PROMPTLY NOTIFY LENDER THEREOF AND, AT THE REQUEST AND OPTION OF
LENDER, BORROWERS SHALL, PURSUANT TO AN AGREEMENT IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO LENDER, EITHER (A) ARRANGE FOR THE ISSUER AND ANY
CONFIRMER OF SUCH LETTER OF CREDIT, OR (B) ARRANGE FOR LENDER TO BECOME THE
TRANSFEREE BENEFICIARY OF THE LETTER OF CREDIT, WITH LENDER AGREEING, IN EACH
CASE, THAT THE PROCEEDS OF ANY DRAWING UNDER THE LETTER OF CREDIT ARE TO BE
APPLIED IN THE SAME MANNER AS ANY OTHER PAYMENT ON AN ACCOUNT.
5-29.
COMMERCIAL TORT CLAIMS.
IF BORROWERS SHALL AT ANY TIME HOLD OR
ACQUIRE A COMMERCIAL TORT CLAIM, BORROWERS SHALL IMMEDIATELY NOTIFY LENDER IN A
WRITING SIGNED BY
27
Borrowers of the brief details thereof and grant to Lender in such writing a
security interest therein, and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance reasonably
satisfactory to Lender.
5-30.
CHANGES IN LEGAL STATUS.
NO BORROWER SHALL (A) CHANGE ITS NAME,
ITS PLACE OF BUSINESS OR, IF MORE THAN ONE, CHIEF EXECUTIVE OFFICE, OR ITS
MAILING ADDRESS OR ORGANIZATIONAL IDENTIFICATION NUMBER IF IT HAS ONE, OR (B)
CHANGE ITS TYPE OF ORGANIZATION, JURISDICTION OR ORGANIZATION OR OTHER LEGAL
STRUCTURE; WITHOUT PROVIDING THIRTY (30) DAYS' PRIOR WRITTEN NOTICE TO LENDER IN
EACH CASE. IF ANY BORROWER DOES NOT HAVE AN ORGANIZATIONAL IDENTIFICATION NUMBER
AND LATER OBTAINS ONE, SUCH BORROWER SHALL FORTHWITH NOTIFY THE LENDER OF SUCH
ORGANIZATIONAL IDENTIFICATION NUMBER.
5-31.
SUPPLY AGREEMENT.
NO PARTY TO THE SUPPLY AGREEMENT IS IN DEFAULT
OR VIOLATION OF THE SUPPLY AGREEMENT, AND THE SUPPLY AGREEMENT IS, AND SHALL AT
ALL TIMES REMAIN, IN FULL FORCE AND EFFECT.
ARTICLE 6 - USE AND COLLECTION OF COLLATERAL
6-1.
USE OF INVENTORY COLLATERAL.
(A)
EXCEPT AS OTHERWISE PROVIDED IN SECTION 5-4(F) HEREIN, THE
BORROWERS SHALL NOT ENGAGE IN ANY SALE OF THE INVENTORY OTHER THAN FOR FAIR
CONSIDERATION IN THE CONDUCT OF THE BORROWERS' BUSINESS IN THE ORDINARY COURSE
AND SHALL NOT ENGAGE IN SALES OR OTHER DISPOSITIONS TO CREDITORS; SALES OR OTHER
DISPOSITIONS IN BULK; AND ANY USE OF ANY OF THE INVENTORY IN BREACH OF ANY
PROVISION OF THIS AGREEMENT.
(B)
NO SALE OF INVENTORY SHALL BE ON CONSIGNMENT, APPROVAL, OR UNDER
ANY OTHER CIRCUMSTANCES SUCH THAT, WITH THE EXCEPTION OF THE BORROWERS'
CUSTOMARY RETURN POLICY APPLICABLE TO THE RETURN OF INVENTORY PURCHASED BY THE
BORROWERS' RETAIL CUSTOMERS IN THE ORDINARY COURSE, SUCH INVENTORY MAY BE
RETURNED TO THE BORROWERS WITHOUT THE CONSENT OF THE LENDER.
6-2.
INVENTORY QUALITY.
ALL INVENTORY NOW OWNED OR HEREAFTER ACQUIRED
BY THE BORROWERS ARE AND WILL BE OF GOOD AND MERCHANTABLE QUALITY AND FREE FROM
DEFECTS (OTHER THAN DEFECTS WITHIN CUSTOMARY TRADE TOLERANCES).
6-3.
ADJUSTMENTS AND ALLOWANCES.
THE BORROWERS MAY GRANT SUCH
ALLOWANCES OR OTHER ADJUSTMENTS TO THE BORROWERS' ACCOUNT DEBTORS (EXCLUSIVE OF
EXTENDING THE TIME FOR PAYMENT OF ANY ACCOUNT OR ACCOUNT RECEIVABLE, WHICH SHALL
NOT BE DONE WITHOUT FIRST OBTAINING THE LENDER'S PRIOR WRITTEN CONSENT IN EACH
INSTANCE) AS