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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from__________ to___________
Commission File Number 0-4096
COMSHARE, INCORPORATED
(Exact name of registrant as specified in its charter)
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<S><C>
MICHIGAN 38-1804887
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
555 BRIARWOOD CIRCLE, ANN ARBOR, MICHIGAN 48108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (313) 994-4800
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $1.00 Par Value
Rights to Purchase Preferred Shares
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Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statement
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
The aggregate market value of the Common Stock held by non-affiliates of the
Registrant as of August 29, 1997 based on $8.19 per share, the last sale price
for the Common Stock on such date as reported on the Nasdaq Stock Market -
National Market System, was approximately $77,668,000.
As of August 29, 1997 the Registrant had 9,871,773 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document
Portions of Proxy Statement for the Part of Form 10-K Report
1997 Annual Meeting of Shareholders into which it is incorporated
("The 1997 Proxy Statement") III
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PART 1
ITEM 1. BUSINESS
This Business section contains forward looking statements that involve
uncertainties. Actual results could differ materially from those in the
forward looking statements due to a number of uncertainties, including, but not
limited to those discussed below, particularly in "Business - Uncertainties
Relating to Forward Looking Statements."
GENERAL
Comshare, Incorporated and its subsidiaries (collectively referred to as
"Comshare" or the "Company") develop, market and support client/server decision
support software applications designed to improve business analysis, planning,
reporting and decision making. The Company's software products enable the
enterprise-wide integration and transformation of data into business-critical
information and provide customers with robust multidimensional analysis
capabilities. More specifically, the Company focuses on delivering complete
decision support solutions by providing implementation, consulting, training
and support services in these markets. Such complete decision support
solutions permit the implementation and adoption of the Company's software
applications throughout an enterprise, thus enabling end-users to make faster
and better decisions. Comshare offers several decision support applications
designed for use by customers in any industry, as well as decision support
applications targeted to meet the specific needs of the retail industry.
BUSINESS STRATEGY
The Company's objective is to be the leading provider of client/server decision
support applications in its target markets. The Company's strategy includes
the following key elements:
1. A product strategy of offering complete decision support solutions. The
Company's software products address the full range of a customer's
information access and analysis needs from data extraction to end-user
desktop access. Packaged applications are designed to satisfy the specific
decision support needs of a company, especially in budgeting, planning,
sales analysis, and performance measurement.
2. A product development strategy which uses a common technology platform,
Comshare Application Architecture, for new products. Commander Decision
was the first product built using the Comshare Application Architecture.
The use of a common technology platform permits the addition of new
software tools and technological advances to all products developed using
the Comshare Application Architecture at the same time. In addition, the
Company expects to be able to develop new packaged applications more
quickly by leveraging the underlying technology capabilities of the
Comshare Application Architecture.
3. A product design strategy which capitalizes on innovative
internally-developed technology and third-party software tools offering
the latest technological advances. The Company believes the use of
third-party tools allows it to focus product development efforts on
differentiating applications and developing innovative technology, while
offering products which include the latest technological advances and
reducing product development risk and time to market.
4. A marketing strategy designed to leverage the Company's current customer
base through sales of additional or new products to existing clients and
the extension into other departments or functional areas of existing
clients, and to leverage the Company's established direct and indirect
international sales distribution network in 41 countries. By utilizing
its extensive worldwide sales network, the Company can address the global
needs of its international customers for decision support applications
software and provide the implementation, consulting, training and support
services required.
5. A service and support strategy of offering superior implementation,
consulting, training and support to the Company's customers.
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The foregoing statements regarding the Company's product expansion, design,
development and market strategy contain "forward looking statements" within the
meaning of the Securities Exchange Act of 1934. Actual results could differ
materially from those in the forward looking statements due to a number of
uncertainties, including, but not limited to, those described below and under
"Business - Uncertainties Relating to Forward Looking Statements".
PRODUCTS
The Company offers several decision support applications designed for use by
customers in any industry, as well as decision support applications targeted to
meet the specific needs of the retail industry.
Comshare's software products are generally licensed to end-user customers under
non-exclusive perpetual license agreements. Software license fees for the
Company's decision support software applications vary widely depending upon the
product, platform and number of users supported. Add-on features and products
are available for additional fees. The initial amount paid by customers
purchasing decision support applications typically covers the software license
fee and product maintenance for the first year of the license. Customers may
continue product maintenance thereafter for an annual fee normally ranging from
15 to 20 percent of the software license fee.
GENERAL INDUSTRY APPLICATIONS
The general industry sales force services all customers outside of the retail
industry and sells the Company's products designed for use by customers in any
industry. These products include Commander Decision, Commander DecisionWeb,
Commander BudgetPLUS, Commander FDC and Commander Sales Analysis.
DSS Applications
Comshare's flagship products are Commander Decision and Commander DecisionWeb,
the latest generation decision support products for client/server systems and
web-based systems, respectively, which follow a long line of Executive
Information Systems ("EIS") products offered by the Company. Comshare was
among the first software companies to successfully introduce EIS products to
the market.
Commander Decision and Commander DecisionWeb are decision support ("DSS")
application designed to provide information to a wide range of business users
for planning, analysis, reporting and decision-making. Typical applications
include customer and product profitability analysis, sales reporting and
analysis, business unit profitability analysis, critical success factor
reporting and key performance indicator monitoring. The Company designed them
to be customized by the Company's consultants, third parties or the customers
themselves to meet specific customer requirements.
These products capitalize on the increased use of multidimensional analysis by
business professionals to solve business problems. Using multidimensional
analysis, business professionals view information in a manner which is
consistent with their perception of the underlying business. For example, for
a business organized along geographic lines and product lines, a business
professional is able to view this data across multiple time periods. Commander
Decision and Commander DecisionWeb facilitate these and other multidimensional
analyses by permitting end-users to structure business data across the multiple
dimensions of importance to these users.
Commander Decision includes a full suite of client/server software necessary to
deliver enterprise-wide decision support solutions. Commander Decision is
designed using the latest 32-bit Microsoft technology, and supports NT on the
server and Windows 95 and Windows NT on the client/desktop.
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The Commander Decision software includes:
Data Integrator. A powerful back-end which gathers, consolidates,
interprets, cleanses and reshapes data from multiple, disparate data
sources, including spreadsheets, relational database management systems
("RDBMS"), data warehouses, legacy systems and other data repositories.
Multidimensional Database Software. Customers can choose from one of
three multidimensional databases: Essbase developed by Arbor Software
Corporation ("Arbor"), Oracle Express provided by Oracle Corporation
("Oracle"), or TM1 provided by Applix, Inc. ("Applix"). Each of these
multidimensional databases provides a comprehensive on-line analytical
processing ("OLAP") solution that stores and summarizes data, and
supports concurrent multi-user read-write for multidimensional analysis.
Decision Access Module ("DecAM"). Comshare's internally-developed
technology which is the backbone of Commander Decision. DecAM
facilitates fast-response sorting of large volumes of data by reducing
the size of the multidimensional database and increasing the speed of
computation-intensive functions, such as sorting and ad hoc calculations,
by processing the calculations on the server.
Decision Desktop. An analysis and presentation front-end which presents
business information in five ways: graphically, through charts;
geographically, through an integrated mapping system; visually, through
color-coded exception reporting; analytically, through ad hoc queries and
calculations; and proactively, through Comshare's innovative Detect &
Alert technology and advanced exceptions technology. By pointing and
clicking, end-users are able to easily and quickly query the information,
drill down for more detail, change dimensions and extract data for
further analysis. End-users alternatively may select Microsoft Excel or
Lotus 1-2-3 front-ends, which provide spreadsheet capability.
Commander DecisionWeb includes a full suite of software necessary for delivery
of enterprise-wide decision support applications using a company's intranet.
Commander DecisionWeb is a Web server-based component of Commander Decision
which provides users with an alternative method of accessing the same
multidimensional decision support applications available through Decision
Desktop.
Using DecisionWeb, users around the world can link to DSS applications using
only a Java-enabled Internet browser. DecisionWeb can deliver web-based
applications with the functionality found in traditional client/server
solutions, such as exception reporting, personal calculations, sorting, the
ability to write data back to the central database, and customizable points of
entry for individual users.
In addition to providing powerful user capabilities, the Java applet approach
simplifies the process of building and maintaining production-scale
applications. Commander DecisionWeb includes a developer module that allows
administrators or information providers to define grid and chart formats,
select data sources, and choose dimensions. DecisionWeb generates the
appropriate Web pages, which can be distributed and customized as needed.
Commander Decision and its companion DecisionWeb are both based on the Comshare
Application Architecture, so organizations can deliver the same applications
using a combination of Commander Decision Desktops and Internet browsers.
Decision and DecisionWeb together provide an effective solution for a wide
range of application requirements and user needs. For example, sophisticated
users can get the benefit of Decision Desktop's rich analysis environment,
while the typical business user can analyze and report using the browser, and
all users are able to access and work with the same applications and consistent
data.
Budgeting and Financial Reporting Applications
Commander BudgetPLUS, commercially available at the end of fiscal 1996, is a
client/server based application offering full multi-dimensional budgeting
functionality.
As an integrated budgeting, analysis, and reporting application, Commander
BudgetPLUS is designed to improve productivity, shorten budget cycles and
enhance the quality and usability of an enterprise's budgeting information.
Commander BudgetPLUS has built in data collection mechanisms that integrate
with Lotus and Excel spreadsheets, and load enterprise data from other systems.
Commander BudgetPLUS also offers salary planning and asset
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planning capabilities. Commander BudgetPLUS allows the end-users to define
enterprise wide calculations, allocations and adjustments to the budget data.
The use of the Comshare Application Architecture provides a powerful
information delivery and analysis mechanism, exception reporting and
enterprise-wide information distribution.
Commander FDC is a statutory consolidation and financial reporting application
which collects and consolidates financial data from different general ledgers,
spreadsheets, and other sources within a multi-division or multi-location
company and produces consolidated financial reports for management, public and
statutory reporting. Commander FDC performs currency translation, handles
intercompany eliminations and account reclassifications and is readily
adaptable to the changing reporting needs of the end-user.
Commander FDC consists of data extraction tools, a central database and a
choice of front ends. The data extraction tools within Commander FDC collect,
integrate, summarize and filter data from multiple, disparate data sources.
Commander FDC utilizes a Btrieve database that permits the integration of
consolidated historical and budgetary financial data, giving the end-user the
option of a fully-integrated financial management system. Commander FDC is
offered with Microsoft Excel or Lotus 1-2-3. Customers may separately purchase
Execu-View Finance, which allows users point-and-click access to interactively
browse, report, graph and analyze information generated by Commander FDC.
Other
Commander Sales Analysis, initially aimed solely at the consumer goods market,
is now available to the broad general market. This application is designed for
sales representatives, key account managers, business unit managers, and sales
executives. Sales Analysis allows users to track sales and profits, compare
actual results to planned targets, and monitor growth trends and product
contributions. A unique and intuitive "Question and Answer" interface guides
users through the database to find the most relevant information.
Comshare continues to support Commander OLAP, the client/server predecessor to
Commander Decision, and earlier LAN-based EIS products. The Company also sells
and supports System W and IFPS decision support products for use on mainframe
and UNIX-based computers. Customers use System W and IFPS for applications
similar to those performed with Commander Decision and Commander OLAP, although
the multidimensional database resides on the mainframe, rather than on the
server. Because market demand has shifted towards client/server technology,
the mainframe-related portions of Comshare's general industry business have
declined significantly in recent years. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
RETAIL DECISION SUPPORT APPLICATIONS
The Company offers retailers a suite of decision support software, sold under
the ARTHUR brand name, specifically tailored to their merchandise planning
needs, as well as the general industry products described above.
The Arthur Enterprise Suite
Comshare's Arthur Enterprise Suite, a set of retail decision support
applications, enables retailers to focus an entire organization on strategic
decision making, and integrates the critical business processes of merchandise
planning, allocation and tracking. Arthur Enterprise Suite allows the
retailer to review results, plan future merchandise seasons, and respond
quickly to actual performance as necessary.
Members of Arthur Enterprise Suite
TRACKING is a sale reporting application which enables retailers to see trends
across the product lines at various levels of detail over multiple periods on a
store-by-store basis. With Arthur's powerful exception highlighting, the users
can spot market opportunities and changing sales patterns.
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PLANNING enables retailers to create detailed merchandise plans. Goals can be
pushed down rapidly to the detailed levels. The impact of a change at a
detailed level can be quickly viewed at the summary. Gaps between desired
sales targets and planned targets can be identified. The impact of intake
timing, pricing, markdowns, or promotions can be analyzed, allowing the users
to formulate alternative merchandise strategies quickly.
ALLOCATION gives the retailer an automatic way to allocate merchandise received
among its stores. Using the assortment plan as the basis for distribution,
Allocation can blend in current performance to optimize product allocations.
Allocation allows retailers to match various products to each store's
particular characteristics, customer base and capacity.
SERVICES AND SUPPORT
The Company offers implementation, consulting, training, pre-sales and
post-sales technical support and maintenance to complement its software product
offerings. Comshare supports its product offerings with customer support from
its teams of industry and product decision support specialists and its
worldwide agent/distributor network.
IMPLEMENTATION AND CONSULTING SERVICES
Implementation and consulting services are offered for all of the Company's
decision support software products, and include application design and
modification, installation assistance, implementation and troubleshooting
support.
Comshare complements its services through partnership arrangements with value
added consultants who complete a certification process. Implementation and
consulting certification is a distinction given to recognize consultants
qualified in the use of Comshare applications and products. The certification
process is also designed to help Comshare's customers receive quality service
and support, training, project oversight and service monitoring. Comshare
certified value added consultants include, among others, Andersen Consulting,
Applied Retail Technology, Legacy Technology, Orion Financials, and Technium in
the U.S.; A.G. Solutions, Ltd. in the U.K.; Cap Gemini Sogeti and Valoris in
France and Kurt Salmon Associates in the U.S., U.K. and Germany.
SOFTWARE MAINTENANCE AND SUPPORT
The Company provides customer telephone helpline support staffed with
experienced professionals. Customers under maintenance receive product
enhancements and updates, bug fixes and access to Comshare's helpline web
pages. Initial product license fees typically include the first year of
maintenance support. Thereafter, maintenance customers pay an annual
maintenance fee, which is typically 15 to 20 percent of the software license
fee.
CUSTOMER TRAINING
Comshare offers a training program to customers and third party consultants.
Training classes are provided by the Company at customer sites, at its local
sales offices and at its central training centers in Ann Arbor, Michigan and
London, England. The Company's training program is designed for end-users and
system support staff and includes a variety of training classes covering
software applications functional use, applications building, and system
administration.
CUSTOMERS
Comshare has implemented its client/server and mainframe decision support
applications software, and is currently providing maintenance, at more than
3,000 corporate and public sector customer sites in 41 countries. Comshare's
diversified customer base includes many Fortune 1000 and Financial Times 1000
industrial companies as well as
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large and mid-sized companies in the communications, financial services, health
care, retail and transportation industries, and many governmental and other
public sector organizations.
SALES AND MARKETING
Comshare products and services are sold on a worldwide basis by a direct sales
operation and by an extensive worldwide agent/distributor network. Both of
these complementary distribution channels leverage the Company's industry and
application expertise and offer pre-sales and post-sales implementation,
consulting, and customer support and services.
The Company sells and markets its software products and services in the United
States, Canada, United Kingdom, France and Germany through direct sales
organizations. Direct sales operations are organized geographically, and
within a geographic region, are generally organized by industry.
The Company has an extensive agent/distributor network covering 36 countries
not directly served by the Company. The Company has selected established
software application vendors or systems integration firms to act as agents and
distributors to market, implement and support Comshare products in their
respective geographic areas. Comshare derived 20% of its total revenue in
fiscal 1997 from the Company's agent/distributor network.
To generate sales, the Company conducts comprehensive marketing programs which
include direct mail, public relations, advertising, seminars, trade shows and
on-going customer communication programs. The sales cycle begins with the
generation of a sales lead or request for proposal from a prospect. After a
lead is qualified, the Company's sales force analyzes the potential customer's
decision support needs and makes one or more presentations to the potential
customer. After obtaining a preliminary commitment, the Company often develops
customized demonstrations to illustrate how the Company's products will satisfy
a customer's specific needs. The sales cycle varies in length from customer to
customer, but typically requires three to six months or more.
RESEARCH AND PRODUCT DEVELOPMENT
The Company's product development strategies are: (1) to provide packaged
decision support applications that meet customer needs for planning, analysis,
reporting, and improving the effectiveness of an organization's management; (2)
to leverage a common technology platform, Comshare Application Architecture,
for implementation on traditional client/server platforms and on the emerging
intranet platform; (3) to provide multiple database technologies to better
support customer needs; and (4) to leverage third-party software tools.
To support its application strategy, the Company developed a common
architectural platform known as Comshare Application Architecture ("CAA").
This architecture is a three-tiered design that includes a database tier, an
application server tier, and a client-side presentation tier with standard
interfaces which allow changes in one tier without affecting the other tiers.
The CAA offers several benefits for future product development. First, new
applications can be developed using the CAA allowing the Company to leverage
existing technology. Second, the CAA gives the Company the ability to support
multiple platforms in its database and client tiers. Current platforms
supported include Applix's TM1, Arbor's Essbase and Oracle's Express and
Oracle7 databases. Third, CAA will enable the Company to implement innovative,
differentiating features in the application server tier, which will benefit all
applications developed based on CAA. Fourth, CAA will allow the Company to
integrate its application products for the benefit of customers who buy
multiple Comshare applications.
The Company has increasingly incorporated third-party tools into its products
in order to focus its internal product development efforts on applications, and
reduce product development risk and time to market. Commander Decision, which
was built using the Comshare Application Architecture, employs third-party OLAP
technology in its database tier and multiple third-party objects in its
presentation tier (e.g. a third-party charting object, a third-party data grid
object, a third-party geographic mapping object, and a third party scripting
language).
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During the fiscal years ended June 30, 1997, 1996, and 1995 worldwide internal
research and development expenses were (in thousands):
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1997 1996 1995
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Internal research and product development $15,556 $15,977 $16,180
As a % of total revenue 16.8% 13.4% 14.9%
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The markets for the Company's products are characterized by rapid technological
advances, evolving industry standards, changes in customer requirements and
frequent introductions and enhancements of competitive products. The Company's
success and future financial performance will depend on its ability to
anticipate these changes as they occur and to enhance its existing products and
develop new products in a timely and cost-effective manner which keeps pace
with these changes. There can be no assurance that the Company will be able to
successfully accomplish future technological or product transitions, that the
Company will not experience significant delays in developing new products or
enhancements required to accomplish such transitions, or that the Company will
have sufficient financial resources available to it to finance such efforts.
There can be no assurance as to the impact that any such transition would have
on the Company's revenue or profitability. In addition, there can be no
assurance that the Company's new products and enhancements will adequately
address the changing needs of the marketplace and achieve market acceptance or
that developments by others will not render the Company's products obsolete or
noncompetitive.
The foregoing statements regarding the Company's product development efforts
contain "forward looking statements" within the meaning of the Securities
Exchange Act of 1934. Actual results could differ materially from those in the
forward looking statements due to a number of uncertainties, including, but not
limited to, those described below and under "Business - Uncertainties Relating
to Forward Looking Statements".
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
The Company's success is dependent on its proprietary technology. The Company
does not hold any material patents and seeks to protect its technology
primarily through trademarks, copyrights, employee and third-party
non-disclosure agreements and trade secret laws, which afford only limited
protection.
Comshare distributes its software products under software license agreements
which generally grant customers a non-exclusive license to use the Company's
products. The Company considers its software products to be valuable and
unique assets and actively attempts to protect them contractually by generally
restricting usage to internal operations, and prohibiting the unauthorized
reproduction or transfer to third parties. The Company also believes that the
nature of its customers and the provision of continuing maintenance and support
services reduce the risk of unauthorized reproduction.
The Company has registered certain of its trademarks and copyrights. The
Company is the owner of various trademarks, including ARTHUR, BOOST(R),
Commander Budget, Commander BudgetPLUS, Commander Decision, Detect and
Alert(R), Commander EIS, Commander Execu-View Server, Commander FDC, Commander
NewsAlert, The Decision Support Company(R), Commander DecisionWeb, and Comshare
Application Architecture. The Company's software bears appropriate copyright
notices.
The laws of some foreign countries do not protect the Company's proprietary
rights to the same extent as do the laws of the United States. In addition,
certain provisions of the Company's contracts prohibiting unauthorized
reproduction may be unenforceable under the laws of certain foreign countries.
There can be no assurance that the steps taken by the Company to protect its
proprietary rights will be adequate to prevent misappropriation of its
technology or development by others of similar or superior technology.
Although the Company believes that its products and technology do not infringe
on any existing proprietary rights of others, there can be no assurance that
third parties will not assert infringement claims in the future or that any
such claims will not require the Company to enter into license arrangements or
result in litigation, regardless of the merits of such claims. No assurance
can be given that any necessary licenses will be available or that, if
available, such licenses can be obtained on commercially reasonable terms.
Should litigation with respect to any such claims commence, such litigation
could be extremely expensive and time-consuming.
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LICENSED TECHNOLOGIES
The Company licenses certain software programs and tools from third parties and
incorporates them into the Company's products. Generally, these licenses are
non-exclusive worldwide licenses providing for varying royalty payments and
expiration dates. The Company believes that the inclusion of third-party
software programs and tools in its products reduces product development risk
and time to market.
Examples of third-party software tools that the Company incorporates into its
products include Applix's TM1, Arbor's Essbase, Btrieve Technology, Inc.'s
Btrieve database, Microsoft Excel, Oracle's Express, and Strategic Mapping,
Inc.'s Atlas View SDK. During fiscal 1997, the Company was substantially
dependent upon Arbor's Essbase to provide the critical multidimensional
functionality for Commander Decision and certain of its other products. The
Company's worldwide license for Essbase expires December 31, 2001. The license
may be terminated in the event of an uncured material breach. The Company and
Arbor disagree about certain definitions in the license agreement related to
the calculation of royalties and are currently in litigation, see Item 3 -
"Legal Proceedings" and Note 12 of Notes to Consolidated Financial Statements.
In fiscal 1997, the Company completed agreements with Oracle and Applix, and
now offers Commander Decision on three different databases: Essbase, Express
and TM1. The Company has under development relational versions of certain of
its other applications. The Company's strategy is to support multiple
databases through the use of Comshare Application Architecture.
COMPETITION
The markets for Comshare's software products are highly competitive and
characterized by continued change and rapid technological advancements. In
general, the Company competes principally on the basis of: (1) software
application utility, which includes the extent to which its product offerings
meet specific end-user markets and needs; (2) functionality, which includes the
breadth and depth of features and functions and ease-of-use; (3) service and
support, which includes the range and quality of technical support, training
and consulting services; (4) vendor reputation; (5) product architecture, which
includes distributed computing capability, and ease of customization and
integration with other applications; and (6) product pricing in relation to
performance. The Company believes it competes favorably with respect to these
factors.
The client/server applications software market, including the market for
decision support software, is intensely competitive, highly fragmented and
subject to rapid change and evolving industry standards. Because the Company
offers multiple products, the Company competes with a variety of other
companies depending on the target market for their applications software
products. The Company competes primarily with Oracle Corporation, which
purchased Express software from Information Resources, Inc., and Hyperion
Software Corporation. In the retail decision support applications markets, the
Company also competes with a few software vendors who have specific planning
and sales tracking applications.
The Company also competes with a variety of additional software companies,
third-party professional service organizations that develop custom software and
with internal information technology departments which develop decision support
solutions. Among The Company's current and potential competitors are a number
of large software companies, including developers of spreadsheets, RDBMSs, data
warehouses, database query and reporting tools, transaction processing-based
applications and OLAP technologies, that may elect to increase the decision
support capabilities of their current products or that may develop or acquire
products that compete with the Company's products. In addition, recent
acquisitions and adoptions of OLAP technologies by various software vendors may
result in increased competition in the Company's markets. Increased
competition could result in price reductions, reduced operating margins and
loss of market share. In addition, many of the Company's current and potential
competitors have significantly greater financial, technical, marketing and
other resources than the Company. As a result, they may be able to respond
more quickly to new or emerging technologies and changes in customer
requirements, or to devote greater resources to the development, promotion and
sale of products than the Company. There can be no assurance that the Company
will be able to compete successfully against current and future competitors.
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INTERNATIONAL OPERATIONS
The Company derived 47.6%, 53.1% and 55.3% of its total revenue from outside
North America in fiscal 1997, 1996, and 1995, respectively, and expects that
revenue generated outside North America will continue to represent a
significant portion of the Company's total revenue. This international
business is subject to various risks inherent in international activities,
including the impact on the Company's operations of, and the burdens of
complying with, a wide variety of laws, regulations, rules and policies of
local foreign governments, such as those relating to currency controls, hiring
and termination of employees, import restrictions and the protection of
proprietary rights.
The Company's international operations also expose the Company to constantly
fluctuating currency rates. Currency fluctuations have in the past adversely
affected, and may in the future adversely affect, the Company's reported
revenue, expenses and shareholders' equity. The Company's international sales
are primarily denominated in foreign currencies. As a result, an increase in
the value of the U.S. dollar relative to foreign currencies may have the effect
of reducing the Company's reported revenue and profits from international sales
denominated in such currencies. Currency exchange rate fluctuations can also
result in gains and losses from foreign currency exchange transactions. The
Company at various times has entered into forward exchange contracts to hedge
exposures related to foreign currency exchange transactions. Because the
Company only selectively hedges against certain large transactions that present
the most exposure to exchange rate fluctuations, the Company's results of
operations will continue to be impacted by fluctuations in foreign currency
exchange rates, which at times could be material. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and Note 1 of
Notes to Consolidated Financial Statements.
EMPLOYEES
Comshare employed 579 full-time employees as of June 30, 1997; including 220 in
sales and marketing, 121 in consulting and implementation services, 106 in
research and product development, and 132 in customer support and
administration. None of the Company's employees is represented by a collective
bargaining agreement, nor has the Company experienced any work stoppages. The
Company considers its relations with its employees to be good.
MISCELLANEOUS
Compliance with federal, state and local laws and ordinances that regulate the
discharge of materials into the environment has not had, and is not expected to
have, a material effect upon the capital expenditures, earnings or competitive
position of Comshare.
UNCERTAINTIES RELATING TO FORWARD LOOKING STATEMENTS
"Item 1. Business" and other parts of this Form 10-K contain "forward-looking
statements" within the meaning of the Securities Exchange Act of 1934, as
amended. Actual results could differ materially from those in the forward
looking statements due to a number of uncertainties, including, but not limited
to, those discussed in this section and in "Business Strategy", "Research and
Product Development", "Intellectual Property and Proprietary Rights", "Licensed
Technologies", "Competition" and "International Operations" above.
The Company's future results could differ materially from those in the forward
looking statements due to a number of uncertainties, including, but not limited
to, the demand for the Company's products and services; the size, timing and
recognition of revenue from significant orders; increased competition; the
Company's success in and expense associated with developing, introducing and
shipping new products, particularly in markets not previously served by the
Company; new product introductions and announcements by the Company's
competitors; changes in Company strategy; product life cycles; the cost and
continued availability of third party software and technology incorporated into
the Company's products; the impact of rapid technological advances, evolving
industry standards and changes in customer requirements; the impact of recent
transitional changes in North American and international management and sales
personnel; the impact of the investigation into violations of the Company's
revenue recognition policies on the Company's ongoing operations; cancellations
of maintenance and support agreements; software defects; changes in operating
expenses; variations in the amount of cost savings anticipated to result from
11
<PAGE> 12
cost reduction actions; the impact of cost reduction actions on the Company's
operations; fluctuations in foreign exchange rates; and economic conditions
generally or in specific industry segments. In addition, a significant portion
of the Company's revenue in any quarter is typically derived from non-recurring
license fees, a substantial portion of which is booked in the last month of a
quarter. Since the purchase of the Company's products is relatively
discretionary and generally involves a significant commitment of capital, in
the event of any downturn in any potential customer's business or the economy
in general, purchases of the Company's products may be deferred or canceled.
Further, the Company's expense levels are based, in part, on its expectations
as to future revenue and a significant portion of the Company's expenses do not
vary with revenue. As a result, if revenue is below expectations, results of
operations are likely to be materially adversely affected.
12
<PAGE> 13
ITEM 2. PROPERTIES
Comshare leases sales offices and general office space in 18 major cities
throughout the United States, Canada and Europe. Comshare's primary leased
locations are identified in the following table:
<TABLE>
<CAPTION>
Approximate Lease
Area in Principal Expiration
Location Square Feet Activity Date
- -------- ----------- -------- ----
<S> <C> <C> <C>
Headquarters,
Administration, Sales,
Marketing, Research
Ann Arbor, and Product Development
Michigan 70,700 and Customer Support February 2005*
London, Administration, Sales, Marketing and
England 52,115 Implementation Services January 2008
</TABLE>
* Option to cancel February 2000.
ITEM 3. LEGAL PROCEEDINGS
Between August 9, 1996 and September 5, 1996, following the Company's
announcement of certain violations of the Company's revenue recognition
policies, four separate shareholder class action suits were filed in the United
States District Court for the Eastern District of Michigan against the Company
and certain of its officers and directors on behalf of shareholders who had
purchased the Company's common stock between April 17, 1996 and August 6, 1996.
The Court consolidated the four suits into one class action, In Re Comshare,
Incorporated Securities Litigation, and the plaintiffs amended their complaint
to expand the class to shareholder who had purchased the Company's common stock
between August 2, 1995 and August 6, 1996. The action alleged that the
plaintiffs sustained losses as a result of the defendant's alleged untrue
statements of material facts and alleged omissions to state material facts
necessary in order to make the statements made not misleading. The complaint
sought unspecified damages and costs. On September 18, 1997 the court
dismissed all of the claims. The plaintiffs have thirty days from the date of
entry of the order in which to appeal the dismissal.
In 1996, Arbor Software Corporation ("Arbor"), following an audit of the
Company's records, demanded that the Company submit certain issues involving
interpretation of royalty provisions of the license agreement between the
Company and Arbor to binding arbitration. Arbor and the Company were in the
process of working out a procedure for and definition of all legal and
accounting issues to be resolved by such arbitration when, on September 27,
1996, Arbor filed a lawsuit against Comshare in the United States District
Court for the Northern District of California alleging breach of contract and
fraud relating to royalty calculations. The Company filed a denial of all of
Arbor's claims and filed a counterclaim against Arbor for fraud, defamation,
unfair competition, interference with economic relationships and breach of
contract. The parties are in the process of conducting discovery, and trial
is currently scheduled for May 1998. The Company is contesting Arbor's claims
and pursuing its own counterclaims vigorously.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
13
<PAGE> 14
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
PRICE RANGE OF COMMON STOCK
The Company's common stock is traded on The Nasdaq Stock Market - National
Market System under the symbol "CSRE".
The following table sets forth, for the periods indicated, the high and low per
share closing sales prices for the Company's common stock as reported on The
Nasdaq Stock Market - National Market System. All amounts in the following
table have been adjusted to reflect the three-for-two stock split effective in
the second quarter of fiscal 1996.
<TABLE>
<CAPTION>
FISCAL YEAR MARKET PRICES
ENDING JUNE 30 HIGH LOW
-------------- ---- ---
<S> <C> <C> <C>
1995 First Quarter $ 8.50 6.00
Second Quarter 9.83 7.17
Third Quarter 11.50 8.83
Fourth Quarter 14.33 10.00
1996 First Quarter 21.58 13.50
Second Quarter 25.67 17.33
Third Quarter 27.25 20.00
Fourth Quarter 31.50 20.25
1997 First Quarter 31.63 11.63
Second Quarter 17.50 13.00
Third Quarter 18.75 13.00
Fourth Quarter 14.38 11.25
1998 First Quarter $12.38 8.13
(through August 29, 1997)
</TABLE>
At August 29, 1997, there were approximately 1,200 holders of record of the
Company's common stock.
DIVIDEND POLICY
The Company has not paid dividends on its common stock since incorporation. It
is the Company's present policy to retain earnings for use in the Company's
business. Accordingly, the Company does not anticipate that cash dividends
will be paid in the foreseeable future. The Company's credit agreement
contains covenants which prohibit the payment of cash dividends on the common
stock. See Note 3 of the Notes to Consolidated Financial Statements regarding
restrictions on the payment of dividends.
14
<PAGE> 15
ITEM 6. SELECTED CONSOLIDATED FINANCIAL INFORMATION
The selected financial data for the five fiscal years ended June 30 are derived
from the audited Consolidated Financial Statements of the Company. This
information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements and related Notes included elsewhere in this annual report
on Form 10-K.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Revenue $ 92,831 $118,984 $108,358 $96,626 $105,194
Income from operations
before unusual and
restructuring charges (19,727) 6,375 8,850 3,991 218
Income (loss) from operations (25,972) (16,792) 2,485 1,648 (1,271)
Net income (loss) (17,117) (9,891) 5,328 222 (1,763)
Per share $ (1.75) $ (1.09) $ 0.63 $ 0.03 $ (0.22)
Average shares
(thousands) 9,770 9,048 8,398 8,234 7,978
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
------------------------------------------------------------
1997 1996 1995 1994 1993
------- ------ ------ ------ ------
(IN THOUSANDS)
CONSOLIDATED BALANCE SHEET DATA:
<S> <C> <C> <C> <C> <C>
Cash & cash equivalents $11,651 $27,468 $ 1,398 $ 1,774 $ 2,593
Total assets 80,751 98,238 79,310 88,944 92,582
Long-term debt 343 1,913 5,436 15,354 16,058
Total shareholders' equity $31,959 $48,664 $32,548 $26,506 $26,161
ADDITIONAL DATA:
Number of employees at year-end 579 695 686 729 862
</TABLE>
NOTES: (1) The income (loss) from operations for the fiscal years ended
June 30, 1997, 1996, 1995, 1994 and 1993 includes restructuring
and unusual charges of $6,245,000, $23,167,000, $6,365,000,
$2,343,000 and $1,489,000, respectively. See Note 2 of the Notes
to Consolidated Financial Statements for information regarding
restructuring and unusual charges.
(2) The fiscal year ended June 30, 1996 included a $1,200,000 tax
benefit which related to the settlement of certain tax issues and
the amendment of certain tax returns to claim credits which had
previously not been claimed.
(3) The fiscal year ended June 30, 1995 included a $4,100,000 tax
benefit related to the recognition of prior years net operating
losses and tax credits, as well as tax reserves released.
(4) The fiscal year ended June 30, 1994 included a $1,100,000
gain from the sale of undeveloped land.
15
<PAGE> 16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, certain financial
data as a percentage of total revenue:
<TABLE>
<CAPTION>
AS A PERCENT OF TOTAL REVENUE
YEAR ENDED
JUNE 30,
-------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
REVENUE
Software licenses 39.2 % 48.5 % 45.5 %
Software maintenance 38.8 31.2 33.8
Implementation, consulting and other services 22.0 20.3 20.7
------ ------ ------
TOTAL REVENUE 100.0 100.0 100.0
COSTS AND EXPENSES
Selling and marketing 57.7 43.2 41.8
Cost of revenue and support 32.9 26.7 22.9
Internal research and product development 16.8 13.4 14.9
Internally capitalized software (7.5) (5.2) (10.8)
Software amortization 7.7 5.5 12.2
General and administrative 13.7 11.0 10.8
Unusual charge - 19.5 5.9
Restructuring related costs 6.7 - -
------ ------ ------
TOTAL COSTS AND EXPENSES 128.0 114.1 97.7
------ ------ ------
INCOME (LOSS) FROM OPERATIONS (28.0) (14.1) 2.3
Interest and other income (expense) 0.2 0.4 (0.2)
------ ------ ------
INCOME (LOSS) BEFORE INCOME TAXES (27.8) (13.7) 2.1
Provision (benefit) for income taxes (9.4) (5.4) (2.8)
------ ------ ------
NET INCOME (LOSS) (18.4)% (8.3)% 4.9 %
====== ====== ======
</TABLE>
16
<PAGE> 17
REVENUE
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, PERCENT JUNE 30, PERCENT JUNE 30,
REVENUE 1997 CHANGE 1996 CHANGE 1995
---- ------ ---- ------ ------
<S> <C> <C> <C> <C> <C>
Software licenses $ 36,455 (36.8)% $ 57,715 17.1% $ 49,294
Software maintenance 35,983 (3.0) 37,095 1.2 36,649
Implementation &
consulting svcs. 20,393 (15.6) 24,174 7.8 22,415
--------- -------- ---------
TOTAL REVENUE $ 92,831 (22.0)% $118,984 9.8% $ 108,358
========= ======== =========
</TABLE>
Total revenue decreased 22% in fiscal 1997 compared with fiscal 1996 primarily
due to the decline in software license revenue. Total revenue increased 9.8%
in fiscal 1996 compared with fiscal 1995 primarily due to the growth in
software license revenue.
SOFTWARE LICENSE REVENUE
Software license revenue decreased 36.8% in fiscal 1997 compared with fiscal
1996. The decline in software license fee revenue was mainly due to a loss of
sales momentum from turnover in the Company's international sales force, as a
result of the Company's investigation into violations of the Company's revenue
recognition policies, and turnover in the Company's domestic sales force as a
result of transitional changes in the sales organization.
Software license revenue increased 17.1% in fiscal 1996 compared with fiscal
1995. This growth in software license revenue primarily reflected the strong
demand for the Company's application products, primarily Commander Decision and
Commander OLAP, its predecessor.
In connection with the Company's fiscal 1996 year end audit, the Company
discovered side letters setting forth conditions to certain foreign orders in
violation of the Company's revenue recognition policies. No violations were
found in U.S. orders. The growth in fiscal 1996 for all the Company's products
was negatively impacted by these violations, although it is difficult to
estimate what license growth would have been in fiscal 1996 without the
violation of Company policies. The full impact on fiscal 1996 loss before
taxes from orders requiring non-recognition or reversal was approximately $6.9
million, which included amounts for prior quarters and years. These prior
period adjustments are not material to the quarters or year to which they
relate, and prior period results were not restated.
SOFTWARE MAINTENANCE REVENUE
Software maintenance revenue decreased 3.0% in fiscal 1997 compared with fiscal
1996. The decrease in fiscal 1997 was mainly due to the decline in software
maintenance revenue from mainframe products. Mainframe software maintenance
revenue decreased 26.7% in fiscal 1997 and 30.9% in fiscal 1996 primarily due
to mainframe maintenance cancellations and continued customer migration to
client/server platforms. The decline in mainframe software maintenance revenue
in fiscal 1997 was partially offset by an 8% increase in client/server
maintenance revenue. Client/server software maintenance revenue represented
76%, or $27.4 million, of total software maintenance revenue in fiscal 1997,
compared to 68%, or $25.4 million, in fiscal 1996 and 54%, or $19.7 million, in
fiscal 1995.
Software maintenance revenue increased 1.2% in fiscal 1996 compared to fiscal
1995 principally due to the 28.8% growth in client/server maintenance revenue,
partially offset by the 30.9% decline in mainframe software maintenance
revenue.
Mainframe software maintenance revenue is expected to continue to decline.
IMPLEMENTATION AND CONSULTING SERVICES REVENUE
Implementation, consulting and other service revenue decreased 15.6% in fiscal
1997 compared with fiscal 1996 principally due to a lower number of billable
consultants as a result of the lower level of software license revenue, and to
the sale of the Company's Australian business to an agent in June 1996.
17
<PAGE> 18
Implementation, consulting and other service revenue increased 7.8% in fiscal
1996 compared to fiscal 1995 primarily due to increased demand for such
services resulting from the growth in client/server software license revenue,
primarily in the EIS market.
COSTS AND EXPENSES
<TABLE>
<CAPTION>
YEAR YEAR YEAR
ENDED ENDED ENDED
JUNE 30, PERCENT JUNE 30, PERCENT JUNE 30,
1997 CHANGE 1996 CHANGE 1995
---- ------ ---- ------ ------
<S> <C> <C> <C> <C> <C>
COST AND EXPENSES
Selling and marketing $ 53,552 4.3 % $ 51,354 13.4 % $ 45,283
Cost of revenue and support 30,594 (3.8) 31,814 28.3 24,799
Internal research and product development 15,556 (2.6) 15,977 (1.3) 16,180
Internally capitalized software (6,966) 13.2 (6,153) (47.3) (11,667)
Software amortization 7,129 9.1 6,535 (50.7) 13,250
General and administrative 12,693 (3.0) 13,082 12.2 11,663
-------- -------- --------
Total costs and expenses before unusual
charge and restructuring costs 112,558 - 112,609 13.2 99,508
Unusual charge - * 23,167 * 6,365
Restructuring related costs 6,245 * - - -
-------- -------- --------
TOTAL COSTS AND EXPENSES $118,803 (12.5) % $135,776 28.2 % $105,873
======== ======== ========
</TABLE>
* % not meaningful.
Total costs and expenses in fiscal 1997 included a $6.2 million charge for
restructuring related costs, and in fiscal 1996 a $23.2 million non-cash charge
to write off capitalized software. Total operating expenses, excluding
restructuring and unusual charges, in fiscal 1997 were relatively flat compared
with fiscal 1996, and increased 13.2% from fiscal 1995 to fiscal 1996.
Selling and marketing expense increased 4.3% in fiscal 1997 compared to fiscal
1996 primarily due to increased spending on marketing activities to promote the
Company's new applications. The increase was partially offset by the cost
reduction actions taken in the third quarter of fiscal 1997 and decreased
commissions on lower software license revenue. Selling and marketing expense
increased 13.4% in fiscal 1996 compared to fiscal 1995 mainly due to increased
employee-related expenses, including travel and compensation costs, and agency
fees, incurred in support of the growth in software license revenue.
Cost of revenue and support expense decreased 3.8% in fiscal 1997 compared with
fiscal 1996 principally due to the decrease in implementation services costs
with lower service revenue. Cost of revenue and support expense increased
28.3% in fiscal 1996 compared with fiscal 1995 primarily due to increased third
party royalty fees as a result of increased software license revenue from
certain Comshare products, and higher employee-related costs and outside
consulting fees related to the growth in implementation and consulting services
revenue.
Internal research and product development expense decreased 2.6% in fiscal 1997
compared to fiscal 1996 mainly due to the cost reduction actions taken early in
the third quarter of fiscal 1997 in connection with the consolidation of the
Company's product development activities in Ann Arbor, Michigan and closing of
the Leicester, England product development facility, partially offset by
increased spending for on-going enhancements to existing software products.
Internal research and product development expense in fiscal 1996 was relatively
flat compared with fiscal 1995 reflecting relatively little change in the size
of the development staff.
Internally capitalized software increased 13.2% in fiscal 1997 compared to
fiscal 1996 mainly due to the increased levels of development costs that were
capitalizable. Software amortization expense increased in fiscal 1997 compared
to fiscal 1996 due to the increased levels of capitalized software. Internally
capitalized software and software amortization expense decreased in fiscal 1996
compared to fiscal 1995 primarily due to the reduced levels of capitalized
software as a result of the $23.2 million write-off of capitalized software in
the second quarter of fiscal 1996 as described below.
18
<PAGE> 19
General and administrative expense, excluding the fiscal 1996 provisions for
$900,000 of professional service fees associated with the investigation into
violations of the Company's revenue recognition policies, $760,000 reserved in
connection with the termination of the Company's vacated office facility in
London, England and $600,000 gain on sale of the Company's Australian business,
increased 5.6% in fiscal 1997 compared to fiscal 1996, and increased 3.1% in
fiscal 1996 compared to fiscal 1995. The increase in fiscal 1997 was primarily
due to increased legal fees as a result of the Arbor Software litigation as
described under Item 3 - "Legal Proceedings" and Note 12 of the Notes to
Consolidated Financial Statements. The increase in fiscal 1996 was primarily
attributable to employee-related costs.
In fiscal 1997, during the third quarter ended March 31, 1997, the Company
recorded a $6.2 million restructuring charge for management actions or plans in
connection with the consolidation of the Company's product development
activities in Ann Arbor, Michigan and reductions in staff and non-revenue
generating costs. The restructuring had a $4.2 million negative after tax
impact on net income. The restructuring charge included staff reductions of
approximately 70 employees. These cost reduction actions were expected to save
approximately $6.8 million annually. At June 30, 1997, $2.0 million remains to
be paid for termination of employment and contractual obligations related to
these restructuring actions taken during the third quarter ended March 31,
1997. See Note 2 of Notes to Consolidated Financial Statements. The Company
will incur a charge of approximately $1.6 million related to the termination of
certain executives and others in the first quarter of fiscal 1998.
In fiscal 1996, during the second quarter ended December 31, 1995, the Company
recorded a $23.2 million non-cash charge to write off certain capitalized
software. The write-off had a $15.5 negative after tax impact on net income.
The write-off was the result of strong customer interest in the Company's
product, Commander Decision, for customizable decision support applications,
which substantially reduced the realizable value of the Company's older desktop
products. The write-off also reflected the reduction of the estimated useful
service life of the Company's products and the amortization period of its
capitalized software costs, prompted by the Company's acceleration of its
product development cycles in response to changes in the technological
environment in the decision support applications market. See Note 2 of Notes
to Consolidated Financial Statements.
OTHER INCOME AND EXPENSE
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
OTHER INCOME (EXPENSE)
Interest income (expense) $ 494 $ 492 $ (512)
Exchange gain (loss) (310) (50) 307
----- ----- ------
TOTAL OTHER INCOME (EXPENSE) $ 184 $ 442 $ (205)
===== ===== ======
</TABLE>
The increase in net interest income resulted from a decline in interest expense
and bank related charges in fiscal 1997 compared to fiscal 1996. Partially
offsetting lower interest expense was a decrease in interest income in fiscal
1997 compared to fiscal 1996 primarily due to lower cash levels as a result of
cash used in operating and investment activities. Interest income increased in
fiscal 1996 compared to fiscal 1995 due to investment of the net proceeds
received from the public offering of the Company's common stock closed in the
second quarter ended December 31, 1995 (see Note 4 of Notes to Consolidated
Financial Statements) and the reduced loan balances outstanding following the
closing of the offering.
FOREIGN CURRENCY
In fiscal 1997, 1996, and 1995, 47.6%, 53.1%, and 55.3% of the Company's total
revenue was from outside North America. Most of the Company's international
revenue is denominated in foreign currencies. Comshare recognizes currency
transaction gains and losses in the period of occurrence. As currency rates
are constantly changing, these gains and losses can, at times, fluctuate
greatly. The $310,000 foreign exchange loss in fiscal 1997 principally
reflected the weakening of certain foreign currencies against the British pound
during the twelve months ended June 30, 1997. The Company had an exchange loss
of $50,000 in fiscal 1996, compared with an exchange gain in fiscal 1995. The
exchange gain in fiscal 1995 was attributable to the strengthening of certain
foreign currencies against the British pound.
19
<PAGE> 20
Foreign currency fluctuations in fiscal 1997, 1996, and 1995 impacted operating
income as currency fluctuations on revenue denominated in a foreign currency
were partially offset by currency fluctuations on expenses denominated in a
foreign currency. In fiscal 1997, the decrease in total revenue, at actual
exchange rates, was $1,142,000 less than at comparable exchange rates. The
decrease in total expenses in fiscal 1997, at actual exchange rates, was
$858,000 less than at comparable exchange rates. As a result of the changes in
the foreign currency exchange rates, the increase in the net loss before taxes
in fiscal 1997, at actual exchange rates, was $284,000 less than at comparable
exchange rates. In fiscal 1996, the increase in total revenue at actual
exchange rates was $216,000 less than at comparable exchange rates. The
increase in total expenses in fiscal 1996 at actual exchange rates was $34,000
more than at comparable exchange rates. As a result of the changes in the
foreign currency exchange rates, the increase in net loss before taxes in
fiscal 1996, at actual exchange rates, was $250,000 more than at comparable
exchange rates.
The Company at various times denominates borrowings in foreign currencies and
enters into forward exchange contracts to hedge exposures related to foreign
currency transactions. The Company does not use any other types of derivatives
to hedge such exposures nor does it speculate in foreign currency. In general,
the Company uses forward exchange contracts to hedge against large selective
transactions that present the most exposure to exchange rate fluctuations. At
June 30, 1997 and June 30, 1996 the Company had forward contracts of
approximately $1.8 million and $5.7 million (notional amounts), respectively,
denominated in foreign currencies. The contracts outstanding at June 30, 1997
mature through July 25, 1997 and are intended to hedge various foreign currency
commitments due from foreign subsidiaries and the Company's agents and
distributors. Due to the short term nature of these financial instruments, the
fair value of these contracts is not materially different than their notional
amount at June 30, 1997 and 1996.
Inflation did not have a material impact on the Company's revenue or income
from operations in fiscal 1997, 1996 or 1995.
INCOME TAXES
The benefit from income taxes in fiscal 1997 was $8.7 million related to the
Company's operating loss for the current year. The benefit from income taxes
in fiscal 1996 was $6.5 million which included the tax benefits related to the
Company's operating loss, and $1.2 million related to the settlement of certain
tax issues and the amendment of certain tax returns to claim credits which had
previously not been claimed. The benefit from income taxes in fiscal 1995 was
$3.0 million which included the release of tax valuation reserves of $2.5
million related to tax credits. This release was attributable to the
significant improvement in the Company's profitability in fiscal 1995, which
allowed the realization of a significant portion of these credits. In
addition, settlements with tax authorities regarding certain outstanding issues
allowed the Company to release tax reserves of $1.6 million in fiscal 1995
previously established against these exposures.
Realization of deferred tax assets associated with the Company's future
deductible temporary differences, net operating loss carryforwards and tax
credit carryforwards is dependent upon generating sufficient taxable income
prior to their expiration. Although realization of the deferred tax assets is
not assured, management believes it is more likely than not that the deferred
tax assets will be realized through future taxable income or by using a tax
strategy currently available to the Company. On a quarterly basis, management
will assess whether it remains more likely than not that the deferred tax
assets will be realized. This assessment could be impacted by a combination of
continuing operating losses and a determination that the tax strategy is no
longer sufficient to realize some or all of the deferred tax assets. If
management determines that it is no longer more likely than not that the
deferred tax assets will be realized, a valuation allowance will be required
against some or all of the deferred tax assets. This would require a charge to
the income tax provision, and such charge could be material to the Company's
results of operations.
A comparative analysis of the factors influencing the effective income tax rate
is presented in Note 8 of the Notes to Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, cash and cash equivalents were $11.7 million, compared with
cash and cash equivalents of $27.5 million at June 30, 1996. The decrease in
cash and cash equivalents was principally due to the net cash used for
operating and investing activities in the twelve months ended June 30, 1997.
Net cash used in operating activities was $8.4 million in fiscal 1997, compared
with net cash provided by operating activities of $13.8 million in fiscal 1996.
The decrease in net cash provided by operating activities was primarily due to
a $17.1 million net loss from operations, and a $2.4 million payment to
terminate the Company's lease obligation on its
20
<PAGE> 21
vacated London office facility. Partially offsetting the net loss from
operations was a $ 10.2 million decrease in accounts receivable balances as a
result of improved collections in fiscal 1997.
Net cash used in investing activities was flat in fiscal 1997 compared to
fiscal 1996. At June 30, 1997, the Company did not have material capital
expenditure commitments. In fiscal 1998, property and equipment purchases are
expected to be comparable or lower than fiscal 1997, while additions to
internally developed software are expected to continue at levels similar to
those in fiscal 1997.
Net cash provided by financing activities was $3.5 million in fiscal 1997,
compared with $23.0 million in fiscal 1996. During fiscal 1996, the Company
completed a public offering in which it received net proceeds of $25.2 million
in the second quarter ended December 31, 1995.
Working capital as of June 30, 1997 was a negative $1 million, compared with
$24.6 million as of June 30, 1996. Working capital includes deferred revenue
of $19.9 million as of June 30, 1997, compared with $18.4 million as of June
30, 1996. Deferred revenue principally relates to maintenance contracts, and
represents a noncash obligation. Total assets were $80.8 million at June 30,
1997, compared with total assets of $98.2 million at June 30, 1996. The
decrease in both working capital and total assets was primarily due to the
decrease in cash and cash equivalents and accounts receivable.
Effective September 23, 1997 the Company entered into a new $10 million credit
agreement with its bank which matures on October 1, 2000. Borrowings are
secured by accounts receivable and the credit agreement contains covenants
regarding among other things, earnings, leverage, net worth and payment of
dividends. Under the terms of the agreement, the Company is not permitted to
pay cash dividends on its common stock. Permitted borrowings available as of
September 23, 1997 under the credit agreement, which are based on a percentage
of worldwide eligible accounts receivable, were $9.2 million. The interest
rate is based on LIBOR, plus applicable margin, which varies between 1.0% and
1.75%. The Company will borrow approximately $3 million under the new credit
agreement to repay all amounts borrowed under its existing credit agreement.
The Company had a $10 million credit agreement with another bank as of June 30,
1997, which it will terminate on or about September 30, 1997. At June 30,
1997, there was $4 million outstanding under this credit agreement. At June
30, 1997 interest was at 8.5% for domestic borrowings, and at the Eurodollar
rate for foreign borrowings, which varied between 0.5% and 6% plus applicable
margin, which varied between 1.5% and 2% (2% at June 30, 1997).
In addition, certain of the Company's European subsidiaries have local currency
overdraft facilities with banks, which totaled $1.1 million at June 30, 1997.
The Company had outstanding borrowings of $138,000 at June 30, 1997 under these
facilities. The interest rates generally vary with the banks' base rate. Most
of such borrowings are guaranteed by the Company.
The Company believes that the combination of present cash balances, lease
financing, and amounts available under credit facilities will be sufficient to
meet the Company's currently anticipated cash requirements for at least the
next twelve months. The foregoing statement is a "forward looking statement"
within the meaning of the Securities Exchange Act of 1934. The extent to which
such sources will be sufficient to meet the Company's anticipated cash
requirements is subject to a number of uncertainties including the ability of
the Company's operations to generate sufficient cash to support operations, and
other uncertainties described in "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Safe Harbor Statement."
SAFE HARBOR STATEMENT
Certain information in this Form 10-K contains "forward looking statements"
within the meaning of the Securities Exchange Act of 1934, including those
concerning the Company's future results and expected cost savings from cost
reduction actions described in Note 2 of "Notes to Consolidated Financial
Statements" and Item 7 "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Costs and Expenses". Actual results
could differ materially from those in the forward looking statements due to a
number of uncertainties, including, but not limited to, the demand for the
Company's products and services; the size, timing and recognition of revenue
from significant orders; increased competition; the Company's success in and
expense associated with developing, introducing and shipping new products; new
product introductions and announcements by the Company's competitors; changes
in Company strategy; product life cycles; the cost and continued availability
of third party software and technology incorporated into the Company's
products; the impact of rapid technological advances, evolving industry
standards and changes in customer requirements; the impact of recent
transitional changes in North American and international management and sales
personnel; the impact of the investigation into violations of the Company's
revenue recognition policies on the Company's
21
<PAGE> 22
ongoing operations; cancellations of maintenance and support agreements;
software defects; changes in operating expenses; variations in the amount of
cost savings anticipated to result from cost reduction actions; the impact
of cost reduction actions on the Company's operations; fluctuations in foreign
exchange rates; and economic conditions generally or in specific industry
segments. In addition, a significant portion of the Company's revenue in any
quarter is typically derived from non-recurring license fees, a substantial
portion of which is booked in the last month of a quarter. Since the purchase
of the Company's products is relatively discretionary and generally involves a
significant commitment of capital, in the event of any downturn in any
potential customer's business or the economy in general, purchases of the
Company's products may be deferred or canceled. Further, the Company's expense
levels are based, in part, on its expectations as to future revenue and a
significant portion of the Company's expenses do not vary with revenue. As a
result, if revenue is below expectations, results of operations are likely to
be materially adversely affected.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and schedule filed herewith are set forth on the Index
to Consolidated Financial Statements and Schedule on page 25 and are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is incorporated herein by reference to
the Company's 1997 Proxy Statement under the captions "Election of Directors"
and "Further Information-Executive Officers."
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to
the Company's 1997 Proxy Statement under the caption "Executive Compensation."
ITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information required by this Item is incorporated herein by reference to the
Company's 1997 Proxy Statement under the captions "Further
Information-Principal Shareholders" and "Further Information-Stock Ownership of
Management."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this Item is incorporated herein by reference to the
Company's 1997 Proxy Statement under the captions "Certain Relationships and
Related Transactions."
22
<PAGE> 23
PART IV
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) The following documents are filed as part of this Report:
1. Consolidated Financial Statements:
The Financial Statements filed with this report are listed in the
Index to Consolidated Financial Statements and Schedule which appears
on page 25.
2. Consolidated Financial Statement Schedule:
The Financial Statement Schedule filed with this report is listed in
the Index to Consolidated Financial Statements and Schedule which
appears on page 25.
3. The exhibits filed with this report are listed in the Exhibit
Index which appears on page 48. The following are the Company's
management contracts and compensatory plans and arrangements which are
required to be filed as exhibits to this Form 10-K:
EXHIBIT NO. DESCRIPTION
10.01 Benefit Adjustment Plan of Comshare, Incorporated, effective June 1,
1986, as amended - incorporated by reference to Exhibit 10.20 to the
Registrant's Form 10-K Report for the fiscal year ended June 30, 1993.
10.02 Comshare, Incorporated 1988 Stock Option Plan, as amended - incorporated
by reference to Exhibit 10.21 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 1990 and Exhibit 10.22 to the Registrant's Form
10-Q Report for the quarter ended September 30, 1994.
10.03 Amended and Restated Profit Sharing Plan of Comshare, Incorporated,
effective as of October 1, 1995 - incorporated by reference to Exhibit 4.1
to the Registrant's Form S-8 Registration Statement No. 33-65109.
10.04 Rules of the Comshare Retirement and Death Benefits Plan for employees
of the United Kingdom, effective January 1, 1991, as amended -
incorporated by reference to Exhibit 10.27 to the Registrant's Form 10-K
Report for the fiscal year ended June 30, 1993.
10.05 Deed of Variation relating to the Comshare Retirement and Death Benefits
Plan for employees of United Kingdom, dated July 30, 1997.
10.06 Interim Trust Deed establishing the Comshare Money Purchase Plan for
employees of the United Kingdom, effective March 1, 1994 - incorporated by
reference to Exhibit 10.08 to the Registrant's Form 10-K for the fiscal
year ended June 30, 1994.
10.07 Employment and NonCompetition Agreement between Comshare, Incorporated
and T. Wallace Wrathall, effective as of April 1, 1994 - incorporated by
reference to Exhibit 10.23 to the Registrant's Form 10-Q Report for the
quarter ended December 31, 1994.
10.08 Amended and Restated Employee Agreement between Comshare, Incorporated
and Richard L. Crandall effective July 1, 1994, as amended - incorporated
by reference to Exhibit 10.10 to the Registrant's Form 10-K for the fiscal
year ended June 30, 1994.
10.09 Non-Competition Agreement between Comshare, Incorporated and Richard L.
Crandall - incorporated by reference to Exhibit 10.11 of the Registrant's
Form 10-K for the fiscal year ended June 30, 1994. (Portions of this
exhibit have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment
pursuant to Rule 24b-2).
10.10 Letter Agreement from Comshare, Incorporated to Kathryn A. Jehle
regarding terms of employment dated April 18, 1994 - incorporated by
reference to Exhibit 10.12 to the Registrant's Form 10-K for the fiscal
year ended June 30, 1994.
23
<PAGE> 24
10.11 Description of Incentive Arrangements for certain executive officers for
fiscal years 1994 and 1995-2000 - incorporated by reference to Exhibit
10.12 to the Registrant's Form 10-K Report for the fiscal year ended
June 30, 1996.
10.12 Stock Option Agreement, effective as of March 10, 1997, between
Comshare, Incorporated and Daniel T. Carroll - incorporated by reference
to Exhibit 10.22 to the Registrant's Form 10-Q Report for the quarter
ended March 31, 1997.
10.13 Trust Agreement under the Benefit Adjustment Plan of Comshare,
Incorporated, effective April 25, 1988, as amended - incorporated by
reference to Exhibit 10.31 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 1993.
10.14 Trust Agreement between Comshare, Incorporated and Vanguard Fiduciary
for maintaining the Profit Sharing Plan of Comshare, Incorporated
effective March 31, 1992, as amended - incorporated by reference to
Exhibit 10.15 to the Registrant's Form 10-K for the fiscal year ended
June 30, 1994.
10.15 1994 Executive Stock Purchase Program of Comshare, Incorporated -
incorporated by reference to Exhibit 10.19 to the Registrant's Form 10-Q
Report for the quarter ended September 30, 1994.
10.16 Employee Stock Purchase Plan of Comshare, Incorporated - incorporated by
reference to Exhibit 10.20 to the Registrant's Form 10-Q Report for the
quarter ended September 30, 1994.
10.17 1994 Directors Stock Option Plan of Comshare, Incorporated -
incorporated by reference to Exhibit 10.21 to the Registrant's Form 10-Q
Report for the quarter ended September 30, 1994.
10.18 Letter of understanding between Comshare, Incorporated and Steven J.
Tonissen regarding employment termination dated August 4, 1997.
10.19 Agreement between Comshare, Incorporated and Dion T. O'Leary dated July
9, 1997.
10.20 Letter agreement between Comshare, Incorporated and Geoffrey R. Cluett
dated April 29, 1997 regarding term of employment and non-compete
agreement.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the
quarter ended June 30, 1997.
24
<PAGE> 25
COMSHARE, INCORPORATED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants 26
Consolidated Statement of Operations for
the Fiscal Years Ended June 30, 1997, 1996 and 1995 27
Consolidated Balance Sheet as of June 30, 1997 and 1996 28-29
Consolidated Statement of Cash Flows for the
Fiscal Years Ended June 30, 1997, 1996 and 1995 30
Consolidated Statement of Shareholders' Equity
for the Fiscal Years Ended June 30, 1997, 1996 and 1995 31
Notes to Consolidated Financial Statements 32-45
</TABLE>
SCHEDULE
II. Consolidated Schedule of Valuation and Qualifying Accounts 46
25
<PAGE> 26
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Comshare, Incorporated:
We have audited the accompanying consolidated balance sheets of COMSHARE,
INCORPORATED (a Michigan corporation) and subsidiaries as of June 30, 1997 and
1996, and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the three years in the period ended June 30,
1997. These financial statements and the schedule referred to below are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Comshare, Incorporated and
subsidiaries as of June 30, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
1997, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the accompanying
index is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Detroit, Michigan,
September 23, 1997.
26
<PAGE> 27
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
----------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
REVENUE
Software licenses $ 36,455 $ 57,715 $ 49,294
Software maintenance 35,983 37,095 36,649
Implementation, consulting and other services 20,393 24,174 22,415
-------- --------- --------
TOTAL REVENUE 92,831 118,984 108,358
COSTS AND EXPENSES
Selling and marketing 53,552 51,354 45,283
Cost of revenue and support 30,594 31,814 24,799
Internal research and product development 15,556 15,977 16,180
Internally capitalized software (6,966) (6,153) (11,667)
Software amortization 7,129 6,535 13,250
General and administrative 12,693 13,082 11,663
Unusual charge - 23,167 6,365
Restructuring related costs 6,245 - -
-------- --------- --------
TOTAL COSTS AND EXPENSES 118,803 135,776 105,873
-------- -------- --------
INCOME (LOSS) FROM OPERATIONS (25,972) (16,792) 2,485
OTHER INCOME (EXPENSE)
Interest income (expense) 494 492 (512)
Exchange gain (loss) (310) (50) 307
-------- -------- --------
TOTAL OTHER INCOME (EXPENSE) 184 442 (205)
INCOME (LOSS) BEFORE TAXES (25,788) (16,350) 2,280
Benefit for income taxes (8,671) (6,459) (3,048)
-------- -------- --------
NET INCOME (LOSS) $(17,117) $ (9,891) $ 5,328
======== ======== ========
WEIGHTED AVERAGE NUMBER OF COMMON
AND DILUTIVE COMMON EQUIVALENT SHARES 9,770 9,048 8,398
======== ======== ========
NET INCOME (LOSS) PER COMMON SHARE $ (1.75) $ (1.09) $ 0.63
======== ======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
27
<PAGE> 28
COMSHARE, INCORPORATED
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF JUNE 30,
-----------------------
1997 1996
---- ----
Assets
Current assets
<S> <C> <C>
Cash and cash equivalents $ 11,651 $ 27,468
Accounts receivable, less allowance for
doubtful accounts of $1,053 and $1,411 as of
June 30, 1997 and 1996, respectively 24,675 34,853
Deferred income taxes 1,953 758
Prepaid expenses and other current assets 5,298 5,733
-------- --------
Total current assets 43,577 68,812
Property and equipment, at cost
Computers and other equipment 18,678 24,946
Leasehold improvements 2,708 2,999
-------- --------
21,386 27,945
Less - Accumulated depreciation 16,432 23,426
-------- --------
Property and equipment, net 4,954 4,519
Computer software, net of accumulated
amortization of $10,685 and $3,423 as of
June 30, 1997 and 1996, respectively 9,175 9,064
Goodwill, net of accumulated
amortization of $1,551 and $1,684 as of
June 30, 1997 and 1996, respectively 1,609 1,947
Deferred income taxes 15,580 7,940
Other assets 5,856 5,956
-------- --------
$ 80,751 $ 98,238
======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
28
<PAGE> 29
COMSHARE, INCORPORATED
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF JUNE 30,
--------------
1997 1996
---- ----
<S> <C> <C>
Liabilities and Shareholders' Equity
Current liabilities
Notes payable $ 4,332 $ -
Accounts payable 12,597 17,934
Accrued liabilities -
Payroll 3,191 3,394
Taxes 1,953 3,171
Other 2,601 1,391
-------- --------
Total accrued liabilities 7,745 7,956
Deferred revenue 19,868 18,364
-------- --------
Total current liabilities 44,542 44,254
Long-term debt 343 1,913
Other liabilities 3,907 3,407
Commitments and contingencies
Shareholders' equity
Capital stock:
Preferred stock, no par value;
authorized 5,000,000 shares; none issued - -
Common stock, $1.00 par value;
authorized 20,000,000 shares; outstanding
9,871,260 shares as of June 30, 1997
and 9,691,443 shares as of June 30, 1996 9,871 9,691
Capital contributed in excess of par 39,528 38,132
Retained earnings (deficit) (12,363) 5,239
Currency translation adjustments (4,021) (3,586)
-------- --------
33,015 49,476
Less - Notes receivable 1,056 812
-------- --------
Total shareholders' equity 31,959 48,664
-------- --------
$ 80,751 $ 98,238
======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
29
<PAGE> 30
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Fiscal Year Ended June 30,
---------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Operating activities
Net income (loss) $(17,117) $ (9,891) $ 5,328
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization 9,582 8,330 15,901
Write-off of capitalized software - 23,167 6,365
Noncash restructuring costs 1,317 - -
Changes in operating assets and liabilities:
Accounts receivable 10,226 (5,679) 2,556
Prepaid expenses and other assets 537 (928) 77
Accounts payable (5,728) 6,686 (469)
Accrued liabilities (160) 58 (337)
Deferred revenue 1,314 (19) (1,489)
Deferred income taxes (8,829) (8,238) (4,645)
Other liabilities 427 338 42
-------- -------- ---------
Net cash provided by (used in) operating activities (8,431) 13,824 23,329
Investing activities
Additions to computer software (7,066) (6,207) (11,667)
Payments for property and equipment (2,835) (3,220) (1,207)
Other (783) (1,272) (1,227)
-------- -------- ---------
Net cash used in investing activities (10,684) (10,699) (14,101)
Financing activities
Net borrowings (payments) under notes payable 4,053 - (33)
Net repayments under debt agreements and capital lease
obligations (1,403) (3,394) (10,044)
Stock options exercised 878 474 248
Issuance of common stock - 25,148 -
Other (31) 730 202
-------- -------- ---------
Net cash provided by (used in) financing activities 3,497 22,958 (9,627)
Effect of exchange rate changes (199) (13) 23
-------- -------- ---------
Net increase (decrease) in cash (15,817) 26,070 (376)
Balance at beginning of period 27,468 1,398 1,774
-------- -------- ---------
Balance at end of period $ 11,651 $ 27,468 $ 1,398
======== ======== =========
Supplemental disclosures:
Cash paid for interest $ 169 $ 371 $ 690
======== ======== =========
Cash paid for income taxes $ 740 $ 1,869 $ 558
======== ======== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
30
<PAGE> 31
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Fiscal Year Ended June 30,
---------------------------------------------------
1997 1996 1995
---- ---- -----
Common stock
<S> <C> <C> <C>
Balance beginning of year $ 9,691 $ 8,221 $ 8,037
Employee Stock Purchase Plan 18 26 22
1994 Executive Stock Purchase Program 21 - 104
Retirement of shares (39) (16) (2)
Sale of common stock in a public offering - 1,294 -
Stock options exercised 180 166 60
------- -------- ---------
Balance end of year 9,871 9,691 8,221
------- -------- ---------
Capital contributed in excess of par
Balance beginning of year 38,132 13,199 11,982
Employee Stock Purchase Plan 333 384 155
1994 Executive Stock Purchase Program 392 - 855
Retirement of shares (160) (62) (3)
Sale of common stock in a public offering -- 23,854 -
Stock options exercised 831 757 210
------- -------- ----------
Balance end of year 39,528 38,132 13,199
------- -------- ----------
Retained earnings (deficit)
Balance beginning of year 5,239 15,500 10,190
Net income (loss) (17,117) (9,891) 5,328
Retirement of shares (485) (370) (18)
------- -------- ----------
Balance end of year (12,363) 5,239 15,500
------- -------- ----------
Currency translation adjustments
Balance beginning of year (3,586) (3,239) (3,504)
Translation adjustments (435) (347) 265
------- -------- ----------
Balance end of year (4,021) (3,586) (3,239)
------- -------- ----------
Less - Notes receivable
Balance beginning of year 812 1,133 199
1994 Executive Stock Purchase Program 244 (122) 934
Employee Stock Ownership Plan - (199) -
-------- -------- ----------
Balance end of year 1,056 812 1,133
-------- -------- ----------
Total shareholders' equity $ 31,959 $ 48,664 $ 32,548
======== ======== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
31
<PAGE> 32
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY. Comshare, Incorporated (the "Company") develops, markets and
supports client/server decision support applications software designed for
business analysis, planning, reporting and decision making. The Company also
provides services such as maintenance, training, consulting and support
services. Comshare is currently providing maintenance at more than 3,000
corporate and public sector customer sites. The Company markets its products
through a direct sales force in the United States, Canada, United Kingdom,
France and Germany and has an extensive agent/distributor network in 36 other
countries. The Company was incorporated in Michigan in February 1966 and
commenced operations at that time.
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of the Company and its subsidiaries, all of which are wholly owned.
All material intercompany accounts and transactions have been eliminated.
REVENUE. The Company's revenue consists of software license, software
maintenance and implementation, consulting and other service revenue. Software
license revenue is recognized when a customer contract is fully executed and
the software has been shipped. Software maintenance revenue, whether bundled
with a product license or priced separately, is recorded as deferred revenue on
the balance sheet when invoiced and is recognized over the term of the
maintenance contract. Implementation, consulting and other services revenue is
recognized as the services are performed.
EXPENSE CLASSIFICATION. Selling and marketing expense primarily includes
employee costs, travel costs, facilities expenses, advertising and agency fees.
Cost of revenue and support includes personnel and other costs related to
implementation and consulting services revenue, customer support costs, direct
cost of producing software and royalty expense for products licensed from
others for use in the Company's product offerings. Internal research and
product development expense includes all such expense before computer software
capitalization and amortization.
FOREIGN CURRENCY TRANSLATION. All assets and liabilities of the Company's
foreign operations are translated at current exchange rates and revenue and
expenses are translated at monthly exchange rates. Resulting translation
adjustments are reflected as a separate component of shareholders' equity.
Foreign currency transaction gains and losses are included in net loss.
FINANCIAL INSTRUMENTS. The Company at various times enters into forward
exchange contracts to hedge certain exposures related to identifiable foreign
currency transactions that are relatively certain as to both timing and amount.
Gains and losses on the forward contracts are recognized concurrently with the
gains and losses from the underlying transactions. The forward exchange
contracts used are classified as "held for purposes other than trading." The
Company does not use any other types of derivative financial instruments to
hedge such exposures, nor does it use derivatives for speculative purposes. At
June 30, 1997 and 1996, the Company had forward foreign currency exchange
contracts of approximately $1,809,000 and $5,746,000 (notional amounts),
respectively. The contracts outstanding at June 30, 1997 mature through July
25, 1997 and are intended to hedge various foreign currency commitments due
from foreign subsidiaries and the Company's agents and distributors. Due to
the short term nature of these financial instruments, the fair value of these
contracts is not materially different than their notional amount at June 30,
1997 and 1996.
CASH AND CASH EQUIVALENTS. Cash and cash equivalents includes investments in
highly liquid investments with maturities of ninety days or less.
32
<PAGE> 33
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
COMPUTER SOFTWARE. The costs of developing and purchasing new software
products and enhancements to existing software products are capitalized after
technological feasibility is established. The establishment of technological
feasibility and the ongoing assessment of the recoverability of these costs
require considerable judgment by management with respect to certain external
factors, including, but not limited to, anticipated future gross product
revenue, estimated economic product lives and changes in software and hardware
technology. Beginning October 1, 1995, capitalized development costs were
amortized using the straight-line method over a two-year service life (see Note
2). Previously, capitalized development costs were amortized using a rolling
three-year method, effectively a service life of approximately six years. The
policy is reevaluated and adjusted as necessary at the end of each accounting
period. On an ongoing basis, management reviews the valuation and amortization
of capitalized development costs. As part of this review, the Company
considers the value of future cash flows attributable to the capitalized
development costs in evaluating potential impairment of the asset.
DEPRECIATION. The cost of depreciable assets is charged to operations on a
straight-line basis. Principal service lives for computers and other equipment
are three to five years. Leasehold improvements are amortized over the
expected life of the asset or term of the lease, whichever is shorter.
GOODWILL. Goodwill represents the unamortized cost in excess of fair value of
net assets acquired and is amortized on a straight-line basis over forty years.
On an ongoing basis, management reviews the valuation and amortization of
goodwill. As part of this review, the Company considers the value of future
cash flows attributable to the acquired operations in evaluating potential
impairment of goodwill.
OTHER ASSETS. In fiscal 1997, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" which requires an
evaluation of long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. There was no adjustment to the Company's financial statements in
fiscal 1997 as a result of this evaluation.
INCOME TAXES. The Company accounts for estimated income taxes under the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." This statement provides for an asset and liability approach
under which deferred income taxes are provided based upon enacted tax laws and
rates applicable to the periods in which the taxes become payable.
EARNINGS PER SHARE. Earnings per share of common stock is based on the daily
weighted average number of shares of common stock outstanding considering the
dilutive effect of outstanding stock options when appropriate. In February
1997, the Financial Accounting Standard Board issued Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per Share." See Note 4 of
Notes to Consolidated Financial Statements for further discussion and pro forma
disclosure.
STOCK PLANS. The Company accounts for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion (APB)
No. 25 "Accounting for Stock Issued to Employees", and related interpretations.
Accordingly, compensation cost for stock options is measured as the excess, if
any, of the quoted market price of the stock at grant date over the amount an
employee must pay to acquire the stock. As supplemental information, the
Company has provided pro forma disclosure of the fair value of stock options
granted during fiscal 1997 and 1996 in accordance with the requirements of
Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for
Stock-Based Compensation." See Note 5 of Notes to Consolidated Financial
Statements.
COMPREHENSIVE INCOME. The Financial Accounting Standards Board has issued
Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive
Income" which establishes standards for reporting comprehensive income and its
components in a full set of financial statements. Comprehensive income is
defined as the total of net income and all other nonowner changes in equity.
The Company has not yet adopted this statement but is required to adopt this
statement for the fiscal year ending June 30, 1999.
SEGMENTS OF AN ENTERPRISE. The Financial Accounting Standards Board has issued
Statement of Financial Accounting Standards No. 131 "Disclosures About Segments
of an Enterprise and Related Information" which establishes standards for
disclosures of certain segment information based on the "management approach"
which organizes segments within a company the way the chief operating decision
maker of that company organizes the
33
<PAGE> 34
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
segments. The Company has not yet adopted this statement but is required to
adopt this statement for the fiscal year ending June 30, 1999.
USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the period. Actual results may differ from these estimates.
RECLASSIFICATIONS. Certain amounts in the 1995 and 1996 financial statements
have been reclassified to conform with 1997 presentations.
34
<PAGE> 35
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
2. RESTRUCTURING AND UNUSUAL CHARGES
During the quarter ended March 31, 1997, the Company recorded a $6.2 million
pre-tax restructuring charge for management actions or plans in connection with
the consolidation of the Company's product development activities in Ann Arbor,
Michigan and reductions in staff and non-revenue generating costs. This $6.2
million pre-tax charge was composed of a $2.4 million for personnel reductions,
$2.6 million in space and office costs, and $1.2 million for non-compete and
consulting agreement. The restructuring charge includes staff reductions of
approximately 70 employees. These cost reduction actions were expected to save
approximately $6.8 million annually. At June 30, 1997, $2.0 million remains to
be paid for termination of employment and contractual obligations related to
these restructuring actions.
The foregoing statements regarding the Company's expected cost savings from
cost reduction actions contain "forward looking statements" within the meaning
of the Securities Exchange Act of 1934. Actual results could differ materially
from those in the forward looking statements due to a number of uncertainties,
including, but not limited to, those described under Item 7 "Management's
Discussion and Analysis of Financial Condition and Results of Operations - Safe
Harbor Statement".
During the year ended June 30, 1996, the Company recorded a $23,167,000
non-cash charge to write off certain capitalized software. The write-off
resulted from the strong customer interest in Commander Decision, the Company's
newest generation product for customizable decision support applications, which
substantially reduced the realizable value of the Company's older Commander
desktop products, and the Company's acceleration of its product development
cycles in response to changes in the technological environment in the decision
support application software market.
The write-off reflected principally the Company's decision to focus its sales
efforts on Commander Decision, which was released in December 1995. Commander
Decision was introduced at the Company's Users Conference held during the
second quarter of fiscal 1996 and generated greater interest than originally
anticipated by the Company. This strong customer interest, combined with the
Company's decision in fiscal 1996 to offer the new Commander Decision end-user
front-end to existing maintenance-paying Commander OLAP customers at no charge,
was expected to result in rapid migration from Commander OLAP front-ends to the
Commander Decision front-end.
The write-off also reflected the reduction of the estimated useful service life
of the Company's products and the amortization period for its capitalized
software costs, prompted by the Company's acceleration of its product
development cycle. The reduction of the software amortization period to two
years and a review of projected revenues over this two-year service life
resulted in the write-off of unamortized capitalized software development
costs.
During the year ended June 30, 1995, the Company recorded an unusual charge of
$6,365,000. This charge related to the write-off of capitalized software
associated with its mature mainframe products. The write-off of capitalized
software associated with the Company's mainframe products was the result of
industry trends and reflected the Company's strategic product plan to focus on
client/server software products.
3. BORROWINGS
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Line of credit and overdraft facilities $ 4,161 $ 1,913
Capital lease obligations 514 -
------- -------
Total debt outstanding 4,675 1,913
Less: current portion 4,332 -
------- -------
$ 343 $ 1,913
======= =======
</TABLE>
35
<PAGE> 36
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Effective September 23, 1997 the Company entered into a new $10 million credit
agreement with its bank which matures on October 1, 2000. Borrowings are
secured by accounts receivable and the credit agreement contains covenants
regarding among other things, earnings, leverage, net worth and payment of
dividends. Under the terms of the agreement, the Company is not permitted to
pay cash dividends on its common stock. Permitted borrowings available as of
September 23, 1997 under the credit agreement, which are based on a percentage
of worldwide eligible accounts receivable, were $9.2 million. The interest
rate is based on LIBOR, plus applicable margin, which varies between 1.0% and
1.75%. The Company will borrow approximately $3 million under the new credit
agreement to repay all amounts borrowed under its existing credit agreement.
The Company had a $10 million credit agreement with another bank as of June 30,
1997, which it will terminate on or about September 30, 1997. At June 30,
1997, there was $4 million outstanding under this credit agreement. At June
30, 1997 interest was at 8.5% for domestic borrowings, and at the Eurodollar
rate for foreign borrowings, which varied between 0.5% and 6% plus applicable
margin, which varied between 1.5% and 2% (2% at June 30, 1997).
In addition, certain of the Company's European subsidiaries have local currency
overdraft facilities with banks, which totaled $1.1 million at June 30, 1997.
The Company had outstanding borrowings of $138,000 at June 30, 1997 under these
facilities. The interest rates generally vary with the banks' base rate. Most
of such borrowings are guaranteed by the Company.
See Note 9 of Notes to Consolidated Financial Statements regarding capital
lease obligations.
4. SHAREHOLDERS' EQUITY
The Board of Directors has the authority to issue up to 5,000,000 shares of no
par value preferred stock. The shares can be issued in one or more series with
full, limited or no voting powers and with such special rights, qualifications,
limitations and restrictions as may be adopted by the Board of Directors.
In September 1996, the Company's Board of Directors approved a Shareholder
Rights Plan ("Rights Plan"). Under the Rights Plan, the Company declared a
dividend of one preferred stock purchase right on each outstanding share of
common stock. Under certain conditions, each right may be exercised to
purchase one one-hundredth share of Series A Preferred Stock at an exercise
price of $110. Of the 5,000,000 preferred shares the Company is authorized to
issue, 200,000 shares have been designated Series A Preferred. The Series A
Preferred has certain dividend, voting and liquidation preferences. No
preferred shares have been issued. The rights may only be exercised beginning
ten business days following a public announcement that a person or group
acquires 15% or more of the Company's common stock (subject to certain
exceptions) or beginning ten business days (or under certain circumstances a
later date) following the commencement or announcement of a tender or exchange
offer which would cause that result. In addition, under certain circumstances,
the rights will entitle shareholders (other than the acquiror) to purchase the
Company's common stock, or stock of the acquiror, at a discount to market
prices. The rights, which do not have voting rights, expire on September 30,
2006.
Effective November 20, 1995, upon approval of the Company's Board of Directors,
Comshare declared a three-for-two stock split of the Company's common stock
distributable to shareholders of record as of November 13, 1995. All share and
per share data included in the consolidated financial statements and
accompanying notes have been adjusted to reflect this stock split.
In December 1995, the Company completed a public offering of its common stock
which involved the issuance and sale by the Company of 1,293,750 shares
resulting in net proceeds to the Company of approximately $25,150,000.
The Company's senior executives are encouraged to own Comshare common stock.
To facilitate such ownership, the shareholders approved the 1994 Executive
Stock Purchase Program which enables certain executives to purchase Comshare
common stock at then current market prices directly from the Company via a
promissory note. The promissory note cannot exceed the executive's base annual
salary and is secured by the related common stock issued by the Company. The
promissory note matures four years from the date of issuance. Interest is at
the prime rate plus 1% and may be deferred until the promissory note matures.
A total of 300,000 shares of the Company's
36
<PAGE> 37
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
common stock has been reserved for issuance under the 1994 Executive Stock
Purchase Program. For the year ended June 30, 1997, a total of 30,813 shares
at prices ranging from $11.50 to $16 were issued in exchange for notes
totaling $410,600. No shares were purchased under this program during
fiscal 1996. For the year ended June 30, 1995, a total of 104,044 shares at
prices ranging from $8.67 to $12.33 were issued in exchange for notes totaling
$934,000. The aggregate principal balance of these promissory notes
outstanding and due to the Company was $1,056,000 and $812,000 at June 30, 1997
and 1996, respectively.
During 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 128, "Earning per Share", which changes
the calculation of earnings per share to be more consistent with countries
outside of the United States. Under the new statement, primary earnings per
share is replaced by basic earnings per share and fully diluted earnings per
share is replaced by diluted earnings per share. Basic EPS is computed using
weighted average shares outstanding and does not include potentially dilutive
securities. Diluted EPS is to be computed using the average share price for
the period when calculating the dilution of options and warrants. This
statement will be adopted by the Company as required in the second quarter
ended December 31, 1997 consolidated financial statements (an interim period).
Early adoption of SFAS 128 is not permitted. If this statement had been
adopted for the periods presented, the net income per share amounts would have
been as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Net income (loss) per share as reported $(1.75) $(1.09) $0.63
Pro forma basic net income (loss) per share (1.75) (1.09) 0.66
Pro forma diluted net income (loss) per share (1.75) (1.09) 0.63
</TABLE>
5. STOCK OPTIONS
The Company has two stock option plans, the 1988 Stock Option Plan (the "1988
Plan") and the 1994 Directors Stock Option Plan (the "Directors Plan"). On
March 10, 1997, the Company granted an option for 10,000 shares to the
Company's Chairman at an exercise price of $15.75 per share which was the
closing price of the common stock on that date. The option vests on March 10,
1998 or the date on which the Chairman ceases to be Chairman of the Board of
the Company, whichever occurs last. The option vests immediately in the event
of a change in control of the Company. The option expires thirty months from
the grant date or six months after which the Chairman ceases to be Chairman of
the Board of the Company, whichever occurs earlier.
1988 STOCK OPTION PLAN
The Company's 1988 Plan provides for the grant of both incentive stock options
and non-qualified options to officers and key employees. Options under the
1988 Plan are granted at 100% of market price on the date of grant, are
exercisable at the rate of 25% per year after one year from the date of grant
and have a term of five years. The Board of Directors may, at its discretion,
grant stock appreciation rights in connection with the grant of options, but to
date has not elected to do so.
The 1988 Stock Option Plan was amended in November 1994 to increase the number
of shares of common stock authorized for grant from 900,000 shares to
1,275,000.
At June 30, 1997, the Company has reserved 849,782 shares of common stock for
the exercise of employee stock options. The number of options outstanding and
exercisable under the 1988 Plan was 603,884 and 225,011 at June 30, 1997,
respectively.
37
<PAGE> 38
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
1994 DIRECTORS STOCK OPTION PLAN
The 1994 Directors Stock Option Plan, approved by the shareholders in November
1994, provides for the issuance of options to purchase up to 150,000 shares of
the Company's common stock to non-employee directors of the Company. Options
under the Directors Plan are granted at 100% of the market price on the date of
grant, are exercisable at a rate of 25% per year after one year from the date
of grant and have a term of five years.
At June 30, 1997 the Company has reserved 146,250 shares of common stock for
the exercise of directors' stock options. The number of options outstanding
and exercisable under the Directors Plan was 61,500 and 22,500 at June 30,
1997, respectively.
SUMMARY OF ACTIVITY
Stock option activity under all plans is summarized below:
<TABLE>
<CAPTION>
1997 1996
----------------- ----------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
------ ----- ------ -----
<S> <C> <C> <C> <C>
Outstanding at beginning of year 762,756 $10.70 818,025 $6.71
Granted 265,500 18.01 177,750 24.02
Exercised (179,501) 5.63 (167,394) 5.51
Canceled (173,371) 16.36 (65,625) 8.32
Outstanding at end of year 675,384 13.45 762,756 10.70
Options exercisable at year end 247,511 215,443
Weighted average fair value of
options granted during the year $17.31 $22.87
</TABLE>
A summary of outstanding and exercisable stock options as of June 30, 1997
is as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------- -------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
- --------------- ----------- ------ ----- ----------- -----
<S> <C> <C> <C> <C> <C>
$ 4.08 to $ 6.00 83,875 1.03 $ 4.64 71,875 $ 4.41
6.17 to 7.33 90,000 1.66 6.75 56,250 6.63
7.67 to 8.67 96,759 2.34 8.48 43,511 8.48
8.75 to 13.00 115,000 3.22 11.26 47,625 10.89
14.75 to 14.87 17,500 4.21 14.77 0 0.00
14.88 to 14.88 69,500 4.46 14.88 0 0.00
15.38 to 24.25 123,250 3.76 20.57 19,125 23.59
24.50 to 26.00 11,500 3.54 25.48 2,875 25.48
27.25 to 27.25 63,000 3.96 27.25 6,250 27.25
27.50 to 27.50 5,000 4.05 27.50 0 0.00
------- ---- ------ ------- -------
$ 4.08 to $27.50 675,384 2.95 $13.45 247,511 $ 9.18
======= =======
</TABLE>
38
<PAGE> 39
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
PRO FORMA DISCLOSURE UNDER SFAS 123, "ACCOUNTING FOR STOCK-BASED
COMPENSATION"
Using the intrinsic value method of accounting for the value of stock options
granted during fiscal 1997 and 1996, no compensation cost was recorded in the
accompanying consolidated statement of operations. Had compensation costs been
determined based on the fair value at the date of grant for awards in fiscal
1997 and 1996 consistent with the provisions of SFAS 123, net loss and net loss
per share would have been reduced to the pro forma amounts indicated below (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Net loss - as reported $(17,117) $ (9,891)
Net loss - pro forma (17,785) (10,292)
Net loss per share - as reported (1.75) (1.09)
Net loss per share - pro forma (1.82) (1.14)
</TABLE>
The fair value of each option grant was estimated on the date of grant using
the Black-Scholes option-pricing model. Because the SFAS 123 method of
accounting has not been applied to options granted prior to July 1, 1995, the
resulting pro forma compensation cost may not be representative of that to be
expected in future years. The following weighted average assumptions were used
in valuing the option grants:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
STOCK OPTION PLANS:
Expected life (years) 3.26 3.26
Risk free interest rate 6.1% 6.4%
Expected stock price volatility 0.56 0.59
Expected dividend yield - -
EMPLOYEE STOCK PURCHASE PLAN:
Expected life (years) 0.50 0.50
Risk free interest rate 6.1% 6.4%
Expected stock price volatility 0.56 0.59
Expected dividend yield - -
</TABLE>
6. EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan (the "ESPP") was approved by the shareholders
in November 1994. A total of 300,000 shares of the Company's common stock have
been reserved for issuance under the ESPP. The ESPP allows participating
employees to purchase shares of the Company's common stock through payroll
deductions at 85% of the fair market value at July 1 and January 1.
Substantially all employees are eligible to participate in the ESPP. Under the
ESPP, 18,233 shares, 26,218 shares and 21,834 shares were issued in fiscal
1997, 1996 and 1995, respectively.
7. BENEFIT PLANS
The Company has a profit sharing plan covering substantially all United States
employees. The profit sharing plan provides for a minimum annual Company
contribution of 2% of an employee's salary, and matching contributions based on
employee 401(K) contributions. The Company also has a deferred compensation
plan for United States officers for the payment of benefits which would not
otherwise be eligible under its tax-qualified retirement plans. The Company
contributions, other than the above, are discretionary and are determined by
the Board of Directors.
39
<PAGE> 40
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The total contributions for both plans were $826,000, $1,183,000 and $1,224,000
in fiscal 1997, 1996 and 1995, respectively.
A subsidiary in the United Kingdom maintains, through a trustee, a defined
benefit pension plan for substantially all of its employees hired before
January 1, 1994 and a defined contribution plan for employees hired after
January 1, 1994. Effective April 1, 1997, the defined benefit plan was frozen,
with no further contributions or benefits accruing under the plan. The
resulting curtailment loss was partially included in the restructuring related
costs during fiscal 1997. As of the same date, the defined contribution plan
was amended, providing a minimum annual company contribution of 2-1/2% of the
employee's compensation, and matching contributions up to an additional 2-1/2%
of compensation based on employee contributions. The defined contribution plan
now covers substantially all United Kingdom employees. Prior to April 1, 1997,
the defined contribution plan provided that participating employees contribute
a minimum of 5% of their pensionable salary with the Company contributing 5%.
The components of pension expense for the fiscal year ended June 30 are as
follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Service cost for benefits earned during the year $ 473 $ 429 $ 540
Interest cost on projected benefit obligation 1,519 1,340 1,292
Actual return on assets (3,468) (1,899) (1,347)
Net amortization and deferral 1,913 722 101
------- ------- -------
Net pension expense $ 437 $ 592 $ 586
======= ======= =======
</TABLE>
The funded status of the pension plan as of June 30 is as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Actuarial present value of benefit obligations
Vested benefits $ 19,280 $15,742
Non-vested benefits - -
-------- -------
Accumulated benefit obligation 19,280 15,742
Effects of salary progression - 1,583
-------- -------
Projected benefit obligation 19,280 17,325
Plan assets at fair value 20,730 17,314
-------- --------
Plan assets over (under) projected benefit obligation 1,450 (11)
Amounts not recognized in balance sheet:
Unamortized transition obligation - 650
Unamortized net loss 599 1,796
------- -------
Amount unamortized 599 2,446
------- -------
Net pension assets $ 2,049 $ 2,435
======= =======
</TABLE>
The actuarial present value of the projected benefit obligation was determined
using a weighted average discount rate of 8.5% and an annual increase in future
compensation of 6.5% for fiscal 1997, 1996 and 1995 calculations. The long
term weighted average rate of return on assets used was 8.5% for fiscal 1997,
1996 and 1995.
The Company provides defined retirement benefits to the employees of the other
foreign subsidiaries through various contribution plans. The amount charged to
expense for these benefits was $146,000 in fiscal 1997, $228,000 in fiscal 1996
and $142,000 in fiscal 1995.
40
<PAGE> 41
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
8. INCOME TAXES
A summary of income (loss) before provision (benefit) for income taxes and
components of the provision (benefit) for income taxes for the years ended June
30 is as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Income (loss) before provision (benefit)
for income taxes:
Domestic $ (8,650) $(12,428) $ 486
Foreign (17,138) (3,922) 1,794
-------- -------- --------
$(25,788) $(16,350) $ 2,280
======== ======== ========
Domestic provision (benefit) for income taxes:
Current $ - $ 731 $ (15)
Deferred (2,907) (5,781) (2,773)
Foreign provision (benefit) for income taxes:
Current - 1,000 1,499
Deferred (5,764) (2,409) (1,759)
-------- -------- --------
Benefit for income taxes $ (8,671) $ (6,459) $ (3,048)
======== ======== ========
</TABLE>
The differences between the United States Federal statutory income tax benefit
and the consolidated income tax benefit for the years ended June 30 are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Federal statutory provision (benefit) $(8,768) $(5,559) $ 775
Non-deductible meals and entertainment 181 256 109
State income taxes, net of federal tax benefit 22 146 67
Increase in valuation reserve due to domestic
and foreign losses without tax benefit and tax credits - 872 42
Recognition of tax credits - (1,222) (2,500)
Tax reserves released (312) (1,200) (1,600)
Tax rate differences (63) 76 (51)
Other, net 269 172 110
------- ------- -------
Actual income tax benefit $(8,671) $(6,459) $(3,048)
======= ======= =======
</TABLE>
41
<PAGE> 42
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Deferred income taxes represent temporary differences in the recognition of
certain items for income tax and financial reporting purposes. The components
of the net deferred income tax asset as of June 30 are summarized as follows
(in thousands):
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Deferred income tax assets:
Research and development $ 1,721 $ 2,810
Tax credits 2,964 3,097
Depreciation and amortization 729 975
Net operating loss 11,305 1,290
Deferred revenue 429 458
Employee benefits 752 901
Accrued liabilities 856 851
Other 1,276 495
---------- -----------
20,032 10,877
Valuation allowance (1,594) (1,241)
---------- -----------
18,438 9,636
Deferred income tax liabilities:
Employee benefits (790) (808)
Other (115) (130)
---------- -----------
(905) (938)
---------- -----------
Net deferred income tax asset $ 17,533 $ 8,698
========== ===========
</TABLE>
Realization of deferred tax assets associated with the Company's future
deductible temporary differences, net operating loss carryforwards and tax
credit carryforwards is dependent upon generating sufficient taxable income
prior to their expiration. Although realization of the deferred tax assets is
not assured, management believes it is more likely than not that the deferred
tax assets will be realized through future taxable income or by using a tax
strategy currently available to the Company. On a quarterly basis, management
will assess whether it remains more likely than not that the deferred tax
assets will be realized. This assessment could be impacted by a combination of
continuing operating losses and a determination that the tax strategy is no
longer sufficient to realize some or all of the deferred tax assets. If
management determines that it is no longer more likely than not that the
deferred tax assets will be realized, a valuation allowance will be required
against some or all of the deferred tax assets. This would require a charge to
the income tax provision, and such charge could be material to the Company's
results of operations.
At June 30, 1997, for income tax purposes, the Company and certain of its
foreign subsidiaries had available net operating loss carryforwards of
approximately $33 million. If not used, these net operating loss
carryforwards, as well as the Company's general business tax credits, will
expire between 1998 and 2012.
9. LEASES
The Company leases most of its office space, transportation and certain of its
equipment under noncancelable capital and operating leases. Initial lease
terms vary in length and several of the leases contain renewal options. The
Company leases certain equipment under long-term lease agreements that are
classified as capital leases, and the leased assets are included in "Property
and equipment" in the accompanying Consolidated Balance Sheet. These capital
leases terminate at various dates through fiscal 2000. Other leases are
classified as operating leases and are not capitalized. Future minimum lease
payments under all noncancelable capital and operating leases are as follows
(in thousands):
42
<PAGE> 43
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
OPERATING CAPITAL
FISCAL YEAR ENDING JUNE 30, TOTAL LEASE LEASE
--------------------------- ----- --------- -------
<S> <C> <C> <C>
1998 $ 4,369 $ 4,144 $ 225
1999 3,583 3,358 225
2000 3,120 2,962 158
2001 2,774 2,774 -
2002 2,428 2,428 -
2003 and thereafter 8,243 8,243 -
----------- --------- --------
Total minimum payments $ 24,517 $ 23,909 $ 608
=========== =========
Less: amount representing interest (94)
--------
Present value of capital lease obligations 514
Less: current portion (171)
--------
Long-term capital lease obligations $ 343
========
</TABLE>
Total rental expense was $7,818,000 in fiscal 1997, $8,513,000 in fiscal 1996
and $7,252,000 in fiscal 1995. In August 1996, the Company surrendered its
lease of the vacated London office. The cost to terminate the lease,
approximately $2,600,000, was fully reserved for by the Company at June 30,
1996.
10. GEOGRAPHIC OPERATIONS AND SEGMENT INFORMATION
The following table summarizes selected financial information of the Company's
operations by geographic location (in thousands):
<TABLE>
<CAPTION>
Fiscal Year Ended June 30,
--------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Revenue from customers:
North America $ 48,684 $ 55,782 $ 48,478
International 44,147 63,202 59,880
---------- ---------- -----------
Total revenue $ 92,831 $ 118,984 $ 108,358
========== ========== ===========
Operating income:
North America $ 5,377 $ 15,720 $ 15,205
International (2,262) 12,438 15,392
---------- ---------- -----------
Total operating income 3,115 28,158 30,597
Unallocated expenses, net (28,903) (44,508) (28,317)
---------- ---------- -----------
Income (loss) before taxes $ (25,788) $ (16,350) $ 2,280
========== ========== ===========
Identifiable assets:
North America $ 38,948 $ 53,635 $ 16,672
International 32,628 35,539 29,962
---------- ---------- -----------
Total identifiable assets 71,576 89,174 46,634
Computer software 9,175 9,064 32,676
---------- ---------- -----------
Total assets $ 80,751 $ 98,238 $ 79,310
========== ========== ===========
</TABLE>
Unallocated expenses consist of general corporate expenses, internal research
and product development expenses, interest expense and interest income.
Unallocated expenses include $6,245,000 of restructuring related costs for cost
reduction actions in fiscal 1997 and $23,167,000 and $6,365,000 of unusual
charges related to the write-off of capitalized software in fiscal 1996 and
1995, respectively.
43
<PAGE> 44
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The presentation of information on a geographical basis requires the use of
estimation techniques and does not take into account the extent to which the
Company's marketing and management skills are inter-dependent.
The Company operates in one business segment: the development and marketing of
computer software and related services.
No customer accounted for more than 5% of total revenues in the fiscal years
ended June 30, 1997, 1996 and 1995.
11. QUARTERLY FINANCIAL DATA
Summarized quarterly financial data is as follows (unaudited and in thousands
except per share data):
<TABLE>
<CAPTION>
INCOME NET
(LOSS) NET INCOME
FROM INCOME (LOSS)
REVENUE OPERATIONS (LOSS) PER SHARE
------- ---------- ------ ---------
<S> <C> <C> <C> <C>
1997
First Quarter $ 19,984 $ (7,709) $ (4,931) $(0.51)
Second Quarter 26,195 (4,173) (2,762) (0.28)
Third Quarter 24,045 (10,198) (6,923) (0.71)
Fourth Quarter 22,607 (3,892) (2,501) (0.25)
-------- --------- --------
Year ended June 30 $ 92,831 $(25,972) $(17,117) $(1.75)
======== ========= ========
1996
First Quarter $ 28,653 $ 2,628 $ 1,510 $ 0.17
Second Quarter 32,183 (18,979) (12,864) (1.48)
Third Quarter 31,534 2,759 2,038 0.20
Fourth Quarter 26,614 (3,200) (575) (0.06)
-------- -------- --------
Year ended June 30 $118,984 $(16,792) $ (9,891) $(1.09)
======== ======== ========
1995
First Quarter $ 24,158 $ 1,418 $ 751 $ 0.09
Second Quarter 27,656 2,846 1,681 0.20
Third Quarter 27,704 1,828 1,204 0.14
Fourth Quarter 28,840 (3,607) 1,692 0.20
-------- -------- --------
Year ended June 30 $108,358 $ 2,485 $ 5,328 $ 0.63
======== ======== ========
</TABLE>
During the quarter ended March 31, 1997, the Company recorded a $6,245,000
restructuring charge for management actions or plans in connection with the
consolidation of the Company's product development activities in Ann Arbor,
Michigan and reductions in staff and non-revenue generating costs.
During the quarter ended June 30, 1996, the Company realized a $1,200,000 tax
benefit related to the settlement of certain tax issues and the amendment of
certain tax returns to claim credits which had previously not been claimed.
During the quarter ended December 31, 1995, the Company recorded a non-cash
charge of $23,167,000 to write off certain capitalized software.
During the quarter ended June 30, 1995, the Company wrote off $6,365,000 of
capitalized mainframe computer software.
The fourth quarter ended June 30, 1995, also included a $4,100,000 tax benefit
related to the recognition of prior years' net operating losses and tax
credits as well as tax reserves released.
44
<PAGE> 45
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
12. LITIGATION
Between August 9, 1996 and September 5, 1996, following the Company's
announcement of certain violations of the Company's revenue recognition
policies, four separate shareholder class action suits were filed in the United
States District Court for the Eastern District of Michigan against the Company
and certain of its officers and directors on behalf of shareholders who had
purchased the Company's common stock between April 17, 1996 and August 6, 1996.
The Court consolidated the four suits into one class action, In Re Comshare,
Incorporated Securities Litigation, and the plaintiffs amended their complaint
to expand the class to shareholders who had purchased the Company's common stock
between August 2, 1995 and August 6, 1996. The action alleged that the
plaintiffs sustained losses as a result of the defendants' alleged untrue
statements of material facts and alleged omissions to state material facts
necessary in order to make the statements made not misleading. The complaint
sought unspecified damages and costs. On September 18, 1997 the Court
dismissed all of the claims. The plaintiffs have thirty days from the date of
entry of the order in which to appeal the dismissal.
In 1996, Arbor Software Corporation ("Arbor"), following an audit of the
Company's records, demanded that the Company submit certain issues involving
interpretation of royalty provisions of the license agreement between the
Company and Arbor to binding arbitration. Arbor and the Company were in the
process of working out a procedure for and definition of all legal and
accounting issues to be resolved by such arbitration when, on September 27,
1996, Arbor filed a lawsuit against Comshare in the United States District
Court for the Northern District of California alleging breach of contract and
fraud relating to royalty calculations. The Company filed a denial of all of
Arbor's claims and filed a counterclaim against Arbor for fraud, defamation,
unfair competition, interference with economic relationships and breach of
contract. The parties are in the process of conducting discovery, and trial
is currently scheduled for May 1998. The Company is contesting Arbor's claims
and pursuing its own counterclaims vigorously.
45
<PAGE> 46
COMSHARE, INCORPORATED
SCHEDULE II
CONSOLIDATED SCHEDULE
OF VALUATION & QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance Charged to Deductions Balance
Beginning Costs and from Translation End of
DESCRIPTION of Period Expenses Reserves Adjustments Other Period
- ----------- ---------- -------- -------- ----------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Allowance for doubtful accounts
For the year ended June 30:
1997 $1,411 $ 526 $ (916) $ 32 $ - $1,053
====== ====== ====== ====== ====== ======
1996 $ 887 $ 578 $ (52) $ (2) $ - $1,411
====== ====== ====== ====== ====== ======
1995 $1,161 $ (119) $ (173) $ 18 $ - $ 887
====== ====== ====== ====== ====== ======
</TABLE>
46
<PAGE> 47
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Comshare, Incorporated
Date: September 29, 1997 By: /s/ Kathryn A. Jehle
------------------ ---------------------------------
Kathryn A. Jehle
Senior Vice President,
Chief Financial Officer,
Treasurer and Assistant Secretary
Pursuant to the requirement of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Dennis G. Ganster President, Chief Executive
- ---------------------- Officer, and a Director September 29, 1997
Dennis G. Ganster (Principal Executive Officer) ------------------
/s/ Kathryn A. Jehle Senior Vice President,
- ---------------------- Chief Financial Officer, September 29, 1997
Kathryn A. Jehle Treasurer and Assistant Secretary ------------------
(Principal Financial Officer)
/s/ R. Michael Mahoney Senior Director of Finance,
- ---------------------- Chief Accounting Officer, September 29, 1997
R. Michael Mahoney (Principal Accounting Officer) ------------------
/s/ Daniel T. Carroll Chairman of the Board
- ----------------------- September 29, 1997
Daniel T. Carroll ------------------
/s/ Geoffrey B. Bloom Director
- ----------------------- September 29, 1997
Geoffrey B. Bloom ------------------
/s/ Richard L. Crandall Director
- ----------------------- September 29, 1997
Richard L. Crandall ------------------
/s/ Stanley R. Day Director
- ----------------------- September 29, 1997
Stanley R. Day ------------------
/s/ W. John Driscoll Director
- ----------------------- September 29, 1997
W. John Driscoll ------------------
/s/ Alan G. Merten Director
- ----------------------- September 29, 1997
Alan G. Merten ------------------
/s/ John F. Rockart Director
- ----------------------- September 29, 1997
John F. Rockart ------------------
/s/ T. Wallace Wrathall Director
- ----------------------- September 29, 1997
T. Wallace Wrathall ------------------
</TABLE>
47
<PAGE> 48
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
3.01 Restated Articles of Incorporation of the Registrant, as amended -
incorporated by reference to Exhibit 3.02 to the Registrant's 10-K Report
for the fiscal year ended June 30, 1996.
3.02 Bylaws of the Registrant, as amended - incorporated by reference to
Exhibit 3.02 to the Registrant's 10-K Report for the fiscal year ended
June 30, 1995.
4.01 Specimen form of Common Stock Certificate - incorporated by reference to
Exhibit 4(c) to the Registrant's Form S-1 Registration Statement No.
2-29663.
4.02 Credit agreement dated September 23, 1997 among Comshare, Incorporated, its Borrowing
Subsidiary (as defined therein) and Harris Trust and Savings Bank.
4.03 Rights Agreement, dated as of September 16, 1996, between Comshare,
Incorporated and KeyBank National Association, as Rights Agent -
incorporated by reference to Exhibit 2 to the Registrant's Registration
Statement on Form 8-A, filed on September 17, 1996.
4.04 Form of certificate representing Rights (included as Exhibit B to the
form of Rights Agreement filed as Exhibit 4.03). Pursuant to the Rights
Agreement, Rights Certificates will not be mailed until after the earlier
of (i) the tenth business day (or such later date as may be determined by
the Board of Directors, with the concurrence of a majority of the
Continuing Directors, prior to such time as any person becomes an
Acquiring Person) after the date of the commencement of, or first public
announcement of the intent to commence, a tender or exchange offer by any
person or group of affiliated or associated persons (other than the
Company or certain entities affiliated with or associated with the
Company), if, upon consummation thereof, such person or group of
affiliated or associated persons would be the beneficial owner of 15% or
more of such outstanding shares of common stock - incorporated by
reference to Exhibit 1 to the Registrant's Registration Statement on Form
8-A, filed on September 17, 1996.
10.01 Benefit Adjustment Plan of Comshare, Incorporated, effective June 1,
1986, as amended - incorporated by reference to Exhibit 10.20 to the
Registrant's Form 10-K Report for the fiscal year ended June 30, 1993.
10.02 Comshare, Incorporated 1988 Stock Option Plan, as amended - incorporated
by reference to Exhibit 10.21 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 1990 and Exhibit 10.22 to the Registrant's Form
10-Q Report for the quarter ended September 30, 1994.
10.03 Amended and Restated Profit Sharing Plan of Comshare, Incorporated,
effective as of October 1, 1995 - incorporated by reference to Exhibit 4.1
to the Registrant's Form S-8 Registration Statement No. 33-65109.
10.04 Rules of the Comshare Retirement and Death Benefits Plan for employees
of the United Kingdom, effective January 1, 1991, as amended -
incorporated by reference to Exhibit 10.27 to the Registrant's Form 10-K
Report for the fiscal year ended June 30, 1993.
10.05 Deed of Variation relating to the Comshare Retirement and Death Benefits
Plan for employees of United Kingdom, dated July 30, 1997.
10.06 Interim Trust Deed establishing the Comshare Money Purchase Plan for
employees of the United Kingdom, effective March 1, 1994 - incorporated by
reference to Exhibit 10.08 to the Registrant's Form 10-K for the fiscal
year ended June 30, 1994.
10.07 Employment and NonCompetition Agreement between Comshare, Incorporated
and T. Wallace Wrathall, effective as of April 1, 1994 - incorporated by
reference to Exhibit 10.23 to the Registrant's Form 10-Q Report for the
quarter ended December 31, 1994.
</TABLE>
48
<PAGE> 49
10.08 Amended and Restated Employee Agreement between Comshare, Incorporated
and Richard L. Crandall effective July 1, 1994, as amended - incorporated
by reference to Exhibit 10.10 to the Registrant's Form 10-K for the fiscal
year ended June 30, 1994.
10.09 Non-Competition Agreement between Comshare, Incorporated and Richard L.
Crandall - incorporated by reference to Exhibit 10.11 of the Registrant's
Form 10-K for the fiscal year ended June 30, 1994. (Portions of this
exhibit have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment
pursuant to Rule 24b-2).
10.10 Letter Agreement from Comshare, Incorporated to Kathryn A. Jehle
regarding terms of employment dated April 18, 1994 - incorporated by
reference to Exhibit 10.12 to the Registrant's Form 10-K for the fiscal
year ended June 30, 1994.
10.11 Description of Incentive Arrangements for certain executive officers for
fiscal years 1994 and 1995-2000 - incorporated by reference to Exhibit
10.12 to the Registrant's Form 10-K Report for the fiscal year ended June
30, 1996.
10.12 Stock Option Agreement, effective as of March 10, 1997, between
Comshare, Incorporated and Daniel T. Carroll - incorporated by reference
to Exhibit 10.22 to the Registrant's Form 10-Q Report for the quarter
ended March 31, 1997.
10.13 Trust Agreement under the Benefit Adjustment Plan of Comshare,
Incorporated, effective April 25, 1988, as amended - incorporated by
reference to Exhibit 10.31 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 1993.
10.14 Trust Agreement between Comshare, Incorporated and Vanguard Fiduciary
for maintaining the Profit Sharing Plan of Comshare, Incorporated
effective March 31, 1992, as amended - incorporated by reference to
Exhibit 10.15 to the Registrant's Form 10-K for the fiscal year ended June
30, 1994.
10.15 1994 Executive Stock Purchase Program of Comshare, Incorporated -
incorporated by reference to Exhibit 10.19 to the Registrant's Form 10-Q
Report for the quarter ended September 30, 1994.
10.16 Employee Stock Purchase Plan of Comshare, Incorporated - incorporated by
reference to Exhibit 10.20 to the Registrant's Form 10-Q Report for the
quarter ended September 30, 1994.
10.17 1994 Directors Stock Option Plan of Comshare, Incorporated -
incorporated by reference to Exhibit 10.21 to the Registrant's Form 10-Q
Report for the quarter ended September 30, 1994.
10.18 Letter of understanding between Comshare, Incorporated and Steven J.
Tonissen regarding employment termination dated August 4, 1997.
10.19 Agreement between Comshare, Incorporated and Dion T. O'Leary dated July
9, 1997.
10.20 Letter agreement between Comshare, Incorporated and Geoffrey R. Cluett
dated April 29, 1997 regarding term of employment and non-compete
agreement.
10.21 Lease dated September, 1994, between Comshare, Incorporated, Tenant and
MGI Holding, Inc., Landlord for office space located at 555 Briarwood
Circle, Ann Arbor, Michigan 48108 - incorporated by reference to Exhibit
10.18 to the Registrant's Form 10-Q Report for the quarter ended September
30, 1994.
10.22 Agreement between Taurusbuild Limited, Comshare and Svenska
Handelsbanken related to the lease of office space for the Company's
London office facility - incorporated by reference to Exhibit 10.17 of the
Registrant's Form 10-K Report for the fiscal year ended June 30, 1994.
10.23 Software License Agreement by and between Arbor Software Corporation and
Comshare, Incorporated dated December 23, 1993 - incorporated by reference
to Exhibit 10.20 to Amendment Number 3 to the Registrant's Form 10-K
Report, filed November 8, 1995, for the fiscal year ended June 30, 1995.
(Portions
49
<PAGE> 50
of this exhibit have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment pursuant to Rule 24b-2).
10.24 First Amendment to License Agreement by and between Arbor Software
Corporation and Comshare, Incorporated dated March 1, 1994 - incorporated
by reference to Exhibit 10.20 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 1995. (Portions of this exhibit have been
omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment pursuant to Rule 24b-2).
11.1 Computation of per share earnings.
21.01 Subsidiaries of the Registrant.
23.01 Consent of Independent Public Accountants.
27.00 Financial Data Schedule.
99.00 Amended and Restated Profit Sharing Plan of Comshare, Incorporated, Form
11-K Annual Report - filed pursuant to Section 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended June 30, 1997.
50
<PAGE> 1
EXHIBIT 4.02
================================================================================
CREDIT AGREEMENT
DATED AS OF
SEPTEMBER 23, 1997,
BETWEEN
COMSHARE, INCORPORATED,
COMSHARE LIMITED
AND
HARRIS TRUST AND SAVINGS BANK
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION DESCRIPTION PAGE
<S> <C> <C>
SECTION 1. THE REVOLVING CREDIT...................................................... 1
Section 1.1. Revolving Credit...................................................... 1
Section 1.2. Manner and Disbursement of Loans...................................... 2
Section 1.3. Appointment of Company as Agent for Borrowers......................... 2
SECTION 2. INTEREST AND CHANGE IN CIRCUMSTANCES...................................... 2
Section 2.1. Interest Rate Options................................................. 2
Section 2.2. Minimum Amounts....................................................... 4
Section 2.3. Computation of Interest............................................... 4
Section 2.4. Manner of Rate Selection.............................................. 5
SECTION 3. FEES, PREPAYMENTS, TERMINATIONS AND APPLICATIONS.......................... 5
Section 3.1. Fees.................................................................. 5
Section 3.2. Voluntary Prepayments................................................. 6
Section 3.3. Mandatory Prepayment.................................................. 6
Section 3.4. Terminations.......................................................... 6
Section 3.5. Place and Application of Payments..................................... 6
Section 3.6. Notations............................................................. 7
Section 3.7. Payments Free of Withholding.......................................... 7
SECTION 4. COLLATERAL................................................................ 8
Section 4.1. Personal Property Collateral from Company and each Subsidiary......... 8
Section 4.2. Foreign Security Documents............................................ 8
Section 4.3. Foreign Accounts...................................................... 8
Section 4.4. Stock Pledge.......................................................... 8
Section 4.5. Guarantees............................................................ 8
Section 4.6. Further Assurances.................................................... 8
SECTION 5. DEFINITIONS; INTERPRETATION............................................... 8
Section 5.1. Definitions........................................................... 8
Section 5.2. Interpretation........................................................ 20
SECTION 6. REPRESENTATIONS AND WARRANTIES............................................ 21
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
Section 6.1. Organization and Qualification........................................ 21
Section 6.2. Subsidiaries.......................................................... 21
Section 6.3. Corporate Authority and Validity of Obligations....................... 22
Section 6.4. Use of Proceeds; Margin Stock......................................... 22
Section 6.5. Financial Reports..................................................... 22
Section 6.6. Solvency, Etc......................................................... 23
Section 6.7. No Material Adverse Change............................................ 23
Section 6.8. Full Disclosure....................................................... 23
Section 6.9. Good Title............................................................ 23
Section 6.10. Litigation and Other Controversies.................................... 23
Section 6.11. Taxes................................................................. 24
Section 6.12. Approvals............................................................. 24
Section 6.13. Affiliate Transactions................................................ 24
Section 6.14. Investment Company.................................................... 24
Section 6.15. ERISA................................................................. 24
Section 6.16. Compliance with Laws.................................................. 24
Section 6.17. Other Agreements...................................................... 25
Section 6.18. No Default............................................................ 25
SECTION 7. CONDITIONS PRECEDENT...................................................... 25
Section 7.1. All Advances.......................................................... 25
Section 7.2. Initial Advance....................................................... 26
SECTION 8. COVENANTS................................................................. 27
Section 8.1. Maintenance of Business............................................... 28
Section 8.2. Maintenance of Properties............................................. 28
Section 8.3. Taxes and Assessments................................................. 28
Section 8.4. Insurance............................................................. 28
Section 8.5. Financial Reports..................................................... 28
Section 8.6. Inspection............................................................ 30
Section 8.7. Net Worth............................................................. 30
Section 8.8. Fixed Charge Coverage Ratio........................................... 31
Section 8.9. Minimum EBIT.......................................................... 31
Section 8.10. Indebtedness for Borrowed Money....................................... 31
Section 8.11. Liens................................................................. 32
Section 8.12. Investments, Acquisitions, Loans, Advances and Guaranties............. 33
Section 8.13. Mergers, Consolidations and Sales..................................... 34
Section 8.14. Dividends and Certain Other Restricted Payments....................... 34
Section 8.15. ERISA................................................................. 34
</TABLE>
-3-
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
Section 8.16. Compliance with Laws.................................................. 35
Section 8.17. Burdensome Contracts With Affiliates.................................. 35
Section 8.18. No Changes in Fiscal Year............................................. 35
Section 8.19. Formation of Subsidiaries............................................. 35
Section 8.20. Change in the Nature of Business...................................... 35
Section 8.21. Borrowing Subsidiary................................................. 35
SECTION 9. EVENTS OF DEFAULT AND REMEDIES............................................ 36
Section 9.1. Events of Default..................................................... 36
Section 9.2. Non-Bankruptcy Defaults............................................... 38
Section 9.3. Bankruptcy Defaults................................................... 39
SECTION 10. JOINT AND SEVERAL LIABILITY............................................... 39
Section 10.1. Joint and Several Liability........................................... 39
Section 10.2. Joint and Several Liability Unconditional............................. 39
Section 10.3. Discharge Only Upon Payment in Full................................... 40
Section 10.4. Waivers............................................................... 40
Section 10.5. Limit on Recovery..................................................... 41
Section 10.6. Stay of Acceleration.................................................. 41
SECTION 11. FUNDING INDEMNITY AND CHANGE IN CIRCUMSTANCES............................. 41
Section 11.1. Change in Capital Adequacy Requirements............................... 41
Section 11.2. Change of Law......................................................... 41
Section 11.3. Unavailability of Deposits or Inability to Ascertain Adjusted LIBOR... 42
Section 11.4. Taxes and Increased Costs............................................. 42
Section 11.5. Funding Indemnity..................................................... 43
Section 11.6. Lending Branch........................................................ 44
Section 11.7. Discretion of Bank as to Manner of Funding............................ 44
SECTION 12. MISCELLANEOUS............................................................. 44
Section 12.1. Non-Business Days..................................................... 44
Section 12.2. No Waiver, Cumulative Remedies........................................ 44
Section 12.3. Amendments, Etc....................................................... 44
Section 12.4. Extensions of the Commitment.......................................... 44
Section 12.5. Costs and Expenses.................................................... 45
Section 12.6. Currency.............................................................. 46
Section 12.7. Currency Equivalence.................................................. 46
Section 12.8. Documentary Taxes..................................................... 47
</TABLE>
-4-
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C>
Section 12.9. Survival of Representations........................................... 47
Section 12.10. Survival of Indemnities............................................... 47
Section 12.11. Notices............................................................... 47
Section 12.12. Construction.......................................................... 48
Section 12.13. Headings.............................................................. 48
Section 12.14. Severability of Provisions............................................ 48
Section 12.15. Counterparts.......................................................... 48
Section 12.16. Binding Nature, Governing Law, Etc.................................... 48
Section 12.17. Submission to Jurisdiction; Waiver of Jury Trial..................... 48
Signature..................................................................................... 50
</TABLE>
-5-
<PAGE> 6
EXHIBIT A - Revolving Credit Note
EXHIBIT B - Borrowing Base Certificate
EXHIBIT C - Compliance Certificate
EXHIBIT D - Opinion of Borrowers' Counsel
EXHIBIT E - Form of Opinion of Borrowing Subsidiary's/Guarantors' Counsel
EXHIBIT F - Optional Currencies
EXHIBIT G - Form Of Guaranty Agreement
SCHEDULE 6.2 - Subsidiaries
SCHEDULE 8.10 - Foreign Overdraft Liens
SCHEDULE 8.11 - Permitted Liens
-6-
<PAGE> 7
CREDIT AGREEMENT
Harris Trust and Savings Bank
Chicago, Illinois
Ladies and Gentlemen:
The undersigned, Comshare, Incorporated, a Michigan corporation (the
"Company"), and Comshare Limited, a private limited company organized under the
laws of England (the "Borrowing Subsidiary") (the Company and the Borrowing
Subsidiary being hereinafter referred to collectively as the "Borrowers" and
individually as a "Borrower"), hereby apply to you (the "Bank") to provide to
the Borrowers a revolving credit facility, all on and subject to the terms and
conditions set forth below. Accordingly, this Agreement is executed and
delivered by the Borrowers to the Bank to set forth and confirm the terms and
conditions applicable to such credit facility and the covenants,
representations and warranties of the Borrowers to be made in connection
therewith.
SECTION 1. THE REVOLVING CREDIT.
Section 1.1. Revolving Credit. Subject to the terms and conditions
hereof, the Bank agrees to extend a revolving credit (the "Revolving Credit")
to the Company and (subject to Section 1.3 hereof) the Borrowing Subsidiary
which may be availed of by each Borrower from time to time during the period
from and including the date hereof to but not including the Termination Date,
at which time the commitment of the Bank to extend credit under the Revolving
Credit shall expire. The Revolving Credit may be utilized by each Borrower in
the form of loans (individually a "Loan" and collectively the "Loans") on a
revolving basis in U.S. Dollars and Optional Currencies, all as more fully
hereinafter set forth; provided, however, that the aggregate Original Dollar
Amount of Loans outstanding at any one time to the Borrowers (taken together)
shall not exceed the lesser of (x) $10,000,000 (such amount, as the same may be
reduced pursuant to Section 3.4 hereof, being hereinafter referred to as the
"Commitment") and (y) the Borrowing Base as then determined and computed. Each
Loan shall be in a minimum amount of $100,000; provided, however, that Loans
which bear interest with reference to the Adjusted LIBOR shall be in such
greater amount as is required by Section 2.2 hereof. The Loans shall be made
against and evidenced by a single promissory note of the Company and the
Borrowing Subsidiary, jointly and severally, in the form (with appropriate
insertions) attached hereto as Exhibit A (the "Note") payable to the order of
the Bank in the outstanding principal amount of the Loans. The Note shall be
dated the date of issuance thereof, be expressed to bear interest as set forth
in Section 2 hereof, and be expressed to mature on the Termination Date.
Without regard to the principal amount of the Note stated on its face, the
actual principal amount
<PAGE> 8
at any time outstanding and owing by the Borrowers on account of the Note shall
be the sum of all Loans made hereunder (without regard to which Borrower such
Loans were made) less all payments of principal actually received by the Bank
on the Loans. During the period from and including the date hereof to but not
including the Termination Date, each Borrower may use the Commitment by
borrowing, repaying and reborrowing Loans in whole or in part, all in
accordance with the terms and conditions of this Agreement.
Section 1.2. Manner and Disbursement of Loans. The Company (which is
acting on behalf of the Borrowers pursuant to Section 1.3 hereof) shall give
written or telephonic notice to the Bank (which notice shall be irrevocable
once given and, if given by telephone, shall be promptly confirmed in writing)
by no later than 11:00 a.m. (Chicago time) on the date a Borrower requests the
Bank to make a Loan hereunder to such Borrower. Each such notice shall specify
the date of the Loan requested (which must be a Business Day), the amount of
such Loan and the Borrower to whom it is to be disbursed. Each Loan shall
initially constitute part of the Domestic Rate Portion of the Note except to
the extent the Company (which is acting on behalf of the Borrowers pursuant to
Section 1.3 hereof) has otherwise timely elected that such Loan, or any part
thereof, constitute part of a Eurocurrency Portion as provided in Section 2
hereof. The Borrowers agree that the Bank may rely upon any written or
telephonic notice given by any person the Bank in good faith believes is an
Authorized Representative without the necessity of independent investigation
and, in the event any telephonic notice conflicts with the written
confirmation, such telephonic notice shall govern if the Bank has acted in
reliance thereon. Subject to the provisions of Section 7 hereof, the proceeds
of each Loan shall be made available to the relevant Borrower at the principal
office of the Bank in Chicago, Illinois, in immediately available funds, except
in the case of Eurocurrency Portions of Loans denominated in an Optional
Currency, which shall be made available at such office as the Bank has
previously notified to the Company, in such funds which are then customary for
the settlement of international transactions in such currency and no later than
such local time as is necessary for such funds to be received and transferred
to the relevant Borrower for same day value.
Section 1.3. Appointment of Company as Agent for Borrowers. Each Borrower
hereby irrevocably appoints the Company as its agent hereunder to make requests
on such Borrower's behalf under Section 1 hereof for Loans to be made to such
Borrower, to select on such Borrower's behalf the interest rate and (if
relevant) currency to be applicable under Section 2 hereof to Portions of Loans
made to such Borrower and to take any other action contemplated by the Loan
Documents with respect to credit extended hereunder to such Borrower. The Bank
shall be entitled to conclusively presume that any action by the Company under
the Loan Documents is taken on behalf of either one or both of the Borrowers
whether or not the Company so indicates.
SECTION 2. INTEREST AND CHANGE IN CIRCUMSTANCES.
-8-
<PAGE> 9
Section 2.1. Interest Rate Options. (a) Subject to all of the terms and
conditions of this Section 2, portions of the principal indebtedness evidenced
by the Note (all of the indebtedness evidenced by the Note bearing interest at
the same rate for the same period of time being hereinafter referred to as a
"Portion" of the Note) may, at the option of the Company (which is acting on
behalf of the Borrowers pursuant to Section 1.3 hereof), bear interest with
reference to the Domestic Rate (the "Domestic Rate Portion") or with reference
to an Adjusted LIBOR ("Eurocurrency Portions"), and Portions may be converted
from time to time from one basis to another. Eurocurrency Portions of the Note
may be denominated in either U.S. Dollars or an Optional Currency, but all
other Portions of the Note must be denominated in U.S. Dollars only. All of
the indebtedness evidenced by the Note which is not part of a Eurocurrency
Portion shall constitute a single Domestic Rate Portion. All of the
indebtedness evidenced by the Note which bears interest with reference to a
particular Adjusted LIBOR for a particular Interest Period shall constitute a
single Eurocurrency Portion. There shall not be more than fifteen (15)
Eurocurrency Portions applicable to the Note outstanding at any one time.
Anything contained herein to the contrary notwithstanding, the obligation of
the Bank to create, continue or effect by conversion any Eurocurrency Portion
shall be conditioned upon the fact that at the time no Default or Event of
Default shall have occurred and be continuing. The Borrowers hereby jointly
and severally promise to pay interest on each Portion of the Note at the rates
and times specified in this Section 2.
(b) Domestic Rate Portion. The Domestic Rate Portion shall bear interest
at the rate per annum determined by adding the Applicable Margin to the
Domestic Rate as in effect from time to time, provided that if the Domestic
Rate Portion of the Note or any part thereof is not paid when due (whether by
lapse of time, acceleration or otherwise), such Portion shall bear interest,
whether before or after judgment, until payment in full thereof at the rate per
annum determined by adding 2% to the interest rate which would otherwise be
applicable thereto from time to time. Interest on the Domestic Rate Portion of
the Note shall be payable quarterly in arrears on the last Business Day of each
calendar quarter in each year and at maturity of the Note, and interest after
maturity (whether by lapse of time, acceleration or otherwise) shall be due and
payable upon demand. Any change in the interest rate on each Domestic Rate
Portion resulting from a change in the Domestic Rate shall be effective on the
date of the relevant change in the Domestic Rate.
(c) Eurocurrency Portions. Each Eurocurrency Portion shall bear interest
for each Interest Period selected therefor at a rate per annum determined by
adding the Applicable Margin to the Adjusted LIBOR for such Interest Period,
provided that if any Eurocurrency Portion is not paid when due (whether by
lapse of time, acceleration or otherwise), such Portion shall bear interest,
whether before or after judgment, until payment in full thereof (i) if such
portion is denominated in U.S. Dollars, at the rate per annum determined by
adding 2% to the interest rate which would otherwise be applicable thereto
through the end of the Interest Period then
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<PAGE> 10
applicable thereto, and effective at the end of such Interest Period such
Eurocurrency Portion shall automatically be converted into and added to the
Domestic Rate Portion of the Note and shall thereafter bear interest at the
interest rate applicable to such Domestic Rate Portion after default and (ii)
if such Portion is denominated in an Optional Currency, at the rate per annum
determined by adding 2% to the interest rate which would otherwise be
applicable thereto at the time of such default until the end of the Interest
Period applicable thereto and, thereafter, at a rate per annum equal to the sum
of the Applicable Margin plus 2% plus the Overnight Eurocurrency Rate.
Interest on each Eurocurrency Portion shall be due and payable on the last day
of each Interest Period applicable thereto and, with respect to any Interest
Period applicable to a Eurocurrency Portion in excess of 3 months, on the date
occurring every 3 months after the date such Interest Period began and at the
end of such Interest Period, and interest after maturity (whether by lapse of
time, acceleration or otherwise) shall be due and payable upon demand. The
Company (which is acting on behalf of the Borrowers pursuant to Section 1.3
hereof) shall notify the Bank on or before 11:00 a.m. (Chicago time) on the
third Business Day (or, on the third Business Day in the case of a Eurocurrency
Portion denominated in U.S. Dollars) preceding the end of an Interest Period
applicable to a Eurocurrency Portion whether such Eurocurrency Portion is to
continue as a Eurocurrency Portion in the same currency, in which event the
Company (which is so acting on behalf of the Borrowers) shall notify the Bank
of the new Interest Period selected therefor, and in the event the Company
shall fail to so notify the Bank, such Eurocurrency Portion if denominated in
U.S. Dollars shall automatically be converted into and added to the Domestic
Rate Portion of the Note as of and on the last day of such Interest Period (and
the relevant Borrower shall be deemed to have requested such conversion) or if
denominated in an Optional Currency shall automatically as of the last day of
such Interest Period, be continued as a Eurocurrency Portion in the same amount
and in the same currency and with an Interest Period of 1 month (and the
relevant Borrower shall be deemed to have requested such continuance), subject
to Section 7 hereof.
In the event the Company (which is acting on behalf of the Borrowers
pursuant to Section 1.3 hereof) requests the Bank create or continue, or
convert a Portion (an "Existing Portion") into, a Eurocurrency Portion
denominated in an Optional Currency and the Bank notifies the Company by no
later than 12:00 noon (Chicago time) on the date of such request that such
Optional Currency is not available to the Bank in a sufficient amount and for a
sufficient term to enable the Bank to create, continue or convert into such
Eurocurrency Portion, the relevant Borrower shall automatically be deemed to
have revoked its request for such Eurocurrency Portion and the Existing Portion
if denominated in U.S. Dollars shall automatically be converted into and added
to the Domestic Rate Portion of the Note as of and on the last day of the
Interest Period applicable thereto (and the relevant Borrower shall be deemed
to have requested such conversion) or if denominated in an Optional Currency
shall be repaid in full on the last day of such Interest Period. Any Loan made
in an Optional Currency shall be advanced
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<PAGE> 11
in such currency, and all payments of principal and interest thereon shall be
made in such Optional Currency.
Section 2.2. Minimum Amounts. Each Loan and each Portion of each Loan
shall be in a minimum amount of $100,000 except for Eurocurrency Portions.
Each Eurocurrency Portion denominated in U.S. Dollars shall be in a minimum
amount of $100,000 or such greater amount which is an integral multiple of
$10,000. Each Eurocurrency Portion denominated in an Optional Currency shall
be in a minimum amount for which the U.S. Dollar Equivalent is $100,000 or such
greater amount which is an integral multiple 50,000 units of the relevant
currency or, solely in the case of a Eurocurrency Portion denominated in an
Optional Currency being continued in the same currency, if less, the same
amount of such currency.
Section 2.3. Computation of Interest. All interest on the Notes (except
for Eurocurrency Portions denominated in British Pound Sterling) shall be
computed on the basis of a year of 360 days for the actual number of days
elapsed. All interest on Eurocurrency Portions denominated in British Pound
Sterling shall be computed on the basis of a year of 365 or 366 days, as the
case may be.
Section 2.4. Manner of Rate Selection. Each Loan shall initially
constitute part of the Domestic Rate Portion of the Note except to the extent
the Company (which is acting on behalf of the Borrowers pursuant to Section 1.3
hereof) has otherwise timely elected otherwise as hereinafter set forth. In
the event the relevant Borrower desires a Eurocurrency Portion be created,
continued or converted, the Company (which is acting on behalf of the Borrowers
pursuant to Section 1.3 hereof) shall notify the Bank by 11:00 a.m. (Chicago
time) at least three (3) Business Days prior to the date upon which the
relevant Borrower requests that any Eurocurrency Portion be created or that any
part of the Domestic Rate Portion be converted into a Eurocurrency Portion.
Each such notice shall specify in each instance the amount of the Portion being
created or converted and in the case of the creation of or conversion into any
Eurocurrency Portion, the Interest Period selected therefor and in the case of
the creation of or conversion into any Eurocurrency Portion, the currency in
which such Portion is to be denominated. If any request is made to convert a
Eurocurrency Portion into another type of Portion available hereunder, such
conversion shall only be made so as to become effective as of the last day of
the Interest Period applicable thereto. All requests for the creation,
continuance and conversion of Portions under this Agreement shall be
irrevocable. Such requests may be written or oral and the Bank is hereby
authorized to honor telephonic requests for creations, continuances and
conversions received by it from any person the Bank in good faith believes to
be an Authorized Representative without the necessity of independent
investigation, the Borrowers hereby jointly and severally indemnifying the Bank
from any liability or loss ensuing from so acting.
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<PAGE> 12
SECTION 3. FEES, PREPAYMENTS, TERMINATIONS AND APPLICATIONS.
Section 3.1. Fees.
(a) Closing Fee. On the date hereof, the Borrowers shall pay to the Bank
a closing fee of $25,000, such fee to be deemed fully earned and non-refundable
upon the Bank's acceptance of this Agreement.
(b) Commitment Fee. For the period from and including the date hereof to
but not including the Termination Date, the Borrowers shall pay to the Bank a
commitment fee at a rate per annum equal at all times to the Applicable Margin
(computed on the basis of a year of 360 days for the actual number of days
elapsed) on the average daily unused portion of the Commitment. Such
commitment fee shall be payable quarterly in arrears on the last Business Day
of each calendar quarter in each year (commencing on September 30, 1997) and on
the Termination Date.
(c) Audit Fees. The Borrowers shall pay to the Bank charges for audits of
the Collateral performed by the Bank or its agents or representatives in such
amounts as the Bank may from time to time request (the Bank acknowledging and
agreeing that such charges shall be computed reasonably and in the same manner
as it at the time customarily uses for the assessment of charges for similar
collateral audits); provided, however, that in the absence of any Default or
Event of Default, the Borrowers shall not be required to pay the Bank for more
than one such audit per calendar year.
Section 3.2. Voluntary Prepayments. (a) Each Borrower shall have the
privilege of prepaying without premium or penalty and in whole or in part (but
if in part, then in an amount not less than $100,000) the Domestic Rate Portion
of the Note at any time upon notice to the Bank prior to 11:00 a.m. (Chicago
time) on the date fixed for prepayment, each such prepayment to be made by the
payment of the principal amount to be prepaid and accrued interest thereon to
the date of prepayment.
(b) Each Borrower may prepay any Eurocurrency Portion of the Note only on
the last date of the then applicable Interest Period, in whole or in part (but
if such prepayment is in part, then such prepayment shall be: (i) if such
Portion is denominated in U.S. Dollars, in an amount not less than $100,000 or
such greater amount which is an integral multiple of $100,000, (ii) if such
Portion is denominated in an Optional Currency, an amount for which the U.S.
Dollar Equivalent is not less than $100,000 or such greater amount which is an
integral multiple of 100,000 units of the relevant currency and (iii) in all
cases in an amount such that the minimum amount required for Portions of such
type pursuant to Section 2.2 hereof without the necessity of any consent from
the Bank remains outstanding after giving effect to such prepayment) upon 3
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<PAGE> 13
Business Days' prior notice to the Bank (which notice shall be irrevocable once
given, must be received by the Bank no later than 10:00 a.m. (Chicago time) on
the fourth Business Day preceding the date of such prepayment, and shall
specify the principal amount to be repaid). Any such prepayment shall be
effected by payment of the principal amount to be prepaid and accrued interest
thereon to the end of the applicable Interest Period.
Section 3.3. Mandatory Prepayment. The Borrowers covenant and agree that
if at any time the sum of the then aggregate Original Dollar Amount of Loans
then outstanding shall be in excess of the lesser of (x) the Borrowing Base as
then determined and computed or (y) the Commitment then in effect, the
Borrowers shall immediately and without notice or demand pay over the amount of
the amount of the excess to the Bank as and for a mandatory prepayment on Note
until payment in full thereof. Each such prepayment shall be accompanied by
accrued interest on the amount prepaid to the date of prepayment plus any
amounts due to the Bank under Section 11.5 hereof.
Section 3.4. Terminations. The Company shall have the right at any time
and from time to time, upon 1 Business Day's prior notice to the Bank, to
terminate without premium or penalty and in whole or in part (but if in part,
then in an amount not less than $500,000) the Commitment, provided that the
Commitment may not be reduced to an amount less than the aggregate Original
Dollar Amount of the Loans then outstanding. No termination of the Commitment
pursuant to this Section may be reinstated.
Section 3.5. Place and Application of Payments. All payments of
principal, interest, fees and all other Obligations payable hereunder and under
the other Loan Documents shall be made to the Bank at its office at 111 West
Monroe Street, Chicago, Illinois (or at such other place as the Bank may
specify) no later than 11:00 a.m. (Chicago time) on the date any such payment
is due and payable. Payments received by the Bank after 11:00 a.m. (Chicago
time) shall be deemed received as of the opening of business on the next
Business Day. All such payments shall be made (i) in the case of Obligations
payable in U.S. Dollars, in lawful money of the United States, immediately
available funds at the place of payment, or (ii) in the case of Obligations
payable in an Optional Currency, in such Optional Currency in such funds then
customary for the settlement of international transactions in such currency.
Unless the Company (which is acting on behalf of the Borrowers pursuant to
Section 1.3 hereof) otherwise directs, principal payments shall be applied
first to the Domestic Rate Portion of the Note until payment in full thereof,
with any balance applied to the Eurocurrency Portions of the Note in the order
in which their Interest Periods expire.
Section 3.6. Notations. Each Loan made against the Note, the status of
all amounts evidenced by the Note as constituting part of the relevant Domestic
Rate Portion or a Eurocurrency Portion, and, in the case of any Eurocurrency
Portion, the rates of interest and
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<PAGE> 14
Interest Periods applicable to such Portion and the currency in which such
Portion is denominated shall be recorded by the Bank on its books and records
or, at its option in any instance, endorsed on a schedule to the Note and the
unpaid principal balance and status, rates and Interest Periods so recorded or
endorsed by the Bank shall be prima facie evidence in any court or other
proceeding brought to enforce the Note of the principal amount remaining unpaid
thereon, the status of the Loan or Loans evidenced thereby and the interest
rates and Interest Periods applicable thereto and the currency in which such
Portion is repayable; provided that the failure of the Bank to record any of
the foregoing shall not limit or otherwise affect the obligation of the Company
to repay the principal amount of the Note together with accrued interest
thereon. Prior to any negotiation of the Note, the Bank shall record on a
schedule thereto the status of all amounts evidenced thereby as constituting
part of the relevant Domestic Rate Portion or a Eurocurrency Portion, and, in
the case of any Eurocurrency Portion, the rates of interest and the Interest
Periods applicable thereto and the currency in which such Portion is
denominated.
Section 3.7. Payments Free of Withholding. All payments of principal,
interest, fees and all other Obligations payable hereunder and under the other
Loan Documents shall be made without set-off or counterclaim and without
reduction for, and free from, any and all present or future taxes, levies,
imposts, duties, fees, charges, deductions, withholdings, restrictions and
conditions of any nature (each, a "withholding") imposed by any government or
any political subdivision or taxing authority thereof (but excluding any taxes
imposed on or measured by the net income of the Bank). If any such withholding
is so required, the Borrowers shall make the withholding, pay the amount
withheld to the appropriate governmental authority before penalties attach
thereto or interest accrues thereon and forthwith pay such additional amount as
may be necessary to ensure that the net amount actually received by the Bank
free and clear of such taxes (including such taxes on such additional amount)
is equal to the amount which the Bank would have received had such withholding
not been made. If the Bank pays any amount in respect of any such taxes,
penalties or interest the Borrowers shall reimburse the Bank for that payment
on demand in the currency in which such payment was made. If any Borrower pays
any such taxes, penalties or interest, it shall deliver official tax receipts
evidencing that payment or certified copies thereof to the Bank on or before
the thirtieth day after payment.
SECTION 4. COLLATERAL.
Section 4.1. Personal Property Collateral from Company and each
Subsidiary. The payment and performance of the Obligations shall be secured by
a first priority, perfected Lien on all of the Company's and each Subsidiary's
accounts and certain other related assets and property of the Company and each
Subsidiary, in each case whether now owned or held or hereafter acquired or
arising, pursuant to, among other things, that certain Security Agreement
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<PAGE> 15
dated as of even date herewith, as the same may be amended, modified or
supplemented from time to time (the "Security Agreement").
Section 4.2. Foreign Security Documents The payment and performance of
the Obligations shall also be secured by a first priority, perfected Lien on
the accounts and other related assets and properties of Comshare Canada,
Comshare UK and the Borrowing Subsidiary pursuant to the Foreign Security
Documents, in each case whether now owned or held or hereafter acquired or
arising.
Section 4.3. Foreign Accounts. Notwithstanding anything herein to the
contrary, neither the Company nor any Material Subsidiary need take such action
as shall be necessary or advisable to perfect, under the laws of any
jurisdiction outside the United States of America, Canada and the United
Kingdom, the Bank's Lien on any Foreign Account.
Section 4.4. Stock Pledge. The payment and performance of the Obligations
shall also be secured by a first priority, perfected Lien on the capital stock
held by the Company or any Subsidiary in each Subsidiary pursuant to that
certain Pledge Agreement dated as of even date herewith, as the same may be
amended, modified or supplemented from time to time (the "Pledge Agreement").
Notwithstanding the foregoing, neither the Company nor any Subsidiary shall be
required to pledge more than 65% of the issued and outstanding capital stock of
any Subsidiary that is organized under the laws of a jurisdiction outside the
United States of America.
Section 4.5. Guarantees. The payment and performance of the Obligations
shall be guaranteed by each Material Subsidiary (other than the Borrowing
Subsidiary) pursuant to a Guaranty Agreement duly executed by such Subsidiary.
Section 4.6. Further Assurances. The Company covenants and agrees that it
shall comply, and shall cause its Subsidiaries to comply, with all terms and
conditions of each of the Collateral Documents and that it shall, at any time
and from time to time as requested by the Bank, execute and deliver, and shall
cause its Subsidiaries to execute and deliver, such further instruments and do
such acts and things as the Bank may deem necessary or desirable to provide for
or protect or perfect the Lien of the Bank in the Collateral.
SECTION 5. DEFINITIONS; INTERPRETATION.
Section 5.1. Definitions. The following terms when used herein shall have
the following meanings:
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<PAGE> 16
"Adjusted LIBOR" means a rate per annum determined by the Bank in
accordance with the following formula:
Adjusted LIBOR = LIBOR
------------------------------
100%-Reserve Percentage
"Reserve Percentage" means, for the purpose of computing Adjusted LIBOR, the
maximum rate of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental or other special reserves) imposed by the
Board of Governors of the Federal Reserve System (or any successor) under
Regulation D on "eurocurrency liabilities", as such term is defined in
Regulation D (or in respect of any other category of liabilities that includes
deposits by reference to which the interest rate on Eurocurrency Portions is
determined or any category of extension of credit or other assets that include
loans by non-United States offices of the Bank to United States residents), for
the applicable Interest Period as of the first day of such Interest Period, but
subject to any amendments to such reserve requirement by such Board or its
successor, and taking into account any transitional adjustments thereto
becoming effective during such Interest Period. For purposes of this
definition, Eurocurrency Portions shall be deemed to be Eurocurrency
liabilities as defined in Regulation D without benefit of or credit for
prorations, exemptions or offsets under Regulation D. "LIBOR" means, for each
Interest Period, (a) the LIBOR Index Rate for such Interest Period, if such
rate is available, and (b) if the LIBOR Index Rate cannot be determined, the
arithmetic average of the rate of interest per annum (rounded upward, if
necessary, to the nearest 1/100th of 1%) at which deposits in U.S. Dollars or
the relevant Optional Currency, as appropriate, in immediately available funds
are offered to the Bank at 11:00 a.m. (London, England time) two (2) Business
Days before the beginning of such Interest Period by major banks in the
interbank eurocurrency market for a period equal to such Interest Period and in
an amount equal or comparable to the applicable Eurocurrency Portion scheduled
to be outstanding from the Bank during such Interest Period. "LIBOR Index
Rate" means, for any Interest Period, the rate per annum (rounded upwards, if
necessary, to the next higher one hundred-thousandth of a percentage point) for
deposits in U.S. Dollars or the relevant Optional Currency, as appropriate, for
a period equal to such Interest Period which appears on the appropriate
Telerate Page as of 11:00 a.m. (London, England time) on the date two (2)
Business Days before the commencement of such Interest Period. "Telerate Page"
means the display designated on the Telerate Service (or such other page as may
replace Page 3750 on that service or such other service as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for deposits
in U.S. Dollars or such Optional Currency, as the case may be) for the purpose
of displaying British Bankers' Association Interest Settlement Rates for
deposits of U.S. Dollars, currently displayed on Page 3750, or of the
appropriate Optional Currency. Each determination of LIBOR made by the Bank
shall be conclusive and binding absent manifest error.
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<PAGE> 17
"Affiliate" means any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by contract or otherwise.
"Agency Receivable" means an account receivable recognized by a Qualified
Comshare Company (in accordance with the Company's accounting practices as in
effect as of the date hereof) as owing by the relevant end-user arising from
the rendition of services sold to such end-user by a party which a Qualified
Comshare Company considers (in accordance with the Company's business practices
as in effect on the date hereof) as its agent (as opposed to its distributor).
"Agreement" means this Credit Agreement, as the same may be amended,
modified or restated from time to time in accordance with the terms hereof.
"Applicable Margin" with respect to Loans and the commitment fee payable
under Section 3.1 hereof shall mean the rate specified for such obligation
below, subject to quarterly adjustment as hereinafter provided:
<TABLE>
<CAPTION>
When Following Applicable Applicable Applicable
Status Exists Margin Margin Margin For
For any For Domestic Rate For LIBOR Commitment
Determination Date Portion Is: Portions Is: Fee Is:
<S> <C> <C> <C>
Level I Status 0% 1.00% 0.250%
Level II Status 0% 1.50% 0.250%
Level III Status 0% 1.75% 0.375%
</TABLE>
provided, however, that all of the foregoing is subject to the following:
(i) the initial Applicable Margin in effect through the first
Determination Date shall be the Applicable Margin for Level III Status;
(ii) on or before the date that is ten (10) Business Days after the
latest date by which the Company is required to deliver pursuant to
Section 8.5 hereof a Compliance Certificate to the Bank for each
quarterly fiscal period (such date that is ten (10) Business Days after
the latest date by which the Company is required to deliver a Compliance
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<PAGE> 18
Certificate to the Bank being herein referred to as the "Determination
Date"), the Bank shall determine whether Level I Status, Level II Status
or Level III Status (as each is hereinafter defined) exists as of the
close of the applicable accounting period, based upon the Compliance
Certificate and financial statements delivered to the Bank under Section
8.5 hereof for such accounting period, and shall promptly notify the
Company of such determination and of any change in the Applicable Margin
resulting therefrom;
(iii) any change in the Applicable Margin shall be effective as of
such Determination Date, with such new Applicable Margin to continue in
effect until the next Determination Date. If the Company has not
delivered a Compliance Certificate by the date such Compliance
Certificate is required to be delivered under Section 8.5 hereof, until a
Compliance Certificate is delivered before the next Determination Date,
the Applicable Margin shall be the Applicable Margin for Level III
Status. If the Company subsequently delivers a Compliance Certificate
before the next Determination Date, the Applicable Margin established by
such Compliance Certificate shall take effect from the date ten (10)
Business Days after the date of delivery and remain effective until the
next Determination Date; and
(iv) if and so long as any Event of Default has occurred and is
continuing hereunder, notwithstanding anything herein to the contrary,
the Applicable Margin shall be the Applicable Margin for Level III
Status.
The Bank's determination of Level I Status, Level II Status or Level III Status
shall be conclusive and binding on the Borrowers except in the case of manifest
error or willful misconduct.
"Authorized Representative" means those persons shown on the list of
officers provided by the Company pursuant to Section 7.2(a) hereof or on any
update of any such list provided by the Company to the Bank, or any further or
different officer of the any Borrower so named by any Authorized Representative
of any Borrower in a written notice to the Bank.
"Bank" is defined in the introductory paragraph hereof.
"Borrowing Base" means, as of any time it is to be determined, the sum of:
(a) 80% of the then outstanding unpaid amount of Eligible Accounts
other than Software Maintenance Receivables; plus
(b) 70% of the then outstanding unpaid amount of Eligible Accounts
consisting of Software Maintenance Receivables;
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<PAGE> 19
provided, however, that (i) not more than 30% of the Borrowing Base shall at
any time be attributable to Software Maintenance Receivables and (ii) the
Borrowing Base shall be computed only as against and on so much of the
Collateral as is included on the certificates to be furnished from time to time
by the Company pursuant to Section 8.5(a) hereof and, if required by the Bank
pursuant to any of the terms hereof or any Collateral Document, as verified by
such other evidence required to be furnished to the Bank pursuant hereto or
pursuant to any such Collateral Document, and (iii) the unpaid amount of each
Agency Receivable shall be computed net of (that is, after deducting therefrom)
any agency finder's fee, commission, broker's fee or similar amount accrued on
the books of the Company or any Subsidiary as a liability owed to the agent
with respect to such Agency Receivable.
"Borrowers" means the Company and subject to Section 1.3 hereof, the
Borrowing Subsidiary, with (i) the term "Borrowers" to mean the Borrowers,
collectively, and, also, each individually, and (ii) all promises and covenants
(including promises to pay) and representations and warranties of and by the
Borrowers made in the Loan Documents or any instruments or documents delivered
pursuant thereto to be and constitute the joint and several promises,
covenants, representations and warranties of and by each and all of such
corporations. The term "Borrower" appearing in such singular form shall be
deemed a reference to Company or the Borrowing Subsidiary unless the context in
which such term is used shall otherwise require.
"Borrowing Subsidiary" is defined in the introductory paragraph hereof.
"Business Day" means any day other than a Saturday or Sunday on which the
Bank is not authorized or required to close in Chicago, Illinois and, when used
with respect to Eurocurrency Portions, a day on which the Bank is also dealing
in United States Dollar deposits in London, England and Nassau, Bahamas and, if
the applicable Business Day relates to the borrowing or payment of a
Eurocurrency Portion denominated in an Optional Currency, on which banks and
foreign exchange markets are open for business in the city where disbursements
of or payments on such Portions are to be made.
"Capital Lease" means any lease of Property which in accordance with GAAP
is required to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligation" means the amount of the liability shown on
the balance sheet of any Person in respect of a Capital Lease determined in
accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
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<PAGE> 20
"Collateral" means all properties, rights, interests and privileges from
time to time subject to the Liens granted to the Bank by the Collateral
Documents.
"Collateral Documents" means the Security Agreement, the Pledge Agreement,
the Foreign Security Documents and all other mortgages, deeds of trust,
security agreements, assignments, financing statements and other documents as
shall from time to time secure the Obligations.
"Commitment" is defined in Section 1.1 hereof.
"Company" is defined in the introductory paragraph hereof.
"Comshare Canada" means Comshare Limited, a corporation organized under
the laws of the Province of Ontario, Canada.
"Comshare UK" means Comshare International Ltd., a private limited company
organized under the laws of England.
"Comshare US" means Comshare (U.S.), Inc., a Michigan corporation.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Company or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"Default" means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or both, constitute an Event of
Default.
"Domestic Account" means each account receivable of a Qualified Comshare
Company on which the account debtor is located within the United States of
America.
"Domestic Rate" means, for any day, the greater of (i) the rate of
interest announced by the Bank from time to time as its prime commercial rate,
as in effect on such day (it being understood and agreed that such rate may not
be the Bank's best or lowest rate); and (ii) the sum of (x) the rate determined
by the Bank to be the average (rounded upwards, if necessary, to the next
higher 1/100 of 1%) of the rates per annum quoted to the Bank at approximately
10:00 a.m. (Chicago time) (or as soon thereafter as is practicable) on such day
(or, if such day is not a Business Day, on the immediately preceding Business
Day) by two or more Federal funds brokers selected by the Bank for the sale to
the Bank at face value of Federal funds in an amount
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<PAGE> 21
equal or comparable to the principal amount owed to the Bank for which such
rate is being determined, plus (y) 1/2 of 1%.
"Domestic Rate Portion" is defined in Section 2.1(a) hereof.
"EBIT" means, with reference to any period, Net Income for such period
plus all amounts deducted in arriving at such Net Income amount in respect of
each of the following: (i) Interest Expense for such period and (ii) federal,
state and local income taxes for such period. Solely for purposes of Section
8.9 hereof, EBIT shall be increased when being computed for any period which
includes the Company's fiscal quarter ending September 30, 1997 by up to
$1,500,000 of all amounts properly charged in accordance with GAAP for
restructuring or unusual charges during such quarter on the books of the
Company and its Subsidiaries.
"EBITDAL" means, with reference to any period, EBIT for such period plus
(but without duplication all amounts deducted in arriving at such EBIT amount
in respect of each of the following: (i) all amounts properly charged in
accordance with GAAP for depreciation of fixed assets and amortization of
intangible assets and capitalized software (net of software capitalized for the
period under FAS 86) during such period on the books of the Company and its
Subsidiaries and (ii) rental expense of the Company or any Subsidiary during
such period in respect of leases or similar arrangements (other than Capital
Leases) under which the Company or any Subsidiary is liable as a lessee.
"Eligible Account" means each account receivable of each Qualified
Comshare Company that:
(a) arises out of the rendition of services commenced (or, in the
case of an account arising out of the provision of maintenance services,
to be commenced within one Business Day of the date such account
receivable first arose) by such Qualified Comshare Company under written
contract with the account debtor to the extent necessary to obligate such
account debtor on such account receivable, and such account receivable
otherwise represents an amount finally due from such account debtor;
(b) is a Domestic Account or a Qualified Foreign Account;
(c) is the valid, binding and legally enforceable obligation of the
account debtor obligated thereon and such account debtor is not (i) a
Subsidiary or an Affiliate of the Company, (ii) a shareholder, director,
officer or employee of the Company or any Subsidiary, (iii) the United
States of America or any other country, or any state or political
subdivision thereof, or any department, agency or instrumentality of any
of the foregoing, unless the Company has complied with the Assignment of
Claims Act or any
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similar legislation, as the case may be, to the satisfaction of the Bank,
(iv) a debtor under any proceeding under the United States Bankruptcy
Code, as amended, or any other comparable bankruptcy or insolvency law,
or (v) an assignor for the benefit of creditors;
(d) is not evidenced by an instrument or chattel paper unless the
same has been endorsed and delivered to the Bank;
(e) is an asset of such Qualified Comshare Company to which it has
good and marketable title and is freely assignable;
(f) is subject to a perfected, first priority Lien in favor of the
Bank, and is free and clear of any other Liens;
(g) is net of any credit or allowance given by such Qualified
Comshare Company to such account debtor;
(h) is not owing from an account debtor who is also a supplier of
information systems or software services to the Company or any
Subsidiary, and is not subject to any offset, counterclaim or other
defense with respect thereto;
(i) is (1) not unpaid more than 60 days after the due date in the
original invoice furnished to the account debtor for such account
receivable (which due date must be (A) not more than 30 days subsequent
to the date of completion by such Qualified Comshare Company of those
services (the "relevant services") whose performance obligated the
account debtor to pay such account receivable or (B) to the extent
comprising less than 50% of the Borrowing Base as then determined and
computed, not more than six calendar months subsequent to the original
invoice date for such account receivable) and (2) evidenced by an invoice
bearing an original date not more than 10 days after the close of the
calendar month within which the relevant services were fully performed;
(j) is not owed by an account debtor who is obligated on accounts
receivable owed to the Qualified Comshare Companies more than 50% of the
aggregate unpaid balance of which have been past due for longer than the
relevant period specified in subsection (i) above unless the Bank has
approved the continued eligibility thereof; and
(k) does not arise from a sale to an account debtor on a
bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis.
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<PAGE> 23
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.
"Eurocurrency Portions" is defined in Section 2.1(a) hereof.
"Event of Default" means any event or condition identified as such in
Section 9.1 hereof.
"Fixed Charge Coverage Ratio" means, as of any time the same is to be
determined, the ratio of (x) EBITDAL for the four most recently completed
fiscal quarters of the Company to (y) Fixed Charges for the same such period of
four fiscal quarters.
"Fixed Charges" means, with reference to any period, the sum (but without
duplication) of (i) the aggregate amount of payments scheduled to be made by
the Company and its Subsidiaries during such period in respect of principal on
all long-term Indebtedness for Borrowed Money other than the Note (whether at
maturity, as a result of mandatory sinking fund redemption, mandatory
prepayment, or otherwise), plus (ii) the aggregate amount of rental charges and
other payments required to be made by the Company or any Subsidiary during such
period in respect of leases or similar arrangements (including without
limitation operating leases and Capital Leases) under which the Company or any
Subsidiary is liable as lessee, plus (iii) Net Interest Expense for such
period.
"Foreign Security Documents" means (i) the General Debenture (Fixed and
Floating Charge) executed by the Bank, Comshare UK and the Borrowing Subsidiary
and (ii) the Security Agreement solely executed by Comshare Canada in
accordance with the laws of Canada.
"Foreign Subsidiary" means each Subsidiary which is organized under the
laws of a jurisdiction outside the United States of America.
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied by the Company and its Subsidiaries on a basis consistent
with the preparation of the Company's most recent financial statements
furnished to the Bank pursuant to Section 6.4 hereof.
"Guarantors" means each Subsidiary obligated on a Guaranty Agreement.
"Guaranty Agreement" means each guaranty executed by a Subsidiary in the
form, or substantially in the form, of Exhibit G hereto.
"Indebtedness for Borrowed Money" means for any Person (without
duplication) (i) all indebtedness created, assumed or incurred in any manner by
such Person representing money
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<PAGE> 24
borrowed (including by the issuance of debt securities), (ii) all indebtedness
for the deferred purchase price of property or services (other than trade
accounts payable arising in the ordinary course of business), (iii) all
indebtedness secured by any Lien upon Property of such Person, whether or not
such Person has assumed or become liable for the payment of such indebtedness,
(iv) all Capitalized Lease Obligations of such Person and (v) all obligations
of such Person on or with respect to letters of credit, bankers' acceptances
and other extensions of credit whether or not representing obligations for
borrowed money.
"Interest Expense" means, with reference to any period, the sum of all
interest charges (including imputed interest charges with respect to
Capitalized Lease Obligations and all amortization of debt discount and
expense) of the Company and its Subsidiaries for such period determined in
accordance with GAAP.
"Interest Period" means, with respect to any Eurocurrency Portion, the
period commencing on, as the case may be, the creation, continuation or
conversion date with respect to such Eurocurrency Portion and ending 1, 2, 3 or
6 months thereafter as selected by the Company acting on behalf of a Borrower
in its notice as provided herein; provided that all of the foregoing provisions
relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day which is not
a Business Day, that Interest Period shall be extended to the next
succeeding Business Day, unless the result of such extension would be to
carry such Interest Period into another calendar month in which event
such Interest Period shall end on the immediately preceding Business Day;
(ii) no Interest Period may extend beyond the final maturity date of
the Note;
(iii) the interest rate to be applicable to each Portion for each
Interest Period shall apply from and including the first day of such
Interest Period to but excluding the last day thereof; and
(iv) no Interest Period may be selected if after giving effect
thereto a Borrower will be unable to make a principal payment scheduled
to be made during such Interest Period without paying part of a
Eurocurrency Portion on a date other than the last day of the Interest
Period applicable thereto.
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, provided, however, if an Interest Period begins on the
last day of a month or if there is no
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<PAGE> 25
numerically corresponding day in the month in which an Interest Period is to
end, then such Interest Period shall end on the last Business Day of such
month.
"Level I Status" shall mean, for any Determination Date, that as of the
close of the accounting period with reference to which such Determination Date
was set, the Fixed Charge Coverage Ratio is greater than or equal to 2.50 to
1.0.
"Level II Status" shall mean, for any Determination Date, that as of the
close of the accounting period with reference to which such Determination Date
was set, the Fixed Charge Coverage Ratio is less than 2.5 to 1.0 but greater
than 1.75 to 1.0.
"Level III Status" shall mean, for any Determination Date, that as of the
close of the accounting period with reference to which such Determination Date
was set, the Fixed Charge Coverage Ratio is less than or equal to 1.75 to 1.0.
"Lien" means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of
a vendor or lessor under any conditional sale, Capital Lease or other title
retention arrangement.
"Loan" is defined in Section 1.2 hereof.
"Loan Documents" means this Agreement, the Note, each Subsidiary Guaranty
Agreement, the Collateral Documents and each other instrument or document to be
delivered hereunder or thereunder or otherwise in connection therewith.
"Material Subsidiary" means (i) each Subsidiary other than a Non-Material
Subsidiary, (ii) each Subsidiary which is a Qualified Comshare Company and
(iii) the following other Subsidiaries: (a) Comshare Holdings Company, an
unlimited liability company organized under the laws of England, (b) Comshare
S.A., a societe anonyme organized under the laws of France and (c) Comshare
GmbH, a limited liability company organized under the laws of the Federal
Republic of Germany. Each Subsidiary shall be deemed a Material Subsidiary
unless and until the Company establishes to the Bank's reasonable satisfaction
that such Subsidiary is a Non-Material Subsidiary.
"Net Income" means, with reference to any period, the net income (or net
loss) of the Company and its Subsidiaries for such period as computed on a
consolidated basis in accordance with GAAP.
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<PAGE> 26
"Net Interest Expense" means, with reference to any period, the amount (if
any) by which Interest Expense during such period exceeds interest income of
the Company and its Subsidiaries for such period determined in accordance with
GAAP.
"Net Worth" means, at any time the same is to be determined, the total
shareholders' equity (including capital stock, additional paid-in capital and
retained earnings after deducting treasury stock, but excluding minority
interests in Subsidiaries) which would appear on the balance sheet of the
Company and its Subsidiaries determined on a consolidated basis in accordance
with GAAP.
"Non-Material Subsidiary" shall mean any Subsidiary (i) the revenues of
which for each of the five most recently completed fiscal years of the Company
(but in the case of Comshare South Pacific Pty Ltd., a private limited company
organized under the laws of Australia, for each such fiscal year of the Company
commencing on or after July 1, 1996) were less than $100,000 for each such
fiscal year and (ii) the consolidated total assets (excluding intercompany
receivables) of which as of the close of each such year were less than $100,000
as of each such date.
"Note" is defined in Section 1.1 hereof.
"Obligations" means all obligations of the Borrowers and either of them to
pay principal and interest on the Loans, all fees and charges payable
hereunder, and all other payment obligations of the Company arising under or in
relation to any Loan Document, in each case whether now existing or hereafter
arising, due or to become due, direct or indirect, absolute or contingent, and
howsoever evidenced, held or acquired.
"Optional Currency" means each of the currencies designated on Exhibit F
hereto in each case for so long as such designated currency is freely
transferable and freely convertible to U.S. Dollars and the Dow Jones Telerate
Service or Reuters monitor Money Rates Service (or any successor to either)
reports a LIBOR for such currency for interest periods of one, two, three and
six calendar months.
"Original Dollar Amount" means as of any time the same is to be determined
in relation to any Eurocurrency Portion denominated in an Optional Currency,
the U.S. Dollar Equivalent of such Portion on the first day of the Interest
Period then applicable to such Portion (the day on which such Portion was most
recently created, continued or effected by conversion).
"Overnight Eurocurrency Rate" shall mean for a Eurocurrency Portion
denominated in an Optional Currency, the rate of interest per annum as
determined by the Bank (rounded upwards, if necessary, to the nearest whole
multiple of one-sixteenth of one percent (1/16 of 1%)) at which overnight or
weekend deposits of the appropriate currency (or, if such amount
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remains unpaid more than 3 Business Days, then for such period of time
not longer than 6 months as the Bank may elect in its absolute discretion) for
delivery in immediately available and freely transferable funds would be offered
by the Bank to major banks in the interbank market upon request of such major
banks for the applicable period as determined above and in an amount comparable
to the unpaid principal amount of such Portion (or, if the Bank is not placing
deposits in such currency in the interbank market, then the Bank's cost of funds
in such currency for such period).
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision
thereof.
"Plan" means any employee pension benefit plan covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
that either (i) is maintained by a member of the Controlled Group for employees
of a member of the Controlled Group or (ii) is maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which a member of the Controlled Group
is then making or accruing an obligation to make contributions or has within
the preceding five plan years made contributions.
"Pledge Agreement" is defined in Section 4.4 hereof.
"Portion" is defined in Section 2.1(a) hereof.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Qualified Comshare Companies" means each of the Company, Comshare US,
Comshare Canada, the Borrowing Subsidiary and Comshare UK.
"Qualified Foreign Account" means (i) each account receivable of a
Qualified Comshare Company on which the account debtor is located within Canada
or the United Kingdom and (ii) to the extent not aggregating in excess of
$15,000,000 at any time outstanding, each account receivable of a Qualified
Comshare Company owing by an account debtor which, by virtue of a license from
a Qualified Comshare Company, functions as a distributor for the products and
services of one or more of the Qualified Comshare Companies, without regard to
the location of such account debtor.
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<PAGE> 28
"Revolving Credit" is defined in Section 1.2 hereof.
"SEC" means the federal Securities and Exchange Commission, and any
successor thereto.
"Security Agreement" is defined in Section 4.1 hereof.
"Software Maintenance Receivable" means an account receivable arising from
the rendition of any one or more of the following services for computer
software: maintenance, help line support, upgrading, bugfixing and
troubleshooting; provided, however, that Software Maintenance Receivables shall
not include the one-time lump sum due upon commencement of a contract entered
into by the Company or any Subsidiary in the ordinary course of its business as
presently conducted to license its computer software to an account debtor if
such contract obligates the Company or such Subsidiary without any additional
payment to render maintenance services for such account debtor for a period not
to exceed eighteen (18) calendar months from the commencement of such contract
and the principal purpose of such contract is to grant such license (not to
sell maintenance services).
"Subordinated Debt" means indebtedness for borrowed money subordinated in
right of payment to the prior payment of the Obligations by written provisions
acceptable to the Bank in form and substance and otherwise pursuant to
documentation, in an amount, and containing interest rates, payment terms,
maturities, amortization schedules, covenants, defaults, remedies and other
material terms in form and substance satisfactory to the Bank
"Subsidiary" means any corporation or other Person more than 50% of the
outstanding ordinary voting shares or other equity interests of which is at the
time directly or indirectly owned by the Company, by one or more of its
Subsidiaries, or by the Company and one or more of its Subsidiaries.
"Termination Date" means September 30, 2000, or such earlier date on which
the Commitment is terminated in whole pursuant to Section 3.4, 9.2 or 9.3
hereof, or such later date to which the Termination Date is extended pursuant
to Section 12.4 hereof.
"Unfunded Vested Liabilities" means, for any Plan at any time, the amount
(if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
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<PAGE> 29
"U.S. Dollar Equivalent" means the amount of U.S. Dollars which would be
realized by converting an Optional Currency into U.S. Dollars in the spot
market at the exchange rate quoted by the Bank, at approximately 11:00 a.m.
(London, England time) two Business Days prior to the date on which a
computation thereof is required to be made, to major banks in the interbank
foreign exchange market for the purchase of U.S. Dollars for such Optional
Currency.
"Welfare Plan" means a "welfare plan" as defined in Section 3(1) of ERISA.
"Wholly-Owned Subsidiary" means a Subsidiary of which all of the issued
and outstanding shares of capital stock (other than directors' qualifying
shares as required by law) or other equity interests are owned by the Company
and/or one or more Wholly-Owned Subsidiaries within the meaning of this
definition.
Section 5.2. Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The
words "hereof", "herein", and "hereunder" and words of like import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All references to time of day herein
are references to Chicago, Illinois time unless otherwise specifically
provided. 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 except where such
principles are inconsistent with the specific provisions of this Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
The Company and Borrowing Subsidiary represent and warrant to the Bank as
follows (provided that the Borrowing Subsidiary is making such representations
and warranties only as to itself and its subsidiaries):
Section 6.1. Organization and Qualification. The Company is duly
organized, validly existing and in good standing as a corporation under the
laws of the State of Michigan, has full and adequate corporate power to own its
Property and conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the nature of the
business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to be so
licensed or qualified would not (a) impair the validity or enforceability of,
or impair the ability of the Company to perform its obligations under, this
Agreement or any other Loan Document or (b) result in any material adverse
change in the financial condition, Properties, business or operations of the
Company or any Subsidiary.
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Section 6.2. Subsidiaries. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, as the case may be, has full and adequate power to
own its Property and conduct its business as now conducted, and is duly
licensed or qualified and in good standing in each jurisdiction in which the
nature of the business conducted by it or the nature of the Property owned or
leased by it requires such licensing or qualifying, except where the failure to
be so licensed or qualified would not (a) impair the validity or enforceability
of, or impair the ability of such Subsidiary to perform its obligations under,
this Agreement or any other Loan Document or (b) result in any material adverse
change in the financial condition, Properties, business or operations of the
Company or any Subsidiary. Schedule 6.2 hereto identifies each Subsidiary, the
jurisdiction of its incorporation or organization, as the case may be, the
percentage of issued and outstanding shares of each class of its capital stock
or other equity interests owned by the Company and the Subsidiaries and, if
such percentage is not 100% (excluding directors' qualifying shares as required
by law), a description of each class of its authorized capital stock and other
equity interests and the number of shares of each class issued and outstanding.
All of the outstanding shares of capital stock and other equity interests of
each Subsidiary are validly issued and outstanding and fully paid and
nonassessable and all such shares and other equity interests indicated on
Schedule 6.2 as owned by the Company or a Subsidiary are owned, beneficially
and of record, by the Company or such Subsidiary free and clear of all Liens.
There are no outstanding commitments or other obligations of any Subsidiary to
issue, and no options, warrants or other rights of any Person to acquire, any
shares of any class of capital stock or other equity interests of any
Subsidiary.
Section 6.3. Corporate Authority and Validity of Obligations. Each
Borrower has full right and authority to make the borrowings herein provided
for such Borrower to make and to issue the Note delivered by such Borrower in
evidence of such borrowings. Each Borrower and Subsidiary has full right and
authority to enter into the Loan Documents delivered by it, to grant to the
Bank the Liens described in the Collateral Documents delivered by it and to
perform all of its obligations under the Loan Documents delivered by it. The
Loan Documents delivered by each Borrower and Subsidiary have been duly
authorized, executed and delivered by such Borrower or Subsidiary, as the case
may be, and constitute valid and binding obligations of such Borrower or
Subsidiary enforceable in accordance with their terms except as enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law); and the Loan Documents delivered by a Borrower
or Subsidiary do not, nor does the performance or observance by such Borrower
or Subsidiary, as the case may be, of any of the matters and things therein
provided for, contravene or constitute a default under any provision of law or
any judgment, injunction, order or decree binding upon such Borrower or
Subsidiary or any provision of the charter, articles of incorporation or
by-laws of such Borrower or Subsidiary or any covenant, indenture or
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agreement of or affecting any Borrower or Subsidiary or any of its Properties,
or result in the creation or imposition of any Lien on any Property of any
Borrower or Subsidiary.
Section 6.4. Use of Proceeds; Margin Stock. Each Borrower shall use the
proceeds of the Loans made available hereunder solely for its general working
capital purposes and for such other legal and proper purposes as are consistent
with all applicable laws. Neither the Company nor any Subsidiary is engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System), and no part of the proceeds of any Loan made
hereunder will be used to purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin
stock.
Section 6.5. Financial Reports. The (i) consolidated balance sheet of the
Company and its Subsidiaries as at June 30, 1996, and the related consolidated
statements of income, retained earnings and cash flows of the Company and its
Subsidiaries for the fiscal year then ended, and accompanying notes thereto,
which financial statements are accompanied by the audit report of Arthur
Andersen LLP, independent public accountants, and (ii) unaudited interim
consolidated balance sheet of the Company and its Subsidiaries as at March 31,
1997, and the related consolidated statements of income, retained earnings and
cash flows of the Company and its Subsidiaries for the nine (9) months then
ended, and (iii) preliminary unaudited interim consolidated balance sheet of
the Company and its Subsidiaries as at June 30, 1997, and the related
consolidated statements of income, retained earnings and cash flows of the
Company and its Subsidiaries for the fiscal year then ended, all as heretofore
furnished to the Bank, fairly present in all material respects the consolidated
financial condition of the Company and its Subsidiaries as at said dates and
the consolidated results of their operations and cash flows for the periods
then ended in conformity with generally accepted accounting principles applied
on a consistent basis. Neither the Company nor any Subsidiary has contingent
liabilities which are material to it other than as indicated on such financial
statements or, with respect to future periods, on the financial statements
furnished pursuant to Section 8.5 hereof.
Section 6.6. Solvency, Etc. On the date of the initial Loan hereunder,
(i) the assets of each Qualified Comshare Company, at a fair valuation, will
exceed its liabilities, including contingent liabilities, but in any event
excluding intercompany liabilities owed to the Company or any Subsidiary, (ii)
the remaining capital of such Qualified Comshare Company will not be
unreasonably small to conduct or in relation to its business or any transaction
in which it intends to engage, and (iii) such Qualified Comshare Company will
not have incurred debts, and does not intend to incur debts, beyond its ability
to pay such debts as they mature. For purposes of this Section, "debt" means
any liability on a claim other than an intercompany claim against the Company
or any Subsidiary, and "claim" means (i) right to payment, whether or not such
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured,
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disputed, undisputed, legal, equitable, secured, or unsecured; or (ii)
right to an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured,
or unsecured.
Section 6.7. No Material Adverse Change. Since June 30, 1997, there has
been no change in the condition (financial or otherwise) or business prospects
of the Company or any Subsidiary except those occurring in the ordinary course
of business, none of which individually or in the aggregate have been
materially adverse.
Section 6.8. Full Disclosure. The statements and information furnished to
the Bank in connection with the negotiation of this Agreement and the other
Loan Documents and the commitment by the Bank to provide all or part of the
financing contemplated hereby do not contain any untrue statements of a
material fact or omit a material fact necessary to make the material statements
contained herein or therein not misleading, the Bank acknowledging that as to
any projections furnished to the Bank, the Company only represents that the
same were prepared on the basis of information and estimates the Company
believed to be reasonable.
Section 6.9. Good Title. The Company and its Subsidiaries each have good
and defensible title to their assets as reflected on the most recent
consolidated balance sheet of the Company and its Subsidiaries furnished to
the Bank (except for sales of assets by the Company and its Subsidiaries in the
ordinary course of business), subject to no Liens other than such thereof as
are permitted by Section 8.12 hereof.
Section 6.10. Litigation and Other Controversies. Except as properly
disclosed in the Company's periodic filings with the SEC, there is no
litigation or governmental proceeding or labor controversy pending, nor to the
knowledge of the Company threatened, against the Company or any Subsidiary
which if adversely determined would (a) impair the validity or enforceability
of, or impair the ability of the Company to perform its obligations under, this
Agreement or any other Loan Document or (b) result in any material adverse
change in the financial condition, Properties, business or operations of the
Company or any Subsidiary.
Section 6.11. Taxes. All United States federal income tax returns, all
Michigan state income tax returns and all other material tax returns required
to be filed by the Company or any Subsidiary in any jurisdiction have, in fact,
been filed, and all federal income taxes, Michigan state income taxes and all
other material taxes, assessments, fees and other governmental charges upon the
Company or any Subsidiary or upon any of their respective Properties, income or
franchises, which are shown to be due and payable in such returns, have been
paid. The Company does not know of any proposed additional tax assessment
against it or its Subsidiaries for which adequate provision in accordance with
GAAP has not been made on its accounts.
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Adequate provisions in accordance with GAAP for taxes on the books of the
Company and each Subsidiary have been made for all open years, and for its
current fiscal period.
Section 6.12. Approvals. No authorization, consent, license, or exemption
from, or filing or registration with, any court or governmental department,
agency or instrumentality, nor any approval or consent of the stockholders of
the Company or any other Person, is or will be necessary to the valid
execution, delivery or performance by the Company of this Agreement or any
other Loan Document.
Section 6.13. Affiliate Transactions. Neither the Company nor any
Subsidiary is a party to any contracts or agreements with any of its Affiliates
(other than Wholly-Owned Subsidiaries) on terms and conditions which are less
favorable to the Company or such Subsidiary than would be usual and customary
in similar contracts or agreements between Persons not affiliated with each
other.
Section 6.14. Investment Company. Neither the Company nor any Subsidiary
is an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
Section 6.15. ERISA. The Company and each other member of its Controlled
Group has fulfilled its obligations under the minimum funding standards of and
is in compliance in all material respects with ERISA and the Code to the extent
applicable to it and has not incurred any liability to the PBGC or a Plan under
Title IV of ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA. Neither the Company nor any Subsidiary has any contingent
liabilities with respect to any post-retirement benefits under a Welfare Plan,
other than liability for continuation coverage described in article 6 of Title
I of ERISA.
Section 6.16. Compliance with Laws. The Company and each of its
Subsidiaries are in compliance with the requirements of all federal, state and
local laws, rules and regulations applicable to or pertaining to their
Properties or business operations (including, without limitation, the
Occupational Safety and Health Act of 1970, the Americans with Disabilities Act
of 1990, and laws and regulations establishing quality criteria and standards
for air, water, land and toxic or hazardous wastes and substances),
non-compliance with which could have a material adverse effect on the financial
condition, Properties, business or operations of the Company or any Subsidiary.
Neither the Company nor any Subsidiary has received notice to the effect that
its operations are not in compliance with any of the requirements of applicable
federal, state or local environmental, health and safety statutes and
regulations or are the subject of any governmental investigation evaluating
whether any remedial action is needed to respond to a release of any toxic or
hazardous waste or substance into the environment, which non-compliance or
remedial
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action could have a material adverse effect on the financial condition,
Properties, business or operations of the Company or any Subsidiary.
Section 6.17. Other Agreements. Neither the Company nor any Subsidiary is
in default under the terms of any covenant, indenture or agreement of or
affecting the Company, any Subsidiary or any of their Properties, which default
if uncured would have a material adverse effect on the financial condition,
Properties, business or operations of the Company or any Subsidiary.
Section 6.18. No Default. No Default or Event of Default has occurred and
is continuing.
SECTION 7. CONDITIONS PRECEDENT.
The obligation of the Bank to make any Loan under this Agreement is
subject to the following conditions precedent:
Section 7.1. All Advances. As of the time of the making of each extension
of credit (including the initial extension of credit) hereunder:
(a) each of the representations and warranties set forth in Section
6 hereof and in the other Loan Documents shall be true and correct as of
such time, except to the extent the same expressly relate to an earlier
date;
(b) the relevant Borrower's request for such credit shall be made in
full compliance with all of the terms and conditions of Sections 1 and 2
of this Agreement, and no Default or Event of Default shall have occurred
and be continuing or would occur as a result of making such extension of
credit;
(c) in the case of any request for a Loan, after giving effect to
such extension of credit, neither the aggregate U.S. Dollar Equivalent
nor the aggregate Original Dollar Amount of all Loans outstanding under
this Agreement shall exceed the lesser of (i) the Commitment and (ii)
the Borrowing Base;
(d) such extension of credit shall not violate any order, judgment
or decree of any court or other authority or any provision of law or
regulation applicable to the Bank (including, without limitation,
Regulation U of the Board of Governors of the Federal Reserve System) as
then in effect.
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A Borrower's request for any Loan shall constitute its warranty as to the facts
specified in subsections (a) through (c), both inclusive, above.
Section 7.2. Initial Advance. At or prior to the making of the initial
extension of credit hereunder, the following conditions precedent shall also
have been satisfied:
(a) the Bank shall have received the following (each to be properly
executed and completed) and the same shall have been approved as to form
and substance by the Bank:
(i) the Note;
(ii) a Guaranty from each of the following:
(a) Comshare UK
(b) Comshare Holdings Company, an unlimited liability
company organized under the laws of England
(c) Comshare Canada
(d) Comshare S.A., a limited liability company organized
under the laws of France and
(e) Comshare GmbH, a limited liability company organized
under the laws of the Federal Republic of Germany;
(iii) the Security Agreement, the Pledge Agreement and the
other Collateral Documents requested by the Bank, together with any
financing statements requested by the Bank in connection therewith;
(iv) an incumbency certificate containing the name, title and
genuine signatures of the Authorized Representatives;
(v) a payoff letter from NBD Bank in which it states the
amount necessary for the Company to repay in full all obligations
owed it and agrees to release its collateral for such obligations
immediately upon its receipt of such payoff amount;
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<PAGE> 36
(vi) copies of the most recent drafts of the Company's Form
10-K for its fiscal year ended June 30, 1997;
(vii) evidence of insurance required by Section 8.4 hereof;
and
(viii) a list of all bank accounts of the Company and its
Subsidiaries, together with such information as the Bank shall
reasonably request to determine the use of such accounts;
(b) the Bank shall have completed such field audits and received
such valuations and certifications as it may require in order to satisfy
itself as to the value of the Collateral, the financial condition of the
Company and its Subsidiaries, and the lack of material contingent
liabilities of the Company and its Subsidiaries;
(c) legal matters incident to the execution and delivery of this
Agreement and the other Loan Documents and to the transactions
contemplated hereby shall be satisfactory to the Bank and its counsel;
(d) the Bank shall have received the favorable written opinion of
counsel for the Company in the form of Exhibit D hereto;
(e) The Bank shall have received an opinion of counsel acceptable to
the Bank for each Qualified Comshare Company which is a Foreign
Subsidiary, substantially in the form of Exhibit E hereto (with
appropriate assumptions, exceptions and qualifications reasonably
acceptable to the Bank reflecting the laws of the relevant jurisdiction)
and covering such additional matters as the Bank may reasonably request;
(f) The Bank shall have received (i) certified copies of resolutions
of the Board of Directors (or comparable authorizing documents) of each
Borrower and Guarantor authorizing its execution, delivery and
performance of each Loan Document delivered by such Borrower or
Guarantor, indicating the authorized signers thereof and all other
documents relating thereto and the specimen signatures of such signers
and (ii) copies of each Borrower's and Guarantor's charter and by-laws
(or other comparable constituent documents) certified by the Secretary or
other appropriate officer of such Borrower or Guarantor together with (if
available in the relevant jurisdiction) a certificate of good standing
(or similar document) certified as of a date within 30 days of the date
hereof by the appropriate governmental officer in the jurisdiction of
such Borrower's or Guarantor's incorporation.
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(g) the Bank shall have received a Borrowing Base Certificate in the
form attached hereto as Exhibit B showing the computation of the
Borrowing Base in reasonable detail as of the close of business as of the
last day of the calendar month most recently completed prior to the
making of the initial extension of credit hereunder;
(h) the Liens granted to the Bank under the Collateral Documents
shall have been perfected in a manner satisfactory to the Bank and its
counsel; and
(i) the Bank shall have received such other agreements, instruments,
documents, certificates and opinions as the Bank may reasonably request.
SECTION 8. COVENANTS.
Each Borrower agrees that, so long as any credit is available to or in use
by any Borrower hereunder, except to the extent compliance in any case or cases
is waived in writing by the Bank (except that the Borrowing Subsidiary is
making such agreements only as to itself and its subsidiaries):
Section 8.1. Maintenance of Business. The Company shall, and shall cause
each Subsidiary to, preserve and maintain its existence. The Company shall,
and shall cause each Subsidiary to, preserve and keep in force and effect all
licenses, permits and franchises necessary to the proper conduct of its
business except where the failure to do so would not (a) impair the validity or
enforceability of, or impair the ability of the Company or any Subsidiary to
perform its obligations under, this Agreement or any other Loan Document or (b)
result in any material adverse change in the financial condition, Properties,
business or operations of the Company or any Subsidiary.
Section 8.2. Maintenance of Properties. The Company shall maintain,
preserve and keep its property, plant and equipment in good repair, working
order and condition (ordinary wear and tear excepted) and shall from time to
time make all needful and proper repairs, renewals, replacements, additions and
betterments thereto so that at all times the efficiency thereof shall be fully
preserved and maintained, and shall cause each Subsidiary to do so in respect
of Property owned or used by it.
Section 8.3. Taxes and Assessments. The Company shall duly pay and
discharge, and shall cause each Subsidiary to duly pay and discharge, all
federal income taxes, Michigan state income taxes and other material taxes,
rates, assessments, fees and governmental charges upon or against it or its
Properties, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith
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and by appropriate proceedings which prevent enforcement of the matter under
contest and adequate reserves are provided therefor.
Section 8.4. Insurance. The Company shall insure and keep insured, and
shall cause each Subsidiary to insure and keep insured, with good and
responsible insurance companies, all insurable Property owned by it which is of
a character usually insured by Persons similarly situated and operating like
Properties against loss or damage from such hazards and risks, and in such
amounts, as are insured by Persons similarly situated and operating like
Properties; and the Company shall insure, and shall cause each Subsidiary to
insure, such other hazards and risks (including employers' and public liability
risks) with good and responsible insurance companies as and to the extent
usually insured by Persons similarly situated and conducting similar
businesses. The Company shall in any event maintain, and shall cause its
Subsidiaries to maintain in any event, insurance on the Collateral to the
extent required by the Collateral Documents. The Company shall upon request
furnish to the Bank a certificate setting forth in summary form the nature and
extent of the insurance maintained pursuant to this Section.
Section 8.5. Financial Reports. The Company shall on a consolidated basis
maintain a standard system of accounting in accordance with GAAP. The Company
shall furnish, and shall cause each Subsidiary to furnish to, the Bank and its
duly authorized representatives such information respecting the business and
financial condition of the Company and its Subsidiaries as the Bank may
reasonably request; and without any request, the Company shall furnish to the
Bank:
(a) as soon as available, and in any event within fifteen (15) days
after the last day of each calendar month, a Borrowing Base Certificate
in the form attached hereto as Exhibit B showing the computation of the
Borrowing Base in reasonable detail as of the close of business on the
last day of such month, together with an accounts receivable aging
(broken down on a company-by-company basis and setting forth Software
Maintenance Receivables separately), prepared by the Company and
certified to by its chief financial officer or another officer of the
Company satisfactory to the Bank;
(b) as soon as available, and in any event within forty-five (45)
days after the close of each calendar quarter, a copy of the consolidated
and consolidating balance sheet of the Company and its Subsidiaries as of
the last day of such period and the consolidated and consolidating
statement of income and consolidated statements of cash flows and changes
in and reconciliation of equity accounts of the Company and its
Subsidiaries for the quarter and the fiscal year-to date period then
ended, each in reasonable detail showing in comparative form the figures
for the corresponding date and period in the previous fiscal year,
prepared by the Company in accordance with GAAP and certified to by its
chief financial officer or another officer of the Company satisfactory to
the Bank;
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<PAGE> 39
(c) as soon as available, and in any event within ninety days after
the close of each annual accounting period of the Company, a copy of the
consolidated and consolidating balance sheet of the Company and its
Subsidiaries as of the close of such period and the consolidated and
consolidating statement of income and consolidated statements of cash
flows and changes in and reconciliation of equity accounts of the Company
and its Subsidiaries for such period, and accompanying notes thereto,
each in reasonable detail showing in comparative form the figures for the
previous fiscal year, accompanied by an unqualified opinion thereon of
Arthur Anderson LLP or another firm of independent public accountants of
recognized standing, selected by the Company and satisfactory to the
Bank, to the effect that the financial statements have been prepared in
accordance with GAAP and present fairly in all material respects in
accordance with GAAP the consolidated financial condition of the Company
and its Subsidiaries as of the close of such fiscal year and the results
of their operations and cash flows for the fiscal year then ended and
that an examination of such accounts in connection with such financial
statements has been made in accordance with generally accepted auditing
standards and, accordingly, such examination included such tests of the
accounting records and such other auditing procedures as were considered
necessary in the circumstances;
(d) promptly after receipt thereof, any additional written reports,
management letters or other detailed information contained in writing
concerning significant aspects of the Company's or any Subsidiary's
operations and financial affairs given to it by its independent public
accountants;
(e) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports the Company sends to
its shareholders, and copies of all other regular, periodic and special
reports and all registration statements the Company files with the SEC or
any successor thereto (including without limitation Forms 10-Q and 10-K),
or with any national securities exchanges;
(f) within ten (10) days after its submission to the Company's board
of directors for approval, a copy of the Company's consolidated strategic
plan and annual budget for such fiscal year, such business plan to show
the Company's projected consolidated revenues, expenses, and balance
sheet on quarter-by-quarter basis in reasonable detail, prepared by the
Company and in form reasonably satisfactory to the Bank; and
(g) promptly after knowledge thereof shall have come to the
attention of any responsible officer of the Company, written notice of
any threatened or pending litigation or governmental proceeding or labor
controversy against the Company or any Subsidiary
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<PAGE> 40
which, if adversely determined, would materially and adversely effect the
financial condition, Properties, business or operations of the Company or
any Subsidiary or of the occurrence of any Default or Event of Default
hereunder.
Each of the financial statements furnished to the Bank pursuant to subsections
(b) and (c) of this Section shall be accompanied by a written certificate in
the form attached hereto as Exhibit C signed by the chief financial officer of
the Company or another officer of the Company satisfactory to the Bank, in each
case on behalf of the Company, to the effect that to the best of such officer's
knowledge and belief no Default or Event of Default has occurred during the
period covered by such statements or, if any such Default or Event of Default
has occurred during such period, setting forth a description of such Default or
Event of Default and specifying the action, if any, taken by the Company to
remedy the same. Such certificate shall also set forth the calculations
supporting such statements in respect of Sections 8.7, 8.8 and 8.9 of this
Agreement.
Section 8.6. Inspection. The Company shall, and shall cause each
Subsidiary to, permit the Bank and its duly authorized representatives and
agents to visit and inspect any of the Properties, corporate books and
financial records of the Company and each Subsidiary, to examine and make
copies of the books of accounts and other financial records of the Company and
each Subsidiary, and to discuss the affairs, finances and accounts of the
Company and each Subsidiary with, and to be advised as to the same by, its
officers, employees and independent public accountants (and by this provision
the Company hereby authorizes such accountants to discuss with the Bank the
finances and affairs of the Company and of each Subsidiary) at such reasonable
times and reasonable intervals as the Bank may designate.
Section 8.7. Net Worth. The Company shall not, as of the last day of each
calendar quarter, permit Net Worth to be less than the Minimum Required Amount.
For purposes of this Section, the term "Minimum Required Amount" shall mean as
of any time for which the same is to be determined, (i) $26,000,000 from
September 30, 1997 through and including March 31, 1998, (ii) $28,000,000
thereafter and through and including June 30, 1998 and (iii) shall increase
(but never decrease) as of July 1, 1998 and each July 1 thereafter by an amount
(if positive) equal to 50% of Net Income for the then most recently completed
fiscal year of the Company.
Section 8.8. Fixed Charge Coverage Ratio. The Company shall not, as of
each date set forth below (commencing on September 30, 1998), permit the Fixed
Charge Coverage Ratio to be less than:
FIXED CHARGE COVERAGE
AS OF: RATIO SHALL NOT BE LESS THAN:
9/30/98 1.25 to 1
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12/31/98 and last day of each calendar quarter 1.50 to 1
through and including 6/30/99
9/30/99 and last day of each 1.75 to 1
calendar quarter thereafter
Section 8.9. Minimum EBIT. The Company will earn an EBIT for each period
set forth below in an amount not less than indicated below for such period:
<TABLE>
<CAPTION>
EBIT FOR SUCH PERIOD SHALL
DURING THE PERIOD NOT BE LESS THAN:
<S> <C> <C>
The three calendar months ending 9/30/97 -$4,500,000
The six calendar months ending 12/31/97 -$4,350,000
The nine calendar months ending 3/31/98 -$4,430,000
The twelve calendar months ending 6/30/98 -$1,940,000
</TABLE>
Section 8.10. Indebtedness for Borrowed Money. The Company shall not, nor
shall it permit any Subsidiary to, issue, incur, assume, create or have
outstanding any Indebtedness for Borrowed Money; provided, however, that the
foregoing shall not restrict nor operate to prevent:
(a) the Obligations of the Company owing to the Bank and other
indebtedness and obligations of the Company or any Subsidiary from time
to time owing to the Bank;
(b) purchase money indebtedness and Capitalized Lease Obligations
secured by Liens permitted by Section 8.11(e) hereof in an aggregate
amount not to exceed $3,000,000 at any one time outstanding;
(c) the overdraft facilities of the Foreign Subsidiaries described
on Schedule 8.10 hereto; and
(d) other unsecured indebtedness not otherwise permitted by this
Section in an aggregate amount not to exceed $250,000 at any one time
outstanding.
Section 8.11. Liens. The Company shall not, nor shall it permit any
Subsidiary to, create, incur or permit to exist any Lien of any kind on any
Property owned by the Company or any Subsidiary; provided, however, that the
foregoing shall not apply to nor operate to prevent:
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(a) Liens arising by statute in connection with worker's
compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar
charges, good faith cash deposits in connection with tenders, contracts
or leases to which the Company or any Subsidiary is a party or other cash
deposits required to be made in the ordinary course of business, provided
in each case that the obligation is not for borrowed money and that the
obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves have been established
therefor;
(b) mechanics', workmen's, materialmen's, landlords', carriers', or
other similar Liens arising in the ordinary course of business with
respect to obligations which are not due or which are being contested in
good faith by appropriate proceedings which prevent enforcement of the
matter under contest;
(c) the pledge of assets for the purpose of securing an appeal, stay
or discharge in the course of any legal proceeding, provided that the
aggregate amount of liabilities of the Company and its Subsidiaries
secured by a pledge of assets permitted under this subsection, including
interest and penalties thereon, if any, shall not be in excess of
$500,000 at any one time outstanding;
(d) the Liens granted in favor of the Bank pursuant to the
Collateral Documents;
(e) Liens on property of the Company or any of its Subsidiaries
created solely for the purpose of securing indebtedness permitted by
Section 8.10(b) hereof, representing or incurred to finance, refinance or
refund the purchase price of Property, provided that no such Lien shall
extend to or cover other Property of the Company or such Subsidiary other
than the respective Property so acquired, and the principal amount of
indebtedness secured by any such Lien shall at no time exceed the
original purchase price of such Property;
(f) any interest or title of the lessor in the Property subject to
any operating lease entered into by the Company or any Subsidiary in the
ordinary course of business; and
(g) Liens described on Schedule 8.11 hereto.
Section 8.12. Investments, Acquisitions, Loans, Advances and Guaranties.
The Company shall not, nor shall it permit any Subsidiary to, directly or
indirectly, make, retain or
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have outstanding any investments (whether through purchase of stock or
obligations or otherwise) in, or loans or advances (other than for travel
advances and other similar cash advances made to employees in the ordinary
course of business) to, any other Person, or acquire all or any substantial
part of the assets or business of any other Person or division thereof, or be
or become liable as endorser, guarantor, surety or otherwise for any debt,
obligation or undertaking of any other Person, or otherwise agree to provide
funds for payment of the obligations of another, or supply funds thereto or
invest therein or otherwise assure a creditor of another against loss, or apply
for or become liable to the issuer of a letter of credit which supports an
obligation of another, or subordinate any claim or demand it may have to the
claim or demand of any other Person; provided, however, that the foregoing
shall not apply to nor operate to prevent:
(a) investments in direct obligations of the United States of
America or of any agency or instrumentality thereof whose obligations
constitute full faith and credit obligations of the United States of
America, provided that any such obligations shall mature within one year
of the date of issuance thereof;
(b) investments in commercial paper rated at least P-1 by Moody's
Investors Services, Inc. and at least A-1 by Standard & Poor's
Corporation maturing within 270 days of the date of issuance thereof;
(c) investments in certificates of deposit issued by any United
States commercial bank having capital and surplus of not less than
$100,000,000 which have a maturity of one year or less;
(d) investments by the Company in Property which (i) the Company's
board of directors reasonably and in good faith determines are cash
equivalents or short-term, liquid, marketable investments and (ii) is
consistent with the Company's then current investment policy as disclosed
to the Bank;
(e) endorsement of items for deposit or collection of commercial
paper received in the ordinary course of business;
(f) investments by the Company and its Subsidiaries in, and
intercompany loans and advances by the Company and its Subsidiaries to,
the Borrowers and Guarantors, provided (i) each such investment, loan and
advance is made by the Company or any Subsidiary in the ordinary course
of its business as presently conducted and (ii) each such investment,
loan or advance is made exclusively for any one or more of the following
purposes: (x) repatriation to the United States of earnings of the
Company and its Subsidiaries, (y) minimizing the overall income tax
liabilities of the Company and
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its Subsidiaries or (z) financing short term working capital needs
arising in the ordinary course of the Borrower or Guarantor receiving
such investment, loan or advance;
(g) the currently outstanding loans by the Company to certain
executives and former executives of the Company provided the principal
amount of the same does not aggregate not more than $1,200,000;
(h) advances by the Company and its Subsidiaries in the ordinary
course of their respective businesses to their employees to finance such
employees' acquisition of computer software and hardware provided the
same aggregate not more than $500,000 at any one time outstanding; and
(i) other investments, loans and advances not otherwise permitted by
this Section in an aggregate amount not to exceed $500,000 at any one
time outstanding.
In determining the amount of investments, acquisitions, loans, advances and
guarantees permitted under this Section, investments and acquisitions shall
always be taken at the original cost thereof (regardless of any subsequent
appreciation or depreciation therein), loans and advances shall be taken at the
principal amount thereof then remaining unpaid, and guarantees shall be taken
at the amount of obligations guaranteed thereby.
Section 8.13. Mergers, Consolidations and Sales. The Company shall not,
nor shall it permit any Subsidiary to, be a party to any merger or
consolidation, or sell, transfer, lease or otherwise dispose of all or any
substantial part of its Property, including any disposition of Property as part
of a sale and leaseback transaction, or in any event sell or discount (with or
without recourse) any of its notes or accounts receivable; provided, however,
that this Section shall not apply to nor operate to prevent (x) the Company or
any Subsidiary from selling its inventory in the ordinary course of its
business or (y) any Subsidiary (other than a Qualified Company) from merging
into any Wholly-Owned Subsidiary. The term "substantial" as used herein shall
mean the sale, lease or other disposition of Property of the Company and its
Subsidiaries in one or more transactions during any fiscal year and having a
fair market value aggregating more than 10% of Net Worth as of the last day of
the immediately preceding fiscal quarter.
Section 8.14. Dividends and Certain Other Restricted Payments. The
Company shall not during any fiscal year (a) declare or pay any dividends on or
make any other distributions in respect of any class or series of its capital
stock (other than dividends payable solely in its capital stock) or (b)
directly or indirectly purchase, redeem or otherwise acquire or retire any of
its capital stock or warrants or options to acquire such capital stock;
provided, however, that the foregoing shall neither apply to nor operate to
prevent:
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(a) the Company's acceptance and acquisition of its capital stock as
repayment from the borrowers of the loans to them permitted by Section
8.12(g) hereof; and
(b) the Company's payment of up to $150,000 to T. Wallace Wrathall
("Wrathall") to repurchase stock options awarded to Wrathall by the
Company.
Section 8.15. ERISA. The Company shall, and shall cause each Subsidiary
to, promptly pay and discharge all obligations and liabilities arising under
ERISA of a character which if unpaid or unperformed might result in the
imposition of a Lien against any of its Properties. The Company shall, and
shall cause each Subsidiary to, promptly notify the Bank of (i) the occurrence
of any reportable event (as defined in ERISA) with respect to a Plan, (ii)
receipt of any notice from the PBGC of its intention to seek termination of any
Plan or appointment of a trustee therefor, (iii) its intention to terminate or
withdraw from any Plan, and (iv) the occurrence of any event with respect to
any Plan which would result in the incurrence by the Company or any Subsidiary
of any material liability, fine or penalty, or any material increase in the
contingent liability of the Company or any Subsidiary with respect to any
post-retirement Welfare Plan benefit.
Section 8.16. Compliance with Laws. The Company shall, and shall cause
each Subsidiary to, comply in all respects with the requirements of all
federal, state and local laws, rules, regulations, ordinances and orders
applicable to or pertaining to their Properties or business operations,
non-compliance with which could have a material adverse effect on the financial
condition, Properties, business or operations of the Company or any Subsidiary
or could result in a Lien upon any of their Property.
Section 8.17. Burdensome Contracts With Affiliates. The Company shall
not, nor shall it permit any Subsidiary to, enter into any contract, agreement
or business arrangement with any of its Affiliates (other than Wholly-Owned
Subsidiaries) on terms and conditions which are less favorable to the Company
or such Subsidiary than would be usual and customary in similar contracts,
agreements or business arrangements between Persons not affiliated with each
other.
Section 8.18. No Changes in Fiscal Year. Neither the Company nor any
Subsidiary shall change its fiscal year from its present basis without the
prior written consent of the Bank.
Section 8.19. Formation of Subsidiaries. Except for existing Subsidiaries
designated on Schedule 6.2 hereto, the Company shall not, nor shall it permit
any Subsidiary to, form or acquire any Subsidiary without the prior written
notice to the Bank.
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Section 8.20. Change in the Nature of Business. The Company shall not,
and shall not permit any Subsidiary to, engage in any business or activity if
as a result the general nature of the business of the Company or any Subsidiary
would be changed in any material respect from the general nature of the
business engaged in by the Company or such Subsidiary on the date of this
Agreement; provided, however, that the foregoing shall neither apply to nor
operate to prevent the Company from conducting in a formally inactive
Subsidiary any business or activity of the type generally conducted as of the
date hereof by the Company or any Subsidiary.
Section 8.21. Borrowing Subsidiary. Except to the extent compliance in
any case or cases is waived in writing by the Bank, the Borrowing Subsidiary
shall observe and perform, and shall cause its subsidiaries to observe and
perform, all covenants and agreements which the Company is required by this
Agreement to cause the Borrowing Subsidiary and its subsidiaries to observe and
perform.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.
Section 9.1. Events of Default. Any one or more of the following shall
constitute an "Event of Default" hereunder:
(a) default in the payment when due of all or any part of the
principal of the Note (whether at the stated maturity thereof or at any
other time provided for in this Agreement); or
(b) default for five (5) Business Days or more on the payment when
due of all or part of the interest on the Note (whether at the stated
maturity thereof or at any time provided for in this Agreement) or of any
fee or other amount payable hereunder or under any other Loan Document or
of any other indebtedness or obligation (whether direct, contingent or
otherwise) of the Company owing to the Bank; or
(c) default in the observance or performance of any covenant set
forth in Sections 8.7, 8.8, 8.9, 8.10, 8.11, 8.13 or 8.14 hereof or of
any provision of any Loan Document requiring the maintenance of insurance
on the Collateral subject thereto or dealing with the use or remittance
of proceeds of Collateral; or
(d) default in the observance or performance of any covenant set
forth in Sections 8.5 or 8.12 hereof but which is not remedied within 5
days after the earlier of (i) the date on which such failure shall first
become known to any officer of the Company or (ii) written notice thereof
is given to the Company by the Bank; or
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(e) default in the observance or performance of any other provision
hereof or of any other Loan Document which is not remedied within 30 days
after the earlier of (i) the date on which such failure shall first
become known to any officer of the Company or (ii) written notice thereof
is given to the Company by the Bank; or
(f) any representation or warranty made by any Borrower herein or in
any other Loan Document, or in any statement or certificate furnished by
it pursuant hereto or thereto, or in connection with any extension of
credit made hereunder, proves untrue in any material respect as of the
date of the issuance or making thereof; or
(g) any event occurs or condition exists (other than those described
in subsections (a) through (e) above) which is specified as an event of
default under any of the other Loan Documents, or any of the Loan
Documents shall for any reason not be or shall cease to be in full force
and effect, or any of the Loan Documents is declared to be null and void,
or any of the Collateral Documents shall for any reason fail to create a
valid and perfected first priority Lien in favor of the Bank in any
Collateral aggregating more than $100,000 in value purported to be
covered thereby except as expressly permitted by the terms hereof or
thereof; or
(h) default shall occur under any Indebtedness for Borrowed Money
aggregating more than $500,000 issued, assumed or guaranteed by the
Company or any Subsidiary, or under any indenture, agreement or other
instrument under which the same may be issued, and such default shall
continue for a period of time sufficient to permit the acceleration of
the maturity of any such Indebtedness for Borrowed Money (whether or not
such maturity is in fact accelerated), or any such Indebtedness for
Borrowed Money shall not be paid when due (whether by lapse of time,
acceleration or otherwise); or
(i) any judgment or judgments, writ or writs, or warrant or warrants
of attachment, or any similar process or processes in an aggregate amount
in excess of $500,000 shall be entered or filed against the Company or
any Subsidiary or against any of their Property and which remains
unvacated, unbonded, unstayed or unsatisfied for a period of 30 days; or
(j) the Company or any member of its Controlled Group shall fail to
pay when due an amount or amounts aggregating in excess $500,000 which it
shall have become liable to pay to the PBGC or to a Plan under Title IV
of ERISA; or notice of intent to terminate a Plan or Plans having
aggregate Unfunded Vested Liabilities in excess of $500,000
(collectively, a "Material Plan") shall be filed under Title IV of ERISA
by the Company or any other member of its Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC shall
institute
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proceedings under Title IV of ERISA to terminate or to cause a trustee to
be appointed to administer any Material Plan or a proceeding shall be
instituted by a fiduciary of any Material Plan against the Company or any
member of its Controlled Group to enforce Section 515 or 4219(c)(5) of
ERISA and such proceeding shall not have been dismissed within 30 days
thereafter; or a condition shall exist by reason of which the PBGC would
be entitled to obtain a decree adjudicating that any Material Plan must
be terminated; or
(k) dissolution or termination of the existence of the Company or
any Subsidiary (except as a result of mergers permitted by Section 8.13
hereof); or
(l) the Borrowing Subsidiary shall at any time and for any reason
cease to be a Wholly-Owned Subsidiary of the Company; or
(m) any agreement purporting to subordinate payment of any
Subordinated Debt to the prior payment of any Loan or any other
Obligations shall purport to be terminated or shall cease to have any
force or effect; or
(n) the Company or any Subsidiary makes any payment or other
distribution on account of the principal of or interest on any
Subordinated Debt or any other indebtedness, which payment or
distribution as prohibited under the terms of any instrument
subordinating such indebtedness to the prior payment of the Loans or any
of the other Obligations; or
(o) any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the SEC under said Act) of 50% or more in voting power of
the outstanding capital stock of the Company entitled to vote for the
election of its directors; or
(p) the Company or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the United States
Bankruptcy Code, as amended, or any analogous action is taken under any
other applicable law of any country or any political subdivision thereof
in each case relating to bankruptcy or insolvency, (ii) not pay, or admit
in writing its inability to pay, its debts generally as they become due,
(iii) make an assignment for the benefit of creditors, (iv) apply for,
seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or
any substantial part of its Property, (v) institute any proceeding
seeking to have entered against it an order for relief under the United
States Bankruptcy Code, as amended, or any analogous law of any country
or any political subdivision thereof in each case to adjudicate it
insolvent, or seeking dissolution, winding up, liquidation,
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reorganization, arrangement, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (vi) take
any corporate action in furtherance of any matter described in parts (i)
through (v) above, or (vii) fail to contest in good faith any appointment
or proceeding described in Section 9.1(q) hereof; or
(q) a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Company or any Subsidiary or any
substantial part of any of their Property, or a proceeding described in
Section 9.1(p)(v) shall be instituted against the Company or any
Subsidiary, and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of 60 days.
Section 9.2. Non-Bankruptcy Defaults. When any Event of Default described
in subsection (a) through (o), both inclusive, of Section 9.1 has occurred and
is continuing, the Bank may, by notice to the Company, take one or more of the
following actions:
(a) terminate the obligation of the Bank to extend any further
credit hereunder on the date (which may be the date thereof) stated in
such notice;
(b) declare the principal of and the accrued interest on the Note to
be forthwith due and payable and thereupon the Note, including both
principal and interest and all fees, charges and other Obligations
payable hereunder and under the other Loan Documents, shall be and become
immediately due and payable without further demand, presentment, protest
or notice of any kind; and
(c) enforce any and all rights and remedies available to it under
the Loan Documents or applicable law.
Section 9.3. Bankruptcy Defaults. When any Event of Default described in
subsection (p) or (q) of Section 9.1 has occurred and is continuing, then the
Note, including both principal and interest, and all fees, charges and other
Obligations payable hereunder and under the other Loan Documents, shall
immediately become due and payable without presentment, demand, protest or
notice of any kind, and the obligation of the Bank to extend further credit
pursuant to any of the terms hereof shall immediately terminate. In addition,
the Bank may exercise any and all remedies available to it under the Loan
Documents or applicable law.
SECTION 10. JOINT AND SEVERAL LIABILITY.
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Section 10.1. Joint and Several Liability. To induce the Bank to provide
the credit described herein and in consideration of benefits expected to accrue
to the Borrowers by reason of the credit from time to time extended hereunder
to the Borrowers and for other good and valuable consideration, receipt of
which is hereby acknowledged, each Borrower (each Borrower, to the extent
incurring Obligations under this Section, being referred to individually as a
"Co-Obligor" and collectively as the "Co-Obligors") hereby unconditionally and
irrevocably agrees to be jointly and severally liable to the Bank and each
other holder of any of the Obligations, for the due and punctual payment of all
present and future Obligations, including, but not limited to, the due and
punctual payment of principal of and interest on the Loans (without regard to
the Borrower to whom any Loan was disbursed) and the due and punctual payment
of all other Obligations now or hereafter owed by the Borrowers and either of
them under the Loan Documents as and when the same shall become due and
payable, whether at stated maturity, by acceleration or otherwise, according to
the terms hereof and thereof. In case of failure by any Borrower punctually to
pay any Loan or other Obligations, each Co-Obligor hereby unconditionally
agrees jointly and severally to make such payment or to cause such payment to
be made punctually as and when the same shall become due and payable, whether
at stated maturity, by acceleration or otherwise, and as if such payment were
made by such Borrower.
Section 10.2. Joint and Several Liability Unconditional. The obligations
of each Co-Obligor as a joint and several obligor under this Section 10 shall
be unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any Borrower or of any other
Co-Obligor under this Agreement or any other Loan Document or by
operation of law or otherwise;
(b) any modification or amendment of or supplement to this Agreement
or any other Loan Document;
(c) any change in the corporate existence, structure or ownership
of, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting, the Borrowers, any other Co-Obligor, or any of
their respective assets, or any resulting release or discharge of any
obligation of any Borrower or of any other Co-Obligor contained in any
Loan Document;
(d) the existence of any claim, set-off or other rights which the
Co-Obligor may have at any time against the Bank or any other Person,
whether or not arising in connection herewith;
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(e) any failure to assert, or any assertion of, any claim or demand
or any exercise of, or failure to exercise, any rights or remedies
against any Borrower, any other Co-Obligor or any other Person or
Property;
(f) any application of any sums by whomsoever paid or howsoever
realized to any obligation of any Borrower, regardless of what
obligations of the Borrowers remain unpaid;
(g) any invalidity or unenforceability relating to or against any
Borrower or any other Co-Obligor for any reason of this Agreement or of
any other Loan Document or any provision of applicable law or regulation
purporting to prohibit the payment by the Borrowers or any other
Co-Obligor of the principal of or interest on the Note or any other
amount payable by them on the Obligations; or
(h) any other act or omission to act or delay of any kind by the
Bank or any other Person or any other circumstance whatsoever that might,
but for the provisions of this paragraph, constitute a legal or equitable
discharge of the obligations of the Co-Obligors under this Section 10.
Section 10.3. Discharge Only Upon Payment in Full; Reinstatement in
Certain Circumstances. Each Co-Obligor's obligations under this Section 10
shall remain in full force and effect until the Commitment is terminated and
the principal of and interest on the Note and all other amounts payable by the
Borrowers on the Obligations shall have been paid in full. If at any time any
payment of the principal of or interest on the Note or any other amount payable
by the Borrowers on the Obligations is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of any Borrower
or of any Co-Obligor, or otherwise, each Co-Obligor's obligations under this
Section 10 with respect to such payment shall be reinstated at such time as
though such payment had become due but had not been made at such time.
Section 10.4. Waivers. (a) General. Each Co-Obligor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by the
Bank or any other Person against the Borrowers, another Co-Obligor or any other
Person.
(b) Subrogation and Contribution. Until such time as all the Loans and
other Obligations have been fully paid and satisfied and the Commitment has
terminated, each Co-Obligor hereby irrevocably waives any claim or other right
it may now or hereafter acquire against the Borrowers or any other Co-Obligor
that arises from the existence, payment, performance or enforcement of such
Co-Obligor's obligations under this Section 10 or any other
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Loan Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, or any right to
participate in any claim or remedy of the Bank or any other holder of any of
the Obligations against the Borrowers or any other Co-Obligor whether or not
such claim, remedy or right arises in equity or under contract, statute or
common law, including, without limitation, the right to take or receive from
the Borrowers or any other Co-Obligor directly or indirectly, in cash or other
Property or by set-off or in any other manner, payment or security on account
of such claim or other right.
Section 10.5. Limit on Recovery. Notwithstanding any other provision
hereof, the right of recovery against each Co-Obligor under this Section 10
shall not exceed $1.00 less than the amount which would render such
Co-Obligor's obligations under this Section 10 void or voidable under
applicable law, including without limitation fraudulent conveyance law.
Section 10.6. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Borrowers under this Agreement or any
other Loan Document is stayed upon the insolvency, bankruptcy or reorganization
of any of the Borrowers, all such amounts otherwise subject to acceleration
under the terms of this Agreement or the other Loan Documents shall nonetheless
be payable jointly and severally by the other Co-Obligors hereunder forthwith
on demand by the Bank.
SECTION 11. FUNDING INDEMNITY AND CHANGE IN CIRCUMSTANCES.
Section 11.1. Change in Capital Adequacy Requirements. If the Bank shall
determine that the adoption after the date hereof of any applicable law, rule
or regulation regarding capital adequacy, or any change in any existing law,
rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by the
Bank (or any of its branches) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on the Bank's capital as a consequence of its obligations
hereunder or for the credit which is the subject matter hereof to a level below
that which the Bank could have achieved but for such adoption, change or
compliance (taking into consideration the Bank's policies with respect to
liquidity and capital adequacy) by an amount deemed by the Bank to be material,
then from time to time, within fifteen (15) days after demand by the Bank, the
Borrowers shall pay to the Bank such additional amount or amounts reasonably
determined by the Bank as will compensate the Bank for such reduction.
Section 11.2. Change of Law. Notwithstanding any other provisions of this
Agreement or the Note, if at any time the Bank shall determine in good faith
that any change in
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applicable laws, treaties or regulations or in the interpretation thereof makes
it unlawful for the Bank to create or continue to maintain any Eurocurrency
Portion in the relevant currency, it shall promptly so notify the Company and
the obligation of the Bank to create, continue or maintain any such
Eurocurrency Portion in such currency under this Agreement shall terminate
until it is no longer unlawful for the Bank to create, continue or maintain
such Eurocurrency Portion. The Borrowers, on demand, shall, if the continued
maintenance of any such Eurocurrency Portion is unlawful, thereupon prepay the
outstanding principal amount of the affected Eurocurrency Portion, together
with all interest accrued thereon and all other amounts payable to the Bank
with respect thereto under this Agreement; provided, however, that the Company
may elect to convert the principal amount of the affected Portion into another
type of Portion available hereunder, subject to the terms and conditions of
this Agreement; and further provided, however, that the Borrowers shall have no
obligation under Section 11.5 with respect to any such prepayment or
conversion.
Section 11.3. Unavailability of Deposits or Inability to Ascertain
Adjusted LIBOR. Notwithstanding any other provision of this Agreement or the
Note, if prior to the commencement of any Interest Period, the Bank shall
determine in good faith that deposits in the relevant currency and amount of
any Eurocurrency Portion scheduled to be outstanding during such Interest
Period are not readily available to the Bank in the relevant market or, by
reason of circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining Adjusted LIBOR, then the Bank shall
promptly give notice thereof to the Company and the obligations of the Bank to
create, continue or effect by conversion any such Eurocurrency Portion in such
amount and currency and for such Interest Period shall terminate until deposits
in such amount and currency and for the Interest Period selected by the Company
shall again be readily available in the relevant market and adequate and
reasonable means exist for ascertaining Adjusted LIBOR.
Section 11.4. Taxes and Increased Costs. With respect to any Eurocurrency
Portion, if the Bank shall determine in good faith that any change in any
applicable law, treaty, regulation or guideline (including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or any
new law, treaty, regulation or guideline, or any interpretation of any of the
foregoing by any governmental authority charged with the administration thereof
or any central bank or other fiscal, monetary or other authority having
jurisdiction over the Bank or its lending branch or the Eurocurrency Portions
contemplated by this Agreement (whether or not having the force of law), shall:
(i) impose, increase, or deem applicable any reserve, special
deposit or similar requirement against assets held by, or deposits in or
for the account of, or loans by, or any other acquisition of funds or
disbursements by, the Bank which is not in any
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instance already accounted for in computing the interest rate applicable
to such Eurocurrency Portion;
(ii) subject the Bank, any Eurocurrency Portion or the Note to the
extent it evidences such a Portion to any tax, duty, charge, stamp tax,
fee, deduction or withholding in respect of this Agreement, any
Eurocurrency Portion or the Note to the extent it evidences such a
Portion, except such taxes as may be measured by the overall net income
or gross receipts of the Bank or its lending branches and imposed by the
jurisdiction, or any political subdivision or taxing authority thereof,
in which the Bank's principal executive office or its lending branch is
located;
(iii) change the basis of taxation of payments of principal and
interest due from the Company to the Bank hereunder or under the Note to
the extent it evidences any Eurocurrency Portion (other than by a change
in taxation of the overall net income or gross receipts of the Bank); or
(iv) impose on the Bank any penalty with respect to the foregoing or
any other condition regarding this Agreement, any Eurocurrency Portion,
or its disbursement, or the Note to the extent it evidences any
Eurocurrency Portion;
and the Bank shall determine in good faith that the result of any of the
foregoing is to increase the cost (whether by incurring a cost or adding to a
cost) to the Bank, within five (5) days after the Bank's written demand
therefor, of creating or maintaining any Eurocurrency Portion hereunder or to
reduce the amount of principal or interest received or receivable by the Bank
(without benefit of, or credit for, any prorations, exemption, credits or other
offsets available under any such laws, treaties, regulations, guidelines or
interpretations thereof), then the Borrowers shall pay to the Bank from time to
time as specified by the Bank such additional amounts as the Bank shall
reasonably determine are sufficient to compensate and indemnify it for such
increased cost or reduced amount. If the Bank makes such a claim for
compensation, it shall provide to the Company a certificate setting forth the
computation of the increased cost or reduced amount as a result of any event
mentioned herein in reasonable detail and such certificate shall be conclusive
if reasonably determined.
Section 11.5. Funding Indemnity. In the event the Bank shall incur any
loss, cost or expense (including, without limitation, any loss (including loss
of profit), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired or contracted to be acquired
by the Bank to fund or maintain any Eurocurrency Portion or the relending or
reinvesting of such deposits or other funds or amounts paid or prepaid to the
Bank) as a result of:
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(i) any payment of a Eurocurrency Portion on a date other than the
last day of the then applicable Interest Period for any reason, whether
before or after default, and whether or not such payment is required by
any provisions of this Agreement; or
(ii) any failure by any Borrower to create, borrow, continue or
effect by conversion a Eurocurrency Portion on the date specified in a
notice given pursuant to this Agreement;
then upon the demand of the Bank, the Borrowers shall pay to the Bank, within
five (5) days after the Bank's written demand therefor, such amount as will
reimburse the Bank for such loss, cost or expense. If the Bank requests such a
reimbursement, it shall provide to the Company a certificate setting forth the
computation of the loss, cost or expense giving rise to the request for
reimbursement in reasonable detail and such certificate shall be conclusive if
reasonably determined.
Section 11.6. Lending Branch. Subject to the immediately following
sentence, the Bank may, at its option, elect to make, fund or maintain Portions
of the Loans hereunder at such of its branches or offices as the Bank may from
time to time elect. To the extent reasonably possible, the Bank shall
designate an alternate branch or funding office with respect to the
Eurocurrency Portions to reduce any liability of the Borrowers to the Bank
under Section 11.4 hereof or to avoid the unavailability of an interest rate
option under Section 11.3 hereof, so long as such designation is not otherwise
disadvantageous to the Bank.
Section 11.7. Discretion of Bank as to Manner of Funding. Notwithstanding
any provision of this Agreement to the contrary, the Bank shall be entitled to
fund and maintain its funding of all or any part of any Note in any manner it
sees fit, it being understood, however, that for the purposes of this Agreement
all determinations hereunder (including, without limitation, determinations
under Sections 11.3, 11.4 and 11.5 hereof) shall be made as if the Bank had
actually funded and maintained each Eurocurrency Portion during each Interest
Period applicable thereto through the purchase of deposits in the relevant
market in the amount and currency of such Eurocurrency Portion, having a
maturity corresponding to such Interest Period, and bearing an interest rate
equal to the LIBOR for such Interest Period.
SECTION 12. MISCELLANEOUS.
Section 12.1. Non-Business Days. If any payment hereunder becomes due and
payable on a day which is not a Business Day, the due date of such payment
shall be extended to the next succeeding Business Day on which date such
payment shall be due and payable. In the case of any payment of principal
falling due on a day which is not a Business Day, interest on such principal
amount shall continue to accrue during such extension at the rate per annum
then
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in effect, which accrued amount shall be due and payable on the next scheduled
date for the payment of interest.
Section 12.2. No Waiver, Cumulative Remedies. No delay or failure on the
part of the Bank in the exercise of any power or right shall operate as a
waiver thereof or as an acquiescence in any default, nor shall any single or
partial exercise of any power or right preclude any other or further exercise
thereof or the exercise of any other power or right. The rights and remedies
hereunder of the Bank are cumulative to, and not exclusive of, any rights or
remedies which it would otherwise have.
Section 12.3. Amendments, Etc. No amendment, modification, termination or
waiver of any provision of this Agreement or of any other Loan Document, nor
consent to any departure by any Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Bank and (if to
be effective as against the Borrowers) the Company. No notice to or demand on
any Borrower in any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances.
Section 12.4. Extensions of the Commitment. The Company may advise the
Bank in writing of the Borrowers' desire to extend the Termination Date for an
additional calendar year, provided (i) such request is made no later than June
30 of the calendar year in which such Termination Date is scheduled to occur,
(ii) not more than one such request for the extension of a Termination Date may
be made in any one calendar year and (iii) in no event shall any of such
Termination Date be extended beyond September 30, 2002. In the event that the
Bank shall fail to so notify the Company in writing within forty-five (45) days
after the Company's request for such extension as to whether or not the Bank
agrees to such extension, the Bank shall be deemed to have refused to grant the
requested extension. If the Bank so consents in writing to such extension
within such 45-day period, the Termination Date shall be automatically extended
for one calendar year. In the event of any such extension, the Borrowers and
the Bank shall enter into such documents as the Bank may reasonably deem
necessary or appropriate to reflect such extension and to assure that all
extensions of credit pursuant to the Commitment as so extended is guaranteed by
the Guaranties and secured by the Collateral, all costs and expenses incurred
by the Bank in connection therewith to be paid by the Company. In the event
the Bank does not so consent in writing to the requested extension of a
Termination Date, the Termination Date shall take place as scheduled.
Section 12.5. Costs and Expenses. (a) The Borrowers agree to pay on
written demand the reasonable costs and expenses of the Bank in connection with
the negotiation, preparation, execution and delivery of this Agreement and the
other Loan Documents and the other instruments and documents to be delivered
thereunder, and in connection with the recording and filing of any of the
foregoing as well as in connection with lien searches from time to time
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obtained by the Bank in its administration of the credit facilities provided
for herein, and in connection with the transactions contemplated hereby or
thereby, and in connection with any consents hereunder and any waivers or
amendments hereto or thereto, including the reasonable fees and expenses of
Messrs. Chapman and Cutler, counsel for the Bank, with respect to all of the
foregoing (whether or not the transactions contemplated hereby are
consummated). The Borrowers further agree to pay to the Bank or any other
holder of the Obligations all reasonable costs and expenses (including court
costs and reasonable attorneys' fees), if any, incurred or paid by the Bank or
any other holder of the Obligations in connection with any Default or Event of
Default or in connection with the enforcement of this Agreement or any other
Loan Document or any other instrument or document delivered thereunder. The
Borrowers further agree to indemnify the Bank, and any security trustee, and
their respective directors, officers and employees, against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor, whether or not
the indemnified person is a party thereto) which any of them may pay or incur
arising out of or relating to any Loan Document or any of the transactions
contemplated thereby or the direct or indirect application or proposed
application of the proceeds of any extension of credit made available
hereunder, other than those which arise from the gross negligence or willful
misconduct of the party claiming indemnification. The Borrowers, within thirty
(30) days after written demand by the Bank at any time, shall reimburse the
Bank for any legal or other expenses incurred in connection with investigating
or defending against any of the foregoing except if the same is directly due to
the gross negligence or willful misconduct of the party to be indemnified. The
obligations of the Borrowers under this Section 12.4 shall survive the
termination of this Agreement.
(b) Each Borrower unconditionally agrees to forever indemnify, defend and
hold harmless, and covenants not to sue for any claim for contribution against,
the Bank for any damages, costs, loss or expense, including without limitation,
response, remedial or removal costs, arising out of any of the following: (i)
any presence, release, threatened release or disposal of any hazardous or toxic
substance or petroleum by any Borrower or otherwise occurring on or with
respect to its property, (ii) the operation or violation of any environmental
law, whether federal, state, or local, and any regulations promulgated
thereunder, by any Borrower or otherwise occurring on or with respect to its
property, (iii) any claim for personal injury or property damage in connection
with any Borrower or otherwise occurring on or with respect to its property,
and (iv) the inaccuracy or breach of any environmental representation, warranty
or covenant by any Borrower made herein or in any loan agreement, promissory
note, mortgage, deed of trust, security agreement or any other instrument or
document evidencing or securing any indebtedness, obligations or liabilities of
the Borrower owing to the Bank or setting forth terms and conditions applicable
thereto or otherwise relating thereto, except for damages arising from the
Bank's willful misconduct or gross negligence. This indemnification shall
survive the payment and satisfaction of all indebtedness, obligations and
liabilities of the Borrower owing to
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the Bank and the termination of this Agreement, and shall remain in force
beyond the expiration of any applicable statute of limitations and payment or
satisfaction in full of any single claim under this indemnification. This
indemnification shall be binding upon the successors and assigns of the
Borrower and shall inure to the benefit of Bank and its directors, officers,
employees, agents, and collateral trustees, and their successors and assigns.
Section 12.6. Currency. Each reference in this Agreement to U.S. Dollars
or to an Optional Currency (the "relevant currency") is of the essence. To the
fullest extent permitted by law, the obligation of each Borrower in respect of
any amount due in the relevant currency under this Agreement shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
relevant currency that the Bank may, in accordance with normal banking
procedures, purchase with the sum paid in such other currency (after any
premium and costs of exchange) on the Business Day immediately following the
day on which such party receives such payment. If the amount in the relevant
currency that may be so purchased for any reason falls short of the amount
originally due, the Borrowers shall pay such additional amounts, in the
relevant currency, as may be necessary to compensate for the shortfall. Any
obligations of a Borrower not discharged by such payment shall, to the fullest
extent permitted by applicable law, be due as a separate and independent
obligation and, until discharged as provided herein, shall continue in full
force and effect.
Section 12.7. Currency Equivalence. If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due from a Borrower on
the Obligations in the currency expressed to be payable herein or under the
Note (the "specified currency") into another currency, the parties agree that
the rate of exchange used shall be that at which in accordance with normal
banking procedures the Bank could purchase the specified currency with such
other currency on the Business Day preceding that on which final judgment is
given. The obligation of the Borrowers in respect of any such sum due to the
Bank on the Obligations shall, notwithstanding any judgment in a currency other
than the specified currency, be discharged only to the extent that on the
Business Day following receipt by the Bank of any sum adjudged to be so due in
such other currency, the Bank may in accordance with normal banking procedures
purchase the specified currency with such other currency. If the amount of the
specified currency so purchased is less than the sum originally due to the Bank
in the specified currency, the Borrowers agree, as a separate obligation and
notwithstanding any such judgment, to indemnify the Bank against such loss, and
if the amount of the specified currency so purchased exceeds the amount
originally due to the Bank in the specified currency, the Bank agrees to remit
such excess to the Company.
Section 12.8. Documentary Taxes. The Borrowers agree to pay on demand any
documentary, stamp or similar taxes payable in respect of this Agreement or any
other Loan Document, including interest and penalties, in the event any such
taxes are assessed, irrespective
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<PAGE> 59
of when such assessment is made and whether or not any credit is then in use or
available hereunder.
Section 12.9. Survival of Representations. All representations and
warranties made herein or in any of the other Loan Documents or in certificates
given pursuant hereto or thereto shall survive the execution and delivery of
this Agreement and the other Loan Documents, and shall continue in full force
and effect with respect to the date as of which they were made as long as any
credit is in use or available hereunder.
Section 12.10. Survival of Indemnities. All indemnities and other
provisions relative to reimbursement to the Bank of amounts sufficient to
protect the yield of the Bank with respect to the Loans, including, but not
limited to, Sections 11.1, 11.4 and 11.5 hereof, shall survive the termination
of this Agreement and the payment of the Note.
Section 12.11. Notices. Except as otherwise specified herein, all notices
hereunder shall be in writing (including, without limitation, notice by
telecopy) and shall be given to the relevant party at its address or telecopier
number set forth below, or such other address or telecopier number as such
party may hereafter specify by notice to the other given by United States
certified or registered mail, by telecopy or by other telecommunication device
capable of creating a written record of such notice and its receipt. Notices
hereunder shall be addressed:
to either Borrower, then to the Bank at:
to the Company at: Harris Trust and Savings Bank
Comshare, Incorporated P.O. Box 755
555 Briarwood Circle 111 West Monroe Street
Ann Arbor, Michigan 48108 Chicago, Illinois 60690
Attention: Chief Financial Officer Attention:Jeffrey C. Nicholson
Telephone: (313)994-4800 Telephone: (312) 461-2736
Telecopy: (313)994-5895 Telecopy: (312) 461-5225
Each such notice, request or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a confirmation of such telecopy has been received
by the sender, (ii) if given by mail, five (5) days after such communication is
deposited in the mail, certified or registered with return receipt requested,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the addresses specified in this Section; provided that any notice given
pursuant to Section 1 or Section 2 hereof shall be effective only upon receipt.
Section 12.12. Construction. The provisions of this Agreement relating to
Subsidiaries shall only apply during such times as the Company has one or more
Subsidiaries. Nothing
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<PAGE> 60
contained herein shall be deemed or construed to permit any act or omission
which is prohibited by the terms of any of the other Loan Documents, the
covenants and agreements contained herein being in addition to and not in
substitution for the covenants and agreements contained in the other Loan
Documents.
Section 12.13. Headings. Section headings used in this Agreement are for
convenience of reference only and are not a part of this Agreement for any
other purpose.
Section 12.14. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 12.15. Counterparts. This Agreement may be executed in any number
of counterparts, and by different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
Section 12.16. Binding Nature, Governing Law, Etc. This Agreement shall
be binding upon the Borrowers and their respective successors and assigns, and
shall inure to the benefit of the Bank and the benefit of its successors and
assigns, including any subsequent holder of the Obligations. Neither Borrower
may assign its rights hereunder without the written consent of the Bank. This
Agreement constitutes the entire understanding of the parties with respect to
the subject matter hereof and any prior agreements, whether written or oral,
with respect thereto are superseded hereby. THIS AGREEMENT AND THE RIGHTS AND
DUTIES OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
Section 12.17. Submission to Jurisdiction; Waiver of Jury Trial. Each
Borrower hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Northern District of Illinois and of any Illinois State
court sitting in the City of Chicago for purposes of all legal proceedings
arising out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby. Each Borrower irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum. EACH BORROWER AND THE BANK EACH HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
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<PAGE> 61
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall constitute a contract between us for the uses and purposes
hereinabove set forth.
Dated as of this 23rd day of September, 1997.
COMSHARE, INCORPORATED
By
Name:___________________________
Title:__________________________
COMSHARE LIMITED
By
Name:___________________________
Title:__________________________
Accepted and agreed to at Chicago, Illinois as of the day and year last
above written.
HARRIS TRUST AND SAVINGS BANK
By
Name:___________________________
Title: Vice President
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<PAGE> 62
EXHIBIT A
COMSHARE INCORPORATED
COMSHARE LIMITED
REVOLVING CREDIT NOTE
Chicago, Illinois
_________, 199__
On the Termination Date, for value received, the undersigned, COMSHARE
INCORPORATED, a Michigan corporation (the "Company"), and COMSHARE LIMITED, a
private limited company organized under the laws of England (the "Borrowing
Subsidiary") (the Company and the Borrowing Subsidiary being hereinafter
referred to collectively as the "Borrowers" and individually as a "Borrower"),
hereby jointly and severally promise to pay to the order of HARRIS TRUST AND
SAVINGS BANK (the "Bank") at its office at 111 West Monroe Street, Chicago,
Illinois (or in the case of Eurocurrency Portions denominated in an Optional
Currency, at such office as the Bank has previously notified the Company) in
the currency of such Loan in accordance with Section 3 of the Credit Agreement
hereinafter identified and defined, the aggregate unpaid principal amount of
all Loans made by the Bank to either Borrower pursuant to the Credit Agreement,
together with interest on the principal amount of each Loan from time to time
outstanding hereunder at the rates, and payable in the manner and on the dates,
specified in the Credit Agreement.
This Note evidences Loans made and to be made to the Borrowers by the Bank
under the Revolving Credit provided for under that certain Credit Agreement
dated as of September 23, 1997, between the Borrowers and the Bank (said Credit
Agreement, as the same may be amended, modified or restated from time to time,
being referred to herein as the "Credit Agreement").
Each Loan made against this Note, the Borrower to which such Loan was
made, any repayment of principal hereon, the status of each such Loan from time
to time as part of the Domestic Rate Portion or a Eurocurrency Portion, the
currency thereof and the interest rate and Interest Period applicable thereto
shall be endorsed by the holder hereof on a schedule to this Note or recorded
on the books and records of the holder hereof (provided that such entries shall
be endorsed on a schedule to this Note prior to any negotiation hereof). Each
Borrower agrees that in any action or proceeding instituted to collect or
enforce collection of this Note, the entries endorsed on a schedule to this
Note or recorded on the books and records of the holder hereof shall be prima
facie evidence of the unpaid principal balance of this Note, the Borrower to
which such Loan was made, the status of each Loan from time to time as part of
the Domestic Rate
<PAGE> 63
Portion or a Eurocurrency Portion, the currency thereof and the interest rate
and Interest Period applicable thereto.
This Note is issued by the Borrowers under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary
prepayments may be made hereon, and certain prepayments are required to be made
hereon, all in the events, on the terms and with the effects provided in the
Credit Agreement. All capitalized terms used herein without definition shall
have the same meanings herein as such terms are defined in the Credit
Agreement.
The Borrowers hereby jointly and severally promise to pay all costs and
expenses (including attorneys' fees) suffered or incurred by the holder hereof
in collecting this Note or enforcing any rights in any collateral therefor.
The Borrowers hereby waive presentment for payment and demand. THIS NOTE SHALL
BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE
STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
COMSHARE, INCORPORATED
By
Name:___________________________
Title:__________________________
COMSHARE LIMITED
By
Name:___________________________
Title:__________________________
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<PAGE> 64
EXHIBIT B
BORROWING BASE CERTIFICATE
TO: HARRIS TRUST AND SAVINGS BANK
Pursuant to the terms of the Credit Agreement dated as of September 23,
1997, between us (the "Credit Agreement"), we submit this Borrowing Base
Certificate to you and certify that the information set forth below and on any
attachments to this certificate is true, correct and complete as of the date of
this certificate.
BORROWING BASE CALCULATION
A. Eligible Domestic Non-Maintenance Accounts in Borrowing Base
1. Gross Domestic Accounts
_____________
2. Less:
(a) Ineligible sales (i.e.,
not within the U.S.
or not supported by an
eligible letter of credit) ______________
(b) Owed by an account
debtor who is an
Affiliate or Subsidiary ______________
(c) Owed by an account
debtor who is in
an insolvency or
reorganization
proceeding ______________
(d) Unpaid more than
60 days ______________
<PAGE> 65
(e) Less: Accrual for
finder's fees, commissions,
broker's fees and similar amounts
due on Agency Receivables
(NOTE: Software Maintenance
Receivables below should
not include this accrual) ______________
(f) Software Maintenance
Receivables ______________
(g) Otherwise ineligible ______________
Total Deductions (sum of lines A2a - A2g)
_____________
3. Eligible Domestic Non-Maintenance Accounts
(line A1 minus line A2)
_____________
4. Eligible Domestic Non-Maintenance Accounts in
Borrowing Base
(line A3 x .80)
=============
5. Eligible Domestic Maintenance Accounts
(line A2f) _____________
6. Eligible Domestic Maintenance Accounts in
Borrowing Base
(line A5 x .70)
=============
B. Eligible Foreign Accounts in Borrowing Base
1. Gross Foreign Accounts
_____________
2. Less:
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<PAGE> 66
(a) Ineligible sales
(i.e., not owed to
Qualified Comshare
Company or not within
UK or Canada or not
sale to distributor or
if sale to distributor,
aggregating more
than $15,000,000) ______________
(b) Owed by an account
debtor who is an
Affiliate or Subsidiary ______________
(c) Owed by an account
debtor who is in
an insolvency or
reorganization
proceeding ______________
(d) Unpaid more than
60 days ______________
(e) Unperfected ______________
(f) Less: Accrual for finder's
fees, commissions, broker's
fees and similar amounts
due on Agency Receivables
(NOTE: Software Maintenance
Receivables below should
not include this accrual) ______________
(g) Software Maintenance
Receivables ______________
(h) Otherwise ineligible ______________
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<PAGE> 67
Total Deductions (sum of lines
B2a - B2h) _____________
3. Eligible Perfected Foreign Non-Maintenance
Accounts (Line B1 minus line B2)
_____________
4. Eligible Perfected Foreign Non Maintenance
Accounts in Borrowing Base (Line B3 x .80)
=============
5. Eligible Foreign Maintenance Accounts
(Line B2g)
_____________
6. Eligible Foreign Maintenance Accounts
in Borrowing Base (Line B5 x .70)
_____________
C. BORROWING BASE (sum of lines A4, A6, B4
and B6)
======
D. REVOLVING CREDIT LOANS
======
E. UNUSED AVAILABILITY (the amount by which (a)
the lesser of (i) the Commitment and (ii)
Line C exceeds (b) Line D)
======
Dated as of this ___________ day of __________________, 19____.
COMSHARE, INCORPORATED
By
____________________,_____________
(Type or Print Name) (Title)
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<PAGE> 68
EXHIBIT C
COMPLIANCE CERTIFICATE
This Compliance Certificate is furnished to Harris Trust and Savings Bank
(the "Bank") pursuant to that certain Credit Agreement dated as of September
23, 1997, between Comshare Incorporated (the "Company") and the Bank (the
"Credit Agreement"). Unless otherwise defined herein, the terms used in this
Compliance Certificate have the meanings ascribed thereto in the Credit
Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _____________________________________ of
the Company;
2. I have reviewed the terms of the Credit Agreement and I have
made, or have caused to be made under my supervision, a detailed review
of the transactions and conditions of the Company and its Subsidiaries
during the accounting period covered by the attached financial
statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or the occurrence of
any event which constitutes a Default or Event of Default during or at
the end of the accounting period covered by the attached financial
statements or as of the date of this Certificate, except as set forth
below;
4. The financial statements required by Section 8.5 of the Credit
Agreement and being furnished to you concurrently with this certificate
are, to the best of my knowledge, true, correct and complete as of the
dates and for the periods covered thereby; and
5. The Attachment hereto sets forth financial data and computations
evidencing the Company's compliance with certain covenants of the Credit
Agreement, all of which data and computations are, to the best of my
knowledge, true, complete and correct and have been made in accordance
with the relevant Sections of the Credit Agreement.
<PAGE> 69
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Company has taken, is taking, or proposes to
take with respect to each such condition or event:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
The foregoing certifications, together with the computations set forth in
the Attachment hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this _________ day of
__________________ 19___.
________________________________________
______________________________,_________
(Type or Print Name) (Title)
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<PAGE> 70
ATTACHMENT TO COMPLIANCE CERTIFICATE
COMSHARE, INCORPORATED
Compliance Calculations for Credit Agreement
Dated as of September 23, 1997
Calculations as of _____________, 19___
___________________________________________________________________________
A. Tangible Net Worth (Section 8.7)
<TABLE>
<S> <C> <C>
1. Total shareholder's equity (Net Worth) $
=======
2. Line A1 must be greater than or equal to $___________
3. Company is in compliance (circle yes or no) yes/no
B. Operating Expense Coverage Ratio (Section 8.8)
1. Net Income for past 4 quarters (or as otherwise $___________
specified)
2. Interest Expense for past 4 quarters (or as otherwise $___________
specified)
3. Federal, state and local income tax for past 4 quarters $___________
(or as otherwise specified)
4. Depreciation and amortization for past 4 quarters $___________
(or as otherwise specified)
5. Operating lease charges for past 4 quarters $___________
(or as otherwise specified)
6. Add Lines B1-B5 (EBITDAL) $
=======
7. Capital lease expense for past 4 quarters $___________
(or as otherwise specified)
</TABLE>
<PAGE> 71
<TABLE>
<S> <C> <C>
8. Add Lines B2 plus B5 plus B7 $
(Operating Charges) =======
9. Ratio of Line B6 to Line B8 _______:1.0
(Operating Expense Coverage Ratio)
10. Line B9 ratio must not be less than _______:1.0
11. Company is in compliance (circle yes or no) yes/no
C. Minimum EBIT (Section 8.9)
1. Net Income for period specified $___________
2. Interest Expense for period specified $___________
3. Federal, state and local income tax for period specified $___________
4. Add Lines C1-C3 (EBIT) $
=======
5. Line C4 must not be less than $___________
6. Company is in compliance (circle yes or no) yes/no
</TABLE>
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<PAGE> 72
EXHIBIT D
[DYKEMA TO SUPPLY]
<PAGE> 73
EXHIBIT E
Harris Trust And Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
Gentlemen:
We have acted as counsel to [COMSHARE LIMITED/INSERT GUARANTOR NAME], a
private limited company organized under the laws of [ENGLAND/INSERT
JURISDICTION OF ORGANIZATION] (the "Loan Party"), in connection with the
authorization of and the execution and delivery of the Credit Agreement, dated
as of September 23, 1997 (the "Credit Agreement") by and among Comshare,
Incorporated, a Michigan corporation (the "Company") and Harris Trust and
Savings Bank and certain affiliates of the Company. All capitalized terms used
and not defined herein shall have the meanings assigned to them in the Credit
Agreement.
In our capacity as such counsel, we have made such investigations of fact
and have considered such questions of law as we have deemed necessary for the
purposes of this opinion, which is delivered to you pursuant to Section 7.2(e)
of the Credit Agreement. Based on the foregoing, it is our opinion that:
(i) The Loan Party is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; has the
corporate power to carry on its present business; is duly licensed or
qualified in all states and jurisdictions wherein the nature of the
business carried on by it or the assets and properties owned or leased by
it requires such qualification or licensing; and the Loan Party has the
corporate power and authority to enter into the Loan Documents delivered
by it [OK TO LIST WHICH ONES], to guarantee [FOR BORROWING SUBSIDIARY:
CHANGE TO "MAKE AND GUARANTEE"] the borrowings therein provided for, to
execute and deliver the Loan Documents delivered by it (collectively, the
"Relevant Loan Documents"), and to perform each and all of the matters
and things therein provided for.
(ii) The Relevant Loan Documents have been duly authorized,
executed, and delivered by and on behalf of the Loan Party [FOLLOWING NOT
REQUIRED UNLESS LOCAL COUNSEL RECOMMENDS THAT IT BE OBTAINED] and all
constitute legal, valid, and enforceable obligations of the Loan Party,
except to the extent affected by bankruptcy, insolvency or other similar
laws relating to or affecting the enforcement of creditors' rights and
remedies generally and general principles of equity.
<PAGE> 74
(iii) The Relevant Loan Documents, do not, nor will the performance
or observance by the Loan Party of any of the matters and things therein
provided for, contravene any provision of law applicable to the Loan
Party, any judgment or decree applicable to the Loan Party, the Articles
of Incorporation, or By-laws of the Loan Party, or, any indenture or
material agreement to which the Loan Party is a party or by which it or
any of its properties is bound.
(iv) All authorizations, consents, approvals, filings,
registrations, exemptions and regulatory approvals necessary to permit
execution of the Relevant Loan Documents and performance of its
obligations thereunder by the Loan Party, and to permit guarantees of
borrowings [FOR SUBSIDIARY BORROWER: CHANGE TO "PERMIT BORROWINGS AND
GUARANTEES OF BORROWINGS"] by the Borrowers under the Relevant Loan
Documents, have been obtained and remain in full force and effect.
(v) There is no litigation or governmental proceeding pending or to
the best of our knowledge threatened, against the Loan Party which could
reasonably be expected to (i) materially adversely affect the business
and properties of the Loan Party on a consolidated basis or (ii) impair
the validity or enforceability of the Relevant Loan Documents or
materially impair the ability of the Loan Party to perform its
obligations under the Relevant Loan Documents.
(vi) Except for ________, the execution and delivery of the Relevant
Loan Documents are not subject to any tax, duty, fee or other charge,
including, without limitation, any registration or transfer tax, stamp
duty or similar levy, imposed by or within [INSERT JURISDICTION OF
INCORPORATION] or any political subdivision or taxing authority thereof
or therein.
(vii) Neither the Loan Party nor its property has any right of
immunity on grounds of sovereignty or otherwise from jurisdiction,
attachment (before or after judgment) or execution in respect of any
action or proceeding relating in any way to the Relevant Loan Documents
that may be brought in the courts of [INSERT JURISDICTION OF
INCORPORATION].
(viii) There are no legal impediments to your access to the courts
of [INSERT RELEVANT JURISDICTION] nor shall you be required to qualify
under any statute or law or pay any franchise tax, stamp tax or similar
fee to gain such access, whether in respect of a direct suit on any of
the Relevant Loan Documents or a proceeding to register a judgment
obtained before a court in the United States, except for such fees as
would be required of plaintiffs, both resident and non-resident, in
seeking access to the courts of [INSERT RELEVANT JURISDICTION]; nor
except for ________, will you be resident, domiciled,
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<PAGE> 75
carrying on business or otherwise subject to taxation in [INSERT RELEVANT
JURISDICTION] by reason only of your execution, delivery or performance
the Relevant Loan Documents or enforcement of any of the Relevant Loan
Documents.
(ix) The Loan Party has the power to submit, and pursuant to the
Relevant Loan Documents has legally, validly, effectively and irrevocably
submitted, to the jurisdiction of the courts of the State of Illinois and
of the United States for the Northern District of Illinois in respect of
any action or proceeding relating in any way to the Relevant Loan
Documents.
(x) The choice by the parties to the Relevant Loan Documents of the
law of the State of Illinois as governing law should be recognized by the
courts of [INSERT JURISDICTION OF INCORPORATION] as legal, valid and
binding.
In rendering the opinions expressed above, we have examined originals, or
copies of originals certified to our satisfaction, of such agreements,
documents, certificates and other statements of government officials and
corporate officers and such other papers and evidence as we have deemed
relevant and necessary as a basis for this opinion.
Respectfully submitted,
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<PAGE> 76
EXHIBIT F
OPTIONAL CURRENCIES
British Pound Sterling
Japanese Yen
French Francs
Deutsche Marks
Dutch Guilders
Italian Lira
Spanish Pesetas
Danish Krone
Norwegian Krone
Belgian Francs
Swiss Francs
Swedish Krona
Austrain Shillings
Finnish Markkas
Portugese Escudos
Austrailian Dollars
Canadian Dollars
Hong Kong Dollars
Irish Punts
Singapore Dollars
Malaysian Ringgits
New Zealand Dollars
ECU's
<PAGE> 77
EXHIBIT G
FORM OF GUARANTY AGREEMENT
(from ______________________________________)
This Guaranty Agreement (the "guaranty") is made and given as of this 23rd
day of September, 1997 by __________________, a __________________ organized
under the laws of ________________ (hereinafter referred to as the
"undersigned") in favor of Harris Trust and Savings Bank, an Illinois banking
corporation (hereinafter referred to as the "Bank").
RECITALS
A. The undersigned is a subsidiary of Comshare, Incorporated, a
corporation organized under the laws of the State of Michigan in the United
States of America (the "Parent Debtor"). The Parent Debtor and one or more of
its subsidiaries may from time to time obtain credit accommodations and
facilities from the Bank (the Parent Debtor and each such subsidiary
hereinafter designated collectively as the "Debtors" and individually as a
"Debtor"). Each Debtor, the undersigned and the other subsidiaries of the
Parent Debtor comprise an integrated group of companies to which the Parent
Debtor provides financial, management, administrative and technical support.
The undersigned receives substantial direct benefit from such services. In
addition, the undersigned benefits indirectly from belonging to this integrated
group of companies, which in the aggregate possess substantially more assets
and resources than are possessed by the undersigned standing alone. The
interdependent nature of the businesses of the Parent Debtor and its
subsidiaries (including the undersigned) is such that the viability of each
subsidiary (including the undersigned) is dependent upon the continued success
of the Parent Debtor and its subsidiaries and upon the continuation of the
Parent Debtor's business relationships with its subsidiaries (including the
undersigned).
B. [INSERT APPROPRIATE LOCAL STATEMENT OF BENEFIT]
C. These direct and indirect benefits to the undersigned will continue
only if each Debtor continues to have access to credit accommodations and
facilities to be afforded to it by the Bank, which the Bank will only make
available on the condition, among others, that the undersigned guaranty the
indebtedness, obligations and liabilities of each Debtor from time to time
owing to the Bank.
NOW, THEREFORE, FOR VALUE RECEIVED and in consideration of advances made
or to be made, or credit given or to be given, or other financial accommodation
afforded or to be afforded
<PAGE> 78
to the Debtors by the Bank from time to time, the undersigned hereby guarantees
the full and prompt payment to the Bank at maturity and at all times thereafter
of any and all indebtedness, obligations and liabilities of every kind and
nature of each Debtor to the Bank, howsoever evidenced, whether now existing or
hereafter created or arising, whether direct or indirect, absolute or
contingent, joint or several, or joint and several and howsoever owned, held or
acquired, whether through discount, overdraft, purchase, direct loan or as
collateral, or otherwise (hereinafter all such indebtedness, obligations and
liabilities being collectively referred to as the "Indebtedness"); and the
undersigned further agrees to pay all expenses, legal and/or otherwise
(including court costs and reasonable attorneys' fees), paid or incurred by the
Bank in endeavoring to collect the Indebtedness, or any part thereof, and in
enforcing this guaranty in any litigation, bankruptcy or insolvency proceeding
or otherwise.
Notwithstanding anything in this guaranty to the contrary, the Bank's
right of recovery against the undersigned under this guaranty (excluding any
such recovery for Collection Costs) shall not exceed the greater of:
(x) U.S. $______________; or
(y) the sum (determined as of the date the Bank makes demand on this
guaranty) of (i) the principal amount then outstanding on loans and
advances (including trade credit) made after the date hereof by the
Debtors or any subsidiary of the Parent Debtor directly or indirectly to
the undersigned, whether or not funded out of the proceeds of credit
extended by the Bank, and (ii) the amount, if any, by which capital
contributions made after the date hereof by the Debtors or any subsidiary
of the Parent Debtor directly or indirectly to the undersigned exceeds
the amount of dividends paid after the date hereof by the undersigned to
the Debtors or any subsidiary of the Parent Debtor. [INSERT ALTERNATIVE
RIGHT OF RECOVERY LIMIT IN ACCORDANCE WITH LAWS AND CUSTOM OF EACH
PARTICULAR JURISDICTION.]
The undersigned's liability hereunder for Collection Costs is not limited by
the immediately preceding sentence.
This guaranty is a continuing, absolute and unconditional guaranty, and
shall remain in full force and effect until written notice of its
discontinuance shall be actually received by the Bank, and also until any and
all of the Indebtedness created, existing or committed to before receipt of
such notice shall be fully paid. The liability of the undersigned hereunder
shall in no way be affected or impaired by (and the Bank is hereby expressly
authorized to make from time to time, without notice to anyone) any sale,
pledge, surrender, compromise, settlement, release, renewal, extension,
indulgence, alteration, substitution, exchange, change in, modification or
other disposition of any of the Indebtedness, either express or implied, or of
any contract or
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<PAGE> 79
contracts evidencing any thereof, or of any security or collateral therefor.
The liability of the undersigned hereunder shall also in no way be affected or
impaired by any acceptance by the Bank of any security for or other guarantors
upon any of the Indebtedness, or by any failure, neglect or omission on the
part of the Bank to realize upon or protect any of the Indebtedness, or any
collateral or security or other guaranty therefor, or to exercise any lien upon
or right of appropriation of any moneys, credits or property of any Debtor
possessed by the Bank toward the liquidation of the Indebtedness, or by any
application of payments or credits thereon. The Bank shall have the exclusive
right to determine how, when and what application of payments and credits, if
any, shall be made on the Indebtedness, or any part thereof. In order to hold
the undersigned liable hereunder, there shall be no obligation on the part of
the Bank, at any time, to resort for payment to the Debtors or to any other
guaranty, or to any other person or corporation, their properties or estate, or
resort to any collateral, security, property, liens or other rights or remedies
whatsoever and the Bank shall have the right to enforce this guaranty
irrespective of whether or not other proceedings or steps are pending seeking
resort to or realization upon or from any of the foregoing.
All diligence in collection or protection, and all presentment, demand,
protest and/or notice, as to any and everyone, whether or not any Debtor or the
undersigned or others, of dishonor and of default and of non-payment and of the
creation and existence of any and all of the Indebtedness, and of any security
and collateral therefor, and of the acceptance of this guaranty, and of any and
all extensions of credit and indulgence, are expressly waived.
The undersigned will not exercise or enforce any right of exoneration,
contribution, reimbursement, recourse or subrogation available to the
undersigned against any person liable for payment of the Indebtedness, or as to
any security therefor, unless and until the full amount owing to the Bank on
the Indebtedness has been paid and each commitment of the Bank to extend credit
to any Debtor shall have terminated, and the payment by the undersigned of any
amount pursuant to this guaranty shall not in any wise entitle the undersigned
to any right, title or interest (whether by way of subrogation or otherwise) in
and to any of the Indebtedness or any proceeds thereof or any security therefor
unless and until the full amount owing to the Bank on the Indebtedness has been
paid and each commitment of the Bank to extend credit to any Debtor shall have
terminated.
In the case of the dissolution, liquidation, or insolvency (howsoever
evidenced) of, or the institution of bankruptcy or receivership proceedings
against any Debtor or the undersigned, all of the Indebtedness then existing
shall, at the option of the Bank, immediately become due and accrued and
payable from the undersigned. All dividends or other payments received from
any Debtor, or on account of any Debtor from whatsoever source, shall be taken
and applied as payment in gross, and this guaranty shall apply to and secure
any ultimate balance that shall remain owing to the Bank.
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<PAGE> 80
The Bank may, without any notice whatsoever to anyone, sell, assign, or
transfer all of the Indebtedness, or any part thereof, or grant participations
therein, and in that event each and every immediate and successive assignee,
transferee, or holder of or participant in all or any part of the Indebtedness,
shall have the right to enforce this guaranty, by suit or otherwise, for the
benefit of such assignee, transferee, holder or participant, as fully as if
such assignee, transferee, holder or participant were herein by name
specifically given such rights, powers and benefits; but the Bank shall have an
unimpaired right to enforce this guaranty for the benefit of the Bank or any
such participant, as to such of the Indebtedness that it has not sold, assigned
or transferred.
If any payment applied by the Bank to the Indebtedness is thereafter set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
any Debtor or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this guaranty be deemed to have continued in
existence, notwithstanding such application, and this guaranty shall be
enforceable as to such of the Indebtedness as fully as if such application had
never been made.
This guaranty shall be governed by and construed according to the laws of
the State of Illinois, in which State it shall be performed by the undersigned.
All payments to be made by the undersigned hereunder shall be made in the same
currency and funds in which the Indebtedness of the relevant Debtor is payable
at the principal Chicago office of Harris Trust and Savings Bank at 111 West
Monroe Street, Chicago, Illinois 60690 (or at such other place for the account
of the Bank as it may from time to time specify to the undersigned) in
immediately available and freely transferable funds at the place of payment,
all such payments to be paid without setoff, counterclaim or reduction and
without deduction for, and free from, any and all present or future taxes,
levies, imposts, duties, fees, charges, deductions, withholding or liabilities
with respect thereto or any restrictions or conditions of any nature. If the
undersigned is required by law to make any deduction or withholding on account
of any tax or other withholding or deduction from any sum payable by the
undersigned hereunder, the undersigned shall pay any such tax or other
withholding or deduction and shall pay such additional amount necessary to
ensure that, after making any payment, deduction or withholding, the Bank shall
receive and retain (free of any liability in respect of any payment, deduction
or withholding) a net sum equal to what it would have received and so retained
hereunder had no such deduction, withholding or payment been required to have
been made.
The payment by the undersigned of any amount or amounts due the Bank
hereunder shall be made in the same currency (the "relevant currency") and
funds in which the underlying Indebtedness of any Debtor are payable. To the
fullest extent permitted by law, the obligation of the undersigned in respect
of any amount due in the relevant currency under this guaranty shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
relevant currency that the Bank
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<PAGE> 81
may, in accordance with normal banking procedures, purchase with the sum paid
in such other currency (after any premium and costs of exchange) on the
business day immediately following the day on which the Bank receives such
payment. If the amount in the relevant currency that may be so purchased for
any reason falls short of the amount originally due, the undersigned shall pay
such additional amounts, in the relevant currency, as may be necessary to
compensate for the shortfall. Any obligations of the undersigned not
discharged by such payment shall, to the fullest extent permitted by applicable
law, be due as a separate and independent obligation and, until discharged as
provided herein, shall continue in full force and effect.
The undersigned waives any and all defenses, claims and discharges of the
Debtors, or any other obligor, pertaining to the Indebtedness, except the
defense of discharge by payment in full. Without limiting the generality of
the foregoing, the undersigned will not assert, plead or enforce against the
Bank any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute, fraud,
incapacity, minority, usury, illegality or unenforceability which may be
available to any Debtor or any other person or entity liable in respect of any
of the Indebtedness, or any setoff available against the Bank to any Debtor or
any such other person or entity, whether or not on account of a related
transaction. The undersigned agrees that the undersigned shall be and remain
liable for any deficiency remaining after foreclosure of any mortgage or
security interest securing the Indebtedness, whether or not the liability of
the Debtors or any other obligor for such deficiency is discharged pursuant to
statute or judicial decision.
The undersigned hereby irrevocably submits to the non-exclusive
jurisdiction of any State of Illinois court or any federal court located in
Chicago, Illinois for the adjudication of any matter arising out of or relating
to this guaranty and consents to the service of process by registered or
certified mail out of any such court or by service of process on the Parent
Debtor (now at 555 Briarwood Circle, Ann Arbor, Michigan 48108) which the
undersigned hereby irrevocably appoints as its agent to receive, for it and on
its behalf, service of process in any action or proceeding in Illinois. Such
service shall be deemed completed on delivery to such process agent (whether or
not it is forwarded to and received by the undersigned) provided that notice of
such service of process is given by the Bank to the undersigned. If, for any
reason, such process agent ceases to be able to act as such or no longer has an
address in Illinois, the undersigned irrevocably agrees to appoint a substitute
process agent acceptable to the Bank and to deliver to the Bank a copy of the
new agent's acceptance of that appointment within 30 days. Nothing contained
herein shall affect the right of the Bank to serve legal process in any other
manner or to bring any proceeding hereunder in any jurisdiction where the
undersigned may be amenable to suit. The undersigned hereby waives any
objection to any action or proceeding in any Illinois court or federal court
located in Chicago, Illinois on the grounds of venue or any claim that any
State of Illinois court or federal court located in Chicago, Illinois is an
inconvenient forum.
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<PAGE> 82
Any invalidity or unenforceability of any provision or application of this
guaranty shall not affect other lawful provisions and applications hereof, and
to this end the provisions of this guaranty are declared to be severable. This
guaranty may not be waived, amended, released or otherwise changed except by a
writing signed by the Bank.
All notices or other communications given hereunder by the Bank to the
undersigned shall be addressed to the undersigned at its address below or to
such other address as the undersigned shall designate by notice in writing to
the Bank. Any such notice or other communication shall be effective only upon
receipt thereof by the undersigned.
This guaranty and every part thereof shall be binding upon the
undersigned, and upon the heirs, legal representatives, successors and assigns
of the undersigned, and shall inure to the benefit of the Bank, its successors,
legal representatives and assigns. The undersigned waives notice of the Bank's
acceptance hereof.
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<PAGE> 83
SIGNED AND DELIVERED by the undersigned, this 23rd day of September, 1997.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS GUARANTY AS
OF THE TIME OF EXECUTION.
[Insert Guarantor's name]
(SEAL)
By_______________________________
Name:__________________________
Title:_________________________
ADDRESS:
_________________________________
_________________________________
_________________________________
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<PAGE> 84
SCHEDULE 6.2
SUBSIDIARIES
<TABLE>
<CAPTION>
JURISDICTION OF PERCENTAGE
NAME INCORPORATION OWNERSHIP
<S> <C> <C>
Comshare (U.S.), Inc. Michigan 100%
Comshare International B.V. Netherlands 100%
Comshare Limited Ontario, Canada 100%
CS Iberia sl Spain 100%
CS srl Italy 100%
Comshare Holdings Company United Kingdom 100%(1)
Comshare Limited United Kingdom 100%(2)
Comshare International Limited United Kingdom 100%(3)
</TABLE>
________________________
(1)owned 100% by Comshare International B.V.
(2)owned 100% by Comshare Holdings Company
(3)owned 100% by Comshare
<PAGE> 85
<TABLE>
<S> <C> <C>
Comshare GmbH Germany 100%***
Comshare S.A. France 100%***
Comshare South Pacific
Pty Ltd. Australia 100%
</TABLE>
-86-
<PAGE> 86
SCHEDULE 8.10
FOREIGN OVERDRAFT LINES
<PAGE> 87
SCHEDULE 8.11
PERMITTED LIENS
<PAGE> 88
GUARANTY AGREEMENT
(from Comshare (U.S.), Inc.)
This Guaranty Agreement (the "guaranty") is made and given as of this 23rd
day of September, 1997 by Comshare (U.S.), Inc., a Michigan corporation
(hereinafter referred to as the "undersigned") in favor of Harris Trust and
Savings Bank, an Illinois banking corporation (hereinafter referred to as the
"Bank").
RECITALS
A. The undersigned is a subsidiary of Comshare, Incorporated, a
corporation organized under the laws of the State of Michigan in the United
States of America (the "Parent Debtor"). The Parent Debtor and one or more of
its subsidiaries may from time to time obtain credit accommodations and
facilities from the Bank (the Parent Debtor and each such subsidiary
hereinafter designated collectively as the "Debtors" and individually as
a"Debtor"). Each Debtor, the undersigned and the other subsidiaries of the
Parent Debtor comprise an integrated group of companies to which the Parent
Debtor provides financial, management, administrative and technical support.
The undersigned receives substantial direct benefit from such services. In
addition, the undersigned benefits indirectly from belonging to this integrated
group of companies, which in the aggregate possess substantially more assets
and resources than are possessed by the undersigned standing alone. The
interdependent nature of the businesses of the Parent Debtor and its
subsidiaries (including the undersigned) is such that the viability of each
subsidiary (including the undersigned) is dependent upon the continued success
of the Parent Debtor and its subsidiaries and upon the continuation of the
Parent Debtor's business relationships with its subsidiaries (including the
undersigned).
B. These direct and indirect benefits to the undersigned will continue
only if each Debtor continues to have access to the credit accommodations and
facilities to be afforded to it by the Bank, which the Bank will only make
available on the condition, among others, that the undersigned guaranty the
indebtedness, obligations and liabilities of each Debtor from time to time
owing to the Bank.
NOW, THEREFORE, FOR VALUE RECEIVED and in consideration of advances made
or to be made, or credit given or to be given, or other financial accommodation
afforded or to be afforded to the Debtors by the Bank from time to time, the
undersigned hereby guarantees the full and prompt payment to the Bank at
maturity and at all times thereafter of any and all indebtedness, obligations
and liabilities of every kind and nature of each Debtor to the Bank, howsoever
evidenced, whether now existing or hereafter created or arising, whether direct
or indirect, absolute or contingent, joint or several, or joint and several and
howsoever owned, held or
<PAGE> 89
acquired, whether through discount, overdraft, purchase, direct loan or as
collateral, or otherwise (hereinafter all such indebtedness, obligations and
liabilities being collectively referred to as the "Indebtedness"); and the
undersigned further agrees to pay all expenses, legal and/or otherwise
(including court costs and reasonable attorneys' fees), paid or incurred by the
Bank in endeavoring to collect the Indebtedness, or any part thereof, and in
enforcing this guaranty in any litigation, bankruptcy or insolvency proceeding
or otherwise.
This guaranty is a continuing, absolute and unconditional guaranty, and
shall remain in full force and effect until written notice of its
discontinuance shall be actually received by the Bank, and also until any and
all of the Indebtedness created, existing or committed to before receipt of
such notice shall be fully paid. The liability of the undersigned hereunder
shall in no way be affected or impaired by (and the Bank is hereby expressly
authorized to make from time to time, without notice to anyone) any sale,
pledge, surrender, compromise, settlement, release, renewal, extension,
indulgence, alteration, substitution, exchange, change in, modification or
other disposition of any of the Indebtedness, either express or implied, or of
any contract or contracts evidencing any thereof, or of any security or
collateral therefor. The liability of the undersigned hereunder shall also in
no way be affected or impaired by any acceptance by the Bank of any security
for or other guarantors upon any of the Indebtedness, or by any failure,
neglect or omission on the part of the Bank to realize upon or protect any of
the Indebtedness, or any collateral or security or other guaranty therefor, or
to exercise any lien upon or right of appropriation of any moneys, credits or
property of any Debtor possessed by the Bank toward the liquidation of the
Indebtedness, or by any application of payments or credits thereon. The Bank
shall have the exclusive right to determine how, when and what application of
payments and credits, if any, shall be made on the Indebtedness, or any part
thereof. In order to hold the undersigned liable hereunder, there shall be no
obligation on the part of the Bank, at any time, to resort for payment to the
Debtors or to any other guaranty, or to any other person or corporation, their
properties or estate, or resort to any collateral, security, property, liens or
other rights or remedies whatsoever and the Bank shall have the right to
enforce this guaranty irrespective of whether or not other proceedings or steps
are pending seeking resort to or realization upon or from any of the foregoing.
All diligence in collection or protection, and all presentment, demand,
protest and/or notice, as to any and everyone, whether or not any Debtor or the
undersigned or others, of dishonor and of default and of non-payment and of the
creation and existence of any and all of the Indebtedness, and of any security
and collateral therefor, and of the acceptance of this guaranty, and of any and
all extensions of credit and indulgence, are expressly waived.
The undersigned will not exercise or enforce any right of exoneration,
contribution, reimbursement, recourse or subrogation available to the
undersigned against any person liable for payment of the Indebtedness, or as to
any security therefor, unless and until the full amount
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<PAGE> 90
owing to the Bank on the Indebtedness has been paid and each commitment of the
Bank to extend credit to any Debtor shall have terminated, and the payment by
the undersigned of any amount pursuant to this guaranty shall not in any wise
entitle the undersigned to any right, title or interest (whether by way of
subrogation or otherwise) in and to any of the Indebtedness or any proceeds
thereof or any security therefor unless and until the full amount owing to the
Bank on the Indebtedness has been paid and each commitment of the Bank to
extend credit to any Debtor shall have terminated.
In the case of the dissolution, liquidation, or insolvency (howsoever
evidenced) of, or the institution of bankruptcy or receivership proceedings
against any Debtor or the undersigned, all of the Indebtedness then existing
shall, at the option of the Bank, immediately become due and accrued and
payable from the undersigned. All dividends or other payments received from
any Debtor, or on account of any Debtor from whatsoever source, shall be taken
and applied as payment in gross, and this guaranty shall apply to and secure
any ultimate balance that shall remain owing to the Bank.
The Bank may, without any notice whatsoever to anyone, sell, assign, or
transfer all of the Indebtedness, or any part thereof, or grant participations
therein, and in that event each and every immediate and successive assignee,
transferee, or holder of or participant in all or any part of the Indebtedness,
shall have the right to enforce this guaranty, by suit or otherwise, for the
benefit of such assignee, transferee, holder or participant, as fully as if
such assignee, transferee, holder or participant were herein by name
specifically given such rights, powers and benefits; but the Bank shall have an
unimpaired right to enforce this guaranty for the benefit of the Bank or any
such participant, as to such of the Indebtedness that it has not sold, assigned
or transferred.
If any payment applied by the Bank to the Indebtedness is thereafter set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
any Debtor or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this guaranty be deemed to have continued in
existence, notwithstanding such application, and this guaranty shall be
enforceable as to such of the Indebtedness as fully as if such application had
never been made.
This guaranty shall be governed by and construed according to the laws of
the State of Illinois, in which State it shall be performed by the undersigned.
All payments to be made by the undersigned hereunder shall be made in the same
currency and funds in which the Indebtedness of the relevant Debtor is payable
at the principal Chicago office of Harris Trust and Savings Bank at 111 West
Monroe Street, Chicago, Illinois 60690 (or at such other place for the account
of the Bank as it may from time to time specify to the undersigned) in
immediately available and freely transferable funds at the place of payment,
all such payments to be paid without setoff, counterclaim or reduction and
without deduction for, and free from, any and all present or future
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<PAGE> 91
taxes, levies, imposts, duties, fees, charges, deductions, withholding or
liabilities with respect thereto or any restrictions or conditions of any
nature. If the undersigned is required by law to make any deduction or
withholding on account of any tax or other withholding or deduction from any
sum payable by the undersigned hereunder, the undersigned shall pay any such
tax or other withholding or deduction and shall pay such additional amount
necessary to ensure that, after making any payment, deduction or withholding,
the Bank shall receive and retain (free of any liability in respect of any
payment, deduction or withholding) a net sum equal to what it would have
received and so retained hereunder had no such deduction, withholding or
payment been required to have been made.
The undersigned waives any and all defenses, claims and discharges of the
Debtors, or any other obligor, pertaining to the Indebtedness, except the
defense of discharge by payment in full. Without limiting the generality of
the foregoing, the undersigned will not assert, plead or enforce against the
Bank any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute, fraud,
incapacity, minority, usury, illegality or unenforceability which may be
available to any Debtor or any other person or entity liable in respect of any
of the Indebtedness, or any setoff available against the Bank to any Debtor or
any such other person or entity, whether or not on account of a related
transaction. The undersigned agrees that the undersigned shall be and remain
liable for any deficiency remaining after foreclosure of any mortgage or
security interest securing the Indebtedness, whether or not the liability of
the Debtors or any other obligor for such deficiency is discharged pursuant to
statute or judicial decision.
Notwithstanding anything herein to the contrary, the right of recovery
against the undersigned under this guaranty shall not exceed the Maximum
Liability Amount. For purposes hereof, the term "Maximum Liability Amount"
shall mean $1.00 less than the amount of the lowest claim on this guaranty
which would render it void or voidable under applicable law against the
undersigned.
Any invalidity or unenforceability of any provision or application of this
guaranty shall not affect other lawful provisions and applications hereof, and
to this end the provisions of this guaranty are declared to be severable. This
guaranty may not be waived, amended, released or otherwise changed except by a
writing signed by the Bank.
All notices or other communications given hereunder by the Bank to the
undersigned shall be addressed to the undersigned at its address below
(directed to the attention of the President) or to such other address as the
undersigned shall designate by notice in writing to the Bank. Any such notice
or other communication shall be effective only upon receipt thereof by the
undersigned.
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<PAGE> 92
This guaranty and every part thereof shall be binding upon the
undersigned, and upon the heirs, legal representatives, successors and assigns
of the undersigned, and shall inure to the benefit of the Bank, its successors,
legal representatives and assigns. The undersigned waives notice of the Bank's
acceptance hereof.
SIGNED AND DELIVERED by the undersigned, this 23rd day of September, 1997.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS GUARANTY AS
OF THE TIME OF EXECUTION.
COMSHARE (U.S.), INC.
(SEAL)
By
--------------------------------
Its
ADDRESS:
555 Briarwood Circle
Ann Arbor, Michigan 48108
-5-
<PAGE> 93
SECURITY AGREEMENT
THIS SECURITY AGREEMENT made as of this 23rd day of September, 1997, by
and among Comshare, Incorporated, a Michigan corporation (the "Parent
Borrower"), and the other parties executing this Agreement under the heading
"Debtors" (the and such other parties, along with any parties who execute and
deliver to the Agent an agreement attached hereto as Schedule C, being
hereinafter referred to collectively as the "Debtors" and individually as a
"Debtor"), each with its mailing address as set forth on Schedule A hereto, and
Harris Trust and Savings Bank, an Illinois banking corporation (the"Bank"),
with its mailing address at 111 West Monroe Street, P.O. Box 755, Chicago,
Illinois 60690;
W I T N E S S E T H T H A T:
WHEREAS, the Debtors (other than the Parent Borrower) are subsidiaries or
affiliates of the Parent Borrower; and
WHEREAS, the Parent Borrower and one or more of its subsidiaries (the
Parent Borrower and each such subsidiary being hereafter referred to
collectively as the "Borrowers" and individually as a "Borrower") have obtained
and may from time to time hereafter obtain credit and other financial
accommodations from the Bank and have incurred and may from time to time
hereafter incur liabilities to the Bank; and
WHEREAS, each Debtor, and especially the Parent Borrower, provides each of
the other Debtors with substantial financial, management, administrative and
technical support; and
WHEREAS, the interdependent nature of the businesses and hence of each of
the Debtors is such that the viability of each Debtor is dependent upon the
continued success of the other Debtors and, upon the continuation of such
Debtor's business relationships with the other Debtors, and the continuation
thereof necessitates each Borrower's access to credit and other financial
accommodations from the Bank, which the Bank will only make available to a
Borrower on the condition, among others, that the other Debtors pledge their
respective assets to secure all indebtedness, obligations and liabilities of
each Borrower from time to time owing to the Bank; and
WHEREAS, each Debtor will directly and substantially benefit from credit
and other financial accommodations extended and to be extended by the Bank to
the Borrowers;
NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of advances made
or to be made, or credit accommodations given or to be given, to the Borrowers
by the Bank from time to time, each Debtor hereby agrees as follows:
<PAGE> 94
1. Security Interest. Accordingly, each Debtor, in order to secure the
prompt payment and performance in full when due (whether by lapse of time,
acceleration or otherwise) of (i) any and all indebtedness, obligations and
liabilities of whatsoever kind and nature of each Borrower to the Bank (whether
arising before or after the filing of a petition in bankruptcy), whether direct
or indirect, absolute or contingent, due or to become due, and whether now
existing or hereafter arising and howsoever held, evidenced or acquired, and
whether several, joint or joint and several, (ii) any and all indebtedness,
obligations and liabilities of whatsoever kind and nature of each other Debtor,
to the Bank (whether arising before or after the filing of a petition in
bankruptcy), whether direct or indirect, absolute or contingent, due or to
become due, and whether now existing or hereafter arising and howsoever held
evidenced or acquired and (iii) any and all reasonable expenses and charges,
legal or otherwise, suffered or incurred by the Bank in collecting or in
enforcing any of such indebtedness, obligations and liabilities or realizing on
or protecting or preserving any security therefor, including, without
limitation, the lien and security interest granted hereby (all of the
indebtedness, obligations, liabilities, expenses and charges described in
clauses (i), (ii) and (iii) above being hereinafter referred to as the
"Obligations"), each Debtor hereby grants to the Bank a security interest in
and right of setoff against, and acknowledges and agrees that the Bank has and
shall continue to have a continuing security interest in and right of setoff
against, any and all of such Debtor's:
(a) Receivables. Receivables whether now existing or hereafter
created or arising, and however evidenced or acquired, or in which such
Debtor now has or hereafter acquires any rights (the term "Receivables"
means and includes all accounts, accounts receivable, instruments, notes,
drafts, acceptances, chattel paper, any right of such Debtor to payment
for goods sold or leased or for services rendered, whether or not earned
by performance, and all other forms of obligations owing to such Debtor);
(b) Customer Contracts. All right, title and interest in, to and
under contracts entered into by such Debtor with customers in its
ordinary course of business, whether now existing or hereafter created,
acquired or arising, or contracts in which such Debtor now has or
hereafter acquires any rights, including without limitation all such
rights to payment with respect to (i) software license agreements, (ii)
software maintenance agreements, (iii) software distribution agreements
and (iv) software implementation and consulting services agreements;
(c) Records and Cabinets. Supporting evidence and documents
relating to any of the above-described property, including without
limitation, copies of computer programs, disks, tapes and related
electronic data processing media, rights of such Debtor to retrieve the
same from third parties, written applications, credit information,
account cards, payment records, correspondence, delivery and installation
certificates, invoice copies, delivery receipts, notes and other
evidences of indebtedness, together with all
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<PAGE> 95
books of account, ledgers and cabinets in which the same are reflected or
maintained, all whether now existing or hereafter arising;
(d) Accessions and Additions. All accessions and additions to and
substitutions and replacements of any of the foregoing, whether now
existing or hereafter arising; and
(e) Proceeds. All proceeds of the foregoing, whether now existing
or hereafter arising;
all of the foregoing being herein sometimes referred to as the "Collateral".
The terms "Debtor" and "Debtors" as used herein shall mean and include the
Debtors collectively and also each individually, with all grants,
representations, warranties and covenants of and by the Debtors, or any of
them, herein contained to constitute joint and several grants, representations,
warranties and covenants of and by the Debtors; provided that, unless the
context in which the same is used shall otherwise require, any grant,
representation, warranty or covenant contained herein related to the Collateral
shall be made by each such Debtor only with respect to the Collateral owned by
it or represented by such Debtor as owned by it.
2. Covenants, Agreements, Representations and Warranties. Each Debtor
hereby covenants and agrees with, and represents and warrants to the Bank that:
(a) Such Debtor is a corporation or other entity duly organized,
existing and in good standing under the laws of the state, province or
country of its incorporation or organization, is the sole and lawful
owner of its Collateral and has full right, power and authority to enter
into this Agreement and to perform each and all of the matters and things
herein provided for; and the execution and delivery of this Agreement,
and the observance and performance of any of the matters and things
herein set forth, will not violate or contravene in any material respect
any provision of law or of the articles of incorporation or by-laws or
other organizational agreement of such Debtor or of any indenture, loan
agreement or other agreement of or affecting such Debtor or any of its
properties, or result in the creation or imposition of any liens or
encumbrance on any property of such Debtor.
(b) The Collateral is and will remain in each Debtor's possession at
the locations listed under Column 2 on Schedule A attached hereto. Each
Debtor's respective chief executive office is listed opposite its name on
Schedule A attached hereto and the Debtors have no other places of
business other than those listed under Column 3 on Schedule A attached
hereto. No Debtor will remove its Collateral from the locations
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specified in the first sentence of this Section 2(b) without the Bank's
prior written consent (provided that if for any reason Collateral is at
any time kept or located at locations other than its present location or
locations hereafter consented to by the Bank, the Bank shall nevertheless
have and retain a security interest therein).
(c) The Collateral and every part thereof is and will be free and
clear of all security interests, liens (including without limitation
mechanics, laborers and statutory liens), attachments, levies and
encumbrances of every kind, nature and description and whether voluntary
or involuntary except for the security interest of the Bank therein and
as otherwise provided in the Credit Agreement (as hereinafter defined),
and each Debtor will warrant and defend its Collateral against any claims
and demands of all persons at any time claiming the same or any interest
therein adverse to the Bank.
(d) Each Debtor will pay promptly when due all material taxes,
assessments, and governmental charges and levies upon or against its
Collateral in each case before the same become delinquent and before
penalties accrue thereon, unless and to the extent that the same are
being contested in good faith by appropriate proceedings.
(e) Each Debtor at its own cost and expense will maintain, keep and
preserve its Collateral in good repair and condition and will not waste
or destroy such Collateral or any part thereof and will not be negligent
in the care and use of any Collateral and will not use or permit to be
used any Collateral in violation of any statute, ordinance or other
governmental requirement. Each Debtor will perform in all material
respects its obligations under any contract or other agreement
constituting part of the Collateral, it being understood and agreed that
the Bank has no responsibility to perform such obligations.
(f) Except for liens permitted by the Credit Agreement and subject
to Section 4(a) hereof, no Debtor will, without the Bank's prior written
consent, sell, assign, mortgage, lease or otherwise dispose of its
Collateral or any interest therein.
(g) Each Debtor will at all times allow the Bank or its
representatives free access to and right of inspection of the Collateral;
provided, however, except during the continuance of any event of default
hereunder, such access and inspection shall be made only after reasonable
notice to the Parent Borrower or the relevant Debtor and during normal
business hours. As to any premises not owned by any of the Debtors
wherein any of the Collateral is located, if any, the appropriate Debtor
shall, if the Bank so requests, cause each party having any right, title
or interest in, or lien on, any of such premises to enter into an
agreement (any such agreement to contain a legal description of such
premises) whereby such party disclaims any right, title and interest in,
and lien on, the
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Collateral, allowing the removal of such Collateral by the Bank and
otherwise in form and substance acceptable to the Bank.
(h) Each Debtor agrees from time to time to deliver to the Bank such
evidence of the existence and identity of such Debtor's Collateral and of
its availability as collateral security pursuant hereto (including,
without limitation, schedules describing all Receivables created or
acquired by such Debtor, copies of customer invoices or the equivalent
and original shipping or delivery receipts for all merchandise and other
goods sold or leased or services rendered, together with such Debtor's
warranty of the genuineness thereof), as the Bank may reasonably request.
(i) Each Debtor will comply in all material respects with the terms
and conditions of any leases, easements, right-of-way agreements or other
agreements covering the premises wherein its Collateral is located and
any orders, ordinances, laws or statutes of any city, state or other
governmental entity, department or agency having jurisdiction with
respect to such premises or the conduct of business thereon.
(j) On failure of any Debtor to perform any of the covenants and
agreements herein contained, the Bank may, at its option but in any event
with notice to the Parent Borrower or such Debtor (which need not
necessarily be prior notice), perform the same and in so doing may expend
such sums as the Bank may reasonably deem advisable in the performance
thereof, including without limitation the payment of any taxes, liens and
encumbrances, expenditures made in defending against any adverse claim
and all other expenditures which the Bank may be compelled to make by
operation of law or which the Bank may make by agreement or otherwise for
the protection of the security hereof. All such sums and amounts so
expended shall be repayable by the Debtors immediately without notice or
demand, shall constitute so much additional Obligations hereby secured
and shall bear interest from the date said amounts are expended at the
rate per annum (computed on the basis of a 360-day year for the actual
number of days elapsed) determined by adding 2% to the rate per annum
from time to time announced by said Harris Trust and Savings Bank as its
prime commercial rate with any change in such rate per annum as so
determined by reason of a change in such prime commercial rate to be and
become effective as of and on the date of such change in said prime
commercial rate (such rate per annum as so determined being hereinafter
referred to as the "Default Rate"). No such performance of any covenant
or agreement by the Bank on behalf of any Debtor and no such advancement
or expenditure therefor, shall relieve any Debtor of any default under
the terms of this Agreement. The Bank, in making any payment hereby
authorized may do so according to any bill, statement or estimate
procured from the appropriate public office or holder of the claim to be
discharged without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax assessment,
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sale, forfeiture, tax lien or title or claim. The Bank, in performing
any act hereunder, shall be the sole judge of whether any Debtor is
required to perform the same under the terms of this Agreement.
(k) Each Debtor warrants that such Debtor has not transacted
business, and does not transact business, under any trade names except as
set forth on Schedule B. Each Debtor agrees that it will not change its
name or transact business under any trade names without first giving the
Bank 30 days' prior written notice of its intent to do so.
(l) Each Debtor agrees to execute and deliver to the Bank such
further agreements and assignments or other instruments and to do all
such other things as the Bank may deem necessary or appropriate to assure
the Bank its security interest hereunder, including such financing
statement or statements or amendments thereof or supplements thereto or
other instruments as the Bank may from time to time require in order to
comply with the Uniform Commercial Code as enacted in the State of
Illinois and any successor statute(s) thereto (the "Code"). Each Debtor
hereby agrees that a carbon, photographic or other reproduction of this
Agreement or any such financing statement is sufficient for filing as a
financing statement by the Bank without notice thereof to any Debtor
wherever the Bank in its sole discretion desires to file the same. In
the event for any reason the law of any other jurisdiction than Illinois
becomes or is applicable to the Collateral or any part thereof, or to any
of the Obligations, each Debtor agrees to execute and deliver all such
instruments and to do all such other things as the Bank in its sole
discretion deems necessary or appropriate to preserve, protect and
enforce the security interests of the Bank under the law of such other
jurisdiction to at least the same extent as such security interests would
be protected under the Code. If any Collateral is in the possession or
control of any of a Debtor's agents or processors and unless the Bank
requests otherwise, such Debtor agrees to notify such agents or
processors in writing of the Bank's security interests therein, and upon
the Bank's request instruct them to hold all such Collateral for the
Bank's account and subject to the Bank's instructions. The Debtors agree
to mark their books and records to reflect the security interests of the
Bank in the Collateral.
3. Special Provisions Re: Receivables. (a) As of the time any Receivable
which is an account receivable becomes subject to the security interests
provided for hereby, each Debtor shall be deemed to have warranted as to each
and all of its Receivables that each such Receivable and all papers and
documents relating thereto are genuine and in all respects what they purport to
be; that each such Receivable is valid and subsisting and if such Receivable is
an account receivable, arises out of and for services theretofore actually
rendered or to be rendered by such Debtor to, the account debtor named therein;
that the amount of the Receivable represented as owing is the correct amount
actually and unconditionally owing, except for normal cash
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discounts on normal trade terms in the ordinary course of business if such
Receivable is an account receivable; that the amount of such Receivable
represented as owing is not disputed, and is not subject to any set-offs,
credits, deductions or counter charges; that no Receivable is evidenced by any
instrument or chattel paper unless such instrument or chattel paper has
theretofore been endorsed by the appropriate Debtor and delivered to the Bank
(except to the extent the Bank specifically requests such Debtor not to do so
with respect to any such instrument or chattel paper); and that no surety bond
was required or given in connection with said Receivable or the contracts or
purchase orders out of which the same arose. Without limiting the foregoing,
if any Receivable arises out of a contract with the United States of America or
any of its departments, agencies or instrumentalities, each Debtor agrees to
notify the Bank and execute whatever instruments are required by the Bank in
order that such Receivable shall be assigned to the Bank and that proper notice
of such assignment shall be given under the Federal Assignment of Claims Act.
(b) Each Debtor shall keep all of its books and records relating to the
Receivables only at its chief executive office described in Section 2(b) hereof
or at the chief executive office of the Parent Borrower.
(c) From time to time, as the Bank may reasonably request of any Debtor,
such Debtor shall provide the Bank with schedules describing all Receivables
created or acquired by such Debtor, provided, however, that the failure of such
Debtor to execute and deliver such schedules shall not affect or limit the
Bank's security interest or other rights in and to any such Receivables.
Together with each schedule, each Debtor shall if reasonably requested by the
Bank, furnish copies of customers' invoices or the equivalent, and original
shipping or delivery receipts, for all merchandise sold, and each Debtor
warrants the genuineness thereof.
4. Collection of Receivables. (a) Unless and until an event of default
hereunder occurs, each Debtor shall make collection of all of its Receivables
and may use the same to carry on its business in accordance with sound business
practice and otherwise subject to the terms hereof.
(b) Whether or not the Bank has exercised any or all of its rights under
other provisions of this Section 4 and upon the occurrence and during the
continuation of any event of default hereunder, in the event the Bank requests
any Debtor to do so:
(i) all instruments and chattel paper at any time constituting part
of the Receivables (including any postdated checks) shall, upon receipt
by such Debtor, be immediately endorsed to and deposited with Bank;
and/or
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(ii) such Debtor shall instruct all account debtors to remit all
payments in respect of Receivables to a lockbox to be maintained at the
main post office, Chicago, Illinois under the sole custody and control of
Bank.
(c) Upon the occurrence and during the continuation of any event of
default hereunder and whether or not the Bank has exercised any or all of its
rights under other provisions of this Section 4, the Bank or its designee may
notify any Debtor's customers or account debtors at any time that Receivables
have been assigned to the Bank or of the Bank's security interest therein and
either in its own name, or such Debtor's or both, demand, collect (including
without limitation through a lockbox analogous to that described in Section
4(b)(ii) hereof), receive, receipt for, sue for, compound and give acquittance
for any or all amounts due or to become due on Receivables, and in the Bank's
discretion file any claim or take any other action or proceeding which the Bank
may deem necessary or appropriate to protect and realize upon the security
interest of the Bank in the Receivables.
(d) Any proceeds of Receivables or other Collateral transmitted to or
otherwise received by the Bank pursuant to any of the provisions of Sections
4(b) or 4(c) hereof shall be handled and administered by the Bank in and
through a remittance account at the Bank and each Debtor acknowledges that the
maintenance of such remittance account by the Bank is solely for the Bank's own
convenience and that such Debtor does not have any right, title or interest in
such remittance account or any amounts at any time standing to the credit
thereof. The Bank may apply all or any part of any proceeds of Receivables or
other Collateral received by it from any source to the payment of the
Obligations (whether or not then due and payable), such applications to be made
in such amounts, in such manner and order and at such intervals as the Bank may
from time to time in its discretion determine, but not less often than once
each week. The Bank need not apply or give credit for any item included in
proceeds of Receivables or other Collateral until the Bank has received final
payment therefor at its office in cash or final solvent credits current in
Chicago, Illinois, acceptable to the Bank as such. However, if the Bank does
give credit for any item prior to receiving final payment therefor and the Bank
fails to receive such final payment or an item is charged back to the Bank for
any reason, the Bank may at its election in either instance charge the amount
of such item back against the remittance account, together with interest
thereon at the Default Rate. Each Debtor shall accompany each transmission of
any proceeds of Receivables or other Collateral to the Bank with a report in
such form as the Bank shall require identifying the particular Receivable or
other Collateral from which the same arises or relates. The Bank, however,
agrees that unless and until default occurs in the payment when due of any of
the Obligations or any other event occurs or condition exists which constitutes
an event of default hereunder or under any indenture or loan or credit
agreement at any time in effect between such Debtor and the Bank or which, with
the lapse of time or the giving of notice, or both, would constitute such an
event of default, the Bank will release proceeds of Collateral from the
remittance account from time to time but not less often
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than once per week. The Debtors hereby jointly and severally indemnify the
Bank from and against all liabilities, damages, losses, actions, claims,
judgments, costs, expenses, charges and reasonable attorney's fees suffered or
incurred by the Bank because of the maintenance of the foregoing arrangements.
The Bank shall have no liability or responsibility to any Debtor for accepting
any check, draft or other order for payment of money bearing the legend
"payment in full" or words of similar import or any other restrictive legend or
endorsement whatsoever or be responsible for determining the correctness of any
remittance.
5. Power of Attorney. In addition to any other powers of attorney
contained herein, each Debtor appoints the Bank, its nominee, or any other
person whom the Bank may designate as such Debtor's attorney in fact, with full
power to endorse such Debtor's names on any checks, notes, acceptances, money
orders, drafts or other forms of payment or security that may come into the
Bank's possession, to sign such Debtor's names on any invoice or bill of lading
relating to any Receivables, on drafts against customers, on schedules and
assignments of Receivables, on notices of assignment, on public records, on
verifications of accounts and on notices to customers, to send requests for
verification of Receivables to customers or account debtors, and to do all
things necessary to carry out this Agreement and after an event of default has
occurred hereunder, to notify the post office authorities to change the address
for delivery of such Debtor's mail to an address designated by the Bank and to
receive, open and dispose of all mail addressed to such Debtor. Each Debtor
hereby ratifies and approves all acts of any such attorney and agree that
neither the Bank nor any such attorney will be liable for any acts or omissions
nor for any error of judgment or mistake of fact or law other than their own
gross negligence or willful misconduct. The foregoing power of attorney, being
coupled with an interest, is irrevocable until the Obligations have been fully
satisfied and each commitment of the Bank to extend credit to a Borrower or any
of them has expired or terminated. The Bank may file one or more financing
statements disclosing its security interest in any or all of the Collateral
without any Debtor's signature appearing thereon. Each Debtor also hereby
grants the Bank a power of attorney to execute any such financing statement, or
amendments and supplements to financing statements, on behalf of such Debtor
without notice thereof to any Debtor, which power of attorney is coupled with
an interest and is irrevocable until the Obligations have been fully satisfied.
6. Defaults and Remedies. (a) The occurrence of any one or more of the
following events shall constitute an "event of default" hereunder:
(i) default in the payment when due (whether by lapse of time,
acceleration or otherwise) of all or any part of the principal of the
Obligations or any part thereof; or
(ii) default for five (5) business days or more on the payment when
due of the remainder of the Obligations (including, without limitation,
interest or any fee or other amount comprising such remainder of the
Obligations); or
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(iii) any representation or warranty made by the Debtors or any of
them herein, or in any statement or certificate furnished by it pursuant
hereto, or in connection with this Agreement, shall be false in any
material respect as of the date of the issuance or making thereof; or
(iv) default in the observance or performance of any other provision
hereof which is not remedied within thirty (30) days after written notice
thereof to the appropriate Debtor by the Bank; or
(v) the occurrence of any event or the existence of any condition
which is specified as an Event of Default under the Credit Agreement,
whether or not the same is in force.
The term "event of default" as used herein shall mean the events of default
specified in this Section 6.
(b) Upon the occurrence of any event of default hereunder, the Bank shall
have, in addition to all other rights provided herein or by law, the rights and
remedies of a secured party under the Code (regardless of whether the Code is
the law of the jurisdiction where the rights or remedies are asserted and
regardless of whether the Code applies to the affected Collateral), and further
the Bank may, without demand and without advertisement or notice, all of which
each Debtor hereby waives, at any time or times, sell and deliver any or all
Collateral held by or for it at public or private sale, for cash, upon credit
or otherwise, at such prices and upon such terms as the Bank deems advisable,
in its sole discretion. In addition to all other sums due the Bank hereunder,
the Debtors jointly and severally agree to pay to the Bank all costs and
expenses incurred by the Bank, including a reasonable allowance for attorneys'
fees and court costs, in obtaining, liquidating or enforcing payment of
Collateral or Obligations or in the prosecution or defense of any action or
proceeding by or against the Bank or the Debtors or any of them concerning any
matter arising out of or connected with this Agreement or the Collateral or
Obligations, including without limitation any of the foregoing arising in,
arising under or related to a case under the Bankruptcy Code. Any requirement
of reasonable notice shall be met if such notice is personally served on or
mailed, postage prepaid, to the Debtors in accordance with Section 10(b) hereof
at least 10 days before the time of sale or other event giving rise to the
requirement of such notice; however, no notification need be given to a Debtor
if that Debtor has signed, after an event of default hereunder has occurred, a
statement renouncing any right to notification of sale or other intended
disposition. The Bank shall not be obligated to make any sale or other
disposition of the Collateral regardless of notice having been given. The Bank
may be the purchaser at any such sale. Each Debtor hereby waives all of its
rights of redemption from any such sale. Subject to the provisions of
applicable law, the Bank may postpone or cause the postponement of the sale of
all or any portion of the Collateral by announcement at the time and
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place of such sale, and such sale may, without further notice, be made at the
time and place to which the sale was postponed or the Bank may further postpone
such sale by announcement made at such time and place.
(c) Without in any way limiting the foregoing, the Bank shall after an
event of default has occurred hereunder have the right, in addition to all
other rights provided herein or by law, to take physical possession of any and
all of the Collateral and anything found therein, the right for that purpose to
enter without legal process any premises where the Collateral may be found
(provided such entry be done lawfully), and the right to maintain such
possession on each Debtor's premises (each Debtor hereby agreeing to lease
warehouses without cost or expense to the Bank or its designee if the Bank so
requests) or to remove its Collateral or any part thereof to such other places
as the Bank may desire. Each Debtor shall, upon the Bank's demand, assemble
its Collateral and make it available to the Bank at a place designated by the
Bank. If the Bank exercises its right to take possession of the Collateral,
each Debtor shall also at its expense perform any and all other steps requested
by the Bank to preserve and protect the security interest hereby granted in the
Collateral, such as placing and maintaining signs indicating the security
interest of the Bank, appointing overseers for the Collateral.
(d) The proceeds and avails of the Collateral at any time received by the
Bank after an event of default hereunder shall have occurred shall, when
received by the Bank in cash or its equivalent, be applied by the Bank as
follows:
(i) First, to the payment and satisfaction of all sums paid and
costs and expenses incurred by the Bank hereunder or otherwise in
connection herewith, including such monies paid or incurred in connection
with protecting, preserving or realizing upon the Collateral or enforcing
any of the terms hereof, including reasonable attorneys' fees and court
costs, together with any interest thereon (but without preference or
priority of principal over interest or of interest over principal), to
the extent the Bank is not reimbursed therefor by the Debtors; and
(ii) Second, to the payment and satisfaction of the remaining
Obligations, whether or not then due (in whatever order the Bank elects),
both for interest and principal.
The Debtors shall remain jointly and severally liable to the Bank for any
deficiency. Any surplus remaining after the full payment and satisfaction of
the foregoing may be returned to Debtors or to whomsoever a court of competent
jurisdiction shall determine to be entitled thereto.
(e) Failure by the Bank to exercise any right, remedy or option under this
Agreement or any other agreement between the Debtors or any of them and the
Bank or provided by law, or
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delay by the Bank in exercising the same, shall not operate as a waiver; no
waiver shall be effective unless it is in writing, signed by the Bank and then
only to the extent specifically stated. Neither the Bank, nor any party acting
as attorney for the Bank, shall be liable for any acts or omissions or for any
error of judgment or mistake of fact or law other than their gross negligence
or willful misconduct. The rights and remedies of the Bank under this
Agreement shall be cumulative and not exclusive of any other right or remedy
which the Bank may have.
7. Continuing Agreement. This Agreement shall be a continuing agreement
in every respect and shall remain in full force and effect until all of the
Obligations, both for principal and interest, have been fully paid and
satisfied and each commitment of the Bank to extend any credit to a Borrower
shall have terminated.
8. Primary Security; Obligations Absolute. The lien and security herein
created and provided for stand as direct and primary security for the
Obligations. No application of any sums received by the Bank in respect of the
Collateral or any disposition thereof to the reduction of the Obligations or
any portion thereof shall in any manner entitle any Debtor to any right, title
or interest in or to the Obligations or any collateral security therefor,
whether by subrogation or otherwise, unless and until all Obligations have been
fully paid and satisfied and each commitment of the Bank to extend credit to a
Borrower shall have expired. Each Debtor acknowledges and agrees that the lien
and security hereby created and provided for are absolute and unconditional and
shall not in any manner be affected or impaired by any acts or omissions
whatsoever of the Bank or any other holder of any of the Obligations, and
without limiting the generality of the foregoing, the lien and security hereof
shall not be impaired by any acceptance by the Bank or any holder of any of the
Obligations of any other security for or guarantors upon any of the Obligations
or by any failure, neglect or omission on the part of the Bank or any other
holder of any of the Obligations to realize upon or protect any of the
Obligations or any collateral security therefor. The lien and security hereof
shall not in any manner be impaired or affected by (and the Bank, without
notice to anyone, is hereby authorized to make from time to time) any sale,
pledge, surrender, compromise, settlement, release, renewal, extension,
indulgence, alteration, substitution, exchange, change in, modification or
disposition of any of the Obligations, or of any collateral security therefor,
or of any guaranty thereof or of any obligor thereon. The Bank may at its
discretion at any time grant credit to any one or more of the Borrowers without
notice to any Debtor in such amounts and on such terms as the Bank may elect
(all of such to constitute additional Obligations) without in any manner
impairing the lien and security hereby created and provided for. No release,
compromise or discharge of any Debtor hereunder or with respect to any of the
Obligations or any Collateral provided by such Debtor shall release or
discharge, or impair the agreements of, any other Debtor hereunder or in any
manner impair the liens and security interests granted by any other Debtor
hereunder; and the Bank may proceed against the Collateral provided hereunder
by any one or more of the Debtors without proceeding against the other Debtors,
their respective properties or any other security or
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guaranty whatsoever. Without limiting the generality of the foregoing, the
Bank may at any time or from time to time release any Debtor from its
obligations hereunder or under any guaranty of the Obligations or release any
Collateral or effect any compromise with any Debtor, and no such release or
compromise shall in any manner impair or otherwise effect the liens granted by,
or the obligations of, the other Debtors hereunder. In order to foreclose or
otherwise realize hereon and to exercise the rights granted the Bank hereunder
and under applicable law, there shall be no obligation on the part of the Bank
or any other holder of any of the Obligations at any time to first resort for
payment to the Borrowers or any other obligor on any of the Obligations or to
any guaranty of the Obligations or any portion thereof or to resort to any
other collateral security, property, liens or any other rights or remedies
whatsoever, and the Bank shall have the right to enforce this instrument
irrespective of whether or not other proceedings or steps are pending seeking
resort to or realization upon or from any of the foregoing.
9. Personal Jurisdiction. (a) Exclusive Jurisdiction. To the extent
permissible under the laws of any jurisdiction located outside of the United
States of America and except as provided in subsection (b), the Bank and the
Debtors agree that all disputes among them arising out of, connected with,
related to, or incidental to the relationship established among them in
connection with this Agreement, and whether arising in contract, tort, equity,
or otherwise, shall be resolved only by state or federal courts located in Cook
County, Illinois, United States of America, but each of the Bank and the
Debtors acknowledge that any appeals from those courts may have to be heard by
a court located outside of Cook County, Illinois, United States of America.
Each of the Debtors waives in all disputes any objection that such Debtor may
have to the location of the court considering the dispute.
(b) Other Jurisdictions. Each of the Debtors agrees that the Bank shall
have the right to proceed against each of the Debtors or their Collateral in a
court in any location to enable the Bank to realize on the Collateral, or to
enforce a judgment or other court order entered in favor of the Bank. Each of
the Debtors agrees that it will not assert any permissive counterclaims in any
proceeding brought in accordance with this provision by the Bank to realize on
Collateral, or to enforce a judgment or other court order in favor of the Bank.
Each of the Debtors waives any objection that it may have to the location of
the court in which the Bank has commenced a proceeding described in this
Subsection.
10. Miscellaneous. (a) This Agreement cannot be changed or terminated
orally. All of the rights, privileges, remedies and options given to the Bank
hereunder shall inure to the benefit of its successors and assigns, and all the
terms, conditions, promises, covenants, representations and warranties of and
in this Agreement shall bind each Debtor and its legal representatives,
successors and assigns, provided that no Debtor may assign its rights or
delegate its duties hereunder without the Bank's prior written consent. Each
Debtor hereby releases the
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Bank from any liability for any act or omission relating to its Collateral or
this Agreement, except the Bank's gross negligence or willful misconduct.
(b) All communications provided for herein shall be in writing (including
as such, communications by telecopy), except as otherwise specifically provided
for hereinabove, and shall be deemed to have been given or made when served
personally or when deposited in the United States mail addressed if to any
Debtor at the Parent Borrower's chief executive office at 555 Briarwood Circle,
Ann Arbor, Michigan 48108, or if to the Bank, at its respective address set
forth opposite its signature to the Credit Agreement, or at such other address
as shall be designated by any party hereto in a written notice given to each
party pursuant to this Section 10(b).
(c) The term "Credit Agreement" as used herein shall mean that certain
Credit Agreement dated as of September 23, 1997 by and between the Parent
Borrower, Comshare Limited, a private limited company organized under the laws
of England and Wales, and the Bank as the same may be amended or modified from
time to time, and any Credit Agreement between the Borrowers and the Bank which
replaces the foregoing Credit Agreement. All capitalized terms used herein
without definition shall have the same meanings herein as such terms have in
the Credit Agreement.
(d) Notwithstanding anything herein to the contrary, the right of recovery
hereunder against any Debtor with respect to the Obligations shall be limited
to $1.00 less than the amount of the lowest claim hereunder against such Debtor
which would render this Agreement void or voidable under applicable law.
(e) In the event that any provision hereof shall be deemed to be invalid
by reason of the operation of any law or by reason of the interpretation placed
thereon by any court, this Agreement shall be construed as not containing such
provision, but only as to such locations where such law or interpretation is
operative, and the invalidity of such provision shall not affect the validity
of any remaining provision hereof, and any and all other provisions hereof
which are otherwise lawful and valid shall remain in full force and effect.
Without limiting the generality of the foregoing, in the event that this
Agreement shall be deemed to be invalid or otherwise unenforceable with respect
to any Debtor, such invalidity or unenforceability shall not affect the
validity of this Agreement with respect to the other Debtors.
(f) To the extent permissible under the laws of any jurisdiction located
outside of the United States of America, this Agreement shall be deemed to have
been made in the State of Illinois and shall be governed by the internal laws
of the State of Illinois (without regard to the principles of conflicts of
law). All terms which are used in this Agreement which are defined in the Code
shall have the same meanings herein as said terms do in the Code unless this
-14-
<PAGE> 107
Agreement shall otherwise specifically provide. The headings in this
instrument are for convenience of reference only and shall not limit or
otherwise affect the meaning of any provision hereof.
(g) This Agreement may be executed in any number of counterparts, each
constituting an original, but all together one and the same instrument. Each
Debtor acknowledges that this Agreement is and shall be effective upon its
execution and delivery by such Debtor to the Bank, and it shall not be
necessary for the Bank to execute this Agreement or any other acceptance hereof
or otherwise to signify or express its acceptance hereof.
(h) In the event the Bank shall at any time in its discretion permit a
substitution of Debtors hereunder or a party shall wish to become a Debtor
hereunder, such substituted or additional Debtor shall, upon executing an
agreement in the form attached hereto as Schedule C, become a party hereto and
be bound by all the terms and conditions hereof to the same extent as though
such Debtor had originally executed this Agreement and in the case of a
substitution, in lieu of the Debtor being replaced. No such substitution shall
be effective absent the written consent of Bank nor shall it in any manner
affect the obligations of the other Debtors hereunder.
-15-
<PAGE> 108
IN WITNESS WHEREOF, the Debtors have caused this Agreement to be duly
executed as of this 23rd day of September, 1997.
COMSHARE, INCORPORATED
COMSHARE (U.S.), INC.
COMSHARE INTERNATIONAL B.V.
COMSHARE LIMITED
CS IBERIA SL
CS SRL
COMSHARE HOLDINGS COMPANY
COMSHARE LIMITED
COMSHARE INTERNATIONAL LIMITED
COMSHARE GMBH
COMSHARE S.A.
COMSHARE SOUTH PACIFIC PTY LTD.
By
Name:
--------------------------
Title:
-------------------------
-16-
<PAGE> 109
SCHEDULE A
<TABLE>
<CAPTION>
COLUMN 1 COLUMN 2 COLUMN 3
NAME OF DEBTOR CHIEF
(AND FEDERAL TAX EXECUTIVE ADDITIONAL PLACES
I.D. NUMBER IF ANY) OFFICE OF BUSINESS
<S> <C> <C>
Comshare, Incorporated 555 Briarwood Circle None
Tax ID #38-1804887 Ann Arbor, Michigan 48108
Comshare (U.S.), Inc. 555 Briarwood Circle 5901-B Peachtree Dunwoody Road
Tax ID #38-3295148 Ann Arbor, Michigan 48108 Atlanta, Georgia
One New England Executive Park
Burlington, Massachussetts
8755 West Higgins Road
Suite 800
Chicago, Illinois
4101 McEwen, Suite 540
Dallas, Texas
12424 Wilshire Blvd., Suite 870
Los Angeles, California
1114 Avenue of the Americas
New York, New York
3 Bala Plaza East, Suite 411
Bala Cynwyd, Pennsylvania
500 108th Avenue NE
800 Koll Center
Bellevue, Washington
27 Princeton Road, Suite 350
Watertown, Connecticut
3505 Silverside Road, Suite 202
Wilmington, Delaware
500 E. Eisenhower
Ann Arbor, Michigan
Comshare International B.V. None
</TABLE>
<PAGE> 110
<TABLE>
<S> <C> <C>
Comshare Limited 180 Attwell Drive, Suite #300 None
Etobicoke
Ontario, Canada M9W 6H4
CS Iberia sl None
CS srl None
Comshare Holdings Company 22 Chelsea Manor Street None
London SW3 5RL, England
United Kingdom
Comshare Limited 22 Chelsea Manor Street None
London SW3 5RL, England
United Kingdom
Comshare International Limited 22 Chelsea Manor Street None
London SW3 5RL, England
United Kingdom
Comshare GmbH None
Comshare S.A. None
Comshare South Pacific Pty Ltd. None
</TABLE>
-18-
<PAGE> 111
SCHEDULE B
TRADENAMES
DEBTOR TRADENAMES
NONE
<PAGE> 112
SCHEDULE C
ASSUMPTION AND SUPPLEMENTAL SECURITY AGREEMENT
THIS AGREEMENT made as of this _____ day of _________, 199___ by and
between [NEW GUARANTOR], a __________ corporation (the "New Debtor"), and
Harris Trust and Savings Bank, an Illinois banking corporation (the "Bank");
WITNESSETH THAT:
WHEREAS, certain parties have executed and delivered to the Bank that
certain Security Agreement dated as of September 23, 1997 or supplements
thereto (such Security Agreement, as the same may from time to time be modified
or amended, including supplements thereto which add additional parties as
Debtors thereunder, being hereinafter referred to as the "Security Agreement")
pursuant to which such parties (the "Existing Debtors") have granted to the
Bank a security interest in such Existing Debtor's accounts, general
intangibles and certain other properties, rights, interests and privileges to
secure, among other things, any and all indebtedness, obligations and
liabilities of Comshare, Incorporated (the "Company"), a Michigan corporation,
and its subsidiaries to the Bank; and
WHEREAS, the Company and one or more of its subsidiaries (the Company and
each such subsidiary being hereafter referred to collectively as the
"Borrowers" and individually as a "Borrower") have obtained and may from time
to time hereafter obtain credit and other financial accommodations from the
Bank and have incurred and may from time to time hereafter incur liabilities to
the Bank; and
WHEREAS, each Debtor, and especially the Company, provides each of the
other Debtors with substantial financial, management, administrative and
technical support; and
WHEREAS, the interdependent nature of the businesses and hence of each of
the Debtors is such that the viability of each Debtor is dependent upon the
continued success of the other Debtors and, upon the continuation of such
Debtor's business relationships with the other Debtors, and the continuation
thereof necessitates each Borrower's access to credit and other financial
accommodations from the Bank, which the Bank will only make available to a
Borrower on the condition, among others, that the other Debtors pledge their
respective assets to secure all indebtedness, obligations and liabilities of
each Borrower from time to time owing to the Bank; and
WHEREAS, each Debtor will directly and substantially benefit from credit
and other financial accommodations extended and to be extended by the Bank to
the Borrowers;
<PAGE> 113
NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of advances made
or to be made, or credit accommodations given or to be given, to the Company by
the Bank from time to time, the New Debtor hereby agrees as follows:
1. The New Debtor acknowledges and agrees that it shall become a "Debtor"
party to the Security Agreement effective upon the date the New Debtor's
execution of this Agreement and the delivery of this Agreement to the Bank, and
that upon such execution and delivery, all references in the Security Agreement
to the terms "Debtor" or "Debtors" shall be deemed to include the New Debtor.
Without limiting the generality of the foregoing, the New Debtor hereby repeats
and reaffirms all grants (including the grant of a security interest),
covenants, agreements, representations and warranties contained in the Security
Agreement as amended hereby, each and all of which are and shall remain
applicable to the Collateral from time to time owned by the New Debtor or in
which the New Debtor from time to time has any rights. Without limiting the
foregoing, in order to secure payment of the Obligations, the New Debtor does
hereby grant to the Bank, and hereby agrees that the Bank has and shall
continue to have a continuing security interest in, among other things, all of
the New Debtor's Receivables, Customer Contracts and all of the other
Collateral described in the granting clauses (a), (b), (c), (d) and (e) of
Section 1 of the Security Agreement, each and all of such granting clauses
being incorporated herein by reference with the same force and effect as if set
forth in their entirety except that all references in such clauses to the
Existing Debtors or any of them shall be deemed references to the New Debtor.
Nothing contained herein shall in any manner impair the priority of the liens
and security interests heretofore granted in favor of the Bank under the
Security Agreement.
2. The New Debtor hereby acknowledges and agrees that (i) the Obligations
are secured by all of the Collateral according to, and otherwise on and subject
to, the terms and conditions of the Security Agreement to the same extent and
with the same force and effect as if the New Debtor had originally been one of
the Existing Debtors under the Security Agreement and had originally executed
the same as such an Existing Debtor and (ii) the information pertaining to the
New Debtor stated on Annex A hereto shall be deemed inserted in the appropriate
locations on Schedule A of the Security Agreement.
3. All capitalized terms used in this Agreement without definition shall
have the same meaning herein as such terms have in the Security Agreement,
except that any reference to the term "Debtor" or "Debtors" and any provision
of the Security Agreement providing meaning to such term shall be deemed a
reference to the Existing Debtors and the New Debtor. Except as specifically
modified hereby, all of the terms and conditions of the Security Agreement
shall stand and remain unchanged and in full force and effect.
-21-
<PAGE> 114
4. The New Debtor agrees to execute and deliver such further instruments
and documents and do such further acts and things as the Bank may deem
necessary or proper to carry out more effectively the purposes of this
Agreement.
5. No reference to this Agreement need be made in the Security Agreement
or in any other document or instrument making reference to the Security
Agreement, any reference to the Security Agreement in any of such to be deemed
a reference to the Security Agreement as modified hereby.
6. To the extent permissible under the laws of any jurisdiction located
outside of the United States of America, this Agreement shall be governed by
and construed in accordance with the internal laws of the State of Illinois
(without regard to principles of conflicts of law) in which state it shall
performed by the New Debtor.
[NEW DEBTOR]
By
Its
-------------------------
-22-
<PAGE> 115
ANNEX A
<TABLE>
<CAPTION>
COLUMN 1 COLUMN 2 COLUMN 3
<S> <C> <C>
NAME OF DEBTOR CHIEF
(AND FEDERAL TAX EXECUTIVE ADDITIONAL PLACES
I.D. NUMBER IF ANY) OFFICE OF BUSINESS
________________________ __________________________ _______________________
</TABLE>
-23-
<PAGE> 116
GUARANTY AGREEMENT
(from Comshare S.A.)
This Guaranty Agreement (the "guaranty") is made and given as of this
23rd day of September, 1997 by Comshare S.A., a limited liability company
organized under the laws of France (hereinafter referred to as the
"undersigned") in favor of Harris Trust and Savings Bank, an Illinois banking
corporation (hereinafter referred to as the "Bank").
RECITALS
A. The undersigned is a subsidiary of Comshare, Incorporated, a
corporation organized under the laws of the State of Michigan in the United
States of America (the "Parent Debtor"). The Parent Debtor and one or more of
its subsidiaries may from time to time obtain credit accommodations and
facilities from the Bank (the Parent Debtor and each such subsidiary hereinafter
designated collectively as the "Debtors" and individually as a"Debtor"). Each
Debtor, the undersigned and the other subsidiaries of the Parent Debtor comprise
an integrated group of companies to which the Parent Debtor provides financial,
management, administrative and technical support. The undersigned receives
substantial direct benefit from such services. In addition, the undersigned
benefits indirectly from belonging to this integrated group of companies, which
in the aggregate possess substantially more assets and resources than are
possessed by the undersigned standing alone. The interdependent nature of the
businesses of the Parent Debtor and its subsidiaries (including the undersigned)
is such that the viability of each subsidiary (including the undersigned) is
dependent upon the continued success of the Parent Debtor and its subsidiaries
and upon the continuation of the Parent Debtor's business relationships with its
subsidiaries (including the undersigned).
B. The undersigned believes that these benefits constitute fair and
adequate compensation from the Debtors to the undersigned for this guaranty and
that the obligations of the undersigned under this guaranty are proportional to
its financial capacities.
C. These direct and indirect benefits to the undersigned will continue
only if each Debtor continues to have access to credit accommodations and
facilities to be afforded to it by the Bank, which the Bank will only make
available on the condition, among others, that the undersigned guaranty the
indebtedness, obligations and liabilities of each Debtor from time to time owing
to the Bank.
NOW, THEREFORE, FOR VALUE RECEIVED and in consideration of advances
made or to be made, or credit given or to be given, or other financial
accommodation afforded or to be afforded to the Debtors by the Bank from time to
time, the undersigned hereby guarantees the full and prompt payment to the Bank
at maturity and at all times thereafter of any and all indebtedness,
<PAGE> 117
obligations and liabilities of every kind and nature of each Debtor to the Bank,
howsoever evidenced, whether now existing or hereafter created or arising,
whether direct or indirect, absolute or contingent, joint or several, or joint
and several and howsoever owned, held or acquired, whether through discount,
overdraft, purchase, direct loan or as collateral, or otherwise (hereinafter all
such indebtedness, obligations and liabilities being collectively referred to as
the "Indebtedness"); and the undersigned further agrees to pay all expenses,
legal and/or otherwise (including court costs and reasonable attorneys' fees),
paid or incurred by the Bank in endeavoring to collect the Indebtedness, or any
part thereof, and in enforcing this guaranty in any litigation, bankruptcy or
insolvency proceeding or otherwise.
NOTWITHSTANDING ANYTHING IN THIS GUARANTY TO THE CONTRARY:
(1) The Bank's right of recovery against the undersigned
under this guaranty (excluding any such recovery for Collection Costs)
shall not exceed the greater of:
(x) U.S. $__________; or
(y) the sum (determined as of the date the Bank
makes demand on this guaranty) of (i) the principal amount
then outstanding on loans and advances (including trade
credit) made after the date hereof by the Debtors or any
subsidiary of the Parent Debtor directly or indirectly to the
undersigned, whether or not funded out of the proceeds of
credit extended by the Bank, and (ii) the amount, if any, by
which capital contributions made after the date hereof by the
Debtors or any subsidiary of the Parent Debtor directly or
indirectly to the undersigned exceeds the amount of dividends
paid after the date hereof by the undersigned to the Debtors
or any subsidiary of the Parent Debtor.
The undersignedOs liability hereunder for Collection Costs is not
limited by the immediately preceding sentence.
(2) This Guaranty shall become effective on, and shall have
no force or effect until SeptemberE23, 1997 unless the undersigned
shall in its discretion agree otherwise in a writing sent to the Bank
for that purpose.
This guaranty is a continuing, absolute and unconditional guaranty, and
shall remain in full force and effect until written notice of its discontinuance
shall be actually received by the Bank, and also until any and all of the
Indebtedness created, existing or committed to before receipt of such notice
shall be fully paid. The liability of the undersigned hereunder shall in no way
be affected or impaired by (and the Bank is hereby expressly authorized to make
from time to time, without notice to anyone) any sale, pledge, surrender,
compromise, settlement, release,
-2-
<PAGE> 118
renewal, extension, indulgence, alteration, substitution, exchange, change in,
modification or other disposition of any of the Indebtedness, either express or
implied, or of any contract or contracts evidencing any thereof, or of any
security or collateral therefor. The liability of the undersigned hereunder
shall also in no way be affected or impaired by any acceptance by the Bank of
any security for or other guarantors upon any of the Indebtedness, or by any
failure, neglect or omission on the part of the Bank to realize upon or protect
any of the Indebtedness, or any collateral or security or other guaranty
therefor, or to exercise any lien upon or right of appropriation of any moneys,
credits or property of any Debtor possessed by the Bank toward the liquidation
of the Indebtedness, or by any application of payments or credits thereon. The
Bank shall have the exclusive right to determine how, when and what application
of payments and credits, if any, shall be made on the Indebtedness, or any part
thereof. In order to hold the undersigned liable hereunder, there shall be no
obligation on the part of the Bank, at any time, to resort for payment to the
Debtors or to any other guaranty, or to any other person or corporation, their
properties or estate, or resort to any collateral, security, property, liens or
other rights or remedies whatsoever and the Bank shall have the right to enforce
this guaranty irrespective of whether or not other proceedings or steps are
pending seeking resort to or realization upon or from any of the foregoing.
All diligence in collection or protection, and all presentment, demand,
protest and/or notice, as to any and everyone, whether or not any Debtor or the
undersigned or others, of dishonor and of default and of non-payment and of the
creation and existence of any and all of the Indebtedness, and of any security
and collateral therefor, and of the acceptance of this guaranty, and of any and
all extensions of credit and indulgence, are expressly waived.
The undersigned will not exercise or enforce any right of exoneration,
contribution, reimbursement, recourse or subrogation available to the
undersigned against any person liable for payment of the Indebtedness, or as to
any security therefor, unless and until the full amount owing to the Bank on the
Indebtedness has been paid and each commitment of the Bank to extend credit to
any Debtor shall have terminated, and the payment by the undersigned of any
amount pursuant to this guaranty shall not in any wise entitle the undersigned
to any right, title or interest (whether by way of subrogation or otherwise) in
and to any of the Indebtedness or any proceeds thereof or any security therefor
unless and until the full amount owing to the Bank on the Indebtedness has been
paid and each commitment of the Bank to extend credit to any Debtor shall have
terminated.
In the case of the dissolution, liquidation, or insolvency (howsoever
evidenced) of, or the institution of bankruptcy or receivership proceedings
against any Debtor or the undersigned, all of the Indebtedness then existing
shall, at the option of the Bank, immediately become due and accrued and payable
from the undersigned. All dividends or other payments received from any Debtor,
or on account of any Debtor from whatsoever source, shall be taken and applied
as
-3-
<PAGE> 119
payment in gross, and this guaranty shall apply to and secure any ultimate
balance that shall remain owing to the Bank.
The Bank may, without any notice whatsoever to anyone, sell, assign, or
transfer all of the Indebtedness, or any part thereof, or grant participations
therein, and in that event each and every immediate and successive assignee,
transferee, or holder of or participant in all or any part of the Indebtedness,
shall have the right to enforce this guaranty, by suit or otherwise, for the
benefit of such assignee, transferee, holder or participant, as fully as if such
assignee, transferee, holder or participant were herein by name specifically
given such rights, powers and benefits; but the Bank shall have an unimpaired
right to enforce this guaranty for the benefit of the Bank or any such
participant, as to such of the Indebtedness that it has not sold, assigned or
transferred.
If any payment applied by the Bank to the Indebtedness is thereafter
set aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
any Debtor or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this guaranty be deemed to have continued in
existence, notwithstanding such application, and this guaranty shall be
enforceable as to such of the Indebtedness as fully as if such application had
never been made.
This guaranty shall be governed by and construed according to the laws
of the State of Illinois, in which State it shall be performed by the
undersigned. All payments to be made by the undersigned hereunder shall be made
in the same currency and funds in which the Indebtedness of the relevant Debtor
is payable at the principal Chicago office of Harris Trust and Savings Bank at
111 West Monroe Street, Chicago, Illinois 60690 (or at such other place for the
account of the Bank as it may from time to time specify to the undersigned) in
immediately available and freely transferable funds at the place of payment, all
such payments to be paid without setoff, counterclaim or reduction and without
deduction for, and free from, any and all present or future taxes, levies,
imposts, duties, fees, charges, deductions, withholding or liabilities with
respect thereto or any restrictions or conditions of any nature. If the
undersigned is required by law to make any deduction or withholding on account
of any tax or other withholding or deduction from any sum payable by the
undersigned hereunder, the undersigned shall pay any such tax or other
withholding or deduction and shall pay such additional amount necessary to
ensure that, after making any payment, deduction or withholding, the Bank shall
receive and retain (free of any liability in respect of any payment, deduction
or withholding) a net sum equal to what it would have received and so retained
hereunder had no such deduction, withholding or payment been required to have
been made.
The payment by the undersigned of any amount or amounts due the Bank
hereunder shall be made in the same currency (the "relevant currency") and funds
in which the underlying Indebtedness of any Debtor are payable. To the fullest
extent permitted by law, the obligation of
-4-
<PAGE> 120
the undersigned in respect of any amount due in the relevant currency under this
guaranty shall, notwithstanding any payment in any other currency (whether
pursuant to a judgment or otherwise), be discharged only to the extent of the
amount in the relevant currency that the Bank may, in accordance with normal
banking procedures, purchase with the sum paid in such other currency (after any
premium and costs of exchange) on the business day immediately following the day
on which the Bank receives such payment. If the amount in the relevant currency
that may be so purchased for any reason falls short of the amount originally
due, the undersigned shall pay such additional amounts, in the relevant
currency, as may be necessary to compensate for the shortfall. Any obligations
of the undersigned not discharged by such payment shall, to the fullest extent
permitted by applicable law, be due as a separate and independent obligation
and, until discharged as provided herein, shall continue in full force and
effect.
The undersigned waives any and all defenses, claims and discharges of
the Debtors, or any other obligor, pertaining to the Indebtedness, except the
defense of discharge by payment in full. Without limiting the generality of the
foregoing, the undersigned will not assert, plead or enforce against the Bank
any defense of waiver, release, discharge in bankruptcy, statute of limitations,
res judicata, statute of frauds, anti-deficiency statute, fraud, incapacity,
minority, usury, illegality or unenforceability which may be available to any
Debtor or any other person or entity liable in respect of any of the
Indebtedness, or any setoff available against the Bank to any Debtor or any such
other person or entity, whether or not on account of a related transaction. The
undersigned agrees that the undersigned shall be and remain liable for any
deficiency remaining after foreclosure of any mortgage or security interest
securing the Indebtedness, whether or not the liability of the Debtors or any
other obligor for such deficiency is discharged pursuant to statute or judicial
decision.
The undersigned hereby irrevocably submits to the non-exclusive
jurisdiction of any State of Illinois court or any federal court located in
Chicago, Illinois for the adjudication of any matter arising out of or relating
to this guaranty and consents to the service of process by registered or
certified mail out of any such court or by service of process on the Parent
Debtor (now at 555 Briarwood Circle, Ann Arbor, Michigan 48108) which the
undersigned hereby irrevocably appoints as its agent to receive, for it and on
its behalf, service of process in any action or proceeding in Illinois. Such
service shall be deemed completed on delivery to such process agent (whether or
not it is forwarded to and received by the undersigned) provided that notice of
such service of process is given by the Bank to the undersigned. If, for any
reason, such process agent ceases to be able to act as such or no longer has an
address in Illinois, the undersigned irrevocably agrees to appoint a substitute
process agent acceptable to the Bank and to deliver to the Bank a copy of the
new agent's acceptance of that appointment within 30 days. Nothing contained
herein shall affect the right of the Bank to serve legal process in any other
manner or to bring any proceeding hereunder in any jurisdiction where the
undersigned may be amenable to suit. The undersigned hereby waives any objection
to any action or proceeding in
-5-
<PAGE> 121
any Illinois court or federal court located in Chicago, Illinois on the grounds
of venue or any claim that any State of Illinois court or federal court located
in Chicago, Illinois is an inconvenient forum.
Any invalidity or unenforceability of any provision or application of
this guaranty shall not affect other lawful provisions and applications hereof,
and to this end the provisions of this guaranty are declared to be severable.
This guaranty may not be waived, amended, released or otherwise changed except
by a writing signed by the Bank.
All notices or other communications given hereunder by the Bank to the
undersigned shall be addressed to the undersigned at its address below or to
such other address as the undersigned shall designate by notice in writing to
the Bank. Any such notice or other communication shall be effective only upon
receipt thereof by the undersigned.
This guaranty and every part thereof shall be binding upon the
undersigned, and upon the heirs, legal representatives, successors and assigns
of the undersigned, and shall inure to the benefit of the Bank, its successors,
legal representatives and assigns. The undersigned waives notice of the Bank's
acceptance hereof.
-6-
<PAGE> 122
SIGNED AND DELIVERED by the undersigned, this 23rd day of September,
1997. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS GUARANTY
AS OF THE TIME OF EXECUTION.
COMSHARE S.A.
(SEAL)
By_________________________________
Name:__________________________
Title:_________________________
ADDRESS:
_________________________________
_________________________________
_________________________________
-7-
<PAGE> 123
GUARANTY AGREEMENT
(from Comshare GmbH)
This Guaranty Agreement (the "guaranty") is made and given as of this 23rd
day of September, 1997 by Comshare GmbH, a limited liability company organized
under the laws of the Federal Republic of Germany (hereinafter referred to as
the "undersigned") in favor of Harris Trust and Savings Bank, an Illinois
banking corporation (hereinafter referred to as the "Bank").
RECITALS
A. The undersigned is a subsidiary of Comshare, Incorporated, a
corporation organized under the laws of the State of Michigan in the United
States of America (the "Parent Debtor"). The Parent Debtor and one or more of
its subsidiaries may from time to time obtain credit accommodations and
facilities from the Bank (the Parent Debtor and each such subsidiary
hereinafter designated collectively as the "Debtors" and individually as
a"Debtor"). Each Debtor, the undersigned and the other subsidiaries of the
Parent Debtor comprise an integrated group of companies to which the Parent
Debtor provides financial, management, administrative and technical support.
The undersigned receives substantial direct benefit from such services. In
addition, the undersigned benefits indirectly from belonging to this integrated
group of companies, which in the aggregate possess substantially more assets
and resources than are possessed by the undersigned standing alone. The
interdependent nature of the businesses of the Parent Debtor and its
subsidiaries (including the undersigned) is such that the viability of each
subsidiary (including the undersigned) is dependent upon the continued success
of the Parent Debtor and its subsidiaries and upon the continuation of the
Parent Debtor's business relationships with its subsidiaries (including the
undersigned).
B. The undersigned does not believe its performance of this guaranty will
have adverse consequences for the continuity of its business.
C. These direct and indirect benefits to the undersigned will continue
only if each Debtor continues to have access to credit accommodations and
facilities to be afforded to it by the Bank, which the Bank will only make
available on the condition, among others, that the undersigned guaranty the
indebtedness, obligations and liabilities of each Debtor from time to time
owing to the Bank.
NOW, THEREFORE, FOR VALUE RECEIVED and in consideration of advances made
or to be made, or credit given or to be given, or other financial accommodation
afforded or to be afforded to the Debtors by the Bank from time to time, the
undersigned hereby guarantees the full and prompt payment to the Bank at
maturity and at all times thereafter of any and all indebtedness,
<PAGE> 124
obligations and liabilities of every kind and nature of each Debtor to
the Bank, howsoever evidenced, whether now existing or hereafter created or
arising, whether direct or indirect, absolute or contingent, joint or several,
or joint and several and howsoever owned, held or acquired, whether through
discount, overdraft, purchase, direct loan or as collateral, or otherwise
(hereinafter all such indebtedness, obligations and liabilities being
collectively referred to as the "Indebtedness"); and the undersigned further
agrees to pay all expenses, legal and/or otherwise (including court costs and
reasonable attorneys' fees), paid or incurred by the Bank in endeavoring to
collect the Indebtedness, or any part thereof, and in enforcing this guaranty
in any litigation, bankruptcy or insolvency proceeding or otherwise.
NOTWITHSTANDING ANYTHING IN THIS GUARANTY TO THE CONTRARY:
(1) The Bank's right of recovery under this guaranty shall not
exceed one U.S. Dollar less than the amount which is necessary to
maintain the equity of the undersigned at an amount equal to its share
capital and non distributable reserves.
(2) This Guaranty shall become effective on, and shall have no force
or effect until September 23, 1997 unless the undersigned shall in its
discretion agree otherwise in a writing sent to the Bank for that
purpose.
This guaranty is a continuing, absolute and unconditional guaranty, and
shall remain in full force and effect until written notice of its
discontinuance shall be actually received by the Bank, and also until any and
all of the Indebtedness created, existing or committed to before receipt of
such notice shall be fully paid. The liability of the undersigned hereunder
shall in no way be affected or impaired by (and the Bank is hereby expressly
authorized to make from time to time, without notice to anyone) any sale,
pledge, surrender, compromise, settlement, release, renewal, extension,
indulgence, alteration, substitution, exchange, change in, modification or
other disposition of any of the Indebtedness, either express or implied, or of
any contract or contracts evidencing any thereof, or of any security or
collateral therefor. The liability of the undersigned hereunder shall also in
no way be affected or impaired by any acceptance by the Bank of any security
for or other guarantors upon any of the Indebtedness, or by any failure,
neglect or omission on the part of the Bank to realize upon or protect any of
the Indebtedness, or any collateral or security or other guaranty therefor, or
to exercise any lien upon or right of appropriation of any moneys, credits or
property of any Debtor possessed by the Bank toward the liquidation of the
Indebtedness, or by any application of payments or credits thereon. The Bank
shall have the exclusive right to determine how, when and what application of
payments and credits, if any, shall be made on the Indebtedness, or any part
thereof. In order to hold the undersigned liable hereunder, there shall be no
obligation on the part of the Bank, at any time, to resort for payment to the
Debtors or to any other guaranty, or to any other person or corporation, their
properties or estate, or resort to any collateral, security, property, liens or
other rights or
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remedies whatsoever and the Bank shall have the right to enforce this
guaranty irrespective of whether or not other proceedings or steps are pending
seeking resort to or realization upon or from any of the foregoing.
All diligence in collection or protection, and all presentment, demand,
protest and/or notice, as to any and everyone, whether or not any Debtor or the
undersigned or others, of dishonor and of default and of non-payment and of the
creation and existence of any and all of the Indebtedness, and of any security
and collateral therefor, and of the acceptance of this guaranty, and of any and
all extensions of credit and indulgence, are expressly waived.
The undersigned will not exercise or enforce any right of exoneration,
contribution, reimbursement, recourse or subrogation available to the
undersigned against any person liable for payment of the Indebtedness, or as to
any security therefor, unless and until the full amount owing to the Bank on
the Indebtedness has been paid and each commitment of the Bank to extend credit
to any Debtor shall have terminated, and the payment by the undersigned of any
amount pursuant to this guaranty shall not in any wise entitle the undersigned
to any right, title or interest (whether by way of subrogation or otherwise) in
and to any of the Indebtedness or any proceeds thereof or any security therefor
unless and until the full amount owing to the Bank on the Indebtedness has been
paid and each commitment of the Bank to extend credit to any Debtor shall have
terminated.
In the case of the dissolution, liquidation, or insolvency (howsoever
evidenced) of, or the institution of bankruptcy or receivership proceedings
against any Debtor or the undersigned, all of the Indebtedness then existing
shall, at the option of the Bank, immediately become due and accrued and
payable from the undersigned. All dividends or other payments received from
any Debtor, or on account of any Debtor from whatsoever source, shall be taken
and applied as payment in gross, and this guaranty shall apply to and secure
any ultimate balance that shall remain owing to the Bank.
The Bank may, without any notice whatsoever to anyone, sell, assign, or
transfer all of the Indebtedness, or any part thereof, or grant participations
therein, and in that event each and every immediate and successive assignee,
transferee, or holder of or participant in all or any part of the Indebtedness,
shall have the right to enforce this guaranty, by suit or otherwise, for the
benefit of such assignee, transferee, holder or participant, as fully as if
such assignee, transferee, holder or participant were herein by name
specifically given such rights, powers and benefits; but the Bank shall have an
unimpaired right to enforce this guaranty for the benefit of the Bank or any
such participant, as to such of the Indebtedness that it has not sold, assigned
or transferred.
If any payment applied by the Bank to the Indebtedness is thereafter set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy,
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<PAGE> 126
insolvency or reorganization of any Debtor or any other obligor), the
Indebtedness to which such payment was applied shall for the purposes of this
guaranty be deemed to have continued in existence, notwithstanding such
application, and this guaranty shall be enforceable as to such of the
Indebtedness as fully as if such application had never been made.
This guaranty shall be governed by and construed according to the laws of
the State of Illinois, in which State it shall be performed by the undersigned.
All payments to be made by the undersigned hereunder shall be made in the same
currency and funds in which the Indebtedness of the relevant Debtor is payable
at the principal Chicago office of Harris Trust and Savings Bank at 111 West
Monroe Street, Chicago, Illinois 60690 (or at such other place for the account
of the Bank as it may from time to time specify to the undersigned) in
immediately available and freely transferable funds at the place of payment,
all such payments to be paid without setoff, counterclaim or reduction and
without deduction for, and free from, any and all present or future taxes,
levies, imposts, duties, fees, charges, deductions, withholding or liabilities
with respect thereto or any restrictions or conditions of any nature. If the
undersigned is required by law to make any deduction or withholding on account
of any tax or other withholding or deduction from any sum payable by the
undersigned hereunder, the undersigned shall pay any such tax or other
withholding or deduction and shall pay such additional amount necessary to
ensure that, after making any payment, deduction or withholding, the Bank shall
receive and retain (free of any liability in respect of any payment, deduction
or withholding) a net sum equal to what it would have received and so retained
hereunder had no such deduction, withholding or payment been required to have
been made.
The payment by the undersigned of any amount or amounts due the Bank
hereunder shall be made in the same currency (the "relevant currency") and
funds in which the underlying Indebtedness of any Debtor are payable. To the
fullest extent permitted by law, the obligation of the undersigned in respect
of any amount due in the relevant currency under this guaranty shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
relevant currency that the Bank may, in accordance with normal banking
procedures, purchase with the sum paid in such other currency (after any
premium and costs of exchange) on the business day immediately following the
day on which the Bank receives such payment. If the amount in the relevant
currency that may be so purchased for any reason falls short of the amount
originally due, the undersigned shall pay such additional amounts, in the
relevant currency, as may be necessary to compensate for the shortfall. Any
obligations of the undersigned not discharged by such payment shall, to the
fullest extent permitted by applicable law, be due as a separate and
independent obligation and, until discharged as provided herein, shall continue
in full force and effect.
The undersigned waives any and all defenses, claims and discharges of the
Debtors, or any other obligor, pertaining to the Indebtedness, except the
defense of discharge by payment in
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<PAGE> 127
full. Without limiting the generality of the foregoing, the undersigned will
not assert, plead or enforce against the Bank any defense of waiver, release,
discharge in bankruptcy, statute of limitations, res judicata, statute of
frauds, anti-deficiency statute, fraud, incapacity, minority, usury, illegality
or unenforceability which may be available to any Debtor or any other person or
entity liable in respect of any of the Indebtedness, or any setoff available
against the Bank to any Debtor or any such other person or entity, whether or
not on account of a related transaction. The undersigned agrees that the
undersigned shall be and remain liable for any deficiency remaining after
foreclosure of any mortgage or security interest securing the Indebtedness,
whether or not the liability of the Debtors or any other obligor for such
deficiency is discharged pursuant to statute or judicial decision.
The undersigned hereby irrevocably submits to the non-exclusive
jurisdiction of any State of Illinois court or any federal court located in
Chicago, Illinois for the adjudication of any matter arising out of or relating
to this guaranty and consents to the service of process by registered or
certified mail out of any such court or by service of process on the Parent
Debtor (now at 555 Briarwood Circle, Ann Arbor, Michigan 48108) which the
undersigned hereby irrevocably appoints as its agent to receive, for it and on
its behalf, service of process in any action or proceeding in Illinois. Such
service shall be deemed completed on delivery to such process agent (whether or
not it is forwarded to and received by the undersigned) provided that notice of
such service of process is given by the Bank to the undersigned. If, for any
reason, such process agent ceases to be able to act as such or no longer has an
address in Illinois, the undersigned irrevocably agrees to appoint a substitute
process agent acceptable to the Bank and to deliver to the Bank a copy of the
new agent's acceptance of that appointment within 30 days. Nothing contained
herein shall affect the right of the Bank to serve legal process in any other
manner or to bring any proceeding hereunder in any jurisdiction where the
undersigned may be amenable to suit. The undersigned hereby waives any
objection to any action or proceeding in any Illinois court or federal court
located in Chicago, Illinois on the grounds of venue or any claim that any
State of Illinois court or federal court located in Chicago, Illinois is an
inconvenient forum.
Any invalidity or unenforceability of any provision or application of this
guaranty shall not affect other lawful provisions and applications hereof, and
to this end the provisions of this guaranty are declared to be severable. This
guaranty may not be waived, amended, released or otherwise changed except by a
writing signed by the Bank.
All notices or other communications given hereunder by the Bank to the
undersigned shall be addressed to the undersigned at its address below or to
such other address as the undersigned shall designate by notice in writing to
the Bank. Any such notice or other communication shall be effective only upon
receipt thereof by the undersigned.
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<PAGE> 128
This guaranty and every part thereof shall be binding upon the
undersigned, and upon the heirs, legal representatives, successors and assigns
of the undersigned, and shall inure to the benefit of the Bank, its successors,
legal representatives and assigns. The undersigned waives notice of the Bank's
acceptance hereof.
SIGNED AND DELIVERED by the undersigned, this 23rd day of September, 1997.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS GUARANTY AS
OF THE TIME OF EXECUTION.
COMSHARE GMBH
(SEAL)
By
-------------------------------
Name:
--------------------------
Title:
-------------------------
ADDRESS:
- ----------------------------
- ----------------------------
- ----------------------------
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<PAGE> 129
GUARANTY AGREEMENT
(from Comshare Limited)
This Guaranty Agreement (the "guaranty") is made and given as of this 23rd
day of September, 1997 by Comshare, Ltd., a corporation organized under the
laws of Ontario, Canada (hereinafter referred to as the "undersigned") in favor
of Harris Trust and Savings Bank, an Illinois banking corporation (hereinafter
referred to as the "Bank").
RECITALS
A. The undersigned is a subsidiary of Comshare, Incorporated, a
corporation organized under the laws of the State of Michigan in the United
States of America (the "Parent Debtor"). The Parent Debtor and one or more of
its subsidiaries may from time to time obtain credit accommodations and
facilities from the Bank (the Parent Debtor and each such subsidiary
hereinafter designated collectively as the "Debtors" and individually as
a"Debtor"). Each Debtor, the undersigned and the other subsidiaries of the
Parent Debtor comprise an integrated group of companies to which the Parent
Debtor provides financial, management, administrative and technical support.
The undersigned receives substantial direct benefit from such services. In
addition, the undersigned benefits indirectly from belonging to this integrated
group of companies, which in the aggregate possess substantially more assets
and resources than are possessed by the undersigned standing alone. The
interdependent nature of the businesses of the Parent Debtor and its
subsidiaries (including the undersigned) is such that the viability of each
subsidiary (including the undersigned) is dependent upon the continued success
of the Parent Debtor and its subsidiaries and upon the continuation of the
Parent Debtor's business relationships with its subsidiaries (including the
undersigned).
B. These direct and indirect benefits to the undersigned will continue
only if each Debtor continues to have access to credit accommodations and
facilities to be afforded to it by the Bank, which the Bank will only make
available on the condition, among others, that the undersigned guaranty the
indebtedness, obligations and liabilities of each Debtor from time to time
owing to the Bank.
NOW, THEREFORE, FOR VALUE RECEIVED and in consideration of advances made
or to be made, or credit given or to be given, or other financial accommodation
afforded or to be afforded to the Debtors by the Bank from time to time, the
undersigned hereby guarantees the full and prompt payment to the Bank at
maturity and at all times thereafter of any and all indebtedness, obligations
and liabilities of every kind and nature of each Debtor to the Bank, howsoever
evidenced, whether now existing or hereafter created or arising, whether direct
or indirect, absolute or contingent, joint or several, or joint and several and
howsoever owned, held or acquired, whether through discount, overdraft,
purchase, direct loan or as collateral, or otherwise
<PAGE> 130
(hereinafter all such indebtedness, obligations and liabilities being
collectively referred to as the "Indebtedness"); and the undersigned further
agrees to pay all expenses, legal and/or otherwise (including court costs and
reasonable attorneys' fees), paid or incurred by the Bank in endeavoring to
collect the Indebtedness, or any part thereof, and in enforcing this guaranty
in any litigation, bankruptcy or insolvency proceeding or otherwise.
Notwithstanding anything in this guaranty to the contrary, the Bank's
right of recovery against the undersigned under this guaranty (excluding any
such recovery for Collection Costs) shall not exceed the greater of:
(x) U.S. $______________; or
(y) the sum (determined as of the date the Bank makes demand on this
guaranty) of (i) the principal amount then outstanding on loans and
advances (including trade credit) made after the date hereof by the
Debtors or any subsidiary of the Parent Debtor directly or indirectly to
the undersigned, whether or not funded out of the proceeds of credit
extended by the Bank, and (ii) the amount, if any, by which capital
contributions made after the date hereof by the Debtors or any subsidiary
of the Parent Debtor directly or indirectly to the undersigned exceeds
the amount of dividends paid after the date hereof by the undersigned to
the Debtors or any subsidiary of the Parent Debtor.
The undersigned's liability hereunder for Collection Costs is not limited by
the immediately preceding sentence.
This guaranty is a continuing, absolute and unconditional guaranty, and
shall remain in full force and effect until written notice of its
discontinuance shall be actually received by the Bank, and also until any and
all of the Indebtedness created, existing or committed to before receipt of
such notice shall be fully paid. The liability of the undersigned hereunder
shall in no way be affected or impaired by (and the Bank is hereby expressly
authorized to make from time to time, without notice to anyone) any sale,
pledge, surrender, compromise, settlement, release, renewal, extension,
indulgence, alteration, substitution, exchange, change in, modification or
other disposition of any of the Indebtedness, either express or implied, or of
any contract or contracts evidencing any thereof, or of any security or
collateral therefor. The liability of the undersigned hereunder shall also in
no way be affected or impaired by any acceptance by the Bank of any security
for or other guarantors upon any of the Indebtedness, or by any failure,
neglect or omission on the part of the Bank to realize upon or protect any of
the Indebtedness, or any collateral or security or other guaranty therefor, or
to exercise any lien upon or right of appropriation of any moneys, credits or
property of any Debtor possessed by the Bank toward the liquidation of the
Indebtedness, or by any application of payments or credits thereon. The Bank
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<PAGE> 131
shall have the exclusive right to determine how, when and what application of
payments and credits, if any, shall be made on the Indebtedness, or any part
thereof. In order to hold the undersigned liable hereunder, there shall be no
obligation on the part of the Bank, at any time, to resort for payment to the
Debtors or to any other guaranty, or to any other person or corporation, their
properties or estate, or resort to any collateral, security, property, liens or
other rights or remedies whatsoever and the Bank shall have the right to
enforce this guaranty irrespective of whether or not other proceedings or steps
are pending seeking resort to or realization upon or from any of the foregoing.
All diligence in collection or protection, and all presentment, demand,
protest and/or notice, as to any and everyone, whether or not any Debtor or the
undersigned or others, of dishonor and of default and of non-payment and of the
creation and existence of any and all of the Indebtedness, and of any security
and collateral therefor, and of the acceptance of this guaranty, and of any and
all extensions of credit and indulgence, are expressly waived.
The undersigned will not exercise or enforce any right of exoneration,
contribution, reimbursement, recourse or subrogation available to the
undersigned against any person liable for payment of the Indebtedness, or as to
any security therefor, unless and until the full amount owing to the Bank on
the Indebtedness has been paid and each commitment of the Bank to extend credit
to any Debtor shall have terminated, and the payment by the undersigned of any
amount pursuant to this guaranty shall not in any wise entitle the undersigned
to any right, title or interest (whether by way of subrogation or otherwise) in
and to any of the Indebtedness or any proceeds thereof or any security therefor
unless and until the full amount owing to the Bank on the Indebtedness has been
paid and each commitment of the Bank to extend credit to any Debtor shall have
terminated.
In the case of the dissolution, liquidation, or insolvency (howsoever
evidenced) of, or the institution of bankruptcy or receivership proceedings
against any Debtor or the undersigned, all of the Indebtedness then existing
shall, at the option of the Bank, immediately become due and accrued and
payable from the undersigned and, in such case, such Indebtedness shall become
a separate and independent obligation of the undersigned, as principal debtor
and not as surety, and, in respect thereof, the undersigned shall fully
indemnify the Bank for the full amount of such Indebtedness, notwithstanding
such dissolution, liquidation, insolvency, bankruptcy or receivership, as the
case may be. All dividends or other payments received from any Debtor, or on
account of any Debtor from whatsoever source, shall be taken and applied as
payment in gross, and this guaranty shall apply to and secure any ultimate
balance that shall remain owing to the Bank.
The Bank may, without any notice whatsoever to anyone, sell, assign, or
transfer all of the Indebtedness, or any part thereof, or grant participations
therein, and in that event each and
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<PAGE> 132
every immediate and successive assignee, transferee, or holder of or
participant in all or any part of the Indebtedness, shall have the right to
enforce this guaranty, by suit or otherwise, for the benefit of such assignee,
transferee, holder or participant, as fully as if such assignee, transferee,
holder or participant were herein by name specifically given such rights,
powers and benefits; but the Bank shall have an unimpaired right to enforce
this guaranty for the benefit of the Bank or any such participant, as to such
of the Indebtedness that it has not sold, assigned or transferred.
If any payment applied by the Bank to the Indebtedness is thereafter set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
any Debtor or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this guaranty be deemed to have continued in
existence, notwithstanding such application, and this guaranty shall be
enforceable as to such of the Indebtedness as fully as if such application had
never been made.
This guaranty shall be governed by and construed according to the laws of
the State of Illinois, in which State it shall be performed by the undersigned.
All payments to be made by the undersigned hereunder shall be made in the same
currency and funds in which the Indebtedness of the relevant Debtor is payable
at the principal Chicago office of Harris Trust and Savings Bank at 111 West
Monroe Street, Chicago, Illinois 60690 (or at such other place for the account
of the Bank as it may from time to time specify to the undersigned) in
immediately available and freely transferable funds at the place of payment,
all such payments to be paid without setoff, counterclaim or reduction and
without deduction for, and free from, any and all present or future taxes,
levies, imposts, duties, fees, charges, deductions, withholding or liabilities
with respect thereto or any restrictions or conditions of any nature. If the
undersigned is required by law to make any deduction or withholding on account
of any tax or other withholding or deduction from any sum payable by the
undersigned hereunder, the undersigned shall pay any such tax or other
withholding or deduction and shall pay such additional amount necessary to
ensure that, after making any payment, deduction or withholding, the Bank shall
receive and retain (free of any liability in respect of any payment, deduction
or withholding) a net sum equal to what it would have received and so retained
hereunder had no such deduction, withholding or payment been required to have
been made.
The payment by the undersigned of any amount or amounts due the Bank
hereunder shall be made in the same currency (the "relevant currency") and
funds in which the underlying Indebtedness of any Debtor are payable. To the
fullest extent permitted by law, the obligation of the undersigned in respect
of any amount due in the relevant currency under this guaranty shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
relevant currency that the Bank may, in accordance with normal banking
procedures, purchase with the sum paid in such other currency (after any
premium and costs of exchange) on the business day immediately following
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<PAGE> 133
the day on which the Bank receives such payment. If the amount in the relevant
currency that may be so purchased for any reason falls short of the amount
originally due, the undersigned shall pay such additional amounts, in the
relevant currency, as may be necessary to compensate for the shortfall. Any
obligations of the undersigned not discharged by such payment shall, to the
fullest extent permitted by applicable law, be due as a separate and
independent obligation and, until discharged as provided herein, shall continue
in full force and effect.
The undersigned waives any and all defenses, claims and discharges of the
Debtors, or any other obligor, pertaining to the Indebtedness, except the
defense of discharge by payment in full. Without limiting the generality of
the foregoing, the undersigned will not assert, plead or enforce against the
Bank any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute, fraud,
incapacity, minority, usury, illegality or unenforceability which may be
available to any Debtor or any other person or entity liable in respect of any
of the Indebtedness, or any setoff available against the Bank to any Debtor or
any such other person or entity, whether or not on account of a related
transaction. The undersigned agrees that the undersigned shall be and remain
liable for any deficiency remaining after foreclosure of any mortgage or
security interest securing the Indebtedness, whether or not the liability of
the Debtors or any other obligor for such deficiency is discharged pursuant to
statute or judicial decision.
The undersigned hereby irrevocably submits to the non-exclusive
jurisdiction of any State of Illinois court or any federal court located in
Chicago, Illinois for the adjudication of any matter arising out of or relating
to this guaranty and consents to the service of process by registered or
certified mail out of any such court or by service of process on the Parent
Debtor (now at 555 Briarwood Circle, Ann Arbor, Michigan 48108) which the
undersigned hereby irrevocably appoints as its agent to receive, for it and on
its behalf, service of process in any action or proceeding in Illinois. Such
service shall be deemed completed on delivery to such process agent (whether or
not it is forwarded to and received by the undersigned) provided that notice of
such service of process is given by the Bank to the undersigned. If, for any
reason, such process agent ceases to be able to act as such or no longer has an
address in Illinois, the undersigned irrevocably agrees to appoint a substitute
process agent acceptable to the Bank and to deliver to the Bank a copy of the
new agent's acceptance of that appointment within 30 days. Nothing contained
herein shall affect the right of the Bank to serve legal process in any other
manner or to bring any proceeding hereunder in any jurisdiction where the
undersigned may be amenable to suit. The undersigned hereby waives any
objection to any action or proceeding in any Illinois court or federal court
located in Chicago, Illinois on the grounds of venue or any claim that any
State of Illinois court or federal court located in Chicago, Illinois is an
inconvenient forum.
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<PAGE> 134
Any invalidity or unenforceability of any provision or application of this
guaranty shall not affect other lawful provisions and applications hereof, and
to this end the provisions of this guaranty are declared to be severable. This
guaranty may not be waived, amended, released or otherwise changed except by a
writing signed by the Bank.
All notices or other communications given hereunder by the Bank to the
undersigned shall be addressed to the undersigned at its address below or to
such other address as the undersigned shall designate by notice in writing to
the Bank. Any such notice or other communication shall be effective only upon
receipt thereof by the undersigned.
This guaranty and every part thereof shall be binding upon the
undersigned, and upon the heirs, legal representatives, successors and assigns
of the undersigned, and shall inure to the benefit of the Bank, its successors,
legal representatives and assigns. The undersigned waives notice of the Bank's
acceptance hereof.
SIGNED AND DELIVERED by the undersigned, this 23rd day of September, 1997.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS GUARANTY AS
OF THE TIME OF EXECUTION.
COMSHARE LIMITED
(SEAL)
By
------------------------------
Name:
-------------------------
Title:
------------------------
ADDRESS:
180 Attwell Drive, Suite #300
Etobicoke
Ontario, Canada M9W 6H4
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<PAGE> 135
PLEDGE AGREEMENT
This Pledge Agreement (the "Agreement") is dated as of September 23,
1997, by and among the parties executing this Agreement under the heading
"Pledgors" (such parties, along with any parties who execute and deliver to the
Bank (as hereinafter defined) an agreement in the form attached hereto as
Schedule C, being hereinafter referred to collectively as the "Pledgors" and
individually as a "Pledgor"), each with its mailing address as set forth on the
signature page hereto and Harris Trust and Savings Bank, an Illinois banking
corporation (the "Bank"), with its mailing address at 111 West Monroe Street,
Chicago, Illinois 60603;
PRELIMINARY STATEMENTS
A. Comshare, Incorporated, a Michigan corporation (the "Parent
Borrower"), and one or more of its Subsidiaries (the Parent Borrower and each
such subsidiary being hereafter referred to collectively as the "Borrowers" and
individually as a "Borrower") have obtained and may from time to time hereafter
obtain credit and other financial accommodations from the Bank and may from time
to time hereafter incur liabilities to the Bank.
B. Each Pledgor, and especially the Parent Borrower, provides each
of the other Pledgors with substantial financial, management, administrative and
technical support.
C. The interdependent nature of the businesses and hence of each of
the Pledgors is such that the viability of each Pledgor is dependent upon the
continued success of the other Pledgors and, upon the continuation of such
Pledgor's business relationships with the other Pledgors, and the continuation
thereof necessitates each Borrower's access to credit and other financial
accommodations from the Bank, which the Bank will only make available to a
Borrower on the condition, among others, that the other Pledgors pledge their
respective assets to secure all indebtedness, obligations and liabilities of
each Borrower from time to time owing to the Bank.
D. Each Pledgor will directly and substantially benefit from credit
and other financial accommodations extended and to be extended by the Bank to
the Borrowers.
NOW, THEREFORE, for and in consideration of the execution and delivery
by the Bank of the Credit Agreement, and other good and valuable consideration,
receipt whereof is hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Terms Defined in Credit Agreement. All capitalized
terms used herein without definition shall have the same meanings herein as such
terms have in that certain Credit Agreement dated as of September 23, 1997 by
and between the Parent Borrower, Comshare
<PAGE> 136
Limited, a private limited company organized under the laws of England and
Wales, and the Bank (such Credit Agreement, as the same may be amended or
modified from time to time, including amendments and restatements thereof in its
entirety, being hereinafter referred to as the "Credit Agreement"). The term
"Pledgor" and "Pledgors" as used herein shall mean and include the Pledgors
collectively and also each individually, with all grants, representations,
warranties and covenants of and by the Pledgors, or any of them, herein
contained to constitute joint and several grants, representations, warranties
and covenants of and by the Pledgors; provided, however, that unless the context
in which the same is used shall otherwise require, any grant, representation,
warranty or covenant contained herein related to the Collateral shall be made by
each Pledgor only with respect to the Collateral owned by it or represented by
such Pledgor as owned by it.
Section 2. Grant of Security Interest in the Collateral. Each
Pledgor hereby grants to the Bank a lien on and security interest in, and
acknowledges and agrees that the Bank has and shall continue to have a
continuing lien on and security interest in, any and all right, title and
interest of each Pledgor, whether now owned or existing or hereafter created,
acquired or arising, in and to the following: (a) all of the issued and
outstanding shares of the capital stock of each company owned or held by such
Pledgor, whether now existing or hereafter formed or acquired (the certificates
representing such shares delivered to and deposited with the Bank on the date
hereof being listed and described on Schedule A attached hereto), and all
substitutions and additions to such shares (herein, the "Pledged Securities");
provided that, in the case of a lien and security interest on the capital stock
of a company incorporated or otherwise organized outside of the United States of
America or any State or territory thereof (herein a "Foreign Company"), if any
such grant of lien would amount to more than 65% of the total combined voting
stock of any such Foreign Company then such lien and security interest shall be
limited to a lien and security interest on the shares of capital stock
representing 65% of the total combined voting stock of such Foreign Company, (b)
all dividends, distributions and sums distributable or payable from, upon or in
respect of the Pledged Securities, (c) all other rights and privileges incident
to the Pledged Securities, and (d) all proceeds of the foregoing (all of the
foregoing being hereinafter referred to collectively as the "Collateral").
Section 3. Obligations Hereby Secured. This Agreement is made and
given to secure, and shall secure, the payment and performance of (i) any and
all indebtedness, obligations and liabilities of whatsoever kind and nature of
each Borrower to the Bank (whether arising before or after the filing of a
petition in bankruptcy), whether direct or indirect, absolute or contingent, due
or to become due, and whether now existing or hereafter arising and howsoever
held, evidenced or acquired, and whether several, joint or joint and several,
(ii) any and all indebtedness, obligations and liabilities of whatsoever kind
and nature of each other Pledgor, to the Bank (whether arising before or after
the filing of a petition in bankruptcy), whether direct or indirect, absolute or
contingent, due or to become due, and whether now
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<PAGE> 137
existing or hereafter arising and howsoever held evidenced or acquired and (iii)
any and all reasonable expenses and charges, legal or otherwise, suffered or
incurred by the Bank in collecting or in enforcing any of such indebtedness,
obligations and liabilities or realizing on or protecting or preserving any
security therefor, including, without limitation, the lien and security interest
granted hereby (all of the indebtedness, obligations, liabilities, expenses and
charges described in clauses (i), (ii) and (iii) above being hereinafter
referred to as the "Obligations"). Notwithstanding anything in this Agreement to
the contrary, the right of recovery against any Pledgor (other than the Parent
Borrower to which this limitation shall not apply) under this Agreement shall
not exceed $1 less than the amount which would render such Pledgor's obligations
under this Agreement void or voidable under applicable law, including fraudulent
conveyance law.
Section 4. Covenants, Agreements, Representations and Warranties.
Each Pledgor hereby covenants and agrees with, and represents and warrants to,
the Bank that:
(a) The certificates for all shares of the Pledged Securities
shall be delivered by the relevant Pledgor to the Bank duly endorsed in
blank for transfer or accompanied by an appropriate assignment or
assignments or an appropriate undated stock power or powers, in every
case sufficient to transfer title thereto. The Bank may at any time
after the occurrence of an Event of Default cause to be transferred
into its name or into the name of its nominee or nominees any and all
of the Pledged Securities. The Bank shall at all times have the right
to exchange the certificates representing the Pledged Securities for
certificates of smaller or larger denominations.
(b) Each Pledgor is and shall be the sole and lawful legal,
record and beneficial owner of the Collateral. No Pledgor shall,
without the BankOs prior written consent, sell, assign, or otherwise
dispose of the Collateral or any interest therein. The Collateral, and
every part thereof, is and shall be free and clear of all security
interests, liens, rights, claims, attachments, levies and encumbrances
of every kind, nature and description and whether voluntary or
involuntary, except for the security interest of the Bank hereunder and
for other Liens permitted by SectionE8.11 of the Credit Agreement. Each
Pledgor shall warrant and defend the Collateral against any claims and
demands of all persons at any time claiming the same or any interest in
the Collateral adverse to the Bank and the Bank. Each Pledgor has the
right to vote the Collateral and there are no restrictions upon the
voting rights associated with, or the transfer of, any of the
Collateral, except as provided by federal and state laws applicable to
the sale of securities generally.
(c) The Pledged Securities have been validly issued and are
fully paid and non-assessable. There are no outstanding commitments or
other obligations of the issuers of any of the Pledged Securities to
issue, and no options, warrants or other rights of any
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<PAGE> 138
individual or entity to acquire, any share of any class or series of
capital stock of such issuers. The Pledged Securities listed and
described on Schedule A attached hereto constitute the percentage of
the issued and outstanding capital stock of each series and class of
the issuers thereof as set forth thereon owned by the relevant Pledgor.
Each Pledgor further agrees that in the event any such issuer shall
issue any additional capital stock of any series or class (whether or
not entitled to vote) to such Pledgor or otherwise on account of its
ownership interest therein, subject to the limitations set forth in
SectionE2 above with respect to each Foreign Company, each Pledgor will
forthwith pledge and deposit hereunder, or cause to be pledged and
deposited hereunder, all such additional shares of such capital stock.
(d) None of the Collateral constitutes margin stock (within
the meaning of RegulationEU of the Board of Governors of the Federal
Reserve System).
(e) Each Pledgor agrees to execute and deliver to the Bank
such further agreements, assignments, instruments and documents and to
do all such other things as the Bank may reasonably deem necessary or
appropriate to assure the Bank its lien and security interest
hereunder, including such assignments, stock powers, financing
statements, instruments and documents as the Bank may from time to time
require in order to comply with (i)Ethe Uniform Commercial Code as
enacted in the State of Illinois and any successor statute(s) thereto
(the "UCC") and (ii) any law or regulation governing the enforcement of
said lien and security interest outside of the United States of
America. Except as may be otherwise required by a jurisdiction outside
of the United States of America, each Pledgor hereby agrees that a
carbon, photographic or other reproduction of this Agreement or any
such financing statement is sufficient for filing as a financing
statement by the Bank without notice thereof to such Pledgor wherever
the Bank in its discretion desires to file the same. In the event for
any reason the law of any jurisdiction other than Illinois becomes or
is applicable to the Collateral or any part thereof, or to any of the
Obligations, each Pledgor agrees to execute and deliver all such
agreements, assignments, instruments and documents and to do all such
other things as the Bank in its discretion reasonably deems necessary
or appropriate to preserve, protect and enforce the lien and security
interest of the Bank under the law of such other jurisdiction. Each
Pledgor agrees to mark its corporate books and records to reflect the
lien and security interest of the Bank in the Collateral.
(f) If, as and when any Pledgor delivers any securities for
pledge hereunder in addition to those listed on Schedule A hereto, the
Pledgors shall furnish to the Bank a duly completed and executed
amendment to such Schedule in substantially the form (with appropriate
insertions) of Schedule B hereto reflecting the securities pledged
hereunder after giving effect to such addition.
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<PAGE> 139
(g) On failure of any Pledgor to perform any of the
agreements and covenants herein contained, the Bank may, at its option
but in any event with notice to the Parent Borrower or such Pledgor
(which need not necessarily be prior notice), perform the same and in
so doing may expend such sums as the Bank may reasonably deem advisable
in the performance thereof, including, without limitation, the payment
of any taxes, liens and encumbrances, expenditures made in defending
against any adverse claim, and all other expenditures which the Bank
may be compelled to make by operation of law or which the Bank may make
by agreement or otherwise for the protection of the security hereof.
All such sums and amounts so expended shall be repayable by the Pledgor
immediately without notice or demand, shall constitute additional
Obligations secured hereunder and shall bear interest from the date
said amounts are expended at the rate per annum (computed on the basis
of a 360-day year for the actual number of days elapsed) determined by
adding 2% to the Domestic Rate from time to time in effect, with any
change in such rate per annum by reason of a change in such Domestic
Rate to become effective on the date of such change in said Domestic
Rate (such rate per annum as so determined being hereinafter referred
to as the "Reimbursement Rate"). No such performance of any covenant or
agreement by the Bank on behalf of such Pledgor, and no such
advancement or expenditure therefor, shall relieve such Pledgor of any
default under the terms of this Agreement or in any way obligate the
Bank to take any further or future action with respect thereto. The
Bank, in making any payment hereby authorized, may do so according to
any bill, statement or estimate procured from the appropriate public
office or holder of the claim to be discharged without inquiry into the
accuracy of such bill, statement or estimate, or into the validity of
any tax assessment, sale, forfeiture, tax lien or title or claim. The
Bank, in performing any act hereunder, shall be the sole judge of
whether the relevant Pledgor is required to perform the same under the
terms of this Agreement. The Bank is hereby authorized to charge any
depository or other account of any Pledgor maintained with the Bank for
the amount of such sums and amounts so expended.
Section 5. Voting Rights and Dividends. Unless and until an event of
default hereunder has occurred and thereafter until notified by the Bank
pursuant to Section 7(b) hereof:
(a) Each Pledgor shall be entitled to exercise all voting
and/or consensual powers pertaining to the Collateral of such Pledgor,
or any part thereof, for all purposes not inconsistent with the terms
of this Agreement or any other document evidencing or otherwise
relating to any of the Obligations.
(b) To the extent not prohibited by the terms of the Credit
Agreement, each Pledgor shall be entitled to receive and retain all
dividends and distributions in respect of the Collateral which are paid
in cash of whatsoever nature.
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<PAGE> 140
(c) In order to permit each Pledgor to exercise such voting
and/or consensual powers which it is entitled to exercise under
subsectionE(a) above and to receive such distributions which such
Pledgor is entitled to receive and retain under subsectionE(b) above,
the Bank will, if necessary, upon the written request of such Pledgor,
from time to time execute and deliver to such Pledgor appropriate
proxies and dividend orders.
Section 6. Power of Attorney. Each Pledgor hereby appoints the
Bank, and each of its nominees, officers, Banks, attorneys, and any other person
whom the Bank may designate, as such Pledgor's attorney-in-fact, with full power
and authority to ask, demand, collect, receive, receipt for, sue for, compound
and give acquittance for any and all sums or properties which may be or become
due, payable or distributable in respect of the Collateral or any part thereof,
with full power to settle, adjust or compromise any claim thereunder or therefor
as fully as such Pledgor could itself do, to endorse or sign the Pledgor's name
on any assignments, stock powers, or other instruments of transfer and on any
checks, notes, acceptances, money orders, drafts, and any other forms of payment
or security that may come into the Bank's possession and on all documents of
satisfaction, discharge or receipt required or requested in connection
therewith, and, in its discretion, to file any claim or take any other action or
proceeding, either in its own name or in the name of such Pledgor, or otherwise,
which the Bank may deem necessary or appropriate to collect or otherwise realize
upon all or any part of the Collateral, or effect a transfer thereof, or which
may be necessary or appropriate to protect and preserve the right, title and
interest of the Bank in and to such Collateral and the security intended to be
afforded hereby. Each Pledgor hereby ratifies and approves all acts of any such
attorney and agrees that neither the Bank nor any such attorney will be liable
for any such acts or omissions nor for any error of judgment or mistake of fact
or law other than such person's gross negligence or willful misconduct. The Bank
may file one or more financing statements disclosing its security interest in
all or any part of the Collateral without any Pledgor's signature appearing
thereon, and each Pledgor also hereby grants the Bank a power of attorney to
execute any such financing statements, and any amendments or supplements
thereto, on behalf of such Pledgor without notice thereof to such Pledgor. The
foregoing powers of attorney, being coupled with an interest, are irrevocable
until the Obligations have been fully paid and satisfied and each commitment of
the Bank to extend credit to or for the account of any one or more of the
Borrowers have expired or otherwise has terminated; provided, however, that the
Bank agrees, as a personal covenant to the relevant Pledgor, not to exercise the
powers of attorney set forth in this Section unless an Event of Default exists.
Section 7. Defaults and Remedies. (a) The occurrence of any one
or more of the following events shall constitute an "event of default"
hereunder:
(i) default in the payment when due (whether by lapse of
time, acceleration or otherwise) of all or any part of the principal of
the Obligations or any part thereof; or
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<PAGE> 141
(ii) default for five (5) business days or more on the payment
when due of the remainder of the Obligations (including, without
limitation, interest or any fee or other amount comprising such
remainder of the Obligations); or
(iii) any representation or warranty made by the Pledgors or
any of them herein, or in any statement or certificate furnished by it
pursuant hereto, or in connection with this Agreement, shall be false
in any material respect as of the date of the issuance or making
thereof; or
(iv) default in the observance or performance of any other
provision hereof which is not remedied within thirty (30) days after
written notice thereof to the appropriate Pledgor by the Bank; or
(v) the occurrence of any event or the existence of any
condition which is specified as an Event of Default under the Credit
Agreement, whether or not the same is in force.
The term "event of default" as used herein shall mean the events of default
specified in this Section 7.
(b) Upon the occurrence of any event of default hereunder, all rights
of the Pledgors to receive and retain the distributions which they are entitled
to receive and retain pursuant to SectionE5(b) hereof shall, at the option of
the Bank cease and thereupon become vested in the Bank which, in addition to all
other rights provided herein or by law, shall then be entitled solely and
exclusively to receive and retain the distributions which the Pledgors would
otherwise have been authorized to retain pursuant to SectionE5(b) hereof and all
rights of the Pledgors to exercise the voting and/or consensual powers which
they are entitled to exercise pursuant to SectionE5(a) hereof shall, at the
option of the Bank, cease and thereupon become vested in the Bank which, in
addition to all other rights provided herein or by law, shall then be entitled
solely and exclusively to exercise all voting and other consensual powers
pertaining to the Collateral and to exercise any and all rights of conversion,
exchange or subscription and any other rights, privileges or options pertaining
thereto as if the Bank were the absolute owner thereof including, without
limitation, the right to exchange, at its discretion, the Collateral or any part
thereof upon the merger, consolidation, reorganization, recapitalization or
other readjustment of the respective issuer thereof or upon the exercise by or
on behalf of any such issuer or the Bank of any right, privilege or option
pertaining to the Collateral or any part thereof and, in connection therewith,
to deposit and deliver the Collateral or any part thereof with any committee,
depositary, transfer Bank, registrar or other designated agency upon such terms
and conditions as the Bank may determine. In the event the Bank in good faith
believes any of the Collateral constitutes
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<PAGE> 142
restricted securities within the meaning of any applicable securities law, any
disposition thereof in compliance with such laws shall not render the
disposition commercially unreasonable.
(c) Upon the occurrence of any event of default hereunder, the Bank
shall have, in addition to all other rights provided herein or by law, the
rights and remedies of a secured party under the UCC (regardless of whether the
UCC is the law of the jurisdiction where the rights or remedies are asserted and
regardless of whether the UCC applies to the affected Collateral), and further
the Bank may, without demand and without advertisement, notice, hearing or
process of law to the extent permitted by law, all of which the Pledgors waive
to the extent permitted by law, at any time or times, sell and deliver any or
all of the Collateral held by or for it at public or private sale, at any
securities exchange or brokerOs board or at any of the BankOs offices or
elsewhere, for cash, upon credit or otherwise, at such prices and upon such
terms as the Bank deems advisable, in its sole discretion. In the exercise of
any such remedies, the Bank may sell the Collateral as a unit even though the
sales price thereof may be in excess of the amount remaining unpaid on the
Obligations. The Bank is authorized at any sale or other disposition of the
Collateral, if it deems it advisable so to do, to restrict the prospective
bidders or purchasers to persons who will represent and agree that they are
purchasing for their own account for investment, and not with a view to the
distribution or resale of any of the Collateral. Also, if less than all the
Collateral is sold, the Bank shall have no duty to marshal or apportion the part
of the Collateral so sold as between the Pledgors, or any of them, but may sell
and deliver any or all of the Collateral without regard to which of the Pledgors
are the owners thereof. In addition to all other sums due to the Bank, each
Pledgor shall pay the Bank all costs and expenses incurred by the Bank,
including reasonable attorneysO fees and court costs, in obtaining, liquidating
or enforcing payment of Collateral or the Obligations or in the prosecution or
defense of any action or proceeding by or against the Bank or any Pledgor
concerning any matter arising out of or connected with this Agreement or the
Collateral or the Obligations including, without limitation, any of the
foregoing arising in, arising under or related to a case under the United States
Bankruptcy Code (or any successor statute). Any requirement of reasonable notice
shall be met if such notice is personally served on or mailed, postage prepaid,
to the Pledgors in accordance with SectionE11(b) hereof at least 10 days before
the time of sale or other event giving rise to the requirement of such notice;
provided, however, no notification need be given to a Pledgor if such Pledgor
has signed, after an event of default hereunder has occurred, a statement
renouncing any right to notification of sale or other intended disposition. The
Bank shall not be obligated to make any sale or other disposition of the
Collateral regardless of notice having been given. The Bank may be the purchaser
at any sale or other disposition of the Collateral or any part thereof. Each
Pledgor hereby waives all of its rights of redemption from any sale or other
disposition of the Collateral or any part thereof. The Bank may postpone or
cause the postponement of the sale of all or any portion of the Collateral by
announcement at the time and place of such sale, and such sale may, without
further notice, be made at the time and place to which the sale was
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<PAGE> 143
postponed or the Bank may further postpone such sale by announcement made at
such time and place.
(d) The powers conferred upon the Bank hereunder are solely to
protect its interest in the Collateral and shall not impose on it any duties to
exercise such powers. The Bank shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equivalent to that which the Bank
accords its own property, consisting of similar types of securities, it being
understood, however, that the Bank shall have no responsibility for (i)
ascertaining or taking any action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Collateral, whether or not
the Bank has or is deemed to have knowledge of such matters, (ii) taking any
necessary steps to preserve rights against any parties with respect to any
Collateral, or (iii) initiating any action to protect the Collateral or any part
thereof against the possibility of a decline in market value. This Agreement
constitutes an assignment of rights only and not an assignment of any duties or
obligations of the Pledgors in any way related to the Collateral, and the Bank
shall have no duty or obligation to discharge any such duty or obligation.
Neither the Bank, nor any party acting as attorney for the Bank, shall be liable
hereunder for any acts or omissions or for any error of judgment or mistake of
fact or law other than such person's gross negligence or willful misconduct.
(e) Failure by the Bank to exercise any right, remedy or option under
this Agreement or any other agreement between any Pledgor and the Bank or
provided by law, or delay by the Bank in exercising the same, shall not operate
as a waiver; and no waiver shall be effective unless it is in writing, signed by
the party against whom such waiver is sought to be enforced and then only to the
extent specifically stated. The rights and remedies of the Bank under this
Agreement shall be cumulative and not exclusive of any other right or remedy
which the Bank may have. For purposes of this Agreement, an event of default
hereunder shall be construed as continuing after its occurrence until the same
is waived in writing by the Bank in accordance with the Credit Agreement.
Section 8. Application of Proceeds. The proceeds and avails of
the Collateral at any time received by the Bank after the occurrence of any
Event of Default hereunder shall, when received by the Bank in cash or its
equivalent, be applied by the Bank as follows:
(i) First, to the payment and satisfaction of all sums paid
and costs and expenses incurred by the Bank hereunder or otherwise in
connection herewith, including such monies paid or incurred in
connection with protecting, preserving or realizing upon the Collateral
or enforcing any of the terms hereof, including attorneysO fees and
court costs, together with any interest thereon (but without preference
or priority of principal
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<PAGE> 144
over interest or of interest over principal), to the extent the Bank is
not reimbursed therefor by the Pledgors; and
(ii) Second, to the payment and satisfaction of the remaining
Obligations, whether or not then due (in whatever order the Bank
elects), both for interest and principal.
The Pledgors shall remain liable to the Bank for any deficiency. Any surplus
remaining after the full payment and satisfaction of the foregoing shall be
returned to the Parent Borrower or to whomsoever the Bank reasonably determines
is lawfully entitled thereto.
Section 9. Continuing Agreement. This Agreement shall be a
continuing agreement in every respect and shall remain in full force and effect
until all of the Obligations, both for principal and interest, have been fully
paid and satisfied and each commitment of the Bank to extend credit or otherwise
make financial accommodations available to any one or more of the Borrowers has
expired or otherwise has been terminated. Upon such termination of this
Agreement, the Bank shall, upon the request and at the expense of the Pledgors,
forthwith release all its liens and security interests hereunder.
Section 10. Primary Security; Obligations Absolute. The lien and
security herein created and provided for stand as direct and primary security
for the Obligations. No application of any sums received by the Bank in respect
of the Collateral or any disposition thereof to the reduction of the Obligations
or any portion thereof shall in any manner entitle any Pledgor to any right,
title or interest in or to the Obligations or any collateral security therefor,
whether by subrogation or otherwise, unless and until all Obligations have been
fully paid and satisfied and each commitment of the Bank to extend credit or
otherwise make financial accommodations available to any one or more of the
Borrowers has expired or otherwise has been terminated. The Pledgors acknowledge
and agree that the lien and security hereby created and provided for are
absolute and unconditional and shall not in any manner be affected or impaired
by any acts or omissions whatsoever of the Bank or any other holder of any of
the Obligations, and without limiting the generality of the foregoing, the lien
and security hereof shall not be impaired by any acceptance by the Bank or any
other holder of any of the Obligations of any other security for or guarantors
upon any Obligations or by any failure, neglect or omission on the part of the
Bank or any other holder of any of the Obligations to realize upon or protect
any of the Obligations or any collateral security therefor. The lien and
security hereof shall not in any manner be impaired or affected by (and the
Bank, without notice to anyone, is hereby authorized to make from time to time)
any sale, pledge, surrender, compromise, settlement, release, renewal,
extension, indulgence, alteration, substitution, exchange, change in,
modification or disposition of any of the Obligations, or of any collateral
security therefor, or of any guaranty thereof, or of any instrument or agreement
setting forth the terms and conditions pertaining to any of the foregoing.
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<PAGE> 145
The Bank may at its discretion at any time grant credit to any one or more of
the Borrowers without notice to any Pledgor in such amounts and on such terms as
the Bank may elect without in any manner impairing the lien and security hereby
created and provided for. In order to realize hereon and to exercise the rights
granted to the Bank hereunder and under applicable law, there shall be no
obligation on the part of the Bank or any other holder of any of the Obligations
at any time to first resort for payment to the Borrowers or to any other obligor
on any of the Obligations or to any guaranty of the Obligations or any portion
thereof or to resort to any other collateral security, property, liens or any
other rights or remedies whatsoever, and the Bank shall have the right to
enforce this Agreement irrespective of whether or not other proceedings or steps
are pending seeking resort to or realization upon or from any of the foregoing.
Section 11. Miscellaneous. (a) This Agreement cannot be changed or
terminated orally. This Agreement shall create a continuing lien on and security
interest in the Collateral and shall be binding upon each Pledgor, its
successors and assigns, and shall inure, together with the rights and remedies
of the Bank hereunder, to the benefit of the Bank, and its successors and
assigns; provided, however, that no Pledgor may assign its rights or delegate
its duties hereunder without the Bank's prior written consent.
(b) All notices hereunder shall be in writing (including, without
limitation, notice by telecopy) and shall be given to the relevant party, and
shall be deemed to have been made when given to the relevant party, in
accordance with SectionE12.11 of the Credit Agreement. All notices to the
Pledgors hereunder shall be made to the Parent Borrower, as their agent, in
accordance with SectionE12.11 of the Credit Agreement.
(c) In the event that any provision hereof shall be deemed to be
invalid or unenforceable by reason of the operation of any law or by reason of
the interpretation placed thereon by any court, this Agreement shall be
construed as not containing such provision, but only as to such jurisdictions
where such law or interpretation is operative, and the invalidity or
unenforceability of such provision shall not affect the validity of any
remaining provision hereof, and any and all other provisions hereof which are
otherwise lawful and valid shall remain in full force and effect.
(d) To the extent permissible under the laws of any jurisdiction
located outside of the United States of America, this Agreement shall be deemed
to have been made in the State of Illinois and shall be governed by, and
construed in accordance with, the internal laws of the State of Illinois. All
terms which are used in this Agreement which are defined in the UCC shall have
the same meanings herein as said terms do in the UCC unless this Agreement shall
otherwise specifically provide. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of any provision hereof.
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<PAGE> 146
(e) This Agreement may be executed in any number of counterparts and
by different parties hereto on separate counterpart signature pages, each
constituting an original, but all together one and the same instrument. Each
Pledgor acknowledges that this Agreement is and shall be effective upon its
execution and delivery by such Pledgor to the Bank, and it shall not be
necessary for the Bank to execute this Agreement or any other acceptance hereof
or otherwise to signify or express its acceptance hereof.
(f) In the event the Bank shall at any time in its discretion permit
a substitution of Pledgors hereunder or a party shall wish to become a Pledgor
hereunder, such substituted or additional Pledgor shall, upon executing an
agreement in the form attached hereto as Schedule C, become a party hereto and
be bound by all the terms and conditions hereof to the same extent as though
such Pledgor had originally executed this Agreement and, in the case of a
substitution, in lieu of the Pledgor being replaced. No such substitution shall
be effective absent the written consent of the Bank nor shall it in any manner
affect the obligations of the other Pledgors hereunder.
(g) To the extent permissible under the laws of any jurisdiction
located outside of the United States of America, each Pledgor hereby submits to
the non-exclusive jurisdiction of the United States District Court for the
Northern District of Illinois and of any Illinois state court sitting in the
City of Chicago for purposes of all legal proceedings arising out of or relating
to this Agreement or the transactions contemplated hereby. Each Pledgor
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient form. EACH PLEDGOR AND THE BANK HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
[SIGNATURE PAGE TO FOLLOW]
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<PAGE> 147
IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be duly
executed and delivered as of the date first above written.
PLEDGORS:
Comshare, Incorporated COMSHARE HOLDINGS COMPANY
555 Briarwood Circle 22 Chelsea Manor Street
Ann Arbor, Michigan 48108 London SW3 5RL, England
United Kingdom
By By
------------------,--------------- --------------------,------------
(Print or Type Name) (Title) (Print or Type Name) (Title)
COMSHARE INTERNATIONAL B.V. COMSHARE LIMITED
- --------------------------- 22 Chelsea Manor Street
- --------------------------- Long SW3 5RL, England
- --------------------------- United Kingdom
By By
------------------,-------------- ---------------------,-------------
(Print or Type Name) (Title) (Print or Type Name) (Title)
Acknowledged and agreed to as of the date first above written.
HARRIS TRUST AND SAVINGS BANK
By
----------------------,--------------
(Print or Type Name) (Title)
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<PAGE> 148
SCHEDULE A
THE PLEDGED SECURITIES
<TABLE>
<CAPTION>
NAME OF NAME OF JURISDICTION OF NO. OF CERTIFICATE PERCENTAGE OF
PLEDGOR ISSUER INCORPORATION SHARES CLASS NO. ISSUER'S STOCK
<S> <C> <C> <C> <C> <C> <C>
Comshare, Comshare (U.S.), Michigan 1,000 Ordinary 1 100
Incorporated Inc.
Comshare, Comshare Netherlands 2,670 Ordinary N/A 100
Incorporated International B.V.
Comshare, Comshare Limited Canada 2,001,827 Ordinary 1993-2 100
Incorporated
Comshare, CS Iberia sl Spain N/A* Ordinary N/A* 100
Incorporated
Comshare, CS srl Italy N/A* Ordinary N/A* 100
Incorporated
Comshare, Comshare South Australia 36 Ordinary ___ 100
Incorporated Pacific Pty Ltd.
Comshare Comshare Holdings England and Wales ____ _______ ___ 100
International B.V. Company (United Kingdom)
Comshare Holdings Comshare Limited England and Wales 5,908,980 Ordinary 100 approximately
Company (United Kingdom) 100
Comshare Limited Comshare, S.A. France 10,000 Ordinary N/A 100
Comshare Limited Comshare GmbH Germany 2 Ordinary N/A 100
</TABLE>
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<PAGE> 149
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Comshare Limited Comshare England and Wales 2 Ordinary 1 100
International (United Kingdom)
Limited
</TABLE>
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<PAGE> 150
SCHEDULE B
AMENDMENT TO PLEDGE AGREEMENT
Reference is hereby made to that certain Pledge Agreement dated as of
SeptemberE23, 1997 (as the same may be amended, the "Pledge Agreement"), from
Comshare, Incorporated and the other Pledgors signatory thereto to Harris Trust
and Savings Bank. Capitalized terms not otherwise defined herein shall have the
meaning set forth in the Pledge Agreement.
Subsequent to the Pledgors' delivery of the Pledge Agreement, certain
shares of stock have been added as Pledged Securities under the Pledge
Agreement. As a result of such addition, Schedule A of the Pledge Agreement does
not accurately describe the shares of capital stock currently held by the Bank
as collateral under the Pledge Agreement.
The Pledgors now desire to amend Schedule A to the Pledge Agreement to
reflect such addition, and this instrument shall constitute an agreement between
the Pledgors and the Bank amending the Pledge Agreement in the respects, but
only in the respects, hereinafter set forth:
1. Schedule A of the Pledge Agreement shall be and hereby is
amended and as so amended shall be restated in its entirety to read as
Annex A attached hereto.
2. As collateral security for the Obligations, each Pledgor
hereby grants to the Bank a continuing security interest in, and
acknowledges and agrees that the Bank has and shall continue to have a
continuing security interest in, all the shares of capital stock of
each issuer listed and described on Annex A attached hereto and all the
other properties, rights, interests and privileges comprising the
Collateral (as such term is defined in the Pledge Agreement after
giving effect to this Amendment), to the same extent and with the same
force and effect as if the shares of stock described on Annex A had
originally been included on Schedule A to the Pledge Agreement. The
foregoing granting clause is in addition to and supplemental of and not
in substitution for the granting clause contained in the Pledge
Agreement. Neither the Pledgors nor the Bank intend by this Amendment
to in any way impair or otherwise affect the lien of the Pledge
Agreement on such of the Collateral which was subject to the Pledge
Agreement prior to giving effect to this Amendment.
3. Each Pledgor hereby repeats and reaffirms all of its
covenants, agreements, representations and warranties contained in the
Pledge Agreement, each and all of which shall be applicable to all of
the stock and other properties, rights, interests and privileges
subject to the lien of the Pledge Agreement after giving effect to this
Amendment. Each Pledgor hereby certifies that no event of default or
event which, with
<PAGE> 151
notice or lapse of time or both, would constitute an event of default
exists under the Pledge Agreement after giving effect to this
Amendment.
4. No reference to this Amendment need be made in any note,
instrument or other document at any time referring to the Pledge
Agreement, any reference in any of such to the Pledge Agreement to be
deemed to reference to the Pledge Agreement as modified hereby. All
references in the Pledge Agreement to the term OPledged SecuritiesO
shall be deemed a reference to such term as defined in the Pledge
Agreement after giving effect to this Amendment.
5. Except as specifically modified hereby, all the terms and
conditions of the Pledge Agreement shall stand and remain unchanged and
in full force and effect. This Amendment shall be effective upon the
PledgorsO execution and delivery thereof to the Bank, no acceptance by
the Bank being required.
Dated as of __________, 199_.
PLEDGORS:
[INSERT NAMES OF EXISTING PLEDGORS]
By
_____________________,______________
(Print or Type Name) (Title)
Acknowledged and agreed to as of the date first above written.
HARRIS TRUST AND SAVINGS BANK
By
_____________________, ___________
(Print or Type Name) (Title)
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<PAGE> 152
ANNEX A
TO AMENDMENT TO PLEDGE AGREEMENT
THE PLEDGED SECURITIES
<TABLE>
<CAPTION>
NAME OF NAME OF JURISDICTION OF NO. OF CERTIFICATE PERCENTAGE OF
PLEDGOR ISSUER INCORPORATION SHARES CLASS NO. ISSUER'S STOCK
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 153
SCHEDULE C
ASSUMPTION AND SUPPLEMENTAL PLEDGE AGREEMENT
THIS AGREEMENT dated as of this _____ day of ______________, 199___
from [NEW PLEDGOR], a __________ (the "New Pledgor"), to Harris Trust and
Savings Bank (the "Bank");
WITNESSETH THAT:
WHEREAS, Comshare, Incorporated and certain other parties have executed
and delivered to the Bank that certain Pledge Agreement dated as of September
23, 1997 (such Pledge Agreement, as the same may from time to time be modified
or amended, including supplements thereto which add additional parties as
Pledgors thereunder, being hereinafter referred to as the "Pledge Agreement")
pursuant to which such parties (the "Existing Pledgors") have granted to the
Bank a lien on and security interest in such Existing Pledgors' Collateral (as
such term is defined in the Pledge Agreement) to secure the Obligations (as such
term is defined in the Pledged Agreement) of the Borrowers referred to therein
owing to the Bank arising out of or related to the Credit Agreement referred to
therein; and
WHEREAS, the Borrowers provide the New Pledgor with substantial
financial, managerial, administrative and technical support and the New Pledgor
will directly and substantially benefit from credit and other financial
accommodations extended and to be extended by the Bank to the Borrowers;
NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of advances
made or to be made, or credit accommodations given or to be given, to the
Borrowers by the Bank from time to time, the New Pledgor hereby agrees as
follows:
1. The New Pledgor acknowledges and agrees that it shall become a
OPledgorO party to the Pledge Agreement effective upon the date the New
PledgorOs execution of this Agreement and the delivery of this Agreement to the
Bank, and that upon such execution and delivery, all references in the Pledge
Agreement to the terms OPledgorO or OPledgorsO shall be deemed to include the
New Pledgor. Without limiting the generality of the foregoing, the New Pledgor
hereby repeats and reaffirms all grants (including the grant of a lien and
security interest), covenants, agreements, representations and warranties
contained in the Pledge Agreement as amended hereby, each and all of which are
and shall remain applicable to the Collateral from time to time owned by the New
Pledgor or in which the New Pledgor from time to time has any rights. Without
limiting the foregoing, in order to secure payment of the Obligations, whether
now existing or hereafter arising, the New Pledgor does hereby grant to the
Bank, and hereby agrees that the Bank has and shall continue to have a
continuing security interest in, among other
<PAGE> 154
things, all of the New PledgorOs Collateral (as such term is defined in the
Pledge Agreement) described in SectionE2 of the Pledge Agreement, each and all
of such granting clauses being incorporated herein by reference with the same
force and effect as if set forth in their entirety except that all references in
such clauses to the Existing Pledgor or any of them shall be deemed to include
references to the New Pledgor. Nothing contained herein shall in any manner
impair the priority of the liens and security interests heretofore granted in
favor of the Bank under the Pledge Agreement.
2. The New Pledgor hereby acknowledges and agrees that the
Obligations are secured by all of the Collateral according to, and otherwise on
and subject to, the terms and conditions of the Pledge Agreement to the same
extent and with the same force and effect as if the New Pledgor had originally
been one of the Existing Pledgors under the Pledge Agreement and had originally
executed the same as such an Existing Pledgor.
3. All capitalized terms used in this Agreement without definition
shall have the same meaning herein as such terms have in the Pledge Agreement,
except that any reference to the term OPledgorO or OPledgorsO and any provision
of the Pledge Agreement providing meaning to such term shall be deemed a
reference to the Existing Pledgors and the New Pledgor. Except as specifically
modified hereby, all of the terms and conditions of the Pledge Agreement shall
stand and remain unchanged and in full force and effect.
4. The New Pledgor agrees to execute and deliver such further
instruments and documents and do such further acts and things as the Bank may
reasonably deem necessary or proper to carry out more effectively the purposes
of this Agreement.
5. No reference to this Agreement need be made in the Pledge
Agreement or in any other document or instrument making reference to the Pledge
Agreement, any reference to the Pledge Agreement in any of such to be deemed a
reference to the Pledge Agreement as modified hereby.
6. To the extent permissible under the laws of any jurisdiction
located outside of the United States of America, this Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Illinois (without regard to principles of conflicts of law).
[NEW PLEDGOR]
By
---------------------,-----------------
(Print or Type Name) (Title)
c-20
<PAGE> 155
GUARANTY AGREEMENT
(from Comshare Holdings Company)
This Guaranty Agreement (the "guaranty") is made and given as of this 23rd
day of September, 1997 by Comshare Holdings Company, an unlimited liability
company organized under the law of England and Wales (hereinafter referred to
as the "undersigned") in favor of Harris Trust and Savings Bank, an Illinois
banking corporation (hereinafter referred to as the "Bank").
RECITALS
A. The undersigned is a subsidiary of Comshare, Incorporated, a
corporation organized under the laws of the State of Michigan in the United
States of America (the "Parent Debtor"). The Parent Debtor and one or more of
its subsidiaries may from time to time obtain credit accommodations and
facilities from the Bank (the Parent Debtor and each such subsidiary
hereinafter designated collectively as the "Debtors" and individually as
a"Debtor"). Each Debtor, the undersigned and the other subsidiaries of the
Parent Debtor comprise an integrated group of companies to which the Parent
Debtor provides financial, management, administrative and technical support.
The undersigned receives substantial direct benefit from such services. In
addition, the undersigned benefits indirectly from belonging to this integrated
group of companies, which in the aggregate possess substantially more assets
and resources than are possessed by the undersigned standing alone. The
interdependent nature of the businesses of the Parent Debtor and its
subsidiaries (including the undersigned) is such that the viability of each
subsidiary (including the undersigned) is dependent upon the continued success
of the Parent Debtor and its subsidiaries and upon the continuation of the
Parent Debtor's business relationships with its subsidiaries (including the
undersigned).
B. This guaranty is being issued by the undersigned in good faith and for
the purpose of carrying on its business and otherwise in furtherance of its
commercial interests. The undersigned believes itself solvent after its
execution and delivery of this guaranty and that the value of the consideration
received by the guarantor in the form of these direct and indirect benefits is
comparable to the value of the consideration provided by the guarantor's
execution of this guaranty.
C. These direct and indirect benefits to the undersigned will continue
only if each Debtor continues to have access to credit accommodations and
facilities to be afforded to it by the Bank, which the Bank will only make
available on the condition, among others, that the undersigned guaranty the
indebtedness, obligations and liabilities of each Debtor from time to time
owing to the Bank.
<PAGE> 156
NOW, THEREFORE, FOR VALUE RECEIVED and in consideration of advances made
or to be made, or credit given or to be given, or other financial accommodation
afforded or to be afforded to the Debtors by the Bank from time to time, the
undersigned hereby guarantees the full and prompt payment to the Bank at
maturity and at all times thereafter of any and all indebtedness, obligations
and liabilities of every kind and nature of each Debtor to the Bank, howsoever
evidenced, whether now existing or hereafter created or arising, whether direct
or indirect, absolute or contingent, joint or several, or joint and several and
howsoever owned, held or acquired, whether through discount, overdraft,
purchase, direct loan or as collateral, or otherwise (hereinafter all such
indebtedness, obligations and liabilities being collectively referred to as the
"Indebtedness"); and the undersigned further agrees to pay all expenses, legal
and/or otherwise (including court costs and reasonable attorneys' fees), paid
or incurred by the Bank in endeavoring to collect the Indebtedness, or any part
thereof, and in enforcing this guaranty in any litigation, bankruptcy or
insolvency proceeding or otherwise.
Notwithstanding anything in this guaranty to the contrary, the Bank's
right of recovery against the undersigned under this guaranty (excluding any
such recovery for Collection Costs) shall not exceed at any time the greater
of:
(x) U.S. $_________; or
(y) the sum (determined as of the date the Bank makes demand on this
guaranty) of (i) the principal amount then outstanding on loans and
advances (including trade credit) made after the date hereof by the
Debtors or any subsidiary of the Parent Debtor directly or indirectly to
the undersigned, whether or not funded out of the proceeds of credit
extended by the Bank, and (ii) the amount, if any, by which capital
contributions made after the date hereof by the Debtors or any subsidiary
of the Parent Debtor directly or indirectly to the undersigned exceeds
the amount of dividends paid after the date hereof by the undersigned to
the Debtors or any subsidiary of the Parent Debtor.
The undersigned's liability hereunder for Collection Costs is not limited by
the immediately preceding sentence.
This guaranty is a continuing, absolute and unconditional guaranty, and
shall remain in full force and effect until written notice of its
discontinuance shall be actually received by the Bank, and also until any and
all of the Indebtedness created, existing or committed to before receipt of
such notice shall be fully paid. The liability of the undersigned hereunder
shall in no way be affected or impaired by (and the Bank is hereby expressly
authorized to make from time
-2-
<PAGE> 157
to time, without notice to anyone) any sale, pledge, surrender, compromise,
settlement, release, renewal, extension, indulgence, alteration, substitution,
exchange, change in, modification or other disposition of any of the
Indebtedness, either express or implied, or of any contract or contracts
evidencing any thereof, or of any security or collateral therefor. The
liability of the undersigned hereunder shall also in no way be affected or
impaired by any acceptance by the Bank of any security for or other guarantors
upon any of the Indebtedness, or by any failure, neglect or omission on the
part of the Bank to realize upon or protect any of the Indebtedness, or any
collateral or security or other guaranty therefor, or to exercise any lien upon
or right of appropriation of any moneys, credits or property of any Debtor
possessed by the Bank toward the liquidation of the Indebtedness, or by any
application of payments or credits thereon. The Bank shall have the exclusive
right to determine how, when and what application of payments and credits, if
any, shall be made on the Indebtedness, or any part thereof. In order to hold
the undersigned liable hereunder, there shall be no obligation on the part of
the Bank, at any time, to resort for payment to the Debtors or to any other
guaranty, or to any other person or corporation, their properties or estate, or
resort to any collateral, security, property, liens or other rights or remedies
whatsoever and the Bank shall have the right to enforce this guaranty
irrespective of whether or not other proceedings or steps are pending seeking
resort to or realization upon or from any of the foregoing.
All diligence in collection or protection, and all presentment, demand,
protest and/or notice, as to any and everyone, whether or not any Debtor or the
undersigned or others, of dishonor and of default and of non-payment and of the
creation and existence of any and all of the Indebtedness, and of any security
and collateral therefor, and of the acceptance of this guaranty, and of any and
all extensions of credit and indulgence, are expressly waived.
The undersigned will not exercise or enforce any right of exoneration,
contribution, reimbursement, recourse or subrogation available to the
undersigned against any person liable for payment of the Indebtedness, or as to
any security therefor, unless and until the full amount owing to the Bank on
the Indebtedness has been paid and each commitment of the Bank to extend credit
to any Debtor shall have terminated, and the payment by the undersigned of any
amount pursuant to this guaranty shall not in any wise entitle the undersigned
to any right, title or interest (whether by way of subrogation or otherwise) in
and to any of the Indebtedness or any proceeds thereof or any security therefor
unless and until the full amount owing to the Bank on the Indebtedness has been
paid and each commitment of the Bank to extend credit to any Debtor shall have
terminated.
In the case of the dissolution, liquidation, or insolvency (howsoever
evidenced) of, or the institution of bankruptcy or receivership proceedings
against any Debtor or the undersigned, all of the Indebtedness then existing
shall, at the option of the Bank, immediately become due and accrued and
payable from the undersigned and, in such case, such Indebtedness shall become
a
-3-
<PAGE> 158
separate and independent obligation of the undersigned, as principal debtor and
not as surety, and, in respect thereof, the undersigned shall fully indemnify
the Bank for the full amount of such Indebtedness, notwithstanding such
dissolution, liquidation, insolvency, bankruptcy or receivership, as the case
may be. All dividends or other payments received from any Debtor, or on
account of any Debtor from whatsoever source, shall be taken and applied as
payment in gross, and this guaranty shall apply to and secure any ultimate
balance that shall remain owing to the Bank.
The Bank may, without any notice whatsoever to anyone, sell, assign, or
transfer all of the Indebtedness, or any part thereof, or grant participations
therein, and in that event each and every immediate and successive assignee,
transferee, or holder of or participant in all or any part of the Indebtedness,
shall have the right to enforce this guaranty, by suit or otherwise, for the
benefit of such assignee, transferee, holder or participant, as fully as if
such assignee, transferee, holder or participant were herein by name
specifically given such rights, powers and benefits; but the Bank shall have an
unimpaired right to enforce this guaranty for the benefit of the Bank or any
such participant, as to such of the Indebtedness that it has not sold, assigned
or transferred.
If any payment applied by the Bank to the Indebtedness is thereafter set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
any Debtor or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this guaranty be deemed to have continued in
existence, notwithstanding such application, and this guaranty shall be
enforceable as to such of the Indebtedness as fully as if such application had
never been made.
This guaranty shall be governed by and construed according to the laws of
the State of Illinois, in which State it shall be performed by the undersigned.
All payments to be made by the undersigned hereunder shall be made in the same
currency and funds in which the Indebtedness of the relevant Debtor is payable
at the principal Chicago office of Harris Trust and Savings Bank at 111 West
Monroe Street, Chicago, Illinois 60690 (or at such other place for the account
of the Bank as it may from time to time specify to the undersigned) in
immediately available and freely transferable funds at the place of payment,
all such payments to be paid without setoff, counterclaim or reduction and
without deduction for, and free from, any and all present or future taxes,
levies, imposts, duties, fees, charges, deductions, withholding or liabilities
with respect thereto or any restrictions or conditions of any nature. If the
undersigned is required by law to make any deduction or withholding on account
of any tax or other withholding or deduction from any sum payable by the
undersigned hereunder, the undersigned shall pay any such tax or other
withholding or deduction and shall pay such additional amount necessary to
ensure that, after making any payment, deduction or withholding, the Bank shall
receive and retain (free of any liability in respect of any payment, deduction
or withholding) a net sum equal to what it would
-4-
<PAGE> 159
have received and so retained hereunder had no such deduction, withholding or
payment been required to have been made.
The payment by the undersigned of any amount or amounts due the Bank
hereunder shall be made in the same currency (the "relevant currency") and
funds in which the underlying Indebtedness of any Debtor are payable. To the
fullest extent permitted by law, the obligation of the undersigned in respect
of any amount due in the relevant currency under this guaranty shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
relevant currency that the Bank may, in accordance with normal banking
procedures, purchase with the sum paid in such other currency (after any
premium and costs of exchange) on the business day immediately following the
day on which the Bank receives such payment. If the amount in the relevant
currency that may be so purchased for any reason falls short of the amount
originally due, the undersigned shall pay such additional amounts, in the
relevant currency, as may be necessary to compensate for the shortfall. Any
obligations of the undersigned not discharged by such payment shall, to the
fullest extent permitted by applicable law, be due as a separate and
independent obligation and, until discharged as provided herein, shall continue
in full force and effect.
The undersigned waives any and all defenses, claims and discharges of the
Debtors, or any other obligor, pertaining to the Indebtedness, except the
defense of discharge by payment in full. Without limiting the generality of
the foregoing, the undersigned will not assert, plead or enforce against the
Bank any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute, fraud,
incapacity, minority, usury, illegality or unenforceability which may be
available to any Debtor or any other person or entity liable in respect of any
of the Indebtedness, or any setoff available against the Bank to the Debtor or
any such other person or entity, whether or not on account of a related
transaction. The undersigned agrees that the undersigned shall be and remain
liable for any deficiency remaining after foreclosure of any mortgage or
security interest securing the Indebtedness, whether or not the liability of
the Debtors or any other obligor for such deficiency is discharged pursuant to
statute or judicial decision.
The undersigned hereby irrevocably submits to the non-exclusive
jurisdiction of any State of Illinois court or any federal court located in
Chicago, Illinois for the adjudication of any matter arising out of or relating
to this guaranty and consents to the service of process by registered or
certified mail out of any such court or by service of process on the Parent
Debtor (now at 555 Briarwood Circle, Ann Arbor, Michigan 48108) which the
undersigned hereby irrevocably appoints as its agent to receive, for it and on
its behalf, service of process in any action or proceeding in Illinois. Such
service shall be deemed completed on delivery to such process agent (whether or
not it is forwarded to and received by the undersigned) provided that notice of
such service of process is given by the Bank to the undersigned. If, for any
reason,
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<PAGE> 160
such process agent ceases to be able to act as such or no longer has an address
in Illinois, the undersigned irrevocably agrees to appoint a substitute process
agent acceptable to the Bank and to deliver to the Bank a copy of the new
agent's acceptance of that appointment within 30 days. Nothing contained
herein shall affect the right of the Bank to serve legal process in any other
manner or to bring any proceeding hereunder in any jurisdiction where the
undersigned may be amenable to suit. The undersigned hereby waives any
objection to any action or proceeding in any Illinois court or federal court
located in Chicago, Illinois on the grounds of venue or any claim that any
State of Illinois court or federal court located in Chicago, Illinois is an
inconvenient forum.
Any invalidity or unenforceability of any provision or application of this
guaranty shall not affect other lawful provisions and applications hereof, and
to this end the provisions of this guaranty are declared to be severable. This
guaranty may not be waived, amended, released or otherwise changed except by a
writing signed by the Bank.
All notices or other communications given hereunder by the Bank to the
undersigned shall be addressed to the undersigned at its address below or to
such other address as the undersigned shall designate by notice in writing to
the Bank. Any such notice or other communication shall be effective only upon
receipt thereof by the undersigned.
This guaranty and every part thereof shall be binding upon the
undersigned, and upon the heirs, legal representatives, successors and assigns
of the undersigned, and shall inure to the benefit of the Bank, its successors,
legal representatives and assigns. The undersigned waives notice of the Bank's
acceptance hereof.
SIGNED AND DELIVERED by the undersigned, this 23rd day of September, 1997.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS GUARANTY AS
OF THE TIME OF EXECUTION.
COMSHARE HOLDINGS COMPANY
(SEAL)
By
-------------------------------
Name:
--------------------------
Title:
-------------------------
ADDRESS:
22 Chelsea Manor Street
London SW3 5RL, England
United Kingdom
-6-
<PAGE> 161
GUARANTY AGREEMENT
(from Comshare International Limited)
This Guaranty Agreement (the "guaranty") is made and given as of this 23rd
day of September, 1997 by Comshare International Limited, a private limited
company organized under the law of England and Wales (hereinafter referred to
as the "undersigned") in favor of Harris Trust and Savings Bank, an Illinois
banking corporation (hereinafter referred to as the "Bank").
RECITALS
A. The undersigned is a subsidiary of Comshare, Incorporated, a
corporation organized under the laws of the State of Michigan in the United
States of America (the "Parent Debtor"). The Parent Debtor and one or more of
its subsidiaries may from time to time obtain credit accommodations and
facilities from the Bank (the Parent Debtor and each such subsidiary
hereinafter designated collectively as the "Debtors" and individually as
a"Debtor"). Each Debtor, the undersigned and the other subsidiaries of the
Parent Debtor comprise an integrated group of companies to which the Parent
Debtor provides financial, management, administrative and technical support.
The undersigned receives substantial direct benefit from such services. In
addition, the undersigned benefits indirectly from belonging to this integrated
group of companies, which in the aggregate possess substantially more assets
and resources than are possessed by the undersigned standing alone. The
interdependent nature of the businesses of the Parent Debtor and its
subsidiaries (including the undersigned) is such that the viability of each
subsidiary (including the undersigned) is dependent upon the continued success
of the Parent Debtor and its subsidiaries and upon the continuation of the
Parent Debtor's business relationships with its subsidiaries (including the
undersigned).
B. This guaranty is being issued by the undersigned in good faith and for
the purpose of carrying on its business and otherwise in furtherance of its
commercial interests. The undersigned believes itself solvent after its
execution and delivery of this guaranty and that the value of the consideration
received by the guarantor in the form of these direct and indirect benefits is
comparable to the value of the consideration provided by the guarantor's
execution of this guaranty.
C. These direct and indirect benefits to the undersigned will continue
only if each Debtor continues to have access to credit accommodations and
facilities to be afforded to it by the Bank, which the Bank will only make
available on the condition, among others, that the undersigned guaranty the
indebtedness, obligations and liabilities of each Debtor from time to time
owing to the Bank.
<PAGE> 162
NOW, THEREFORE, FOR VALUE RECEIVED and in consideration of advances made
or to be made, or credit given or to be given, or other financial accommodation
afforded or to be afforded to the Debtors by the Bank from time to time, the
undersigned hereby guarantees the full and prompt payment to the Bank at
maturity and at all times thereafter of any and all indebtedness, obligations
and liabilities of every kind and nature of each Debtor to the Bank, howsoever
evidenced, whether now existing or hereafter created or arising, whether direct
or indirect, absolute or contingent, joint or several, or joint and several and
howsoever owned, held or acquired, whether through discount, overdraft,
purchase, direct loan or as collateral, or otherwise (hereinafter all such
indebtedness, obligations and liabilities being collectively referred to as the
"Indebtedness"); and the undersigned further agrees to pay all expenses, legal
and/or otherwise (including court costs and reasonable attorneys' fees), paid
or incurred by the Bank in endeavoring to collect the Indebtedness, or any part
thereof, and in enforcing this guaranty in any litigation, bankruptcy or
insolvency proceeding or otherwise.
Notwithstanding anything in this guaranty to the contrary, the Bank's
right of recovery against the undersigned under this guaranty (excluding any
such recovery for Collection Costs) shall not exceed at any time the greater
of:
(x) U.S. $_________; or
(y) the sum (determined as of the date the Bank makes demand on this
guaranty) of (i) the principal amount then outstanding on loans and
advances (including trade credit) made after the date hereof by the
Debtors or any subsidiary of the Parent Debtor directly or indirectly to
the undersigned, whether or not funded out of the proceeds of credit
extended by the Bank, and (ii) the amount, if any, by which capital
contributions made after the date hereof by the Debtors or any subsidiary
of the Parent Debtor directly or indirectly to the undersigned exceeds
the amount of dividends paid after the date hereof by the undersigned to
the Debtors or any subsidiary of the Parent Debtor.
The undersigned's liability hereunder for Collection Costs is not limited by
the immediately preceding sentence.
This guaranty is a continuing, absolute and unconditional guaranty, and
shall remain in full force and effect until written notice of its
discontinuance shall be actually received by the Bank, and also until any and
all of the Indebtedness created, existing or committed to before receipt of
such notice shall be fully paid. The liability of the undersigned hereunder
shall in no way be affected or impaired by (and the Bank is hereby expressly
authorized to make from time to time, without notice to anyone) any sale,
pledge, surrender, compromise, settlement, release, renewal, extension,
indulgence, alteration, substitution, exchange, change in, modification or
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<PAGE> 163
other disposition of any of the Indebtedness, either express or implied, or of
any contract or contracts evidencing any thereof, or of any security or
collateral therefor. The liability of the undersigned hereunder shall also in
no way be affected or impaired by any acceptance by the Bank of any security
for or other guarantors upon any of the Indebtedness, or by any failure,
neglect or omission on the part of the Bank to realize upon or protect any of
the Indebtedness, or any collateral or security or other guaranty therefor, or
to exercise any lien upon or right of appropriation of any moneys, credits or
property of any Debtor possessed by the Bank toward the liquidation of the
Indebtedness, or by any application of payments or credits thereon. The Bank
shall have the exclusive right to determine how, when and what application of
payments and credits, if any, shall be made on the Indebtedness, or any part
thereof. In order to hold the undersigned liable hereunder, there shall be no
obligation on the part of the Bank, at any time, to resort for payment to the
Debtors or to any other guaranty, or to any other person or corporation, their
properties or estate, or resort to any collateral, security, property, liens or
other rights or remedies whatsoever and the Bank shall have the right to
enforce this guaranty irrespective of whether or not other proceedings or steps
are pending seeking resort to or realization upon or from any of the foregoing.
All diligence in collection or protection, and all presentment, demand,
protest and/or notice, as to any and everyone, whether or not any Debtor or the
undersigned or others, of dishonor and of default and of non-payment and of the
creation and existence of any and all of the Indebtedness, and of any security
and collateral therefor, and of the acceptance of this guaranty, and of any and
all extensions of credit and indulgence, are expressly waived.
The undersigned will not exercise or enforce any right of exoneration,
contribution, reimbursement, recourse or subrogation available to the
undersigned against any person liable for payment of the Indebtedness, or as to
any security therefor, unless and until the full amount owing to the Bank on
the Indebtedness has been paid and each commitment of the Bank to extend credit
to any Debtor shall have terminated, and the payment by the undersigned of any
amount pursuant to this guaranty shall not in any wise entitle the undersigned
to any right, title or interest (whether by way of subrogation or otherwise) in
and to any of the Indebtedness or any proceeds thereof or any security therefor
unless and until the full amount owing to the Bank on the Indebtedness has been
paid and each commitment of the Bank to extend credit to any Debtor shall have
terminated.
In the case of the dissolution, liquidation, or insolvency (howsoever
evidenced) of, or the institution of bankruptcy or receivership proceedings
against any Debtor or the undersigned, all of the Indebtedness then existing
shall, at the option of the Bank, immediately become due and accrued and
payable from the undersigned and, in such case, such Indebtedness shall become
a separate and independent obligation of the undersigned, as principal debtor
and not as surety, and, in respect thereof, the undersigned shall fully
indemnify the Bank for the full amount of
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such Indebtedness, notwithstanding such dissolution, liquidation, insolvency,
bankruptcy or receivership, as the case may be. All dividends or other
payments received from any Debtor, or on account of any Debtor from whatsoever
source, shall be taken and applied as payment in gross, and this guaranty shall
apply to and secure any ultimate balance that shall remain owing to the Bank.
The Bank may, without any notice whatsoever to anyone, sell, assign, or
transfer all of the Indebtedness, or any part thereof, or grant participations
therein, and in that event each and every immediate and successive assignee,
transferee, or holder of or participant in all or any part of the Indebtedness,
shall have the right to enforce this guaranty, by suit or otherwise, for the
benefit of such assignee, transferee, holder or participant, as fully as if
such assignee, transferee, holder or participant were herein by name
specifically given such rights, powers and benefits; but the Bank shall have an
unimpaired right to enforce this guaranty for the benefit of the Bank or any
such participant, as to such of the Indebtedness that it has not sold, assigned
or transferred.
If any payment applied by the Bank to the Indebtedness is thereafter set
aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
any Debtor or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this guaranty be deemed to have continued in
existence, notwithstanding such application, and this guaranty shall be
enforceable as to such of the Indebtedness as fully as if such application had
never been made.
This guaranty shall be governed by and construed according to the laws of
the State of Illinois, in which State it shall be performed by the undersigned.
All payments to be made by the undersigned hereunder shall be made in the same
currency and funds in which the Indebtedness of the relevant Debtor is payable
at the principal Chicago office of Harris Trust and Savings Bank at 111 West
Monroe Street, Chicago, Illinois 60690 (or at such other place for the account
of the Bank as it may from time to time specify to the undersigned) in
immediately available and freely transferable funds at the place of payment,
all such payments to be paid without setoff, counterclaim or reduction and
without deduction for, and free from, any and all present or future taxes,
levies, imposts, duties, fees, charges, deductions, withholding or liabilities
with respect thereto or any restrictions or conditions of any nature. If the
undersigned is required by law to make any deduction or withholding on account
of any tax or other withholding or deduction from any sum payable by the
undersigned hereunder, the undersigned shall pay any such tax or other
withholding or deduction and shall pay such additional amount necessary to
ensure that, after making any payment, deduction or withholding, the Bank shall
receive and retain (free of any liability in respect of any payment, deduction
or withholding) a net sum equal to what it would have received and so retained
hereunder had no such deduction, withholding or payment been required to have
been made.
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The payment by the undersigned of any amount or amounts due the Bank
hereunder shall be made in the same currency (the "relevant currency") and
funds in which the underlying Indebtedness of any Debtor are payable. To the
fullest extent permitted by law, the obligation of the undersigned in respect
of any amount due in the relevant currency under this guaranty shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
relevant currency that the Bank may, in accordance with normal banking
procedures, purchase with the sum paid in such other currency (after any
premium and costs of exchange) on the business day immediately following the
day on which the Bank receives such payment. If the amount in the relevant
currency that may be so purchased for any reason falls short of the amount
originally due, the undersigned shall pay such additional amounts, in the
relevant currency, as may be necessary to compensate for the shortfall. Any
obligations of the undersigned not discharged by such payment shall, to the
fullest extent permitted by applicable law, be due as a separate and
independent obligation and, until discharged as provided herein, shall continue
in full force and effect.
The undersigned waives any and all defenses, claims and discharges of the
Debtors, or any other obligor, pertaining to the Indebtedness, except the
defense of discharge by payment in full. Without limiting the generality of
the foregoing, the undersigned will not assert, plead or enforce against the
Bank any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute, fraud,
incapacity, minority, usury, illegality or unenforceability which may be
available to any Debtor or any other person or entity liable in respect of any
of the Indebtedness, or any setoff available against the Bank to the Debtor or
any such other person or entity, whether or not on account of a related
transaction. The undersigned agrees that the undersigned shall be and remain
liable for any deficiency remaining after foreclosure of any mortgage or
security interest securing the Indebtedness, whether or not the liability of
the Debtors or any other obligor for such deficiency is discharged pursuant to
statute or judicial decision.
The undersigned hereby irrevocably submits to the non-exclusive
jurisdiction of any State of Illinois court or any federal court located in
Chicago, Illinois for the adjudication of any matter arising out of or relating
to this guaranty and consents to the service of process by registered or
certified mail out of any such court or by service of process on the Parent
Debtor (now at 555 Briarwood Circle, Ann Arbor, Michigan 48108) which the
undersigned hereby irrevocably appoints as its agent to receive, for it and on
its behalf, service of process in any action or proceeding in Illinois. Such
service shall be deemed completed on delivery to such process agent (whether or
not it is forwarded to and received by the undersigned) provided that notice of
such service of process is given by the Bank to the undersigned. If, for any
reason, such process agent ceases to be able to act as such or no longer has an
address in Illinois, the undersigned irrevocably agrees to appoint a substitute
process agent acceptable to the Bank and to deliver to the Bank a copy of the
new agent's acceptance of that appointment within 30 days.
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Nothing contained herein shall affect the right of the Bank to serve legal
process in any other manner or to bring any proceeding hereunder in any
jurisdiction where the undersigned may be amenable to suit. The undersigned
hereby waives any objection to any action or proceeding in any Illinois court
or federal court located in Chicago, Illinois on the grounds of venue or any
claim that any State of Illinois court or federal court located in Chicago,
Illinois is an inconvenient forum.
Any invalidity or unenforceability of any provision or application of this
guaranty shall not affect other lawful provisions and applications hereof, and
to this end the provisions of this guaranty are declared to be severable. This
guaranty may not be waived, amended, released or otherwise changed except by a
writing signed by the Bank.
All notices or other communications given hereunder by the Bank to the
undersigned shall be addressed to the undersigned at its address below or to
such other address as the undersigned shall designate by notice in writing to
the Bank. Any such notice or other communication shall be effective only upon
receipt thereof by the undersigned.
This guaranty and every part thereof shall be binding upon the
undersigned, and upon the heirs, legal representatives, successors and assigns
of the undersigned, and shall inure to the benefit of the Bank, its successors,
legal representatives and assigns. The undersigned waives notice of the Bank's
acceptance hereof.
SIGNED AND DELIVERED by the undersigned, this 23rd day of September, 1997.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS GUARANTY AS
OF THE TIME OF EXECUTION.
COMSHARE INTERNATIONAL LTD.
(SEAL)
By
-------------------------------
Name:
--------------------------
Title:
-------------------------
ADDRESS:
22 Chelsea Manor Street
London SW3 5RL, England
United Kingdom
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT made as of this 23rd day of September, 1997, by
Comshare Limited, a corporation incorporated in Ontario, Canada (the "Debtor"),
with its mailing address as set forth on Schedule A hereto, and Harris Trust
and Savings Bank, an Illinois banking corporation (the"Bank"), with its mailing
address at 111 West Monroe Street, P.O. Box 755, Chicago, Illinois 60690;
W I T N E S S E T H T H A T:
WHEREAS, the Debtor has delivered to the Bank a guaranty agreement dated
September 23, 1997 (the "Guaranty") guaranteeing the obligations of Comshare,
Incorporated (the "Parent Borrower") and one or more of the Parent Borrower's
subsidiaries (the Parent Borrower and each such subsidiary hereinafter referred
to collectively as the "Borrowers" and individually as a "Borrower") to the
Bank; and
WHEREAS, the Bank will only make available to the Borrowers credit and
other financial accomodations on the condition, among others, that the Debtor
pledges its assets to secure the Guaranty;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Debtor, the Debtor hereby
agrees as follows:
1. Security Interest. Accordingly, the Debtor, in order to secure the
prompt payment and performance in full when due (whether by lapse of time,
acceleration or otherwise) of (i) any and all indebtedness, obligations and
liabilities of whatsoever kind and nature of the Debtor to the Bank (whether
arising before or after the filing of a petition in bankruptcy), whether direct
or indirect, absolute or contingent, due or to become due, and whether now
existing or hereafter arising and howsoever held, evidenced or acquired, and
whether several, joint or joint and several, (ii) any and all indebtedness,
obligations and liabilities of whatsoever kind and nature of each Borrower to
the Bank (whether arising before or after the filing of a petition in
bankruptcy), whether direct or indirect, absolute or contingent, due or to
become due, and whether now existing or hereafter arising and howsoever held,
evidenced or acquired, and whether several, joint or joint and several and
(iii) any and all reasonable expenses, commissions and charges, legal or
otherwise, suffered or incurred by the Bank in collecting or in enforcing any
of such indebtedness, obligations and liabilities or realizing on or protecting
or preserving any security therefor, including, without limitation, the lien
and security interest granted hereby (all of the indebtedness, obligations,
liabilities, expenses and charges described in clauses (i), (ii) and (iii)
above being hereinafter referred to as the "Obligations"), the Debtor hereby
grants to the Bank a security interest in and right of setoff against, and
acknowledges and agrees that the Bank has
<PAGE> 168
and shall continue to have a continuing security interest in and right of
setoff against, any and all of the Debtor's:
(a) Accounts. The Accounts whether now existing or hereafter
created or arising, and however evidenced or acquired, or in which the
Debtor now has or hereafter acquires any rights (the term "Accounts"
means and includes all accounts, debts, accounts receivable, and other
intangibles, instruments, notes, drafts, acceptances, chattel paper,
securities and security interests, any right of the Debtor to payment for
goods sold or leased or for services rendered, whether or not earned by
performance, and all other forms of obligations owing to the Debtor)
(including any and all claims and other rights for insurance against loss
or misappropriation or otherwise to the property of the Debtor);
(b) Customer Contracts. All right, title and interest in, to and
under contracts entered into by the Debtor with customers in its ordinary
course of business, whether now existing or hereafter created, acquired
or arising, or contracts in which the Debtor now has or hereafter
acquires any rights, including without limitation all such rights to
payment with respect to (i) software license agreements, (ii) software
maintenance agreements, (iii) software distribution agreements and (iv)
software implementation and consulting services agreements;
(c) Records and Cabinets. Supporting evidence and documents
relating to any of the above-described property, including without
limitation, copies of computer programs, disks, tapes and related
electronic data processing media, rights of the Debtor to retrieve the
same from third parties, written applications, credit information,
account cards, payment records, correspondence, delivery and installation
certificates, invoice copies, delivery receipts, notes and other
evidences of indebtedness, together with all books of account, ledgers
and cabinets in which the same are reflected or maintained, all whether
now existing or hereafter arising;
(d) Accessions and Additions. All accessions and additions to and
substitutions and replacements of any of the foregoing, whether now
existing or hereafter arising; and
(e) Proceeds. All proceeds of the foregoing, whether now existing
or hereafter arising;
all of the foregoing being herein sometimes referred to as the "Collateral".
2. Covenants, Agreements, Representations and Warranties. The Debtor
hereby covenants and agrees with, and represents and warrants to the Bank that:
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(a) The Debtor is a corporation or other entity duly organized,
existing and in good standing under the laws of Ontario, Canada, is the
sole and lawful owner of the Collateral and has full right, power and
authority to enter into this Agreement and to perform each and all of the
matters and things herein provided for; and the execution and delivery of
this Agreement, and the observance and performance of any of the matters
and things herein set forth, will not violate or contravene in any
material respect any provision of law or of the articles of incorporation
or by-laws or other organizational agreement of the Debtor or of any
indenture, loan agreement or other agreement of or affecting the Debtor
or any of its properties, or result in the creation or imposition of any
liens or encumbrance on any property of the Debtor.
(b) The Collateral is and will remain in the Debtor's possession at
the locations listed under Column 2 on Schedule A attached hereto. The
Debtor's chief executive office is listed opposite its name on Schedule A
attached hereto and the Debtor has no other places of business other than
those listed under Column 3 on Schedule A attached hereto. The Debtor
will not remove the Collateral from the locations specified in the first
sentence of this Section 2(b) without the Bank's prior written consent
(provided that if for any reason Collateral is at any time kept or
located at locations other than its present location or locations
hereafter consented to by the Bank, the Bank shall nevertheless have and
retain a security interest therein).
(c) The Collateral and every part thereof is and will be free and
clear of all security interests, liens (including without limitation
mechanics, laborers and statutory liens), attachments, levies and
encumbrances of every kind, nature and description and whether voluntary
or involuntary except for the security interest of the Bank therein and
as otherwise provided in the Credit Agreement (as hereinafter defined),
and the Debtor will warrant and defend the Collateral against any claims
and demands of all persons at any time claiming the same or any interest
therein adverse to the Bank.
(d) The Debtor will pay promptly when due all material taxes,
assessments, and governmental charges and levies upon or against the
Collateral in each case before the same become delinquent and before
penalties accrue thereon, unless and to the extent that the same are
being contested in good faith by appropriate proceedings.
(e) The Debtor at its own cost and expense will maintain, keep and
preserve the Collateral in good repair and condition and will not waste
or destroy such Collateral or any part thereof and will not be negligent
in the care and use of any Collateral and will not use or permit to be
used any Collateral in violation of any statute, ordinance or other
governmental requirement. The Debtor will perform in all material
respects its obligations under any contract or other agreement
constituting part of the Collateral, it
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being understood and agreed that the Bank has no responsibility to
perform such obligations.
(f) Except for liens permitted by the Credit Agreement and subject
to Section 4(a) hereof, the Debtor will not, without the Bank's prior
written consent, sell, assign, mortgage, lease or otherwise dispose of
the Collateral or any interest therein.
(g) The Debtor will at all times allow the Bank or its
representatives free access to and right of inspection of the Collateral;
provided, however, except during the continuance of any event of default
hereunder, such access and inspection shall be made only after reasonable
notice to the Parent Borrower or the Debtor and during normal business
hours. As to any premises not owned by the Debtor wherein any of the
Collateral is located, if any, the Debtor shall, if the Bank so requests,
cause each party having any right, title or interest in, or lien on, any
of such premises to enter into an agreement (any such agreement to
contain a legal description of such premises) whereby such party
disclaims any right, title and interest in, and lien on, the Collateral,
allowing the removal of such Collateral by the Bank and otherwise in form
and substance acceptable to the Bank.
(h) The Debtor agrees from time to time to deliver to the Bank such
evidence of the existence and identity of the Collateral and of its
availability as collateral security pursuant hereto (including, without
limitation, schedules describing all Accounts created or acquired by the
Debtor and any security therefor and other rights and benefits in respect
thereof, copies of customer invoices or the equivalent and original
shipping or delivery receipts for all merchandise and other goods sold or
leased or services rendered, together with the Debtor's warranty of the
genuineness thereof), as the Bank may reasonably request.
(i) The Debtor will comply in all material respects with the terms
and conditions of any leases, easements, right-of-way agreements or other
agreements covering the premises wherein the Collateral is located and
any orders, ordinances, laws or statutes of any city, state or other
governmental entity, department or agency having jurisdiction with
respect to such premises or the conduct of business thereon.
(j) On failure of the Debtor to perform any of the covenants and
agreements herein contained, the Bank may, at its option but in any event
with notice to the Parent Borrower or the Debtor (which need not
necessarily be prior notice), perform the same and in so doing may expend
such sums as the Bank may reasonably deem advisable in the performance
thereof, including without limitation the payment of any taxes, liens and
encumbrances, expenditures made in defending against any adverse claim
and all other
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<PAGE> 171
expenditures which the Bank may be compelled to make by operation of law
or which the Bank may make by agreement or otherwise for the protection
of the security hereof. All such sums and amounts so expended shall be
repayable by the Debtor immediately without notice or demand, shall
constitute so much additional Obligations hereby secured and shall bear
interest from the date said amounts are expended at the rate per annum
(computed on the basis of a 360-day year for the actual number of days
elapsed) determined by adding 2% to the rate per annum from time to time
announced by said Harris Trust and Savings Bank as its prime commercial
rate with any change in such rate per annum as so determined by reason of
a change in such prime commercial rate to be and become effective as of
and on the date of such change in said prime commercial rate (such rate
per annum as so determined being hereinafter referred to as the "Default
Rate"). No such performance of any covenant or agreement by the Bank on
behalf of the Debtor and no such advancement or expenditure therefor,
shall relieve the Debtor of any default under the terms of this
Agreement. The Bank, in making any payment hereby authorized may do so
according to any bill, statement or estimate procured from the
appropriate public office or holder of the claim to be discharged without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax assessment, sale, forfeiture, tax lien or title or
claim. The Bank, in performing any act hereunder, shall be the sole
judge of whether the Debtor is required to perform the same under the
terms of this Agreement.
(k) The Debtor warrants that it has not transacted business, and
does not transact business, under any trade names except as set forth on
Schedule B. The Debtor agrees that it will not change its name or
transact business under any trade names without first giving the Bank 30
days' prior written notice of its intent to do so.
(l) The Debtor agrees to execute and deliver to the Bank such
further agreements and assignments or other instruments and to do all
such other things as the Bank may deem necessary or appropriate to assure
the Bank its security interest hereunder, including such financing
statement or statements or amendments thereof or supplements thereto or
other instruments as the Bank may from time to time require in order to
comply with the Personal Property Security Act as enacted in the Province
of Ontario and any successor statute(s) thereto (the "Act"). The Debtor
hereby agrees that a carbon, photographic or other reproduction of this
Agreement or any such financing statement is sufficient for filing as a
financing statement by the Bank without notice thereof to the Debtor
wherever the Bank in its sole discretion desires to file the same. In
the event for any reason the law of any other jurisdiction than Ontario
becomes or is applicable to the Collateral or any part thereof, or to any
of the Obligations, the Debtor agrees to execute and deliver all such
instruments and to do all such other things as the Bank in its sole
discretion deems necessary or appropriate to preserve, protect and
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<PAGE> 172
enforce the security interests of the Bank under the law of such other
jurisdiction to at least the same extent as such security interests would
be protected under the Act. If any Collateral is in the possession or
control of any of the Debtor's agents or processors and unless the Bank
requests otherwise, the Debtor agrees to notify such agents or processors
in writing of the Bank's security interests therein, and upon the Bank's
request instruct them to hold all such Collateral for the Bank's account
and subject to the Bank's instructions. The Debtor agrees to mark its
books and records to reflect the security interests of the Bank in the
Collateral.
3. Special Provisions Re: Accounts. (a) As of the time any Account which
is an account receivable becomes subject to the security interests provided for
hereby, the Debtor shall be deemed to have warranted as to each and all of its
Accounts that each such Account and all papers and documents relating thereto
are genuine and in all respects what they purport to be; that each such Account
is valid and subsisting and if such Account is an account receivable, arises
out of and for services theretofore actually rendered or to be rendered by the
Debtor to, the account debtor named therein; that the amount of the Account
represented as owing is the correct amount actually and unconditionally owing,
except for normal cash discounts on normal trade terms in the ordinary course
of business if such Account is an account receivable; that the amount of such
Account represented as owing is not disputed, and is not subject to any
set-offs, credits, deductions or counter charges; that no Account is evidenced
by any instrument or chattel paper unless such instrument or chattel paper has
theretofore been endorsed by the Debtor and delivered to the Bank (except to
the extent the Bank specifically requests the Debtor not to do so with respect
to any such instrument or chattel paper); and that no surety bond was required
or given in connection with said Account or the contracts or purchase orders
out of which the same arose. Without limiting the foregoing, if any Account
arises out of a contract with the federal government of Canada or any
provincial government or any of their respective departments, agencies or
instrumentalities, the Debtor agrees to notify the Bank and execute whatever
instruments are required by the Bank in order that such Account shall be
assigned to the Bank and that proper notice of such assignment shall be given
under the Financial Administration Act (Canada) or other like statute.
(b) The Debtor shall keep all of its books and records relating to the
Accounts only at its chief executive office described in Section 2(b) hereof or
at the chief executive office of the Parent Borrower.
(c) From time to time, as the Bank may reasonably request of the Debtor,
the Debtor shall provide the Bank with schedules describing all Accounts
created or acquired by the Debtor, provided, however, that the failure of the
Debtor to execute and deliver such schedules shall not affect or limit the
Bank's security interest or other rights in and to any such Accounts. Together
with each schedule, the Debtor shall, if reasonably requested by the Bank,
furnish copies of
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customers' invoices or the equivalent, and original shipping or delivery
receipts, for all merchandise sold, and the Debtor warrants the genuineness
thereof.
4. Collection of Accounts. (a) Unless and until an event of default
hereunder occurs, the Debtor shall make collection of all of its Accounts and
may use the same to carry on its business in accordance with sound business
practice and otherwise subject to the terms hereof.
(b) Whether or not the Bank has exercised any or all of its rights under
other provisions of this Section 4 and upon the occurrence and during the
continuation of any event of default hereunder, in the event the Bank requests
the Debtor to do so:
(i) all instruments and chattel paper at any time constituting part
of the Accounts (including any postdated checks) shall, upon receipt by
the Debtor, be immediately endorsed to and deposited with Bank; and/or
(ii) the Debtor shall instruct all account debtors to remit all
payments in respect of Accounts to a lockbox to be maintained at the main
post office, Chicago, Illinois or such other place as may be designated
by the Bank, in any case under the sole custody and control of Bank.
(c) Upon the occurrence and during the continuation of any event of
default hereunder and whether or not the Bank has exercised any or all of its
rights under other provisions of this Section 4, the Bank or its designee may
notify the Debtor's customers or account debtors at any time that Accounts have
been assigned to the Bank or of the Bank's security interest therein and either
in its own name, or the Debtor's or both, demand, collect (including without
limitation through a lockbox analogous to that described in Section 4(b)(ii)
hereof), receive, receipt for, sue for, compound and give acquittance for any
or all amounts due or to become due on Accounts, and in the Bank's discretion
file any claim or take any other action or proceeding which the Bank may deem
necessary or appropriate to protect and realize upon the security interest of
the Bank in the Accounts.
(d) Any proceeds of Accounts or other Collateral transmitted to or
otherwise received by the Bank pursuant to any of the provisions of Sections
4(b) or 4(c) hereof shall be handled and administered by the Bank in and
through a remittance account at the Bank and the Debtor acknowledges that the
maintenance of such remittance account by the Bank is solely for the Bank's own
convenience and that the Debtor does not have any right, title or interest in
such remittance account or any amounts at any time standing to the credit
thereof. The Bank may apply all or any part of any proceeds of Accounts or
other Collateral received by it from any source to the payment of the
Obligations (whether or not then due and payable), such applications to be made
in such amounts, in such manner and order and at such intervals as the
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Bank may from time to time in its discretion determine, but not less often than
once each week. The Bank need not apply or give credit for any item included
in proceeds of Accounts or other Collateral until the Bank has received final
payment therefor at its office in cash or final solvent credits current in
Chicago, Illinois, acceptable to the Bank as such. However, if the Bank does
give credit for any item prior to receiving final payment therefor and the Bank
fails to receive such final payment or an item is charged back to the Bank for
any reason, the Bank may at its election in either instance charge the amount
of such item back against the remittance account, together with interest
thereon at the Default Rate. The Debtor shall accompany each transmission of
any proceeds of Accounts or other Collateral to the Bank with a report in such
form as the Bank shall require identifying the particular Account or other
Collateral from which the same arises or relates. The Bank, however, agrees
that unless and until default occurs in the payment when due of any of the
Obligations or any other event occurs or condition exists which constitutes an
event of default hereunder or under any indenture or loan or credit agreement
at any time in effect between the Debtor and the Bank or which, with the lapse
of time or the giving of notice, or both, would constitute such an event of
default, the Bank will release proceeds of Collateral from the remittance
account from time to time but not less often than once per week. The Debtor
hereby indemnifies the Bank from and against all liabilities, damages, losses,
actions, claims, judgments, costs, expenses, charges and reasonable attorney's
fees suffered or incurred by the Bank because of the maintenance of the
foregoing arrangements. The Bank shall have no liability or responsibility to
the Debtor for accepting any check, draft or other order for payment of money
bearing the legend "payment in full" or words of similar import or any other
restrictive legend or endorsement whatsoever or be responsible for determining
the correctness of any remittance.
5. Power of Attorney. In addition to any other powers of attorney
contained herein, the Debtor appoints the Bank, its nominee, or any other
person whom the Bank may designate as the Debtor's attorney in fact, with full
power to endorse the Debtor's names on any checks, notes, acceptances, money
orders, drafts or other forms of payment or security that may come into the
Bank's possession, to sign the Debtor's names on any invoice or bill of lading
relating to any Accounts, on drafts against customers, on schedules and
assignments of Accounts, on notices of assignment, on public records, on
verifications of accounts and on notices to customers, to send requests for
verification of Accounts to customers or account debtors, and to do all things
necessary to carry out this Agreement and after an event of default has
occurred hereunder, to notify the post office authorities to change the address
for delivery of the Debtor's mail to an address designated by the Bank and to
receive, open and dispose of all mail addressed to the Debtor. The Debtor
hereby ratifies and approves all acts of any such attorney and agree that
neither the Bank nor any such attorney will be liable for any acts or omissions
nor for any error of judgment or mistake of fact or law other than their own
gross negligence or willful misconduct. The foregoing power of attorney, being
coupled with an interest, is irrevocable until the Obligations have been fully
satisfied and each commitment of the Bank to extend credit to a
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<PAGE> 175
Borrower or any of them has expired or terminated. The Bank may file one or
more financing statements disclosing its security interest in any or all of the
Collateral without the Debtor's signature appearing thereon. The Debtor also
hereby grants the Bank a power of attorney to execute any such financing
statement, or amendments and supplements to financing statements, on behalf of
the Debtor without notice thereof to the Debtor, which power of attorney is
coupled with an interest and is irrevocable until the Obligations have been
fully satisfied.
6. Defaults and Remedies. (a) The occurrence of any one or more of the
following events shall constitute an "event of default" hereunder:
(i) default in the payment when due (whether by lapse of time,
acceleration or otherwise) of all or any part of the principal of the
Obligations or any part thereof; or
(ii) default for five (5) business days or more on the payment when
due of the remainder of the Obligations (including, without limitation,
interest or any fee or other amount comprising such remainder of the
Obligations); or
(iii) any representation or warranty made by the Debtor herein, or
in any statement or certificate furnished by it pursuant hereto, or in
connection with this Agreement, shall be false in any material respect as
of the date of the issuance or making thereof; or
(iv) default in the observance or performance of any other provision
hereof which is not remedied within thirty (30) days after written notice
thereof to the Debtor by the Bank; or
(v) the occurrence of any event or the existence of any condition
which is specified as an Event of Default under the Credit Agreement,
whether or not the same is in force.
The term "event of default" as used herein shall mean the events of default
specified in this Section 6.
(b) Upon the occurrence of any event of default hereunder, the Bank shall
have, in addition to all other rights provided herein or by law, the rights and
remedies of a secured party under the Act (regardless of whether the Act is the
law of the jurisdiction where the rights or remedies are asserted and
regardless of whether the Act applies to the affected Collateral), and further
the Bank may, without demand and without advertisement or notice, (other than
as required by law) all of which the Debtor hereby waives, at any time or
times, sell and deliver any or all Collateral held by or for it at public or
private sale, for cash, upon credit or otherwise, at
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<PAGE> 176
such prices and upon such terms as the Bank deems advisable, in its sole
discretion. In addition to all other sums due the Bank hereunder, the Debtor
agrees to pay to the Bank all costs and expenses incurred by the Bank,
including a reasonable allowance for attorneys' fees and court costs, in
obtaining, liquidating or enforcing payment of Collateral or Obligations or in
the prosecution or defense of any action or proceeding by or against the Bank
or the Debtor concerning any matter arising out of or connected with this
Agreement or the Collateral or Obligations, including without limitation any of
the foregoing arising in, arising under or related to a case under the
Bankruptcy and Insolvency Act (Canada). Any requirement of reasonable notice
shall be met if such notice is personally served on or mailed, postage prepaid,
to the Debtor in accordance with Section 10(b) hereof at least 10 days before
the time of sale or other event giving rise to the requirement of such notice;
however, no notification need be given to the Debtor if the Debtor has signed,
after an event of default hereunder has occurred, a statement renouncing any
right to notification of sale or other intended disposition. The Bank shall
not be obligated to make any sale or other disposition of the Collateral
regardless of notice having been given. The Bank may be the purchaser at any
such sale. The Debtor hereby waives all of its rights of redemption from any
such sale. Subject to the provisions of applicable law, the Bank may postpone
or cause the postponement of the sale of all or any portion of the Collateral
by announcement at the time and place of such sale, and such sale may, without
further notice, be made at the time and place to which the sale was postponed
or the Bank may further postpone such sale by announcement made at such time
and place.
(c) Without in any way limiting the foregoing, the Bank (or any agent
appointed by it) shall after an event of default has occurred hereunder have
the right, in addition to all other rights provided herein or by law, to take
physical possession of any and all of the Collateral and anything found
therein, the right for that purpose to enter without legal process any premises
where the Collateral may be found (provided such entry be done lawfully), and
the right to maintain such possession on the Debtor's premises (the Debtor
hereby agreeing to lease warehouses without cost or expense to the Bank or its
designee if the Bank so requests) or to remove the Collateral or any part
thereof to such other places as the Bank may desire. The Debtor shall, upon
the Bank's demand, assemble the Collateral and make it available to the Bank at
a place designated by the Bank. Any amounts paid to or received by the Debtor
shall be received as agent and in trust for the Bank and the Debtor shall
forthwith pay over same to the Bank. If the Bank exercises its right to take
possession of the Collateral, the Debtor shall also at its expense perform any
and all other steps requested by the Bank to preserve and protect the security
interest hereby granted in the Collateral, such as placing and maintaining
signs indicating the security interest of the Bank and appointing overseers for
the Collateral.
(d) The proceeds and avails of the Collateral at any time received by the
Bank after an event of default hereunder shall have occurred shall, when
received by the Bank in cash or its equivalent, be applied by the Bank as
follows:
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<PAGE> 177
(i) First, to the payment and satisfaction of all sums paid and
costs and expenses incurred by the Bank (or its agent) hereunder or
otherwise in connection herewith, including such monies paid or incurred
in connection with protecting, preserving or realizing upon the
Collateral or enforcing any of the terms hereof, including reasonable
attorneys' fees and court costs, together with any interest thereon (but
without preference or priority of principal over interest or of interest
over principal), to the extent the Bank is not reimbursed therefor by the
Debtor; and
(ii) Second, to the payment and satisfaction of the remaining
Obligations, whether or not then due (in whatever order the Bank elects),
both for interest and principal.
The Debtor shall remain liable to the Bank for any deficiency. Any surplus
remaining after the full payment and satisfaction of the foregoing may be
returned to the Debtor or to whomsoever a court of competent jurisdiction shall
determine to be entitled thereto.
(e) Failure by the Bank to exercise any right, remedy or option under this
Agreement or any other agreement between the Debtor and the Bank or provided by
law, or delay by the Bank in exercising the same, shall not operate as a
waiver; no waiver shall be effective unless it is in writing, signed by the
Bank and then only to the extent specifically stated. Neither the Bank, nor
any party acting as attorney for the Bank, shall be liable for any acts or
omissions or for any error of judgment or mistake of fact or law other than
their gross negligence or willful misconduct. The rights and remedies of the
Bank under this Agreement shall be cumulative and not exclusive of any other
right or remedy which the Bank may have.
7. Continuing Agreement. This Agreement shall be a continuing agreement
in every respect and shall remain in full force and effect until all of the
Obligations, both for principal and interest, have been fully paid and
satisfied and each commitment of the Bank to extend any credit to a Borrower
shall have terminated.
8. Primary Security; Obligations Absolute. The lien and security herein
created and provided for stand as direct and primary security for the
Obligations. No application of any sums received by the Bank in respect of the
Collateral or any disposition thereof to the reduction of the Obligations or
any portion thereof shall in any manner entitle the Debtor to any right, title
or interest in or to the Obligations or any collateral security therefor,
whether by subrogation or otherwise, unless and until all Obligations have been
fully paid and satisfied and each commitment of the Bank to extend credit to a
Borrower shall have expired. The Debtor acknowledges and agrees that the lien
and security hereby created and provided for are absolute and unconditional and
shall not in any manner be affected or impaired by any acts or omissions
whatsoever of the Bank or any other holder of any of the Obligations, and
without limiting the
-11-
<PAGE> 178
generality of the foregoing, the lien and security hereof shall not be impaired
by any acceptance by the Bank or any holder of any of the Obligations of any
other security for or guarantors upon any of the Obligations or by any failure,
neglect or omission on the part of the Bank or any other holder of any of the
Obligations to realize upon or protect any of the Obligations or any collateral
security therefor. The lien and security hereof shall not in any manner be
impaired or affected by (and the Bank, without notice to anyone, is hereby
authorized to make from time to time) any sale, pledge, surrender, compromise,
settlement, release, renewal, extension, indulgence, alteration, substitution,
exchange, change in, modification or disposition of any of the Obligations, or
of any collateral security therefor, or of any guaranty thereof or of any
obligor thereon. The Bank may at its discretion at any time grant credit to
any one or more of the Borrowers without notice to the Debtor in such amounts
and on such terms as the Bank may elect (all of such to constitute additional
Obligations) without in any manner impairing the lien and security hereby
created and provided for. No release, compromise or discharge of the Debtor
hereunder or with respect to any of the Obligations or any Collateral provided
by the Debtor shall release or discharge, or impair the agreements of the
Borrowers, or in any manner impair the liens and security interests granted
hereunder; and the Bank may proceed against the Collateral without proceeding
against the Borrowers, their respective properties or any other security or
guaranty whatsoever. Without limiting the generality of the foregoing, the
Bank may at any time or from time to time release the Borrowers or release any
Collateral or effect any compromise with the Borrowers, and no such release or
compromise shall in any manner impair or otherwise effect the liens granted by,
or the obligations of, the Debtor hereunder. In order to foreclose or
otherwise realize hereon and to exercise the rights granted the Bank hereunder
and under applicable law, there shall be no obligation on the part of the Bank
or any other holder of any of the Obligations at any time to first resort for
payment to the Borrowers or any other obligor on any of the Obligations or to
any guaranty of the Obligations or any portion thereof or to resort to any
other collateral security, property, liens or any other rights or remedies
whatsoever, and the Bank shall have the right to enforce this instrument
irrespective of whether or not other proceedings or steps are pending seeking
resort to or realization upon or from any of the foregoing.
9. Personal Jurisdiction. (a) Exclusive Jurisdiction. The Bank and the
Debtor agree that all disputes among them arising out of, connected with,
related to, or incidental to this Agreement, and whether arising in contract,
tort, equity, or otherwise, shall be resolved only by the courts located in
Ontario, Canada. The Debtor waives in all disputes any objection that the
Debtor may have to the location of the court considering the dispute.
(b) Other Jurisdictions. The Debtor agrees that the Bank shall have the
right to proceed against it or the Collateral in a court in any location to
enable the Bank to realize on the Collateral, or to enforce a judgment or other
court order entered in favor of the Bank. The Debtor agrees that it will not
assert any permissive counterclaims in any proceeding brought in
-12-
<PAGE> 179
accordance with this provision by the Bank to realize on the Collateral, or to
enforce a judgment or other court order in favor of the Bank. The Debtor
waives any objection that it may have to the location of the court in which the
Bank has commenced a proceeding described in this Subsection.
10. Miscellaneous. (a) This Agreement cannot be changed or terminated
orally. All of the rights, privileges, remedies and options given to the Bank
hereunder shall inure to the benefit of its successors and assigns, and all the
terms, conditions, promises, covenants, representations and warranties of and
in this Agreement shall bind the Debtor and its legal representatives,
successors and assigns, provided that the Debtor may not assign its rights or
delegate its duties hereunder without the Bank's prior written consent. The
Debtor hereby releases the Bank from any liability for any act or omission
relating to its Collateral or this Agreement, except the Bank's gross
negligence or willful misconduct.
(b) All communications provided for herein shall be in writing (including
as such, communications by telecopy), except as otherwise specifically provided
for hereinabove, and shall be deemed to have been given or made when served
personally or when deposited in the mail addressed to the Debtor at the Parent
Borrower's chief executive office at 555 Briarwood Circle, Ann Arbor, Michigan
48108, United States of America, or if to the Bank, at its address set forth in
the first paragraph of this Agreement, or at such other address as shall be
designated by any party hereto in a written notice given to each party pursuant
to this Section 10(b).
(c) The term "Credit Agreement" as used herein shall mean that certain
Credit Agreement dated as of September 23, 1997 by and between the Parent
Borrower, Comshare Limited, a private limited company organized under the laws
of England and Wales, and the Bank as the same may be amended or modified from
time to time, and any Credit Agreement between the Borrowers and the Bank which
replaces the foregoing Credit Agreement. All capitalized terms used herein
without definition shall have the same meanings herein as such terms have in
the Credit Agreement.
(d) Notwithstanding anything herein to the contrary, the right of recovery
hereunder against the Debtor with respect to the Obligations shall be limited
to $1.00 less than the amount of the lowest claim hereunder against the Debtor
which would render this Agreement void or voidable under applicable law.
(e) In the event that any provision hereof shall be deemed to be invalid
by reason of the operation of any law or by reason of the interpretation placed
thereon by any court, this Agreement shall be construed as not containing such
provision, but only as to such locations where such law or interpretation is
operative, and the invalidity of such provision shall not affect
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<PAGE> 180
the validity of any remaining provision hereof, and any and all other
provisions hereof which are otherwise lawful and valid shall remain in full
force and effect.
(f) This Agreement shall be deemed to have been made in the Province of
Ontario and shall be governed by the laws of the Province of Ontario (without
regard to the principles of conflicts of law). All terms which are used in
this Agreement which are defined in the Act shall have the same meanings herein
as said terms do in the Act unless this Agreement shall otherwise specifically
provide. The headings in this instrument are for convenience of reference only
and shall not limit or otherwise affect the meaning of any provision hereof.
(g) This Agreement may be executed in any number of counterparts, each
constituting an original, but all together one and the same instrument. The
Debtor acknowledges that this Agreement is and shall be effective upon its
execution and delivery by the Debtor to the Bank, and it shall not be necessary
for the Bank to execute this Agreement or any other acceptance hereof or
otherwise to signify or express its acceptance hereof. The Debtor hereby
acknowledges receipt of a copy of this Agreement.
(h) This Agreement is in addition to and not in substitution for any
former assignment and shall not be merged in any subsequent assignment.
-14-
<PAGE> 181
IN WITNESS WHEREOF, the Debtor has caused this Agreement to be duly
executed as of this 23rd day of September, 1997.
COMSHARE LIMITED
Address: 180 Attwell Drive, Suite 300
Etobicoke
Ontario, Canada M9W 6H4
By
Name:
-----------------------------
Title:
----------------------------
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<PAGE> 182
SCHEDULE A
<TABLE>
<S> <C> <C>
COLUMN 1 COLUMN 2 COLUMN 3
CHIEF
EXECUTIVE ADDITIONAL PLACES
NAME OF DEBTOR OFFICE OF BUSINESS
Comshare Limited 180 Attwell Drive None
Suite #300
Etobicoke
Ontario M9W 6H4
Canada
</TABLE>
<PAGE> 183
SCHEDULE B
TRADENAMES
NONE
<PAGE> 184
September 23, 1997
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60690
Re: Credit Facilities to Comshare, Incorporated (the "Company") and
Comshare Limited (the "Borrowing Subsidiary") under the Credit Agreement
dated as of September 23, 1997 by and among the Company, the
Borrowing Subsidiary and Harris Trust and
Savings Bank (the "Credit Agreement")
Gentlemen:
Pursuant to Section 7.2(a)(iv) of the above referenced Credit
Agreement, the Company hereby designates the following persons as "Authorized
Representatives" under the Credit Agreement:
TITLE/OFFICE NAME SIGNATURE
Senior Vice President, Kathryn A. Jehle ___________________
Chief Financial Officer
Treasurer, and Assistant
Secretary
_______________________ R. Michael Mahoney _________________________
_______________________ David H. Mackenzie _________________________
_______________________ Dennis G. Ganster _________________________
The Company certifies that the persons named above are at the date
hereof the duly elected, qualified and acting incumbents of their respective
offices of the Company set out at the left of their respective names, and the
signature at the right of said names, respectively, are the genuine signatures
of said persons.
Pursuant to Section 7.2(a)(iv) of the above referenced Credit
Agreement, the Borrowing Subsidiary hereby designates the following persons as
"Authorized Representatives" under the Credit Agreement:
<PAGE> 185
TITLE/OFFICE NAME SIGNATURE
____________________ __________________ ______________________
____________________ __________________ ______________________
____________________ __________________ ______________________
The Borrowing Subsidiary certifies that the persons named above are at
the date hereof the duly elected, qualified and acting incumbents of their
respective offices of the Borrowing Subsidiary set out at the left of their
respective names, and the signature at the right of said names, respectively,
are the genuine signatures of said persons.
COMSHARE, INCORPORATED
By
Its__________________________________
COMSHARE LIMITED
By
Its__________________________________
<PAGE> 186
COMSHARE INCORPORATED
COMSHARE LIMITED
REVOLVING CREDIT NOTE
Chicago, Illinois
September 23, 1997
On the Termination Date, for value received, the undersigned, COMSHARE
INCORPORATED, a Michigan corporation (the "Company"), and COMSHARE LIMITED, a
private limited company organized under the laws of England (the "Borrowing
Subsidiary") (the Company and the Borrowing Subsidiary being hereinafter
referred to collectively as the "Borrowers" and individually as a "Borrower"),
hereby jointly and severally promise to pay to the order of HARRIS TRUST AND
SAVINGS BANK (the "Bank") at its office at 111 West Monroe Street, Chicago,
Illinois (or in the case of Eurocurrency Portions denominated in an Optional
Currency, at such office as the Bank has previously notified the Company) in
the currency of such Loan in accordance with Section 3 of the Credit Agreement
hereinafter identified and defined, the aggregate unpaid principal amount of
all Loans made by the Bank to either Borrower pursuant to the Credit Agreement,
together with interest on the principal amount of each Loan from time to time
outstanding hereunder at the rates, and payable in the manner and on the dates,
specified in the Credit Agreement.
This Note evidences Loans made and to be made to the Borrowers by the Bank
under the Revolving Credit provided for under that certain Credit Agreement
dated as of September 23, 1997, between the Borrowers and the Bank (said Credit
Agreement, as the same may be amended, modified or restated from time to time,
being referred to herein as the "Credit Agreement").
Each Loan made against this Note, the Borrower to which such Loan was
made, any repayment of principal hereon, the status of each such Loan from time
to time as part of the Domestic Rate Portion or a Eurocurrency Portion, the
currency thereof and the interest rate and Interest Period applicable thereto
shall be endorsed by the holder hereof on a schedule to this Note or recorded
on the books and records of the holder hereof (provided that such entries shall
be endorsed on a schedule to this Note prior to any negotiation hereof). Each
Borrower agrees that in any action or proceeding instituted to collect or
enforce collection of this Note, the entries endorsed on a schedule to this
Note or recorded on the books and records of the holder hereof shall be prima
facie evidence of the unpaid principal balance of this Note, the Borrower to
which such Loan was made, the status of each Loan from time to time as part of
the Domestic Rate
<PAGE> 187
Portion or a Eurocurrency Portion, the currency thereof and the interest rate
and Interest Period applicable thereto.
This Note is issued by the Borrowers under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary
prepayments may be made hereon, and certain prepayments are required to be made
hereon, all in the events, on the terms and with the effects provided in the
Credit Agreement. All capitalized terms used herein without definition shall
have the same meanings herein as such terms are defined in the Credit
Agreement.
The Borrowers hereby jointly and severally promise to pay all costs and
expenses (including attorneys' fees) suffered or incurred by the holder hereof
in collecting this Note or enforcing any rights in any collateral therefor.
The Borrowers hereby waive presentment for payment and demand. THIS NOTE SHALL
BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE
STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
COMSHARE, INCORPORATED
By
Name:___________________________
Title:__________________________
COMSHARE LIMITED
By
Name:___________________________
Title:__________________________
<PAGE> 1
EXHIBIT 10.05
DATED 30TH JULY 1997
(1) COMSHARE LIMITED
and
(2) DAVID HUNTER MACKENZIE
DION O'LEARY
KATHRYN JEHLE
NICHOLAS PAUL SEATON BRAY
MARY ANN MOORE
_____________________________________
DEED OF VARIATION
- RELATING TO -
THE COMSHARE RETIREMENT AND
DEATH BENEFITS PLAN
_____________________________________
<PAGE> 2
THIS DEED OF VARIATION is made the 30th day of July 1997 BETWEEN COMSHARE
LIMITED of 22 Chelsea Manor Street London SW3 5RL ("the Principal Employer")
of the one part and DAVID HUNTER MACKENZIE of 74 Thetford Road New Malden
Surrey DION O'LEARY of 21 West Park Road Kew Richmond London TW9 4DB KATHRYN
JEHLE of 2455 Adare Ann Abor 48104 Michigan USA NICHOLAS PAUL SEATON BRAY of
14 Shelly Road High Wycombe Buckinghamshire HP11 2UP and MARY ANN MOORE
20 Lime Avenue Groby Leicester LE2 OEN ("the Trustees") of the other part
WHEREAS:-
(A) This Deed is supplemental inter alia to
(i) an Interim Trust Deed made 25th August 1971 between the
Principal Employer of the first part and the then trustees of the
second part whereby the Principal Employer established the Comshare
Retirement and Death Benefits Plan ("the Plan")
(ii) a Definitive Trust Deed made 28th April 1978 between the
Principal Employer of the first part and the then trustees of the
second part ("the Definitive Deed") bringing into effect rules ("the
Old Rules") in accordance with which the Plan was to be administered
(iii) a Deed of Variation made 21st December 1982 between the
Principal Employer of the first part and the then trustees of the
other part whereby the Principal Employer and the then trustees
amended the Definitive Deed with effect from 1st July 1981
(iv) a Deed of Variation made 3rd April 1990 between the Principal
Employer of the one part and the then trustees of the other part
(v) a Deed of Variation made 31st May 1990 between the Principal
Employer of the one part and the then trustees of the other part
2
<PAGE> 3
(vi) a Deed of Variation ("the Deed of Variation") made 28th August
1992 between the Principal Employer of the one part and the
then trustees of the other part bringing into effect new rules
("the Rules") in accordance with which the Plan is to be
administered
(vii) a Deed of Variation dated 27th January 1993 between the
Principal Employer of the one part and the then trustees of the
other part
(viii) a Deed of Retirement and Amendment dated 7th December 1994 between
the Principal Employer of the first part the continuing trustees
named therein of the second part and the retiring trustee named
therein of the third part.
(B) By Rule 23 of the Rules and Clause 5 of the Deed of Variation the
Principal Employer and the Trustees have power subject to the limitations
therein contained to amend or add to the Deed of Variation and the Rules
and to substitute other rules for the Rules.
(C) The Principal Employer and the Trustees wish to amend the Rules in the
manner hereinafter appearing
NOW THIS DEED WITNESSES that in exercise of the powers conferred by rule 23 of
the Rules and by clause 5 of the Deed of Variation and all other relevant
powers the Principal Employer and the Trustees hereby amend the Rules as
follows; each amendment to take effect from the date shown at its head:
1. With effect from 1 January 1991:
(a) The definition of "Pensionable Salary" in Rule 1 is deleted
and replaced by the following:
""Pensionable Salary" means unless it is otherwise agreed by letter
between the Member and the Principal Employer the Member's basic
annual salary or wages, plus any shift allowance or disturbance
allowance on the date of joining the Plan and on each subsequent
Plan Anniversary Date, plus the annual average of any profit
related pay, any commission received, any bonus received or
3
<PAGE> 4
due but not paid, in which case it shall be considered to have been
paid in the year in which it was due and in the case of a Category
3 Employee only, the notional value of any benefits in kind which
are assessable to income tax as emoluments under Schedule E, in the
three years up to the 30th June immediately before the Plan
Anniversary Date on which basic salary is determined less in the
case of a Category 1 Employee or a Category 2 Employee 1.25 times
the annual equivalent of the lower Earnings Limit on 6th April
immediately preceding the Plan Anniversary Date."
(b) paragraph (b)(ii) of Rule 9B is deleted and replaced by the
following:
"(ii) any benefits in excess of the benefits described
in (i) above will be increased by the greater of the
Revaluation Percentage and the increase in the Index subject
to a maximum rate of eight per cent compound for each year
between the date of leaving Employment and his date of
retirement but in any event the increase will be at least
sufficient to meet the requirements imposed by the Revaluation
Laws."
2. With effect from 1st August 1992 rule 2 of the Rules is deleted and
replaced by the following:
"2. JOINING THE PLAN (see also Rule 15 of the Overriding Appendix)
Except where specific eligibility requirements are hereinafter laid down
as applying at specified dates this Rule shall take effect from 1st
August 1992.
Each Employee who is eligible to join Eligible Category I or Eligible
Category 2 may join the Plan on the first of the month after he fulfils
the following conditions:-
4
<PAGE> 5
(a) he has reached age 21 but is not over age 64 (or
in the case of a female Employee who is eligible to join
Eligible Category 1 who joined Employment prior to 1st August
1992 she has reached age 21 but is not over age 59)
(b) he has completed at least 6 months' Employment.
Except in the case of an Employee who has elected to pay Category 3
Employee Contributions each Employee who is eligible to join
Eligible Category 3 may join the Plan on the first of the month
after he fulfils the following conditions:-
(a) he has reached age 21 but is not over age 63
(b) he has completed at least 6 months' Employment.
Each Employee who is eligible to join Eligible Category 3 and who
elects to pay Category 3 Employee Contributions may join the Plan
on the first of the month after he fulfils the following
conditions:-
(a) he has reached age 21 but is not over age 60
(b) he has completed at least 6 months' Employment.
All employees of the Employers will be eligible to join the Plan for the
benefits described in (ii) of Rule 7A provided they have not attained
their Normal Retiring Date.
If an Eligible Employee does not join at the first opportunity, he may
join later only with the specific permission of the Principal Employer
and the Trustees. Likewise if a Member has opted out of the Plan under
Rule 9A, he may rejoin the Plan at a later date only with the specific
permission of the Principal Employer and the Trustees.
5
<PAGE> 6
The Principal Employer may vary the requirements of this Rule for any
Eligible Employee or class of Eligible Employees. It may also allow an
employee of an Employer who is not an Eligible Employee to join the Plan
(in which case references to "Eligible Employees" in these Rules include
such an employee).
Applications to join the Plan must be made in the form required by the
Trustees.
A director may only join the Plan if he receives remuneration from the
Employers which he does not have to account for to another company or
employer and which is not treated for tax purposes as receipts of a
profession which he carries on.
Within 13 weeks of joining or such other period as is required by law a
Member will be given basic information about the Plan as required by the
Disclosure Laws.
3. With effect from 12th May 1993 the following alterations are made to rule
9 of the Rules:
(a) the first paragraph of Rule 9B is deleted and replaced by the
following:
"A Member who ceases to be in Pensionable Employment before Normal
Retiring Date and who satisfies the preservation requirements (see
Rule 9D) will receive a pension for life from Normal Retiring Date
of an amount calculated as described in Rule 5A, but, based on the
Member's Pensionable Employment completed up to the date of leaving
and the greater of Final Pensionable Salary and Pensionable Salary
at that date. However, a Class A Member who is still in Employment
when he reaches Normal Retiring Date may not receive a pension or
lump sum until he actually leaves Employment or reaches age 75 if
earlier)."
6
<PAGE> 7
(b) the first paragraph of Rule 9C is deleted and replaced by the
following:
"A Member who ceases to be in Pensionable Employment before Normal
Retiring Date without becoming entitled to a preserved pension will
receive a refund of his contributions (less tax at 20% or such
other rate as applies from time to time)."
4. With effect from 1st October 1993 the definition of Plan Anniversary Date
contained in rule 1 of the Rules is deleted and replaced by the following:
""Plan Anniversary Date" means the 1st October in each year up to and
including 1991, the 1st August 1993, 1st October in each year
thereafter."
5. With effect from 15th November 1993 the following alterations are made to
rule 2 of the Rules:
(a) at the end of the first sentence add the words "and shall
apply up to and including 14th November 1993"
(b) at the end of Rule 2 add the following
"On and after 15th November 1993 no further employees will be
admitted to Plan membership except that
(i) Any Employee in Employment prior to 15th November
1993 who had not at that time fulfilled the eligibility
conditions but who has subsequently fulfilled the eligibility
conditions for Eligible Category 1, Eligible Category 2 or
Eligible Category 3 described above and has applied to join
the Plan as required by the Trustees may be admitted to
membership of the appropriate eligible category from the first
of the month following fulfilment of the eligibility
conditions."
7
<PAGE> 8
(ii) Any employee of the Employers will be eligible to
join the Plan for the benefit described in (ii) of Rule 7A
provided that
(a) he has not attained his Normal Retiring Date
(b) he attends work on the first day of his Employment
(c) he is not provided with benefit of a similar nature
under the Comshare Money Purchase Plan."
6. With effect from 1st January 1994 the Rules are amended as follows:
1. The definition of Normal Retiring Date contained in rule 1 of
the Rules is deleted and replaced by the following:-
"Normal Retiring Date" means
(i) in respect of a Member who was a female Category
1 Employee and who was in Employment prior to 1st August 1992
and who died, left Pensionable Employment retired or attained
age 60 prior to 1st January 1994 her 60th birthday
(ii) in respect of any other Member who is a Category
1 Employee or Category 2 Employee the Member's 65th birthday
(iii) in respect of a Member who is a Category 3
Employee the Member's 63rd birthday unless the Category 3
Employee has elected to pay Category 3 Employee Contributions
(as deferred in Rule 3B) when it shall mean the Member's 60th
birthday."
8
<PAGE> 9
2. Add a new definition after the definition of Overriding
Appendix as follows:
""Pension Calculation Date" means in respect of a Category 1
Employee who was in Employment prior to 1st August 1992 only the
Member's 60th birthday."
3. Rules 5B, 5C and 5D are deleted and replaced by the
following:
"5B. LATE RETIREMENT
With the Principal Employer's consent a Member who stays in
Employment after Normal Retiring Date will receive a pension
when he leaves Employment calculated as described in Rule 5A
as if he had left at Normal Retiring Date and then increased
on a basis certified as reasonable by an actuary to reflect
Employment completed between Normal Retiring Date and the
date of actual retirement.
A Class B Member or Class C Member may alternatively choose
to receive his pension as if he had left Employment at an
earlier date (but not before Normal Retiring Date) and in
this case the pension will only be increased to reflect any
period for which pension is deferred after Normal Retiring
Date.
A Class A Member who is still in Employment when he reaches
age 75 will be treated for all the purposes of the Plan as
if he left Employment on his 75th birthday.
9
<PAGE> 10
5C. EARLY RETIREMENT (NOT INCAPACITY).
A Member who leaves Employment (not for Incapacity) before
Normal Retiring Date but after reaching age 50 may with the
consent of the Principal Employer choose an immediate pension
calculated as described in Rule 5A but based on the Member's
Pensionable Employment and Final Pensionable Salary at the
date of retirement unless the Member is in receipt of
payments under the Comshare Limited Permanent Health
Insurance Scheme when Final Pensionable Salary shall be the
last Final Pensionable Salary received by the Member prior to
the commencement of absence. If the Trustees so decide this
pension shall be reduced for early payment.
If the Member is a Category 1 Employee whose Employment
commenced on or after 1st August 1992 or a Category 2
Employee or a Category 3 Employee any reduction will be on a
basis decided by the Trustees and certified as reasonable by
an actuary.
If the Member is a Category 1 Employee whose Employment
commenced prior to 1st August 1992 a reduction may be made on
a basis decided by the Trustees provided that
(i) in respect of a male Member pension attributable to
Pensionable Employment completed prior to 17th May 1990
may only be reduced if retirement takes place prior to
Normal Retiring Date and the reduction will reflect the
period between actual retirement and Normal Retiring Date
10
<PAGE> 11
(ii) in respect of a female Member pension attributable to
Pensionable Employment completed prior to 17th May 1990
may only be reduced if retirement takes place prior to
Pension Calculation Date and the reduction will reflect
the period between actual retirement and Pension
Calculation Date
(iii) pension attributable to Pensionable Employment
completed after 17th May 1990 and prior to
1st January 1994 may only be reduced if retirement takes
place prior to Pension Calculation Date and the
reduction will reflect the period between actual
retirement and Pension Calculation Date
(iv) pension attributable to Pensionable Employment
completed after 1st January 1994 may be reduced if
retirement takes place prior to Normal Retiring Date
and will reflect the period between actual retirement
and Normal Retiring Date
(v) any reduction made is certified as reasonable by an
actuary.
The Trustees must be reasonably satisfied that the immediate
pension is at least equal in value (i.e. taking account of
the longer period of payment) to the preserved pension
(including future increases under Rule 9B) payable from
Normal Retiring Date to which the Member would otherwise have
become entitled on leaving Employment.
11
<PAGE> 12
In certain circumstances the benefit in Rule 7A (ii) may be
continued. If this applies you will be informed.
5D. EARLY RETIREMENT THROUGH INCAPACITY.
A Member who leaves Employment before Normal Retiring Date
through Incapacity may with the consent of the Principal
Employer choose an immediate pension calculated as described
in Rule 5A but based on the Member's Pensionable Employment
and Final Pensionable Salary at the date of retirement unless
the Member is in receipt of payments under the Comshare
Limited Permanent Health Insurance Scheme when Final
Pensionable Salary shall be the last Final Pensionable Salary
received by the Member prior to the commencement of absence.
If the Trustees so decide this pension shall be reduced for
early payment in exactly the same way as the pension
described in Rule 5C. The Trustees must be reasonably
satisfied that the immediate pension is at least equal in
value to the preserved pension (including future increases
under Rule 9B) payable from Normal Retiring Date to which
the Member would otherwise have become entitled on leaving
Employment.
Until Normal Retiring Date the Trustees may from time to time
require evidence of continued Incapacity and if not satisfied
may suspend the pension for any period or periods before
Normal Retiring Date. Any pensions payable on the Member's
death will be adjusted appropriately on the advice of an
actuary."
7. With effect from 1st October 1994 the following alterations are made to
Rule 7 of the Rules:
(a) at the start of paragraph (ii) of Rule 7A add the words
"Subject to Rule 14G"
12
<PAGE> 13
(b) at the start of paragraph (iii) of Rule 7A add the words
"Subject to Rule 14G"
(c) rule 14G of the Rules is deleted and replaced by the
following:
"14G EVIDENCE OF HEALTH
Where benefits payable on a Member's death are insured or reinsured
with an Insurance Company, such benefits will be subject to any
restrictions imposed by the Insurance Company and the Trustees will
not be liable to pay any amount in excess of the amount actually
paid by the Insurance Company. The Trustees may also decide that
these benefits will be reduced in respect of Members who are unable
or who refuse to provide medical evidence satisfactory to the
Trustees or whose death results from any special cause notified to
the Members in writing."
8. With effect from 21 August 1996 the following alterations are made to
Rule 1:
(a) The definition of "Final Pensionable Salary" in Rule 1 is
deleted and replaced by the following:
""FINAL PENSIONABLE SALARY" means unless it is otherwise agreed by
letter between the Member and the Principal Employer,
(i) in respect of a Category 1 Employee or a Category
2 Empoyee the highest annual average of the Member's
Pensionable Salary for any period of three consecutive years
within the 10 years immediately preceding the Member's Normal
Retiring Date, or, if earlier, the Member's actual retirement
date, date of leaving Pensionable Employment or death or
(ii) in respect of a Category 3 Employee the greater
of the definition previously described (except that no
deductor shall be imposed upon Pensionable Salary) and the
13
<PAGE> 14
Member's basic annual salary in any one year in the last five
years before the Member's Normal Retiring Date, or, if
earlier, the Member's actual retirement date, date of leaving
Pensionable Employment or death, plus the annual average of
any profit related pay, any commission received, any bonus
received or due but not paid, in which case it shall be
considered to have been paid in the year in which it was due
and the notional value of any benefits in kind which are
assessable to income tax as emoluments under Schedule E, in
the three years up to 30th June immediately before the Plan
Anniversay Date on which basic salary is determined PROVIDED
THAT with effect from 21 August 1996 no amount in excess of
130% of basic annual salary will count as Final Pensionable
Salary
(b) the definition of Pensionable Salary is amended as follows:
""PENSIONABLE SALARY" means unless it is otherwise agreed by
letter:
(i) in the case of a Category 1 Employee or a Category 2 Employee
the Member's basic annual salary or wages, plus any shift
allowance or disturbance allowance on the date of joining the
Plan and on each subsequent Plan Anniversary Date, plus the
annual average of any performance related pay any commission
received or bonus due or received in the three years up to 30
June immediately before the Plan Anniversary Date on which
salary is determined less 1.25 times the annual equivalent of
the Lower Earnings Limit on the 6 April immediately preceding
the Plan Anniversary Date
(ii) in the case of a Category 3 Employee the Member's basic annual
salary or wages, plus any shift allowance or disturbance
allowance on the date of joining the Plan and on each
subsequent Plan Anniversary Date, plus the annual average
of any performance related pay any commission
14
<PAGE> 15
received or bonus due or received and the notional value of
any benefits in kind which are assessable to income tax as
emoluments under Schedule E in the three years up to 30 June
immediately before the Plan Anniversary Date on which salary
is determined
PROVIDED THAT
(1) any bonus shall only be counted once
(2) with effect from 21 August 1996 no amount in excess of
110 per cent of Planned Earnings will count as
Pensionable Salary in respect of a Category 1 Employee
(3) with effect from 21 August 1996 no amount in excess of
130% of basic annual salary will count as Pensionable
Salary in respect of a Category 3 Employee"
(c) a new definition is introduced after the definition of Plan
ANNIVERSARY DATE:
""PLANNED EARNINGS" means in respect of a Category 1 Member his
basic annual salary on the Plan Anniversary Date in each year plus
the annual average of the Category 1 Member, commission received in
the three years up to 30 June immediately before the Plan
Anniversary Date on which Salary is determined (no deduction will
be made from Planned Earnings to account for State benefits)"
9. With effect from the date of this deed the following amendments are made:
A. The following references throughout the Rules are altered and
the GMP Model Rules appended to this deed are adopted and the
Overriding Appendix GMP Model Rules are deleted.
15
<PAGE> 16
(1) CONTENTS
The final item "OVERRIDING APPENDIX - GMP MODEL RULES" is
deleted and replaced by "GMP MODEL RULES".
(2) RULE 1
(a) the definition of "GMP" is deleted and replaced by the
following:
""GMP" has the meaning given to it in the GMP Model
Rules".
(b) A new definition is inserted following the definition of
"GMP" as follows:
""GMP MODEL RULES" means the GMP Model Rules which are
included at the end of these Rules."
(c) The definition of "OVERRIDING APPENDIX" is deleted.
(d) The last sentence of Rule 1 is deleted and replaced by
the following:
"Words and expressions used in the GMP Model Rules are
defined in Rule 1 of those Rules."
(3) In the heading to Rule 2 the words in brackets are deleted and
replaced by the following:
"(See also Rule 4 of the GMP Model Rules)"
(4) In the heading to Rule 5 the words in brackets are deleted and
replaced by the following:
"(See also Rules 5 and 6 of the GMP Model Rules)"
16
<PAGE> 17
(5) In the heading to Rule 6 the words in brackets are deleted and
replaced by the following:
"(see also Rule 12 of the GMP Model Rules)"
(6) In the heading to Rule 8 the words in brackets are deleted and
replaced by the following:
"(see also Rule 5 of the GMP Model Rules)"
(7) In the heading to Rule 9 the words in brackets are deleted and
replaced by the following:
"(see also Rules 5, 6, 8 and 18 of the GMP Model Rules)"
(8) Paragraph (a) of Rule 9B is deleted and replaced by the
following:
"(a) the GMP will be increased as described in Rule 7.1 of
the GMP Model Rules, and "
(9) In the heading to Rule 10 the words in brackets are deleted
and replaced by the following:
"(see also Rule 6 of these Rules and Rules 6, 7, 10 and 11
of the GMP Model Rules)"
(10) Paragraph (d) of Rule 10D is deleted and replaced by the
following:
"(d) where GMP is bought out the policy must satisfy the
requirements of Rule 10.1(2) of the GMP Model Rules"
17
<PAGE> 18
(11) The following alterations are made to Rule 10E of the Rules
(i) in the first paragraph the words "Rule 9.1 of the
Overriding Appendix are satisfied" are deleted and
replaced by "Rule 10.1 of the GMP Model Rules are
satisfied."
(ii) at the end of the second paragraph the words "Rule 10 of
the Overriding Appendix" are deleted and replaced by
"Rule 11 of the GMP Model Rules".
(12) The following alteration is made to Rule 11E
delete the words "Rule 1.1 of the Overriding Appendix" in
the second line and replace them with "Rule 1 of the GMP
Model Rules."
(13) Rule 13 is amended by the deletion of the words
"Overriding Appendix" and the insertion of the words "GMP
Model Rules".
(14) In the heading to Rule 14 the words in brackets
are deleted and replaced by the following:
"(see also Rules 7, 16 and 17 of the GMP Model Rules)"
(15) Rule 14A is amended by the deletion of the second
paragraph and the insertion of the following:
"The GMP portion of each pension in payment will be
increased as described in Rule 7 of the GMP Model Rules".
(16) In the heading to Rule 15 the words in brackets are deleted
and replaced by the following
"(See also Rules 6, 9, 10, 11 and 12 of the GMP Model Rules)"
18
<PAGE> 19
(17) Rule 15B is amended by the deletion of the second
paragraph and the insertion of the following:
"A GMP may be commuted for a lump sum on grounds of
triviality only if the conditions of Rule 12 of the GMP
Model Rules are satisfied."
(18) The first paragraph of Rule 15D is amended by the
deletion of the words from the opening of the second set of
brackets to the end of the paragraph and the insertion of the
following:
"in Rule 1 of the GMP Model Rules) shall be subject to the
conditions of Rule 6.2 and 9 of the GMP Model Rules."
(19) The following alterations are made to Rule 15E o fthe Rules:
(i) The fourth paragraph is deleted and replaced by:
"A transfer of GMP may be made only if the
conditions of Rule 10.1 of the GMP Model Rules are
satisfied."
(ii) In the fifth paragraph the words "Rule 10 of the
Overriding Appendix" are deleted and replaced by:
"Rule 11 of the GMP Model Rules."
(20) Rule 15F is amended by the deletion of the words "Rule 9.1(2)
of the Overriding Appendix" at the end of the first paragraph
and the insertion of the following:
"Rule 10.1(2) of the GMP Model Rules."
19
<PAGE> 20
(21) In the heading to Rule 22 the words in brackets are deleted
and replaced by the following:
"(see also Rule 14 of the GMP Model Rules)"
(22) In the heading to Rule 23 the words in brackets are deleted
and replaced by the following:
"(See also Rule 3 of the GMP Model Rules)".
B. (1) CONTENTS: Page 3 is amended:
(i) by the insertion of (1) after the number 22
(ii) by the insertion of "22(2) FROZEN PLAN" after "22H".
(2) Rule 1 is amended by the insertion of the following
definition after the definition of "Member":
"MONEY PURCHASE SECTION" means the section of the Plan which
commenced on 1 April 1997 and is described to Members in the
announcement issued in February 1997."
(3) Rule 2 is amended
(a) by deletion of the words;
"On and after 15 November 1993 no further employees
will be admitted to Plan membership except that"
and the insertion of the following in their place
"Between 15 November 1993 and 1 April 1997 no further
employees will be admitted to Plan membership except
that"
20
<PAGE> 21
(b) at the end of Rule 2 add the following:
"On and after 1 April 1997 any Employee of the
Employer who has attained age 18 may join the Money
Purchase Section of the Plan."
(4) The heading of Rule 22 is amended as follows:
"22 (1) TERMINATION OF THE PLAN (See also
Rule 14 of the GMP Model Rules)"
(5) Sub-Rules 22A, 22B, 22C, 22D, 22E, 22F, 22G, 22H are
renumbered 22(1)A, 22(1)B, 22(1)C, 22(1)D, 22(1)E, 22(1)F,
22(1)G and 22(1)H
(6) A new sub-rule is added after Rule 22(1)
"22 (2) FROZEN PLAN
The Principal Employer and the Trustees may at
any time resolve that the Plan or a section of
it shall be treated as a frozen Plan.
If such resolutions are made no further contributions
shall be made or benefits accrue to the Plan or the
section of the Plan concerned.
While the Plan or a section of it is frozen the
power of alteration may continue to be exercised
by the Principal Employer and the Trustees and
the Plan will continue to be administered by the
Trustees.
Expenses of the Plan or the section of the Plan
will continue to be met by the Principal Empoyer
or from the Plan or the appropriate section of
the Plan if the Principal Employer and the
Trustees agree."
21
<PAGE> 22
(7) Rule 21B is amended as follows:
in the second and third paragraphs references to Rules "22B,
C and D" are deleted and replaced by
"22(1)B, 22(1)C and 22(1)D" as appropriate.
IN WITNESS whereof this Deed has been entered into the day and year first above
written
THE COMMON SEAL of
COMSHARE LIMITED
was affixed to this Deed
in the presence of:
Director /s/ Kathryn A. Jehle [SEAL]
-----------------------------
Secretary /s/ David H. Mackenzie
---------------------------
SIGNED AND DELIVERED AS A DEED
by the said DAVID HUNTER MACKENZIE /s/ David H. Mackenzie
in the presence of: ------------------------
Witness /s/ F.O. OBILEYE
--------------------------
Address 22 CHELSEA MANOR STREET,
--------------------------
LONDON
- ----------------------------------
SW3 5RL
- ----------------------------------
Occupation Administrative Assistant
-----------------------------
22
<PAGE> 23
SIGNED AND DELIVERED AS A DEED
by the said DION O'LEARY /s/ Dion O'Leary
in the presence of: -----------------------
Witness /s/ S. Watkinson
------------------------
Address 22 Chelsea Manor Street,
---------------------------
London,
- -----------------------------------
SW3 5RL
- -----------------------------------
Occupation HR Manager
------------------------
SIGNED AND DELIVERED AS A DEED
by the said KATHRYN JEHLE /s/ Kathryn A. Jehle
in the presence of: ------------------------
Witness /s/ C. Potter
-------------------------
Address 22 Chelsea Manor Street,
----------------------------
London
- ------------------------------------
SW3 5RL
- -------------------------------------
Occupation Accountant
------------------
SIGNED AND DELIVERED AS A DEED
by the said NICHOLAS PAUL SEATON BRAY /s/ Nicholas P.S. Bray
in the presence of: ------------------------
Witness /s/ G. Halliman
--------------------
Address 63 Toll Bar Ct.,
--------------------
Basinghall Gons,
- ----------------------------
Sutton, Surrey, SM2 6AV
- ----------------------------
Occupation Office Manager
-----------------
SIGNED AND DELIVERED AS A DEED /s/ Mary Ann Moore
by the said MARY ANN MOORE ------------------------
in the presence of:
Witness /s/ G. Sollis
---------------------
Address 22 Chelsea Manor Street, London, SW3 5RL
------------------------------------------
Occupation Legal Secretary
--------------------
23
<PAGE> 24
CONTRACTED-OUT SALARY RELATED SCHEMES
GMP MODEL RULES
SECTION A: THE BASIC RULES
1. DEFINITIONS
2. OVERRIDING EFFECT OF THESE GMP MODEL RULES
3. ALTERATIONS TO THESE GMP MODEL RULES
3.1 Power to alter GMP Model Rules
3.2 OPB consent
4. MEMBERSHIP OF THE SCHEME
5. ENTITLEMENT TO GMP
5.1 Guaranteed Minimum
5.2 Member's GMP
5.3 Widow's GMP
5.4 Payment of Widow's GMP
5.5 Widower's GMP
5.6 Payment of Widower's GMP
5.7 Offsetting pension against GMP
6. REVALUATION OF GMP
6.1 Revaluation before State Pensionable Age
6.2 Transfers in
6.3 Transfers out
24
<PAGE> 25
7. INCREASE OF GMP
7.1 Increase after State Pensionable Age
7.2 Increase after State Pensionable Age or Member's death
8. ANTI-FRANKING
9. TRANSFERS INTO THE SCHEME
9.1 Acceptance of transfers
9.2 Effect of transfers
10. TRANSFERS OUT OF THE SCHEME
10.1 Conditions for transfer of GMPs
10.2 Effect of such transfers
11. TRANSFER PREMIUMS
12. COMMUTATION OF GMP
12.1 Circumstances in which GMP may be commuted
12.2 Commutation Condition
13. SECURING GMPs
14. WINDING UP THE SCHEME
14.1 Priorities on winding-up
14.2 Order of priorities
14.3 Voluntary contributions
15. SCHEME CEASES TO BE A CONTRACTED-OUT SALARY RELATED SCHEME
16. SUSPENSION OF GMP
25
<PAGE> 26
17. FORFEITURE OF GMP
18. CONTRIBUTIONS EQUIVALENT PREMIUMS
SECTION B: THE EMPLOYER'S COMPULSORY ALTERNATIVES
SECTION C: THE EMPLOYER'S VOLUNTARY OPTIONS
SECTION D: CERTIFICATE TO CONFIRM WHICH PARTS OF SECTIONS B AND C HAVE
BEEN INCORPORATED INTO SECTION A OF THE MODEL RULES
26
<PAGE> 27
Interpretation : References to any legislation or any provision includes
references to any previous legislation or provision relating to the same
subject matter and to any modification or re-enactment for the time being in
force
CONTRACTED-OUT SALARY RELATED SCHEMES
GMP MODEL RULES
SECTION A
1. DEFINITIONS
In these GMP Model Rules the following words have the following
meanings:-
"THE ACT" means the Pension Schemes Act 1993.
"ACTUARY" means a Fellow of the Institute of Actuaries or a Fellow of the
Faculty of Actuaries, or a person with other actuarial qualifications who
is approved by the Secretary of State for Social Security, at the request
of the Trustees, as being a proper person to act in this capacity.
"CONTRACTED-OUT EMPLOYMENT" means a Member's contracted-out employment by
reference to the Scheme (as in section 8(1)(a)(i) and 8(1)(b) of the
Act).
"FIXED RATE REVALUATION" means the method of revaluing a GMP before State
Pensionable Age described in Rule 6.1 (C) below.
"GMP" means the guaranteed minimum pension of a Member, Widow or Widower
as defined in the Act.
"INSURER" means an insurance company, an EC company or a friendly society
as defined in regulation 30 of the Occupational Pension Schemes
(Contracting-out) Regulations 1984 (SI 1984/380) as amended by regulation
2 of SI 1995/35.
27
<PAGE> 28
"LIMITED REVALUATION" means the method of revaluing a GMP before State
Pensionable Age described in Rule 6.1 (B) below.
"MEMBER" means a member of the Scheme (including a person who is not in
the pensionable service of any employer participating in the Scheme but
to whom, or in respect of whom, benefits are still immediately or
prospectively payable under the Scheme in respect of previous membership
of the Scheme or another scheme).
"NORMAL RETIRING DATE" means the day on which a Member attains normal
pension age (within the meaning of the Act) under the Scheme.
"PROTECTED RIGHTS" has the same meaning as in section 10 of the Act.
"QUALIFYING SERVICE" has the same meaning as in section 71(7) of the Act.
"RULE" (followed by a number) means the Rule (with that number) in this
Appendix.
"SCHEME" means this occupational pension scheme.
"SECTION 53 MONEY PURCHASE SCHEME" means a scheme which was a
contracted-out scheme, providing protected rights and satisfying section
9(3) of the Act, and which the Occupational Pensions Board are under a
duty to supervise under section 53 of the Act.
"SECTION 53 SALARY RELATED SCHEME" means a scheme which was a
contracted-out scheme, providing guaranteed minimum pensions and
satisfying section 9(2) of the Act, and which the Occupational Pensions
Board are under a duty to supervise under section 53 of the Act.
"SECTION 148 REVALUATION" means the method of revaluing a GMP before
State Pensionable Age described in Rule 6.1 (A) below.
"SHORT SERVICE BENEFIT" means the benefit to which an early leaver who
satisfies the qualifying conditions must be entitled under the
preservation requirements.
28
<PAGE> 29
"STATE PENSIONABLE AGE" means a man's 65th birthday and a woman's 60th
birthday.
"TRUSTEES" means the trustees or administrators of the Scheme.
"WIDOW" and "WIDOWER" mean respectively the widow and the widower of a
Member. If a Member has married under a law which allows polygamy and,
on the day of the Member's death, has more than one spouse, the Trustees
must decide which, if any, survivor is the Widow or Widower. In reaching
that decision, the Trustees must have regard to the practice of the
Department of Social Security and any relevant provisions of existing
Social Security legislation, in particular section 17(5) of the Act and
regulation 2 of the Social Security and Family Allowance (Polygamous
Marriages) Regulations 1975 (SI 1975/561).
2. OVERRIDING EFFECT OF THESE GMP MODEL RULES
These Rules shall apply if any Member's employment becomes Contracted-out
Employment by reference to the Scheme and the Scheme is not
contracted-out on a money purchase basis. These Rules will only apply
for so long as anyone has a GMP or a prospective right to receive a GMP
under the Scheme which subjects the Scheme to the continuing supervision
of the Occupational Pensions Board.
These Rules override any inconsistent provisions elsewhere in the Scheme
except provisions which are necessary in order that Inland Revenue
approval for the purposes of Chapter I of Part XIV of the Income and
Corporation Taxes Act 1988 is not prejudiced.
3. ALTERATIONS TO THESE GMP MODEL RULES
3.1 POWER TO ALTER GMP MODEL RULES. The persons or bodies having
the power of alteration in relation to the rest of the Scheme may at
any time in writing make any alteration to these GMP Model Rules
necessary to comply with the contracting-out requirements of the
29
<PAGE> 30
Act applicable to salary related contracted-out schemes and Section
53 salary related schemes. This power of alteration may be
exercised by them without any condition except the one in 3.2 below.
It is additional to, and independent of, any other power of
alteration in relation to the Scheme.
3.2 OPB CONSENT. No alteration to these GMP Model Rules may be
made without the consent of the Occupational Pensions Board. This
applies whether the alteration is made under 3.1 above or under any
other power of alteration in relation to the Scheme.
4. MEMBERSHIP OF THE SCHEME
Membership of the Scheme must be open to persons who enter employment to
which the Scheme relates more than 6 years before Normal Retiring Date.
If the Scheme has an annual entry date, this 6 year period may be
increased to a period of 6 years plus the part of a year until the next
entry date. Where the Scheme and one or more other contracted-out
schemes relate to employment with the same employer, those schemes may be
treated as if they were a single scheme in deciding whether the
requirements of this Rule are satisfied.
5. ENTITLEMENT TO GMP
5.1 GUARANTEED MINIMUM. This Rule 5 applies to a Member, Widow
or Widower where the Member has a guaranteed minimum in relation to
the pension provided for the Member under the Scheme in accordance
with section 14 of the Act.
5.2 MEMBER'S GMP. The Member shall be entitled to a pension for
life paid at a rate equivalent to a weekly rate of not less than
that guaranteed minimum. The pension will be paid from State
Pensionable Age but commencement of the pension may be postponed for
any period during which the Member remains in employment after State
Pensionable Age:-
30
<PAGE> 31
(1) if the employment is employment to which the Scheme relates and
the postponement is not for more than 5 years after State
Pensionable Age; or
(2) if the Member consents to the postponement.
5.3 WIDOW'S GMP. Where the Member is a man and dies at any time
leaving a Widow, she shall be entitled, subject to 5.4 below, to
receive a pension from the Scheme paid at a rate equivalent to a
weekly rate of not less than half that guaranteed minimum.
5.4 PAYMENT OF WIDOW'S GMP. [See Section B]
5.5 WIDOWER'S GMP. Where the Member is a woman and dies at any
time on or after 6 April 1989 leaving a Widower, he shall be
entitled, subject to 5.6 below, to receive a pension from the Scheme
paid at a rate equivalent to a weekly rate of not less than half of
that part of the guaranteed minimum which is attributable to
earnings for the tax year 1988/1989 and subsequent tax years.
5.6 PAYMENT OF WIDOWER'S GMP. [See Section B]
5.7 OFFSETTING PENSION AGAINST GMP. Any pension payable to the
Member, Widow or Widower under any other provision of the Scheme may
be offset against the pension entitlement under this Rule 5 except
to the extent that:-
(1) any part of the pension is an equivalent pension benefit within
the meaning of the National Insurance Act 1965; or
(2) any part of the pension is an increase, calculated in
accordance with Schedule 3 of the Act and added to the amount
that would be payable but for Chapter II of Part IV of the Act
or regulations made under it; or
3) offsetting would contravene the anti-franking legislation (see
Rule 8 below).
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<PAGE> 32
6. REVALUATION OF GMP
6.1 REVALUATION BEFORE STATE PENSIONABLE AGE. Where a Member
ceases to be in Contracted-out Employment before State Pensionable
Age, the Member's GMP at State Pensionable Age or at the Member's
earlier death will be calculated by increasing the accrued rights to
GMP at cessation of Contracted-out Employment under one of the
options (A), (B) or (C) below.
(A) SECTION 148 REVALUATION.
The increase will be by the percentage by which earnings
factors for the tax year in which Contracted-out Employment
ceases are increased by the last order under section 148 of
the Social Security Administration Act 1992 to come into
force before the tax year in which the Member reaches State
Pensionable Age (or dies, if earlier).
(B) LIMITED REVALUATION.
The increase will be by the lesser of:-
(1) 5 per cent (5%) compound for each tax year after that
in which Contracted-out Employment ceases up to and
including the last complete tax year before the Member
reaches State Pensionable Age (or dies, if earlier); and
(2) the percentage by which earnings factors for the tax
year in which Contracted-out Employment ceases are
increased by the last order under section 148 of the
Social Security Administration Act 1992 to come into
force before the tax year in which the Member reaches
State Pensionable Age (or dies, if earlier).
The Trustees must pay a limited revaluation premium in
respect of the Member to the Secretary of State for Social
Security.
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<PAGE> 33
(C) FIXED RATE REVALUATION.
The increase will be by such rate as regulations made under
section 55(5) of the Act specify as being relevant at the
date Contracted-out Employment ceases, for each complete tax
year after the tax year containing that date up to and
including the last complete tax year before the Member
reaches State Pensionable Age (or dies, if earlier).
The Trustees and the principal employer participating in the Scheme
shall decide which of the options (A), (B) or (C) applies to the
Scheme. They may at any time decide that one of the other two
methods shall be used, instead of the method currently being used,
for all Members ceasing to be in Contracted-out Employment after a
specified date. They must notify the Occupational Pensions Board
whenever the method of revaluation for the Scheme is changed.
6.2 TRANSFERS IN. Where a transfer payment is received in respect
of a Member from another scheme ("the transferring scheme") which
includes accrued rights of the Member to a GMP (or includes
protected rights in respect of which the receiving scheme will
provide a GMP) the earnings factors used in calculating that GMP
will normally be revalued using Section 148 Revaluation during the
Member's Contracted-out Employment, and 6.1 above will apply if that
Contracted-out Employment ceases before State Pensionable Age. The
Trustees may, however, decide, if the provisions of the transferring
scheme so allow, to use either Limited Revaluation or Fixed Rate
Revaluation from the date on which the Member ceased to be in
contracted-out employment by reference to the transferring scheme
until the Member attains State Pensionable Age (or dies, if earlier)
but:-
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<PAGE> 34
(1) Limited Revaluation may not be used as regards any part of the
GMP being transferred which arose from contracted-out
employment in relation to a previous scheme and which the
transferring scheme is already revaluing by Fixed Rate
Revaluation (or vice versa); and
(2) the Trustees may not make that decision if, on becoming a
Member, the Member's contracted-out employment in relation to
a previous scheme is treated as continuing for the purposes
of the Act.
Where, under this Rule 6.2, Limited Revaluation is to be used, the
Trustees shall have power to pay out of the transfer payment in
respect of that Member any limited revaluation premium payable as a
result of the Member ceasing to be in contracted-out employment by
reference to the transferring scheme.
Where the Scheme accepts the proceeds of, or the assignment of, an
insurance policy which consists of, or includes, accrued rights to
GMP, the Trustees may use either Section 148 Revaluation or the
method of revaluation that was in use under the policy (and
condition (1) above applies).
6.3 TRANSFERS OUT. Where a Member's accrued rights to GMP are
transferred to another contracted-out salary related scheme or to a
Section 53 salary related scheme, the Trustees may agree with the
administrator of that scheme that the Member's GMP shall, instead of
being revalued using the method currently being adopted under 6.1
above, be revalued using another method which would be permitted if
that scheme contained a rule in the same terms as 6.2 above but,
where Limited Revaluation is to be used, that administrator must
make arrangements for the payment of any limited revaluation premium
(unless it has already been paid by the Trustees).
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<PAGE> 35
7. INCREASE OF GMP
7.1 INCREASE AFTER STATE PENSIONABLE AGE. If the commencement of
any Member's GMP is postponed for any period after State Pensionable
Age, that GMP shall be increased to the extent, if any, specified in
section 15 of the Act.
7.2 INCREASE AFTER STATE PENSIONABLE AGE OR MEMBER'S DEATH. Any
GMP to which a Member, Widow or Widower is entitled under Rule 5
above shall, insofar as it is attributable to earnings in the tax
years from and including 1988/1989, be increased in accordance with
the requirements of section 109 of the Act.
8. ANTI-FRANKING
Except as provided in sections 87-92 and 110 of the Act, no part of a
Member's, Widow's or Widower's pension under the Scheme may be used to
frank an increase in the Member's, Widow's or Widower's GMP under Rule 6
or Rule 7 above.
9. TRANSFERS INTO THE SCHEME
9.1. ACCEPTANCE OF TRANSFERS. The Trustees may accept:-
(1) a transfer payment in respect of the Member's accrued rights to
GMPs under a contracted-out salary related scheme, a Section 53
salary related scheme or a policy of insurance or an annuity
contract of the type described in section 19 of the Act;
(2) a transfer of the liability for the payment of GMPs to, or in
respect of, any person who has become entitled to them;
(3) a transfer of Protected Rights
(a) in respect of the Member or a former Member from another
scheme which is, or was, an appropriate personal pension
scheme;
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<PAGE> 36
(b) in respect of the Member or a former Member from
another scheme which is, or was, a scheme
contracted-out on a money purchase basis or a
Section 53 money purchase scheme.
Transfers may be accepted only as provided in the appropriate
regulations.
9.2 EFFECT OF TRANSFERS. Where a transfer is accepted under
9.1(1) above, the Member's accrued rights to GMPs under the Scheme
will be increased accordingly.
Where a transfer is accepted under 9.1(3) above, the Member's,
Widow's and Widower's GMPs under the Scheme will be increased by
amounts equal to the GMPs to which they would have been treated as
entitled by reason of the Member's membership of the transferring
scheme if the transfer payment had not been made.
10. TRANSFERS OUT OF THE SCHEME
10.1 CONDITIONS FOR TRANSFER OF GMPS. A transfer payment made out
of the Scheme may include a Member's accrued rights to GMPs or the
liability for the payment of GMPs to, or in respect of, any person
who has become entitled to them only if the following conditions are
fulfilled. These conditions depend on the type of scheme, policy or
contract to which the transfer is being made.
(1) ALL SCHEMES AND ARRANGEMENTS
The Member must consent to the transfer unless:-
(a) it is made to another contracted-out salary related scheme
or a Section 53 salary related scheme where either the
scheme is a scheme of the same employer or the transfer
involves all of, or a group of, the Members, and either the
transfer results from a
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<PAGE> 37
financial transaction between the Member's old and new
employers, or the receiving scheme is a scheme of an
employer connected with the Member's old employer for the
purposes of section 35 of the Act. The transfer must be
made in accordance with the appropriate regulations (SI
1991/167) which may involve an actuarial certificate;
(b) it is to allow benefits to be bought out where the Member
has less than 5 years Qualifying Service, or to allow the
Trustees to buy out the benefits of the Widow or Widower of
such a Member.
The transfer will be subject to any requirements of the
Inland Revenue.
The receiving scheme, policy or contract must be an
appropriate personal pension scheme, a contracted-out
occupational pension scheme, a Section 53 money purchase
scheme, a Section 53 salary related scheme, an overseas
occupational pension scheme to which the Occupational
Pensions Board approve the transfer, or an insurance policy
or annuity contract of the type described in section 19 of
the Act.
(2) CONTRACTED-OUT SALARY RELATED SCHEMES AND SECTION 19 INSURANCE
POLICIES OR ANNUITY CONTRACTS
The receiving scheme, policy or contract must provide the
Member and the Member's Widow or Widower with GMPs equal to
their accrued GMPs under the Scheme up to the date of
transfer, together with revaluation until the Member reaches
State Pensionable Age (or dies, if earlier). In the case of
GMPs already in payment, the receiving scheme must provide
for the pensions to commence from the date from which
liability for payment has been assumed by it, and for the
conditions of payment relating to its own GMPs to apply
equally to such pensions.
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<PAGE> 38
(3) ALL OCCUPATIONAL PENSION SCHEMES (EXCEPT OVERSEAS SCHEMES
COVERED BY (6))
The Member must have entered employment with an employer
which is (or, in the case of a Section 53 scheme, is or was)
a contributor to the receiving scheme. If the employment is
not contracted-out, the transfer must be in accordance with
regulations 2(4) and 2A(4) of SI 1985/1323.
(4) APPROPRIATE PERSONAL PENSION SCHEMES AND OCCUPATIONAL PENSION
SCHEMES WHICH ARE OR WERE CONTRACTED-OUT BY THE MONEY
PURCHASE TEST
That part of the transfer payment which relates to the
Member's accrued rights to GMPs must be of an amount at
least equal to the cash value of those accrued rights and
applied by the receiving scheme in providing money purchase
benefits for, or in respect of, the Member.
(5) SECTION 53 MONEY PURCHASE OR SECTION 53 SALARY RELATED SCHEMES
No transfer payment may be made to such a scheme without the
approval of the Occupational Pensions Board, who may impose
any conditions they consider appropriate.
(6) OVERSEAS OCCUPATIONAL PENSION SCHEMES NOT COVERED BY (2), (4)
OR (5) ABOVE
The Member must have entered employment outside the United
Kingdom to which the receiving scheme applies.
No transfer payments may be made to such a scheme without
the approval of the Occupational Pensions Board, who may
impose any conditions they consider appropriate.
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10.2 EFFECT OF SUCH TRANSFERS. Where the Member's accrued rights
to GMPs or liability for GMPs already in payment are transferred in
accordance with 10.1 above, the Member and the Member's Widow or
Widower will cease to have any entitlement to a GMP under the
Scheme. If the transfer does not relate to the whole of the
Member's rights to benefits under the Scheme, the Member's remaining
benefits under the Scheme may be reduced to allow for the fact that
the Member's GMP rights have been transferred.
11. TRANSFER PREMIUMS
Where a Member ceases to be in Contracted-out Employment before Normal
Retiring Date and the Member's accrued rights to benefits (other than
GMPs) are transferred to another occupational pension scheme which is
neither a contracted-out scheme nor one which was formerly contracted-out
and which remains under the supervision of the Occupational Pensions
Board in accordance with section 53 of the Act, or to a non-appropriate
personal pension scheme, the Trustees may elect to pay a transfer premium
to the Secretary of State for Social Security. No such election may be
made where the Member has completed less than 2 years' Qualifying
Service or where an accrued rights premium is payable in respect of the
Member.
Where a transfer premium is paid, the Member's accrued rights to GMPs
under the Scheme shall be extinguished.
12. COMMUTATION OF GMP
12.1 CIRCUMSTANCES IN WHICH GMP MAY BE COMMUTED.
(1) MEMBER'S GMP. The Member's GMP may be commuted if the
Commutation Condition is satisfied and all the Member's
other benefits under the Scheme are being commuted, and
(a) the benefits have become payable; or
(b) the Scheme is being wound up.
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<PAGE> 40
(2) WIDOW'S OR WIDOWER'S GMP. The Widow's or Widower's GMP may be
commuted if the Commutation Condition is satisfied and all the
Widow's or Widower's other benefits under the Scheme are being
commuted, and
(a) the benefits have become payable; or
(b) the Member's benefits are being commuted on grounds of
triviality.
(3) MORE THAN ONE RETIREMENT BENEFIT SCHEME RELATING
TO THE SAME EMPLOYMENT. If the Member is a member of more
than one retirement benefit scheme relating to the same
employment the requirements of this Rule must be satisfied by
all of the schemes.
12.2 COMMUTATION CONDITION. The Commutation Condition is that the
aggregate of the pensions and the pension equivalent of any lump sum
benefits to which the person is entitled under the Scheme, and under
all other retirement benefit schemes relating to employment with the
same employer as the employment in respect of which the benefits are
payable, does not exceed L.260 per annum (or such greater amount as
may be prescribed by regulations made under section 21 and section
77 of the Act and is permitted by the Inland Revenue). In
addition:-
(1) Where commutation is taking place before State Pensionable
Age, other than on the death of the Member, Limited
Revaluation or Fixed Rate Revaluation must be applied to any
GMP included in the aggregate pension, and such GMP must be
revalued to State Pensionable Age for the purposes of
calculating that aggregate. For this purpose, Limited
Revaluation is to be taken as 5% per annum compound.
(2) Where the Member's pension, being an alternative
to Short Service Benefit, becomes payable before or after
Normal Retiring Date, the value of that pension must, to the
reasonable satisfaction of the Trustees, be at least equal to
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<PAGE> 41
the value of the Short Service Benefit, plus the revaluation
to Normal Retiring Date that the deferred pension would have
attracted in accordance with Chapter II of Part IV of the Act
had it been provided by the Scheme at Normal Retiring Date,
and the revaluation of GMP referred to in (1) above.
(3) Where commutation of the whole of a Member's deferred pension
is taking place at Normal Retiring Date (or on the winding up
of the Scheme if earlier), the Member's pension in excess of
GMP must be revalued up to Normal Retiring Date in accordance
with Chapter II of Part IV of the Act and the GMP revalued in
accordance with (1) above.
(4) In any event, the Trustees must be satisfied that the basis of
commutation is reasonable. The basis must be certified as
reasonable by an Actuary or be in accordance with commutation
factors agreed with the PSO as suitable for the Scheme.
13. SECURING GMPS
GMPs may be secured through the Scheme provided it has been established
under an irrevocable trust subject to the laws of any part of the United
Kingdom. Otherwise, a GMP must be secured by means of an insurance
policy or annuity contract with an Insurer.
14. WINDING-UP OF THE SCHEME
14.1 PRIORITIES ON WINDING-UP. If the Scheme winds-up for any
reason, priority must be given, over any other liability to provide
benefits, to any benefit which falls within any one or more of the
following:-
(1) Pensions and other benefits in respect of which entitlement to
payment has already arisen;
(2) GMPs and accrued rights to GMPs;
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<PAGE> 42
(3) State scheme premiums;
(4) Equivalent pension benefits within the meaning of
the National Insurance Act 1965.
[See Section C for further priorities which may be added.]
14.2 ORDER OF PRIORITIES. The Trustees and the principal employer
participating in the Scheme may elsewhere in the provisions of the
Scheme specify an order of priorities amongst the items listed in
14.1 above, but the order of priorities shall not give any liability
to provide benefits which are not listed in 14.1 above priority
equal to or exceeding the priority given to any item which is listed
there.
14.3 VOLUNTARY CONTRIBUTIONS. [Optional - see Section C]
15. SCHEME CEASES TO BE A CONTRACTED-OUT SALARY RELATED SCHEME
If the Scheme ceases to be a contracted-out salary related scheme, the
Trustees must seek the approval of the Occupational Pensions Board to any
proposed arrangement for securing GMPs. If it is decided to buy Members
back into the State Earnings Related Pension Scheme (SERPS), then accrued
rights premiums or pensioner's rights premiums must be paid to the
Secretary of State for Social Security in the manner required by
regulations made under the Act. Once these premiums have been paid, the
GMPs will be extinguished. The other benefits of the Members, Widows or
Widowers concerned under the Scheme shall be reduced by the amount of the
GMP accrued at the date the Scheme ceased to be contracted-out, increased
to State Pensionable Age (or the Member's death, if earlier) by Fixed
Rate Revaluation or Section 148 Revaluation.
16. SUSPENSION OF GMP [Optional - see Section C]
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<PAGE> 43
17. FORFEITURE OF GMP [Optional - see Section C]
18. CONTRIBUTIONS EQUIVALENT PREMIUMS [Optional - see Section C]
43
<PAGE> 44
SECTION B
THE EMPLOYER'S COMPULSORY ALTERNATIVES
THE EMPLOYER MUST SELECT ONE (ONLY) OF EACH SET OF COMPULSORY ALTERNATIVES, AND
INDICATE ITS CHOICE BY TICKING THE APPROPRIATE BOX ON THE CERTIFICATE.
RULE 5.4
ALTERNATIVE A: 5.4 The pension shall be paid for life to any Widow.
ALTERNATIVE B: 5.4 The pension shall be paid for life to any Widow who is
eligible for payment of a State benefit as described in
section 17(5) of the Act.
ALTERNATIVE C: 5.4 The pension shall be payable to any Widow. It shall cease
if the Widow remarries before her 60th birthday, but
otherwise it shall be payable for life.
ALTERNATIVE D: 5.4 The pension shall be payable to any Widow who is eligible
for payment of a State benefit as described in section
17(5) of the Act. It shall cease if she remarries before
her 60th birthday, but otherwise it shall be payable for
life.
ALTERNATIVE E: 5.4 The pension shall be payable to any Widow who is eligible
for payment of a State benefit as described in section
17(5) of the Act. It shall cease when the Widow ceases to
be entitled to receive payment of those State benefits.
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<PAGE> 45
RULE 5.6
ALTERNATIVE A: 5.6 The pension shall be paid for life to any Widower.
ALTERNATIVE B: 5.6 The pension shall be paid for life to any Widower who is
eligible for payment of a GMP under Regulation 33B of the
Occupational Pension Schemes (Contracting-out) Regulations
1984.
ALTERNATIVE C: 5.6 The pension shall be payable to any Widower. It shall
cease if the Widower remarries before his 65th birthday,
but otherwise it shall be payable for life.
ALTERNATIVE D: 5.6 The pension shall be payable to any Widower who is eligible
for payment of a GMP under Regulation 33B of the
Occupational Pension Schemes (Contracting-out) Regulations
1984. It shall cease if the Widower remarries before his
65th birthday, but otherwise it shall be payable for life.
ALTERNATIVE E: 5.6 The pension shall be payable to any Widower who is eligible
for payment of a GMP under Regulation 33B of the
Occupational Pension Schemes (Contracting-out) Regulations
1984. It shall cease when the Widower ceases to be
entitled to receive payment of that GMP under Regulation
33C of those Regulations.
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<PAGE> 46
SECTION C
THE EMPLOYER'S VOLUNTARY OPTIONS
THESE VOLUNTARY OPTIONS WILL APPLY ONLY IF THE EMPLOYER INDICATES THAT THEY ARE
TO APPLY BY TICKING THE APPROPRIATE BOX ON THE CERTIFICATE. THE EMPLOYER
SHOULD INCLUDE ONLY THOSE OPTIONS OF RULE 14.1 WHICH HE WISHES TO APPLY TO THE
SCHEME.
RULE 14.3 IS OPTIONAL AND MAY BE OMITTED ENTIRELY.
RULES 16, 17 AND 18 ARE OPTIONAL. THEY SHOULD BE INCLUDED ONLY IF THE EMPLOYER
WISHES ONE OR MORE OF THE OPTIONS TO APPLY TO THE SCHEME, BUT MAY BE OMITTED
ENTIRELY.
RULE 14.1
OPTION A: ( ) in the case of a serving Member who has attained Normal Retiring
Date before the winding-up began, the benefits to which the
Member would have been entitled if the Member had retired on the
day the winding-up began.
OPTION B: ( ) benefits attributable to the Member's service before the Scheme
became a contracted-out scheme.
OPTION C: ( ) benefits attributable to the Member's service before the Scheme
became a contracted-out scheme and calculated in accordance with
the provisions of the Scheme in force and relevant earnings at
that time.
OPTION D: ( ) benefits to which the widow or widower or any dependant of a
Member to whom 14.1(1) applies will be entitled on the Member's
death.
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<PAGE> 47
OPTION E: ( ) benefits to which any dependant of a deceased Member will be
entitled on the death of any widow or widower or dependant of
that Member.
OPTION F: ( ) benefits to which the widow or widower or any dependant of a
serving Member who has attained Normal Retiring Date before the
winding-up began will become entitled on the death of the
Member.
OPTION G: ( ) benefits resulting from transfer credits.
RULE 14.3
14.3 VOLUNTARY CONTRIBUTIONS. Where Members' voluntary contributions to the
Scheme are being used to provide benefits equivalent on a money purchase
basis to the voluntary contributions paid, and where there are separately
identifiable assets attributable to those voluntary contributions within
the Scheme, 14.1 above shall not apply to those separately identifiable
assets. That part of those assets which is attributable to the voluntary
contributions of a Member shall be used to provide benefits for, or in
respect of, that Member of the types specified in the other provisions of
the Scheme. No regular payments may be made by the employer to those
separately identified assets unless they are used solely for the purpose
of meeting administrative expenses.
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<PAGE> 48
RULE 16
16. SUSPENSION OF GMP
Payment of a GMP may be suspended during any period when:-
OPTION A:
the person receiving the GMP is unable to act (by reason of mental
disorder or otherwise) but the amount of the GMP must either be paid or
applied for the maintenance of the recipient or his dependants, or paid
to the recipient when that recipient is again able to act, or paid to the
recipient's estate after that recipient's death.
OPTION B:
the recipient of the GMP is in prison or detained in legal custody but
the amount of the GMP must then be paid or applied for the maintenance of
such one or more of the recipient's dependants as the Trustees shall
determine.
OPTION C:
the Member is receiving the GMP but is then re-employed in an employment
to which the Scheme relates. The GMP must then be increased under Rule
7.1 above during the period of suspension.
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RULE 17
17. FORFEITURE OF GMP
OPTION A:
Any instalment of a GMP may be forfeited if it is not paid within 6 years
of the date on which the instalment became due and the Trustees do not
know the whereabouts of the recipient.
OPTION B:
A GMP may be forfeited if the person entitled to the GMP has been
convicted of one or more offences under the Official Secrets Acts 1911 to
1989, for which the recipient has been sentenced to a term or consecutive
terms of imprisonment totalling at least 10 years, or of an offence of
treason.
RULE 18
18. CONTRIBUTIONS EQUIVALENT PREMIUMS
18.1 A contributions equivalent premium shall be paid, subject to
18.2 below, in respect of a Member who ceases to be in Contracted-out
Employment before whichever is the earlier of the Member's Normal
Retiring Date and the end of the tax year preceding that in which the
Member will reach State Pensionable Age with less than 2 years'
Qualifying Service and less than 2 years' Contracted-out Employment.
A contributions equivalent premium shall not be paid where the
Member's accrued rights include rights transferred from a personal
pension, nor where the Member is a woman who dies in contracted-out
employment in respect of Widower's GMP.
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<PAGE> 50
Payment of the contributions equivalent premium extinguishes the
Member's accrued rights to GMPs under the Scheme. Therefore, where
the premium is paid, any refund of contributions to the Member or
any transfer payment from the Scheme in respect of a Member shall
be reduced by the certified amount (as defined in the Act) in
relation to that premium and any pension benefit under the Scheme
for the Member or the Member's Widow or Widower shall be reduced so
as to allow for the fact that their accrued rights to GMPs have
been extinguished.
18.2 The premium shall not be payable if:-
OPTION A:
its amount is less than pounds sterling 17 (or such greater amount
as is specified in regulations made under the Act).
OPTION B:
the Member's accrued rights to GMPs are transferred to another
scheme, policy or contract in accordance with Rule 10 above.
OPTION C:
the Member has become entitled to an immediate or a deferred
pension under the Scheme on ceasing to be in Contracted-out
Employment.
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SECTION D
{THIS CERTIFICATE FORMS PART OF THE MODEL RULES DOCUMENTATION}
OCCUPATIONAL PENSIONS BOARD
CONTRACTED-OUT SALARY RELATED SCHEMES
CERTIFICATE TO CONFIRM WHICH PARTS OF SECTIONS B AND C HAVE BEEN INCORPORATED
INTO SECTION A OF THE MODEL RULES
I certify that the Comshare Retirement and Death Benefits Plan has adopted with
effect from the date of the deed to which this certificate is appended as part
of the documentation of the scheme an Overriding Appendix of GMP Model Rules,
coded OPB/SR/1995, which incorporates the whole of Section A of Appendix 10 of
Memorandum No 77 and the parts of Section B and C specified below.
SECTION B - THE EMPLOYER'S COMPULSORY ALTERNATIVES
(Tick the appropriate box to indicate which Compulsory Alternative is adopted.
ONE ONLY of each set of Compulsory Alternatives must be adopted.)
RULE 5.4:-
Alternative A (.....X.......)
Alternative B (.............)
Alternative C (.............)
Alternative D (.............)
Alternative E (.............)
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<PAGE> 52
RULE 5.6:-
Alternative A (.....X.......)
Alternative B (.............)
Alternative C (.............)
Alternative D (.............)
Alternative E (.............)
SECTION C - THE EMPLOYER'S VOLUNTARY OPTIONS
(Tick the appropriate box only if the Option is to apply.)
RULE 14.1:-
Option A (.....X.......)
Option B (.............)
Option C (.............)
Option D (.....X.......)
Option E (.....X.......)
Option F (.....X.......)
Option G (.............)
RULE 14.3:-
Applies (.....X.......)
Does not Apply (.............)
RULE 16:-
Option A (.....X.......)
Option B (.....X.......)
Option C (.....X.......)
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<PAGE> 53
RULE 17:-
Option A (......X.......)
Option B (......X.......)
RULE 18:-
Applies (......X.......)
Does not Apply (..............)
RULE 18.2 (ONLY IF RULE 18 APPLIES TO THE SCHEME):-
Option A (......X.......)
Option B (......X.......)
Option C (......X.......)
Signature /s/ B. M. Cole (The Certificate must be signed by either:-
-------------------- (i) the administrator of the scheme; or
(ii) a director of the insurance company
concerned; or
Name Miss B. M. Cole (iii) an employee authorised by the
------------------------- insurance company to sign such a
certificate on its behalf; or
(iv) a person who is recognised by a
self-regulating organisation under
the Financial Services Act 1986 or
regulated by a professional body
under that Act; or a person who is
authorised by a consultancy which is
so recognised or regulated.)
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<PAGE> 1
EXHIBIT 10.18
August 4, 1997
Mr. Steven J. Tonissen
196 Orchard Hills
Ann Arbor, MI 48104
RE: Letter of Understanding
Dear Steve,
This letter ("Agreement") confirms the terms and conditions of your termination
from Comshare, Incorporated ("Comshare") under mutually agreed upon
circumstances.
The arrangement will be as follows:
1. Your termination from Comshare, Incorporated will be effective on
August 25, 1997 ("Termination Date").
2. Comshare agrees to pay you salary continuation pay commencing from your
"Termination Date" until February 25, 1998 ("Salary Continuation Period").
If you secure other employment prior to this date, Comshare agrees to pay
the difference, less appropriate federal and state withholdings and
deductions, between the amount of salary continuation pay already paid to
you and the total amount that would have been paid through February 25,
1998. You will be paid $7,692.31 bi-weekly during the Salary Continuation
Period, less appropriate federal and state withholdings and deductions, on
Comshare's regular, scheduled pay dates. Your group health, dental, vision
and life coverage, including elected dependent coverage, which are
currently in effect shall continue for you and any of your covered
dependents until February 25, 1998, or until you are eligible for insurance
from other employment, whichever occurs first, provided that Comshare shall
have the right to change such coverage to the extent that Comshare is
generally changing coverage for its employees. You shall continue to make
required contributions, via payroll deductions, at the then current rate
for similarly situated Comshare employees. Long term disability coverage
ceases on your Termination Date. As discussed, this agreement does allow
you to work as a consultant in businesses other than those listed on the
August 6, 1997, addendum to the Comshare At Will Employee Agreement.
3. You are eligible to participate in an executive outplacement program. As
agreed, the costs of the program, $12,500.00, less appropriate federal and
state withholdings and deductions, will be paid directly to you for use at
your discretion.
4. Your bi-weekly car allowance of $436.15 will be continued through
August 31, 1997.
5. Comshare shall make available to you and your qualified dependents the
election of coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1985 ("COBRA") at the time required by COBRA.
6. You will not accrue vacation benefits during the Salary Continuation
Period. Our records indicate that you have ten (10) vacation days.
Vacation will be paid to you less appropriate federal and state
withholdings and deductions, within two (2) weeks of August 25, 1997.
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7. You will not be eligible to continue your participation in the Profit
Sharing Plan, including the 401K option, throughout the Salary Continuation
Period. You will be apprised of your options, with respect to such plans,
under separate cover. Your participation in the Employee Stock Purchase
Plan will end immediately and a refund check for contributions deducted
from July 1, 1997, will be refunded to you.
8. Except for publicly held information, all information to which you had
access during your employment with Comshare or as a result of your dealings
with Comshare and/or any clients, customers, suppliers or business partners
shall be kept confidential and shall not be disclosed to any third party.
This information includes, without limitation, a) computer programs,
technical specifications, software programming techniques, methodologies,
ideas concepts, or interfaces; b) information which relates to Comshare's
proprietary software, prototypes, or plans; c) business, financial,
marketing or sales plans and data; d) customer lists and information; and
e) other information. Your confidentiality obligations under this
paragraph are in addition to those set forth in your Comshare Employment
Agreement.
9. You shall not discuss any of the terms of this Agreement with any third
party including, but not limited to, other Comshare employees. In
addition, You shall not comment on the business affairs, policies or the
like of Comshare without the specific written approval of Comshare.
NOTWITHSTANDING THE FOREGOING, YOU MAY BE ENCOURAGED TO PROVIDE A COPY OF
THIS AGREEMENT TO LEGAL COUNSEL AND OTHER OUTSIDE ADVISORS OF YOUR CHOICE
TO OBTAIN SUCH COUNSEL AND ADVICE AS YOU DEEM APPROPRIATE.
10. You have stated that you have returned to Comshare all property of Comshare
in your possession and/or subject to your control, including, but not
limited to, any and all credit cards, files memoranda, correspondence,
customer lists, proposals, software or the like, and all copies of such
items on whatever media they appear. If you uncover additional company
property please return it to the company. This provision excludes your
Comshare issued personal computer that you may retain for your use, as
agreed, until September 30, 1997.
11. It is understood that this Agreement and your Comshare Employee Agreement,
dated May 27, 1995, constitute the entire understanding of the parties with
respect to your employment at Comshare and that this Agreement and your
Comshare Employee Agreement supersede all other understandings, proposals,
samples, models, agreements, representations, or conditions, written or
oral, regarding its subject matter. In the event of a conflict between the
terms of this Agreement and your Comshare Employee Agreement, the terms of
this Agreement shall take precedence.
12. You acknowledge and agree that you will not be eligible for and are not
entitled to severance pay or other considerations at the end of the Salary
Continuation Period.
13. In exchange for the good and valuable consideration detailed in this
Agreement and effective as of the date you sign this Agreement and for all
acts prior to such date, you hereby release, waive and discharge any and
all manner of action, causes of action, claims, rights, charges, suits,
damages, debts, demands, obligations, attorney's fees, and any and all
other liabilities or claims of whatever nature, whether in law or in
equity, known or unknown, including, but not limited to any claim or claims
of damages or other relief for tort, breach of contract, personal injury,
negligence, age discrimination under the Age Discrimination in Employment
Act of 1967 as amended, employment discrimination prohibited by other
federal, state or local laws
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including discrimination as to sex, race, national origin, marital status,
age, disability, height, weight or religion, and any other claims of
unlawful employment practices, and any other similar and dissimilar claims,
which you have claimed or may claim or could claim against Comshare,
Incorporated, its direct and indirect subsidiaries or their respective
directors, officers, employees, successors, or assigns, as a result of
employment at and the separation from employment with Comshare or
otherwise.
14. You acknowledge that you have read this Agreement and that you understand
all of its terms and execute it voluntarily with full knowledge of its
significance and consequences thereof. Further, you acknowledge that you
have had twenty-one (21) days to consider the terms and conditions of this
Agreement. In addition, you shall have a seven day period following your
execution of this Agreement, during which you may revoke the Agreement by
providing Comshare with written notice to that effect. (Any notice should
be addressed to the attention of the undersigned.) Finally, you hereby
acknowledge that you have had an adequate opportunity to review and
consider the terms of this Agreement, and have discussed this Agreement
with legal counsel of your choice. You agree that you grant a full and
final release as set forth herein.
15. The Agreement shall be governed by and construed according to the laws of
the State of Michigan. The Agreement shall be binding upon you and your
heirs, administrator, representatives, executors, and assigns.
16. Sections 6, 7, 8, 10, 11, 12, 14 shall survive the end of the Salary
Continuation Period.
If the above is acceptable, please sign this Agreement and return it to me by
August 22, 1998. If I am not in receipt of a copy of this Agreement, executed
by you on or before that date, this offer shall be void.
Sincerely,
Comshare, Incorporated
/s/ Carol A. Peterson
- --------------------------------
Carol A. Peterson
Sr. Director, Human Resources
The above terms and conditions are agreed to and accepted:
/s/ Steven J. Tonissen
- --------------------------------
Steven J. Tonissen
August 4, 1997
- --------------------------------
Date
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<PAGE> 1
EXHIBIT 10.19
AGREEMENT
THIS AGREEMENT is made on July 9, 1997 between Dion Taylor O'Leary of 21 West
Park Road, Kew, Richmond, Surrey, UK, TW9 4DB ("the Executive"), a resident of
the United Kingdom, and COMSHARE, INCORPORATED ("COMSHARE") a Michigan
corporation.
RECITALS
A. The Executive has served as an executive officer of Comshare and as an
employee of Comshare's United Kingdom subsidiary, Comshare Limited.
B. The Executive is terminating his service with Comshare and its affiliated
companies and is executing contemporaneously herewith a Termination Agreement
and a Non-Competition Agreement attached hereto as Exhibits A and B (the
"Termination Agreement" and the "Non-Competition Agreement") between the
Executive and Comshare Limited of which Comshare is an intended beneficiary.
C. The Executive and Comshare wish to provide for certain business requirements
of Comshare in addition to those provided for in the Termination Agreement
and the Non-Competition Agreement.
In consideration of the stated recitals and of the promises and mutual
covenants contained herein, it is hereby agreed between the Executive and
Comshare as follows:
AGREEMENT
1. Until 30 June 1998 the Executive will not perform services anywhere in the
world for a competitor of Comshare, whether such services are provided as an
officer, director, proprietor, employee, partner, investor (other than as a
holder of less than one percent of the equity securities of any entity whose
securities are listed or traded on any recognized public exchange),
consultant, advisor, agent, or in any other capacity. As used in this
agreement, a competitor is defined as any entity engaged in the licensing
or distribution of decision support software tools or applications whose
product is at that time or is designed to be competitive with a Comshare
product, including but not limited to the following companies or
corporations (or companies or corporations directly or indirectly controlled
by the following corporations or companies) and any successors to their
businesses:
- Arbor Software Corporation Inc.
- Business Objects Inc.
- Cognos Inc.
- Hyperion Software Corporation
- IBM Incorporated
- Information Resources Inc.
- Merchandise Management Systems Inc.
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- Multime Limited
- Oracle Inc.
- Pilot Software Inc.
- Planning Sciences
- Retek Incorporated
- SAS Institute Inc.
- Seagate Technologies Incorporated
If the Executive is unsure whether a particular entity which he has under
serious consideration would be construed by Comshare as a competitor, he may
submit a written request to the President of Comshare for a determination.
Comshare shall respond in writing within ten (10) days after receipt of the
notice. If Comshare either states that the entity is not a competitor or
does not respond within the prescribed time period, then the Executive may
accept employment with that entity without breach of this paragraph one. If
the executive does not become employed by the entity in question within
three (3) months after receipt of Comshare's acceptance (or deemed
acceptance), however, then Comshare's acceptance shall be automatically
revoked and may be reinstated only if the Executive submits a new request
and the above procedure is repeated. The Executive agrees that the nature
and the extent of the restrictions of paragraph one are reasonable, are
designed to eliminate competition which otherwise would be unfair to
Comshare, do not stifle his inherent skill and experience would not operate
as a bar to The Executive's sole means of support, and are required to
protect the legitimate interests of Comshare. If the provisions of this
paragraph are found by any court having jurisdiction to be unreasonably
broad to any extent, then the restrictions shall nevertheless remain
effective, but shall be deemed amended (solely for the purposes of
jurisdiction of such court) as may be considered to be reasonably necessary
by such court, and as so amended shall be enforced.
2. Comshare confirms that the Executive will continue to receive the applicable
benefits afforded by Comshare's Executive Protection Policy.
3. The provisions of Sections 1.1 and 1.2, all of Section 3 and all of Section
4 of the Non-Competition Agreement are incorporated herein by reference.
4. This Agreement, together with the Termination Agreement and the
Non-Competition Agreement, constitute the entire agreement between the
parties with respect to the subject matter hereof. This Agreement shall be
construed in accordance with the laws of the State of Michigan and the
Executive hereby submits to the jurisdiction of the state and federal courts
located in the State of Michigan with respect to any claim or action brought
under this Agreement. If any provision of this Agreement shall for any
reason be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision hereof.
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5. Any notice to be given hereunder may be delivered (a) in the case of
Comshare Incorporated by first class post addressed to the President of
Comshare Incorporated and (b) in the case of the Executive, either to him
personally or by first class post to his last known address. Notice served
by post shall be deemed served on the second business day after posting.
Signed by: /s/ Kathryn A. Jehle
--------------------
For and on behalf of COMSHARE INCORPORATED
Date: July 9, 1997
------------
Witness: /s/ David Mackenzie
-------------------
Signed by: /s/ Dion T. O'Leary
-------------------
For and on behalf of EXECUTIVE
Date: July 9, 1997
------------
Witness: /s/ Barbara Baas
-------------------
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EXHIBIT A
TERMINATION AGREEMENT
THIS AGREEMENT dated this 9th day of July, 1997
BETWEEN
Comshare Limited, whose registered office is 22 Chelsea Manor Street, London
SW3 5RL ("the Company")
and Dion Taylor O'Leary of 21 West Park Road, Kew, Richmond, Surrey, UK, TW9
4DB ("the Executive")
IT IS AGREED as follows:
1. The Executive has given notice to the Company of the termination of his
employment; the notice period commencing on 1st July 1997 and ending on 30th
September 1997 ("the Termination Date").
2. During the notice period the Executive will be paid his normal salary of
pounds sterling 10,133.33 per month, a car allowance of pounds sterling 618
per month and an additional payment coincident with the September salary for
outstanding holiday entitlement of pounds sterling 12,160.
3. During the notice period the Executive will relocate his base of operations
from the United States, and as a consequence the Company will make a
disturbance payment to the Executive of pounds sterling 5,000 per month for
each of the three months comprising the notice period. Such payments will
be made together with the salary payments.
4. Save for the payments referred to in Clauses 1, 2 and 3 above, the Executive
has been paid all outstanding salary, incentive payments or holiday pay which
has accrued up to the Termination Date, (including any outstanding bonuses
payable including any from the payrolls of Comshare International B.V. and
Comshare Inc.) less normal deductions and hereby waives his right to any
bonuses or incentive not yet paid.
5. The Company shall on its own behalf and on behalf of all Associated
Companies, pay to him the sum of pounds sterling 30,000 as an ex gratia
termination payment. Payment will be made in three equal monthly
installments of pounds sterling 10,000 each on 30th April 1998, 31st May
1998 and 30th June 1998.
6. The Executive may retain the personal computer presently in his possession.
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7. If at any time during the period up to 30th June 1998, the Executive returns
to live in the United Kingdom, the Company shall, at its own cost, procure
that the Executive shall be covered by the Company's Dental Health Insurance
and BUPA medical insurance scheme until 30th September 1998.
8. The Executive shall be entitled to exercise any stock options vested as of
the Termination Date in shares under the Comshare Incorporated 1988 Stock
Option Plan ("the Plan") within three months following the Termination Date
in accordance with and subject to the rules and conditions of the Plan.
9. The Company will meet the cost of the Executive obtaining assistance from
Arthur Andersen in respect of the preparation of the UK tax return for the
fiscal years 1996/7 and 1997/8 and the US tax return for the calendar year
1997. Fees in respect thereof not to exceed pounds sterling 3,000.00.
10. The Company confirms that it will not seek any reimbursement from the
Executive of any relocation payments made to him in respect of his
secondment to the U.S.A.
11. The Company hereby consents to the Executive, if he so wishes, taking early
retirement under and subject to the rules of the Company's pension plan.
12. The Executive accepts the sums and benefits to be given to him under this
Agreement, the Non-Competition Agreement between the Executive and the
Company of even date and the Agreement between the Executive and Comshare
Incorporated of even date are in full and final settlement of all claims
and rights of action (whether under statute, common law or otherwise) in
any jurisdiction in the world which the Executive has or may have against
the Company or any Associated Company, arising out of his employment by the
Company or any Associated Company, the termination thereof, or any other
matter concerning the Company or any Associated Company PROVIDED ALWAYS
that this waiver shall not apply to any pension rights or pension benefits
which have accrued to the Executive up to the Termination Date. The
Executive hereby waives all such claims and rights of action and agrees
that (except for the sums and benefits referred to herein above) no other
sums or benefits are due to him from the Company or any Associated Company.
13. The Executive shall contemporaneously with the signing of this Agreement
resign in writing from all directorships and other offices which he holds
with the Company or any Associated Company and upon the request of the
Company will resign in writing as a trustee of the Company's Pension Plans
in the form set out in the draft letters attached hereto.
14. The Executive shall return to the Company on the Termination Date all
documents and software and any other property (save for the Executive's
personal computer if the option to purchase referred to in clause 4 is
exercised) belonging to the Company or any Associated Company which is in
the Executive's possession or has been in his possession and is under his
control.
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15. In consideration of the sum of pounds sterling 32,196 payable as set out in
the Non-Competition Agreement between the Executive and the Company and the
Agreement between the Executive and Comshare Incorporated both of even date,
the Executive hereby undertakes and agrees to be bound by the restraints set
out therein ("the restraints").
16. The Executive confirms that he is responsible for and in due course if
required will account to the United Kingdom Inland Revenue or the taxing
authorities of any other jurisdiction if appropriate in respect of any tax
or other governmental charge payable by the Executive on the payments
arising from this Agreement and the Executive hereby indemnifies and holds
the Company harmless against any taxes or other imposts excluding
employer's National Insurance contributions costs, claims or expenses or
proceedings, interest and penalties incurred by the Company in connection
therewith. The Company agrees to provide the Executive with details of any
request received by the Company from the Inland Revenue or any other
authority for payment of any tax, impost, interest and /or penalties in
connection with the payments arising out of this agreement as soon as
reasonably practicable after the Company has received the same. The
Company also reserves the right to set off any sums owed to it by the
Executive pursuant to this Clause 16, against any liability to make
payments under this agreement.
17. The Executive agrees to keep the terms of this Agreement confidential and
not to disclose them without prior written authority of the Company
Secretary save that in the event of receiving from any person, company,
business entity or other organization an offer of employment either during
the continuance of this Agreement or during the continuance in force of any
of the restrictions set out in the Non-Competition Agreement between the
Executive and the Company and the Agreement between the Executive and
Comshare Incorporated both of even date, he will forthwith provide to such
person, company, business entity or other organization making such an offer
of employment a full and accurate copy of this Agreement signed by the
parties hereto.
18. For the purposes of this Agreement, an "Associated Company" includes any
firm, company, corporation, business entity or other organization which is
directly or indirectly controlled by the Company, or which directly or
indirectly controls the Company, or which is directly or indirectly
controlled by a third party who also directly or indirectly controls the
Company. All references in this Agreement to the Company or any Associated
Companies shall include any successor in title or assign of the Company or
any of the Associated Companies.
19. The various provisions and sub-provisions of this Agreement are severable
and if any provision or part thereof is held to be unenforceable by any
court of competent jurisdiction then such unenforceability shall not
affect the enforceability of the remaining provisions or parts thereof in
this Agreement or the Schedule.
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20. The terms of this Agreement, the Non-Competition Agreement and the
Agreement between the Executive and Comshare Incorporated constitute the
entire agreement and understanding between the parties hereto and supersede
and replace all prior negotiations, agreements, arrangements or
understandings (whether implied or express, orally or in writing)
concerning the subject matter hereof, all of which are hereby treated as
terminated by mutual consent provided that nothing in this Agreement will
affect or prevent the Executive and enforcing his right or rights pursuant
to the letter of January 17, 1997 to the Executive from Dykema Gossett of
Ann Arbor.
21. This agreement is governed by English Law and the parties hereby submit to
the jurisdiction of the English Courts.
SIGNED by or on behalf of the parties on the date first above written:
Signed by: /s/ Kathryn A. Jehle
For and on behalf of COMSHARE LIMITED --------------------
Date: July 9, 1997
------------
Signed by: /s/ Dion T. O'Leary
-------------------
For and on behalf of EXECUTIVE
Date: July 9, 1997
------------
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EXHIBIT B
NON COMPETITION AGREEMENT
THIS AGREEMENT dated this 9th day of July, 1997
BETWEEN
Comshare Limited whose registered office is 22 Chelsea Manor Street, London SW3
5RL ("the Company")
and Dion Taylor O'Leary of 21 West Park Road, Kew, Richmond, Surrey, UK, TW9
4DB ("the Executive")
IT IS AGREED as follows:
In consideration of Comshare Limited ("the Company") paying to the Executive
the sum of pounds sterling 32,196, less any tax and national insurance the
Company is obliged to deduct if any, the Employee agrees as follows:-
1. CONFIDENTIALITY
1.1 Save as required by law the Executive shall not at any time (without limit)
after the Termination Date directly or indirectly:
1.1.1 use for his own purposes or those of any other person, company,
business entity or other organization whatsoever; or
1.1.2 disclose to any person, company, business entity or other
organization whatsoever;
any trade secrets or confidential information relating or belonging
to the Company or its Associated Companies including but not limited
to any such information relating to customers, customer lists or
requirements, price lists or pricing structures, marketing and sales
information, business plans or dealings, employees or officers,
financial information and plans, including strategic plans for
marketing sales and product development, designs, formulae, product
lines, research activities, any document marked 'Confidential' or
which he might reasonably expect the Company would regard as
'Confidential', or any information which has been given to the
Company or Associated Company in confidence by customers, suppliers
or other persons.
1.2 The obligations contained in Clause 1.1 shall cease to apply to any
information or knowledge which may subsequently come into the public domain
other than by way of unauthorized disclosure.
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1.3 the Executive shall not make or communicate any statement (whether written
or oral) to any representative of the press, television, radio or other
media and shall not write any article for the press or otherwise for
publication regarding the business of the Company or any Associated Company
without obtaining the written approval of the Board.
1.4 The Executive agrees not to make, or cause to be made, any derogatory or
critical statements (whether orally or in writing) about the Company or any
Associated Company or their respective officers or employees.
1.5 The company agrees not to make, or cause to be made, any derogatory or
critical statements (whether orally or in writing) about the Executive.
2. NON COMPETITION
2.1 The Executive hereby agrees that he shall not (without the consent in
writing of the Board) for a period of twelve months immediately following
the Termination Date within the Prohibited Area and whether on his own
account or in conjunction with or on behalf of any other person, firm,
company or other organization and whether as an employee, director,
principal, agent, consultant or in any other capacity whatsoever in
competition with the Company be directly or indirectly employed or engaged
in or perform services in respect of, or be concerned with:-
2.2 the research into, development, manufacture, supply or marketing of any
product which is of the same or similar type to any product researched,
developed, manufactured, supplied, sold or marketed by the Company during
the twelve months immediately preceding the Termination Date;
2.3 the development or provision of any services (including but not limited to
technical and product support, consultancy or customer services) which are
of the same or similar type to any services provided by the Company during
the twelve months preceding the Termination Date;
PROVIDED ALWAYS that the provisions of this Clause 2 shall apply only in
respect of products or services with which the Executive was either
personally concerned or for which he was responsible whilst either employed
by the Company during the twelve months immediately preceding the
Termination Date and that it shall only apply in respect of products
researched, developed, manufactured, supplied or marketed by or in respect
of services developed or provided by, the following companies or
corporations (or by companies or corporations directly or indirectly
controlled by the following corporations or companies) or the successors to
their businesses:-
- Arbor Software Corporation Inc.
- Business Objects Inc.
- Cognos Inc.
- Hyperion Software Corporation
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- IBM Incorporated
- Information Resources Inc.
- Merchandise Management Systems Inc.
- Multime Limited
- Oracle Inc.
- Pilot Software Inc.
- Planning Sciences
- Retek Incorporated
- SAS Institute Inc.
- Seagate Technologies Incorporated
3. NON SOLICITATION OF CUSTOMERS
3.1 The Executive hereby agrees that he shall not for a period of twelve months
immediately following the termination of his employment and whether on his
own behalf or in conjunction with any person, company, business entity or
other organization whatsoever directly or indirectly:-
3.2 solicit or assist in soliciting in competition with the Company, the custom
or business of any Customer or Prospective Customer:-
3.2.1 with whom the Executive has had personal contact or dealings on
behalf of the Company during the twelve months immediately preceding
the Termination Date;
3.2.2 with whom employees reporting to the Executive had person contact or
dealings on behalf of the Company during the twelve months immediately
preceding the Termination Date;
3.2.3 for whom the Executive was directly or indirectly responsible during
the twelve months immediately preceding the Termination Date;
3.3 accept or facilitate the acceptance of, or deal with, in competition with
the Company, the custom or business of any Customer or Prospective
Customer:-
3.3.1 with whom the Executive has had personal contact or dealings on
behalf of the Company during the twelve months immediately preceding
the Termination Date;
3.3.2 with whom employees reporting to the Executive had dealings on
behalf of the Company during the twelve months immediately preceding
the Termination Date;
3.3.3 for whom the Executive was directly or indirectly responsible during
the twelve months immediately preceding the Termination Date.
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<PAGE> 11
4. NON SOLICITATION OF EMPLOYEES
4.1 The Executive hereby agrees that he will not for a period of twelve months
immediately following the termination of his employment either on his own
account or in conjunction with or on behalf of any other person, company,
business entity or other organization whatsoever directly or indirectly:-
4.2 induce, solicit, entice or procure any person who is a Company Employee to
leave such employment, where that person is a Company Employee on the
Termination Date.
4.3 accept into employment or otherwise engage or use the services of any
person who is a Company Employee on the Termination Date.
5. ASSOCIATED COMPANIES
5.1 Clauses 2, 3, 4 and 6 in this Agreement shall apply as though references to
the "Associated Company" were substituted for references to the "Company"
(save that Clause 1 shall not apply in relation to Comshare Incorporated as
the Executive is entering into a direct agreement with Comshare
Incorporated in relation to non-competition). The obligations undertaken
by the Executive pursuant to this Clause 5 shall, with respect to each
Associated Company, constitute a separate and distinct covenant and the
invalidity or unenforceability of any such covenant shall not affect the
validity or enforceability of the covenants in favor of the Company or any
other Associated Company PROVIDED ALWAYS that this Clause 5 shall only
apply to those Associated Companies to whom the Executive gave his services
or with whom he had been concerned in the twelve months immediately
preceding the Termination Date.
5.2 In relation to each Associated Company the Company contracts as trustee and
agent for the benefit of such Associated Company. If required the
Executive will enter into covenants in the terms of those set out in
paragraphs 2, 3, 4 and 6 direct with any such Associated Company mutatis
mutandis. If the Executive fails to sign the necessary documents to give
effect to the foregoing, the Company shall be entitled and is hereby
irrevocably authorized on behalf of the Executive to execute all such
documents as are required to give effect to the foregoing.
6. DEFINITIONS
For the purposes of this Agreement the following words and cognate expressions
shall have the meanings set out below:
6.1 "Customer" shall mean any person, firm, company or other organization
whatsoever to whom the Company has supplied goods or services.
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<PAGE> 12
6.2 "Prospective Customer" shall mean any person, firm, company or other
organization whatsoever with whom the Company has had any negotiations or
material discussions regarding the possible supply of goods or services.
6.3 "Termination Date" shall mean the thirtieth day of September 1997 upon
which the Executive's employment with the Company terminates.
6.4 "The Board" shall mean the Board of Directors of the Company.
6.5 "Associated Company" includes any firm, company, corporation or other
organization which:-
6.5.1 is directly or indirectly controlled by the Company; or
6.5.2 directly or indirectly controls the Company; or
6.5.3 is directly or indirectly controlled by a third party who also
directly or indirectly controls the Company; or
6.5.4 is the successor in the title or assign of the firms, companies,
corporations or other organizations referred to above.
6.6 "Company" shall mean Comshare Limited and its successors in title and
assigns.
6.7 "Prohibited Area" means:
6.7.1 the United Kingdom
6.7.2 any other country in the world where on the Termination Date, the
Company develops, sells, supplies, manufactures or researches its
products or services and in respect of which the Executive has been
responsible (whether alone or jointly with others), concerned or
active on behalf of the Company during any part of the two years
immediately preceding the Termination Date.
6.8 "Company Employee" means any person who was employed in sales, marketing,
product development, technical support, customer support and implementation
by the Company or any Associated Company and:
6.8.1 with whom the Executive had personal contact or dealings in
performing his duties or employment; or
6.8.2 who reported to the Executive; or
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<PAGE> 13
6.8.3 who had material contact with customers or suppliers of the Company
in performing his or her duties of employment with the Company or any
Associated Company (as applicable); or
6.8.4 who was a member of the management team of the Company or any
Associated Company.
7. DEBRIEFING
The Executive agrees to co-operate with the Company's debriefing process and
shall answer all questions and provide all necessary information to the Company
as may be required in order to ensure the smooth handover of his work after the
Termination Date.
8. PAYMENT ARRANGEMENTS
The Company shall pay the sum of pounds sterling 32,196 to the Executive in
three equal monthly installments of pounds sterling 10,732 on 30th April 1998,
31st May 1998 and 30th June 1998 - PROVIDED THAT the Executive has not breached
any of the Clauses 2, 3, 4, 5 or 7 of this Schedule or any of the provisions of
the Agreement between the Executive and Comshare of even date herewith. In the
event that such breach occurs the Company reserves the right to stop making
further payments under this Clause 8 and to recover any sums already paid.
SIGNED by or on behalf of the parties on the date first above written.
Signed by: /s/ Kathryn A. Jehle
For and on behalf of COMSHARE LIMITED --------------------
Date: July 9, 1997
------------
Signed by: /s/ Dion T. O'Leary
-------------------
For and on behalf of EXECUTIVE
Date: July 9, 1997
------------
13
<PAGE> 1
EXHIBIT 10.20
April 29, 1997
Mr. Geoffrey R. Cluett
89 Bridle Path
Sudbury, MA 01776
Dear Geoff:
It is with pleasure I offer you the position of Comshare's Senior Vice
President, EMEA (Europe, Middle East, Africa) Field Operations, reporting
directly to me. The position is based in London, England. You will be an
employee of Comshare Limited.
Your responsibilities will be to direct the strategic vision of the Field
Sales, Consulting and Field Marketing organizations in EMEA. You also will be
responsible to provide leadership and support the formulation of overall
Comshare strategy and to ensure coordination with other company organizations.
You will participate as a contributing member of the company's senior
management team.
Your starting salary will be pounds sterling 10,833 monthly. You will also
participate in a bonus and incentive plan effective July 1, 1997, which will be
comparable to plans for other senior executives. The plan is expected to
provide for, among other things, a share of an award pool primarily based upon
company earnings, a share option plan, minimum stock ownership, and the right
to acquire company shares through a note payable to Comshare. You will also be
eligible to participate in other benefit plans and programs including optional
supplemental life insurance, private health and dental care, income tax advice
and preparation, a regular stock purchase program, a money purchase pension
plan, and all plans generally available to Comshare employees. You will be
provided a car, or allowance, in accordance with the Company Car Policy;
however, a specific car that was used by the
1
<PAGE> 2
previous holder of the position will be provided for the approximate 2 1/2
year remainder of its lease.
In addition, the Board of Directors also has agreed to grant you an option to
purchase 30,000 shares of Comshare common stock under the terms of the company
stock option plan. The grant will be initiated at the first Board of
Director's Compensation Committee meeting after the start of your employment.
Comshare wishes to support your move to allow maximum productivity and minimum
disruption. Necessary and reasonable costs will be reimbursed or paid for
house hunting in the London area, interim travel, temporary living expenses up
to pounds sterling 2,000, final trip to your new location, shipment of
household goods including temporary storage up to 30 days, incidental expense
allowance of pounds sterling 5,000 which includes costs related to disposal of
your two automobiles and boat, two percent (2%) of your current home sale
price, if you sell it yourself or if through a Realtor, legal fees, brokerage
and closing costs, double occupancy reimbursement for up to two months for
interest, taxes and insurance costs of your old residence, costs of closing
your new home including escrow fees, legal fees, title costs and loan
origination fees, and up to 90 days' interest on a bridge loan to purchase a
primary residence.
As some relocation expenses reimbursed or paid on your behalf are considered
taxable income by the Inland Revenue and/or the IRS, relocation payments made
by Comshare that do not qualify as "moving" or employee business expense will
be grossed up to offset some of the added income tax burden.
Should you voluntarily leave the employ of Comshare Limited within one year
after your start, you agree to return to the company amounts reimbursed or paid
for relocation expenses and any related gross up.
As a prior condition of employment, you must sign an Employment Application
form, an agreement to adhere to the
2
<PAGE> 3
Comshare Limited Terms and Conditions of Employment with a U.K. Noncompetition
Addendum, and a Comshare, Incorporated Noncompetition Agreement. I have
enclosed copies of each of these forms.
Geoff, based on our discussions together, your experience and your background,
I think you will find this position challenging and rewarding. I am looking
forward to adding your strengths to the management team and look forward to
your starting on May 1, 1997. Please return a signed copy of this letter by
that day, at which time this offer will expire.
Sincerely,
FOR COMSHARE, INC and COMSHARE LIMITED
/s/ T. Wallace Wrathall
- ------------------------------
T. Wallace Wrathall
Enclosures
AGREED:
/s/ Geoffrey R. Cluett
- ------------------------------
Geoffrey R. Cluett
April 30, 1997
- ------------------------------
Date
3
<PAGE> 4
AGREEMENT
THIS AGREEMENT is made this 30th day of April, 1997, between GEOFFREY
R. CLUETT ("Cluett"), a resident of the United States, and COMSHARE,
INCORPORATED ("Comshare"), a Michigan corporation.
RECITALS
A. Cluett is being appointed as an executive officer of Comshare,
Incorporated and as an employee of its subsidiary Comshare Limited. (As used
in this Agreement, Comshare, Incorporated and its subsidiaries are referred to
collectively as "Comshare.")
B. Contemporaneously, Cluett is entering into other employment related
agreements, including but not limited to the Terms and Conditions of Employment
and a Noncompetition Agreement with Comshare Limited (collectively the
"Employment Agreements").
C. Because of the global nature of Comshare's business and the senior
position to be occupied by Cluett, Comshare and Cluett need to provide for
certain business requirements of Comshare in addition to those provided for in
the Employment Agreements.
AGREEMENT
In consideration of the stated recitals and of the promises and mutual
covenants contained herein, it is hereby agreed between Cluett and Comshare as
follows:
1. Noncompetition.
(a) For a period of two years after he ceases to be employed by
Comshare, Cluett will not perform services anywhere in the world for a
competitor of Comshare, whether such services are provided as an officer,
director, proprietor, employee, partner, investor (other than as a holder of
less than 1 percent of the equity securities of any entity whose securities are
listed or traded on any recognized public exchange), consultant, advisor,
agent, or in any other capacity. As used in this Agreement, a competitor is
defined as any entity engaged in the licensing or distribution of decision
support software applications or tools or in the provision of services
connected with such software products and whose products or services are at
that time or are designed to be competitive with Comshare products or services.
4
<PAGE> 5
(b) If Cluett is unsure whether a particular entity which he
has under serious consideration would be construed by Comshare as a competitor,
he may submit a written request to the President of Comshare for a
determination. Comshare shall respond in writing within fifteen (15) days
after receipt of the notice. If Comshare either states that the entity is not a
competitor or does not respond within the prescribed time period, then Cluett
may accept employment with that entity without breach of this section 1. If
Cluett does not become employed by the entity in question within three (3)
months after receipt of Comshare's acceptance (or deemed acceptance), however,
then Comshare's acceptance shall be automatically revoked and may be reinstated
only if Cluett submits a new request and the above procedure is repeated.
(c) Cluett agrees that the nature and the extent of the
restrictions in this section 1 are reasonable, are designed to eliminate
competition which otherwise would be unfair to Comshare, do not stifle his
inherent skill and experience, would not operate as a bar to Cluett's sole
means of support, and are required to protect the legitimate interests of
Comshare. If the provisions of this section are found by any court having
jurisdiction to be unreasonably broad to any extent, then the restrictions
shall nevertheless remain effective, but shall be deemed amended (solely for
the purposes of jurisdiction of such court) as may be considered to be
reasonably necessary by such court, and as so amended shall be enforced.
2. Confidentiality. Cluett shall not, during his employment by
Comshare or at any time thereafter, use for his own purposes or publish or
divulge to any other person, firm or corporate body whatsoever, except in the
proper course of his duties, any information relating to trade secrets or
software owned, developed or used by Comshare or any other information of a
confidential nature relating to the business, management, finances, dealings,
transactions or affairs of Comshare which may have come to his knowledge in the
course of his employment. Cluett's obligations under this section 2 shall not
apply to any information which comes into the public domain through no fault of
his.
3. Non-solicitation. For a period of one year following the
termination of his employment (irrespective of the reason for such termination)
Cluett will not, whether on his own behalf or on behalf of any other person,
firm, company or entity: (i) directly or indirectly solicit or attempt to
solicit or obtain in competition with Comshare the custom of, or orders from,
any person, firm, corporation or other entity who or which during the 18 months
preceding the termination of his employment was a customer or prospective
customer of Comshare; nor (ii) directly or indirectly endeavor to entice any
person who was an employee of Comshare at any time during Cluett's employment
to become employed or provide services to any other person, firm, company or
entity (whether in breach of his or her contract of employment or otherwise).
5
<PAGE> 6
4. General. This Agreement shall be construed in accordance with the
laws of the State of Michigan, and Cluett hereby submits to the jurisdiction of
the state and federal courts located in the State of Michigan with respect to
any claim or action brought under this Agreement. In the United Kingdom, this
Agreement shall have no effect and is superseded by the Employment Agreements.
If any provision of this Agreement shall for any reason be held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision hereof.
/s/ Jane Franklin /s/ Geoffrey R. Cluett
- ----------------------- --------------------------------
Witness Geoffrey R. Cluett
May 1, 1997
- -----------------------
Date
COMSHARE, INCORPORATED:
/s/ Kathryn A. Jehle /s/ T. Wallace Wrathall
- ----------------------- --------------------------------
Witness By: T. Wallace Wrathall
President and CEO
May 1, 1997
- -----------------------
Date
6
<PAGE> 7
NON COMPETITION AGREEMENT
THIS AGREEMENT dated this 1st day of May, 1997.
BETWEEN
COMSHARE LIMITED whose registered office is 22 Chelsea Manor Street,
London SW3 5RL ("the Company"),
and
GEOFFREY R. CLUETT, of 89 Bridle Path, Sudbury, MA 01776, U.S.A. ("the
Executive").
RECITALS
A. The Executive is being appointed as an executive officer of Comshare,
Incorporated and as an employee of its subsidiary Comshare Limited.
B. Contemporaneously, Executive is entering into other employment
related agreements, including but not limited to the Terms and Conditions of
Employment of Comshare Limited and a Noncompetition Agreement with the
Comshare, Incorporated (collectively the "Employment Agreements").
C. The business of the Company is worldwide and both parties
acknowledge that by virtue of the Executive's employment with the Company he
will gain knowledge of and have access to all of the Company's trade secrets,
confidential information, business plans and strategies, so that the Executive
agrees to be bound by the post-termination restrictions set out below.
AGREEMENT
In consideration of the Executive's employment with the Company, the
following terms shall apply:
7
<PAGE> 8
1. NON-COMPETITION:
1.1 The Executive hereby agrees that he shall not (without the consent
in writing of the Company) for a period of twelve months
immediately following the termination of his employment within the
Prohibited Area and whether on his own account or in conjunction
with or on behalf of any other person, firm, company or other
organisation, and whether as an employee, director, principal,
agent, consultant or in any other capacity whatsoever in
competition with the Company be directly or indirectly employed or
engaged in or perform services in respect of, or be concerned with:
1.2 the research into, development, manufacture, supply or marketing
of any product which is of the same or similar type to any product
researched, or developed, or manufactured, or supplied or sold, or
marketed by the Company during the twelve (12) months immediately
preceding the Termination Date;
1.3 the development of provision of any services (including but not
limited to technical and product support, or consultancy or
customer services) which are of the same or similar type to any
services provided by the Company during the twelve months preceding
the Termination Date;
PROVIDED ALWAYS that the provisions of this Clause 1 shall apply
only in respect of products or services with which the Executive
was either personally concerned or for which he was responsible
whilst employed by the Company during the twelve months immediately
preceding the Termination Date.
2. NON-SOLICITATION OF EMPLOYEES:
The Executive hereby agrees that he will not for a period of twelve
(12) months immediately following the termination of his employment either on
his own account or in conjunction with or on behalf of any other person,
company, business entity, or other organisation whatsoever directly or
indirectly induce, solicit, entice or procure, any person who is a Company
Employee to leave such employment, where that person is:
2.1 a Company Employee on the Termination Date; or
2.2 had been a Company Employee in any part of the twelve (12) months
immediately preceding the Termination Date except where the
President of Comshare Incorporated gives his written approval.
8
<PAGE> 9
3. ASSOCIATED COMPANIES:
Clauses 1 and 2 in this Agreement shall apply as though references to
the "Associated Company" were substituted for references to "Company". The
obligations undertaken by the Executive pursuant to this Agreement shall, with
respect to each Associated Company, constitute a separate and distinct covenant
and the invalidity or unenforceability of any such covenant shall not affect
the validity or enforceability of the covenants in favor of the Company or any
other Associated Company PROVIDED ALWAYS that this Clause 3 shall only apply to
those Associated Companies to whom the Executive gave his services or with whom
he had been concerned in the twelve (12) months immediately preceding the
Termination Date.
4. DEFINITIONS:
For the purposes of this Agreement the following words and cognate
expressions shall have the meanings set out below:
4.1 "Customer" shall mean any person, firm, company or other
organisation whatsoever to whom the Company has supplied goods
or services.
4.2 "Prospective Customer" shall mean any person, firm, company or
other organisation whatsoever to whom the Company has offered to
supply goods or services, or to whom the Company has provided
details of the terms on which it would or might be willing to
supply goods or services, or with whom the Company has had any
negotiations or discussions regarding the possible supply of
goods or services.
4.3 "Associated Company" includes any firm, company, corporation or
other organisation which:
4.3.1 is directly or indirectly controlled by the Company; or
4.3.2 directly or indirectly controls the Company; or
4.3.3 is directly or indirectly controlled by a third party who also
directly or indirectly controls the Company; or
4.3.4 is the successor in title or assign of the firms, companies,
corporations or other organisations referred to above.
4.4 "Company" shall mean Comshare Limited and its successors in
title and assigns.
4.5 "Prohibited Area" means:
9
<PAGE> 10
4.5.1 the United Kingdom;
4.5.2 any other country in the world where, on the Termination Date,
the Company develops, sells, supplies, manufactures or
researched its products or services and in respect of which the
Executive has been responsible (whether alone or jointly with
others), concerned or active on behalf of the Company during any
part of the two years immediately preceding the Termination
Date.
4.6 "Company Employee" means any person who was employed in sales,
marketing, product development, technical support, customer
support and implementation by the Company or any Associated
Company or as a director and
4.6.1 with whom the Executive had personal contact or dealings in
performing his duties of employment; or
4.6.2 who reported to the Executive; or
4.6.3 who had material contact with customers or suppliers of the
Company in performing his or her duties of employment with the
Company or any Associated Company (as applicable); or
4.6.4 who was a member of the management team including the worldwide
management of the Company or any Associated Company or a
director of the Company or any Associated Company.
5. OTHER TERMS AND CONDITIONS.
The Executive also agrees to adhere to the Company's Terms and
Conditions of Employment except as varied by the specific terms of this
Agreement.
10
<PAGE> 11
6. JURISDICTION
The Executive agrees that this Agreement shall be subject to English
law and both parties agree to the exclusive jurisdiction of the English courts.
SIGNED by or on behalf of the parties on the date first above written:
COMSHARE LIMITED
/s/ T. Wallace Wrathall
--------------------------
T. Wallace Wrathall
April 30, 1997
--------------------------
Date
/s/ Geoffrey R. Cluett
--------------------------
Geoffrey R. Cluett
April 30, 1997
--------------------------
Date
11
<PAGE> 1
EXHIBIT 11.1
COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE
<TABLE>
<CAPTION>
Years Ended June 30,
----------------------------------------
1997 1996 1995
---- ---- ----
(In thousands, except per share amounts)
<S> <C> <C> <C>
WEIGHTED AVERAGE SHARES
Common shares outstanding 9,770 9,048 8,221
Common equivalent shares, treasury stock method - - 177
--------- -------- --------
9,770 9,048 8,398
========= ======== ========
NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) $ (17,117) $(9,891) $ 5,328
Shares used in per common share computation 9,770 9,048 8,398
Net income (loss) per common share $ (1.75) $ (1.09) $ 0.63
</TABLE>
51
<PAGE> 1
EXHIBIT 21.01
SUBSIDIARIES OF COMSHARE, INCORPORATED
<TABLE>
<CAPTION>
Subsidiaries of the Incorporated
Registrant (a) In
- -------------- ----------------------
<S> <C>
Comshare (U.S.), Inc. Michigan
Comshare South Pacific Pty Ltd. Australia
Comshare, Ltd. Canada
Comshare International B.V. Netherlands
Comshare Holdings Company United Kingdom
Comshare, Ltd. United Kingdom
Comshare, Gmbh Germany
Comshare S.A. France
Comshare International Ltd. United Kingdom
CS Iberia sl Spain
CS srl Italy
CSI International Holdings, Inc. (b) Delaware
CS Holdings, Inc. (b) Delaware
</TABLE>
- ---------------
(a) All subsidiaries are wholly owned by their immediate parent.
(b) Subsidiaries have been dissolved as of June 30, 1997.
<PAGE> 1
EXHIBIT 23.01
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference of our report on the June 30, 1997 consolidated financial statements
of Comshare, Incorporated and subsidiaries dated July 29, 1997 (except with
respect to the matters discussed in Notes 3 and 12, as to which the dates are
September 25 and 19, 1997, respectively), included in this Form 10-K, into the
Company's previously filed Form S-8 and S-3 registration statements (File No.
33-6730, File No. 33-9755-3, File No. 33-28437, File No. 33-27002, File No.
33-37564, File No. 33-85720, File No. 33-87706, File No. 33-87708, File No.
33-86908 and File No. 33-65109).
/s/ ARTHUR ANDERSEN LLP
--------------------------
ARTHUR ANDERSEN LLP
Detroit, Michigan
September 25, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 11,651,000
<SECURITIES> 0
<RECEIVABLES> 24,675,000<F1>
<ALLOWANCES> 1,053,000
<INVENTORY> 0
<CURRENT-ASSETS> 43,577,000
<PP&E> 21,386,000
<DEPRECIATION> 16,432,000
<TOTAL-ASSETS> 80,751,000
<CURRENT-LIABILITIES> 44,542,000
<BONDS> 0
0
0
<COMMON> 9,871,000
<OTHER-SE> 22,088,000
<TOTAL-LIABILITY-AND-EQUITY> 80,751,000
<SALES> 0
<TOTAL-REVENUES> 92,831,000
<CGS> 0
<TOTAL-COSTS> 118,803,000
<OTHER-EXPENSES> (517,000)<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 333,000
<INCOME-PRETAX> (25,788,000)
<INCOME-TAX> (8,671,000)
<INCOME-CONTINUING> (17,117,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,117,000)
<EPS-PRIMARY> (1.75)
<EPS-DILUTED> 0
<FN>
<F1>Accounts receivable are stated at net of allowance for doubtful accounts.
<F2>Comprised of $827,000 of interest income and $310,000 of exchange loss.
</FN>
</TABLE>
<PAGE> 1
EXHIBIT 99.00
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
[X] 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED JUNE 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM _________________
[ ] TO ____________________COMMISSION FILE NUMBER_____________________________
Profit Sharing Plan of Comshare, Incorporated
Full Title of the plan.
Comshare, Incorporated, 555 Briarwood Circle, Ann Arbor, MI 48108
Name of issuer of securities held pursuant to the plan
and the address of its principal executive offices.
<PAGE> 2
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
FINANCIAL STATEMENTS AS OF JUNE 30, 1997 AND 1996
AND FOR THE THREE YEARS ENDED JUNE 30, 1997
TOGETHER WITH AUDITORS' REPORT
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator
of the Profit Sharing Plan
of Comshare, Incorporated:
We have audited the accompanying statements of net assets available for
benefits of the PROFIT SHARING PLAN OF COMSHARE, INCORPORATED (the "Plan") as
of June 30, 1997 and 1996, and the related statements of changes in net assets
available for benefits for the years ended June 30, 1997, 1996 and 1995. These
financial statements and the schedules referred to below are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.We conducted our audits
in accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.In our opinion, the
financial statements referred to above present fairly, in all material
respects, the net assets available for benefits of the Plan as of June 30, 1997
and 1996 and the changes in net assets available for benefits for the years
ended June 30, 1997, 1996 and 1995 in conformity with generally accepted
accounting principles.Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a whole. The supplemental
schedules of assets held for investment purposes and reportable transactions
are presented for the purposes of additional analysis and are not a required
part of the basic financial statements but are supplementary information
required by the Department of Labor Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental schedules have been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, are fairly
stated, in all material respects, in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Detroit, Michigan,
September 19, 1997.
<PAGE> 4
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Statements of Net Assets Available for Benefits as of
June 30, 1997 and 1996
Statements of Changes in Net Assets Available for Benefits
for the Years Ended June 30, 1997, 1996 and 1995
Notes to Financial Statements
SCHEDULES
I. Item 27a - Schedule of Assets Held
for Investment Purposes as of June 30, 1997
II. Item 27d - Schedule of Reportable Transactions
for the Year Ended June 30, 1997
<PAGE> 5
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Vanguard
Vanguard Vanguard Vanguard Vanguard Vanguard International
Money Market- Bond Index Index 500 Wellington U.S. Growth Value
Prime Portfolio Fund Portfolio Fund Portfolio Portfolio
-------------- ----------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
RECEIVABLES:
Employer's contribution $ 60,999 $ 26,017 $ 137,162 $ 47,505 $ 64,742 $ 16,580
Participants' contributions 13,511 7,250 49,207 18,990 28,971 8,436
Accrued loan repayments 3,178 923 6,398 2,304 3,076 522
---------- ---------- ----------- ---------- ---------- ----------
77,688 34,190 192,767 68,799 96,789 25,538
INVESTMENTS, at market:
Registered Investment Companies 2,721,591 1,395,409 13,291,055 2,465,188 3,314,385 860,658
Company Stock Fund -- -- -- -- -- --
Loans to participants -- -- -- -- -- --
---------- ---------- ----------- ---------- ---------- ----------
2,721,591 1,395,409 13,291,055 2,465,188 3,314,385 860,658
NET ASSETS AVAILABLE
FOR BENEFITS $2,799,279 $1,429,599 $13,483,822 $2,533,987 $3,411,174 $886,196
========== ========== =========== ========== ========== ==========
<CAPTION>
Comshare Loan 1997
Stock Fund Fund Total
---------- ---------- ----------
<S> <C> <C> <C>
RECEIVABLES:
Employer's contribution $ 14,693 $ -- $ 367,698
Participants' contributions 8,476 -- 134,841
Accrued loan repayments 1,725 -- 18,126
---------- --------- -----------
24,894 -- 520,665
INVESTMENTS, at market:
Registered Investment Companies -- -- 24,048,286
Company Stock Fund 1,727,122 -- 1,727,122
Loans to participants -- 718,567 718,567
---------- --------- -----------
1,727,122 718,567 26,493,975
NET ASSETS AVAILABLE
FOR BENEFITS $1,752,016 $ 718,567 $27,014,640
========== ========= ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 6
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF JUNE 30, 1996
<TABLE>
<CAPTION>
Vanguard Vanguard Vanguard Vanguard Vanguard
Money Market- Bond Index Index 500 Wellington U.S. Growth
Prime Portfolio Fund Portfolio Fund Portfolio
---------------- --------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
RECEIVABLES:
Employer's contribution $ 56,579 $ 55,851 $ 256,124 $ 104,117 $ 98,407
Participants' contributions 11,045 7,593 46,175 18,776 22,138
Accrued loan repayments 3,189 1,175 5,279 1,588 2,347
---------- ---------- ----------- ---------- ----------
70,813 64,619 307,578 124,481 122,892
INVESTMENTS, at market:
Registered Investment
Companies 3,065,717 1,687,144 10,395,281 2,309,281 2,999,767
Company Stock Fund -- -- -- -- --
Loans to participants -- -- -- -- --
---------- ---------- ----------- ---------- ----------
3,065,717 1,687,144 10,395,281 2,309,281 2,999,767
NET ASSETS AVAILABLE
FOR BENEFITS $3,136,530 $1,751,763 $10,702,859 $2,433,762 $3,122,659
========== ========== =========== ========== ==========
<CAPTION>
Vanguard
International
Value Comshare Loan 1996
Portfolio Stock Fund Fund Total
---------------- --------------- -------- -----------
<S> <C> <C> <C> <C>
RECEIVABLES:
Employer's contribution $ 28,973 $ 15,913 $ -- $ 615,964
Participants' contributions 8,019 4,274 -- 118,020
Accrued loan repayments 926 741 -- 15,245
---------- ---------- -------- -----------
37,918 20,928 749,229
INVESTMENTS, at market:
Registered Investment
Companies 1,083,123 -- -- 21,540,313
Company Stock Fund -- 3,960,341 -- 3,960,341
Loans to participants -- -- 635,662 635,662
---------- ---------- -------- -----------
1,083,123 3,960,341 635,662 26,136,316
NET ASSETS AVAILABLE
FOR BENEFITS $1,121,041 $3,981,269 $635,662 $26,885,545
========== ========== ======== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 7
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
Vanguard
Vanguard Vanguard Vanguard Vanguard Vanguard International
Money Market- Bond Index Index 500 Wellington U.S.Growth Value
INVESTMENT INCOME: Prime Portfolio Fund Portfolio Fund Portfolio Portfolio
------------------- ---------- ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Unrealized appreciation (depreciation)
of investments $ -- $ 13,776 $ 2,988,259 $ 292,461 $ 486,517 $ (10,758)
Interest and dividend income 158,926 99,058 257,917 180,140 260,689 188,680
Realized gain (loss) on investments -- 3,367 147,785 22,078 57,140 (59,278)
----------- ---------- ----------- ---------- ---------- ----------
158,926 116,201 3,393,961 494,679 804,346 118,644
CONTRIBUTIONS:
Employer 109,690 59,534 321,794 111,672 152,579 41,359
Participants 193,117 114,355 715,440 279,178 442,913 136,118
----------- ---------- ----------- ---------- ---------- ----------
302,807 173,889 1,037,234 390,850 595,492 177,477
LOAN ORIGINATIONS (79,667) (23,769) (135,939) (48,973) (53,371) (7,120)
LOAN REPAYMENTS 77,471 19,113 95,655 36,872 42,061 18,271
INTERFUND TRANSFERS, NET 843,753 (422,305) (363,905) (449,832) 308,703 (199,170)
DISTRIBUTIONS TO PARTICIPANTS (1,640,541) (185,293) (1,246,043) (323,371) (1,408,716) (342,947)
----------- ---------- ----------- ---------- ---------- ----------
Increase (Decrease) in Net Assets
Available for Benefits (337,251) (322,164) 2,780,963 100,225 288,515 (234,845)
NET ASSETS AVAILABLE FOR
BENEFITS BEGINNING OF YEAR 3,136,530 1,751,763 10,702,859 2,433,762 3,122,659 1,121,041
----------- ---------- ----------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR $ 2,799,279 $1,429,599 $13,483,822 $2,533,987 $3,411,174 $ 886,196
=========== ========== =========== ========== ========== ==========
<CAPTION>
Comshare Loan 1997
INVESTMENT INCOME: Stock Fund Fund Total
------------ ---------- ------------------
<S> <C> <C> <C>
Unrealized appreciation (depreciation)
of investments $(1,581,935) $ -- $ 2,188,320
Interest and dividend income -- 67,303 1,212,713
Realized gain (loss) on investments (749,905) -- (578,813)
----------- --------- -----------
(2,331,840) 67,303 2,822,220
CONTRIBUTIONS:
Employer 22,063 -- 818,691
Participants 89,656 -- 1,970,777
----------- --------- -----------
111,719 -- 2,789,468
LOAN ORIGINATIONS (58,658) 407,497 --
LOAN REPAYMENTS 34,110 (323,553) --
INTERFUND TRANSFERS, NET 282,756 -- --
DISTRIBUTIONS TO PARTICIPANTS (267,340) (68,342) (5,482,593)
----------- --------- -----------
Increase (Decrease) in Net Assets
Available for Benefits (2,229,253) 82,905 129,095
NET ASSETS AVAILABLE FOR
BENEFITS BEGINNING OF YEAR 3,981,269 635,662 26,885,545
----------- --------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR $ 1,752,016 $ 718,567 $27,014,640
=========== ========= ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 8
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Vanguard
Vanguard Vanguard Vanguard Vanguard Vanguard International
Money Market- Bond Index Index 500 Wellington U.S.Growth Value
Prime Portfolio Fund Portfolio Fund Portfolio Portfolio
---------------- ---------- ------------ ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Unrealized appreciation (depreciation)
of investments $ -- $ (30,758) $ 1,674,861 $ 196,661 $ 472,563 $ 10,636
Interest and dividend income 178,792 107,802 219,446 120,986 82,532 95,269
Realized gain on investments -- 937 141,928 47,203 31,118 5,530
---------- ---------- ----------- ---------- ---------- ----------
178,792 77,981 2,036,235 364,850 586,213 111,435
CONTRIBUTIONS:
Employer 97,516 95,724 434,895 180,635 156,646 56,055
Participants 242,547 166,416 587,678 265,954 238,877 109,048
---------- ---------- ----------- ---------- ---------- ----------
340,063 262,140 1,022,573 446,589 395,523 165,103
TRANSFER OF ASSETS FROM
OTHER PLANS -- -- -- -- -- --
LOAN ORIGINATIONS (67,911) (36,006) (93,771) (28,087) (28,488) (7,880)
LOAN REPAYMENTS 77,916 21,485 123,139 50,137 47,321 21,707
INTERFUND TRANSFERS, NET (798,285) (168,273) 845,839 152,052 569,951 (15,567)
DISTRIBUTIONS TO PARTICIPANTS (392,844) (63,287) (1,309,944) (475,426) (106,104) (56,811)
---------- ---------- ----------- ---------- ---------- ----------
Increase (decrease) in Net Assets (662,269) 94,040 2,624,071 510,115 1,464,416 217,987
Available for Benefits
NET ASSETS AVAILABLE FOR
BENEFITS BEGINNING OF YEAR 3,798,799 1,657,723 8,078,788 1,923,647 1,658,243 903,054
---------- ---------- ----------- ---------- ---------- ----------
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR $3,136,530 $1,751,763 $10,702,859 $2,433,762 $3,122,659 $1,121,041
========== ========== =========== ========== ========== ==========
<CAPTION>
Comshare Loan 1996
Stock Fund Fund Total
----------- ---------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Unrealized appreciation (depreciation)
of investments $1,424,698 $ -- $ 3,748,661
Interest and dividend income -- 53,701 858,528
Realized gain on investments 177,244 -- 403,960
---------- --------- -----------
1,601,942 53,701 5,011,149
CONTRIBUTIONS:
Employer 18,778 -- 1,040,249
Participants 40,930 -- 1,651,450
---------- --------- -----------
59,708 -- 2,691,699
TRANSFER OF ASSETS FROM
OTHER PLANS 3,183,333 -- 3,183,333
LOAN ORIGINATIONS (61,411) 323,554 --
LOAN REPAYMENTS 3,122 (344,827) --
INTERFUND TRANSFERS, NET (585,717) --
DISTRIBUTIONS TO PARTICIPANTS (219,708) (11,190) (2,635,314)
---------- --------- -----------
Increase (decrease) in Net Assets 3,981,269 21,238 8,250,867
Available for Benefits
NET ASSETS AVAILABLE FOR
BENEFITS BEGINNING OF YEAR -- 614,424 18,634,678
---------- --------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR $3,981,269 $ 635,662 $26,885,545
========== ========= ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 9
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
Vanguard
Vanguard Vanguard Vanguard Vanguard Vanguard International
Money Market- Bond Index Index 500 Wellington U.S.Growth Value
Prime Portfolio Fund Portfolio Fund Portfolio Portfolio
--------------- ------------- ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Unrealized appreciation (depreciation)
of investments $ -- $ 76,028 $ 1,317,955 $ 219,092 $ 246,207 $ (26,308)
Interest and dividend income 215,539 107,263 207,110 75,542 9,333 42,870
Realized gain (loss) on investments -- (3,635) 141,397 14,376 12,981 (19,061)
----------- ---------- ----------- ---------- ---------- ---------
215,539 179,656 1,666,462 309,010 268,521 (2,499)
CONTRIBUTIONS:
Employer 146,227 87,651 321,337 129,416 89,099 54,274
Participants 290,831 131,045 525,878 210,493 139,318 105,377
----------- ---------- ----------- ---------- ---------- ---------
437,058 218,696 847,215 339,909 228,417 159,651
LOAN ORIGINATIONS (60,361) (22,769) (81,743) (33,744) (44,223) (4,840)
LOAN REPAYMENTS 106,026 45,034 216,657 31,785 22,643 23,266
INTERFUND TRANSFERS, NET (95,951) (176,643) (634,641) (259,828) 724,844 442,219
DISTRIBUTIONS TO PARTICIPANTS (1,313,081) (393,804) (1,573,917) (210,204) (151,539) (213,255)
----------- ---------- ----------- ---------- ---------- ---------
Increase (decrease) in Net Assets (710,770) (149,830) 440,033 176,928 1,048,663 404,542
Available for Benefits
NET ASSETS AVAILABLE FOR
BENEFITS BEGINNING OF YEAR 4,509,569 1,807,553 7,638,755 1,746,719 609,580 498,512
----------- ---------- ----------- ---------- ---------- ---------
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR $ 3,798,799 $1,657,723 $ 8,078,788 $1,923,647 $1,658,243 $ 903,054
=========== ========== =========== ========== ========== =========
<CAPTION>
Loan 1995
Fund Total
---------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Unrealized appreciation (depreciation)
of investments $ -- $ 1,832,974
Interest and dividend income 66,753 724,410
Realized gain (loss) on investments -- 146,058
--------- -----------
66,753 2,703,442
CONTRIBUTIONS:
Employer -- 828,004
Participants -- 1,402,942
--------- -----------
-- 2,230,946
LOAN ORIGINATIONS 247,680 --
LOAN REPAYMENTS (445,411) --
INTERFUND TRANSFERS, NET -- --
DISTRIBUTIONS TO PARTICIPANTS (55,821) (3,911,621)
--------- -----------
Increase (decrease) in Net Assets (186,799) 1,022,767
Available for Benefits
NET ASSETS AVAILABLE FOR
BENEFITS BEGINNING OF YEAR 801,223 17,611,911
--------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR $ 614,424 $18,634,678
========= ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 10
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTION OF THE PLAN
The information discussed below is a summary only and reference should be
made to the Profit Sharing Plan of Comshare, Incorporated (the "Plan") or
inquiries made of the Plan Administrator for more complete information.
(a) General
The Plan is a defined contribution plan covering eligible employees of
Comshare, Incorporated (the "Company"). The Plan provides retirement
benefits and is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA). The Company administers the Plan
and pays all plan administration costs, including fees paid to the
Trustee. The operating expenses of the investment advisor are netted
from the returns of the funds.
The Employee Stock Ownership Plan (ESOP) of Comshare Incorporated was
merged with the Plan effective October 1, 1995. All of the assets of
the ESOP which consisted primarily of Comshare common stock were
transferred to the Plan and placed in the new Comshare Stock Fund.
(b) Trustee and Investment Advisor
As of June 30, 1997 the Plan held all investments with Vanguard
Fiduciary Trust Company (the "Trustee" and "Investment Advisor").
In accordance with the Trust Agreement, the Trustee holds and
administers the Plan's assets and executes transactions therewith for
the purpose of providing benefits as described in the Plan agreement.
The Investment Advisor executes all investment transactions.
(c) Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from
those estimates.
(d) Contributions
The Plan provides for annual employer fixed contributions equal to 2%
of eligible participants' compensation. In addition, the Company may
make discretionary contributions, the amount of which is determined by
the Board of Directors. There were no discretionary contributions in
1997 or 1995. The discretionary contributions in 1996 were $234,000.
To qualify for such employer contributions for any given Plan year, a
participant must be credited with 1,000 or more hours of service during
the Plan year and be employed by the Company on the last day of the
Plan year.
<PAGE> 11
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(continued)
Participants may make before-tax contributions, subject to Internal
Revenue Service limitations. Participants are eligible for employer
matching contributions equal to 50% of the participant's before-tax
contributions up to 6% of their compensation.
(e) Investment Options
As of June 30, 1997 the investment options available to participants
are as follows: (1) Vanguard Money Market - Prime Portfolio, a money
market fund, consisting of investments with maturities of one year or
less; (2) Vanguard Bond Index Fund, an intermediate bond fund,
consisting primarily of investments in U.S. Government and corporate
bonds; (3) Vanguard Index 500 Portfolio, a diversified equity fund,
consisting of investments in the stocks included in the Standard &
Poors' 500 Index; (4) Vanguard Wellington Fund, a balanced fund,
consisting of investments in both stocks and bonds; (5) Vanguard United
States Growth Portfolio, a growth stock fund, consisting of investments
in common stocks of companies with above-average growth potential; (6)
Vanguard International Value Portfolio, an international equity fund,
consisting of investments in stocks of companies based outside the
United States; (7) Comshare Stock Fund, a fund investing in the common
stock of Comshare, Inc. There are no guaranteed rates of returns for
these funds.
Participants may change their investment election daily for new
contributions or loans repaid to the Plan. Contributions to the Plan
are invested directly by the Trustee into the investment options based
on participant elections.
(f) Vesting and Eligibility
All full-time employees and certain part-time employees are eligible to
make employee before-tax contributions to the Plan at the beginning of
the calendar quarter following the date of hire. Eligible participants
begin sharing in employer contributions after completing one year of
service. As of June 30, 1997 there were 332 active participants.
Participants vest in employer discretionary contributions according to
a seven year schedule. Participants completing at least 1,000 hours of
service in a given plan year are credited with an increase in vesting
for such plan year. Full vesting also occurs upon retirement at age
65, or after death or total disability. Employer matching
contributions vest according to a seven year schedule for participants
with targeted compensation greater than the social security wage base.
All other participants are fully vested in employer matching
contributions.
Employee contributions and employer fixed contributions are always fully
vested.
<PAGE> 12
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(continued)
(g) Loans and Hardship Withdrawals
The Plan provides for hardship withdrawals in certain circumstances and
for loans to participants. Loans are limited to 50% of a participant's
vested balance, and bear interest comparable to competitive bank rates
for loans of similar purpose. Loans are repaid through payroll
withholding, and typically mature within five years with a maximum
maturity of twenty years. A 10% excise tax is imposed upon hardship
withdrawals.
(h) Benefit Distributions
Distribution of the vested amounts in a participant's account can be
made upon termination of employment or upon retirement. Benefits are
paid, at the option of the participant, in a lump sum payment or in
periodic payments of substantially equal amounts for a specified number
of years, not to exceed ten.
(i) Benefits Payable
As of June 30, 1997 and 1996, the net assets available for benefits
included $1,501,183 and $808,841, respectively, for benefits payable
that were due but undistributed to participants as a result of
termination of employment or retirement. These amounts are shown as
liabilities on Form 5500 and are the only reconciling item between the
financial statements and Form 5500.
(j) Allocation to Participants' Accounts
The Trustee maintains the detailed accounts of the net assets available
for benefits in the Plan. The Trustee values the fund for each
investment option at market value on a daily basis. The net change in
each fund's market value for the period is allocated to the accounts of
participants within that fund in the same proportion that the balance
of each participant's account bears to the total of the fund on the
last day of the period. Interest income on loans to participants is
credited directly to the individual participant's account. Company
discretionary contributions and forfeitures are allocated to eligible
participants' accounts in the same proportion that the participant's
eligible compensation bears to the total eligible compensation of all
participants for the year.
(k) Plan Termination
Although it has not expressed the intent to do so, the Company has the
right to terminate the Plan subject to the provisions of ERISA. In the
event the Plan is terminated, the participants will become fully vested
and will receive the balances in their individual accounts.
(l) Federal Income Tax Status
The Plan obtained its latest determination letter dated September 16,
1996, in which the Internal Revenue Service stated that the Plan, as
amended and restated effective July 1, 1994, was in compliance with the
applicable requirements of the Internal Revenue Code (the "Code").
The Plan has subsequently been amended and restated effective October
1, 1995 to reflect the merger with the ESOP. The Plan administrator
is applying for a new determination letter. The Plan administrator and
the Plan's tax counsel believe that the Plan is currently designed and
being operated in compliance with the applicable requirements of the
Code.
<PAGE> 13
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(continued)
Therefore, they believe that the Plan was qualified and the related
trust was tax-exempt as of the financial statement date.
(m) Forfeitures
Non-vested account balances of terminated employees are forfeited at
the end of the quarter following the date of termination. Forfeitures
were $33,657, $62,517 and $26,714 for the years ended June 30, 1997,
1996 and 1995, respectively. Forfeitures are allocated on a pro-rata
basis to remaining participants.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Accounting
The financial statements have been prepared on the accrual basis of
accounting.
(b) Investments
Investment transactions are recorded by the Trustee on a trade date
basis. Investments are stated in the Statement of Net Assets Available
for Benefits at market value. Realized gains and losses on sale of
investments and unrealized appreciation (depreciation) of investments
are computed based on the difference between the market value of the
investments at the beginning of the year, or at the time of purchase if
acquired during the year, and the market value of investments when sold
or at Plan year end.
(3) REPORTABLE TRANSACTIONS
Transactions, or a series of transactions, in excess of 5% of Net Assets
Available for Benefits at the beginning of the Plan year are reportable
transactions under the provisions of ERISA. A list of such transactions is
included in Schedule II.
(4) SUBSEQUENT EVENTS
As of September 19, 1997, the Company's stock was trading at $8.375 per
share compared to $12.375 per share at June 30, 1997. The investments in
the Comshare Stock Fund consist primarily of the Company's stock which is
valued in the accompanying Statement of Net Assets Available for Benefits at
the June 30, 1997 share price.
<PAGE> 14
SCHEDULE I
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
EIN: 38-1804887 PN: 001
ITEM 27a - SCHEDULE OF ASSETS
HELD FOR INVESTMENT PURPOSES AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
(c) Description of Investment
(a) (b) Identity of Issue, Including Maturity Date, (e)
Borrower, Lessor, Rate of Interest, Collateral, (d) Current
or Similar Party Par or Maturity Value Cost Value
-------------------------- -------------------------------- ----------- -----------
<S> <C> <C> <C> <C>
MUTUAL FUNDS:
* Vanguard Group 2,721,591 units of Money $ 2,721,591 $ 2,721,591
Market - Prime Portfolio
* Vanguard Group 118,923 units of Bond 1,390,869 1,395,409
Index Fund
* Vanguard Group 160,656 units of Index 7,890,905 13,291,055
500 Portfolio
* Vanguard Group 84,831 units of Wellington 1,949,000 2,465,188
Fund
* Vanguard Group 118,923 units of U.S. Growth 2,423,066 3,314,385
Portfolio
* Vanguard Group 28,536 units of International 873,067 860,658
Value Portfolio
* Vanguard Group 279,922 units of Comshare Stock 1,445,860 1,727,122
Fund ----------- -----------
Total Mutual Funds 18,694,358 25,775,408
----------- -----------
LOANS:
Loans to plan participants Interest rates range 718,567 718,567
from 6.5% to 12.25%; ----------- -----------
maturing through December, 2016
TOTAL INVESTMENTS $19,412,925 $26,493,975
=========== ===========
</TABLE>
* Represents a party-in-interest
<PAGE> 15
SCHEDULE II
PROFIT SHARING PLAN
OF COMSHARE, INCORPORATED
EIN: 38-1804887 PN: 001
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
(a) (b) (c) (d) (g)
Identity of Party Description of Purchase Selling Cost of
Involved Asset Price Price Asset
- ----------------- ---------------------------------------------------- ---------------- --------------- -------------
<S> <C> <C> <C> <C>
Vanguard Group 104 purchases of shares of Vanguard $2,571,862 N/A N/A
Money Market - Prime Portfolio
Vanguard Group 90 purchases of shares of Vanguard Index 2,805,964 N/A N/A
500 Portfolio
Vanguard Group 70 purchases of shares of Vanguard U.S. 1,987,883 N/A N/A
Growth Portfolio
Vanguard Group 57 purchases of shares of Vanguard Wellington Fund 845,236 N/A N/A
Vanguard Group 74 purchases of shares of Comshare Stock Fund 2,275,493 N/A N/A
Vanguard Group 76 sales of shares of Vanguard Money N/A $2,915,987 $2,915,987
Market - Prime Portfolio
Vanguard Group 74 sales of shares of Vanguard Index 500 Portfolio N/A 3,046,225 2,312,463
Vanguard Group 57 sales of shares of Vanguard U.S. Growth Portfolio N/A 2,216,922 1,881,112
Vanguard Group 57 sales of shares of Vanguard Wellington Fund N/A 1,003,868 873,768
Vanguard Group 91 sales of shares of Comshare Stock Fund N/A 2,176,872 1,624,391
<CAPTION>
(h)
Current Value
of Asset on (i)
Transaction Date Net Gain
-------------------- --------------------
<S> <C> <C>
Vanguard Group $2,571,862 N/A
Vanguard Group 2,805,964 N/A
Vanguard Group 1,987,833 N/A
Vanguard Group 845,236 N/A
Vanguard Group 2,275,493 N/A
Vanguard Group 2,915,987 --
Vanguard Group 3,046,225 $733,762
Vanguard Group 2,216,922 335,810
Vanguard Group 1,003,868 130,100
Vanguard Group 2,176,872 552,481
</TABLE>
<PAGE> 16
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference of our report on the June 30, 1997 financial statements of the Profit
Sharing Plan of Comshare, Incorporated dated September 19, 1997, included in
this Form 11-K into the Company's previously filed Form S-8 and S-3
registration statements (File No. 33-6730, File No. 33-9755-3, File No.
33-28437, File No. 33-27002, File No. 33-37564, File No. 33-85720, File No.
33-87706, File No. 33-87708, File No. 33-86908 and File No. 33-65109).
Arthur Andersen LLP
Detroit, Michigan
September 19, 1997.
