RATE DIVIDED BY 360 MULTIPLIED BY THE NUMBER OF DAYS EACH SUCH
FINANCED RECEIVABLE IS OUTSTANDING MULTIPLIED BY (A) WITH RESPECT TO FINANCED
RECEIVABLES BASED ON ELIGIBLE ACCOUNTS, THE OUTSTANDING FINANCED RECEIVABLE
BALANCE OF SUCH FINANCED RECEIVABLE AND (B) WITH RESPECT TO FINANCED RECEIVABLES
BASED ON INVENTORY PLACEHOLDER INVOICES, THE INVENTORY ACCOUNT BALANCE. EXCEPT
AS SET FORTH IN SECTION 2.11.1(B)(I), THE FINANCE CHARGE IS PAYABLE WHEN THE
ADVANCE MADE BASED ON SUCH FINANCED RECEIVABLE IS DUE AND PAYABLE IN ACCORDANCE
WITH SECTION 2.11 OF THIS AGREEMENT.
UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, THE APPLICABLE RATE WILL INCREASE AN
ADDITIONAL THREE PERCENT (3.0%) PER ANNUM. IN THE EVENT THAT THE AGGREGATE
AMOUNT OF FINANCE CHARGES EARNED BY BANK IN ANY RECONCILIATION PERIOD IS LESS
THAN THE MINIMUM FINANCE CHARGE, BORROWER SHALL PAY TO BANK AN ADDITIONAL
FINANCE CHARGE EQUAL TO (I) THE MINIMUM FINANCE CHARGE MINUS (II) THE AGGREGATE
AMOUNT OF ALL FINANCE CHARGES EARNED BY BANK IN SUCH RECONCILIATION PERIOD.
SUCH ADDITIONAL FINANCE CHARGE SHALL BE PAYABLE ON THE FIRST DAY OF THE NEXT
RECONCILIATION PERIOD.
2.6
ACCOUNTING.
AFTER EACH RECONCILIATION PERIOD, BANK WILL PROVIDE
BORROWER WITH AN ACCOUNTING OF THE TRANSACTIONS FOR THAT RECONCILIATION PERIOD,
INCLUDING THE AMOUNT OF ALL FINANCED RECEIVABLES, ALL COLLECTIONS, ADJUSTMENTS,
FINANCE CHARGES AND THE FACILITY FEE.
IF BORROWER DOES NOT OBJECT TO THE
ACCOUNTING IN WRITING WITHIN THIRTY (30) DAYS IT SHALL BE CONSIDERED ACCURATE.
ALL FINANCE CHARGES AND OTHER INTEREST AND FEES ARE CALCULATED ON THE BASIS OF A
360 DAY YEAR AND ACTUAL DAYS ELAPSED.
2.7
DEDUCTIONS.
BANK MAY DEDUCT FEES, BANK EXPENSES, FINANCE CHARGES,
ADVANCES WHICH BECOME DUE PURSUANT TO SECTION 2.11 OF THIS AGREEMENT, AND OTHER
AMOUNTS DUE PURSUANT TO THIS AGREEMENT FROM ANY ADVANCES MADE OR COLLECTIONS
RECEIVED BY BANK.
2.8
LOCKBOX; ACCOUNT COLLECTION SERVICES
(A)
BORROWER SHALL DIRECT EACH ACCOUNT DEBTOR (AND EACH DEPOSITORY
INSTITUTION WHERE PROCEEDS OF ACCOUNTS ARE ON DEPOSIT) TO REMIT PAYMENTS WITH
RESPECT TO THE ACCOUNTS TO A LOCKBOX ACCOUNT OF BORROWER ESTABLISHED WITH BANK
OR TO REMIT PAYMENTS WITH RESPECT TO THE ACCOUNTS TO A CASH COLLECTIONS ACCOUNT
OF BORROWER ESTABLISHED WITH BANK (COLLECTIVELY, THE "LOCKBOX").
IT WILL BE
CONSIDERED AN IMMEDIATE EVENT OF DEFAULT IF THE LOCKBOX IS NOT ESTABLISHED AND
OPERATIONAL ON THE EFFECTIVE DATE AND AT ALL TIMES THEREAFTER.
(B)
UPON RECEIPT BY BORROWER OF ANY PROCEEDS OF ACCOUNTS, BORROWER
SHALL IMMEDIATELY TRANSFER AND DELIVER THE SAME TO BANK, ALONG WITH A DETAILED
CASH RECEIPTS JOURNAL.
4
(C)
PROVIDED NO EVENT OF DEFAULT EXISTS OR AN EVENT THAT WITH NOTICE
OR LAPSE OF TIME WILL BE AN EVENT OF DEFAULT, WITHIN ONE (1) BUSINESS DAY OF
RECEIPT OF ANY PROCEEDS OF THE ACCOUNTS BY BANK (WHETHER RECEIVED BY BANK IN THE
LOCKBOX, DIRECTLY FROM BORROWER, OR OTHERWISE), BANK WILL TURN OVER TO BORROWER
SUCH PROCEEDS OTHER THAN (I) COLLECTIONS APPLIED BY BANK PURSUANT TO SECTION 2.3
OF THIS AGREEMENT, AND (II) SUCH PROCEEDS WHICH SHALL BE USED BY BANK TO REPAY
ANY OTHER