LAURUS SHALL HAVE THE RIGHT TO (A) HAVE ACCESS TO, VISIT, INSPECT, REVIEW,
EVALUATE AND MAKE PHYSICAL VERIFICATION AND APPRAISALS OF THE PROPERTIES OF
PARENT AND EACH OF ITS SUBSIDIARIES AND THE COLLATERAL, (B) INSPECT, AUDIT AND
COPY (OR TAKE ORIGINALS IF NECESSARY) AND MAKE EXTRACTS FROM THE BOOKS AND
RECORDS OF PARENT AND EACH OF ITS SUBSIDIARIES, INCLUDING MANAGEMENT LETTERS
PREPARED BY THE ACCOUNTANTS, AND (C) DISCUSS WITH THE DIRECTORS, PRINCIPAL
OFFICERS, AND INDEPENDENT ACCOUNTANTS OF PARENT AND EACH OF ITS SUBSIDIARIES,
SUCH PERSON'S BUSINESS, ASSETS, LIABILITIES, FINANCIAL CONDITION, RESULTS OF
OPERATIONS AND BUSINESS PROSPECTS; PROVIDED THAT ABSENT THE OCCURRENCE OF A
DEFAULT OR AN EVENT OF DEFAULT, SUCH INSPECTIONS SHALL BE LIMITED TO THREE TIMES
DURING EACH YEAR OF TERM OF THIS AGREEMENT.
EACH COMPANY AND EACH OF ITS
SUBSIDIARIES WILL DELIVER TO LAURUS ANY INSTRUMENT NECESSARY FOR LAURUS TO
OBTAIN RECORDS FROM ANY SERVICE BUREAU MAINTAINING RECORDS FOR SUCH COMPANY AND
ITS SUBSIDIARIES.
IF ANY INTERNALLY PREPARED FINANCIAL INFORMATION, INCLUDING
THAT REQUIRED UNDER THIS SECTION IS UNSATISFACTORY IN ANY MANNER TO LAURUS,
LAURUS MAY REQUEST THAT THE ACCOUNTANTS
10
review the same.
Notwithstanding the foregoing, no Company nor any of its
Subsidiaries shall provide any material, non-public information to Laurus unless
Laurus signs a confidentiality agreement and otherwise complies with Regulation
FD, under the federal securities laws.
11.
FINANCIAL REPORTING.
COMPANY AGENT WILL
DELIVER, OR CAUSE TO BE DELIVERED, TO LAURUS EACH OF THE FOLLOWING, WHICH SHALL
BE IN FORM AND DETAIL ACCEPTABLE TO LAURUS:
(A)
NOT LATER THAN ONE HUNDRED TWENTY (120)
DAYS AFTER THE CLOSE OF EACH FISCAL YEAR OF THE PARENT, UNQUALIFIED, AUDITED
FINANCIAL STATEMENTS OF PARENT AND EACH OF ITS SUBSIDIARIES AS OF THE END OF
SUCH YEAR, ON A CONSOLIDATED AND CONSOLIDATING BASIS, CERTIFIED BY A FIRM OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS OF RECOGNIZED STANDING SELECTED BY
COMPANY BUT ACCEPTABLE TO LAURUS (THE "ACCOUNTANTS") (EXCEPT FOR A QUALIFICATION
FOR A CHANGE IN ACCOUNTING PRINCIPLES WITH WHICH THE ACCOUNTANT CONCURS);
(B)
NOT LATER THAN THIRTY (30) DAYS AFTER THE
END OF EACH MONTH HEREAFTER, INCLUDING THE LAST MONTH OF PARENT'S FISCAL YEAR,
UNAUDITED, INTERIM FINANCIAL STATEMENTS OF PARENT AND ITS SUBSIDIARIES AS OF THE
END OF SUCH MONTH AND OF THE PORTION OF THE FISCAL YEAR THEN ELAPSED, ON A
CONSOLIDATED AND CONSOLIDATING BASIS, CERTIFIED BY THE CHIEF FINANCIAL OFFICER
OF PARENT AS PREPARED IN ACCORDANCE WITH GAAP AND FAIRLY PRESENTING THE
CONSOLIDATED FINANCIAL POSITION AND RESULTS OF OPERATIONS OF PARENT AND ITS
SUBSIDIARIES FOR SUCH MONTH AND PERIOD SUBJECT ONLY TO CHANGES FROM AUDIT AND
YEAR-END ADJUSTMENTS AND EXCEPT THAT SUCH STATEMENTS NEED NOT CONTAIN FOOTNOTE
DISCLOSURES;
(C)
PROMPTLY UPON LAURUS' REQUEST, BUT IN ANY
EVENT, ON THE SECOND FULL BUSINESS DAY OF EACH WEEK, A BORROWING BASE
CERTIFICATE FOR THE PREVIOUS WEEK, WHICH INCLUDES A WEEKLY REPORT OF SALES,
CREDITS AND COLLECTIONS OF EACH COMPANY;
(D)
NOT LATER TWENTY (20) DAYS AFTER THE END OF
EACH MONTH (A) A RECONCILIATION OF ACCOUNTS, (B) AN AGING OF ACCOUNTS
RECEIVABLE, AND ACCOUNTS