Common use of Status of Receivables and Other Collateral Clause in Contracts

Status of Receivables and Other Collateral. The Company covenants, represents and warrants to the Lender that: (a) it shall be the sole owner, free and clear of all Liens except Liens in favor of the Lender or otherwise permitted hereunder, of and fully authorized to sell, transfer, pledge and/or grant a security interest in each and every item of said collateral owned by it; (b) each Account shall be a good and valid account representing an undisputed bona fide indebtedness incurred or an amount indisputably owed by the Customer therein named, for a fixed sum as set forth in the invoice relating thereto with respect to an absolute sale and delivery upon the specified terms of goods sold by the Company, or work, labor and/or services theretofore rendered by the Company; (c) no Account is or shall be subject to any defenses, offset, counterclaim, discount or allowance (as of the time of its creation) except as may be stated in the invoice relating thereto or discounts and allowances as may be customary in the Company's business; (d) none of the transactions underlying or giving rise to any Account shall violate any applicable state or federal laws or regulations, and all documents relating to any Account shall be legally sufficient under such laws or regulations and shall be legally enforceable in accordance with their terms; (e) to the best of its knowledge, each Customer, guarantor or endorser with respect to any Account is solvent and will continue to be fully able to pay all Receivables on which it is obligated in full when due; (f) all documents and agreements relating to Receivables shall be true and correct and in all respects what they purport to be; (g) to the best of its knowledge, all signatures and endorsements that appear on all documents and agreements relating to Receivables shall be genuine and all signatories and endorsers with respect thereto shall have full capacity to contract; (h) it shall maintain books and records pertaining to the collateral in such detail, form and scope as the Lender shall require; (i) it will immediately notify the Lender if any accounts arise out of contracts with the United States of America or any department, agency or instrumentality thereof, and, if required by the Lender, will execute any instruments and take any steps required by the Lender in order that all monies due or to become due under any such contract shall be assigned to the Lender and notice thereof given to the United States Government under the Federal Assignment of Claims Act; (j) it will, immediately upon learning thereof, report to the Lender any material loss or destruction of, or substantial damage to, any of the collateral, and any other matters affecting the value, enforceability or collectibility of any of the collateral; (k) if any amounts payable under or in connection with any Account is evidenced by a promissory note or other instrument, as such terms are defined in the Uniform Commercial Code, such promissory note or instrument shall be immediately pledged, endorsed, assigned and delivered to the Lender as additional collateral; (l) it shall not re-date any invoice or sale or make sales on extended dating beyond that customary in the industry; (m) all inventory to the extent produced by the Company has been or will be produced in accordance with the federal Fair Labor Standards Act of 1938, as amended, and the rules, regulations and orders thereunder; and (n) it is not nor shall it be entitled to pledge the Lender's credit on any purchases or for any purpose whatsoever.

Status of Receivables and Other Collateral. The Company Each ------------------------------------------ Borrower covenants, represents and warrants to the Lender that: (a) it shall be the sole owner, free and clear of all Liens except Liens in favor of the Lender Agent or otherwise permitted hereunder, of and fully authorized to sell, transfer, pledge and/or grant a security interest in each and every item of said collateral Collateral owned by it; (b) each Account Receivable shall be a good and valid account representing an undisputed a bona fide indebtedness incurred or an amount indisputably owed by the Customer therein named, for a fixed sum as set forth in the invoice relating thereto with respect to an absolute sale and delivery upon the specified terms of goods sold or leased by the Companya Borrower, or work, labor and/or services theretofore rendered by the Companya Borrower; (c) no Account Receivable is or shall be subject to any defensesgood faith defense, offset, counterclaim, discount or allowance (as of the time of its creation) except as may be stated in the invoice relating thereto or discounts and allowances as may be customary in the Companysuch Borrower's business; (d) none of the transactions underlying or giving rise to any Account Receivable shall violate any applicable state or federal laws or regulations, and all documents relating to any Account Receivable shall be legally sufficient under such laws or regulations and shall be legally enforceable in accordance with their terms; (e) to the best of its knowledge, each Customer, guarantor or endorser with respect to any Account Receivable is solvent and will continue to be fully able to pay all Receivables on which it is obligated in full when due; (f) to Borrower's knowledge, all documents and agreements relating to Receivables shall be true and correct and in all respects what they purport to be; (g) to the best of its knowledge, all signatures and endorsements that appear on all documents and agreements relating to Receivables shall be genuine and all signatories and endorsers with respect thereto shall have full capacity to contract; (h) it shall maintain books and records pertaining to the collateral Collateral in such detail, form and scope as the Lender Agent shall requirerequire in its reasonable discretion; (i) it will immediately notify the Lender Agent if any accounts arise out of contracts with the United States of America or any department, agency or instrumentality thereof, and, if required by the Lender, and will execute any instruments and take any steps required by the Lender Agent in order that all monies due or to become due under any such contract shall be assigned to the Lender Agent and notice thereof given to the United States Government under the Federal Assignment of Claims Act; (j) it will, immediately upon learning thereof, report to the Lender Agent any material loss or destruction of, or substantial damage to, any of the collateralCollateral, and any other matters affecting the value, enforceability or collectibility collectability of any of the collateralCollateral; (k) if any amounts amount payable under or in connection with any Account Receivable is evidenced by a promissory note or other instrument, as such terms are defined in the Uniform Commercial Code, such promissory note or instrument shall be immediately promptly pledged, endorsed, assigned and delivered to the Lender Agent as additional collateral; (l) if any Receivable constitutes chattel paper under the UCC, promptly upon the request of the Agent, the Borrowers will deliver all documents evidencing such chattel paper to the Agent to be held as Collateral, together with any endorsements reasonably requested by the Agent; (m) it shall not re-date any invoice or sale or make sales on extended dating beyond that customary in the industry; (mn) all it shall conduct a physical count of its inventory at such intervals as the Agent may request (provided, however, that if no Event of Default shall be in existence -------- ------- and a perpetual inventory system reasonably satisfactory to the extent produced Agent shall be in effect, Borrowers shall be obligated to compensate the Agent for only one such physical inventory in each Fiscal Year) and promptly supply the Agent with a copy of such counts accompanied by a report of the Company has been value (based on the lower of cost (on a FIFO basis) or will be produced in accordance with the federal Fair Labor Standards Act market value) of 1938, as amended, and the rules, regulations and orders thereundersuch inventory; and (no) it is not nor shall it be entitled to pledge the Lender's Lenders' credit on any purchases or for any purpose whatsoever.

Status of Receivables and Other Collateral. The Company Each Borrower covenants, represents and warrants to the Lender that: (a) it shall be the sole owner, free and clear of all Liens except Liens in favor of the Lender Agent or otherwise permitted hereunder, of and fully authorized to sell, transfer, pledge and/or grant a security interest in each and every item of said collateral Collateral owned by it; (b) each Account Receivable shall be a good and valid account representing an undisputed bona fide indebtedness incurred or an amount indisputably owed by the Customer therein named, for a fixed sum as set forth in the invoice relating thereto with respect to an absolute sale and delivery upon the specified terms of goods sold by the Companya Borrower, or work, labor and/or services theretofore rendered by the Companya Borrower; (c) no Account Receivable is or shall be subject to any defensesdefense, offset, counterclaim, discount or allowance (as of the time of its creation) except as may be stated in the invoice relating thereto or discounts and allowances as may be customary in the Companysuch Borrower's business; (d) none of the transactions underlying or giving rise to any Account Receivable shall violate any applicable state or federal laws or regulations, and all documents relating to any Account Receivable shall be legally sufficient under such laws or regulations and shall be legally enforceable in accordance with their terms; (e) to the best of its knowledge, each Customer, guarantor or endorser with respect to any Account is solvent and will continue to be fully able to pay all Receivables on which it is obligated in full when due; (f) all documents and agreements relating to Receivables shall be true and correct and in all respects what they purport to be; (g) 0 to the best of its knowledge, all signatures and endorsements that appear on all documents and agreements relating to Receivables shall be genuine and all signatories and endorsers with respect thereto shall have full capacity to contract; (h9) it shall maintain books and records pertaining to the collateral Collateral in such detail, form and scope as the Lender Agent shall require; (ih) it will immediately notify the Lender Agent if any accounts arise out of contracts with the United States of America or any department, agency or instrumentality thereof, and, if required by the Lender, and will execute any instruments and take any steps required by the Lender Agent in order that all monies due or to become due under any such contract shall be assigned to the Lender Agent and notice thereof given to the United States Government under the Federal Assignment of Claims Act; (ji) it will, immediately upon learning thereof, report to the Lender Agent any material loss or destruction of, or substantial damage to, any of the collateralCollateral, and any other matters affecting the value, enforceability or collectibility collectability of any of the collateralCollateral; (k0) if any amounts amount payable under or in connection with any Account Receivable is evidenced by a promissory note or other instrument, as such terms are defined in the Uniform Commercial Code, such -76- 82 promissory note or instrument shall be immediately pledged, endorsed, assigned and delivered to the Lender Agent as additional collateral; (lk) it shall not re-date any invoice or sale or make sales on extended dating beyond that customary in the industry; (mI) all it shall conduct a physical count of its inventory to at such intervals as the extent produced Agent may request and promptly supply the Agent with a copy of such counts accompanied by a report of the Company value (based on the lower of cost (on a FIFO basis) or market value) of such inventory; provided, that the Agent shall not request a physical count for any twelve-month period, more frequently than once during such period (unless a Default or an Event of Default has been or will be produced occurred and is continuing in accordance with which case as often as the federal Fair Labor Standards Act of 1938, as amended, and the rules, regulations and orders thereunder; Agent may request) and (nm) it is not nor shall it be entitled to pledge the Lender's Lenders' credit on any purchases or for any purpose whatsoever.

Status of Receivables and Other Collateral. The Company With respect to the Collateral of any Loan Party at the time the Collateral becomes subject to Agent's Lien, each Loan Party covenants, represents and warrants to the Lender thatwarrants: (a) it such Loan Party shall be the sole owner, free and clear of all Liens (except for the Liens granted in the favor of Agent for the Lender or otherwise permitted hereunderbenefit of Lenders and Permitted Liens), of and shall be fully authorized to sell, transfer, pledge and/or grant a security interest in each and every item of said collateral owned by itCollateral; (b) each Account shall be a good and valid account receivable or other right of payment owing to such Loan Party, representing an undisputed bona fide indebtedness incurred or an amount indisputably owed by the Customer obligor therein named, for a fixed sum as set forth in the invoice relating thereto with respect to an absolute sale and delivery upon the specified terms of goods sold by the Company, or work, labor and/or services theretofore rendered by the Companyapplicable documents evidencing such Account; (c) no Account is or material portion of the Accounts shall be subject to any defensesdefense, offset, counterclaim, discount or allowance (as of the time of its creation) except as may be stated in the invoice relating thereto or discounts and allowances as may be customary in the Company's businessallowance; (d) none of the transactions underlying or giving rise to any Account shall violate any applicable state or federal laws or regulations, and all documents relating to any Account thereto shall be legally sufficient under such laws or regulations and shall be legally enforceable in accordance with their terms; (e) to the best of its knowledgeall agreements, each Customer, guarantor or endorser with respect instruments and other documents relating to any Account is solvent and will continue to be fully able to pay all Receivables on which it is obligated in full when due; (f) all documents and agreements relating to Receivables shall be true and correct and in all material respects what they purport to be; (gf) to the best of its knowledge, all signatures and endorsements that appear on all agreements, instruments and other documents and agreements relating to Receivables any Account shall be genuine and all signatories and endorsers with respect thereto shall have full capacity to contract; (hg) it such Loan Party shall maintain books and records pertaining to the collateral said Collateral in such detail, form and scope as the Lender Agent shall reasonably require; and (ih) it will immediately notify the Lender if any accounts arise out of contracts with the United States of America or any department, agency or instrumentality thereof, and, if required by the Lender, will execute any instruments and take any steps required by the Lender in order that all monies due or to become due under any such contract shall be assigned to the Lender and notice thereof given to the United States Government under the Federal Assignment of Claims Act; (j) it Loan Party will, immediately upon learning thereof, report to the Lender Agent any material loss or destruction of, or substantial damage to, of any of the collateralCollateral, and any other matters affecting the value, enforceability or collectibility of any of the collateral; (k) if any amounts payable under or in connection with any Account is evidenced by a promissory note or other instrument, as such terms are defined in the Uniform Commercial Code, such promissory note or instrument shall be immediately pledged, endorsed, assigned and delivered to the Lender as additional collateral; (l) it shall not re-date any invoice or sale or make sales on extended dating beyond that customary in the industry; (m) all inventory to the extent produced by the Company has been or will be produced in accordance with the federal Fair Labor Standards Act of 1938, as amended, and the rules, regulations and orders thereunder; and (n) it is not nor shall it be entitled to pledge the Lender's credit on any purchases or for any purpose whatsoeverCollateral.