Adverse Change.
5.2
COLLATERAL.
BORROWER HAS GOOD TITLE TO THE
COLLATERAL, FREE OF LIENS EXCEPT PERMITTED LIENS.
BORROWER HAS NO DEPOSIT
ACCOUNT, OTHER THAN THE DEPOSIT ACCOUNTS WITH BANK AND DEPOSIT ACCOUNTS
DESCRIBED IN THE PERFECTION CERTIFICATE DELIVERED TO THE BANK IN CONNECTION
HEREWITH.
THE ACCOUNTS ARE BONA FIDE, EXISTING OBLIGATIONS, AND THE SERVICE OR
PROPERTY HAS BEEN PERFORMED OR DELIVERED TO THE ACCOUNT DEBTOR OR ITS AGENT FOR
IMMEDIATE SHIPMENT TO THE ACCOUNT DEBTOR. THE COLLATERAL IS NOT IN THE
POSSESSION OF ANY THIRD PARTY BAILEE (SUCH AS A WAREHOUSE).
EXCEPT AS HEREAFTER
DISCLOSED TO THE BANK IN WRITING BY BORROWER, NONE OF THE COMPONENTS OF THE
COLLATERAL SHALL BE MAINTAINED AT LOCATIONS OTHER THAN AS PROVIDED IN THE
PERFECTION CERTIFICATE.
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 THE WRITTEN CONSENT OF BANK, NOT TO BE
UNREASONABLY WITHHELD, AND SUCH BAILEE MUST ACKNOWLEDGE IN WRITING THAT THE
BAILEE IS ALSO HOLDING SUCH COLLATERAL FOR THE BENEFIT OF BANK (IN ADDITION TO
THE BORROWER). BORROWER HAS NO KNOWLEDGE OF ANY ACTUAL OR IMMINENT INSOLVENCY
PROCEEDING OF ANY ACCOUNT DEBTOR WHOSE ACCOUNTS ARE AN ELIGIBLE ACCOUNT IN ANY
BORROWING BASE CERTIFICATE. BORROWER IS THE SOLE OWNER OF OR HAS ALL NECESSARY
RIGHTS AND INTERESTS TO THE INTELLECTUAL PROPERTY, EXCEPT FOR NON-EXCLUSIVE
LICENSES (OR EXCLUSIVE LICENSES FOR A PARTICULAR FIELD OF USE OR GEOGRAPHIC
AREA) GRANTED TO ITS CUSTOMERS IN THE ORDINARY COURSE OF BUSINESS.
5.3
LITIGATION.
EXCEPT AS SHOWN IN THE PERFECTION
CERTIFICATE, THERE ARE NO ACTIONS OR PROCEEDINGS PENDING OR, TO THE KNOWLEDGE OF
BORROWER'S RESPONSIBLE OFFICERS, THREATENED BY OR AGAINST BORROWER OR ANY
SUBSIDIARY IN WHICH AN ADVERSE DECISION COULD REASONABLY BE EXPECTED TO CAUSE A
MATERIAL ADVERSE CHANGE.
5.4
NO MATERIAL DEVIATION IN FINANCIAL
STATEMENTS.
ALL CONSOLIDATED FINANCIAL STATEMENTS FOR BORROWER AND ANY
SUBSIDIARY DELIVERED TO BANK FAIRLY PRESENT, IN ACCORDANCE WITH GAAP, IN ALL
MATERIAL RESPECTS BORROWER'S CONSOLIDATED FINANCIAL CONDITION AND BORROWER'S
CONSOLIDATED RESULTS OF OPERATIONS.
THERE HAS NOT BEEN
5
ANY MATERIAL DETERIORATION IN BORROWER'S CONSOLIDATED FINANCIAL CONDITION SINCE
THE DATE OF THE MOST RECENT FINANCIAL STATEMENTS SUBMITTED TO BANK.
5.5
SOLVENCY.
THE FAIR SALABLE VALUE OF
BORROWER'S ASSETS (INCLUDING GOODWILL MINUS DISPOSITION COSTS) EXCEEDS THE FAIR
VALUE OF ITS LIABILITIES; THE BORROWER IS NOT LEFT WITH UNREASONABLY SMALL
CAPITAL AFTER THE TRANSACTIONS IN THIS AGREEMENT; AND BORROWER IS ABLE TO PAY
ITS DEBTS (INCLUDING TRADE DEBTS) AS THEY MATURE.
5.6
REGULATORY COMPLIANCE.
BORROWER IS NOT AN
"INVESTMENT COMPANY" OR A COMPANY "CONTROLLED" BY AN "INVESTMENT COMPANY" UNDER
THE INVESTMENT COMPANY ACT.
BORROWER IS NOT ENGAGED AS ONE OF ITS IMPORTANT
ACTIVITIES IN EXTENDING CREDIT FOR MARGIN STOCK (UNDER REGULATIONS T AND U OF
THE FEDERAL RESERVE BOARD OF GOVERNORS).
BORROWER HAS COMPLIED IN ALL MATERIAL
RESPECTS WITH THE FEDERAL FAIR LABOR STANDARDS ACT.
BORROWER HAS NOT KNOWINGLY
VIOLATED ANY LAWS, ORDINANCES OR RULES, THE VIOLATION OF WHICH COULD REASONABLY
BE EXPECTED TO CAUSE