INVENTORY WHICH AGENT DETERMINES, IN THE EXERCISE OF ITS
REASONABLE CREDIT JUDGMENT, IS UNACCEPTABLE FOR BORROWING PURPOSES DUE TO AGE,
QUALITY, TYPE, CATEGORY AND/OR QUANTITY, INCLUDING, WITHOUT LIMITATION,
(A) INVENTORY ON HAND FOR MORE THAN TWELVE (12) MONTHS AND (B) INVENTORY
PURCHASED OR OTHERWISE ACQUIRED MORE THAN THREE (3) MONTHS PRIOR TO ANY DATE OF
DETERMINATION WHICH IS IN EXCESS OF A TWELVE (12) MONTH SUPPLY;
(4)
PACKAGING, SHIPPING MATERIALS OR SUPPLIES CONSUMED IN THE
APPLICABLE BORROWER'S BUSINESS;
(5)
INVENTORY WITH RESPECT TO WHICH AGENT, ON BEHALF OF ITSELF AND
LENDERS, DOES NOT HAVE A VALID AND FULLY PERFECTED SECURITY INTEREST (OR THE
APPLICABLE EQUIVALENT THEREOF) SUBJECT ONLY TO, WITH RESPECT TO PRIORITY, PRIOR
CLAIMS;
(6)
INVENTORY WITH RESPECT TO WHICH THERE EXISTS ANY LIEN IN FAVOUR OF
ANY PERSON OTHER THAN AGENT, ON BEHALF OF ITSELF AND LENDERS, AND US FACILITY
AGENT, ON BEHALF OF ITSELF AND US FACILITY LENDERS, AND EXCLUDING PRIOR CLAIMS;
(7)
INVENTORY PRODUCED IN VIOLATION OF THE UNITED STATES FAIR LABOR
STANDARDS ACT AND SUBJECT TO THE SO-CALLED "HOT GOODS" PROVISIONS CONTAINED IN
TITLE 29 U.S.C. 215 (A)(I) OR ANY REPLACEMENT STATUTE;
(8)
INVENTORY LOCATED AT ANY LOCATION OTHER THAN THOSE IDENTIFIED
PURSUANT TO SUBSECTION 4.6;
(9)
INVENTORY LOCATED AT A VENDOR'S LOCATION OR WITH A CONSIGNEE;
6
(10)
INVENTORY LOCATED WITH A WAREHOUSEMAN, BAILEE, PROCESSOR OR SIMILAR
THIRD PARTY, UNLESS SUCH PERSON HAS EXECUTED A WAIVER OF INTEREST SATISFACTORY
TO AGENT; AND
(11)
UNLESS OTHERWISE AGREED BY AGENT, INVENTORY IN ANY LOCATION FOR
WHICH AGENT HAS NOT RECEIVED AN AGREEMENT, IN FORM AND SUBSTANCE ACCEPTABLE TO
AGENT, ACKNOWLEDGING AGENT'S RIGHTS AND WAIVING ITS OWN INTEREST IN SUCH
INVENTORY FROM EACH LESSOR AND SUBLESSOR AND EACH MORTGAGEE OF SUCH LOCATION.
(C)
BORROWING MECHANICS.
(1) BA RATE LOANS MADE ON ANY FUNDING DATE
SHALL BE IN AN AGGREGATE MINIMUM AMOUNT OF C$2,500,000 AND INTEGRAL MULTIPLES OF
C$500,000 IN EXCESS OF SUCH AMOUNT.
(2)
ON ANY DAY WHEN BORROWER DESIRES A
REVOLVING ADVANCE UNDER THIS SUBSECTION 2.1, BORROWER SHALL GIVE AGENT WRITTEN
OR TELEPHONIC NOTICE OF THE PROPOSED BORROWING BY 1:00 P.M. TORONTO TIME ON THE
FUNDING DATE OF AN INDEX RATE LOAN LESS THAN C$5,000,000 AND WRITTEN OR
TELEPHONIC NOTICE BY 1:00 P.M. TORONTO TIME ONE (1) BUSINESS DAY PRIOR TO THE
FUNDING DATE OF AN INDEX RATE LOAN EQUAL TO OR GREATER THAN C$5,000,000, AND
THREE (3) BUSINESS DAYS IN ADVANCE OF THE FUNDING DATE OF A BA RATE LOAN, WHICH
NOTICE SHALL SPECIFY THE PROPOSED FUNDING DATE (WHICH SHALL BE A BUSINESS DAY),
WHETHER SUCH LOANS SHALL CONSIST OF INDEX RATE LOANS OR BA RATE LOANS, AND, FOR
BA RATE LOANS, THE BA PERIOD APPLICABLE THERETO.
ANY SUCH TELEPHONIC NOTICE
SHALL BE CONFIRMED WITH A NOTICE OF BORROWING ON THE SAME DAY AS SUCH REQUEST.
NEITHER AGENT NOR ANY LENDER SHALL INCUR ANY LIABILITY TO BORROWER FOR ACTING
UPON ANY TELEPHONIC NOTICE OR A NOTICE OF BORROWING AGENT BELIEVES IN GOOD FAITH
TO HAVE BEEN GIVEN BY A DULY AUTHORIZED OFFICER OR OTHER