MORE OFTEN THAN ONCE
EVERY TWELVE (12) MONTHS UNLESS A DEFAULT OR AN EVENT OF DEFAULT HAS OCCURRED
AND IS CONTINUING.
BORROWER HEREBY ACKNOWLEDGES THAT THE FIRST SUCH AUDIT SHALL
BE CONDUCTED WITHIN ONE HUNDRED TWENTY (120) DAYS OF THE EFFECTIVE DATE.
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 AS THEY EXIST AT THE EFFECTIVE DATE.
BORROWER MUST PROMPTLY
NOTIFY BANK OF ALL RETURNS, RECOVERIES, DISPUTES AND CLAIMS THAT INVOLVE MORE
THAN TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00).
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, AND IN AMOUNTS THAT ARE SATISFACTORY TO
BANK, IT BEING AGREED THAT THE INSURANCE MAINTAINED BY BORROWER AS OF THE
EFFECTIVE DATE IS SATISFACTORY TO BANK AS OF THE EFFECTIVE DATE.
ALL PROPERTY
POLICIES SHALL HAVE A LOSS PAYABLE ENDORSEMENT SHOWING BANK AS THE SOLE 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 REASONABLE 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.
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.
8
6.6
OPERATING ACCOUNTS.
(A)
MAINTAIN ITS AND ITS SUBSIDIARIES' PRIMARY
OPERATING ACCOUNTS WITH BANK AND BANK'S AFFILIATES.
IN ADDITION, BORROWER AND
ITS SUBSIDIARIES SHALL MAINTAIN CASH OR SECURITIES WITH BANK AND BANK'S
AFFILIATES IN AN AMOUNT EQUAL TO A MAJORITY OF BORROWER'S AND SUCH SUBSIDIARIES'
CASH OR SECURITIES IN EXCESS OF THAT AMOUNT USED FOR BORROWER'S AND SUCH
SUBSIDIARIES' CURRENT OPERATIONS.
SUBJECT TO THE FOREGOING, BORROWER AND ITS
SUBSIDIARIES MAY MAINTAIN ACCOUNTS WITH FINANCIAL INSTITUTIONS OUTSIDE OF THE
UNITED STATES WITH FINANCIAL INSTITUTIONS OTHER THAN BANK AND BANK'S AFFILIATES.
(B)
PROVIDE BANK FIVE