Common use of Use and Operation of Collateral Clause in Contracts

Use and Operation of Collateral. Should any Collateral come into the possession of Holder Representative while a Default exists, Holder Representative may use or operate such Collateral for the purpose of preserving it or its value pursuant to the order of a court of appropriate jurisdiction or in accordance with any other rights held by Holder Representative in respect of such Collateral. Debtor covenants to promptly reimburse and pay to Holder Representative, at Holder Representative’s request, the amount of all reasonable expenses (including, without limitation, the cost of any insurance and payment of taxes or other charges) incurred by Holder Representative in connection with its custody and preservation of Collateral, and all such expenses, costs, taxes and other charges shall be payable by Debtor to Holder Representative upon demand and shall become part of the Obligation. However, the risk of accidental loss or damage to, or diminution in value of, Collateral is on Debtor, and Holder Representative shall have no liability whatever for failure to obtain or maintain insurance, nor to determine whether any insurance ever in force is adequate as to amount or as to the risks insured. With respect to Collateral that is in the possession of Holder Representative, Holder Representative shall have no duty to fix or preserve rights against prior parties to such Collateral and shall never be liable for any failure to use diligence to collect any amount payable in respect of such Collateral, but shall be liable only to exercise reasonable care in the safekeeping of any Collateral in its possession (it being agreed that treatment substantially equal to that which the Holder Representative accords its own property shall be deemed to constitute the exercise of reasonable care) and to account to Debtor for what it may actually collect or receive thereon. The provisions of this subparagraph are only applicable during the existence of a Default.