OF DEFAULT AT SUCH TIME, AGENT SHALL CONSULT WITH BORROWERS AS TO
THE IDENTITY OF ANY SUCH FIRM.
IN THE EVENT THE VALUE OF BORROWERS' INVENTORY,
AS SO DETERMINED PURSUANT TO SUCH APPRAISAL, IS LESS THAN ANTICIPATED BY AGENT
OR LENDERS, SUCH THAT THE REVOLVING ADVANCES AGAINST ELIGIBLE INVENTORY, ARE IN
FACT IN EXCESS OF SUCH ADVANCES PERMITTED HEREUNDER, THEN, PROMPTLY UPON AGENT'S
DEMAND FOR SAME, BORROWERS SHALL MAKE MANDATORY PREPAYMENTS OF THE THEN
OUTSTANDING REVOLVING ADVANCES MADE AGAINST SUCH ELIGIBLE INVENTORY, SO AS TO
ELIMINATE THE EXCESS ADVANCES.
V.
REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants as follows:
5.1.
AUTHORITY.
EACH BORROWER HAS FULL POWER, AUTHORITY AND LEGAL
RIGHT TO ENTER INTO THIS AGREEMENT AND THE OTHER DOCUMENTS AND TO PERFORM ALL
ITS RESPECTIVE OBLIGATIONS HEREUNDER AND THEREUNDER.
THIS AGREEMENT AND THE
OTHER DOCUMENTS HAVE BEEN DULY EXECUTED AND DELIVERED BY EACH BORROWER, AND THIS
AGREEMENT AND THE OTHER DOCUMENTS CONSTITUTE THE LEGAL, VALID AND BINDING
OBLIGATION OF SUCH BORROWER ENFORCEABLE IN ACCORDANCE WITH THEIR TERMS, EXCEPT
AS SUCH ENFORCEABILITY MAY BE LIMITED BY ANY APPLICABLE BANKRUPTCY, INSOLVENCY,
MORATORIUM OR SIMILAR LAWS AFFECTING CREDITORS' RIGHTS GENERALLY AND SUBJECT TO
GENERAL PRINCIPLES OF EQUITY, REGARDLESS OF WHETHER CONSIDERED AT A PROCEEDING
IN EQUITY OR AT LAW.
THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT
AND OF THE OTHER DOCUMENTS (A) ARE WITHIN SUCH BORROWER'S CORPORATE OR LIMITED
LIABILITY COMPANY POWERS, AS APPLICABLE, HAVE BEEN DULY AUTHORIZED BY ALL
56
NECESSARY CORPORATE OR COMPANY ACTION, AS APPLICABLE, ARE NOT IN CONTRAVENTION
OF LAW OR THE TERMS OF SUCH BORROWER'S BY-LAWS, CERTIFICATE OF INCORPORATION,
OPERATING AGREEMENT OR CERTIFICATE OF FORMATION, AS APPLICABLE, OR OTHER
APPLICABLE DOCUMENTS RELATING TO SUCH BORROWER'S FORMATION OR TO THE CONDUCT OF
SUCH BORROWER'S BUSINESS OR OF ANY MATERIAL AGREEMENT OR UNDERTAKING TO WHICH
SUCH BORROWER IS A PARTY OR BY WHICH SUCH BORROWER IS BOUND, INCLUDING THE
INDENTURE LOAN DOCUMENTATION, (B) WILL NOT CONFLICT WITH OR VIOLATE ANY LAW OR
REGULATION, OR ANY JUDGMENT, ORDER OR DECREE OF ANY GOVERNMENTAL BODY, (C) WILL
NOT REQUIRE THE CONSENT OF ANY GOVERNMENTAL BODY OR ANY OTHER PERSON, EXCEPT
THOSE CONSENTS SET FORTH ON SCHEDULE 5.1 HERETO, ALL OF WHICH WILL HAVE BEEN
DULY OBTAINED, MADE OR COMPILED PRIOR TO THE CLOSING DATE AND WHICH ARE IN FULL
FORCE AND EFFECT AND (D) WILL NOT CONFLICT WITH, NOR RESULT IN ANY BREACH IN ANY
OF THE PROVISIONS OF OR CONSTITUTE A DEFAULT UNDER OR RESULT IN THE CREATION OF
ANY LIEN EXCEPT PERMITTED ENCUMBRANCES UPON ANY ASSET OF SUCH BORROWER UNDER THE
PROVISIONS OF ANY AGREEMENT, CHARTER DOCUMENT, INSTRUMENT, BY-LAW, OPERATING
AGREEMENT OR OTHER INSTRUMENT TO WHICH SUCH BORROWER IS A PARTY OR BY WHICH IT
OR ITS PROPERTY IS A PARTY OR BY WHICH IT MAY BE BOUND, INCLUDING UNDER THE
PROVISIONS OF THE INDENTURE LOAN DOCUMENTATION.
5.2.
FORMATION AND QUALIFICATION.
(A)
EACH BORROWER IS DULY INCORPORATED OR FORMED, AS APPLICABLE, AND
IN GOOD STANDING UNDER THE LAWS OF THE STATE LISTED ON SCHEDULE 5.2(A) AND IS