WILL MAINTAIN AND IT WILL CAUSE
EACH OF ITS SUBSIDIARIES TO MAINTAIN IN FULL FORCE AND EFFECT ALL MATERIAL
LEASES, LICENCES, PERMITS, CONSENTS AND REGULATORY APPROVALS NECESSARY FOR THE
DUE CARRYING ON OF THEIR RESPECTIVE BUSINESSES;
(M)
THAT IT WILL MAINTAIN AND IT WILL CAUSE EACH
OF ITS SUBSIDIARIES TO MAINTAIN THEIR RESPECTIVE CORPORATE EXISTENCES AS VALIDLY
SUBSISTING CORPORATIONS;
(N)
THAT IT WILL GIVE TO ROYAL PROMPT NOTICE OF
ANY EVENT OF DEFAULT OR ANY EVENT THAT WITH NOTICE OR LAPSE OF TIME WOULD BE AN
EVENT OF DEFAULT;
(O)
THAT IT WILL USE BORROWINGS SOLELY FOR THE
PURPOSES SET FORTH IN SECTION 3.1 AND FOR NO OTHER PURPOSE;
Negative Covenants of the Borrower
(P)
THAT, WITHOUT THE PRIOR WRITTEN CONSENT OF
ROYAL, IT WILL NOT, NOR WILL IT PERMIT ANY SUBSIDIARY TO MERGE, AMALGAMATE,
ENTER INTO ANY CORPORATE REORGANIZATION OR OTHERWISE MODIFY ITS CORPORATE
STRUCTURE IN ANY WAY WHICH WOULD MATERIALLY ADVERSELY AFFECT ITS ASSET BASE OR
CONSOLIDATED CASH FLOW OR IMPAIR THE ABILITY OF THE BORROWER TO OBSERVE AND
PERFORM ITS OBLIGATIONS UNDER THE AGREEMENT;
(Q)
THAT, IT WILL NOT AND IT WILL CAUSE EACH OF
ITS SUBSIDIARIES NOT TO MAKE ANY DISPOSITION OF ANY OF ITS PROPERTY OR ASSETS
EXCEPT FOR:
(1)
DISPOSITIONS OF INVENTORY OR CURRENT ASSETS
IN THE ORDINARY COURSE OF BUSINESS AND ON COMMERCIALLY REASONABLE TERMS IT BEING
ACKNOWLEDGED THAT SALES AND TRANSFERS OF INVENTORY AND RELATED PROPERTY AND
ASSETS TO THE GUARANTOR ARE IN THE ORDINARY COURSE OF BUSINESS;
(2)
DISPOSITIONS OF INDIVIDUAL ITEMS OF
PROPERTY OR ASSETS IN ANY FISCAL YEAR HAVING AN AGGREGATE VALUE OF $5,000,000 OR
LESS BASED ON THE GREATER OF NET BOOK VALUE OR THE VALUE DETERMINED BY THE VALUE
OF THE SALE OR DISPOSITION, OR
(3)
DISPOSITIONS OF ASSETS AS APPROVED IN
WRITING BY ROYAL;
(R)
THAT IT WILL NOT ALLOW THE AGGREGATE OF
THE PRINCIPAL AMOUNT OF BORROWINGS UNDER THE CREDIT FACILITY ESTABLISHED
PURSUANT TO SECTION 3.1(A) TO EXCEED AT ANY TIME DURING THE CASH COLLATERAL
PERIOD THE COLLATERAL VALUE OF THE BORROWING BASE SET OUT IN THE THEN CURRENT
BORROWING BASE CERTIFICATE;
(S)
THAT, WITHOUT THE PRIOR WRITTEN CONSENT, OF
ROYAL, IT WILL NOT GRANT, CREATE, ASSUME, SUFFER OR PERMIT ANY LIEN ON THE
RESTRICTED CASH COLLATERAL EXCEPT FOR ROYAL'S SECURITY;
57
Reporting Covenants of the Borrower
(T)
THAT IT WILL AND IT WILL CAUSE EACH OF
ITS SUBSIDIARIES TO AT ALL TIMES KEEP OR CAUSE TO BE KEPT PROPER BOOKS OF
ACCOUNT AND THAT IT WILL FURNISH TO ROYAL WITHIN 90 DAYS AFTER THE CLOSE OF EACH
FISCAL YEAR SUFFICIENT COPIES OF ITS ANNUAL UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS, SIGNED BY A RESPONSIBLE OFFICER;
(U)
EXCEPT FOR THE YEAR END FISCAL QUARTER, IT
WILL DELIVER TO ROYAL WITHIN 45 DAYS OF THE CLOSE OF EACH FISCAL QUARTER
SUFFICIENT COPIES OF ITS QUARTERLY UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SIGNED BY A RESPONSIBLE OFFICER;
(V)
THAT IT WILL DELIVER TO ROYAL ON OR PRIOR TO
THE DATE REASONABLY STIPULATED BY ROYAL SUFFICIENT COPIES OF THE BORROWER'S (OR