{"id":41127,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/loan-and-security-agreement-diamond-technology-partners-inc.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"loan-and-security-agreement-diamond-technology-partners-inc","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/finance\/loan-and-security-agreement-diamond-technology-partners-inc.html","title":{"rendered":"Loan and Security Agreement &#8211; Diamond Technology Partners Inc. and Safeguard Scientifics Inc."},"content":{"rendered":"<pre>     LOAN AND SECURITY AGREEMENT (this 'Agreement'), dated November 8, 1996, by\nand among Diamond Technology Partners Incorporated, a Delaware corporation\n('Diamond Technology Partners'), and Diamond Partners Incorporated, an Illinois\ncorporation ('Diamond Partners') and a wholly owned subsidiary of Diamond\nTechnology Partners Incorporated (collectively, the 'Borrower'), and Safeguard\nScientifics (Delaware), Inc. ('Lender'), a Delaware corporation.\n\n                                  BACKGROUND\n\n     The Borrower presently has a senior bank credit in the amount of\n$3,425,000 (consisting of a $3,000,000 revolving line of credit, a $175,000 term\nloan and a $250,000 term loan) (the 'Senior Credit')  pursuant to Secured Credit\nAgreement, dated November 30, 1995 between the American National Bank and Trust\nCompany of Chicago (the 'Bank') and Diamond Technology Partners (as amended to\ndate, the 'Credit Agreement'), a Term Note, Second Term Note, Revolving Note,\nSecurity Agreement, and Trademark Collateral Assignment and Security Agreement\n(all as defined in the Credit Agreement), the Modification Agreement dated May\n31, 1996 between the Bank and Diamond Technology Partners and Diamond Partners,\nthe Second Modification Agreement dated November 8, 1996, between the Bank and\nDiamond Technology Partners and Diamond Partners (the 'Second Modification\nAgreement'), the Security Agreement and the Guaranty (all as defined in the\nSecond Modification Agreement), and wishes to obtain a loan from Lender pursuant\nto this Agreement.\n\n     NOW, THEREFORE, intending to be legally bound, the parties agree as\nfollows:\n\n\n                                   ARTICLE I\n                                   THE LOAN\n\n     1.1.  The Loan. Subject to the terms and conditions hereinafter provided,\n           --------\nLender shall make the following loans and\/or lines of credit (whether one or\nmore, collectively, the 'Loan') available to Borrower, for the purposes\nindicated below :\n\n     The loan shall be for an aggregate amount of Two Million Dollars\n($2,000,000) and shall be used only for working capital purposes, which shall\nnot include the repayment of any existing indebtedness. The Loan shall be\nadvanced at one time upon request of the Borrower. The request shall be made\npursuant to a notice from the Borrower to the Lender which certifies the Loan is\nto be used for working capital purposes of Diamond Partners, which it is\nunderstood includes the purchase of assets for Diamond Partners, that the\nrepresentations and warranties hereunder remain true and correct in all material\nrespects, and that there is no event of default or event which with the passage\nof time or giving of notice or both would cause an event of default hereunder or\na default under the documents in respect of the Senior Credit.\n\n                                       1\n\n \n     1.2.  The Subordinated Note; Repayment. The Loan shall be evidenced by a\n           --------------------------------           \nsubordinated promissory note from Borrower to Lender (the 'Subordinated Note'),\nwhich shall be substantially in the form attached hereto as Exhibit 1.2 . The\n                                                            -----------\nLoan shall be repaid with interest as provided in the Subordinated Note.\n\n\n                                  ARTICLE II\n                                  COLLATERAL\n\n    2.1.   Collateral. Borrower hereby pledges, assigns and grants to Lender, as\n           ----------                           \nsecurity for the performance of this Agreement and any other agreements executed\nin connection herewith, and the repayment of the Loan and the Subordinated Note\nand for all other indebtedness, liabilities and obligations of Borrower\n(primary, secondary, direct, contingent, related, unrelated, sole, joint or\nseveral) due or to become due to Lender or which may be contracted for or\nacquired hereafter (collectively, the 'Obligations'), a security interest under\nthe Uniform Commercial Code in all Accounts, Inventory, General Intangibles,\nChattel Paper, Instruments, Documents and Equipment (whether or not constituting\nfixtures) and any other security of the Senior Credit now owned or hereafter\nacquired by Borrower, together with all cash and non-cash proceeds (including\nwithout limitation, insurance proceeds), products, distributions, additions,\naccessions, substitutions, exchanges and replacements thereof, (collectively,\nthe 'Collateral').\n\n     2.2.  Further Assurances. Borrower shall from time to time promptly take\n           ------------------                      \nall actions (and execute, deliver and record all instruments and documents)\nnecessary or reasonably appropriate or requested by Lender, to perfect and\nprotect any security interest granted or purported to be granted hereby or to\nenable Lender to exercise and enforce its rights and remedies hereunder with\nrespect to any of the Collateral, subject to the Subordination Agreement (the\n'Subordination Agreement') dated as of November 8, 1996 between Lender and the\nBank.\n\n     2.3.  Attorney-In-Fact. Borrower hereby irrevocably appoints Lender as its\n           ----------------\nattorney-in-fact, in the name of Borrower or otherwise, from time to time in\nLender's discretion and at Borrower's expense, to take any action and to\nexecute, deliver and record any instruments or documents which Lender may deem\nnecessary or advisable in order to perfect and protect any security interest\ngranted or purported to be granted hereby or to enable Lender to exercise and\nenforce its rights and remedies hereunder with respect to any of the Collateral\nincluding, without limitation, financing or continuation statements under the\nUniform Commercial Code, and amendments thereto. Lender shall not, in its\ncapacity as such attorney-in-fact, be liable for any acts or omissions, nor for\nany error of judgment or mistake of fact or law, but only for gross negligence\nor willful misconduct.\n\n\n                                  ARTICLE III\n                        REPRESENTATIONS AND WARRANTIES\n\n     Borrower hereby makes the following representations and warranties,\nwhich shall be continuing in nature and remain in full force and effect until\nthe Obligations are satisfied in full:\n\n                                       2\n\n \n     3.1.  Existence and Power. Borrower is a corporation duly organized,\n           -------------------                \nvalidly existing and in good standing under the laws of the jurisdiction of its\nincorporation or organization and has all requisite power and authority to own\nand operate its assets and to conduct its business as now or proposed to be\ncarried on, and is duly qualified, licensed and in good standing to do business\nin all jurisdictions where its ownership of property or the nature of its\nbusiness requires such qualification or licensing. Borrower has the full power\nand authority to execute, deliver and perform this Agreement, the Subordinated\nNote, and all other agreements, instruments, and documents evidencing or\nsecuring the Loan (collectively as 'Loan Documents').\n\n     3.2.  Authorization and Enforceability. Borrower has been duly authorized\n           --------------------------------           \nto execute, deliver and perform the Loan Documents by all appropriate action of\nits Board of Directors if Borrower is a corporation, all of its general partners\nif Borrower is a partnership or otherwise as may be required by law, charter or\nother organizational documents or agreements. Each of the Loan Documents, when\nexecuted and delivered by Borrower, will constitute the legal, valid and binding\nobligation of Borrower, enforceable in accordance with its respective terms.\n\n     3.3.  No Defaults or Violations. There does not exist any Event of Default\n           -------------------------                 \n(as that term is defined in Section 5.1) under this Agreement or any default or\n                            -----------\nviolation by Borrower of or under any of the terms, conditions or obligations\nof: (a) its articles or certificate of incorporation, regulations or bylaws if\nBorrower is a corporation, its partnership agreement if Borrower is a\npartnership or its other organizational documents as applicable; (b) any\nindenture, mortgage, deed of trust, franchise, permit, contract, agreement, or\nother instrument to which Borrower is a party or by which it or any of its\nproperties may be bound, including the documents in respect of the Senior\nCredit; or (c) any law, regulation, ruling, order, injunction, decree, condition\nor other requirement applicable to or imposed upon Borrower by any law, or by\nthe action of any court or other governmental authority or agency; and the\nexecution, delivery and performance of the Loan Documents will not result in any\nsuch default or violation, nor are any approvals, authorizations, licenses,\nwaivers or consents, governmental (foreign, federal, state or local) or non-\ngovernmental, under the terms of contracts or otherwise, required to be obtained\nby Borrower by reason of or in connection with its execution, delivery and\nperformance of any of the Loan Documents.\n\n     3.4.  Financial Statements. Borrower has delivered or caused to be\n           --------------------               \ndelivered to Lender its most recent balance sheet, income statement and\nstatement of cash flows as of September 30, 1996 (the 'Financial Statements').\nThe Financial Statements are true, accurate and complete in all material\nrespects and fairly present the financial condition, cash flow and the results\nof Borrower's operations as of the respective dates thereof and for the periods\ntherein referred to, all in accordance with generally accepted accounting\nprinciples in effect from time to time ('GAAP'), consistently applied from\nperiod to period subject in the case of interim statements to normal year-end\nadjustments and excluding disclosures normally required by GAPP. Borrower does\nnot have any liabilities or obligations of any nature (whether or not of the\nnature required to be reflected in a balance sheet prepared in accordance with\nGAAP) that are not reflected on the Financial Statements (including, without\nlimitation, any liabilities relating to environmental, occupational and health\nmatters or ERISA) except for current liabilities (within the meaning of\n\n                                       3\n\n \nGAAP) which have been incurred since the date thereof in the ordinary course of\nbusiness and consistent in nature and amount with Borrower's operating history.\n\n     3.5.  No Material Adverse Change. Since the date of its most recent\n           --------------------------                 \nFinancial Statements, Borrower has not suffered any damage, destruction or loss,\nand no event or condition has occurred or exists, which has resulted or could\nresult in a material adverse change in its business, assets, operations,\nfinancial condition or results of operation.\n\n     3.6.  Title to Assets; Existing Liens. Borrower has good and marketable\n           -------------------------------           \ntitle to its assets, free and clear of all liens and encumbrances, except for\n(a) current taxes and assessments not yet due and payable, (b) liens and\nencumbrances, if any, reflected or noted in its most recent Financial\nStatements, (c) assets disposed of by Borrower since the date of its most recent\nFinancial Statements in the ordinary course of business, consistent with past\npractice, and (d) the liens and encumbrances described on Schedule 3.6.\n                                                          ------------ \n\n     3.7.  Litigation. Except as set forth in Schedule 3.7, there are no\n           ----------                                  \nactions, suits, proceedings or governmental investigations pending or, to the\nknowledge of Borrower, threatened, against Borrower or any of its properties\nwhich could result in a material adverse change in Borrower's business, assets,\noperations, financial condition or results of operations and there is no basis\nknown to Borrower for any action, suit, proceeding or investigation which could\nresult in such a material adverse change.\n\n     3.8.  Tax Returns. Borrower has filed all returns and reports that are\n           -----------  \nrequired to be filed by it in connection with any federal, state or local tax,\nduty or charge levied, assessed or imposed upon it or any of its properties or\nthat it is required to withhold and pay over including, without limitation,\nunemployment, social security and similar taxes, and all of such taxes have been\npaid or adequate reserves therefor have been set aside or other provisions\ntherefor have been made.\n\n     3.9.  Intellectual Property. Borrower owns or is licensed to use all\n           ---------------------                      \npatents, patent rights, trademarks, trade names, service marks, copyrights,\nintellectual property, technology, know-how and processes necessary for the\nconduct of its business as currently conducted that are material to Borrower's\ncondition (financial or otherwise), business or operations.\n\n     3.10. Solvency. As of the date hereof and after giving effect to the\n           --------                                  \ntransactions contemplated by the Loan Documents, (a) the aggregate value of\nBorrower's assets exceeds its liabilities (including, without limitation,\ncontingent, subordinated, unmatured and unliquidated liabilities), (b) Borrower\nhas sufficient cash flow to enable it to pay its debts as they mature, and (c)\nBorrower does not have unreasonably small capital for the business in which it\nis engaged.\n\n     3.11. Disclosure.  None of the Loan Documents contain any untrue statement\n           ----------                             \nof material fact or omit to state a material fact necessary in order to make the\nstatements contained in the Loan Documents not misleading. There is no fact\nknown to Borrower which materially and adversely affects or, so far as Borrower\ncan now foresee, might materially and adversely affect Borrower's business,\nassets, operations, financial condition or results of operation and\n\n                                       4\n\n \nwhich has not otherwise been fully set forth in this Agreement\nor otherwise disclosed in writing to Lender.\n\n     3.12. Places of Business. The locations of Borrower's chief executive\n           ------------------                   \noffice and other places of business are shown on Schedule 3.12. Borrower\n                                                 -------------\ncovenants not to establish any new, or discontinue any existing, place of\nbusiness without giving Lender at least 30 days' prior notice.\n\n     3.13. Capital Structure. Schedule 3.13 sets forth the authorized capital\n           -----------------  -------------           \nstock of Borrower, the issued and outstanding shares of such stock, and the\nowners thereof. There are no options, warrants or other rights outstanding to\npurchase any such shares except as indicated on Schedule 3.13.\n                                                ------------- \n\n     3.14. Subsidiaries, Affiliates, and Other Investments. Except as shown on\n           -----------------------------------------------\nSchedule 3.14, Borrower has no subsidiaries or affiliates (other than its own\n-------------\nshareholders); nor does Borrower have any investment in any other person or\nentity.\n\n     3.15  Bank Consent. The Bank has consented to this Loan, a copy of such\n           ------------                                   \nconsent has been delivered to Lender, and the liens in respect of the Collateral\nconstitute Permitted Liens (as defined in the Credit Agreement).\n\n     3.16  Bank Documents. Accurate copies of all of the documents in respect of\n           --------------                            \nthe Senior Credit have been delivered to Lender.\n\n\n                                  ARTICLE IV\n                                   COVENANTS\n\n     4.1.  Affirmative Covenants. Borrower agrees that from the date of\n           ---------------------                       \nexecution of this Agreement until the Obligations are satisfied in full,\nBorrower shall (and shall cause each of its majority-owned subsidiaries, if any,\nto):\n\n           4.1.1.  Payments of Taxes and Other Charges.  Pay and discharge when\n                   -----------------------------------                         \ndue all indebtedness and all taxes, assessments, charges, levies and other\nliabilities imposed upon Borrower, its income, profits, properties or business,\nexcept those which currently are being contested in good faith by appropriate\nproceedings and for which Borrower shall have set aside adequate reserves or\nmade other adequate provisions acceptable to Lender in its sole discretion.\n\n           4.1.2.  Maintenance of Existence, Operation and Assets; Inspection.\n                   ----------------------------------------------------------  \nDo all things necessary to maintain, renew and keep in full force and effect its\norganizational existence and all rights, permits and franchises necessary to\nenable it to continue its business; continue in operation in substantially the\nsame manner as at present; conduct business and enter into transactions only in\nthe ordinary course, consistent with past practice; keep its properties in good\noperating condition and repair; make all necessary and proper repairs, renewals,\nreplacements, additions and improvements thereto; and permit representatives of\nLender to inspect Borrower's \n\n                                       5\n\n \nproperties and its books and records and to make extracts therefrom at all\nreasonable times during normal business hours.\n\n           4.1.3.  Insurance. Keep its assets insured with responsible insurance\n                   ---------  \ncompanies against those risks and in such amounts as are commonly insured\nagainst by companies in similar businesses and owning similar assets. At\nLender's request, Borrower shall have Lender named as loss payee on all hazard\ninsurance policies covering the Collateral and shall have Lender named as an\nadditional insured on liability policies, subject to the Subordination\nAgreement. Borrower shall deliver to Lender such certificates, endorsements, and\nother evidence of such insurance as Lender may reasonably request.\n\n           4.1.4.  Compliance with Laws.  Comply with all laws applicable to\n                   --------------------     \nBorrower and to the operation of its business (including, without limitation,\nany statute, rule or regulation relating to employment practices and employee\nbenefits and to environmental, occupational and health standards and controls).\n\n           4.1.5.  Financial Reports. Deliver promptly such financial statements\n                   -----------------     \nand reports as Lender may reasonably request including, without limitation,\nannual financial statements audited or reviewed by independent certified public\naccountants and interim financial statements prepared by Borrower's management.\nAll such financial data shall be true, accurate and complete in all material\nrespects and shall be prepared in accordance with GAAP consistently applied,\nsubject, in the case of interim statements, to normal year-end adjustments and\nexcluding disclosures normally required by GAAP.\n\n           4.1.6.  Additional Reports.  Provide prompt notice to Lender of the\n                   ------------------                                         \noccurrence of any of the following (together with a description of the action\nwhich Borrower proposes to take with respect thereto):  (a) any Event of Default\nor potential Event of Default hereunder or under any of the agreements in\nrespect of the Senior Credit, (b) any litigation filed by or against Borrower,\n(c) any event which might result in a material adverse change in Borrower's\nbusiness, assets, operations, financial condition or results of operation; and\nprovide to Lender any other reports reasonably requested thereby.\n\n           4.1.7.  Use of Proceeds. Use of the proceeds of the Loan only for the\n                   ---------------             \npurposes specified in Section 1.1 above.\n\n     4.2.  Negative Covenants. Borrower covenants and agrees that from the date\n           ------------------   \nof execution of this Agreement until the Obligations are satisfied in full,\nBorrower shall not (and shall cause each of its majority-owned subsidiaries, if\nany, not to), without Lender's prior written consent:\n\n           4.2.1.  Indebtedness.  Except as permitted pursuant to Section 6.6 of\n                   ------------                                                 \nthe Credit Agreement as now in effect, maintain, create or incur any\nindebtedness for borrowed money (including, without limitation, the deferred\npurchase price of goods and services) other than (a) the Loan and any subsequent\nindebtedness to Lender, and (b) existing or proposed indebtedness disclosed on\nthe Borrower's most recent Financial Statements or on Schedule 4.2.1.\n                                                      -------------- \n\n                                       6\n\n \n           4.2.2.  Liens and Encumbrances.  Except for liens in favor of Lender\n                   ----------------------                                      \nand for the liens and encumbrances described on Schedule 3.6, create, assume or\n                                                ------------                   \npermit to exist any mortgage, pledge, encumbrance or other security interest or\nlien upon any assets now owned or hereafter acquired by Borrower.\n\n           4.2.3.  Guarantees.  Except as permitted pursuant to Section 6.8 of\n                   ----------                                                 \nthe Credit Agreement as now in effect, guarantee, endorse or become contingently\nliable for the obligations of any person or entity, except in connection with\nthe endorsement and deposit of checks in the ordinary course of business for\ncollection and as permitted under the existing terms of the Credit Agreement.\n\n           4.2.4.  Merger; Disposition of Assets.  Merge or consolidate with or\n                   -----------------------------                               \ninto any person or entity or lease, sell, transfer or otherwise dispose of any\nmaterial assets, whether now owned or hereafter acquired, other than in the\nnormal course of business and consistent with past practices.\n\n           4.2.5.  Change in Business, Management or Ownership.  Make or permit\n                   -------------------------------------------                 \nany material change in the nature of Borrower's business as carried on as of the\ndate hereof.\n\n           4.2.6.  Dividends and Other Distributions.  Except as permitted\n                   ---------------------------------                      \npursuant to Section 6.7 of the Credit Agreement as now in effect, declare or pay\nany dividends on or make any distribution with respect to any class of its\ncapital stock or equity or ownership interest, or repurchase, redeem, retire or\notherwise acquire any of its capital stock or equity.\n\n           4.2.7.  Investments.  Purchase or hold beneficially any stock, other\n                   -----------                                                 \nsecurities or evidence of indebtedness or make any loans or advances to, or make\nany investment or acquire any interests in, any other person or entity except as\npermitted under the existing terms of the Credit Agreement.\n\n                                       7\n\n \n           4.2.8.  Modification of the Senior Credit.  Without the written\n                   ---------------------------------                      \nconsent of lender, Borrowers will not amend or modify any of the agreements,\nincluding the Credit Agreement and the Second Modification Agreement, executed\nin connection with the Senior Credit or referred to in the Subordination\nAgreement (as hereinafter defined); provided, if any of such agreements referred\nto in the Subordination Agreement in respect of the Lease Indebtedness and the\nStockholder Indebtedness (each as defined in the Subordination Agreement) have\nnot been executed as of the date hereof this restriction shall apply upon such\nexecution and, in any event, all such agreements shall be reasonably acceptable\nto Lender.\n\n     4.3.  Compliance with Terms of Stock Purchase Agreement\n           -------------------------------------------------\n\n\n           4.3.1.  Covenants.  Borrower shall also comply with the covenants set\n                   ---------                                                    \nforth in a certain Stock Purchase Agreement dated as of March 22, 1994, as\namended, among Diamond Technology Partners, Safeguard Scientifics, Inc. and\ncertain other persons and investors specified therein.\n\n                                   ARTICLE V\n                                    DEFAULT\n\n     5.1.  Events of Default. The occurrence of an event of default as defined\n           -----------------                       \nin the Subordinated Note or any of the other Loan Documents shall constitute an\n'Event of Default' hereunder.\n\n     5.2.  Remedies on Default:  Rights in Collateral. Upon any Event of\n           ------------------------------------------  \nDefault, Lender may, in addition to its other rights at law, in equity, or under\nany other agreement, exercise with respect to the Collateral all of the rights\nand remedies of a secured party under the Uniform Commercial Code as in effect\nin Delaware.\n\n\n                                  ARTICLE VI\n                              DISPUTE RESOLUTION\n\n     6.1.  Resolution of Disputes.\n           ---------------------- \n\n           6.1.1.  Good-Faith Negotiations.  If any dispute arises under this\n                   -----------------------                                   \nAgreement or any of the other Loan Documents that is not settled promptly in the\nordinary course of business, the parties shall seek to resolve any such dispute\nbetween them, first, by negotiating promptly with each other in good faith in\nface-to-face negotiations. These face-to-face negotiations shall be conducted by\nthe respective designated senior management representative of each party. If the\nparties are unable to resolve the dispute between them through these face-to-\nface negotiations, within 20 business days (or such period as the parties shall\notherwise agree) following the date of notification (the 'Notice Date') by one\nparty to the other(s) of the  existence of such dispute, then any such disputes\nshall be resolved in the following manner.\n\n                                       8\n\n \n           6.1.2.  Mediation. The parties shall endeavor to resolve any dispute\n                   ---------                                                   \narising out of or relating to this Agreement by mediation under the CPR\nMediation Procedures for Business Disputes.  Unless otherwise agreed, the\nparties will select a mediator from the CPR Panels of Neutrals and shall notify\nCPR to initiate the selection process.\n\n           6.1.3.  Resolution of Disputes.\n                   ---------------------- \n\n                   (a) Any action, suit or proceeding where the amount in\ncontroversy as to at least one party, exclusive of interest and costs, exceeds\n$1,000,000 ('Summary Proceeding'), arising out of or relating to this Agreement,\nor any of the other Loan Documents or the breach, termination or validity\nthereof which has not been resolved by mediation as provided herein within 90\ndays of the Notice Date, shall be litigated exclusively in the Superior Court of\nthe State of Delaware (the 'Delaware Superior Court') as a summary proceeding\npursuant to Rules 124-131 of the Delaware Superior Court, or any successor rules\n(the 'Summary Proceeding Rules'). Each of the parties hereto hereby irrevocably\nand unconditionally (A) submits to the jurisdiction of the Delaware Superior\nCourt for any Summary Proceeding, (B) agrees not to commence any Summary\nProceeding except in the Delaware Superior Court, (C) waives, and agrees not to\nplead or to make, any objection to the venue of any Summary Proceeding in the\nDelaware Superior Court, (D) waives, and agrees not to plead or to make any\nclaim that any Summary Proceeding brought in the Delaware Superior Court has\nbeen brought in an improper or otherwise inconvenient forum, (E) waives, and\nagrees not to plead or to make, any claim that the Delaware Superior Court lacks\npersonal jurisdiction over it, (F) waives its right to remove any Summary\nProceeding to the federal courts except where such courts are vested with sole\nand exclusive jurisdiction by statute, and (G) understands and agrees that it\nshall not seek a jury trial or punitive damages in any Summary Proceeding based\nupon or arising out of or otherwise related to this Agreement or any of the\nother Loan Documents or the breach, termination or validity thereof, and waives\nany and all rights to any such jury trial or to seek punitive damages.\n\n                   (b) In the event any action, suit or proceeding where the\namount in controversy as to at least one party, exclusive of interest and costs,\ndoes not exceed $1,000,000 (a 'Proceeding'), arising out of or relating to this\nAgreement or any of the other Loan Documents or the breach, termination or\nvalidity thereof, is brought, the parties to such Proceeding agree to make\napplication to the Delaware Superior Court to proceed under the Summary\nProceeding Rules. Until such time as such application is rejected, such\nProceeding shall be treated as a Summary Proceeding and all of the foregoing\nprovisions of this Section relating to Summary Proceedings shall apply to such\nProceeding.\n\n                   (c) If a Summary Proceeding is not available to resolve any\ndispute hereunder, the controversy or claim shall be settled by arbitration\nconducted on a confidential basis, under the U.S. Arbitration Act, if\napplicable, and the then current Commercial Arbitration Rules of the American\nArbitration Association (the 'Association') strictly in accordance with the\nterms of this Agreement and the substantive law of the State of Delaware\nincluding law in respect of any statute of limitations. The arbitration shall be\nconducted at the Association's regional office located closest to Lender's\nprincipal place of business by a single arbitrator. The \n\n                                       9\n\n \narbitrator is not empowered to award damages in excess of compensating damages\nand each party hereby irrevocably waives any right to recover such damages with\nrespect to any such dispute. Judgment upon the arbitrator's aware may be entered\nand enforced in any court of competent jurisdiction.\n\n     6.2. Equitable Remedies.  Neither party shall be precluded hereby from\n          ------------------                                               \nsecuring equitable remedies in courts of any jurisdiction including, but not\nlimited to, temporary restraining orders and preliminary injunctions, to protect\nits rights and interests, but such shall not be sought as a means to avoid or\nstay any of the provisions of this Article VI.\n                                   ---------- \n\n     6.3. Performance Pending Resolution.  Each party shall be required to\n          ------------------------------                                  \ncontinue to perform its respective obligations under the Loan Documents pending\nfinal resolution of any Dispute, unless to do so would be impossible or\nimpracticable under the circumstances.\n\n\n                                  ARTICLE VII\n                                 MISCELLANEOUS\n\n     7.1.  Expenses.  Borrower shall pay to Lender, upon execution of this\n           --------                                                       \nAgreement, and otherwise on demand, all costs and expenses incurred by Lender in\nconnection with (a) the preparation, negotiation and closing of this Agreement\nand any related documents, and any modifications hereto or thereto, and (b)\ninstituting, maintaining, preserving, enforcing and foreclosing the security\ninterest in any of the Collateral, whether through judicial proceedings,\narbitration or otherwise, or in defending or prosecuting any actions,\narbitrations or proceedings arising out of or relating to the Loan Documents\nincluding, without limitation, reasonable fees and expenses of counsel (which\nmay include costs of in-house counsel), expenses for auditors, appraisers and\nenvironmental consultants, lien searches, recording and filing fees and taxes.\n\n     7.2.  Amendments, Indulgences, Etc.  No amendment or waiver of any\n           ----------------------------        \nprovision of this Agreement nor consent to any departure by Borrower herefrom\nshall in any event be effective unless the same shall be in writing and signed\nby Lender, and then such amendment, waiver or consent shall be effective only in\nthe specific instance and for the specific purpose for which given. No failure\nor delay on the part of Lender in the exercise of any right, power, or remedy\nunder this Agreement or any of the other Loan Documents shall under any\ncircumstances constitute or be deemed to be a waiver thereof, or prevent the\nexercise thereof in that or any other instance.\n\n     7.3.  Notices.  All notices given hereunder shall be in writing and deemed\n           -------                                                             \nvalidly given (a) three (3) business days after sent, postage prepaid, by\ncertified mail, return receipt requested, (b) one (1) business day after sent,\ncharges paid by the sender, by Federal Express Next Day Delivery or other\nguaranteed delivery service, (c) when confirmation of transmission by facsimile\nduring normal business hours is received, or (d) when delivered by hand, upon\ndelivery, in each case to the intended recipient at its address shown below or\nto such other address, or in care of such other person, as either party shall\nhereafter specify to the other from time to time by due notice:\n\n                                       10\n\n \n           If to Borrower:\n                             Diamond Technology Partners Incorporated\n                             875 North Michigan, Suite 3000\n                             Chicago, IL  60611\n                             Attn:  CFO\n                             Fax No.:  312\/255-6000\n\n           cc:               Mark L. Gordon, Esq.\n                             Gordon &amp; Glickson\n                             444 N. Michigan Avenue, Suite 3600\n                             Chicago, IL  60611\n\n           If to Lender:\n                             Safeguard Scientifics (Delaware), Inc.\n                             800 The Safeguard Building\n                             435 Devon Park Drive\n                             Wayne, PA  19803\n                             Attn:  Senior Vice President, Finance\n                             Fax No.:  610\/293-0601\n\n     7.4.  Interpretation.  Except as otherwise indicated, all agreements\n           --------------  \ndefined herein refer to the same as from time to time amended or supplemented or\nthe terms thereof waived or modified in accordance herewith and therewith. Any\nprovision hereof found to be illegal, invalid or unenforceable for any reason\nwhatsoever shall not affect the legality, validity or enforceability of the\nremainder hereof. In this Agreement, in the computation of a period of time from\na specified date to a later specified date, the word 'from' means 'from and\nincluding' and the words 'to' and 'until' each means 'to but excluding.' Unless\notherwise expressly provided, the word 'including' does not limit the preceding\nwords or terms.\n\n     7.5.  Entire Agreement. This Agreement, and all agreements and instruments\n           ---------------- \nto be delivered by the parties pursuant hereto or in connection herewith,\nrepresent the entire understanding of the parties with respect to the subject\nmatter hereof, and supersede all other prior and contemporaneous agreements and\nunderstandings, both written and oral, between the parties with respect to the\nsubject matter hereof.\n\n     7.6.  Governing Law.  This Agreement shall be binding upon and shall inure\n           -------------                                                       \nto the benefit of the parties hereto and their respective successors and\nassigns, and construed and interpreted according to the laws of the State of\nDelaware.\n\n     7.7.  Counterparts.  This Agreement may be executed in one or more\n           ------------                                                \ncounterparts, all of which taken together shall constitute one and the same\ninstrument.\n\n     7.8.  Joint and Several Obligations.  The obligations and liabilities of\n           -----------------------------  \nthe Borrower hereunder and under any of the other documents excluding the\nwarrants for 319,150 shares\n\n                                       11\n\n \nissued in connection therewith, executed in connection herewith are joint and\nseveral obligations and liabilities, including those in respect of the\nrepresentations, warranties, and covenants hereof; provided, however, that the\nwarrants for 319,150 shares of stock of Diamond Technology Partners are only for\nshares thereof and not for shares of Diamond Partners.\n\n     IN WITNESS WHEREOF, the parties have executed or caused to be executed this\nAgreement as of the day and year first above written.\n\n\n                                       Diamond Technology Partners Incorporated\n                                                                               \n                                       By:______________________________       \n                                       Title:_____________________________     \n                                                                               \n                                                                               \n                                       Safeguard Scientifics (Delaware), Inc.  \n                                                                               \n                                       By:______________________________       \n                                       Title:_____________________________     \n                                                                               \n                                       Diamond Partners Incorporated           \n                                                                               \n                                                                               \n                                       By: ______________________________      \n                                       Title: _____________________________     \n\n                                       12\n\n \n                            SCHEDULES AND EXHIBITS\n                            ----------------------\n\n\nExhibit 1.2        Subordinated Note                                     \nSchedule 3.6       Liens and Encumbrances                                \nSchedule 3.7       Litigation                                            \nSchedule 3.12      Places of Business                                    \nSchedule 3.13      Authorized Capital Stock of Borrower                  \nSchedule 3.14             Subsidiaries and Affiliates; Other Investments \nSchedule 4.2.1     Existing Indebtedness for Borrowed Money               \n\n                                       13\n\n \n                                  EXHIBIT 1.2\n                               SUBORDINATED NOTE\n\nTHIS INSTRUMENT IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENTDATED AS OF\nNOVEMBER 8, 1996 (AS AMENDED, RESTATED, SUPPELEMENTED OR OTHERWISE MODIFIED FROM\nTIME TO TIME) BY AND BETWEEN SAFEGUARD SCIENTIFICS (DELAWARE), INC. AND AMERICAN\nNATIONAL BANK AND TRUST COMPANY OF CHICAGO\n\n                                                           Chicago, Illinois\n$2,000,000                                                 November 8, 1996\n\n\n     FOR VALUE RECEIVED, Diamond Technology Partners Incorporated ('DTP or\n'Parent'), a Delaware corporation, and Diamond Partners Incorporated, an\nIllinois corporation and wholly-owned subsidiary of DTP ('Subsidiary')\n(collectively, 'Borrower'), each having an office at 875 North Michigan, Suite\n3000, Chicago, IL 60611, do hereby jointly and severally unconditionally promise\nto pay to the order of Safeguard Scientifics (Delaware), Inc., a Delaware\ncorporation ('Lender'), at Lender's office located at 435 Devon Park Drive,\nWayne, Pennsylvania 19087 or at such other place as Lender may from time to time\ndesignate in writing, in lawful money of the United States, the principal sum of\nTWO MILLION DOLLARS ($2,000,000) (the 'Loan'), with interest, all as provided\nbelow.\n\n     1.    Rate of Interest.  Interest on the principal amount outstanding\n           ----------------                                               \nunder this Note shall accrue at an annual rate equal to 6%.  Such interest rate\nshall be increased by 1% on each anniversary of the date of the Subordinated\nNote so that in the fifth year the rate shall be 10% per annum and such rate\nshall thereafter remain at 10% per annum.  Interest payable hereunder shall be\ncalculated for actual days elapsed on the basis of a 360-day year.\n\n     Notwithstanding anything in this Note, the interest rate charged hereon\nshall not exceed the maximum rate allowable by applicable law. If any stated\ninterest rate herein exceeds the maximum allowable rate, then the interest rate\nshall be reduced to the maximum allowable rate, and any excess payment of\ninterest made by Borrower at any time shall be applied to the unpaid balance of\nany outstanding principal of this Note.\n\n     2.    Maturity Date.  The 'Maturity Date' shall mean November 1, 2001,\n           -------------                                                   \nor such later date as may be designated by Lender in writing.\n\n     3.    Payment of Interest and Principal.\n           --------------------------------- \n\n           (a)  Accrued interest shall be due and payable on the first day of\neach quarter, beginning January 1, 1997 and on the date of repayment of the Loan\nin full. Unless prepaid pursuant to Section 3(b) hereof, the principal of the\nLoan shall be repaid on the Maturity Date.\n\n                                       14\n\n \n           (b)  The outstanding principal amount of this Note may be prepaid by\nthe Borrower upon notice to the Lender in whole at any time or in part from time\nto time without any prepayment penalty or premium; provided, that upon such\npayment any interest due to the date of such prepayment on such prepaid amount\nshall also be paid.  In addition, the Borrower shall, without any notice or\ndemand whatsoever, prepay this Subordinated Note in full upon the consummation\nof an initial public offering (which includes a rights offering) of any\nsecurities of the Borrower.\n\n     4.    Subordination to Bank.  Borrower's obligations under this\n           ---------------------                                    \nSubordinated Note, regardless of whether demand for payment has been made by\nLender, and the lien and security interest granted pursuant to the Loan\nAgreement (as hereinafter defined) are subject and subordinate to Borrower's\nobligations to American National Bank and Trust Company of Chicago (the 'Bank')\nand all liens and security interests granted by Borrower to the Bank in\naccordance with a certain Subordination Agreement between the Bank and the\nLender.\n\n     5.    Other Loan Documents.  This Subordinated Note is issued in\n           --------------------                                      \nconnection with, and subject to the provisions of, that certain loan and\nsecurity agreement, dated the date hereof, by and between Borrower and Lender\n(the 'Loan Agreement') and is secured by the property described in the Loan\nAgreement and by such other collateral as previously may have been or may in the\nfuture be granted to Lender to secure this Subordinated Note.\n\n     6.    Method and Application of Payments.  All amounts payable hereunder\n           ----------------------------------                                \nshall be paid by Borrower in immediately available and freely transferable funds\nat the place designated by Lender to Borrower for such payment.  All payments\nmade on this Subordinated Note  shall be applied to fees and expenses (including\nattorneys' fees), accrued interest and principal in any order Lender may choose,\nin its sole discretion.\n\n     7.    Events of Default. Each of following events shall constitute an event\n           -----------------          \nof default (an 'Event of Default') hereunder :\n\n           a.  If Borrower shall fail to pay when due any interest or principal\nor any other sum payable to Lender hereunder, and such failure continues\nunremedied for five (5) days after the due date thereof.\n\n           b.  If any representation or warranty made by Borrower to Lender in\nany statement, certificate or other document including, but not limited to, the\nLoan Agreement or any other documents now or in the future securing the\nobligations of Borrower to Lender, is false, erroneous or misleading in any\nmaterial respect.\n\n           c.  If Borrower shall default in the performance of any other\nagreement or covenant with Lender contained in any document including, but not\nlimited to, the Loan Agreement or any other documents now or in the future\nsecuring the obligations of Borrower to Lender, and such default shall continue\nuncured for ten (10) days after written notice thereof to Borrower given by \nLender (or, if such default cannot reasonably be cured within such ten (10)\n\n                                       15\n\n \nday period and Borrower is proceeding to cure with reasonable diligence, such\nperiod of time as shall be reasonably necessary to cure such default, but in no\nevent more that thirty (30) days).\n\n           d.  If Borrower shall become insolvent, bankrupt or shall generally\nfail to pay its debts as such debts become due; or if Borrower shall admit in\nwriting its inability to pay its debts; or if Borrower shall suffer a receiver\nor trustee for it or substantially all of its property to be appointed; or if\nBorrower makes an assignment for the benefit of creditors; or if proceedings\nunder any law related to bankruptcy or insolvency or the reorganization or the\nrelease of debtors are instituted against Borrower and are not dismissed or\nstayed within sixty (60) days; or if a receiver or trustee for Borrower or\nsubstantially all of its property shall be appointed without Borrower's consent\nand such receiver or trustee shall not be discharged within sixty (60) days; or\nif proceedings relating to Borrower under any law related to bankruptcy or\ninsolvency or the reorganization or the release of debtors are instituted or\ncommenced by Borrower.\n\n           e.  A Default (as defined in the Credit Agreement as now in\neffect) shall have occurred or exist.\n\n     8.    Remedies.  Upon the occurrence of any Event of Default, (a)\n           --------                                                   \nBorrower's right to request further advances under the Loan Agreement shall\nterminate, (b) interest shall automatically and without notice begin to accrue\non the outstanding balance of this Note at the aforesaid interest rate plus 3%,\n(c) the entire unpaid principal amount of this Subordinated Note and all unpaid\ninterest accrued thereon shall, at the sole option of Lender upon notice to\nBorrower, become immediately due and payable, (d) Lender shall have the right to\noffset all amounts owed by Borrower hereunder against any amounts owed by Lender\nin any capacity to Borrower, whether or not due, and (e) Lender shall thereupon\nhave the immediate right to exercise from time to time all rights and remedies\navailable to Lender under the Loan Agreement or now or hereafter available at\nlaw or in equity, including the rights of a secured party under the Uniform\nCommercial Code, all of which shall be cumulative in nature.\n\n     9.    Guarantee.  Without limiting the effect of the Subsidiary's joint\n           ---------                                                        \nand several responsibility with the Parent for all duties, obligations, and\nliabilities of the Borrower under this Subordinated Note and the related Loan\nAgreement, the Subsidiary, by executing this Subsidiary's Note, also absolutely\nand unconditionally guarantees, to and in favor of  Lender, the prompt payment\nand performance of all principal, interest and other sums due and owing with\nrespect to this Subordinated Note, when and as the same shall become due and\npayable, whether at maturity, by acceleration or otherwise, and the due and\npunctual performance of all duties, obligations, and liabilities of the\nBorrowers' under this Subordinated Note and the related Loan Agreement and the\ndocuments executed in connection therewith.  The Subsidiary hereby agrees that\nits obligations hereunder shall be absolute and unconditional, irrespective of,\nand shall be unaffected by, any invalidity, irregularity, or unenforceability of\nany provision of this Subsidiary's Note or any other loan documents.\n\n     10.   Miscellaneous.  Except as expressly set forth herein, Borrower\n           -------------                                                 \nhereby waives presentment, demand, protest and notice of dishonor and protest,\nand also waives all other exemptions; and agrees that extension or extensions of\nthe time of payment of this Note or any \n\n                                       16\n\n \ninstallment or part thereof may be made before, at or after maturity by\nagreement by Lender. Borrower shall pay to Lender, upon demand, all costs and\nexpenses that may be incurred by Lender in connection with the enforcement of\nthis Subordinated Note including, without limitation, reasonable fees and\nexpenses of Lender's counsel. Notices required to be given hereunder shall be\ngiven in accordance with the provisions of the Loan Agreement, as amended from\ntime to time. Any failure by Lender to exercise any right hereunder shall not be\nconstrued as a waiver of the right to exercise the same or any other right at\nany time. No amendment to or modification of this Subordinated Note shall be\nbinding upon Lender unless in writing and signed by it. Any provision hereof\nfound to be illegal, invalid or unenforceable for any reason whatsoever shall\nnot affect the legality, validity or enforceability of the remainder hereof.\nThis Subordinated Note shall apply to and bind the successors of Borrower and\nshall inure to the benefit of Lender, its successors and assigns; provided,\nhowever, that Borrower may not assign its rights and obligations under this Note\nwithout the express prior written consent of Lender. The Subordinated Note shall\nbe governed by and interpreted in accordance with the laws of the State of\nDelaware.\n\n     IN WITNESS WHEREOF, Borrower, by its duly authorized officer intending to\nbe legally bound hereby, has duly executed this Subordinated Note as of the date\nfirst written above.\n\n                                       Diamond Technology Partners Incorporated\n\n\n                                       By:______________________________\n                                       Name:____________________________\n                                       Title:_____________________________\n\n                                       Diamond Partners Incorporated\n\n\n                                       By:_____________________________\n                                       Name:___________________________\n                                       Title:____________________________\n\n                                       17\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7316,8738],"corporate_contracts_industries":[9505],"corporate_contracts_types":[9560,9567],"class_list":["post-41127","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-diamondcluster-international-inc","corporate_contracts_companies-safeguard-scientifics-inc","corporate_contracts_industries-services__management","corporate_contracts_types-finance","corporate_contracts_types-finance__loan"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/41127","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=41127"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=41127"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=41127"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=41127"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}