FIRST
PRIORITY SECURITY INTEREST (SUBJECT TO PERMITTED ENCUMBRANCES) IN EACH AND EVERY
ITEM OF ITS RESPECTIVE COLLATERAL (OTHER THAN THE SPECIFIED EQUITY INTERESTS AND
EXCLUDED PERSONAL PROPERTY) TO AGENT; AND, EXCEPT FOR PERMITTED ENCUMBRANCES THE
COLLATERAL SHALL BE FREE AND CLEAR OF ALL LIENS AND ENCUMBRANCES WHATSOEVER;
(II) EACH DOCUMENT AND AGREEMENT EXECUTED BY EACH BORROWER OR DELIVERED TO AGENT
OR ANY LENDER IN CONNECTION WITH THIS AGREEMENT SHALL BE TRUE AND CORRECT IN ALL
MATERIAL RESPECTS; (III) ALL SIGNATURES AND ENDORSEMENTS OF EACH BORROWER THAT
APPEAR ON SUCH DOCUMENTS AND AGREEMENTS SHALL BE GENUINE AND EACH BORROWER SHALL
HAVE FULL CAPACITY TO EXECUTE SAME; AND (IV) EACH BORROWER'S INVENTORY SHALL BE
LOCATED AS SET FORTH ON SCHEDULE 4.5 AND SHALL NOT BE REMOVED FROM SUCH
LOCATION(S) WITHOUT THE PRIOR WRITTEN CONSENT OF AGENT EXCEPT WITH RESPECT TO
THE SALE OF INVENTORY IN THE ORDINARY COURSE OF BUSINESS.
(B)
(I) THERE IS NO LOCATION AT WHICH ANY BORROWER HAS ANY INVENTORY
(EXCEPT FOR INVENTORY IN TRANSIT) OTHER THAN THOSE LOCATIONS LISTED ON SCHEDULE
4.5; (II) SCHEDULE 4.5 HERETO CONTAINS A CORRECT AND COMPLETE LIST, AS OF THE
CLOSING DATE, OF THE LEGAL NAMES AND ADDRESSES OF EACH WAREHOUSE AT WHICH
INVENTORY OF ANY BORROWER IS STORED;
NONE OF THE RECEIPTS RECEIVED BY ANY
BORROWER FROM ANY WAREHOUSE STATES THAT THE GOODS COVERED THEREBY ARE TO BE
DELIVERED TO BEARER OR TO THE ORDER OF A NAMED PERSON OR TO A NAMED PERSON AND
SUCH NAMED PERSON'S ASSIGNS;
(III) SCHEDULE 4.5 HERETO SETS FORTH A CORRECT AND
COMPLETE LIST AS OF THE CLOSING DATE OF (A) EACH PLACE OF BUSINESS OF EACH
BORROWER AND (B) THE CHIEF EXECUTIVE OFFICE OF EACH BORROWER; AND (IV) SCHEDULE
4.5 HERETO SETS FORTH A CORRECT AND COMPLETE LIST AS OF THE CLOSING DATE OF THE
LOCATION, BY STATE AND STREET ADDRESS, OF ALL REAL PROPERTY OWNED OR LEASED BY
EACH BORROWER, TOGETHER WITH THE NAMES AND ADDRESSES OF ANY LANDLORDS.
4.6.
DEFENSE OF AGENT'S AND LENDERS' INTERESTS.
UNTIL (A) PAYMENT AND
PERFORMANCE IN FULL OF ALL OF THE OBLIGATIONS AND (B) TERMINATION OF THIS
AGREEMENT, AGENT'S INTERESTS IN THE COLLATERAL SHALL CONTINUE IN FULL FORCE AND
EFFECT.
DURING SUCH PERIOD NO BORROWER SHALL, WITHOUT AGENT'S PRIOR WRITTEN
CONSENT, PLEDGE, SELL (EXCEPT AS OTHERWISE PERMITTED HEREUNDER), ASSIGN,
TRANSFER, CREATE OR SUFFER TO EXIST A LIEN UPON OR ENCUMBER OR ALLOW OR SUFFER
TO BE ENCUMBERED IN ANY WAY EXCEPT FOR PERMITTED ENCUMBRANCES, ANY PART OF THE
COLLATERAL.
EACH BORROWER SHALL DEFEND AGENT'S INTERESTS IN THE COLLATERAL
AGAINST ANY AND ALL PERSONS WHATSOEVER.
AT ANY TIME
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FOLLOWING THE OCCURRENCE AND DURING THE CONTINUATION OF AN EVENT OF DEFAULT AND
DEMAND BY AGENT FOR PAYMENT OF ALL OBLIGATIONS, AGENT SHALL HAVE THE RIGHT TO
TAKE POSSESSION OF THE INDICIA OF THE COLLATERAL AND THE COLLATERAL IN WHATEVER
PHYSICAL FORM CONTAINED, INCLUDING:
LABELS, STATIONERY, DOCUMENTS, INSTRUMENTS
AND ADVERTISING MATERIALS.
IF AGENT EXERCISES THIS RIGHT TO TAKE POSSESSION OF
THE COLLATERAL, BORROWERS SHALL, UPON DEMAND, ASSEMBLE IT IN