SCHEDULE 6.8. NO CLAIM OF
INFRINGEMENT HAS BEEN MADE OR THREATENED IN WRITING OR OTHERWISE WITH RESPECT TO
ANY OF BORROWER'S INTELLECTUAL PROPERTY.
6.9
LITIGATION.
TO GRANTORS' KNOWLEDGE, THERE ARE NO ACTIONS OR
PROCEEDINGS PENDING BY OR AGAINST BORROWER BEFORE ANY COURT OR ADMINISTRATIVE
AGENCY IN WHICH AN ADVERSE DECISION COULD HAVE A MATERIAL ADVERSE EFFECT ON THE
GRANTORS, TAKEN AS A WHOLE, OR THE AGGREGATE VALUE OF THE COLLATERAL. NO GRANTOR
HAS KNOWLEDGE OF ANY SUCH THREATENED ACTIONS OR PROCEEDINGS. BORROWER WILL
PROMPTLY NOTIFY LENDER IN WRITING IF ANY ACTION, PROCEEDING OR GOVERNMENTAL
INVESTIGATION INVOLVING A GRANTOR IS COMMENCED THAT MAY RESULT IN DAMAGES OR
COSTS TO THE GRANTORS, TAKEN AS A WHOLE, OF $50,000 OR MORE IN THE AGGREGATE.
6.10
LIABILITIES.
OTHER THAN WITH RESPECT TO THE LOAN, GRANTORS DO NOT
HAVE ANY INDEBTEDNESS EXCEPT AS DESCRIBED ON SCHEDULE 6.10.
6.11
FINANCIAL STATEMENTS.
THE BORROWER FINANCIAL STATEMENTS PRESENT
FAIRLY IN ALL MATERIAL RESPECTS BORROWER'S CONSOLIDATED FINANCIAL CONDITION AS
OF THE DATES THEREOF AND BORROWER'S CONSOLIDATED RESULTS OF OPERATIONS AT THE
DATES AND DURING THE PERIODS INDICATED THEREIN IN ACCORDANCE WITH GAAP (SUBJECT,
IN THE CASE OF UNAUDITED STATEMENTS, TO NORMAL, RECURRING YEAR-END ADJUSTMENTS).
THE BORROWER FINANCIAL STATEMENTS COMPLIED AS TO FORM IN ALL MATERIAL RESPECTS
WITH APPLICABLE ACCOUNTING REQUIREMENTS AND WITH THE PUBLISHED RULES AND
REGULATIONS OF THE SEC WITH RESPECT THERETO AS OF THEIR RESPECTIVE DATES, AND
HAVE BEEN PREPARED
19
in accordance with GAAP applied on a basis consistent throughout the periods
indicated and consistent with each other (except as may be expressly indicated
in the notes thereto or, in the case of unaudited statements included in
Quarterly Reports on Forms 10-QSB, as permitted by Form 10-QSB of the SEC).
6.12
SOLVENCY.
BORROWER AND EACH OF ITS SUBSIDIARIES IS SOLVENT AND ABLE
TO PAY ITS DEBTS (INCLUDING TRADE DEBTS) AS THEY MATURE.
6.13
TAXES.
BORROWER HAS FILED ALL FEDERAL, STATE AND LOCAL, DOMESTIC OR
FOREIGN TAX RETURNS AND ALL OTHER TAX RETURNS THAT ARE REQUIRED TO BE FILED BY
IT AND IT HAS PAID ALL TAXES DUE PURSUANT TO SUCH RETURNS OR PURSUANT TO ANY
DEFICIENCY, NOTICE OF PROPOSED ASSESSMENT, AUDIT, ASSESSMENT OR OTHER SIMILAR
NOTICE RECEIVED BY IT IN WRITING OTHER THAN THOSE BEING CONTESTED IN GOOD FAITH
IN APPROPRIATE PROCEEDINGS AND FOR WHICH RESERVES HAVE BEEN ESTABLISHED IN THE
BORROWER FINANCIAL STATEMENTS AND ANY OTHER FINANCIAL STATEMENTS OF BORROWER
DELIVERED TO LENDER PRIOR TO THE DATE HEREOF. THERE ARE NO AUDITS, ASSESSMENTS
OR CLAIM FOR ASSESSMENTS, AND NO BASIS UPON WHICH SUCH A CLAIM CAN BE MADE TO
THE BEST KNOWLEDGE OF BORROWER AFTER REASONABLE REVIEW AND DUE INQUIRY. THE
CHARGES, ACCRUAL AND RESERVES ON BORROWER'S BOOKS AND RECORDS IN RESPECT OF
TAXES ARE ADEQUATE. BORROWER HAS NOT GIVEN OR BEEN REQUESTED TO GIVE A WAIVER OF
THE STATUTE OF LIMITATIONS RELATING TO THE PAYMENT OF FEDERAL OR OTHER TAXES OR
THE AUDIT OF ANY TAX PERIOD.
6.14
FULL DISCLOSURE.
NO GRANTOR HAS KNOWLEDGE OF ANY FACT THAT COULD
MATERIALLY ADVERSELY AFFECT THE