ITS OPERATIONS AS AT THE DATES AND FOR THE PERIODS
INDICATED.
SINCE DECEMBER 31, 2005, THERE HAS BEEN NO CHANGE IN ANY
CIRCUMSTANCES, FACTS OR CONDITIONS NOR SHALL AN EVENT HAVE TAKEN PLACE WHICH,
INDIVIDUALLY OR IN THE AGGREGATE, COULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT.
DURING THE PERIOD FROM JUNE 30, 2006 TO THE CLOSING
DATE, THE BORROWER HAS HAD A POSITIVE TANGIBLE NET WORTH, AS DETERMINED IN
ACCORDANCE WITH GAAP.
FOR THE PURPOSE OF THIS DETERMINATION, NET WORTH (AS
DETERMINED IN ACCORDANCE WITH GAAP) MUST BE (I) INCREASED BY ANY DEBT OF THE
BORROWER AND ITS SUBSIDIARIES SUBORDINATED TO THE INDEBTEDNESS EVIDENCED BY THIS
AGREEMENT AND (II) DECREASED BY ALL INTANGIBLE ASSETS (INCLUDING, WITHOUT
LIMITATION, ALL PATENTS, LICENSES, GOODWILL, SUBSCRIPTION LISTS, CAPITALIZED
SOFTWARE, ORGANIZATION EXPENSES, COVENANTS NOT TO COMPETE, AND INVESTMENTS IN
AND MONIES DUE FROM AFFILIATES, OFFICERS AND DIRECTORS OF THE BORROWER AND ITS
SUBSIDIARIES).
6.3
LITIGATION; CONTINGENT LIABILITIES.
OTHER
THAN AS SET FORTH ON SCHEDULE 6.3, THERE IS NO MATERIAL ACTION OR PROCEEDING
PENDING OR, TO THE KNOWLEDGE OF THE LOAN PARTIES, OVERTLY THREATENED AGAINST OR
INVOLVING THE BORROWER OR ANY SUBSIDIARY BEFORE ANY COURT, ADMINISTRATIVE AGENCY
OR ARBITRATOR THE RESULTS OF WHICH COULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT.
OTHER THAN ANY LIABILITY INCIDENT TO THE ACTIONS OR
PROCEEDINGS DISCLOSED ON SCHEDULE 6.3, OR PROVIDED FOR OR DISCLOSED IN THE
FINANCIAL STATEMENTS REFERRED TO IN SECTION 6.2, AS OF THE CLOSING DATE, NONE OF
THE BORROWER OR ANY OF THE BORROWER'S SUBSIDIARIES HAS ANY CONTINGENT
LIABILITIES WHICH COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT.
6.4
DEFAULT.
NEITHER THE BORROWER NOR ANY
SUBSIDIARY IS (I) IN DEFAULT UNDER ANY AGREEMENT OR INSTRUMENT TO WHICH ANY OF
SUCH PERSONS IS A PARTY OR BY WHICH ANY OF THEIR RESPECTIVE PROPERTIES OR ASSETS
IS BOUND OR AFFECTED, WHICH DEFAULT COULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT, (II) IN DEFAULT UNDER OR IN VIOLATION OF THE PROVISIONS
OF ANY GOVERNMENTAL REQUIREMENT (EXCEPT WHERE SUCH DEFAULT OR VIOLATION COULD
NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT) OR (III) IN
DEFAULT IN ANY MATERIAL RESPECT WITH ANY MATERIAL PROVISIONS OF ANY EXPORT ORDER
(WHICH IS INCLUDED IN THE INTERNATIONAL BORROWING BASE), WHICH HAS NOT BEEN
WAIVED BY THE APPLICABLE PARTY THERETO.
NO EVENT OF DEFAULT OR DEFAULT HAS
OCCURRED AND IS CONTINUING.
6.5
TITLE TO ASSETS; OWNERSHIP.
(A)
THE BORROWER AND EACH SUBSIDIARY HAS GOOD
AND MARKETABLE TITLE TO, OR A VALID LEASEHOLD INTEREST IN, ITS MATERIAL
PROPERTIES, SUBJECT TO NO LIENS EXCEPT AS PERMITTED BY SECTION 9.1 HEREOF.
(B)
AS OF THE CLOSING DATE, EXCEPT AS PERMITTED
IN SECTION 9.1 HEREOF, THE PERSONS IDENTIFIED ON SCHEDULE 6.5 DIRECTLY OWN, FREE
AND CLEAR OF ALL LIENS OR RESTRICTIONS ON TRANSFERABILITY OR VOTING, ONE HUNDRED
PERCENT (100%) OF THE OUTSTANDING SHARES OF CAPITAL STOCK OF THE BORROWER AND
ALL SUCH SHARES ARE VALIDLY ISSUED, FULLY PAID AND NON ASSESSABLE.
AS OF THE
CLOSING DATE, THERE ARE NO