EXHIBIT 10.1
CORPORATE REVOLVING AND TERM LOAN AGREEMENT
BETWEEN
MANUFACTURERS AND TRADERS TRUST COMPANY
AND
DSET CORPORATION
DATED AUGUST 5, 1997
TABLE OF CONTENTS
1. DEFINITIONS....................................................... 1
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a. Accumulated Funding Deficiency............................. 1
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b. Affiliate.................................................. 1
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c. Bankruptcy Law............................................. 1
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d. Business Day............................................... 1
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e. Consolidated Adjusted Net Income........................... 1
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f. Consolidated Current Assets................................ 2
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g. Consolidated Current Liabilities........................... 2
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h. Consolidated Net Income Available for Interest Charges..... 2
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i. Consolidated Tangible Net Worth............................ 2
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j. Consolidated Total Liabilities............................. 3
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k. Control.................................................... 3
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l. Distribution............................................... 3
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m. EBITDA..................................................... 3
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n. ERISA...................................................... 3
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o. Event of Default........................................... 3
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p. Interest Charges........................................... 4
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q. Interest Payment Date...................................... 5
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r. Internal Revenue Code...................................... 5
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s. Law........................................................ 5
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t. Libor Rate................................................. 5
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u. Libor Rate Business Day.................................... 5
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v. Libor Rate Election........................................ 5
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w. Libor Rate Period.......................................... 5
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x. Libor Rate Period Commencement Date........................ 5
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y. Libor Rate Portion......................................... 5
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z. Loan....................................................... 6
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aa. Loan Document.............................................. 6
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bb. Material Adverse Effect.................................... 6
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cc. Pension Plan............................................... 6
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dd. Permitted Indebtedness..................................... 6
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ee. Permitted Lien............................................. 6
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ff. Person..................................................... 7
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gg. Potential Event of Default................................. 7
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hh. Prime Rate................................................. 7
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ii. Prime Rate Portion......................................... 7
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jj. Prohibited Transaction..................................... 8
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kk. Reportable Event........................................... 8
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ll. Revolving Loan............................................. 8
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mm. Revolving Loan Repayment Date.............................. 8
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nn. Subsidiary................................................. 8
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oo. Term Loan.................................................. 8
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pp. Working Capital............................................ 8
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2. LOANS............................................................. 8
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a. Revolving Loans............................................. 8
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b. Revolving Loan Note......................................... 9
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c. Interest on Revolving Loans................................. 9
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d. Term Loan................................................... 9
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e. Term Note................................................... 10
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f. Interest on Term Loan....................................... 10
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g. Interest on Prime Rate Portions............................. 10
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h. Interest on Libor Rate Portions............................. 10
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i. Libor Rate Election......................................... 11
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j. Extension of Revolving Loan Repayment Date.................. 12
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k. Optional Repayment in Advance............................... 12
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l. Non-Usage Fee............................................... 12
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m. Default Rate of Interest.................................... 12
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n. Late Charge................................................. 12
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o. Application of Payments and Computations.................... 12
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p. General Provisions as to Repayment and Payment.............. 13
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q. Limitation on Interest...................................... 13
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3. PREREQUISITES TO LOAN............................................. 13
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a. No Default.................................................. 13
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b. Representations and Warranties.............................. 13
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c. Proceedings................................................. 14
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d. Receipt by Bank Prior to Making of First Revolving Loan..... 14
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e. Receipt by Bank Prior to Making of Additional Revolving Loan 15
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f. Receipt by Bank Prior to Making of Term Loan................ 15
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4. REPRESENTATIONS AND WARRANTIES.................................... 15
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a. Use of Proceeds............................................. 15
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b. Subsidiaries................................................ 15
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c. Good Standing; Qualification; Authority..................... 15
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d. Compliance.................................................. 16
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e. Legality.................................................... 16
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f. Fiscal Year................................................. 17
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g. Financial Statements........................................ 17
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h. Material Adverse Effects; Distributions..................... 17
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i. Tax Returns and Payments.................................... 17
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j. Indebtedness................................................ 17
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k. Pension Obligations......................................... 18
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l. Assets; Liens and Encumbrances.............................. 18
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m. Loans....................................................... 18
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n. Judgments and Litigation.................................... 18
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o. Default..................................................... 19
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ii
p. Full Disclosure............................................. 19
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5. AFFIRMATIVE COVENANTS 19
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a. Good Standing; Qualification................................ 19
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b. Compliance.................................................. 19
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c. EBITDA...................................................... 19
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d. Working Capital............................................. 19
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e. Net Worth; Liabilities...................................... 19
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f. Ratio of Liabilities to Net Worth........................... 20
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g. Accounting; Reserves; Tax Returns........................... 20
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h. Reporting Requirements...................................... 20
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i. Payment of Certain Indebtedness............................. 21
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j. Maintenance of Title and Assets; Insurance.................. 22
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k. Inspections................................................. 22
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l. Pension Obligations......................................... 22
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m. Changes in Management, Ownership and Control................ 23
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n. Judgments................................................... 23
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o. Litigation.................................................. 23
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p. Liens and Encumbrances...................................... 24
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q. Defaults and Material Adverse Effects....................... 24
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r. Guaranties.................................................. 24
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s. Further Actions............................................. 24
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6. NEGATIVE COVENANTS................................................ 24
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a. Fiscal Year................................................. 24
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b. Indebtedness................................................ 25
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c. Pension Obligations......................................... 25
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d. Liens....................................................... 25
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e. Distributions............................................... 25
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f. Corporate Changes........................................... 25
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g. Stock of Subsidiary......................................... 26
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h. Full Disclosure............................................. 26
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7. INDEBTEDNESS IMMEDIATELY DUE...................................... 26
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8. EXPENSES; INDEMNIFICATION......................................... 26
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a. Expenses.................................................... 26
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b. Expenses Due to Law Changes................................. 27
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9. GENERAL........................................................... 28
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a. Term; Survival.............................................. 28
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b. Survival; Reliance........................................... 28
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iii
c. Cumulative Nature, Nonexclusive Exercise and Waivers of
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Rights and Remedies.......................................... 28
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d. Binding Effect............................................... 29
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e. Entire Agreement............................................. 29
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f. Governing Law................................................ 29
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g. Notices...................................................... 29
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h. Assignments and Participations............................... 30
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i. Requests..................................................... 30
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j. Right of Setoff.............................................. 30
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k. Invalidity................................................... 31
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l. Directly or Indirectly....................................... 31
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m. Accounting Terms and Computations............................ 31
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n. Headings..................................................... 31
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10. CONSENTS AND WAIVERS RELATING TO LEGAL PROCEEDINGS................. 31
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a. JURISDICTIONAL CONSENTS AND WAIVERS.......................... 31
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b. WAIVER OF TRIAL BY JURY AND CLAIMS TO CERTAIN DAMAGES........ 32
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iv
CORPORATE REVOLVING AND TERM LOAN AGREEMENT
This Agreement is made this 5th day of August, 1997, between
Manufacturers and Traders Trust Company, a New York banking corporation having
its chief executive office at One M&T Plaza, Buffalo, New York 14203 (the
"Bank") and DSET Corporation, a New Jersey business corporation having its chief
executive office at ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(the "Borrower").
The Bank and the Borrower agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
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a. Accumulated Funding Deficiency. "Accumulated Funding
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Deficiency" has the meaning given to such term in Section 412(a) of the Internal
Revenue Code.
b. Affiliate. "Affiliate" means, other than all Subsidiaries,
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any Person who or that now or hereafter has Control of, or is now or hereafter
under common Control with, the Borrower or any Subsidiary or over whom or over
which the Borrower or any Subsidiary now or hereafter has Control.
c. Bankruptcy Law. "Bankruptcy Law" means any bankruptcy or
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insolvency Law or any other Law relating to the relief of debtors, to the
readjustment, composition or extension of indebtedness, to liquidation or to
reorganization.
d. Business Day. "Business Day" means any day not a Saturday,
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Sunday or legal holiday, on which the Bank is open for business in Buffalo, New
York.
e. Consolidated Adjusted Net Income. "Consolidated Adjusted Net
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Income" for any period means the consolidated gross revenues of the Borrower for
such period less all expenses and other proper charges (including taxes on
income) and extraordinary items of income, but excluding in any event (to the
extent not previously deducted as extraordinary items of income):
i) any gains or losses on the sale or other disposition
of investments or fixed or capital assets, and any taxes on such excluding gains
and any tax deductions or credits on accounts of any such excluded losses;
ii) the proceeds of any life insurance policy;
iii) net earnings and losses of any corporation,
substantially all the assets of which have been acquired in any manner by the
Borrower or a Subsidiary, realized by such corporation prior to the date of such
acquisition;
iv) net earnings and losses of any corporation with which
the Borrower or a Subsidiary shall have consolidated or which shall have merged
into or with the Borrower or a Subsidiary prior to the date of such
consolidation or merger;
v) net earnings of any business entity in which the
Borrower or a Subsidiary has an ownership interest unless such net earnings
shall have actually been received by the Borrower in the form of cash
distributions;
vi) earnings resulting from any reappraisal, revaluation
or write-up of assets;
vii) any gain arising from the acquisition of any
securities of the Borrower; and
viii) any reversal of any contingency reserve, except to the
extent that provision for such contingency reserve shall have been made from
income arising during such period.
f. Consolidated Current Assets. "Consolidated Current Assets"
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means, at any date, the aggregate amount of all assets of the Borrower and its
Subsidiaries which would be properly classified as current assets at such date,
all computed as per management statements prepared on a consistent basis.
g. Consolidated Current Liabilities. "Consolidated Current
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Liabilities" means the aggregate amount of all liabilities of the Borrower and
its Subsidiaries (including tax and other proper accruals) which would be
classified as current liabilities, all computed as per management statements
prepared on a consistent basis.
h. Consolidated Net Income Available for Interest Charges.
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"Consolidated Net Income Available for Interest Charges" for any period means
the sum of (i) Consolidated Adjusted Net Income during such period, plus (to the
extent deducted in determining adjusted net income) (ii) all provisions for any
federal, state or other income taxes made by the Borrower during such period,
and (iii) Interest Charges during such period.
i. Consolidated Tangible Net Worth. "Consolidated Tangible Net
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Worth" means for the Borrower and its Subsidiaries, the excess of (i) the
aggregate net book value of the assets (other than patents, patent rights,
trademarks, trade names, treasury stock, franchises, copyrights, licenses,
permits, goodwill and other intangible
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assets classified as such in accordance with generally accepted accounting
principles and appearing on the balance sheet as of the date on which
Consolidated Tangible Net Worth is being determined) after all appropriate
adjustments in accordance with generally accepted accounting principles applied
on a consistent basis (including, without limitation, reserves for doubtful
receivables, obsolescence, depreciation and amortization and excluding the
amount of any write-up or revaluation of any asset) over (ii) Consolidated Total
Liabilities, in each case computed and consolidated in accordance with generally
accepted accounting principles applied on a consistent basis.
j. Consolidated Total Liabilities. "Consolidated Total
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Liabilities" means all items which, in accordance with generally accepted
accounting principles applied on a consistent basis, would properly be included
on the liability side of the balance sheet (other than capital stock, capital
surplus and retained earnings), as of the date on which the amount of
Consolidated Total Liabilities is to be determined, of the Borrower and its
Subsidiaries, computed and consolidated in accordance with generally accepted
accounting principles applied on a consistent basis.
k. Control. "Control" means, with respect to any Person,
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whether direct or indirect, (i) if such Person is a corporation, the power to
vote 10% or more of the outstanding shares of any class of stock of such Person
ordinarily having the power to vote for the election of directors of such
Person, (ii) the beneficial ownership of 10% or more of the outstanding shares
of any class of stock of such Person or of 10% or more of any other ownership
interest in such Person or (iii) the power to direct or cause the direction of
the management and policies of such Person, whether by ownership of any stock or
other ownership interest, by agreement or otherwise.
l. Distribution. "Distribution" means, with respect to any
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corporation, (i) any dividend or other distribution, whether in cash or in the
form of any other asset, on account of any of its stock or (ii) any payment on
account of the purchase, redemption, retirement or other acquisition of any of
its stock.
m. EBITDA. "EBITDA" means the sum of Consolidated Net Income
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Available for Interest Charges, plus depreciation and amortization.
n. ERISA. "ERISA" means the Employee Retirement Income
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Security Act of 1974, as amended.
o. Event of Default. An "Event of Default" occurs or exists if
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(i) the Borrower defaults in the payment when due of the principal of or
interest on any Loan or of any other amount owing by the Borrower to the Bank
pursuant to this Agreement, (ii) the Borrower or any Subsidiary defaults in the
payment when due of any sum that is now or hereafter owing by it to the Bank
other than pursuant to this Agreement, or the maturity of any such sum is
accelerated, (iii) the Borrower defaults in
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the performance when due of any obligation owing by it to the Bank pursuant to
this Agreement other than an obligation to pay money, and fails to cure such
default within 90 days after notice of such default is given by the Bank, (iv)
the Borrower is dissolved, ceases to exist, participates or agrees to
participate in any merger, consolidation or other absorption in which the
Borrower is not the surviving entity, assigns, sells or otherwise transfers or
disposes of all or substantially all of its assets, makes or permits what might
be fraudulent transfer or fraudulent conveyance of any of its assets, makes any
bulk sale, sends any notice of any intended bulk sale, becomes insolvent
(however such insolvency is evidenced), generally fails to pay its debts as they
become due, fails to pay, withhold or collect any tax as required by any Law
(except for any tax not yet required by Section 5i of this Agreement to be
paid), suspends or ceases its present business, has served or filed against it
or against any of its assets any attachment, levy, tax lien, warrant or similar
lien other than a Permitted Lien or has entered against it or against any of its
assets any judgment, order or award of any court, agency or other governmental
authority or of any arbitrator, (vi) the Borrower has any receiver, trustee,
liquidator, sequestrator or custodian of it or of any of its assets appointed
(whether with or without its consent), makes any assignment for the benefit of
creditors or commences or has commenced against it any case or other proceeding
pursuant to any Bankruptcy Law or any formal or informal proceeding for the
dissolution, liquidation or winding up of the affairs of, or for the settlement
of claims against it, (vii) any representation or warranty made in this
Agreement or heretofore or hereafter made to the Bank proves, as of the time it
was made or deemed to have been made, to have been incorrect or misleading in
any material respect, except to the extent updated in a certificate executed by
the President or a Vice President of the Borrower and by the chief financial
officer of the Borrower and received by the Bank, or (viii) there occurs or
exists with respect to any Pension Plan any Prohibited Transaction, Reportable
Event or other event or condition that, in the opinion of the Bank, constitutes
or will or might constitute grounds for the institution by the Pension Benefit
Guaranty Corporation of any proceeding under ERISA seeking the termination of
such Pension Plan or the appointment of a trustee to administer such Pension
Plan, the Pension Benefit Guaranty Corporation institutes any proceeding under
ERISA seeking the termination of any Pension Plan or the appointment of a
trustee to administer any Pension Plan, any Person other than the Pension
Benefit Guaranty Corporation institutes any proceeding under ERISA seeking the
termination of any Pension Plan or the appointment of a trustee to administer
any Pension Plan that is, in the opinion of the Bank, likely to result in the
termination of such Pension Plan, any trustee is appointed by a United States
District Court to administer any Pension Plan, or there are vested unfunded
liabilities under any Pension Plan that, in the opinion of the Bank, have or
will or might have any Material Adverse Effect.
p. Interest Charges. "Interest Charges" for any period means
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all interest and all amortization of debt discount and expense on all
indebtedness of the Borrower and its Subsidiaries.
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q. Interest Payment Date. "Interest Payment Date" means,
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except as otherwise provided in this Agreement, (i) the first day of each
calendar month, beginning on the first day of the first calendar month after the
calendar month in which the first Revolving Loan is made, except for any of such
interest payable with respect to any Libor Rate Portion for any Libor Rate
Period, and (ii) with respect to any Libor Rate Portion for any Libor Rate
Period, the day after the last day in such Libor Rate Period.
r. Internal Revenue Code. "Internal Revenue Code" means the
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Internal Revenue Code of 1986, as amended.
s. Law. "Law" means any statute, ordinance, regulation, rule,
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interpretation, decision, guideline or other requirement enacted or issued by
any court, agency or other governmental authority.
t. Libor Rate. "Libor Rate" means the rate to be charged
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during a Libor Rate Period, as determined by the Bank from any broker, quoting
service or commonly available source utilized by the Bank, at which United
States dollar deposits in immediately available funds are offered to leading
banks for deposit in the London interbank eurodollar market at approximately
11:00 a.m. London, England time (or as soon thereafter as practicable) on the
date that is two Libor Rate Business Days before the first day of such period
for delivery on the first day of such period for a period equal to such period.
u. Libor Rate Business Day. "Libor Rate Business Day" means
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any day on which in both New York, New York and London, England banks are open
to conduct regular business.
v. Libor Rate Election. "Libor Rate Election" means any oral
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(including, but not limited to, telephonic), written or other (including, but
not limited to, facsimile) election to have the interest charged for any period
on a portion of the aggregate outstanding principal amounts of all Loans
determined by reference to the Libor Rate for such period.
w. Libor Rate Period. "Libor Rate Period" means any period for
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which interest is to be charged on any Libor Rate Portion at a rate determined
by reference to the Libor Rate for such period pursuant to a Libor Rate
Election.
x. Libor Rate Period Commencement Date. "Libor Rate Period
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Commencement Date" means the date on which any Libor Rate Period begins.
y. Libor Rate Portion. "Libor Rate Portion" means any portion
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of the aggregate outstanding principal amounts of all Loans on which interest is
to be
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charged for any period at a rate determined by reference to the Libor Rate for
such period pursuant to a Libor Rate Election.
z. Loan. "Loan" means any Revolving Loan or the Term Loan.
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aa. Loan Document. "Loan Document" means this Agreement or any
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other agreement or instrument referred to in Section 3d, 3e or 3f of this
Agreement.
bb. Material Adverse Effect. "Material Adverse Effect" means
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any material adverse effect on (i) the ability of the Borrower to repay when due
any of the principal amount of the Loan or to pay when due any interest owing to
any Bank pursuant to this Agreement or any other amount owing by the Borrower to
the Bank pursuant to this Agreement, (ii) the ability of the Borrower or of any
Subsidiary to perform when due any obligation pursuant to any Loan Document or
(iii) the Borrower and its Subsidiaries taken as a whole or the business,
operations, assets, affairs or condition (financial or other) of the Borrower
and its Subsidiaries taken as a whole.
cc. Pension Plan. "Pension Plan" means (i) any pension plan,
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as such term is defined in Section 3(2) of ERISA, that (A) has heretofore been
or is hereafter established or maintained by the Borrower, by any Subsidiary or
by any other Person that is, together with the Borrower or with any Subsidiary,
a member of a controlled group of corporations for purposes of Section 414(b) of
the Internal Revenue Code or is under common control with the Borrower or with
any Subsidiary for purposes of Section 414(c) of the Internal Revenue Code, (B)
to which contributions have heretofore been or are hereafter made by the
Borrower, by any Subsidiary or by any such other Person or (C) to which the
Borrower, any Subsidiary or any such other Person has heretofore agreed or
hereafter agrees or otherwise has heretofore incurred or hereafter incurs any
obligation to make contributions or (ii) any trust heretofore or hereafter
created under any such pension plan.
dd. Permitted Indebtedness. "Permitted Indebtedness" means
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indebtedness, liabilities and obligations (i) to the Bank, (ii) resulting from
the endorsement in the ordinary course of business of any check or other
negotiable instrument for deposit or for collection, (iii) trade payables
incurred in the ordinary course of business, or (iv) obligations on capital
leases and the principal amount of the deferred purchase price of assets, not
exceeding $1,000,000 in aggregate principal amount at any given time, and
incurred by the Borrower or any Subsidiary in the ordinary course of its
business.
ee. Permitted Lien. "Permitted Lien" means (i) any lease of any
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asset by the Borrower or by any Subsidiary as a lessor in the ordinary course of
its business and without interference with the conduct of its business or
operations, (ii) any pledge or deposit made by the Borrower or by any Subsidiary
in the ordinary course of its business (A) in connection with any workers'
compensation, unemployment insurance,
6
social security or similar Law or (B) to secure the payment of any indebtedness,
liability or obligation in connection with any letter of credit, bid, tender,
trade or government contract, lease, surety, appeal or performance bond or Law,
or of any similar indebtedness, liability or obligation, not incurred in
connection with the borrowing of any money or in connection with the deferral of
the payment of the purchase price of any asset, (iii) any attachment, levy or
similar lien with respect to the Borrower or with respect to any Subsidiary
arising in connection with any action or other legal proceeding so long as (A)
the validity of the claim or judgment secured thereby is being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted,
(B) adequate reserves have been appropriately established for such claim or
judgment, (C) the execution or other enforcement of such attachment, levy or
similar lien is effectively stayed and (D) neither such claim or judgment nor
such attachment, levy or similar lien has any Material Adverse Effect, (iv) any
statutory lien in favor of the United States for any amount paid to the Borrower
or to any Subsidiary as a progress payment pursuant to any government contract,
(v) any statutory lien securing the payment of any tax, assessment, fee, charge,
fine or penalty imposed by any government or political subdivision upon the
Borrower, upon any Subsidiary or upon any of the assets, income and franchises
of the Borrower or of any Subsidiary but not yet required by Section 5i of this
Agreement to be paid, (vi) any statutory lien securing the payment of any claim
or demand of any materialman, mechanic, carrier, warehouseman, garageman or
landlord against the Borrower or against any Subsidiary but not yet required by
such Section 5i to be paid, (vii) any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or similar title
exception or encumbrance affecting the title to any real property of the
Borrower or of any Subsidiary but not interfering with the conduct of its
business or operations, or (viii) any security interest, mortgage, leasehold
interest or other lien or encumbrance securing any Permitted Indebtedness.
ff. Person. "Person" means (i) any individual, corporation,
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partnership, limited liability company, joint venture, trust, unincorporated
association, government or political subdivision, (ii) any court, agency or
other governmental authority or (iii) any other entity, body, organization or
group.
gg. Potential Event of Default. "Potential Event of Default"
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means any event or condition that, after notice, after lapse of time or after
both notice and lapse of time, would constitute an Event of Default.
hh. Prime Rate. "Prime Rate" means the rate announced by the
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Bank as its prime rate of interest.
ii. Prime Rate Portion. "Prime Rate Portion" means the
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aggregate outstanding principal amounts of all Loans less the Libor Rate
Portion.
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jj. Prohibited Transaction. ""Prohibited Transaction" (i) has
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the meaning given to such term in Section 4975(c) of the Internal Revenue Code,
and (ii) means any transaction prohibited by Section 406(a) of ERISA.
kk. Reportable Event. "Reportable Event" has the meaning given
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to such term in Section 4043(b) of ERISA.
ll. Revolving Loan. "Revolving Loan" means any loan by the Bank
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to the Borrower pursuant to Section 2a of this Agreement.
mm. Revolving Loan Repayment Date. "Revolving Loan Repayment
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Date" means the later of (i) August 5, 2000, or (ii) any date specified in any
extension request executed by the Bank in accordance with Section 2j of this
Agreement.
nn. Subsidiary. "Subsidiary" means any corporation of which the
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Borrower now or hereafter has beneficial ownership, whether direct or indirect,
of (i) 50% or more of the outstanding shares of any class of stock ordinarily
having the power to vote for the election of directors of such corporation or
(ii) such lower percentage of the outstanding shares of any class of such stock
as is sufficient to render such corporation a subsidiary of the Borrower for
purposes of generally accepted accounting principles as in effect at the time of
determination of the status of such corporation for purposes of this definition.
oo. Term Loan. "Term Loan" means the loan by the Bank to the
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Borrower pursuant to Section 2d of this Agreement.
pp. Working Capital. "Working Capital" shall mean for the
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Borrower and its Subsidiaries, the amount by which Consolidated Current Assets
exceed Consolidated Current Liabilities.
2. LOANS.
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a. Revolving Loans. (i) Subject to the terms and conditions,
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and relying upon the representations and warranties, set forth herein, the Bank
agrees to make Revolving Loans to the Borrower at any time or from time to time
on or after the date hereof and until the Revolving Loan Repayment Date, in an
aggregate principal amount not in excess of $3,000,000 at any time (the
"Commitment"). Within the foregoing limits, the Borrower may borrow hereunder on
or after the date hereof and prior to the Revolving Loan Repayment Date, repay
or reborrow subject to the terms, provisions and limitations set forth herein.
After the Revolving Loan Repayment Date, no amounts repaid may be reborrowed.
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(ii) Revolving Loans made by the Bank on any one day shall
be in any combination of Prime Rate Portions and Libor Rate Portions, provided,
that each such Portion of a Revolving Loan shall be in an amount not less than
$50,000 and in integral multiples thereof. The initial Revolving Loan by the
Bank to the Borrower shall be made against delivery to the Bank of the Revolving
Loan Note, payable to the order of the Bank, as described in Section 2b hereof,
and upon delivery of the other documentation required in Article 3 herein.
(iii) Each Revolving Loan shall be made upon one (1)
Business Day's (or three (3) Libor Rate Business Days' in the case of a
Revolving Loan consisting wholly or partly of a Libor Rate Portion) prior notice
from the Borrower to the Bank. Each such notice shall specify (A) the requested
date of such Loan, (B) the requested type of Loan, and (C) the requested amount
of such Loan.
b. Revolving Loan Note. The Revolving Loans shall be
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evidenced by a promissory note (the "Revolving Loan Note"), substantially in the
form attached hereto as Exhibit A, appropriately completed by the Borrower, duly
executed and delivered on behalf of the Borrower, and payable to the order of
the Bank. The date and amount of each Revolving Loan, and the date and amount of
each payment or prepayment of principal of any Revolving Loan, shall be recorded
on the grid schedule annexed to the Revolving Loan Note, and the Borrower
authorizes the Bank to make such recordation. The Revolving Loan Note and grid
schedule shall be presumptive evidence of the Revolving Loans, absent manifest
error. The aggregate principal amount outstanding on each Revolving Loan Note
shall be payable on the Revolving Loan Repayment Date. All accrued and unpaid
interest on the Revolving Loans shall be payable on each Interest Payment Date
and on the Revolving Loan Repayment Date; provided, however, that if any such
-------- -------
day is not a Business Day, such accrued interest, if any, shall be payable on
the next succeeding Business Day with additional accrued interest until paid.
c. Interest on Revolving Loans. The Prime Rate Portion of each
---------------------------
Revolving Loan shall bear interest in accordance with Section 2g, and the Libor
Rate Portion of each Revolving Loan shall bear interest in accordance with
Section 2h.
d. Term Loan. Not later than 30 days nor more than 90 days
---------
prior to the Revolving Loan Repayment Date, the Borrower may deliver to the Bank
a request (a "Conversion Request") that all or a portion of the then outstanding
principal amount of Revolving Loans made to the Borrower be converted to a Term
Loan. Subject to the terms and conditions of this Agreement, including Section
3f, the Bank agrees, upon the simultaneous payment in full of the principal of
and interest on the Revolving Loans then outstanding, to make a four year term
loan (the "Term Loan") to the Borrower on the Revolving Loan Repayment Date. The
Term Loan shall be in the principal amount contained in the Conversion Request;
provided that the Term Loan shall be in a principal
--------
9
amount of not more than the lesser of (i) the total of the outstanding principal
amounts of all Revolving Loans, or (ii) $3,000,000.
e. Term Note. The Term Loan shall be evidenced by a promissory
---------
note ("Term Note") substantially in the form attached hereto as Exhibit B,
appropriately completed, payable to the order of the Bank, duly executed and
delivered on behalf of the Borrower, dated the Revolving Loan Repayment Date and
in the principal amount of the Term Loan. The principal amount outstanding on
such Term Note shall be payable as to principal in sixteen (16) equal
consecutive quarterly installments, with the first of such installments due on
the date that is three months after the Revolving Loan Repayment Date, and
additional installments due on the same day of each succeeding calendar quarter
through the date that is four years after the Revolving Loan Repayment Date,
when the Borrower shall repay the entire outstanding principal amount of the
Term Loan to the Bank together with all interest and other amounts owing
pursuant to this Agreement and remaining unpaid.
f. Interest on Term Loan. The Prime Rate Portion of the Term
---------------------
Loan shall bear interest in accordance with Section 2g, and the Libor Rate
Portion of the Term Loan shall bear interest in accordance with Section 2h.
g. Interest on Prime Rate Portions. The Borrower shall pay
-------------------------------
interest on the unpaid principal amount of the Prime Rate Portion of each Loan
from the date such Loan is disbursed to the Borrower until the date such
principal amount is due and payable, on each Interest Payment Date for such Loan
at an interest rate per annum equal to (a) the Prime Rate in effect from time to
time, minus 0.25%, on the aggregate principal amount of the Prime Rate Portions
of all Loans to the extent it is $1,000,000 or less, and (b) the Prime Rate in
effect from time to time on the aggregate principal amount of the Prime Rate
Portions of all Loans to the extent such aggregate principal amount exceeds
$1,000,000.
h. Interest on Libor Rate Portions. (i) The Borrower shall pay
-------------------------------
interest on the unpaid principal amount of the Libor Rate Portion of each Loan
from the date such Loan is disbursed to the Borrower until the date such
principal amount is due and payable, on each Interest Payment Date for such
Loan, at an interest rate per annum equal to (a) the Libor Rate plus 1.25%, if
the aggregate principal amount of all Loans is $1,000,000 or less, (b) the Libor
Rate plus 1.75%, if the aggregate principal amount of the Prime Rate Portions of
all Loans exceeds $1,000,000, or (c) if the aggregate principal amount of all
Loans exceeds $1,000,000, but the aggregate principal amount of the Prime Rate
Portions of all Loans is $1,000,000 or less, (i) the Libor Rate plus 1.25% on
the aggregate principal amount of the Libor Rate Portions of Loans which is
equal to the difference between $1,000,000 and the aggregate principal amount of
the Prime Rate Portions of all Loans, and (ii) the Libor Rate plus 1.75% on the
aggregate principal amount of the Libor Rate Portions of all Loans to the extent
they exceed such amount.
10
(ii) Notwithstanding anything to the contrary in paragraph
2h(i), (1) interest shall not be charged at as determined under paragraph 2h(i),
and shall instead be charged as provided in Section 2g, with respect to any
Libor Rate Portion during any Libor Rate Period if before such Libor Rate Period
begins (a) any governmental authority asserts that it is unlawful, or the Bank
determines that it is unlawful, for the Bank to charge interest with respect to
such Libor Rate Portion during such Libor Rate Period at a rate determined by
reference to a Libor Rate, (b) the Bank determines that sufficient United States
dollar deposits in immediately available funds offered for deposit are not
available for such Libor Rate Period to the Bank or any participant in such
Libor Rate Portion to the extent of its interest in such Libor Rate Portion or
(c) the Bank determines that information necessary to determine the rate to be
charged pursuant to paragraph 2h(i) is unavailable, and (2) such interest shall
cease to be charged as provided in such paragraph 2h(i), and shall begin to be
charged as provided in Section 2g, with respect to any Libor Rate Portion during
any Libor Rate Period if any governmental authority asserts that it is unlawful,
or the Bank determines that it is unlawful, for the Bank to continue to charge
interest with respect to such Libor Rate Portion during such Libor Rate Period
at a rate determined by reference to a Libor Rate.
i. Libor Rate Election. At any time and from time to time,
-------------------
upon three (3) Libor Rate Business Days' prior notice by the Borrower to Bank,
the Borrower may irrevocably make a Libor Rate Election that specifies (i) the
Libor Rate Business Day that is to be the Libor Rate Period Commencement Date
for the Libor Rate Period elected pursuant to such Libor Rate Election, (ii)
whether a one-month, two-month, three-month or six-month option is elected as
the length of such Libor Rate Period and (iii) expressed as a dollar amount, (A)
any portion of the principal amount of any Loan requested to be made on such
Libor Rate Period Commencement Date to which such Libor Rate Election relates
and (B) any portion of the aggregate outstanding principal amounts of all Loans
made prior to such Libor Rate Period Commencement Date to which such Libor Rate
Election relates; provided, however, that (I) such Libor Rate Period may not
extend beyond the Revolving Loan Repayment Date in the case of Revolving Loans,
or beyond the maturity date of the Term Loan in the case of the Term Loan, (II)
such Libor Rate Election may not change any election made pursuant to any prior
Libor Rate Election, and (III) such Libor Rate Election need not be honored by
the Bank if (1) such Libor Rate Election is received by the Bank more than five
or less than three Libor Rate Business Days before such Libor Rate Period
Commencement Date, (2) any Event of Default occurs or exists before the time
such Libor Rate Election is received by the Bank or exists at such time, or (3)
the total of the dollar amounts specified in clause (iii) of this sentence is
not at least $250,000. Each Libor Rate Period shall end on the day before the
anniversary of such Libor Rate Period Commencement Date corresponding to the
option elected pursuant to such Libor Rate Election (e.g., one-month, two-month,
----
three-month or six-month anniversary) or, if such anniversary is not a Libor
Rate Business Day, on the day before the first day following such anniversary
that is a Libor Rate Business Day. The Bank may treat as made by the Borrower
and rely upon, and the Borrower shall be bound by, any Libor Rate
11
Election that the Bank believes in good faith to be valid and to have been made
in the name or on behalf of the Borrower by any officer of the Borrower, and the
Bank shall not incur any liability to the Borrower or any other Person as a
direct or indirect result of honoring such Libor Rate Election.
j. Extension of Revolving Loan Repayment Date. At least 30 days
------------------------------------------
but not more than 90 days before the Revolving Loan Repayment Date, the Borrower
may request that the Revolving Loan Repayment Date be extended for one year by
executing and delivering to the Bank an extension request. If prior to the
Revolving Loan Repayment Date, the Bank executes such extension request, the
Revolving Loan Repayment Date shall automatically be extended to the date
specified in such extension request. If the Bank does not so execute such
extension request, the Revolving Loan Repayment Date shall remain the same.
k. Optional Repayment in Advance. Subject to Section 8b, the
-----------------------------
Borrower shall have the option of repaying the principal amount of any Loan to
the Bank in advance in full or in part at any time and from time to time without
any premium or penalty; provided, however, that (i) the amount of any such
repayment of the Term Loan in part shall be an integral multiple of $100,000 and
(ii) upon making any such repayment in full the Borrower shall pay to the Bank
all interest owing pursuant to this Agreement and remaining unpaid and all other
amounts owing by the Borrower to the Bank pursuant to this Agreement and
remaining unpaid. Each such repayment in part of the Term Loan shall be applied
to the installments of the principal amount of the Term Loan in the inverse
order of such installments becoming due.
l. Non-Usage Fee. The Borrower agrees to pay to the Bank, in
-------------
consideration of its Commitment, a non-usage fee of 0.25% per annum on the
average daily unused portion of the Commitment (based on a year of 360 days),
payable quarterly commencing on the first day of the second quarter following
the Closing Date.
m. Default Rate of Interest. Upon the occurrence of an uncured
------------------------
Event of Default, the interest rates applicable to the Loans shall immediately
without further action by the Bank be increased to a rate equal to 5% above the
Prime Rate until paid in full.
n. Late Charge. If the outstanding principal amount of any
-----------
Loans is not repaid, or any interest owing pursuant to this Agreement in
connection with any Loan is not paid, within ten days after the date it becomes
due, whether by acceleration or otherwise, the Borrower shall pay to the Bank a
late charge of the greater of (a) 5% of the amount due or (b) $50.
o. Application of Payments and Computations. All computations
----------------------------------------
of the Prime Rate and Libor Rate and of fees, overdue payment interest charges
and
12
penalties hereunder shall be made by the Bank on the basis of a year of 360
days, for the actual number of days (including the first day but excluding the
last day) occurring in the period for which such amounts are payable.
p. General Provisions as to Repayment and Payment. Repayment of
----------------------------------------------
the principal amount of each Loan, payment of all interest owing pursuant to
this Agreement in connection with any Loan and payment of all other amounts
owing by the Borrower to the Bank pursuant to this Agreement in connection with
any Loan shall be made in lawful money of the United States and in immediately
available funds at the banking office of the Bank located at One M&T Plaza,
Buffalo, New York, or at such other office of the Bank as may at any time and
from time to time be specified in any notice delivered, given or sent to the
Borrower by the Bank. No such repayment or payment shall be deemed to have been
received by the Bank until received by the Bank at the office of the Bank
determined in accordance with the preceding sentence, and any such repayment or
payment received by the Bank at such office after 2:00 P.M. on any day shall be
deemed to have been received by the Bank at the time such office opens for
business on the next Business Day of the Bank. If the time by which any of the
principal amount of any Revolving Loan is to be repaid is extended by operation
of law or otherwise, the Borrower shall pay interest on the outstanding portion
thereof during such period of extension as provided in this Agreement.
q. Limitation on Interest. Notwithstanding anything to the
----------------------
contrary contained in this Agreement, in no event shall interest be payable on
any Loan at a rate in excess of the maximum rate permitted by applicable law,
and solely to the extent necessary to result in such interest not being payable
at a rate in excess of such maximum rate, any amount that would be treated as
part of such interest under a final judicial interpretation of applicable law
shall be deemed to have been a mistake and automatically canceled, and, if
received by the Bank, shall be refunded to the Borrower, it being the intention
of the Bank and of the Borrower that such interest not be payable at a rate in
excess of such maximum rate.
3. PREREQUISITES TO LOAN. The obligation of the Bank to make any
---------------------
Loan shall be conditioned upon the following:
a. No Default. (i) There not existing at the time such Loan is
----------
to be made, any Event of Default or Potential Event of Default and (ii) the Bank
not believing in good faith that any Event of Default or Potential Event of
Default has so occurred or existed or so exists;
b. Representations and Warranties. (i) Each representation and
------------------------------
warranty made in this Agreement being true and correct as of the time such Loan
is to be made, (ii) each financial statement provided to the Bank by or on
behalf of the Borrower or by or on behalf of any Subsidiary before the time such
Loan is to be made being
13
materially true and correct as of the date thereof, and (iii) the Bank not
believing in good faith that (A) any such representation or warranty is other
than true and correct as of such date, or (B) any such financial statement was
other than materially true and correct as of the date thereof;
c. Proceedings. The Bank being satisfied as to each corporate
-----------
or other proceeding in connection with any transaction contemplated by this
Agreement;
d. Receipt by Bank Prior to Making of First Revolving Loan. The
-------------------------------------------------------
receipt by the Bank at or before the time the first Revolving Loan is to be made
of the following, in form and substance satisfactory to the Bank:
i) A Revolving Loan Note, appropriately completed and
duly executed by the Borrower;
ii) An opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, counsel to the
Borrower;
iii) A certificate executed by the President or a Vice
President of the Borrower or by the chief financial officer of the Borrower and
stating that (A) there does not exist at the time such Loan is to be made any
Event of Default or Potential Event of Default and (B) each representation and
warranty made in this Agreement is true and correct as of the time such Loan is
to be made;
iv) Evidence that each of the Borrower and all
Subsidiaries is at the time such Loan is to be made (A) in good standing under
the law of the jurisdiction in which it is incorporated and (B) duly qualified
and in good standing as a foreign corporation authorized to do business in each
jurisdiction in which such qualification is necessary;
v) A copy of the certificate of incorporation or other
charter document of each of the Borrower and all Subsidiaries certified by its
Secretary to be complete and accurate at the time such Loan is to be made;
vi) A copy of the by-laws or other organizational document
of each of the Borrower and all Subsidiaries certified by its Secretary to be
complete and accurate at the time such Loan is to be made;
vii) Evidence of the taking, and of the continuation in
full force and effect at the time such Loan is to be made, of each corporate or
other action of the Borrower and the execution, delivery to the Bank and
performance of each Loan Document;
14
viii) Evidence that each requirement contained in any Loan
Document with respect to insurance is being met at the time such Loan is to be
made;
ix) Each additional writing required by any Loan Document
or deemed necessary or desirable by the Bank at the sole option of the Bank; and
x) Payment of all costs and expenses payable pursuant to
the first sentence of Section 8a of this Agreement at or before the time such
Loan is to be made;
e. Receipt by Bank Prior to Making of Additional Revolving
-------------------------------------------------------
Loan. If such Loan is a Revolving Loan other than the first Revolving Loan, to
----
the extent requested by the Bank, the receipt by the Bank at or before the time
such Loan is to be made of the items described in Section 3d of this Agreement,
in form and substance satisfactory to the Bank; and
f. Receipt by Bank Prior to Making of Term Loan. If such Loan
--------------------------------------------
is the Term Loan, the receipt by the Bank at or before the time such Loan is to
be made of the following, in form and substance satisfactory to the Bank:
i) A Term Loan Note, appropriately completed and duly
executed by the Borrower; and
ii) To the extent requested by the Bank, the items
described in clauses (ii) through (x) of Section 3d of this Agreement.
4. REPRESENTATIONS AND WARRANTIES. Except as fully and accurately
------------------------------
described in Schedule A attached to and made a part of this Agreement, the
Borrower represents and warrants to the Bank as follows:
a. Use of Proceeds. The proceeds of each Revolving Loan will
---------------
be used only for working capital of the Borrower or general corporate needs of
the Borrower. The proceeds of the Term Loan will be used only to repay the
outstanding principal amounts of Revolving Loans.
b. Subsidiaries. The Borrower has no majority-owned
------------
Subsidiaries.
c. Good Standing; Qualification; Authority. Each of the
---------------------------------------
Borrower and all Subsidiaries (i) is a corporation duly incorporated and
organized, validly existing and in good standing under the law of the
jurisdiction in which it is incorporated, (ii) is duly qualified and in good
standing as a foreign corporation authorized to do
15
business in each jurisdiction in which such qualification is necessary, and
(iii) has the power and authority to own each of its assets, to use each of its
assets as now and as anticipated that such asset will hereafter be used and to
conduct its business and operations as now and as anticipated that its business
and operations will hereafter be conducted.
d. Compliance. The present and anticipated conduct of the
----------
business and operations of the Borrower and of each Subsidiary and the present
and anticipated ownership or lease and use of each asset owned or leased by the
Borrower and each Subsidiary are in compliance in each material respect with
each applicable Law. Each authorization, approval, permit, consent, franchise
and license from, each registration and filing with, each declaration, report
and notice to, and each other act by or relating to, any Person necessary for
the present or anticipated conduct of the business or operations of the Borrower
or of any Subsidiary, and for the present or anticipated ownership, lease or use
of any asset of the Borrower or of any Subsidiary, has been duly obtained, made,
given or done, and is in full force and effect. Each of the Borrower and all
Subsidiaries is in compliance in each material respect with each such
authorization, approval, permit, consent, franchise and license with respect to
it, with its certificate or articles of incorporation or other charter document,
with its by-laws or other organizational document and with each agreement and
instrument to which it is a party or by which it or any of its assets is bound.
e. Legality. The obtaining of each Loan and the execution,
--------
delivery to the Bank and performance of each Loan Document by the Borrower (i)
are and will be in furtherance of the purposes of the Borrower and within the
power and authority of the Borrower, (ii) do not and will not (A) violate, or
result in any violation of, any Law or any judgment, order or award of any
court, agency or other governmental authority or of any arbitrator or (B)
violate, result in any violation of, constitute (whether immediately or after
notice, after lapse of time or both notice and lapse of time) any default under,
or result in or require the imposition or creation of any security interest in,
or of any mortgage or other lien or encumbrance upon, any asset of the Borrower
pursuant to, (I) the certificate of incorporation or other charter document of
the Borrower, (II) the by-laws or other organizational document of the Borrower,
(III) any shareholder agreement, voting trust or similar arrangement applicable
to any of the outstanding shares of any class of stock of the Borrower, (IV) any
resolution or other action of record of the shareholders or board of directors
of the Borrower or (V) any agreement or instrument to which the Borrower is a
party or by which the Borrower or any asset of the Borrower is bound, and (iii)
have been duly authorized by each necessary action of the shareholders or board
of directors of the Borrower. Each authorization, approval, permit and consent
from, each registration and filing with, each declaration and notice to, and
each other act by or relating to, any Person required as a condition of the
obtaining of any Loan by the Borrower, of the execution, delivery to the Bank or
performance of any Loan Document by any Person other than the Bank has been duly
obtained, made, given or done, and is in full force and effect. Each Loan
Document has been duly executed and delivered to the
16
Bank by each Person other than the Bank who or that is contemplated by such Loan
Document as a party thereto.
f. Fiscal Year. The fiscal year of the Borrower and of each
-----------
Subsidiary is the year ending on the last day of December.
g. Financial Statements. The Borrower has heretofore delivered to
--------------------
the Bank a copy of each of the following financial statements:
i. Audited statements of income and cash flows of the Borrower
for its fiscal year ended December 31, 1996; and
ii. An audited balance sheet of the Borrower dated as of
December 31, 1996.
Each such financial statement (i) is correct and complete, (ii) is in accordance
with the records of the Borrower, (iii) presents fairly the results of the
operations and cash flows of the Borrower for the fiscal period covered thereby,
or the financial position of the Borrower as of the date thereof, in conformity
with generally accepted accounting principles applied consistently with the
application of such principles with respect to the preceding fiscal period of
the Borrower, and (iv) if a balance sheet, reflects each indebtedness and other
obligation of the Borrower as of the date thereof that has had or (so far as the
Borrower can foresee) will or might have any Material Adverse Effect.
h. Material Adverse Effects; Distributions. Since December 31, 1996,
---------------------------------------
(i) there has not occurred or existed any event or condition that has had or (so
far as the Borrower or any Subsidiary can foresee) will or might have any
Material Adverse Effect, and (ii) neither the Borrower nor any Subsidiary has
declared, paid, made or agreed or otherwise incurred any obligation to declare,
pay or make any Distribution, except for Distributions to the holders of
Borrower's preferred stock in accordance with the terms thereof.
i. Tax Returns and Payments. Each of the Borrower and all
------------------------
Subsidiaries has duly (i) filed each tax return required to be filed by it and
(ii) paid or caused to be paid each tax, assessment, fee, charge, fine and
penalty that has been imposed by any government or political subdivision upon it
or upon any of its assets, income and franchises and has become due.
j. Indebtedness. Except for Permitted Indebtedness, neither the
------------
Borrower nor any Subsidiary has any indebtedness, liability or obligation (i)
arising from the borrowing of money or from the deferral of the payment of the
purchase price of any asset, including by means of a capital lease, or (ii)
pursuant to any guaranty or other contingent obligation (including, but not
limited to, any obligation to (A) maintain the net
17
worth of any other Person, (B) purchase or otherwise acquire, or assume, any
indebtedness, liability or obligation or (C) provide funds for or otherwise
assure the payment of any indebtedness, liability or obligation, whether by
means of any investment, by means of any sale or other disposition, or by means
of any purchase or other acquisition, of any asset or service or otherwise);
k. Pension Obligations. No Pension Plan was or is a multiemployer
-------------------
plan, as such term is defined in Section 3(37) of ERISA. The present value of
all benefits vested under any Pension Plan does not exceed the value of the
assets of such Pension Plan allocable to such vested benefits. Since September
2, 1974, (i) no Prohibited Transaction that could subject any Pension Plan to
any tax or penalty imposed pursuant to the Internal Revenue Code or pursuant to
ERISA has been engaged in by any Pension Plan, (ii) there has not occurred or
existed with respect to any Pension Plan any Reportable Event, Accumulated
Funding Deficiency or event or condition that, but for a waiver by the Internal
Revenue Service, would constitute an Accumulated Funding Deficiency, that, after
notice, after lapse of time or after both notice and lapse of time, will or
might constitute a Reportable Event or that constituted or will or might
constitute grounds for the institution by the Pension Benefit Guaranty
Corporation of any proceeding under ERISA seeking the termination of such
Pension Plan or the appointment of a trustee to administer such Pension Plan,
(iii) no Pension Plan has been terminated, (iv) no trustee has been appointed by
a United States District Court to administer any Pension Plan, (v) no proceeding
seeking the termination of any Pension Plan or the appointment of a trustee to
administer any Pension Plan has been instituted, and (vi) neither the Borrower
nor any Subsidiary has made any complete or partial withdrawal from any Pension
Plan.
l. Assets; Liens and Encumbrances. Each of the Borrower and all
------------------------------
Subsidiaries has good and marketable title to each asset it purports to own, and
no such asset is subject to any security interest, mortgage or other lien or
encumbrance, except for Permitted Liens.
m. Loans. Neither the Borrower nor any Subsidiary has made any
-----
loan, advance or other extension of credit with respect to which any sum is
owing to it, except for Permitted Loans.
n. Judgments and Litigation. There is no outstanding judgment,
------------------------
order or award of any court, agency or other governmental authority or of any
arbitrator, and no pending or threatened claim, audit or investigation, and no
pending or threatened action or other legal proceeding, by or before any court,
agency or other governmental authority or before any arbitrator, that (i) is
against, or otherwise involves, the Borrower, any Subsidiary or any asset of the
Borrower or of any Subsidiary, and which has had or (so far as the Borrower or
any Subsidiary can foresee) will or might have any Material Adverse Effect, or
(ii) renders invalid, or questions the validity of, any Loan Document or any
action taken or to be taken pursuant to any Loan Document.
18
o. Default. There does not exist any Event of Default or
-------
Potential Event of Default.
p. Full Disclosure. Neither any Loan Document nor any certificate,
---------------
financial statement or other writing heretofore provided to the Bank by or on
behalf of the Borrower or by or on behalf of any Subsidiary contains any
statement of fact that is incorrect or misleading in any material respect or
omits to state any fact necessary to make any statement of fact contained
therein not incorrect or misleading in any material respect. Neither the
Borrower nor any Subsidiary has failed to disclose to the Bank any fact that has
had or (so far as the Borrower or any Subsidiary can foresee) will or might have
any Material Adverse Effect.
5. AFFIRMATIVE COVENANTS. During the term of this Agreement, the
---------------------
Borrower shall do the following unless the prior written consent of the Bank to
not doing so shall have been obtained by the Borrower:
a. Good Standing; Qualification. Cause each of the Borrower and
----------------------------
all Subsidiaries at all times to (i) maintain its corporate existence in good
standing and (ii) remain or become and remain duly qualified and in good
standing as a foreign corporation authorized to do business in each jurisdiction
in which such qualification is or becomes necessary;
b. Compliance. Cause each of the Borrower and all Subsidiaries at
----------
all times to (i) conduct its business and operations, own and use each of its
assets, and use each asset leased by it as a lessee, in compliance in each
material respect with each applicable Law, (ii) obtain, make, give or do, and
maintain in full force and effect, each authorization, approval, permit,
consent, franchise and license from, each registration and filing with, each
declaration, report and notice to, and each other act by or relating to, any
Person necessary for the conduct of its business or operations, for the
ownership, lease or use of any of its assets, and (iii) remain in compliance in
each material respect with each such authorization, approval, permit, consent,
franchise and license, with its certificate of incorporation or other charter
document, with its by-laws or other organizational document and with each
agreement and instrument to which it is a party or by which it or any of its
assets is bound;
c. EBITDA. Assure that at the end of each calendar quarter EBITDA
------
for the four calendar quarters then ending is at least $2,000,000;
d. Working Capital. Assure that at the end of each calendar quarter
---------------
the Working Capital of the Borrower is at least $3,700,000;
e. Net Worth; Liabilities. Assure that at the end of each calendar
----------------------
quarter the Consolidated Tangible Net Worth of the Borrower is at least
$4,500,000;
19
f. Ratio of Liabilities to Net Worth. Assure that at the end of
---------------------------------
each calendar quarter the ratio of Consolidated Total Liabilities of the
Borrower, other than indebtedness, liabilities and obligations of the Borrower
that are fully subordinated pursuant to a subordination agreement in form and
substance satisfactory to the Bank to all indebtedness, liabilities and
obligations of the Borrower to the Bank, to Consolidated Tangible Net Worth,
does not exceed 1.2 to 1.0;
g. Accounting; Reserves; Tax Returns. Cause each of the Borrower
---------------------------------
and all Subsidiaries at all times to (i) maintain a system of accounting
established and administered in accordance with generally accepted accounting
principles, (ii) establish each reserve it is required by generally accepted
accounting principles to establish and (iii) file each tax return it is required
to file;
h. Reporting Requirements. Furnish directly to the Bank:
----------------------
i) as soon as available and in any event within 120 days after
the end of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as of the end of such fiscal year and
a consolidated income statement and statements of cash flows and changes in
stockholders' equity of the Borrower and its consolidated Subsidiaries for such
fiscal year, all in reasonable detail and stating in comparative form the
respective consolidated figures for the corresponding date and period in the
prior fiscal year, and all prepared in accordance with generally accepted
accounting principles and as to the consolidated statements accompanied by an
opinion thereon acceptable to the Bank by independent accountants of national
standing selected by the Borrower;
ii) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the Borrower,
a consolidated and consolidating balance sheet of the Borrower and its
consolidated Subsidiaries as of the end of such quarter and a consolidated and
consolidating income statement and statements of cash flows of the Borrower and
its consolidated Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, all in reasonable
detail and stating in comparative form the respective consolidated and
consolidating figures for the corresponding date and period in the previous
fiscal year and all prepared in accordance with generally accepted accounting
principles and certified by the chief financial officer of the Borrower (subject
to year-end adjustments);
iii) promptly upon receipt thereof, copies of any reports
submitted to the Borrower or any of its Subsidiaries by independent certified
public accountants in connection with examination of the financial statements of
the Borrower or any such Subsidiary made by such accountants;
20
iv) simultaneously with the delivery of the financial
statements referred to above, a certificate of the Chief Financial Officer of
the Borrower (i) certifying that to the best of his knowledge no Default or
Event of Default has occurred and is continuing or, if a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the action which is proposed to be taken with respect thereto, and (ii) with
computations demonstrating compliance with the covenants contained in Sections
5c, 5d, 5e and 5f;
v) promptly after the commencement thereof, notice of each
action, suit, and proceeding before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Borrower or any of its Subsidiaries;
vi) as soon as possible after the occurrence of each Default or
Event of Default, a written notice setting forth the details of such Default or
Event of Default and the action which is proposed to be taken by the Borrower
with respect thereto;
vii) at all times indicated in (i) above, a copy of the
management letter prepared by the independent auditors;
viii) as soon as available, (A) each financial statement, report,
notice and proxy statement sent or made available by the Borrower or by any
Subsidiary to holders of its stock generally, (B) each periodic or special
report, registration statement, prospectus and other written communication other
than a transmittal letter filed by the Borrower or by any Subsidiary with, and
each written communication received by the Borrower or by any Subsidiary from,
any securities exchange or the Securities and Exchange Commission, (C) each
annual report relating to any Pension Plan and filed with the Internal Revenue
Service, with the Department of Labor or with the Pension Benefit Guaranty
Corporation and (D) each press release and other statement made available by the
Borrower or by any Subsidiary to the public generally and relating to the
business, operations, assets, affairs or condition (financial or other) of the
Borrower or of any Subsidiary;
ix) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of the
Borrower and any of its Subsidiaries as the Bank may reasonably request.
i. Payment of Certain Indebtedness. Cause each of the Borrower and
-------------------------------
all Subsidiaries to pay, before the end of any applicable grace period, each
tax, assessment, fee, charge, fine and penalty imposed by any government or
political subdivision upon it or upon any of its assets, income and franchises
and each claim and demand of any materialman, mechanic, carrier, warehouseman,
garageman or landlord against it; provided, however, that no such tax,
assessment, fee, charge, fine, penalty,
21
claim or demand shall be required to be so paid so long as (i) the validity
thereof is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, (ii) adequate reserves have been
appropriately established therefor, (iii) the execution or other enforcement of
any lien resulting therefrom is effectively stayed and (iv) the nonpayment
thereof does not have any Material Adverse Effect;
j. Maintenance of Title and Assets; Insurance. Cause each of the
------------------------------------------
Borrower and all Subsidiaries to (i) at all times maintain good and marketable
title to each asset it purports to own, (ii) at all times maintain each of its
tangible assets in good working order and condition, (iii) at any time and from
time to time make each replacement of any of its tangible assets necessary or
desirable for the conduct of its business or operations, (iv) at all times keep
each of its insurable tangible assets insured with financially sound and
reputable insurance carriers against fire and other hazards to which extended
coverage applies in such manner and to the extent that the amount of insurance
carried on such asset shall be adequate, taking into account such factors as the
probability of loss of such asset, the value of such asset and the cost to the
Borrower of such insurance, and (v) at all times keep adequately insured with
financially sound and reputable insurance carriers against business interruption
and against liability on account of damage to any Person or asset or pursuant to
any applicable workers' compensation law;
k. Inspections. Upon the request of the Bank, upon five days' prior
-----------
written notice, permit each officer, employee, accountant, attorney and other
agent of the Bank to (i) visit and inspect each of the premises of the Borrower
and of each Subsidiary, (ii) examine, audit, copy and extract each record of the
Borrower and of each Subsidiary and (iii) discuss the business, operations,
assets, affairs and condition (financial or other) of the Borrower and of each
Subsidiary with each responsible officer of the Borrower and of each Subsidiary
and with each independent accountant of the Borrower and of each Subsidiary;
l. Pension Obligations. (i) Immediately upon acquiring knowledge or
-------------------
reason to know of the occurrence or existence with respect to any Pension Plan
of any Prohibited Transaction, Reportable Event, Accumulated Funding Deficiency
or event or condition that, but for a waiver by the Internal Revenue Service,
would constitute an Accumulated Funding Deficiency, that, after notice, after
lapse of time or after both notice and lapse of time, will or might constitute a
Reportable Event or that constitutes or will or might constitute grounds for the
initiation by the Pension Benefit Guaranty Corporation of any proceeding under
ERISA seeking the termination of such Pension Plan or the appointment of a
trustee to administer such Pension Plan, provide to the Bank a certificate
executed by the President or a Vice President of the Borrower and by the chief
financial officer of the Borrower and specifying the nature of such Prohibited
Transaction, Reportable Event, Accumulated Funding Deficiency, event or
condition, what action the Borrower has taken, is taking or proposes to take
with respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, by the Department of
22
Labor or by the Pension Benefit Guaranty Corporation with respect thereto and
(ii) immediately upon acquiring knowledge or reason to know of (A) the
institution by the Pension Benefit Guaranty Corporation or by any other Person
of any proceeding under ERISA seeking the termination of any Pension Plan or the
appointment of a trustee to administer any Pension Plan or (B) the complete or
partial withdrawal or proposed complete or partial withdrawal by the Borrower or
by any Subsidiary from any Pension Plan, provide to the Bank a certificate
executed by the President or a Vice President of the Borrower and by the chief
financial officer of the Borrower and describing such proceeding, withdrawal or
proposed withdrawal;
m. Changes in Management, Ownership and Control. Immediately upon
--------------------------------------------
acquiring knowledge or reason to know of any change in the identity of the
Chairman, President or chief executive officer of the Borrower, or in the
beneficial ownership of more than 10% of the stock of the Borrower, provide to
the Bank a certificate executed by the President or a Vice President of the
Borrower and specifying such change;
n. Judgments. Immediately upon acquiring knowledge or reason to
---------
know of any judgment, order or award of any court, agency or other governmental
authority or of any arbitrator that (i) is against, or otherwise involves, the
Borrower, any Subsidiary or any asset of the Borrower or of any Subsidiary, and
which has or (so far as the Borrower or any Subsidiary can foresee) will or
might have any Material Adverse Effect or (ii) renders invalid any Loan Document
or any action taken or to be taken pursuant to any Loan Document, provide to the
Bank a certificate executed by the President or a Vice President of the Borrower
and specifying the nature of such judgment, order or award and what action the
Borrower has taken, is taking or proposes to take with respect thereto;
o. Litigation. (i) Immediately upon acquiring knowledge or reason
----------
to know of the commencement or threat of any claim, audit or investigation, or
of the commencement or threat of any action or other legal proceeding, by or
before any court, agency or other governmental authority or before any
arbitrator that is against, or otherwise involves, the Borrower, any Subsidiary
or any asset of the Borrower or of any Subsidiary, and which (so far as the
Borrower or any Subsidiary can foresee) will or might have any Material Adverse
Effect, provide to the Bank a certificate executed by the President or a Vice
President of the Borrower and specifying the nature of such claim, audit or
investigation or of such action or other legal proceeding and what action the
Borrower has taken, is taking or proposes to take with respect thereto and (ii)
immediately upon acquiring knowledge or reason to know of any development with
respect to any claim, audit, investigation, action or other legal proceeding
theretofore disclosed by the Borrower to the Bank that has or (so far as the
Borrower or any Subsidiary can foresee) will or might have any Material Adverse
Effect, provide to the Bank a certificate executed by the President or a Vice
President of the Borrower and specifying the nature of such
23
development and what action the Borrower has taken, is taking or proposes to
take with respect thereto;
p. Liens and Encumbrances. Immediately upon acquiring knowledge or
----------------------
reason to know that any asset of the Borrower or of any Subsidiary has or may
become subject to any security interest, mortgage or other lien or encumbrance
other than Permitted Liens, provide to the Bank a certificate executed by the
President or a Vice President of the Borrower and specifying the nature of such
security interest, mortgage or other lien or encumbrance and what action the
Borrower has taken, is taking or proposes to take with respect thereto;
q. Defaults and Material Adverse Effects. Immediately upon
-------------------------------------
acquiring knowledge or reason to know of the occurrence or existence of (i) any
Event of Default or Potential Event of Default or (ii) any event or condition
that has or (so far as the Borrower or any Subsidiary can foresee) will or might
have any Material Adverse Effect, provide to the Bank a certificate executed by
the President or a Vice President of the Borrower and by the chief financial
officer of the Borrower and specifying the nature of such Event of Default,
Potential Event of Default, event or condition, the date of occurrence or period
of existence thereof and what action the Borrower has taken, is taking or
proposes to take with respect thereto;
r. Guaranties. Unless prohibited by applicable law, cause each
----------
Person that is or becomes a majority-owned Subsidiary after the date of this
Agreement to execute and deliver to the Bank, in form and substance satisfactory
to the Bank, a guaranty agreement guaranteeing, without any limitation as to
amount, the payment of all indebtedness and other obligations of the Borrower to
the Bank, whether then existing or thereafter arising or accruing; and
s. Further Actions. Promptly upon the request of the Bank, execute
---------------
and deliver, or cause to be executed and delivered, each writing, and take, or
cause to be taken, each other action, that the Bank shall deem necessary or
desirable at the sole option of the Bank in connection with any transaction
contemplated by any Loan Document.
6. NEGATIVE COVENANTS. During the term of this Agreement, the Borrower
------------------
shall not, without the prior written consent of the Bank, do, attempt to do, or
agree or otherwise incur, assume or have any obligation to do, and the Borrower
shall assure that, without the prior written consent of the Bank, no Subsidiary
does, attempts to do, or agrees or otherwise incurs, assumes or has any
obligation to do, any of the following:
a. Fiscal Year. Change its fiscal year;
-----------
24
b. Indebtedness. Create, incur, assume or have any indebtedness,
------------
liability or obligation (i) arising from the borrowing of money or from the
deferral of the payment of the purchase price of any asset, including by means
of a capital lease, or (ii) pursuant to any guaranty or other contingent
obligation (including, but not limited to, any obligation to (A) maintain the
net worth of any other Person, (B) purchase or otherwise acquire, or assume, any
indebtedness, liability or obligation or (C) provide funds for or otherwise
assure the payment of any indebtedness, liability or obligation, whether by
means of any investment, by means of any sale of other disposition, or by means
of any purchase or other acquisition, of any asset or service or otherwise),
except for Permitted Indebtedness;
c. Pension Obligations. (i) Engage in any Prohibited Transaction
-------------------
with respect to any Pension Plan, (ii) permit to occur or exist with respect to
any Pension Plan any Accumulated Funding Deficiency or event or condition that,
but for a waiver by the Internal Revenue Service, would constitute an
Accumulated Funding Deficiency or that constitutes or will or might constitute
grounds for the institution by the Pension Benefit Guaranty Corporation of any
proceeding under ERISA seeking the termination of such Pension Plan or the
appointment of a trustee to administer such Pension Plan, (iii) make any
complete or partial withdrawal from any Pension Plan, (iv) fail to make to any
Pension Plan any contribution that it is required to make, whether to meet any
minimum funding standard under ERISA or any requirement of such Pension Plan or
otherwise, or (v) terminate any Pension Plan in any manner, or otherwise take or
omit to take any action with respect to any Pension Plan, that would or might
result in the imposition of any lien upon any asset of the Borrower or of any
Subsidiary pursuant to ERISA;
d. Liens. Cause or permit, whether upon the happening of
-----
any contingency or otherwise, any of its assets to be subject to any security
interest, mortgage or other lien or encumbrance, except for Permitted Liens;
e. Distributions. Declare, pay or make any Distribution, except for
-------------
(i) dividends payable on the preferred stock of Borrower in accordance with its
terms, (ii) dividends payable solely in any of its stock, and (iii) cash
dividends paid to the Borrower by any Subsidiary all of the outstanding shares
of stock of which other than shares required by any applicable Law to enable any
individual to serve as a director of such Subsidiary are owned by the Borrower
at the time of such payment;
f. Corporate Changes. (i) Assign, sell or otherwise transfer or
-----------------
dispose of all or substantially all of its assets, (ii) participate in any
merger, consolidation or other absorption unless the Borrower is the surviving
entity in such merger, consolidation or absorption and does not as a result
thereof fail to comply with any of the covenants set forth in this Agreement, or
(iii) make any change in its corporate structure, except for the merger into the
Borrower of, or the acquisition by the Borrower of all of the assets of, any
Subsidiary all of the outstanding shares of stock of which are owned by the
25
Borrower, or (iv) make any significant change in any of its business objectives
and purposes or in its business or operations that would or might have any
Material Adverse Effect, except for expansion of its business into related
areas, utilizing its human resources and body of knowledge developed in
connection with software applications, which management of the Borrower
determines to be in the best interests of the Borrower;
g. Stock of Subsidiary. Issue or sell any stock of any Subsidiary,
-------------------
except (i) to the minimum extent required by any applicable Law to enable any
individual to serve as a director of such Subsidiary, (ii) as a dividend to the
shareholders of such Subsidiary and (iii) to the Borrower or to another
Subsidiary; or
h. Full Disclosure. Provide to the Bank, or permit to be provided
---------------
to the Bank on its behalf, any certificate, financial statement or other writing
that contains any statement of fact that is incorrect or misleading in any
material respect or omits to state any fact necessary to make any statement of
fact contained therein not incorrect or misleading in any material respect.
7. INDEBTEDNESS IMMEDIATELY DUE. Upon or at any time or from time to
----------------------------
time after the occurrence or existence of any uncured Event of Default other
than an Event of Default described in clause (vi) of Section 1o of this
Agreement, the outstanding principal amount of each Loan, all interest owing
pursuant to this Agreement and remaining unpaid and all other amounts owing by
the Borrower to the Bank pursuant to this Agreement and remaining unpaid shall,
at the sole option of the Bank and without any notice, demand, presentment or
protest of any kind (each of which is knowingly, voluntarily, intentionally and
irrevocably waived by the Borrower), become immediately due. Upon the occurrence
or existence of any Event of Default described in such clause (vi), such
outstanding principal amount, all such interest and all such other amounts
shall, without any notice, demand, presentment or protest of any kind (each of
which is knowingly, voluntarily, intentionally and irrevocably waived by the
Borrower), automatically become immediately due.
8. EXPENSES; INDEMNIFICATION.
-------------------------
a. Expenses. The Borrower shall pay to the Bank on demand each cost
--------
and expense (including, but not limited to, the reasonable fees and
disbursements of counsel to the Bank) incurred by the Bank in connection with
(a) the preparation of, entry into or performance of any Loan Document, whether
or not any Loan is made, or (b) any modification of, or any release, consent or
waiver relating to, any Loan Document, whether or not such modification,
release, consent or waiver becomes effective. In addition, the Borrower shall
pay to the Bank on demand each cost and expense (including, but not limited to,
the reasonable fees and disbursements of counsel to the Bank, whether retained
for advice, for litigation or for any other purpose) incurred by the Bank in
endeavoring to (a) collect any of the outstanding principal amount of any Loan,
any
26
interest owing pursuant to this Agreement and remaining unpaid or any other
amount owing by the Borrower to the Bank pursuant to this Agreement and
remaining unpaid, (b) preserve or exercise any right or remedy of the Bank
relating to, enforce or realize upon any guaranty, endorsement, subordination,
collateral or other security or assurance of payment now or hereafter directly
or indirectly securing the repayment or payment of, or otherwise now or
hereafter directly or indirectly applicable to, any of such outstanding
principal amount, any such interest or any such other amount, (c) preserve or
exercise any right or remedy of the Bank pursuant to any Loan Document or (d)
defend against any claim, regardless of the basis or outcome thereof, asserted
against the Bank as a direct or indirect result of the entry into any Loan
Document, except for any claim for any tax imposed by any government or
political subdivision upon any income of the Bank or for any interest or penalty
relating to any such tax.
b. Expenses Due to Law Changes. The Borrower shall pay to the Bank
---------------------------
on demand made by the Bank each amount necessary to compensate the Bank for any
liability, cost or expense that is a direct or indirect result of (i) the
repayment in full or part of any Libor Rate Portion during any Libor Rate Period
for such Libor Rate Portion (whether by reason of any reduction in yield, by
reason of the liquidation or reemployment of any deposit or other funds acquired
by the Holder by reason of the fixing of the rate of interest payable on such
Libor Rate Portion or otherwise), (ii) any increase in the amount of capital
required or expected to be maintained by the Bank or any bank holding company of
the Bank with respect to any Loan or the obligation of the Bank to make any Loan
that is due to (A) after the date of this Agreement, the enactment or issuance
of or any change in any Law relating to capital adequacy of banks and banking
holding companies or (B) the compliance by the Bank or such bank holding company
with any request or direction relating to such capital made or issued by any
governmental authority after the date of this Agreement, (iii) any change in the
basis of taxation of repayments of the outstanding principal amount of any Loan
or the payment of any interest payable pursuant to this Agreement or any other
amount payable by the Borrower to the Bank pursuant to this Agreement that is
due to, after the date of this Agreement, any change in the basis of taxation of
the overall net income of the Bank in the jurisdiction in which the Bank has its
principal place of business, (iv) any imposition or application of or increase
in any reserve or similar requirement applicable to assets or liabilities of,
deposits with or credit extended by the Bank, or for the account of the Bank,
that increases the cost to the Bank of making, funding or maintaining any Loan
and is due to, after the date of this Agreement, the enactment or issuance of or
any change in any Law, except for any reserve or similar requirement reflected
in the rate of interest charged on any Libor Rate Portion, (v) any imposition or
application of, increase in or deduction or withholding for any tax, assessment,
fee, charge, fine or penalty imposed by any governmental authority that is due
to, after the date of this Agreement, the enactment or issuance of or any change
in any Law or (vi) without limiting any of clauses (i) through (v) of this
sentence, after the date of this Agreement, any enactment or issuance of or any
change in any Law that directly or indirectly (A) results in any increase in the
cost to the Bank of making, funding
27
or maintaining any Loan or (B) reduces that amount of, requires the Bank to
forego or, except for any tax on the overall net income of the Bank in the
jurisdiction in which the Bank has its principal place of business, make any
payment with respect to any repayment by the Borrower of any of the outstanding
principal amount of any Loan or the payment by the Borrower of any interest
payable pursuant to this Agreement or any other amount payable by the Borrower
to the Bank pursuant to this Agreement. The determination by the Bank of the
amount necessary to compensate the Bank for any such liability, cost or expense
shall, in the absence of manifest error, be conclusive and binding upon the
Borrower.
9. GENERAL.
-------
a. Term; Survival. The term of this Agreement shall be until the
--------------
principal amount of each Loan, all interest owing pursuant to this Agreement and
all other amounts owing by the Borrower to the Bank pursuant to this Agreement
have been fully, finally and irrevocably repaid, paid or otherwise discharged.
The obligation of the Borrower to pay liabilities, costs and expenses described
in Section 8 of this Agreement shall survive beyond the term of this Agreement.
b. Survival; Reliance. Each representation, warranty, covenant and
------------------
agreement contained in this Agreement shall survive the making of each Loan and
the execution and delivery to the Bank of each Loan Document, and shall continue
in full force and effect during the term of this Agreement. Each such
representation, warranty, covenant and agreement shall be presumed to have been
relied upon by the Bank regardless of any investigation made or not made, or any
information possessed or not possessed, by the Bank.
c. Cumulative Nature, Nonexclusive Exercise and Waivers of Rights
--------------------------------------------------------------
and Remedies. All rights and remedies of the Bank pursuant to this Agreement
------------
or otherwise shall be cumulative, and no such right or remedy shall be exclusive
of any other such right or remedy. No single or partial exercise by the Bank of
any such right or remedy shall preclude any other or further exercise thereof,
or any exercise of any other such right or remedy, by the Bank. No course of
dealing, performance or other conduct heretofore pursued, accepted or acquiesced
in, no oral or written agreement or representation heretofore made, and no oral
agreement or representation hereafter made, by or on behalf of the Bank, whether
or not relied or acted upon, and no usage of trade, whether or not relied or
acted upon, shall operate as a waiver of any such right or remedy. No delay by
the Bank in exercising any such right or remedy, whether or not relied or acted
upon, shall operate as a waiver thereof or of any other such right or remedy. No
notice or demand of any kind, and no attempted but unsuccessful notice or demand
of any kind, by the Bank prior to exercising any such right or remedy on any one
occasion, whether or not relied or acted upon, shall operate as a waiver of any
right of the Bank to exercise the same or any other such right or remedy on such
or any future occasion
28
without any notice or demand of any kind. No waiver by the Bank of any such
right or remedy shall be effective unless made in a writing duly executed by the
Bank and specifically referring to such waiver. No waiver by the Bank on any one
occasion of any such right or remedy shall operate as a waiver thereof or of any
other such right or remedy on any future occasion.
d. Binding Effect. This Agreement shall be binding upon the
--------------
Borrower and each direct or indirect successor and assignee of the Borrower and
shall inure to the benefit of and be enforceable by the Bank and each direct or
indirect successor and assignee of the Bank.
e. Entire Agreement. This Agreement contains the entire agreement
----------------
between the Bank and the Borrower with respect to the subject matter of this
Agreement, and supersedes each course of dealing or other conduct heretofore
pursued, accepted or acquiesced in, and each oral or written agreement and
representation heretofore made, by or on behalf of the Bank with respect
thereto, whether or not relied or acted upon. No modification or termination of
this Agreement shall be effective unless made in a writing duly executed by the
Bank and specifically referring to each provision of this Agreement being
modified or to such termination.
f. Governing Law. This Agreement shall be governed by and
-------------
construed, interpreted and enforced in accordance with the internal law of the
State of New York, without regard to principles of conflict of laws.
g. Notices. All notices, requests and other communications provided
-------
for hereunder shall be in writing and shall be deemed to have been duly given or
made when delivered by hand or facsimile at the address set forth below, or if
sent by certified mail, three days after the day on which mailed, or, in the
case of telex, when answer back received, or, in the case of an overnight
courier service, one business day after delivery to such courier service,
addressed as set forth below, or to such other address as may be hereafter
notified by the respective parties hereto:
(a) if to the Bank, at
Western New York Commercial Banking Department
Manufacturers and Traders Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Mr. C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Banking Officer
Fax #: ▇▇▇-▇▇▇-▇▇▇▇
29
(b) if to Borrower, at
DSET Corporation
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
Fax #: ▇▇▇-▇▇▇-▇▇▇▇
h. Assignments and Participations. This Agreement shall inure to
------------------------------
the benefit of, and be enforceable by, the Bank, each successor of the Bank and
each assignee of any of the rights and remedies of the Bank pursuant to this
Agreement, and shall be binding upon the Borrower, upon each successor of the
Borrower and upon each assignee of any of the rights of the Borrower pursuant to
this Agreement; provided, however, the Borrower shall not assign or otherwise
transfer any of the rights of the Borrower pursuant to this Agreement without
the prior written consent of the Bank, and any such assignment or other transfer
without such prior written consent shall be void. No consent by the Bank to any
such assignment or other transfer shall release the Borrower from any
indebtedness, liability or obligation of the Borrower pursuant to this
Agreement. The Bank shall have the right to assign or otherwise transfer, or to
grant any participation in, any indebtedness, liability or obligation of the
Borrower to the Bank pursuant to this Agreement or any of the rights and
remedies of the Bank pursuant to this Agreement.
i. Requests. Each request of the Bank pursuant to this Agreement
--------
may be made (i) at any time and from time to time, (ii) at the sole option of
the Bank and (iii) whether or not any Event of Default or Potential Event of
Default has occurred or existed.
j. Right of Setoff. Upon and at any time and from time to time
---------------
after the occurrence or existence of any Event of Default, (i) the Bank shall
have the right, at the sole option of the Bank and without any notice or demand
of any kind (each of which is knowingly, voluntarily, intentionally and
irrevocably waived by the Borrower), other than any notice required by
applicable law (including, but not limited to, any notice required by Section 9-
g of the New York Banking Law), to set off against the outstanding principal
amount of each Loan, against all interest owing pursuant to this Agreement and
remaining unpaid and against all other amounts owing by the Borrower to the Bank
pursuant to this Agreement and remaining unpaid each indebtedness of the Bank in
any capacity to the Borrower in any capacity, whether alone or otherwise and
whether or not then due, (including, but not limited to, any such indebtedness
arising as a direct or indirect result of any deposit account, whether evidenced
by a certificate of deposit or otherwise), and (ii) each holder of any
participation in any unpaid indebtedness of the Borrower to the Bank pursuant to
this Agreement shall have the right, at the sole option of such holder and
without any notice or demand of any kind (each of which is knowingly,
30
voluntarily, intentionally and irrevocably waived by Borrower), to set off
against such unpaid indebtedness, to the extent of such holder's participation
in such unpaid indebtedness, each indebtedness of such holder in any capacity to
the Borrower in any capacity, whether alone or otherwise and whether or not then
due, (including, but not limited to, any such indebtedness arising as a direct
or indirect result of any deposit account, whether evidenced by a certificate of
deposit or otherwise). Each exercise of such right by the Bank or by such holder
shall be deemed to be immediately effective at the time the Bank or such holder
opts therefor even though evidence thereof is not entered on the records of the
Bank or of such holder until later. For purposes of this Section 9j, the Bank
acknowledges that M&T Securities, Inc. is a separate corporation from the Bank
and does not fall within the definition of "Bank" as used in this Agreement.
k. Invalidity. Whenever possible, each provision of this Agreement
----------
shall be interpreted in such manner as to be effective and valid under
applicable law. If, however, any such provision shall be prohibited by or
invalid under such law, it shall be deemed modified to conform to the minimum
requirements of such law, or, if for any reason it is not deemed so modified, it
shall be prohibited or invalid only to the extent of such prohibition or
invalidity without the remainder thereof or any other such provision being
prohibited or invalid.
l. Directly or Indirectly. Any provision of this Agreement that
----------------------
prohibits or has the effect of prohibiting the Borrower or any Subsidiary from
taking any action shall be construed to prohibit it from taking such action
directly or indirectly.
m. Accounting Terms and Computations. Each accounting term used
---------------------------------
in this Agreement shall be construed as of any time in accordance with generally
accepted accounting principles as in effect at such time. Each accounting
computation that this Agreement requires to be made as of any time shall be made
in accordance with such principles as in effect at such time, except where such
principles are incompatible with any requirement of this Agreement.
n. Headings. In this Agreement, headings of sections are for
--------
convenience of reference only, and are not of substantive effect.
10. CONSENTS AND WAIVERS RELATING TO LEGAL PROCEEDINGS.
--------------------------------------------------
a. JURISDICTIONAL CONSENTS AND WAIVERS. THE BORROWER KNOWINGLY,
-----------------------------------
VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY (i) CONSENTS IN EACH ACTION AND OTHER
LEGAL PROCEEDING COMMENCED BY THE BANK IN CONNECTION WITH ANY LOAN, ANY LOAN
DOCUMENT OR ANY COLLATERAL, SUBORDINATION, GUARANTY, ENDORSEMENT OR OTHER
SECURITY OR ASSURANCE OF
31
PAYMENT, WHETHER NOW EXISTING OR HEREAFTER ARISING, THAT NOW OR HEREAFTER
DIRECTLY OR INDIRECTLY SECURES THE REPAYMENT OR PAYMENT OF OR IS OTHERWISE NOW
OR HEREAFTER DIRECTLY OR INDIRECTLY APPLICABLE TO ANY OF THE OUTSTANDING
PRINCIPAL AMOUNT OF ANY LOAN, ANY INTEREST PAYABLE PURSUANT TO THIS AGREEMENT OR
ANY OTHER AMOUNT PAYABLE BY THE BORROWER TO THE BANK PURSUANT TO THIS AGREEMENT,
TO THE PERSONAL JURISDICTION OF ANY COURT THAT IS EITHER A COURT OF RECORD OF
THE STATE OF NEW YORK OR A COURT OF THE UNITED STATES LOCATED IN THE STATE OF
NEW YORK, (ii) WAIVES EACH OBJECTION TO THE LAYING OF VENUE OF ANY SUCH ACTION
OR OTHER LEGAL PROCEEDING IN THE COUNTY OF ERIE OF THE STATE OF NEW YORK, (iii)
WAIVES PERSONAL SERVICE OF PROCESS IN EACH SUCH ACTION AND OTHER LEGAL
PROCEEDING, (iv) CONSENTS TO THE MAKING OF SERVICE OF PROCESS IN EACH SUCH
ACTION AND OTHER LEGAL PROCEEDING BY REGISTERED MAIL DIRECTED TO THE BORROWER AT
THE LAST ADDRESS OF THE BORROWER SHOWN IN THE RECORDS RELATING TO THIS AGREEMENT
MAINTAINED BY THE BANK, WITH SUCH SERVICE OF PROCESS TO BE DEEMED COMPLETED FIVE
DAYS AFTER THE MAILING THEREOF, (v) WAIVES EACH RIGHT TO ATTACK ON ANY OF THE
FOREGOING GROUNDS ANY FINAL JUDGMENT THAT IS OBTAINED AS A DIRECT OR INDIRECT
RESULT OF ANY SUCH ACTION OR OTHER LEGAL PROCEEDING AND (vi) CONSENTS TO EACH
SUCH FINAL JUDGMENT BEING SUED UPON IN ANY COURT HAVING JURISDICTION WITH
RESPECT THERETO AND ENFORCED IN THE JURISDICTION IN WHICH SUCH COURT IS LOCATED
AS IF ISSUED BY SUCH COURT.
b. WAIVER OF TRIAL BY JURY AND CLAIMS TO CERTAIN DAMAGES. EACH OF
-----------------------------------------------------
THE BANK AND THE BORROWER KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION,
WHETHER BASED ON ANY CONTRACT, ON ANY NEGLIGENT OR INTENTIONAL TORT, ON ANY LAW
OR OTHERWISE, IN CONNECTION WITH, OR OTHERWISE RELATING TO, (A) ANY LOAN, ANY
LOAN DOCUMENT OR ANY GUARANTY, ENDORSEMENT, SUBORDINATION, COLLATERAL OR OTHER
SECURITY OR ASSURANCE OF PAYMENT NOW OR HEREAFTER DIRECTLY OR INDIRECTLY
SECURING THE PAYMENT OR REPAYMENT OF, OR NOW OR HEREAFTER DIRECTLY OR INDIRECTLY
APPLICABLE TO, ANY OF THE PRINCIPAL AMOUNT OF ANY LOAN, ANY INTEREST OWING
PURSUANT TO THIS AGREEMENT OR ANY OTHER AMOUNT OWING BY THE BORROWER TO THE BANK
PURSUANT TO THIS AGREEMENT, (B) ANY OTHER WRITING HERETOFORE OR HEREAFTER
EXECUTED IN CONNECTION WITH, OR OTHERWISE RELATING TO, ANY LOAN, ANY LOAN
DOCUMENT OR ANY SUCH GUARANTY, ENDORSEMENT, SUBORDINATION, COLLATERAL OR
32
OTHER SECURITY OR ASSURANCE OF PAYMENT OR (C) ANY COURSE OF DEALING, COURSE OF
PERFORMANCE OR OTHER CONDUCT HERETOFORE OR HEREAFTER PURSUED, ANY ACTION
HERETOFORE OR HEREAFTER TAKEN OR OMITTED TO BE TAKEN, OR ANY ORAL OR WRITTEN
REPRESENTATION HERETOFORE OR HEREAFTER MADE, BY OR ON BEHALF OF THE OTHER IN
CONNECTION WITH, OR OTHERWISE RELATING TO, ANY LOAN, ANY LOAN DOCUMENT OR ANY
SUCH GUARANTY, ENDORSEMENT, SUBORDINATION, COLLATERAL OR OTHER SECURITY OR
ASSURANCE OF PAYMENT. THIS SECTION 10b IS A MATERIAL INDUCEMENT FOR EACH OF THE
BANK AND THE BORROWER IN CONNECTION WITH ITS ENTRY INTO THIS AGREEMENT.
IN WITNESS WHEREOF, the Bank and the Borrower have caused this
Agreement to be duly executed on the date shown at the beginning of this
Agreement.
MANUFACTURERS AND TRADERS
TRUST COMPANY
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Banking Officer
DSET CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇▇▇▇▇▇, Chief Financial Officer
33
ACKNOWLEDGMENTS
STATE OF NEW JERSEY )
) SS.:
COUNTY OF )
On the 5th day of August in the year 1997, before me personally came
C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and
say that he resides at ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇; that he is a Banking
Officer of Manufacturers and Traders Trust Company, the corporation described in
and which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ESQUIRE
---------------------------------------
Notary Public
Attorney at Law
State of New Jersey
STATE OF NEW JERSEY )
) SS.:
COUNTY OF )
On the 5th day of August in the year 1997, before me personally came
▇▇▇▇ ▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that
he resides at ▇▇▇▇ ▇▇ ▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇;▇▇▇▇ he is the Chief Financial
Officer of DSET Corporation, the corporation described in and which executed the
above instrument; and that he signed his name thereto by order of the board of
directors of said corporation.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ESQUIRE
---------------------------------------
Notary Public
Attorney at Law
State of New Jersey
34
SCHEDULE A
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
None
EXHIBIT A
REVOLVING CREDIT NOTE
$3,000,000 Buffalo, New York
August 5, 1997
FOR VALUE RECEIVED, the undersigned, DSET CORPORATION, a New Jersey
corporation (the "Borrower"), DOES HEREBY PROMISE to pay to the order of
MANUFACTURERS AND TRADERS TRUST COMPANY (the "Bank"), at the office of the Bank
at One M&T Plaza, Buffalo, New York 14203, on the Revolving Loan Repayment Date
as defined in the Corporate Revolving and Term Loan Agreement (the "Agreement")
dated as of August 5, 1997, between the Borrower and the Bank, in lawful money
of the United States of America, in immediately available funds, the principal
amount of Three Million Dollars ($3,000,000) or, if less than such principal
amount, the aggregate unpaid principal amount of all Revolving Loans (as defined
in the Agreement) made by the Bank to the Borrower pursuant to the Agreement as
shown on the grid schedules annexed hereto, and to pay interest from the date
hereof on the unpaid principal amount hereof, in like money, at said office, on
the dates and at the rates selected in accordance with Article 2 of the
Agreement and, upon default, on demand from time to time, on any overdue
principal and on any overdue charge or fee, and, to the extent permitted by law,
on any overdue interest, for each day from the due date thereof (by acceleration
or otherwise) until such sum is paid in full, at the rate in effect from time to
time as described in the Agreement.
This Note is the Revolving Loan Note referred to in Section 2b of the
Agreement, and is subject to prepayment and acceleration of maturity as set
forth in the Agreement. All terms defined in the Agreement are used herein with
their defined meanings unless otherwise provided.
All Revolving Loans made by the Bank to the Borrower under the Agreement
and the applicable rates together with all payments or prepayments of principal
shall be recorded by the Bank and endorsed on the grid schedule or grid
schedules attached hereto and hereby made a part of this Note.
This Note shall be governed by and construed in accordance with the laws of
the State of New York and any applicable laws of the United States of America.
DSET CORPORATION
By:___________________
Title:
SCHEDULE OF ADVANCES AND PAYMENTS
Principal Principal Outstanding
Date Amount Amount Principal Approving
Advanced Advanced Date Paid Paid Amount Employee
-------- -------- --------- ---- ------ --------
EXHIBIT B
TERM NOTE
$ Buffalo, New York
__________, 200__
FOR VALUE RECEIVED, the undersigned, DSET Corporation, a _________________
corporation (the "Borrower"), DOES HEREBY PROMISE to pay to the order of
MANUFACTURERS AND TRADERS TRUST COMPANY (the "Bank"), at the office of the Bank
at One M&T Plaza, Buffalo, New York 14203, in lawful money of the United States
of America, in immediately available funds, the principal amount of ____________
($_______) in sixteen (16) equal consecutive quarterly calendar installments,
with the first of such installments due on ______________________, 200__, and
additional installments due on the dates described in the Corporate Revolving
and Term Loan Agreement (the "Agreement") dated as of August 5, 1997, between
the Borrower and the Bank, and to pay interest from the date hereof on the
unpaid principal amount hereof, in like money, at said office, on the dates and
at the rates selected in accordance with Article 2 of the Agreement and, upon
default, on demand from time to time, on any overdue principal and on any
overdue charge or fee, and, to the extent permitted by law, on any overdue
interest, for each day from the due date thereof (by acceleration or otherwise)
until such sum is paid in full, at the rate in effect from time to time as
described in the Agreement.
This Note is the Term Note referred to in Section 2e of the Agreement, and
is subject to prepayment and acceleration of maturity as set forth in the
Agreement. All terms defined in the Agreement are used herein with their defined
meanings unless otherwise provided.
This Note shall be governed by and construed in accordance with the laws of
the State of New York and any applicable laws of the United States of America.
DSET CORPORATION
By:___________________
Title: