ANY OF ITS SUBSIDIARIES TO DO SO UNLESS SUCH
PERSON HAS ENTERED INTO AN ACCOUNT CONTROL AGREEMENT WITH BANK IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO BANK; OR SUFFER OR PERMIT ANY SUBSIDIARY TO
BE A PARTY TO, OR BE BOUND BY, AN AGREEMENT THAT RESTRICTS 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 IN COMPLIANCE WITH THE TERMS OF SUCH SUBORDINATED DEBT, OR AMEND ANY
PROVISION CONTAINED IN ANY DOCUMENTATION RELATING TO THE SUBORDINATED DEBT
WITHOUT BANK'S PRIOR WRITTEN CONSENT.
7.10
INVENTORY AND EQUIPMENT. EXCEPT AS SET FORTH IN THE SCHEDULE, 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" OR BE CONTROLLED BY 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.
IF BORROWER FAILS TO PERFORM ANY OBLIGATION
UNDER ARTICLE 6 OR VIOLATES ANY OF THE COVENANTS CONTAINED