ENTITLED AT ANY TIME OR
TIMES.
(B)
AT ANY TIME AFTER AN EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING, WITHOUT PRIOR NOTICE TO GRANTOR, AGENT MAY NOTIFY ACCOUNT DEBTORS
AND OTHER PERSONS OBLIGATED ON ANY OF THE COLLATERAL THAT AGENT HAS A SECURITY
INTEREST THEREIN, AND THAT PAYMENTS SHALL BE MADE DIRECTLY TO AGENT, FOR ITSELF
AND THE BENEFIT OF LENDERS.
UPON THE REQUEST OF AGENT, EACH GRANTOR SHALL SO
NOTIFY ACCOUNT DEBTORS AND OTHER PERSONS OBLIGATED ON COLLATERAL.
ONCE ANY SUCH
NOTICE HAS BEEN GIVEN TO ANY ACCOUNT DEBTOR OR OTHER PERSON OBLIGATED ON
COLLATERAL, EACH GRANTOR SHALL NOT GIVE ANY CONTRARY INSTRUCTIONS TO SUCH
ACCOUNT DEBTOR OR OTHER PERSON WITHOUT AGENT'S PRIOR WRITTEN CONSENT.
(C)
AGENT MAY AT ANY TIME IN AGENT'S OWN NAME, IN THE NAME OF A NOMINEE
OF AGENT OR IN THE NAME OF ANY GRANTOR COMMUNICATE (BY MAIL, TELEPHONE,
FACSIMILE OR OTHERWISE) WITH ACCOUNT DEBTORS, PARTIES TO CONTRACTUAL OBLIGATIONS
AND OBLIGORS IN RESPECT OF INSTRUMENTS TO VERIFY WITH SUCH PERSONS, TO AGENT'S
SATISFACTION, THE EXISTENCE, AMOUNT, TERMS OF, AND ANY OTHER MATTER RELATING TO,
ACCOUNTS, INSTRUMENTS, CHATTEL PAPER AND/OR PAYMENT INTANGIBLES.
IF A DEFAULT
OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, EACH GRANTOR, AT ITS
OWN EXPENSE, SHALL CAUSE THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS THEN
ENGAGED BY SUCH GRANTOR TO PREPARE AND DELIVER TO AGENT AND EACH LENDER AT ANY
TIME AND FROM TIME TO TIME PROMPTLY UPON AGENT'S REQUEST THE FOLLOWING REPORTS
WITH RESPECT TO GRANTOR: (I) A RECONCILIATION OF ALL ACCOUNTS; (II) AN AGING OF
ALL ACCOUNTS; (III) TRIAL BALANCES; AND (IV) A TEST VERIFICATION OF SUCH
ACCOUNTS AS AGENT MAY REQUEST.
EACH GRANTOR, AT ITS OWN EXPENSE, SHALL DELIVER
TO AGENT THE RESULTS OF EACH PHYSICAL VERIFICATION, IF ANY, WHICH SUCH GRANTOR
MAY IN ITS DISCRETION HAVE MADE, OR CAUSED ANY OTHER PERSON TO HAVE MADE ON ITS
BEHALF, OF ALL OR ANY PORTION OF ITS INVENTORY.
4
4.
REPRESENTATIONS AND WARRANTIES.
THE
GRANTORS JOINTLY AND SEVERALLY, REPRESENT AND WARRANT THAT:
(A)
EACH GRANTOR HAS RIGHTS IN AND THE POWER TO TRANSFER EACH ITEM OF
THE COLLATERAL UPON WHICH IT PURPORTS TO GRANT A LIEN HEREUNDER FREE AND CLEAR
OF ANY AND ALL LIENS OTHER THAN LIENS PERMITTED UNDER THE CREDIT AGREEMENT AND
PERMITTED ENCUMBRANCES.
(B)
NO EFFECTIVE SECURITY AGREEMENT, FINANCING STATEMENT, EQUIVALENT
SECURITY OR LIEN INSTRUMENT OR CONTINUATION STATEMENT COVERING ALL OR ANY PART
OF THE COLLATERAL IS ON FILE OR OF RECORD IN ANY PUBLIC OFFICE, EXCEPT SUCH AS
MAY HAVE BEEN FILED (I) BY ANY GRANTOR IN FAVOR OF AGENT PURSUANT TO THIS
SECURITY AGREEMENT OR THE OTHER LOAN DOCUMENTS, (II) IN CONNECTION WITH ANY
LIENS PERMITTED UNDER THE CREDIT AGREEMENT AND PERMITTED ENCUMBRANCES, AND
(III) BY ANY GRANTOR IN FAVOR OF THE SECURED PARTIES UNDER THE PRE-PETITION
CREDIT AGREEMENT AND RELATED PRE-PETITION LOAN DOCUMENTS.
(C)
THIS SECURITY AGREEMENT IS EFFECTIVE TO CREATE A VALID AND
CONTINUING LIEN ON AND, UPON ENTRY OF THE INTERIM ORDER OR THE FINAL ORDER (AS
APPLICABLE) OR