EVENT OF DEFAULT, BORROWER SHALL
DELIVER TO LENDER ALL FULL AND PARTIAL PAYMENTS ARISING FROM THE SALE OR OTHER
DISPOSITION OF COLLATERAL RECEIVED BY BORROWER THEIR ORIGINAL FORM, EXCEPT FOR
ENDORSEMENT WHERE NECESSARY.
UNTIL SUCH PAYMENTS ARE SO DELIVERED TO LENDER,
SUCH PAYMENTS SHALL BE HELD IN TRUST BY BORROWER FOR AND AS LENDER'S PROPERTY
AND SHALL NOT BE COMMINGLED WITH ANY FUNDS OF BORROWER.
THE NET AMOUNT RECEIVED
BY LENDER AS PROCEEDS
13
ARISING FROM THE SALE OR OTHER DISPOSITION OF COLLATERAL WILL BE CREDITED BY
LENDER TO BORROWER'S LOAN ACCOUNT (SUBJECT TO FINAL COLLECTION THEREOF) AFTER
ALLOWING THE NUMBER OF DAYS REQUIRED BY THE APPLICABLE BANK FOR COLLECTION OF
CHECKS AND OTHER INSTRUMENTS.
ON AND AFTER THE EFFECTIVE DATE OF REVISED
ARTICLE 9, BORROWER, FOR PURPOSES OF THE SECURITY INTEREST GRANTED PURSUANT TO
THIS AGREEMENT, HAS GRANTED TO THE LENDER A DIRECT SECURITY INTEREST IN ALL
DEPOSIT ACCOUNTS CONSTITUTING PART OF THE COLLATERAL AND SUCH DEPOSIT ACCOUNTS
ARE NOT CLAIMED MERELY AS PROCEEDS OF OTHER COLLATERAL.
8.
WARRANTY AS TO COLLATERAL.
BORROWER WARRANTS THAT:
(A)
ALL RECEIVABLES LISTED IN BORROWER'S FINANCIAL STATEMENTS OR
SCHEDULES WILL, WHEN BORROWER DELIVERS SUCH FINANCIAL STATEMENTS OR THE
SCHEDULES TO LENDER, BE BONA FIDE EXISTING OBLIGATIONS CREATED BY THE SALE AND
ACTUAL DELIVERY OF GOODS OR THE RENDITION OF SERVICES TO CUSTOMERS IN THE
ORDINARY COURSE OF BUSINESS, WHICH BORROWER THEN OWNS FREE OF ANY SECURITY
INTEREST EXCEPT FOR THE SECURITY INTEREST IN FAVOR OF LENDER CREATED BY THIS
AGREEMENT AND WHICH ARE THEN UNCONDITIONALLY OWING TO BORROWER WITHOUT DEFENSE,
OFFSET OR COUNTERCLAIM; AND
(B)
ALL INVENTORY AND EQUIPMENT IS AND SHALL BE OWNED BY BORROWER,
FREE OF ANY SECURITY INTEREST EXCEPT FOR THE SECURITY INTEREST OF LENDER CREATED
BY THIS AGREEMENT OR SECURITY INTERESTS PERMITTED BY PARAGRAPH 18(C).
Lender's rights to and security interest in the Collateral will not be impaired
by the ineligibility of any such Collateral for Advances and will continue to be
effective until all Obligations chargeable to Borrower's loan account have been
fully satisfied.
9.
POWER OF ATTORNEY.
BORROWER APPOINTS LENDER, OR ANY OTHER PERSON
WHOM LENDER MAY FROM TIME TO TIME DESIGNATE, AS BORROWER'S ATTORNEY WITH POWER:
(A) TO ENDORSE BORROWER'S NAME ON ANY CHECKS, NOTES, ACCEPTANCES, DRAFTS OR
OTHER FORMS OF PAYMENT OR SECURITY THAT MAY COME INTO LENDER'S POSSESSION;
(B) TO SIGN BORROWER'S NAME ON ANY INVOICE OR BILL OF LADING RELATING TO ANY
RECEIVABLES, ON DRAFTS AGAINST CUSTOMERS, ON SCHEDULES AND CONFIRMATORY
ASSIGNMENTS OF RECEIVABLES, ON NOTICES OF ASSIGNMENT, FINANCING STATEMENTS AND
AMENDMENTS UNDER THE COMMERCIAL CODE AND OTHER PUBLIC RECORDS, ON VERIFICATIONS
OF ACCOUNTS AND ON NOTICES TO CUSTOMERS; (C) TO NOTIFY THE POST OFFICE
AUTHORITIES TO CHANGE THE ADDRESS FOR DELIVERY OF BORROWER'S MAIL TO AN ADDRESS
DESIGNATED BY LENDER; (D) TO RECEIVE, OPEN AND DISPOSE OF ALL MAIL ADDRESSED TO
BORROWER; (E) TO SEND REQUESTS FOR VERIFICATION OF ACCOUNTS TO CUSTOMERS; AND
(T) TO DO ALL THINGS NECESSARY TO CARRY OUT THIS AGREEMENT; PROVIDED, HOWEVER,
THAT THE POWERS SPECIFIED IN