(COLLECTIVELY, "LOSSES") THAT THE LENDER MAY
SUFFER OR INCUR AS A RESULT OF OR RELATING TO ANY MISREPRESENTATION, BREACH OR
INACCURACY OF ANY REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT MADE BY THE
BORROWER IN ANY TRANSACTION DOCUMENT.
IN ADDITION TO THE INDEMNITY CONTAINED
HEREIN, THE BORROWER WILL REIMBURSE THE LENDER FOR LENDER'S REASONABLE LEGAL AND
OTHER EXPENSES (INCLUDING THE COST OF ANY INVESTIGATION, PREPARATION AND TRAVEL
IN CONNECTION THEREWITH) INCURRED IN CONNECTION THEREWITH, AS SUCH EXPENSES ARE
INCURRED.
4.7.
USE OF PROCEEDS.
THE BORROWER SHALL USE THE
NET PROCEEDS FROM THE SALE OF THE SECURITIES HEREUNDER FOR WORKING CAPITAL
PURPOSES AND NOT TO REDEEM ANY COMMON STOCK OR COMMON STOCK EQUIVALENTS.
ARTICLE V.
NEGATIVE COVENANTS
The Borrower covenants and agrees that from and after the Closing Date and so
long as any there remains any outstanding principal amount under the Debentures,
the Borrower shall not, and shall not permit its Subsidiaries to, without the
prior written consent of the Lender in each instance:
5.1.
LIENS.
CREATE, INCUR OR ASSUME ANY LIEN ON
ANY PROPERTY OR ASSETS (INCLUDING, WITHOUT LIMITATION, THE COLLATERAL AND
INCLUDING STOCK OR OTHER SECURITIES OF ANY PERSON, INCLUDING
14
ANY SUBSIDIARY), TANGIBLE OR INTANGIBLE, NOW OWNED OR HEREAFTER ACQUIRED, OR
AGREE OR BECOME LIABLE TO DO SO, EXCEPT PERMITTED LIENS (AS DEFINED IN THE
SECURITY AGREEMENT).
5.2.
DISPOSITIONS OF ASSETS OR SUBSIDIARIES.
EXCEPT PURSUANT TO SECTION 13 OF THE SECURITY AGREEMENTS AND SECTION 11(C) OF
THE DEBENTURES, SELL, CONVEY, ASSIGN, LEASE, ABANDON OR OTHERWISE TRANSFER OR
DISPOSE OF, VOLUNTARILY OR INVOLUNTARILY, ANY OF ITS PROPERTIES OR ASSETS,
TANGIBLE OR INTANGIBLE (INCLUDING ANY SPIN-OFFS OF ANY DIVISIONS, LINES OF
BUSINESS OR SUBSIDIARIES AND ALSO INCLUDING SALE, ASSIGNMENT, DISCOUNT OR OTHER
DISPOSITION OF ACCOUNTS, CONTRACT RIGHTS, CHATTEL PAPER, EQUIPMENT OR GENERAL
INTANGIBLES WITH OR WITHOUT RECOURSE OR OF CAPITAL STOCK, SHARES OF BENEFICIAL
INTEREST, PARTNERSHIP INTERESTS OR LIMITED LIABILITY BORROWER INTERESTS OF A
SUBSIDIARY OF THE BORROWER), EXCEPT:
(A)
TRANSACTIONS INVOLVING THE SALE OF
INVENTORY OR UPGRADE OR EXCHANGE OF MACHINERY, IN EITHER CASE, IN THE ORDINARY
COURSE OF BUSINESS AND FOR USUAL AND ORDINARY PRICES;
(B)
ANY SALE, TRANSFER OR LEASE OF ASSETS BY ANY
WHOLLY OWNED SUBSIDIARY TO THE BORROWER OR ANOTHER SUBSIDIARY;
(C)
ANY SALE, TRANSFER OR LEASE OF ASSETS IN
THE ORDINARY COURSE OF BUSINESS WHICH ARE REPLACED BY SUBSTITUTE ASSETS ACQUIRED
OR LEASED;
(D)
ANY PERMITTED TRANSFER (AS DEFINED IN THE
DEBENTURES); OR
(E)
ANY SALE, TRANSFER OR LEASE OF ASSETS,
OTHER THAN THOSE SPECIFICALLY EXCEPTED PURSUANT TO CLAUSES (A) THROUGH (D)
ABOVE, THE FAIR MARKET VALUE OF WHICH DOES NOT EXCEED $100,000 IN THE AGGREGATE
DURING THE TERM OF THIS AGREEMENT.
5.3.
DIVIDENDS AND OTHER PAYMENTS.
DECLARE OR
DISTRIBUTE ANY DIVIDENDS OR ANY OTHER PAYMENTS OR DISTRIBUTIONS OF CASH OR OTHER
PROPERTY TO ITS STOCKHOLDERS OR OFFICERS OR DIRECTORS (OTHER THAN IN COMPLIANCE
WITH EXISTING BORROWER STOCK OPTION PLANS AND SALARIES IN THE ORDINARY COURSE OF
BUSINESS) WITH RESPECT TO ITS CAPITAL STOCK.
ARTICLE VI.
CONDITIONS
6.1.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF