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III IIIIIIIIIIIIIIII ®R,~.~ C~
<br />A ConStatos Compglny 999
<br />INVENTORY SECURITY AGREEMENT
<br />SUPPLEMENT TO ACCOUNTS FINANCING AGREEMENT
<br />(SECURITY AGREEMENT]
<br />Congress Financial Corporation (western)
<br />225 South Lake Avenue
<br />............................
<br />Pasadena, California 91101
<br />............................
<br />Gentlemen
<br />This Inventory Security Agreemen[ ("Supplement") is a supplement to the Accounts Financing Agreement lSeturity Agreement( between
<br />us dazed . NOYptnbO!'. , _ _ _ , , , .., (g ,@0... (the "Agreement"). Tbis Supplement is (a) hereby incorporated into [he Agreemen[, (bl made a
<br />pan thereof and (c) subject [o the other terms, conditions, covenants and warran[ie thereof. All [arms lincluding capitalized terms) used herein
<br />shill have the meanings ascribed to them mpettively in [he Agreement, unlns otherwise defined in [his Supplemen[.
<br />Section 1. ADDITIONAL SECURITY INTEREST.
<br />As additional security for she prompt performance observance and payment in fu0 of ill Oblige[ions, we hereby gran[ so you a continuing
<br />securi[y inserts[ in, a lien upon, and a right of setoff against, and we hereby usign, transfer, pledge and set over to you she following Iwhich
<br />u and shall be deemed pan of the Collateral u defined and used in [he Agreement):
<br />1.1. All raw muerials, work m process, finished goods, and aU other inventory of wha[soner kind or natun; wherever loa[ed, whtther
<br />now owned or hereafter arsung or acquired by us ("Inventory"), including without limiusion, aU wrapping, packaging, advertising. shipping
<br />ma[eriils and all other goods consumed in our business, all labels and other devim, names or mules atfued or to be affiud thertto for purposes
<br />of selling or of identifying she same or the se0er or manufacturer thereof and all of our right, title and in[ttat [heron and thertto;
<br />12. All books, records, dommente other property and general intangible at any time relating to the Inventory;
<br />IJ. All products and proceeds of she foregoing, in airy Corm, including, without Gmitatio4 insurance proceeds and any claims against
<br />third pubes for loss or damage to or destruction of arty or all of the foregoing.
<br />Seesloa 2. ADDITIONAL REPRESENTATIONS WARRANTIES AND COVENANTS
<br />We hereby represent, warren[ and covenant to you the fo0owing (which shall survive [he tucution and debvcry of this Supplemenq, the
<br />truth and accuracy of which, and mmDlunce with, being a continstiag mnditioo of she making of loam by you under the Agseevtem or any
<br />other supplement shemo:
<br />2.1. The ody loatiom of any Colluttil are those addresses fisted on E:h ib ItA amaed hereto and made a put hereof. Ex h 1 b 1 t
<br />A sets forth the owner and/or operator of the premise a such addsases [or all loca[iom which we do not own and operate and all mortgages,
<br />if any, with respen m [he premise. Ne shall not remove any Collateral from such locauoru, without you prior written consent, eueps for Wes
<br />of ]aventory in the ordinary course of our business
<br />3Z. We shall u a0 time maintai4 with fmandally sound and reputable issstsrets, taesdualry and hazard insurance with rtspect to the
<br />CoWtenl for not Inv than its full muktt value and agaimt all risks m which it may be a~iifr~t h insurance poticia shill be in such
<br />ftxm, subatance, amounu and tovaage u may -e sttiffactory to you ersd shell ptovidc for 7~ minimum prior ancellation notice
<br />in writing to you. You maY act u anoroey for us in obtaining, adjusting, selling, amending end cancelling such insurance tVe shall Dmmptly
<br />IU obtain endonemmu to W existing end future iasuratsce policies with [apses m she Collateral spedfying [hat the Proceeds of such insurance
<br />shall be pryable m you end u: a our iote[es[s tisaY appear and tunher spedfying that you shall be paid rr:gaNleu of any act, omission or breach
<br />of wwnwmY by us, (b) deliver m you as original esssuted copy of, or exavted txniFiau of the insurance artier with respect tq such endorse-
<br />ment sod, at your requet, the original or a artified duptiute copy of the undalyiog insurance po6q, and (c) deliver m you such o[hcr evidence
<br />rhich is satisfactory to you of compliance wish the psovisiotu hereof.
<br />2.3. We shall prompdy notify you in writing of the devils of any loss, dartsage ivvatiptio4 eetio4 sui[, proceeding or claim relating
<br />m the CaOatecal or whidf would soots in atry mLeial advese tdsaoge is ou busioes ptopcties, assets, goodwill or conditio4 fusandal or otherwise
<br />2.a. At your optio4 you may apply any insurance monies rtceived u any lime m the mss of repairs m or rcplacemen[ for the
<br />Inventory andJOr to paymtm of toy of she Obliptiotss whe[her err not due, In any order and in such roamer as Yo4 in your sole discretion.
<br />may determire
<br />2.3. Upon your requm, n arty time and from time m time we shall, at ou sole mss and expense exemu and deliver so you Written
<br />reports or appraisals u to [he Ioentory listing W items and utgorie Nerenf, describing the condition of same and setting forth the lower
<br />of cost or fair mvktt value thereof, in such form u u satisfac[ory m you.
<br />2.6. \ste shall (a) use Wore and ,,,•innin the Irrvenrory with all reawnable tare and autio4 and (bl use the Inventory for lawful Purpose
<br />ody and m conformity with apphable laws, ordinanm and rcguluiom.
<br />2.7. All Imenmry shall be produced in amordance wiN the rcquismsmu of the federal Fair Labor Sunduds An of 1938, u amended
<br />and all rules, regulation and ordm related [hertto.
<br />2.8. W"e assume all responibili[y and liabili[y arising from or relating to the use sale or a[her disposition of the Invenrory.
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