PAYMENT IN FULL, OR AGREE TO DO ANY OF THE FOREGOING SO LONG AS (I) BORROWER
DOES SO IN GOOD FAITH, IN A COMMERCIALLY REASONABLE MANNER, IN THE ORDINARY
COURSE OF BUSINESS, IN ARM'S-LENGTH TRANSACTIONS, AND REPORTS THE SAME TO BANK
IN THE REGULAR REPORTS PROVIDED TO BANK; (II) NO DEFAULT OR EVENT OF DEFAULT HAS
OCCURRED AND IS CONTINUING; AND (III) AFTER TAKING INTO ACCOUNT ALL SUCH
DISCOUNTS, SETTLEMENTS AND FORGIVENESS, THE TOTAL OUTSTANDING CREDIT EXTENSIONS
WILL NOT EXCEED THE AMOUNT AVAILABLE UNDER THE LESSER OF (1) THE REVOLVING LINE,
AND (2) THE BORROWING BASE.
(C)
COLLECTION OF ACCOUNTS.
BORROWER SHALL
HAVE THE RIGHT TO COLLECT ALL ACCOUNTS, UNLESS AND UNTIL A DEFAULT OR AN EVENT
OF DEFAULT HAS OCCURRED AND IS CONTINUING.
ALL PAYMENTS ON, AND PROCEEDS OF,
ACCOUNTS SHALL BE DEPOSITED DIRECTLY BY THE APPLICABLE ACCOUNT DEBTOR INTO A
LOCKBOX ACCOUNT, OR SUCH OTHER "BLOCKED ACCOUNT" AS BANK MAY SPECIFY, PURSUANT
TO A BLOCKED ACCOUNT AGREEMENT IN FORM AND SUBSTANCE SATISFACTORY TO BANK IN ITS
SOLE DISCRETION.
WHETHER OR NOT AN EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING, BORROWER SHALL HOLD ALL PAYMENTS ON, AND PROCEEDS OF, ACCOUNTS IN
TRUST FOR BANK, AND BORROWER SHALL PROMPTLY DELIVER ALL SUCH PAYMENTS AND
PROCEEDS TO BANK IN THEIR ORIGINAL FORM, DULY ENDORSED, TO BE APPLIED TO THE
OBLIGATIONS PURSUANT TO THE TERMS OF SECTION 9.4 HEREOF, PROVIDED, HOWEVER, THAT
DURING A STREAMLINE PERIOD, PROVIDED NO EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING, SUCH PAYMENTS AND PROCEEDS SHALL BE TRANSFERRED BY BANK TO AN
ACCOUNT OF BORROWER MAINTAINED AT BANK.
(D)
RETURNS.
PROVIDED NO EVENT OF DEFAULT HAS
OCCURRED AND IS CONTINUING, IF ANY ACCOUNT DEBTOR RETURNS ANY INVENTORY TO
BORROWER IN EXCESS OF TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) IN THE
AGGREGATE, BORROWER SHALL PROMPTLY (I) DETERMINE THE REASON FOR SUCH RETURN,
(II) ISSUE A CREDIT MEMORANDUM TO THE ACCOUNT DEBTOR IN THE APPROPRIATE AMOUNT,
AND (III) PROVIDE A COPY OF SUCH CREDIT MEMORANDUM TO BANK, UPON REQUEST FROM
BANK.
IN THE EVENT ANY ATTEMPTED RETURN OCCURS AFTER THE OCCURRENCE AND DURING
THE CONTINUANCE OF ANY
10
EVENT OF DEFAULT, BORROWER SHALL HOLD THE RETURNED INVENTORY IN TRUST FOR BANK,
AND IMMEDIATELY NOTIFY BANK OF THE RETURN OF THE INVENTORY.
(E)
VERIFICATION.
BANK MAY, FROM TIME TO TIME,
VERIFY DIRECTLY WITH THE RESPECTIVE ACCOUNT DEBTORS THE VALIDITY, AMOUNT AND
OTHER MATTERS RELATING TO THE ACCOUNTS, EITHER IN THE NAME OF BORROWER OR BANK
OR SUCH OTHER NAME AS BANK MAY CHOOSE.
(F)
NO LIABILITY.
BANK SHALL NOT BE
RESPONSIBLE OR LIABLE FOR ANY SHORTAGE OR DISCREPANCY IN, DAMAGE TO, OR LOSS OR
DESTRUCTION OF, ANY GOODS, THE SALE OR OTHER DISPOSITION OF WHICH GIVES RISE TO
AN ACCOUNT, OR FOR ANY ERROR, ACT, OMISSION, OR DELAY OF ANY KIND OCCURRING IN
THE SETTLEMENT, FAILURE TO SETTLE, COLLECTION OR FAILURE TO COLLECT ANY ACCOUNT,
OR FOR SETTLING ANY ACCOUNT IN GOOD FAITH FOR LESS THAN THE FULL AMOUNT THEREOF,
NOR SHALL BANK BE DEEMED TO BE RESPONSIBLE