Common use of Lockbox System Clause in Contracts

Lockbox System. (a) The Grantors will establish in the name of the Administrative Agent, and subject to the control of the Administrative Agent pursuant to the Lockbox and Depository Agreements, for the ratable benefit of the Administrative Agent and the other Secured Parties, a system of lockboxes and related Collection Deposit Accounts (the "Lockbox System") with one or more financial institutions that are reasonably satisfactory to the Administrative Agent into which the Proceeds of Accounts Receivable and Inventory shall be deposited. (b) Effective upon notice to the Grantors from the Administrative Agent after the occurrence and during the continuance of an Event of Default (which notice may be given by telephone if promptly confirmed in writing), the Collection Deposit Accounts will after notice to the applicable Sub-Agent, without any further action on the part of any Grantor, the Administrative Agent or any Sub-Agent, convert into a closed lockbox account under the exclusive dominion and control of the Administrative Agent in which funds are held subject to the rights of the Administrative Agent hereunder. Each Grantor irrevocably authorizes the Administrative Agent to notify each Sub-Agent (i) of the occurrence of an Event of Default and (ii) of the matters referred to in this paragraph (b).