OPINION ON THE FINANCIAL STATEMENTS FROM AN
INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM REASONABLY ACCEPTABLE TO BANK; (IV)
A PROMPT REPORT OF ANY LEGAL ACTIONS PENDING OR THREATENED AGAINST BORROWER OR
ANY SUBSIDIARY THAT COULD RESULT IN DAMAGES OR COSTS TO BORROWER OR ANY
SUBSIDIARY OF ONE HUNDRED THOUSAND DOLLARS ($100,000.00) OR MORE; (V) PROMPT
NOTICE OF ANY MATERIAL CHANGE IN THE COMPOSITION OF THE INTELLECTUAL PROPERTY,
INCLUDING ANY SUBSEQUENT OWNERSHIP RIGHT OF BORROWER IN OR TO ANY COPYRIGHT,
PATENT OR TRADEMARK NOT SHOWN IN ANY INTELLECTUAL PROPERTY SECURITY AGREEMENT
BETWEEN BORROWER AND BANK OR KNOWLEDGE OF AN EVENT THAT MATERIALLY ADVERSELY
AFFECTS THE VALUE OF THE INTELLECTUAL PROPERTY; AND (VI) BUDGETS, SALES
PROJECTIONS, OPERATING PLANS OR OTHER FINANCIAL INFORMATION REASONABLY REQUESTED
BY BANK.
(B)
WITHIN THIRTY (30) DAYS AFTER THE LAST DAY OF EACH MONTH, BORROWER
SHALL DELIVER TO BANK A BORROWING BASE CERTIFICATE SIGNED BY A RESPONSIBLE
OFFICER IN THE FORM OF EXHIBIT C, WITH AGED LISTINGS OF ACCOUNTS RECEIVABLE (BY
INVOICE DATE).
(C)
WITHIN THIRTY (30) DAYS AFTER THE LAST DAY OF EACH MONTH AND ALSO
FORTY-FIVE (45) DAYS AFTER THE LAST DAY OF EACH OF BORROWER'S FISCAL QUARTERS,
BORROWER SHALL DELIVER TO BANK WITH THE MONTHLY AND QUARTERLY FINANCIAL
STATEMENTS A COMPLIANCE CERTIFICATE SIGNED BY A RESPONSIBLE OFFICER IN THE FORM
OF EXHIBIT D.
(D)
BORROWER SHALL ALLOW BANK TO AUDIT BORROWER'S ACCOUNTS AT
BORROWER'S EXPENSE.
SUCH AUDITS SHALL BE CONDUCTED NO MORE OFTEN THAN ONCE
EVERY TWELVE (12) MONTHS UNLESS AN EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING.
IN ADDITION, PRIOR TO BANK MAKING ANY CREDIT EXTENSIONS HEREUNDER,
BANK SHALL HAVE RECEIVED A SATISFACTORY AUDIT OF THE BORROWER'S ACCOUNTS (THE
"INITIAL AUDIT").
6
6.3
­INVENTORY; RETURNS.
BORROWER SHALL KEEP ALL INVENTORY IN GOOD
AND MARKETABLE CONDITION, FREE FROM MATERIAL DEFECTS.
RETURNS AND ALLOWANCES
BETWEEN BORROWER AND ITS ACCOUNT DEBTORS SHALL FOLLOW BORROWER'S CUSTOMARY
PRACTICES AS THEY EXIST AT THE CLOSING DATE.
BORROWER MUST PROMPTLY NOTIFY BANK
OF ALL RETURNS, RECOVERIES, DISPUTES AND CLAIMS THAT INVOLVE MORE THAN FIFTY
THOUSAND DOLLARS ($50,000.00).
6.4
­TAXES.
BORROWER SHALL MAKE, AND CAUSE EACH SUBSIDIARY TO MAKE,
TIMELY PAYMENT OF ALL MATERIAL FEDERAL, STATE, AND LOCAL TAXES OR ASSESSMENTS
(OTHER THAN TAXES AND ASSESSMENTS WHICH BORROWER IS CONTESTING IN GOOD FAITH,
WITH ADEQUATE RESERVES MAINTAINED IN ACCORDANCE WITH GAAP) AND SHALL DELIVER TO
BANK, ON DEMAND, APPROPRIATE CERTIFICATES ATTESTING TO SUCH PAYMENTS.
6.5
­INSURANCE.
BORROWER SHALL KEEP ITS BUSINESS AND THE COLLATERAL
INSURED FOR RISKS AND IN AMOUNTS,
STANDARD FOR BORROWER'S INDUSTRY, AND AS BANK
MAY REASONABLY REQUEST IN BANK'S REASONABLE DISCRETION.
INSURANCE POLICIES
SHALL BE IN A FORM, WITH COMPANIES, AND IN AMOUNTS THAT ARE SATISFACTORY TO
BANK.
ALL PROPERTY POLICIES SHALL HAVE A LENDER'S LOSS PAYABLE ENDORSEMENT
SHOWING BANK AS AN ADDITIONAL
LOSS PAYEE AND ALL LIABILITY POLICIES SHALL SHOW
THE BANK AS AN ADDITIONAL INSURED AND
ALL POLICIES SHALL PROVIDE THAT THE
INSURER MUST GIVE BANK AT LEAST THIRTY (30) DAYS NOTICE BEFORE CANCELING ITS
POLICY.
AT BANK'S REQUEST, BORROWER SHALL DELIVER CERTIFIED COPIES OF POLICIES