NEGATIVE COVENANTS

During the term of this Agreement, Debtor agrees that, without the prior express written consent of Bank, it will not do, nor will it permit any or all of its subsidiaries and/ or affiliates, if any, any or all of the following:

12.1 Create, incur, assume or suffer to exist any indebtedness for borrowed money except the Obligations to Bank, other than indebtedness set forth in a schedule provided by Debtor which is attached hereto and incorporated herein as though set forth in full in this paragraph.

12.2 Create, incur, assume or suffer to exist any mortgage, lease, lien, pledge, charge or encumbrance of any kind on any of its property other than in favor of Bank, without first receiving express written approval of Bank, except:

(a) liens for taxes, assessment or governmental charges being contested in good faith by appropriate proceedings and for which adequate reserves have been established;

(b)pledges or deposits to secure obligations under workmen's compensation, unemployment insurance or social security laws or similar legislation;

(d)materialman's, mechanic's, carrier's, workmen's or other like liens in the ordinary course of Debtor's business, or deposits to obtain the release of such liens;

(e) deposits to secure surety, appeal or custom's bonds to which Debtor is a party;

(f) deposits as reserves for delinquent and/or contested taxes; and

(g)those set forth in a schedule provided pursuant to paragraph 10.9.

12.3Make any loans or advances to or investments in the securities of any other person, firm or corporation, except investments in direct obligations of the United States of America, or commercial paper or money market investments acceptable to Bank.

12.4Guarantee, assume, endorse, become surety to or otherwise become directly or contingently liable in connection with or upon obligations of any person, firm, association or corporation, except the endorsement of checks and other instruments for collection or similar transactions in the ordinary course of business.

12.5 Enter into any transaction of merger or consolidation or enter into the sale, lease, sale-leaseback, release, or disposal of all or any part of its assets out of the ordinary course of business or sell any Inventory or property below Debtor's cost or dispose of any single item of Equipment which at the time of such disposition has a fair market value in excess of $_______.

12.6 Declare or pay any dividends except in the form of capital stock of the Debtor or in any amount not to exceed in the aggregate $_________per annum. Additionally, Debtor may not redeem, purchase or otherwise acquire any shares of its capital stock.

12.7 Lease, as lessee, real or personal property with an aggregate annual rental in excess of $_________.

12.8 Sell, assign or transfer any of its Accounts or any of its contracts or subcontracts, or any interest therein.

12.9 Make capital expenditures for fixed assets in an aggregate amount in excess of $________annually during any fiscal period.

12.10 Substantially change the nature of its business or its mode of operation.

12.11. Enter into any arrangement for the acquisition of any real or personal property subject to any conditional sale agreement or lease subject to purchase, or enter into any other title retention agreement, during any annual fiscal period of Debtor in an aggregate amount in excess of $_________.

12.12Create or have any subsidiaries or affiliates, other than those listed in a schedule attached hereto and incorporated herein.

12.13Enter into any business or other transaction (i) with any stockholder, partner or owner who owns 10 % or more of any class or classes of the stock of Debtor, or (ii) with any affiliate and/or subsidiary of Debtor, except, in either case, on such terms and conditions as Debtor deals with independent parties at arms' length and, in either of such events, Debtor must provide Bank with a monthly list and description of all such transactions.

12.14Enter into any transaction for the acquisition of any business, firm or corporation, or substantially all of the assets thereof, including, but not limited to, such transaction on behalf of any affiliate and/or subsidiary of Debtor.

12.15Permit any of Debtor's Equipment to be removed from Debtor's place (s) of business.

12.16Permit any of the Collateral, as that term is defined in the Security Agreement (s), to be repossessed or levied upon under any legal process.

12.17Permit anything to be done that may impair the value of any Collateral, as that term is defined in the Security Agreement (s).

12.18Expend or become obligated to expend for fixed assets and improvements to its plant in excess of $_____________during any fiscal year of Debtor.

12.19Make any change in the Board of Directors or in the five (5) most senior officer positions of management of Debtor without first obtaining Bank's written consent, which will not be unreasonably withheld.

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<== попередня сторінка	\|	наступна сторінка ==>
REPRESENTATIONS AND WARRANTIES	\|	EVENTS OF DEFAULT

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