DEFAULT
HAS OCCURRED AND IS CONTINUING, BORROWER SHALL HOLD ALL PAYMENTS ON, AND
PROCEEDS OF, ACCOUNTS IN TRUST FOR BANK, AND BORROWER SHALL IMMEDIATELY DELIVER
ALL SUCH PAYMENTS AND PROCEEDS TO BANK IN THEIR ORIGINAL FORM, DULY ENDORSED, TO
BE APPLIED TO THE OBLIGATIONS PURSUANT TO THE TERMS OF SECTION 9.4 HEREOF.
ALL
PROCEEDS OF ACCOUNTS SHALL BE DEPOSITED BY BORROWER INTO A LOCKBOX ACCOUNT, OR
SUCH OTHER "BLOCKED ACCOUNT" AS BANK MAY SPECIFY, PURSUANT TO A BLOCKED ACCOUNT
AGREEMENT IN SUCH FORM AS BANK MAY SPECIFY; PROVIDED, HOWEVER, IN THE EVENT
(I) BORROWER MAINTAINS OR EXCEEDS $50,000,000 IN (A) BORROWER'S UNRESTRICTED
CASH PLUS CASH EQUIVALENTS ON DEPOSIT AT BANK PLUS (B) UNUSED AVAILABILITY UNDER
THE REVOLVING LINE, AS DETERMINED BY BANK WITH REFERENCE TO THE AVAILABILITY
AMOUNT AND (II) NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING,
THEN ALL PAYMENTS ON, AND PROCEEDS OF, ACCOUNTS SHALL BE TRANSFERRED BY BANK TO
AN OPERATING ACCOUNT OF BORROWER MAINTAINED AT BANK.
10
(D)
RETURNS.
PROVIDED NO EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING, IF ANY ACCOUNT DEBTOR RETURNS ANY INVENTORY TO BORROWER, BORROWER
SHALL PROMPTLY (I) DETERMINE THE REASON FOR SUCH RETURN, (II) ISSUE A CREDIT
MEMORANDUM TO THE ACCOUNT DEBTOR IN THE APPROPRIATE AMOUNT, AND (III) PROVIDE A
COPY OF SUCH CREDIT MEMORANDUM TO BANK, UPON REQUEST FROM BANK.
IN THE EVENT
ANY ATTEMPTED RETURN OCCURS AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF
ANY EVENT OF DEFAULT, BORROWER SHALL HOLD THE RETURNED INVENTORY IN TRUST FOR
BANK, AND IMMEDIATELY NOTIFY BANK OF THE RETURN OF THE INVENTORY.
(E)
VERIFICATION.
BANK MAY, FROM TIME TO TIME, VERIFY DIRECTLY WITH
THE RESPECTIVE ACCOUNT DEBTORS THE VALIDITY, AMOUNT AND OTHER MATTERS RELATING
TO THE ACCOUNTS, EITHER IN THE NAME OF BORROWER OR BANK OR SUCH OTHER NAME AS
BANK MAY CHOOSE.
(F)
NO LIABILITY.
BANK SHALL NOT BE RESPONSIBLE OR LIABLE FOR ANY
SHORTAGE OR DISCREPANCY IN, DAMAGE TO, OR LOSS OR DESTRUCTION OF, ANY GOODS, THE
SALE OR OTHER DISPOSITION OF WHICH GIVES RISE TO AN ACCOUNT, OR FOR ANY ERROR,
ACT, OMISSION, OR DELAY OF ANY KIND OCCURRING IN THE SETTLEMENT, FAILURE TO
SETTLE, COLLECTION OR FAILURE TO COLLECT ANY ACCOUNT, OR FOR SETTLING ANY
ACCOUNT IN GOOD FAITH FOR LESS THAN THE FULL AMOUNT THEREOF, NOR SHALL BANK BE
DEEMED TO BE RESPONSIBLE FOR ANY OF BORROWER'S OBLIGATIONS UNDER ANY CONTRACT OR
AGREEMENT GIVING RISE TO AN ACCOUNT.
NOTHING HEREIN SHALL, HOWEVER, RELIEVE
BANK FROM LIABILITY FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
6.4
REMITTANCE OF PROCEEDS.
EXCEPT AS OTHERWISE PROVIDED IN
SECTION 6.3(C), DELIVER, IN KIND, ALL PROCEEDS ARISING FROM THE DISPOSITION OF
ANY COLLATERAL TO BANK IN THE ORIGINAL FORM IN WHICH RECEIVED BY BORROWER NOT
LATER THAN THE FOLLOWING BUSINESS DAY AFTER RECEIPT BY BORROWER, TO BE APPLIED
TO THE OBLIGATIONS PURSUANT TO THE TERMS OF SECTION 9.4 HEREOF; PROVIDED THAT,
IF NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, BORROWER SHALL
NOT BE OBLIGATED TO REMIT