OR DISSOLVE; OR (C) ENTER INTO ANY TRANSACTION OR SERIES OF
RELATED TRANSACTIONS IN WHICH THE STOCKHOLDERS OF BORROWER IMMEDIATELY PRIOR TO
THE FIRST SUCH TRANSACTION OWN LESS THAN FIFTY ONE PERCENT (51%) OF THE VOTING
STOCK OF BORROWER IMMEDIATELY AFTER GIVING EFFECT TO SUCH TRANSACTION OR RELATED
SERIES OF SUCH TRANSACTIONS (OTHER THAN BY THE SALE OF BORROWER'S EQUITY
SECURITIES IN A PUBLIC OFFERING OR TO VENTURE CAPITAL INVESTORS SO LONG AS
BORROWER IDENTIFIES TO BANK THE VENTURE CAPITAL INVESTORS PRIOR TO THE CLOSING
OF THE TRANSACTION).
BORROWER SHALL NOT, WITHOUT AT LEAST TEN (10) DAYS PRIOR
WRITTEN NOTICE TO BANK: (1) ADD ANY NEW OFFICES OR BUSINESS LOCATIONS AT WHICH
ANY MATERIAL AMOUNT OF INVENTORY OR EQUIPMENT WILL BE LOCATED, (2) CHANGE ITS
JURISDICTION OF ORGANIZATION, (3) CHANGE ITS ORGANIZATIONAL STRUCTURE OR TYPE,
13
(4) CHANGE ITS LEGAL NAME, OR (5) CHANGE ANY ORGANIZATIONAL NUMBER (IF ANY)
ASSIGNED BY ITS JURISDICTION OF ORGANIZATION.
7.3
MERGERS OR ACQUISITIONS.
MERGE OR
CONSOLIDATE, OR PERMIT ANY OF ITS SUBSIDIARIES TO MERGE OR CONSOLIDATE, WITH ANY
OTHER PERSON, OR ACQUIRE, OR PERMIT ANY OF ITS SUBSIDIARIES TO ACQUIRE, ALL OR
SUBSTANTIALLY ALL OF THE CAPITAL STOCK OR PROPERTY OF ANOTHER PERSON.
A
SUBSIDIARY MAY MERGE OR CONSOLIDATE INTO ANOTHER SUBSIDIARY OR INTO BORROWER.
7.4
INDEBTEDNESS.
CREATE, INCUR, ASSUME, OR BE
LIABLE FOR ANY INDEBTEDNESS, OR PERMIT ANY SUBSIDIARY TO DO SO, OTHER THAN
PERMITTED INDEBTEDNESS.
7.5
ENCUMBRANCE.
CREATE, INCUR, OR ALLOW ANY LIEN
ON ANY OF
ITS PROPERTY, OR ASSIGN OR CONVEY ANY RIGHT TO RECEIVE INCOME,
INCLUDING THE SALE OF ANY ACCOUNTS, OR PERMIT ANY OF ITS SUBSIDIARIES TO DO SO,
EXCEPT FOR PERMITTED LIENS, PERMIT ANY COLLATERAL NOT TO BE SUBJECT TO THE FIRST
PRIORITY SECURITY INTEREST GRANTED HEREIN, OR ENTER INTO ANY AGREEMENT,
DOCUMENT, INSTRUMENT OR OTHER ARRANGEMENT (EXCEPT WITH OR IN FAVOR OF BANK) WITH
ANY PERSON WHICH DIRECTLY OR INDIRECTLY PROHIBITS OR HAS THE EFFECT OF
PROHIBITING BORROWER OR ANY SUBSIDIARY FROM ASSIGNING, MORTGAGING, PLEDGING,
GRANTING A SECURITY INTEREST IN OR UPON, OR ENCUMBERING ANY OF BORROWER'S OR ANY
SUBSIDIARY'S INTELLECTUAL PROPERTY, EXCEPT AS IS OTHERWISE PERMITTED IN
SECTION 7.1 HEREOF AND THE DEFINITION OF "PERMITTED LIEN" HEREIN.
7.6
MAINTENANCE OF COLLATERAL ACCOUNTS.
MAINTAIN
ANY COLLATERAL ACCOUNT EXCEPT PURSUANT TO THE TERMS OF SECTION 6.8(B) HEREOF.
7.7
INVESTMENTS; DISTRIBUTIONS.
(A) DIRECTLY OR
INDIRECTLY MAKE ANY INVESTMENT OTHER THAN PERMITTED INVESTMENTS, OR PERMIT ANY
OF ITS SUBSIDIARIES TO DO SO; OR (B) PAY ANY DIVIDENDS OR MAKE ANY DISTRIBUTION
OR PAYMENT OR REDEEM, RETIRE OR PURCHASE ANY CAPITAL STOCK PROVIDED THAT
(I) BORROWER MAY CONVERT ANY OF ITS CONVERTIBLE SECURITIES INTO OTHER SECURITIES
PURSUANT TO THE TERMS OF SUCH CONVERTIBLE SECURITIES OR OTHERWISE IN EXCHANGE
THEREOF, (II) BORROWER MAY PAY DIVIDENDS SOLELY IN COMMON STOCK; AND
(III) BORROWER MAY REPURCHASE THE STOCK OF FORMER EMPLOYEES OR CONSULTANTS
PURSUANT TO STOCK REPURCHASE AGREEMENTS SO LONG AS AN EVENT OF DEFAULT DOES NOT
EXIST AT THE TIME OF SUCH REPURCHASE AND WOULD NOT EXIST AFTER GIVING EFFECT TO
SUCH