(17) Acquired Accounts with respect to which Borrower or PFS or BSD has
permitted or agreed to any extension, compromise or settlement, or made any
change or modification of any kind or nature, including, but not limited to, any
change or modification to the terms relating thereto, unless agreed to in
writing by IBM Credit;
(18) Acquired Accounts that do not arise from undisputed bona fide
transactions completed in accordance with the terms and conditions contained in
the invoices, purchase orders and contracts relating thereto;
(19) Acquired Accounts that are discounted for the full payment term
specified in Borrower's or BSD's terms and conditions with its BSD Account
Debtors, or for any longer period of time;
(20) Acquired Accounts on cash on delivery (C.O.D.) terms;
(21) Acquired Accounts arising from maintenance or service contracts
that are billed in advance of full performance of service;
(22) Acquired Accounts arising from bartered transactions;
(23) Acquired Accounts arising from incentive payments, rebates,
discounts, credits, and refunds from a supplier, and
(24) Any and all other Acquired Accounts that IBM Credit deems, in its
sole and absolute discretion, to be ineligible.
The aggregate of all Acquired Accounts that are not ineligible Acquired Accounts
shall hereinafter be referred to as "Eligible Acquired Accounts".
Notwithstanding anything herein to the contrary, Eligible Acquired Accounts
shall not include any accounts receivable acquired by the Borrower after the
Second Conversion Date.
3.2. REIMBURSEMENT FOR CHARGES. Borrower agrees to pay for all costs and
expenses of Borrower's bank in respect to collection of checks and other items
of payment, all fees relating to the use and maintenance of the Lockbox and the
Special Account and with respect to remittances of proceeds of the Advances
hereunder.
3.3. LOCKBOX AND SPECIAL ACCOUNT. Borrower shall establish and maintain
lockbox(es) (each, a "Lockbox") at the address(es) set forth in Attachment A
with the financial institution(s) listed in Attachment A (each, a "Bank")
pursuant to an agreement between the Borrower and each Bank in form and
substance satisfactory to IBM Credit. Borrower shall also establish and maintain
a deposit account which shall contain only proceeds of Borrower's Accounts and
the Acquired Accounts ("Special Account") with each Bank. Borrower shall enter
into and maintain a blocked account agreement with each Bank for the benefit of
IBM Credit in form and substance satisfactory to IBM Credit pursuant to which,
among other things, such Bank shall agree that disbursements from the Special
Account shall be made only as IBM Credit shall direct.
3.4. COLLECTIONS. Each of PFS and the Borrower shall instruct all Account
Debtors and the BSD Account Debtors to remit payments directly to a Lockbox. In
addition, each of PFS and the Borrower shall have such instruction printed in
conspicuous type on all invoices relating to such Accounts and Acquired
Accounts. Borrower shall instruct such Bank to deposit all remittances to such
Bank's Lockbox into its Special Account. Each of Borrower and PFS further agrees
that it shall not deposit or permit any deposits of funds other than remittances
paid in respect of the Accounts and the Acquired Accounts into the Special
Account(s) or permit any commingling of funds with such remittances in any
Lockbox or Special Account.
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