TO BANK IN CONNECTION HEREWITH, OR OF WHICH BORROWER HAS
GIVEN BANK NOTICE AND TAKEN SUCH ACTIONS AS ARE NECESSARY TO GIVE BANK A
PERFECTED SECURITY INTEREST THEREIN. THE ACCOUNTS ARE BONA FIDE, EXISTING
OBLIGATIONS OF THE ACCOUNT DEBTORS.
5
THE COLLATERAL IS NOT IN THE POSSESSION OF ANY THIRD PARTY BAILEE (SUCH AS A
WAREHOUSE) EXCEPT AS OTHERWISE PROVIDED IN THE PERFECTION CERTIFICATE; PROVIDED,
HOWEVER, THAT BORROWER SHALL HAVE THE RIGHT TO DELIVER POSSESSION OF COMPLETED
PRODUCTS TO ITS CUSTOMERS BEFORE SUCH CUSTOMERS HAVE PURCHASED SUCH PRODUCTS,
EITHER FOR EVALUATION PURPOSES OR PURSUANT TO AN ADVANCE-DELIVERY "KAN-BAN"
ARRANGEMENT. BORROWER SHALL GIVE BANK NOTICE OF ALL SUCH KAN-BAN ARRANGEMENTS
AND SHALL REPORT ON THE AMOUNT OF PRODUCT HELD IN SUCH ARRANGEMENTS IN ITS
MONTHLY REPORTS. BANK SHALL NOT REQUIRE BAILEE'S WAIVERS FROM BORROWER'S
CUSTOMERS WHO ARE PARTY TO KAN-BAN ARRANGEMENTS. NONE OF THE COMPONENTS OF THE
COLLATERAL SHALL BE MAINTAINED AT LOCATIONS OTHER THAN AS PROVIDED IN THE
PERFECTION CERTIFICATE OR AS BORROWER HAS GIVEN BANK NOTICE PURSUANT TO SECTION
7.2. IN THE EVENT THAT BORROWER, AFTER THE DATE HEREOF, INTENDS TO STORE OR
OTHERWISE DELIVER ANY PORTION OF THE COLLATERAL TO A BAILEE (OTHER THAN A
KAN-BAN ARRANGEMENT) WITH AN AGGREGATE VALUE IN EXCESS OF ONE HUNDRED THOUSAND
DOLLARS ($100,000.00), THEN BORROWER WILL FIRST RECEIVE A WRITTEN
ACKNOWLEDGEMENT FROM SUCH BAILEE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
TO BANK IN ITS SOLE DISCRETION.
ALL INVENTORY IS IN ALL MATERIAL RESPECTS OF GOOD AND MARKETABLE QUALITY, FREE
FROM MATERIAL DEFECTS.
EXCEPT AS NOTED ON THE PERFECTION CERTIFICATE, BORROWER IS NOT A PARTY TO, NOR
IS BOUND BY, ANY LICENSE OR OTHER AGREEMENT WITH RESPECT TO WHICH BORROWER IS
THE LICENSEE, OTHER THAN (I) LICENSES OR AGREEMENTS FOR SOFTWARE THAT BORROWER
INCORPORATES INTO PRODUCTS FOR DISTRIBUTION TO ITS CUSTOMERS, (II) SOFTWARE
LICENSED FOR INTERNAL USE BY BORROWER AND (III) SHRINK-WRAP, FREEWARE AND OPEN
SOURCE SOFTWARE LICENSES (COLLECTIVELY "EXCLUDED LICENSES")
THAT PROHIBITS OR
OTHERWISE RESTRICTS BORROWER FROM GRANTING A SECURITY INTEREST IN BORROWER'S
INTEREST IN SUCH LICENSE OR AGREEMENT OR ANY OTHER PROPERTY. BORROWER SHALL
PROVIDE WRITTEN NOTICE TO BANK WITHIN TEN (10) DAYS OF ENTERING OR BECOMING
BOUND BY ANY SUCH LICENSE OR AGREEMENT, OTHER THAN EXCLUDED LICENSES, WHICH IS
REASONABLY LIKELY TO HAVE A MATERIAL IMPACT ON BORROWER'S BUSINESS OR FINANCIAL
CONDITION (OTHER THAN OVER-THE-COUNTER SOFTWARE THAT IS COMMERCIALLY AVAILABLE
TO THE PUBLIC). BORROWER SHALL TAKE SUCH STEPS AS BANK REQUESTS TO OBTAIN THE
CONSENT OF, OR WAIVER BY, ANY PERSON WHOSE CONSENT OR WAIVER IS NECESSARY FOR
ALL SUCH LICENSES OR CONTRACT RIGHTS, OTHER THAN EXCLUDED LICENSES TO BE DEEMED
"COLLATERAL" AND FOR BANK TO HAVE A SECURITY INTEREST IN IT THAT MIGHT OTHERWISE
BE RESTRICTED OR PROHIBITED BY LAW OR BY THE TERMS OF ANY SUCH LICENSE OR
AGREEMENT (SUCH CONSENT OR AUTHORIZATION MAY INCLUDE A LICENSOR'S AGREEMENT TO A
CONTINGENT ASSIGNMENT OF THE LICENSE TO BANK IF BANK DETERMINES THAT IS
NECESSARY IN ITS GOOD FAITH JUDGMENT), WHETHER NOW EXISTING OR ENTERED INTO IN
THE FUTURE.