REVOLVING CREDIT LOAN AGREEMENT
executed by and between
SAGA SOFTWARE, INC.,
as the Borrower
and
THE CHASE MANHATTAN BANK,
as the Lender
[LOGO]
Dated: October 15, 1999
TABLE OF CONTENTS
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Page
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PREAMBLE AND RECITALS................................................. 1
ARTICLE I
DEFINITIONS; RULES OF
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INTERPRETATION AND CONSTRUCTION; AND ACCOUNTING
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Section 1.01 Definitions........................................... 2
Section 1.02 Rules of Interpretation and Construction.............. 20
Section 1.03 Accounting Principles................................. 21
ARTICLE II
AMOUNT AND TERMS OF THE REVOLVING CREDIT FACILITY
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Section 2.01 Revolving Credit Facility............................. 22
Section 2.02 Interest on the Revolving Credit Facility............. 24
Section 2.03 Fees.................................................. 27
Section 2.04 Voluntary Prepayments................................. 27
Section 2.05 Payments.............................................. 28
Section 2.06 Special Provision Governing Eurodollar Rate Loans..... 29
Section 2.07 Increased Capital..................................... 33
Section 2.08 Authorized Officers of the Borrower................... 33
Section 2.09 Taxes................................................. 33
ARTICLE III
CONDITIONS TO THE REVOLVING CREDIT LOANS
----------------------------------------
Section 3.01 Conditions Precedent to the Effectiveness
of this Loan Agreement................................. 35
Section 3.02 Conditions Precedent to All Revolving Credit Loans..... 37
i
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
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Section 4.01 Representations and Warranties on the Closing Date..... 38
Section 4.02 Subsequent Funding Representations and Warranties...... 46
ARTICLE V
REPORTING COVENANTS
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Section 5.01 Statement of Accounting................................ 47
Section 5.02 Reporting and Information Requirements................. 47
Section 5.03 Environmental Notices.................................. 52
ARTICLE VI
AFFIRMATIVE COVENANTS
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Section 6.01 Corporate Existence, etc............................... 53
Section 6.02 Corporate Powers, etc.................................. 53
Section 6.03 Compliance with Laws, etc.............................. 53
Section 6.04 Payment of Taxes and Claims............................ 53
Section 6.05 Maintenance of Properties; Insurance................... 54
Section 6.06 Inspection of Property; Books and Records; Discussion.. 54
Section 6.07 Litigation, Claims, etc................................ 54
Section 6.08 Labor Disputes......................................... 55
Section 6.09 Maintenance of Licenses, Permits, etc.................. 55
Section 6.10 Use of Proceeds........................................ 55
Section 6.11 Continuation of or Change in Business.................. 55
Section 6.12 Additional Guarantors; Additional Pledge of Stock
Agreements............................................. 55
Section 6.13 Year 2000.............................................. 56
Section 6.14 Year 2000 Compliance................................... 56
ARTICLE VII
NEGATIVE COVENANTS
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Section 7.01 Consolidated Debt...................................... 57
Section 7.02 Sale of Assets; Additional Liens....................... 57
Section 7.03 Loans, Advances and Investments........................ 58
Section 7.04 Transactions with Shareholders, Subsidiaries and
Affiliates............................................. 59
Section 7.05 Restriction on Fundamental Changes; Mergers and
Acquisitions........................................... 59
Section 7.06 ERISA.................................................. 59
ii
Section 7.07 Amendment of Corporate Documents....................... 60
Section 7.08 Margin Regulations..................................... 61
Section 7.09 Cancellation of Consolidated Debt; Prepayment.......... 61
Section 7.10 Environmental Liabilities.............................. 61
Section 7.11 Fiscal Year............................................ 61
Section 7.12 Guaranties............................................. 61
Section 7.13 No Negative Pledges to Other Persons................... 62
Section 7.14 No Borrowing Under the CBL Credit Facility............. 62
ARTICLE VIII
FINANCIAL COVENANTS
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Section 8.01 Minimum Consolidated Current Ratio..................... 63
Section 8.02 Maximum Consolidated Cash Flow Leverage Ratio.......... 63
Section 8.03 No Net Consolidated Loss............................... 63
ARTICLE IX
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
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Section 9.01 Events of Default...................................... 64
Section 9.02 Rights and Remedies.................................... 65
Section 9.03 Application of Proceeds................................ 66
Section 9.04 No Notices............................................. 66
Section 9.05 Agreement to Pay Attorneys' Fees and Expenses.......... 67
Section 9.06 No Additional Waiver Implied by One Waiver............. 67
Section 9.07 Failure to Exercise Rights............................. 67
Section 9.08 Waiver of Jury Trial................................... 67
Section 9.09 Remedies Cumulative.................................... 67
ARTICLE X
MISCELLANEOUS
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Section 10.01 Expenses............................................... 69
Section 10.02 Indemnity.............................................. 69
Section 10.03 Amendments and Waivers................................. 70
Section 10.04 Independence of Covenants.............................. 70
Section 10.05 Notices................................................ 70
Section 10.06 Survival of Warranties and Agreements.................. 70
Section 10.07 Marshaling; Payments Set Aside......................... 71
Section 10.08 Severability........................................... 71
iii
REVOLVING CREDIT LOAN AGREEMENT
-------------------------------
THIS REVOLVING CREDIT LOAN AGREEMENT (hereinafter as it may be from time to
time amended, modified, extended, renewed, refinanced and/or supplemented
referred to as this "Loan Agreement"), is made this 15th day of October, 1999,
by and between
SAGA SOFTWARE, INC., a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Virginia, having its
principal office located at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter referred to as the "Borrower"),
AND
THE CHASE MANHATTAN BANK, a state banking institution duly organized and
validly existing under the laws of the State of New York, having an office
located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇/▇▇/ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter referred to as the "Lender").
W I T N E S S E T H:
--------------------
WHEREAS, the Borrower has requested that the Lender make available to the
Borrower an unsecured recourse revolving credit loan in the aggregate principal
amount of up to Twenty-Five Million and 00/100 ($25,000,000.00) Dollars for the
general corporate purposes of the Borrower, including the financing of Permitted
Acquisitions but expressly excluding the Stock Repurchase Program (hereinafter
---------
referred to as the "Revolving Credit Facility"); and
WHEREAS, the Lender has agreed to make the Revolving Credit Facility
available to the Borrower, subject to the terms, conditions and provisions
hereinafter set forth; and
NOW, THEREFORE, in consideration of these premises and the mutual
representations, covenants and agreements of the Borrower and the Lender, each
party, binding itself and its respective successors and/or assigns, does hereby
promise, covenant and agree as follows:
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ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION AND
CONSTRUCTION; AND ACCOUNTING
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Section 1.01 Definitions. The following terms, as used in this Loan
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Agreement, shall have the following meanings, unless the context expressly
indicates and requires otherwise:
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Rate Loan
------------------
for any Eurodollar Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next highest 1/16 of 1%) equal to (i) the LIBO Rate for
such Eurodollar Interest Period multiplied by (ii) the Statutory Reserve Rate.
---------- --
"Affiliate" shall mean, with respect to a specified Person, another Person
---------
that directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with the Person specified. For the
purposes of the preceding sentence, "controls" (including, with correlative
meanings, the terms "controlling", "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities
or by contract or otherwise, and in any case shall include direct or indirect
ownership (beneficially or of record) of, or direct or indirect power to vote,
more than fifty percent (50%) of the outstanding shares of any class of capital
stock of such Person (or in the case of a Person that is not a corporation, more
than fifty percent (50%) of any class of equity interest).
"Agreement of Guaranty" shall mean that certain Agreement of Guaranty, of
---------------------
even date hereof, executed by the Guarantors in favor of the Lender, pursuant to
which the Guarantors have agreed to unconditionally guaranty, on a joint and
--------------
several basis, the full, prompt and complete payment and performance of all of
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the Borrower's liabilities, duties, covenants and obligations under this Loan
Agreement, the Revolving Credit Loan Note and the other Loan Documents. The
term "Agreement of Guaranty" shall also be deemed to mean and refer to any and
all amendments, modifications, extensions, renewals, refinancings and/or
supplements to said Agreement of Guaranty made and/or entered into subsequent to
the Closing Date, including, without limitation, all amendments which are
consummated for the purposes of adding any new and/or additional Persons as
guarantors, all as provided for in Section 6.12 of this Loan Agreement.
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"Applicable Margin" shall have the meaning ascribed and assigned to such
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term in Section 2.02(i)(b) of this Loan Agreement.
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"Authorized Officer" shall mean those officers of the Borrower, whose
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signatures and incumbency shall have been certified to the Lender pursuant to an
Officer's Certificate delivered to the Lender on the Closing Date or any other
form of resolution or certification delivered to and approved by the Lender
after the Closing Date.
"Bankruptcy Code" shall mean a collective reference to any and all of the
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following, as they may be applicable in the given context: (i) with respect to
Persons located, chartered,
2
formed or otherwise domiciled in the Unites States, Title 11 of the United
States Bankruptcy Code (11 U.S.C. Section 101 et seq.), as amended and/or
modified from time to time, or any successor statute thereto; (ii) with respect
to Persons located, chartered, formed or otherwise domiciled in Canada, the
Bankruptcy and Insolvency Act (Canada) as amended from time to time, or any
successor statute; and (iii) with respect to any Persons located, chartered,
formed or otherwise domiciled elsewhere, the Laws of the applicable country.
"Base Rate" or "Base Lending Rate" shall mean the fluctuating interest
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rate per annum publicly announced by the Lender from time to time as its Prime
Rate, which interest rate may not necessarily be the rate actually charged by
the Lender to its most creditworthy customers.
"Base Rate Loan" or "Base Rate Loans" shall mean all Revolving Credit
-------------- ---------------
Loans outstanding which bear interest at a rate determined by a reference to the
Base Rate or to the Base Lending Rate.
"Benefit Plan" shall mean a defined benefit plan as defined in Section 3
------------
(35) of ERISA (other than a Multiemployer Plan) in respect of which the
Borrower, any of the Guarantors, their respective Subsidiaries and/or Affiliates
or an ERISA Affiliate is, or within the immediately preceding six (6) years was,
an "employer" as defined in Section 3(5) of ERISA.
"Big Five Accounting Firm" shall mean any of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., KPMG
-------------------------
Peat Marwick, Ernst & Young LLP, Deloitte & Touche and Pricewaterhouse Coopers
or any of their respective successors.
"Borrower" shall have the meaning ascribed and assigned to such term as set
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forth in the preamble of this Loan Agreement.
"Borrowing" shall mean a borrowing consisting of a Revolving Credit Loan
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or Revolving Credit Loans made by the Lender to the Borrower on the same day.
"Business Day" shall mean (i) for all purposes other than as covered by
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clause (ii) below, any day excluding Saturday, Sunday and any day which is a
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legal holiday under the laws of the State of New York, the State of New Jersey
and/or the Commonwealth of Virginia, or is a day upon which banking institutions
located in New York City, New York are required or authorized by law or other
Governmental Action to remain closed and (ii) with respect to all notices,
determinations, fundings and payments in connection with a Eurodollar Rate Loan,
any day which is a Business Day as described and defined in clause (i) above,
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and which is also a day for trading by and between banks in the London interbank
eurodollar market.
"CBL Credit Facility" shall mean a collective reference to (i) that
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certain credit facility which may be entered into by and between Saga Systems
and Credit Bancorp Limited pursuant to the terms of which Saga Systems expects
to earn a 3% to 4% "dividend" on its treasury stock and (ii) any substitute,
successor and/or similar type of facility.
"Capitalized Lease" and "Capitalized Leases" shall mean at any time any
----------------- ------------------
lease which is, or is required under Generally Accepted Accounting Principles to
be, capitalized on the balance sheet of the lessee at such time.
3
"Capitalized Lease Obligations" of any Person, shall mean all obligations
-----------------------------
of such Person to pay rent or other amounts under any lease (or similar
arrangement conveying the right to use) for real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as Capitalized Leases, in accordance with Generally Accepted
Accounting Principles, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with Generally Accepted
Accounting Principles.
"Cash and Cash Equivalents" shall mean all (i) cash and cash equivalents
-------------------------
and (ii) any of the following: (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by an
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year after the date of acquisition thereof;
(b) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one (1) year after the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from any two (2) of Standard & Poor's Corporation,
▇▇▇▇▇'▇ Investors Service, Inc., Duff and ▇▇▇▇▇▇ or Fitch Investors (or, if at
any time no two of the foregoing shall be rating such obligations, then from
such other nationally recognized rating services as may be acceptable to the
Lender) and not listed for possible down-grade in Credit Watch published by
Standard & Poor's Corporation; (c) commercial paper of a corporation having a
net worth of not less than $500,000,000.00, other than commercial paper issued
by the Borrower, any of the Guarantors, their respective Subsidiaries and/or
Affiliates, maturing no more than ninety (90) days after the date of creation
thereof and, at the time of acquisition, having a rating of at least A-2 or P-2
from either Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.;
(d) domestic certificates of deposit or domestic time deposits or repurchase
agreements maturing within one (1) year after the date of acquisition thereof
issued by any commercial bank organized under the laws of the United States of
America or any state thereof or the District of Columbia having combined capital
and surplus of not less than $1,000,000,000.00, which commercial bank has a
rating of at least A-2 or P-2 from either Standard & Poor's Corporation or
▇▇▇▇▇'▇ Investors Service, Inc.; (e) any funds deposited or invested by the
Borrower, any of the Guarantors, their respective Subsidiaries and/or
Affiliates, in accounts maintained with the Lender; (f) money market funds
having assets in excess of $2,000,000,000.00; and (g) any and all instruments,
securities and/or other investments permitted by the investment policy of the
Borrower, the Guarantors, their Subsidiaries and Affiliates, as adopted and
approved by the board of directors and/or the chief financial officer of Saga
Systems as more fully described and set forth on Schedule 1.01-A, as it may be
---------------
from time to time amended and/or modified.
"CERCLIS" shall mean the Comprehensive Environmental Response,
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Compensation and Liability Information System List, as the same may be amended
from time to time.
"Claim" or "Claims" shall mean any claim or demand, by any Person, of
----- ------
whatsoever kind or nature for any alleged Liabilities and Costs, whether based
in contract, tort, implied or express warranty, strict liability, criminal or
civil statute, permit, ordinance or regulation, common law or otherwise.
"Closing Date" shall mean the date upon which this Loan Agreement is
------------
executed by the
4
Lender and the Borrower and the conditions set forth in Section 3.01 of this
------------
Loan Agreement have been completed and fulfilled to the satisfaction of the
Lender in its sole and absolute discretion.
"Code" means the Internal Revenue Code of 1986, as amended, any successor
----
statute of similar import, and regulations thereunder, in each case as in effect
from time to time. References to sections of the Code shall be construed also
to refer to any successor sections.
"Commitment" shall mean, at any particular time during the term of the
----------
Revolving Credit Facility, the principal amount of the Revolving Credit Facility
which the Lender has committed to make available to the Borrower, as said
principal amount may be permanently reduced by the Borrower pursuant to Section
-------
2.01(v) of this Loan Agreement. As of the Closing Date, the initial amount of
-------
the Commitment is $25,000,000.00.
"Consolidated Cash Flow Leverage Ratio" shall mean with respect to the
-------------------------------------
Borrower, the Guarantors, their respective Subsidiaries and Affiliates, on a
consolidated basis, as of any date of determination thereof, the ratio of (i)
Consolidated Funded Debt, as of such date of determination, -to- (ii) for the
period of four (4) consecutive Fiscal Quarters immediately preceding said date
of determination taken together as one accounting period, Consolidated EBITDA
for the same period, calculated in accordance with Generally Accepted Accounting
Principles.
"Consolidated Current Assets" shall mean, as at any date of determination,
---------------------------
all assets which, in accordance with Generally Accepted Accounting Principles,
would be classified on a consolidated balance sheet of the Borrower, the
Guarantors, their respective Subsidiaries and Affiliates as current assets.
"Consolidated Current Liabilities" shall mean, as at any date of
--------------------------------
determination, all liabilities which, in accordance with Generally Accepted
Accounting Principles, would be classified on a consolidated balance sheet of
the Borrower, the Guarantors, their respective Subsidiaries and Affiliates as
current liabilities.
"Consolidated Debt" shall mean, with respect to the Borrower, the
-----------------
Guarantors, their respective Subsidiaries and/or Affiliates, the aggregate sum
of the following items as such items may appear on a consolidated balance sheet
of the Borrower, the Guarantors, their respective Subsidiaries and Affiliates:
(i) the unpaid principal balance of all indebtedness or liability for money
borrowed or owed by the Borrower, the Guarantors, their respective Subsidiaries
and Affiliates from time to time (including any renewals, extensions and
refundings thereof), whether or not the indebtedness was heretofore or hereafter
created, issued, incurred, assumed or guarantied, as determined in accordance
with Generally Accepted Accounting Principles; (ii) the unpaid principal balance
of all indebtedness or liability for the deferred purchase price of property or
services incurred (including trade obligations); (iii) all obligations as lessee
under leases which have been or should be, in accordance with Generally Accepted
Accounting Principles, recorded as Capitalized Lease Obligations, (iv) all
current Obligations in respect of any unfunded vested benefits under any Plan
covered by Title IV of ERISA; (v) all obligations, contingent or otherwise
relative to the face amount of all letters of credit issued for the Borrower's,
the Guarantors', their respective Subsidiaries' and/or Affiliates' account,
whether or not drawn; (vi) all obligations arising
5
under bankers' acceptance facilities issued for the account of the Borrower, the
Guarantors, their respective Subsidiaries and/or Affiliates; (vii) all
guarantees, endorsements and other contingent obligations to purchase, to
provide funds for payments, to supply funds to invest in the Borrower, the
Guarantors, their respective Subsidiaries and/or Affiliates or otherwise to
assure a creditor against loss; and (viii) all obligations secured by any
mortgage, lien, pledge, or security interest or other charge or encumbrance on
property, whether or not the obligations have been assumed.
"Consolidated EBITDA" shall mean with respect to the Borrower, the
-------------------
Guarantors, their respective Subsidiaries and Affiliates, as of any date of
determination thereof, for the period of four (4) consecutive Fiscal Quarters
immediately preceding said date of determination taken together as one
accounting period, the amount equal to the sum of (i) Consolidated Net Income
for such test period, plus (ii) all gross interest expense on Consolidated Debt
----
of the Borrower, the Guarantors, their respective Subsidiaries and Affiliates,
for such test period, plus (iii) all charges against income of the Borrower, the
----
Guarantors, their respective Subsidiaries and Affiliates for foreign, federal,
state and local taxes for such test period, plus (iv) all depreciation expense
----
for such test period, plus (v) all amortization expense for such test period,
----
all as determined in accordance with Generally Accepted Accounting Principles.
"Consolidated Funded Debt" shall mean, as of any date of determination
------------------------
thereof, all items which in accordance with Generally Accepted Accounting
Principles would be Consolidated Debt exclusive of (i) those items described in
------------
clause (iv), (v) and (vii) of the definition of Consolidated Debt and (ii) trade
--------------------------
obligations.
"Consolidated Net Income" shall mean with respect to the Borrower, the
-----------------------
Guarantors, their respective Subsidiaries and Affiliates, as of any date of
determination thereof, an amount equal to all amounts which, in accordance with
Generally Accepted Accounting Principles, would be included under net income on
a consolidated income statement of the Borrower, the Guarantors, their
respective Subsidiaries and Affiliates for such test period.
"Contractual Obligation" shall mean with respect to any Person, any
----------------------
provision of any Securities issued by said Person or any indenture, mortgage,
deed of trust, contract, undertaking, document, instrument or other agreement or
instrument to which said Person is a party or by which it or any of its
properties is bound, or to which it or any of its properties is subject
(including, without limitation, any restrictive covenant affecting said Person
or any of its properties).
6
"Corporate Guarantors" shall mean a collective reference to (i) SAGA
--------------------
SYSTEMS, Inc., a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, having its principal office
located at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter
referred to as "Saga Systems"); (ii) SAGA SOFTWARE International, Inc., a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, having its principal office located at ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; (iii) SAGA SOFTWARE Technologies, Inc., a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, having its principal office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇-▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; (iv) BLUE LOBSTER SOFTWARE, Inc., a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York, having its principal office located at ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as "Blue
Lobster"); (v) SOFTWARE AG PROFESSIONAL SERVICES, Inc., a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia, having its principal office located at ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; (vi) any new or additional (a) domestic
Subsidiaries and/or Affiliates of the Borrower or any of the Guarantors or (b)
foreign Subsidiaries and/or Affiliates of the Borrower or any of the Guarantors
which are not "controlled foreign corporations" (as such term is defined in
Section 957 of the Code), all whether existing now or in the future, made a
guarantor pursuant to Section 6.12 hereof.
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"Customary Permitted Liens" shall mean
-------------------------
(i) Liens (other than Environmental Liens and any Lien imposed under
ERISA) for taxes, assessments or charges of any Governmental Authority or claims
not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with Generally Accepted Accounting
Principles;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens (other than any Lien
imposed under ERISA) imposed by Law, including, without limitation, Liens in
favor of any Governmental Authority securing progress payments made under
government contracts created in the ordinary course of business and for amounts
not yet due or which are being contested in good faith by appropriate
proceedings which are sufficient to prevent imminent foreclosure of such Liens,
are promptly instituted and diligently conducted and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with Generally Accepted Accounting Principles;
(iii) Liens (other than any Lien imposed under ERISA) incurred or
deposits made in the ordinary course of business (including, without limitation,
surety bonds and appeal bonds) in connection with workers' compensation,
unemployment insurance and other types of social security benefits or to secure
the performance of tenders, bids, leases, contracts, statutory obligations and
other similar obligations or arising as a result of progress payments or
deposits under government contracts (including foreign government contracts);
(iv) easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and other restrictions, charges or
encumbrances (whether or not recorded) affecting the
7
use of real property or impairing the use thereof;
(v) Liens arising out of and with respect to customer deposits made
in the ordinary course of the Borrower's, any Guarantor's, their respective
Subsidiaries' and/or Affiliates' respective businesses;
(vi) Liens arising as a result of the filing of any financing
statement under any applicable state uniform commercial code or other comparable
Law of any jurisdiction covering consigned or leased goods which do not
constitute assets of the Borrower, any of the Guarantors or any of their
respective Subsidiaries and/or Affiliates and which Lien is not intended as
security; and
(vii) extensions, renewals or replacements of any Lien referred to in
clauses (i) through (vi) above, provided that, in the case of clauses (i)
------------------------ -----------
through (vi) above, (a) the principal amount of the obligation secured thereby
------------
is not increased and (b) any such extension, renewal or replacement is limited
to the property originally encumbered thereby;
provided, however, to the extent that the amount of obligations of the Borrower,
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such Guarantor, such Subsidiary or such Affiliate arising from Claims being
contested in good faith secured by such Liens in clauses (i) and (ii) above
--------------------
exceeds $1,000,000.00 in the aggregate, the Borrower, such Guarantor, such
Subsidiary or such Affiliate shall have set aside full cash reserves in an
amount equal to twenty-five percent (25%) of the amount of such obligations.
"Default Rate" shall mean a rate of interest equal to two hundred basis
------------
points (2.0%) above the applicable nondefault interest rate(s) then in effect
with respect to any outstanding Revolving Credit Loan or Revolving Credit Loans.
"DOL" shall mean the United States Department of Labor and any successor
---
department or agency thereto.
"Dollar", "Dollars" and the symbol "$" shall mean lawful money of the
------ ------- -
United States of America.
"Environment" shall mean all air, surface water, water, vapor,
-----------
groundwater, drinking water supply or land, including land surface or
subsurface, and includes all fish, wildlife, biota and all other natural
resources.
"Environmental Approval" and "Environmental Approvals" shall mean any
---------------------- -----------------------
Governmental Action pursuant to or required under any Environmental Law.
"Environmental Claim" shall mean, with respect to any Person, any action,
-------------------
suit, proceeding, investigation, notice, claim, complaint or demand, made by any
other Person (including but not limited to, any Governmental Authority,
citizens' group or present or former employee of such first Person) alleging,
asserting or claiming any actual or potential (i) violation of any Environmental
Law, (ii) liability under any Environmental Law or (iii) liability for
investigatory costs, cleanup costs, governmental response costs, damages to the
Environment, property damages, personal injuries, fines or penalties arising out
of, based on or resulting from the presence, or release into the Environment, of
any Environmental Concern Materials at any location, whether or not owned by
8
such Person; provided, however, in no event shall any voluntary action,
-------- ------- ---------
proceeding or investigation made or brought by the Borrower, the Guarantors,
their respective Subsidiaries and/or Affiliates from time to time in connection
with their own activities or inactivities be included in this definition.
"Environmental Cleanup Site" shall mean any location whether located in the
--------------------------
United States or elsewhere which is listed or proposed for listing on the
National Priorities List, on CERCLIS or on any similar state list of sites
requiring investigation or cleanup, or which is the subject of any pending or
threatened action, suit, proceeding or investigation related to or arising from
any alleged violation of any Environmental Law.
"Environmental Concern Materials" shall mean (i) any flammable substance,
-------------------------------
explosive, radioactive material, hazardous material, hazardous waste, toxic
substance, solid waste, pollution, contaminate or any related material, raw
material, substance, product or by-product of any substance specified in or
regulated or otherwise affected by any Environmental Law (including but not
limited to any "hazardous substance" as defined in any Environmental Law), (ii)
any toxic chemical or other substance from or related to industrial, commercial
or institutional activities, (iii) asbestos, gasoline, diesel fuel, motor oil,
waste and used oil, heating oil and other petroleum products or compounds,
polychlorinated biphenyls, radon gas and urea-formaldehyde and (iv) all other
substances or waste of any nature regulated pursuant to any Environmental Law.
"Environmental Law" and "Environmental Laws" shall mean any Law, whether
----------------- ------------------
now existing or subsequently enacted or amended, relating to (i) pollution or
protection of the Environment, (ii) exposure of Persons, including but not
limited to employees, to Environmental Concern Materials, (iii) protection of
the public health or welfare from the effects of products, by-products, wastes,
emissions, discharges or releases of Environmental Concern Materials or (iv)
regulation of the manufacture, generation, use or introduction into commerce of
Environmental Concern Materials including their manufacture, formulation,
packaging, labeling, distribution, treatment, transportation, handling, storage
or disposal. Without limitation, "Environmental Law" shall include (a) any
Environmental Approval and the terms and conditions thereof, (b) any and all
federal, state or local Laws including, without limitation, the following
statutes: the Clean Air Act (42 U.S.C. 7401 et seq.); the Comprehensive
Environmental Response Compensation and Liability Act of 1980 (42 U.S.C. (S)9601
et seq.); the Federal Water Pollution Control Act (33 U.S.C. (S)1251 et seq.);
the Hazardous Material Transportation Act (49 U.S.C. (S)1801 et seq.); the
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. (S) 136 et seq.);
the Resource Conservation and Recovery Act of 1976 (42 U.S.C. (S)6901 et seq.)
(including the Hazardous and Solid Waste Amendments of 1984), the Toxic
Substance Control Act (15 U.S.C. (S) 2601 et seq.); the Federal Occupational
Safety & Health Act of 1970 (29 U.S.C. (S)651 et seq.) (including (S)3101 of the
Omnibus Reconciliation Act of 1990), and the regulations promulgated thereunder
and all as amended from time to time; and (c) any common law doctrine
(including, without limitation, injunctive relief and tort, such as negligence,
nuisance, trespass and strict liability) that may impose obligations or
liabilities for personal injury or property damage due to, or threatened as a
result of, the presence of or exposure to Environmental Concern Materials.
"Environmental Lien" shall mean a Lien in favor of any Governmental
------------------
Authority for (i)
9
any liability under any Environmental Laws or (ii) damages arising from, or
costs incurred by such Governmental Authority in response to, a Release or
threatened Release of any Environmental Concern Materials into the Environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and any successor statute of similar import, together
with the regulations promulgated thereunder by the United States Treasury
Department, the DOL and/or the PBGC.
"ERISA Affiliate" shall mean each trade or business (whether or not
---------------
incorporated) which together with any of the Borrower and/or the Guarantors, is
treated as a "single employer" under Section 414(b) and (c) of the Code or,
solely for purposes of Section 302 of ERISA and Section 412 of the Code, is
treated as a "single employer" under Section 414 of the Code.
"Eurodollar Affiliate" shall mean with respect to the Lender, the
--------------------
Affiliate of the Lender, if any, set forth on Exhibit "A" attached hereto and
----------
made a part hereof.
"Eurodollar Interest Payment Date" shall mean, with respect to any
--------------------------------
Eurodollar Rate Loan, the last day of each Eurodollar Interest Period applicable
to such Loan.
"Eurodollar Interest Period" shall mean one or more periods of time during
--------------------------
which the Borrower may select, convert to or continue a Eurodollar Rate Loan,
such funding period with respect to the Revolving Credit Facility, to be either
a one (1), two (2) or three (3) month period(s), subject to availability, all as
more fully subject to the provisions of Section 2.06 of this Loan Agreement.
------------
"Eurodollar Interest Rate Determination Date" shall mean the date on which
-------------------------------------------
the Lender determines the Adjusted LIBO Rate applicable to (i) a Borrowing or
(ii) the continuation or conversion of Eurodollar Rate Loans. The Eurodollar
Interest Rate Determination Date shall be the second Business Day prior to the
first day of the Eurodollar Interest Period applicable to such Borrowing,
continuation or conversion.
"Eurodollar Portion" of any Revolving Credit Loans shall mean at any time
------------------
the portion, including the whole, of such Revolving Credit Loans bearing
interest at any time under the Adjusted LIBO Rate.
"Eurodollar Rate Loan" or "Eurodollar Rate Loans" shall mean those
-------------------- ---------------------
Revolving Credit Loans outstanding which bear interest at a rate determined by
reference to the Adjusted LIBO Rate, as provided for in Sections 2.02(i) and
----------------
2.06 of this Loan Agreement.
----
"Eurodollar Rate Option" shall mean one of the interest rates available to
----------------------
the Borrower as provided for and described in Section 2.02(i)(a)(1) of this Loan
---------------------
Agreement.
"Eurodollar Rate Taxes" shall have the meaning ascribed to such term in
---------------------
Section 2.06(vii)(a) of this Loan Agreement.
--------------------
"Event of Default" or "Events of Default" shall mean any of the events of
---------------- -----------------
default as
10
defined and described in Section 9.01 of this Loan Agreement.
------------
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
----
successor thereto.
"Facility Fee" shall mean that certain facility fee in the amount of
------------
$62,500.00 paid by the Borrower to the Lender as of the Closing Date.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
---------------------
Reserve System or any governmental authority succeeding to its functions.
"Fiscal Quarter" shall mean the following three month periods of each
--------------
Fiscal Year:
January 1 - March 31
April 1 - June 30
July 1 - September 30
October 1 - December 31
"Fiscal Year" shall mean that period commencing on January 1 and ending on
-----------
December 31 of the next succeeding year or such other period as the Borrower
and/or the Guarantors may designate and the Lender may approve in writing.
"Funding Date" shall mean, with respect to any Revolving Credit Loan, the
------------
date of the funding of such Revolving Credit Loan by the Lender.
"Funding Segment" shall mean with respect to an Eurodollar Rate Loan, the
---------------
entire principal amount of such Eurodollar Portion to which at the time in
question there is applicable a particular Eurodollar Interest Period beginning
on a particular day and ending on a particular day. (By definition, each such
Eurodollar Portion is at all times composed of an integral number of discrete
Funding Segments and the sum of the principal amounts of all Funding Segments of
any such Eurodollar Portion at any time equals the principal amount of such
Eurodollar Portion at such time.)
"Generally Accepted Accounting Principles" shall mean generally accepted
----------------------------------------
accounting principles, consistently applied, in the United States of America, as
in effect from time to time, as developed, modified and set forth in the
opinions and pronouncements of the Accounting Principles Board, the American
Institute of Certified Public Accountants and the Financial Accounting Standards
Board, or in such other statements by such other Person as may be in general use
by significant segments of the accounting profession, which are applicable to
the circumstances as of the date of determination, subject to the terms of
Section 1.03 of this Loan Agreement.
------------
"Governmental Action" or "Governmental Approvals" shall mean any approval,
------------------- ----------------------
order, consent, authorization, certificate, license, permit or validation of, or
exemption or other action by, or filing, recording or registration with or
notice to, any Governmental Authority.
"Governmental Authority" shall mean the government of the United States of
----------------------
America, any other nation or any political subdivision thereof, or any agency,
authority, bureau, central
11
bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
"Guarantors" shall mean a collective reference to (i) the Corporate
----------
Guarantors and (ii) the Limited Liability Company Guarantor.
"Indemnified Matters" shall have the meaning ascribed and assigned to such
-------------------
term in Section 10.02 hereof.
-------------
"Indemnified Party" and "Indemnified Parties" shall mean the Lender and
----------------- -------------------
the directors, officers, trustees, employees, agents, attorneys and controlling
shareholders of the Lender.
"Independent Certified Public Accountant" shall mean KPMG Peat Marwick and
---------------------------------------
any other independent certified public accounting firm selected by the Borrower
which accounting firm is satisfactory to the Lender including, without
limitation, any one of the Big Five Accounting Firms.
"IRS" shall mean the Internal Revenue Service and any Person succeeding to
---
the functions thereof.
"Law" or "Laws" shall mean any law (including common law), constitution,
--- ----
statute, treaty, convention, regulation, rule, ordinance, code, order,
injunction, writ, decree or award of any Governmental Authority.
"Lender" shall have the meaning ascribed and assigned to such term as set
------
forth in the preamble hereof.
"Liabilities and Costs" shall mean all liabilities, obligations,
---------------------
responsibilities, losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including, without limitation, attorneys',
experts' and consulting fees and costs of investigation and feasibility
studies), fines, penalties and monetary sanctions, interest, direct or indirect,
known or unknown, absolute or contingent, past, present or future.
"LIBO Rate" shall mean, with respect to any Eurodollar Rate Loan for any
---------
Eurodollar Interest Period, the rate appearing on Page 3750 of the Telerate
Service (or on any successor or substitute page of such service, or any
successor to or substitute for such service, providing rate quotations
comparable to those currently provided on such page of such service, as
determined by the Lender from time to time for purposes of providing quotations
of interest rates applicable to dollar deposits in the London interbank market)
at approximately 11:00 a.m., London time, three (3) Business Days prior to the
commencement of such Eurodollar Interest Period, as the rate for dollar deposits
with a maturity comparable to such Eurodollar Interest Period. In the event
that such rate is not available at such time for any reason, then the "LIBO
----
Rate" with respect to such Eurodollar Rate Loan for such Eurodollar Interest
----
Period shall be the rate rounded upwards, if necessary, to the next highest 1/16
of 1% at which a dollar deposit of $5,000,000.00 and for a maturity comparable
to such Eurodollar Interest Period is offered by the principal London office of
the Lender in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, three (3) Business Days prior to the
commencement of
12
such Eurodollar Interest Period.
"Lien" and "Liens" shall mean with respect to any asset, any mortgage,
---- -----
deed of trust, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other) or preference, priority, security
interest or other security agreement of any kind or nature whatsoever (including
any conditional sale or other title retention agreement, any financing lease
involving substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction).
"Limited Liability Company Guarantor" shall mean a reference to SAGA
-----------------------------------
SOFTWARE Atlantic, L.L.C., a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware, having
its principal office located at P.O. Box HM 38, ▇▇▇▇▇▇▇▇, HMFX Bermuda.
"Loan Account" shall have the meaning ascribed and assigned to such term
------------
in Section 2.05(iv) hereof.
----------------
"Loan Agreement" shall have the meaning ascribed and assigned to such term
--------------
as set forth in the preamble of this Loan Agreement.
"Loan Documents" shall mean any and all agreements, documents,
--------------
certificates and instruments executed by the Borrower, any of the Guarantors
and/or any other Person and delivered by them to the Lender pursuant to and in
connection with the Revolving Credit Facility, including, without limitation,
this Loan Agreement, the Revolving Credit Loan Note, the Pledge of Stock
Agreements and the Agreement of Guaranty, in each case as amended, modified,
extended, restated, refinanced and/or supplemented from time to time in
accordance with the provisions hereof or thereof.
"Margin Stock" shall have the meaning ascribed and assigned to such term
------------
in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect upon (i)
-----------------------
the business, assets, condition (financial or otherwise), performance,
properties or operations of the Borrower, the Guarantors, their respective
Subsidiaries and Affiliates taken as a whole, (ii) the ability of the Borrower
and/or any of the Guarantors to perform their respective obligations and duties
under the Loan Documents or (iii) the rights of or benefits available to the
Lender under the Loan Documents. The phrase "has a Material Adverse Effect" or
"will result in a Material Adverse Effect" or words substantially similar
thereto shall in all cases be intended to mean "has resulted, or will or could
reasonably be anticipated to result, in a Material Adverse Effect", and the
phrase "has no (or does not have a) Material Adverse Effect" or "will not result
in a Material Adverse Effect" or words substantially similar thereto shall in
all cases be intended to mean "does not or will not or could not reasonably be
anticipated to result in a Material Adverse Effect".
"Multiemployer Plan" shall mean an employee benefit plan defined in
------------------
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by the Borrower, the Guarantors or an ERISA
Affiliate.
13
"Notice of Borrowing" shall mean, with respect to a proposed Borrowing
-------------------
pursuant to Section 2.01(ii) hereof, a notice substantially in the form of
----------------
Exhibit "B" attached hereto and made a part thereof.
-----------
"Notice of Conversion/Continuation" shall mean, with respect to a proposed
---------------------------------
conversion or continuation of a Revolving Credit Loan pursuant to Section
-------
2.02(iii) hereof, a notice in the form of Exhibit "C" attached hereto and made a
--------- ----------
part hereof.
"Obligations" shall mean all present and future Consolidated Debt and
-----------
other liabilities of the Borrower, the Guarantors, their respective Subsidiaries
and Affiliates due and owing to the Lender, or any Person entitled to
indemnification pursuant to Section 10.02 hereof, or any of their respective
-------------
successors, transferees or assigns, of every type and description, whether or
not evidenced by any note, guaranty or other instrument, arising under or in
connection with this Loan Agreement or any other Loan Document, whether or not
for the payment of money, whether direct or indirect (including those acquired
by assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without limitation,
all interest, charges, expenses, fees, attorneys' fees and disbursements and any
other sum chargeable to the Borrower, the Guarantors, their respective
Subsidiaries and Affiliates under this Loan Agreement or any other Loan
Document.
"Officer's Certificate" shall mean a certificate from the Borrower
---------------------
executed by any of the Authorized Officers of the Borrower, including, without
limitation, the president, any vice-president or the chief financial officer, in
the form of Exhibit "D" attached hereto and made a part hereof.
----------
"Operating Lease" or "Operating Leases" shall mean, as applied to any
--------------- ----------------
Person, any lease of any property (whether real, personal or any combination
thereof) by that Person as lessee which is not a Capitalized Lease.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
----
defined in ERISA and any Person succeeding to any or all of its functions and
duties under ERISA.
"Pension Plan" shall mean any "employee pension benefit plan" within the
------------
meaning of Section 3(2) of ERISA (other than a Multiemployer Plan) covered by
Title IV of ERISA by reason of Section 4021 of ERISA, of which the Borrower, the
Guarantors, their respective Subsidiaries and/or Affiliates or any ERISA
Affiliate are or have been within the preceding five years a "contributing
sponsor" within the meaning of Section 4001(a)(13) of ERISA, or which are or
have been within the preceding five (5) years maintained for employees of the
Borrowers, the Guarantors, their respective Subsidiaries, Affiliates or any
ERISA Affiliate.
"Permits" shall mean any permit, approval, authorization, license,
-------
variance, or permission required from a Governmental Authority under any
applicable Requirement of Law.
"Permitted Acquisition" or "Permitted Acquisitions" shall mean any merger,
--------------------- ----------------------
consolidation, joint venture, partnership or acquisition which complies with
each of the following conditions: (i) the target Person must be in the same line
of business as the Borrower and the Guarantors; (ii) all of the financial
covenants set forth in Article VIII of this Loan Agreement must
------------
14
be complied with on both a projected and, with respect to the Borrower, the
Guarantors, their Subsidiaries and Affiliates, an historical pro forma basis and
no other Event of Default or Potential Event of Default shall exist at the time
of, or shall result or be caused by, such merger, consolidation, joint venture,
partnership or acquisition; (iii) the Borrower and/or one of the Guarantors must
be the surviving Person (or the surviving Person must execute the Agreement of
Guaranty or there must be pledged to the Lender no more than sixty-five percent
(65%) of the stock of such surviving Person); (iv) the Borrower shall have
submitted to the Lender, as soon as practicable but in any event prior to the
-----
execution of a letter of intent, contract, commitment letter or other similar
document having the effect of binding the Borrower and/or any of the Guarantors
to said merger, consolidation, joint venture, partnership or acquisition, pro-
forma financial statements for the Person resulting from such merger,
consolidation, joint venture, partnership or acquisition showing the projected
financial condition of said Person as of the last day of the then current Fiscal
Year and as of the last day of each and every subsequent Fiscal Year until the
Revolving Credit Facility is terminated; and (v) the Borrower shall furnish to
the Lender a certified statement of the Borrower executed by an Authorized
Officer of the Borrower (a) describing the financial, economic, structural and
other details of the proposed merger, consolidation, joint venture, partnership
or acquisition, all in detail reasonably satisfactory to the Lender and (b)
stating that said Authorized Officer has reviewed the terms of all of the
material documents to be executed and delivered by any Person in connection with
such merger, consolidation, joint venture, partnership or acquisition and has
made, or caused to be made under his supervision, a review in reasonable detail
of the transaction and of the condition, financial and otherwise, of the
Borrower, taken as a whole, on a projected and a historical pro forma basis and
no Event of Default or Potential Event of Default will result from such merger,
consolidation, joint venture, partnership or acquisition.
"Permitted Encumbrances" shall mean a collective reference to (i) any
----------------------
Customary Permitted Liens, (ii) any Liens created or contemplated by the Loan
Documents and (iii) any Liens existing on the Closing Date and described on
Schedule 1.01-B attached hereto and made a part hereto which Liens are
---------------
acceptable to the Lender in its sole and absolute discretion.
"Person" or "Persons" shall mean any natural person, employee, general or
------ -------
limited partnership, limited liability partnership, corporation (including a
business trust), limited liability company joint stock company, trust,
unincorporated association, joint venture, company, trust, bank or other
organization, whether or not a legal entity or any other non-governmental
entity, or any Governmental Authority.
"Plan" shall mean any employee benefit plan within the meaning of Section
----
3(3) of ERISA (other than a Multiemployer Plan) of which any of the Borrower,
the Guarantors or any ERISA Affiliate are, or within the preceding five years
were, an "employer" as that term is defined in Section 3(5) of ERISA.
"Pledge of Stock Agreements" shall mean a collective reference to (i) that
--------------------------
certain Pledge of Stock Agreement #1, dated of even date herewith, executed by
Saga Systems and the Borrower, as pledgors, pledging an aggregate of sixty-five
percent (65%) of the authorized, issued and outstanding voting capital stock of
(a) SAGA SYSTEMS (Canada) Holdings Ltd., a company organized under the laws of
Canada and (b) SAGA SOFTWARE S.A. de C.V., a company organized under the laws of
Mexico, as hereafter amended, modified, extended,
15
renewed, refinanced and/or supplemented, (ii) that certain Pledge of Stock
Agreement #2, dated of even date herewith, executed by the Borrower, as pledgor,
pledging sixty-five percent (65%) of the authorized, issued and outstanding
voting capital stock of Software AG FSC, Inc., a company organized under the
laws of the United States Virgin Islands and (iii) any and all additional Pledge
of Stock Agreements, in form and substance satisfactory to the Lender in its
reasonable discretion, executed, made and/or entered into in connection with the
Revolving Credit Facility subsequent to the Closing Date, including, without
limitation, any and all such Pledge of Stock Agreements which are consummated
for the purposes of pledging no more than sixty-five percent (65%) of the
authorized, issued and outstanding stock of any foreign Subsidiary and/or
Affiliate of the Borrower or any of the Guarantors, all as provided for in
Section 6.12 of this Loan Agreement.
------------
"Potential Event of Default" shall mean an event, condition or situation
--------------------------
which with the giving of any required notice and/or the passage of any required
grace or cure periods, or any combination of the foregoing, would constitute an
Event of Default.
"Pricing Grid" shall mean the following matrix upon which interest rates
------------
described in Section 2.02 hereof are determined on the basis of the Borrower's,
------------
the Guarantors', their respective Subsidiaries' and Affiliates' Consolidated
Cash Flow Leverage Ratio:
(All Amounts Expressed in Basis Points)
Consolidated Cash Applicable Applicable
Flow Leverage Adjusted LIBO Base Rate
Level Ratio Rate Margin* Margin*
---------------------------------------------------------------------
I equal to or less than 1.0 75.0 0.0
II greater than 1.0
but less than or
equal to 1.5 100.0 0.0
III greater than 1.5
but less than or
equal to 1.75 125.0 25.0
IV greater than 1.75 ** **
* Any adjustment to the interest rates as a result of a change to the
Consolidated Cash Flow Leverage Ratio shall take effect in accordance with the
terms, conditions and provisions of Section 2.02(i)(b) of this Loan Agreement.
------------------
** Notwithstanding any term, condition or provision of this Loan Agreement to
the contrary, in the event the Consolidated Cash Flow Leverage Ratio is greater
than 1.75, the interest rate for all Revolving Credit Loans shall be the Default
Rate.
"Prime Rate" or "Prime Lending Rate" shall mean the fluctuating interest
---------- ------------------
rate per annum publicly announced from time to time by the Lender as its prime
commercial lending rate in
16
effect at its principal office presently located at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. Each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective.
"Property" or "Properties" shall mean any real or personal property, plant,
-------- ----------
building, facility, structure, underground storage tank, equipment or unit, or
other asset owned, leased or operated by the Borrower, the Guarantors, their
respective Subsidiaries and/or Affiliates.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42 U.S.C.
----
(S)6901 et seq. and any successor statute, and regulations promulgated
thereunder.
"Regulation D" shall mean Regulation D of the Federal Reserve Board, or
------------
any successor statute or regulation thereto, as in effect from time to time.
"Regulation T" shall mean Regulation T of the Federal Reserve Board, or
------------
any successor statute or regulation thereto, as in effect from time to time.
"Regulation U" shall mean Regulation U of the Federal Reserve Board, or
------------
any successor statute or regulation thereto, as in effect from time to time.
"Regulation X" shall mean Regulation X of the Federal Reserve Board, or
------------
any successor statute or regulation thereto, as in effect from time to time.
"Release" shall mean release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor Environment or into or out of any Property, including the
movement of Environmental Concern Materials through or in the air, soil, surface
water, groundwater or Property.
"Remedial Action" shall mean actions required to (i) clean up, remove,
---------------
treat or in any other way address Environmental Concern Materials in the indoor
or outdoor environment; (ii) prevent the Release or threat of Release or
minimize the further Release of Environmental Concern Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; or (iii) perform pre-remedial studies and
investigations and post-remedial monitoring and care.
"Reportable Event" shall have the meaning ascribed to, such term in
----------------
Section 4043 of ERISA or regulations promulgated thereunder.
"Requirements of Law" shall mean, as to any Person, the charter and by-
-------------------
laws or other organization or governing documents of such Person, and any law,
rule or regulation, Permit, or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject, including, without limitation, the Securities Act, the Securities
Exchange Act, Regulations U and X, and any certificate of occupancy, zoning
ordinance, building, environmental or land use requirement or Permit or
occupational safety or health law, rule or regulation.
17
"Restricted Junior Payments" shall mean (i) any dividend or other
--------------------------
distribution to any of the Shareholders of the Borrower, any of the Guarantors,
their respective Subsidiaries and/or Affiliates (whether direct or indirect and
whether in cash, property, Securities or otherwise) on account of any stock
ownership interest of the Borrower, any of the Guarantors, their respective
Subsidiaries and/or Affiliates now or hereafter outstanding, (ii) any
redemption, conversion, exchange, retirement, sinking fund or similar payment,
purchase or other acquisition for value (whether direct or indirect) or any
shares of any class of stock of the Borrower, any of the Guarantors, their
respective Subsidiaries and/or Affiliates now or hereafter outstanding, (iii)
any prepayment of principal of, premium, if any, or interest on, or fees in
respect of, redemption, conversion, exchange, purchase, retirement, defeasance,
sinking fund or similar payment with respect to any Consolidated Debt and (iv)
any prepayment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock of the
Borrower, any of the Guarantors, their respective Subsidiaries and/or Affiliates
now or hereafter outstanding.
"Revolving Credit Facility" shall have the meaning ascribed and assigned
-------------------------
to such term as set forth in the first recital of this Loan Agreement.
"Revolving Credit Loan" and "Revolving Credit Loans" shall have the
--------------------- ----------------------
meaning ascribed and assigned to such term in Section 2.01(i) of this Loan
---------------
Agreement.
"Revolving Credit Loan Note" shall mean that certain Revolving Credit Loan
--------------------------
Note, in substantially the form attached hereto as Exhibit "E" with blanks
-----------
appropriately filled, dated of even date herewith executed by the Borrower, as
the maker, in favor of the Lender, as the payee,
18
in a face amount equal to the Revolving Credit Facility, as hereafter amended,
modified, extended, renewed, refinanced and/or supplemented.
"Revolving Credit Termination Date" shall mean the earlier of (i) November
---------------------------------
__, 2002, (ii) the date of termination of the Revolving Credit Facility by the
Lender pursuant to Section 9.02 of this Loan Agreement or (iii) the date the
------------
Revolving Credit Facility is fully repaid and terminated by the Borrower.
"SEC" shall mean the United States Securities and Exchange Commission and
---
any successor department or agency thereto.
"Securities" shall mean any stock, shares, voting trust certificates,
----------
bonds, debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly known as "securities" or any certificates of interest, shares or
participation in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing which can readily be bought and sold on any nationally recognized
securities exchange and would properly be classified as securities on the
consolidated balance sheet of the Borrower, the Guarantors and their respective
Subsidiaries and/or Affiliates in accordance with Generally Accepted Accounting
Principles.
"Securities Act" shall mean the Securities Act of 1933, as amended to the
--------------
date hereof and from time to time hereafter, and any successor statute.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934,
------------------------
as amended to the date hereof from time to time hereafter, and any successor
statute.
"Shareholder" or "Shareholders" shall mean any shareholder or shareholders
----------- ------------
of the Borrower, the Guarantors or any Subsidiary or Affiliate of the Borrower
or of any Guarantor.
"Single Employer Plan" shall mean any Plan which is not a Multiemployer
--------------------
Plan under Title IV of ERISA.
"Solvent" shall mean when used with respect to any Person, that at the time
-------
of determination:
(i) the fair value of its assets (at fair valuation) is in excess of
the total amount of its liabilities, including, without limitation, any and all
"contingent liabilities" (as such term is defined in Financial Accounting
Standards Board Statement 5);
(ii) it is then able to pay its debts as they mature; and
(iii) it has capital sufficient to carry on its business.
"Statutory Reserve Rate" shall mean a fraction (expressed as a decimal),
----------------------
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate
-----
19
of the maximum reserve percentages (including any marginal, special, emergency
or supplemental reserves) expressed as a decimal established by the Federal
Reserve Board to which the Lender is subject with respect to the Adjusted LIBO
Rate, for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D. Eurodollar Rate Loans
shall be deemed to constitute eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to the Lender under such
Regulation D or any comparable regulation. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.
"Stock Repurchase Program" shall mean a collective reference to (i) that
------------------------
certain stock repurchase program involving the repurchase of up to two million
shares of Saga Systems' common stock as detailed in that certain Form 8-K filed
with the SEC by Saga Systems and dated June 14, 1999 and (ii) any other similar
stock repurchase program entered into by Saga Systems in the future.
"Subsidiary" or "Subsidiaries" shall mean with respect to any Person at
---------- ------------
any date of determination (i) a corporation a majority of whose capital stock
with voting power, under ordinary circumstances, to elect a majority of
directors is at the time, directly or indirectly owned by said Person, (ii) any
other Person (other than a corporation) in which said Person, directly or
indirectly, at the date of determination thereof has at least majority ownership
interest and/or (iii) any entity whose net earnings (losses) or portions thereof
would be properly included and combined with the net earnings of said Person in
accordance with Generally Accepted Accounting Principles; provided, however,
-------- -------
that the term Subsidiary shall not include any entity that is not reflected on
the balance sheet of said Person due to inactivity and lack of material assets
and liabilities. For the purposes of this Loan Agreement, the defined term
"Subsidiary" or "Subsidiaries" when used with respect to any Person shall be
deemed to include any Subsidiary of any Subsidiary of such Person.
"Taxes" shall have the meaning ascribed and assigned to such term as set
-----
forth in Section 2.09(i)(b) of this Loan Agreement.
------------------
"Termination Event" shall mean (i) any Reportable Event with respect to
-----------------
any Benefit Plan described in Section 4043 of ERISA and the regulations issued
thereunder for which the notice requirements have not been waived by the PBGC,
(ii) the withdrawal of the Borrower, the Guarantors or an ERISA Affiliate from a
Benefit Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001 (a)(2) of ERISA, (iii) the occurrence of an obligation
arising under Section 4041 of ERISA of the Borrower, the Guarantors or an ERISA
Affiliate to provide affected parties with a written notice of an intent to
terminate a Benefit Plan in a distress termination described in Section 4041 (c)
of ERISA, (iv) the institution by the PBGC of proceedings to terminate any
Benefit Plan, (v) any event or condition which constitutes grounds under Section
4042 of ERISA for the appointment of a trustee to administer a Benefit Plan or
(vi) the partial or complete withdrawal of the Borrower, the Guarantors or any
ERISA Affiliate from a Multiemployer Plan.
"Year 2000 Compliant" means, with regard to any Person, that all software,
-------------------
embedded microchips and other processing capabilities utilized by, and material
to the business operations or
20
financial condition of, such Person are able to interpret and manipulate data on
and involving all calendar dates correctly and without causing any abnormal
ending scenario, including in relation to dates in and after the year 2000.
"Year 2000 Problem" shall mean the risk that computer applications used by
------------------
or for the benefit of the Borrower, the Guarantors or any Subsidiary and/or
Affiliate of the Borrower or any of the Guarantors may be unable to recognize or
perform properly certain date sensitive functions involving certain dates prior
to and any date after December 31, 1999.
Section 1.02 Rules of Interpretation and Construction. In this Loan
----------------------------------------
Agreement unless the context otherwise clearly requires:
(i) Articles and Sections mentioned by number only are the
respective Articles and Sections of this Loan Agreement as so numbered;
(ii) Words importing a particular gender mean and include every
other gender, and words importing the singular number mean and include the
plural number and vice versa;
----------
(iii) Words importing persons mean and include firms, associations,
partnerships (including limited partnerships and limited liability
partnerships), societies, trusts, corporations, limited liability companies or
other legal entities, including public or governmental bodies and the Borrower's
and Guarantors' respective Subsidiaries and/or Affiliates, as well as natural
persons;
(iv) Any headings preceding the texts of the several Articles and
Sections of this Loan Agreement, and any table of contents or marginal notes
appended to copies hereof, shall be solely for convenience of reference and
shall not affect or control the meaning, construction or interpretation of this
Loan Agreement;
(v) If any clause, provision or section of this Loan Agreement
shall be ruled invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any of the remaining
provisions thereof, unless not invalidating or rendering unenforceable the
remaining provisions shall be inequitable;
(vi) The terms "herein", "hereunder", "hereby", "hereto", "hereof"
and any similar terms as used in this Loan Agreement refer to this Loan
Agreement as a whole and not to any particular provision of this Loan Agreement;
the term "heretofore" means before the date of execution of this Loan Agreement;
and the term "hereafter" means on or after the date of execution of this Loan
Agreement;
(vii) This Loan Agreement and all matters relating hereto shall be
governed by and construed and interpreted in accordance with the laws of the
State of New York; and
(viii) If any clause, provision or section of this Loan Agreement
shall be determined to be apparently contrary to or conflicting with any other
clause, provision or section of this Loan Agreement, then the clause, provision
or section containing the more specific provisions shall control and govern with
respect to such apparent conflict;
21
(ix) References in this Loan Agreement to "determination" (and
similar terms) by the Lender include good faith and reasonable estimates by the
Lender (in the case of quantitative determinations) and good faith and
reasonable beliefs by the Lender (in the case of qualitative determinations);
and
(x) The word "and" when used from time to time herein shall mean
"or" or "and/or" if such meaning is expansive of the rights or interests of the
Lender in the given context.
Section 1.03 Accounting Principles. Except as otherwise provided for in
---------------------
this Loan Agreement, all computations and determinations as to accounting or
financial matters shall be made, and all financial statements to be delivered
pursuant to this Loan Agreement shall be prepared, in accordance with Generally
Accepted Accounting Principles (including principles of consolidation where
appropriate), and all accounting or financial terms shall have the meanings
ascribed to such term by Generally Accepted Accounting Principles, as
established from time to time.
22
ARTICLE II
AMOUNT AND TERMS FOR THE REVOLVING CREDIT FACILITY
--------------------------------------------------
Section 2.01 Revolving Credit Facility.
-------------------------
(i) Availability. (a) Subject to the terms, conditions and
------------
provisions set forth in this Loan Agreement and provided no Event of Default or
Potential Event of Default shall have occurred and be continuing, the Lender
hereby agrees to make available to the Borrower from time to time during the
period from the Closing Date up through and including the Business Day next
preceding the Revolving Credit Termination Date, revolving credit loans
(hereinafter each individually referred to as a "Revolving Credit Loan" and
collectively referred to as the "Revolving Credit Loans") in amounts which shall
not exceed, in the aggregate for all Revolving Credit Loans at any time
outstanding, the Commitment. The Revolving Credit Loans shall be evidenced by
the Revolving Credit Loan Note. The Lender is hereby authorized to record the
date and amount of each Revolving Credit Loan made by the Lender and the date
and amount of each payment or prepayment of principal thereof made by the
Borrower on the Schedule "1" annexed to and constituting a part of the Revolving
------------
Credit Loan Note, and any such recordation shall constitute prima facie evidence
of the accuracy of the information so recorded. If the outstanding amount of
the Revolving Credit Loans shall exceed the amount of the Revolving Credit
Facility at any time, such excess shall be immediately due and payable to the
Lender and subject to the terms, conditions and provisions of this Loan
Agreement.
(b) Revolving Credit Loans may be voluntarily prepaid pursuant to
Section 2.04 hereof and, subject to the provisions of this Loan Agreement, any
------------
amounts so prepaid may be reborrowed, up to the amount available under this
Section 2.01(i) at the time of such Borrowing, until the Business Day next
---------------
preceding the Revolving Credit Termination Date. The Lender's commitment to
make Revolving Credit Loans shall automatically expire, and each Revolving
Credit Loan then outstanding shall be repaid in full by the Borrower, no later
than the Revolving Credit Termination Date.
(ii) Notice of Borrowing. Whenever the Borrower desires to borrow
-------------------
under this Section 2.01, the Borrower shall deliver to the Lender a Notice of
------------
Borrowing no later than (a) 11:00 A.M. (New York City, New York time) on the
proposed Funding Date, in the case of a Borrowing as a Base Rate Loan, and (b)
11:00 A.M. (New York City, New York time) at least three (3) Business Days in
advance of the proposed Funding Date, in the case of a Borrowing as a Eurodollar
Rate Loan. The Notice of Borrowing shall specify (1) the Funding Date (which
shall be a Business Day) in respect of the Revolving Credit Loan, (2) the amount
of the proposed Borrowing which shall not be less than (A) $250,000.00, in the
case of a Borrowing as a Base Rate Loan, and (B) $500,000.00, in the case of a
Borrowing as a Eurodollar Rate Loan, (3) the intended use of the proceeds of
such Borrowing, (4) the applicable interest rate option as described in Section
-------
2.02(i) of this Loan Agreement and, if applicable, (5) the Eurodollar Interest
-------
Period for such Revolving Credit Loan. In lieu of delivering the above-
described Notice of Borrowing, such Borrower may give the Lender telephonic
notice of any proposed Borrowing by the time required under this Section
-------
2.01(ii); provided, however, that such notice shall be confirmed in writing by
-------- -------- -------
delivery to the Lender promptly (but in no event later than the Funding
23
Date of the requested Revolving Credit Loan) of a Notice of Borrowing. Any
Notice of Borrowing (or telephonic notice in lieu thereof) pursuant to this
Section 2.01(ii) shall be irrevocable.
----------------
(iii) Making of Revolving Credit Loans. The Lender shall make the
--------------------------------
proceeds of such Revolving Credit Loan available to the Borrower in Newark, New
Jersey on such Funding Date by the end of business on such Funding Date and
shall disburse such funds in Dollars and in immediately available funds to an
account of the Borrower maintained with the Lender and thereafter to any
substitute account designated in writing by the Borrower in the Notice of
Borrowing.
(iv) Use of Proceeds of Revolving Credit Loans. The proceeds of the
-----------------------------------------
Revolving Credit Loans shall be used by the Borrower for financing the general
corporate purposes of the Borrower including the financing of Permitted
Acquisitions (but expressly excluding the financing of the Stock Repurchase
-------------------
Program).
(v) Reduction of Revolving Credit Facility; Revolving Credit
--------------------------------------------------------
Termination Date.
----------------
(a) The Borrower shall have the right, at any time and from
time to time, to terminate in whole or permanently reduce in part, the Revolving
Credit Facility in an amount up to the amount of the Commitment minus the
-----
aggregate principal amount of the Revolving Credit Loans then outstanding. Any
such prepayment may be made by the Borrower without premium or fee, except as
------
provided for in Section 2.04 of this Loan Agreement with respect to the
------------
prepayment of a Eurodollar Rate Loan. The Borrower shall give not less than
three (3) Business Days' prior express written notice to the Lender designating
the date (which shall be a Business Day) of such termination or reduction and
the amount of any partial reduction. Such termination or partial permanent
reduction of the Revolving Credit Facility and the Commitment shall be effective
on the date specified in the Borrower's notice. Any such partial permanent
reduction of the Revolving Credit Facility shall be in an aggregate minimum
principal amount of $1,000,000.00 and integral multiples of $500,000.00 in
excess of that amount.
(b) The Revolving Credit Facility shall automatically expire
without further action on the part of the Lender, and all then outstanding
Revolving Credit Loans shall be paid in full, on the Revolving Credit
Termination Date.
(vi) No Amortization of the Revolving Credit Facility. Prior to the
------------------------------------------------
Revolving Credit Termination Date, provided no Event of Default of Potential
Event of Default shall have occurred and be continuing, there shall be no
required scheduled principal amortization payments due and owing to the Lender
on the Revolving Credit Facility. The full and final payment of any and all
principal, unpaid accrued interest, fees, costs and expenses, if any, owing to
the Lender under the Revolving Credit Facility shall be made by the Borrower to
the Lender on the Revolving Credit Termination Date. The Lender hereby agrees
that no "annual clean-up" of the Revolving Credit Loan shall be required.
Section 2.02 Interest on the Revolving Credit Facility.
-----------------------------------------
(i) Rates of Interest. (a) All Revolving Credit Loans shall bear
-----------------
interest
24
computed daily on the outstanding principal balance thereof from the Funding
Date thereof until repaid in full at one or more of the interest rate options
selected by the Borrower from between the two (2) interest rate options set
forth below. Subject to the provisions of this Loan Agreement, the Borrower may
select different options to apply simultaneously to different portions of the
Revolving Credit Loans and may select different Funding Segments to apply
simultaneously to different parts of the Eurodollar Portion of the Revolving
Credit Loans. Each selection of an interest rate option shall apply separately
and without overlap to the Revolving Credit Loans as a class. There shall be no
limit to the aggregate number of Funding Segments applicable to the Eurodollar
Portion of the Revolving Credit Loans at any time.
Interest Rate Options for Revolving Credit Loans:
------------------------------------------------
(1) Eurodollar Rate Option. A fluctuating rate per annum (fixed
----------------------
for each particular Eurodollar Interest Period only) for each day during a
----
Eurodollar Interest Period equal to (A) the Adjusted LIBO Rate plus (B) the
----
Applicable Margin for such day. The Lender shall give prompt notice to the
Borrower of the Adjusted LIBO Rate, determined or adjusted in accordance
with the provisions hereof, which determination or adjustment shall be
conclusive (absent manifest error) if made by the Lender in good faith.
The Adjusted LIBO Rate shall be calculated in accordance with the
Eurodollar Reserve Percentage, if the Lender is required to hold such
reserves; or
(2) Base Rate Option: A fluctuating rate per annum for each day
----------------
equal to (A) the Base Rate of the Lender, in effect from time to time (such
interest rate to change immediately upon any change in the Base Rate) plus
----
(B) the Applicable Margin for such day.
(b) The Applicable Margin for Eurodollar Rate Loans and Base
Rate Loans with respect to the Revolving Credit Loan Facility for any day shall
be the applicable amount (expressed in basis points) set forth in the Pricing
Grid (hereinafter referred to as the "Applicable Margin"). For purposes of this
Section 2.04(i)(b), the Consolidated Cash Flow Leverage Ratio shall be tested at
------------------
the end of the periods covered by the quarterly and annual consolidated
financial statements which are to be provided to the Agent pursuant to Section
-------
5.02 of the Loan Agreement. Any change in the Applicable Margin (both increases
----
and decreases therein) shall be effective on the first (1/st/) day of the Fiscal
Quarter following the Fiscal Quarter in which the Lender is entitled to receive
said submitted financial statements for a prior Fiscal Quarter all as provided
for in Article V hereof. For example, for financial statements covering the
---------
first Fiscal Quarter of any Fiscal Year, the effective date of any increase or
decrease in the Applicable Margin would be July 1/st/ of said calendar year. For
the period from the Closing Date up through and including the date upon which
the Lender receives the September 30, 1999 Compliance Certificate attached to
the Officer's Certificate set forth on Exhibit "D" attached hereto and made a
-----------
part hereof, the Applicable Margin for Base Rate Loans and Eurodollar Rate Loans
shall be the percentage described at Level I on the Pricing Grid. Thereafter,
the Applicable Margin for Base Rate Loans and Eurodollar Rate Loans shall be set
and established based upon the Consolidated Cash Flow Leverage Ratio tested in
accordance with the terms, conditions and provisions set forth in Section 8.02
------------
hereof.
(c) Notwithstanding subsections (a) and (b) above, interest in
-----------------------
respect
25
of any Revolving Credit Loan shall not exceed the maximum rate permitted
by applicable Law.
(ii) Interest Payments. Subject to the terms, conditions and
-----------------
provisions of Section 2.02(iv) hereof, interest accrued on all Base Rate Loans
----------------
shall be payable by the Borrower in arrears (a) on the first Business Day of
each month during the term of this Loan Agreement, commencing on the first
Business Day of the first full month next following the making of each such Base
Rate Loan and (b) at maturity. Interest accrued on each Eurodollar Rate Loan
shall be payable by the Borrower in arrears (1) on each Eurodollar Interest
Payment Date applicable to such Eurodollar Rate Loan, (2) upon prepayment
thereof in full or in part and (3) at maturity.
(iii) Conversion or Continuation. (a) Subject to the terms,
--------------------------
conditions and provisions of Section 2.06 hereof, the Borrower shall have the
------------
option (1) to convert at any time all or any part of outstanding Revolving
Credit Loans which comprise part of the same Borrowing and which, in the
aggregate, equal $500,000.00 from Base Rate Loans to Eurodollar Rate Loans; (2)
to convert all or any part of outstanding Revolving Credit Loans from Eurodollar
Rate Loans to Base Rate Loans or (3) upon the expiration of any Eurodollar
Interest Period applicable to a Borrowing of Eurodollar Rate Loans, to continue
all or any portion of such Revolving Credit Loans equal to $500,000.00 as
Eurodollar Rate Loans of the same type, and the succeeding Eurodollar Interest
Period of such continued Revolving Credit Loans shall commence on the expiration
date of the Eurodollar Interest Period applicable thereto; provided, however,
-------- -------
that no outstanding Revolving Credit Loan may be continued as, or be converted
into, a Eurodollar Rate Loan when any Event of Default or Potential Event of
Default has occurred and is continuing.
(b) In the event the Borrower shall elect to convert or continue
a Revolving Credit Loan under this Section 2.02 (iii), the Borrower shall
------------------
deliver a Notice of Conversion/Continuation to the Lender no later than 11:00
a.m. (New York City, New York time) at least three (3) Business Days in advance
of the proposed conversion/continuation date in the case of a conversion to or a
continuation of a Eurodollar Rate Loan. A Notice of Conversion/Continuation
shall specify (1) the proposed conversion/continuation date (which shall be a
Business Day), (2) the amount of the Revolving Credit Loan to be
converted/continued, (3) the nature of the proposed conversion/continuation, and
(4) in the case of a conversion to, or continuation of, a Eurodollar Rate Loan,
the requested Eurodollar Interest Period. In lieu of delivering the above-
described Notice of Conversion/Continuation, the Borrower may give the Lender
telephonic notice of any proposed conversion/continuation by the time required
under this Section 2.02(iii); provided, however, that such notice shall be
----------------- -------- -------
confirmed in writing by delivery to the Lender promptly (but in no event later
than the proposed conversion/continuation date) of a Notice of
Conversion/Continuation. In the event the Borrower shall fail to provide the
Lender with the requisite Notice of Conversion/Continuation for a continuation
of any Eurodollar Rate Loan within the time prescribed above, said Eurodollar
Rate Loan shall automatically continue as a Eurodollar Rate Loan for the same
Eurodollar Interest Period.
(c) Any Notice of Conversion/Continuation for conversion to, or
continuation of, a Revolving Credit Loan (or telephonic notice in lieu thereof)
shall be irrevocable and the Borrower shall be bound to convert or continue in
accordance therewith.
26
(iv) Default Interest. Notwithstanding the rate of interest
----------------
specified in Section 2.02(i) hereof and the payment dates specified in Section
--------------- -------
2.02(ii) and Section 2.05(i) hereof, effective immediately upon the occurrence
-------- ---------------
of any Event of Default and for as long thereafter as any such Event of Default
shall be continuing, the principal balance of all Revolving Credit Loans then
outstanding and any interest payments on the Revolving Credit Loans not paid
when due shall bear interest, to the extent permitted by applicable Law, payable
upon demand at the Default Rate. The Borrower hereby acknowledges that: (a) such
Default Rate is a material inducement to the Lender to make the Revolving Credit
Facility available to the Borrower; (b) the Lender would not have made the
Revolving Credit Facility available to the Borrower in the absence of the
agreement of the Borrower to pay such Default Rate; (c) such Default Rate
represents compensation for increased risk to the Lender that the Revolving
Credit Facility will not be repaid; and (d) such Default Rate is not a penalty
and represents a reasonable estimate of (1) the cost to the Lender in allocating
its resources (both personnel and financial) to the on-going review, monitoring,
administration and collection of the Revolving Credit Facility and (2)
compensation to the Lender for losses that are difficult to ascertain.
(v) Computation of Interest. Interest on all Revolving Credit Loans
-----------------------
shall be computed on the basis of the actual number of days elapsed in the
period during which interest accrues and a year of 360 days. In computing
interest on any Revolving Credit Loan, the date of the making of the Revolving
Credit Loan or the first day of a Eurodollar Interest Period, as the case may
be, shall be included and the date of payment or the expiration date of a
Eurodollar Interest Period, as the case may be, shall be excluded; provided,
--------
however, that if a Revolving Credit Loan is repaid on the same day on which it
-------
is made, one day's interest shall be paid on that Revolving Credit Loan.
(vi) Changes: Legal Restrictions. Except as provided in Section
--------------------------- -------
2.06(iv) hereof with respect to certain determinations on Eurodollar Interest
--------
Rate Determination Dates, in the event that after the date hereof (a) the
adoption of or any change in any law, treaty, rule, regulation, guideline or
determination of a court or Governmental Authority or any change in the
interpretation or application thereof by a court or Governmental Authority or
(b) compliance by the Lender with any request or directive (whether or not
having the force of law and whether or not the failure to comply therewith would
be unlawful) from any central bank or other Governmental Authority or quasi-
governmental authority:
(1) does or may impose, modify, or hold applicable, in the
determination of a Lender, any reserve, special deposit, compulsory loan, FDIC
insurance, capital allocation or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, advances or loans by,
commitments made, or other credit extended by, or any other acquisition of funds
by, the Lender or any applicable lending office or Eurodollar Affiliate of the
Lender (except, with respect to a Eurodollar Rate Loan, to the extent that the
Statutory Reserve Rate requirements are reflected in the definition of "Adjusted
LIBO Rate"); or
(2) does or is reasonably likely to impose on the Lender any
other condition materially more burdensome in nature, extent or consequence than
those in existence as of the Closing Date;
and the result of any of the foregoing is to increase the cost to the Lender of
making, renewing or
27
maintaining the Revolving Credit Loans, then, in any such case, the Borrower
shall promptly pay to the Lender, upon demand, such amount or amounts (based
upon an allocation thereof by the Lender to the financing transactions
contemplated by this Loan Agreement and effected by this Section 2.02(vi) as may
---------------
be necessary to compensate the Lender for any such additional cost incurred or
reduced amount received. The Lender shall deliver to the Borrower a written
statement of the costs or reductions claimed and the basis therefore, and the
allocation made by the Lender of such costs and reductions shall be conclusive,
absent manifest error, if made in good faith. If the Lender subsequently
recovers any amount previously paid by the Borrower pursuant to this Section
-------
2.02(vi), the Lender shall, within thirty (30) days after receipt of such refund
--------
and to the extent permitted by applicable Law, pay to the Borrower the amount of
any such recovery.
Section 2.03 Fees.
----
(i) Facility Fee. The Borrower shall have paid to the Lender the
------------
Facility Fee, in full, as of the Closing Date.
(ii) Commitment Fee. The Borrower shall pay to the Lender a
--------------
commitment fee, from and after the Closing Date until the Obligations are paid
in full and the Revolving Credit Facility is terminated, equal to (a) one-eighth
of one percent (0.125%) per annum multiplied by (b) the positive difference
---------- --
between (1) the average daily amount of the Commitment minus (2) the aggregate
-----
average daily amount of all Revolving Credit Loans outstanding under the
Revolving Credit Facility from time to time. All such commitment fees payable
under this Section 2.03(ii) shall be calculated and payable quarterly in arrears
----------------
on the last Business Day in each Fiscal Quarter beginning after the Closing
Date.
(iii) Late Charge Fee. In the event that any payment (other than a
---------------
payment of principal and/or interest) required to be made by the Borrower under
the Revolving Credit Loan Note or under this Loan Agreement shall not be
received by the Lender within ten (10) days of when due, the Lender may charge,
and if so charged, the Borrower shall pay, a late charge of ($0.05) for each
dollar ($1.00) of each delinquent payment for the purpose of defraying the
expense incident to the handling of such delinquent payment. In no event shall
said late charge fee be less than ten dollars ($10.00).
(iv) Payment of Fees. The fees described in this Section 2.03
--------------- ------------
represent compensation for services rendered and to be rendered separate and
apart from the lending of money or the provision of credit, and the obligation
of the Borrower to pay each fee described herein shall be in addition to, and
not in lieu of, the obligation of the Borrower to pay interest, other fees and
expenses otherwise described in this Loan Agreement. Fees shall be payable when
due at the office of the Lender in Newark, New Jersey in immediately available
funds. All fees shall be non-refundable when paid. All fees and expenses
specified or referred to in this Loan Agreement due and owing to the Lender,
including, without limitation, those referred to in this Section 2.03 and in
------------
Section 10.01 hereof, shall bear interest, if not paid when due, at the Default
-------------
Rate (but not to exceed the maximum rate permitted by applicable Law), and shall
constitute Obligations. All fees described in this Section 2.03 which are
------------
expressed as a per annum charge shall be calculated on the basis of the actual
number of days elapsed in a 360-day year.
28
Section 2.04 Voluntary Prepayments.
---------------------
(i) Eurodollar Rate Loans. The Borrower may, at any time and from
---------------------
time to time, upon the giving of at least three (3) Business Days' prior express
written notice to the Lender, voluntarily prepay any Eurodollar Rate Loan in
whole or in part, in an aggregate minimum amount of $500,000.00, subject to the
following: (a) any principal prepayment of a Eurodollar Rate Loan shall be
accompanied by the payment of all unpaid accrued interest due and owing on said
Eurodollar Rate Loan and (b) the Borrower shall pay to the Lender all amounts
described in Section 2.06(vi) of this Loan Agreement. Such notice shall (1)
----------------
specify the prepayment date (which shall be a Business Day), (2) specify the
principal amount being prepaid, (3) be irrevocable and (4) commit the Borrower
to prepay said Eurodollar Rate Loan in full on the date and in the amount stated
therein.
(ii) Base Rate Loans. The Borrower may, at any time and from time to
---------------
time, upon the giving of at least one (1) Business Day's prior express written
notice to the Lender, voluntarily prepay any Base Rate Loan in whole or in part,
in an aggregate minimum amount of $250,000.00, without premium or fee; provided,
--------
however, any principal prepayment of a Base Rate Loan shall be accompanied by
-------
the payment of all unpaid accrued interest due and owing on said Base Rate Loan.
(iii) Prepayments in Full. Notwithstanding any term, condition or
-------------------
provision of this Section 2.04 to the contrary, in the event that any
------------
prepayments of any Revolving Credit Loans are made in connection with the
termination of this Loan Agreement, such prepayments shall be made only upon
three (3) Business Days' prior express written notice to the Lender.
Section 2.05 Payments.
--------
(i) Manner and Time of Payment. All payments of principal, interest
--------------------------
and fees hereunder payable to the Lender, including, without limitation, all
payments in connection with Revolving Credit Loans, shall be made without
condition or reservation or right, in Dollars and in immediately available
funds, delivered to the Lender not later than 2:00 p.m. (New York City, New York
time) on the date due, to such account of the Lender in Newark, New Jersey, as
the Lender may designate. Funds received by the Lender after that time and date
shall be deemed to have been paid on the next succeeding Business Day. The
Lender shall send a monthly and/or quarterly invoice, as applicable, to the
Borrower reflecting the accrued interest due and owing and all fees due and
owing hereunder. The Borrower hereby agrees that on the Business Day that any
payment of principal, interest and fees are due, the Borrower shall initiate the
transfer of such payment to the Lender; provided, however, if the Borrower shall
-------- -------
fail to initiate such payment no later than the date on which any such payment
is due and owing to the Lender, the Lender shall, and is hereby authorized by
the Borrower to, automatically charge a demand deposit account of the Borrower,
which account shall be maintained with the Lender at all times throughout the
term of the Revolving Credit Facility. The Borrower's authorization of the
Lender to charge such account having sufficient funds on deposit shall
constitute payment of the amount so authorized notwithstanding the Lender's
failure to charge said account. Any failure or delay by the Lender in
submitting invoices for interest and fee payments shall not discharge or relieve
the Borrower of the obligation to make such payments into the demand deposit
account or
29
to initiate any such transfer of payment.
(ii) Apportionment of Payments. So long as there does not exist an
-------------------------
Event of Default, all payments of principal and interest in respect of
outstanding Revolving Credit Loans, all payments of the fees described herein
and all payments in respect of any other Obligation shall be allocated by the
Lender as it may be entitled thereto as provided herein. After the occurrence
and during the continuance of an Event of Default, the Lender shall, after
providing notice to the Borrower that payments and proceeds shall be so applied,
apply all payments remitted to the Lender and all amounts received by the
Lender, subject to the provisions of this Loan Agreement, (a) first, to pay
Obligations in respect of any fees, expense reimbursements or indemnities then
due and owing to the Lender from the Borrower; (b) second, to pay interest due
in respect of Revolving Credit Loans and to pay (or to the extent such
Obligations are contingent, prepay or provide cash collateral in respect of);
(c) third, to pay or prepay principal of Revolving Credit Loans in the inverse
order of maturity and (d) fourth, to the ratable payment of all other
Obligations.
(iii) Payments on Non-Business Days. Whenever any payment to be made
-----------------------------
by the Borrower hereunder shall be stated to be due on a day which is not a
Business Day, payments shall be made on the next succeeding Business Day and
such extension of time shall be included in the computation of the payment of
interest hereunder and of any of the fees specified in Section 2.03 hereof, as
------------
the case may be.
(iv) Lender's Accounting. The Lender shall maintain a loan account
-------------------
(hereinafter referred to as the "Loan Account") on its books in which shall be
recorded (a) the principal amount of Revolving Credit Loans owing to the Lender
from time to time; (b) all other appropriate debits and credits as provided in
this Loan Agreement, including, without limitation, all interest, fees,
expenses, charges and other Obligations; and (c) all payments of Obligations
made by the Borrower or for the Borrower's account. All entries in the Loan
Account shall be made in accordance with the Lender's customary accounting
practices as in effect from time to time. The Lender will render a statement of
the Loan Account upon the request of the Borrower. Each and every such
statement shall be deemed final, binding and conclusive upon the Borrower in all
respects as to all matters reflected therein (absent manifest error), unless the
Borrower, within fifteen (15) days after the date such statement is rendered,
delivers to the Lender written notice of any objection which the Borrower may
have to any such statement. In that event, only those items expressly objected
to in such notice shall be deemed to be disputed by the Borrower.
Notwithstanding the foregoing, the Lender's entries in the Loan Account
evidencing Revolving Credit Loans and other financial accommodations made from
time to time shall be final, binding and conclusive upon the Borrower (absent
manifest error) as to the existence and amount of the Obligations recorded in
the Loan Account. The Lender, in its discretion, may charge any or all
interest, fees and expenses incurred by the Borrower hereunder to the Loan
Account.
Section 2.06 Special Provisions Governing Eurodollar Rate Loans.
--------------------------------------------------
Notwithstanding other provisions of this Loan Agreement to the contrary, if any,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters described below:
(i) Amount of Eurodollar Rate Loans. Each Eurodollar Rate Loan shall
-------------------------------
be for a minimum amount of $500,000.00.
30
(ii) Determination of Eurodollar Interest Period. By giving notice as
-------------------------------------------
set forth in Sections 2.01(ii) and 2.02(iii) hereof (with respect to a
-------------------------------
conversion into or a continuation of Eurodollar Rate Loans), the Borrower shall
have the option, subject to the other terms, conditions and provisions of this
Section 2.06, to specify the Eurodollar Interest Period to apply to the
------------
Borrowing of Eurodollar Rate Loans described in such notice, subject to
availability. The determination of Eurodollar Interest Periods shall be subject
to the following provisions:
(a) In the case of immediately successive Eurodollar Interest
Periods applicable to a Borrowing of Eurodollar Rate Loans, each successive
Eurodollar Interest Period shall commence on the day on which the next preceding
Eurodollar Interest Period expires;
(b) If any Eurodollar Interest Period would otherwise expire on
a day which is not a Business Day, the Eurodollar Interest Period shall be
extended to expire on the next succeeding Business Day; provided, however, that
-------- -------
if any such Eurodollar Interest Period applicable to a Borrowing of Eurodollar
Rate Loans would otherwise expire on a day which is not a Business Day but is a
day of the month after which no further Business Day occurs in that month, then
that Eurodollar Interest Period shall expire on the immediately preceding
Business Day;
(c) The Borrower may not select a Eurodollar Interest Period for
any Revolving Credit Loan which terminates later than the Revolving Credit
Termination Date;
(d) The Borrower may not select a Eurodollar Interest Period
with respect to any portion of principal of a Eurodollar Rate Loan which extends
beyond a date on which the Borrower is required to make a scheduled payment of
any portion of principal, it being understood and agreed that any Eurodollar
Rate Loan whose Eurodollar Interest Period ends less than one month prior to
such required principal payment date shall be deemed converted to a Base Rate
Loan as of the last day of such Eurodollar Interest Period for purposes of
determining whether any portion of principal of any Eurodollar Rate Loan is
required in order to make a mandatory payment of principal;
(e) There shall be no limit to the number of Eurodollar Interest
Periods under this Loan Agreement in effect at any one time under the Revolving
Credit Facility; and
(f) If any Eurodollar Interest Period commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Eurodollar Interest Period)
then said Eurodollar Interest Period shall end on the last Business Day of the
last calendar month of such Eurodollar Interest Period.
(iii) Determination of Interest Rate. As soon as practicable after
------------------------------
11:00 a.m. (New York City, New York time) on any Eurodollar Interest Rate
Determination Date, the Lender shall determine (which determination shall,
absent manifest error, be presumptively correct) the interest rate which shall
apply to the Eurodollar Rate Loans for which an interest rate is then being
determined for the applicable Eurodollar Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to the
Borrower.
31
(iv) Interest Rate Unascertainable, Inadequate or Unfair. If, with
---------------------------------------------------
respect to any Eurodollar Interest Period, the Lender determines that (a)
deposits in Dollars (in the applicable amounts) are not being offered in the
relevant market for such Eurodollar Interest Period, (b) adequate and reasonable
means do not exist for ascertaining the Adjusted LIBO Rate, (c) a contingency
has occurred which materially and adversely affects the London interbank
Eurodollar market or (d) the effective cost to the Lender of funding a proposed
Funding Segment of the Eurodollar Portion from a corresponding source of funds
shall exceed the Eurodollar Rate, applicable to such Funding Segment, the Lender
shall forthwith give notice thereof to the Borrower, whereupon until the Lender
notifies the Borrower that the circumstances giving rise to such suspension no
longer exist, (1) the right of the Borrower to elect to have Revolving Credit
Loans bear interest based upon the Adjusted LIBO Rate shall be suspended and (2)
each outstanding Eurodollar Rate Loan shall be converted into a Base Rate Loan
on the last day of the then current Eurodollar Interest Period therefor,
notwithstanding any prior election by the Borrower to the contrary.
(v) Illegality. (a) In the event that on any date the Lender shall
----------
have determined (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties) that the making or continuation of any
Eurodollar Rate Loan has become unlawful by compliance by the Lender in good
faith with any Law, of any Governmental Authority (whether or not having the
force of Law and whether or not failure to comply therewith would be unlawful),
then, and in any such event, the Lender shall promptly give notice (by telephone
promptly confirmed in writing) to the Borrower.
(b) Upon the giving of the notice referred to in Section
-------
2.06(v)(a) hereof, (1) the Borrower's right to request of the Lender and the
----------
Lender's obligation to make Eurodollar Rate Loans shall be immediately
suspended, and the Lender shall make a Revolving Credit Loan, as part of any
requested Borrowing of Eurodollar Rate Loans, as a Base Rate Loan, which Base
Rate Loan shall, for all purposes, be considered a part of such Borrowing and
(2) if the affected Revolving Credit Loans are then outstanding, the Borrower
shall immediately (or, if permitted by applicable Law, no later than the date
permitted thereby, upon at least one (1) Business Day's written notice to the
Lender) convert each such Revolving Credit Loan into a Base Rate Loan.
(c) In the event that the Lender determines at any time
following its giving of the notice referred to in Section 2.06(iv) and Section
---------------- -------
2.06(v)(a) hereof that the Lender may lawfully make Eurodollar Rate Loans of the
----------
type referred to in such notice, the Lender shall promptly give notice (by
telephone confirmed in writing) to the Borrower of that determination, whereupon
the Borrower's right to request of the Lender, and the Lender's obligation to
make, Eurodollar Rate Loans shall be restored.
(vi) Compensation. In addition to such amounts as are required to be
------------
paid by the Borrower pursuant to Sections 2.02(iv), 2.02(vi), 2.03, 2.04(i),
-------------------------------------------
2.06(vii), 2.07 and 2.09 hereof, the Borrower shall compensate the Lender, upon
--------------- ----
demand, for all losses, expenses and liabilities (including, without limitation,
any loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds required by the Lender to fund or maintain the Lender's
Eurodollar Rate Loans) which losses, expenses and liabilities the Lender may
sustain (a) if for any reason a Borrowing, conversion or continuation of
Eurodollar Rate Loans does not
32
occur on a date specified therefor in a Notice of Borrowing or a Notice of
Conversion/Continuation or in a telephonic request for borrowing or
conversion/continuation or a successive Eurodollar Interest Period does not
commence after notice therefor is given pursuant to Section 2.02(iii) hereof,
-----------------
(b) if any prepayment of an Eurodollar Rate Loan (including, without limitation,
any prepayment pursuant to Section 2.04 hereof) occurs for any reason on a date
------------
which is not the last day of the applicable Eurodollar Interest Period, (c) as a
consequence of any required conversion of a Eurodollar Rate Loan to a Base Rate
Loan as a result of any of the events indicated in Section 2.06(v) or (d) as a
---------------
consequence of any other failure by the Borrower to repay Eurodollar Rate Loans
when required by the terms of this Loan Agreement. The Lender shall deliver to
the Borrower a written statement as to such losses, expenses and liabilities
which statement shall be conclusive as to such amounts in the absence of
manifest error.
(vii) Eurodollar Rate Taxes. The Borrower hereby agrees that:
---------------------
(a) the Borrower shall pay, prior to the date on which
penalties attach thereto, all present and future income, stamp and other taxes,
levies, or costs and charges whatsoever imposed, assessed, levied or collected
on or in respect of a Revolving Credit Loan solely as a result of the interest
rate being determined by reference to the Adjusted LIBO Rate or the provisions
of this Loan Agreement relating to the Adjusted LIBO Rate or the recording,
registration, notarization or other formalization of any thereof or any payments
of principal, interest or other amounts made on or in respect of a Revolving
Credit Loan made to the Borrower when the interest rate is determined by
reference to the Adjusted LIBO Rate (all such taxes, levies, costs and charges
being hereinafter collectively called "Eurodollar Rate Taxes"); provided,
--------
however, that Eurodollar Rate Taxes shall not include net income or franchise
-------
taxes imposed by any jurisdiction. The Borrower shall also pay such additional
amounts equal to increases in net income or franchise taxes attributable to
payments made by the Borrower pursuant to this clause (a). Promptly after the
----------
date on which payment of any such Eurodollar Rate Tax is due pursuant to
applicable law, the Borrower will, at the request of the Lender, furnish to the
Lender evidence, in form and substance satisfactory to the Lender, that the
Borrower has met its obligation under this Section 2.06(vii); and
-----------------
(b) the Borrower will indemnify the Lender against, and
reimburse the Lender on demand for, any Eurodollar Rate Taxes paid by the Lender
in respect of a Revolving Credit Loan made to the Borrower, as determined by the
Lender in its sole discretion. The Lender shall provide the Borrower with (1)
appropriate receipts for any payments or reimbursements made by the Borrower
pursuant to this clause (b) and (2) such information as may reasonably be
----------
required to indicate the basis for such Eurodollar Rate Taxes; provided,
however, that if the Lender subsequently recovers, or receives a net tax benefit
with respect to, any amount of Eurodollar Rate Taxes previously paid by the
Borrower pursuant to this Section 2.06(vii)(b), the Lender shall, within thirty
--------------------
(30) days after receipt of such refund, and to the extent permitted by
applicable law, pay to the Borrower the amount of any such recovery or permanent
net tax benefit.
(viii) Booking of Eurodollar Rate Loans. The Lender may make, carry
--------------------------------
or transfer Eurodollar Rate Loans at, to, or for the account of, any of its
branch offices, agencies or the office of an Affiliate of the Lender; provided,
--------
however, the Lender shall not be entitled to receive any greater amount under
-------
Section 2.02(vi) or Section 2.06(vii) hereof as a result of the
---------------- -----------------
33
transfer of any such Revolving Credit Loan than the Lender would be entitled to
immediately prior thereto unless (a) such transfer occurred at a time when
circumstances giving rise to the claim for such greater amount did not exist and
were not reasonably foreseeable in the view of the Lender and (b) such claim
would have arisen even if such transfer had not occurred.
(ix) Affiliates Not Obligated. No Eurodollar Affiliate or other
------------------------
Affiliate of the Lender shall be deemed a party to this Loan Agreement or shall
have any rights, liability or obligation under this Loan Agreement.
Section 2.07 Increased Capital. If either (i) the introduction of or any
-----------------
change in or in the interpretation of any Law or regulation or (ii) compliance
by the Lender with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law and whether or
not the failure to comply therewith would be unlawful) affects or would affect
the amount of capital required or expected to be maintained by the Lender or any
corporation controlling the Lender and the Lender determines that the amount of
such capital is increased by or based upon the existence of the Lender's
commitment to make Revolving Credit Loans and other commitments of this type,
then, upon demand by the Lender, the Borrower shall immediately pay to the
Lender, from time to time as specified by the Lender, additional amounts
sufficient to compensate the Lender in the light of such circumstances, to the
extent that the Lender determines such increase in capital to be allocable to
the existence of the Lender's commitment to fund the Revolving Credit Facility.
A certificate as to such amounts submitted to the Borrower by the Lender, shall,
in the absence of manifest error, be conclusive and binding for all purposes.
The Lender shall make written demand on the Borrower for such additional amounts
no later than one hundred eighty (180) days after the Lender receives actual
notice or obtains actual knowledge of the promulgation of any law, rule,
regulation or interpretation, or occurrence of any other event, giving rise to a
claim by the Lender against the Borrower for any such additional amounts
pursuant to this Section 2.07. The Lender shall furnish the Borrower with a
------------
description of the reason for any such increased capital requirement. In the
event that the Lender fails to make such written demand on the Borrower within
such time period, then the Borrower shall have no obligation to pay any such
additional amount with respect to claims accruing prior to the one hundred
eightieth (180/th/) day preceding the date on which such written demand is made.
Section 2.08. Authorized Officers of the Borrower. The Borrower shall
-----------------------------------
notify the Lender in writing of the names of the officers and employees
authorized to request Revolving Credit Loans and shall provide the Lender with a
specimen signature of each such Authorized Officer. The Lender shall be
entitled to rely conclusively on such officer's or employee's authority to
request such Revolving Credit Loans until the Lender receives written notice to
the contrary. The Lender shall have no duty to verify the authenticity of the
signature on any written Notice of Borrowing or Notice of
Conversion/Continuation and, with respect to an oral request for such a
Revolving Credit Loan, the Lender shall have no duty to verify the identity of
any Person representing himself as one of the officers or employees authorized
to make such request on behalf of the Borrower. The Lender shall not incur any
liability to the Borrower in acting upon any telephonic notice referred to above
which the Lender believes in good faith to have been given by a duly Authorized
Officer or other Person authorized to borrow on behalf of the Borrower or for
otherwise acting in good faith under this Section 2.08.
------------
34
Section 2.09 Taxes.
-----
(i) Payments Net of Taxes. All payments made by the Borrower under
---------------------
this Loan Agreement or any other Loan Document shall be made free and clear of,
and without reduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, and all liabilities with respect
thereto, excluding
(a) in the case of the Lender, income or franchise taxes imposed
on the Lender by the jurisdiction under the laws of which the Lender is
organized or any political subdivision or taxing authority thereof or therein or
as a result of a connection between the Lender and any jurisdiction and the
transactions contemplated hereby; and
(b) in the case of the Lender, income or franchise taxes imposed
by any jurisdiction in which the Lender's lending offices which make or book
Revolving Credit Loans, are located or any political subdivision or taxing
authority thereof or therein (all such non-excluded taxes, levies, imposts,
deductions, charges or withholdings being hereinafter called "Taxes"). If any
Taxes are required to be withheld or deducted from any amounts payable to the
Lender under this Loan Agreement or any other Loan Document, the Borrower shall
pay the relevant amount of such Taxes and the amounts so payable to the Lender
shall be increased to the extent necessary to yield to the Lender (after payment
of all Taxes) interest or any such other amounts payable hereunder at the rates
or in the amounts specified in this Loan Agreement and the other Loan Documents.
Whenever any Taxes are paid by the Borrower with respect to payments made in
connection with this Loan Agreement or any other Loan Document, as promptly as
possible thereafter, the Borrower shall send to the Lender for its own account a
certified copy of an original official receipt received by the Borrower showing
payment thereof.
(ii) Indemnity. The Borrower hereby indemnifies the Lender for the
---------
full amount of all Taxes attributable to payments by or on behalf of the
Borrower hereunder or under any of the other Loan Documents, any Taxes paid by
the Lender any present or future claims, liabilities or losses with respect to
or resulting from any omission to pay or delay in paying any Taxes (including
any incremental Taxes, interest or penalties that may become payable by the
Lender as a result of any failure to pay such Taxes), whether or not such Taxes
were correctly or legally asserted. Such indemnification shall be made within
thirty (30) days from the date the Lender makes written demand therefor.
35
ARTICLE III
CONDITIONS TO THE REVOLVING CREDIT LOANS
----------------------------------------
Section 3.01 Conditions Precedent to the Effectiveness of this Loan
------------------------------------------------------
Agreement. This Loan Agreement shall become effective on the Closing Date when
---------
the following conditions precedent have been satisfied (unless waived by the
Lender or unless the deadline for delivery has been extended by the Lender):
(i) Certain Documents. The Lender shall have received on or before
-----------------
the Closing Date all of the following, all of which, except as otherwise
specifically described below, shall be in form and substance satisfactory to the
Lender:
(a) this Loan Agreement, together with all Exhibits and
Schedules attached hereto completed in full;
(b) a Notice of Borrowing pursuant to Section 2.01 hereof dated
------------
the Closing Date and executed by the Borrower;
(c) the Revolving Credit Loan Note;
(d) the Pledge of Stock Agreements;
(e) the Agreement of Guaranty;
(h) the opinions of counsel to the Borrower and the Guarantors
substantially in the form of Exhibit "F" attached hereto;
-----------
(i) a certificate of the Secretary or Assistant Secretary of the
Borrower dated the Closing Date certifying (1) the names and true signatures of
the incumbent officers of the Borrower authorized to sign this Loan Agreement
and all other Loan Documents executed by the Borrower in connection with the
Revolving Credit Facility, (2) the By-Laws of the Borrower as in effect on the
date of such certification and (3) the resolutions of the Borrower's Board of
Directors approving and authorizing the execution, delivery and performance of
this Loan Agreement and all of the other Loan Documents;
(j) the Certificate of Incorporation of the Borrower, as
amended, modified or supplemented to the Closing Date, shall be certified to be
true, correct and complete by the applicable Secretary of State or other
appropriate Governmental Authority as of a recent date prior to the Closing
Date;
(k) Good Standing Certificate(s) or other appropriate
documentation certified by the appropriate Secretary of State or other
appropriate Governmental Authority relating to the Borrower for each of the
states or countries in which the Borrower is qualified to conduct its business;
(l) a certificate of the Chief Financial Officer of the Borrower
36
certifying that such financial information (including any annual or quarterly
financial statements of the Borrower) as the Lender may reasonably request are
true and accurate;
(m) a contemporaneous search of real property, tax, judgment
and litigation dockets and records and other appropriate registers shall have
revealed no filings or recordings in effect with respect to the Borrower and the
Guarantors, except such filings or recordings as are reasonably acceptable to
the Lender, and the Lender shall have received a copy of the search reports
received as a result of the search; and
(n) such additional documentation as the Lender may reasonably
require, as indicated on the Lender's "Closing Document Checklist For Unsecured
Revolving Credit Loan" of even date herewith, and, where required to be signed
by the Borrower, the Guarantors, the Lender and/or other Persons, said
documents, agreements and certificates shall have been duly executed, witnessed,
sealed, attested and/or notarized, as appropriate.
(ii) Fees and Expenses Paid. The Borrower shall have paid to the
----------------------
Lender, for its own account, all fees and expenses due and payable under this
Loan Agreement on or before the Closing Date.
(iii) Representations and Warranties. All of the representations and
------------------------------
warranties of the Borrower contained in subsections (i) through (xxx) of Section
----------------------------- -------
4.01 hereof and in any other Loan Document (other than for changes permitted or
----
contemplated by this Loan Agreement) shall be true and correct in all material
respects on and as of the Closing Date as though made on and as of that date
(except any such representations and warranties stated to be given on a specific
date other than the Closing Date).
(iv) No Default. No Event of Default or Potential Event of Default
----------
hereunder or under the other Loan Documents shall have occurred and be
continuing on the Closing Date.
(v) No Injunction. No Requirements of Law shall prohibit, and no
-------------
order, judgment or decree of any Governmental Authority shall and, except as set
forth on Schedule 4.01(vii) hereto, no litigation shall be pending or threatened
------------------
which in the judgment of the Lender would, enjoin, prohibit restrain, impose or
result in the imposition of any material adverse condition upon the consummation
of the transactions contemplated hereby.
(vi) Consents. The Borrower shall have received all consents and
--------
authorizations required pursuant to any material Contractual Obligation with any
other Person and shall have obtained all consents and authorizations of, and
effected all notices to and filings with, any Governmental Authority, in each
case, as may be necessary to allow them lawfully to execute, deliver and
perform, in all material respects, their respective obligations under this Loan
Agreement and the other Loan Documents.
37
(vii) No Material Adverse Change. No adverse change deemed material
--------------------------
by the Lender, in its reasonable opinion, shall have occurred since the date of
the most recent annual audited financial report of the Borrower and the
Guarantors delivered to the Lender through the Closing Date, as to the condition
(financial or otherwise), operations, performance or properties of the Borrower,
the Guarantors, their respective Subsidiaries and Affiliates, individually or
taken as a whole.
Section 3.02. Conditions Precedent to All Revolving Credit Loans. The
--------------------------------------------------
obligation of the Lender to make any Revolving Credit Loan requested to be made
by it on any Funding Date is subject to the following conditions precedent as of
such date:
(i) Notice of Borrowing. With respect to a request for a Revolving
-------------------
Credit Loan, the Lender shall have received in accordance with the provisions of
Section 2.01(ii) hereof, on or before any Funding Date, an original Notice of
----------------
Borrowing duly executed by an Authorized Officer of the Borrower.
(ii) Additional Matters. As of the Funding Date for any Revolving
------------------
Credit Loan:
(a) Representations and Warranties. All of the representations
------------------------------
and warranties of the Borrower contained in subsections (i) through (xxx) of
-----------------------------
Section 4.01 hereof and in any other Loan Document (other than representations
------------
and warranties which expressly speak only of a different date and other than
for changes permitted or contemplated by this Loan Agreement) shall be true and
correct in all material respects;
(b) No Default. No Event of Default or Potential Event of
----------
Default shall have occurred and be continuing or would result from the making
of the requested Revolving Credit Loan;
(c) No Injunction. No law or regulations shall prohibit, and no
-------------
order, judgment or decree of any Governmental Authority shall, and, except as
set forth on Schedule 4.01(vii) hereto, no litigation shall be pending or
------------------
threatened which in the reasonable judgment of the Lender would, enjoin,
prohibit, restrain, impose or result in the imposition of any material adverse
condition upon the Lender from making the Revolving Credit Loan requested to be
made on the Funding Date; and
(d) No Material Adverse Effect. No Material Adverse Effect
--------------------------
shall have occurred after the Closing Date.
Each submission by the Borrower to the Lender of a Notice of Borrowing
with respect to a Revolving Credit Loan and the acceptance by the Borrower of
the proceeds of each such Revolving Credit Loan made hereunder shall constitute
a representation and warranty by the Borrower as of the Funding Date in respect
of such Revolving Credit Loan that all the conditions contained in this Section
-------
3.02 have been satisfied.
----
38
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 4.01 Representations and Warranties on the Closing Date. In order
--------------------------------------------------
to induce the Lender to enter into this Loan Agreement, the Borrower hereby
represents and warrants to the Lender that the following statements are true,
correct and complete on and as of the Closing Date:
(i) Organization; Corporate Powers. The Borrower (a) is a
------------------------------
corporation duly organized, validly existing and in good standing under the Laws
of the Commonwealth of Virginia, (2) is duly qualified to conduct business as a
foreign corporation and in good standing under the Laws of each jurisdiction in
which it owns or leases real property or in which the nature of its business
requires it to be so qualified except where the failure to so qualify would not
have a Material Adverse Effect and (3) has all requisite power and authority to
own, operate and encumber its property and assets and to conduct its business as
presently conducted and as proposed to be conducted in connection with and
following the consummation of the actions contemplated by the Loan Documents.
(ii) Authority. (a) The Borrower has the requisite corporate power
---------
and authority (1) to execute, deliver and perform each of the Loan Documents
executed by it, or to be executed by it and (2) to file the Loan Documents filed
by it, or to be filed by it, with any appropriate Governmental Authority.
(b) The execution, delivery and performance (or filing, as the
case may be) of each of the Loan Documents to which the Borrower is a party and
the consummation of the transactions contemplated thereby, have been duly
authorized by the Board of Directors of the Borrower and no further corporate
proceedings on the part of the Borrower are necessary to consummate such
transactions.
(c) Each of the Loan Documents to which the Borrower is a party
has been duly executed and delivered (or filed, as the case may be) by the
Borrower and constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms.
(iii) Subsidiaries and Affiliates. As of the Closing Date, all of
---------------------------
the Subsidiaries and Affiliates of the Borrower and the Guarantors are listed on
Schedule 4.01(iii) attached hereto and made a part hereof and are properly
------------------
identified thereon as to whether each is an operating company in the Borrower's,
the Guarantors', their respective Subsidiaries' and Affiliates' consolidated
businesses and there are no other Subsidiaries and/or Affiliates of the Borrower
or any of the Guarantors. Except for SAGA SOFTWARE (Canada), Inc., a company
organized under the laws of Canada, those Subsidiaries and Affiliates of the
Borrower and Saga Systems which have either (a) executed the Agreement of
Guaranty or (b) have had pledged no more than sixty five percent (65%) of their
authorized, issued and outstanding stock to the Lender pursuant to any of the
Pledge of Stock Agreements are the only operating companies represented by the
consolidated financial statements of Saga Systems.
(iv) No Conflict. The execution and delivery by the Borrower and the
-----------
39
Guarantors of each Loan Document to which they are party and the performance of
each of the transactions contemplated thereby do not and will not (a) constitute
a tortious interference with any Contractual Obligation of the Borrower or of
any of the Guarantors or (b) conflict with or violate the Borrower's or the
Guarantors' respective Certificate of Incorporation, By-Laws, Operating
Agreement or Certificate of Formation, as applicable, or (c) conflict with,
result in a breach of or constitute (with or without notice or lapse of time or
both) a default under any Requirement of Law or, subject to clause (a) above,
----------
Contractual Obligation of the Borrower or of any of the Guarantors or require
termination of any Contractual Obligation, the consequences of which conflict or
default or termination would have or is reasonably likely to result in a
Material Adverse Effect or (d) result in or require the creation or imposition
of any Lien whatsoever upon any of the Properties or assets of the Borrower or
any of the Guarantors (other than Liens permitted pursuant to Section 7.01(ii)
----------------
hereof) or (e) require any approval of the stockholders of the Borrower or of
the Guarantors.
(v) Governmental Consents. The execution, delivery and performance
---------------------
of each Loan Document (and the transactions contemplated thereby) do not and
will not require any registration with, consent or approval of, or notice to,
or other action to, with or by any Governmental Authority, except filings,
consents or notices which have been, or will in due course, be made, obtained
or given other than as otherwise obtained.
(vi) Governmental Regulation. Neither the Borrower, any of the
-----------------------
Guarantors nor any of their respective Subsidiaries and/or Affiliates is subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Investment Company Act of 1940 or any other Law such that the
Borrower's, any Guarantor's, any such Subsidiary's or Affiliate's ability to
incur indebtedness is limited or its ability to consummate the transactions
contemplated hereby is materially impaired.
(vii) Litigation; Adverse Effects. (a) Except as set forth in
---------------------------
Schedule 4.01(vii) attached hereto, there is no action, suit, proceeding,
------------------
governmental investigation or arbitration, at law or in equity, or before or by
any Governmental Authority, pending, or, to the knowledge of the Borrower,
threatened against the Borrower, any of the Guarantors or any of their
respective Subsidiaries or Affiliates or any Property of the Borrower, any of
the Guarantors or any of their respective Subsidiaries or Affiliates which is
reasonably likely to (1) result in any Material Adverse Effect, (2) materially
and adversely affect the ability of the Borrower, any of the Guarantors or any
of their respective Subsidiaries or Affiliates to perform their respective
obligations under the Law, any Contractual Obligation and/or the Loan Documents
or (3) materially and adversely affect the ability of the Borrower and/or the
Guarantors to pay and/or perform their respective Obligations or the Lender's
ability to enforce such Obligations.
(b) Neither the Borrower, any of the Guarantors nor any of their
respective Subsidiaries or Affiliates is (1) in violation of any applicable Law
which violation has or is reasonably likely to have a Material Adverse Effect or
(2) subject to or in default with respect to any final judgment, writ,
injunction, decree, rule or regulation of any court or Governmental Authority
which has or is reasonably likely to have a Material Adverse Effect. There is
no action, suit, proceeding or investigation pending or, to the best knowledge
of the Borrower, threatened against or affecting the Borrower, any of the
Guarantors or any of their respective Subsidiaries or Affiliates challenging the
validity or the enforceability of any of the
40
Loan Documents.
(vii) No Material Adverse Change. Since the date of the most recent
--------------------------
financial statements delivered by the Borrower, the Guarantors and their
respective Subsidiaries and Affiliates to the Lender, no material adverse change
in, the condition (financial or otherwise), operations or performance of the
Borrower, any of the Guarantors or any of their respective Subsidiaries or
Affiliates or the ability of the Borrower or any of the Guarantors to perform
their respective Obligations under the Loan Documents and the transactions
contemplated thereby has occurred.
(viii) Payment of Taxes. All returns and reports of the Borrower,
----------------
the Guarantors and their respective Subsidiaries and Affiliates required to be
filed, have been timely filed (or appropriate extensions of time for the filing
of same have been timely requested), and all taxes, assessments, fees and other
governmental charges thereupon and upon their respective Properties, assets,
income and franchises which are shown on such returns as being due and payable,
have been paid when due and payable. The Borrower has no knowledge of any
proposed tax assessment against the Borrower, any of the Guarantors or any of
their respective Subsidiaries or Affiliates that is reasonably likely to result
in a Material Adverse Effect.
(ix) Material Adverse Agreements. The Borrower, the Guarantors and
---------------------------
their respective Subsidiaries and Affiliates are not a party to or subject to
any Contractual Obligation or other restriction contained in their respective
Certificates of Incorporation, By-Laws, Operating Agreements, Certificates of
Formation or similar governing corporate documents which is reasonably likely to
have a Material Adverse Effect.
(x) Performance. Neither the Borrower, any of the Guarantors nor
-----------
any of their respective Subsidiaries or Affiliates is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any Contractual Obligation applicable to them and no
condition exists which, with the giving of notice or the lapse of time or
both, would constitute a default under such Contractual Obligation in, each
case, except where the consequences, direct or indirect, of such default or
defaults, if any, would not have or are not reasonably likely to result in a
Material Adverse Effect.
(xi) Accurate and Complete Disclosure. The representations and
--------------------------------
warranties of the Borrower or any other Person contained in the Loan Documents,
and all certificates and other documents delivered to the Lender, in connection
herewith and therewith, do not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
41
(xii) Securities Activities. Neither the Borrower, any of the
---------------------
Guarantors nor any of their respective Subsidiaries or Affiliates are engaged
principally in the business of extending credit for the purpose of purchasing or
carrying any Margin Stock.
(xiii) Requirements of Law. Neither the Borrower, any of the
-------------------
Guarantors, nor any of their respective Subsidiaries or Affiliates have actual
knowledge of any non-compliance with respect to all Requirements of Law
applicable to the Borrower, the Guarantors, their respective Subsidiaries and
Affiliates and their respective businesses which non-compliance could reasonably
be expected to result in a Material Adverse Effect.
(xiv) Patents, Trademarks, Permits, Etc. Each of the Borrower, the
----------------------------------
Guarantors, their respective Subsidiaries and Affiliates owns, is licensed or
otherwise has the lawful right to use, or has all permits and other governmental
approvals, patents, trademarks, trade names, copyrights, technology, know-how
and processes used in or necessary for the conduct of its respective business as
currently conducted which are material to its respective condition (financial or
otherwise), operations and performance, taken as a whole. The use of such
permits and other governmental approvals, patents, trademarks, trade names,
copyrights, technology, know how and processes by the Borrower, the Guarantors,
their respective Subsidiaries and Affiliates does not infringe on the rights of
any Person, subject to such claims and infringements and does not, in the
aggregate, give rise to any liability on the part of the Borrower, the
Guarantors, their respective Subsidiaries and Affiliates which has or is
reasonably likely to result in a Material Adverse Effect.
(xv) Environmental Matters. Except as disclosed in Schedule 4.01(xv)
--------------------- -----------------
attached hereto and except where the failure to comply with the provisions of
clauses (a) through (k) below does not result in a Material Adverse Effect: (a)
-----------------------
the operations of the Borrower, the Guarantors, their respective Subsidiaries
and Affiliates comply in all substantial respects with all applicable
environmental, health and safety Requirements of Law; (b) the Borrower, the
Guarantors, their respective Subsidiaries and Affiliates have obtained all
material environmental, health and safety Permits necessary for their respective
operations, and all such Permits are in good standing, and the Borrower, the
Guarantors, their respective Subsidiaries and Affiliates are in material
compliance with all terms and conditions of such Permits; (c) the Borrower's,
the Guarantors', their respective Subsidiaries' and Affiliates' present
Properties and operations, and the Borrower's, the Guarantors', their respective
Subsidiaries' and Affiliates' past Properties and operations, are not the
subject of any written order from or agreement with any Governmental Authority
or private party or any judicial or administrative proceeding or investigations
respecting any environmental, health or safety Requirements of Law, and are not
the subject of any Remedial Action or other Liabilities and Costs arising from
the Release or threatened Release of an Environmental Concern Material into the
Environment; (d) the Borrower, the Guarantors, their respective Subsidiaries and
Affiliates have not filed any written notice under any Requirement of Law
indicating past or present treatment, storage or disposal of an Environmental
Concern Material in violation of any Environmental Law; (e) the Borrower, the
Guarantors, their respective Subsidiaries and Affiliates have not filed any
written notice under any applicable Requirement of Law reporting a Release of an
Environmental Concern Material into the Environment in violation of any
Environmental Law; (f) there is not now, nor, to the Borrower's knowledge has
there ever been, on or in the Property of the Borrower, the Guarantors, their
respective Subsidiaries and/or Affiliates a violation of any Environmental Law
relating to: (1) any generation, treatment, recycling, storage or disposal of
any Environmental
42
Concern Material, (2) any underground storage tanks or surface impoundments,
(3) any asbestos-containing material, or (4) any polychlorinated biphenyls
(PCB's) used in hydraulic oils, electrical transformers or other equipment;
(g) neither the Borrower, the Guarantors nor any of their respective
Subsidiaries and/or Affiliates have received any written notice or claim to the
effect that they are or may be liable to any Person as a result of the Release
or threatened Release of a Environmental Concern Material into the Environment,
or as a result of exposure to asbestos or to cotton dust, which may result in
any liability; (h) no Environmental Lien has attached to any Property of the
Borrower, the Guarantors, their respective Subsidiaries and/or Affiliates; (i)
neither the Borrower, the Guarantors nor any of their respective Subsidiaries
and Affiliates have entered into any negotiations or written agreements with any
Person (including, without limitation, the prior owner(s) of any Property owned
or leased by the Borrower, the Guarantors, their respective Subsidiaries and
Affiliates) relating to any Remedial Action or environmentally related Claim;
(j) neither the Borrower, the Guarantors nor any of their respective
Subsidiaries and Affiliates have any material contingent liability in connection
with any Release or threatened Release of any Environmental Concern Material
into the Environment; and (k) none of the products that the Borrower, the
Guarantors, their respective Subsidiaries and Affiliates manufactures,
distributes or sells, or, ever, to the Borrower's knowledge, has manufactured,
distributed or sold, contains an asbestos-containing material.
(xvi) ERISA. Neither the Borrower, any of the Guarantors, their
-----
respective Subsidiaries and Affiliates nor any ERISA Affiliate maintains or
contributes to any Plan other than a Plan listed on Schedule 4.01(xvi) attached
------------------
hereto. Except as otherwise provided on Schedule 4.01(xvi), each Plan which is
------------------
intended to be a qualified plan has been determined by the IRS to be qualified
under Section 401(a), and each trust related to any such Plan has been so
determined to be exempt from federal income tax under Section 501(a) of the Code
prior to its amendment by the Tax Reform Act of 1986, and such Plan and trust
are being operated in all material respects in compliance with and will be
timely amended in accordance with the Tax Reform Act of 1986 and the Omnibus
Budget Reconciliation Act of 1987 as interpreted by the regulations promulgated
thereunder. Except as otherwise provided on Schedule 4.01(xvi) attached hereto,
------------------
neither the Borrower, the Guarantors, their respective Subsidiaries and
Affiliates nor any ERISA Affiliate maintains or contributes to any employee
welfare benefit plan within the meaning of Section 3(l) of ERISA which provides
lifetime benefits to retirees other than as may be required by the Combined
Omnibus Budget Reconciliation Act of 1985, as amended and interpreted by
regulations promulgated thereunder. The Borrower, the Guarantors, their
respective Subsidiaries and Affiliates and all ERISA Affiliates are in
compliance in all material respects with the responsibilities, obligations or
duties imposed on them by ERISA or regulations promulgated thereunder with
respect to all Plans. No material accumulated funding deficiency (as defined in
Section 302(a)(2) of ERISA and Section 412(a) of the Code) exists in respect to
any Benefit Plan. The Borrower, the Guarantors, their respective Subsidiaries
and Affiliates and any ERISA Affiliate and any fiduciary of any Plan (a) have
not engaged in a nonexempt "prohibited transaction" described in Section 406 of
ERISA or Section 4975 of the Code and (b) have not taken any action which would
constitute or result in a Termination Event with respect to any Plan such that
actions under (a) or (b) or both would result in a material obligation to pay
money. Neither the Borrower, the Guarantors, their respective Subsidiaries and
Affiliates nor any ERISA Affiliate have incurred any material liability to the
PBGC which remains outstanding other than the liability to pay the PBGC
insurance premiums for the current year. Schedule B to the most recent annual
report filed with the IRS with respect to each Benefit Plan and furnished
43
to the Lender is complete and accurate in all material respects. Except as
provided on Schedule 4.01(xvi) attached hereto, since the date of each such
------------------
Schedule B, there has been no material adverse change in the funding status or
financial condition of the Benefit Plan relating to such Schedule B which would
result in a Material Adverse Effect. Neither the Borrower, the Guarantors, their
respective Subsidiaries and Affiliates nor any ERISA Affiliate have failed to
make a required installment under subsection (m) of Section 412 of the Code or
any other payment required under Section 412 of the Code on or before the due
date for such installment or other payment which would in the aggregate have a
Material Adverse Effect. Neither the Borrower, the Guarantors, their respective
Subsidiaries and Affiliates nor any ERISA Affiliate are required to provide
security to a Plan under Section 401(a)(29) of the Code due to a Plan amendment
that results in an increase in current liability for the plan year. Neither the
Borrower, the Guarantors, their respective Subsidiaries and Affiliates nor any
ERISA Affiliate are now contributing or have ever contributed to or been
obligated to contribute to any Multiemployer Plan, and no employees or former
employees of the Borrower, the Guarantors, their respective Subsidiaries and
Affiliates and or any ERISA Affiliate have been covered by any Multiemployer
Plan in respect of their employment by the Borrower, the Guarantors, their
respective Subsidiaries and Affiliates and or any ERISA Affiliate, and,
accordingly, the representations and warranties in this subsection (xvi) do not
----------------
apply to Multiemployer Plans.
(xvii) Solvency. The Borrowers, the Guarantors, their respective
--------
Subsidiaries and Affiliates, taken as a whole, are Solvent after giving effect
to the transactions contemplated by (a) this Loan Agreement and the other Loan
Documents and (b) the payment and accrual of all costs payable on the Closing
Date with respect to any of the foregoing.
(xviii) Assets and Properties. Substantially all of the assets and
---------------------
properties owned by, leased to or used by the Borrower, the Guarantors, their
respective Subsidiaries and Affiliates in their respective businesses (a) are in
good operating condition and repair, (ordinary wear and tear excepted), (b) are
free and clear of any known defects (except such defects as do not substantially
interfere with the continued use thereof in the conduct of normal operations)
and (c) are able to serve the function for which they are currently being used,
in each case where the failure of such asset to meet such requirements would not
have or is not reasonably likely to result in a Material Adverse Effect.
(xix) Joint Venture; Partnership. Except as set forth in Schedule
-------------------------- --------
4.01(xix) attached hereto, as of the Closing Date neither the Borrower, any of
---------
the Guarantors nor any of their respective Subsidiaries or Affiliates are
engaged in any joint venture or partnership with any other Person.
(xx) Insurance. The Borrower, the Guarantors, their respective
---------
Subsidiaries and Affiliates maintain with financially sound and reputable
insurers not related to or affiliated with the Borrowers, the Guarantors, their
respective Subsidiaries and Affiliates, insurance with respect to their
respective Properties and businesses, insured against such liabilities,
casualties and contingencies and in such types and amounts as is customary in
the case of corporations engaged in the same or a similar business or having
similar properties similarly situated. Schedule 6.05 attached hereto and made a
-------------
part hereof sets forth a list of all insurance currently maintained by or in
respect of the Borrower, the Guarantors, their respective Subsidiaries and
Affiliates setting forth the identity of the insurance carrier, the type of
coverage, the amount of coverage and the deductible.
44
There are no claims, actions, suits, proceedings against, arising under or
based upon any of such insurance policies except as set forth in Schedule 6.05
-------------
attached hereto and made a part hereof.
(xxi) Title to Property. The Borrower, the Guarantors, their
-----------------
respective Subsidiaries and Affiliates have good and marketable title in fee
simple to all Property owned or purported to be owned by them, including,
without limitation, all property reflected in the most recent audited
consolidated balance sheet referred to in Section 4.01(xxii) hereof or submitted
------------------
pursuant to Article V hereof, in each case free and clear of all Liens, other
---------
than Customary Permitted Liens.
(xxii) Audited Financial Statements. The Borrower has heretofore
----------------------------
furnished to the Lender a consolidated balance sheet of the Borrower, the
Guarantors, their respective Subsidiaries and Affiliates dated as of December
31, 1998, and the related statements of income, cash flows and changes in
stockholders' equity for the Fiscal Year then ended, as examined and reported on
by the Independent Certified Public Accountant, who delivered an unqualified
opinion in respect thereof. Such financial statements (including the notes
thereto) present fairly the financial condition of the Borrower, the Guarantors,
their respective Subsidiaries and Affiliates as of the end of such Fiscal Year
and the results of its operations and its cash flows for the Fiscal Year then
ended, all in conformity with Generally Accepted Accounting Principles.
(xxiii) Interim Financial Information. The Borrower has heretofore
-----------------------------
furnished to the Lender an interim consolidated balance sheet of the Borrower,
the Guarantors, their respective Subsidiaries and Affiliates as of the end of
its second Fiscal Quarter of the Fiscal Year beginning January 1, 1999 and the
related statements of income, cash flows and changes in stockholders' equity for
the Fiscal Quarter then ended. Such financial statements present fairly the
financial condition of the Borrower, the Guarantors, their respective
Subsidiaries and Affiliates as of the end of such Fiscal Quarters and the
results of their operations and their cash flows for the fiscal periods then
ended, all in conformity with Generally Accepted Accounting Principles (except
to the extent set forth in the notes to said financial statements), subject to
normal and recurring year-end audit adjustments.
(xxiv) Absence of Undisclosed Liabilities. Neither the Borrower, any
----------------------------------
of the Guarantors nor any of their respective Subsidiaries or Affiliates has any
liability or obligation of any nature whatever (whether absolute, accrued,
contingent or otherwise, whether or not due), forward or long-term commitments
or unrealized or anticipated losses from unfavorable commitments, except (a) as
disclosed in the financial statements referred to in Sections 4.01 (xxii) and
--------------------
(xxiii) hereof, (b) matters that, individually or in the aggregate could not
-------
result in a Material Adverse Effect and (c) Contractual Obligations incurred in
the ordinary course of the Borrower's, the Guarantors' or their respective
Subsidiaries' or Affiliates' respective businesses.
45
(xxv) Margin Regulations. No part of the proceeds of the Revolving
------------------
Credit Facility will be used for the purpose of buying or carrying any Margin
Stock, as such term is used in Regulation U of the Federal Reserve Board, as
amended from time to time, or to extend credit to others for the purpose of
buying or carrying any Margin Stock. Neither the Borrower, any of the
Guarantors nor any of their respective Subsidiaries or Affiliates is engaged in
the business of extending credit to others for the purpose of buying or carrying
Margin Stock. The making of any Revolving Credit Loan and the use of proceeds
of any such Revolving Credit Loan will not violate or conflict with the
provisions of Regulation T, U or X of the Federal Reserve Board, as amended from
time to time.
(xxvi) Labor Matters. Except as set forth on Schedule 4.01(xxvi)
------------- -------------------
attached hereto and made a part hereof, neither the Borrower, any of the
Guarantors nor any of their respective Subsidiaries or Affiliates are a party to
any labor union or collective bargaining agreements. The Borrowers, the
Guarantors, their respective Subsidiaries and Affiliates are in compliance with
all applicable laws respecting employment and employment practices, including,
without limitation, laws, regulations, and judicial and administrative decisions
relating to wages, hours, conditions of work, collective bargaining, health and
safety, payment of social security, payroll, withholding and other taxes,
worker's compensation, insurance requirements, as well as requirements of ERISA
and the Consolidated Omnibus Budget Reconciliation Act, except to the extent
that noncompliance would not have a Material Adverse Effect. There is no (a)
unfair labor practice complaint pending or, to the best knowledge of the
Borrowers, threatened against the Borrower, the Guarantors, their respective
Subsidiaries and Affiliates before the National Labor Relations Board, any court
or any other Governmental Authority nor any pending or, to the best knowledge of
the Borrower, threatened sexual harassment, or wrongful discharge claim, (b)
labor strike, dispute, slowdown, or stoppage pending or, to the best knowledge
of the Borrower, threatened against the , the Guarantors, their respective
Subsidiaries and Affiliates or (c) representation petition, respecting the
employees of the Borrowers, the Guarantors, their respective Subsidiaries and
Affiliates filed or threatened to be filed with the National Labor Relations
Board
(xxvii) Brokerage Commissions. No other Person is entitled to
---------------------
receive from the Borrower, the Guarantors, their respective Subsidiaries and/or
Affiliates any brokerage commission, finder's fee or similar fee or payment in
connection with the consummation of the transactions contemplated by this Loan
Agreement. No brokerage or other fee, commission or compensation is to be paid
by the Lender by reason of any act, alleged act or omission of the Borrower, the
Guarantors, their respective Subsidiaries and/or Affiliates with respect to the
transactions contemplated hereby.
(xxviii) Year 2000 Problem. The Year 2000 Problem will not result in
-----------------
a Material Adverse Effect.
(xxix) Reprogramming of Computer Systems. Any reprogramming required
---------------------------------
to permit the proper functioning, in and following the year 2000, of the
Borrower's, the Guarantors', their respective Subsidiaries' and/or Affiliates'
(a) computer systems and (b) equipment containing embedded microchips (including
systems and equipment supplied by others or with which the Borrower's, the
Guarantors', their respective Subsidiaries' and/or Affiliates' systems
interface) will be completed prior to October 31, 1999. The testing of all such
systems and equipment, as so
46
reprogrammed, will be completed by November 30, 1999. The cost to the Borrower,
the Guarantors, their respective Subsidiaries and Affiliates of such
reprogramming, as projected, will not result in an Event of Default or a
Material Adverse Effect. Except for such reprogramming referred to in the
preceding sentence (as may be necessary), the computer and management
information systems of the Borrower, the Guarantors, their respective
Subsidiaries and Affiliates are and, with upgrading and maintenance in the
ordinary course of business, will continue to be adequate for the conduct of its
business without Material Adverse Effect.
(xxx) Plan for Year 2000 Compliance. (a) The Borrower, the
-----------------------------
Guarantors, their respective Subsidiaries and Affiliates (1) have undertaken a
detailed review and assessment of all areas within its business and operations
that could be adversely affected by its failure to be Year 2000 Compliant on a
timely basis, (2) have developed on a timely basis, a detailed plan and timeline
for becoming Year 2000 Compliant on a timely basis and (3) have implemented that
plan in accordance with that timetable in all material respects. The Borrower,
the Guarantors, their respective Subsidiaries and Affiliates reasonably
anticipate that they will be Year 2000 Compliant on a timely basis.
(b) The Borrower, the Guarantors, their respective Subsidiaries and
Affiliates have completed or accomplished the following:
(1) Prepared a comprehensive, detailed assessment of the extent
to which the Borrower, the Guarantors, their respective Subsidiaries and
Affiliates are not Year 2000 Compliant;
(2) Made detailed inquiry of all material suppliers, vendors
and customers of the Borrower, the Guarantors, their respective
Subsidiaries and Affiliates to ascertain whether such entities are aware of
the need to be Year 2000 Compliant and is taking all appropriate steps to
become Year 2000 Compliant on a timely basis; and
(3) Prepared a detailed project plan and timetable for ensuring
that the Borrower, the Guarantors, their respective Subsidiaries and
Affiliates are Year 2000 Compliant on a timely basis.
Section 4.02. Subsequent Funding Representations and Warranties. In order
-------------------------------------------------
to induce the Lender to enter into this Loan Agreement and to make Revolving
Credit Loans, the Borrower hereby represents and warrants to the Lender that the
statements set forth in subsections (i) through (xxx) of Section 4.01 hereof
----------------------------- ------------
(except to the extent that such statements (i) are made expressly only as of the
Closing Date or (ii) other than for changes permitted or contemplated by this
Loan Agreement), are true, correct and complete in all material respects after
the Closing Date on and as of the Funding Date in respect of each Borrowing.
47
ARTICLE V
REPORTING COVENANTS
-------------------
On and after the Closing Date and so long as the Borrower shall have any
Obligation hereunder, unless the Lender shall give its prior express written
consent to the effect otherwise, then:
Section 5.01 Statement of Accounting. The Borrower shall, and shall cause
-----------------------
each of the Guarantors, their respective Subsidiaries and Affiliates, as
applicable, (i) to make and to keep books, records and accounts which, in
reasonable detail, accurately and fairly reflect their respective transactions
and dispositions of their respective assets and (ii) to maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorization, (b) transactions are recorded as necessary (1) to permit
preparation of financial statements in conformity with Generally Accepted
Accounting Principles and any other accounting principles applicable thereto and
(2) to maintain accountability for assets and (c) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
Section 5.02 Reporting and Information Requirements. The Borrower shall
--------------------------------------
deliver or cause to be delivered to the Lender the following financial
statements, data, reports and information, at the Borrower's own cost and
expense:
(i) Annual "Audited" Consolidated Financial Statements of the
---------------------------------------------------------
Borrower, the Guarantors and their respective Subsidiaries and Affiliates. (a)
-------------------------------------------------------------------------
As soon as available, but in any event within ninety (90) days after the close
of each Fiscal Year of the Borrower, "audited" consolidated statements of
income, retained earnings and a statement of cash flows for the Borrower, the
Guarantors, their respective Subsidiaries and Affiliates for such Fiscal Year
and a consolidated balance sheet of the Borrower, the Guarantors, their
respective Subsidiaries and Affiliates as of the close of such Fiscal Year, and
notes to each, all as set forth in the Form 10-K filed by Saga Systems with the
SEC, setting forth in comparative form the corresponding figures for the
preceding Fiscal Year. Such financial statements shall be accompanied by an
opinion of the Independent Certified Public Accountant, which opinion shall be
signed by such Independent Certified Public Accountant. The opinion of the
Independent Certified Public Accountant shall be free of exceptions or
qualifications not acceptable to the Lender and, in any event, shall be free of
any exception or qualification which is of "going concern" or like nature or
which relates to a more limited scope of examination and shall be otherwise
acceptable to the Lender. Such opinion shall in any event contain a written
statement of the Independent Certified Public Accountant substantially to the
effect that (a) the Independent Certified Public Accountant examined the
financial statements in accordance with Generally Accepted Auditing Standards
and accordingly made such tests of accounting records and such other auditing
procedures as the Independent Certified Public Accountant considered necessary
under the circumstances and (b) in the opinion of the Independent Certified
Public Accountant such financial statements present fairly the financial
position and cash flows of the Borrower, the Guarantors, their respective
Subsidiaries and Affiliates as of the end of such Fiscal Year, and the results
of the Borrower's, the Guarantors', their respective Subsidiaries' and
Affiliates' operations and the changes in their financial position
48
for such Fiscal Year, in conformity with Generally Accepted Accounting
Principles applied on a basis consistent with that of the preceding Fiscal Year.
(b) In addition to the delivery of the annual "audited"
consolidated financial statements to be delivered by the Borrower to the Lender
pursuant to Section 5.02(i)(a) above, the Borrower shall also deliver, or
------------------
cause to be delivered, to the Lender, at the same time, an "unaudited"
management prepared consolidating statement of income for the Borrower, the
Guarantors, their respective Subsidiaries and Affiliates for such Fiscal Year,
all prepared and certified to the Lender by the Borrower's chief accounting
officer in his capacity as an Authorized Officer.
(ii) Quarterly "Unaudited" Consolidated Financial Statements of the
--------------------------------------------------------------
Borrower, the Guarantors, their respective Subsidiaries and Affiliates. (a) As
----------------------------------------------------------------------
soon as available, but in any event within forty-five (45) days after the close
of each of the first three Fiscal Quarters of each Fiscal Year of the Borrower,
"unaudited" consolidated statements of income, retained earnings and a statement
of cash flows for the Borrower, the Guarantors, their respective Subsidiaries
and Affiliates for such Fiscal Quarter and for the period from the beginning of
such Fiscal Year to the end of such Fiscal Quarter, and an "unaudited"
consolidated balance sheet of the Borrower, the Guarantors, their respective
Subsidiaries and Affiliates as of the close of such Fiscal Quarter, all as set
forth in the Form 10-Q filed by Saga Systems with the SEC, setting forth in
comparative form the corresponding figures for the corresponding dates and
periods during the preceding Fiscal Year.
(b) All of the above-described financial statements shall be
certified by the chief accounting officer of the Borrower, in his capacity as an
Authorized Officer, as presenting fairly the financial position of the Borrower,
the Guarantors, their respective Subsidiaries and Affiliates as of the end of
such dates and fiscal periods and the results of their operations and the
changes in their financial position and cash flows for such fiscal periods, in
conformity with Generally Accepted Accounting Principles applied in a manner
consistent with that of the most recent audited financial statements furnished
to the Lender, subject to normal and recurring year-end audit adjustments.
(iii) Compliance Certificates. Together with each delivery of any
-----------------------
financial statement pursuant to Section 5.02(i) and Section 5.02(ii) above, an
------------------------------------
Officer's Certificate of the Borrower substantially in the form of Exhibit "D"
-----------
attached hereto, (a) stating that the officer signatory thereto in his capacity
as an Authorized Officer has reviewed the terms of this Loan Agreement and the
principal Loan Documents, and has made, or caused to be made under his
supervision, a review in reasonable detail of the transactions and condition of
the Borrower, taken as a whole, during the accounting period covered by such
financial statements, and that such review has not disclosed the existence
during or at the end of such accounting period, and that the signer does not
have knowledge of the existence as at the date of the Officer's Certificate, of
any condition or event which constitutes an Event of Default or Potential Event
of Default, or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action the Borrower has taken,
are taking and propose to take with respect thereto and (b) demonstrating in
reasonable detail compliance, during and at the end of such accounting periods,
with the financial covenants contained in Article VIII of this Loan Agreement.
------------
49
(iv) Annual Projections; Forecast Analysis. As soon as practicable,
-------------------------------------
but in any event within ninety (90) days after the close of each Fiscal Year of
the Borrower, an update to the projections previously delivered to the Lender
(in form and substance substantially similar thereto), as of the end of (a) the
next full Fiscal Year or (b) any other full Fiscal Year during the term of the
Revolving Credit Facility requested by the Lender.
(v) Accountants Audit Opinion Letter. Each set of financial
--------------------------------
statements delivered pursuant to Section 5.02(i) hereof shall be accompanied by
---------------
the annual audit opinion letter submitted with such financial statements by the
Independent Certified Public Accountant who certified such financial statements.
(vi) Other Reports and Information. Promptly upon their becoming
-----------------------------
available to the Borrower, a copy of (a) all reports, financial statements and
other information distributed generally by the Borrower, the Guarantors, their
respective Subsidiaries and Affiliates to their respective stockholders,
members, bondholders or the financial community, (b) all accountants' management
letters pertaining to, all other reports submitted by accountants in connection
with any audit of, and all other material reports from outside accountants with
respect to, the Borrower, the Guarantors, their respective Subsidiaries and
Affiliates, if any, and (c) all reports submitted to Governmental Authorities
and/or with respect to Plans under ERISA, except as prepared in the normal
course of the Borrower's, any of the Guarantors', any Subsidiaries', and any
Affiliates' respective businesses and where no material adverse action with
respect thereto would result.
(vii) Further Information. The Borrower shall promptly furnish to
-------------------
the Lender any business, financial or other information concerning the Borrower,
the Guarantors, their respective Subsidiaries and Affiliates which the Lender
may reasonably request from time to time in a form acceptable to the Lender.
(viii) Notice of Event of Default. Promptly upon becoming aware of
--------------------------
any Event of Default or Potential Event of Default, the Borrower shall give the
Lender written notice thereof, together with a written statement of the
Authorized Officer of the Borrower setting forth the details thereof and any
action with respect thereto taken or contemplated to be taken by the Borrower.
(ix) Notice of Material Adverse Effect. Promptly upon becoming
---------------------------------
aware thereof, the Borrower shall give the Lender written notice about any
Material Adverse Effect, including, without limitation, any loss from casualty
or theft in excess of $1,000,000.00 whether or not insured, affecting any
property or assets of the Borrower, the Guarantors, their respective
Subsidiaries and Affiliates, setting forth the details thereof and any action
with respect thereto taken or contemplated to be taken by the Borrower, the
Guarantors, their respective Subsidiaries and Affiliates.
(x) Notice of Material Proceedings. Promptly upon becoming aware
------------------------------
thereof, the Borrower shall give the Lender written notice of the commencement,
existence or threat of any action, suit, proceeding, governmental investigation
or arbitration against or affecting the Borrower, the Guarantors, their
respective Subsidiaries and Affiliates, including without limitation,
litigation, arbitration or administration proceedings, which, if adversely
decided, would have a Material
50
Adverse Effect on the business, assets, operations or financial condition of the
Borrower, the Guarantors, their respective Subsidiaries and Affiliates or on the
ability of the Borrower and/or any of the Guarantors to perform their respective
obligations under this Loan Agreement or under the other Loan Documents.
(xi) Notice of Pension-Related Events. The Borrower shall give the
--------------------------------
Lender the following:
(a) As soon as possible, and in any event within ten (10) days
after the Borrower, any of the Guarantors, any of their respective Subsidiaries
or Affiliates or an ERISA Affiliate knows or has reason to know that a
Termination Event has occurred, a written statement of the Authorized Officer of
the Borrower describing such Termination Event and the action, if any, which the
Borrower, the Guarantors, their respective Subsidiaries or Affiliates or such
ERISA Affiliate has taken, is taking or proposes to take with respect thereto,
and when known, any action taken or threatened by the IRS, the DOL or PBGC with
respect thereto;
(b) As soon as possible, and in any event within fifteen (15) days,
after the Borrower, any of the Guarantors, any of their respective Subsidiaries
or Affiliates or an ERISA Affiliate knows or has reason to know that a non-
exempt prohibited transaction (as defined in Section 406 of ERISA and Section
4975 of the Code) has occurred, a statement of the Authorized Officer of the
Borrower describing such transaction;
(c) Within ten (10) days after the filing thereof with the DOL, IRS
or PBGC, copies of each annual report, filed with respect to each Benefit Plan;
(d) Within ten (10) days after the filing thereof with the IRS, a
copy of each funding waiver request filed with respect to any Benefit Plan and
all communications received by the Borrower, any of the Guarantors, any of their
respective Subsidiaries or Affiliates or an ERISA Affiliate with respect to such
request;
(e) Within thirty (30) days after the occurrence thereof, the first
to occur of an amendment of any existing Benefit Plan which will result in a
material increase in the benefits under such Benefit Plan or a notification of
any such increase, or the establishment of any new Plan or the commencement of
contributions to any Plan to which the Borrower, any of the Guarantors, any of
their respective Subsidiaries or Affiliates or an ERISA Affiliate was not
previously contributing in a material amount, the details and/or copies of such
amendment, notification or Plan;
51
(f) Promptly upon, and in any event within fifteen (15) Business
Days after, receipt by the Borrower, any of the Guarantors, any of their
respective Subsidiaries or Affiliates or an ERISA Affiliate of the PBGC's
intention to terminate a Benefit Plan or to have a trustee appointed to
administer a Benefit Plan, copies of each such notice;
(g) Promptly upon, and in any event within ten (10) Business Days
after, receipt by the Borrower, any of the Guarantors, any of their respective
Subsidiaries or Affiliates or an ERISA Affiliate of an unfavorable determination
letter from the IRS regarding the qualification of a Plan under Section 401(a)
of the Code, copies of such letter;
(h) Promptly upon, and in any event within fifteen (15) Business
Days after, receipt by the Borrower, any of the Guarantors, any of their
respective Subsidiaries or Affiliates or an ERISA Affiliate of a notice from a
Multiemployer Plan regarding the imposition of withdrawal liability, copies of
such notice; and
(i) Promptly upon, and in any event within fifteen (15) Business
Days after, the Borrower, any of the Guarantors, any of their respective
Subsidiaries or Affiliates or any ERISA Affiliate fails to make a required
installment under subsection (m) of Section 412 of the Code or any other payment
required under Section 412 of the Internal Revenue Code on or before the due
date for such installment or payment, a notification of such failure provided
that such installment payment is an amount which is material.
(xii) Notice of Other Material Defaults. Promptly upon becoming
---------------------------------
aware of any material default by the Borrower, any Guarantor, any Subsidiary
and/or Affiliate under any material Contractual Obligation to which the
Borrower, any Guarantor, any Subsidiary and/or Affiliate or by which the
Borrower, any Guarantor, any Subsidiary and/or Affiliate or any of their
respective Properties may be bound, the Borrower shall give the Lender written
notice thereof, together with a written statement of the Authorized Officer of
the Borrower in his capacity as an Authorized Officer setting forth the details
thereof and any action with respect thereto taken or contemplated to be taken by
the Borrower, such Guarantor, such Subsidiary and/or Affiliate.
(xvi) Notice of Material Claims. The Borrower shall promptly
-------------------------
notify the Lender of all written Claims, complaints, orders, citations or
notices, whether formal or informal, from a Governmental Authority or other
Person relating to any Law, including, without limitation, any Environmental Law
or health and safety law, which could reasonably be expected to have a Material
Adverse Effect. Such notices shall include, among other information, the name of
the party who filed the Claim, the potential amount of the Claim, if known, and
the nature of the Claim.
(xvii) Notice of Stock Repurchase Program. The Borrower shall
----------------------------------
promptly notify the Lender, in writing, of any proposed repurchase by Saga
Systems of the common stock of Saga Systems pursuant to any Stock Repurchase
Program on or prior to the date such Stock Repurchase Program takes effect if
such repurchase will cost Saga Systems $5,000,000.00 or more.
(xviii) Subsidiaries and/or Affiliates Formed or Acquired. The
-------------------------------------------------
Borrower shall promptly notify the Lender of, but in any event within thirty
(30) days following, the acquisition or formation of any Subsidiary or Affiliate
of the Borrower or of any Guarantor which is acquired or formed after the
Closing Date and whether such Subsidiary or Affiliate is an operating company in
52
the Borrower's, the Guarantors', their respective Subsidiaries' and Affiliates'
consolidated businesses.
Section 5.03 Environmental Notices. The Borrower shall notify the Lender,
---------------------
in writing, promptly, and in any event within fifteen (15) days after obtaining
actual knowledge, of any: (i) notice or claim to the effect that the Borrower,
any of the Guarantors, any of their respective Subsidiaries or Affiliates
thereof is or may be liable to any Person as a result of the Release or
threatened Release of any Environmental Concern Material into the Environment;
(ii) notice that the Borrower, any of the Guarantors, any of their respective
Subsidiaries or Affiliates thereof is under investigation by any Governmental
Authority evaluating whether any Remedial Action is needed to respond to the
Release or threatened Release of any Environmental Concern Material into the
Environment; (iii) notice that any Property of the Borrower, any of the
Guarantors, any of their respective Subsidiaries or Affiliates thereof is
subject to an Environmental Lien which could reasonably be expected to have a
Material Adverse Effect; (iv) notice of violation to the Borrower, any of the
Guarantors, any of their respective Subsidiaries or Affiliates thereof or
awareness by the Borrower, any of the Guarantors, any of their respective
Subsidiaries or Affiliates thereof of a condition which might reasonably result
in a notice of violation of any environmental, health or safety Requirement of
Law, which could have a Material Adverse Effect; (v) commencement or threat of
any judicial or administrative proceeding alleging a material violation of any
environmental, health or safety Requirement of Law; (vi) new changes to any
existing environmental, health or safety Requirement of Law that could have a
Material Adverse Effect on the operations of the Borrower, any of the
Guarantors, any of their respective Subsidiaries or Affiliates thereof; or (vii)
any proposed acquisition of stock, assets, real estate, or leasing of property,
or any other action by the Borrower, any of the Guarantors, any of their
respective Subsidiaries or Affiliates thereof that could subject the Borrower,
any of the Guarantors, any of their respective Subsidiaries or Affiliates
thereof to environmental, health or safety Liabilities and Costs that could have
a Material Adverse Effect.
53
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
The Borrower hereby covenants and agrees that, on and after the Closing
Date and until payment in full of all of the Obligations, unless the Lender
shall give its prior express written consent to the effect otherwise, then:
Section 6.01 Corporate Existence, etc. The Borrower, its Subsidiaries and
------------------------
Affiliates shall, and shall cause the Guarantors, their Subsidiaries and
Affiliates to, do or cause to be done all things necessary (i) to maintain their
respective status as a corporation, limited liability company or other form of
legal entity, duly organized, validly existing and in good standing under the
laws of their respective jurisdictions of incorporation, formation or
organization and (ii) to preserve and to keep in full force and effect their
respective rights and franchises unless the failure to maintain such rights and
franchises would not result in a Material Adverse Effect. The Borrower shall
promptly provide the Lender with a complete and up-to-date list of all
Subsidiaries and Affiliates of the Borrower and of each of the Guarantors.
Section 6.02 Corporate Powers, etc. The Borrower, its Subsidiaries and
---------------------
Affiliates shall, and shall cause the Guarantors, their Subsidiaries and
Affiliates to, do or cause to be done all things necessary to qualify and remain
qualified to conduct business in each jurisdiction in which the nature of their
respective businesses or the ownership of their respective properties or both
requires them to be so qualified except where the failure to be so qualified
would not reasonably be expected to cause a Material Adverse Effect. The
Borrower, its Subsidiaries and Affiliates shall, and shall cause the Guarantors,
their Subsidiaries and Affiliates to, do or cause to be done all things
necessary to transact business in their own names and shall invoice all accounts
in their own name.
Section 6.03 Compliance with Laws, etc. The Borrower, its Subsidiaries and
-------------------------
Affiliates shall, and shall cause the Guarantors, their Subsidiaries and
Affiliates to, (i) to comply with all Requirements of Law, and all restrictive
covenants affecting them or their respective businesses, properties, assets or
operations and (ii) to obtain as needed all Permits necessary for their
respective operations, and maintain such Permits in good standing, except to the
extent non-compliance with this Section 6.03 would not result in a Material
------------
Adverse Effect.
Section 6.04 Payment of Taxes and Claims. The Borrower, its Subsidiaries
---------------------------
and Affiliates shall, and shall cause the Guarantors, their Subsidiaries and
Affiliates to, pay or cause to be paid (i) all taxes, assessments and other
governmental charges imposed upon them or on any of their respective properties
or assets or in respect of any of their respective franchises, business, income
or property before any penalty or interest accrues thereon and (ii) all Claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums material in the aggregate to the Borrower, the Guarantors,
their respective Subsidiaries and Affiliates which have become due and payable
and which by Law have or may become a Lien (other than a Customary Permitted
Lien) upon their respective Properties, prior to time when any penalty or fine
shall be incurred with respect thereto; provided, however, that no such taxes,
-------- -------
assessments and governmental charges referred to in clause (i) above or Claims
----------
referred to in clause (ii) above need be paid if being contested in good faith
-----------
by appropriate proceedings
54
promptly instituted and diligently conducted and if adequate reserves shall have
been set aside therefor in accordance with Generally Accepted Accounting
Principles.
Section 6.05 Maintenance of Properties; Insurance. The Borrower, its
------------------------------------
Subsidiaries and Affiliates shall, and shall cause the Guarantors, their
Subsidiaries and Affiliates to, maintain or cause to be maintained in good
repair, working order and condition, excepting ordinary wear and tear, all of
their respective Properties material to their respective operations and will
make or cause to be made all appropriate repairs, renewals and replacements
thereof, consistent with past practice. The Borrower, its Subsidiaries and
Affiliates shall, and shall cause the Guarantors, their Subsidiaries and
Affiliates to, to maintain or cause to be maintained with financially sound and
reputable insurers reasonably acceptable to the Lender, the insurance policies
and programs listed on Schedule 6.05 attached hereto and made a part hereof or
-------------
substantially similar programs or policies and amounts or other programs,
policies and amounts acceptable to the Lender. Not later than thirty (30) days
later than the renewal, replacement, cancellation, termination or material
modification of any policy or program, the Borrower shall deliver or cause to be
delivered to the Lender a certificate of insurance setting forth for each such
policy or program: (i) the amount of such policy, (ii) the risks insured against
by such policy, (iii) the name of the insurer and each insured party under such
policy and (iv) the policy number of such policy.
Section 6.06 Inspection of Property; Books and Records; Disclosure.
-----------------------------------------------------
Except for information and records which the Borrower, any of the Guarantors,
any of their respective Subsidiaries and/or Affiliates may not under applicable
Law disseminate or disclose to the Lender, the Borrower, its Subsidiaries and
Affiliates shall, and shall cause the Guarantors, their Subsidiaries and
Affiliates to, permit any authorized representative(s) designated by the Lender
to visit, to conduct a field audit or to otherwise inspect the Borrower's, any
of the Guarantor's or any of their respective Subsidiary's and/or Affiliate's
respective corporate records, including their financial and accounting records,
located at the Borrower's or Saga Systems' respective chief executive offices
and/or principal places of business, as such offices and places of business may
change from time to time, and to make copies and take extracts therefrom, and to
discuss the Borrower's, any of the Guarantor's, any of their respective
Subsidiary's and any Affiliate's affairs, finances and accounts with the
Lender's officers, employees, representatives or independent certified public
accountants, upon at least fifteen (15) days' notice from the Lender to the
Borrower, during normal business hours and on a date which is reasonably
mutually convenient for both the Lender and the Borrower; provided, however,
-------- -------
that if an Event of Default or Potential Event of Default shall have occurred
and be continuing, the Lender shall have the right to make any such visit, field
audit or other inspection at any time, on any date and without prior notice to
the Borrower. All information furnished to the Lender shall be received and
maintained by the Lender in strict confidence and in accordance with applicable
Law, and the Lender shall not disseminate said information to any Person, except
where required by and in accordance with applicable Law or where contemplated by
the Loan Documents. The Lender agrees that it shall not take any action or omit
to take any action which would cause or result in the violation of Law
(including without limitation, any export control law) by the Borrower, the
Guarantors, their respective Subsidiaries and/or Affiliates. Each such
visitation and inspection by or on behalf of the Lender shall be at the
Borrower's own cost and expense. The Borrower, its Subsidiaries and Affiliates
shall, and shall cause the Guarantors, their Subsidiaries and Affiliates to,
keep proper books and records and accounting in accordance with sound and
accepted accounting practices, consistently applied and all Requirements of Law.
55
Section 6.07 Litigation, Claims, etc., The Borrower shall provide the
------------------------
Lender with (i) a litigation status report, in a form satisfactory to the
Lender, with respect to any litigation described on Schedule 4.01(vii) attached
------------------
hereto and made a part hereof or any new litigation (whether at law or in
equity) which is asserted against the Borrower, any of the Guarantors or any of
their respective Subsidiaries and/or Affiliates involving money or property
valued in excess of $750,000.00 promptly after the close of each Fiscal Quarter;
(ii) notice of any suit at law or in equity or claim brought or asserted against
the Borrower, any of the Guarantors, their respective Subsidiaries and/or
Affiliates, promptly after learning thereof with respect to any suit or claim
involving money or property valued in excess of $300,000.00 or any such suits or
claims which in the aggregate involve money or property valued in excess of
-- --- ---------
$750,000.00; and (iii) prompt notice of any investigation or proceeding before
or by any Governmental Authority, the effect of which is reasonably likely to
result in a Material Adverse Effect.
Section 6.08 Labor Disputes. The Borrower shall notify the Agent in
--------------
writing, promptly, but in any event within two (2) Business Days after learning
thereof, of any material labor dispute to which the Borrower, any of the
Guarantors, their respective Subsidiaries and/or Affiliates may become a party,
any strikes or walkouts relating to any of their respective Properties and the
expiration of any labor contract to which they are a party or by which they are
bound.
Section 6.09 Maintenance of Licenses, Permits, etc., The Borrower, its
--------------------------------------
Subsidiaries and Affiliates shall, and shall cause the Guarantors, their
Subsidiaries and Affiliates to, (i) maintain in full force and effect all
licenses, permits, governmental approvals, franchises, authorizations or other
rights necessary for the operation of their respective businesses, except where
the failure to obtain any of the foregoing would not result in or is not
reasonably likely to result in a Material Adverse Effect and (ii) to notify the
Lender in writing, promptly after learning thereof, of the suspension,
cancellation, revocation or discontinuance of or of any pending or threatened
action or proceeding seeking to suspend, cancel, revoke or discontinue any
Permit where the result thereof could reasonably be expected to result in a
Material Adverse Effect.
Section 6.10 Use of Proceeds. The Borrower shall not use the proceeds of
---------------
any Revolving Credit Loans hereunder directly or indirectly for any unlawful
purpose, in any manner inconsistent with Section 2.01(iv) hereof, or
----------------
inconsistent with any other term, conditions or provision of any Loan Document.
Section 6.11 Continuation of or Change in Business. The Borrower, its
-------------------------------------
Subsidiaries and Affiliates shall, and shall cause the Guarantors, their
Subsidiaries and Affiliates to, continue to engage in their respective
businesses substantially as conducted and operated during the present and
preceding Fiscal Year, and the Borrower shall, and shall cause the Guarantors
to, not engage in any other business.
Section 6.12 Additional Guarantors; Additional Pledge of Stock Agreements.
------------------------------------------------------------
(i) The Borrower shall cause each domestic Subsidiary and/or Affiliate which is
an operating company, in which either the Borrower, Saga Systems or any of the
Guarantors is the owner (whether legal or beneficial and whether direct or
indirect) of greater than fifty percent (50%) or more of the authorized, issued
and outstanding common stock of said Subsidiary or Affiliate, or
56
other form of ownership interest in the event any such Subsidiary or Affiliate
is not a corporation, which is acquired or formed after the Closing Date to
enter into and execute the Agreement of Guaranty, thereby becoming a Guarantor,
unless otherwise expressly waived in writing by the Lender.
(ii) The Borrower shall further execute or cause to be executed, a
Pledge of Stock Agreement, in form and substance satisfactory to the Lender in
its sole and absolute discretion, pledging no more than sixty-five percent (65%)
of the authorized, issued and outstanding stock of any foreign Subsidiary and/or
Affiliate which is an operating company and in which either the Borrower, Saga
Systems or any of the Guarantors is the owner (whether legal or beneficial and
whether direct or indirect) of greater than fifty percent (50%) or more of the
authorized, issued and outstanding common stock of said Subsidiary or Affiliate,
or other form of ownership interest in the event any such Subsidiary or
Affiliate is not a corporation, which is acquired or formed by either the
Borrower, Saga Systems or any of the Guarantors after the Closing Date, as
additional collateral security for the Revolving Credit Facility.
Section 6.13 Year 2000. The Borrower, the Guarantors, their respective
---------
Subsidiaries and Affiliates shall take all action necessary to assure that their
respective computer-based systems are able to effectively process data including
dates prior to, on, and after January 1, 2000 such that there will be no
Material Adverse Effect. At the request of the Lender, the Borrower shall
provide the Lender with assurance reasonably acceptable to the Lender of the
Borrower's, Guarantors', their Subsidiaries' and Affiliates' Year 2000
capability.
Section 6.14 Year 2000 Compliance. The Borrower, its Subsidiaries and
--------------------
Affiliates shall, and shall cause the Guarantors, their Subsidiaries and
Affiliates to, complete or accomplish, by the indicated dates, the following:
(i) By October 31, 1999, fix all code dates for, or replace with
Year 2000 Compliant technology, all adversely affected material computer
applications and embedded microchips, and commence testing thereof; and
(ii) By November 30, 1999, complete testing and installation of
all necessary software and embedded microchip technology such that the Borrower,
the Guarantors, their respective Subsidiaries and/or Affiliates are Year 2000
Compliant.
57
ARTICLE VII
NEGATIVE COVENANTS
------------------
The Borrower hereby covenants and agrees that, on and after the Closing
Date and until payment in full of all of the Obligations, unless the Lender
shall give its prior express written consent to the effect otherwise, then:
Section 7.01 Consolidated Debt. The Borrower, its Subsidiaries and
-----------------
Affiliates shall not, and shall not permit the Guarantors, their Subsidiaries
and Affiliates to, create, incur, assume or otherwise become or remain directly
or indirectly liable with respect to, any Consolidated Debt, except for:
(i) the Obligations;
(ii) accounts payable owing to trade creditors arising from current
liabilities for goods and services purchased in the normal course of the
Borrower's, the Guarantors', their respective Subsidiaries' and/or Affiliates'
respective businesses;
(iii) the permitted existing Consolidated Debt as described on Schedule
--------
7.01(iii) attached hereto, and any extensions, renewals and refinancing thereof
---------
not exceeding the principal amount outstanding on the date of such extension,
renewal, or refinancing, provided that the terms are no less advantageous to the
-------- ----
Borrower, the Guarantors, their respective Subsidiaries and/or Affiliates than
the original obligation;
(iv) any Consolidated Debt in connection with purchase money liens
permitted by Section 7.02 hereof; and
------------
(v) additional Consolidated Funded Debt not to exceed Twenty-Five
Million and 00/100 ($25,000,000.00) Dollars; provided that no Event of Default
-------- ----
(a) shall have occurred and be continuing or (b) shall result from the
incurrence of any such Consolidated Funded Debt.
Section 7.02 Sales of Assets; Additional Liens.
---------------------------------
(i) Sales. The Borrower, its Subsidiaries and Affiliates shall not,
-----
and shall not permit the Guarantors, their Subsidiaries and Affiliates to, sell,
assign, transfer, lease, convey, abandon or otherwise dispose of, voluntarily or
involuntarily, any Properties, whether now owned or hereafter acquired, or any
income or profits therefrom, except:
(a) The Borrower, the Guarantors, their respective Subsidiaries
and/or Affiliates may sell inventory in the ordinary course of their respective
business;
(b) The Borrower, the Guarantors, their respective Subsidiaries
and/or Affiliates may dispose of Properties which are obsolete or no longer
useful in their respective businesses; provided that (1) such disposition shall
-------- ----
not result in a Material Adverse Effect and (2) the Borrower shall promptly
report any disposition of any such Properties to the Lender where, whether
singularly or in aggregate, proceeds are equal to or greater than $5,000,000.00;
58
(c) The Borrower may transfer all of the assets of Blue
Lobster to the Borrower or any of the Guarantors;
(d) The Borrower may sell its accounts receivable without
recourse in the ordinary course of its business; provided, however, (1) no Event
-------- -------
of Default or Potential Event of Default shall have occurred and be continuing,
(2) such accounts receivable shall be sold on commercially reasonable terms in
arms' length transactions and (3) the Borrower shall have given the Lender
express written notice of such sale within thirty (30) days from the completion
of such sale; and
(e) The Borrower, any of the Guarantors and/or any Person
whose authorized, issued and outstanding stock has been pledged to the Lender
pursuant to any of the Pledge of Stock Agreements may transfer any of its
respective assets to the Borrower, any of the Guarantors and/or any Person whose
authorized, issued and outstanding stock has been pledged to the Lender pursuant
to any of the Pledge of Stock Agreements.
(f) Any Person (1) whose financial performance is represented
in the consolidated financial statements of Saga Systems and (2) which is not
the Borrower, a Guarantor or a Person whose authorized, issued and outstanding
stock has been pledged to the Lender pursuant to any of the Pledge of Stock
Agreements, may transfer any of its assets to any other Person whose financial
performance is represented in the consolidated financial statements of Saga
Systems.
(ii) Additional Liens. The Borrower, its Subsidiaries and
----------------
Affiliates shall not, and shall not permit the Guarantors, their Subsidiaries
and Affiliates to, directly or indirectly create, incur, assume or permit to
exist any Lien on or with respect to any of their respective Properties except:
(a) any interest or title of a lessor or secured by a
lessor's interest under any lease permitted by this Loan Agreement;
(b) Liens existing on the date of this Loan Agreement
securing the existing Consolidated Debt described on Schedule 7.01(iii) attached
------------------
hereto and made a part hereof (but said Liens may not be renewed, extended or
increased in principal amount);
(c) Customary Permitted Liens;
(d) Permitted Encumbrances listed on Schedule 1.01-B attached
---------------
hereto and made a part hereof; and
(e) purchase money Liens securing Consolidated Debt
(including the interest of a lessee under a Capitalized Lease) in the aggregate
amount outstanding at any one time not to exceed $500,000.00.
Section 7.03 Loans, Advances and Investments. The Borrower, its
-------------------------------
Subsidiaries and Affiliates shall not, and shall not permit the Guarantors,
their Subsidiaries and Affiliates to, (i)
59
make or suffer to exist or remain outstanding, any loan or advance to any other
Person, or (ii) purchase, acquire or own (beneficially or of record) any stock,
--
bonds, notes or securities of, or any partnership interest (whether general or
limited) in, or any other interest in, any other Person, or (iii) make any
--
capital contribution to or other investment in any other Person or (iv) agree,
--
become or remain liable (contingent or otherwise) to do any of the foregoing,
except:
(a) Loans and investments existing on the date hereof and listed
in Schedule 7.03 attached hereto and extensions, renewals and refinancings
-------------
thereof on terms no less favorable than those existing immediately
prior to such extension, renewal or refinancing;
(b) Provided no Event of Default and no Potential Event of
Default presently exists and would not result from the making thereof, loans
from the Borrower, any of the Guarantors, their respective Subsidiaries and/or
Affiliates to the Borrower or any of the Guarantors;
(c) Provided no Event of Default and no Potential Event of
Default presently exists and would not result from the making thereof, loans or
advances not to exceed $1,500,000.00 in the aggregate at any time outstanding,
made to officers or other employees of the Borrower, the Guarantors, their
respective Subsidiaries and/or Affiliates;
(d) Investments in Cash or Cash Equivalents;
(e) Accounts receivable owing to the Borrower, the Guarantors,
their respective Subsidiaries and/or Affiliates arising from sales of inventory
under usual and customary terms in the ordinary course of business;
(f) Permitted Acquisitions; and
(g) Provided no Event of Default and no Potential Event of
Default presently exists and would not result from the making thereof, loans to
and investments in the Borrower, Saga Systems, any Guarantor or any Subsidiary
or Affiliate thereof whose financial performance is represented in the
consolidated financial statements of Saga Systems in accordance with Generally
Accepted Accounting Principles.
Section 7.04 Transactions with Shareholders, Subsidiaries and Affiliates.
-----------------------------------------------------------
The Borrower, its Subsidiaries and/or Affiliates shall not, and shall not permit
the Guarantors, their Subsidiaries and/or Affiliates to, enter into or permit to
exist, directly or indirectly, any transaction (including, without limitation,
the purchase, sale, lease or exchange of any Property or the rendering of any
service) with any Shareholder, Subsidiary and/or Affiliate, on terms that are
less favorable to the Borrower, any of the Guarantors, their respective
Subsidiaries and/or Affiliates than those that might be obtained in an arm's
length transaction at the time from unrelated Persons who are not such a
Shareholder, Subsidiary or Affiliate. Nothing contained in this Section 7.04
------------
shall prohibit any transaction expressly permitted by Section 7.03 hereof.
------------
Section 7.05 Restriction on Fundamental Changes.
----------------------------------
(i) Except for Permitted Acquisitions, the Borrower, its Subsidiaries
and/or Affiliates
60
shall not, and shall not permit any of the Guarantors, their Subsidiaries and/or
Affiliates to, enter into any joint venture, merger, partnership, acquisition or
consolidation, or liquidate, windup or dissolve (or suffer any liquidation or
dissolution), or convey, lease, sell, transfer or otherwise dispose of, in one
transaction or series of transactions, all or any substantial part of their
respective businesses, Properties or assets, whether now or hereafter acquired,
without the prior express written consent of the Lender, except as permitted by
------
Section 7.02(i) hereof.
---------------
(ii) Except for Permitted Acquisitions, the Borrower, its Subsidiaries
and/or Affiliates shall not, and shall not permit any of the Guarantors, their
Subsidiaries and/or Affiliates to, (a) acquire by purchase or otherwise all or
substantially all of the business property or assets of or stock or other
evidence of legal or beneficial ownership of, any Person or (b) unless the
Borrower, such Guarantor, such Subsidiary and/or Affiliate complies with Section
-------
6.12 of this Loan Agreement, create any Subsidiary or Affiliate.
----
(iii) Except for Permitted Acquisitions, the Borrower, its Subsidiaries
and/or Affiliates shall not, and shall not permit any of the Guarantors, their
Subsidiaries and/or Affiliates to, (a) change their respective corporate
structures; provided that such a change in corporate structure involving the
-------- ----
creation of a new Subsidiary or Affiliate shall be allowed if the Borrower, such
Guarantor, such Subsidiary and/or Affiliate complies with Section 6.12 of this
------------
Loan Agreement, or (b) materially alter the nature or character of their
respective businesses as conducted on the Closing Date.
Section 7.06 ERISA. The Borrower, its Subsidiaries and/or Affiliates
-----
shall not, and shall not permit any of the Guarantors, their Subsidiaries and/or
Affiliates or any ERISA Affiliate to, do any of the following to the extent that
such act or failure to act would result in the aggregate, after taking into
account any other such acts or failure to act, in a obligation to pay a sum of
money that is material to the businesses of the Borrower, any of the Guarantors,
their respective Subsidiaries and/or Affiliates:
(i) Engage, or permit an ERISA Affiliate to engage, in any
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code for which a class exemption is not available or a private exemption has not
been obtained from the DOL;
(ii) Permit to exist any accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code), whether or not waived;
(iii) Fail, or permit an ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any waived
funding deficiency to any Plan;
(iv) Terminate, or permit an ERISA Affiliate to terminate, any
Benefit Plan which would result in any liability of the Borrower, the
Guarantors, their respective Subsidiaries and/or Affiliates or any ERISA
Affiliate under Title IV of ERISA; or
(v) Fail, or permit any ERISA Affiliate to fail, to pay any
required installment under section (m) of Section 412 of the Code or any other
payment required under Section 412 of the Code on or before the due date for
such installment or other payment.
61
Section 7.07 Amendment of Corporate Documents. The Borrower, its
--------------------------------
Subsidiaries and/or Affiliates shall not, and shall not permit any of the
Guarantors, their respective Subsidiaries and/or Affiliates to, amend, modify or
supplement their respective Articles or Certificates of Incorporation, By-Laws,
Operating Agreements, Certificates of Formation, Memoranda and Articles of
Incorporation or other similar corporate organizational documents without
written notice to the Lender of any such amendments, modifications and/or
supplements which are material.
Section 7.08 Margin Regulations. The Borrower shall not permit any
------------------
portion of the proceeds of any Revolving Credit Loans extended to be used in any
manner which might cause the extension of credit or the application of such
proceeds to violate Regulation U or Regulation X or any other regulation of the
Federal Reserve Board or to violate the Securities Exchange Act or the
Securities Act, in each case as in effect on the date or dates of such
Borrowing, such use of proceeds, such creation or such issuance.
Section 7.09 Cancellation of Consolidated Debt; Prepayment. The Borrower,
---------------------------------------------
its Subsidiaries and/or Affiliates shall not, and shall not permit any of the
Guarantors, their Subsidiaries and/or Affiliates to, cancel any Claim or
Consolidated Debt, except for adequate consideration and in the ordinary course
of their respective businesses.
Section 7.10 Environmental Liabilities. The Borrower, its Subsidiaries
-------------------------
and/or Affiliates shall not, and shall not permit any of the Guarantors, their
Subsidiaries and/or Affiliates to, become subject to any Liabilities and Costs
which the Lender deems has or is likely to have a Material Adverse Effect
arising out of or related to (i) the Release or threatened Release at any
location of any Environmental Concern Material into the Environment, or any
Remedial Action in response thereto, or (ii) any violation of any Environmental,
health or safety Requirement of Law; provided, however, that this covenant shall
-------- -------
not be violated so long as (a) the Borrower, such Guarantor or such Subsidiary
or Affiliate shall have notified the Lender of the assertion of such liability
or required expenditures promptly upon receiving written notice of such
assertion, (b) the Borrower, such Guarantor or such Subsidiary or Affiliate
shall have continued to furnish the Lender with such information concerning such
asserted liability or required expenditure as the Lender shall have reasonably
requested, or as otherwise provided herein, (c) the Borrower, such Guarantor or
such Subsidiary or Affiliate shall be diligently pursuing indemnification for
such liability or required expenditures from any Person which has an obligation
to provide such indemnification, and (d) the imposition of such liability during
the pendency of the Borrower's, such Guarantor's or such Subsidiary's or
Affiliate's pursuit of indemnification will not materially impair the
Borrower's, such Guarantor's or such Subsidiary's or Affiliate's ability to
perform its respective financial obligations under this Loan Agreement.
Section 7.11 Fiscal Year. The Borrower, its Subsidiaries and/or
-----------
Affiliates shall not, and shall not permit any of the Guarantors, their
Subsidiaries and/or Affiliates to, change their respective Fiscal Year, without
providing express written notice of such change to the Lender.
Section 7.12 Guaranties. The Borrower, its Subsidiaries and/or Affiliates
----------
shall not, and shall not permit any of the Guarantors, their Subsidiaries and/or
Affiliates to, assume, guaranty, endorse or otherwise be or become directly or
contingently responsible or liable, for obligations
62
or liabilities of any Person, except for:
(i) guaranties existing on the Closing Date as described on Schedule
--------
7.12(i) attached hereto and made a part hereof;
-------
(ii) guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(iii) guaranties entered into in the ordinary course of the
Borrower's, the Guarantors', their respective Subsidiaries' and/or Affiliates'
respective businesses in the aggregate amount outstanding at any one time not to
exceed $1,000,000.00.
Section 7.13 No Negative Pledges to Other Person. The Borrower, its
-----------------------------------
Subsidiaries and/or Affiliates shall not, and shall not permit any of the
Guarantors, their Subsidiaries and/or Affiliates to, grant to another Person a
covenant commonly referred to as a "negative pledge" with respect to their
respective assets and/or Properties.
Section 7.14 No Borrowing Under the CBL Credit Facility. The Borrower,
------------------------------------------
its Subsidiaries and/or Affiliates shall not, and shall not permit any of the
Guarantors, their Subsidiaries and/or Affiliates to, borrow, incur debt or
otherwise become liable for any sums pursuant to, under or in connection with
the CBL Credit Facility.
63
ARTICLE VIII
FINANCIAL COVENANTS
-------------------
The Borrower hereby covenants and agrees that, on and after the Closing Date
and until payment in full of all the Obligations unless the Lender shall give
its prior written consent to the effect otherwise, then:
Section 8.01 Minimum Consolidated Current Ratio. The Borrower, the
----------------------------------
Guarantors, their respective Subsidiaries and Affiliates shall maintain at all
times throughout the term of the Revolving Credit Facility (which covenant shall
be tested by reviewing the quarterly and annual financial statements which are
to be provided to the Lender pursuant to Section 5.02 of this Loan Agreement),
------------
on a consolidated basis, a ratio of Consolidated Current Assets -to-
Consolidated Current Liabilities of not less than 1.5 -to- 1.0.
-------------
Section 8.02 Maximum Consolidated Cash Flow Leverage Ratio. The Borrower,
---------------------------------------------
the Guarantors, their respective Subsidiaries and Affiliates shall maintain at
all times throughout the term of the Revolving Credit Facility (which covenant
shall be tested at the end of the periods covered by the quarterly and annual
financial statements which are to be provided to the Lender pursuant to Section
-------
5.02 of this Loan Agreement), on a consolidated basis, a Consolidated Cash Flow
----
Leverage Ratio equal to or less than 1.75 -to- 1.0.
---------------------
Section 8.03 No Net Consolidated Loss. The Borrower, the Guarantors,
------------------------
their respective Subsidiaries and Affiliates shall not permit a net loss to
occur from the operations of their consolidated businesses (i) for any two (2)
consecutive Fiscal Quarters and/or for any Fiscal Year or (ii) for any four
consecutive Fiscal Quarters taken together as one accounting period (which
covenant shall be tested at the end of the periods covered by the quarterly and
annual financial statements which are to be provided to the Lender pursuant to
Section 5.02 of this Loan Agreement).
------------
64
ARTICLE IX
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
--------------------------------------
Section 9.01 Events of Default. The occurrence of any of the following
-----------------
events with the passing of any applicable notice and cure periods shall
constitute an "Event of Default" under this Loan Agreement (hereinafter each
referred to as an "Event of Default"):
(i) Any representation or warranty made by the Borrower or any of
the Guarantors or any other Person in any of the Loan Documents furnished in
connection with the Revolving Credit Facility, shall prove to have been false,
incorrect or misleading in any substantial and material respect on the date as
of which made;
(ii) The Borrower shall have failed to make any payment of any
installment of interest on the Revolving Credit Loan Note on its due date;
(iii) The Borrower shall have failed to make any payment of principal
on the Revolving Credit Loan Note on its due date;
(iv) The Borrower or any of the Guarantors shall have failed to duly
observe or perform any covenant, condition or agreement with respect to the
payment of moneys on their part which is to be observed or performed pursuant to
the terms of the Loan Documents, other than the payment of principal and
interest which shall be governed by clauses (ii) and (iii) above, and such
----------------------
default shall have remained uncured for a period of thirty (30) days;
(v) The Borrower and the Guarantors shall have failed to duly
observe any of the financial covenants set forth in Article VIII of this Loan
------------
Agreement as of any date of determination;
(vi) The Borrower or any of the Guarantors shall have failed to duly
observe or perform any covenant, condition or agreement on the part of the
Borrower or such Guarantors to be observed or performed pursuant to the terms of
the Loan Documents other than the payment of moneys which shall be governed by
clauses (ii), (iii) and (iv) above, and such default shall have remained uncured
----------------------------
for a period of thirty (30) days;
(vii) The Borrower or any of the Guarantors shall have applied for or
consented to the appointment of a custodian, receiver, or liquidated of all or a
substantial part of their respective assets; a custodian shall have been
appointed with or without consent of the Borrower and/or any of the Guarantors;
the Borrower and/or any of the Guarantors shall generally not be paying their
respective debts as they become due; the Borrower and/or any of the Guarantors
shall have made a general assignment for the benefit of their respective
creditors; the Borrower and/or any of the Guarantors shall have filed a
voluntary petition in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with their respective creditors, or shall have
taken advantage of any insolvency law, or shall have filed an answer admitting
the material allegations of a petition in bankruptcy, reorganization or
insolvency proceeding; a petition in bankruptcy shall have been filed against
the Borrower and/or any of the Guarantors and shall not have been dismissed for
a period of sixty (60) consecutive days, or an Order for Relief shall have
65
been entered against the Borrower and/or any of the Guarantors under the
Bankruptcy Code; or an order, judgment or decree shall have been entered without
the application, approval or consent of the Borrower and/or any of the
Guarantors by any court of competent jurisdiction appointing a receiver,
trustee, custodian or liquidator of the Borrower and/or any of the Guarantors of
a substantial part of its assets and such order, judgment or decree shall have
continued unstayed and in effect for any period of sixty (60) consecutive days;
(viii) A writ of execution or attachment or any similar process shall
be issued or levied against all or any part of or interest in any of the
Properties of the Borrower and/or any of the Guarantors or any judgment
involving monetary damages shall be entered against the Borrower and/or any of
the Guarantors which shall become a lien on the Borrower's or any of said
Guarantor's Properties or any portion thereof or interest therein and such
execution, attachment or similar process is not released, bonded, satisfied,
vacated or stayed within thirty (30) days after its entry or levy, and said writ
of execution, attachment, levy or judgment shall involve monetary damages
aggregating more than $1,000,000.00;
(ix) Seizure or foreclosure of any of the Properties of the
Borrower and/or any of the Guarantors pursuant to process of law or by respect
of legal self-help, involving monetary damages aggregating more than
$1,000,000.00, unless said seizure or foreclosure is stayed or bonded within
thirty (30) days after the occurrence of same;
(x) The voluntary permanent closing of business or ceasing of
operations of the Borrower and/or any one or more of the Guarantors;
(xi) Default by the Borrower or any of the Guarantors in any of the
terms or conditions of any agreement (excluding the Loan Documents) covering the
payment of borrowed money whether from the Lender or from any other creditor;
(xii) The occurrence of a Material Adverse Effect; and
(xiii) The occurrence of a Reportable Event with respect to the
Borrower and/or any of the Guarantors.
Section 9.02 Rights and Remedies.
-------------------
(i) Acceleration. Upon the occurrence and during the continuance
------------
of any Event of Default described in the foregoing Section 9.01(vii) hereof, the
-----------------
Revolving Credit Facility shall automatically and immediately terminate and the
unpaid principal amount of any and all accrued interest and due fees on the
Revolving Credit Loans outstanding shall automatically become immediately due
and payable, with all additional interest from time to time accrued thereon and
without presentment, demand, or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and of acceleration), all
of which are hereby expressly waived by the Borrower, and the obligation of the
Lender to make any Revolving Credit Loans hereunder shall thereupon terminate.
Upon the occurrence and during the continuance of any other Event of Default
described in Section 9.01 above, the Lender may by written notice to the
------------
Borrower, (a) declare that the Revolving Credit Facility is terminated,
whereupon the obligation of the Lender
66
to make any Revolving Credit Loans hereunder shall immediately terminate, and/or
(b) declare the unpaid principal amount of and any and all accrued and unpaid
interest on the Revolving Credit Loans to be, and the same shall thereupon be,
immediately due and payable with all additional interest from time to time
accrued thereon and without presentment, demand, or protest or other
requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and of acceleration), all of which are hereby expressly waived by the Borrower.
(ii) Rights Under Loan Documents. Upon the occurrence and during
---------------------------
the continuance of any Event of Default, the Lender may take any lawful action
against the Borrower and/or any of the Guarantors to collect the payments then
due and thereafter to become due under the Loan Documents, including, without
limitation, the Agreement of Guaranty and the Pledge of Stock Agreements.
(iii) Setoff. Upon the occurrence and during the continuance of any
------
Event of Default, without notice or other action (any such notice being
expressly waived by the Borrower) the Lender may setoff any money owed by the
Lender in any capacity to the Borrower or any Property of the Borrower in the
possession of the Lender against any of the monetary obligations of the Borrower
to the Lender under the Loan Documents, and the Lender shall be deemed to have
exercised such right of setoff and to have made a charge against any such money
or property immediately, even though the actual book entries may be made at some
time subsequent thereto.
Section 9.03 Application of Proceeds.
-----------------------
(i) All payments and proceeds received under Section 9.02 of this
------------
Loan Agreement shall be applied in the following order of priority:
(a) First, to the payment of all reasonable fees, costs and
expenses (including reasonable attorney's fees, costs and other expenses
including, without limitation, post-judgment attorney's fees, costs and other
expenses) incurred by the Lender and/or its agents or representatives in
connection with the realization of such payments or proceeds;
(b) Next, to the payment in full of all unpaid principal,
accrued interest and other sums, if any, due and owing under the Revolving
Credit Facility; and,
(c) Next, the balance, if any, or such payments, proceeds,
or amounts to the Borrower, or, if otherwise determined by a court of competent
jurisdiction, to whomever may be entitled thereto.
(ii) If the amount of the proceeds received in Section 9.03(i) above
---------------
shall be insufficient to satisfy in full the amounts referred to in clauses (a)
-----------
and (b) above, then the Borrower shall remain and be liable for any such
-------
deficiency.
Section 9.04 No Notices. In order to entitle the Lender to exercise any
----------
remedy available to it under Section 9.02 of this Loan Agreement, it shall not
------------
be necessary for the Lender to give any notice, other than such notice as may be
required expressly in this Loan Agreement or by
67
applicable law.
Section 9.05 Agreement to Pay Attorneys' Fees and Expenses. Upon the
---------------------------------------------
occurrence and during the continuance of an Event of Default, as a result of
which the Lender shall require and employ attorneys or incur other expenses for
the collection of payments due or to become due or the enforcement or
performance or observance of any obligation or agreement on the part of the
Borrower contained herein, the Borrower shall, on demand, pay to the Lender, the
reasonable fees of such attorneys, costs and such other expenses so incurred by
them including, without limitation, post-judgment attorney's fees, costs and
other expenses.
Section 9.06 No Additional Waiver Implied by One Waiver. In the event any
------------------------------------------
agreement contained in this Loan Agreement should be breached by any party and
thereafter waived by the other parties, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
Section 9.07 Failure to Exercise Rights. Nothing herein contained shall
--------------------------
impose upon the Lender any obligation to enforce any terms, covenants or
conditions contained in this Loan Agreement and the other Loan Documents.
Failure of the Lender, in any one or more instances, to insist upon strict
performance by the Borrower of any terms, covenants or conditions of this Loan
Agreement and the other Loan Documents, shall not be considered or taken as a
waiver or relinquishment by the Lender of its right to insist upon and to
enforce in the future, by injunction or other appropriate legal or equitable
remedy, strict compliance by the Borrower with all the terms, covenants and
conditions of this Loan Agreement and the other Loan Documents. The consent of
the Lender to any act or omission by the Borrower shall not be construed to be a
consent to any other or subsequent act or omission or to waive the requirement
for the Lender's consent to be obtained in any future or other instance.
Section 9.08 WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY
--------------------
WAIVE ANY AND ALL RIGHTS THAT THEY MAY NOW OR HEREAFTER HAVE UNDER THE LAWS OF
THE UNITED STATES OF AMERICA OR ANY STATE, TO A TRIAL BY JURY OF ANY AND ALL
ISSUES ARISING EITHER DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING BETWEEN
THE BORROWER, THE LENDER OR THEIR SUCCESSORS AND ASSIGNS, OUT OF OR IN ANY WAY
CONNECTED WITH THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS. IT IS INTENDED
THAT SAID WAIVER SHALL APPLY TO ANY AND ALL DEFENSES, RIGHTS, AND/OR
COUNTERCLAIMS IN ANY ACTION OR PROCEEDING. THE BORROWER AND THE LENDER
RECOGNIZE THAT ANY DISPUTE ARISING IN CONNECTION WITH THE REVOLVING CREDIT
FACILITY IS LIKELY TO BE COMPLEX AND CONSEQUENTLY THEY WISH TO STREAMLINE AND
MINIMIZE THE COST OF THE DISPUTE RESOLUTION PROCESS BY AGREEING TO WAIVE THEIR
RIGHTS TO A JURY TRIAL.
Section 9.09 Remedies Cumulative. No remedy herein conferred upon or
-------------------
reserved to the Lender is intended to be exclusive of any other remedy or
remedies; but each and every such remedy shall be cumulative, and shall be in
addition to every other remedy given hereunder, or now or hereafter existing at
law or in equity or by statute. No express or implied waiver by the
68
Lender of any Event of Default hereunder shall in any way be, or construed to
be, a waiver of any future or subsequent Event of Default. No delay or omission
to exercise any right or power accruing upon any Event of Default continuing as
aforesaid, shall impair any such right or power or shall be construed to be a
waiver of any such Event of Default, or acquiescence therein; and every such
right and power may be exercised from time to time and as often as may be deemed
expedient.
69
ARTICLE X
MISCELLANEOUS
-------------
Section 10.01 Expenses.
--------
(i) Generally. The Borrower hereby covenants and agrees upon demand
---------
to pay, or reimburse the Lender for, all the Lender's reasonable external legal
costs and expenses (but not internal legal costs and expenses), including,
without limitation, post-judgment attorney's fees, costs and other expenses, and
all internal and external audit, appraisal, valuation and investigation expenses
and for all other reasonable out-of-pocket costs and expenses of every type and
nature (including, without limitation, the reasonable fees, expenses and
disbursements of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP and any other external attorneys
retained by the Lender, auditors, accountants, appraisers, insurance and
environmental advisers, and other consultants) incurred by the Lender in
connection with (a) the administration of this Loan Agreement, the other Loan
Documents and the Revolving Credit Facility including consultation with
attorneys in connection therewith and in connection with the amendment, waiver
or consents required or requested hereunder and (b) the protection, collection
or enforcement of any of the Obligations.
(ii) After Default. The Borrower hereby further covenants and agrees
-------------
to pay, or reimburse the Lender for all reasonable out-of-pocket costs and
expenses, including, without limitation, reasonable external attorneys' fees and
disbursements, and costs of settlement incurred by the Lender after the
occurrence and during the continuance of an Event of Default (a) in enforcing
any Obligation or exercising or enforcing any other right or remedy available by
reason of such Event of Default, (b) in connection with any refinancing or
restructuring of the credit arrangements provided under this Loan Agreement in
the nature of a "work-out" or in any insolvency or bankruptcy proceeding, (c) in
commencing, defending or intervening in any litigation or in filing a petition,
complaint, answer, motion or other pleadings in any legal proceeding relating to
the Borrower and/or any of the Guarantors and related to or arising out of the
transactions contemplated thereby or by any of the Loan Documents or (d) in
taking any other action in or with respect to any suit or proceeding (whether in
bankruptcy or otherwise).
Section 10.02 Indemnity. The Borrower hereby further covenants and agrees
---------
to defend, protect, indemnify and hold harmless the Indemnified Parties from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for the Indemnified Parties in connection with any
investigative, administrative or judicial proceeding, whether or not the
Indemnified Parties shall be designated a party thereto), imposed on, incurred
by, or asserted against the Indemnified Parties (whether direct, indirect or
consequential and whether based on any federal or state Laws or other statutory
regulations, including, without limitation, securities and commercial laws and
regulations, under common law or at equitable cause, or on contract or
otherwise, including any liability and costs under federal, state or local
environmental, health or safety laws, regulations, or common law principles,
arising from or in connection with the past, present or future environmental
condition of the Property or the Release or threatened Release of any
Environmental Concern Material into the Environment from the Property) in any
manner relating to or arising out of this Loan Agreement or the other Loan
Documents, or any act, event or
70
transaction related or attendant thereto, the making of and participation in the
Revolving Credit Facility and the management of such Revolving Credit Loans or
the use or intended use of the proceeds of the Revolving Credit Facility
hereunder (hereinafter collectively referred to as the "Indemnified Matters");
provided, however, that the Borrower shall not have any obligation to an
-------- -------
Indemnified Party hereunder with respect to (a) matters for which such
Indemnified Party has been compensated pursuant to or for which an exemption is
provided in this Loan Agreement and (b) Indemnified Matters caused by or
resulting from the willful misconduct or gross negligence of that Indemnified
Party, as determined by a court of competent jurisdiction. To the extent that
the undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Borrower shall contribute the maximum portion which it is permitted
to pay and satisfy under applicable law, to the payment and satisfaction of all
Indemnified Matters incurred by the Indemnified Parties.
Section 10.03 Amendments and Waivers. No amendment or modification of any
----------------------
provision of this Loan Agreement shall be effective without the written
agreement of the Lender and the Borrower, and no termination or waiver of any
provision of this Loan Agreement, or consent to any departure by the Borrower
therefrom, shall in any event be effective without the written concurrence of
the Lender, which the Lender shall have the right to grant or withhold at its
sole discretion.
Section 10.04 Independence of Covenants. All covenants hereunder shall be
-------------------------
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of an Event of Default or Potential Event of Default if
such action is taken or condition exists.
Section 10.05 Notices. Unless otherwise specifically provided therein,
-------
any notice or other communication herein required or permitted to be given shall
be in writing and may be personally served, or sent by confirmed telecopy
transmission, nationally recognized overnight courier service or United States
mail and shall be deemed to have been given when delivered in person or by said
courier service, or upon receipt of a confirmed telecopy transmission during
normal business hours or three (3) Business Days after deposit in the United
States mail (registered or certified, with postage prepaid and properly
addressed). Notices to the Lender pursuant to Article II hereof shall not be
----------
effective until received by the Lender. For the purposes hereof, the addresses
of the parties hereto (until notice of a change thereof is delivered as provided
in this Section 10.05) shall be as set forth below each party's name on the
--------------
signature pages hereof, or, as to each party, at such other address as may be
designated by such party in a written notice to the other party, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Loan Agreement and the other Loan Documents and the making and
repayment of the Loans hereunder. A failure to send the requisite copies does
not invalidate an otherwise properly sent notice to the Borrower and/or the
Lender.
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Section 10.06 Survival of Warranties and Agreements. Subject only to the
-------------------------------------
limitations on the liability of the Borrower for increased costs and other
charges detailed in Section 2.07 hereof, all agreements, representations and
------------
warranties made herein shall survive the execution and delivery of this Loan
Agreement and the other Loan Documents and the making and repayment of Revolving
Credit Loans hereunder.
Section 10.07 Marshaling; Payments Set Aside. The Lender shall not be
------------------------------
under any obligation to marshal any assets in favor of the Borrower, any of the
Guarantors or any other Person or against or in payment of any or all of the
Obligations. To the extent that the Borrower and/or any of the Guarantors make a
payment or payments to the Lender, or the Lender enforces its rights and
remedies under the Loan Documents or exercises its right of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied, and all Liens, right and remedies therefor (to the
extent permissible and practicable under the law and the circumstances), shall
be revived and continued in full force and effect as if such payment had not
been made or such enforcement or setoff and not occurred.
Section 10.08 Severability. In case any provision in or obligation under
------------
this Loan Agreement or the other Loan Documents shall be held to be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations under the Loan
Agreement or the other Loan Documents, shall not in any way be affected or
impaired thereby. The invalidating, illegality or unenforceability of a
particular provision in a particular jurisdiction shall not render such
provision invalid, illegal or unenforceable in any other jurisdiction.
Section 10.09 Governing Law. This Loan Agreement shall be governed by,
-------------
and shall be construed and enforced in accordance with, the laws of the State of
New York.
Section 10.10 Successors and Assigns. This Loan Agreement and the other
----------------------
Loan Documents shall be binding upon the parties hereto and their respective
successors and assigns. The Borrower's Obligations hereunder, may not be
assigned to any Person without the prior express written consent of the Lender.
The Lender may assign, transfer, sell, participate or convey all or any part of
the Revolving Credit Facility to any Person without the consent of the Borrower.
The Lender agrees to promptly notify the Borrower in writing of any sale or
participation by the Lender of all or any part of the Revolving Credit Facility.
Section 10.11 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
----------------------------------------------
PROCEEDINGS BROUGHT AGAINST THE BORROWER WITH RESPECT TO THIS LOAN AGREEMENT AND
THE REVOLVING CREDIT LOAN NOTE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY
OF THIS LOAN AGREEMENT, THE BORROWER ACCEPTS, FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF
THE AFORESAID
72
COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS LOAN AGREEMENT AND THE REVOLVING CREDIT LOAN
NOTE FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE. THE BORROWER
IRREVOCABLY DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, AS ITS AGENT TO RECEIVE, ON ITS BEHALF, SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY SUCH PERSON TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE
ADDRESS SPECIFIED ON THE SIGNATURE PAGES HEREOF, SUCH SERVICE TO BECOME
EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. THE BORROWER AND THE LENDER
IRREVOCABLY WAIVE ANY OBJECTION (INCLUDING WITHOUT LIMITATION, ANY OBJECTION OF
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH THEY
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH
RESPECT TO THIS LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY JURISDICTION
SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF ANY LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
Section 10.12 Counterparts; Effectiveness; Inconsistencies. This Loan
--------------------------------------------
Agreement and any amendments, waivers, consents, or supplements may be executed
in counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Loan Agreement and each of the other Loan Documents shall
be construed to the extent reasonable to be consistent one with the other, but
to the extent that the terms and conditions of this Loan Agreement are actually
inconsistent with the terms and conditions of any other Loan Documents, this
Loan Agreement shall govern.
Section 10.13 Construction. The parties acknowledge that each party and
------------
its counsel have reviewed and revised this Loan Agreement and that the normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Loan Agreement or any amendments or exhibits hereto.
Section 10.14 Entire Agreement. This Loan Agreement, taken together with
----------------
all of the other Loan Documents and all certificates and other documents
delivered by the Borrower or any other Person to the Lender, embody the entire
agreement and supersede all prior agreements, written and oral, relating to the
subject matter hereof
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be executed and delivered by their proper and duly authorized corporate officers
as appropriate, and the Borrower has caused its corporate seal to be hereunto
affixed and attested pursuant to the resolution of its Board of Directors, all
on the day and year first hereinabove written.
[SEAL] SAGA SOFTWARE, INC.,
ATTEST: as the Borrower
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------- ---------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Secretary Vice President, Treasurer and
Chief Financial Officer
Notice Address:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President, Treasurer and
Chief Financial Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
King & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
74
THE CHASE MANHATTAN BANK,
as the Lender
By: /s/ ▇▇▇▇▇▇ B.V.W. ▇▇▇▇▇
-----------------------
▇▇▇▇▇▇ B.V.W. ▇▇▇▇▇
Vice President
Notice Address:
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ B.V.W. ▇▇▇▇▇
Vice President
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Princeton, New Jersey 08540
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., Esq.
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
75