Common use of Collateral in the Possession of a Bailee Clause in Contracts

Collateral in the Possession of a Bailee. If any Collateral having an aggregate value of more than $1,000,000 is now or at any time hereafter in the possession of a bailee at a particular location, the Guarantor shall promptly notify the Agent thereof and, at the Agent’s request and option, shall use reasonable best efforts to obtain an acknowledgement from the bailee, in form and substance reasonably satisfactory to the Agent, that the bailee holds such Collateral for the benefit of the Agent and such bailee’s agreement to comply, without further consent of the Guarantor, at any time with instructions of the Agent as to such Collateral. The Agent agrees with the Guarantor that the Agent shall not give any such instructions unless an Event of Default has occurred and is continuing or would occur after taking into account any action by the Guarantor with respect to the bailee.