THE AGENT MAY
> ESTABLISH A FUNDED RESERVE OF UP TO 110% OF THE AGGREGATE STATED AMOUNTS OF
> SUCH L/C'S.
SUCH FUNDED RESERVE SHALL EITHER BE (I) RETURNED TO THE BORROWERS
> PROVIDED THAT, NO SUSPENSION EVENT HAS OCCURRED OR (II) APPLIED TOWARDS THE
> LIABILITIES FOLLOWING ACCELERATION.
7.6
THE OPERATING ACCOUNTS
Except as otherwise specifically provided in, or permitted by, this
Agreement,
all checks shall be drawn by the Borrowers upon, and other disbursements shall
be made by the Borrowers solely from, the Operating Account or Disbursement
Account.
ARTICLE VIII. -
GRANT OF SECURITY INTEREST:
8.1
GRANT OF SECURITY INTEREST.
To secure the Borrowers' prompt, punctual, and faithful performance and payment
of all and each of the Liabilities, each Borrower hereby grants to the Agent,
for the benefit of the Lenders, a continuing security interest in and to, and
assigns to the Agent all Inventory and certain assets relating to Inventory (as
described below) of the Borrowers, and each item thereof, whether now owned or
in which that Borrower now has an interest, or hereafter acquired or arising, or
in which that Borrower hereafter obtains an interest, and all products,
Proceeds, substitutions, and accessions of or to any of the foregoing (all of
which, together with any other property in which the Agent may in the future be
granted a security interest, is referred to herein as the "Collateral"),
including, but not limited to:
> (A)
ALL INVENTORY INCLUDING, BUT NOT LIMITED TO, PACKAGING, ADVERTISING AND
> SHIPPING MATERIALS.
>
>
> (B)
ALL BOOKS, RECORDS, AND INFORMATION RELATING TO THE COLLATERAL AND/OR TO
> THE OPERATION OF THE BORROWERS' BUSINESS, AND ALL RIGHTS OF ACCESS TO SUCH
> BOOKS AND RECORDS, AND ALL MEDIA IN WHICH SUCH BOOKS, RECORDS, AND INFORMATION
> ARE STORED, RECORDED, AND MAINTAINED TO THE EXTENT REASONABLY NECESSARY FOR
> LENDER TO OBTAIN ACCESS TO AND UTILIZE SUCH BOOKS AND RECORDS IN CONNECTION
> WITH A LIQUIDATION OR OTHER ENFORCEMENT OF THE AGENT'S RIGHTS OR REMEDIES.
>
>
> (C)
ALL
POLICIES AND CERTIFICATES OF INSURANCE, IN RESPECT OF THE
> COLLATERAL.
>
>
> (D)
ALL INSURANCE PROCEEDS, REFUNDS, AND PREMIUM REBATES, INCLUDING, WITHOUT
> LIMITATION, PROCEEDS OF FIRE AND CREDIT INSURANCE, WHICH PROCEEDS, REFUNDS,
> AND PREMIUM REBATES ARISE OUT OF ANY OF THE FOREGOING (8.1(A) THROUGH 8.1(C)).
>
>
> (E)
ALL SUPPORTING OBLIGATIONS AND ALL PRESENT AND FUTURE LIENS, SECURITY
> INTERESTS, RIGHTS, REMEDIES, TITLE AND INTEREST IN, TO AND IN RESPECT OF THE
> COLLATERAL, INCLUDING (I) RIGHTS AND REMEDIES RELATING TO GUARANTIES,
> CONTRACTS OF SURETYSHIP, LETTER OF CREDIT AND CREDIT AND OTHER INSURANCE
> RELATED TO THE COLLATERAL, (II) RIGHTS OF STOPPAGE IN TRANSIT, REPLEVIN,
> REPOSSESSION, RECLAMATION AND OTHER RIGHTS AND REMEDIES OF AN UNPAID VENDOR,
> LIEN OR SECURED PARTY, (III) AND GOODS DESCRIBED IN INVOICES, DOCUMENTS,
> CONTRACTS OR INSTRUMENTS WITH RESPECT THERETO, OR OTHERWISE REPRESENTING OR
> EVIDENCING, COLLATERAL, INCLUDING RETURNED, REPOSSESSED AND RECLAIMED GOODS.
8.2
EXTENT AND DURATION OF SECURITY INTEREST.