BANK, BORROWER AND ITS OFFICERS, EMPLOYEES AND AGENTS AND
BORROWER'S BOOKS, TO THE EXTENT THAT BANK MAY DEEM THEM REASONABLY NECESSARY TO
PROSECUTE OR DEFEND ANY THIRD-PARTY SUIT OR PROCEEDING INSTITUTED BY OR AGAINST
BANK WITH RESPECT TO ANY COLLATERAL OR RELATING TO BORROWER.
6.12
CREATION/ACQUISITION OF SUBSIDIARIES.
NOTWITHSTANDING AND WITHOUT LIMITING THE NEGATIVE COVENANT CONTAINED IN
SECTION 7.3 HEREOF, IN THE EVENT BORROWER OR ANY SUBSIDIARY CREATES OR ACQUIRES
ANY
12
SUBSIDIARY, BORROWER AND SUCH SUBSIDIARY SHALL PROMPTLY NOTIFY BANK OF THE
CREATION OR ACQUISITION OF SUCH NEW SUBSIDIARY AND, AT BANK'S REQUEST, IN ITS
SOLE DISCRETION, TAKE ALL SUCH ACTION AS MAY BE REASONABLY REQUIRED BY BANK TO
CAUSE EACH SUCH SUBSIDIARY TO, IN BANK'S SOLE DISCRETION, BECOME A CO-BORROWER
OR GUARANTOR UNDER THE LOAN DOCUMENTS AND GRANT A CONTINUING PLEDGE AND SECURITY
INTEREST IN AND TO THE ASSETS OF SUCH SUBSIDIARY (SUBSTANTIALLY AS DESCRIBED ON
EXHIBIT A HERETO); AND BORROWER SHALL GRANT AND PLEDGE TO BANK A PERFECTED
SECURITY INTEREST IN THE STOCK, UNITS OR OTHER EVIDENCE OF OWNERSHIP OF EACH
SUBSIDIARY.
6.13
FURTHER ASSURANCES.
EXECUTE ANY FURTHER INSTRUMENTS
AND TAKE FURTHER ACTION AS BANK REASONABLY REQUESTS TO PERFECT OR CONTINUE
BANK'S LIEN IN THE COLLATERAL OR TO EFFECT THE PURPOSES OF THIS AGREEMENT.
7
NEGATIVE COVENANTS
Borrower shall not do any of the following without Bank's prior written consent:
7.1
DISPOSITIONS. CONVEY, SELL, LEASE, TRANSFER,
ASSIGN, OR OTHERWISE DISPOSE OF (COLLECTIVELY, "TRANSFER"), OR PERMIT ANY OF ITS
SUBSIDIARIES TO TRANSFER, ALL OR ANY PART OF ITS BUSINESS OR PROPERTY, EXCEPT
FOR TRANSFERS (A) OF INVENTORY IN THE ORDINARY COURSE OF BUSINESS; (B) OF WORN
OUT, EXCESSIVE OR OBSOLETE EQUIPMENT; (C) IN CONNECTION WITH PERMITTED LIENS AND
PERMITTED INVESTMENTS; AND (D) OF NON-EXCLUSIVE LICENSES FOR THE USE OF THE
PROPERTY OF BORROWER OR ITS SUBSIDIARIES IN THE ORDINARY COURSE OF BUSINESS.
7.2
CHANGES IN BUSINESS, MANAGEMENT, OWNERSHIP OR
BUSINESS LOCATIONS.
(A) ENGAGE IN OR PERMIT ANY OF ITS SUBSIDIARIES, IF ANY, TO
ENGAGE IN ANY BUSINESS OTHER THAN THE BUSINESSES CURRENTLY ENGAGED IN BY
BORROWER AND SUCH SUBSIDIARY, AS APPLICABLE, OR REASONABLY RELATED THERETO;
(B) LIQUIDATE OR DISSOLVE; OR (C) (I) HAVE A CHANGE IN MANAGEMENT SUCH THAT ANY
KEY PERSON RESIGNS, IS TERMINATED, OR IS NO LONGER ACTIVELY INVOLVED IN THE
MANAGEMENT OF THE BORROWER IN HIS/HER POSITION HELD AS OF THE EFFECTIVE DATE,
AND A REPLACEMENT REASONABLY SATISFACTORY TO BANK FOR SUCH KEY PERSON IS NOT
MADE WITHIN NINETY (90) DAYS AFTER DEPARTURE FROM BORROWER; OR (II) ENTER INTO
ANY TRANSACTION OR SERIES OF RELATED TRANSACTIONS IN WHICH THE STOCKHOLDERS OF
BORROWER WHO WERE NOT STOCKHOLDERS IMMEDIATELY PRIOR TO THE FIRST SUCH
TRANSACTION OWN MORE THAN FORTY PERCENT (40%) 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