ON THREE (3) BUSINESS DAY'S NOTICE (PROVIDED NO NOTICE IS REQUIRED IF AN
EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING), BANK, OR ITS AGENTS, SHALL
HAVE THE RIGHT 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, BUT THE TOTAL AMOUNT OF ANY SUCH
AUDIT SHALL NOT EXCEED $7,500 PLUS REASONABLE OUT-OF-POCKET EXPENSES.
ABSENT
THE OCCURRENCE OF AN EVENT OF DEFAULT, NO MORE THAN ONE SUCH INSPECTION OR AUDIT
MAY OCCUR IN ANY FISCAL QUARTER.
IN THE EVENT BORROWER AND BANK SCHEDULE AN
AUDIT MORE THAN TEN (10) DAYS IN ADVANCE, AND BORROWER CANCELS OR SEEKS TO
RESCHEDULE 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.
THE FIRST SUCH INSPECTION AND AUDIT SHALL BE SCHEDULED TO OCCUR
WITH SIXTY (60) DAYS OF THE EFFECTIVE DATE.
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 REASONABLY SATISFACTORY TO BANK.
ALL
PROPERTY POLICIES SHALL HAVE A LENDER'S LOSS PAYABLE ENDORSEMENT SHOWING BANK AS
THE SOLE LENDER 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 MUST GIVE BANK AT LEAST TWENTY (20) DAYS NOTICE
BEFORE CANCELING, AMENDING, OR DECLINING TO RENEW ITS POLICY.
AT BANK'S
REQUEST, BORROWER SHALL DELIVER COPIES OF POLICIES AND EVIDENCE OF ALL PREMIUM
PAYMENTS.
PROCEEDS PAYABLE UNDER ANY 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 $1,000,000, IN
THE AGGREGATE, 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 COLLATERAL IN WHICH BANK HAS BEEN GRANTED A FIRST PRIORITY SECURITY
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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