DEBTOR OR OTHERWISE TO
ASSURE ANY CREDITOR AGAINST LOSS) (AND WILL NOT PERMIT ANY OF ITS SUBSIDIARIES
SO TO ASSUME, GUARANTY OR BECOME DIRECTLY OR CONTINGENTLY LIABLE) IN CONNECTION
WITH ANY INDEBTEDNESS OF ANY OTHER PERSON, EXCEPT (A) GUARANTIES BY ENDORSEMENT
FOR DEPOSIT OR COLLECTION IN THE ORDINARY COURSE OF BUSINESS, AND (B) GUARANTIES
EXISTING AT THE DATE HEREOF AND DESCRIBED ON ITEM 7.3 OF THE ATTACHED DISCLOSURE
SCHEDULE.
7.4
LOANS AND ADVANCES.
THE BORROWER WILL NOT
MAKE (AND WILL NOT PERMIT ANY SUBSIDIARY TO MAKE) ANY LOANS OR ADVANCES TO ANY
PERSON, INCLUDING, WITHOUT LIMITATION, THE BORROWER'S DIRECTORS, OFFICERS AND
EMPLOYEES, EXCEPT (A) AS DESCRIBED ON ITEM 7.4 OF THE ATTACHED DISCLOSURE
SCHEDULE, (B) SO LONG AS NO DEFAULT THEN EXISTS, AFFILIATE LOANS, (C)
ADVANCES
TO SUCH DIRECTORS, OFFICERS OR EMPLOYEES WITH RESPECT TO EXPENSES INCURRED BY
THEM IN THE ORDINARY COURSE OF THEIR DUTIES AND ADVANCES AGAINST SALARY, ALL OF
WHICH LOANS AND ADVANCES UNDER THIS CLAUSE (C) WILL NOT EXCEED, IN THE
AGGREGATE, $100,000 OUTSTANDING AT ANY ONE TIME, AND (D) ADVANCES FOR SECURITY
DEPOSITS.
7.5
SUBSIDIARIES; ACQUISITIONS.
OTHER THAN THE
ACQUISITION, WHICH ACQUISITION IS EXPRESSLY PERMITTED, THE BORROWER WILL NOT,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE BANK, MAKE (AND WILL NOT PERMIT ANY
SUBSIDIARY TO MAKE) ANY ACQUISITION OF ALL OR SUBSTANTIALLY ALL OF THE STOCK OR
OTHER EQUITY INTEREST OF ANY OTHER PERSON OR OF ALL OR SUBSTANTIALLY ALL OF THE
ASSETS OF ANY OTHER PERSON, OTHER THAN, ANY ACQUISITION THE PURCHASE PRICE FOR
WHICH DOES NOT EXCEED $1,000,000. THE BORROWER WILL NOT BECOME A PARTNER IN ANY
PARTNERSHIP OR LIMITED LIABILITY COMPANY.
THE BORROWER WILL PROMPTLY INFORM THE
BANK IF IT FORMS ANY SUBSIDIARIES AFTER THE DATE OF THIS AGREEMENT.
7.6
MERGER.
THE BORROWER (AND ITS SUBSIDIARIES)
WILL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE BANK, MERGE OR CONSOLIDATE
WITH ANY PERSON, OR SELL, LEASE, TRANSFER OR OTHERWISE DISPOSE OF (WHETHER IN
ONE OR MORE TRANSACTIONS) ANY MATERIAL PORTION OF ITS ASSETS (INCLUDING, WITHOUT
LIMITATION, ANY MATERIAL PORTION OF ITS INTELLECTUAL PROPERTY), OTHER THAN
(A) IN A SALE OF INVENTORY IN THE ORDINARY COURSE; AND (B) LICENSING OF ANY OF
ITS INTELLECTUAL PROPERTY IN THE ORDINARY COURSE OF BORROWER'S BUSINESS TO
ANOTHER PERSON ON COMMERCIALLY REASONABLE TERMS.
7.7
AFFILIATE TRANSACTIONS.
EXCEPT FOR
TRANSACTIONS DESCRIBED ON ITEM 7.7 OF THE ATTACHED DISCLOSURE SCHEDULE, THE
BORROWER WILL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE BANK, ENTER INTO ANY
TRANSACTION,
10
INCLUDING, WITHOUT LIMITATION, THE PURCHASE, SALE OR EXCHANGE OF ANY PROPERTY OR
THE RENDERING OF ANY SERVICE, WITH ANY AFFILIATE OF THE BORROWER, EXCEPT IN THE
ORDINARY COURSE AND PURSUANT TO THE REASONABLE REQUIREMENTS OF THE BORROWER'S
BUSINESS AND UPON FAIR AND REASONABLE TERMS NO LESS FAVORABLE TO THE BORROWER
THAN WOULD BE OBTAINED IN A COMPARABLE ARMS'-LENGTH TRANSACTION WITH ANY PERSON
NOT AN AFFILIATE; PROVIDED THAT NOTHING IN THIS §7.7 SHALL BE DEEMED TO RESTRICT
THE PAYMENT OF SALARY OR OTHER SIMILAR PAYMENTS TO ANY OFFICER OR DIRECTOR OF
THE BORROWER