FINANCIAL CONDITION SINCE
THE DATE OF THE MOST RECENT FINANCIAL STATEMENTS SUBMITTED TO BANK.
5.6
SOLVENCY. BORROWER IS ABLE TO PAY ITS DEBTS (INCLUDING TRADE DEBTS)
AS THEY MATURE.
5.7
REGULATORY COMPLIANCE.
BORROWER IS NOT AN "INVESTMENT COMPANY" OR
A COMPANY "CONTROLLED" BY AN "INVESTMENT COMPANY" UNDER THE INVESTMENT COMPANY
ACT.
BORROWER IS NOT ENGAGED AS ONE OF ITS IMPORTANT ACTIVITIES IN EXTENDING
CREDIT FOR MARGIN STOCK (UNDER REGULATIONS T AND U OF THE FEDERAL RESERVE BOARD
OF GOVERNORS).
BORROWER HAS COMPLIED IN ALL MATERIAL RESPECTS WITH THE FEDERAL
FAIR LABOR STANDARDS ACT.
BORROWER HAS NOT VIOLATED ANY LAWS, ORDINANCES OR
RULES, THE VIOLATION OF WHICH COULD REASONABLY BE EXPECTED TO CAUSE A MATERIAL
ADVERSE CHANGE.
NONE OF BORROWER'S OR ANY OF ITS SUBSIDIARIES' PROPERTIES OR
ASSETS HAS BEEN USED BY BORROWER OR ANY SUBSIDIARY OR, TO THE BEST OF BORROWER'S
KNOWLEDGE, BY PREVIOUS PERSONS, IN DISPOSING, PRODUCING, STORING, TREATING, OR
TRANSPORTING ANY HAZARDOUS SUBSTANCE OTHER THAN LEGALLY.
BORROWER AND EACH OF
ITS SUBSIDIARIES HAVE OBTAINED ALL CONSENTS, APPROVALS AND AUTHORIZATIONS OF,
MADE ALL DECLARATIONS OR FILINGS WITH, AND GIVEN ALL NOTICES TO, ALL GOVERNMENT
AUTHORITIES THAT ARE NECESSARY TO CONTINUE ITS BUSINESS AS CURRENTLY CONDUCTED.
5.8
SUBSIDIARIES; INVESTMENTS.
BORROWER DOES NOT HAVE ANY
SUBSIDIARIES, OTHER THAN ITERIS EUROPE GMBH AND OTHER SUBSIDIARIES ORGANIZED
WITH THE PRIOR WRITTEN CONSENT OF BANK, AND DOES NOT OWN ANY STOCK, PARTNERSHIP
INTEREST OR OTHER EQUITY SECURITIES IN ANY OTHER PERSON, EXCEPT FOR PERMITTED
INVESTMENTS.
5.9
TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS.
BORROWER HAS
TIMELY FILED ALL REQUIRED TAX RETURNS AND REPORTS, AND BORROWER HAS TIMELY PAID
ALL FOREIGN, FEDERAL, STATE AND LOCAL TAXES, ASSESSMENTS, DEPOSITS AND
CONTRIBUTIONS OWED BY BORROWER.
BORROWER MAY DEFER PAYMENT OF ANY CONTESTED
TAXES, PROVIDED THAT BORROWER (A) IN GOOD FAITH CONTESTS ITS OBLIGATION TO PAY
THE TAXES BY APPROPRIATE PROCEEDINGS PROMPTLY AND DILIGENTLY INSTITUTED AND
CONDUCTED, (B) NOTIFIES BANK IN WRITING OF THE COMMENCEMENT OF, AND ANY MATERIAL
DEVELOPMENT IN, THE PROCEEDINGS, (C) POSTS BONDS OR TAKES ANY OTHER STEPS
REQUIRED TO PREVENT THE GOVERNMENTAL AUTHORITY LEVYING SUCH CONTESTED TAXES FROM
OBTAINING A LIEN UPON ANY OF THE COLLATERAL THAT IS OTHER THAN A "PERMITTED
LIEN".
BORROWER IS UNAWARE OF ANY CLAIMS OR ADJUSTMENTS PROPOSED FOR ANY OF
BORROWER'S PRIOR TAX YEARS WHICH COULD RESULT IN ADDITIONAL TAXES BECOMING DUE
AND PAYABLE BY BORROWER.
BORROWER HAS PAID ALL AMOUNTS NECESSARY TO FUND ALL
PRESENT PENSION, PROFIT SHARING AND DEFERRED COMPENSATION PLANS IN ACCORDANCE
WITH THEIR TERMS, AND BORROWER HAS NOT WITHDRAWN FROM PARTICIPATION IN, AND HAS
NOT PERMITTED PARTIAL OR COMPLETE TERMINATION OF, OR PERMITTED THE OCCURRENCE OF
ANY OTHER EVENT WITH RESPECT TO, ANY SUCH PLAN WHICH COULD REASONABLY BE
EXPECTED TO RESULT IN ANY
7
LIABILITY OF BORROWER, INCLUDING ANY LIABILITY TO THE PENSION BENEFIT GUARANTY
CORPORATION OR ITS SUCCESSORS OR ANY OTHER GOVERNMENTAL AGENCY.
5.10
USE OF PROCEEDS.
BORROWER SHALL USE THE PROCEEDS OF THE CREDIT
EXTENSIONS SOLELY AS WORKING CAPITAL, AND TO FUND ITS GENERAL BUSINESS
REQUIREMENTS AND NOT FOR PERSONAL, FAMILY, HOUSEHOLD