THE SECURED PARTY REPORTS SHOWING
RECONCILIATIONS, AGING AND TEST VERIFICATIONS OF, AND TRIAL BALANCES FOR, THE
ACCOUNTS.
(D)
COLLECTIONS ON ACCOUNTS.
THE SECURED PARTY
HEREBY AUTHORIZES THE DEBTOR TO COLLECT THE ACCOUNTS SUBJECT TO THE SECURED
PARTY'S DIRECTION AND CONTROL, AND THE SECURED PARTY MAY CURTAIL OR TERMINATE
SAID AUTHORITY UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF
4
AN EVENT OF DEFAULT.
IF REQUIRED BY THE SECURED PARTY UPON THE OCCURRENCE AND
DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, ANY PAYMENTS OF ACCOUNTS, WHEN
COLLECTED BY THE DEBTOR, SHALL BE FORTHWITH (AND, IN ANY EVENT, WITHIN TWO
BUSINESS DAYS) DEPOSITED BY THE DEBTOR IN THE EXACT FORM RECEIVED, DULY ENDORSED
BY THE DEBTOR TO THE SECURED PARTY IF REQUIRED, IN A SPECIAL COLLATERAL ACCOUNT
MAINTAINED BY THE SECURED PARTY, SUBJECT TO WITHDRAWAL BY THE SECURED PARTY
ONLY, AS HEREINAFTER PROVIDED, AND, UNTIL SO TURNED OVER, SHALL BE HELD BY THE
DEBTOR IN TRUST FOR THE SECURED PARTY, SEGREGATED FROM OTHER FUNDS OF THE
DEBTOR.
EACH DEPOSIT OF ANY SUCH PROCEEDS SHALL BE ACCOMPANIED BY A REPORT
IDENTIFYING IN REASONABLE DETAIL THE NATURE AND SOURCE OF THE PAYMENTS INCLUDED
IN THE DEPOSIT.
ALL PROCEEDS CONSTITUTING COLLECTIONS OF ACCOUNTS WHILE HELD BY
THE SECURED PARTY (OR BY THE DEBTOR IN TRUST FOR THE SECURED PARTY) SHALL
CONTINUE TO BE COLLATERAL SECURITY FOR ALL OF THE OBLIGATIONS AND THE GUARANTY
OBLIGATIONS AND SHALL NOT CONSTITUTE PAYMENT THEREOF UNTIL APPLIED AS
HEREINAFTER PROVIDED.
IF AN EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE
CONTINUING, AT ANY TIME AT THE SECURED PARTY'S ELECTION, THE SECURED PARTY SHALL
APPLY ALL OR ANY PART OF THE FUNDS ON DEPOSIT IN SAID SPECIAL COLLATERAL ACCOUNT
ON ACCOUNT OF THE OBLIGATIONS AND THE GUARANTY OBLIGATIONS, AND ANY PART OF SUCH
FUNDS WHICH THE SECURED PARTY ELECTS NOT SO TO APPLY AND DEEMS NOT REQUIRED AS
COLLATERAL SECURITY FOR THE OBLIGATIONS AND THE GUARANTY OBLIGATIONS SHALL BE
PAID OVER FROM TIME TO TIME BY THE SECURED PARTY TO THE DEBTOR OR TO WHOMSOEVER
MAY BE LAWFULLY ENTITLED TO RECEIVE THE SAME.
AT THE SECURED PARTY'S REQUEST
DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, THE DEBTOR SHALL DELIVER TO THE
SECURED PARTY ALL ORIGINAL AND OTHER DOCUMENTS EVIDENCING, AND RELATING TO, THE
AGREEMENTS AND TRANSACTIONS WHICH GAVE RISE TO THE ACCOUNTS, INCLUDING, WITHOUT
LIMITATION, ALL ORIGINAL ORDERS, INVOICES AND SHIPPING RECEIPTS.
4.
REPRESENTATIONS AND WARRANTIES.
THE
DEBTOR HEREBY REPRESENTS AND WARRANTS THAT:
(A)
TITLE; NO OTHER ENCUMBRANCES.
EXCEPT FOR
THE LIENS GRANTED TO THE SECURED PARTY PURSUANT TO THIS SECURITY AGREEMENT, AND
THE OTHER PERMITTED LIENS, THE DEBTOR OWNS EACH ITEM OF THE COLLATERAL FREE AND
CLEAR OF ANY AND ALL LIENS.
NO SECURITY AGREEMENT, FINANCING STATEMENT OR OTHER
PUBLIC NOTICE WITH RESPECT TO ALL OR ANY PART OF THE COLLATERAL IS ON FILE OR OF
RECORD IN ANY PUBLIC OFFICE, EXCEPT SUCH AS MAY HAVE BEEN FILED IN FAVOR OF THE
SECURED PARTY OR ANY OTHER PERSON HOLDING A PERMITTED LIEN.
(B)
PERFECTED LIENS.
EXCEPT WITH