AND COLLATERAL REPORTS
DELIVERED TO AGENT AND LENDERS WITH RESPECT THERETO; (IV) NO GRANTOR HAS
RECEIVED ANY NOTICE OF PROCEEDINGS OR ACTIONS WHICH ARE THREATENED OR PENDING
AGAINST ANY ACCOUNT DEBTOR WHICH MIGHT RESULT IN ANY ADVERSE CHANGE IN SUCH
ACCOUNT DEBTOR'S FINANCIAL CONDITION; AND (V) NO GRANTOR HAS KNOWLEDGE THAT ANY
ACCOUNT DEBTOR IS UNABLE GENERALLY TO PAY ITS DEBTS AS THEY BECOME DUE.
FURTHER
WITH RESPECT TO THE ACCOUNTS (X) THE AMOUNTS
9
SHOWN ON ALL INVOICES, STATEMENTS AND COLLATERAL REPORTS WHICH MAY BE DELIVERED
TO THE AGENT WITH RESPECT THERETO ARE ACTUALLY AND ABSOLUTELY OWING TO SUCH
GRANTOR AS INDICATED THEREON AND ARE NOT IN ANY WAY CONTINGENT; (Y) NO PAYMENTS
HAVE BEEN OR SHALL BE MADE THEREON EXCEPT PAYMENTS IMMEDIATELY DELIVERED TO THE
APPLICABLE BLOCKED ACCOUNTS OR THE AGENT AS REQUIRED PURSUANT TO THE TERMS OF
SECTION 6.16 OF THE CREDIT AGREEMENT; AND (Z) TO EACH GRANTOR'S KNOWLEDGE, ALL
ACCOUNT DEBTORS HAVE THE CAPACITY TO CONTRACT;
(G)
WITH RESPECT TO ANY INVENTORY SCHEDULED OR
LISTED ON THE MOST RECENT COLLATERAL REPORT DELIVERED TO AGENT PURSUANT TO THE
TERMS OF THIS SECURITY AGREEMENT OR THE CREDIT AGREEMENT, (I) SUCH INVENTORY IS
LOCATED AT ONE OF THE APPLICABLE GRANTOR'S LOCATIONS SET FORTH ON SCHEDULE
III-A, SCHEDULE III-B, SCHEDULE III-C, SCHEDULE III-D, SCHEDULE III-E, SCHEDULE
III-F, SCHEDULE III-G, SCHEDULE III-H, SCHEDULE III-I, [SCHEDULE III-J] AND
[SCHEDULE III-K] HERETO, AS APPLICABLE, (II) NO INVENTORY IS NOW, OR SHALL AT
ANY TIME OR TIMES HEREAFTER BE STORED AT ANY OTHER LOCATION WITHOUT AGENT'S
PRIOR CONSENT, AND IF AGENT GIVES SUCH CONSENT, EACH APPLICABLE GRANTOR WILL
CONCURRENTLY THEREWITH OBTAIN, TO THE EXTENT REQUIRED BY THE CREDIT AGREEMENT,
BAILEE, LANDLORD AND MORTGAGEE AGREEMENTS, (III) THE APPLICABLE GRANTOR HAS
GOOD, INDEFEASIBLE AND MERCHANTABLE TITLE TO SUCH INVENTORY AND SUCH INVENTORY
IS NOT SUBJECT TO ANY LIEN OR SECURITY INTEREST OR DOCUMENT WHATSOEVER EXCEPT
FOR THE LIEN GRANTED TO AGENT, FOR THE BENEFIT OF AGENT AND LENDERS, AND EXCEPT
FOR PERMITTED ENCUMBRANCES, (IV) EXCEPT AS SPECIFICALLY DISCLOSED IN THE MOST
RECENT COLLATERAL REPORT DELIVERED TO AGENT, SUCH INVENTORY IS ELIGIBLE
INVENTORY OF GOOD AND MERCHANTABLE QUALITY, FREE FROM ANY DEFECTS, (V) SUCH
INVENTORY IS NOT SUBJECT TO ANY LICENSING, PATENT, ROYALTY, TRADEMARK, TRADE
NAME OR COPYRIGHT AGREEMENTS WITH ANY THIRD PARTIES WHICH WOULD REQUIRE ANY
CONSENT OF ANY THIRD PARTY UPON SALE OR DISPOSITION OF THAT INVENTORY OR THE
PAYMENT OF ANY MONIES TO ANY THIRD PARTY UPON SUCH SALE OR OTHER DISPOSITION,
AND (VI) THE COMPLETION OF MANUFACTURE, SALE OR OTHER DISPOSITION OF SUCH
INVENTORY BY AGENT FOLLOWING AN EVENT OF DEFAULT SHALL NOT REQUIRE THE CONSENT
OF ANY PERSON AND SHALL NOT CONSTITUTE A BREACH OR DEFAULT UNDER ANY CONTRACT OR
AGREEMENT TO WHICH ANY GRANTOR IS A PARTY OR TO WHICH SUCH PROPERTY IS SUBJECT.
(H)
NO GRANTOR HAS ANY INTEREST IN, OR TITLE TO,
ANY PATENT, TRADEMARK OR COPYRIGHT EXCEPT AS SET FORTH IN SCHEDULE IV HERETO.
THIS SECURITY AGREEMENT IS EFFECTIVE TO CREATE A VALID AND CONTINUING LIEN ON