PRONOUNCEMENTS ISSUED OR PROMULGATED THEREUNDER WHICH WOULD PERMIT A PLEDGE OF
66-2/3% OR MORE OF THE TOTAL COMBINED VOTING POWER OF ALL CLASSES OF CAPITAL
STOCK OF ANY FOREIGN SUBSIDIARY ENTITLED TO VOTE WITHOUT CAUSING THE
UNDISTRIBUTED EARNINGS OF SUCH FOREIGN SUBSIDIARY AS DETERMINED FOR FEDERAL
INCOME TAXES TO BE TREATED AS A DEEMED DIVIDEND TO THE BORROWER FOR FEDERAL
INCOME TAX PURPOSES, THEN THE 65% LIMITATION SET FORTH ABOVE SHALL NO LONGER BE
APPLICABLE AND THE BORROWER SHALL CAUSE TO BE DULY PLEDGED AND DELIVERED TO BANK
SUCH OF THE CAPITAL STOCK NOT THERETOFORE REQUIRED TO BE PLEDGED UNDER THIS
AGREEMENT.
ARTICLE V.
NEGATIVE COVENANTS
BORROWER WILL NOT, AND NO SUBSIDIARY OF BORROWER WILL:
SECTION 5.01.
INDEBTEDNESS.
CREATE, INCUR, OR PERMIT TO EXIST, OR ASSUME
OR GUARANTEE, DIRECTLY OR INDIRECTLY, OR BECOME OR REMAIN LIABLE WITH RESPECT
TO, ANY INDEBTEDNESS, CONTINGENT OR OTHERWISE EXCEPT:
7
(A)
INDEBTEDNESS TO BANK, OR SECURED BY LIENS
PERMITTED BY THIS AGREEMENT, OR OTHERWISE APPROVED IN WRITING BY BANK, AND
RENEWALS AND EXTENSIONS (BUT NOT INCREASES) THEREOF;
(B)
PURCHASE MONEY INDEBTEDNESS OWING TO PERSONS
OTHER THAN BANK, SO LONG AS THE AMOUNT OF SUCH PURCHASE MONEY INDEBTEDNESS
INCURRED BY BORROWER DOES NOT EXCEED $250,000, IN THE AGGREGATE AT ANY TIME
OUTSTANDING;
(C)
INDEBTEDNESS (OTHER THAN THE PURCHASE MONEY
INDEBTEDNESS REFERENCED IN SECTION 5.01(B)) OWING TO PERSONS OTHER THAN BANK, SO
LONG AS THE AMOUNT OF SUCH INDEBTEDNESS INCURRED BY BORROWER DOES NOT EXCEED
$250,000, IN THE AGGREGATE AT ANY TIME OUTSTANDING;
(D)
INDEBTEDNESS OUTSTANDING AS OF THE DATE
HEREOF MORE PARTICULARLY DESCRIBED IN SCHEDULE 5.01 ATTACHED HERETO, AND ALL
RENEWALS AND EXTENSIONS (BUT NOT INCREASES) THERETO; AND
(E)
CURRENT ACCOUNTS PAYABLE AND UNSECURED
CURRENT LIABILITIES, NOT THE RESULT OF BORROWING, TO VENDORS, SUPPLIERS AND
PERSONS PROVIDING SERVICES, FOR EXPENDITURES FOR GOODS AND SERVICES NORMALLY
REQUIRED BY IT IN THE ORDINARY COURSE OF BUSINESS AND ON ORDINARY TRADE TERMS.
SECTION 5.02.
LIENS.
CREATE OR PERMIT TO EXIST ANY LIEN UPON ANY OF ITS
PROPERTY NOW OWNED OR HEREAFTER ACQUIRED, EXCEPT:
(A)
LIENS, NOT FOR BORROWED MONEY, ARISING IN
THE ORDINARY COURSE OF BUSINESS;
(B)
LIENS FOR TAXES NOT DELINQUENT OR BEING
CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS;
(C)
LIENS IN EFFECT ON THE DATE HEREOF AND SET
FORTH IN SCHEDULE 5.02, SO LONG AS NEITHER THE INDEBTEDNESS SECURED THEREBY NOR
THE PROPERTY COVERED THEREBY INCREASES;
(D)
LIENS SECURING PURCHASE MONEY INDEBTEDNESS
THAT IS OTHERWISE PERMITTED UNDER SECTION 5.01(B) OF THIS AGREEMENT; AND
(E)
LIENS IN FAVOR OF BANK, OR OTHERWISE
APPROVED IN WRITING BY BANK.
SECTION 5.03.
FINANCIAL AND OTHER COVENANTS.
FAIL TO COMPLY WITH THE
REQUIRED FINANCIAL COVENANTS AND OTHER COVENANTS DESCRIBED, AND CALCULATED AS
SET FORTH, IN EXHIBIT B.
UNLESS OTHERWISE PROVIDED ON EXHIBIT B, ALL SUCH
AMOUNTS AND RATIOS WILL BE CALCULATED: (A) ON THE BASIS OF GAAP; AND (B) ON A
CONSOLIDATED BASIS.
COMPLIANCE WITH THE REQUIREMENTS OF EXHIBIT B WILL BE
DETERMINED AS OF THE DATES OF THE FINANCIAL STATEMENTS TO BE PROVIDED TO BANK.
SECTION 5.04.
CORPORATE