EACH CONTRACT,
AGREEMENT OR INSTRUMENT RELATING TO THE ARTICLE 9 COLLATERAL, ALL IN ACCORDANCE
WITH THE TERMS AND CONDITIONS THEREOF, AND EACH GRANTOR JOINTLY AND SEVERALLY
AGREES TO INDEMNIFY AND HOLD HARMLESS THE COLLATERAL AGENT AND THE SECURED
PARTIES FROM AND AGAINST ANY AND ALL LIABILITY FOR SUCH PERFORMANCE, EXCEPT TO
THE EXTENT THAT SUCH LIABILITY IS DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE BAD
FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE COLLATERAL AGENT OR SUCH
SECURED PARTY, AS THE CASE MAY BE.
(I)
NONE OF THE GRANTORS SHALL MAKE OR PERMIT TO BE MADE AN ASSIGNMENT, PLEDGE
OR HYPOTHECATION OF THE ARTICLE 9 COLLATERAL OR SHALL GRANT ANY OTHER LIEN IN
RESPECT OF THE ARTICLE 9 COLLATERAL, EXCEPT TO THE EXTENT NOT PROHIBITED BY
SECTION 6.02 OF THE CREDIT AGREEMENT.
NONE OF THE GRANTORS SHALL MAKE OR PERMIT
TO BE MADE ANY SALE, LEASE, TRANSFER OR OTHER DISPOSITION OF THE ARTICLE 9
COLLATERAL, EXCEPT TO THE EXTENT NOT PROHIBITED BY SECTION 6.04 OF THE CREDIT
AGREEMENT.
EACH GRANTOR AGREES THAT IT SHALL NOT PERMIT ANY INVENTORY WITH AN
AGGREGATE BOOK VALUE EXCEEDING $500,000 TO BE IN THE POSSESSION OR CONTROL OF
ANY WAREHOUSEMAN, AGENT, BAILEE, OR PROCESSOR AT ANY TIME UNLESS SUCH
WAREHOUSEMAN, BAILEE, AGENT OR PROCESSOR SHALL HAVE BEEN NOTIFIED OF THE
SECURITY INTEREST AND SHALL HAVE ACKNOWLEDGED IN WRITING, IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE COLLATERAL AGENT, THAT SUCH WAREHOUSEMAN, AGENT,
BAILEE OR PROCESSOR HOLDS THE INVENTORY FOR THE BENEFIT OF THE COLLATERAL AGENT
SUBJECT TO THE SECURITY INTEREST AND SHALL ACT UPON THE INSTRUCTIONS OF THE
COLLATERAL AGENT WITHOUT FURTHER CONSENT FROM THE GRANTOR, AND THAT SUCH
WAREHOUSEMAN, AGENT, BAILEE OR PROCESSOR FURTHER AGREES TO WAIVE AND RELEASE ANY
LIEN HELD BY IT WITH RESPECT TO SUCH INVENTORY, WHETHER ARISING BY OPERATION OF
LAW OR OTHERWISE.
(J)
NONE OF THE GRANTORS WILL, WITHOUT THE COLLATERAL AGENT'S PRIOR WRITTEN
CONSENT, GRANT ANY EXTENSION OF THE TIME OF PAYMENT OF ANY ACCOUNTS INCLUDED IN
THE ARTICLE 9 COLLATERAL, COMPROMISE, COMPOUND OR SETTLE THE SAME FOR LESS THAN
THE FULL AMOUNT THEREOF, RELEASE, WHOLLY OR PARTLY, ANY PERSON LIABLE FOR THE
PAYMENT THEREOF OR ALLOW ANY CREDIT OR DISCOUNT WHATSOEVER THEREON, OTHER THAN
EXTENSIONS, COMPROMISES, SETTLEMENTS, RELEASES, CREDITS OR DISCOUNTS (I) GRANTED
OR MADE IN THE ORDINARY COURSE OF BUSINESS AND CONSISTENT WITH ITS CURRENT
PRACTICES AND IN ACCORDANCE WITH SUCH PRUDENT AND STANDARD PRACTICE USED IN
INDUSTRIES THAT ARE THE SAME AS OR SIMILAR TO THOSE IN WHICH SUCH GRANTOR IS
ENGAGED, OR (II) TO THE EXTENT PERMITTED BY SECTION 6.05 OF THE CREDIT
AGREEMENT.
(K)
THE GRANTORS, AT THEIR OWN EXPENSE, SHALL MAINTAIN OR CAUSE TO BE
MAINTAINED INSURANCE COVERING PHYSICAL LOSS OR DAMAGE TO THE INVENTORY AND
EQUIPMENT IN ACCORDANCE WITH THE REQUIREMENTS SET FORTH IN SECTION 5.07 OF THE
CREDIT AGREEMENT.
EACH GRANTOR IRREVOCABLY MAKES, CONSTITUTES AND APPOINTS THE
COLLATERAL AGENT (AND ALL
18
OFFICERS, EMPLOYEES OR AGENTS DESIGNATED BY THE