BORROWER'S EXPENSE.
SUCH
AUDITS SHALL BE CONDUCTED NO MORE OFTEN THAN ONCE EVERY TWELVE (12) MONTHS
UNLESS A DEFAULT OR AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING.
6.3
INVENTORY; RETURNS.
KEEP ALL INVENTORY IN GOOD AND MARKETABLE
CONDITION, FREE FROM MATERIAL DEFECTS.
RETURNS AND ALLOWANCES BETWEEN BORROWER
AND ITS ACCOUNT DEBTORS SHALL FOLLOW BORROWER'S CUSTOMARY PRACTICES.
BORROWER
MUST PROMPTLY NOTIFY BANK OF ALL RETURNS, RECOVERIES, DISPUTES AND CLAIMS THAT
INVOLVE MORE THAN ONE MILLION DOLLARS ($1,000,000).
6.4
TAXES; PENSIONS.
MAKE, AND CAUSE EACH OF ITS SUBSIDIARIES TO MAKE,
TIMELY PAYMENT OF ALL FOREIGN, FEDERAL, STATE, AND LOCAL TAXES OR ASSESSMENTS
(OTHER THAN TAXES AND ASSESSMENTS WHICH BORROWER IS CONTESTING PURSUANT TO THE
TERMS OF SECTION 5.9 HEREOF) AND SHALL DELIVER TO BANK, ON DEMAND, APPROPRIATE
CERTIFICATES ATTESTING TO SUCH PAYMENTS, AND PAY ALL AMOUNTS NECESSARY TO FUND
ALL PRESENT PENSION, PROFIT SHARING AND DEFERRED COMPENSATION PLANS IN
ACCORDANCE WITH THEIR TERMS.
6.5
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 HAVING A MINIMUM AM BEST RATING OF A-, AND IN AMOUNTS THAT ARE
COMMERCIALLY REASONABLE.
ALL PROPERTY POLICIES SHALL HAVE A LENDER'S LOSS
PAYABLE ENDORSEMENT SHOWING BANK AS LENDER LOSS PAYEE, 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 THIRTY (30) DAYS NOTICE
BEFORE CANCELING ITS POLICY.
AT BANK'S REQUEST, BORROWER SHALL DELIVER
CERTIFIED 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
9
IS CONTINUING, BORROWER SHALL HAVE THE OPTION OF APPLYING THE PROCEEDS OF ANY
CASUALTY POLICY UP TO $250,000, 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 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 6.5 OR TO PAY ANY AMOUNT OR FURNISH ANY REQUIRED PROOF OF PAYMENT TO
THIRD PERSONS AND BANK, BANK MAY MAKE ALL OR PART OF SUCH PAYMENT OR OBTAIN SUCH
INSURANCE POLICIES REQUIRED IN THIS SECTION 6.5, AND TAKE ANY ACTION UNDER THE
POLICIES BANK DEEMS PRUDENT.
6.6
OPERATING ACCOUNTS.
(A)
MAINTAIN ITS AND ITS SUBSIDIARIES' DEPOSITORY, OPERATING AND SECURITIES
ACCOUNTS WITH BANK AND BANK'S AFFILIATES, WITH THE EXCEPTION