Subsidiaries or any of their property or assets may
be bound or affected, (iv) require any action by, filing, registration, or
qualification with, or Governmental Approval from, any Governmental Authority
(except such Governmental Approvals which have already been obtained and are in
full force and effect), or (v) constitute an event of default under any material
agreement by which Borrower is bound.
Borrower is not in default under any
agreement to which it is a party or by which it is bound in which the default
would reasonably be expected to have a material adverse effect on Borrower's
business.
5.2
COLLATERAL.
(A)
BORROWER HAS GOOD TITLE TO, HAS RIGHTS IN,
AND THE POWER TO TRANSFER EACH ITEM OF THE COLLATERAL UPON WHICH IT PURPORTS TO
GRANT A LIEN HEREUNDER, FREE AND CLEAR OF ANY AND ALL LIENS EXCEPT PERMITTED
LIENS.
BORROWER HAS NO DEPOSIT ACCOUNTS OTHER THAN THE DEPOSIT ACCOUNTS WITH
BANK, THE DEPOSIT ACCOUNTS, IF ANY DESCRIBED IN THE PERFECTION CERTIFICATE
DELIVERED 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.
(B)
THE COLLATERAL IS NOT IN THE POSSESSION OF
ANY THIRD PARTY BAILEE (SUCH AS A WAREHOUSE) EXCEPT AS OTHERWISE PROVIDED IN THE
PERFECTION CERTIFICATE.
NONE OF THE COMPONENTS OF THE COLLATERAL SHALL BE
MAINTAINED AT LOCATIONS OTHER THAN AS PROVIDED IN THE PERFECTION CERTIFICATE OR
AS PERMITTED 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, THEN BORROWER WILL FIRST RECEIVE A WRITTEN ACKNOWLEDGMENT FROM SUCH
BAILEE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO BANK IN ITS SOLE
DISCRETION.
(C)
ALL INVENTORY IS IN ALL MATERIAL RESPECTS
OF GOOD AND MARKETABLE QUALITY, FREE FROM MATERIAL DEFECTS.
(D)
BORROWER IS THE SOLE OWNER OF THE
INTELLECTUAL PROPERTY WHICH IT OWNS OR PURPORTS TO OWN EXCEPT FOR
(A) NON-EXCLUSIVE LICENSES GRANTED TO ITS CUSTOMERS IN THE ORDINARY COURSE OF
BUSINESS, (B) OVER-THE-COUNTER SOFTWARE THAT IS COMMERCIALLY AVAILABLE TO THE
PUBLIC, AND (C) MATERIAL INTELLECTUAL PROPERTY LICENSED TO BORROWER AND NOTED ON
THE PERFECTION CERTIFICATE.
EACH PATENT WHICH IT OWNS OR PURPORTS TO OWN AND
WHICH IS MATERIAL TO BORROWER'S BUSINESS IS VALID AND ENFORCEABLE, AND NO PART
OF THE INTELLECTUAL PROPERTY WHICH BORROWER OWNS OR PURPORTS TO OWN AND WHICH IS
MATERIAL TO BORROWER'S BUSINESS HAS BEEN JUDGED INVALID OR UNENFORCEABLE, IN
WHOLE OR IN PART.
TO THE BEST OF BORROWER'S KNOWLEDGE, NO CLAIM HAS BEEN MADE
THAT ANY PART OF THE INTELLECTUAL PROPERTY VIOLATES THE RIGHTS OF ANY THIRD
PARTY EXCEPT TO THE EXTENT SUCH CLAIM WOULD NOT HAVE A MATERIAL ADVERSE EFFECT
ON BORROWER'S BUSINESS.
(E)
EXCEPT AS NOTED ON THE PERFECTION
CERTIFICATE, BORROWER IS NOT A PARTY TO, NOR IS IT BOUND BY, ANY RESTRICTED
LICENSE, OTHER THAN (I) LICENSES OR AGREEMENTS FOR SOFTWARE THAT BORROWER
INCORPORATES INTO