ALLOWANCES OR EXTENSIONS MADE OR GIVEN IN THE ORDINARY
COURSE OF EACH BORROWER'S BUSINESS IN ACCORDANCE WITH PRACTICES AND POLICIES
PREVIOUSLY DISCLOSED TO AGENT, (IV) THERE SHALL BE NO SETOFFS, DEDUCTIONS,
CONTRAS, DEFENSES, COUNTERCLAIMS OR DISPUTES EXISTING OR ASSERTED WITH RESPECT
THERETO EXCEPT AS REPORTED TO AGENT IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT AND (V) NONE OF THE TRANSACTIONS GIVING RISE THERETO WILL VIOLATE ANY
APPLICABLE FOREIGN, FEDERAL, STATE OR LOCAL LAWS OR REGULATIONS IN ANY MATERIAL
RESPECT, ALL DOCUMENTATION RELATING THERETO WILL BE LEGALLY SUFFICIENT UNDER
SUCH LAWS AND REGULATIONS AND ALL SUCH DOCUMENTATION WILL BE LEGALLY ENFORCEABLE
IN ACCORDANCE WITH ITS TERMS.
(C)
AGENT SHALL HAVE THE RIGHT AT ANY TIME OR TIMES BUT
SUBJECT TO REASONABLE INTERVALS CONSISTENT WITH AGENT'S CUSTOMARY PRACTICES, IN
AGENT'S NAME OR IN THE NAME OF A NOMINEE OF AGENT, TO VERIFY THE VALIDITY,
AMOUNT OR ANY OTHER MATTER RELATING TO ANY RECEIVABLES OR OTHER COLLATERAL, BY
MAIL, TELEPHONE, FACSIMILE TRANSMISSION OR OTHERWISE.
7.3
INVENTORY COVENANTS.
WITH RESPECT TO THE INVENTORY: (A) EACH
BORROWER SHALL AT ALL TIMES MAINTAIN INVENTORY RECORDS, CONSISTENT WITH THE
CURRENT PRACTICES EACH BORROWER AS OF THE DATE HEREOF, KEEPING CORRECT AND
ACCURATE RECORDS ITEMIZING AND DESCRIBING THE KIND, TYPE, QUALITY AND QUANTITY
OF INVENTORY, SUCH BORROWER'S COST THEREFOR AND DAILY WITHDRAWALS THEREFROM AND
ADDITIONS THERETO; (B) BORROWERS SHALL CONDUCT A PHYSICAL COUNT OF THE INVENTORY
AT LEAST ONCE EACH YEAR BUT AT ANY TIME OR TIMES AS AGENT MAY REQUEST ON OR
AFTER AN EVENT OF DEFAULT AND FOR SO LONG AS THE SAME IS CONTINUING, AND
PROMPTLY FOLLOWING SUCH PHYSICAL INVENTORY SHALL SUPPLY AGENT WITH A REPORT IN
THE FORM AND WITH SUCH SPECIFICITY AS MAY BE REASONABLY SATISFACTORY TO AGENT
CONCERNING SUCH PHYSICAL COUNT; (C) BORROWERS SHALL NOT REMOVE ANY INVENTORY
FROM THE LOCATIONS SET FORTH OR PERMITTED HEREIN, WITHOUT THE PRIOR WRITTEN
CONSENT OF AGENT, EXCEPT FOR SALES OF INVENTORY IN THE ORDINARY COURSE OF ITS
BUSINESS AND EXCEPT TO MOVE INVENTORY DIRECTLY FROM ONE LOCATION SET FORTH OR
PERMITTED HEREIN TO ANOTHER SUCH LOCATION AND EXCEPT FOR INVENTORY SHIPPED FROM
THE MANUFACTURER THEREOF TO SUCH BORROWER WHICH IS IN TRANSIT TO THE LOCATIONS
SET FORTH OR PERMITTED HEREIN, PROVIDED, THAT, SUCH BORROWER MAY REMOVE
INVENTORY TO ANY LOCATIONS NOT OTHERWISE PERMITTED HEREUNDER SO LONG AS THE
AGGREGATE AMOUNT OF ALL OF SUCH INVENTORY AT
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SUCH OTHER LOCATIONS DOES NOT HAVE A VALUE IN EXCESS OF $10,000; (D) UPON
AGENT'S REQUEST, BORROWERS SHALL, AT THEIR EXPENSE, NO MORE THAN ONE (1) TIME IN
ANY TWELVE (12) MONTH PERIOD, BUT AT ANY TIME OR TIMES AS AGENT MAY REQUEST ON
OR AFTER AN EVENT OF DEFAULT AND FOR SO LONG AS THE SAME IS CONTINUING OR AT ANY
TIME ON OR AFTER ANY CHANGE IN THE CALCULATION OF STANDARD COSTS OF INVENTORY,
DELIVER OR CAUSE TO BE DELIVERED TO AGENT WRITTEN APPRAISALS AS TO THE INVENTORY
IN FORM, SCOPE AND METHODOLOGY ACCEPTABLE TO AGENT IN GOOD FAITH AND BY AN
APPRAISER ACCEPTABLE