MATERIAL PROPERTY (REAL,
34
PERSONAL OR MIXED) AND ALL CHARGES WITH RESPECT TO TAX, SOCIAL SECURITY AND
UNEMPLOYMENT WITHHOLDING WITH RESPECT TO ITS EMPLOYEES, EXCEPT SUCH UNPAID
CHARGES WHICH WILL NOT CUMULATIVELY IN THE AGGREGATE FOR ALL UNPAID CHARGES OF
ALL CREDIT PARTIES RESULT IN MORE THAN $100,000 IN LIABILITIES FOR ALL CREDIT
PARTIES COMBINED, (II) LAWFUL CLAIMS FOR LABOR, MATERIALS, SUPPLIES AND SERVICES
OR OTHERWISE, AND (III) ALL STORAGE OR RENTAL CHARGES PAYABLE TO WAREHOUSEMEN
AND BAILEES, IN EACH CASE, BEFORE ANY THEREOF SHALL BECOME PAST DUE, EXCEPT IN
THE CASE OF CLAUSES (II) AND (III) WHERE THE FAILURE TO PAY OR DISCHARGE SUCH
CHARGES, INDIVIDUALLY OR IN THE AGGREGATE, COULD NOT REASONABLY BE EXPECTED TO
HAVE A MATERIAL ADVERSE EFFECT.
(B)
EACH CREDIT PARTY MAY IN GOOD FAITH CONTEST,
BY APPROPRIATE PROCEEDINGS, THE VALIDITY OR AMOUNT OF ANY CHARGES, TAXES OR
CLAIMS DESCRIBED IN SECTION 5.2(A); PROVIDED, THAT (I) ADEQUATE RESERVES WITH
RESPECT TO SUCH CONTEST ARE MAINTAINED ON THE BOOKS OF SUCH CREDIT PARTY, IN
ACCORDANCE WITH GAAP, (II) NO LIEN SHALL BE IMPOSED TO SECURE PAYMENT OF SUCH
CHARGES (OTHER THAN PAYMENTS TO WAREHOUSEMEN AND/OR BAILEES) THAT IS SUPERIOR TO
ANY OF THE LIENS SECURING PAYMENT OF THE OBLIGATIONS AND SUCH CONTEST IS
MAINTAINED AND PROSECUTED CONTINUOUSLY AND WITH DILIGENCE AND OPERATES TO
SUSPEND COLLECTION OR ENFORCEMENT OF SUCH CHARGES, (III) NONE OF THE COLLATERAL
BECOMES SUBJECT TO FORFEITURE OR LOSS AS A RESULT OF SUCH CONTEST, AND (IV) SUCH
CREDIT PARTY SHALL PROMPTLY PAY OR DISCHARGE SUCH CONTESTED CHARGES, TAXES OR
CLAIMS AND ALL ADDITIONAL CHARGES, INTEREST, PENALTIES AND EXPENSES, IF ANY, AND
SHALL DELIVER TO AGENT EVIDENCE REASONABLY ACCEPTABLE TO AGENT OF SUCH
COMPLIANCE, PAYMENT OR DISCHARGE, IF SUCH CONTEST IS TERMINATED OR DISCONTINUED
ADVERSELY TO SUCH CREDIT PARTY OR THE CONDITIONS SET FORTH IN THIS
SECTION 5.2(B) ARE NO LONGER MET.
5.3
Books and Records.
Each Credit Party shall
keep adequate books and records with respect to its business activities in which
proper entries, reflecting all financial transactions, are made in order to
permit the preparation of financial statements in accordance with GAAP.
5.4
Insurance; Damage to or Destruction of
Collateral.
(A)
THE CREDIT PARTIES SHALL, AT THEIR SOLE
COST AND EXPENSE, MAINTAIN (I) THE POLICIES OF INSURANCE DESCRIBED ON DISCLOSURE
SCHEDULE (3.18) AS IN EFFECT ON THE DATE HEREOF OR (II) CASUALTY INSURANCE ON
ALL REAL AND PERSONAL PROPERTY ON AN ALL RISKS BASIS (INCLUDING THE PERILS OF
FLOOD AND QUAKE), COVERING THE REPAIR AND REPLACEMENT COST OF ALL SUCH PROPERTY
AND COVERAGE FOR BUSINESS INTERRUPTION AND PUBLIC LIABILITY INSURANCE (INCLUDING
PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE) IN EACH CASE OF THE KINDS
CUSTOMARILY CARRIED OR MAINTAINED BY PERSONS OF ESTABLISHED REPUTATION ENGAGED
IN SIMILAR BUSINESSES AND IN EACH CASE WITH INSURERS AND IN AMOUNTS REASONABLY
ACCEPTABLE TO AGENT (IT BEING AGREED THAT ANY INSURER HAVING AN A.M. BEST POLICY
HOLDERS RATING OF AT LEAST "A MINUS" SHALL BE ACCEPTABLE TO AGENT). SUCH
POLICIES OF INSURANCE (OR THE LOSS PAYABLE AND ADDITIONAL INSURED