SUCH SUBSIDIARY FROM
PAYING DIVIDENDS OR OTHERWISE DISTRIBUTING PROPERTY TO BORROWER.
7.8
TRANSACTIONS WITH AFFILIATES.
DIRECTLY OR INDIRECTLY ENTER INTO
OR PERMIT TO EXIST ANY MATERIAL TRANSACTION WITH ANY AFFILIATE OF BORROWER
EXCEPT FOR TRANSACTIONS THAT ARE IN THE ORDINARY COURSE OF BORROWER'S BUSINESS,
UPON FAIR AND REASONABLE TERMS THAT ARE NO LESS FAVORABLE TO BORROWER THAN WOULD
BE OBTAINED IN AN ARM'S LENGTH TRANSACTION WITH A NON-AFFILIATED PERSON.
7.9
SUBORDINATED DEBT.
MAKE ANY PAYMENT IN RESPECT OF ANY
SUBORDINATED DEBT, OR PERMIT ANY OF ITS SUBSIDIARIES TO MAKE ANY SUCH PAYMENT,
EXCEPT TO THE EXTENT SUCH PAYMENTS ARE PERMITTED UNDER A SUBORDINATION AGREEMENT
BETWEEN BANK AND THE APPLICABLE SUBORDINATED CREDITOR, OR AMEND ANY PROVISION
CONTAINED IN ANY DOCUMENTATION RELATING TO THE SUBORDINATED DEBT WITHOUT BANK'S
PRIOR WRITTEN CONSENT.
7.10
INVENTORY AND EQUIPMENT. STORE THE INVENTORY OR THE EQUIPMENT WITH
A BAILEE, WAREHOUSEMAN, OR OTHER THIRD PARTY UNLESS THE THIRD PARTY HAS BEEN
NOTIFIED OF BANK'S SECURITY INTEREST AND BANK (A) HAS RECEIVED AN ACKNOWLEDGMENT
FROM THE THIRD PARTY THAT IT IS HOLDING OR WILL HOLD THE INVENTORY OR EQUIPMENT
FOR BANK'S BENEFIT OR (B) IS IN PLEDGE POSSESSION OF THE WAREHOUSE RECEIPT,
WHERE NEGOTIABLE, COVERING SUCH INVENTORY OR EQUIPMENT. STORE OR MAINTAIN ANY
EQUIPMENT OR INVENTORY AT A LOCATION OTHER THAN THE LOCATION SET FORTH IN
SECTION 10 OF THIS AGREEMENT.
7.11
COMPLIANCE.
BECOME AN "INVESTMENT COMPANY" WITHIN THE MEANING OF
THE INVESTMENT COMPANY ACT OF 1940, OR BECOME PRINCIPALLY ENGAGED IN, OR
UNDERTAKE AS ONE OF ITS IMPORTANT ACTIVITIES, THE BUSINESS OF EXTENDING CREDIT
FOR THE PURPOSE OF PURCHASING OR CARRYING MARGIN STOCK, OR USE THE PROCEEDS OF
ANY CREDIT EXTENSION FOR SUCH PURPOSE.
FAIL TO MEET THE MINIMUM FUNDING
REQUIREMENTS OF ERISA, PERMIT A REPORTABLE EVENT OR PROHIBITED TRANSACTION, AS
DEFINED IN ERISA, TO OCCUR, FAIL TO COMPLY WITH THE FEDERAL FAIR LABOR STANDARDS
ACT OR VIOLATE ANY LAW OR REGULATION, WHICH VIOLATION COULD HAVE A MATERIAL
ADVERSE EFFECT, OR A MATERIAL ADVERSE EFFECT ON THE COLLATERAL OR THE PRIORITY
OF BANK'S LIEN ON THE COLLATERAL, OR PERMIT ANY OF ITS SUBSIDIARIES TO DO ANY OF
THE FOREGOING.
7.12
NEGATIVE PLEDGE AGREEMENTS.
PERMIT THE INCLUSION IN ANY CONTRACT
TO WHICH IT OR A SUBSIDIARY BECOMES A PARTY OF ANY PROVISIONS THAT COULD
RESTRICT OR INVALIDATE THE CREATION OF A SECURITY INTEREST IN ANY OF BORROWER'S
OR SUCH SUBSIDIARY'S PROPERTY.
8.
EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an Event of Default by
Borrower under this Agreement:
8.1
PAYMENT DEFAULT.
IF BORROWER FAILS TO PAY, WHEN DUE, ANY OF THE
OBLIGATIONS;
8.2
COVENANT DEFAULT.
(A)
IF BORROWER FAILS TO PERFORM ANY OBLIGATION UNDER ARTICLE 6 OR
VIOLATES ANY OF THE COVENANTS CONTAINED IN ARTICLE 7 OF THIS AGREEMENT; OR
(B)
IF BORROWER FAILS OR NEGLECTS TO PERFORM OR OBSERVE ANY OTHER
MATERIAL TERM, PROVISION, CONDITION, COVENANT CONTAINED IN THIS AGREEMENT, IN
ANY OF THE LOAN DOCUMENTS, OR IN ANY OTHER PRESENT OR FUTURE AGREEMENT BETWEEN
BORROWER AND BANK AND AS TO ANY