TO PURCHASE THE SECURITY OR INSTRUMENT
AGREED TO BY BORROWER AND BANK IN ACCORDANCE WITH THE IMMEDIATELY PRECEDING
SENTENCE.
IF NO AGREEMENT HAS BEEN MADE, SUCH PROCEEDS SHALL BE PLACED INTO AN
INTEREST BEARING ACCOUNT OFFERED BY BANK IN WHICH BANK HAS A FIRST PRIORITY
SECURITY INTEREST UNTIL SUCH TIME AS AN AGREEMENT AS TO THE SECURITY REPLACING
THE ORIGINAL CASH COLLATERAL CAN BE REACHED.
BANK MAY RETAIN ANY SUCH SUCCESSOR
COLLATERAL AND THE PROCEEDS THEREFROM AS CASH COLLATERAL IN ACCORDANCE WITH THE
TERMS OF THIS AGREEMENT.
5.
REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants as follows:
5.1
DUE ORGANIZATION AND QUALIFICATION.
BORROWER AND EACH SUBSIDIARY
IS A CORPORATION DULY EXISTING UNDER THE LAWS OF ITS STATE OF INCORPORATION AND
QUALIFIED AND LICENSED TO DO BUSINESS IN ANY STATE IN WHICH THE FAILURE TO DO SO
COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.
5.2
DUE AUTHORIZATION; NO CONFLICT.
THE EXECUTION, DELIVERY, AND
PERFORMANCE OF THE LOAN DOCUMENTS ARE WITHIN BORROWER'S POWERS, HAVE BEEN DULY
AUTHORIZED, AND ARE NOT IN CONFLICT WITH NOR CONSTITUTE A BREACH OF ANY
PROVISION CONTAINED IN BORROWER'S CERTIFICATE OF INCORPORATION OR BYLAWS, NOR
WILL THEY CONSTITUTE AN EVENT OF DEFAULT UNDER ANY MATERIAL AGREEMENT TO WHICH
BORROWER IS A PARTY OR BY WHICH BORROWER IS BOUND.
BORROWER IS NOT IN DEFAULT
UNDER ANY MATERIAL AGREEMENT TO WHICH IT IS A PARTY OR BY WHICH IT IS BOUND.
5.3
NO PRIOR ENCUMBRANCES.
BORROWER HAS GOOD AND MARKETABLE TITLE TO
ITS PROPERTY, FREE AND CLEAR OF LIENS, EXCEPT FOR PERMITTED LIENS.
5.4
BONA FIDE ELIGIBLE ACCOUNTS.
THE ELIGIBLE ACCOUNTS ARE BONA FIDE
EXISTING OBLIGATIONS.
THE PROPERTY AND SERVICES GIVING RISE TO SUCH ELIGIBLE
ACCOUNTS HAS BEEN DELIVERED OR RENDERED TO THE ACCOUNT DEBTOR OR TO THE ACCOUNT
DEBTOR'S AGENT FOR IMMEDIATE AND UNCONDITIONAL ACCEPTANCE BY THE ACCOUNT DEBTOR.
5.5
MERCHANTABLE INVENTORY.
ALL INVENTORY IS IN ALL MATERIAL RESPECTS
OF GOOD AND MARKETABLE QUALITY, FREE FROM ALL MATERIAL DEFECTS, EXCEPT FOR
INVENTORY FOR WHICH ADEQUATE RESERVES HAVE BEEN MADE.
5.6
INTELLECTUAL PROPERTY.
BORROWER IS THE LICENSEE OR SOLE OWNER OF
ITS PATENTS, TRADEMARKS, COPYRIGHTS, AND OTHER INTELLECTUAL PROPERTY, EXCEPT FOR
LICENSES GRANTED BY BORROWER TO ITS CUSTOMERS IN THE ORDINARY COURSE OF
BUSINESS.
TO THE KNOWLEDGE OF BORROWER, EACH OF BORROWER'S PATENTS IS VALID AND
ENFORCEABLE, AND NO PART OF ITS INTELLECTUAL PROPERTY HAS BEEN JUDGED INVALID OR
UNENFORCEABLE, IN WHOLE OR IN PART, AND NO CLAIM HAS BEEN MADE THAT ANY PART OF
ITS INTELLECTUAL PROPERTY VIOLATES THE RIGHTS OF ANY THIRD PARTY.
5.7
NAME; LOCATION OF CHIEF EXECUTIVE OFFICE.
EXCEPT AS DISCLOSED IN
THE SCHEDULE, BORROWER HAS NOT DONE BUSINESS UNDER ANY NAME OTHER THAN THAT
SPECIFIED ON THE SIGNATURE PAGE HEREOF.
THE CHIEF EXECUTIVE OFFICE OF BORROWER
IS LOCATED AT THE ADDRESS INDICATED IN SECTION 0 HEREOF.
EXCEPT AS DISCLOSED IN
THE SCHEDULE, ALL BORROWER'S INVENTORY AND EQUIPMENT IS LOCATED ONLY AT THE
LOCATION SET FORTH IN SECTION 10 HEREOF AND BORROWER HAS PAID FOR AND OWNS ALL
EQUIPMENT FINANCED BY BANK