EXHIBIT 4.8
EXECUTION COPY
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COMPUWARE CORPORATION
AMENDED AND RESTATED CREDIT AGREEMENT
DATED MAY 2, 2003 AS OF JULY 27, 2006
COMERICA BANK
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TABLE OF CONTENTS
SCHEDULES
Schedule 2.4 List of Officers Authorized to Make Telephone Requests
Schedule 6.5 Employee Pension Benefit Plans
Schedule 6.8 Subsidiaries
Schedule 6.9 Environmental Matters
Schedule 8.1 Existing Debt
Schedule 8.4 Permitted Liens
Schedule 8.7 Non-Arms Length Transactions with Affiliates
TABLE OF CONTENTS
(Continued)
EXHIBITS
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF SUBSIDIARY GUARANTY
EXHIBIT C FORM OF REQUEST FOR ADVANCE
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, made as of the 27th day of July, 2006, by and
between COMPUWARE CORPORATION, a Michigan corporation (herein called "Company")
and COMERICA BANK, a Michigan banking corporation, of Detroit, Michigan (herein
called "Bank").
RECITALS
A. Company and Bank are parties to the Credit Agreement dated as of May
2, 2003, as amended by the Amendment No. 1 dated as of April 30, 2004, the
Amendment No. 2 dated as of July 29, 2004 and the Amendment No. 3 dated as of
July 28, 2005 (the "Prior Credit Agreement").
B. Company and Bank wish to amend and restate the Prior Credit
Agreement as provided herein.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
is acknowledged, Bank and Company agree that the Prior Credit Agreement is
hereby amended and restated in its entirety as follows:
W I T N E S S E T H
1. DEFINITIONS
For the purposes of this Agreement the following terms have the
following meanings:
"Advance" shall mean a borrowing requested by Company and made by Bank
under Section 2 of this Agreement, including any refunding or conversions of
such borrowings pursuant to Section 3.3 hereof, and shall include a
Eurodollar-based Advance and a Prime-based Advance.
"Affiliate" shall mean, with respect to any Person (other than, with
respect to Company, a Wholly-Owned Subsidiary), any other Person directly or
indirectly Controlling (including but not limited to all directors and officers
of such Person), Controlled by, or under direct or indirect common Control with
such Person. A Person shall be deemed to Control a corporation for the purposes
of this definition if such Person possesses, directly or indirectly, the power
(i) to vote 10% or more of the securities having ordinary voting power for the
election of directors or managers of such corporation or (ii) to direct or cause
the direction of the management and policies of such corporation, whether
through the ownership of voting securities, by contract or otherwise.
"Alternate Base Rate" shall mean for any day a rate per annum (rounded
upwards, if necessary, to the next higher 1/100 of 1%) equal to the Federal
Funds Effective Rate in effect on such day plus one percent (1%).
"Applicable Eurodollar Margin" shall mean one percent (1%).
"Business Day" shall mean any day on which commercial banks are open
for domestic and international business (including dealings in foreign exchange)
in Detroit and London.
"Capitalized Lease" shall mean any lease of any property (whether real,
personal or mixed) by any Person as lessee which, in conformity with GAAP, is,
or is required to be accounted for as, a capital lease on the balance sheet of
such Person, together with any renewals of such leases (or entry into new
leases) on substantially similar terms.
"Change of Control" shall mean (i) any Person or "group" (within the
meaning of Sections 13(d) and 14(d) under the Securities Exchange Act, as in
effect on the Restatement Date), shall have (A) acquired beneficial ownership
(as such term is used in Rule 13d-3 under the Securities Exchange Act, as in
effect of the Restatement Date) of 33% or more on a fully diluted basis of the
voting interest in the Company's voting capital stock or (B) obtained the power
(whether or not exercised) to elect a majority of the Company's directors or
(ii) the Board of Directors of the Company shall cease to consist of a majority
of Continuing Directors.
"Commitment" shall mean One Hundred Million Dollars ($100,000,000),
subject to reduction or termination under Section 2 and Section 3.
"Consolidated" shall mean, when used with reference to any financial
term in this Agreement, the aggregate for two or more Persons of the amounts
signified by such term for all such Persons determined on a consolidated basis
in accordance with GAAP. Unless otherwise specified herein, references to
Consolidated financial statements or data of the Company shall be deemed to mean
the financial statements and data of the Company in consolidation with its
Subsidiaries in accordance with GAAP.
"Continuing Directors" shall mean the directors of the Company on the
Restatement Date and each other director if such director's nomination for
election to the Board of Directors of the Company is recommended by a majority
of the then Continuing Directors.
"Debt" shall mean as to any Person, without duplication (a) all Funded
Debt of such Person, (b) all Guarantee Obligations of such Person, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property or assets purchased by such Person, (d) all
indebtedness of such Person arising in connection with any interest rate swap
transaction, basis swap transaction, forward rate transaction, commodity swap
transaction, equity transaction, equity index transaction, foreign exchange
transaction, cap transaction, floor transaction (including any option with
respect to any of these transactions and any combination of any of the
foregoing) entered into by such Person and (e) any items which would be
classified as liabilities on the balance sheet of such Person. Unless the
context otherwise requires, as used in this Agreement, the term Debt refers to
Debt of Company or its Subsidiaries.
"Default" shall mean any condition or event which, with the giving of
notice or the passage of time, or both, would constitute an Event of Default
under this Agreement.
"Domestic Subsidiary" shall mean each Subsidiary of the Company that is
incorporated under the laws of the United States or any State thereof.
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"Effective Date" shall mean May 2, 2003.
"Environmental Laws" shall mean all federal, state and local laws
including statutes, regulations, ordinances, codes, rules, and other
governmental restrictions and requirements, relating to environmental pollution,
contamination or other impairment of the environment or any hazardous or toxic
substances of any nature, including but not be limited to the Federal Solid
Waste Disposal Act, the Federal Clean Air Act, the Federal Clean Water Act, the
Federal Resource Conservation and Recovery Act of 1976, the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
and the Federal Superfund Amendments and Reauthorization Act of 1986, each as
amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, or any successor act or code.
"Eurodollar-based Advance" shall mean an Advance which bears interest
at the Eurodollar-based Rate.
"Eurodollar-based Rate" shall mean a per annum interest rate which is
the Applicable Eurodollar Margin plus the quotient of:
(a) the per annum interest rate at which Bank's Eurodollar Lending
Office offers deposits to prime banks in the eurodollar market
in an amount comparable to the relevant Eurodollar-based
Advance and for a period equal to the relevant Interest Period
at approximately the time Company requests such Advance on the
first day of such Interest Period; divided by
(b) a percentage equal to 100% minus the maximum rate on such date
at which Bank is required to maintain reserves on
"Euro-currency Liabilities" as defined in and pursuant to
Regulation D of the Board of Governors of the Federal Reserve
System or, if such regulation or definition is modified, and
as long as Bank is required to maintain reserves against a
category of liabilities which includes eurodollar deposits or
includes a category of assets which includes eurodollar loans,
the rate at which such reserves are required to be maintained
on such category;
all as conclusively determined by Bank, such sum to be rounded upward, if
necessary, to the nearest whole multiple of 1/100th of 1%.
"Eurodollar Lending Office" shall mean Bank's office located at Grand
Cayman, British West Indies or such other branch of Bank, domestic or foreign,
as it may hereafter designate as its Eurodollar Lending Office by notice to
Company.
"Event of Default" shall mean any of the events of default specified in
Section 9 hereof.
"Federal Funds Effective Rate" shall mean, for any day, a fluctuating
interest rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the
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Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Bank from three Federal funds brokers of recognized
standing selected by it.
"Foreign Subsidiary" shall mean each Subsidiary of Company that is not
a Domestic Subsidiary.
"Funded Debt" of any Person shall mean (a) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services as of such date (other than operating leases and trade liabilities
incurred in the ordinary course of business and payable in accordance with
customary practices and equipment purchased for which the purchase price is due
and payable less than one year from the date the equipment is delivered to such
Person) or which is evidenced by a note, bond, debenture or similar instrument,
(b) the principal component of all obligations of such Person under Capitalized
Leases, (c) all reimbursement obligations (actual, contingent or otherwise) of
such Person in respect of letters of credit, acceptances or similar obligations
issued or created for the account of such Person and which are the functional
equivalent of indebtedness for borrowed money, (d) all liabilities secured by
any consensual liens on any property owned by such Person as of such date even
though such Person has not assumed or otherwise become liable for the payment
thereof, in each case determined in accordance with GAAP; provided however that
so long as such Person is not personally liable for such liabilities, the amount
of such liability shall be deemed to be the lesser of the fair market value at
such date of the property subject to the lien securing such liability and the
amount of the liability secured, and (e) all Guarantee Obligations in respect of
any liability which constitutes Funded Debt; provided, however that Funded Debt
shall not include any interest rate swap transaction, basis swap transaction,
forward rate transaction, commodity swap transaction, equity transaction, equity
index transaction, foreign exchange transaction, cap transaction, floor
transaction (including any option with respect to any of these transactions and
any combination of any of the foregoing) entered into by such Person prior to
the occurrence of a termination event with respect thereto.
"GAAP" shall mean, as of any applicable date of determination,
generally accepted accounting principles consistently applied in the United
States of America.
"Guarantee Obligations" shall mean as to any Person (the "guaranteeing
person") any obligation of the guaranteeing person in respect of any obligation
of another Person (including, without limitation, any bank under any letter of
credit), the creation of which was induced by a reimbursement agreement, counter
indemnity or similar obligation issued by the guaranteeing person, in either
case guaranteeing or in effect guaranteeing any Debt, leases, dividends or other
obligations (the "primary obligations") of any other third Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold harmless
the owner of any
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such primary obligation against loss in respect thereof; provided, however, that
the term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by Company in good faith.
"Guarantors" shall mean each Material Wholly-Owned Domestic Subsidiary
which is required to guarantee the obligations of the Company hereunder and
under the other Loan Documents and any other Domestic Subsidiary which has
executed and delivered (including by execution and delivery of a joinder
agreement) the Guaranty, and "Guarantor" shall mean any one of them.
"Guaranty" shall mean that certain guaranty of all outstanding
Indebtedness by the Guarantors (whether by execution thereof or by execution of
a joinder agreement thereto) substantially in the form attached as Exhibit "B."
"Hazardous Materials" shall mean and include any hazardous, toxic or
dangerous waste, substance or material defined as such in (or for purposes of)
the Environmental Laws.
"Hedging Transaction" shall mean each interest rate swap transaction,
basis swap transaction, forward rate transaction, commodity swap transaction,
equity transaction, equity index transaction, foreign exchange transaction, cap
transaction, floor transaction (including any option with respect to any of
these transactions and any combination of any of the foregoing) entered into by
Company or any Subsidiary from time to time; provided that such transaction is
entered into for risk management purposes and not for speculative purposes.
"Indebtedness" shall mean all loans, advances, indebtedness,
obligations and liabilities of Company and its Subsidiaries to Bank under this
Agreement or any of the other Loan Documents or under any hedging agreements
with the Bank, together with all other indebtedness, obligations and liabilities
whatsoever of Company and its Subsidiaries to Bank arising under or in
connection with this Agreement, whether matured or unmatured, liquidated or
unliquidated, direct or indirect, absolute or contingent, joint or several, due
or to become due, now existing or hereafter arising.
"Interest Period" shall mean a period of one (1), two (2) or three (3)
months as selected by Company pursuant to the provisions of this Agreement
commencing on the day a Eurodollar-based Advance is made, or on the effective
date of an election of the Eurodollar-based Rate made under Section 3.1.
"Inventory" shall have the meaning assigned to it in the Michigan
Uniform Commercial Code on the date of this Agreement.
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"Loan Documents" shall mean collectively, this Agreement, the Note, the
Guaranty and any other instruments or agreements executed at any time pursuant
to or in connection with any such documents, and any and all amendments,
renewals, replacements, substitutions, extensions or other modifications of any
of the foregoing.
"Loan Parties" shall mean collectively Company and any or all of the
Guarantors, and "Loan Party" shall mean any one of them, as the context
indicates or otherwise requires.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business or financial condition of Company and its Subsidiaries taken as a
whole, (b) the ability of Company and the Guarantors to perform their respective
obligations under this Agreement, the Note (if issued) or any other Loan
Document to which any of them is a party, or (c) the validity or enforceability
of this Agreement, the Note (if issued) or any of the other Loan Documents or
the rights or remedies of the Bank hereunder or thereunder.
"Material Wholly-Owned Domestic Subsidiary" shall mean each
Wholly-Owned Domestic Subsidiary of Company which, together with its
Subsidiaries, account for at least ten percent (10%) of the consolidated assets
of the Company and its Subsidiaries at the most recently ended fiscal quarter of
Company.
"Maturity Date" shall mean July 26, 2007.
"Note" shall mean the note described in Section 2.1 hereof made by
Company to Bank in the form annexed to this Agreement as Exhibit "A" as such
note may be amended or supplemented from time to time, or any other note issued
in substitution, replacement or renewal thereof from time to time.
"PBGC" is defined in Section 6.6.
"Pension Plan" is defined in Section 6.5.
"Permitted Liens" shall mean with respect to any Person:
(a) liens for taxes not yet due and payable or which are being
contested in good faith by appropriate proceedings diligently
pursued, provided that provision for the payment of all such
taxes has been made on the books of such Person as may be
required by GAAP;
(b) mechanics', materialmen's, banker's, carriers', warehousemen's
and similar liens and encumbrances arising in the ordinary
course of business and securing obligations of such Person
that are not overdue for a period of more than 60 days or are
being contested in good faith by appropriate proceedings
diligently pursued, provided that in the case of any such
contest (i) any proceedings commenced for the enforcement of
such liens and encumbrances shall have been duly suspended;
and (ii) such provision for the payment of such liens and
encumbrances has been made on the books of such Person as may
be required by GAAP;
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(c) liens arising in connection with worker's compensation,
unemployment insurance, old age pensions and social security
benefits and similar statutory obligations which are not
overdue or are being contested in good faith by appropriate
proceedings diligently pursued, provided that in the case of
any such contest (i) any proceedings commenced for the
enforcement of such liens shall have been duly suspended; and
(ii) such provision for the payment of such liens has been
made on the books of such Person as may be required by GAAP;
(d)(i) liens incurred in the ordinary course of business to secure
the performance of statutory obligations arising in connection
with progress payments or advance payments due under contracts
with the United States government or any agency thereof
entered into in the ordinary course of business and (ii) liens
incurred or deposits made in the ordinary course of business
to secure the performance of statutory obligations, bids,
leases, fee and expense arrangements with trustees and fiscal
agents and other similar obligations (exclusive of obligations
incurred in connection with the borrowing of money, any
lease-purchase arrangements or the payment of the deferred
purchase price of property), provided that full provision for
the payment of all such obligations set forth in clauses (i)
and (ii) has been made on the books of such Person as may be
required by GAAP, consistently applied; and
(e) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities
and other similar purposes, or zoning or other restrictions as
to the use of real properties, which do not materially
interfere with the business of such Person.
"Person" or "person" shall mean any individual, corporation,
partnership, joint venture, limited liability company, association, trust,
unincorporated association, joint stock company, government, municipality,
political subdivision or agency, or other entity.
"Prime Rate" shall mean the per annum interest rate established by Bank
as its prime rate for its borrowers as such rate may vary from time to time,
which rate is not necessarily the lowest rate on loans made by Bank at any such
time.
"Prime-based Advance" shall mean an Advance which bears interest at the
Prime-based Rate.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Pension Plan other than those events as to which the
thirty-day notice period is waived under subsection 22, 23, 25, 27, 28 or 29 of
PBGC Regulation Section 4043.
"Request for Advance" shall mean a Request for Advance issued by
Company under this Agreement in the form annexed to this Agreement as Exhibit
"C."
"Restatement Date" shall mean the date on which all the conditions
precedent set forth in Sections 5.1 through 5.7 have been satisfied.
"SEC" is defined in Section 7.1(a).
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"Securities Act" shall mean the Securities Act of 1933, as amended and
the rules promulgated under it.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated under it.
"Subsidiary(ies)" shall mean any other corporation, association, joint
stock company, business trust, limited liability company or any other business
entity of which more than fifty percent (50%) of the outstanding voting stock,
share capital, membership or other interests, as the case may be, is owned
either directly or indirectly by any Person or one or more of its Subsidiaries,
or the management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by any Person and/or its
Subsidiaries. Unless otherwise specified to the contrary herein or the context
otherwise requires, Subsidiary(ies) shall refer to the Subsidiary(ies) of the
Company.
"Wholly-Owned Domestic Subsidiary" shall mean each Domestic Subsidiary
of the Company that is also a Wholly-Owned Subsidiary of the Company.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock is at the time owned by such Person
and/or one or more Wholly-Owned Subsidiaries of such Person (other than
director's qualifying shares) and (ii) any partnership, limited liability
company, association, joint venture or other entity in which such Person and/or
one or more Wholly-Owned Subsidiaries of such Person has a 100% equity interest
at such time.
2. THE INDEBTEDNESS: Revolving Credit
2.1 Subject to the terms and conditions of this Agreement (including
without limitation Section 2.3 hereof), Bank agrees to make Advances to Company
at any time and from time to time from the Restatement Date until the Maturity
Date, in an aggregate principal amount not to exceed at any one time outstanding
the Commitment. All of the Advances under this Section 2 shall be evidenced by
the Note under which Advances, repayments and readvances may be made, subject to
the terms and conditions of this Agreement.
2.2 The Note shall mature on the Maturity Date and each Advance from
time to time outstanding thereunder shall bear interest at its Applicable
Interest Rate. The amount and date of each Advance, its Applicable Interest
Rate, its Interest Period, if applicable, and the amount and date of any
repayment shall be noted on Bank's records, which records will be conclusive
evidence thereof absent manifest error.
2.3 Company may request an Advance under this Section 2 upon the
delivery to Bank of a Request for Advance executed by an authorized officer of
Company, subject to the following:
(a) each such Request for Advance shall set forth the information
required on the Request for Advance form annexed hereto as
Exhibit "C";
(b) each such Request for Advance shall be delivered to Bank by
3:00 p.m. (Detroit time) on the proposed date of Advance with
respect to Prime-based Advances,
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and by 12:00 p.m. (Detroit time) three (3) Business Day prior
to the proposed date of Advance with respect to
Eurodollar-based Advances;
(c) the principal amount of such Advance, plus the amount of any
outstanding indebtedness to be then combined therewith having
the same Applicable Interest Rate and Interest Period, if any,
shall be, in the case of Prime-based Advances at least
$100,000 and, in the case of a Eurodollar-based Advance, at
least $1,000,000 or any larger amount in $100,000 increments;
(d) on the proposed date of such Advance, after giving effect to
all Advances requested on that day, the principal amount of
such Advance, plus the sum of the amount of all other
outstanding Advances under this Section 2, shall not exceed
the Commitment;
(e) a Request for Advance, once delivered to Bank, shall not be
revocable by Company.
(f) each Request for Advance shall constitute a certification by
Company, as of the date hereof:
(i) both before and after such Advance, the obligations
of the Loan Parties set forth in this Agreement and
the other Loan Documents to which such Persons are
parties are valid, binding and enforceable
obligations of such Persons;
(ii) all conditions to Advances have been satisfied and
shall remain satisfied to the date of such Advance
(both before and after giving effect to such
Advance);
(iii) there is no Default or Event of Default in existence,
and none will exist upon the making of such Advance
(both before and after giving effect to such
Advance);
(iv) the representations and warranties contained in this
Agreement and the other Loan Documents are true and
correct in all material respects and shall be true
and correct in all material respects as of the making
of such Advance (both before and after giving effect
to such Advance), other than any representation or
warranty that expressly speaks only as of a different
date; and
(v) the execution of such Request for Advance will not
violate the material terms and conditions of any
material contract, agreement or other borrowing of
Company.
2.4 Bank may also, at its option, lend under this Section 2 upon the
telephone request of an authorized officer of Company and, in the event Bank
makes any such advance upon a telephone request, the requesting officer shall
fax to Bank, on the same day as such telephone request, a Request for Advance in
the form attached as Exhibit "C." Company hereby authorizes
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Bank to disburse Advances under this Section 2 pursuant to the telephone
instructions of any person purporting to be an authorized officer of Company
and, notwithstanding any provision of this Agreement to the contrary, Company
shall bear all risk of loss resulting from disbursements made upon any telephone
request. Each telephone request for an Advance shall constitute a certification
of the matters set forth in clause (f) of Section 2.3. Company certifies that
Schedule 2.4 lists all Company officers authorized to request Advances by
telephone. Only those officers specified on Schedule 2.4 (as amended or
supplemented in a writing or writings executed by Company and delivered by
Company to Bank in accordance with this Agreement), and no others, are
authorized to make such telephone requests. Any Advance made pursuant to such
telephone request shall only be deposited by Bank into Company's corporate bank
account, Comerica Bank Account Number 1840278004.
2.5 Company may prepay all or part of the outstanding balance of the
Prime-based Advance(s) under the Note at any time. Upon three (3) Business Days'
prior notice to Bank, Company may prepay all or part of any Eurodollar-based
Advance, provided that the amount of any such partial prepayment shall be at
least $100,000 and the unpaid portion of such Advance which is refunded or
converted under Section 3.3 shall be subject to the limitations of Section
2.3(c) hereof. Any prepayment of a Prime-based Advance or a Eurodollar-based
Advance made in accordance with this Section shall be without premium, penalty
or prejudice to Company's right to reborrow under the terms of this Agreement
subject, in the case of Eurodollar-based Advances, to the provisions of Section
4.1 hereof.
2.6 Proceeds of Advances under the Note shall be used for general
corporate purposes, including working capital.
2.7 (a) Provided that no Default or Event of Default has occurred and
is continuing, Company may, upon at least three (3) Business Days' prior written
notice to Bank, permanently reduce the Commitment in whole at any time, or in
part from time to time, without premium or penalty, provided that each partial
reduction of the Commitment shall be in an aggregate amount equal to at least
Ten Million Dollars ($10,000,000) or the aggregate remaining principal amount of
the Commitment, whichever is less.
(b) If the Commitment is reduced under Sections 2.7(a) above,
Company must prepay in accordance with the terms hereof the
amount, if any, by which the aggregate unpaid principal amount
of Advances exceeds the amount of the Commitment, taking into
account the aforesaid reductions thereof, together with
accrued but unpaid interest on the principal amount of such
prepaid Advances to the date of prepayment. If the termination
or reduction of the Commitment requires the prepayment of a
Eurodollar-based Advance on a day other than the last day of
the then current Interest Period applicable to such Advance,
so long as no Default or Event of Default has occurred and is
continuing, Company, rather than immediately prepaying the
Advance, may deposit with the Bank cash collateral acceptable
to the Bank in an amount equal to the prepayment and required
interest payments (to the end of the then current Interest
Payment) to be applied to the Advance at the end of that
Interest Period. Reductions of the Commitment will not be
available for reinstatement by or readvance to the Company and
shall be permanent and irrevocable. If the Company permanently
reduces the
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Commitment to zero and has satisfied all of its obligations
under this Agreement, this Agreement shall terminate (except
for any provisions which, by their terms, explicitly survive
the termination of this Agreement and the payment of
obligations hereunder).
3. INTEREST, INTEREST PERIODS, CONVERSIONS, PREPAYMENTS.
3.1 Interest. The Note and the Advances thereunder shall bear interest
from the date thereof on the unpaid principal balance thereof from time to time
outstanding, at a rate per annum equal to the Prime-based Rate or the
Eurodollar-based Rate, as the Company may elect subject to the provisions of
this Agreement. With respect to each Prime-based Advance, interest shall be
payable quarterly in arrears on the first Business Day of each March, June,
September and December, commencing on the first such Business Day following the
month during which such Advance is made, and at maturity (whether by
acceleration or otherwise). With respect to each Eurodollar-based Advance,
interest shall be payable on the last day of each Interest Period applicable
thereto. Notwithstanding the foregoing, from and after the occurrence of any
Event of Default and during the continuation thereof, the interest shall be
payable on demand, at a rate per annum equal to: (i) in the case of Prime-based
Advances, two percent (2%) above the Prime-based Rate; and (ii) in the case of a
Eurodollar-based Advance, two percent (2%) above the rate which would otherwise
be applicable under this Section 3.1 until the end of the then current Interest
Period, at which time such Advance shall bear interest at the rate provided for
in clause (i) of this Section 3.1. Interest on all Eurodollar-based Advances
shall be calculated on the basis of a 360-day year for the actual number of days
elapsed. Interest on all Prime-based Advances shall be calculated on the basis
of a 365 or 366 day year, as the case may be, for the actual number of days
elapsed. The interest rate with respect to any Prime-based Advance shall change
on the effective date of any change in the Prime-based Rate.
3.2 Interest Periods. Each Interest Period for a Eurodollar-based
Advance shall commence on the date such Eurodollar-based Advance is made or is
converted from an Advance of another type pursuant to Section 3.3 hereof or on
the last day of the immediately preceding Interest Period for such
Eurodollar-based Advance, and shall end on the date one, two or three months
thereafter, as the Company may elect as set forth below, subject to the
following:
(i) no Interest Period shall extend beyond the Maturity
Date; and
(ii) any Interest Period which would otherwise end on a
day which is not a Business Day shall be extended to
the next succeeding Business Day unless the next
succeeding Business Day falls in another calendar
month, in which case, such Interest Period shall end
on the immediately preceding Business Day and when an
Interest Period begins on a day which has no
numerically corresponding day in the calendar month
during which such Interest Period is to end, it shall
end on the last Business Day of such calendar month.
The Company shall elect the initial Interest Period applicable to a
Eurodollar-based Advance by its Request for Advance given to the Bank pursuant
to Section 2.3 or by its notice of conversion given to the Bank pursuant to
Section 3.3, as the case may be. Provided that no Default or Event
11
of Default shall have occurred and be continuing, the Company may elect to
continue an Advance as a Eurodollar-based Advance by giving irrevocable written,
telephonic or telegraphic notice thereof to the Bank, before 12:00 noon on the
third Business Day before the last day of the then current Interest Period
applicable to such Eurodollar-based Advance, specifying the duration of the
succeeding Interest Period therefor. If the Bank does not receive timely notice
of the election and the Interest Period elected by the Company, the Company
shall be deemed to have elected to convert such Eurodollar-based Advance to a
Prime-based Advance at the end of the then current Interest Period.
3.3 Conversion of Advances. Provided that no Default or Event of
Default shall have occurred and be continuing, the Company may, on any Business
Day, convert any outstanding Advance into an Advance of another type in the same
aggregate principal amount, provided that any conversion of a Eurodollar-based
Advance shall be made only on the last Business Day of the then current Interest
Period applicable to such Advance. If the Company desires to convert an Advance,
it shall give the Bank written, telephonic or telegraphic notice, specifying the
date of such conversion, the Advances to be converted, the type of Advance
elected and, if the conversion is into a Eurodollar-based Advance, the duration
of the first Interest Period therefor, which notice shall be given not later
than 12:00 noon on the third Business Day before the applicable date of
conversion. Each notice of conversion described in this Section 3.3 shall
constitute and include a certification by the Company as of the date hereof as
to the matters set forth in clause (f) of Section 2.3.
3.4 Prime-based Advance in Absence of Election or Upon Default. If, (a)
as to any outstanding Eurodollar-based Advance, Bank has not received payment of
all outstanding principal and accrued interest on the last day of the Interest
Period applicable thereto, or does not receive a timely Request for Advance
meeting the requirements of Section 2 hereof with respect to the refunding or
conversion of such Advance, or (b) subject to Section 3.1 hereof, if on such day
a Default or an Event of Default shall have occurred and be continuing, then the
principal amount thereof which is not then prepaid in the case of a
Eurodollar-based Advance shall be converted automatically to a Prime-based
Advance and the Bank shall thereafter promptly notify the Company of said
action.
4. SPECIAL PROVISIONS, CHANGES IN CIRCUMSTANCES AND YIELD PROTECTION.
4.1 If Company makes any payment of principal with respect to any
Eurodollar-based Advance on any day other than the last day of the Interest
Period applicable thereto (whether voluntarily, by acceleration, or otherwise),
or if Company fails to borrow any Eurodollar-based Advance after notice has been
given by Company to Bank in accordance with the terms hereof requesting such
Advance, or if Company fails to make any payment of principal or interest when
due in respect of a Eurodollar-based Advance, Company shall reimburse Bank on
demand for any resulting loss, cost or expense incurred by Bank as a result
thereof, including, without limitation, any such loss, cost or expense incurred
in obtaining, liquidating, employing or redeploying deposits from third parties,
whether or not Bank shall have funded or committed to fund such Advance. Such
amount payable by Company to Bank may include, without limitation, an amount
equal to the excess, if any, of (a) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, refunded or converted, for
the period from the date of
12
such prepayment or of such failure to borrow, refund or convert, through the
last day of the relevant Interest Period, at the applicable rate of interest for
said Advance(s) over (b) the amount of interest (as reasonably determined by
Bank) which would have accrued to Bank on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. Calculation of any amounts payable to Bank under this paragraph shall be
made as though Bank shall have actually funded or committed to fund the relevant
Eurodollar-based Advance through the purchase of an underlying deposit in an
amount equal to the amount of such Advance and having a maturity comparable to
the relevant Interest Period; provided, however, that Bank may fund any
Eurodollar-based Advance in any manner it deems fit and the foregoing
assumptions shall be utilized only for the purpose of the calculation of amounts
payable under this paragraph. Upon the written request of Company, Bank shall
deliver to Company a certificate setting forth the basis for determining such
losses, costs and expenses, which certificate shall be conclusively presumed
correct, absent manifest error.
4.2 For any Interest Period for which the Applicable Interest Rate is
the Eurodollar-based Rate, if Bank shall designate a Eurodollar Lending Office
which maintains books separate from those of the rest of Bank, Bank shall have
the option of maintaining and carrying the relevant Advance on the books of such
Eurodollar Lending Office.
4.3 If with respect to any Interest Period Bank reasonably determines
that, by reason of circumstances affecting the foreign exchange and interbank
markets generally, deposits in Eurodollars in the applicable amounts are not
being offered to the Bank for such Interest Period, then Bank shall forthwith
give notice thereof to the Company. Thereafter, until Bank notifies Company that
such circumstances no longer exist, the obligation of Bank to make
Eurodollar-based Advances, and the right of Company to convert an Advance to or
refund an Advance as a Eurodollar-based Advance shall be suspended.
4.4 If, after the date hereof, the introduction or implementation of,
or any change in, any applicable law, rule or regulation or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by Bank (or its
Eurodollar Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, shall make it unlawful or impossible
for the Bank (or its Eurodollar Lending Office) to honor its obligations
hereunder to make or maintain any Advance, Bank shall forthwith give notice
thereof to Company. Thereafter (a) the obligations of Bank to make
Eurodollar-based Advances and the right of Company to convert an Advance or
refund an Advance as a Eurodollar-based Advance shall be suspended and
thereafter Company may select only the Prime-based Rate as the Applicable
Interest Rate, and (b) if Bank may not lawfully continue to maintain a
Eurodollar-based Advance to the end of the then current Interest Period
applicable thereto, the Prime-based Rate shall be the Applicable Interest Rate
for the remainder of such Interest Period.
4.5 If the adoption or implementation after the date hereof, or any
change after the date hereof in, any applicable law, rule or regulation of any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or its
Eurodollar Lending Office) with any request or directive (whether or not having
the force of law) made by any such authority, central bank or comparable agency
after the date hereof:
13
(a) shall subject Bank (or its Eurodollar Lending Office) to any
tax, duty or other charge with respect to any Advance or the
Note or shall change the basis of taxation of payments to Bank
(or its Eurodollar Lending Office) of the principal of or
interest on any Advance or the Note or any other amounts due
under this Agreement in respect thereof (except for changes in
the rate of tax on the overall net income of Bank or its
Eurodollar Lending Office imposed by any jurisdiction in which
Bank is organized or engaged in business); or
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of
Governors of the Federal Reserve System), special deposit or
similar requirement against assets of, deposits with or for
the account of, or credit extended by Bank (or its Eurodollar
Lending Office) or shall impose on Bank (or its Eurodollar
Lending Office) or the foreign exchange and interbank markets
any other condition affecting any Advance or the Note;
and the result of any of the foregoing is to increase the costs to Bank of
maintaining any part of the indebtedness hereunder or to reduce the amount of
any sum received or receivable by Bank under this Agreement or under the Note,
by an amount deemed by the Bank to be material, then Bank shall promptly notify
Company of such fact and demand compensation therefor and, within fifteen (15)
days after demand by Bank, Company agrees to pay to Bank such additional amount
or amounts as will compensate Bank for such increased cost or reduction. Bank
will promptly notify Company of any event of which it has knowledge which will
entitle Bank to compensation pursuant to this Section. Bank will deliver a
certificate to Company setting forth the basis for determining such additional
amount or amounts necessary to compensate Bank, which certificate shall be
conclusively presumed to be correct save for manifest error. Bank agrees that,
as promptly as practical after it becomes aware of the occurrence of any event
or the existence of a condition that will cause Bank to be entitled to
compensation under this Section, it will, to the extent not inconsistent with
Bank's internal policies, use reasonable efforts to make, fund or maintain any
affected Eurodollar-based Advance through another lending office of Bank if as a
result thereof the additional monies which would otherwise be required to be
paid in respect of such Eurodollar-based Advance would be materially reduced and
if, as determined by Bank, in its reasonable discretion, the making, funding or
maintaining of such Eurodollar-based Advance through such other lending office
would not materially adversely affect such Advance or Bank. Company shall pay
all reasonable expenses incurred by Bank in utilizing another lending office
pursuant to this Section.
4.6 In the event that at any time after the date of this Agreement any
change in law such as described in Section 4.5 hereof, shall, in the reasonable
opinion of Bank require that the credit provided under Section 2 of this
Agreement be treated as an asset or otherwise be included for purposes of
calculating the appropriate amount of capital to be maintained by Bank or any
corporation controlling Bank and such change has or would have the effect of
reducing the rate of return on Bank's or Bank's parent's capital or assets as a
consequence of Bank's obligations hereunder to a level below that which Bank or
Bank's parent would have achieved but for such change, then Bank shall notify
Company and demand compensation therefor and, within five (5) days after demand
by Bank, Company agrees to pay to Bank such additional amount or amounts as will
compensate Bank for such reduction. Bank will promptly notify Company of any
event of
14
which it has knowledge which will entitle Bank to compensation pursuant to this
Section. A certificate of Bank setting forth the basis for determining such
additional amount or amounts necessary to compensate Bank shall be conclusively
presumed to be correct save for manifest error.
5. CONDITIONS
5.1 The effectiveness of this Agreement and the Bank's obligation to
make any Advances under it are conditioned on Company's furnishing to Bank, in
form and substance to be reasonably satisfactory to Bank, (i) certified copies
of resolutions of the boards of directors or partners, as applicable, of each
Loan Party evidencing approval of the transactions contemplated hereunder and
authorizing the execution and delivery of the Loan Documents, and in the case of
the Company, the requests of Advances hereunder, including incumbency and
signatures of authorized officers of the applicable Loan Party; (ii) a
certificate of good standing from the state of each Loan Party's organization
and from the state(s) in which any of them are required to be qualified to do
business; (iii) copies of each Loan Party's articles of incorporation and bylaws
or other constitutional documents, as in effect on the Restatement Date (or, to
the extent applicable, the certificate of an officer of the applicable Loan
Party that the applicable constitutional documents have not been amended or
otherwise modified since the Effective Date and continue in full force and
effect). and (iv) such other documents and instruments as Bank may reasonably
require.
5.2 The effectiveness of this Agreement and the Bank's obligation to
make any Advances under it are conditioned on Company's furnishing, executing
and delivering to Bank, or causing to be furnished, executed and delivered to
Bank, the Guaranty, in form to be satisfactory to Bank and supported by
appropriate resolution in certified form authorizing same.
5.3 The effectiveness of this Agreement and the Bank's obligation to
make any Advances under it are conditioned on Company's payment to Bank of a
$150,000 facility fee.
5.4 The effectiveness of this Agreement and the Bank's obligation to
make any Advances under it are conditioned on the Bank's receiving evidence
satisfactory to it that the Company and the Subsidiaries have obtained the
insurance policies required by Section 7.3 hereof and that such insurance
policies are in full force and effect.
5.5 The effectiveness of this Agreement and the Bank's obligation to
make any Advances under it are conditioned on the Loan Parties (and any of their
respective Subsidiaries or Affiliates) having each performed and complied in all
material respects with all agreements and conditions contained in this
Agreement, other Loan Documents, or any agreement or other document executed
thereunder and required to be performed or complied with by each of them (as of
the applicable date) and none of such parties shall be in material default in
the performance or compliance with any of the terms or provisions hereof or
thereof.
5.6 The effectiveness of this Agreement and the Bank's obligation to
make any Advances under it are conditioned on the Loan Parties' furnishing to
Bank opinions of counsel to the Loan Parties, dated the Restatement Date and
covering such matters as reasonably required by and otherwise reasonably
satisfactory in form and substance to the Bank.
15
5.7 The effectiveness of this Agreement and the Bank's obligation to
make the initial Advance under it are conditioned on the Bank's having received,
a certificate of an authorized officer of the Company dated the date of the
making such Advance hereunder, stating that to the best of his or her knowledge
after due inquiry, (a) the conditions set forth in this Section 5 have been
satisfied; (b) the representations and warranties made by Loan Parties in this
Agreement or any of the other Loan Documents, shall have been true and correct
in all material respects when made and shall be true and correct in all material
respects on and as of the Restatement Date; (c) no Default or Event of Default
shall have occurred and be continuing; and (d) since March 31, 2006 or the date
of the most recent fiscal year end for which Bank has received the financial
statements required to be delivered under Section 7.1(a), whichever is later,
nothing shall have occurred which the Bank shall reasonably determine has had,
or could reasonably be expected to have, a Material Adverse Effect.
5.8 Reserved.
5.9 The obligations of the Bank to make Advances (including the initial
Advance) under this Agreement shall be subject to the occurrence of the
Effective Date and to the continuing conditions that:
(a) No Default or Event of Default shall exist as of the date of
the Advance;
(b) Company and its Subsidiaries shall be in compliance with the
Negative Covenants set forth in Section 8 at the time of and
after giving effect to the Advance, it being understood that
failure to so comply is not a Default or an Event of Default
so long as no Indebtedness is outstanding under this
Agreement; and
(c) Each of the representations and warranties contained in this
Agreement and in each of the other Loan Documents shall be
true and correct in all material respects as of the date of
the Advance as if made on and as of such date (other than any
representation or warranty that expressly speaks only as of a
different date).
6. REPRESENTATIONS AND WARRANTIES
Company represents and warrants and such representations and warranties
shall be deemed to be made on the date of this Agreement, the date of each
Request for Advance and the date of each Advance.
6.1 Each Loan Party is a corporation (or other business entity) duly
organized and existing in good standing under the laws of the state of its
organization; each Loan Party is in good standing in each jurisdiction in which
it is required to be qualified to do business, except where the failure to be so
qualified would not have a Material Adverse Effect.
6.2 Execution, delivery and performance of the applicable Loan
Documents to which any such Loan Party is a party, are within its powers, having
been duly authorized, are not in contravention of law or such Loan Party's
organizational documents or of the unwaived terms of any indenture, agreement or
undertaking to which such Loan Party is a party or by which it is bound, and do
not require the consent or approval of any governmental body, agency or
authority; and the Loan Documents and other documents and instruments required
under
16
thereunder, when issued and delivered, will be valid and binding on such
Loan Party in accordance with their terms.
6.3 No litigation or other proceeding before any court or
administrative agency is pending, or to the knowledge of the officers of
Company, is threatened against any Loan Party, the outcome of which would
reasonably be expected to have a Material Adverse Effect.
6.4 There are no security interests in, liens, mortgages, or other
encumbrances on any of Company's or any Subsidiary's assets, except to Bank or
as otherwise permitted by this Agreement.
6.5 Neither Company nor any Subsidiary maintains or contributes to any
employee pension benefit plan subject to Title IV of ERISA, except those set
forth in attached Schedule 6.5 (each, a "Pension Plan"). There was no material
unfunded past service liability of any Pension Plan maintained by the Company as
of March 31, 2006, and there is no "accumulated funding deficiency" within the
meaning of Section 302 of ERISA, or any existing material liability with respect
to any Pension Plan owed to the Pension Benefit Guaranty Corporation ("PBGC") or
any successor thereto, except any funding deficiency for which an application to
the PBGC for waiver is pending or for which a waiver has been granted by the
PBGC.
6.6 The financial statements of Company for the fiscal year ended March
31, 2006 as filed with the SEC and previously furnished by Company to Bank,
fairly present in all material respects the financial condition of Company and
its consolidated Subsidiaries as of such date; since said date there has been no
material adverse change in the financial condition of Company and its
consolidated Subsidiaries taken as a whole; to the best of the knowledge of
Company's officers, Company does not have any material contingent obligations
(including any liability for taxes) not disclosed by or reserved against those
financial statements, and at the present time there are no material unrealized
or anticipated losses from any present commitment of Company or any of its
Subsidiaries.
6.7 All tax returns and tax reports of Company and its Consolidated
Subsidiaries required by law to have been filed have been duly filed or
extensions obtained, or requested within permitted deadlines and all taxes,
assessments and other governmental charges or levies (other than those presently
payable without penalty and those currently being contested in good faith for
which adequate reserves have been established) upon Company and its consolidated
Subsidiaries (or any of its or their properties) which are due and payable and
for which the failure to pay would materially adversely affect its business or
the value of its property or assets have been paid. The charges, accruals and
reserves on the books of Company in respect of the Federal income tax for all
periods are adequate in the opinion of Company.
6.8 As of the date of this Agreement the Company has no Subsidiaries
other than those listed in Schedule 6.8.
6.9 Except as set forth in Schedule 6.9 and except for such matters as
are not likely to have a Material Adverse Effect:
(a) all facilities and property owned or leased by the Loan
Parties or any of their respective Subsidiaries, are in
material compliance with all Environmental Laws;
17
(b) to the best knowledge of the Company, there have been no
unresolved and outstanding past, and there are no pending or
threatened
(i) claims, complaints, notices or requests for
information received by any Loan Party or any of
their respective Subsidiaries with respect to any
alleged violation of any Environmental Law, or
(ii) written complaints, notices or inquiries to any Loan
Party or any of their respective Subsidiaries
regarding potential liability of the Loan Parties or
any of their respective Subsidiaries under any
Environmental Law; and
(c) to the knowledge of the Company, no conditions exist at, on or
under any property now or previously owned or leased by the
Loan Parties or any of their respective Subsidiaries which,
with the passage of time, or the giving of notice or both,
would give rise to liability of the Loan Parties or any of
their respective Subsidiaries under any Environmental Law.
6.10 Neither the Company nor any of its Subsidiaries is an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
Company is not engaged principally, or as one of its important activities,
directly or indirectly, in the business of extending credit for the purpose of
purchasing or carrying margin stock, and none of the proceeds of any of the
loans hereunder will be used, directly or indirectly, for any purpose which
would violate the provisions of Regulation U or X of the Board of Governors of
the Federal Reserve System. Terms for which meanings are provided in Regulation
U of the Board of Governors of the Federal Reserve System or any regulations
substituted therefor, as from time to time in effect, are used in this paragraph
with such meanings.
7. AFFIRMATIVE COVENANTS
Company covenants and agrees that it will and, as applicable, it will
cause its Subsidiaries to, so long as Bank may make any Advance under this
Agreement (regardless of whether any Indebtedness is outstanding under this
Agreement) and thereafter until the irrevocable final payment in full of the
Indebtedness and the performance by the Loan Parties of all other obligations
under this Agreement and the other Loan Documents:
7.1 Furnish Bank:
(a) as soon as available, but in any event within ninety-five (95)
days after the end of each fiscal year of the Company) a copy
of the audited Consolidated financial statements of Company
and its Subsidiaries as at the end of such year and the
related audited statements of income, accumulated earnings,
and cash flows for such year and underlying assumptions,
setting forth in each case in comparative form the figures for
the previous year, with an opinion satisfactory to the Bank
and certified as being fairly stated in all material respects
by a nationally recognized certified public accounting firm
reasonably satisfactory to the Bank (including Company's
current auditors, Deloitte & Touche, LLP), it being understood
and agreed that the delivery by Company of the Company's form
10-K as filed with the Securities and Exchange Commission
("SEC") for the
18
respective fiscal year and within ninety (90) days after the
close thereof shall satisfy the provisions of this clause (a)
to the extent that such form 10-K contains the information
and/or certification required to be delivered pursuant to this
clause (a) and, to the extent that any such information and/or
certification is not otherwise contained in such form 10-K,
such information and/or certification shall be delivered
together with the respective form 10-K;
(b) as soon as available, but in any event not later than fifty
(50) days after the end of each fiscal quarter of Company,
Company prepared unaudited Consolidated financial statements
of Company and its Subsidiaries as at the end of such fiscal
quarter and the related unaudited statements of income,
accumulated earnings and cash flows of Company and its
Subsidiaries for the portion of the fiscal year through the
end of such fiscal quarter, setting forth in each case in
comparative form the figures for the previous year, and
certified by Company; it being understood and agreed that the
delivery by Company of the Company's form 10-Q as filed with
the SEC for the respective fiscal quarter and within forty
five (45) days after the close thereof shall satisfy the
provisions of this clause (b) to the extent that such form
10-Q contains the information and/or certification required to
be delivered pursuant to this clause (b) and, to the extent
that any such information and/or certification is not
otherwise contained in such form 10-Q, such information and/or
certification shall be delivered together with the respective
form 10-Q;
(c) concurrently with the delivery of each of the financial
statements required by Section 7.1(a) and (b) hereof, a
statement prepared and certified by the chief financial
officer of Company (or in such officer's absence, a
responsible senior officer of Company) (i) stating that as of
the date thereof, no condition or event which constitutes a
Default hereunder or which with the running of time and/or the
giving of notice would constitute an Event of Default
hereunder has occurred and is continuing, or if any such event
or condition has occurred and is continuing or exists,
specifying in detail the nature and period of existence
thereof and any action with respect thereto taken or
contemplated to be taken by Company and (ii) stating that the
signer has personally reviewed this Agreement and that such
certificate is based on an examination sufficient to assure
that such certificate is accurate; and
(d) promptly, and in form to be reasonably satisfactory to Bank,
such other information as Bank may reasonably request from
time to time;
all such financial statements required to be delivered under this Section 7.1 to
be complete and correct in all material respects and to be prepared in
reasonable detail and in accordance with GAAP throughout the periods reflected
therein and consistent with prior periods (except as approved by such officer
and disclosed therein).
7.2 Pay and discharge, and cause its Subsidiaries to pay and discharge,
all taxes and other governmental charges, and all contractual obligations
calling for the payment of money,
19
before the same shall become overdue except (i) where the failure to do so would
not reasonably be expected to have a Material Adverse Effect or (ii) to the
extent only that such payment is being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided upon the books of the Company, provided that, in any event, the Company
will, and will cause its Subsidiaries to pay any such tax, charge or other
obligation prior to the commencement of any proceeding to foreclose any lien
securing the same.
7.3 (a) Keep all property material to its business in working order and
(b) maintain, and cause its Subsidiaries to maintain, insurance coverage on
their physical assets and against other business risks in such amounts and of
such types as are consistent with past practice of Company and in the event of
acquisition of additional property, real or personal, or of incurrence of
additional risks of any nature, increase such insurance coverage in such manner
and to such extent as prudent business judgment and present practice would
dictate.
7.4 Upon reasonable advance notice (unless a Default or Event of
Default has occurred and is continuing in which event such notice shall not be
required) and during normal business hours, permit Bank, through its authorized
attorneys, accountants and representatives, to examine Company's and each
Subsidiary's books, accounts, records, ledgers and assets of every kind and
description at all reasonable times upon oral or written request of Bank, and to
visit all of their respective offices and discuss financial matters with their
respective officers and independent certified public accountants. Company hereby
authorizes such accountants to discuss the finances and affairs of the Loan
Parties and to examine any of its or their books and other corporate records.
7.5 Promptly notify Bank of any condition or event which constitutes a
Default or with the running of time and/or the giving of notice would constitute
an Event of Default under this Agreement, and promptly inform Bank of the
existence or occurrence of any condition or event (other than conditions having
an effect on the economy in general) which could reasonably be expected to have
a Material Adverse Effect.
7.6 Promptly notify Bank of any litigation or other proceeding before
any court or administrative agency that arises, or to the knowledge of the
officers of Company is threatened against any Loan Party after the Restatement
Date, the outcome of which would reasonably be expected to have a Material
Adverse Effect.
7.7 Maintain, and cause its Subsidiaries to maintain, in good standing
all licenses required by their respective states of organization or any agency
thereof, or other governmental authority that may be necessary or required for
Company and its Subsidiaries to carry on its general business objects and
purposes, except where the failure to do so would not reasonably be expected to
have a Material Adverse Effect.
7.8 Continue to engage in the business as substantially now conducted
by the Company and its Subsidiaries and businesses related thereto and preserve,
renew and keep in full force and effect its existence and comply with all
contractual obligations, except to the extent that failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
20
7.9 Comply, and cause its Subsidiaries to comply, in all material
respects, with all material requirements imposed by ERISA as presently in effect
or hereafter promulgated, including but not limited to, the minimum funding
standards under Section 302 of ERISA with respect to any Pension Plan and
promptly notify Bank after the occurrence thereof in writing of any of the
following events:
(a) the termination of a Pension Plan pursuant to Subtitle C of
Title IV of ERISA or otherwise (other than any defined
contribution plan not subject to Section 412 of the Internal
Revenue Code of 1986, as amended and any multi-employer plan);
(b) the appointment of a trustee by a United States District Court
to administer a Pension Plan;
(c) the commencement by the PBGC, or any successor thereto, of any
proceeding to terminate a Pension Plan;
(d) the failure of a Pension Plan to satisfy the minimum funding
requirements for any plan year as established in Section 412
of the Internal Revenue Code of 1986, as amended;
(e) the withdrawal of Company or any Subsidiary from a
"multi-employer" plan, as so defined in Section 4001(a)(3) of
ERISA; or
(f) a reportable event, within the meaning of Title IV of ERISA.
7.10 Reserved.
7.11 (a) Use and operate all of its facilities and properties in
material compliance with all Environmental Laws, keep all necessary permits,
approvals, certificates, licenses and other authorizations under Environmental
Laws in effect and remain in material compliance therewith, and handle all
Hazardous Materials in material compliance with all applicable Environmental
Laws except where the failure to do so would not reasonably be expected to have
a Material Adverse Effect;
(b) Promptly notify Bank and provide copies upon receipt of all
written claims, complaints, notices or inquiries received by
the Company or any of its Subsidiaries of a material nature
relating to its facilities and properties or compliance with
Environmental Laws, and shall promptly cure all violations of
or noncompliance with all Environmental Laws to the extent
that such violations could reasonably be likely to have a
Material Adverse Effect and shall have dismissed with
prejudice to the satisfaction of the Bank any actions and
proceedings relating to compliance with Environmental Laws to
which Company or any of its Subsidiaries is named a party,
other than such actions or proceedings being contested in good
faith and with the establishment of a reasonable reserve;
(c) To the extent necessary to materially comply with
Environmental Laws, remediate or monitor contamination arising
from a release or disposal of Hazardous Material; and
21
(d) Provide such information and certifications which Bank may
reasonably request from time to time to evidence compliance
with this Section 7.11.
7.12 Use all Advances as set forth in Section 2.6.
7.13 Promptly after any Subsidiary (including any Subsidiary formed or
acquired after the date of execution and delivery of this Agreement) that is not
a Guarantor becomes a Material Wholly Owned Domestic Subsidiary of the Company,
the Company must cause each such Subsidiary to execute and deliver to Bank a
joinder to the Guaranty under which such Subsidiary becomes a Guarantor under
the Guaranty, together with such other documentation as Bank may reasonably
require, not later than the date upon which such transaction is consummated.
8. NEGATIVE COVENANTS
Company covenants and agrees that, so long as any Indebtedness remains
outstanding under this Agreement, it will not, and will cause its Subsidiaries
not to, without the prior written consent of Bank (it being understood that the
Company shall not be obligated under this Section 8 at any time no Indebtedness
is outstanding under this Agreement):
8.1 Create, incur, assume, suffer or permit to exist any Debt, except:
(a) Indebtedness to Bank;
(b) unsecured trade payables and accrued liabilities arising in
the ordinary course of Company's business (including, without
limitation, obligations under operating leases);
(c) Debt described in the attached Schedule 8.1;
(d) Debt under Hedging Transactions entered into with respect to
Debt permitted under this Section 8.1;
(e) Intercompany loans between the Company and the Guarantors or
among any Guarantors to the extent permitted by Section
8.8(d);
(f) Intercompany loans from Company or any Guarantor to any
Foreign Subsidiary to the extent permitted by Section 8.8(e);
(g) purchase money Debt incurred in connection with the
acquisition of fixed assets in an aggregate amount not
exceeding $25,000,000 at any time outstanding, and any
renewals or refinancing of such Debt in amounts not exceeding
the scheduled amounts (less any required amortization
according to the terms thereof), on substantially the same
terms as in effect on the Restatement Date and otherwise in
compliance with this Agreement, provided that no Default or
Event of Default has occurred and is continuing, both before
and after giving effect to the incurrence thereof;
22
(h) Debt consisting of Guarantee Obligations of Company and its
Subsidiaries of other Debt of the Company and its Subsidiaries
otherwise permitted to be incurred under this Section 8.1;
(i) Debt under Hedging Transactions (other than those permitted
under clause (d) above) providing protection against
fluctuations in currency values in connection with the
Company's or any of its Subsidiaries' operations so long as
management of the Company or such Subsidiary, as the case may
be, has determined in good faith that the entering into of
such Hedging Transactions are bona fide hedging activities and
are not for speculative purposes;
(j) Debt of a Subsidiary existing at the time of an acquisition
thereof by the Company or a Subsidiary thereof (or Debt
assumed at the time of such an acquisition of an asset
securing such Debt), provided that such Debt was not incurred
in connection with, or in contemplation of, such acquisition;
(k) Debt arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts)
drawn against insufficient funds in the ordinary course of
business, so long as such Debt not otherwise constituting Debt
permitted under this Section 8.1 is extinguished within five
Business Days of the incurrence thereof;
(l) Debt in respect of bid, performance, advance payment or surety
bonds entered into in the ordinary course of business and
consistent with past practices;
(m) Debt resulting from mechanics', materialmen's and other
similar liens that arise by operation of law in connection
with goods and services delivered as part of the construction
and furnishing of Company's new headquarters building, in
Detroit, Michigan, provided, however, that the aggregate
amount of such Debt with respect to any such goods and
services does not exceed One Hundred Million Dollars
($100,000,000); and provided further that no more than Ten
Million ($10,000,000) of such Debt is past due at any time,
and that any such past due Debt is being contested in good
faith with provision for adequate reserves;
(n) Guarantee Obligations of Company or any Subsidiary in the
ordinary course of business of the performance of third
parties acting as subcontractors to Company or any Subsidiary
under contracts between Company and its customers and/or
contracts between any Subsidiary and its customers;
8.2 Enter into any merger or consolidation or sell, lease, assign,
transfer, or dispose of all or substantially all, of its assets, except:
(a) sales of inventory in the ordinary course of its business;
(b) sale or other disposition of obsolete or worn out property,
property no longer useful in the conduct of Company's or a
Subsidiary's business or property from closed offices; and
23
(c) mergers or consolidations of any Subsidiary with or into
Company (so long as Company shall be the continuing or
surviving entity) or with or into any other Subsidiary,
provided that such Subsidiary is a Wholly-owned Subsidiary and
shall be the continuing or surviving entity.
8.3 Reserved.
8.4 Affirmatively pledge or mortgage any of its assets, whether now
owned or hereafter acquired, or create, suffer or permit to exist any lien,
security interest in, or encumbrance thereon, except:
(a) to Bank;
(b) Permitted Liens;
(c) liens described in attached Schedule 8.4;
(d) liens and security interests securing Debt permitted by
Section 8.1(g) provided that (i) such liens are created upon
fixed assets acquired by Company after the date of this
Agreement (including by virtue of a Capitalized Lease); (ii)
any such lien or security interest is created solely for the
purpose of securing indebtedness representing, or incurred to
finance, the cost of the item of property subject thereto;
(iii) the principal amount of the indebtedness secured by such
lien does not exceed 100% of the fair value of the property at
the time it was acquired; (iv) the lien or security interest
does not cover any property other than such item of property
and (v) the aggregate amount of such liens and security
interests does not at any time exceed $25,000,000;
(e) leases or subleases granted to other Persons not materially
interfering with the conduct of the business of the Company or
any of its Subsidiaries;
(f) Liens arising from precautionary UCC financing statement
filings regarding operating leases;
(g) Liens arising out of the existence of judgments or awards not
constituting an Event of Default under Section 9.1(g),
provided that the aggregate amount of all cash and the fair
market value of all other property pledged or deposited to
secure all such judgments or awards shall not exceed
$25,000,000 at any time outstanding;
(h) any lien existing on any property or asset prior to the
acquisition thereof by the Company or any Subsidiary of the
Company or existing on any property or asset of any Person
that becomes a Subsidiary of the Company after the Restatement
Date prior to the time such Person becomes a Subsidiary of the
Company, provided that (i) such lien is not created in
contemplation of or in connection with such acquisition or
such Person becoming a Subsidiary of the Company, as the case
may be, (ii) such lien shall not apply to any other property
or assets of the Company or any Subsidiary of the Company and
(iii) such Lien shall secure only
24
those obligations which it secures on the date of such
acquisition or the date such Person becomes a Subsidiary of
the Company, as the case may be and extensions, renewals and
replacements thereof that do not increase the outstanding
principal amount thereof;
(i) other liens incidental to the conduct of the business or the
ownership of the assets of the Company or any Subsidiary that
either (i) (a) were not incurred in connection with borrowed
money and (b) do not secure obligations in excess of
$10,000,000 in the aggregate for all such liens or (ii) were
created by operation of law in connection with goods and
services delivered as part of the construction of Company's
new headquarters building.
8.5 Sell, assign, transfer or confer a security interest in any
account, contract, note, trade acceptance or other receivable, except to Bank
and except for sales of such accounts, contracts, notes, trade acceptances or
other receivables, the collectability of which Company has determined to be
impaired, as part of Company's commercially reasonable procedures for managing
its collections.
8.6 Materially alter the character of its business from that conducted
as of the date of this Agreement.
8.7 Enter into or allow to continue to exist any transaction or series
of transactions with any Affiliate other than on terms and conditions as
favorable to Company as would be obtainable in a comparable arms-length
transaction with a Person other than an Affiliate; provided, however, that
transactions with Affiliates described in the attached Schedule 8.7, in place on
the date of this Agreement may continue to exist and may be extended or renewed
by Company (or a subsidiary, as appropriate) on terms substantially the same as
those currently in effect, notwithstanding the terms of this Section 8.7.
8.8 Reserved.
8.9 Enter into or become or remain subject to any agreement, other than
this Agreement and any other agreement with respect to Debt permitted under
Section 8.1(g) (but only with respect to assets acquired with such Debt), (i)
prohibiting the creation or assumption of any lien or encumbrance upon the
properties or assets of Company or any Subsidiary or (ii) requiring an
obligation to become secured (or further secured) if another obligation is
secured or further secured.
8.10 Directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on (a) the ability of
any Subsidiary of the Company to pay dividends or make any other distributions
on its capital stock or any other interest or participation in its profits owned
by the Company or any Subsidiary of the Company, or pay any Debt owed to the
Company or any Subsidiary of the Company, (b) the ability of any Subsidiary of
the Company to make loans or advances to the Company or any Subsidiary of the
Company, (c) the ability of any Subsidiary of the Company to transfer any of its
properties or assets to the Company or any Subsidiary of the Company.
25
8.11 Amend, modify or otherwise alter any of the material terms and
conditions of those documents or instruments evidencing or otherwise related to
any Debt set forth on Schedule 8.1, or waive (or permit to be waived) any
provision thereof in any material respect or allow any such amendment,
modification or alteration to remain in effect, in each case without the prior
written approval of Bank.
8.12 Make, permit or consent to any amendment or other modification to
the constitutional documents of any of the Loan Parties except to the extent
that any such amendment (i) does not violate the terms and conditions of this
Agreement or any of the other Loan Documents, and (ii) could not reasonably be
expected to have a Material Adverse Effect.
8.13 Permit the fiscal year of the Company to end on a day other than
March 31.
9. EVENTS OF DEFAULT
9.1 The occurrence of any of the following events shall constitute an
Event of Default hereunder:
(a) non-payment when due of (i) the principal or interest on the
Indebtedness under this Agreement, or (ii) any fees or other
amounts payable by Company hereunder, and in the case of
interest payments and fees, continuance thereof for three (3)
Business Days;
(b) default in the observance or performance of any of the
conditions, covenants or agreements of Company set forth in
Sections 7.1(a) or (b), 7.2, 7.3(b), 7.4, 7.5, 7.6, 7.8, 7.12,
7.13 or Section 8 in its entirety it being understood, for the
avoidance of doubt, that failure to comply with the terms of
Section 8 at any time no Indebtedness is outstanding hereunder
is not an Event of Default;
(c) default in observance or performance of any of the conditions,
covenants or agreements of Company herein set forth in
Sections 7.3(a), 7.7 and continuance thereof for fifteen (15)
days after notice or when a senior officer of the Company
obtains knowledge thereof;
(d) default in the observance or performance of any of the other
conditions, covenants or agreements of Company herein set
forth, and continuance thereof for a period of thirty (30)
days after notice or when a senior officer of the Company
obtains knowledge thereof;
(e) any representation or warranty made by Company or any other
Loan Party herein or in any instrument submitted pursuant
hereto proves untrue in any material adverse respect when made
or deemed made;
(f) default in the payment of any other obligation of any Loan
Party for borrowed money in an aggregate amount in excess of
Twenty Five Million Dollars ($25,000,000) individually or in
the aggregate when due (whether by acceleration or otherwise)
and continuance thereof beyond any applicable period of cure,
or in the observance or performance of any conditions,
covenants or agreements related
26
or given with respect to any obligations for borrowed money in
an aggregate amount in excess of Twenty Five Million Dollars
($25,000,000) individually or in the aggregate when due
(whether by acceleration or otherwise) which continues beyond
any applicable period of cure and which is sufficient to
permit the holder thereof to accelerate the maturity of such
obligation;
(g) judgments for the payment of money in excess of the sum of
Twenty Five Million Dollars ($25,000,000) in the aggregate
shall be rendered against Company or any of its Subsidiaries
and such judgments shall remain unpaid, unvacated, unbonded or
unstayed by appeal or otherwise for a period of twenty one
(21) consecutive days from the date of its entry and such
judgment is not covered by insurance from a solvent insurer
who is defending such action without reservation of rights;
(h) the occurrence of any event, which is determined by the PBGC
to constitute grounds for termination by the PBGC of any
Pension Plan of Company or any Subsidiary or for the
appointment by the appropriate United States District Court of
a trustee to administer such plan, and such event is not
corrected and such determination is not revoked within sixty
(60) days after notice thereof has been given to the plan
administrator or Company or the applicable Subsidiary; or the
institution of proceedings by the PBGC to terminate any such
Pension Plan or to appoint a trustee to administer such plan;
or the appointment of a trustee by the appropriate United
States District Court to administer any such Pension Plan.
(i) a Change of Control shall occur;
(j) if the Guaranty is revoked or the validity, binding effect or
enforceability of any provision thereof is challenged by any
Loan Party;
(k) any Loan Party shall be dissolved or liquidated (or any
judgment, order or decree therefor shall be entered). If a
creditors' committee shall have been appointed for the
business of the any Loan Party; or if any Loan Party shall
have made a general assignment for the benefit of creditors or
shall have been adjudicated bankrupt and if not an
adjudication based on a filing by Company it shall not have
been dismissed within sixty (60) days, or shall have filed a
voluntary petition in bankruptcy or for reorganization or to
effect a plan or arrangement with creditors or shall fail to
pay or admits in writing its inability or refusal to pay, its
debts generally as such debts become due in the ordinary
course of business (except as contested in good faith and for
which adequate reserves are made in such party's financial
statements); or shall file an answer to a creditor's petition
or other petition filed against it, admitting the material
allegations thereof for an adjudication in bankruptcy or for
reorganization; or shall have applied for or permitted the
appointment of a receiver or trustee or custodian for any of
its property or assets; or such receiver, trustee or custodian
shall have been appointed for any of its property or assets
(other than upon application or consent of any Loan Party) and
shall not have been removed within sixty (60) days; or if an
order shall be entered approving any petition for
reorganization of any Loan Party and shall not have been
reversed or dismissed within sixty (60) days; or any Loan
27
Party shall take any action (corporate or other) authorizing
or in furtherance any of the actions described above in this
subsection;
(l) any material provision of any Loan Document shall at any time
for any reason cease to be valid, binding and enforceable
against Loan Party or, (other than in accordance with the
terms thereof), as applicable, or the validity, binding effect
or enforceability thereof shall be contested by the any Loan
Party or any Loan Party shall deny that it has any or further
liability or obligation under any Loan Document, or any such
Loan Document shall be terminated (other than in accordance
with the terms thereof), invalidated, revoked or set aside or
in any way cease to give or provide to the Bank the benefits
purported to be created thereby.
9.2 If an Event of Default has occurred and is continuing hereunder:
(a) the Bank may declare the Commitment terminated; (b) the Bank may declare the
entire unpaid principal Indebtedness, immediately due and payable, without
presentment, notice or demand, all of which are hereby expressly waived by
Company; (c) upon the occurrence of any Event of Default specified in subsection
9.1(k), above, and notwithstanding the lack of any declaration by Bank, the
entire unpaid principal Indebtedness shall become automatically and immediately
due and payable, and the Commitment shall be automatically and immediately
terminated; (d) the Bank may exercise any remedy permitted by this Agreement,
the other Loan Documents or law.
9.3 The remedies provided for herein are cumulative to the remedies for
collection of the Indebtedness as provided by law, in equity or by any Loan
Document. Nothing herein contained is intended, nor shall it be construed, to
preclude Bank from pursuing any other remedy for the recovery of any other sum
to which Bank may be or become entitled for the breach of this Agreement by
Company.
9.4 Upon the occurrence and during the continuance of any Event of
Default, Bank may at any time and from time to time, without notice to the
Company (any requirement for such notice being expressly waived by the Company),
set off and apply against any and all of the obligations of the Company now or
hereafter existing under this Agreement, any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Bank to or for the credit or the account
of Company, irrespective of whether or not such deposits held or indebtedness
owing by the Bank may be contingent and unmatured. Promptly following any such
setoff, the Bank shall give written notice to Company of the occurrence thereof.
The Company hereby grants to the Bank a lien on and security interest in all
such deposits, indebtedness and property as collateral security for the payment
and performance of all of the obligations of the Company under this Agreement.
The rights of the Bank under this Section 9.4 are in addition to the other
rights and remedies (including, without limitation, other rights of setoff)
which the Bank may have.
9.5 No Event of Default may be waived by the Bank except in a writing
signed by an officer of the Bank. No single or partial exercise of any right,
power or privilege hereunder, nor any delay in the exercise thereof, shall
preclude other or further exercise of its rights by Bank. No waiver of any Event
of Default shall extend to any other or further Event of Default. No forbearance
on the part of the Bank in enforcing any of its rights shall constitute a waiver
of any
28
of its rights. Company expressly agrees that this Section 9.5 may not be waived
or modified by the Bank by course of performance, estoppel or otherwise.
10. MISCELLANEOUS
10.1 This Agreement shall be binding upon and shall inure to the
benefit of Company and Bank and their respective successors and assigns, except
that the credit provided for under this Agreement and no part thereof and no
obligation of Bank hereunder shall be assignable or otherwise transferable by
Company.
10.2 Company shall pay all closing costs and expenses, including, by
way of description and not limitation, reasonable outside attorney fees (without
duplication of fees and expenses for the same services) and lien search fees
incurred by Bank in connection with the commitment, consummation and closing of
this Agreement or any subsequent amendment of this Agreement or any other Loan
Document. All of said amounts required to be paid by Company may, at Bank's
option if they remain unpaid for fifteen (15) days after payment therefore is
requested by Bank, be charged by Bank as an advance against the proceeds of the
Note. All costs, including reasonable attorney fees incurred by Bank in
protecting or enforcing any of its rights against Company or in defending Bank
from any claims or liabilities by any party or otherwise incurred by Bank in
connection with a Default or an Event of Default (including evaluation of
whether a Default or Event of Default exists or will exist) or the enforcement
of this Agreement or the related documents, including by way of description and
not limitation, such charges in any court or bankruptcy proceedings or arising
out of any claim or action by any person against Bank which would not have been
asserted were it not for Bank's relationship with Company hereunder, shall also
be paid by Company.
10.3 Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, it shall be done in accordance with GAAP.
10.4 No delay or failure of Bank in exercising any right, power or
privilege hereunder shall affect such right, power or privilege, nor shall any
single or partial exercise thereof preclude any further exercise thereof, or the
exercise of any other power, right or privilege. The rights of Bank under this
Agreement are cumulative and not exclusive of any right or remedies which Bank
would otherwise have.
10.5 Except as expressly provided otherwise in this Agreement, all
notices and other communications provided to any party hereto under this
Agreement shall be in writing and shall be given by personal delivery, by mail,
by reputable overnight courier, by telex or by facsimile and addressed or
delivered to it at its address set forth below or at such other address as may
be designated by such party in a notice to the other parties that complies as to
delivery with the terms of this Section 10.5. Any notice, if personally
delivered or if mailed and properly addressed with postage prepaid and sent by
registered or certified mail, shall be deemed given when received; any notice,
if given to a reputable overnight courier and properly addressed, shall be
deemed given two (2) Business Days after the date on which it was sent, unless
it is actually received sooner by the named addressee; and any notice, if
transmitted by telex or facsimile,
29
shall be deemed given when received (answerback confirmed in the case of telexes
and receipt confirmed in the case of telecopies). Bank may, but shall not be
required to, take any action on the basis of any notice given to it by
telephone, but Company shall promptly confirm such notice in writing or by telex
or facsimile, and such notice will not be deemed to have been received until
such confirmation is deemed received in accordance with the provisions of this
Section set forth above. If such telephonic notice conflicts with any such
confirmation, the terms of such telephonic notice shall control.
To Company:
Compuware Corporation
Xxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attn: Chief Financial Officer
Fax No.: (000) 000-0000
With a copy to : General Counsel at the same address and fax number
To Bank:
One Detroit Center
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. X'Xxxxxx and Xxxxxxx Xxxxx
Fax No.: (000) 000-0000
10.6 This Agreement and the Note have been delivered at Detroit,
Michigan, and shall be governed by and construed and enforced in accordance
with the laws of the State of Michigan. Whenever possible each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. Company and Bank hereby irrevocably submit to the non-exclusive
jurisdiction of any United States Federal Court or Michigan state court sitting
in Detroit, Michigan in any action or proceeding arising out of or relating to
this Agreement or any of the Loan Documents and Company and Bank hereby
irrevocably agree that all claims in respect of such action or proceeding may be
heard and determined in any such United States Federal Court or Michigan state
court. Company irrevocably consents to the service of any and all process in any
such action or proceeding brought in any court in or of the State of Michigan by
the delivery of copies of such process to Company at its address specified on
the signature page hereto or by certified mail directed to such address or such
other address as may be designated by Company in a notice to the other parties
that complies as to delivery with the terms of Section 10.5. Nothing in this
Section shall affect the right of the Bank to serve process in any other manner
permitted by law or limit the right of the Bank to bring any such action or
proceeding against Company or any Subsidiary or any of its or their property in
the courts with subject matter jurisdiction of any other jurisdiction. Company
hereby irrevocably waives any objection to the laying of venue of any such suit
or proceeding in the above described courts.
30
10.7 No amendments or waiver of any provisions of this Agreement nor
consent to any departure by Company therefrom shall in any event be effective
unless the same shall be in writing and signed by the Bank and the Company, and
then such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No amendment, waiver or
consent with respect to any provision of this Agreement shall affect any other
provision of this Agreement.
10.8 All sums payable by Company to Bank under this Agreement or the
other documents contemplated hereby shall be paid directly to Bank at its
principal office set forth in Section 10.5 hereof in immediately available
United States funds, without set off, deduction or counterclaim. In its sole
discretion, Bank may charge any and all deposit or other accounts (including
without limit an account evidenced by a certificate of deposit) of Company with
Bank for all or a part of any Indebtedness then due; provided, however, that
this authorization shall not affect Company's obligation to pay, when due, any
Indebtedness whether or not account balances are sufficient to pay amounts due.
10.9 Any payment of the Indebtedness made by mail will be deemed
tendered and received only upon actual receipt by Bank at the address designated
for such payment, whether or not Bank has authorized payment by mail or any
other manner, and shall not be deemed to have been made in a timely manner
unless received on the date due for such payment, time being of the essence.
Company expressly assumes all risks of loss or liability resulting from
non-delivery or delay of delivery of any item of payment transmitted by mail or
in any other manner. Acceptance by Bank of any payment in an amount less than
the amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be an Event
of Default, and at any time thereafter and until the entire amount then due has
been paid, Bank shall be entitled to exercise any and all rights conferred upon
it herein upon the occurrence of an Event of Default. Upon the occurrence and
during the continuance of a an Event of Default, Company waives the right to
direct the application of any and all payments at any time or times hereafter
received by Bank from or on behalf of Company. Upon the occurrence and during
the continuance of an Event of Default, Company agrees that Bank shall have the
continuing exclusive right to apply and to reapply any and all payments received
at any time or times hereafter against the Indebtedness in such manner as Bank
may deem advisable, notwithstanding any entry by Bank upon any of its books and
records. Company expressly agrees that to the extent that Bank receives any
payment or benefit and such payment or benefit, or any part thereof, is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or is required to be repaid to a trustee, receiver, or any other party under any
bankruptcy act, state or federal law, common law or equitable cause, then to the
extent of such payment or benefit, the Indebtedness or part thereof intended to
be satisfied shall be revived and continued in full force and effect as if such
payment or benefit had not been made and, further, any such repayment by Bank,
to the extent that Bank did not directly receive a corresponding cash payment,
shall be added to and be additional Indebtedness payable upon demand by Bank.
10.10 In the event Company's obligation to pay interest on the
principal balance of the Note is or becomes in excess of the maximum interest
rate which Company is permitted by law to contract or agree to pay, giving due
consideration to the execution date of this Agreement, then, in that event, the
rate of interest applicable shall be deemed to be immediately reduced to
31
such maximum rate and all previous payments in excess of such maximum rate shall
be deemed to have been payments in reduction of principal and not of interest.
10.11 COMPANY AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.
10.12 This Agreement may be executed in several counterparts, and each
executed copy shall constitute an original instrument, but such counterparts
together shall constitute but one and the same instrument.
10.13 This Agreement, the Note (if issued) and any Requests for Advance
hereunder, and the other Loan Documents contain the entire agreement of the
parties hereto, superseding all prior agreements, discussions and understandings
relating to the subject matter hereof, and none of the parties shall be bound by
anything not expressed in writing. In the event of any conflict between the
terms of this Agreement and the other Loan Documents, this Agreement shall
govern.
10.14 In case any one or more of the obligations of Company under this
Agreement, the Note or any of the other Loan Documents shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining obligations of Company shall not in any way be affected or
impaired thereby, and such invalidity, illegality or unenforceability in one
jurisdiction shall not affect the validity, legality or enforceability of the
obligations of Company under this Agreement, the Note or any of the other Loan
Documents in any other jurisdiction.
10.15 Each covenant hereunder shall be given independent effect
(subject to any exceptions stated in such covenant) so that if a particular
action or condition is not permitted by any such covenant (taking into account
any such stated exception), the fact that it would be permitted by an exception
to, or would be otherwise within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default.
10.16 All terms, covenants, agreements, representations and warranties
of Company or any party to any of the Loan Documents made herein or in any of
the Loan Documents or in any certificate, report, financial statement or other
document furnished by or on behalf of Company or any Subsidiary in connection
with this Agreement or any of the Loan Documents shall be deemed to have been
relied upon by the Bank, notwithstanding any investigation heretofore or
hereafter made by Bank, and those covenants and agreements of Company set forth
in Section 10.17 hereof (together with any other indemnities of Company or any
Subsidiary contained elsewhere in this Agreement or in any of the other Loan
Documents) shall survive the repayment in full of the Indebtedness and the
termination of the Commitment.
32
10.17 (a) Company agrees to indemnify and hold Bank harmless from all
loss, cost, damage, liability or expenses, including reasonable outside
attorneys' fees and disbursements (but without duplication of fees and expenses
for the same services), incurred by Bank by reason of an Event of Default, or
enforcing the obligations of Company or any Subsidiary under this Agreement or
any of the other Loan Documents or in the prosecution or defense of any action
or proceeding concerning any matter growing out of or connected with this
Agreement or any of the Loan Documents, excluding, however, any loss, cost,
damage, liability or expenses arising solely as a result of the gross negligence
or willful misconduct of the party seeking to be indemnified under this Section
10.17(a).
(b) Company agrees to defend, indemnify and hold harmless Bank,
and its respective employees, agents, officers and directors
from and against any and all claims, demands, penalties,
fines, liabilities, settlements, damages, costs or expenses of
whatever kind or nature (including without limitation,
reasonable attorneys and consultants fees, investigation and
laboratory fees, environmental studies required by Bank in
connection with the violation of Environmental Laws, court
costs and litigation expenses, excluding however, those
arising solely as a result of the gross negligence or willful
misconduct of the Person seeking indemnification, as the case
may be) arising out of or related to (i) the presence, use,
disposal, release or threatened release of any Hazardous
Materials on, from or affecting any premises owned or occupied
by Company or any of their respective Subsidiaries in
violation of or non-compliance with applicable Environmental
Laws, (ii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related
to such Hazardous Materials, (iii) any lawsuit or other
proceeding brought or threatened, settlement reached or
governmental order or decree relating to such Hazardous
Materials, (iv) if any Event of Default exists and remains
uncured, the cost of remediation or monitoring of all
Hazardous Materials in violation of or non-compliance with
applicable Environmental Laws from all or any portion of any
premises owned by Company or their respective Subsidiaries,
(v) if any Event of Default exists and remains uncured,
complying or coming into compliance with all Environmental
Laws and/or (vi) if any Event of Default exists and remains
uncured, any violation of Environmental Laws. The obligations
of Company under this Section 10.17(b) shall be in addition to
any and all other obligations and liabilities the Company may
have to Bank at common law or pursuant to any other agreement.
10.18 The Company authorizes Bank, in its sole discretion, upon one
Business Day's notice to Company (or without notice if an Event of Default has
occurred and is continuing), to charge its general deposit account(s) maintained
at Bank for the amount of any principal, interest, or other amounts or costs due
under this Agreement when the same become due and payable under the terms of
this Agreement or the Note.
10.19 (a) On the Restatement Date, the Prior Credit Agreement shall be
amended, restated and superseded in its entirety. The parties hereto acknowledge
and agree that (i) this Agreement, the Note, and the other Loan Documents
executed and delivered in connection herewith do not constitute a novation,
payment and reborrowing, or termination of the "Indebtedness" (as defined in the
Prior Credit Agreement) under the Prior Credit Agreement as
33
in effect prior to the Restatement Date; and (ii) such "Indebtedness" is in all
respects continuing with only the terms thereof being modified as provided in
this Agreement;
(b) Notwithstanding the modifications effected by this Agreement of the
representations, warranties and covenants of Company contained in the Prior
Credit Agreement, Company acknowledges and agrees that any causes of action or
other rights created in favor of Bank and its successors arising out of the
representations and warranties of Company contained in or delivered (including
representations and warranties delivered in connection with the making of the
loans or other extensions of credit thereunder) in connection with the Prior
Credit Agreement shall survive the execution and delivery of this Agreement;
provided, however, that it is understood and agreed that Company's monetary
obligations under the Prior Credit Agreement in respect of the advances
thereunder are evidenced by this Agreement as provided herein. All
indemnification obligations of Company pursuant to the Prior Credit Agreement
(including any arising from a breach of the representations thereunder) shall
survive the amendment and restatement of the Prior Credit Agreement pursuant to
this Agreement.
(c) On and after the Restatement Date, (i) each reference in the Loan
Documents to the "Credit Agreement", "thereunder", "thereof" or similar words
referring to the Credit Agreement shall mean and be a reference to this
Agreement and (ii) each reference in the Loan Documents to a "Note" shall mean
and be a Note as defined in this Agreement.
WITNESS the due execution hereof as of the day and year first above
written.
[SIGNATURES ARE ON FOLLOWING PAGE]
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COMERICA BANK COMPUWARE CORPORATION
By: /s/ Xxxxxxx X. X'Xxxxxx By:
--------------------------- ------------------------
Its: Vice President Its:
------------------------
35
ACKNOWLEDGMENT OF GUARANTOR
The undersigned is the Guarantor under that certain Guaranty dated
May 2, 2003 ("Guaranty") made by the undersigned in favor of Comerica Bank
("Bank") with respect to the obligations and liabilities of Compuware
Corporation, a Michigan corporation ("Company") to Bank. The undersigned (a)
acknowledges the execution and delivery of the foregoing Amended and Restated
Credit Agreement, (b) affirms each of its obligations to Bank under the
Guaranty, and (c) acknowledges and agrees that the Guaranty remains in full
force and effect in accordance with its terms and that the undersigned has no
defense, counterclaim or setoff to its obligations under the Guaranty.
Dated: July 27, 2006
COMPUWARE INTERNATIONAL I LLC
By: Compuware Corporation
Its: Sole Member
By: /s/ Xxxxx Xxxxxxxx
------------------------------
Its: Chief Financial Officer
36
