USE AND COLLECTION OF COLLATERAL. 27- 6-1. USE OF INVENTORY COLLATERAL..................................................................-27- 6-2. INVENTORY QUALITY............................................................................-27- 6-3. ADJUSTMENTS AND ALLOWANCES...................................................................-27- 6-4. VALIDITY OF ACCOUNTS.........................................................................-27- 6-5. NOTIFICATION TO ACCOUNT DEBTORS..............................................................-28- ARTICLE 7 - CASH MANAGEMENT..............................................................................-28- 7-1. DEPOSITORY ACCOUNTS..........................................................................-28- 7-2. CREDIT CARD RECEIPTS.........................................................................-29- 7-3. THE CONCENTRATION ACCOUNT, THE BLOCKED ACCOUNT AND THE FUNDING ACCOUNTS......................-29- 7-4. PROCEEDS AND COLLECTION OF ACCOUNTS..........................................................-30- 7-5. PAYMENT OF LIABILITIES.......................................................................-31- 7-6. THE FUNDING ACCOUNT..........................................................................-31- ARTICLE 8 - LENDER AS BORROWER'S ATTORNEY-IN-FACT........................................................-32- 8-1. APPOINTMENT AS ATTORNEY-IN-FACT..............................................................-32- 8-2. NO OBLIGATION TO ACT.........................................................................-32- ARTICLE 9 - FINANCIAL AND OTHER REPORTING REQUIREMENTS/FINANCIAL COVENANTS ............................................................-33- 9-1. MAINTAIN RECORDS.............................................................................-33- 9-2. ACCESS TO RECORDS............................................................................-33- 9-3. IMMEDIATE NOTICE TO LENDER...................................................................-34- 9-4. BORROWING BASE CERTIFICATE...................................................................-36- 9-5. WEEKLY REPORTS...............................................................................-36- 9-6. MONTHLY REPORTS..............................................................................-36- 9-7. ANNUAL REPORTS...............................................................................-37- 9-8. OFFICERS' CERTIFICATES.......................................................................-37- 9-9. INVENTORIES. APPRAISALS. AND AUDITS..........................................................-38- 9-10. ADDITIONAL FINANCIAL INFORMATION.............................................................-39- 9-11. FINANCIAL PERFORMANCE AND INVENTORY COVENANTS................................................-39- 9-12. ELECTRONIC REPORTING.........................................................................-39- ARTICLE 10 - EVENTS OF DEFAULT...........................................................................-39- 10-1. FAILURE TO PAY REVOLVING CREDIT..............................................................-40- 10-2. FAILURE TO MAKE OTHER PAYMENTS...............................................................-40- 10-3. FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD)...................................-40- 10-4. FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD)......................................-40- 10-5. MISREPRESENTATION............................................................................-40- 10-6. ACCELERATION OF OTHER DEBT. BREACH OF LEASE..................................................-41- 10-7. DEFAULT UNDER OTHER AGREEMENTS...............................................................-41- 10-8. CASUALTY LOSS. NON-ORDINARY COURSE SALES.....................................................-41- 10-9. JUDGMENT. RESTRAINT OF BUSINESS..............................................................-41- 10-10. BUSINESS FAILURE.............................................................................-41- 10-11. BANKRUPTCY...................................................................................-41- 10-12. DEFAULT BY GUARANTOR. .......................................................................-42- 10-13. INDICTMENT - FORFEITURE......................................................................-42- 10-14. TERMINATION OF GUARANTY......................................................................-42- 10-15. CHALLENGE TO LOAN DOCUMENTS..................................................................-42- 10-16. EXECUTIVE MANAGEMENT.........................................................................-42- 10-17. CHANGE IN CONTROL............................................................................-42- 10-18. MATERIAL ADVERSE CHANGE......................................................................-43-
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USE AND COLLECTION OF COLLATERAL. 27- 26- 6-1. 1 USE OF INVENTORY COLLATERAL..................................................................-27- COLLATERAL ................................................ -26- 6-2. INVENTORY QUALITY............................................................................QUALITY .......................................................... -27- 6-3. ADJUSTMENTS AND ALLOWANCES...................................................................ALLOWANCES ................................................. -27- 6-4. VALIDITY OF ACCOUNTS.........................................................................ACCOUNTS ....................................................... -27- 6-5. NOTIFICATION TO ACCOUNT DEBTORS..............................................................-28- DEBTORS ............................................ -27- ARTICLE 7 - CASH MANAGEMENT..............................................................................-28- MANAGEMENT ............................................................ -27- -iv- 7-1. DEPOSITORY ACCOUNTS..........................................................................-28- ACCOUNTS ........................................................ -27- 7-2. CREDIT CARD RECEIPTS.........................................................................-29- RECEIPTS ....................................................... -28- 7-3. THE CONCENTRATION ACCOUNT, THE BLOCKED ACCOUNT AND THE FUNDING ACCOUNTS......................ACCOUNTS .... -29- 7-4. PROCEEDS AND COLLECTION OF ACCOUNTS..........................................................-30- ACCOUNTS ........................................ -29- 7-5. PAYMENT OF LIABILITIES.......................................................................-31- LIABILITIES ..................................................... -30- 7-6. THE FUNDING ACCOUNT..........................................................................-31- ACCOUNT ....................................................... -30- ARTICLE 8 - LENDER AS BORROWER'S ATTORNEY-IN-FACT........................................................-32- FACT ....................................... -30- 8-1. APPOINTMENT AS ATTORNEY-IN-FACT..............................................................-32- FACT ............................................ -30- 8-2. NO OBLIGATION TO ACT.........................................................................-32- ACT ....................................................... -31- ARTICLE 9 - FINANCIAL AND OTHER REPORTING REQUIREMENTS/FINANCIAL COVENANTS ............................................................-33- ............. -32- 9-1. MAINTAIN RECORDS.............................................................................-33- RECORDS ........................................................... -32- 9-2. ACCESS TO RECORDS............................................................................-33- RECORDS .......................................................... -32- 9-3. IMMEDIATE NOTICE TO LENDER...................................................................-34- LENDER ................................................. -33- 9-4. BORROWING BASE CERTIFICATE...................................................................-36- CERTIFICATE ................................................. -34- 9-5. WEEKLY REPORTS...............................................................................-36- REPORTS ............................................................. -34- 9-6. MONTHLY REPORTS..............................................................................-36- REPORTS ............................................................ -35- 9-7. ANNUAL REPORTS...............................................................................-37- REPORTS ............................................................. -35- 9-8. OFFICERS' CERTIFICATES.......................................................................-37- CERTIFICATES ..................................................... -35- 9-9. INVENTORIES. , APPRAISALS. , AND AUDITS..........................................................-38- 9-10. AUDITS ........................................ -36- 9.10 ADDITIONAL FINANCIAL INFORMATION.............................................................-39- INFORMATION ........................................... -37- -v- 9-11. FINANCIAL PERFORMANCE AND INVENTORY COVENANTS................................................-39- COVENANTS .............................. -37- 9-12. ELECTRONIC REPORTING.........................................................................-39- ........................................................ -37- ARTICLE 10 - EVENTS OF DEFAULT...........................................................................-39- .......................................................... -37- 10-1. FAILURE TO PAY REVOLVING CREDIT..............................................................-40- CREDIT ........................................... -38- 10-2. FAILURE TO MAKE OTHER PAYMENTS...............................................................-40- PAYMENTS ............................................. -38- 10-3. FAILURE TO PERFORM COVENANT OR LIABILITY (NO GRACE PERIOD)...................................-40- PERIOD) ................. -38- 10-4. FAILURE TO PERFORM COVENANT OR LIABILITY (GRACE PERIOD)......................................-40- PERIOD) .................... -38- 10-5. MISREPRESENTATION............................................................................-40- MISREPRESENTATION .......................................................... -38- 10-6. ACCELERATION OF OTHER DEBT. , BREACH OF LEASE..................................................-41- LEASE ................................ -39- 10-7. DEFAULT UNDER OTHER AGREEMENTS...............................................................-41- 10AGREEMENTS ............................................ -39- ▇▇-8▇. CASUALTY LOSS. NON▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇-ORDINARY ▇▇▇▇▇▇▇▇ COURSE SALES.....................................................-41- SALES ................................... -39- 10-9. JUDGMENT. , RESTRAINT OF BUSINESS..............................................................-41- BUSINESS ............................................ -39- 10-10. BUSINESS FAILURE.............................................................................-41- FAILURE ........................................................... -39- 10-11. BANKRUPTCY...................................................................................-41- BANKRUPTCY ................................................................ -39- 10-12. DEFAULT BY GUARANTOR. .......................................................................-42- INSECURITY ................................................................. -40- 10-13. INDICTMENT - FORFEITURE......................................................................-42- DEFAULT BY GUARANTOR OR RELATED ENTITY...................................... -40- 10-14. TERMINATION OF GUARANTY......................................................................-42- INDICTMENT - FORFEITURE .................................................... -40- 10-15. TERMINATION OF GUARANTY .................................................... -40- 10-16. CHALLENGE TO LOAN DOCUMENTS..................................................................-42- 10-16. EXECUTIVE MANAGEMENT.........................................................................-42- ................................................. -40- 10-17. CHANGE IN CONTROL............................................................................-42- EXECUTIVE MANAGEMENT ....................................................... -40- 10-18. CHANGE IN CONTROL .......................................................... -41- -vi- 10-19. MATERIAL ADVERSE CHANGE......................................................................-43-CHANGE .................................................... -41- ARTICLE 11 - RIGHTS AND REMEDIES UPON DEFAULT ........................................... -41- 11-1. RIGHTS OF ENFORCEMENT ...................................................... -41- 11-2. SALE OF COLLATERAL ......................................................... -41- 11-3. OCCUPATION OF BUSINESS LOCATION ............................................ -42- 11-4. GRANT OF NONEXCLUSIVE LICENSE .............................................. -42- 11-5. ASSEMBLY OF COLLATERAL ..................................................... -43- 11-6. RIGHTS AND REMEDIES ........................................................ -43- ARTICLE 12 - NOTICES ................................................................... -43- 12-1. NOTICE ADDRESSES ........................................................... -43- 12-2. NOTICE GIVEN ............................................................... -44- ARTICLE 13 - TERM ...................................................................... -44- 13-1. TERMINATION OF REVOLVING CREDIT ............................................ -45- 13-2. EFFECT OF TERMINATION ...................................................... -45- 13-3. PREPAYMENT PREMIUM ......................................................... -45- ARTICLE 14 - GENERAL.................................................................... -46- 14-1. PROTECTION OF COLLATERAL ................................................... -46- 14-2. SUCCESSORS AND ASSIGNS ..................................................... -46- 14-3. SEVERABILITY ............................................................... -46- 14-4. AMENDMENTS, COURSE OF DEALING ...... ....................................... -46- 14-5. POWER OF ATTORNEY .......................................................... -47- 14-6. APPLICATION OF PROCEEDS .................................................... -47- -vii- 14-7. LENDER'S COSTS AND EXPENSES ................................................ -47- 14-8. COPIES AND FACSIMILES ...................................................... -47- 14-9. MASSACHUSETTS LAW .......................................................... -48- 14-10. CONSENT TO JURISDICTION .................................................... -48- 14-11. INDEMNIFICATION ............................................................ -48- 14-12. RIGHT OF SET-OFF ........................................................... -49- 14-13. USURY SAVINGS CLAUSE ....................................................... -49- 14-14. WAIVERS .................................................................... -50- 14-15. CONFIDENTIALITY ............................................................ -50- 14-16. RIGHT TO PUBLISH NOTICE .................................................... -51- 14-17. ENTITIES RELATED TO LENDER ................................................. -51- 14-18. CREDIT INQUIRIES ........................................................... -51- -viii- EXHIBITS
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