HAS TIMELY PAID ALL MATERIAL FOREIGN, FEDERAL, STATE AND
LOCAL TAXES, ASSESSMENTS, DEPOSITS AND CONTRIBUTIONS OWED BY SUCH PERSON. ANY OF
SUCH PERSONS MAY DEFER PAYMENT OF ANY CONTESTED TAXES, PROVIDED THAT SUCH PERSON
(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". EACH BORROWER IS
UNAWARE OF ANY CLAIMS OR ADJUSTMENTS PROPOSED FOR ANY OF SUCH PERSON'S PRIOR TAX
YEARS WHICH COULD RESULT IN ADDITIONAL TAXES BECOMING DUE AND PAYABLE BY SUCH
PERSONS. EACH BORROWER, PARENT AND SUBSIDIARY OF PARENT HAS PAID ALL AMOUNTS
NECESSARY TO FUND ALL PRESENT PENSION, PROFIT SHARING AND DEFERRED COMPENSATION
PLANS IN ACCORDANCE WITH THEIR TERMS, AND NO SUCH PERSON HAS WITHDRAWN FROM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 LIABILITY OF SUCH ANY SUCH
PERSONS, INCLUDING ANY LIABILITY TO THE PENSION BENEFIT GUARANTY CORPORATION OR
ITS SUCCESSORS OR ANY OTHER GOVERNMENTAL AGENCY.
5.10
USE OF PROCEEDS. BORROWERS SHALL USE THE PROCEEDS OF
THE CREDIT EXTENSIONS SOLELY AS WORKING CAPITAL, TO PURCHASE ELIGIBLE EQUIPMENT,
AND TO FUND ITS GENERAL BUSINESS REQUIREMENTS AND NOT FOR PERSONAL, FAMILY,
HOUSEHOLD OR AGRICULTURAL PURPOSES.
5.11
ASSETS OF FOREIGN SUBSIDIARIES. AS OF MARCH 31,
2006, $746,000 OF THE ACCOUNTS, $595,000 OF THE INVENTORY, $625,000 OF THE NET
EQUIPMENT, AND $6,050,000 OF THE CASH AND CASH EQUIVALENTS LISTED ON PARENT'S
CONSOLIDATED FINANCIAL STATEMENTS ARE OWNED BY FOREIGN SUBSIDIARIES OF PARENT
(AS OPPOSED TO BEING OWNED BY BORROWERS, PARENT OR DOMESTIC SUBSIDIARIES OF
PARENT).
5.12
FULL DISCLOSURE. NO WRITTEN REPRESENTATION, WARRANTY
OR OTHER STATEMENT OF ANY BORROWER, PARENT OR ANY SUBSIDIARY OF PARENT IN ANY
CERTIFICATE OR WRITTEN STATEMENT GIVEN TO BANK, AS OF THE DATE SUCH
REPRESENTATIONS, WARRANTIES, OR OTHER STATEMENTS WERE MADE, TAKEN TOGETHER WITH
ALL SUCH WRITTEN CERTIFICATES AND WRITTEN STATEMENTS GIVEN TO BANK, CONTAINS ANY
UNTRUE STATEMENT OF A MATERIAL FACT OR OMITS TO STATE A MATERIAL FACT NECESSARY
TO MAKE THE STATEMENTS CONTAINED IN THE CERTIFICATES OR STATEMENTS NOT
MISLEADING (IT BEING RECOGNIZED BY BANK THAT THE PROJECTIONS AND FORECASTS
PROVIDED IN GOOD FAITH AND BASED UPON REASONABLE ASSUMPTIONS ARE NOT VIEWED AS
FACTS AND THAT ACTUAL RESULTS DURING THE PERIOD OR PERIODS COVERED BY SUCH
PROJECTIONS AND FORECASTS MAY DIFFER FROM THE PROJECTED OR FORECASTED RESULTS).
6
AFFIRMATIVE COVENANTS
Borrowers shall do all of the following:
6.1
GOVERNMENT COMPLIANCE. EACH BORROWER SHALL,
AND SHALL CAUSE PARENT AND EACH OF PARENT'S SUBSIDIARIES TO, MAINTAIN ITS LEGAL
EXISTENCE AND GOOD STANDING IN ITS JURISDICTION OF FORMATION AND EACH
JURISDICTION IN WHICH THE NATURE OF ITS BUSINESS REQUIRES THEM TO