IS REQUIRED IF AN EVENT OF
DEFAULT HAS OCCURRED AND IS CONTINUING), BANK, OR ITS AGENTS, SHALL HAVE THE
RIGHT, ON A SEMI-ANNUAL BASIS (OR MORE FREQUENTLY, AS BANK SHALL DETERMINE
NECESSARY IN ITS SOLE DISCRETION), TO INSPECT THE COLLATERAL AND THE RIGHT TO
AUDIT AND COPY BORROWER'S BOOKS.
THE FOREGOING INSPECTIONS AND AUDITS SHALL BE
AT BORROWER'S EXPENSE, AND THE CHARGE THEREFOR SHALL BE $750 PER PERSON PER DAY
(OR SUCH HIGHER AMOUNT AS SHALL REPRESENT BANK'S THEN-CURRENT STANDARD CHARGE
FOR THE SAME), PLUS REASONABLE OUT-OF-POCKET EXPENSES.
IN THE EVENT BORROWER
AND BANK SCHEDULE AN AUDIT MORE THAN TEN (10) DAYS IN ADVANCE, AND BORROWER
CANCELS OR SEEKS TO RESCHEDULES THE AUDIT WITH LESS THAN TEN (10) DAYS WRITTEN
NOTICE TO BANK, THEN (WITHOUT LIMITING ANY OF BANK'S RIGHTS OR REMEDIES),
BORROWER SHALL PAY BANK A FEE OF $1,000 PLUS ANY OUT-OF-POCKET EXPENSES INCURRED
BY BANK TO COMPENSATE BANK FOR THE ANTICIPATED COSTS AND EXPENSES OF THE
CANCELLATION OR RESCHEDULING.
6.7
INSURANCE.
KEEP ITS BUSINESS AND THE COLLATERAL INSURED FOR RISKS
AND IN AMOUNTS STANDARD FOR COMPANIES IN BORROWER'S INDUSTRY AND LOCATION AND AS
BANK MAY REASONABLY REQUEST.
INSURANCE POLICIES SHALL BE IN A FORM, WITH
COMPANIES, AND IN AMOUNTS THAT ARE SATISFACTORY TO BANK.
ALL PROPERTY POLICIES
SHALL HAVE A LOSS PAYABLE ENDORSEMENT SHOWING BANK AS AN ADDITIONAL LOSS PAYEE
AND WAIVE SUBROGATION AGAINST BANK, AND ALL LIABILITY POLICIES SHALL SHOW, OR
HAVE ENDORSEMENTS SHOWING, BANK AS AN ADDITIONAL INSURED.
ALL POLICIES (OR THE
LOSS PAYABLE AND ADDITIONAL INSURED ENDORSEMENTS) SHALL PROVIDE THAT THE INSURER
SHALL ENDEAVOR TO GIVE BANK AT LEAST TWENTY (20) DAYS NOTICE BEFORE CANCELING,
AMENDING, OR DECLINING TO RENEW ITS POLICY.
AT BANK'S REQUEST, BORROWER SHALL
DELIVER CERTIFIED COPIES OF POLICIES AND EVIDENCE OF ALL PREMIUM PAYMENTS.
PROCEEDS PAYABLE UNDER ANY PROPERTY POLICY SHALL, AT BANK'S OPTION, BE PAYABLE
TO BANK ON ACCOUNT OF THE OBLIGATIONS.
NOTWITHSTANDING THE FOREGOING, (A) SO
LONG AS NO EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, BORROWER SHALL HAVE
THE OPTION OF APPLYING THE PROCEEDS OF ANY CASUALTY POLICY UP TO TWO HUNDRED
FIFTY THOUSAND DOLLARS ($250,000) WITH RESPECT TO ANY LOSS, BUT NOT EXCEEDING
TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) IN THE AGGREGATE FOR ALL LOSSES
UNDER ALL CASUALTY POLICIES IN ANY ONE YEAR, TOWARD THE REPLACEMENT OR REPAIR OF
DESTROYED OR DAMAGED PROPERTY; PROVIDED THAT ANY SUCH REPLACED OR REPAIRED
PROPERTY (I) SHALL BE OF EQUAL OR LIKE VALUE AS THE REPLACED OR REPAIRED
COLLATERAL AND (II) SHALL BE DEEMED
10
COLLATERAL IN WHICH BANK HAS BEEN GRANTED A FIRST PRIORITY SECURITY INTEREST,
AND (B) AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT,
ALL PROCEEDS PAYABLE UNDER SUCH CASUALTY POLICY SHALL, AT THE OPTION OF BANK, BE
PAYABLE TO BANK ON ACCOUNT OF THE OBLIGATIONS.
IF BORROWER FAILS TO OBTAIN
INSURANCE AS REQUIRED UNDER THIS SECTION 6.7 OR TO PAY ANY AMOUNT OR FURNISH ANY
REQUIRED PROOF OF PAYMENT TO THIRD PERSONS AND BANK, BANK MAY MAKE ALL OR PART
OF