ALL ACTION BY THE
GRANTOR NECESSARY OR DESIRABLE TO PROTECT AND PERFECT THE LENDER'S LIEN ON EACH
ITEM LISTED ON EXHIBIT C (INCLUDING THE DELIVERY OF ALL ORIGINALS AND THE
PLACEMENT OF A LEGEND ON ALL CHATTEL PAPER AS REQUIRED HEREUNDER) HAS BEEN DULY
TAKEN. THE LENDER WILL HAVE A FULLY PERFECTED FIRST PRIORITY SECURITY INTEREST
IN THE COLLATERAL LISTED ON EXHIBIT C, SUBJECT ONLY TO LIENS PERMITTED UNDER
SECTION 4.1(E).
3.8.
ACCOUNTS AND CHATTEL PAPER.
(A)
THE NAMES OF THE OBLIGORS, AMOUNTS OWING, DUE DATES AND OTHER
INFORMATION WITH RESPECT TO THE ACCOUNTS AND CHATTEL PAPER ARE AND WILL BE
CORRECTLY STATED IN ALL RECORDS OF THE GRANTOR RELATING THERETO AND IN ALL
INVOICES AND COLLATERAL REPORTS WITH RESPECT THERETO FURNISHED TO THE LENDER BY
THE GRANTOR FROM TIME TO TIME.
AS OF THE TIME WHEN EACH ACCOUNT OR EACH ITEM OF
CHATTEL PAPER ARISES, THE GRANTOR SHALL BE DEEMED TO HAVE REPRESENTED AND
WARRANTED THAT SUCH ACCOUNT OR CHATTEL PAPER, AS THE CASE MAY BE, AND ALL
RECORDS RELATING THERETO, ARE GENUINE AND IN ALL RESPECTS WHAT THEY PURPORT TO
BE.
(B)
INTENTIONALLY DELETED.
(C)
IN ADDITION, WITH RESPECT TO ALL ACCOUNTS, (I) THE AMOUNTS SHOWN
ON ALL INVOICES, STATEMENTS AND COLLATERAL REPORTS WITH RESPECT THERETO ARE
ACTUALLY AND ABSOLUTELY OWING TO THE GRANTOR AS INDICATED THEREON AND ARE NOT IN
ANY WAY CONTINGENT; AND
(II) TO THE GRANTOR'S KNOWLEDGE, ALL ACCOUNT DEBTORS
HAVE THE CAPACITY TO CONTRACT.
3.9.
INVENTORY.
WITH RESPECT TO ANY INVENTORY SCHEDULED OR LISTED ON
THE MOST RECENT COLLATERAL REPORT, (A) SUCH INVENTORY (OTHER THAN INVENTORY IN
TRANSIT) IS LOCATED AT ONE OF THE GRANTOR'S LOCATIONS SET FORTH ON EXHIBIT A,
(B) NO INVENTORY
(OTHER THAN INVENTORY IN TRANSIT) IS NOW, OR SHALL AT ANY TIME
OR TIMES HEREAFTER BE STORED AT ANY OTHER LOCATION EXCEPT AS PERMITTED BY
SECTION 4.1(G), (C) THE GRANTOR HAS GOOD, INDEFEASIBLE AND MERCHANTABLE TITLE TO
SUCH INVENTORY AND SUCH INVENTORY IS NOT SUBJECT TO ANY LIEN OR SECURITY
INTEREST OR DOCUMENT WHATSOEVER EXCEPT FOR THE LIEN GRANTED TO THE LENDER, AND
EXCEPT FOR LIENS PERMITTED BY SECTION 6.02 OF THE CREDIT AGREEMENT, (D) EXCEPT
AS SPECIFICALLY DISCLOSED IN THE MOST RECENT COLLATERAL REPORT, SUCH INVENTORY
IS ELIGIBLE INVENTORY OF GOOD AND MERCHANTABLE QUALITY, FREE FROM ANY DEFECTS,
(E) SUCH INVENTORY IS NOT SUBJECT TO ANY LICENSING, PATENT, ROYALTY, TRADEMARK,
TRADE NAME OR COPYRIGHT AGREEMENTS WITH ANY THIRD PARTIES WHICH WOULD REQUIRE
ANY CONSENT OF ANY THIRD PARTY UPON SALE OR DISPOSITION OF THAT INVENTORY OR THE
PAYMENT OF ANY MONIES TO ANY THIRD PARTY UPON SUCH SALE OR OTHER DISPOSITION,
(F) SUCH INVENTORY HAS BEEN PRODUCED IN ACCORDANCE WITH THE FEDERAL FAIR LABOR
STANDARDS ACT OF 1938, AS AMENDED, AND ALL RULES, REGULATIONS AND ORDERS
THEREUNDER AND (G) THE COMPLETION OF MANUFACTURE, SALE OR OTHER DISPOSITION OF
SUCH INVENTORY BY THE LENDER FOLLOWING AN EVENT OF DEFAULT SHALL NOT REQUIRE THE
CONSENT OF ANY PERSON AND SHALL NOT CONSTITUTE A BREACH OR DEFAULT UNDER ANY
CONTRACT OR AGREEMENT