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EXHIBIT 10.22
Execution Copy
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is entered into as of June 5, 1996 by
and between BACHMAN INFORMATION SYSTEMS, INC., a Massachusetts corporation (the
"Borrower") and SILICON VALLEY BANK, a California-chartered bank, with its
principal place of business at 3003 Tasman Drive, Santa Clara, California 95054
and with a loan production office located at Wellesley Office Park, 40 William
Street, Suite 350, Wellesley, Massachusetts 02181 doing business under the name
"Silicon Valley East" (hereinafter, together with its successors in title and
assigns, the "Bank").
WITNESSETH:
WHEREAS, the Borrower and the Bank have previously entered into a
certain Revolving Credit Agreement, dated as of October 28, 1994, as amended
pursuant to that certain Loan Modification Agreement dated as of May 18, 1995
(the "Prior Credit Agreement") pursuant to which the Bank established for the
Borrower a credit facility of up to $4,000,000 subject to the terms, conditions
and limitations set forth therein;
WHEREAS, the Borrower has requested the Bank to make available to
Borrower an amended and restated revolving credit facility and the Bank is
willing to make such amended and restated credit facility available on the
following terms and conditions; and
WHEREAS, this Amended and Restated Revolving Credit Agreement amends,
restates, and supersedes the Prior Credit Agreement in its entirety;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Borrower and the Bank hereby
agree as follows:
SECTION 1 - DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, unless otherwise specifically defined herein, the following terms
shall have the following meanings for all purposes when used in this Agreement,
and in the Bank Agreements:
"ACCOUNTS RECEIVABLE" shall mean accounts, as defined in the Uniform
Commercial Code, as adopted in the Commonwealth of Massachusetts, drafts,
acceptances, contracts with customers, and other instruments representing or
evidencing the right to payment for goods sold or for services rendered (or for
maintenance services to be rendered pursuant to the relevant maintenance
agreement), including the right to any insurance premium refunds.
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"AFFILIATE" shall mean, as applied to an individual, a spouse of such
individual, or any relative of such individual, any member, director, officer
or employee of a Person, any corporation, association, firm or other entity of
which such Person is a member, director, officer of employee, and any other
Person, directly or indirectly controlling, controlled by or under direct or
indirect common control with such Person.
"AFFILIATE ACCOUNTS" shall mean all accounts, accounts receivable,
notes or other amounts due to the Borrower from any Affiliate.
"AGREEMENT" shall mean this Amended and Restated Revolving Credit
Agreement (including Schedules and Exhibits annexed hereto), as amended or
supplemented from time to time. References to Sections, Exhibits, Schedules and
the like refer to the Sections, Exhibits, Schedules and the like of this
Agreement unless otherwise indicated.
"AUTHORIZED OFFICER" shall mean an officer of the Borrower who has been
duly authorized by the Borrower to execute and deliver to the Bank on behalf of
the Borrower Borrowing Requests, Compliance Certificates, Borrowing Base
Certificates, and other certifications, each of whom is listed on SCHEDULE
1.1(a) hereto, as such Schedule may be amended from time to time by notice to
the Bank in accordance with Section 13.2 hereof.
"BANK AGREEMENTS" shall mean this Agreement, the Revolving Credit Note,
the Security Documents, the Guaranty Agreement, and any other present or future
agreement from time to time entered into between the Borrower and/or any
Subsidiary and the Bank relating to this Agreement or which is stated to be a
Bank Agreement, each as from time to time amended or modified, and all
statements, reports and certificates delivered by the Borrower to the Bank in
connection herewith or therewith.
"BANKING DAY" shall mean any day, excluding Saturday and Sunday and
excluding any other day which shall be in the City of Santa Clara or in the
State of California a legal holiday or a day on which banking institutions are
authorized by law to close.
"BORROWING BASE" shall mean an amount, subject to decrease as hereafter
provided, equal to (as shown on the Bank's records at any time) the sum of (a)
seventy-five percent (75%) of all Eligible Domestic Accounts Receivable of the
Borrower for which invoices have been issued and are payable, and (b)
seventy-five percent (75%) of all Eligible International Accounts Receivable of
the Foreign Subsidiaries for which invoices have been issued and are payable;
PROVIDED, HOWEVER, that for purposes of determining the Borrowing Base
hereunder, the Accounts Receivable of each of Bachman Asia Pte. Ltd., a
Singapore Corporation and Bachman Spain S.L., a Spanish Corporation, shall not
be included in the calculation of Eligible International Accounts Receivable
until such time as the Bank has received a valid and perfected pledge or lien
on all of the outstanding capital stock of each such Foreign Subsidiary; and,
provided, further that the Accounts Receivable of Bachman Italia, S.r.l. shall
not be included in the determination of Eligible International Accounts
Receivable to the extent
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such Accounts Receivable have been given as collateral to Banca Commerciale
Italiana to secure the loans of up to one billion Lira by such bank to Bachman
Italia, S.r.l. Upon and after the Effective Date of the Merger, the Borrowing
Base shall be decreased to an amount equal to (as shown on the Bank's records
at any time) the sum of (a) sixty percent (60%) of all Eligible Domestic
Accounts Receivable of the Borrower for which invoices have been issued and are
payable, and (b) sixty percent (60%) of all Eligible International Accounts
Receivable of the Foreign Subsidiaries for which invoices have been issued and
are payable; provided, however, in the event the Borrower reports Consolidated
Net Income for any fiscal quarter following the Merger of at least $200,000
(excluding restructuring charges related to the Merger), then, upon receipt by
the Bank of either such quarterly financial statements evidencing such positive
Consolidated Net Income or the public announcement of such positive
Consolidated Net Income, such decreased Borrowing Base shall be increased to an
amount equal to (as shown on the Bank's records at any time) the sum of (a)
seventy-five percent (75%) of all Eligible Domestic Accounts Receivable of the
Borrower for which invoices have been issued and are payable, and (b)
seventy-five percent (75%) of all Eligible International Accounts Receivable of
the Foreign Subsidiaries for which invoices have been issued and are payable.
"BORROWING BASE CERTIFICATE" shall mean a certificate executed by an
Authorized Officer of the Borrower in substantially the form of EXHIBIT C
hereto.
"BORROWING REQUEST" shall mean a request for a borrowing hereunder
executed by an Authorized Officer of the Borrower in substantially the form of
EXHIBIT B hereto.
"CAPITAL LEASE" shall mean any lease of property (real, personal or
mixed) which is or should be capitalized on the lessee's balance sheet in
accordance with GAAP and Statement of Financial Accounting Standards No. 13.
"COLLATERAL" shall mean all assets of the Borrower, now owned or
hereafter acquired, in which the Bank is granted a Lien to secure any of the
Obligations pursuant to the Security Documents.
"COMPLIANCE CERTIFICATE" shall mean a certificate executed by an
Authorized Officer of the Borrower in substantially the form of EXHIBIT D
hereto.
"CONSOLIDATED" shall mean, when used with reference to any term, that
term is applied to the accounts of the Borrower and all of its Subsidiaries (or
other specified Person), in accordance with GAAP.
"CONSOLIDATED NET INCOME (LOSSES)" means for any period, the aggregate
net income (or loss) of the Borrower and all of its Subsidiaries on a
Consolidated basis for such period from operations (taken as a cumulative
whole), after deduction for all operating expenses, taxes, charges and other
reserves (including reserves for deferred income taxes) paid or
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accrued. Consolidated Net Income (Losses) shall be determined on a Consolidated
basis in accordance with GAAP, as reflected in the most recently available
financial statements of the Borrower and its Subsidiaries, as certified by the
chief financial officer of the Borrower.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean, as to any Person, at any
date as of which the amount thereof shall be determined, the excess of the
Consolidated Total Tangible Assets of such Person over the Consolidated Total
Liabilities (without taking into account any outstanding redeemable preferred
stock of the Borrower) of such Person.
"CONSOLIDATED TOTAL TANGIBLE ASSETS" shall mean, as to any Person, at
any particular date, all items which, in accordance with GAAP, would be
included in determining total assets as shown on the asset side of a balance
sheet of such Person (including long term deferred tax benefits) at the date
which Consolidated Total Tangible Assets is to be determined, excluding,
however, from the determination thereof (a) all loans to any stockholder,
employee or officer of such Person, and all amounts payable to such Person from
any of the aforesaid persons, (b) all assets which would be classified as
intangible assets under GAAP, including, without limitation, goodwill (whether
representing the excess of cost over book value of assets acquired or
otherwise), patents, trademarks, trade names, copyrights, franchises and
deferred charges (including, without limitation, unamortized debt discount and
expense, organization costs, and research and development costs), (c) treasury
stock and minority interests in other corporations or business organizations,
(d) cash set apart and held in a sinking or other analogous fund established
for the purpose of redemption or other retirement of capital stock, and (e) to
the extent not already deducted from Consolidated Total Tangible Assets,
reserves for depreciation, depletion, obsolescence and/or amortization of
properties and all other reserves or appropriations of retained earnings which,
in accordance with GAAP, should be established in connection with the business
conducted by such Person.
"CONSOLIDATED TOTAL LIABILITIES" shall mean, as to any Person, at any
particular date, without limitation, (a) all items (except items of capital
stock, partnership interests, capital and capital accounts or paid-in surplus
or of retained earnings or prepaid items or deposits) which, in accordance with
GAAP, would be included in determining total liabilities as shown on the
liabilities side of a balance sheet of such Person at the date as of which
Consolidated Total Liabilities is to be determined, including, without
limitation, all Indebtedness for borrowed money and any lease which in
accordance with GAAP would constitute Indebtedness, (b) all Indebtedness at
such date secured by any mortgage, pledge, lien or conditional sale or other
title retention agreement to which any property or asset owned or held by such
Person is subject, whether or not the indebtedness secured thereby shall have
been assumed, (c) all outstanding reimbursement obligations at such date of
such Person in respect of amounts drawn or available to be drawn on letters of
credit, acceptances or similar obligations issued or created for the account of
such Person, (d) any withdrawal liability of such Person at such date, whether
direct or indirect, absolute or contingent, to a Multi-employer Plan, as that
term is defined in the Pension Reform Act and (e) all Indebtedness of others
which such Person has directly or indirectly guaranteed, endorsed (otherwise
than for collection or deposit in the
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ordinary course of business), discounted or sold with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
in respect of which such Person has agreed to supply or advance funds (whether
by way of loan, stock or equity purchase, capital contribution or otherwise) or
otherwise to become directly or indirectly liable.
"DEFAULT" shall mean any event which, with the giving of notice or
expiration of any applicable grace period, or both, would constitute an Event
of Default.
"DISTRIBUTION" shall mean (a) the declaration or payment of any
dividend on or in respect of any shares of any class of capital stock of any
Person, other than dividends payable solely in shares of capital stock of the
Person involved, (b) the purchase or other retirement of any shares of any
class of capital stock of any Person directly or indirectly, (c) any other
distribution on or in respect of any shares of any class of capital stock of
any Person, and (d) any payment of principal on or any retirement of
Indebtedness which now or hereafter is subordinated to the prior payment of the
Obligations or any portion thereof.
"EFFECTIVE DATE" shall have the meaning ascribed to it in that certain
Agreement and Plan of Merger by and among the Borrower, B.C. Acquisition Corp.
and Cadre Technologies, Inc., dated as of March 25, 1996.
"ELIGIBLE DOMESTIC ACCOUNTS RECEIVABLE" shall mean the sum of Accounts
Receivable owing to any Person, each of which meets all of the following
specifications at the time it came into existence and continues to meet the
same until it is collected in full:
(a) The account is not more than 90 days from the date of the invoice
thereof.
(b) The account is bona fide, valid and constitutes an enforceable
order or contract, written or oral, for services performed (or for
maintenance services to be performed pursuant to the relevant
maintenance agreement) or products delivered, and the same were or
are to be performed, as the case may be, or delivered in accordance
with such order or contract.
(c) The account is not subject to any prior assignment, claim, lien,
or security interest created by such Person, and such Person will
not make any further assignment thereof or create any further
security interest therein, nor permit such Person's right therein
to be reached by attachment, levy, garnishment or other judicial
process.
(d) The account is not subject to notice to Borrower of any claim of
reduction, counterclaim, setoff, recoupment, or other defense in
law or equity, or any claim for credits, contractual allowances,
discounts, or other credit adjustments by the account debtor for
any reason (except discount allowed for prompt payment) unless
reflected in the Borrowing Base Certificate delivered to the
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Bank or in any invoice, certificate, schedule or other statement
delivered to the Bank (prior to any advance against such account,
the amount of any given account eligible for advances shall be net
of any credits, contractual allowances, discounts, other credit
adjustments, counterclaims or other claims for reduction or
deduction of any nature whatsoever), and the account debtor has not
given notice of a dispute with respect thereto nor has returned any
of the goods from the sale from which the account arose which can
be returned pursuant to the terms of the contract with the account
debtor.
(e) The account arose in the ordinary course of such Person's business
and did not arise from the performance of services or a sale of
goods to a supplier of the Borrower or any Subsidiary or any
Affiliate of the Borrower or any Subsidiary.
(f) No notice of bankruptcy or insolvency of the account debtor has
been received by or is known to such Person.
(g) The Bank has not notified the Borrower that the account or account
debtor is unsatisfactory on the basis of the account debtor's
financial condition, operating performance or credit history.
(h) Not more than 50% of the aggregate receivables from the account
debtor are over ninety (90) days from invoice; all accounts
receivable from any account debtor shall be excluded if more than
50% of the accounts receivable from such account debtor are more
than ninety (90) days from invoice.
(i) The aggregate accounts receivables from the account debtor do not
exceed 25% of the total Eligible Domestic Accounts Receivable; that
portion of the account over the 25% level will be disqualified.
(j) The account debtor is not (i) a Subsidiary of the Borrower or
(ii) an officer or employee of any Subsidiary of the Borrower or
(iii) otherwise an Affiliate of the Borrower or any Subsidiary.
(k) The account contract does not arise out of a contract with, or
order from, an account debtor that, by its terms, forbids or makes
void or unenforceable the assignment of such account to the Bank
or the granting of a lien or security interest therein.
(l) The account debtor is not any agency, department or instrumentality
of the United States of America.
(m) The account debtor is a person or entity located in the United
States or Canada and the account arose out of services rendered
(or maintenance services to be
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rendered pursuant to the relevant maintenance agreement) or goods
delivered in the United States or Canada.
"ELIGIBLE INTERNATIONAL ACCOUNTS RECEIVABLE" shall mean the sum of
Accounts Receivable owing to any Person with respect to an Account Receivable
for which the account debtor is not a resident of the United States or Canada
PROVIDED, THAT, (i) the Account Receivable meets the specifications identified
in clauses (a)-(l) of the definition of Eligible Domestic Accounts Receivable at
the time it came into existence and continues to meet the same until it is
collected in full, and (ii) the account debtor (x) has been reviewed by the Bank
and is deemed sufficiently creditworthy by the Bank, in the exercise of the
Bank's reasonable judgment as a lender, or (y) has supplied the Borrower with an
irrevocable letter of credit, issued by a financial institution reasonably
satisfactory to the Bank, sufficient to cover the receivable and in form and
substance reasonably satisfactory to the Bank or (z) the account is insured with
a foreign insurance agency reasonably satisfactory to the Bank and the Bank is
named as a loss payee in respect of such insured account.
"ENVIRONMENTAL LAWS" shall mean all foreign, federal, state and local
laws, regulations, rules and ordinances relating to pollution or protection of
the environment and worker health and safety, including, without limitation,
laws relating to releases or threatened releases of hazardous waste or
materials (and permits, licenses and approvals which may be required under such
laws, regulations, rules and ordinances) into the indoor or outdoor environment
(including, without limitation, ambient air, surface water, groundwater, land,
surface and subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, release, transport or
handling of hazardous waste or materials and all laws and regulations with
regard to record keeping, notification, disclosure and reporting requirements
respecting hazardous waste or materials.
"EVENT OF DEFAULT" shall have the meaning given in Section 10.1 hereof.
"FOREIGN SUBSIDIARIES" shall mean the following Subsidiaries of the
Borrower, collectively: Bachman France S.A.R.L., a French corporation; Bachman
Information Systems Canada Ltd., a Canadian corporation; Bachman Information
Systems Limited, a United Kingdom corporation; Bachman Information Systems,
GmbH, a German corporation; Bachman Italia S.r.l., an Italian corporation;
Bachman Asia Pacific Pte. Ltd., a Singapore corporation; and Bachman Spain
S.L., a Spanish corporation.
"GAAP" shall mean generally accepted accounting principles, as defined
by controlling pronouncements of the Financial Accounting Standards Board, as
from time to time supplemented and amended, consistency applied on the basis
used by the Person in prior years unless such prior practice is deemed by
Borrower's independent auditors to be inconsistent with GAAP.
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"HAZARDOUS WASTE OR HAZARDOUS MATERIAL" shall include any hazardous,
toxic, infectious, or radioactive substances, including petroleum products,
including without limitation those substances regulated pursuant to the federal
Comprehensive Environmental Response, Compensation and Liability Act, 42 USC
Section 9601 et seq., the federal Resource Conservation and Recovery Act, 42
USC Section 6901 et seq., the Federal Water Pollution Control Act, 33 USC
Section 1251 et seq., the federal Clean Air Act, 42 USC Section 7401 et seq.,
the Toxic Substances Control Act, 15 USC Section 2601, et seq., the
Massachusetts Oil and Hazardous Material Release Prevention Act, M.G.L. c. 21E,
all present and future amendments to such statutes, and all regulations
promulgated thereunder.
"INDEBTEDNESS" shall mean, as applied to any Person, (i) all
obligations (except items of capital stock or capital or paid-in surplus or of
retained earnings), whether contingent or otherwise, which in accordance with
GAAP would be included in determining total liabilities as shown on the
liability side of the balance sheet of such Person as of the date of which
Indebtedness is to be determined, including any Capital Lease, (ii) all
indebtedness secured by any mortgage, pledge, lien or conditional sale or other
title retention agreement to which any property or asset owned or held by such
Person is subject, whether or not the indebtedness secured thereby shall have
been assumed, (iii) all indebtedness of others which such Person has directly
or indirectly guaranteed, endorsed (other than endorsements for collection or
deposit in the ordinary course of business), discounted or sold with recourse
or agreed (contingently or otherwise) to purchase or repurchase or otherwise
acquire, or in respect of which such Person has agreed to supply or advance
funds (whether by way of loan, stock purchase, capital contributions or
otherwise) or otherwise to become directly or indirectly liable, and (iv) all
outstanding reimbursement obligations at such date of such Person in respect of
amounts drawn or available to be drawn on letters of credit, acceptances or
similar obligations issued or created for the account of such Person
(excluding, however, long term deferred tax liabilities).
"INVESTMENT" shall mean (a) any stock, evidence of Indebtedness or
other security of another Person, (b) any loan, advance, contribution to
capital, extension of credit (except for current trade and customer accounts
receivable for inventory sold or services rendered in the ordinary course of
business and payable in accordance with customary trade terms) to another
Person, and (c) any purchase of (i) stock or other securities of another Person
or (ii) any business or undertaking of another Person (whether by purchase of
assets or securities), any commitment or option to make any such purchase if,
in the case of an option, the aggregate consideration paid for such option was
in excess of $100,000, or (d) any other investment, and whether existing on the
date of this Agreement or thereafter made.
"LOANS" shall mean all Revolving Credit Loans, collectively.
"MAXIMUM AVAILABLE FUNDS" shall mean, at any time, the lessor of (a)
the Maximum Revolving Credit Amount, and (b) the Borrowing Base in effect at
such time.
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"MAXIMUM REVOLVING CREDIT AMOUNT" shall mean, subject to an increase as
hereinafter provided, Four Million and 00/100 Dollars ($4,000,000.00). In the
event following the Effective Date of the Merger the Borrower reports positive
Consolidated Net Income (excluding restructuring charges related to the Merger)
for any fiscal quarter, as evidenced to the Bank by the Borrower's financial
statements for such quarter, then, upon receipt by the Bank of either such
quarterly financial statements evidencing such positive Consolidated Net Income
or the public announcement of such positive Consolidated Net Income, the Bank
will by notice to the Borrower increase the Maximum Revolving Credit Amount to
Five Million and 00/100 Dollars ($5,000,000.00).
"MERGER" shall mean the merger of B.C. Acquisition Corp., a wholly
owned subsidiary of the Borrower, with and into Cadre Technologies, Inc.
("Cadre"), with Cadre being the surviving corporation pursuant to the Agreement
and Plan of Merger (the "Merger Agreement") by and among the Borrower, B.C.
Acquisition Corp. and Cadre, dated as of March 25, 1996.
"OBLIGATIONS" shall mean all present and future obligations and
Indebtedness of the Borrower owing to the Bank under this Agreement or any
other Bank Agreement, including, without limitation, the obligations
to pay the Indebtedness from time to time evidenced by the Revolving Credit
Note and obligations to pay interest, commitment and other fees, and all other
expenses and charges from time to time owed by Borrower under any Bank
Agreement.
"PENSION PLAN" shall mean an employee benefit plan or other plan
maintained for the employees of any of the Borrower as described in Section
4021(a) of Title IV of the Employee Retirement Income Security Act of 1974, as
amended.
"PENSION REFORM ACT" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"PLEDGED SHARES" shall mean the shares of capital stock pledged to the
Bank under the Pledge Agreement, together with an undated stock power executed
in blank for each such certificate.
"PERSON" shall mean an individual, corporation, partnership, joint
venture, association, estate, joint stock company, trust, organization,
business, or a government or agency or political subdivision thereof.
"PRIME RATE" at any time shall mean the rate per annum of interest then
most recently announced and made effective by the Bank as its "Prime Rate."
Such rate is used for reference purposes only and is not necessarily the best
or lowest rate charged by the Bank to its most substantial or creditworthy
customers and serves only as the basis upon which effective rates of interest
are calculated for obligations making reference thereto.
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"REPORTABLE EVENT" shall mean an event reportable to the Pension
Benefit Guaranty Corporation under Section 4043 of Title IV of the Employee
Retirement Income Security Act of 1974, as amended.
"REVOLVING CREDIT FACILITY TERMINATION DATE" shall mean the earlier of
(a) the occurrence of an Event of Default, or (b) October 5, 1996.
"REVOLVING CREDIT LOANS" shall mean any loan or extension of credit
from the Bank to the Borrower pursuant to the revolving credit facility
established pursuant to this Agreement.
"SECURITY DOCUMENTS" shall mean (i) the Security Agreement, dated as of
October 28, 1995, by the Borrower in favor of the Bank (the "Security
Agreement"), (ii) the Pledge Agreement, dated as of October 28, 1994, by the
Borrower in favor of the Bank (the "Pledge Agreement"), (iii) the Trademark and
License Security Agreement, dated as of October 28, 1994, by the Borrower in
favor of the Bank (the "Trademark Security Agreement"), (iv) the Patent and
License Security Agreement, dated as of October 28, 1994, by the Borrower in
favor of the Bank (the "Patent Security Agreement"), and (v) the Lockbox
Agreement, dated as of October 28, 1994, by the Borrower in favor of the Bank
(the "Lockbox Agreement").
"SUBORDINATED DEBT" shall mean any Indebtedness of the Borrower which
is expressly subordinate to the Obligations of the Borrower to the Bank
pursuant to a written subordination agreement in form and substance reasonably
acceptable to the Bank.
"SUBSIDIARY" shall mean any Person of which the Borrower or other
specified parent shall now or hereafter at the time own, directly or
indirectly, sufficient voting stock (or other beneficial interest) to entitle
it to elect at least a majority of the board of directors or trustees or
similar managing body.
"TAXES" shall mean any tax, levy, impost, duty, deduction, withholding
or other charge of whatever nature at any time required by any law or
regulation (as hereinafter defined) (i) to be paid by the Bank or (ii) to be
withheld or deducted from any payment otherwise required hereby to be made by
the Borrower to the Bank, other than taxes imposed upon the net income of the
Bank by the United States of America or any other jurisdiction in which an
office of the Bank is located or any political subdivision of any thereof.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code as
adopted and amended from time to time by the Commonwealth of Massachusetts.
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"U.S. SUBSIDIARIES" shall mean the following Subsidiaries of the
Borrower, collectively: B.C. Acquisition Corp.; Bachman Securities Corporation;
Bachman International Ltd.; WindTunnel Software, Inc.; and CSI Acquisition
Corporation.
1.2 ACCOUNTING TERMS. All accounting terms used and not defined in this
Agreement shall be construed in accordance with GAAP and all financial data
required to be delivered hereunder shall be prepared in accordance with GAAP.
SECTION 2 - REVOLVING CREDIT FACILITY
2.1 REVOLVING CREDIT. Subject to the terms and conditions of this
Agreement, and in reliance on the representations, warranties and covenants of
the Borrower made herein, the Bank hereby establishes a revolving credit
facility in favor of the Borrower pursuant to which, at any time prior to the
Revolving Credit Facility Termination Date, the Bank shall make Revolving
Credit Loans to the Borrower as the Borrower may from time to time request by
notice to the Bank in accordance with Section 2.3 hereof, provided that the
aggregate amount of all Revolving Credit Loans outstanding at any time shall
not exceed the Maximum Available Funds at such time. Subject to the terms and
limitations hereof, the Borrower shall have the right to make payments reducing
the outstanding balance of Revolving Credit Loans and to request further
Revolving Credit Loans by notice to the Bank in accordance with Section 2.3.
The Borrower shall execute and deliver to the Bank a Revolving Credit Note in
substantially the form attached hereto as EXHIBIT A evidencing the Revolving
Credit Loans. The Borrower hereby irrevocably authorizes the Bank to make or
cause to be made on a schedule attached to the Revolving Credit Note or on the
books of the Bank, at or following the time of making each Revolving Credit
Loan and of receiving payment of principal, an appropriate notation reflecting
such transaction and the then aggregate unpaid principal balance of the
Revolving Credit Loans. Failure of the Bank to make any such notation shall
not, however, affect any obligation of the Borrower hereunder or under the
Revolving Credit Note. The aggregate unpaid principal amount under each
Revolving Credit Loan, as recorded by the Bank from time to time on such a
schedule or on such books shall constitute presumptive evidence of such amount;
provided, however, that the obligations of the Borrower hereunder or under the
Revolving Credit Note will not be increased due to recording errors made by the
Bank.
2.2 INTEREST ON REVOLVING CREDIT LOANS. The interest rate, subject to
increase or decrease as hereinafter provided, for any portion of the
outstanding principal balance of the Revolving Credit Note shall be computed at
a per annum rate equal to the Prime Rate plus one percent (1%). Immediately
upon and after the Effective Date of the Merger, the interest rate for any
portion of the outstanding principal balance of the Revolving Credit Note shall
be computed at a per annum rate equal to the Prime Rate plus two percent (2%);
provided, however, that in the event the Borrower reports Consolidated Net
Income for any fiscal year following the Merger of at least $200,000 (excluding
restructuring charges related to the Merger), then, upon receipt by the Bank
of either such quarterly financial statements evidencing such positive
Consolidated Net Income or the public announcement of such positive
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Consolidated Net Income, the interest rate for any portion of the outstanding
principal balance of the Revolving Credit Note shall be computed at a per annum
rate equal to the Prime Rate plus one percent (1%). In all cases, interest
under the Revolving Credit Note shall be payable in arrears on the fifth day of
each month in which the Revolving Credit Note is outstanding and shall be
computed on the basis of a 360-day year for the number of days actually
elapsed. Any increase or decrease in the interest rate on the Revolving Credit
Note resulting from a change in the Prime Rate shall be effective immediately
from the date of such change.
2.3 REQUESTS FOR LOANS. Each request for a Revolving Credit Loan shall
be made by the Borrower to the Bank by delivery to the Bank no later than one
(1) Banking Day prior to any Banking Day that the Borrower desires to borrow
hereunder, a completed and signed Borrowing Request, substantially in the form
attached hereto as Exhibit B, which request shall be irrevocable and shall
specify the proposed amount of the requested Revolving Credit Loan and proposed
borrowing date. At the time of the initial request for a Revolving Credit Loan,
the Borrower shall have provided the Bank with signed copies of a properly
completed Borrowing Base Certificate and a Compliance Certificate substantially
in the forms of Exhibit C and Exhibit D hereto, respectively. The Borrower
hereby agrees that the Bank shall be entitled to rely upon the Borrowing Base
Certificate and Compliance Certificate in its possession until superseded by a
more recent Borrowing Base Certificate and Compliance Certificate.
2.4 USE OF PROCEEDS. The Borrower agrees to use the proceeds of the
Revolving Credit Loans exclusively for working capital purposes and for general
corporate purposes.
2.5 ADDITIONAL PAYMENTS.
(a) In addition to the payments of interest on the Revolving
Credit Note, the Borrower shall, on demand, pay to the Bank interest on any
overdue installments of principal and, to the extent permitted by law, on any
overdue installments of interest, at a rate per annum equal to two percent (2%)
in excess of the rate otherwise applicable to the principal portion of such
payments compounded monthly.
(b) All agreements between the Borrower and the Bank are hereby
expressly limited so that in no contingency whatsoever, whether by reason of
acceleration of the maturity of this Agreement or the Revolving Credit Note or
otherwise, shall the amount paid or agreed to be paid to the Bank for the use,
forbearance, loaning or retention of the Revolving Credit Loans made under this
Agreement exceed the maximum permissible rate under applicable law. If, for any
circumstances whatsoever, fulfillment of any provisions hereof or of the
Revolving Credit Note, or of any of the Bank Agreements, at any time shall
involve transcending the limit of validity prescribed by law, then the
obligation to be fulfilled shall automatically be reduced to the limit of such
validity, and if under any circumstances the Bank should ever receive as
interest an amount which would exceed the highest lawful rate of interest, such
amount in excess of the lawful rate of interest shall be applied to the
reduction of
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13
the principal balance then outstanding of the Revolving Credit Note and not to
the payment of interest thereon. This provision shall control every other
provision of all agreements between the Borrower and the Bank and shall also be
binding upon and available to any subsequent holder of the Revolving Credit
Note.
2.6 REQUEST TO DEBIT ACCOUNTS. The Borrower hereby authorizes and
requests the Bank to charge against any account of the Borrower with the Bank
an amount equal to the accrued interest and unpaid principal and other fees and
charges from time to time due and payable to the Bank hereunder and under all
other Bank Agreements. The Bank will furnish notice to Borrower of such
charges. The Borrower acknowledges and agrees that debits and charges against
Borrower's amounts under this Section 2.6 shall in no way be deemed a set-off.
2.7 EXAMINATION FEE. The Bank reserves the right to have performed
twice annually, upon reasonable notice and at reasonable times, an examination
of the books and records of the Borrower by an agent of the Bank solely for the
purposes of determining compliance with the Bank Agreements. The Borrower
agrees to pay for the reasonable cost of each such examination. If a default
occurs under the Bank Agreements, the Bank reserves the right to make
additional examinations at the reasonable expense of the Borrower.
2.8 CLOSING FEE. As a condition precedent to the Bank's initial
advance under the revolving credit facility hereunder, the Borrower shall pay
to the Bank a closing fee of $15,000, which shall be paid on or before the date
hereof.
2.9 ADDITIONAL COSTS; CHANGES IN CIRCUMSTANCES; ETC.
Anything hereinbefore in Section 2 of this Agreement to the contrary
notwithstanding, if, after the date hereof, the Bank shall have determined in
good faith and reasonably that compliance with any applicable law, governmental
rule, regulation or order, or any change therein (including without limitation
any change according to a prescribed schedule of increasing requirements,
whether or not in effect or known on the date hereof), or any change in the
interpretation or administration thereof, or compliance by the Bank with any
guideline, request or directive (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) of any such
authority, central bank or comparable agency which, in each instance, is of
general application to banking institutions in the United States of America or
to types of institutions similar to the Bank in terms of charter, has or would
have the effect of reducing the rate of return on the Bank's capital with
respect to, or as a consequence of, its unfunded commitments to extend credit
hereunder to a level below that which the Bank would have achieved but for such
change or compliance, then, within twenty (20) days after demand therefor, the
Borrower shall pay to the Bank as from time to time specified by the Bank such
additional amounts as shall be sufficient to compensate the Bank for each
reduced return relating to its commitments to make such loans hereunder,
together with interest on each such amount from the date required to be paid
until payment in full thereof at the rate set forth in Section 2.5(a). A
certificate of an officer of the Bank setting forth the
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14
amount to be paid to it hereunder and setting forth the basis for the
calculations shall, in the absence of manifest error, be prima facie evidence
thereof. Anything in this Section 2.9 to the contrary notwithstanding, the
foregoing provisions hereof shall not apply in the case of any additional cost,
reduction, payment or foregone interest or other sum resulting from or arising
as a consequence of any taxes charged upon or by reference to the overall net
income, profits or gains of the Bank.
SECTION 3 - PAYMENT AND PREPAYMENT
3.1 SCHEDULE PAYMENTS. The Borrower agrees to pay all amounts due
under the Revolving Credit Note on the dates when due.
3.2 MANDATORY PREPAYMENT OF REVOLVING CREDIT NOTE. If at any time at
the end of any week the Maximum Available Funds at such time shall be less than
the aggregate outstanding principal balance of all Revolving Credit Loans then
outstanding hereunder, the Borrower shall immediately repay to the Bank an
amount equal to such difference within five (5) days after the end of such week.
3.3 VOLUNTARY PREPAYMENT. The Borrower may, at its option, prepay the
Revolving Credit Note in whole or in part at any time and from time to time
without premium or penalty. Any prepayment in full of the Note shall be made
together with accrued interest on the amount prepaid to the date of such
prepayment and all costs and expenses chargeable by the Bank in respect of
Obligations of the Borrower hereunder or under the Bank Agreements. Unless the
Borrower otherwise indicates to the Bank the manner of application of any
prepayment or other payment by written instruction signed by an Authorized
Officer, the Bank may apply any payments received hereunder to the Obligations
in such order and manner as the Bank shall determine.
3.4 CURRENCY. All payments and prepayments provided for under this
Agreement shall be made in lawful United States of America currency in
immediately available funds or in such other manner as the Bank may agree upon
in writing.
3.5 FORM AND TERMS OF PAYMENT. All payments by the Borrower of
principal or interest on the Revolving Credit Note shall be made without set-off
or counterclaim at the office of the Bank located at 3003 Tasman Drive, Santa
Clara, California 95054 or at such other address as the Bank may from time to
time appoint. All payments of principal (whether at maturity or upon
acceleration) and interest shall be made in immediately available, freely
transferable funds not later than 12:00 p.m., Santa Clara, California time on
the date that such payment is due. If any payment of principal or interest on
the Revolving Credit Note shall become due on any date which is not a Banking
Day, such payment shall be made on the next preceding Banking Day and such
extension of time shall in such case be included in computing interest in
connection with such payment.
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15
SECTION 4 - REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and make the
Revolving Credit Loans as contemplated hereby, the Borrower hereby makes the
following representations and warranties, which shall survive the execution and
delivery hereof and of the Bank Agreements:
4.1 EXISTENCE, GOOD STANDING, ETC. The Borrower and each of its
Subsidiaries is validly organized, legally existing and in good standing under
the laws of its jurisdiction of organization set forth on SCHEDULE 4.1 hereto
and has the power to own its properties and conduct its business as now
conducted and as proposed to be conducted by it. Certified copies of the
charter documents and By-Laws of the Borrower and each of its Subsidiaries have
been previously delivered to the Bank and are true, accurate and complete as of
the date hereof.
4.2 PRINCIPAL PLACE OF BUSINESS; LOCATION OF RECORDS. The principal
place of business and chief executive office of the Borrower is 8 New England
Executive Park, Burlington, Massachusetts 08103. The principal place of
business and chief executive office of each of the Borrower's Subsidiaries is
set forth on SCHEDULE 4.2 hereto. All of the books and records or true and
complete copies thereof relating to the accounts and contracts of the Borrower
and its Subsidiaries are at such locations and will be kept at such locations
until such time as the Borrower has provided the Bank fifteen (15) days prior
written notification of a change of such location.
4.3 QUALIFICATION. The Borrower and each of its Subsidiaries is duly
qualified, licensed and authorized to do business and is in good standing as a
foreign corporation in each jurisdiction where its ownership or leasing of
properties or the conduct of its business requires it to be qualified, except
where a failure to so qualify will not have a material adverse affect on the
Borrower or any Subsidiary, and all of such jurisdictions are listed on SCHEDULE
4.3.
4.4 SUBSIDIARIES. Except as set forth on SCHEDULE 4.4, the Borrower is
not engaged in any joint venture or partnership with any other person, firm or
corporation, and has no Subsidiaries. All Subsidiaries listed on SCHEDULE 4.4
are wholly-owned by the Borrower.
4.5 CORPORATE AUTHORITY. The execution, delivery and performance of
this Agreement, the Revolving Credit Note, the Security Documents, all other
Bank Agreements and other documents delivered or to be delivered by the
Borrower to the Bank, and the occurrence of Indebtedness to the Bank hereunder
or thereunder, now or hereafter owing,
(a) are within the corporate powers of the Borrower having been duly
authorized by its Board of Directors and, if required by law, by its charter
documents, by its officers, and/or by its stockholders;
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16
(b) do not require any approval or consent of, or filing (other than
filing financing statements and filing with the United States Patent and
Trademark Office) with, any governmental agency or other Person (or such
approvals and consents have been obtained and delivered to the Bank) and are
not in contravention of the terms of the charter documents or by-laws of the
Borrower or any amendment thereof;
(c) do not and will not (i) result in a breach of or constitute a
material default under any indenture or loan or credit agreement or any other
material agreement, lease or instrument to which the Borrower is a party or by
which the Borrower or its properties are bound or affected; (ii) result in, or
require, the creation or imposition of any mortgage, deed of trust, pledge,
lien, security interest or other charge or encumbrance of any nature on any
property now owned or hereafter acquired by the Borrower except as provided in
the Bank Agreements; or (iii) result in a material violation of or material
default under any law, rule, regulation, order, writ, judgment, injunction,
decree, determination, award, indenture, agreement, lease or instrument now in
effect having applicability to the Borrower or to its properties.
4.6 Valid and Binding Obligations. This Agreement, the Revolving
Credit Note, the Security Documents and all the other Bank Agreements executed
by the Borrower in connection herewith and therewith constitute, or will
constitute when delivered, the valid and binding obligations of the Borrower,
enforceable against it in accordance with their respective judgment.
4.7 Intentionally Omitted.
4.8 Payment of Taxes. The Borrower and each of its Subsidiaries has
filed all federal tax returns required by law to be filed by it and all state
tax returns required by law to be filed in the state of organization in which
it is qualified or licensed to do business. The Borrower and each of its
Subsidiaries has paid all taxes, assessments and other governmental charges
shown with respect to any such tax returns or otherwise levied upon any of
their properties, assets, income or franchises, other than those not yet
delinquent and those not substantial in aggregate amount, being or about to be
contested as provided in Section 9.2(b). The proceedings or other actions which
are still pending or open have been taken for the assessment or collection of
any taxes for any period for which federal or state income tax returns have been
filed. The charges, accruals and reserves on the books of the Borrower and all
of its Subsidiaries in respect of taxes for all fiscal periods are adequate
under GAAP, and neither the Borrower nor any Subsidiary knows of any unpaid
assessment for additional taxes in any fiscal period.
4.9 Financial Statements.
(a) The Borrower has furnished the Bank with (i) the Consolidated
balance sheets of the Borrower and its Subsidiaries for the annual fiscal
years ended June 30, 1993,
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17
1994 and 1995 and the Consolidated statements of operations, shareholders'
equity and changes in cash flow for the years then ended, together with the
supporting schedules listed in the index accompanying such financial
statements, such Consolidated statements having been audited by the Borrower's
independent certified public accountants, and (ii) Consolidated unaudited
balance sheets of the Borrower and its Subsidiaries and unaudited income and
cash flow statements for the nine-month period ended March 31, 1996. A copy of
such financial statements is attached hereto as SCHEDULE 4.9.
(b) Such financial statements present the cash flow of Borrower and its
Subsidiaries as of such dates and the results of operations and the changes in
cash flow for the years then ended, and the balance sheets included in such
audited Consolidated financial statements reflect all material liabilities at
such dates, all in conformity with GAAP.
(c) The Borrower has filed all forms, reports and documents with the
Securities and Exchange Commission ("SEC") required to be filed by it pursuant
to the federal securities laws and the SEC rules and regulations thereunder,
all of which complied in all material respects with all applicable requirements
of the Securities Exchange Act of 1934 (collectively, the "SEC Reports"). None
of the SEC Reports which are subject to Section 10(b) of the Securities and
Exchange Act of 1934, including, without limitation, any financial statements
or schedules included therein, at the time filed contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.10 Capitalization. SCHEDULE 4.10 lists the total number of shares of
capital stock of the Borrower currently outstanding together with a list of all
of the record and beneficial owners of more than 5% of the Borrower's issued
and outstanding capital stock (including the number of shares and percentage
interest held by each such owner) as well as a list of the record and
beneficial owners (and the number of shares and percentage ownership interest
held by each such owner) of all of the presently issued and outstanding shares
of capital stock of the each of the Borrower's Subsidiaries. The Borrower and
each such Subsidiary, as the case may be, has received the consideration for
which such stock was authorized to be issued and has otherwise complied with
all legal requirements relating to the authorization and issuance of shares of
stock and all such shares are validly issued, fully paid and non-assessable.
Neither the Borrower nor any of its Subsidiaries has any other capital stock of
any class outstanding. As of the date hereof, and except as set forth on
SCHEDULE 4.10, (i) there are no outstanding commitments, warrants, options or
other obligations which require the Borrower to issue any shares of its capital
stock or any security exchangeable for or convertible into shares of such
capital stock, and (ii) neither the Borrower nor any of its Subsidiaries has
any obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any shares of its capital stock or any interest therein or to pay any
dividend or make any other distribution in respect thereof.
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4.11 CHANGES IN CONDITION. Except as set forth on SCHEDULE 4.11 hereto,
since March 31, 1996, there has been no material adverse change in the business
or assets or in the condition, financial or otherwise, of the Borrower and its
Subsidiaries and the Borrower has not entered into any transaction outside of
the ordinary course of business which is material to the Borrower. Neither the
Borrower nor any Subsidiary has any known contingent liabilities of any
material amount which are not referred to in the financial statements attached
as Schedule 4.9.
4.12 ASSETS. The Borrower and each of its Subsidiaries has good and
marketable or merchantable title to all of its respective properties and
assets, including the properties and assets reflected in the financial
statements listed on SCHEDULE 4.9 hereto, and such properties and assets are
not subject to any lien, charge, mortgage, pledge, security interest or
encumbrances, except for (i) liens, charges and encumbrances described on
SCHEDULE 4.12 and permitted by Section 9.2 hereof, and (ii) assets sold,
abandoned or otherwise disposed of in the ordinary course of business.
4.13 LITIGATION. Except as set forth on SCHEDULE 4.13 hereto, there is no
action, proceeding or investigation pending, or to the knowledge of the
Borrower, threatened before any federal, state, provincial or municipal board
or other governmental regulatory body or administrative agency, which involves
a material risk of any judgment or liability not fully covered by insurance
which may have a material adverse effect on the business or assets or in the
prospects or condition (financial or otherwise) of the Borrower or any of its
Subsidiaries, or which questions the validity of this Agreement or the
Revolving Credit Note or any action taken or to be taken pursuant hereto or
thereto, and no judgment, decree, or order of any federal, state, provincial or
municipal court, board or other governmental or administrative agency has been
issued against the Borrower or any Subsidiary which has, or in the Borrower's
opinion in the exercise of its reasonable business judgment, may have a
material adverse effect on the business or assets or on the prospects or
condition (financial or otherwise) of the Borrower or any of its Subsidiaries.
4.14 PENSION PLANS. As of the date hereof, except as described on
SCHEDULE 4.14, neither the Borrower nor any of its Subsidiaries has any Pension
Plan subject to the minimum funding or termination insurance provisions of the
Pension Reform Act.
4.15 OUTSTANDING INDEBTEDNESS; AFFILIATE TRANSACTIONS.
(a) The outstanding amount (in excess of $500,000) of (i) all
Investments and (ii) Indebtedness for borrowed money, including Capital Lease
obligations, of the Borrower and each of its Subsidiaries and as of the date
hereof, is correctly set forth on Schedule 4.15 hereto, and said Schedule
correctly describes all security interests securing such indebtedness.
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(b) Except as otherwise set forth on Schedule 4.15, none of the
officers, directors, or employees of the Borrower or any of its Subsidiaries is
presently a party to any transaction with any Affiliate of the Borrower or any
of its Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Borrower, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
4.16 Patents, Trademarks, Copyrights and Licenses. The Borrower and each
of its Subsidiaries owns, licenses or has rights to all material licenses,
patents, patent applications, copyrights, service marks, trademarks, trademark
applications, and trade names necessary to continue to conduct its business as
heretofore conducted by it, now conducted by it and proposed to be conducted by
it. Each patent, patent application or registered trademark or copyright is
listed, together with Patent and Trademark Office application or registration
numbers, on Schedule 4.16 hereto. The Borrower and each of its Subsidiaries
conducts its respective business without knowing infringement or known claim of
infringement of any license, patent, copyright, service mark, trademark, trade
name, trade secret or other intellectual property right of others that would
have a material adverse effect on the business or assets of the Borrower. To the
best knowledge of the Borrower, there is no claim of infringement by others of
any license, patent, copyright, service mark, trademark, trade name, trade
secret or other intellectual property right of the Borrower or any of its
Subsidiaries.
4.17 Environmental Matters. Except as disclosed on Schedule 4.17:
(a) (i) Neither the Borrower nor any of its Subsidiaries has ever
generated, transported, used, stored, treated, disposed of, or managed any
hazardous waste; (ii) to the Borrower's knowledge upon due inquiry, no
Hazardous Material has ever been or is threatened to be spilled, released, or
disposed of at any site presently or formerly owned, operated, leased, or used
by the Borrower or any of its Subsidiaries, or has ever come to be located in
the soil or groundwater at any such site; (iii) to the Borrower's knowledge
upon due inquiry, no Hazardous Material has ever been transported from any site
presently or formerly operated, leased, or used by the Borrower or any of its
Subsidiaries for treatment, storage, or disposal at any other place; (iv) to
the Borrower's knowledge upon due inquiry, neither the Borrower nor any of its
Subsidiaries presently owns, operates, leases, or uses, nor has the Borrower or
any of its Subsidiaries previously owned, operated, leased, or used any site on
which underground storage tanks are or were located; and (v) to the Borrower's
knowledge upon due inquiry, no lien has ever been imposed by any governmental
agency on any property, facility, machinery, or equipment owned, operated,
leased, or used by the Borrower or any of its Subsidiaries in connection with
the presence of any Hazardous Material.
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(b) (i) Neither the Borrower nor any of its Subsidiaries has any
liability under, nor has the Borrower or any of its Subsidiaries ever violated,
any Environmental Laws; (ii) to the Borrower's knowledge upon due inquiry, the
Borrower, each of the Borrower's Subsidiaries, any property owned, operated,
leased, or used by the Borrower or any of its Subsidiaries and any facilities
and operations thereon are presently in compliance with all applicable
Environmental Laws; (iii) neither the Borrower nor any of its Subsidiaries has
ever entered into or been subject to any judgment, consent decree, compliance
order, or administrative order with respect to any environmental or health and
safety matter or received any request for information, notice, demand letter,
administrative inquiry, or formal or informal complaint or claim with respect
to any environmental or health and safety matter or the enforcement of any
Environmental Law; and (iv) neither the Borrower nor any of its Subsidiaries
has any knowledge that any of the items enumerated in clause (iii) of this
paragraph will be forthcoming.
(c) To the Borrower's knowledge upon due inquiry, no site owned,
operated, leased, or used by the Borrower or any of its Subsidiaries contains
any asbestos or asbestos-containing material, any polychlorinated biphenyls
("PCBs") or equipment containing PCBs, or any urea formaldehyde foam
insulation.
(d) The Borrower has provided to the Bank copies of all documents,
records, and information available to the Borrower and/or any of its
Subsidiaries concerning any environmental or health and safety matter relevant
to the Borrower and/or any of its Subsidiaries, whether generated by the
Borrower, any of Borrower's Subsidiaries, or others, including, without
limitation, environmental audits, environmental risk assessments, site
assessments, documentation regarding off-site disposal of Hazardous Materials,
spill control plans and reports, correspondence, permits, licenses, approvals,
consents, and other authorizations related to environmental or health and
safety matters issued by any governmental agency.
4.18 Intentionally Omitted.
4.19 Regulation U, etc. The Borrower does not own, nor does it have any
present intention of acquiring, any "margin stock" within the meaning of
Regulation U (12 CFR Part 221) of the Board of Governors of the Federal Reserve
System (herein called "margin stock"). None of the proceeds of the Revolving
Credit Loan will be used, directly or indirectly, by the Borrower for the
purpose of purchasing or carrying, or for the purpose of reducing or retiring
any indebtedness which was originally incurred to purchase or carry, any margin
stock or for any other purpose which might constitute the transactions
contemplated hereby a "purpose credit" within the meaning of said Regulation U,
or cause this Agreement to violate Regulation U, Regulation T, Regulation X, or
any other regulation of the Board of Governors of the Federal Reserve System or
under the Securities Exchange Act of 1934. If requested by the Bank, the
Borrower agrees that it will promptly furnish the Bank with a statement in
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conformity with the requirements of Federal Reserve Form U-1 referred to in
said Regulation U.
4.20 Foreign Credit Restraints. Neither the Revolving Credit Loan, nor the
use directly or indirectly of all or any portion of the proceeds thereof, will
violate or result in a violation of any provision of any applicable statute,
regulation or order of, or any restriction imposed by, the United States of
America or by any unauthorized official, board, department, instrumentality or
agency thereof relating to the control of foreign or overseas lending or
investment.
4.21 Employee Retirement Income Security Act of 1974. All plans ("Plans")
of a type described in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), in respect of which the Borrower or any of
its Subsidiaries is an "Employer," as defined in Section 3(5) of ERISA, are in
substantial compliance with ERISA, and none of such Plans is insolvent or in
reorganization, has an accumulated or waived funding deficiency within the
meaning of Section 412 of the Internal Revenue Code of 1986, as amended, and
neither the Borrower nor any of its Subsidiaries has incurred any material
liability (including any material contingent liability) to or on account of any
such Plan pursuant to sections 4062, 4063, 4064, 4201 or 4204 of ERISA; and no
proceedings have been instituted to terminate any such Plan, and no condition
exists which presents a material risk to the Borrower or any of its
Subsidiaries of incurring a liability to or on account of any such Plan
pursuant to any of the foregoing Sections of ERISA.
4.22 Compliance with Applicable Laws and Regulations. The Borrower and
each of its Subsidiaries is in compliance with all federal, state and local
laws and regulations and all requirements of all governmental bodies or
agencies having jurisdiction over it, the conduct of its business, the use of
its properties and assets, and all premises occupied by it except where the
failure so to comply would not have a material adverse effect upon the
business, operations, affairs, condition (financial or other), properties or
prospects of the Borrower or any of its Subsidiaries. Without limiting the
foregoing, the Borrower and each of its Subsidiaries has all franchises,
licenses, permits, certificates and other authorizations as are necessary in
order to conduct its respective business and use its properties and all
premises occupied by it (as now conducted, owned and used or as proposed to be
conducted, owned and used) without incurring any material liability. Neither
the Borrower nor any of its Subsidiaries has received any notice, not
heretofore complied with, from any federal, state or local authority or any
insurance or inspecting body that any of its properties, facilities, equipment
or business procedures or practices fails to comply with any applicable law,
ordinance, regulation, license, permit, authorization or any other requirement
of any such authority or body.
4.23 No Violation. Neither the Borrower nor any of its Subsidiaries is in
violation of any term of its respective charter or by-laws, or of any
instrument, contract, or agreement to which it is a party or of any judgment,
decree, order, statute, rule or governmental
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regulation which is applicable to it and which violation may have a material
adverse effect upon its condition (financial or other) business, operations,
properties or prospects.
4.24 Disclosure. This Agreement does not contain any untrue statement of
material fact or omit to state a material fact necessary to make the statements
contained herein, in light of the circumstances under which they are made, not
misleading. There is no fact known to the Borrower and not disclosed to the
Bank which materially, adversely affects, or could, in the Borrower's opinion
in the exercise of its reasonable business judgment, materially, adversely
affect, the business, operations, affairs, prospects or condition (financial or
other ) of the Borrower or any of its properties or assets.
4.25 Security Documents. Each of the Security Documents is in full force
and effect and all necessary continuation statements with respect to all
financing statements have been filed as required by law in order to maintain
the validity and enforceability of the security interest covered by each of the
Security Documents.
SECTION 5 - CONDITIONS PRECEDENT
5.1 Conditions Precedent to Initial Revolving Credit Loan. The obligations
of the Bank to enter into and carry out the terms of this Agreement are subject
to the following conditions, and on or before the date of execution hereof, all
of the following conditions precedent shall have been satisfied:
(a) Documents. The Bank shall have received each of the following
documents, in form and substance reasonably satisfactory to the Bank and its
counsel or in the form attached hereto as an Exhibit, as the case may be:
(i) Note. The Revolving Credit Note, duly executed by the
Borrower;
(ii) Security Documents. Each of the Security Documents shall
be in full force and effect, it being acknowledged and
agreed that, except as set forth below in (iii), nothing
contained herein shall modify, amend, restrict, or limit
in any respect the validity and continued enforceability
of each of the Security Documents.
(iii) Amendment to Pledge Agreement. Schedule I to the Pledge
Agreement is hereby amended by adding each of B.C.
Acquisition Corp. and Bachmann Spain S.L. as a Subsidiary
of the Borrower, and all of the outstanding shares of
capital stock of each of the foregoing shall constitute
"Subsidiary Shares" and "Pledged Collateral" for purposes
of the Pledge Agreement.
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(iv) Certificate of Corporate Action. Certificate of the Clerk
or Assistant Clerk of the Borrower, dated the date
hereof, certifying as to the resolutions of the Board of
Directors of the Borrower authorizing the consummation of
the transactions contemplated hereby and the execution
and delivery of the Bank Agreements to which the Borrower
is a party and the other documents to be delivered by the
Borrower pursuant to this Agreement and the names and
true signatures of the officers of the Borrower
authorized to do so;
(v) Corporate Documents. Copies of the Articles of
Organization of the Borrower certified as true and
correct by the Secretary of State of its jurisdiction of
incorporation, and the By-Laws of the Borrower certified
as true and correct by the Clerk or Assistant Clerk of
the Borrower;
(vi) Good Standing Certificate. Long-Form Good Standing
Certificate with respect to the Borrower from the
Secretary of State of its jurisdiction of incorporation
and from the Secretary of State of jurisdictions in which
the Borrower is qualified to do business as a foreign
corporation, each of which shall be dated as of a recent
date;
(vii) Tax Payment Certificate. A Certificate as to the Tax Good
Standing of the Borrower from the taxing authority in the
state of the Borrower's jurisdiction of incorporation
within thirty (30) days of the Closing. At the Closing,
the Treasurer of the Borrower shall deliver a certificate
certifying as to the payment of all taxes in the
Borrower's jurisdiction of incorporation and in each
jurisdiction in which the Borrower is qualified to do
business;
(viii) Insurance. Evidence of all insurance required to be
obtained by the Borrower hereunder and under the Security
Agreement;
(ix) Lien Searches. The Bank shall have received the results
of a UCC, bankruptcy, tax lien and docket search for the
Borrower in its jurisdiction of incorporation and in the
jurisdiction where Borrower maintains its principal place
of business and from the U.S. Patent and Trademark
Office, indicating no liens other than liens permitted
under Section 9.2 hereof; and
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(c) No Default, etc. On the date of each Revolving Credit Loan
hereunder, after giving effect to the Revolving Credit Loan or Loans to be made
on any date, no Event of Default specified in Section 10.1 hereof, nor any
event which with the giving of notice or lapse of time or both would constitute
such an Event of Default, shall have occurred and be continuing.
(d) Legality. The making of the requested Revolving Credit Loan shall
not be prohibited by any law or governmental order or regulation applicable to
the Bank or to the Borrower and all necessary consents, approvals and
authorizations of any Person for any such Revolving Credit Loan shall have been
obtained.
(e) Supplementary Opinions. With respect to any Revolving Credit Loan
made hereunder subsequent to the first such Revolving Credit Loan, if requested
by the Bank, the Bank shall have received at its address set forth in Section
13.2, an opinion, in form and substance reasonably satisfactory to the Bank and
special counsel for the Bank, of counsel for the Borrower, dated the date of
such subsequent borrowing as to such matters reasonably requested by the Bank.
(f) Other Information and Action. All other information which the Bank
or special counsel for the Bank may reasonably have requested in connection
with the transactions contemplated by this Agreement (such information to be
certified by the proper officers of the Borrower or governmental authority) and
all actions the Bank may deem reasonably desirable in order to perfect and
protect any pledge, assignment or security interest granted in favor of the
Bank or to enable the Bank to exercise its rights and remedies hereunder shall
have been only provided or taken.
SECTION 6 - REPORTING REQUIREMENTS
6.1 Financial Statements.
(a) As soon as available, but in any event within thirty (30) days
after the end of each fiscal month of the Borrower, the Borrower shall deliver
to the Bank duplicate original copies of a Consolidated balance sheet of the
Borrower and its Subsidiaries, together with an income statement and cash flow
statement of the Borrower and its Subsidiaries for such monthly period and for
the period commencing at the beginning of the then current fiscal year and
ending with the end of such month, together with a certification by the
chief financial officer of the Borrower that such financial statements fairly
represent the financial condition of the Borrower and its Subsidiaries as at
the dates indicated.
(b) As soon as available, but in any event within one hundred twenty
(120) days after the end of each fiscal year of the Borrower, the Borrower
shall furnish to the Bank duplicate originals of the Consolidated audited
balance sheet of the Borrower and its
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(x) Guaranty Agreement. A Guaranty Agreement in
substantially the form attached hereto as Exhibit F (the
"Guaranty Agreement") pursuant to which the Borrower
shall guarantee the obligations of Cadre Technologies,
Inc. to the Bank.
(b) Bank Expenses. The Borrower shall have paid all of the Bank's
reasonable attorney's fees and reasonable disbursements incurred in connection
with this Agreement, the Security Documents, the Note and all other Bank
Agreements, and the transactions contemplated hereby and thereby.
(c) Accounts Receivable Examination. The Bank or its agents or
representatives shall have conducted and completed an examination of the
Accounts Receivable of the Borrower and the results of such examination shall
be reasonably satisfactory to the Bank.
(d) Filings, Registration and Recordings:
(i) Any documents (including, without limitation, financing
statements) required to be filed, and any other actions
required to be taken, under or in connection with any of
the Security Documents in order to create, in favor of the
Bank, a perfected security interest in the Collateral
thereunder shall have been properly filed or taken, as the
case may be, and the Bank shall have received evidence
satisfactory to it of each such filing, registration,
recordation or other action and satisfactory evidence of
the payment of any necessary fee, tax or expense relating
thereto.
(ii) It is acknowledged that, upon and subject to the Merger,
the Borrower intends to change its corporate name to
"Cayenne Software, Inc." The Borrower hereby covenants and
agrees that, in accordance with the Security Documents, and
prior to effecting such name change, the Borrower will
arrange for the preparation, execution, delivery, filing
and recordation of such documents as may be required in
order to continue the perfection of the Bank's security
interest in the collateral under the Security Documents
(including, without limitation, UCC-3 Financing Statements
and amendments to the patent License Agreement and the
Trademark License Agreement, for filing in the appropriate
UCC filing offices, the U.S. Patent Office, and the U.S.
Copyright Office) and the Bank shall have received evidence
satisfactory to it of
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such filing, registration, recordation, or other action, as
well as satisfactory evidence of the payment of any
necessary fee, tax or expense relating thereto.
(e) Valid Pledge. The Bank shall have received certificates
representing all of the outstanding capital stock of each of B.C. Acquisition
Corp. and Bachman Spain S.L. in pledge to the Bank under and in accordance with
the Pledge Agreement, together with an undated stock power executed in blank
for each such certificate. The Borrower hereby covenants and agrees to use its
reasonable best efforts to effect the perfection of the pledge to the Bank
under the Pledge Agreement of the shares of capital stock of Bachman Spain S.L.
within forty-five (45) days from the date hereof.
5.2 Conditions Precedent to All Revolving Credit Loans. The obligations of
the Bank to make Revolving Credit Loans to the Borrower hereunder (including
the initial Revolving Credit Loan) are subject to the following conditions, and
on or before the date of making such Revolving Credit Loans, all of the
following conditions precedent shall have been satisfied:
(a) BORROWING DOCUMENTS. The Bank shall have received each of the
following documents, in form and substance reasonably satisfactory to the Bank
and its counsel or in the form attached hereto as an Exhibit, as the case may
be:
(i) A Borrowing Request, dated as of such date, substantially
in the form attached hereto as Exhibit b;
(ii) A Borrowing Base Certificate, dated as of such date,
substantially in the form attached hereto as Exhibit C;
(iii) A Compliance Certificate, dated as of such date,
substantially in the form attached hereto as Exhibit D;
(b) Representations and Warranties. As of the date of making such
Revolving Credit Loan or Loans, (i) the representations and warranties herein
and those made for and on behalf of the Borrower herein or in any other Bank
Agreement shall be true and correct in all respects as of such date with the
same force and effect as if made at and as of such time, and (ii) the Borrower
shall be in compliance with all of the terms and provisions set forth herein on
its part to be observed or performed on or prior to such date. Each request for
a Revolving Credit Loan hereunder shall be accompanied by a Borrowing Request
in accordance with Section 2.3 and shall constitute a representation and
warranty by the Borrower to the Bank that all of the conditions specified in
Section 5 have been satisfied as of the date of each such Revolving Credit Loan.
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Subsidiaries as of the end of such fiscal year and the related statements of
operations and shareholders' equity and changes in cash flow of the Borrower
and its Subsidiaries for such fiscal year and setting forth in comparative form
the figures for the previous fiscal year, all in form reasonably acceptable to
the Bank and in each case accompanied by an opinion of an independent certified
public accountant reasonably acceptable to the Bank (it being acknowledged that
Coopers & Lybrand, the Borrower's current auditors, are acceptable to the
Bank), such opinion to be without material adverse qualification or comment and
shall state that such financial statements have been prepared in accordance
with GAAP applied on a basis consistent with that of the preceding fiscal year
and that the audit by such accountants in connection with such financial
statements has been made in accordance with GAAP relating to reporting.
(c) Promptly upon receipt thereof, the Borrower shall deliver to
the Bank duplicate copies of all financial statements and auditors' reports
thereon submitted to the Borrower by independent public accountants in
connection with each interim or special financial audit of the Borrower made by
such accountants.
6.2 Accounts Receivable Aging Reports.
As soon as available, but in any event within five (5) business days of
the end of each week, the Borrower shall deliver to the Bank an accounts
receivable aging report setting forth the Eligible Domestic Accounts Receivable
and Eligible International Accounts Receivable, in form and substance
satisfactory to Bank.
6.3 Borrowing Base Certificate.
As soon as available, but in any event within five (5) business days
after the end of each week, the Borrower shall deliver to the Bank duplicate
original copies of a Borrowing Base Certificate in the form of Exhibit C
hereto, for the Borrower for the then previous week as of the end of such week;
the Eligible Domestic Accounts Receivable and Eligible International Accounts
Receivable to be used in the calculation of the Borrowing Base which in turn
will be used as the basis for determining the amount of Revolving Credit Loans,
if any, for the next succeeding week or until the Bank shall have received
another Borrowing Base Certificate in the form of Exhibit C, whichever is
sooner. The Borrowing Base Certificate shall be appropriately completed and
duly signed and certified by the chief financial officer as being complete and
correct with respect to the amount of, and payments on, the Eligible Domestic
Accounts Receivable and the Eligible International Accounts Receivable, and the
calculations of the Borrowing Base, all in such detail, and accompanied by such
supporting information and certifications as the Bank may from time to time
reasonably request.
6.4 Compliance Certificate. Together with the financial statements
delivered pursuant to Section 6.1(a) and (b) above, the Borrower shall deliver
to Bank duplicate original copies of a Compliance Certificate substantially in
the form of Exhibit D hereto executed and
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completed by the chief financial officer of the Borrower, in form and substance
reasonably satisfactory to the Bank: (1) stating that the signer has reviewed
the terms of this Agreement and the Bank Agreements, and has made, or caused to
be made under their supervision, a review in reasonable detail of the
transactions and condition of the Borrower 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 Compliance
Certificate, of any condition or event which constitutes an 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, is taking
and proposes to take with respect thereto; (2) demonstrating in reasonable
detail compliance during and at the end of the applicable accounting period
with the provisions set forth in Section 7, Section 8 and Section 9, and (3)
stating that such financial statements present fairly the financial position of
the Borrower and its Subsidiaries as at the dates indicated and the results of
their operations and changes in their financial position for the periods
indicated in conformity with GAAP.
6.5 Notice of Defaults. As soon as possible, and in any event within
five (5) business days after the Borrower has knowledge of the occurrence of
any and each Default, the Borrower shall furnish the Bank with the statement of
an Authorized Officer setting forth details of such Default and the action
which the Borrower has taken or proposes to take with respect thereto.
6.6 Notice of Litigation. Promptly after the commencement thereof, the
Borrower shall furnish the Bank written notice setting forth full particulars
of any action, suit, proceeding or investigation threatened or pending before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the borrower or any Subsidiary,
which, if adversely determined, could materially adversely affect the condition
(financial or other), business, operations or prospects of the borrower or any
of its subsidiaries; and, if any material developments, not previously
disclosed by the Borrower to the Bank in writing, shall occur in any such
action, suit, proceeding or investigation, the Borrower will (in each such
case) promptly furnish or cause to be furnished to the Bank a written notice
setting forth full particulars of each such development.
6.7 Reportable Events. At any time that the Borrower has a Pension
Plan, the Borrower shall furnish to the Bank, as soon as possible, but in any
event within thirty (30) days after the Borrower knows or has reason to know
that any Reportable Event with respect to any Pension Plan has occurred, the
statement of the president or treasurer of the Borrower setting forth the
details of such Reportable Event and the action which the Borrower has taken
or proposes to take with respect thereto, together with a copy of the notice of
such Reportable Event to the Pension Benefit Guaranty Corporation.
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6.8 Annual Pension Reports. At any time that the Borrower has a
Pension Plan, the Borrower shall furnish to the Bank, promptly after the filing
thereof with the Secretary of Labor or the Pension Benefit Guaranty
Corporation, copies of each annual report which is filed with respect to each
such Pension Plan for each such plan year, including:
(a) a statement of assets and liabilities of such Pension Plan
as of the end of such plan year and statements of changes in fund balance and
in financial position, or a statement of changes in net assets available for
plan benefits, for such plan year,
(b) an opinion of an independent certified public accountant
of recognized standing acceptable to the Bank relating to such Pension Plan to
the extent that any such opinion for the Pension Plan is required by law, and
(c) an actuarial statement of such Pension Plan applicable to
such plan year, together with an opinion of an enrolled actuary of recognized
standing acceptable to the Bank, to the extent that any such statement and/or
opinion for the Pension Plan is required by law.
6.9 Public Reporting. promptly upon their becoming available, the
Borrower shall provide to the Bank duplicate copies of all financial
statements, reports, notices and proxy statements sent by the Borrower to
shareholders, and of all annual, periodic or special reports or registration
statements filed by the Borrower with any securities exchange or with the
Securities and Exchange Commission or any governmental authority succeeding to
any of its functions.
6.10 Notice of Amendment to Corporate Documents. In the event that
any amendment to the Articles of Organization, other charter documents or
by-laws (as the case may be) of the Borrower shall be proposed to be adopted,
the Borrower shall, within fifteen (15) days prior to the proposed date of the
adoption of such amendment, furnish or ???? to be furnished to the Bank a
true and complete copy of such amendment.
6.11 Place of Business. The Borrower will notify the Bank (i) at
least fifteen (15) days prior to the occurrence of any changes in the place of
business of the Borrower or any of its Subsidiaries from the places of business
disclosed pursuant hereto or in the Bank Agreements and (ii) of any additional
places of business which may arise hereafter.
6.12 Change in Officers or Directors. The Borrower will notify the
Bank in writing if there occur any changes in the present officers or directors
of the Borrower.
6.13 Miscellaneous. The Borrower shall provide the Bank with such
other information as the Bank may from time to time reasonably request
respecting the business, properties, condition or operations, financial or
otherwise, of the Borrower.
SECTION 7 - FINANCIAL COVENANTS
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30
On and after the date hereof, until all of the Obligations shall have
been paid in full and so long as the Revolving Credit Loans shall remain
available to the Borrower, the Borrower hereby agrees to comply, in addition to
all other covenants contained herein, on a Consolidated basis, with the
following covenants:
7.1 Profitability (tested and reported quarterly). Borrower shall
report Consolidated Net Losses of not more than ($1,400,000) for the third
fiscal quarter ending 3/31/96 and (i) in the event the Merger has not yet been
consummated, Consolidated Net Income of at least $250,000 for the fourth fiscal
quarter ending 6/30/96; or (ii) in the event the Merger has been consummated,
Consolidated Net Losses of not more than ($7,000,000) for the fourth fiscal
quarter ending 6/30/96.
7.2 Tangible Net Worth. [Intentionally Omitted].
7.3 Liquidity (tested and reported monthly). The Borrower shall
maintain, on a Consolidated basis, minimum Liquidity of at least $7,500,000,
tested at each month end. "Liquidity" shall mean cash and cash equivalents
(which shall mean and refer to the items listed in Section 9.3(a) hereof) plus
any Accounts Receivable less Indebtedness to the Bank; provided, however, that
the following shall be excluded for purposes of this Section 7.3: any Accounts
Receivable purchased, or subject to purchase, by the Bank under a factoring
agreement with the Borrower or any subsidiary; and any Indebtedness of the
Borrower or any Subsidiary to the Bank in respect of obligations under a
factoring agreement with the Bank.
SECTION 8 - AFFIRMATIVE COVENANTS
On and after the date hereof, until all of the Obligations shall have
been paid in full and so long as the Revolving Credit Loans shall remain
available to the Borrower, the Borrower covenants that it will comply with the
following covenants and provisions:
8.1 Taxes: ERISA and Other Obligations. The Borrower will (and will
cause each of its Subsidiaries to) (i) duly pay and discharge, or cause to be
paid and discharged, before the same shall become in arrears, all material
taxes, assessments and other governmental charges imposed upon it and its
properties, sales and activities, or upon the income or profits therefrom, as
well as any material claims for labor, materials, or supplies which if unpaid
might by law become alien or charge upon its properties; provided, however,
that the Borrower (and its Subsidiaries) shall not be required to pay and
discharge any such tax, assessment or other governmental charges so long as the
validity thereof shall be contested in good faith by appropriate proceedings,
an adequate reserve for the payment thereof is established on its books in
accordance with GAAP, and the Borrower shall (and shall cause its Subsidiaries
to) pay such tax, assessment or other governmental charges before any taxing
authority files any liens with respect thereto and (ii) promptly pay or cause
to be paid when due or in conformance with customary trade terms (but not later
than one-hundred twenty
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31
(120) days from the due date in the case of trade debt unless there exists
between the Borrower (or its Subsidiaries, as the case may be) and the trade
creditor an agreement which, without creating a default thereunder, provides for
a longer payment term), all material lease obligations, and all other material
Indebtedness incident to the operations of the Borrower (or its Subsidiaries,
as the case may be ). The Borrower shall (and shall cause its Subsidiaries to)
cause all applicable tax returns and all amounts due thereunder to be filed and
paid when due, as the case may be, in order to maintain its good standing with
the Internal Revenue Service, state and local and foreign tax authorities.
Without limiting the scope of the foregoing, the Borrower will satisfy, or
cause to be satisfied, the minimum annual funding standard, within the meaning
of ERISA, for any employee benefit plan established or maintained by the
Borrower which is subject to such act and the Borrower will not permit any tax
or penalty to be incurred by it as a result of any failure to satisfy any such
minimum funding requirement or as a result of any violation of the provisions
of Section 4975 of the Internal Revenue Code of 1986, as amended, or of any
regulations thereunder.
8.2 Maintenance of Property; Leases. The Borrower shall (and shall
cause its Subsidiaries to) maintain its properties in good repair and working
order, ordinary wear and tear and damage by insured casualty excepted, and in
compliance with applicable laws and regulations. The Borrower shall (and shall
cause its Subsidiaries to) replace and improve its properties as necessary for
the conduct of its business and to maintain compliance with applicable laws.
The Borrower shall (and shall cause its Subsidiaries to) comply in all material
respects with all leases naming it as lessee.
8.3 Insurance. The Borrower at all times will (and will cause its
Subsidiaries to) maintain insurance with such insurance companies, in such
amounts (including, without limitation, so-called "all-risk" coverage at
replacement value and "broad form" liability coverage), against such hazards
and liabilities and for such purposes as is reasonably satisfactory to the Bank
and as is customary in the industry for a business of established reputation
engaged in the same or similar business and owning or operating similar
properties. The Bank shall be named as loss payee and additional insured under
the Borrower's insurance pertaining to the Collateral and shall be given twenty
(20) days' advance notice of any modification or cancellation of insurance.
Upon request of the Bank from time to time, the Borrower will furnish to the
Bank certificates or other evidence satisfactory to the Bank of compliance with
the foregoing insurance provisions. If the Borrower fails to provide or cause
to be provided such insurance, the Bank, in its sole discretion, may provide
such insurance and charge the cost as a Revolving Credit Loan or to the
Borrower's deposit accounts with the Bank. Any payment not recovered from the
Borrower shall bear interest at the then rate of interest under the Revolving
Credit Note. The Bank shall not, by the fact of approving, disapproving, or
accepting any such insurance, incur any liability for the form or legal
sufficiency of insurance contracts, solvency of insurance companies or payment
of lawsuits, and the Borrower herby expressly assumes full responsibility
therefor and liability, if any, thereunder.
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8.4 Records and Accounts. The Borrower shall maintain records and
accounts that are complete and accurate in all material respects. The Borrower
shall (and shall cause its Subsidiaries to) maintain adequate and proper
accounts and reserves for all taxes, depreciation, depletion, obsolescence and
amortization of its properties, all contingent obligations and other reserves
in accordance with GAAP.
8.5 Inspection. At any reasonable time and from time to time during
normal business hours after reasonable notice, the Borrower shall permit the
Bank and any of the Bank's agents or representatives to examine and make copies
of and abstracts from the records and books of account of, and visit the
properties of, the Borrower, and to discuss the affairs, finances and accounts
of the Borrower and its Subsidiaries with the Borrower's officers or directors
and independent accountants, solely for the purposes of determining compliance
with the Bank Agreements, all of whom are hereby authorized and directed to
cooperate with the Bank in carrying out the intent of this Section 8.5. Without
limiting the generality of the foregoing, the Bank shall have the right to
conduct field examinations of the books and records of the Borrower, subject to
the provisions hereof, at the Borrower's expense. In addition, the Borrower
will, upon request, arrange for the Bank to have access to (and facilities for
obtaining copies of) all electronically stored data and all papers and files
of any kind relating to Accounts Receivable of the Borrower and the Foreign
Subsidiaries.
8.6 Existence and Business. The Borrower will preserve and maintain
its existence, remain in good standing in its jurisdiction of incorporation,
and comply in all material respects with all valid and applicable statutes,
rules and regulations. The Borrower will continue to engage only in the
business which it is conducting on the date of this Agreement.
8.7 Maintenance of Accounts. The Borrower shall maintain the Bank as
its principal depository for the Borrower's depository accounts.
8.8 Compliance with Laws, etc. The Borrower shall in the conduct of
its business comply, and cause each of its Subsidiaries to so comply, in all
material respects with all applicable laws, rules, regulations and the orders
of any court or other tribunal or governmental or administrative authority or
agency applicable to it or its business, properties or assets.
SECTION 9 - NEGATIVE COVENANTS
On and after the date hereof, until all of the Obligations shall have
been paid in full and so long as the Revolving Credit Loans shall remain
available to the Borrower, the Borrower covenants that it will comply with the
following covenants and provisions:
9.1 Restrictions on Indebtedness. The Borrower will not (and will not
permit its Subsidiaries to) create, incur, suffer or permit to exist, or assume
or guarantee, either directly
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33
or indirectly, or otherwise become or remain liable with respect to, any
Indebtedness, except the following:
(a) Obligations to the Bank.
(b) Current Liabilities (other than for money borrowed or
reimbursement obligations in connection with letters of credit issued for the
account of Borrower or any Foreign Subsidiary except as otherwise permitted
hereunder incurred in the ordinary course of business and in accordance with
customary trade practices of the Borrower or its Foreign Subsidiaries.
(c) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and supplies to
the extent that payment thereof shall not at the time be required to be made in
accordance with the provisions of Section 8.1 hereof.
(d) Indebtedness of the Borrower of its Foreign
Subsidiaries in respect of purchase money liens and capitalized leases as
permitted under Section 9.2(e) hereof.
(e) Unsecured Indebtedness of one or more Foreign
Subsidiaries to one or more foreign banks; provided the same shall never exceed
$1,600,000 in the aggregate at any one time, and each Foreign Subsidiary,
individually, shall not incur Indebtedness greater than the amount set forth
opposite its name on Schedule 9.1(e) hereto.
(f) Unsecured Indebtedness of the Borrower which is
formally subordinated to the Bank pursuant to a written subordination agreement
in form and substance acceptable to the Bank.
(g) Indebtedness of the Borrower or its Subsidiaries
existing on the date hereof to the extent listed on Schedule 4.15.
(h) The Borrower will not make, directly or indirectly, any
optional or voluntary prepayment or purchase of Subordinated Debt or any
long-term debt to any Person (other than the Bank), nor make any payment of any
Subordinated Debt except to the extent expressly permitted in the
subordination agreement entered into with the Bank.
9.2 Restriction on Liens. The Borrower will not (and will not permit
its Subsidiaries to) create or incur or suffer to be created or incurred or to
exist any encumbrance, pledge, lien, charge or other security interest of any
kind (a "Lien") upon any of their respective properties or assets of any
character, whether now owned or hereafter acquired, or transfer any such
property or assets for the purposes of subjecting the same to the payment of
indebtedness or performance of any other obligation in priority to payment of
its general creditors, or acquire or agree or have an option to acquire any
property or assets upon conditional sale or other title retention agreement,
devise or arrangement (including Capital
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Leases) or suffer to exist for a period of more than sixty (60) days after the
same shall have been incurred any Indebtedness against it which if unpaid,
might by law or upon bankruptcy or insolvency, or otherwise, be given any
priority whatsoever over its general creditors, or sell, assign, pledge or
otherwise transfer for security any of its accounts, contract rights, general
intangibles, or chattel paper (as those terms are defined in the Uniform
Commercial Code) with or without recourse; provided, however, that the Borrower
and its Foreign Subsidiaries may create or incur or suffer to be created or
incurred or to exist:
(a) Liens in favor of the Bank.
(b) Deposits or pledges made in connection with, or to secure payment
of, workers' compensation, unemployment insurance, old age pensions and other
social security; and liens for taxes, assessments or governmental charges or
levies and liens to secure claims for labor, material or supplies to the extent
that payment thereof shall not at the time be required to be made in accordance
with Section 8.1.
(c) Encumbrances in the nature of zoning restrictions, easements, and
rights or restrictions of record on the use of real property which do not
materially detract from the name of such property or impair its use in the
business of the owner or lessee.
(d) Liens arising by operation of law to secure landlords, lessors or
renters under leases or rental agreements made in the ordinary course of
business and confined to the premises or property rented.
(e) Liens in respect of Capital Leases and Liens securing the purchase
price of property to be used in the business of Borrower or its Foreign
Subsidiaries, provided that (i) each such Lien shall at all times be confined
solely to the property so acquired, (ii) such property shall secure no
Indebtedness other than the purchase price thereof, and (iii) the aggregate
principal amount of Indebtedness secured by all such Liens and in respect of
Capital Leases shall in the future not exceed $1,000,000 (or $2,000,000 after
the Merger) in excess of the aggregate amount outstanding on the date hereof
and disclosed on Schedule 4.15 hereto, as amended.
(f) Liens listed on Schedule 4.15, as amended.
9.3 Investments and Loans. The Borrower will not (and will not permit
its Subsidiaries to) have outstanding or hold or acquire or make or commit
itself to acquire or make any Investment in or loans to any Person except (a)
Investments having a maturity of one year or less from the date thereof in: (i)
obligations of the Bank; (ii) obligations of the United States of America or
any agency or instrumentality thereof; (iii) certificate of deposit, notes,
acceptances and repurchase agreements involving securities described in clauses
(i) and (ii) with the Bank or any commercial bank organized in the United
States which has capital and surplus of at least $50,000,000; and (iv)
commercial paper which is rated not less than
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35
prime-two or A-2 or their equivalents by Moody's Investor Service, Inc. or
Standard & Poor's Corporation, respectively or their successors, (b) loans and
advances to any employees of the Borrower and any Subsidiaries which shall not
exceed $350,000 in the aggregate in any fiscal year, (c) Investments in and
loans to Subsidiaries of the Borrower existing on the date hereof and described
on Schedule 4.15 hereto, (d) Investments and loans hereafter made in or to the
Foreign Subsidiaries, but only to the extent that as a result of such
Investment or loan the Borrower will not suffer or permit the Tangible Net
Worth of the Borrower alone (exclusive of its interests in Subsidiaries and
also exclusive of all amounts due to the Borrower from any Subsidiary) at any
time to be less than seventy percent (70%) of the Consolidated Tangible Net
Worth of the Borrower and its Subsidiaries, and (e) Investments in and loans
listed on Schedule 4.15.
9.4 Dispositions of Assets. Except as otherwise provided for herein,
the Borrower will not (and will not permit its Subsidiaries to) sell, lease or
otherwise dispose of any assets except for the sale, lease or other disposition
of inventory or other property in the ordinary course of business.
9.5 Assumptions, Guaranties, etc. of Indebtedness of Other Persons. The
Borrower will not (and will not permit its Subsidiaries to) assume, guarantee,
endorse or otherwise become directly or contingently liable (including, without
limitation, by way of agreement, contingent or otherwise, to purchase, provide
funds for payment, supply funds to or otherwise invest in any Person or
otherwise assure the creditors of any such Person against loss) in connection
with any Indebtedness of any other Person, except for guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in
the ordinary course of business of the Borrower and the Foreign Subsidiaries and
guaranties of the Indebtedness permitted under Section 9.1.
9.6 Mergers, etc. Except for the Merger, the Borrower will not (and,
except with respect to the Merger, will not permit its Subsidiaries to) without
the prior written consent of the Bank, which will not be unreasonably withheld
or delayed:
(a) Enter into any merger or consolidation with or acquire all or
substantially all of the assets of any Person; or
(b) Sell, assign, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired to any Person.
9.7 Pension Reform Act. At any time while the Borrower has a Pension
Plan, permit any accumulated funding deficiency to occur with respect to any
Pension Plan or other employee benefit plans established or maintained by the
Borrower or its Subsidiaries or to which contributions are made by the Borrower
(the "Plans"), and which are subject to the Pension Reform Act" and the rule and
regulations thereunder or to Section 412 of the Code,
- 35 -
36
and at all times comply in all material respects with the provisions of the Act
and Code which are applicable to the Plans. The Borrower will not permit the
Pension Benefit Guaranty Corporation to cause the termination of any Pension
Plan under circumstances which would cause the lien provided for in Section
4068 of the Pension Reform Act to attach to the assets of the Borrower.
9.8 Corporate Document Amendments. The Borrower will not and (except
as provided in the Merger Agreement) will not permit any of its Subsidiaries
to, amend its articles of organization, or its bylaws if any such amendment
could reasonably be expected to adversely affect the interest or rights of the
Bank in any manner; it being acknowledged that: (a) an increase in Borrower's
authorized capital (with the rights, terms and privileges in effect on the date
hereof, subject to the restrictions on redemptions, dividends and other
covenants set forth in the Bank Agreements for the benefit of the Bank) shall
not be deemed to adversely affect the interests or rights of the Bank; and (b)
an increase in Borrower's authorized capital with rights, terms or privileges
different from those in effect on the date hereof shall not be deemed to
adversely affect the interest or rights of the Bank so long as the terms of
such capital make an express reference to the restrictions on redemption,
dividends and other negative covenants set forth in the Bank Agreements for the
benefit of the Bank.
9.9 Distributions. The Borrower will not (and will not permit its
subsidiaries to) make any Distribution or make any payment on account of the
purchase, acquisition, redemption, or other retirement of any shares of stock,
whether now or hereafter outstanding except that Subsidiaries of the borrower
may declare and make payment of cash and stock dividends, return capital and
make distributions of assets to the Borrower.
9.10 Transactions with Affiliates. The Borrower will not enter into
(or permit any Subsidiary to enter into) any transaction, including, without
limitation, the purchase, sale or exchange of any property, or the rendering of
any service, with any present or former affiliate, except in the ordinary
course of business and pursuant to the reasonable requirements of its business
and upon fair and reasonable terms no less favorable to the Borrower or such
Subsidiary, as the case may be, than would be obtained in a comparable
arms'-length transaction with any Person not an Affiliate. As used herein,
"Affiliate" includes (i) any officer or director of the Borrower or any
Subsidiary, or (ii) any Person which, directly or indirectly, through one or
more intermediaries, controls or is controlled by or is under common control
with the Borrower or (iii) any Person which beneficially owns or holds five
(5%) percent or more of any class of equity or debt securities of the Borrower.
The term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of any Person,
whether through the ownership of voting securities, by contract or otherwise.
9.11 Accounting Changes. The Borrower will not make or permit, or
permit any of its Subsidiaries to make or permit, any change in accounting
policies or reporting practices including, without limitation, any change
in its fiscal year), unless, prior to such change, the
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37
Borrower shall have informed the Bank of such change and shall have entered
into an amendment to this Agreement, in form and substance satisfactory to the
Bank, in order to preserve unimpaired the rights of the Bank and the
obligations of the Borrower.
SECTION 10 - EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. Each of the following events shall be deemed
to be an Event of Default hereunder:
(a) The Borrower shall fail to make any payment in respect of
the principal of any of the Obligations as the same shall become due, whether
at the stated payment dates or by acceleration or otherwise, or interest or
other fees on or in respect of any of the Obligations as the same shall become
due.
(b) The Borrower shall fail to perform or observe any
covenant, agreement or provision contained in (i) Sections 6.1 through 6.7,
6.10 and 6.11 hereof; (ii) Section 7 hereof; (iii) Section 8.1, 8.3, 8.6 or 8.8
hereof; (iv) Section 9 hereof; or (v) the Revolving Credit Note.
(c) The Borrower shall fail to perform or observe any
covenant, agreement or provision contained in this Agreement (other than those
specified in paragraphs (a) and (b) above) or in any other Bank Agreement, and
such failure shall continue for fifteen (15) days after the earlier of the
Bank's notice thereof to the Borrower or the date the Bank is or should have
been notified of such default under the Bank Agreements.
(d) Any representation or warranty of the Borrower herein or
in any other Bank Agreement or any amendment thereof shall have been false or
misleading in any material respect at the time made or intended to be effective.
(e) The Borrower or any of its Subsidiaries shall fail to make
any payment of Indebtedness for money borrowed in excess of $25,000 when such
payment is due (whether by schedule maturity, required prepayment,
acceleration, demand or otherwise) or shall fail to perform or observe any
provision of any agreement or instrument relating to such indebtedness, and
such failure shall permit the holder thereof to accelerate such Indebtedness.
(f) The Borrower or any of its Subsidiaries shall be involved
in financial difficulties as evidenced by: (i) its commencement of a voluntary
case under Title 11 of the United State Code as from time to time in effect, or
by its authorizing, by appropriate proceedings of its board of directors or
other governing body, the commencement of such a
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38
voluntary case; (ii) by its filing an answer or other pleading admitting or
failing to deny the material allegations of a petition filed against it
commencing an involuntary case under said Title 11, or seeking, consenting to
or acquiescing in the relief therein provided, or by its failing to controvert
timely the material allegations of any such petition; (iii) by the entry of an
order for relief in any involuntary case commenced under said Title 11; (iv) by
its seeking relief as a debtor under any applicable law, other than said
Title 11, of any jurisdiction relating to the liquidation or reorganization of
debtors or to the modification or alteration of the rights of creditors, or by
its consenting to or acquiescing in such relief; (v) by the entry of an order
by a court of competent jurisdiction (x) finding it to be bankrupt or
insolvent, (y) ordering or approving its liquidation, reorganization or any
modification or alteration of the rights of its creditors, or (z) assuming
custody of, or appointing a receiver or other custodian for all or a
substantial part of its property and such order shall not be vacated or stayed
on appeal or otherwise stayed within thirty (30) days; (vi) by filing of a
petition against the Borrower under said Title 11 which shall not be vacated
within (30) days; or (vii) by its making an assignment for the benefit of, or
entering into a composition with, its creditors, or appointing or consenting to
the appointment of a receiver or other custodian for all or a substantial part
of its property.
(g) Any judgment, writ, attachment, execution or similar
process shall be issued or levied against the Borrower, any of its property or
any of its Subsidiaries or their respective property and such judgment, writ,
attachment, execution or similar process shall not be paid, stayed, released,
vacated or fully bonded within ten (10) days after its issue or levy.
(h) With respect to any Pension Plan, a Reportable Event shall
have occurred and the Bank shall have reasonably determined that such event
reasonably could be expected to result in liability of the Borrower or any of
its Subsidiaries to the PBGC or such Pension Plan in an aggregate amount
exceeding $25,000 (individually or in the aggregate) and such event in the
circumstances occurring reasonably could constitute grounds for the termination
of such Pension Plan by the PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer such Pension Plan; or a
trustee shall have been appointed by the United States District Court to
administer such Plan, or the PBGC shall have instituted proceedings to
terminate such Pension Plan.
(i) Any Person (other than a current stockholder of Borrower)
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended), directly or indirectly, of 25% or more of the issued and
outstanding capital stock (or other securities convertible into such
voting stock) of Borrower.
(j) Borrower shall at any time for any reason cease to be the
record and beneficial owner of 100% of the outstanding capital stock of each of
its Subsidiaries
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39
(k) Any "Event of Default" under any other Bank Agreement
shall have occurred.
10.2 Remedies. Upon the occurrence of any Event of Default as defined
in Section 10.1 hereof, and at any time thereafter, in addition to any other
rights and remedies available to the Bank hereunder or otherwise, the Bank (i)
will have no further obligation to make future advances and (ii) may declare
the entire unpaid principal balance of and accrued interest on the Revolving
Credit Note, together with all Obligations under this Agreement and all
Indebtedness owing to the Bank, to be forthwith due and payable, whereupon the
principal of and accrued interest in respect of the Revolving Credit Note and
all such Obligations and Indebtedness shall become forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower (and provided, further, that such
acceleration shall occur automatically upon the occurrence of any Event of
Default described in Section 10.1(f).
10.3 Set-Off. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default hereunder, the Bank is hereby authorized at
any time or from time to time, without presentment, demand, protest or notice
of any kind to the Borrower or to any other Person, all of which are hereby
expressly waived, to setoff and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held by or owing to
the Bank to or for the credit or the account of the Borrower against and on
account of the Obligations of the Borrower to the Bank under this Agreement and
the Bank Agreements, irrespective of whether or not the Bank shall have made
any demand hereunder and all of said obligations, liabilities or claims, or
any of the, may then be contingent or unmatured, and without regard to the
availability or adequacy of other collateral. The Bank shall give notice to the
Borrower following any such setoff or application of funds; provided, however,
that the failure to give such notice shall not affect the validity of such set
off and application.
SECTION 11 - WAIVERS: AMENDMENTS: REMEDIES
No delay or omission on the Bank's part in exercising its rights and
remedies against the Borrower or any other interested party shall constitute a
waiver hereof. A breach by the Borrower of its obligations under this Agreement
may be waived only by a written waiver executed by the Bank. the Bank's waiver
of any breach in one or more instances shall not constitute or otherwise be an
implicit waiver of subsequent breaches. The Borrower hereby agrees to waive,
and does hereby absolutely and irrevocably waive (a) all presentments, demands
for performance, notices or nonperformance, protests, notices of protest and
notices of dishonor in connection with any of the Indebtedness evidenced by the
Revolving Credit Note, (b) any requirement of diligence or promptness on the
Bank's part in the enforcement of its rights under the provisions of this
Agreement or any Bank Agreement, and (c) to the maximum extent permitted by
applicable law, any and all notices of every kind and description which may be
required to be given by any statute or rule of law with respect to its
liability (i)
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40
under this Agreement or in respect of the Indebtedness evidenced by the
Revolving Credit Note, or any other Obligation or (ii) under any other Bank
Agreement. No course of dealing between the Borrower and the Bank shall operate
as a waiver of any of the Bank's rights under this Agreement or any Bank
Agreement or with respect to any of the Obligations. This Agreement or any Bank
Agreement or with respect to any of the Obligations. This Agreement shall be
amended only by a written instrument executed by the parties hereto making
explicit reference to this Agreement. The Bank's rights and remedies under this
Agreement and under all subsequent agreements between the Bank and the Borrower
shall be cumulative and any rights and remedies expressly set forth herein
shall be in addition to, and not in limitation of, any other rights and
remedies which may be applicable to the Bank in law or at equity.
SECTION 12 - INDEMNIFICATION
Without limitation of any other obligation or liability of the Borrower
or right or remedy of the Bank contained herein, the Borrower hereby covenants
and agrees to indemnify and hold the Bank and the shareholders, directors,
agents, officers, partners, subsidiaries and affiliates of the Bank harmless
from and against any and all damages, losses (other than loss of profit),
settlement payments, obligations, liabilities, claims, including, without
limitation, claims for finder's or broker's fees, actions or causes of action,
and reasonable costs and expenses incurred, suffered, sustained or required to
be paid by an indemnified party in each case by reason of or resulting from any
claim relating to the transactions contemplated hereby other than any such
claims which arise or are incurred as a result of the Bank's gross negligence
or willful misconduct. In any investigation, proceeding or litigation, or the
preparation therfor, the Bank shall be entitled to select one counsel of its
own and, in addition to the foregoing indemnity, the Borrower agrees to pay
promptly the reasonable fees and expenses of such counsel, except that such
counsel fees and expense shall not be paid with respect to any claims which
arise or are incurred as a result of the Bank's gross negligence or willful
misconduct. The Bank shall give the Borrower prior written notice of its intent
to settle or compromise any claim. The foregoing notice having been given, the
Bank may settle or compromise any claim, action or cause of action referred to
above, whether prior to or after the commencement of litigation; provided, that
any such settlement shall include only claims, actions or causes of action
against the Bank and not any such claims, actions or causes of action which
claimant may have directly against the Borrower.
SECTION 13 - MISCELLANEOUS
13.1 Survival of Agreements, etc. This Agreement shall inure to the
benefit of the Bank and its successors and assigns, including any
subsequent holder or holders of the Note, and the term "Bank" shall include any
such holder or holders whenever the context permits. All agreements,
covenants, representations and warranties made herein shall survive the
execution and delivery of this Agreement and the making of the Revolving
Credit Loans hereunder.
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41
13.2 Notices. All notices and other communications made or required
to be given pursuant to this Agreement, or in any of the Bank Agreements, shall
be in writing and shall be mailed by first-class mail, postage prepaid; or sent
by overnight courier, or sent by facsimile, in each case addressed as follows:
If to the Borrower, at the following adddress, or at such other address
as the Borrower shall have furnished to the Bank in writing:
Chief Financial Officer
Bachman Information Systems, Inc.
8 New England Executive Park
Burlington, Massachusetts 01803
Facsimile: 617-229-9864
with a copy to:
John D. Patterson, Jr., Esq.
Foley, Hoag & Eliot
One Post Office Square
Boston, Massachusetts 02109
Facsimile: 617-482-7347
If to the Bank, at the following address, or at such address as the
Bank shall have furnished to the Borrower in writing:
David B. Fischer
Senior Vice President
Silicon Valley Bank
Loan Production Office
Wellesley Office Park
40 William Street, Suite 350
Wellesley, MA 02181
Facsimile: 617-431-9906
with a copy to:
Harry A. Hanson, III, Esq.
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Streeet
Boston, Massachusetts 02110
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42
Facsimile: 617-951-1295
All such notices and communications shall be deemed to have been duly
given three (3) business days after being deposited in the mail, postage
prepaid, if mailed; one (1) business day after being sent by overnight courier;
when receipt acknowledged, if telecopied.
13.3 Entire Agreement etc. This Agreement and the documents and
other materials contemplated hereby constitute the entire agreement of the
Borrower and the Bank and express their entire understanding with respect to
credit advanced or to be advanced by the Bank to the Borrower. This Agreement
shall be amended only by a written instrument executed by the Bank making
explicit reference to this Agreement.
13.4 Governing Law: Consent to Jurisdiction. This Agreement, the
Security Documents, the Note and the other Bank Agreements, including the
validity thereof and the rights and obligations of the parties hereunder and
thereunder, shall be construed in accordance with and governed by the internal
laws of the commonwealth of Massachusetts, without giving effect to the
conflicts of law principles thereof. The Borrower hereby consents to service of
process, and to be sued, in the Commonwealth of Massachusetts or the State of
California and consents to the jurisdiction of any federal or state court of
competent jurisdiction in the Commonwealth of Massachusetts or the State of
California, as well as to the jurisdiction of all courts from which an appeal
may be taken from such courts, for the purpose of any suit, action or other
proceeding arising out of any of its obligations hereunder, under the Security
documents, under the Note or under the other Bank Agreements or with respect to
the transactions contemplated hereby or thereby, and expressly waives any and
all objections, it may have as to venue in any such courts, or to any claim as
to inconvenient forum.
The Borrower hereby consents to process being served in any suit,
action or proceeding of the nature referred to in the preceding paragraph of
this Section 13.4 either (i) by mailing a copy thereof by registered or
certified mail, postage prepaid, return receipt requested, to it at its address
set forth in Section 13.2 or (ii) by serving a copy thereof upon it at its
address set forth in Section 13.2. The Borrower irrevocably waives, to the
fullest extent permitted by law, all claims of error by reason of any service
as contemplated herein and agrees that such service shall (x) be deemed in
every respect effective service upon the Borrower in any such suit, action or
proceeding and (y) to the fullest extent permitted by law, be taken and held to
be valid personal service upon and personal delivery to the Borrower.
13.5 Severability; Headings; Counterparts; etc. The invalidity or
unenforceability of any term or provision hereof shall not affect the
validity or enforceability of any other term or condition hereof. The headings
in this Agreement are for convenience of reference only and will not alter or
otherwise affect the meaning hereof. This Agreement may be executed in a number
of counterparts which together shall constitute one instrument and shall bind
and inure to the benefit of the parties hereto and their respective successors
and assigns. The
- 42 -
43
interpretation of the provisions of this Agreement shall not be construed
against any party hereto based upon the fact that such party may have drafted,
or caused to be drafted, such provisions.
13.6 Bank Holidays. Whenever any payment to be made under this
Agreement shall become due on a day on which the Bank is required or permitted
by law to remain closed, such payment may be made on the next succeeding
Banking Day on which the Bank is open, and such extension shall be included in
computing the interest in connection with such payment.
13.7 Expenses. The Borrower agrees to pay on demand, all the Bank's
reasonable expenses in preparing, executing, delivering and administering this
Agreement and related instruments and documents, including, without limitation,
the reasonable fees and out-of-pocket expenses of the Bank's special counsel,
Hutchins, Wheeler & Dittmar (subject to the terms hereof), and (subject to the
terms hereof) the expenses of the Bank in conducting field examinations of the
books and records of the Borrower. The Borrower also agrees to pay on demand,
all reasonable out-of-pocket expenses incurred by the Bank, including, without
limitation, legal and accounting fees, in connection with the collection of
amounts upon the occurrence of an Event of Default described in Section 10
hereof, the revision, protection or enforcement of any of the Bank's rights
against the Borrower under the Agreement, the Revolving Credit Note and all
other Bank Agreements and the administration of special problems that may arise
under this Agreement or any other Bank Agreement. The Borrower also agrees to
pay all stamp and other taxes in connection with the execution and delivery of
this Agreement and related instruments and documents. Any fees, expenses or
other charges which the Bank is entitled to receive from the Borrower hereunder
shall bear interest from the date of demand for payment until paid at the
lesser of (i) the rate specified in Section 2.5(a) hereof or (ii) the maximum
rate permitted by then applicable law.
13.8 Participation. The Borrower acknowledges and agrees that the
Bank shall, upon thirty (30) Banking Days prior notice to the Borrower, be
entitled to sell one or more participations to other banks or financial
institutions in the Revolving Credit Loan and the Revolving Credit Note on such
terms as the Bank in its sole discretion shall deem appropriate. Any such
participating lender shall be deemed to have the same right of set-off
established under this Agreement on behalf of the Bank to the extent of its
participation in the obligations of the Borrower under this Agreement as it
would have if it were a direct lender.
13.9 Termination. This Agreement may be terminated by the Borrower
at any time by not less than ten (10) days' prior written notice of such
termination to the Bank; provided, however, that, unless and until all
Obligations of Borrower to Bank existing (whether or not due) as of the time of
the receipt of such notice by the Bank shall have been paid in full, such
termination shall in no way affect the rights and powers granted to the Bank in
connection with this Agreement, and until such payment in full all rights and
powers hereby
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44
granted to the Bank hereunder shall be and remain in full force and effect; and
provided, further, that if the Borrower, upon termination of this Agreement,
fails to maintain the Bank as its principal depository institution and maintain
its operating account with the Bank, then the Borrower shall pay to the Bank a
termination fee of five thousand dollars ($5,000.00).
13.10 Reproduction of Agreement. This Agreement and all other
instruments, documents and papers which relate thereto which have been or may
be hereafter furnished to the Bank may be reproduced by the Bank by any
photographic, photostatic, micro-card, miniature photographic, xerographic or
similar process, and the Bank may destroy the original from which any document
was so reproduced. Any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not
the original is in existence and whether or not such reproduction was made in
the regular course of business). However, to the extent that such reproduction
conflicts with the original, the original shall control.
13.11 WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY WITH
RESPECT TO ANY SUIT, ACTION OR PROCEEDING IN RESPECT OF ARISING OUT OF, THIS
AGREEMENT, THE REVOLVING CREDIT NOTE AND THE OTHER BANK AGREEMENTS AND
TRANSACTIONS CONTEMPLATED HEREBY AND/OR THE CONDUCT OF THE RELATIONSHIP BETWEEN
THE BORROWER, AND THE BANK. The Borrower hereby certifies that neither the Bank
nor any of its representatives, agents or counsel has represented, expressly or
otherwise, that the Bank would not, in the event of any suit, action or
proceeding, seek to enforce this waiver of right to trial by jury. The Borrower
acknowledges that the Bank has been induced to enter into this agreement by,
among other things, this waiver. The Borrower acknowledges that it has read the
provisions of this Agreement and, in particular, this section, has consulted
legal counsel, understands the rights it is granting in this agreement and is
waiving in this section in particular, and makes the above waiver knowingly,
voluntarily and intentionally.
* * * * * *
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45
Counterpart Signature Page
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
IN WITNESS WHEREOF, the Borrower and the Bank have caused this Amended
and Restated Revolving Credit Agreement to be executed as a sealed instrument by
their duly authorized officers as of the date first above written.
CORPORATE SEAL BACHMAN INFORMATION SYSTEMS, INC.
Attest: /s/ Eugene DiDonato By: /s/ Peter J. Boni
-------------------------- --------------------------
Clerk Name: Peter J. Boni
Its: President
SILICON VALLEY BANK SILICON VALLEY EAST
(signed at Santa Clara, CA)
By: /s/ Julie Haga By: /s/ David Fischer
----------------------------- --------------------------
Name: Julie Haga Name: David Fischer
Its: Its: S.V.P
S-1
46
LIST OF EXHIBITS
EXHIBITS
Exhibit A Form of Revolving Credit Demand Note
Exhibit B Form of Borrowing Request
Exhibit C Form of Borrowing Base Certificate for
Domestic Accounts Receivable
Exhibit C-1 Form of Borrowing Base Certificate for
International Accounts Receivable
Exhibit D Form of Compliance Certificate
Exhibit E Form of guaranty Agreement
47
LIST OF SCHEDULES
SCHEDULES
Schedule 1.1(a) List of Authorized Officers
Schedule 4.1 List of Jurisdictions Where Organized
Schedule 4.2 Principal Places of Business For Subsidiaries
Schedule 4.3 List of Jurisdictions where Qualified
Schedule 4.4 List of Subsidiaries
Schedule 4.9 Financial Statements
Schedule 4.10 Schedule of Issued and Outstanding Stock
Schedule 4.11 Changes in Condition
Schedule 4.12 Schedule of Liens, Encumbrances, and
Capitalized Lease Obligations
Schedule 4.13 Schedule of Litigation
Schedule 4.14 Schedule of Pension Plans
Schedule 4.15 Outstanding Indebtedness, Liens and
Investments
Schedule 4.16 Schedule of Patents, Trademarks, Etc.
Schedule 4.17 Schedule of Environmental Matters
Schedule 9.1(e) Indebtedness Limits of Foreign Subsidiaries