5.12
HAD OCCURRED DURING THE SUBJECT FISCAL YEAR (OR IF ONE OR MORE HAD OCCURRED, THE
FACTS AND CIRCUMSTANCES THEREOF).
86
5.9
OFFICERS' CERTIFICATES.
(A)
THE LEAD BORROWER SHALL CAUSE ITS AUTHORIZED OFFICER TO CERTIFY, IN THE
FORM ATTACHED HERETO AS EXHIBIT 5.9 (THE "OFFICER'S COMPLIANCE CERTIFICATE") IN
CONNECTION WITH THOSE MONTHLY AND ANNUAL STATEMENTS TO BE FURNISHED PURSUANT TO
THIS AGREEMENT THAT:
(I)
SUCH STATEMENT WAS PREPARED IN ACCORDANCE WITH GAAP CONSISTENTLY
APPLIED AND PRESENTS FAIRLY THE FINANCIAL CONDITION OF THE BORROWERS AT THE
CLOSE OF, AND THE RESULTS OF THE BORROWERS' OPERATIONS AND CASH FLOWS FOR, THE
PERIOD(S) COVERED, SUBJECT, HOWEVER TO THE FOLLOWING:
(A)
USUAL YEAR END ADJUSTMENTS (THIS EXCEPTION SHALL NOT BE INCLUDED IN
THE CERTIFICATE WHICH ACCOMPANIES SUCH ANNUAL STATEMENT).
(B)
MATERIAL ACCOUNTING CHANGES (IN WHICH EVENT, SUCH CERTIFICATE
SHALL INCLUDE A SCHEDULE (IN REASONABLE DETAIL) OF THE EFFECT OF EACH SUCH
MATERIAL ACCOUNTING CHANGE) NOT PREVIOUSLY SPECIFICALLY TAKEN INTO ACCOUNT IN
THE DETERMINATION OF THE FINANCIAL PERFORMANCE COVENANT IMPOSED PURSUANT TO
SECTION 5.12.
(II)
NO SUSPENSION EVENT OR EVENT OF DEFAULT HAS OCCURRED WHICH IS
CONTINUING, OR IF SUCH EVENT HAS OCCURRED, ITS NATURE (IN REASONABLE DETAIL) AND
THE STEPS (IF ANY) BEING TAKEN OR CONTEMPLATED BY THE BORROWERS TO BE TAKEN ON
ACCOUNT THEREOF.
(III)
THE BORROWERS WERE IN COMPLIANCE (OR HAD FAILED TO COMPLY) AS OF
THE DATE OF THE APPLICABLE STATEMENT WITH EACH OF THE FINANCIAL PERFORMANCE
COVENANTS INCLUDED IN SECTION 5.12 HEREOF; SUCH CERTIFICATION TO BE ACCOMPANIED
BY CALCULATIONS DEMONSTRATING SUCH COMPLIANCE OR FAILURE TO COMPLY.
5.10
INVENTORIES, APPRAISALS, AND AUDITS.
(A)
THE COLLATERAL AGENT MAY, AT THE EXPENSE OF THE BORROWERS, PARTICIPATE IN
AND/OR OBSERVE EACH INVENTORY AND ANY CYCLE COUNT OF THE COLLATERAL WHICH IS
UNDERTAKEN ON BEHALF OF THE BORROWERS (PROVIDED THAT ANY EXPENSES OF COLLATERAL
AGENT FOR WHICH COLLATERAL AGENT SEEKS REIMBURSEMENT SHALL BE REASONABLE
EXPENSES).
NO BORROWER MAY, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COLLATERAL
AGENT, CHANGE THE METHODOLOGY TO BE FOLLOWED IN CONNECTION WITH THE CONDUCT OF
AND REPORTING ON THE RESULTS OF SUCH INVENTORY FROM THE METHODOLOGY EMPLOYED BY
THE BORROWERS AS OF THE DATE OF THIS AGREEMENT.
(B)
THE BORROWERS, AT THEIR EXPENSE, SHALL CAUSE EACH STORE LOCATION,
WAREHOUSE, AND DISTRIBUTION CENTER TO HAVE NOT LESS THAN ONE (1) PHYSICAL
INVENTORY OR CYCLE COUNT IN EACH TWELVE (12) MONTH PERIOD TO BE UNDERTAKEN
CONSISTENT WITH CURRENT PRACTICE, WHILE THIS
87
AGREEMENT IS IN EFFECT (THE SCHEDULING OF WHICH SHALL BE SUBJECT TO THE
COLLATERAL AGENT'S REASONABLE DISCRETION), CONDUCTED BY SUCH INVENTORY TAKERS AS
ARE REASONABLY SATISFACTORY TO THE COLLATERAL AGENT AND FOLLOWING SUCH
METHODOLOGY AS MAY BE REASONABLY SATISFACTORY TO THE AGENT.
(I)
THE LEAD BORROWER SHALL PROVIDE THE COLLATERAL AGENT WITH A COPY
OF THE PRELIMINARY RESULTS OF EACH SUCH INVENTORY (AS WELL AS OF ANY OTHER
PHYSICAL INVENTORY UNDERTAKEN BY THE BORROWERS) WITHIN TEN (10) DAYS AFTER ITS
COMPLETION.
(II)
THE LEAD BORROWER SHALL PROVIDE THE COLLATERAL AGENT WITH A
RECONCILIATION OF THE RESULTS OF EACH SUCH