OR PAYMENT ITEMS WITH RESPECT TO ANY
COLLATERAL, IT SHALL HOLD SAME IN TRUST FOR AGENT AND PROMPTLY (NOT LATER THAN
THE NEXT BUSINESS DAY) DEPOSIT SAME INTO A CASH COLLATERAL ACCOUNT (EXCEPT THAT
DURING A TRIGGER PERIOD ALL SUCH CASH AND PAYMENT ITEMS SHALL BE HELD IN TRUST
AND PROMPTLY DEPOSITED IN A DOMINION ACCOUNT).
8.3
Administration of Inventory.
8.3.1
RECORDS AND REPORTS OF INVENTORY.
EACH OBLIGOR SHALL KEEP ACCURATE
AND COMPLETE RECORDS OF ITS INVENTORY AND SHALL SUBMIT TO AGENT INVENTORY AND
RECONCILIATION REPORTS
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IN FORM REASONABLY SATISFACTORY TO AGENT, ON SUCH PERIODIC BASIS AS AGENT MAY
REASONABLY REQUEST (BUT NO MORE THAN MONTHLY UNLESS AN EVENT OF DEFAULT
EXISTS).
EACH OBLIGOR SHALL CONDUCT A PHYSICAL INVENTORY AT LEAST ONCE PER
CALENDAR YEAR (AND ON A MORE FREQUENT BASIS IF REQUESTED BY AGENT WHEN AN EVENT
OF DEFAULT EXISTS) AND PERIODIC CYCLE COUNTS CONSISTENT WITH HISTORICAL
PRACTICES, AND SHALL PROVIDE TO AGENT UPON REQUEST A REPORT BASED ON EACH SUCH
INVENTORY AND COUNT PROMPTLY UPON COMPLETION THEREOF, TOGETHER WITH SUCH
SUPPORTING INFORMATION AS AGENT MAY REASONABLY REQUEST.
UPON REASONABLE PRIOR
NOTICE, AGENT MAY OBSERVE EACH PHYSICAL COUNT.
8.3.2
RETURNS OF INVENTORY.
NO OBLIGOR SHALL RETURN ANY INVENTORY TO A
SUPPLIER, VENDOR OR OTHER PERSON, WHETHER FOR CASH, CREDIT OR OTHERWISE, UNLESS
(A) SUCH RETURN IS IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST
PRACTICES; (B) NO DEFAULT, EVENT OF DEFAULT OR OVERADVANCE EXISTS OR WOULD
RESULT THEREFROM; AND (C) ANY PAYMENT RECEIVED BY AN OBLIGOR FOR A RETURN IS
(I) PROMPTLY REMITTED TO AGENT FOR APPLICATION TO THE LOANS, IF ANY ARE
OUTSTANDING, OR (II) IF NO LOANS ARE OUTSTANDING, PROMPTLY IN A CASH COLLATERAL
ACCOUNT (SUBJECT TO SECTION 8.2.5).
8.3.3
ACQUISITION, SALE AND MAINTENANCE.
NO OBLIGOR SHALL ACQUIRE OR
ACCEPT ANY INVENTORY ON CONSIGNMENT OR APPROVAL, AND SHALL TAKE ALL STEPS TO
ASSURE THAT ALL INVENTORY IS PRODUCED IN ACCORDANCE WITH THE FLSA.
NO OBLIGOR
SHALL SELL ANY INVENTORY ON CONSIGNMENT OR APPROVAL OR ANY OTHER BASIS UNDER
WHICH THE CUSTOMER MAY RETURN OR REQUIRE AN OBLIGOR TO REPURCHASE SUCH
INVENTORY.
OBLIGORS SHALL USE, STORE AND MAINTAIN ALL INVENTORY WITH REASONABLE
CARE AND CAUTION, IN ACCORDANCE IN ALL MATERIAL RESPECTS WITH APPLICABLE
STANDARDS OF ANY INSURANCE AND IN CONFORMITY IN ALL MATERIAL RESPECTS WITH ALL
APPLICABLE LAW, AND SHALL MAKE CURRENT RENT PAYMENTS (WITHIN APPLICABLE GRACE
PERIODS PROVIDED FOR IN LEASES AND UNLESS SUCH RENT PAYMENT IS BEING PROPERLY
CONTESTED) AT ALL LOCATIONS WHERE ANY COLLATERAL IS LOCATED.
8.4
Administration of Deposit Accounts.
Schedule 8.4 to the
Disclosure Letter sets forth all Deposit Accounts maintained by Obligors,
including all Dominion Accounts.
Subject to Section 10.4.1, each Obligor shall
take all actions necessary to establish Agent's control of each such Deposit
Account (other than an account exclusively used for payroll, payroll or
employment taxes or employee benefits, or an account containing not more than
the Dollar Equivalent of $10,000 at any time, cash collateral accounts permitted
hereunder and accounts used for collections for transactions permitted