TERM LOAN AGREEMENT Dated as of February 20, 2007

Exhibit 10.1

 

TERM LOAN AGREEMENT

Dated as of February 20, 2007

 

CorVu Corporation, a Minnesota corporation (the “Borrower”), located at 3400 West 66^th Street, Suite 445, Edina, MN 55435, and Commerce Bank, a Minnesota state banking corporation (the “Bank”), located at 7650 Edinborough Way, Suite 150, Edina, MN 55435, agree as follows:

 

ARTICLE I.

 

Section 1.1    Definitions. As used in this Agreement the following terms shall have the following meanings (such meanings to be equally applicable to singular and plural forms of the terms defined):

 

(a)    “Affiliates” means any of the following Persons:

 

(i)    any director, officer or employee of the Borrower;

 

(ii)    any person who, individually or with his immediate family, beneficially owns or holds 5% or more of the voting equity interests in the Borrower; or

 

(iii)    any Subsidiary and any company in which any Person described above owns a 5% or greater equity interest.

 

(b)    “Applicable Percentage” means the following percentages relating to the principal amounts outstanding on the Note from time to time:

 

(i)    with respect to all principal amounts then outstanding on the Note not in excess of the amount on deposit in the Cash Collateral Account as of the end of the previous month, a percentage equal to 2.60% plus the nominal annual interest rate being paid by the Bank on the Cash Collateral Account as of the end of the previous month;

 

 

(ii)    with respect to all principal amounts then outstanding on the Note in excess of the amount on deposit in the Cash Collateral Account as of the end of the previous month if such amount on deposit did not equal at least $2,300,000.00, a percentage equal to the then Prime Rate plus 1.50%;

 

(iii)    with respect to all principal amounts then outstanding on the Note in excess of the amount on deposit in the Cash Collateral Account as of the end of the previous month if such amount on deposit equaled at least $2,300,000.00, a percentage equal to the then Prime Rate plus 1.0%.

 

(c)    “Business Day” means any day other than a Saturday, Sunday or a public holiday or the equivalent under the laws of the State of Minnesota or the United States of America.

 

(d)    “Cash Collateral Account” means a deposit account established and maintained by the Borrower at the Bank under Section 2.7 with respect to which the only Persons with “control” (as defined in Minn. Stat. §336.9-104) are the Borrower and the Bank.

 

(e)    “Debt” means (i) indebtedness for borrowed money or for the deferred purchase price of property or services, (ii) obligations as lessee under leases that have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases, (iii) obligations under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clause (i) or (ii) above, and (iv) liabilities in respect of unfunded vested benefits under plans covered by Title IV of ERISA.

 

 

(f)    “Debt Service Coverage Ratio” for any time period means a ratio the numerator of which is the sum of the Borrower’s net income during that period plus interest, depreciation and amortization expense during that period less any distributions or dividends paid to equity holders during that period and the denominator of which is the sum of interest expense during that period plus that portion of the principal of the Borrower’s Debt coming due during that period.

 

(g)    “Event of Default” means one of the events specified in Section 6.1.

 

(h)    “Loan Documents” means this Agreement, the Note, the Security Agreement, the Corporate Guaranty, the Personal Guaranty and all other documents to be executed in connection with this Agreement.

 

(i)    “Loan Party” means any Person obligated under any Loan Document.

 

(j)    “Note” means the Note described in Section 2.2.

 

(k)    “Person” means an individual, corporation, limited liability company, partnership, joint venture, trust or unincorporated organization or governmental agency or political subdivision thereof.

 

(l)    “Prime Rate” means the prime rate published in the Wall Street Journal as the base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks.

 

(m)    “Subsidiary” means any entity of which more than 50% of the outstanding equity interests having ordinary voting power to elect a majority of the Board of Directors, Board of Governors or comparable governing body of such entity (irrespective of whether or not at the time equity interests of such entity shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries.

 

 

(n)    “Tangible Net Worth” means the aggregate of the capital stock, paid in surplus and retained earnings of the Borrower (excluding stock of the Borrower held by the Borrower), determined and computed in accordance with generally accepted accounting principles consistently applied from year to year, less the book value of all assets of the Borrower that would be treated as intangibles under generally accepted accounting principles including without limitation, such items as goodwill, trademarks, tradenames, service marks, copyrights, patents, licenses, internet domain names, uniform resource locators, and website contracts and registration rights and less the book value of all obligations owed to the Borrower by any of its Affiliates.

 

Section 1.2    Accounting and Other Terms. All accounting terms not specifically defined in this Agreement shall be construed in accordance with generally accepted accounting principles consistently applied as such principles may change from time to time. Other terms defined herein shall have the meanings ascribed to them herein.

 

ARTICLE II.

 

Section 2.1    Commitment for Term Loan. The Bank hereby lends to the Borrower, and the Borrower hereby borrows from the Bank, the amount of $3,200,000.00 (the “Term Loan”).

 

Section 2.2    The Note. The Term Loan shall be evidenced by a promissory note (the “Note”) that is in substantially the form of Exhibit A attached hereto and is delivered to the Bank pursuant to Article III.

 

 

Section 2.3    Interest and Payments. The Borrower shall repay, and shall pay interest on, the aggregate unpaid principal amount of the Term Loan in accordance with the Note, except that after and during the continuance of an Event of Default the Borrower shall pay interest at an annual rate equal to 3.0% in excess of the rate of interest otherwise provided under the Note. All payments of principal, interest and fees under this Agreement shall be made when due to the Bank in immediately available funds. All computations of interest shall be made by the Bank on the basis of the actual number of days elapsed in a year of 360 days. Whenever any such payment shall be due on a non-Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be. The Bank is expressly authorized to charge any principal or interest payment, when due, to Borrower’s demand deposit account maintained at the Bank, or, if that account shall not contain sufficient funds, to any other account maintained by the Borrower at the Bank.

 

Section 2.4    Voluntary Prepayment. The Borrower may prepay the Note in whole, but not in part, at any time.

 

Section 2.5    Mandatory Prepayment. The Note in its entirety shall become due and payable contemporaneously with the closing of any merger or consolidation of the Borrower with any other Person or the sale, transfer, conveyance, lease or other disposition of (whether in one transaction or in a series of transactions) all or a substantial portion of the Borrower’s assets (whether now owned or hereafter acquired) to any other Person.

 

Section 2.6    Use of Proceeds. The proceeds of the Term Loan shall be used to repay existing Debt owed by the Borrower to ComVest Investment Partners II LLC (“ComVest”) and to redeem up to 17,000 shares of Series C preferred stock in the Borrower by ComVest at a price not to exceed $100.00 per share plus any accrued and unpaid dividends on such stock.

 

 

Section 2.7    Cash Collateral Provisions. On or about the date of this Agreement, the Borrower has established the Cash Collateral Account with the Bank in an amount of not less than $2,000,000.00. So long as any amount remains unpaid on the Note, (i) the Borrower will have no right to withdraw any principal from the Cash Collateral Account and (ii) the Borrower will maintain the Cash Collateral Account with the Bank in the following minimum amounts:

 

Time Period:	Minimum Amount:
Through April 29, 2007	$2,000,000.00
April 30, 2007 through June 29, 2007	$2,100,000.00 (First Threshold)
June 30, 2007 through July 30, 2007	$2,200,000.00 (Second Threshold)
After July 30, 2007	$2,300,000.00 (Third Threshold)

 

If by April 30, 2007, the Borrower has met the First Threshold with respect to the Cash Collateral Account at a time that no Event of Default has then occurred and is continuing, the maximum principal amount subject to the Personal Guaranty shall permanently be reduced to $200,000.00. If by June 30, 2007, the Borrower has met the Second Threshold with respect to the Cash Collateral Account at a time that no Event of Default has then occurred and is continuing, the maximum principal amount subject to the Personal Guaranty shall permanently be reduced to $100,000.00. If by July 31, 2007, the Borrower has met the Third Threshold with respect to the Cash Collateral Account at a time that no Event of Default has then occurred and is continuing, the Personal Guaranty shall released in its entirety and shall be returned to the Personal Guarantor. The Borrower is authorized to meet each or all of the Thresholds prior to the dates set forth above. The reduction in, and release of, respectively, the Personal Guaranty shall become effective at the time the Borrower meets the Threshold in question, so long as no Event of Default has occurred and is continuing at such time.

 

 

ARTICLE III.

 

Section 3.1    Conditions Precedent to Term Loan Advance. The Bank shall have no obligation to make the Term Loan unless the Bank shall have received on or before the date of disbursement the following documents or items:

 

(a)    The Note, properly executed and delivered on behalf of the Borrower.

 

(b)    A security agreement (the “Security Agreement”), in a form acceptable to the Bank, properly executed and delivered on behalf of the Borrower and the Corporate Guarantor, granting to the Bank a security interest in all of the Borrower’s and Corporate Guarantor’s inventory, accounts, equipment, general intangibles and other property described therein as security for the performance of the Borrower’s obligations under this Agreement and the Note, together with any UCC-1 Financing Statement or other document deemed necessary or desirable by the Bank to perfect the security interest granted by the Security Agreement.

 

(c)    A certified copy of the resolutions of the Board of Directors of the Borrower and the Corporate Guarantor, approving the execution and delivery of the Loan Documents to which it is a party and approving all other matters contemplated by this Agreement.

 

(d)    A certificate by the Secretary or any Assistant Secretary of the Borrower and the Corporate Guarantor certifying the names of the officer or officers of the Borrower and the Corporate Guarantor authorized to sign the Loan Documents to which it is a party, together with a sample of the true signature of such officer.

 

 

(e)    Favorable opinion of counsel to the Borrower and the Corporate Guarantor in a form and as to such matters as the Bank may request

 

(f)    The Cash Collateral Account in a principal amount of not less than $2,000,000.00.

 

(g)    A guaranty (the “Corporate Guaranty”) of CorVu North America, Inc. (the “Corporate Guarantor”), in a form satisfactory to the Bank, guaranteeing the Borrower’s obligations under this Agreement and the Note.

 

(h)    A guaranty (the “Personal Guaranty”) of James L. Mandel, Joseph J. Caffarelli and David C. Carlson (collectively, the “Personal Guarantor” and, together with the Corporate Guarantor, the “Guarantors”), in a form satisfactory to the Bank, guaranteeing the Borrower’s obligations under this Agreement and the Note, provided that the Personal Guaranty shall be subject to reduction and release under the circumstances described in Section 2.7.

 

In addition, the Bank shall have no obligation to make the Term Loan if on or before the date of disbursement, any event has occurred and is continuing, or will result from such Term Loan, that constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

 

ARTICLE IV.

 

Section 4.1    Representations and Warranties of the Borrower. To induce the Bank to make the Term Loan, the Borrower represents and warrants as follows:

 

(a)    Existence of Borrower. The Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of the state indicated at the beginning of this Agreement. The Borrower has not, in the past five years, operated under any name, including any trade name or assumed name, other than the name indicated at the beginning of this Agreement.

 

 

(b)    Authority to Execute. The execution, delivery and performance by the Borrower of the Loan Documents to which it is a party are within the Borrower’s corporate powers, have been duly authorized by all necessary corporate action, do not and will not conflict with any provision of law or of the charter or bylaws of the Borrower or of any agreement or contractual restriction binding upon or affecting the Borrower or any of its property, and need no further shareholder or creditor consent.

 

(c)    Binding Obligation. This Agreement is, and the other Loan Documents when delivered hereunder will be, legal, valid and binding obligations of the Loan Parties enforceable against such Persons in accordance with their respective terms.

 

(d)    Governmental Approval. No consent of, or filing with, any governmental authority is required on the part of any Loan Party in connection with the execution, delivery or performance of any Loan Documents.

 

(e)    Financial Statements. The audited financial statements of the Borrower as of June 30, 2006, copies of which have been furnished to the Bank, have been prepared in conformity with generally accepted accounting principles consistently applied and present fairly the financial condition of the Borrower as of such dates, and the results of the operations of the Borrower for the financial periods then ended, and since such date, there has been no materially adverse change in such financial condition.

 

 

(f)    Litigation. No litigation or governmental proceeding is pending or threatened against the Borrower that may have a materially adverse effect on the financial condition or operations of the Borrower.

 

(g)    Title to Assets. The Borrower has good and marketable title to all assets used in connection with its trades or businesses, and none of such assets is subject to any mortgage, pledge, lien, security interest or encumbrance of any kind, except for current taxes not delinquent, security interests in favor of ComVest and purchase money liens on, and leases of, equipment as have been disclosed to the Bank prior to, or contemporaneously with, this Agreement.

 

(h)    Taxes. The Borrower has filed all federal and state income tax returns that are required to be filed, and has paid all taxes shown on such returns to be due and all other tax assessments received by it to the extent that such assessments have become due.

 

(i)    ERISA. No plan (as that term is defined in the Employee Retirement Income Security Act of 1974 (“ERISA”)) of the Borrower (a “Plan”) that is subject to Part 3 of Subtitle B of Title 1 of ERISA had an accumulated funding deficiency (as such term is defined in ERISA) as of the last day of the most recent fiscal year of such Plan ended prior to the date hereof, or would have had such an accumulated funding deficiency on such date if such year were the first year of such Plan, and no material liability to the Pension Benefit Guaranty Corporation has been, or is expected by the Borrower to be, incurred with respect to any such Plan. No Reportable Event (as defined in ERISA) has occurred and is continuing in respect to any such Plan.

 

(j)    Defaults. The Borrower is not in default in the payment of principal or interest on any indebtedness for borrowed money and is not in default under any instrument or agreement under or subject to which any indebtedness for borrowed money has been issued, and no event has occurred and is continuing that, with or without the lapse of time or the giving of notice, or both, constitutes or would constitute an event of default under any such instrument or agreement or an Event of Default hereunder.

 

 

(k)    Patents Trademarks, Etc. The Borrower has good and marketable title to, or licenses to use, all patents, trademarks, processes, copyrights, franchises and licenses title to which is necessary for the operation of the Borrower’s businesses.

 

(l)    Regulation U. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and, except for the stock purchase described in Section 2.6, no proceeds of the Term Loan will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.

 

ARTICLE V.

 

Section 5.1    Affirmative Covenants. So long as the Note shall remain unpaid, the Borrower will, unless the Bank shall give its prior written consent:

 

(a)    Financial Reporting. Furnish to the Bank: (i) as soon as available and in any event within 60 days after the end of each quarter of each fiscal year of the Borrower, consolidated and consolidating balance sheets of the Borrower as of the end of such quarter and consolidated and consolidating statements of income and retained earnings of the Borrower for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, certified by the chief financial officer of the Borrower; (ii) as soon as available and in any event within 120 days after the end of each fiscal year of the Borrower, (A) a copy of the annual report for such year for the Borrower, containing consolidated and consolidating financial statements for such year certified in a manner acceptable to the Bank by independent public accountants acceptable to the Bank and (B) a budget and projections prepared by the Borrower in a form acceptable to the Bank for the following fiscal year; (iii) promptly upon the sending or filing thereof copies of all public reports issued by the Borrower to any of its security holders, to the Securities and Exchange Commission or to any national securities exchange; (iv) promptly upon the filing or receiving thereof, copies of all reports that the Borrower files under ERISA or that the Borrower receives from the Pension Benefit Guaranty Corporation if such report shows any material violation or potential violation by the Borrower of its obligations under ERISA; (v) such other information concerning the conditions or operations, financial or otherwise, of the Borrower and the Corporate Guarantor as the Bank from time to time may reasonably request; (vi) until the Personal Guaranty has been released pursuant to Section 2.7, a signed and current personal financial statement of each Personal Guarantor by May 31 of each year.

 

 

(b)    Visitation Rights. At any reasonable time and from time to time, permit the Bank or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower and the Corporate Guarantor, and to discuss the affairs, finances and accounts of the Borrower and the Corporate Guarantor with any of its respective officers or directors. The Borrower will reimburse the Bank for its reasonable costs and expenses of conducting such periodic examinations.

 

(c)    Notification of Default, Etc. Notify the Bank as promptly as practicable (but in any event not later than 5 Business Days) after the Borrower obtains knowledge of: (i) the occurrence of any event that constitutes an Event of Default or that would constitute an Event of Default with the passage of time or the giving of notice or both; or (ii) the commencement of any litigation or governmental proceedings of any type that could materially adversely affect the financial condition or business operations of the Borrower.

 

 

(d)    Compliance Certificate. At the time any financial statement is required to be provided to the Bank under this Agreement, the Borrower will provide to the Bank a certificate of the chief financial officer of the Borrower substantially in the form of Exhibit B attached hereto (appropriately completed). If that certificate shows that an Event of Default or any event that would constitute an Event of Default with the passage of time or the giving of notice or both, has occurred, the certificate shall state in reasonable detail the circumstances surrounding such event and action proposed by the Borrower to cure such event.

 

(e)    Keeping of Financial Records and Books of Account. Maintain proper financial records in accordance with generally accepted accounting principles consistently applied that fully and correctly reflect all financial transactions and all assets and liabilities of the Borrower and the Corporate Guarantor.

 

(f)    Tangible Net Worth. Maintain at all times Tangible Net Worth according to the following schedule:

 

Calendar Year	Required Level of Tangible Net Worth
2007	Not less than a negative $4,500,000
2008	Not less than a negative $3,750,000
2009	Not less than a negative $3,000,000

 

 

(g)    Debt Service Coverage Ratio. Maintain as of the end of each calendar quarter, beginning with December 31, 2007, a Debt Service Coverage Ratio for the 12-month period ending at the end of such quarter of not less than 1.25 to 1.

 

(h)    Maintenance of Insurance. Maintain such insurance with reputable insurance carriers as is normally carried by companies engaged in similar businesses and owning similar property, and name the Bank as loss payee on all policies insuring personal property in which the Bank has a security interest and provide the Bank with certificates of insurance evidencing its status as a loss payee. The loss payee endorsement shall provide for payment to the Bank notwithstanding any acts or omissions of the Borrower and shall require notice to the Bank 30 days prior to the expiration or cancellation of the insurance.

 

(i)    Maintenance of Properties, Etc. Maintain and preserve all of its properties, necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted.

 

(j)    Payment of Taxes. Pay all taxes, assessments and governmental charges of any kind payable by it as such taxes, assessments and charges become due and before any penalty shall be imposed, except as the Borrower shall contest in good faith and by appropriate proceedings providing such reserves as are required by generally accepted accounting principles.

 

(k)    Compliance with ERISA. Cause each benefits Plan to comply and be administered in accordance with those provisions of ERISA that are applicable to such Plan.

 

 

(l)    Preservation of Corporate Existence, Etc. Preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified, as a foreign corporation in each jurisdiction in which such qualification is necessary or desirable in view of its business and operations or the ownership of its properties, and cause the Corporate Guarantor to do so.

 

Section 5.2    Negative Covenants. So long as the Note shall remain unpaid, the Borrower will not, unless the Bank shall give its prior written consent which consent shall not be unreasonably withheld:

 

(a)    Liens. Create or suffer to exist any mortgage, pledge, lien, security interest or other encumbrance with respect to any assets now owned or hereafter acquired by the Borrower or the Corporate Guarantor except those encumbrances made in favor of the Bank or purchase money liens on, or leases of, equipment.

 

(b)    Transactions with Affiliates. Engage in any transaction (including, without limitation, loans or financial accommodations of any kind) with any Affiliate, provided that such transactions are permitted if they are on terms no less favorable to the Borrower than would be obtainable if no such relationship existed.

 

(c)    Investments in Other Persons. Make any loan or advance to any Person, or purchase or otherwise acquire the capital stock, assets, or obligations of, or any interest in, any other Person other than readily marketable direct obligations of the United States of America, deposits in commercial banks of recognized standing operating in the United States of America, transactions with the Corporate Guarantor and existing transactions with Subsidiaries.

 

 

(d)    Change in Nature of Business. Make any material change in the nature of the business of the Borrower, taken as a whole, as carried on at the date hereof.

 

(e)    Dividends, Etc. Purchase or redeem any of its capital stock, declare or pay any dividends (other than stock dividends) thereon, make any cash or property distribution to shareholders, or set aside any funds for such purpose, except that so long as no Event of Default has occurred and is continuing the Borrower may pay dividends on its Series B Convertible Preferred Stock as such dividends come due.

 

ARTICLE VI.

 

Section 6.1    Events of Default. “Events of Default” in this Agreement means any of the following events:

 

(a)    Failure of the Borrower to pay the principal of the Note when due or, if payable on demand, upon demand;

 

(b)    Failure of the Borrower to pay any interest or fees required to be paid hereunder or under the Note when due;

 

(c)    Any representation or warranty made by, or on behalf of, any Loan Party in, or pursuant to, any Loan Document shall prove to have been incorrect in any material respect when made or the Borrower or the Corporate Guarantor shall dispose of any collateral described in the Security Agreement in violation of the Security Agreement;

 

(d)    Default in performance of any other covenant or agreement of any Loan Party in, or pursuant to, any Loan Document and continuance of such default or breach for a period of 30 days after written notice thereof to such Person by the Bank;

 

 

(e)    Any Loan Party shall generally not pay its or his debts as such debts become due, or shall admit in writing its or his inability to pay its or his debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against any Loan Party seeking to adjudicate it or him a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, custodianship, protection, relief, or composition of it or him or its or his debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief, or the appointment of a receiver, custodian, trustee, or other similar official for it or him or for any substantial part of its or his property; or any Loan Party shall take any corporate action to authorize any of the actions set forth above in this subsection; and in the case of a proceeding of the type described in this paragraph commenced against any Loan Party, that proceeding shall not be dismissed within 60 days or that Loan Party shall consent to that proceeding;

 

(f)    The Borrower or any Subsidiary shall fail to pay any Debt (but excluding Debt evidenced by the Note) of the Borrower or such Subsidiary, or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other default under any agreement or instrument relating to any such Debt, or any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such default or event is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof;

 

 

(g)    Any guaranty or any third party security agreement securing any indebtedness of the Borrower to the Bank shall be repudiated or revoked, or purported to be repudiated or revoked;

 

(h)    The entry against any Loan Party of a final judgment, decree or order for the payment of money in excess of $100,000.00 and the continuance of such judgment, decree or order unsatisfied for a period of 30 days without a stay of execution;

 

(i)    Any Reportable Event (as defined in ERISA) shall have occurred with respect to a Plan and continue for 30 days; or any Plan shall have been terminated by the Borrower not in compliance with ERISA, or a trustee shall have been appointed by a court to administer any Plan, or the Pension Benefit Guaranty Corporation shall have instituted proceedings to terminate any Plan or to appoint a trustee to administer any Plan.

 

Section 6.2    Rights and Remedies. If any Event of Default shall occur and be continuing, the Bank may exercise any or all of the following rights and remedies:

 

(a)    Declare the Note, all interest thereon, and all other obligations under, or pursuant to, any Loan Document to be immediately due and payable, and upon such declaration such Note, interest and other obligations shall immediately be due and payable, without presentment, demand, protest or any notice of any kind, all of which are expressly waived;

 

 

(b)    Exercise any right or remedy under the Security Agreement, or any other right or remedy of a secured party under the Uniform Commercial Code as in effect in Minnesota;

 

(c)    Exercise any other right or remedy available to the Bank at law or in equity.

 

ARTICLE VII.

 

Section 7.1    No Waiver; Cumulative Remedies. No failure or delay on the part of the Bank in exercising any right or remedy under, or pursuant to, any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy or power preclude other or further exercise thereof, or the exercise of any other right, remedy or power. The remedies in the Loan Documents are cumulative and are not exclusive of any remedies provided by law.

 

Section 7.2    Amendments and Waivers. No amendment or waiver of any provision of any Loan Document shall be effective unless such amendment or waiver is in writing and is signed by the Bank, and such amendment or waiver shall be effective only in the specific instance and for the specific purpose for which it was given.

 

Section 7.3    Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telecopier communication) and mailed or telecopied or delivered, if to the Borrower, at its address stated in the preamble hereof, Attention: Joseph J. Caffarelli; and if to the Bank, at its address stated in the preamble hereof, Attention: James Senske; or, as to each party, at such other address as shall be designated by such party in a written notice to the other party. All such notices and communications shall, when mailed or telecopied, be effective when deposited in the mails or transmitted by telecopier, respectively, addressed as provided above, except that notices to the Bank pursuant to the provisions of Article II shall not be effective until received by the Bank.

 

 

Section 7.4    Costs and Expenses. The Borrower agrees to pay on demand all costs and expenses of the Bank in connection with the preparation of the Loan Documents, including reasonable attorneys fees and legal expenses, as well as all costs and expenses of the Bank, including reasonable attorneys fees and expenses, in connection with the administration and enforcement of the Loan Documents (whether suit is commenced or not).

 

Section 7.5    Right of Set-off. Upon the occurrence and during the continuance of any Event of Default the Bank is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Bank to or for the credit or the account of the Borrower or any Guarantor against any and all of the obligations of the Borrower now or hereafter existing under any Loan Document, irrespective of whether or not the Bank shall have made any demand under any Loan Document and although such obligations may be unmatured. The Bank agrees promptly to notify the Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Bank under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that the Bank may have.

 

Section 7.6    Governing Law. All Loan Documents shall be governed by the laws of the State of Minnesota. Any term used in this Agreement and not otherwise defined shall have the definition given that term in the Uniform Commercial Code as in effect in the State of Minnesota from time to time, and such definition automatically shall change on the effective date of any amendment to the Uniform Commercial Code that changes such definition. If any term in this Agreement shall be held to be illegal or unenforceable, the remaining portions of this Agreement shall not be affected, and this Agreement shall be construed and enforced as if this Agreement did not contain the term held to be illegal or unenforceable. The Borrower hereby irrevocably submits to the jurisdiction of the Minnesota District Court, Fourth District, and the Federal District Court, District of Minnesota, Fourth Division, over any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of such action or proceeding may be heard and determined in any such court.

 

 

Section 7.7    Binding Effect; Assignment. All Loan Documents shall be binding upon and inure to the benefit of the Loan Parties and the Bank and their respective successors and assigns. No Loan Party shall have the right to assign its rights or interest under any such agreement without the prior written consent of the Bank.

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers as of the date first above written.

 

		CorVu Corporation
		By	/s/ Joseph J. Caffarelli
			Its President

EXHIBIT A

PROMISSORY NOTE

 

$3,200,000.00

Dated: February 20, 2007

        

 

For value received, CorVu Corporation, a Minnesota corporation (the “Borrower”) promises to pay to the order of Commerce Bank (the “Bank”), at its offices in Minneapolis, Minnesota, in lawful money of the United States of America, the principal amount of $3,200,000.00; together with interest on any and all principal amounts remaining unpaid hereon from the date of this Note until said principal amounts are fully paid at a fluctuating annual rate equal to the Applicable Percentage (as defined in the Loan Agreement). Each change in the fluctuating interest rate shall take effect simultaneously with the corresponding change in the Applicable Percentage.

 

Interest shall be due and payable on the first day of each calendar month starting on March 1, 2007 and continuing until this Note is paid in full. Principal shall be paid in quarterly installments of $75,000.00 each on the first day of each March, June, September and December in each year, starting on September 1, 2007 and continuing until February 28, 2008 when all principal and accrued interest shall be due and payable in full.

 

 

This Note is the Note referred to in, and is entitled to the benefits of, the Term Loan Agreement dated as of the date hereof (the “Loan Agreement”) between the Borrower and the Bank, which Loan Agreement, among other things, contains provisions for the acceleration of the maturity of this Note upon the happening of certain stated events, for an increase to the interest rate upon the happening of certain stated events, and for prepayments of the principal amount due under this Note upon stated terms and conditions.

EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE

 

I, the _________________________ of CorVu Corporation (the “Borrower”), hereby provide this Compliance Certificate in accordance with Section 5.1(d) of the Term Loan Agreement (the “Agreement”) dated as of February 20, 2007 between the Borrower and Commerce Bank.

 

I certify that as of the date hereof:

 

(1)

The representations and warranties of the Borrower contained in Article IV of the Agreement are correct as though made on the date hereof.

 

(2)

No event has occurred and is continuing that constitutes an Event of Default under the Agreement or would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

 

(3)

The Borrower’s State of formation is Minnesota.

 

I further certify that as of _____________________, 20__:

 

(1)

Tangible Net Worth as defined in the Agreement was a negative $______________ compared to a requirement in the Agreement of a negative $__________________.

 

(2)

The Debt Service Coverage Ratio as defined in the Agreement was ____ to 1 compared to a minimum in the Agreement of 1.25 to 1.

 

Dated: _______________________________

Title: _______________________________