AGENT AND ATTORNEY-IN-FACT FOR THE PURPOSE OF MAKING, SETTLING AND
ADJUSTING CLAIMS UNDER SUCH "ALL RISK" POLICIES OF INSURANCE, ENDORSING THE NAME
OF EACH SUCH CREDIT PARTY ON ANY CHECK OR OTHER ITEM OF PAYMENT FOR THE PROCEEDS
OF SUCH "ALL RISK" POLICIES OF INSURANCE AND FOR MAKING ALL DETERMINATIONS AND
DECISIONS WITH RESPECT TO SUCH "ALL RISK" POLICIES OF INSURANCE.
AGENT SHALL
HAVE NO DUTY TO EXERCISE ANY RIGHTS OR POWERS GRANTED TO IT PURSUANT TO THE
FOREGOING POWER-OF-ATTORNEY.
BORROWER SHALL PROMPTLY NOTIFY AGENT AND LENDERS
OF ANY LOSS, DAMAGE OR DESTRUCTION TO THE COLLATERAL IN THE AMOUNT OF $500,000
OR MORE, WHETHER OR NOT COVERED BY INSURANCE, AND IF ANY CREDIT PARTY RECEIVES
INSURANCE PROCEEDS IN RESPECT OF ANY SUCH LOSS, DAMAGE OR DESTRUCTION TO THE
COLLATERAL, IT SHALL IMMEDIATELY PAY THEM TO AGENT FOR APPLICATION IN ACCORDANCE
WITH THIS SECTION 5.4(C) (IT BEING UNDERSTOOD THAT PROCEEDS OF BUSINESS
INTERRUPTION INSURANCE SHALL BE RETAINED BY THE APPLICABLE CREDIT PARTY EXCEPT
DURING THE OCCURRENCE AND CONTINUANCE OF A DEFAULT OR AN EVENT OF DEFAULT).
AFTER DEDUCTING FROM SUCH PROCEEDS THE EXPENSES, IF ANY, INCURRED BY
36
AGENT IN THE COLLECTION OR HANDLING THEREOF, AGENT MAY, AT ITS OPTION, APPLY
SUCH PROCEEDS TO THE REDUCTION OF THE OBLIGATIONS OF BORROWER IN ACCORDANCE WITH
SECTION 1.3(C) OR PERMIT OR REQUIRE EACH CREDIT PARTY TO USE SUCH MONEY, OR ANY
PART THEREOF, TO PROMPTLY BEGIN AND DILIGENTLY PURSUE THE REPLACEMENT, REPAIR,
RESTORATION OR REBUILDING OF THE COLLATERAL WITH MATERIALS AND WORKMANSHIP OF
SUBSTANTIALLY THE SAME QUALITY AS EXISTED BEFORE THE LOSS, DAMAGE OR
DESTRUCTION.
NOTWITHSTANDING THE FOREGOING, IF THE CASUALTY GIVING RISE TO SUCH
INSURANCE PROCEEDS COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT AND SUCH INSURANCE PROCEEDS DO NOT EXCEED $500,000 IN THE AGGREGATE,
AGENT SHALL PERMIT THE APPLICABLE CREDIT PARTY EITHER TO REPLACE, RESTORE,
REPAIR OR REBUILD THE PROPERTY OR TO REINVEST SUCH PROCEEDS IN REVENUE PRODUCING
CAPITAL ASSETS USED IN THE BUSINESSES OF THE CREDIT PARTIES OF THE TYPE ENGAGED
IN BY THE CREDIT PARTIES AS OF THE CLOSING DATE OR BUSINESSES REASONABLY RELATED
THERETO; PROVIDED THAT IF SUCH CREDIT PARTY HAS NOT COMPLETED OR ENTERED INTO
BINDING AGREEMENTS TO COMPLETE SUCH REPLACEMENT, RESTORATION, REPAIR OR
REBUILDING WITHIN 180 DAYS FOLLOWING SUCH CASUALTY OR HAS NOT CONSUMMATED SUCH
REINVESTMENT WITHIN 180 DAYS FOLLOWING SUCH CASUALTY, AGENT MAY APPLY SUCH
INSURANCE PROCEEDS TO THE OBLIGATIONS OF BORROWER IN ACCORDANCE WITH
SECTION 1.3(C).
ALL INSURANCE PROCEEDS THAT ARE TO BE MADE AVAILABLE TO ANY
CREDIT PARTY TO REPLACE, REPAIR, RESTORE OR REBUILD SUCH COLLATERAL OR TO FUND
SUCH REINVESTMENT SHALL EITHER BE (X) DEPOSITED IN A CASH COLLATERAL ACCOUNT
HELD BY AGENT OR (Y) APPLIED BY AGENT TO REDUCE THE OUTSTANDING PRINCIPAL
BALANCE OF THE REVOLVING LOAN (WHICH APPLICATION SHALL NOT RESULT IN A PERMANENT
REDUCTION OF THE REVOLVING LOAN COMMITMENT) AND UPON SUCH APPLICATION, AGENT
SHALL ESTABLISH A RESERVE AGAINST THE BORROWING AVAILABILITY IN AN AMOUNT EQUAL
TO THE AMOUNT OF SUCH PROCEEDS SO APPLIED.
THEREAFTER,