OR DEMAND LETTER SUBMITTED BY THE
BORROWER, AND SUCH OTHER INFORMATION AS THE LENDER MAY REQUEST.
(K)
INTELLECTUAL PROPERTY.
(I)
30 DAYS PRIOR WRITTEN NOTICE OF BORROWER'S INTENT TO ACQUIRE
MATERIAL INTELLECTUAL PROPERTY RIGHTS; EXCEPT FOR TRANSFERS PERMITTED UNDER
SECTION 6.16, THE BORROWER WILL GIVE THE LENDER 30 DAYS PRIOR WRITTEN NOTICE OF
ITS INTENT TO DISPOSE OF MATERIAL INTELLECTUAL PROPERTY RIGHTS AND UPON REQUEST
SHALL PROVIDE THE LENDER WITH COPIES OF ALL PROPOSED DOCUMENTS AND AGREEMENTS
CONCERNING SUCH RIGHTS.
(II)
PROMPTLY UPON KNOWLEDGE THEREOF, NOTICE OF (A) ANY INFRINGEMENT
OF ITS INTELLECTUAL PROPERTY RIGHTS BY OTHERS, (B) CLAIMS THAT THE BORROWER IS
INFRINGING ANOTHER PERSON'S INTELLECTUAL PROPERTY RIGHTS AND (C) ANY THREATENED
CANCELLATION, TERMINATION OR MATERIAL LIMITATION OF ITS INTELLECTUAL PROPERTY
RIGHTS.
(III)
PROMPTLY UPON RECEIPT, COPIES OF ALL MATERIAL REGISTRATIONS AND
FILINGS WITH RESPECT TO ITS INTELLECTUAL PROPERTY RIGHTS.
(L)
REPORTS TO SHAREHOLDERS.
PROMPTLY UPON THEIR DISTRIBUTION,
COPIES OF ALL FINANCIAL STATEMENTS, REPORTS AND PROXY STATEMENTS WHICH THE
GUARANTOR SHALL HAVE SENT TO ITS SHAREHOLDERS.
(M)
SEC FILINGS.
IF LENDER SO REQUESTS, PROMPTLY AFTER THE SENDING OR
FILING THEREOF, COPIES OF ALL REGULAR AND PERIODIC REPORTS WHICH THE GUARANTOR
SHALL FILE WITH THE SECURITIES AND EXCHANGE COMMISSION OR ANY NATIONAL
SECURITIES EXCHANGE.
(N)
VIOLATIONS OF LAW.
PROMPTLY UPON KNOWLEDGE THEREOF, NOTICE OF THE
BORROWER'S VIOLATION OF ANY LAW, RULE OR REGULATION, THE NON-COMPLIANCE WITH
WHICH COULD MATERIALLY AND ADVERSELY AFFECT THE FINANCIAL CONDITION, PROPERTIES
OR OPERATIONS OF THE BORROWER.
(O)
OTHER REPORTS.
FROM TIME TO TIME, WITH REASONABLE PROMPTNESS, ANY
AND ALL RECEIVABLES SCHEDULES, INVENTORY REPORTS, COLLECTION REPORTS, DEPOSIT
RECORDS, EQUIPMENT SCHEDULES, COPIES OF INVOICES TO ACCOUNT DEBTORS AND SUCH
OTHER MATERIAL, REPORTS, RECORDS OR INFORMATION AS THE LENDER MAY REQUEST.
SECTION 6.2
FINANCIAL COVENANTS.
THE FOLLOWING FINANCIAL COVENANTS
SHALL BE CALCULATED ON A CONSOLIDATED BASIS INCLUDING THE BORROWER AND THE
GUARANTOR:
(A)
MINIMUM CASH FLOW; MINIMUM CASH ON HAND.
THE BORROWER WILL
MAINTAIN ON A ROLLING TWELVE-MONTH BASIS, DETERMINED AS AT THE END OF EACH
FISCAL QUARTER, CASH FLOW AT OR ABOVE $0.
NOTWITHSTANDING THE FOREGOING, IN THE
EVENT THE BORROWER FAILS TO MAINTAIN THE
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REQUIRED LEVEL OF CASH FLOW SET FORTH IN THE FOREGOING SENTENCE, SUCH FAILURE
WILL NOT CONSTITUTE AN EVENT OF DEFAULT HEREUNDER IF THE SUM OF BORROWER'S CASH,
CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS (AS DETERMINED IN ACCORDANCE WITH
GAAP) AS OF THE END OF SUCH MEASUREMENT PRIOR EQUALS OR EXCEEDS THE FOLLOWING
AMOUNTS DURING THE PERIODS SET FORTH OPPOSITE SUCH AMOUNTS:
Period
Minimum Cash, Cash Equivalents
and Short-Term Investments
End of first fiscal quarter
$
20,000,000
End of second fiscal quarter
$
15,000,000
End of third fiscal quarter
$
10,000,000
End of fourth fiscal quarter
$
25,000,000
(B)
MINIMUM INVENTORY TURNS RATIO.
THE BORROWER WILL MAINTAIN, ON A
ROLLING TWELVE-MONTH BASIS, DETERMINED AS AT THE END OF EACH FISCAL QUARTER, AN
INVENTORY TURNS RATIO OF NOT LESS THAN 3.0 TO 1.0.
SECTION 6.3
PERMITTED LIENS; FINANCING STATEMENTS.
(A)
THE BORROWER WILL NOT CREATE, INCUR OR SUFFER TO EXIST ANY LIEN
UPON