THE BORROWERS' OBTAINING KNOWLEDGE OF ANY INCURRENCE OF ANY EXPENSE OR LOSS BY
ANY GOVERNMENTAL AUTHORITY OR OTHER PERSON IN CONNECTION WITH THE ASSESSMENT,
CONTAINMENT, OR REMOVAL OF ANY HAZARDOUS MATERIAL, FOR WHICH EXPENSE OR LOSS THE
BORROWERS MAY BE LIABLE.
5-16.
LITIGATION.
THERE IS NOT PRESENTLY PENDING OR THREATENED BY OR
AGAINST THE BORROWERS ANY SUIT, ACTION, PROCEEDING, OR INVESTIGATION WHICH, IF
DETERMINED ADVERSELY TO THE BORROWERS, WOULD HAVE A MATERIAL ADVERSE EFFECT UPON
THE BORROWERS' FINANCIAL CONDITION OR ABILITY TO CONDUCT ITS BUSINESS AS SUCH
BUSINESS IS PRESENTLY CONDUCTED OR IS CONTEMPLATED TO BE CONDUCTED IN THE
FORESEEABLE FUTURE.
5-17.
DIVIDENDS OR INVESTMENTS.
EXCEPT AS OTHERWISE PROVIDED IN THE
BUSINESS PLAN, THE BORROWERS SHALL NOT:
(A)
PAY ANY CASH DIVIDEND OR MAKE ANY OTHER DISTRIBUTION IN RESPECT OF
ANY CLASS OF THE BORROWERS' CAPITAL STOCK.
(B)
OWN, REDEEM, RETIRE, PURCHASE, OR ACQUIRE ANY OF THE BORROWERS'
CAPITAL STOCK.
24
(C)
INVEST IN OR PURCHASE ANY STOCK OR SECURITIES OR RIGHTS TO
PURCHASE ANY STOCK OR SECURITIES OF ANY CORPORATION OR OTHER ENTITY.
(D)
MERGE OR CONSOLIDATE OR BE MERGED OR CONSOLIDATED WITH OR INTO ANY
OTHER CORPORATION OR OTHER ENTITY WITHOUT THE PRIOR WRITTEN CONSENT OF THE
LENDER, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED IF THE
PROPOSED MERGER IS WITH IPARTY CORP.
(E)
CONSOLIDATE ANY OF THE BORROWERS' OPERATIONS WITH THOSE OF ANY
OTHER CORPORATION OR OTHER ENTITY.
(F)
ORGANIZE OR CREATE ANY RELATED ENTITY THAT IS A SUBSIDIARY.
(G)
SUBORDINATE ANY DEBTS OR OBLIGATIONS OWED TO THE BORROWERS BY ANY
THIRD PARTY TO ANY OTHER DEBTS OWED BY SUCH THIRD PARTY TO ANY OTHER PERSON.
The foregoing notwithstanding, in the event that all Indebtedness has been paid
in full and Borrowers submit to Lender a new Business Plan which sets forth any
proposed dividends and such Business Plan is reasonably satisfactory to Lender
and such dividends will not have a material adverse effect on Borrowers'
remaining working capital, Borrowers may pay the dividends as set forth in the
new Business Plan.
5-18.
LOANS.
THE BORROWERS SHALL NOT MAKE ANY LOANS OR ADVANCES TO, NOR
ACQUIRE THE INDEBTEDNESS OF, ANY PERSON, PROVIDED, HOWEVER, THE FOREGOING DOES
NOT PROHIBIT ANY OF THE FOLLOWING:
(A)
ADVANCE PAYMENTS MADE TO THE BORROWERS' SUPPLIERS IN THE ORDINARY
COURSE.
(B)
LOANS, ADVANCES AND OTHER INTERCOMPANY TRANSACTIONS BETWEEN THE
BORROWERS.
(C)
ADVANCES TO THE BORROWERS' OFFICERS, EMPLOYEES, AND SALESPERSONS
WITH RESPECT TO REASONABLE EXPENSES TO BE INCURRED BY SUCH OFFICERS, EMPLOYEES,
AND SALESPERSONS FOR THE BENEFIT OF THE BORROWERS, WHICH EXPENSES ARE PROPERLY
SUBSTANTIATED BY THE PERSON SEEKING SUCH ADVANCE AND PROPERLY REIMBURSABLE BY
THE BORROWERS.
5-19.
PROTECTION OF ASSETS.
THE LENDER, IN ITS DISCRETION, AND FROM TIME
TO TIME, (AFTER NOTICE TO THE BORROWERS PROVIDED NO EVENT OF DEFAULT HAS
OCCURRED) MAY DISCHARGE ANY TAX OR ENCUMBRANCE ON ANY OF THE COLLATERAL, OR TAKE
ANY OTHER ACTION THAT THE LENDER MAY DEEM NECESSARY OR DESIRABLE TO REPAIR,
INSURE, MAINTAIN, PRESERVE, COLLECT, OR REALIZE UPON ANY OF THE COLLATERAL. THE