SAME
ACCOUNT) OR CONTRA ACCOUNTS MAY BE ASSERTED WITH RESPECT TO THE FOLLOWING),
WITHOUT PRIOR NOTICE TO ANY GRANTOR, NOTIFY ACCOUNT DEBTORS AND OTHER PERSONS
OBLIGATED ON THE COLLATERAL THAT AGENT HAS A SECURITY INTEREST THEREIN, AND THAT
PAYMENTS SHALL BE MADE DIRECTLY TO AGENT.
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 THE COLLATERAL, THE AFFECTED 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
CONTRACTS 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, PAYMENT INTANGIBLES, INSTRUMENTS OR CHATTEL PAPER.
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 EACH 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.
REPRESENTATIONS AND WARRANTIES.
Each
Grantor represents and warrants 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 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, AND (II) IN
CONNECTION WITH ANY OTHER PERMITTED ENCUMBRANCES;
(C)
THIS SECURITY AGREEMENT IS EFFECTIVE TO
CREATE A VALID AND CONTINUING LIEN ON AND, UPON THE FILING OF THE APPROPRIATE
FINANCING STATEMENTS LISTED ON SCHEDULE I HERETO, A PERFECTED LIEN IN FAVOR OF
AGENT, FOR ITSELF AND THE BENEFIT OF LENDERS, ON THE COLLATERAL
8
WITH RESPECT TO WHICH A LIEN MAY BE PERFECTED BY FILING PURSUANT TO THE CODE.
SUCH LIEN IS PRIOR TO ALL OTHER LIENS, EXCEPT PERMITTED ENCUMBRANCES THAT WOULD
BE PRIOR TO LIENS IN FAVOR