PRODUCTS FOR DISTRIBUTION TO ITS CUSTOMERS, (II) SOFTWARE
LICENSED FOR INTERNAL USE BY BORROWER AND (III) SHRINK-WRAP, FREEWARE AND OPEN
SOURCE SOFTWARE LICENSES (COLLECTIVELY "EXCLUDED LICENSES").
5.3
ACCOUNTS RECEIVABLE.
FOR ANY ELIGIBLE ACCOUNT
IN ANY BORROWING BASE CERTIFICATE, ALL STATEMENTS MADE AND ALL UNPAID BALANCES
APPEARING IN ALL INVOICES, INSTRUMENTS AND OTHER DOCUMENTS EVIDENCING SUCH
ELIGIBLE ACCOUNTS ARE AND SHALL BE TRUE AND CORRECT AND ALL SUCH INVOICES,
INSTRUMENTS AND OTHER DOCUMENTS, AND ALL OF BORROWER'S BOOKS ARE GENUINE AND IN
ALL MATERIAL RESPECTS WHAT THEY PURPORT TO BE.
WHETHER OR NOT AN EVENT OF
DEFAULT HAS OCCURRED AND IS CONTINUING, BANK MAY NOTIFY ANY ACCOUNT DEBTOR OWING
BORROWER MONEY OF BANK'S SECURITY INTEREST IN SUCH FUNDS AND VERIFY THE AMOUNT
OF SUCH ELIGIBLE ACCOUNT.
ALL SALES AND OTHER TRANSACTIONS UNDERLYING OR GIVING
RISE TO EACH ELIGIBLE ACCOUNT SHALL COMPLY IN ALL MATERIAL RESPECTS WITH ALL
APPLICABLE LAWS AND GOVERNMENTAL RULES AND REGULATIONS.
BORROWER HAS NO
KNOWLEDGE OF ANY ACTUAL INSOLVENCY PROCEEDING OF ANY ACCOUNT DEBTOR WHOSE
ACCOUNTS ARE ELIGIBLE ACCOUNTS IN ANY BORROWING BASE CERTIFICATE.
TO THE BEST
OF BORROWER'S KNOWLEDGE, ALL SIGNATURES AND ENDORSEMENTS ON ALL DOCUMENTS,
INSTRUMENTS, AND AGREEMENTS RELATING TO ALL ELIGIBLE ACCOUNTS ARE GENUINE, AND
ALL SUCH DOCUMENTS, INSTRUMENTS AND AGREEMENTS ARE LEGALLY ENFORCEABLE IN
ACCORDANCE WITH THEIR TERMS.
7
5.4
LITIGATION.
THERE ARE NO ACTIONS OR
PROCEEDINGS PENDING OR, TO THE KNOWLEDGE OF THE RESPONSIBLE OFFICERS, THREATENED
IN WRITING BY OR AGAINST BORROWER OR ANY OF ITS SUBSIDIARIES WHICH WOULD BE
REASONABLY LIKELY TO RESULT IN DAMAGES OWED BY BORROWER OR ANY OF ITS
SUBSIDIARIES IN EXCESS OF, INDIVIDUALLY OR IN THE AGGREGATE, TWO HUNDRED FIFTY
THOUSAND DOLLARS ($250,000.00).
5.5
FINANCIAL CONDITION.
ALL CONSOLIDATED
FINANCIAL STATEMENTS FOR BORROWER AND ANY OF ITS SUBSIDIARIES DELIVERED TO BANK
FAIRLY PRESENT IN ALL MATERIAL RESPECTS BORROWER'S CONSOLIDATED FINANCIAL
CONDITION AND BORROWER'S CONSOLIDATED RESULTS OF OPERATIONS.
THERE HAS NOT BEEN
ANY MATERIAL DETERIORATION IN BORROWER'S CONSOLIDATED FINANCIAL CONDITION SINCE
THE DATE OF THE MOST RECENT FINANCIAL STATEMENTS SUBMITTED TO BANK.
5.6
SOLVENCY.
BORROWER IS NOT LEFT WITH
UNREASONABLY SMALL CAPITAL AFTER THE TRANSACTIONS IN THIS AGREEMENT, AND
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 OF 1940, AS AMENDED.
BORROWER IS NOT ENGAGED AS ONE
OF ITS IMPORTANT ACTIVITIES IN EXTENDING CREDIT FOR MARGIN STOCK (UNDER
REGULATIONS X, T AND U OF THE FEDERAL RESERVE BOARD OF GOVERNORS).
BORROWER HAS
COMPLIED IN ALL MATERIAL RESPECTS WITH THE FEDERAL FAIR LABOR STANDARDS ACT.
NEITHER BORROWER NOR ANY OF ITS SUBSIDIARIES IS A "HOLDING COMPANY" OR AN
"AFFILIATE" OF A "HOLDING COMPANY" OR A "SUBSIDIARY COMPANY" OF A "HOLDING
COMPANY" AS EACH TERM IS DEFINED AND USED IN THE PUBLIC UTILITY HOLDING COMPANY
ACT OF 2005.
BORROWER HAS NOT VIOLATED ANY LAWS, ORDINANCES OR RULES, THE
VIOLATION OF WHICH COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT ON ITS BUSINESS.