<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
METRO INFORMATION SERVICES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
VIRGINIA 7370 54-1112301
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
incorporation or Classification Code Number) Identification No.)
organization)
</TABLE>
POST OFFICE BOX 8888
VIRGINIA BEACH, VIRGINIA 23450
(757) 486-1900
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
JOHN H. FAIN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
METRO INFORMATION SERVICES, INC.
607 LYNNHAVEN PARKWAY
VIRGINIA BEACH, VIRGINIA 23452
(757) 486-1900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
STEPHEN W. BURKE, ESQ. ERIC A. STERN, ESQ.
ROBERT J. EVELEIGH, ESQ. LATHAM & WATKINS
CLARK & STANT, P.C. Suite 1300
900 One Columbus Center 1001 Pennsylvania Avenue, N.W.
Virginia Beach, VA 23462 Washington, D.C. 20004
(757) 499-8800 (202) 637-2200
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE COMPLETION OF THIS OFFERING OF THIS
REGISTRATION STATEMENT.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE (2) PRICE(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock $0.01 par value 3,565,000 shares $14.00 $49,910,000 $15,124.24
</TABLE>
(1) Includes 465,000 shares of Common Stock issuable on exercise of an
over-allotment option granted to the underwriters.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Section 6(b) of the Securities Act of 1993.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by the Company
in connection with the sale of Common Stock being registered hereby. All the
amounts shown are estimated, except the SEC registration fee, the NASD filing
fee and the Nasdaq listing fee.
<TABLE>
<CAPTION>
ITEM AMOUNT
- ------------------------------------------------------------------ ---------
SEC Registration Fee.............................................. $ 15,124
<S> <C>
NASD Filing Fee................................................... 5,491
Nasdaq Listing Fee................................................ 50,000
Blue Sky Fee and Expenses......................................... *
Printing and Engraving Expenses................................... *
Legal Fees and Expenses........................................... *
Auditors' Fees and Expenses....................................... *
Transfer Agent and Registrar Fees................................. *
Miscellaneous Expenses............................................ *
---------
Total......................................................... $
---------
---------
</TABLE>
- ------------------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles contain provisions that govern indemnification of the Company's
directors, officers, agents and employees. These provisions enable the Company
to indemnify these individuals to the fullest extent permitted by Virginia law.
By law, Virginia corporations may indemnify any person who was or is a party to
any proceedings by reason of the fact that the person is or was a director,
officer, employee or agent of the Corporation or was serving at the request of
the Corporation in any such capacity of another corporation or other entity,
against liability incurred in connection with such proceeding, including any
appeal thereof, if the individual acted in good faith and believed (i) in the
case of conduct in the individual's official capacity with the Company, that the
individual's conduct was in the best interests of the Company or, (ii) in all
other cases, that the individual's conduct was at least not opposed to the best
interests of the Company. In addition, in the case of any criminal proceeding,
the individual must not have had reasonable cause to believe his conduct was
unlawful. Virginia law requires the Company to indemnify its directors and
officers (and allows the Company to indemnify employees or agents) who entirely
prevail in the defense of any proceeding to which they were a party because they
are or were directors or officers (or employees or agents) of the Company.
Virginia law prohibits the Company from indemnifying directors and officers in
connection with a proceeding by or in the right of the Company in which the
director or officer was adjudged liable to the Company, although the court in
which such action was brought may order indemnification of the director or
officer to the extent of his reasonable expenses if it determines that the
director or officer is entitled to such indemnification. Virginia law also
prohibits the Company from indemnifying directors and officers in connection
with any other proceeding charging improper personal benefit to the director or
officer (whether or not involving action in his official capacity) in which the
director or officer was adjudged liable on the basis that personal benefit was
improperly received by him.
Reference is made to the Underwriting Agreement (to be filed as Exhibit 1.1
hereto) which provides for indemnification arrangements by and among the
Company, its directors or officers, the Underwriters
II-1
<PAGE>
and the Selling Shareholders in the offering of the Common Stock registered
hereby, and each person, if any, who controls the Company, the Selling
Shareholders or the Underwriters, for certain liabilities, including liabilities
arising under the Securities Act of 1933, as amended (the "Securities Act").
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On or about May 1, 1994, 1995 and 1996, for a price per share of $3,994,
$5,209 and $5,355, respectively, the Company sold an aggregate of 87, 69 and 89
shares, respectively, of non-voting common stock to a total of 24 employees of
the Company and to Mr. Fain's sister, Cynthia L. Akins, as custodian for Mr.
Fain's children under the Virginia Uniform Transfer to Minors Act.
No underwriters were engaged in connection with the foregoing sale of
securities. Such sales were made in reliance on the exemption from registration
set forth in Section 4(2) of the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- -----------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement by and among Registrant and Selling Shareholders and
the Underwriters.*
3.1 Amended and Restated Articles of Incorporation of Registrant, as filed in Virginia
on November 20, 1996.
3.2 Amended and restated Bylaws of Registrant.
4.1 See Amended and Restated Articles of Incorporation of Registrant (included as
Exhibit 3.1).
4.2 Specimen Stock Certificate.*
5.1 Opinion of Clark & Stant, P.C., a Virginia professional corporation, as to the
legality of the shares being registered.*
10.1 Registrant's 1997 Stock Incentive Plan and related form of stock option agreement.
10.2 Registrant's 1997 Employee Stock Purchase Plan.
10.3 Registrant's Directors Stock Plan.
10.4 Intercreditor Agreement dated as of May 2, 1996 by and between NationsBank, N.A.
Crestar Bank, Signet Bank and Registrant.
10.5 Security Agreement dated as of April 30, 1996 by and between NationsBank of
Virginia, N.A. and Registrant.
10.6 Promissory Note dated as of April 30, 1996 by and between NationsBank of Virginia,
N.A. and Registrant.
10.7 Security Agreement dated as of April 30, 1996 by and between Crestar Bank and
Registrant.
10.8 Promissory Note dated as of April 30, 1996 by and between Crestar Bank and
Registrant.
10.9 Security Agreement dated as of April 30, 1996 by and between Signet Bank and
Registrant.
10.10 Promissory Note dated as of April 30, 1996 by and between Signet Bank and
Registrant.
10.11 Employment Agreement dated as of December 10, 1996 between Registrant and John H.
Fain.
10.12 Employment Agreement dated as of December 10, 1996 between Registrant and Andrew J.
Downing.
10.13 Employment Agreement dated as of December 10, 1996 between Registrant and Frank B.
Bracken, Jr.
10.14 Employment Agreement dated as of December 10, 1996 between Registrant and Richard
C. Jaeckle.
10.15 Employment Agreement dated as of December 10, 1996 between Registrant and Kathleen
A. Neff.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- -----------------------------------------------------------------------------------
<C> <S>
10.16 Lease dated September 19, 1996 between Tidewater Partners Limited Partnership and
Registrant for premises located at Reflections II Office Building, Suite 300, 200
Golden Oak Court, Virginia Beach, VA 23452.
10.17 Lease dated January 1, 1986 between C-F Lynnhaven Associates and Registrant for
premises located at 607 Lynnhaven Parkway, Virginia Beach, Virginia 23450.
10.18 Tax Indemnification Agreement dated as of by and between Shareholders of
Registrant and Registrant.
11.1 Computation of Earnings Per Share.*
23.1 Consent of KPMG Peat Marwick LLP., independent auditors.*
23.2 Consent of Clark & Stant, P.C., a Virginia professional corporation (included in
Exhibit 5.1).*
23.3 Consent of to serve as director.
27.1 Financial Data Schedule.**
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
(b) Financial Statement Schedules.
Schedule II, "Valuation and Qualifying Accounts."
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the provisions described in Item 14 or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The undersigned Company hereby undertakes to provide at the closing of this
offering to the Underwriters specified in the Underwriting Agreement
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance on rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this Amendment No. 1 Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Virginia Beach, Commonwealth of Virginia on the 12th day of December, 1996.
METRO INFORMATION SERVICES, INC.
By: /s/ JOHN H. FAIN
-----------------------------------------
John H. Fain
PRESIDENT AND PRINCIPAL EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities indicated below on the 12th day of December, 1996.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
President and Sole Director
/s/ JOHN H. FAIN (Principal Executive
- ------------------------------ Officer and Principal December 12, 1996
John H. Fain Financial Officer)
/s/ STEVEN A. LURUS Director of Finance and
- ------------------------------ Treasurer (Principal December 12, 1996
Steven A. Lurus Accounting Officer)
/s/ ANDREW J. DOWNING Executive Vice President
- ------------------------------ December 12, 1996
Andrew J. Downing
II-4
<PAGE>
SCHEDULE II
METRO INFORMATION SERVICES, INC.
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
WRITE-OFF
BALANCE AT OF BALANCE AT
BEGINNING CHARGES TO UNCOLLECTIBLE END OF
OF PERIOD REVENUE ACCOUNTS PERIOD
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Year ended December 31, 1993............... $ 43,687 $ 144,794 $ 135,037 $ 53,444
Year ended December 31, 1994............... 53,444 35,051 19,854 68,641
Year ended December 31, 1995............... 68,641 42,346 24,980 86,007
Nine months ended September 30, 1996....... 86,007 67,504 40,772 112,739
</TABLE>
II-5
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXBIBIT 3.1 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF REGISTRANT, AS
FILED IN VIRGINIA ON NOVEMBER 20, 1996.
METRO INFORMATION SERVICES, INC.
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
ARTICLE I
NAME
The name of the Corporation is Metro Information Services, Inc.
ARTICLE II
PURPOSE
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the Virginia Stock Corporation Act, as amended (the "Act").
ARTICLE III
AUTHORIZED SHARES
3.1 NUMBER AND DESIGNATION. The aggregate number and designation of shares
which the Corporation shall have the authority to issue and the par value per
share are as follows:
Class Number of Shares Par Value
----- ---------------- ---------
Preferred 1,000,000 $0.01
Common 50,000,000 $0.01
3.2 PREEMPTIVE RIGHTS. No holder of outstanding shares of any class
shall have any preemptive right with respect to (i) any shares of any class
of the Corporation, whether now or hereafter authorized (ii) any warrants,
rights or options to purchase any such shares or (iii) any obligations
convertible into or exchangeable for any such shares or into warrants, rights
or options to purchase any such shares.
<PAGE>
ARTICLE IV
PREFERRED SHARES
4.1 ISSUANCE IN SERIES. The Board of Directors (the "Board"), by the
affirmative vote of at least a majority of the members of the Board, is
authorized to issue the Preferred Shares referred to in paragraph 3.1
("Preferred Shares") above from time to time in one or more series and to
provide for the designation, preferences, limitations and relative rights of
the Preferred Shares of each series of preferred stock by the adoption of
Articles of Amendment to the Articles of Incorporation of the Corporation
setting forth the following:
(i) the maximum number of shares in the series and the designation
of the series, which designation shall distinguish the shares thereof from
the shares of any other series or class;
(ii) whether shares of the series shall have special, conditional or
limited voting rights or no right to vote, except to the extent prohibited by
law;
(iii) whether shares of the series are redeemable or convertible:
(a) at the option of the Corporation, a shareholder or another
person or on the occurrence of a designated event;
(b) for cash, indebtedness, securities or other property; or
(c) in a designated amount or in an amount determined in
accordance with a designated formula or by reference to extrinsic data or
events;
(iv) any right of holders of shares of the series to distributions,
calculated in any manner, including the rate or rates of dividends, and
whether dividends shall be cumulative, noncumulative or partially cumulative;
(v) the amount payable on the shares of the series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation;
(vi) any preference of the shares of the series over the shares of
any other series or class with respect to distributions, including dividends,
and with respect to distributions or in the liquidation, dissolution or
winding up of the affairs of the Corporation; and
(vii) any other preferences, limitations or specified rights
(including a right that no transaction of a specified nature shall be
consummated while any shares of such series remain outstanding, except on the
assent of all or a specified portion of such shares) now or hereafter
permitted by the laws of the
<PAGE>
Commonwealth of Virginia and not inconsistent with the provisions of this
Section 4.1.
Except as to the designations, preferences, limitations and relative
rights of each series of Preferred Shares which the Board is authorized to
establish, as is hereinabove set forth, all Preferred Shares, regardless of
series shall rank in a parity as to dividends (whether the dividend rates or
payment dates are different) and as to rights in the liquidation, dissolution
or winding up of the affairs of the Corporation (whether the redemption or
liquidation prices are different).
4.2 ARTICLES OF AMENDMENT. Before the issuance of any shares of a
series, Articles of Amendment establishing such series shall be filed with
and made effective by the State Corporation Commission of Virginia, as
required by law.
ARTICLE V
COMMON SHARES
5.1 CLASSES AND VOTING RIGHTS. As stated in Article III, the
Corporation shall be authorized to issue fifty million (50,000,000) shares of
common stock of the Corporation which shall be divided into two classes,
Common Stock and Nonvoting Common Stock. The Corporation may issue up to
forty-nine million (49,000,000) shares of Common Stock and one million
(1,000,000) shares of Nonvoting Common Stock. Common Stock shall have the
sole right to vote and the Nonvoting Common Stock shall have no right to
vote; provided, however, in all other respects, the Common Stock and the
Nonvoting Common Stock shall have identical rights.
5.2 DISTRIBUTIONS. Subject to the rights of the holders of any existing
shares ranking prior to Common as to dividends or rights in the liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
Common shall be entitled to share equally, share for share, in distributions,
including dividends, when declared by the Board and in the net assets of the
Corporation on the liquidation, dissolution or winding up of the affairs of
the Corporation.
5.3 EXISTING SHARES. On the date these restated Articles are effective
and without further action by the Corporation, each issued and outstanding
share of the Corporation's Class A Common Stock shall become an issued and
outstanding share of Common Stock and each issued and outstanding share of
the Corporation's Class B Common Stock shall become an issued and outstanding
share of Nonvoting Common Stock.
ARTICLE VI
BOARD OF DIRECTORS
6.1 STAGGERED BOARD. The Board of Directors of the Corporation shall
consist of one or more individuals, with the
<PAGE>
number fixed in accordance with the Bylaws of the Corporation (the "Bylaws").
Beginning with the first meeting of shareholders at which three or more
directors are to be elected and thereafter so long as the Corporation has
three or more directors, the members of the Board of Directors shall be
divided into three classes, Class 1, Class 2 and Class 3, as nearly equal in
number as possible. In that event, the terms of the directors in Class 1
shall expire at the first annual shareholders' meeting after their election,
the terms of Class 2 directors shall expire at the second annual
shareholders' meeting following their election and the terms of the Class 3
directors shall expire at the third annual shareholders' meeting after their
election. At each annual shareholders' meeting after the first elections of
the Class 1, Class 2 and Class 3 directors, as the case may be, directors
shall be chosen for a term of three (3) years.
6.2 NEW DIRECTORS. When the number of directors is changed, any newly
created directorships or any decrease in directorships shall be apportioned
among the classes by the Board as to make all classes as nearly equal in
number as possible.
6.3 REMOVAL. Any director whose term has not expired may be removed by
the shareholders only at the annual meeting of shareholders. Removal of a
director by the shareholders shall require a two-thirds vote of the
outstanding shares entitled to vote. The Board may remove any director at
any time, provided no less than two-thirds of the Board votes in favor of the
director's removal.
ARTICLE VII
LIMIT ON LIABILITY AND INDEMNIFICATION
7.1 DEFINITIONS. For purposes of this Article the following definitions
shall apply:
(i) "Corporation" means this Corporation only and no predecessor
entity or other legal entity;
(ii) "expenses" include counsel fees, expert witness fees, and costs
of investigation (including litigation and appeal), as well as any amounts
expended in asserting a claim for indemnification;
(iii) "liability" means the obligation to pay a judgment,
settlement, penalty, fine or other such obligation, including, without
limitation, any excise tax assessed with respect to an employee benefit plan;
(iv) "legal entity" means a corporation, partnership, limited
liability company, joint venture, trust, employee benefit plan or other
enterprise;
(v) "predecessor entity" means a legal entity the
<PAGE>
existence of which ceased on its acquisition by the Corporation in a merger
or otherwise; and
(vi) "proceeding" means any threatened, pending or completed action,
suit, proceeding or appeal whether civil, criminal, administrative or
investigative and whether formal or informal.
7.2 LIMIT ON LIABILITY. The directors and officers of this Corporation
shall not be liable to the Corporation or its shareholders in any instance in
which the Act (as it exists on the date these Articles are effective or as it
exists on the date of an amendment hereto) permits the limitation or
elimination of liability of directors or officers of a corporation to the
corporation or its shareholders.
7.3 INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Corporation shall
indemnify any individual who is, was or is threatened to be made a party to a
proceeding (including a proceeding by or in the right of the Corporation)
because such individual is or was a director or officer of the Corporation or
because such individual is or was serving the Corporation or any other legal
entity in any capacity at the request of the Corporation while a director or
officer of the Corporation, against all liabilities and reasonable expenses
incurred in the proceeding, except to the extent that such liabilities and
expenses are incurred because of such individual's willful misconduct or
knowing violation of the criminal law. Service as a director or officer of a
legal entity controlled by the Corporation shall be deemed service at the
request of the Corporation.
(i) The determination that indemnification under Section 7.3 is
permissible and the evaluation as to the reasonableness of expenses in a
specific case shall be made, in the case of a director, as provided by law
and, in the case of an officer, as provided in Section 7.4 of this Article;
provided, however, that if a majority of the directors of the Corporation has
changed after the date of the alleged conduct giving rise to a claim for
indemnification, such determination and evaluation shall, at the option of
the person claiming indemnification, be made by special legal counsel agreed
on by the Board and such person.
(ii) Unless a determination has been made that indemnification is
not permissible, the Corporation shall make advances and reimbursements for
expenses incurred by a director or officer in a proceeding on receipt of an
undertaking from such director or officer to repay the same if it is
ultimately determined that such director or officer is not entitled to
indemnification. Such undertaking shall be an unlimited, unsecured general
obligation of the director or officer and shall be accepted without reference
to such director's or officer's ability to make repayment.
(iii) The termination of a proceeding by judgment, order,
<PAGE>
settlement, conviction or on a plea of NOLO CONTENDERE or its equivalent
shall not of itself create a presumption that a director or officer acted in
such a manner as to make such director or officer ineligible for
indemnification.
(iv) The Corporation is authorized to contract in advance to
indemnify and make advances and reimbursements for expenses to any of its
directors or officers to the same extent provided in this Section 7.3.
(v) No person's rights under Section 7.3 of this Article shall be
limited by the provisions of Section 7.4.
7.4 INDEMNIFICATION OF OTHERS. The Corporation may, to a lesser extent
or to the same extent that it is required to provide indemnification and make
advances and reimbursements for expenses to its directors and officers
pursuant to Section 7.3, provide indemnification and make advances and
reimbursements for expenses to its employees and agents, the directors,
officers, employees and agents of its subsidiaries and predecessor entities
and any person serving any other legal entity in any capacity at the request
of the Corporation and may contract in advance to do so. The determination
that indemnification under Section 7.4 is permissible, the authorization of
such indemnification and the evaluation as to the reasonableness of expenses
in a specific case shall be made as authorized from time to time by general
or specific action of the Board, which action may be taken before or after a
claim for indemnification is made, or as otherwise provided by law.
7.5 MISCELLANEOUS.
(i) The rights of each person entitled to indemnification under this
Article shall inure to the benefit of such person's heirs, executors and
administrators.
(ii) Special legal counsel selected to make determinations under
this Article may be counsel for the Corporation.
(iii) Indemnification pursuant to this Article shall not be
exclusive of any other right of indemnification to which any person may be
entitled, including, without limitation, the mandatory indemnification of
directors pursuant to Section 13.1-698 of the Act and the mandatory
indemnification of officers pursuant to Section 13.1-702 of the Act, as they
exist on the date these Articles are effective or on the date of an amendment
hereto, indemnification pursuant to a valid contract, indemnification by
legal entities other than the Corporation and indemnification under policies
of insurance purchased and maintained by the Corporation or others. No
person shall be entitled to indemnification by the Corporation, however, to
the extent such person is indemnified by another, including an insurer.
<PAGE>
(iv) The Corporation is authorized to purchase and maintain
insurance against any liability it may have under this Article or to protect
any of the persons named above against any liability arising from their
service to the Corporation or any other legal entity at the request of the
Corporation regardless of the Corporation's power to indemnify against such
liability.
(v) The provisions of this Article shall not be deemed to preclude
the Corporation from entering into contracts otherwise permitted by law with
any individuals or legal entities, including those named above.
(vi) If any provision of this Article or its application to any
person or circumstance is held invalid by a court of competent jurisdiction,
the invalidity shall not affect other provisions or applications of this
Article and, to this end, the provisions of this Article are severable.
7.6 AMENDMENTS. The Bylaws may modify or amend this Article to expand
the provisions of this Article. The Bylaws, however, may not restrict or
limit the provisions of this Article. No amendment, modification or repeal
of this Article shall diminish the rights provided hereunder to any person
arising from conduct or events occurring before the adoption of such
amendment, modification or repeal.
ARTICLE VIII
BYLAWS
In furtherance and not in limitation of the powers conferred by statute,
the Board is expressly authorized to make, alter or repeal the Bylaws.
ARTICLE IX
AMENDMENTS
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles in the manner now or hereafter provided
in these Articles and by the laws of the Commonwealth of Virginia and all
rights conferred on shareholders by these Articles are granted subject to
this reservation.
ARTICLE X
ADMINISTRATIVE PROCEDURES
Meetings of shareholders may be held within or without the Commonwealth
of Virginia, as the Bylaws may provide. The books of the Corporation may be
kept outside the Commonwealth of Virginia at a place or places designated
from time to time by the Board or in the Bylaws. Election of directors need
not be by written ballot unless the Bylaws so provide.
<PAGE>
ARTICLE XI
SUPERSESSION
These restated Articles of Incorporation supersede and take the place of
all existing Articles of Incorporation and all amendments.
ARTICLE XII
EXISTENCE
The Corporation shall have perpetual existence.
I hereby certify that this is a true and correct copy of the Articles of
Incorporation of Metro Information Services, Inc. adopted by the Board on the
22 day of October, 1996.
METRO INFORMATION SERVICES, INC.
By /s/ Steven A. Lurus
------------------------------
Secretary
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 3.2 AMENDED AND RESTATED BYLAWS OF REGISTRANT.
AMENDED AND RESTATED BYLAWS
OF
METRO INFORMATION SERVICES, INC.
ARTICLE I
SHAREHOLDERS' MEETINGS
1.1 ANNUAL MEETING. The annual meeting of the shareholders for the
election of directors and the transaction of such other business as may
properly come before it shall be held at the principal office of METRO
INFORMATION SERVICES, INC. (the "Corporation") in the City of Virginia Beach,
Commonwealth of Virginia, or at such place within or without the Commonwealth
of Virginia as shall be set forth in the notice of annual meeting. The
meeting shall be held on the second Tuesday of June of each and every year,
at 2:30 p.m. or at such other date and time as is designated in the notice of
annual meeting. The Secretary of the Corporation (the "Secretary") shall
give the notice of annual meeting, which shall include the place, date and
hour of the meeting. Such notice shall be given, either personally or by
mail, not less than ten (10) nor more than sixty (60) days before the meeting
date. If mailed, the notice shall be addressed to the shareholder at the
shareholder's address as it appears on the Corporation's record of
shareholders, unless the shareholder shall have filed with the Secretary a
written request that notices intended for the shareholder are to be mailed to
a different address. Notice of annual meetings may be waived by a
shareholder by submitting a signed waiver to the Secretary either before or
after the meeting, or by attendance at the meeting.
1.2 SPECIAL MEETING. Special meetings of shareholders, other than
those regulated by statute, may be called at any time by a majority of the
directors or by the President of the Corporation (the "President"). The written
notice of a special shareholders' meeting shall be given not less than ten (10)
nor more than sixty (60) days before the date set for the meeting, and shall
state the place within or without the Commonwealth of Virginia where the meeting
will be held, the date and hour of the meeting, the purpose or purposes for
which it is called, and the name of the person by whom or at whose direction the
meeting is called. The notice shall be given to each shareholder of record in
the same manner as the notice of the annual meeting; provided, however, that
such notice,
<PAGE>
if mailed, shall be sent certified mail, return receipt requested.
No business other than that specified in the notice shall be transacted at any
such special meeting. Notice of a special shareholders' meeting may be waived
by the shareholder submitting a signed waiver to the Secretary or by attendance
at the meeting.
1.3 QUORUM. The presence, in person or by proxy, of the holders of a
majority of the outstanding shares entitled to vote shall constitute a quorum
for the transaction of business at all meetings of shareholders. If a quorum
does not exist, less than a quorum may adjourn the meeting to a future date at
which a quorum shall be present or represented. At such adjourned meeting, any
business may be transacted which might have been transacted at the meeting as
originally called.
1.4 RECORD DATE. The Board of Directors (the "Board") may fix in
advance the record date for the determination of which shareholders are entitled
to notice of a meeting, or for any other purposes requiring such a
determination. The record date may not be more than seventy (70) days before
the meeting or action. A determination of which shareholders are entitled to
notice of, or to vote at, a shareholders' meeting is effective for any
adjournment of the shareholders' meeting, unless the meeting is adjourned to a
date more than one hundred twenty (120) days after the date fixed for the
original shareholders' meeting. In such case, a new record date must be fixed,
and notice must be given to all persons who are shareholders as of the new
record date.
1.5 VOTING. A shareholder entitled to vote at a meeting may vote in
person or by proxy. Except as otherwise provided by the Virginia Stock
Corporation Act (the "Act") or the Articles of Incorporation of the Corporation,
as they may be from time to time amended, modified, supplemented or restated
(the "Articles"), every shareholder shall be entitled to one vote for each share
standing in the shareholder's name on the Corporation's record of shareholders.
Except as otherwise provided by these Bylaws, the Articles or the Act, the
affirmative vote of a majority of the shares represented at the meeting and
entitled to vote shall be the act of the shareholders.
1.6 PROXIES. Every proxy must be dated and signed by the shareholder
or by the shareholder's attorney-in-fact. No proxy shall be valid after the
expiration of eleven (11) months from the date of its execution, unless
otherwise provided therein. Every proxy shall be revocable at the pleasure of
the shareholder executing it, except where an irrevocable proxy is permitted by
statute and is granted by the shareholder.
1.7 CONSENTS. Actions required or permitted by the Act, the Articles
or these Bylaws, to be taken at a shareholder meeting may be taken without a
meeting if one or more written consents are signed by all the shareholders
entitled to vote on the action and such consents are delivered to the Secretary.
<PAGE>
ARTICLE II
DIRECTORS
2.1 NUMBER AND QUALIFICATIONS. The Board shall consist of at least
one (1) member but not more than eleven (11) members as such number may be
determined, from time to time, by the Board. The maximum number of directors
may be increased or decreased by an amendment to the Bylaws adopted by the
shareholders. Directors need not be shareholders of the Corporation.
2.2 MANNER OF ELECTION. Unless the provisions of Section 2.4 below
apply, each director shall be elected by a plurality vote of the shareholders at
the annual meeting of shareholders.
2.3 TERM OF OFFICE. Unless the provisions of Section 2.4 below
apply, the term of office of each director shall be the longer of one (1) year
from the annual meeting of the shareholders at which the director was elected
and until the director's successor has been duly elected and has qualified.
2.4 STAGGERED BOARD. Beginning with the first meeting of shareholders
at which three or more directors are to be elected and thereafter so long as the
Corporation has three or more directors, the members of the Board shall be
divided into three classes, Class 1, Class 2 and Class 3, as nearly equal in
number as possible. In that event, the terms of the directors in Class 1 shall
expire at the first annual shareholders' meeting after their election, the terms
of Class 2 directors shall expire at the second annual shareholders' meeting
following their election and the terms of the Class 3 directors shall expire at
the third annual shareholders' meeting after their election. At each annual
shareholders' meeting after the first elections of the Class 1, Class 2 and
Class 3 directors, as the case may be, directors shall be chosen for a term of
three (3) years. When the number of directors is changed, any newly created
directorships or any decrease in directorships shall be apportioned among the
classes by the Board as to make all classes as nearly equal in number as
possible.
2.5 DUTIES AND POWERS. The Board shall control and manage the
affairs and business of the Corporation. The directors may adopt such rules and
regulations for the conduct of their meetings and the management of the
Corporation as they may deem proper, but which are not inconsistent with the
Act, the Articles or these Bylaws. The Board may elect a chairperson who shall
preside at all meetings of the Board.
2.6 MEETINGS. The Board shall meet for the election or appointment
of officers and for the transaction of any other business as soon as practicable
after the adjournment of the annual meeting of the shareholders. Other regular
meetings of the Board shall be held at such times as the Board may from time to
time
<PAGE>
determine. Special meetings of the Board may be called by the President at any
time. On the written request of any two directors, the President shall call a
special meeting to be held not more than seven (7) days after the receipt of
such request.
2.7 NOTICE OF MEETINGS. No notice need be given of any regular
meeting of the Board. The Secretary shall serve notice of special meetings on
each director in person or by certified mail, return receipt requested,
addressed to the director at the director's last known post office address, or
by facsimile, or personal delivery, at least twenty-four (24) hours before the
date of such meeting, specifying the time and place of the meeting and the
business to be transacted. At any meeting at which all of the directors shall
be present, although held without notice, any business may be transacted which
might have been transacted if the meeting had been duly called.
2.8 PLACE OF MEETING. The Board may hold its meeting within or
without the Commonwealth of Virginia, at such place as may be designated in the
notice of the meeting.
2.9 QUORUM. At any meeting of the Board, the presence of a majority
of the Board shall constitute a quorum for the transaction of business. Should
a quorum not be present, a lesser number may adjourn the meeting to some further
time, not more than seven (7) days later.
2.10 VOTING. At all meetings of the Board, each director shall have
one vote irrespective of the number of shares that the director may hold. If a
quorum is present for a Board meeting, the vote of a majority of the Board,
except as otherwise provided by the Act or the Articles, shall be the act of the
Board.
2.11 COMPENSATION. Each director shall be entitled to receive for
attendance at each meeting of the Board, or of any duly constituted committee of
the Board, such fee as is fixed by the Board.
2.12 VACANCIES. Any vacancy occurring in the Board by death,
resignation or otherwise shall be filled promptly by a majority vote of the
remaining directors at a special meeting which shall be called for that purpose
within thirty (30) days after the occurrence of the vacancy. The director thus
chosen (the "newly-elected director") shall hold office for the unexpired term
of the newly-elected director's predecessor and until the election and
qualification of the newly-elected director's successor.
2.13 RESIGNATION. Any director may resign at any time by delivering
written notice to the Board, the President or the Secretary. A resignation is
effective on delivery of the notice.
2.14 REMOVAL. Any director whose term has not expired
<PAGE>
may be removed by the shareholders only at the annual meeting of shareholders.
Removal of a director by the shareholders shall require a two-thirds vote of the
outstanding shares entitled to vote. The Board may remove any director at any
time, provided no less than two-thirds of the Board votes in favor of the
director's removal.
2.15 COMMITTEES. At any time the number of members of the Board is
three or greater, the Board may establish one or more committees and appoint
members of the Board to serve on them. Each committee shall have two or more
members and shall serve at the pleasure of the Board. The creation of a
committee and the appointment of members to it shall be approved by a majority
of all the directors in office when the action is taken or such greater number
of directors if now or hereafter required by the Articles of Incorporation. The
Board shall establish, from time to time, the duties and responsibilities of
each committee it establishes and, to the extent permitted by law, each
committee, to the extent duties and responsibilities are so delegated to it by
the Board, may exercise the authority of the Board. No person who is not a
member of the Board shall serve on any committee. The provisions of Sections
2.6, 2.7, 2.8, 2.9 and 2.10, which govern meetings, notice of meetings, place of
meeting, quorum and voting of the Board shall apply to meetings of committees.
ARTICLE III
OFFICERS
3.1 OFFICERS AND QUALIFICATIONS. The officers of the Corporation
shall consist of a President and a Secretary. Other officers of the Corporation
may include one (1) or more Vice Presidents, a Treasurer, one (1) or more
assistant secretaries, and such other officers as the Board may appoint. Vice
Presidents may be classified by the Board as Executive Vice Presidents, Senior
Vice Presidents, Vice Presidents of Operations, Vice Presidents and Assistant
Vice Presidents. The same individual may simultaneously hold more than one (1)
office.
3.2 ELECTION. All officers of the Corporation shall be elected
annually by the Board at its meeting held immediately after the annual meeting
of shareholders.
3.3 TERM OF OFFICE. All officers shall hold office until their
successors have been duly elected and qualified, or until removed as provided
herein.
3.4 REMOVAL OF OFFICERS. Any officer may be removed with or without
cause by the vote of a majority of the Board.
3.5 DUTIES OF OFFICERS. The duties and powers of the officers of the
Corporation shall be as follows and as shall hereafter be set by resolution of
the Board:
<PAGE>
PRESIDENT
A. The President shall preside at all meetings of the Board,
unless the Board has elected a Chairperson, and at all meetings of the
shareholders.
B. The President shall present at each annual meeting of the
shareholders and directors a report of the condition of the business of the
Corporation.
C. The President shall cause to be called regular and special
meetings of the shareholders and directors as required by the Act and these
Bylaws.
D. The President shall, subject to the approval of the Board,
appoint, discharge, and fix the compensation of all employees and agents of the
Corporation other than the duly elected officers.
E. The President has authority to sign and execute, in the name
of the Corporation, all contracts, and all notes, drafts, or other orders for
the payment of money.
F. The President shall sign all certificates representing
shares.
G. The President shall cause all books, reports, statements and
certificates to be properly kept and filed as required by the Act.
H. The President shall enforce these Bylaws and perform all
duties incident to the President's office as required by the Act. Generally, he
shall supervise and control the business and affairs of the Corporation.
I. The President shall, in the absence of any officer, perform
any absent officer's duties as set forth in these Bylaws.
VICE PRESIDENT
Vice Presidents shall perform such duties and functions as the Board
may, from time to time, prescribe. During the absence or incapacity of the
President Vice Presidents in the following order: Executive Vice President,
Senior Vice President, Vice President of Operations, Vice President and
Assistant Vice President, shall perform the duties of the President. When
acting on behalf of the President, such Vice President shall have all of the
powers and be subject to all of the responsibilities of the office of President.
<PAGE>
SECRETARY
A. The Secretary shall keep the minutes of the meetings of the
Board and of the shareholders in appropriate books. The Secretary shall also
keep a record of all actions taken, with or without a meeting, by the
shareholders, Board or any committee of the Board.
B. The Secretary shall attend to the giving of notice of special
meetings of the Board and of all the meetings of the shareholders of the
Corporation.
C. The Secretary shall be custodian of the records and seal of
the Corporation and shall affix the seal to the certificates representing shares
and other corporate papers when required.
D. The Secretary shall keep a record of the shareholders
containing the names of all shareholders, their places of residence, the number
and class of shares held by each and the dates when each shareholder became an
owner of record. The Secretary shall keep a record of all written
communications to shareholders generally within the past three (3) years.
E. The Secretary shall keep all records open for inspection,
daily during the usual business hours, within the limits prescribed by the Act.
At the request of the person entitled to an inspection thereof, the Secretary
shall prepare and make available a current list of the officers and directors of
the Corporation and their business addresses.
F. The Secretary shall sign all certificates representing shares
and affix the corporate seal.
G. The Secretary shall attend to all correspondence and present
to the Board at its meeting all official communications received by him.
H. The Secretary shall perform all the duties incident to the
office of Secretary.
TREASURER
A. The Treasurer shall have the care and custody of and be
responsible for all the funds and securities of the Corporation, and shall
deposit funds and securities in the name of the Corporation in such banks or
safe deposit companies as the Board may designate.
B. The Treasurer has authority to make, sign, and endorse, in
the name of the Corporation, all checks, drafts, notes, and other orders for the
payment of money, and pay out and dispose of such under the direction of the
President or the Board.
<PAGE>
C. The Treasurer shall keep at the principal office of the
Corporation accurate books of account of all its business and transactions and
shall at all reasonable hours exhibit books and accounts to any director on
application at the office of the Corporation during business hours.
D. The Treasurer shall render a report of the condition of the
finances of the Corporation at each regular meeting of the Board and at such
other times as shall be required of him, and the Treasurer shall make a full
financial report at the annual meeting of the shareholders.
E. The Treasurer shall further perform all duties incident to
the office of Treasurer of the Corporation.
F. If required by the Board, the Treasurer shall give such bond
as it shall determine appropriate for the faithful performance of the
Treasurer's duties.
OTHER OFFICERS
Other officers shall perform such duties and have such powers as may
be assigned to them by the Board.
3.6 VACANCIES. All vacancies in any officer's office shall be filled
promptly by the Board, either at regular meetings or at a meeting specially
called for that purpose.
3.7 COMPENSATION OF OFFICERS. The officers shall receive such salary
or compensation as may be fixed by the Board.
3.8 REIMBURSEMENT OF COMPENSATION OF OFFICERS. Any payments made to
an officer of the Corporation such as salary, commission, bonus, interest, rent
or entertainment expense incurred by the officer, which shall be disallowed in
whole or in part as a deductible expense by the Internal Revenue Service, shall
be reimbursed by such officer to the Corporation to the full extent of such
disallowance. It shall be the duty of the directors, as a Board, to enforce
payment of each amount disallowed. In lieu of payment by the officer, subject
to the determination of the directors, proportionate amounts may be withheld
from the officer's future compensation payments until the amount owed to the
Corporation has been recovered.
<PAGE>
ARTICLE IV
SEAL
The seal of the Corporation shall be as follows:
ARTICLE V
SHARES
5.1 CERTIFICATES. The shares of the Corporation shall be represented
by certificates prepared by the Board and signed by (or facsimile signature
thereof) the President and the Secretary and sealed with the seal of the
Corporation. The certificates shall be numbered consecutively and in the order
in which they are issued, and a record shall be maintained of the name of the
person to whom the shares represented by each such certificate is issued, and
the number and class or series of such shares, and the date of issue. Each
certificate shall state the registered holder's name, the number and class of
shares represented, the date of issue and the par value (if any) of such shares.
5.2 SUBSCRIPTIONS. Subscriptions to the shares shall be paid at such
times and in such installments as the Board may determine. If default shall be
made in the payment of any installment as required by such resolution, the Board
may, in the manner prescribed by the Act, declare the shares and all previous
payments thereon forfeited for the use of the Corporation.
5.3 TRANSFER OF SHARES. The shares of the Corporation shall be
assignable and transferable only on the books and records of the Corporation and
by the registered owner, or by the registered owner's duly authorized attorney,
on surrender of the certificate duly and properly endorsed with proper evidence
of authority to transfer. The Corporation shall issue a new
<PAGE>
certificate for the shares surrendered to the person or persons entitled to
receive such shares.
5.4 RETURN CERTIFICATES. All certificates for shares changed or
returned to the Corporation for transfer shall be marked by the Secretary
"Cancelled," with the date of cancellation, and the transaction shall be
immediately recorded in the certificate book opposite the memorandum of their
issue. The returned certificate may be inserted in the certificate book.
ARTICLE VI
DISTRIBUTIONS
The Board, at any regular or special meeting, may authorize and make
distributions to its shareholders; provided, however, no distribution may be
made to the extent not permitted by the Act.
ARTICLE VII
BILLS, NOTES, ETC.
All bills payable, notes, checks, drafts, warrants, or other
negotiable instruments of the Corporation shall be made in the name of the
Corporation, and shall be signed by the President or Secretary, or by such
officer or officers as the Board shall from time to time by resolution direct.
No officer or agent of the Corporation, either singly or jointly with others,
shall have the power to make any bill payable, note, check, draft, warrant or
other negotiable instrument, or endorse the same in the name of the Corporation,
or contract or cause to be contracted any debt of liability in the name and on
behalf of the Corporation, except as herein expressly prescribed and provided.
ARTICLE VIII
OFFICES
The principal office of the Corporation shall be located in the City
of Virginia Beach, Commonwealth of Virginia. The Board may change the location
of the principal office of the Corporation and may, from time to time, designate
other offices within or without the state as the business of the Corporation may
require.
<PAGE>
ARTICLE IX
AMENDMENTS
These Bylaws may be altered, amended, repealed or added to by the
affirmative vote of a majority of the shareholders entitled to vote in the
election of any director at an annual meeting or a special meeting called for
that purpose, provided that a written notice shall have been sent to each
shareholder of record entitled to vote at such meeting at the shareholder's last
known post office address at least ten (10) days before the date of such annual
or special meeting. The notice shall state the alterations, amendments,
additions or changes which are proposed to be made in such Bylaws. Only such
changes shall be made as have been specified in the notice. The Bylaws may also
be altered, amended or repealed, or new Bylaws adopted by a majority of the
entire Board at a regular or special meeting of the Board. However, any Bylaws
adopted by the Board may be altered, amended or repealed by the shareholders.
ARTICLE X
WAIVER OF NOTICE
Whenever, under the provisions of these Bylaws or the Act, any
shareholder or director is entitled to notice of any regular or special meeting
or of any action to be taken by the Corporation, such meeting may be held or
such action may be taken without the giving of such notice, provided every
shareholder or director entitled to such notice waives the notice requirement in
a signed writing delivered to the Secretary.
I hereby certify that this is a true and correct copy of the Bylaws of
METRO INFORMATION SERVICES, INC. adopted by the Board on the 11th day of
December, 1996.
METRO INFORMATION SERVICES, INC.
By /s/ Steven A. Lurus
--------------------------------------
Secretary
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.1 REGISTRANT'S 1997 INCENTIVE STOCK OPTION PLAN AND RELATED FORM OF
STOCK OPTION AGREEMENT.
FORM OF
1997 INCENTIVE STOCK OPTION PLAN
Metro Information Services, Inc., a Virginia corporation and its
subsidiaries, whether now existing or formed after the date hereof (the
"Corporation"), adopts an incentive stock option plan (the "Plan") under the
Internal Revenue Code of 1986, as amended (the "Code") to attract and retain
key employees of the Corporation ("Employees").
As a reward for the Employees' role in the continued growth and
success of the Corporation, the Corporation desires to provide to the
Employees the benefits inherent in ownership of the Corporation's common
stock. This Plan provides a means whereby the Employees are given an
opportunity to purchase shares of the Corporation's voting common stock on
the exercise of the options designed to qualify as incentive stock options
("Options") under Section 422 of the Code.
This Plan is as follows:
1. OPTIONS STOCK. The aggregate number of shares that may be
issued pursuant to Options granted under this Plan is _____ shares of the
Common Stock of the Corporation (the "Stock").
2. EMPLOYEES ELIGIBLE TO RECEIVE OPTION. Only key Employees,
including, without limitation, Employees who are officers or directors of the
Corporation, are eligible to receive Options under this Plan. For the
purposes of this Plan, the term "key employees" shall mean and include all
persons who have responsibility in the management, administration or
supervision of the business or affairs of the Corporation or who are engaged
in the development, sale, marketing, promotion or performance of the services
of the Corporation. Directors of the Corporation who are not employees of the
Corporation are not eligible to receive Options under this Plan. In
determining the Employees to whom Options shall be granted under this Plan
and the number of shares of the Stock as to which Options may be granted to
an Employee, a committee of the Board of Directors ("Committee") shall
consider the duties of the Employees, their present and potential
contributions to the success of the business of the Corporation and such
other factors as the Committee may deem relevant in furthering the purposes
of granting such Options in the interest of the Corporation. An Employee may
receive more than one Option under this Plan.
<PAGE>
3. DURATION OF THE STOCK OPTION PLAN. All Stock Options
authorized under this Plan must be granted within nine (9) years and eleven
(11) months from the date this Plan is adopted by the Committee or by the
shareholders of the Corporation, whichever is earlier.
4. GRANT OF OPTION. The Committee shall set forth each Option and
its terms and conditions on a written incentive stock option certificate
("Option Certificate") that shall be duly authorized by the Committee. The
Option Certificate shall set forth the number of shares of Stock that the
Employee may purchase during any calendar year. The Stock shall be valued as
set forth in Paragraph 5 below. The Committee, in granting the Option, shall
include such terms and conditions in the Option Certificate as may be
required to make the Option qualify as an incentive stock option under the
Code.
5. PURCHASE PRICE. Each Option Certificate shall set forth the
exercise price per share of the Stock ("Purchase Price"). The Purchase Price
will not be less than one hundred percent (100%) of the fair market value of
the Stock on the date that the Option is granted; provided, however, that the
Purchase Price per share of any Option granted to an Employee who, at the
time the Option is granted, is the owner of stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Corporation, shall not be less than one hundred ten percent (110%) of the
fair market value of the Stock on the date that such Option is granted.
6. TIME TO EXERCISE OPTION. Each Option Certificate shall set
forth that the Option is exercisable during a period no later than nine (9)
years and eleven (11) months after the date on which the Option is granted;
provided, however, any Option granted to a person who, at the time the Option
is granted, is the owner of Stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Corporation,
must be exercised no later than four (4) years and eleven (11) months after
the date on which the Option is granted. The Committee, in its discretion,
may reduce the time specified herein for the exercise of the Option in the
Option Certificate, but may not expand on the time specified herein.
7. PERSON EXERCISING OPTION-TRANSFER. Only the Employee to whom
the Option is granted may exercise the Option during the Employee's lifetime.
Further, by its terms, no Option granted may be transferred to any other
individual other than by the will of the Employee or by the laws of descent
and distribution.
8. PAYMENT OF PURCHASE PRICE. At the time the Option is granted,
the Committee, in its sole discretion, may require payment of the Purchase
Price at the date of exercise of any Option hereunder in any form permitted
by the Code, including, without limitation, payment (1) in cash, (2) using a
promissory note
<PAGE>
payable over a specified number of years bearing interest at a specified
annual rate, (3) in stock equal to the Purchase Price or (4) any combination
of the foregoing as set forth in the Option Certificate; provided, however,
if the Option Certificate does not set forth a form of payment, payment shall
be in cash.
9. EXERCISE OF OPTIONS. Each Option shall be exercised, in whole
or in part, as to such number of shares of Stock and at such time or times
as the Committee shall have determined at the time of grant. No more than
$100,000 worth of Options, based on the Purchase Price granted under this
Plan or any other incentive stock option plan sponsored by the Corporation,
shall be first exercisable in any calendar year by any one employee. Except
as provided in Paragraphs 11 and 12, an Option may only be exercised if the
holder of the Option is, at the time of exercise, in the employ of the
Corporation. The holder of an Option shall not have any of the rights of a
shareholder of the Corporation with respect to the shares of the Stock
issuable on the exercise of the Option until one or more certificates
evidencing such shares ("Share Certificates") shall have been issued to the
holder of the Option.
10. RESTRICTIONS ON STOCK. All persons issued Share Certificates
shall sign an agreement with the Corporation indicating that they are not
taking the Stock with the view for sale or distribution of the Stock and, if
no registration statement is in effect with respect to such shares, that they
recognize that the issuance of the Stock is not subject to registration under
the Securities Act of 1933, the Securities and Exchange Act of 1934 or any
state agency of any State respecting the sale and transfer of securities.
11. TERMINATION OF EMPLOYMENT. Except as provided in Paragraph 12,
no Option granted under this Plan shall be exercisable more than thirty (30)
days after the holder ceases to be an Employee of the Corporation and, on the
termination of employment, all outstanding Options and any accompanying
rights, to the extent that the rights have not been exercised, shall
terminate immediately. Options granted under this Plan shall not be affected
by any change of employment so long as the holder continues to be an Employee
of the Corporation.
12. EXERCISE ON DEATH, DISABILITY OR RETIREMENT OF THE EMPLOYEE.
If the holder of an Option dies while employed by the Corporation, the Option
may be exercised, as to any shares subject to the Option, by the executor,
administrator or personal representative of such deceased employee (or by
such other person at the time who is entitled by law to the rights of such
deceased employee under the Option) at any time within twelve (12) months
after the death of the Employee, but in no event after the expiration of the
Option. In the event that the employment of the holder of the Option of the
Corporation is terminated by reason of the disability of the holder of the
Option, the Option may be exercised, as to any shares subject to the Option,
by the holder
<PAGE>
thereof at any time within twelve (12) months after the date of such
termination of Employee, but in no event after the expiration of the term of
the Option. For the purposes of this Plan, the term "disability" shall mean a
physical or mental disability as defined in Section 22(e)(3) of the Code or,
if such provision is repealed, as determined by the Committee in its sole
discretion. In the event that the employment of the holder of any Option is
terminated by reason of retirement of the holder of the Option at such age as
may be determined by the Committee at the date of the grant of the Option,
the Option may be exercised (to the extent otherwise exercisable on the date
of retirement of the holder of the Option) by the holder thereof at any time
within three (3) months after the date of such retirement, but in no event
after the expiration of the term of the Option.
13. NON-TRANSFERABILITY OF OPTIONS. Options may not be assigned,
transferred, pledged, hypothecated or disposed of in any way (whether by
operation of law or otherwise), except to the extent expressly provided for
in this Plan and shall not be subject to execution, attachment or similar
process. Any assignment, transfer, pledge, hypothecation or other disposition
of any Option attempted contrary to the provisions of this Plan or any levy
of execution, attachment or other process attempted on an Option will be null
and void and without effect. Any attempt to make an assignment, pledge,
transfer, hypothecation or other disposition of an Option or any attempt to
make a levy of execution, attachment or other process will cause the Option
to be terminated immediately if the Corporation at any time should, in the
sole discretion of the Committee, so elect by written notice to the person
entitled to exercise the Option; provided, however, that any such termination
of the Option will not prejudice any rights or amenities of the Corporation
that the Corporation may have under this Plan or otherwise.
14. ADJUSTMENTS. If the Corporation shall at any time (a) be
involved in a transaction to which Section 424(a) of the Code is applicable,
(b) declare a dividend payable in stock, (c) subdivide or combine its stock
or (d) be involved in any other event that, in the judgment of the Committee,
necessitates action by way of adjusting the terms of the outstanding Options,
the Committee shall take any action as, in its judgment, may be necessary to
preserve the outstanding Option holders' rights so that these rights remain
substantially proportionate to the rights as they existed before such event.
To the extent that such action shall include an increase or decrease in the
number of shares of Stock subject to outstanding Options under this Plan, the
aggregate number of shares of Stock available under Paragraph 1 of this Plan
for issuance on exercise of outstanding Options and of additional Options
that may be granted shall be increased or decreased proportionately, as the
case may be. No action shall be taken by the Committee under the provisions
of this Paragraph that, in its judgment, would constitute a modification,
extension or renewal of the Option within the meaning of Section 424(h) of
the Code or that would prevent the Option from qualifying as an incentive
stock
<PAGE>
option within the meaning of the Code. The determination of the Committee
with respect to any matter in this Paragraph shall be conclusive and binding
on each holder of an Option granted under this Plan.
15. TERMINATION AND AMENDMENT OF THIS PLAN. Unless sooner
terminated, this Plan shall terminate nine (9) years and eleven (11) months
after the date hereof, and no Option shall be granted hereunder after that
date. At any time, the Committee, without further approval of the
shareholders may terminate or amend this Plan without notice or make such
modifications of this Plan as it shall deem advisable; provided, however,
that the Committee may not, without prior approval of the holders of a
majority of the outstanding shares of the Stock of the Corporation (a)
increase the maximum number of shares of Stock as to which Options may be
granted under this Plan (except as contemplated by the provisions of
Paragraph 14, (b) extend the term during which the Options may be granted
under this Plan, (c) permit the exercise of an Option after the date on which
such Option would otherwise terminate pursuant to the terms hereof or (d)
reduce the exercise price per share less than the Purchase Price set forth in
paragraph 5. No termination, amendment or modification of this Plan may,
without the consent of any person to whom any Option theretofore has been
granted, adversely affect the rights of such person under such Option or any
exercisable portion thereof. Notwithstanding the foregoing, this Plan, any
Option granted hereunder and the number of shares as to which any Option
under this Plan shall have been granted may be modified, retroactively at any
time, to conform to the provisions of the Code and the regulations
promulgated thereunder so that the Options under this Plan may qualify as
incentive stock options within the meaning of the Code. No such amendment
shall be considered prejudicial to the rights of any holder of any Option.
16. NO EMPLOYMENT RIGHTS. This Plan does not, directly or
indirectly, create any right for the benefit of any Employee or class of
Employees to purchase any Stock under the Plan or create in any Employee or
class of Employees any right with respect to continuation of employment by
the Corporation. This Plan shall not be deemed to interfere in any way with
the Corporation's right to terminate or otherwise modify an Employee's
employment at any time.
17. ADMINISTRATION. No person shall serve as a member of the
Committee, or if a member of the Committee, shall not participate in
decisions concerning the timing, pricing or amount of grant of Options
hereunder, unless such person is a non-employee director as defined in Rule
16b-3 promulgated pursuant to Section 16(b) of the Securities Exchange Act of
1934, as amended, or any successor rule ("Rule 16b-3"). This Plan is
intended to meet the requirements of Rule 16b-3 and shall be interpreted and
administered so as to comply with such rule.
18. EFFECTIVE ON ADOPTION BY SHAREHOLDERS. This Plan shall become
effective on the adoption by the Board of Directors
<PAGE>
and by approval of the shareholders of the Corporation after the date of
adoption of this Plan by the Board of Directors.
The Corporation has signed this Plan on the date indicated below to
be effective as of that date.
METRO INFORMATION SERVICES, INC.
Date: By:
-------------- --------------------------------
John H. Fain, President
<PAGE>
FORM OF 1997 INCENTIVE STOCK OPTION
EXHIBIT 1
_____________, 1997
Dear _________________:
Metro Information Services, Inc. (the "Corporation") has designated
you to be a recipient of an option (the "Option") to purchase Common Stock of
the Corporation (the "Stock") on the terms set forth in this letter and in
the Metro Information Services, Inc. 1997 Incentive Stock Option Plan (the
"Plan"). The Option is awarded pursuant to the Plan, which became effective
on [____________ ___, 1997]. The Plan is administered by the Committee (as
defined in the Plan).
Please refer to the Plan for certain conditions not set forth in
this letter. All provisions of the Option and this letter are subject to the
terms of the Plan, and the terms of the Plan are incorporated into this
letter by this reference. Capitalized terms which are not defined in this
letter shall have the meaning given those terms in the Plan.
1. OPTION. In consideration of your agreements contained in this
letter and subject to the vesting requirements set forth below, the
Corporation grants you an Option to purchase from the Corporation ___ shares
of Stock at $_____ per share. Each Option is an incentive stock option as
defined in the Plan. The award of each Option is subject to the terms and
conditions set forth below.
2. TERMS OF OPTION.
A. VESTING. If you die, retire after your [sixty-fifth (65th)]
birthday or become disabled (as provided in the Plan), the Option will become
100% vested. Otherwise, the Option granted in Paragraph 1 will become vested
as follows:
[December 31, 1997 20% of the shares of Stock
December 31, 1998 40% of the shares of Stock
December 31, 1999 60% of the shares of Stock
December 31, 2000 80% of the shares of Stock
December 31, 2001 100% of the shares of Stock]
B. EXERCISE DATE. Subject to the provisions set forth in this
letter and in the Plan, you may not exercise the vested portion of any
Option, in whole or in part, at any time after nine (9) years and eleven (11)
months from the date on which the Option was granted; provided, however, that
if you should own more than ten percent (10%) of the total combined voting
power of all classes
<PAGE>
of stock of the Corporation, you may not exercise the vested portion of the
Option, in whole or in part, at any time after four (4) years and eleven (11)
months from the date on which the Option was granted.
C. PAYMENT TERMS. On the exercise of any Option, you shall
deliver payment in full for such shares to be purchased as follows: [Cash]
[Promissory Note] [Common Stock of Metro].
D. EMPLOYMENT. Except as provided below, you must continue to be
an employee of the Corporation at all times through the appropriate vesting
date for the Option to become vested.
(1) DEATH. If you die while employed by the Corporation, the
Option may be exercised by your executor, administrator or personal
representative at any time within twelve (12) months after your death, but in
no event after the expiration of the Option.
(2) DISABILITY. If your employment with the Corporation is
terminated because of your disability, you may exercise the Option as to any
shares subject to the Option at any time within twelve (12) months after the
date of such termination, but in no event after the expiration of the Option.
(3) RETIREMENT. If your employment with the Corporation is
terminated because of your retirement after your sixty-fifth (65th)
birthday, you may exercise the Option at any time within three (3) months
after the date of your retirement, but in no event after the expiration of
the Option.
E. OTHER TERMINATION. If your employment with the Corporation is
terminated for any reason other than death, disability or retirement as
provided above, you may exercise the Option as to any shares which are vested
and subject to the Option at any time within three (3) months after the date
of your termination of employment with the Corporation, but in no event after
the expiration of the Option. On such a termination of employment, Options
with respect to any shares which are not vested shall be cancelled and
without effect.
F. NONTRANSFERABILITY. Other than by your will or by the laws of
descent and distribution, you may not transfer, assign, pledge, hypothecate
or dispose of in any way (whether by operation of law or otherwise) (a
"Transfer") any Option granted to you to any other individual. Any purported
Transfer or any attempt to levy on, or execute on or place other process on
the Option will be null and void and without effect and shall give the
Committee the right, but not the obligation, to cancel this Option as
provided in the Plan.
<PAGE>
3. OTHER TERMS.
A. CHANGE IN CAPITALIZATION. As provided in the Plan, appropriate
adjustments shall be made in the number and kind of shares for which the
Option may be exercised should there be a change in the capital structure of
the Corporation. The Board may take appropriate actions in good faith with
respect to the Option in the event of a significant corporate or other
capital transaction.
B. TAXES. By signing this letter, you agree to make arrangements
satisfactory to the Corporation to comply with any income and payroll tax
withholding requirements that may apply on the exercise of the Option.
C. INVESTMENT. By signing this letter, you agree to hold all of
the Stock acquired pursuant to the exercise of the Option for investment
purposes and not with a view for resale or distribution to the public, unless
and until such time as the Stock so acquired shall have been registered under
applicable state and federal securities laws or an exemption from such
registration is available. By signing this letter, you agree to execute such
documents as the Corporation may require with respect to state and federal
securities laws, and you agree to any restrictions on the resale of Stock
that may pertain.
D. NOTICE. Written notice is deemed to have been given to the
Corporation if delivered personally or mailed first class, postage prepaid,
to the President of the Corporation at the principal business address of the
Corporation or at such other address or to the attention of such other person
as the Corporation shall have specified by prior written notice to you.
E. AGREEMENT. In consideration of the grant of the Option, you
hereby agree that you will comply with such other reasonable conditions as
the Corporation may impose consistent with the Plan on the exercise of the
Option; provided, however, that the provisions of this sentence shall not be
interpreted as affecting any right that the Corporation may have to terminate
your employment at any time.
F. NO RIGHT OF EMPLOYMENT. You agree and acknowledge that this
Option does not, directly or indirectly, create any right to continued
employment with the Corporation. You agree that this letter will be governed
by the laws of the Commonwealth of Virginia.
<PAGE>
If you agree to the foregoing terms and conditions, please execute
the attached copy of this letter and return it to the President of the
Corporation.
Sincerely,
METRO INFORMATION SERVICES, INC.
By:
------------------------------
Its
-----------------------------
I accept the foregoing Option according to the terms set forth in
this letter and in the Metro Information Services, Inc. 1997 Incentive Stock
Option Plan.
---------------------------------
OPTION HOLDER
<PAGE>
EXHIBIT A
METRO INFORMATION SERVICES, INC.
1997 INCENTIVE STOCK OPTION PLAN
NOTICE OF EXERCISE OF OPTION
Pursuant to the terms of the Option Agreement, dated
________________, 1997, between METRO INFORMATION SERVICES, INC. and the
undersigned Optionee, the Optionee hereby exercises the Option to purchase
_______ shares of Corporation Stock. The Optionee hereby delivers the full
Option price with respect to the exercised Option, which is comprised of
_____________.
Executed this ____ day of _________, _____.
OPTION HOLDER
------------------------------
Signature
------------------------------
Print or Type Name
Metro Information Services, Inc. acknowledges receipt of the
foregoing notice of exercise and payment of the Option Price this ___ day of
___________, _____.
METRO INFORMATION SERVICES, INC.
By
----------------------------
Its
--------------------------
<PAGE>
METRO INFORMATION SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE.
The Metro Information Services, Inc. Employee Stock Purchase Plan (the
"Plan") is intended to provide certain employees ("Participants") of Metro
Information Services, Inc. (the "Company") with an opportunity to acquire a
proprietary interest in the Company through their participation in a plan
designed to qualify as an employee stock purchase plan under Section 423 of
the Internal Revenue Code of 1986 (the "Code").
2. ADMINISTRATION.
(a) COMMITTEE. This Plan shall be administered by a committee (the
"Committee") composed of at least two (2) members of the Board of Directors
of the Company (the "Board"). No person shall serve as a member of the
Committee, or if a member of the Committee, shall not participate in
decisions concerning the timing, pricing or amount of Stock to be made
available for purchase hereunder, unless such person is a disinterested
person as described in Rule 16b-3 promulgated pursuant to Section 16(b) of
the Securities Exchange Act of 1934, as amended, or any successor rule ("Rule
16b-3"). This Plan is intended to meet the requirements of Rule 16b-3 and
shall be interpreted and administered so as to comply with such rule. The
Committee shall have full authority to administer this Plan and to adopt such
rules and regulations for administering this Plan as it may deem necessary to
comply with the requirements of Section 423 of the Code. The Committee may
delegate to an agent or agents any of its responsibilities under this Plan
except its responsibilities to: (1) establish the number of shares available
for purchase by employees during any purchase period; (2) establish the
maximum and minimum percentage of base compensation to be paid by any single
employee for the purchase of stock during any purchase period and its
authority and (3) construe and interpret the provisions of this Plan.
(b) ACTIONS OF THE COMMITTEE. All actions taken and all
interpretations and determinations made by the Committee in good faith
(including determinations of fair market value) shall be final and binding on
all Participants, the Company and all other interested persons. No member of
the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to this Plan and all members
of the Committee shall, in addition to their rights as directors, be fully
protected by the Company with respect to any such action, determination or
interpretation.
3. PURCHASE PERIODS.
The first purchase period under this Plan shall commence on
<PAGE>
the effective date of the Company's registration statement filed with the
Securities and Exchange Commission and shall terminate on March 31, 1997.
Unless otherwise determined by the Committee, a purchase period shall
commence on the first day of each succeeding calendar quarter and shall
terminate on the last day of each such quarter. The Committee may, from time
to time, establish purchase periods with differing commencement dates and
durations. No two purchase periods shall run concurrently.
4. ELIGIBILITY AND PARTICIPATION.
(a) Subject to Section 6(c)(iii), every employee of the Company who, on
the commencement date of the purchase period, has been employed by the
company for at least one (1) year and is employed on a basis that customarily
requires not less than twenty (20) hours of service per calendar week or less
than five (5) months of service per calendar year is eligible to participate
in this Plan during a purchase period.
(b) An employee may become a Participant in this Plan for a particular
purchase period only by completing the enrollment forms prescribed by the
Committee (including a purchase agreement and a payroll deduction
authorization) and filing such forms before the commencement of the purchase
period with the person designated by the Committee. No enrollment forms will
be accepted from an individual who is not on the active payroll of the
Company on the filing date, unless such individual is temporarily off the
payroll by reason of illness, vacation, jury duty or other employer-sponsored
absence.
5. STOCK SUBJECT TO PLAN.
(a) COMMON STOCK. The stock that is purchasable by Participants
shall be the Company's authorized but unissued Common Stock, par value $.01
per share (the "Common Stock"). To have sufficient shares available for sale
under this Plan, the Company may repurchase shares of Common Stock on the
open market, issue authorized but unissued stock or otherwise. The maximum
number of shares that may be sold to employees during any single purchase
period shall be established by the Committee before the beginning of the
purchase period; provided, however, that the total number of shares that may
be sold to Participants throughout the entire duration of this Plan shall not
exceed ___________ shares (subject to adjustment under subparagraph (b) below).
(b) CHANGES IN CAPITAL STRUCTURE. If any change is made to the
Common Stock purchasable under this Plan (whether by reason of merger,
consolidation, reorganization, recapitalization, stock dividend in excess of
twenty percent (20%) at any single time, stock splits, combination of shares,
exchange of shares, changes in corporate structure or otherwise), then
appropriate
2
<PAGE>
adjustments shall be made to the maximum number of shares purchasable under
this Plan and the number of shares and price per share of stock subject to
rights to purchase stock outstanding under this Plan.
6. PURCHASE OF COMMON STOCK.
(a) RIGHT TO PURCHASE. An employee who becomes a Participant for a
particular purchase period shall have the right, as of the beginning of the
purchase period, to purchase Common Stock on the terms and conditions set
forth in this Plan and shall execute a purchase agreement embodying such
terms and conditions and such other provisions, not inconsistent with this
Plan, as the Committee may deem advisable.
(b) PURCHASE PRICE PER SHARE. Except as provided in Section 6(j), the
purchase price per share shall be eighty-five percent (85%) of the fair
market value of a share of Common Stock on the commencement date of the
purchase period. The fair market value of a share of Common Stock on any date
shall be the closing sales price, as quoted by the National Association of
Securities Dealers through the NASDAQ National Market System for the date in
question, or, if the Common Stock is listed on a national stock exchange, the
officially-quoted closing sales price on such exchange on the date in
question. If the Common Stock is not traded publicly, the fair market value
of a share of Common Stock on any date shall be determined, in good faith, by
the Board or the Committee after consultation with outside legal, accounting
or other experts as the Board or the Committee may deem advisable. If the
Common Stock is not traded publicly, the Board or the Committee shall
maintain a written record of its method of determining such value.
(c) TOTAL PURCHASE PRICE. Each Participant shall, for any purchase
period, have the right to purchase Common Stock with a total purchase price
equal to a designated percentage of his Compensation. A Participant's
"Compensation" for a particular purchase period shall be the amount of the
Participant's (i) base salary or wages or (ii) base salary or wages, plus
overtime, bonuses and other compensation, that is payable to the Participant
at any time or from time to time during the purchase period. Each Participant
shall designate in his purchase agreement the whole percentage of the
Participant's Compensation the Participant wishes to use to pay for the
purchase of Common Stock for the particular purchase period, subject to the
provisions set forth below which shall be uniformly applied to all
Participants in a particular purchase period:
(i) The maximum percentage of a Participant's Compensation that may
be used to pay for the Common Stock in a particular purchase period shall be
five percent (5%); provided, however, that the Committee shall establish
before the beginning
3
<PAGE>
of the purchase period a maximum number of shares (subject to adjustment
under Section 6(b)) that may be purchased during the purchase period by each
Participant.
(ii) The minimum percentage of a Participant's Compensation that may be
used to pay for the purchase of Common Stock in a particular period shall be
one percent (1%).
(iii) No right to purchase shares under this Plan shall be granted to an
employee if such employee would, immediately after the grant, own stock
possessing five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company. An employee's stock ownership
shall be determined under Section 424(d) of the Code and stock that an
employee may purchase under any outstanding options shall be treated as stock
owned by the employee.
Notwithstanding the provisions of paragraphs (i) and (ii) above, the
Committee may, in its discretion, establish any other maximum and minimum
percentages of Compensation to be used to pay for Common Stock under this
Plan.
(d) ALLOCATION OF AVAILABLE SHARES. If the total number of shares of
Common Stock that may be purchased under the purchase agreements of all
Participants for a particular purchase period exceeds the number of shares
available for sale under this Plan, then the Committee shall make a pro rata
allocation of the available shares and shall notify each Participant of such
allocation.
(e) PAYMENT. Payment of the purchase price for Common Stock under this
Plan shall be effected by means of payroll deductions, which shall begin with
the first pay period, the payment date for which occurs coincident with or
immediately following the commencement date of the relevant purchase period
and shall terminate with the last pay period, the payment date for which
occurs on or before the last day of the purchase period. Each payroll
deduction shall be an amount equal to the percentage of the Compensation
included in that payroll payment that was designated by the Participant in
his purchase agreement (subject to reduction as provided in Section 6(g)).
(f) TERMINATION OF RIGHT TO PURCHASE. A Participant may, at any time
before the last day of the purchase period, terminate his right to purchase
stock under this Plan by filing the prescribed notification form with the
Committee or its delegate. Any amounts deducted from the Participant's pay or
otherwise collected from him by reason of his participation in this Plan for
such purchase period shall be refunded and no further amounts will be
collected from the Participant (by payroll deduction or otherwise) during the
remainder of the purchase period. A Participant's termination of his right to
purchase shall be
4
<PAGE>
irrevocable with respect to the purchase period to which it pertains.
(g) REDUCTION OF COMPENSATION PERCENTAGE. A Participant may, once and
only once during a purchase period, other than after his termination of
employment with the Company, reduce the percentage of his Compensation to be
paid for shares of Common Stock under the purchase agreement to a lesser
whole percentage by giving written notice to the Committee.
(h) TERMINATION OF EMPLOYMENT. If a Participant ceases to be an
employee of the Company for any reason (including, without limitation, death
or retirement) during a purchase period, the Participant or his personal
representative may either:
(i) receive a stock certificate for the number of shares (in five
(5) share lots) of Common Stock paid for pursuant to payroll deductions made
on behalf of the Participant during the purchase period up to the day before
the date of the Participant's cessation of employment and receive any balance
remaining in the Participant's account after such purchase; or
(ii) receive a cash refund of all sums previously collected from
the Participant during the purchase period.
Any election provided by this Section 6(h) shall be exercisable only during
the 90-day period following the date of the Participant's cessation of
employment (but in no event later than the last date of the purchase period)
and the underlying right to purchase stock under this Plan shall terminate on
the exercise of such election. If a Participant or his personal
representative fails to make a timely election under this Section 6(h), the
Company shall treat such failure as an election to exercise alternative (ii)
above.
(i) EXERCISE. Each right to purchase stock under this Plan, other than
a right to purchase Common Stock that has been accelerated under this Plan or
that has previously terminated under this Plan, shall be exercised
automatically on the last day of the purchase period. Promptly after the
date of exercise, the Participant or the Participant's nominee, shall be
issued a stock certificate for the whole number of shares that is divisible
by five (5) shares for which the Participant's right to purchase has been
exercised. Not more than one certificate shall be issued pursuant to the
exercise of any right to purchase Common Stock under this Plan. Any excess of
amounts collected during the purchase period, plus any beginning balance over
the purchase price of the issued shares, shall be, at the sole option of the
Company, promptly refunded or left on deposit for the ensuing quarterly
period, and, in any case, refunded after termination.
(j) REDUCTION OF PURCHASE PRICE. If the fair market value
5
<PAGE>
of a share of Common Stock on the last day of the purchase period is less
than the fair market value of such share on the commencement date of the
purchase period, then the purchase price per share under this Plan on the
last day of the purchase period shall be reduced to eighty-five percent (85%)
of the fair market value of such share on the last day of the purchase
period. Each right to purchase stock in five (5) share multiples under this
Plan not previously exercised or terminated shall be automatically exercised
on the last day of the purchase period for the number of whole shares (in
five (5) share lots) obtained by dividing the sum on deposit from the
Participant (and not refunded) by the purchase price per share determined
under this Section 6(j), but in no event shall any right to purchase stock
under this Plan be exercised for more than the specified number of shares, if
any, (subject to adjustment under Section 5(b)) established by the Committee
pursuant to Section 6(c) (i) before the beginning of the purchase period, and
the balance shall be, at the sole option of the Company, promptly refunded or
left on deposit for the ensuing quarterly period. For example, if a
Participant has $100.00 on account and the Company's stock price pursuant to
this paragraph is determined to be $9.00, then ten (10) shares will be issued
(10 x $9.00; with ten (10) being divisible by 5) and $10.00 will be left on
deposit or refunded as herein stated.
(k) RIGHTS AS STOCKHOLDER. A Participant shall have no rights as a
stockholder with respect to shares subject to a right to purchase Common
Stock granted under this Plan until such right to purchase is exercised and a
share certificate is delivered to the Participant. No adjustments shall be
made for dividends, distributions or other rights for which the record date
is before the date of exercise.
(l) ASSIGNABILITY. No right to purchase Common Stock granted under
this Plan shall be assignable or transferable by a Participant other than by
will or by the laws of descent and distribution, and, during the lifetime of
the Participant, such rights to purchase Common Stock shall be exercisable
only by the Participant.
(m) ACCRUAL LIMITATIONS. No Participant shall be entitled to accrue
rights to purchase Common Stock under this Plan that, when aggregated with
purchase rights accruable by him under other qualified employee stock
purchase plans (within the meaning of Section 423 of the Code) of the
Company, would permit such Participant to purchase more than $25,000 worth of
Common Stock (determined on the basis of the fair market value of such Common
Stock on the date the Participant accrues purchase rights under the Plan) for
each calendar year such purchase rights are at any time outstanding.
(n) MERGER OR LIQUIDATION OF THE COMPANY. If the Company
6
<PAGE>
or its shareholders enter into an agreement to dispose of all or
substantially all of the assets of the Company or to dispose of greater than
fifty percent (50%) of the outstanding capital stock of the Company by means
of sale, merger, reorganization or liquidation, each Participant shall be
entitled to receive, as nearly as reasonably may be determined, the cash,
securities or property (or any combination thereof) that a holder of one share
of the Common Stock was entitled to receive at the time of such transaction.
The Board or the Committee shall take such steps in connection with such
transactions as the Board or the Committee shall deem necessary to assure
that the provisions of this Section shall thereafter be applicable, as nearly
as reasonably may be determined, to the said cash, securities or property (or
any combination thereof) as to which such Participant might thereafter be
entitled to receive.
(o) NO INTEREST. No interest shall be paid on any monies refunded to
Participants pursuant to the provisions of this Plan.
(p) WITHHOLDING. The Company may withhold any taxes required by any
law or regulation of any governmental authority, whether federal, state or
local, in connection with the purchase of Common Stock under this Plan or the
sale of such stock that is not held for at least two (2) years after the
beginning of the purchase period during which the Common Stock was purchased.
Such withholding may include all or any portion of any payment or other
compensation payable to the Participant, unless the Participant reimburses
the Company for such amount.
7. AMENDMENT.
The Board may from time to time alter, amend, suspend or discontinue
this Plan; provided, however, that no such action shall adversely affect
rights and obligations with respect to rights to purchase stock at the time
outstanding under this Plan and provided, further, that no such action of the
Board may, without the approval of the shareholders of the Company, increase
the number of shares subject to this Plan or the maximum number of shares for
which a right to purchase Common Stock under this Plan may be exercised
(unless necessary to effect the adjustments required by Section 5(b)), extend
the term of this Plan, alter the per share purchase price formula so as to
reduce the purchase price per share specified in this Plan, otherwise
materially increase the benefits accruing to Participants under the Plan or
materially modify the requirements for eligibility to participate in this
Plan. Furthermore, the Plan may not, without the approval of the shareholders
of the Company, be amended in any manner that will cause this Plan to fail to
meet the requirements of an "employee stock purchase plan" under Section 423
of the Code.
7
<PAGE>
8. Effective Date
This Plan has been approved by the Board and shall become effective on
the effective date of the Company's registration statement filed with the
Securities and Exchange Commission, provided the shareholders of the Company
have approved this Plan. If the shareholders have not approved this Plan,
this Plan will not become effective.
METRO INFORMATION SERVICES, INC.
Date: ____________________________ By:________________________________
John H. Fain, President
8
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.3 REGISTRANT'S DIRECTORS STOCK OPTION PLAN
FORM OF
1997 OUTSIDE DIRECTOR STOCK OPTION PLAN
Metro Information Services, Inc., a Virginia corporation (the
"Corporation"), adopts this nonstatutory stock option plan (the "Plan") to
attract and retain persons who are not employees of the Corporation to serve on
the Corporation's Board of Directors (the "Board") by granting to them options
to purchase the Corporation's common stock ("Options").
This Plan is as follows:
1. OPTIONS STOCK. Subject to the provisions of Paragraph 13, the
aggregate number of shares that may be issued pursuant to Options granted
under this Plan is 50,000 shares of the Common Stock of the Corporation (the
"Stock"). Options granted pursuant to this Plan shall be evidenced by an
agreement in writing setting forth the material terms and conditions of the
grant, including, but not limited to, the number of Shares subject to
Options. The Board also shall set forth each Option and its terms and
conditions on a written stock option certificate ("Option Certificate") that
shall be duly authorized by the Board.
2. PERSONS ELIGIBLE TO RECEIVE OPTION. Only a director of the
Corporation who is not an officer or employee of the Corporation ("Independent
Director") is eligible to receive Options under this Plan. An Independent
Director may receive more than one Option under this Plan.
3. DURATION OF THIS PLAN. All Options authorized under this Plan
must be granted within 10 years from the date this Plan is adopted by the Board
or by the shareholders of the Corporation, whichever is earlier.
4. AUTOMATIC GRANT OF OPTION. Options shall be automatically
granted to Independent Directors as set forth below provided that this Plan
remains in effect and a sufficient number of Shares remains available for the
grant of such Options.
a. On the date that this Plan becomes effective pursuant to
Paragraph 17, each Independent Director shall automatically be granted an Option
to purchase 3,000 shares of Stock. Thereafter, on the date on which an
Independent Director (other than an Independent Director who is serving as such
on the Effective Date) is first elected or appointed as an Independent
<PAGE>
Director during the existence of this Plan, such Independent Director shall
automatically be granted an Option to purchase 3,000 shares of Stock.
b. On the day following the annual meeting of shareholders in
each year during the time this Plan is in effect, each Independent Director
shall be granted an Option to purchase 1,000 shares of Stock; provided, however,
that a person who is first elected as an Independent Director on the date of the
annual meeting of shareholders and who receives on that date an option pursuant
to Paragraph 4(a) hereof shall not be eligible to begin to receive grants
pursuant to this Paragraph 4(b) until the day following the next succeeding
annual meeting of shareholders.
5. PURCHASE PRICE. Each Option Certificate shall set forth the
exercise price per share of the Stock ("Purchase Price"). The Purchase Price
will not be less than 100% of the fair market value of the Stock on the date
that the Option is granted.
6. TIME TO EXERCISE OPTION. Each Option Certificate shall set forth
that the Option is exercisable during a period no later than 10 years after the
date on which the Option is granted.
7. PAYMENT OF PURCHASE PRICE. At the time the Option is exercised
by the Independent Director, the Purchase Price shall be paid in cash.
8. EXERCISE OF OPTIONS. Each Option shall be exercised, in whole or
in part, as to such number of shares of Stock and at such time or times as the
Board shall have determined at the time of grant. An Option under this Plan may
be exercised only by its holder by giving written notice to the Corporation at
its principal office specifying the number of shares purchased and by including
payment of the Purchase Price as set forth in the Option Certificate in the form
required by the Board. The holder of an Option shall not have any of the rights
of a shareholder of the Corporation with respect to the shares of the Stock
issuable on the exercise of the Option until one or more certificates evidencing
such shares ("Share Certificates") shall have been issued of record to the
holder of the Option.
9. RESTRICTIONS ON STOCK. All persons issued Share Certificates
shall sign an agreement with the Corporation indicating that they are not taking
the Stock with the view for sale or distribution of the Stock and that they
recognize that the Stock is not a registered security under the Securities Act
of 1933 or the Securities and Exchange Act of 1934 and is not registered with
any state agency of any State respecting the sale and transfer of securities.
10. TERMINATION OF INDEPENDENT DIRECTOR. Except as provided in
Paragraph 11, No Option granted under this Plan shall be exercisable 365 days
after the holder ceases to be an Independent Director of the Corporation and,
thereafter all
<PAGE>
outstanding Options and any accompanying rights, to the extent that the rights
have not been exercised, shall terminate immediately.
11. TRANSFERABILITY OF OPTIONS. Options shall not be assignable or
transferrable by the holder other than by will or by laws of the descent and
distribution, except that the holder of any option may, with the consent of the
board of directors, transfer without consideration, options to the holder's
spouse, children or grandchildren (or to one or more trusts for the benefit of
such family members or to one or more partnerships or limited liability
companies in which any such family members are the only partners or members,
respectively.
a. In the event that the term of the Independent Director
holding the Option terminates by reason of the Independent Director's
retirement, the Option may be exercised, as to any shares subject to the Option,
by the Independent Director at any time within three (3) months after the date
of such retirement, but in no event after the expiration of the term of the
Option.
12. NON-TRANSFERABILITY OF OPTIONS. Except as provided in Paragraph
11, only the Independent Director to whom the Option is granted may exercise the
Option during the Independent Director's lifetime. Further, by its terms, no
Option granted may be transferred to any other individual except by the will of
the Independent Director or by the laws of descent and distribution. Options
may not be assigned, transferred, pledged, hypothecated or disposed of in any
way (whether by operation of law or otherwise), except to the extent expressly
provided for in this Plan and shall not be subject to execution, attachment or
similar process. Any assignment, transfer, pledge, hypothecation or other
disposition of any Option attempted contrary to the provisions of this Plan or
any levy of execution, attachment or other process attempted on an Option will
be null and void and without effect. Any attempt to make an assignment, pledge,
transfer, hypothecation or other disposition of an Option or any attempt to make
a levy of execution, attachment or other process will cause the Option to be
terminated immediately if the Corporation at any time should, in the sole
discretion of the Board, so elect by written notice to the person entitled to
exercise the Option; provided, however, that any such termination of the Option
will not prejudice any rights or amenities of the Corporation that the
Corporation may have under this Plan or otherwise.
13. ADJUSTMENTS. If the number of outstanding Shares is increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Corporation by reason of any recapitalization,
reclassification, stock split, combination of shares, exchange of shares, stock
dividend or other distribution payable in capital stock or if the Corporation is
involved in any other event that, in the judgment of the Board, necessitates
action by way of adjusting the terms of the outstanding Options, the Board shall
take any action as, in its judgment, may be necessary to preserve the
outstanding Option
<PAGE>
holders' rights so that these rights remain substantially proportionate to the
rights as they existed before such event. To the extent that such action shall
include an increase or decrease in the number of shares of Stock subject to
outstanding Options under this Plan, the aggregate number of shares of Stock
available under Paragraph 1 of this Plan for issuance on exercise of outstanding
Options and of additional Options that may be granted shall be increased or
decreased proportionately, as the case may be. The determination of the Board
with respect to any matter in this Paragraph shall be conclusive and binding on
each holder of an Option granted under this Plan.
14. ADMINISTRATION. This Plan is adminstered by the Board. This
Plan requires no discretionary action by any administrative body with regard to
any transaction under this Plan. To the extent, if any, that any questions of
interpretation arise, these questions shall be resolved by the Board.
15. TERMINATION AND AMENDMENT OF THIS PLAN. Unless sooner
terminated, this Plan shall terminate 10 years after the date hereof, and no
Option shall be granted hereunder after that date. At any time, the Board,
without further approval of the shareholders may terminate or amend this Plan
without notice or make such modifications of this Plan as it shall deem
advisable; provided, however, that the Board may not, without prior approval of
the holders of a majority of the outstanding shares of the voting Stock of the
Corporation (a) increase the maximum number of shares of Stock as to which
Options may be granted under this Plan (except as contemplated by the provisions
of Paragraph 13, (b) extend the term during which the Options may be granted
under this Plan, (c) permit the exercise of an Option after the date on which
such Option would otherwise terminate pursuant to the terms hereof or (d) reduce
the exercise price per share to an amount less than the Purchase Price set forth
in Paragraph 5. No termination, amendment or modification of this Plan may,
without the consent of any person to whom any Option theretofore has been
granted, adversely affect the rights of such person under such Option or any
exercisable portion thereof.
16. NO CONTINUATION AS A DIRECTOR AND DISCLAIMER OF RIGHTS. No
provision in this Plan or in any Option granted shall be construed to confer
upon any individual the right to remain a director of the Corporation. This
Plan shall in no way be interpreted to require the Corporation to transfer any
amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any Optionee or beneficiary under the terms of this Plan.
17. EFFECTIVE DATE. This Plan shall become effective on the date
adopted by the Board ("Effective Date") and Options hereunder may be granted at
any time on or after that date, subject to approval of this Plan by the
Corporation's shareholders within one year after the Effective Date by a
majority of the votes cast at a duly held meeting of the shareholders of the
Corporation at
<PAGE>
which a quorum representing a majority of all outstanding stock is present,
either in person or by proxy, and in a manner that satisfies the requirements of
Rule 16b-3. Upon approval of this Plan by the shareholders of the Corporation
as set forth above, all Options granted under this Plan on or after the
Effective Date shall be fully effective as if the shareholders of the
Corporation had approved the Plan on the Effective Date.
METRO INFORMATION SERVICES, INC.
Date: By:________________________________
--------------- John H. Fain, President
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.4 INTERCREDITOR AGREEMENT DATED AS OF MAY 2, 1996 BY AND BETWEEN
NATIONSBANK, N.A. CRESTAR BANK, SIGNET BANK AND REGISTRANT.
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT ("Agreement") is made as of May 2, 1996, by
and between NATIONSBANK, N.A. ("NationsBank"), CRESTAR BANK ("Crestar") and
SIGNET BANK ("Signet").
RECITALS:
A. Signet has extended, or intends to extend, certain loans and/or credit
facilities to Metro Information Services, Inc., a Virginia corporation
("Company"), in an amount not to exceed $2,000,000 (collectively referred to as
the "Signet Loan"). Any documents which now or subsequently evidence, secure or
otherwise document the Signet Loan shall be referred to as the "Signet Loan
Documents." The term "Signet Loan" shall also include all loans, credit
accommodations, letters of credit, reimbursement agreements, acceptances,
guaranty obligations, indebtedness, liabilities, overdrafts in any checking or
other account of the Company with Signet, rights to payment, indemnities, and
other obligations of any kind now or hereafter owed by the Company to Signet,
including, without limitation, all principal amounts, interest charges, late
charges, fees, and other charges and sums, all costs and expenses, including
attorneys' fees and expenses payable or reimbursable by the Company under the
Signet Loan Documents, and otherwise (including interest, late charges, fees and
other charges and sums accruing on such debt after the Company becomes subject
to a bankruptcy proceeding, whether or not any of the same are enforceable
against the Company or recoverable against the bankruptcy estate), as well as
all claims, demands, actions, causes of action and judgments arising from or
relating to any of the foregoing, whether absolute or contingent, matured or
unmatured, accrued or not accrued, liquidated, or unliquidated, direct or
indirect, joint or several, contemplated or uncontemplated, secured or
unsecured, including, without limitation, all indebtedness, obligations and
liabilities evidenced by or incurred in connection with the Signet Loan
Documents, and all replacements, modifications, extensions, renewals or
refinancings of any or all of the foregoing.
B. Crestar has extended or intends to extend certain loans or credit
facilities to the Company in an amount not to exceed $2,000,000 (collectively
referred to as the "Crestar Loan"). Any documents which now or subsequently
evidence, secure or otherwise document the Crestar Loan shall be referred to as
the "Crestar Loan Documents." The term "Crestar Loan" shall also include all
loans, credit
<PAGE>
accommodations, letters of credit, reimbursement agreements, acceptances,
guaranty obligations, indebtedness, liabilities, overdrafts in any checking or
other account of the Company with Crestar, rights to payment, indemnities, and
other obligations of any kind now or hereafter owed by the Company to Crestar,
including, without limitation, all principal amounts, interest charges, late
charges, fees, and other charges and sums, all costs and expenses, including
attorneys' fees and expenses payable or reimbursable by the Company under the
Crestar Loan Documents, and otherwise (including interest, late charges, fees
and other charges and sums accruing on such debt after the Company becomes
subject to a bankruptcy proceeding, whether or not any of the same are
enforceable against the Company or recoverable against the bankruptcy estate),
as well as all claims, demands, actions, causes of action and judgments arising
from or relating to any of the foregoing, whether absolute or contingent,
matured or unmatured, accrued or not accrued, liquidated, or unliquidated,
direct or indirect, joint or several, contemplated or uncontemplated, secured or
unsecured, including, without limitation, all indebtedness, obligations and
liabilities evidenced by or incurred in connection with the Crestar Documents,
and all replacements, modifications, extensions, renewals or refinancings of any
or all of the foregoing.
C. NationsBank has extended or intends to extend certain loans or credit
facilities to the Company in an amount not to exceed $8,000,000 (collectively
referred to as the "NationsBank Loan"). Any documents which now or subsequently
evidence, secure or otherwise document the NationsBank Loan shall be referred to
as the "NationsBank Loan Documents." The term "NationsBank Loan" shall also
include all loans, credit accommodations, letters of credit, reimbursement
agreements, acceptances, guaranty obligations, indebtedness, liabilities,
overdrafts in any checking or other account of the Company with NationsBank,
rights to payment, indemnities, and other obligations of any kind now or
hereafter owed by the Company to NationsBank, including, without limitation, all
principal amounts, interest charges, late charges, fees, and other charges and
sums, all costs and expenses, including attorneys' fees and expenses payable or
reimbursable by the Company under the NationsBank Loan Documents, and otherwise
(including interest, late charges, fees and other charges and sums accruing on
such debt after the Company becomes subject to a bankruptcy proceeding, whether
or not any of the same are enforceable against the Company or recoverable
against the bankruptcy estate), as well as all claims, demands, actions, causes
of action and judgments arising from or relating to any of the foregoing,
whether absolute or contingent, matured or unmatured, accrued or not accrued,
liquidated, or unliquidated, direct or indirect, joint or several, contemplated
or uncontemplated, secured or unsecured, including, without limitation, all
indebtedness, obligations and liabilities evidenced by or incurred in connection
with the NationsBank Loan Documents, and all replacements, modifications,
extensions, renewals or refinancings of any or all of the foregoing. The Signet
Loan, Crestar Loan and the NationsBank Loans are individually referred to as a
"Loan" and collectively as the "Loans" and the NationsBank Loan Documents, the
Crestar Loan Documents and the Signet Loan Documents collectively are referred
to as the Loan Documents.
D. Signet, Crestar and NationsBank desire to agree among themselves to
certain terms and conditions regarding the Loans as set forth below.
<PAGE>
NOW, THEREFORE, the parties hereto agree as follows:
1. JUNIOR LOANS. It is agreed by and between Signet and Crestar
(collectively referred to as the "Junior Lenders") that the indebtedness and
obligations of the Company evidenced by the Signet Loan and the Crestar Loan
(collectively referred to as the "Junior Loans") shall at all times be and
remain in PARI PASSU without preference, priority or distinction by virtue of
any existence of any lien on the Company's property, real, personal or mixed
(the "Assets").
As used herein, "Specific Security Interest" means a perfected and
enforceable security interest of a Lender in any of the following Assets,
including the products and proceeds thereof and accessions thereto:
(a) Assets made available to the Company by such Lender (or its agent
of bailee) pursuant to a trust receipt or other security agreement the effect of
which is to continue the Lender's security interest therein; or
(b) Assets covered by a non-negotiable document issued in the name of
such Lender or as to which the Lender (or agent of bailee on its behalf)
controls possession through a negotiable document.
2. NATIONSBANK LOAN. The Junior Lenders agree that any liens, security
interests, mortgages or pledges of any of the assets of the Company in favor of
or for the benefit of the Junior Lenders, now existing or arising in the future,
are hereby expressly made subordinate and junior in priority to any liens,
security interests, mortgages or pledges of any of the assets of the Company,
now existing or arising in the future, securing the NationsBank Loan, regardless
of the record priority or dates of any public filings pertaining thereto or
whether any or all of the security interests and liens securing any of the
NationsBank Loan are unperfected or avoidable. This subordination provision
shall apply with respect to all of the collateral for the NationsBank Loan,
regardless of how or in what manner the NationsBank Loan is incurred, or whether
the NationsBank Loan has already been incurred or may be incurred in the future
by future advances or other financial accommodations made or extended by
NationsBank, or whether such future advances or other financial accommodations
are made at the discretion of NationsBank under the NationsBank Documents or
pursuant to commitment or otherwise.
3. SUBORDINATED INDEBTEDNESS OWED ONLY TO JUNIOR LENDERS. The Junior
Lenders warrant and represent to NationsBank that neither has previously
assigned any interest in the Junior Loans to any party, that no party owns an
interest in the Junior Loans other than the Junior Lenders (whether as joint
holder of the Junior Loans, participants or otherwise), that the entire Junior
Loans are owing to the Junior Lenders and the Junior Lenders covenant that the
Junior Loans shall continue to be owing only to the Junior Lenders unless
assigned in
3
<PAGE>
accordance with the terms of this Agreement as provided in paragraph 6 below.
Until all of the NationsBank Loan has been paid, the Junior Lenders shall not
take or permit any action prejudicial to or inconsistent with NationsBank's
priority position over the Junior Lenders that is created by this Agreement.
4. SUBROGATION. After the NationsBank Loan has been paid in full and
until the Junior Loans have been paid in full, the Junior Lenders shall be
subrogated to the rights of NationsBank to receive distributions with respect to
the NationsBank Loan, to the extent that distributions otherwise payable to the
Junior Lenders have been applied to the payment of the NationsBank Loan in
accordance with the provisions of this Agreement. As between the Company and
the Junior Lenders, a distribution applied to the payment of the NationsBank
Loan in accordance with the provisions of this Agreement which otherwise would
have been made to the Junior Lenders shall not be deemed a payment by the
Company on the Junior Loans, it being understood that the subordination
provisions of this Agreement are intended solely for the purpose of defining the
relative rights of the Junior Lenders, on the one hand, and NationsBank, on the
other hand, and nothing contained in this Agreement shall impair the obligations
of the Company, which are absolute and unconditional, to pay to the Junior
Lenders the Junior Loans as and when the same shall be due and payable in
accordance with its terms, except as such obligation is modified by the rights
confirmed under this Agreement in favor of NationsBank, or affect the relative
rights of the Junior Lenders and the creditors of the Company other than
NationsBank. NationsBank shall have no obligation or duty to protect the Junior
Lenders' rights of subrogation and shall have no liability to the Junior Lenders
for any loss or impairment of the Junior Lenders' subrogation rights.
5. NO ASSIGNMENT OF SUBORDINATED INDEBTEDNESS. The Junior Lenders agree
that, until the NationsBank Loan has been paid in full and satisfied and all
financing arrangements between the Company and NationsBank have been terminated
in writing, it will not assign, transfer or grant a participating interest in
all or any portion of the Junior Loans, without prior written notice to
NationsBank. Furthermore, prior to any such assignment, transfer or grant of a
participation being effective the assignee, transferee or participant shall
acknowledge in writing the subordinate nature of the Junior Loans and upon
request of NationsBank, shall join in or otherwise agree to be bound by this
Agreement.
6. TERM AND LENDING LIMITS. This Agreement shall constitute a continuing
agreement by and among each of Signet, Crestar and NationsBank (collectively
referred to as the "Lenders") and each of the Lenders may continue, without
notice to any of the other Lenders, to lend monies and extend credit (with
re-advances expressly permitted) limited in aggregate principal amount
outstanding at any time, excluding interest, penalties and amounts advanced to
protect security, up to the following limits at any one time outstanding
(collectively referred to as the "Lending Limits"):
4
<PAGE>
Signet -- $2,000,000
Crestar -- $2,000,000
NationsBank -- $8,000,000
Each of the Lenders shall have the right to modify, amend, renew, extend and
replace its own loan documents which evidence or secure its Loan (generically
referred to as the "Loan Documents") and make other accommodations to or for the
account of the Company in reliance upon the provisions of this Agreement, in all
of which events the Junior Loans shall continue to be subordinated to the
NationsBank Loan (as the same may be increased and/or modified) to the full
extent provided herein and as between the Junior Lenders each shall be and
remain in PARI PASSU. This Agreement shall be irrevocable by all of the Lenders
until all of the Loans shall have been paid and fully satisfied and all
financing arrangements between the Company and the Lenders have been terminated
in writing. This Agreement and the obligations of the Lenders under this
Agreement shall continue to be effective, or be reinstated, as the case may be,
if at any time any payment in respect of any of the Loans is rescinded or must
otherwise be restored or returned by NationsBank by reason of any bankruptcy,
reorganization, arrangement, composition or similar proceeding or as a result of
the appointment of a receiver, intervenor or conservator of, or trustee or
similar official for, the Company or any substantial part of its property, or
otherwise, all as though such payment had not been made.
7. WAIVERS OF LENDERS.
(a) Each of the Loans shall be deemed to have been made or incurred
in reliance upon this Agreement, and the Lenders expressly waive all notice of
the acceptance by the other of the subordination and other provisions of this
Agreement, notice of the incurring of Loans from time to time under documents
(limited in principal amount advanced and or re-advanced, excluding interest,
penalties and amounts advanced to protect NationsBank's security, to an
aggregate amount outstanding at any time of the Lending Limits) and all other
notices not specifically required pursuant to the terms of this Agreement or by
law.
(b) None of the Lenders has made any warranties or representations
with respect to the due execution, legality, validity, completeness or
enforceability of the Loan Documents or the collectibility of the Loans, and
that each Lender shall be entitled to manage (limited in principal amount
advanced and/or readvanced, excluding interest, penalties and amounts advanced
to protect security, to an aggregate amount outstanding at any time of the
Lending Limits) and supervise the Loans in accordance with applicable law and
from time to time as each Lender may deem appropriate under the circumstances.
(c) No waiver shall be deemed to be made by any Lender of any of its
rights hereunder, unless the same shall be in writing signed on behalf of such
Lender, and
5
<PAGE>
each waiver, if any, shall be a waiver only with respect to the specific
instance involved and shall in no way impair the rights of such Lender in any
other respect at any other time.
8. ACTIONS PERMITTED BY EACH LENDER. (a) Each Lender may modify, amend,
renew, extend and replace its own Loan Documents and extend and modify (limited
in principal amount advanced and/or re-advanced, excluding interest, penalties
and amounts advanced to protect security, to an aggregate amount outstanding at
any time of the Lending Limits), or renew all or any part of their respective
Loan, release any surety or security, obtain additional security or exercise any
other right to make additional Loans to the Company, all without any notice to
or consent by any other Lender and without in any way impairing or altering
rights established pursuant to this Agreement. Each Junior Lender hereby waives
all diligence by NationsBank in collection of the NationsBank Loan or in the
protection or perfection of any security interest or lien NationsBank may have
in the assets of the Company. NationsBank may from time to time, whether before
or after any discontinuance of this Agreement and without notice to the Company
or the Junior Lenders, assign or transfer all or any part of the NationsBank
Loan or any interest therein and, notwithstanding any such assignment or
transfer or any subsequent assignment or transfer thereof, such NationsBank Loan
shall be and remain NationsBank Loan for purposes of this Agreement and every
assignee or transferee and successive assignee or transferee of any of the
NationsBank Loan or any interest therein shall, to the extent of the interest of
such assignee or transferee in the NationsBank Loan, be entitled to the benefits
and subject to the obligations (including the Lending Limits) of this Agreement
as if such assignee or transferee were NationsBank; provided, however, that
unless NationsBank shall otherwise consent in writing, NationsBank shall have
and retain an unimpaired right prior and superior to that of any such assignee
or transferee, of this Agreement for the benefit of NationsBank as to such part
of the NationsBank Loan that NationsBank has not assigned or transferred.
(b) Each Lender may obtain from either of the other Lenders from time
to time (but in no event more than once a month) the existing balance
outstanding of the Company to each Lender and request written confirmation
thereof. Each Lender agrees to provide a written confirmation of the amount
payable by the Company in accordance with the preceding sentence. The Lender
providing the information to the requesting Lender shall designate balances
based on the loan confirmation request in form reasonably acceptable to both
Lenders within seven (7) days of the giving of the written request by another
Lender.
9. NO FIDUCIARY DUTIES TO JUNIOR LENDER. Each of the Junior Lenders
acknowledges and agrees that NationsBank owes the Junior Lenders no fiduciary
duties or any duty of care or good faith whatsoever in the Junior Lender's
capacity as a subordinate lien creditor with respect to any collateral for the
NationsBank Loan, that any such duties which might otherwise
6
<PAGE>
be owing are hereby waived, and that NationsBank may exercise any and all rights
and powers hereunder and otherwise act and deal with respect to the collateral
for the NationsBank Loan and the liens thereon in its own self-interest without
regard to any adverse effect upon the rights of the Junior Lender.
NationsBank's only duty to the Junior Lenders is set forth in paragraph 11.
10. NOTICES OF DEFAULT AND FORECLOSURE.
(a) Each of the Lenders agrees to use its best efforts to provide the
other Lenders with notice of any Event of Default with respect to their
respective Loan which is sent to the Borrower, provided that the failure to do
so shall not impair the rights or remedies of such Lender.
(b) NationsBank agrees that prior to initiating any foreclosure
action against the Company, NationsBank shall provide Junior Lenders thirty (30)
days' prior written notice and opportunity to cure or otherwise resolve the
defaults which have given rise to the proposed foreclosure action, during which
period NationsBank will make available appropriate personnel for consultation
and good faith negotiation with Junior Lenders, provided that such notice and
opportunity shall not be required in the event the delay resulting therefrom
would risk waste or loss of the value of the collateral for the NationsBank
Loan, in which case NationsBank shall provide such other period of notice and
opportunity as may be provided without incurring such risk.
11. NOTICES. Any notice required or permitted by or in connection with
this Agreement shall be in writing and shall be made by facsimile (confirmed on
the date the facsimile is sent by one of the other methods of giving notice
provided for in this Section) or by hand delivery, by Federal Express, or other
similar overnight delivery service, or by certified mail, unrestricted delivery,
return receipt requested, postage prepaid, addressed to the Lender at the
appropriate address set forth below or to such other address as may be hereafter
specified by written notice by such Lender. Notice shall be considered given as
of the date of the facsimile or the hand delivery, one (1) business day after
delivery to Federal Express or similar overnight delivery service, or three (3)
business days after the date of mailing, independent of the date of actual
delivery or whether delivery is ever in fact made, as the case may be, provided
the giver of notice can establish the fact that notice was given as provided
herein. If notice is tendered pursuant to the provisions of this Section and is
refused by the intended recipient thereof, the notice, nevertheless, shall be
considered to have been given and shall be effective as of the date herein
provided.
If to Signet:
Signet Bank
7
<PAGE>
Commercial Division, 8th Floor
500 East Plume Street
Norfolk, VA 23501
ATTN: James A. Whitham
Telephone No.: 804-640-4216
Telecopy No.: 804-640-4291
8
<PAGE>
If to Crestar:
Crestar Bank
Second Floor, Crestar Bank Building
500 East Main Street
Norfolk, VA 23510
ATTN: Joel Rhew
Telephone No.:
---------------
Telecopy No.:
----------------
If to NationsBank:
NationsBank, N.A.
NationsBank Center
Third Floor, One Commercial Place
Norfolk, VA 23510
ATTN: Nancy A. Asplen
Telephone No.: 804-624-2975
Telecopy No.: 804-441-8599
12. CHOICE OF LAW. The laws of the Commonwealth of Virginia (excluding,
however, conflict of law principles) shall govern and be applied to determine
all issues relating to this Agreement and the rights and obligations of the
parties hereto, including the validity, construction, interpretation, and
enforceability of this Agreement and its various provisions and the consequences
and legal effect of all transactions and events which resulted in the execution
of this Agreement or which occurred or were to occur as a direct or indirect
result of this Agreement having been executed.
13. CONSENT TO JURISDICTION; AGREEMENT AS TO VENUE. The Lenders
irrevocably consent to the non-exclusive jurisdiction of the courts of the
Commonwealth of Virginia and of the United States District Court for the
District of Virginia, if a basis for federal jurisdiction exists. The Lenders
agrees that venue shall be proper in the circuit court of the City of Norfolk or
in the United States District Court for the Eastern District of Virginia,
Norfolk Division if a basis for Federal jurisdiction exists and waives any right
to object to the maintenance of a suit in any of the state or federal courts of
the Commonwealth of Virginia on the basis of improper venue or of inconvenience
of forum.
14. PARTIES. This Agreement shall be binding upon and inure to the
benefit of, the Lenders and their respective heirs, personal representatives,
successors and assigns. The term the "Company" as used herein shall also refer
to the successors and assigns of the Company, including, without limitation, a
receiver, trustee, custodian or debtor-in-possession.
9
<PAGE>
15. TITLES. The paragraph titles contained in this Agreement are and
shall be without substantive meaning or content of any kind whatsoever and are
not a part of the agreement between the parties hereto.
16. AUTHORITY. Each of the Lenders represents and warrants to other
Lenders that it has authority to enter into this Agreement and that the person
signing for it is authorized and directed to do so.
17. ENTIRE AGREEMENT. This Agreement constitutes and expresses the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, whether express or implied, oral or
written. Neither this Agreement nor any portion or provision hereof may be
changed, waived or amended orally or in any manner other than by an agreement in
writing signed by NationsBank and the Junior Lenders. In the event of any
conflict between any terms of this Agreement with the terms of the Subordinated
Junior Lender Documents dealing with subordination of the Junior Loans, the
terms of this Agreement shall be deemed to control.
18. ADDITIONAL DOCUMENTATION. Each of the Junior Lenders and NationsBank
shall execute and deliver to the other such further instruments and shall take
such further action as the other may at any time or times reasonably request in
order to carry out the provisions and intent of this Agreement.
19. DEFECTS WAIVED. This Agreement is effective notwithstanding any
defect or voidability in the validity or enforceability of any instrument or
document evidencing the Loans.
20. SEVERABILITY. The provisions of this Agreement are independent of and
separable from each other. If any provision hereof shall for any reason be held
invalid or unenforceable, it is the intent of the parties that such invalidity
or unenforceability shall not affect the validity or enforceability of any other
provision hereof, and that this Agreement shall be construed as if such invalid
or unenforceable provision had never been contained herein.
21. WAIVER OF TRIAL BY JURY. Each party to this Agreement agrees that any
suit, action, or proceeding, whether claim or counterclaim, brought or
instituted by either party hereto or any successor or assign of any party on or
with respect to this Agreement or which in any way relates, directly or
indirectly, to the dealings of the parties with respect thereto, shall be tried
only by a court and not by a jury. EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION, OR PROCEEDING.
10
<PAGE>
22. APPLICATION OF PROCEEDS BETWEEN JUNIOR LENDERS. The following
provisions apply after the NationsBank Loan has been paid in full:
(a) If any of the Junior Lenders exercises its rights with respect to
collateral which is secured by the Loan Documents (except collateral which is
subject to a Specific Security Interest), all amounts received as proceeds from
the sale or other dispostion thereof shall be applied as follows: (i) first,
the Junior Lender exercising such rights shall be reimbursed for reasonable
expenses which it incurs in connection with the collection, protection,
assembling, liquidating, insuring and disposition of such collateral; and (ii)
second, each Junior Lender shall be paid the proceeds from the Assets after
payment of expenses in an amount obtained by multiplying the amount of such
proceeds by a fraction, the numerator of which shall be the unpaid principal
balance of such Junior Lender's Loan not to exceed the applicable Lending Limit,
and the denominator of which shall be the sum of the outstanding principal
balances of all of the Loans not to exceed the aggregate of the applicable
Lending Limits.
(b) If either Junior Lender acquires any or all of the collateral
which is secured by the Loan Documents (except collateral which is subject to a
Specific Security Interest), such collateral shall be held in the names of all
the Junior Lenders as tenants in common. Each Junior Lender represents and
warrants that it will not sell, assign or transfer its interest in the
collateral which is secured by the Loan Documents without the written consent of
the other Junior Lender, which consent shall not be unreasonably withheld. All
decisions in connection with such collateral shall be made unanimously by the
Junior Lenders. All costs, expenses and proceeds from such collateral shall be
shared based upon the percentages as calculated herein. For purposes of this
Agreement, a Specific Security Interest shall be deemed to mean the security
interest in a particular piece or portion of personal or real property which is
acquired by funds from a separate loan made by one of the Junior Lenders to the
Company.
23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together only one agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
under seal, all as of the date and year first above written.
NATIONSBANK, N.A.
By: (SEAL)
-------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
11
<PAGE>
SIGNET BANK
By: (SEAL)
-------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
CRESTAR BANK
By: (SEAL)
------------------------------------
Name:
---------------------------------------
Title:
----------------------------------------
12
<PAGE>
JOINDER, WAIVER AND RELEASE
Metro Information Services, Inc. (the "Company") joins in the foregoing
Agreement to acknowledge its consent to the matters set forth therein. The
Company represents and warrants that it has no claims, defenses, actions or
causes of action or setoffs of any kind (nor have its attorneys advised it of
any claims, defenses, actions or cause of actions or setoffs of any kind) in
connection with the Loan Documents or the enforcement thereof. In the event the
Company has any claims, defenses, actions or causes of actions or setoffs of any
kind or nature which it now or hereafter may assert against the Lenders,
individually and/or collectively, in connection with the Loan Documents and/or
the enforcement of the Loan Documents by the Lenders, individually and/or
collectively, it forever waives and relinquishes them by executing this
Agreement. The Company directs each of the Lenders to provide the information
concerning loan balances set forth in paragraph 8(b) to any of the other Lenders
which request such information.
METRO INFORMATION SERVICES, INC.
By:
-----------------------------------------
Title:
--------------------------------------
13
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.5 SECURITY AGREEMENT DATED AS OF APRIL 30, 1996 BY AND BETWEEN
NATIONSBANK OF VIRGINIA, N.A. AND REGISTRANT.
NATIONSBANK
NationsBank of Virginia, N.A. SECURITY AGREEMENT
_______________________________________________________________________________
Date APRIL 30, 1996
-----------------------------
Between and
BANK: (SECURED PARTY) DEBTOR/PLEDGOR:
Nationsbank of Virginia, N.A.
Banking Center:
Mid-Atlantic Commercial Metro Information Services, Inc.
1-Commercial Place 607 Lynnhaven Parkway
Norfolk, Virginia 23510-2351 Virginia Beach, Virginia 23450
(Address) (Name and Address)
Debtor/Pledgor is: / / Individual /X/ Corporation
/ / Partnership / / Other ________
Address is Debtor's: / / Residence / / Place of Business
/X/ Chief Executive Office
if more than one place
of business.
(THIS AGREEMENT CONTAINS SOME PROVISIONS PRECEDED BY BOXES. MARK ONLY THOSE
BOXES BESIDE PROVISIONS WHICH WILL BE APPLICABLE TO THIS TRANSACTION. A BOX
WHICH IS NOT MARKED MEANS THAT THE PROVISION BESIDE IT IS NOT APPLICABLE TO THIS
TRANSACTION.)
A.SECURITY INTEREST. For good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged and subject to the applicable terms
of this agreement, Debtor/Pledgor (hereinafter referred to as Debtor) assigns
and grants to Bank (also known as Secured Party), a security interest and
lien in the Collateral to secure that payment and the performance of the
Obligation.
B.COLLATERAL. The security interest is granted in the following
("Collateral") (Check as applicable)
1.
/X/ ACCOUNTS. Any and all accounts, accounts receivable, receivables,
contract rights, book debts, checks, notes, drafts, instruments, chattel
paper, acceptances, choses in action, any and all amounts due to Debtor from
a factor or other forms of obligations and receivables now existing or
hereafter arising out of the business of the Debtor, as well as any and all
returned, refused and repossessed goods, and the cash or non-cash proceeds
resulting therefrom.
/X/ INVENTORY. Any and all Debtor's inventory, including without limitation
any and all goods held for sale or lease or being processed for sale or lease
in Debtor's business as now or hereafter conducted, whether now owned or
hereinafter acquired, including all materials, goods and work in process,
finished goods, and other tangible property held for sale or lease or
furnished or to be furnished under
<PAGE>
contracts of service or used or consumed in Debtor's business, along with all
documents (including documents of title) covering inventory, all cash and
non-cash proceeds from the sale of inventory including proceeds from
insurance and specifically including but not limited to (attach Schedule if
necessary):
_______________________________________________________________________________
_______________________________________________________________________________.
/X/ EQUIPMENT. Any and all of Debtor's furnishings, fixtures and equipment,
wherever located, whether now owned or hereafter acquired, together with all
increases, parts, fittings, accessories, equipment, and special tools now or
hereafter affixed to any part thereof or used in connection therewith, and
all products, additions, substitutions, accessions, and all cash and non-cash
proceeds, including proceeds from insurance thereof and thereto, including
without limitation the following (attach Schedule if necessary):
_______________________________________________________________________________
_______________________________________________________________________________.
/ / FIXTURES. All of Debtor's fixtures now existing or hereafter acquired,
together with all substitutes and replacements therefor, all accessions and
attachments thereto, and all tools, parts and equipment now or hereafter
added to or used in connection therewith. These goods are or will become
fixtures on the following described real estate in
____________________________________________
________________________________[City or County],
_________________________(State), owned by:_____________________
[name of owner] more particularly described as
follows:___________________________________________________________
__________________________________________________________________________
__________________________________________________________________[insert
legal description (or attach Exhibit) of property, not street address]
, including without limitation the following (attached schedule if
necessary):____________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________.
/ / INSTRUMENTS AND/OR INVESTMENT DOCUMENTS. The following described
instruments and documents including, without limitation, negotiable
instruments, promissory notes, and documents of title owned or to be owned by
Debtor, certificates of deposit, and all liens, security agreements, leases
and other contracts securing or otherwise relating to any of said instruments
or documents, and all cash and non-cash proceeds and products thereof and
such additional property receivable or distributed in respect of or in
exchange for all or any of such instruments or documents (attach Schedule if
necessary):___________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________.
/X/ GENERAL INTANGIBLES. All patents, trademarks, service marks, trade
secrets, copyrights and exclusive licenses (whether issued or pending) and
all documents, applications, materials and other matters related thereto, all
inventions, and all manufacturing, engineering and production plans,
drawings, specifications, processes and systems, all trade names, computer
programs, data bases, systems and software (including source and object
codes), goodwill, choses in action and all other general intangibles of
Debtor whether now owned or hereafter acquired and all cash and non-cash
proceeds thereof, including without limitation the following described
intangible personal property, and all chattel paper, documents and instrument
relating to such intangibles, including without limitation (attach schedule
if necessary):
_______________________________________________________________________________
_______________________________________________________________________________
______________________________________________________________________________.
/ / TIMBER. All of Debtor's uncut timber growing or to be grown on the
following described property, and all cash and non-cash proceeds including
proceeds from insurance, and all products thereof (complete legal description
of real property required) (attach Exhibit if necessary):
_____________________________________________________________________________
<PAGE>
_____________________________________________________________________________
____________________________________________________________________________.
/ / OTHER:
________________________________________________________________________________
________________________________________________________________________________
_____________________________________________________ (hereinafter referred to
as "Goods" and all proceeds thereof).
2.All substitutes and replacements for, accessions, attachments and other
additions to, tools, parts and equipment used in connection with, and
proceeds and products of, the above Collateral (including all income and
benefits resulting from any of the above, such as dividends payable or
distributable in cash, property or stock; interest, premium and principal
payments; redemption proceeds and subscription rights; all certificates of
title, manufacturer's statements of origin, other documents, accounts and
chattel paper arising from or related to the above Collateral, and returned
or repossessed Collateral, any of which, if received by Debtor, upon request
shall be delivered immediately to Bank.
3.The balance of every deposit account of Debtor under control of Bank and
any other claim of Debtor against Bank, now or hereafter existing, liquidated
or unliquidated, and all money, instruments, securities, documents, chattel
paper, credits, claims, demands, income, and any other property, rights and
interests of Debtor which at any time shall come into the possession or
custody or under the control of Bank or any of its agents, affiliates or
correspondents, for any purpose, and the proceeds of any thereof. Bank shall
be deemed to have possession of any of the Collateral in transit to or set
apart for it or any of its agents, affiliates or correspondents.
C.OBLIGATION.
1.DESCRIPTION OF OBLIGATION. The following obligations
("Obligation") are secured by this agreement: (a) All debts, obligations,
liabilities and agreements of Debtor to Bank, now or hereafter existing,
arising directly or indirectly between Debtor and Bank whether absolute or
contingent, joint or several, secured or unsecured, due or not due,
contractual or tortious, liquidated or unliquidated, arising by operation of
law or otherwise, and all renewals, extensions or rearrangement of any of the
above; (b) Bank's participation in any loan or other debt of Debtor to
another person; (c) All costs incurred by Bank to obtain, preserve, perfect
and enforce this agreement and maintain, preserve, collect and enforce the
Collateral; (d) Interest on the above amounts as agreed between Bank and
Debtor; (e) All debt, obligations and liabilities of
___________________________________________________________________________
(if the preceding space is completed, such party, together with the Debtor
named above, is hereinafter referred to collectively as "Debtor") to Bank of
the kinds described in this Item C, now existing or hereafter arising; (f)
All expenses of the Bank, including fees and expenses of the Bank's counsel,
incident to the enforcement of payment of all obligations of the Debtor by
any action or participation in, or in connection with a case or proceeding
under the Bankruptcy Code, or any successor statute thereto; (g) If the
Debtor is not the obligor of any of the Obligations, and in the event any
amount paid to the Bank on any Obligation is subsequently recovered from the
Bank in or as a result of any bankruptcy, insolvency or fraudulent conveyance
proceeding, the Debtor shall be liable to the Bank for the amounts so
recovered up to the fair market value of the Collateral whether or not the
Collateral has been released or the security interest terminated. In the
event the Collateral has been released or the security interest terminated,
the fair market value of the Collateral shall be determined, at the Bank's
option, as of the date the Collateral was released, the security interest
terminated, or said amounts were recovered; and (h) All amounts which may be
owed to Bank pursuant to all other loan documents executed between Bank and
any other Debtor.
Notwithstanding the foregoing, if the Collateral is personal property used as
a principal residence (such as a mobile home or a houseboat) or "household
goods" (as that term is defined at 12 C.F.R.Section 227.12, as it may be
amended from time to time) which are not in the Bank's possession and which
are not fixtures, such Collateral shall not secure any liability contracted
for personal family or household purposes between the Debtor or an obligor
and the Bank already in existence on the date hereof or that arises
hereafter, unless the Debtor otherwise expressly agrees.
D.DEBTOR'S WARRANTIES. Debtor hereby represents and warrants to Bank as
follows:
1.FINANCING STATEMENTS. Except as may be noted by schedule attached
hereto and incorporated herein by reference, no financing statement covering
the Collateral is or will be on file in any public office, except the
financing statements relating to this security interest, and no security
interest, other than the one herein created, has attached or been perfected
in the Collateral or any part thereof.
2.OWNERSHIP. Debtor owns, or will use the proceeds of any loans by Bank to
become the owner of, the Collateral free from any setoff, claim, restriction,
lien, security interest or encumbrance except liens for taxes not yet due and
the security interest hereunder.
3.FIXTURES AND ACCESSIONS. None of the Collateral is affixed to real estate
or is an accession to any goods, or will become a fixture or accession,
except as expressly set out herein.
4.CLAIMS OF DEBTORS ON COLLATERAL. All account debtors and other obligors
whose debts or obligations are part of the Collateral have no right to
setoffs, counterclaims or adjustments, and no defenses in connection
therewith.
<PAGE>
5.POWER AND AUTHORITY. Debtor has full power and authority to make this
agreement.
E.DEBTOR'S COVENANTS. Until full payment and performance of all Obligations
and termination or expiration of any obligation or commitment of Bank to make
advances or loans to Debtor, unless Bank otherwise consents in writing:
1.OBLIGATION AND THIS AGREEMENT. Debtor shall perform all of its agreements
herein and in any other agreements between it and Bank.
2.OWNERSHIP OF COLLATERAL. Debtor shall defend the Collateral against all
claims and demands of all persons at any time claiming any interest therein
adverse to Bank. Debtor shall keep the Collateral free from all liens and
security interests except those for taxes not yet due and the security
interest hereby created.
3.INSURANCE. Debtor shall insure the Collateral with companies acceptable to
Bank. Such insurance shall be in an amount not less than the fair market
value of the Collateral and shall be against such casualties, with such
deductible amounts as Bank shall approve. All insurance policies shall be
written for the benefit of Debtor and Bank as their interests may appear,
payable to Bank as loss payee, or in other form satisfactory to Bank, and
such policies or certificates evidencing the same shall be furnished to Bank.
All policies of insurance shall provide for written notice to Bank at least
30 days prior to cancellation. Risk of loss or damage is Debtor's to the
extent of any deficiency in any effective insurance coverage.
4.MAINTENANCE. Debtor shall keep all tangible Collateral in good condition.
5.BANK'S COSTS. Debtor shall pay all costs necessary to obtain, preserve,
perfect, defend and enforce this security interest, collect the Obligation,
and preserve, defend, enforce and collect the Collateral including but not
limited to taxes, assessments, insurance premiums, repairs, reasonable
attorney's fees and legal expenses, feed, rent, storage costs and expenses of
sales. Whether Collateral is or is not in Bank's possession, and without any
obligation to do so and without waiving Debtor's default for failure to make
any such payment, Bank as its option may pay any such costs and expenses,
discharge encumbrances on Collateral, and pay for insurance of Collateral,
and such payment shall be a part of the Obligation and bear interest at the
rate set out in the Obligation. Debtor agrees to reimburse Bank on demand for
any costs so incurred.
6.INFORMATION AND INSPECTION. Debtor shall (i) promptly furnish Bank any
information with respect to Collateral requested by Bank; (ii) allow Bank or
its representatives to inspect the Collateral, at any time and wherever
located, and to inspect and copy, or furnish Bank or its representatives with
copies of, all records relating to the Collateral and the Obligation; (iii)
furnish Bank or its representatives such information as Bank may request to
identify Collateral, at the time and in the form requested by Bank; and (iv)
deliver upon request to Bank shipping and delivery receipts evidencing the
shipment of goods and invoices evidencing the receipt of, and the payment
for, Collateral.
7.ADDITIONAL DOCUMENTS. Debtor shall sign and deliver any papers furnished by
Bank which are necessary or desirable in the judgment of Bank to obtain,
maintain and perfect the security interest hereunder and enable Bank to
comply with the Federal Assignment of Claims Act or any other federal or
state law in order to obtain or perfect Bank's interest in Collateral or to
obtain proceeds of Collateral.
8.PARTIES LIABLE ON COLLATERAL. Debtor will preserve the liability of all
obligors on any Collateral, will preserve the priority of all security
therefor, and will deliver to Bank the original certificates of title on all
motor vehicles or other titled vehicles constituting the Collateral. Bank
shall have no duty to preserve such liability or security, but may do so at
the expense of Debtor, without waiving Debtor's default.
9.RIGHT OF BANK TO NOTIFY DEBTORS. At any time, whether Debtor is or not in
default hereunder, Bank may notify persons obligated on any Collateral to
make payments directly to Bank and Bank may take control of all proceeds of
any Collateral. Until Bank elects to exercise such rights, Debtor, as agent
of Bank, shall collect and enforce all payments owed on Collateral.
10.RECORDS OF COLLATERAL. Debtor at all times will maintain accurate books
and records covering the Collateral. Debtor immediately will mark all books
and records with an entry showing the absolute assignment of all Collateral
to Bank and Bank is hereby given the right to audit the books and records of
Debtor relating to Collateral at any time and from time to time. The amounts
shown as owed to Debtor on Debtor's books and on any assignment schedule will
be the undisputed amounts owing and unpaid.
11.DISPOSITION OF COLLATERAL. If disposition of any Collateral gives rise to
an account, chattel paper or instrument, Debtor immediately shall notify
Bank, and upon request of Bank shall assign or indorse the same to Bank. No
Collateral may be sold, leased, manufactured, processed or otherwise disposed
of by Debtor in any manner without the prior written consent of Bank, except
Collateral sold, leased, manufactured, processed or consumed in the ordinary
course of business.
12.ACCOUNTS. Each account held as Collateral will represent the valid and
legally enforceable obligation of third parties, and shall not be evidenced
by any instrument or chattel paper.
<PAGE>
13.LOCATION OF COLLATERAL. Debtor shall give Bank written notice of each
office of Debtor in which records of Debtor pertaining to accounts held as
Collateral are kept, and each location at which Collateral is or will be
kept, and of any change of any such location. If no such notice is given,
all records of Debtor pertaining to Collateral are and shall be kept at
Debtor's address shown above. All Collateral of Debtor will be kept at
Debtor's address shown above unless otherwise noted as follows:
________________________________________________________________________________
________________________________________________________________________________
14.NOTICE OF CHANGES. Debtor will notify Bank immediately of any material
change in the Collateral, of a change in Debtor's residence or location, of a
change in any matter warranted or represented by Debtor in this agreement or
furnished to Bank, and of any event of default.
15.USE AND REMOVAL OF COLLATERAL. Debtor will not use the Collateral
illegally nor, unless previously indicated as a fixture, permit the
Collateral to be affixed to real or personal property without the prior
written consent of Bank. Debtor will not permit any of the Collateral to be
removed from the locations specified herein without the prior written consent
of Bank, except for the sale of inventory in the ordinary course of business.
16.POSSESSION OF COLLATERAL. Debtor will deliver all other instruments,
documents, and chattel paper which are part of the Collateral and in Debtor's
possession to the Bank immediately, or if hereafter acquired, immediately
following acquisition, appropriately indorsed to Bank's order, or with
appropriate, executed powers. Debtor waives presentment, notice of
acceleration, demand, notice of dishonor, protect, and all other notices with
respect thereto.
17.CONSUMER CREDIT. If any Collateral or proceeds includes obligations of
third parties to Debtor, the transactions giving rise to the Collateral shall
conform in all respects to the applicable state or federal law including but
not limited to consumer credit law. Debtor shall hold harmless and indemnify
Bank against any cost, loss or expense arising from Debtor's breach of this
covenant.
18.CHANGE OF NAME/STATUS. Without the written consent of Bank, Debtor shall
not change its name, change its corporate status, use any trade name or
engage in any business in which it was not engaged on the date of this
agreement.
19.POWER OF ATTORNEY. Debtor appoints Bank as Debtor's attorney-in-fact with
full power in Debtor's name and behalf to do every act which Debtor is
obligated to do or may be required to do hereunder; however, nothing in this
paragraph shall be construed to obligate Bank to take any action hereunder
nor shall Bank be liable to Debtor for failure to take any action hereunder.
This appointment shall be deemed a power coupled with an interest and shall
not be terminable as long as the Obligations are outstanding and shall not
terminate on the disability or incompetence of the Debtor.
20.WAIVERS BY DEBTOR. Debtor waives notice of the creation, advance,
increase, existence, extension or renewal of, and of any indulgence with
respect to, the Obligation; waives presentment, demand, notice of dishonor,
and protest; waives notice of the amount of the Obligation outstanding at any
time, notice of any change in financial condition of any person liable for
the Obligation or any part thereof, notice of any event of default, and all
other notices respecting the Obligation; and agrees that maturity of the
Obligation and any part thereof may be accelerated, extended or renewed one
or more times by Bank in its discretion, without notice to Debtor. Debtor
waives any right to require that any action brought against any other person
or to require that resort be had to any other security or to any balance of
any deposit account. The Debtor further waives any right of subrogation or
to enforce any right of action against any other Debtor until the Obligation
is paid in full.
21.OTHER PARTIES AND OTHER COLLATERAL. No renewal or extension of or any
other indulgence with respect to the Obligation or any part thereof, no
release of any security, no release of any person (including any maker,
indorser, guarantor or surety) liable on the Obligation, no delay in
enforcement of payment, and no delay or omission or lack of diligence or care
in exercising any right or power with respect to the Obligation or any
security therefor or guaranty thereof or under this agreement shall in any
manner impair or affect the rights of Bank under the law, hereunder, or under
any other agreement pertaining to the Collateral. Bank need not file suit or
assert a claim for personal judgment against any person for any part of the
Obligation or seek to realize upon any other security for the Obligation,
before foreclosing or otherwise realizing upon the Collateral for the purpose
of paying the Obligation. Debtor waives any right to the benefit of or to
require or control application of any other security or proceeds thereof, and
agrees that Bank shall have no duty or obligation to Debtor to apply to the
Obligation any such other security or proceeds thereof.
22.COLLECTION AND SEGREGATION OF ACCOUNTS. The Bank hereby authorizes the
Debtor to collect the Collateral, subject to the direction and control of the
Bank, but the Bank may, without cause or notice, curtail or terminate said
authority at any time. Upon notice by the Bank, whether oral or in writing,
to the Debtor, the Debtor shall forthwith upon receipt of all checks, drafts,
cash, and other remittances in payment of or on account of the Collateral,
deposit the same in one or more special accounts maintained with the Bank
over which the Bank alone shall have the power of withdrawal. The remittance
of the proceeds of such Collateral shall not, however, constitute payment or
liquidation of such Collateral until the Bank shall receive good funds for
such proceeds. Funds placed in such special accounts shall be held by the
Bank as security for all Obligations secured hereunder. These proceeds
shall be deposited in precisely the form received, except for the indorsement
of the Debtor where necessary to permit collection of items, which
indorsement the Debtor agrees to make, and which indorsement the Bank is also
hereby authorized, as attorney-in-fact, to make on behalf of the Debtor. In
the event the Bank has notified the Debtor to make deposits to a special
account, pending such deposit,the Debtor agrees that
<PAGE>
it will not commingle any such checks, drafts, cash or other remittances with
any funds or other property of the Debtor, but will hold them separate and
apart therefrom, and upon an express trust for the Bank until deposit thereof
is made in the special account. The Bank will, from time to time, apply the
whole or any part of the Collateral funds on deposit in this special account
against such Obligations as are secured hereby as the Bank may in its sole
discretion elect. At the sole election of the Bank, any portion of said funds
on deposit in the special account which the Bank shall elect not to apply to
the Obligations, may be paid over by the Bank to the Debtor.
23.COMPLIANCE WITH STATE AND FEDERAL LAWS. Debtor will comply with all State
and Federal laws and regulations applicable to its business, whether now in
effect or hereafter enacted including but not limited to the wage and hours
laws and relating to the use or disposal of hazardous materials and waste.
F.RIGHTS AND POWERS OF BANK
1.GENERAL. Bank, before or after default, without
liability to Debtor may: obtain from any person information regarding Debtor
or Debtor's business, which information any such person also may furnish
without liability to Debtor; require Debtor to give possession or control of
any Collateral to Bank; indorse as Debtor's agent any instruments, documents
or chattel paper in Collateral or representing proceeds of Collateral;
contact account debtors directly to verify information furnished by Debtor;
take control of proceeds, including stock received as dividends or by reason
of stock splits; release Collateral in its possession to any Debtor,
temporarily or otherwise; require additional Collateral; reject as
unsatisfactory any property hereafter offered by Debtor as Collateral; set
standards from time to time to govern what may be used as after acquired
Collateral; designate, from time to time, a certain percent of the Collateral
as the loan value and require Debtor to maintain the Obligation at or below
such figure; take control of funds generated by the Collateral, such as cash
dividends, interest and proceeds or refunds from insurance, and use same to
reduce any part of the Obligation and exercise all rights which an owner of
such Collateral may exercise, except the right to vote or dispose of
Collateral before an event of default; at any time transfer any of the
Collateral or evidence thereof into it own name or that of its nominee; and
demand, collect, covert, redeem, receipt for, settle compromise, adjust, sue
for, foreclose or realize upon Collateral, in its own name or in the name of
the Debtor, as Bank may determine. Bank shall not be liable for failure to
collect any account or instruments, or for any act or omission on the part of
the Bank, its officers, agents or employees, except willful misconduct and
gross negligence. The foregoing rights and powers of Bank will be in
addition to, and not a limitation upon, any rights and powers of Bank given
by law, elsewhere in this agreement, or otherwise. If Debtor fails to
maintain any required insurance, to the extend permitted by applicable law
Bank may (but is not obligated to) purchase single interest insurance
coverage for the Collateral which insurance may at Bank's option (i) protect
only Bank and not provide any remuneration or protection for Debtor directly
and (ii) provide coverage only after the Obligation has been declared due as
herein provided. The premiums for any such insurance purchased by Bank shall
be a part of the Obligation and shall bear interest as provided in B.1.d.
hereof.
2.CONVERTIBLE COLLATERAL. Bank, may present for conversion any Collateral
which is convertible into any other instrument or investment security or a
combination thereof with cash, but Bank shall not have any duty to present
for conversion any Collateral unless it shall have received from Debtor
detailed written instructions to that effect at a time reasonably far in
advance of the final conversion date to make such conversion possible.
G.DEFAULT
1.EVENT OF DEFAULT. An event of default shall occur if: (i) there is a loss,
theft, damage or destruction of any material portion of the Collateral for which
there is no insurance coverage or for which, in the opinion of the Bank there is
insufficient insurance coverage; or (ii) if Debtor or any other obligor on the
Obligation shall fail to timely and properly pay or observe, keep or perform any
term, covenant, agreement or condition in this agreement or in any other
agreement between Debtor and any other obligor on the Obligation, including in
any other note or instrument, loan agreement, security agreement, deed of trust,
mortgage, promissory note, assignment or other agreement or instrument
concerning the Obligation.
2.RIGHTS AND REMEDIES. If any Event of Default shall occur, then, in each and
every such case, the Bank may, without presentment, demand,or protest; notice
of default, dishonor, demand, non-payment, or protest; notice of intent to
accelerate all or any part of the Obligation; notice of acceleration of all
or any part of the Obligation; or notice of any other kind, all of which
Debtor hereby expressly waives, (except for any notice required under this
agreement, any other loan document or applicable law); at any time thereafter
exercise and/or enforce any of the following rights and remedies:
a)POSSESSION AND COLLECTION OF COLLATERAL. At its option: (i) take possession
or control of, store, lease, operate, manage, sell or otherwise dispose of,
all or any part of the Collateral; (ii) notify all parties under any account
or contract right forming all or any part of the Collateral to make any
payments otherwise due to the Debtor directly to the Bank; (iii) in the
Bank's own name, or in the name of the Debtor, demand, collect, receive, sue
for, and give receipts and releases for, any and all amounts due under such
accounts and contract rights; (iv) indorse as the agent of the Debtor any
check, note, chattel paper, documents, or instruments forming all or any part
of the Collateral; (v) make formal application for transfer to the Bank (or
to any assignee of the Bank to any purchaser of any of the Collateral) of all
of the Debtor's permits, licenses, approvals, agreements, and the like
relating to the Collateral or to the Debtor's business; (vi) take any other
action which the Bank deems necessary or desirable to protect and realize
upon its security interest in the collateral; and (vii) in addition to the
foregoing, and not in substitution therefor, exercise any one or more of the
rights and remedies exercisable by the Bank under any other provision of this
agreement, under any of the other loan documents, or as provided by
applicable law (including, without limitation, the Uniform Commercial Code as
in effect in Virginia (hereinafter referred to as the "UCC")). In taking
possession of the Collateral the Bank may enter the Debtor's premises and
otherwise proceed without legal process, if this can be done without breach
of the peace. The Debtor shall, upon the Bank's demand, promptly make the
Collateral or other security available to the Bank at a place designated by
the Bank, which place shall be reasonably convenient to both parties.
<PAGE>
The Bank shall not be liable for, nor be prejudiced by, any loss,
depreciation or other damages to the Collateral, unless caused by the Bank's
willful and malicious act. The Bank shall have no duty to take any action to
preserve or collect the Collateral.
b)RECEIVER. Obtain the appointment of a receiver for all or any of the
Collateral, the Debtor hereby consenting to the appointment of such a
receiver and agreeing not to oppose any such appointment.
c)RIGHT OF SET OFF. Without notice of demand to the Debtor, set off and apply
against any and all of the Obligations any and all deposits (general or
special, time or demand, provisional or final) and any other indebtedness, at
any time held or owning by the Bank to or for the credit of the account of
the Debtor.
Bank shall be entitled to immediate possession of all books and records
evidencing any Collateral or pertaining to chattel paper covered by this
agreement and it or its representatives shall have the authority to enter
upon any premises upon which any of the same, or any Collateral, may be
situated and remove the same therefrom without liability. Bank may surrender
any insurance policies in Collateral and receive the unearned premium
thereon. Debtor shall be entitled to any surplus and shall be liable to Bank
for any deficiency. The proceeds of any disposition after default available
to satisfy the Obligation shall be applied to the Obligation in such order
and in such manner as Bank in its discretion shall decide.
H.GENERAL
1.PARTIES BOUND. Bank's rights hereunder shall inure to the benefit
of its successors and assign, and in the event of any assignment or transfer
of any of the Obligation or the Collateral, Bank thereafter shall be fully
discharged from any responsibility with respect to the Collateral so assigned
or transferred, but Bank shall retain all rights and powers hereby given with
respect to any of the Obligation or Collateral not so assigned or
transferred. All representations, warranties and agreements of Debtor if
more than one are joint and several and all shall be binding upon the
personal representatives, heirs, successors and assigns of Debtor.
2.WAIVER. No delay of Bank in exercising any power or right shall operate as
a waiver thereof; nor shall any single or partial exercise of any power or
right preclude other or further exercise thereof or the exercise of any other
power or right. No waiver by Bank of any right hereunder or of any default
by Debtor shall be binding upon Bank unless in writing, and no failure by
Bank to exercise any power or right hereunder or waiver of any default by
Debtor shall operate as a waiver of any other or further exercise of such
right or power or of any further default. Each right, power and remedy of the
Bank as provided for in any other loan documents, or which shall now or
hereafter exist at law or in equity or by statute or otherwise, shall be
cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by the Bank of
any one or more of such rights, powers or remedies shall not preclude the
simultaneous or later exercise by the Bank of any or all other such rights,
powers or remedies.
3.AGREEMENT CONTINUING. This agreement shall constitute a continuing
agreement, applying to all future as well as existing transactions, whether
or not of the character contemplated at the date of this agreement, and if
all transactions between Bank and Debtor shall be closed at any time, shall
be equally applicable to any new transactions thereafter. Provisions of this
agreement, unless by their terms exclusive, shall be in addition to other
agreements between the parties. Time is of the essence of this agreement.
4.DEFINITIONS. Unless the context indicates otherwise, definitions in the UCC
apply to words and phrases in this agreement; if UCC definitions conflict,
Article 9 definitions apply.
5.NOTICE. Notice shall be deemed reasonable if mailed postage prepaid at
least 5 days before the related action (or if the UCC elsewhere specifies a
longer period, such longer period) to the address of Debtor given above.
6.MODIFICATIONS. No provision hereof shall be modified or limited except by a
written agreement expressly referring hereto and to the provisions so
modified or limited and signed by the Debtor and Bank, nor by course of
conduct, usage or trade.
7.PARTIAL INVALIDITY. The unenforceability or invalidity of any provision of
this security agreement shall not affect the enforceability or validity of
any other provision herein and the invalidity or unenforceability of any
provision of any loan document to any person or circumstances shall not
affect the enforceability or validity of such provision as it may apply to
other persons or circumstances.
8.GENDER AND NUMBER. Where appropriate, the use of one gender shall be
construed to include the others or any of them; and the singular number shall
be construed to include the plural, and vice versa.
9.APPLICABLE LAW AND VENUE. The agreement has been delivered in the State of
Virginia and shall be construed in accordance with the laws of that State.
It is performable by Debtor in the county or city of Bank's address set out
above and Debtor expressly waives any objection as to venue in any such
location. Wherever possible each provision of this agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of
such prohibit or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this agreement.
10.FINANCING STATEMENT. To the extent permitted by applicable law, a carbon,
photographic or other reproduction of this security agreement or any
financing statement covering the Collateral shall be sufficient as a
financing statement.
<PAGE>
11.COUNTERPARTS. This agreement may be executed in any number of
counterparts, each of which shall be considered to be an original, but all of
which shall constitute one in the same instrument. As used herein "this
agreement" shall include all attachments and addenda.
12.ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED
ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING
ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT
APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE
FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF JUDICIAL ARBITRATION AND
MEDIATION SERVICES, INC. (J.A.M.S.) AND THE "SPECIAL RULES" SET FORTH BELOW.
IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT
UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION.
ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR
EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO
WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
A.SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF THE
BORROWER'S DOMICILE AT THE TIME OF THIS AGREEMENT'S EXECUTION AND
ADMINISTERED BY J.A.M.S WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE
OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN
ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE
COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE
ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE
COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B.RESERVATIONS OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO (I)
LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR
REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE A WAIVER BY
THE BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE BANK
HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO)
SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL,
OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT
NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A
RECEIVER. THE BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
AGREEMENT. AT BANK'S OPTION, FORECLOSURE UNDER A DEED OF TRUST OR MORTGAGE
MAY BE ACCOMPLISHED BY ANY OF THE FOLLOWING: THE EXERCISE OF A POWER OF SALE
UNDER THE DEED OF TRUST OR MORTGAGE, OR BY JUDICIAL SALE UNDER THE DEED OF
TRUST OR MORTGAGE, OR BY JUDICIAL FORECLOSURE. NEITHER THIS EXERCISE OR SELF
HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE
OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT
OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE
MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
DEBTOR AGREES THAT BANK AT ITS SOLE OPTION MAY CHOOSE MEDIATION, AND/OR
BINDING ARBITRATION PROCEDURES PERTAINING TO ANY CONTROVERSY(IES) OR
DISPUTE(S) ARISING BETWEEN DEBTOR AND BANK. DEBTOR AGREES TO ABIDE BY THE
SELECTION THAT BANK MAKES TO RESOLVE ANY CONFLICTS OR DISPUTES BETWEEN DEBTOR
AND BANK AND TO PARTICIPATE IN THE MEDIATION AND/OR BINDING ARBITRATION
PROCESS IF SELECTED. DEBTOR AND BANK AGREE THAT EACH WILL BEAR THEIR PORTION
OF EXPENSES RELATED TO MEDIATION AND/OR BINDING ARBITRATION.
13.NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN OR ORAL AGREEMENTS BETWEEN
THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be duly
executed under seal by their duly authorized representatives as of the date
first above written.
BANK/SECURED PARTY: DEBTOR/PLEDGOR:
NATIONSBANK OF VIRGINIA, N.A.
<PAGE>
By:__________________________(Seal) ______________________________________
Print Individual's Name:
Name: ______________________________ _________________________________(Seal)
Title: _____________________________ _______________________________________
Print Individual's Name:
_________________________________(Seal)
Corporate Borrower or Partnership: METRO INFORMATION SERVICES, INC.
----------------------------------
(Name of Corporate, Partnership, etc.)
Attest (If Applicable) By:____________________________(Seal)
___________________________________ ______________________________________
Print Name and Title:
By:____________________________________
[Corporate Seal]
_______________________________________
Print Name and Title:
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.6 PROMISSORY NOTE DATED AS OF APRIL 30, 1996 BY AND BETWEEN
NATIONSBANK OF VIRGINIA, N.A. AND REGISTRANT.
PROMISSORY NOTE
/ / If this box is marked, this Note, and all modifications, renewals and
extensions hereof, are secured by a Deed of Trust dated
______________________________, 19_____, from the Grantor identified
therein to the Trustees identified therein, to secure advances made
hereunder from time to time to Borrower by Bank.
Date April 30, 1996 / / New / / Renewal Amount $7,000,000.00
Maturity Date April 30, 1997
BANK: BORROWER:
NationsBank, N.A.
Banking Center:
Mid-Atlantic Commercial Metro Information Services, Inc.
1 Commercial Place 607 Lynnhaven Parkway
Norfolk, VA 23510-2351 Virginia Beach, VA 23450
(STREET ADDRESS INCLUDING COUNTY) (NAME AND STREET ADDRESS, INCLUDING
COUNTY)
FOR VALUE RECEIVED, the undersigned Borrower unconditionally (and jointly and
severally, if more than one) promises to pay to the order of Bank, its
successors and assigns, without setoff, at its offices indicated at the
beginning of this Note, or at such other place as may be designated by Bank,
the principal amount of SEVEN MILLION AND 00/100 Dollars ($7,000,000.00), or
so much thereof as may be advanced from time to time in immediately available
funds, together with interest computed daily on the outstanding principal
balance hereunder, at an annual interest rate, and in accordance with the
payment schedule, indicated below.
[THIS NOTE CONTAINS SOME PROVISIONS PRECEDED BY BOXES. IF A BOX IS
<PAGE>
MARKED, THE PROVISION APPLIES TO THIS TRANSACTION; IF IT IS NOT MARKED, THE
PROVISION DOES NOT APPLY TO THIS TRANSACTION.]
1. RATE
/ / PRIME RATE. The Rate shall be the Prime Rate, plus ________________
percent, per annum. The "Prime Rate" is the fluctuating rate of interest
established by Bank from time to time, at its discretion, whether or not
such rate shall be otherwise published. The Prime Rate is established by
Bank as an index and may or may not at any time be the best or lowest rate
charged by Bank on any loan.
/ / FIXED RATE. The Rate shall be fixed at _______________ percent per annum.
/X/ OTHER. LIBOR plus 150 basis points (see attached "Attachment A")
Notwithstanding any provision of this Note, Bank does not intend to charge
and Borrower shall not be required to pay any amount of interest or other
charges in excess of the maximum permitted by the applicable law of the
Commonwealth of Virginia; if any higher rate ceiling is lawful, then that
higher rate ceiling shall apply. Any payment in excess of such maximum shall
be refunded to Borrower or credited against principal, at the option of Bank.
2. ACCRUAL METHOD. Unless otherwise indicated, interest at the Rate set forth
above will be calculated by the 365/360 day method (a daily amount of
interest is computed for a hypothetical year of 360 days; that amount is
multiplied by the actual number of days for which any principal is
outstanding hereunder). If interest is not to be computed using this
method, the method shall be: _____________________________________________
__________________________________________________________________________
__________________________________________________________________________
_________________________________________________________________________.
3. RATE CHANGE DATE. Any Rate based on a fluctuating index or base rate will
change, unless otherwise provided, each time and as of the date that the
index or base rate changes. If the Rate is to change on any other date or
at any other interval, the change shall be: ______________________________
__________________________________________________________________________
__________________________________________________________________________
________________________________________________________________. In
the event any index is discontinued, Bank shall substitute an index
determined by
<PAGE>
Bank to be comparable, in its sole discretion.
4. PAYMENT SCHEDULE. All payments received hereunder shall be applied first
to the payment of any expense or charges payable hereunder or under any
other loan documents executed in connection with this Note, then to
interest due and payable, with the balance applied to principal, or in such
other order as Bank shall determine at its option.
/ / PRINCIPAL PLUS ACCRUED INTEREST. Principal shall be paid in consecutive
equal installments of $_________________________, plus accrued interest,
payable / / monthly, / / quarterly or _________________________,
commencing on _______________, 19_____, and continuing on the / / same
day, / / last day of each successive month, quarter or other period (as
applicable) thereafter, with a final payment of all unpaid principal
and accrued interest due on _______________, 19_____.
/ / FIXED PRINCIPAL AND INTEREST. Principal and interest shall be paid in
consecutive equal installments of $____________________, payable / /
monthly, / / quarterly or / / ___________________________________,
commencing on ____________________, 19_____, and continuing on the / /
same day, / / last day of each successive month, quarter or other period
(as applicable) thereafter, with a final payment of all unpaid principal
and interest due on ____________________, 19_____. If, on any payment
date, accrued interest exceeds the installment amount set forth above,
Borrower will also pay such excess as and when billed.
/X/ SINGLE PRINCIPAL PAYMENT. Principal shall be paid in full in a single
payment on April 30, 1997. Interest thereon shall be paid at
maturity, or else /X/ monthly, / / quarterly or
___________________________________, commencing on May 1, 1996,
and continuing on the / / same day, / / last day of each successive month,
quarter or other period (as applicable) thereafter, with a final payment of
all unpaid interest at the stated maturity of this Note.
/ / OTHER. ___________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
____________________
5. REVOLVING FEATURE.
/ / Borrower may borrow, repay and reborrow hereunder at any time, up to a
maximum aggregate amount outstanding at any one time equal to the principal
amount of this Note, provided, that Borrower is not in default under any
provision of this Note, any other documents executed in connection with this
Note, or any other note or other loan documents now or hereafter executed in
connection with any other obligation of Borrower to Bank, and provided that
the borrowings hereunder do not
<PAGE>
exceed any borrowing base or other limitation on borrowings by Borrower. Bank
shall incur no liability for its refusal to advance funds based upon its
determination that any conditions of such further advances have not been met.
Bank records of the amounts borrowed from time to time shall be conclusive proof
thereof.
/ / UNCOMMITTED FACILITY. Borrower acknowledges and agrees that,
notwithstanding any provisions of this Note or any other documents
executed in connection with this Note, Bank has no obligation to make
any advance, and that all advances are at the sole discretion of Bank.
/ / OUT-OF-DEBT PERIOD. For a period of at least _______________ consecutive
days during each fiscal year, any consecutive 12-month period, Borrower
shall fully pay down the balance of this Note, so that no amount of
principal or interest and no other obligation under this Note remains
outstanding.
6. AUTOMATIC PAYMENT.
/ / Borrower has elected to authorize Bank to effect payment of sums due under
this Note by means of debiting Borrower's account number
_________________________. This authorization shall not affect the obligation
of Borrower to pay such sums when due, without notice, if there are
insufficient funds in such account to make such payment in full on the due
date thereof, or if Bank fails to debit the account.
7. WAIVERS, CONSENTS AND COVENANTS. Borrower, any indorser, or guarantor
hereof or any other party hereto (individually an "Obligor" and collectively
"Obligors") and each of them jointly and severally: (a) waive presentment,
demand, protest, notice of demand, notice of intent to accelerate, notice of
acceleration of maturity, notice of protest, notice of nonpayment, notice of
dishonor, and any other notice required to be given under the law to any
Obligor in connection with the delivery, acceptance, performance, default or
enforcement of this Note, any indorsement or guaranty of this Note, or any
other documents executed in connection with this Note or any other note or
other loan documents now or hereafter executed in connection with any
obligation of Borrower to Bank (the "Loan Documents"); (b) consent to all
delays, extensions, renewals or other modifications of this Note or the Loan
Documents, or waivers of any term hereof or of the Loan Documents, or release
or discharge by Bank of any of Obligors, or release, substitution or exchange
of any security for the payment hereof, or the failure to act on the part of
Bank, or any indulgence shown by Bank (without notice to or further assent
from any of Obligors), and agree that no such action, failure to act or
failure to exercise any right or remedy by Bank shall in any way affect or
impair the obligations of any Obligors or be construed as a waiver by Bank
of, or otherwise affect, any of Bank's rights under this Note, under any
indorsement or guaranty of this Note or under any of the Loan Documents; and
(c) agree to pay, on demand, all costs and expenses of collection or defense
of this Note or of any indorsement or guaranty hereof and/or the enforcement
or defense of Bank's rights with respect to, or the administration,
supervision, preservation, protection of, or realization upon, any property
security payment hereof, including, without limitation, reasonable attorney's
fees, including fees related to any suit, mediation or arbitration
proceeding, out of court payment agreement, trial, appeal, bankruptcy
proceedings or other proceeding, in the amount of 25% of the principal amount
of this Note, or such greater amount as may be determined reasonable by any
arbitrator or court, whichever is applicable.
8. PREPAYMENTS. Prepayments may be made in whole or in part at any time on
any loan for which the Rate is based on the Prime Rate. All prepayments of
principal shall be applied in the inverse order of maturity, or in such other
order as Bank shall determine in its sole discretion. No prepayment of any
other loan shall be permitted without the prior written consent of Bank.
Notwithstanding such prohibition, if there is a prepayment of any such loan,
whether by consent of Bank, or because of acceleration or otherwise, Borrower
shall, within 15 days of any request by Bank, pay to Bank any loss or expense
which Bank may incur or sustain as a result of such prepayment. For the
purposes of calculating the amounts owed only, it shall be assumed that Bank
actually funded or committed to fund the loan through the purchase of an
underlying deposit in an amount and for a term comparable to the loan, and
such determination by Bank shall be conclusive, absent a manifest error in
computation.
9. DELINQUENCY CHARGE. To the extent permitted by law, a delinquency charge
may be imposed in an amount not to exceed four percent (4%) of any payment
that is more than fifteen days late.
10. EVENTS OF DEFAULT. The following are events of default hereunder: (a)
the failure to pay or perform any obligation, liability or indebtedness of
any Obligor to Bank, or to any affiliate or subsidiary of NationsBank
Corporation, whether under this Note or any Loan Documents, as and when due
(whether upon demand, at maturity or by acceleration); (b) the failure to pay
or perform any other obligation, liability, or indebtedness of any Obligor to
any other party; (c) the death of any Obligor (if an individual); (d) the
resignation or withdrawal of any partner or a material owner/Guarantor of
Borrower, as determined by Bank in its sole discretion; (e) the commencement
of a proceeding against any Obligor for dissolution or liquidation, the
voluntary or involuntary termination or dissolution of any Obligor or the
merger or consolidation of any Obligor with or into another entity; (f) the
insolvency of, the business failure of, the appointment of a custodian,
trustee, liquidator or receiver for
<PAGE>
or for any of the property of, the assignment for the benefit of creditors
by, or the filing of a petition under bankruptcy, insolvency or debtor's
relief law or the filing of a petition for any adjustment of indebtedness,
composition or extension by or against any Obligor; (g) the determination by
Bank that any representation or warranty made to Bank by any Obligor in any
Loan Documents or otherwise is or was, when it was made, untrue or materially
misleading; (h) the failure of any Obligor to timely deliver such financial
statements, including tax returns, other statements of condition or other
information, as Bank shall request from time to time; (i) the entry of a
judgment against any Obligor which Bank deems to be of a material nature, in
Bank's sole discretion; (j) the seizure or forfeiture of, or the issuance of
any writ of possession, garnishment or attachment, or any turnover order for
any property of any Obligor; (k) the determination by Bank that it is
insecure for any reason; (l) the determination by Bank that a material
adverse change has occurred in the financial condition of any Obligor; or (m)
the failure of Borrower's business to comply with any law or regulation
controlling its operation.
11. REMEDIES UPON DEFAULT. Whenever there is a default under this Note (a)
the entire balance outstanding hereunder and all other obligations of any
Obligor to Bank (however acquired or evidenced) shall, at the option of Bank,
become immediately due and payable and any obligation of Bank to permit
further borrowing under this Note shall immediately cease and terminate,
and/or (b) to the extent permitted by law, the Rate of interest on the unpaid
principal shall be increased at Bank's discretion up to the maximum rate
allowed by law, or if none, 25% per annum (the "Default Rate"). The
provisions herein for a Default Rate shall not be deemed to extend the time
for any payment hereunder or to constitute a "grace period" giving Obligors a
right to cure any default. At Bank's option, any accrued and unpaid
interest, fees or charges may, for purposes of computing and accruing
interest on a daily basis after the due date of the Note or any installment
thereof, be deemed to be a part of the principal balance, and interest shall
accrue on a daily compounded basis after such date at the Default Rate
provided in this Note until the entire outstanding balance of principal and
interest is paid in full. Bank is hereby authorized at any time to set off
and charge against any deposit accounts of any Obligor, as well as any money,
instruments, securities, documents, chattel paper, credits, claims, demands,
income and any other property, rights and interests of any Obligor which at
any time shall come into the possession or custody or under the control of
Bank or any of its agents, affiliates or correspondents, without notice or
demand, any and all obligations due hereunder. Additionally, Bank shall have
all rights and remedies available under each of the Loan Documents, as well
as all rights and remedies available at law or in equity.
12. NON-WAIVER. The failure at any time of Bank to exercise any of its
options or any other rights hereunder shall not constitute a waiver thereof,
nor shall it be a bar to the exercise of any of its options or rights at a
later date. All rights and remedies of Bank shall be cumulative and may be
pursued singly, successively or together, at the option of Bank. The
acceptance by Bank of any partial payment shall not constitute a waiver of
any default or of any of Bank's rights under this Note. No waiver of any of
its rights hereunder, and no modification or amendment of this Note, shall be
deemed to be made by Bank unless the same shall be in writing, duly signed on
behalf of Bank; each such waiver shall apply only with respect to the
specific instance involved, and shall in no way impair the rights of Bank or
the obligations of Obligor to Bank in any other respect at any other time.
13. APPLICABLE LAW, VENUE AND JURISDICTION. This Note and the rights and
obligations of Borrower and Bank shall be governed by and interpreted in
accordance with the law of the Commonwealth of Virginia. In any litigation
in connection with or to enforce this Note or any indorsement or guaranty of
this Note or any Loan Documents, Obligors, and each of them, irrevocably
consent to and confer personal jurisdiction on the courts of the Commonwealth
of Virginia or the United States located within the Commonwealth of Virginia
and expressly waive any objections as to venue in any such courts. Nothing
contained herein shall, however, prevent Bank from bringing any action or
exercising any rights within any other state or jurisdiction or from
obtaining personal jurisdiction by any other means available under applicable
law.
14. PARTIAL INVALIDITY. The unenforceability or invalidity of any provision
of this Note shall not affect the enforceability or validity of any other
provision herein and the invalidity or unenforceability of any provision of
this Note or of the Loan Documents to any person or circumstance shall not
affect the enforceability or validity of such provision as it may apply to
other persons or circumstances.
15. BINDING EFFECT. This Note shall be binding upon and inure to the benefit
of Borrower, Obligors and Bank and their respective successors, assigns,
heirs and personal representatives, provided, however, that no obligations of
Borrower or Obligors hereunder can be assigned without prior written consent
of Bank.
16. CONTROLLING DOCUMENT. To the extent that this Note conflicts with or is
in any way incompatible with any other Loan Document concerning this
obligation, the Note shall control over any other document, and if the Note
does not address an issue, then each other document shall control to the
extent that it deals most specifically with an issue.
17. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM
<PAGE>
AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE
WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE
LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL
DISPUTES OF J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF (J.A.M.S.), AND THE
"SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE
SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE
ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS INSTRUMENT,
AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED
PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS
AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF
ANY BORROWER'S DOMICILE AT THE TIME OF THE EXECUTION OF THIS INSTRUMENT,
AGREEMENT OR DOCUMENT AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL
60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL
BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES
OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT,
AGREEMENT OR DOCUMENT; OR (II) BE A WAIVER BY BANK OF THE PROTECTION AFFORDED
TO IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR
(III) LIMIT THE RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH
AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR
PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR
ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF
POSSESSION OR THE APPOINTMENT OF A RECEIVER. BANK MAY EXERCISE SUCH SELF
HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR
ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION
PROCEEDING BROUGHT PURSUANT TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT.
NEITHER THIS EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR
MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES
SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT
IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM
OCCASIONING RESORT TO SUCH REMEDIES.
BORROWER REPRESENTS TO BANK THAT THE PROCEEDS OF THIS LOAN ARE TO BE USED
PRIMARILY FOR BUSINESS, COMMERCIAL OR AGRICULTURAL PURPOSES. BORROWER
ACKNOWLEDGES HAVING READ AND UNDERSTOOD, AND AGREES TO BE BOUND BY, ALL TERMS
AND CONDITIONS OF THIS NOTE AND HEREBY EXECUTES THIS NOTE UNDER SEAL AS OF
THE DATE HERE ABOVE WRITTEN.
NOTICE OF FINAL AGREEMENT. THIS WRITTEN PROMISSORY NOTE REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS.
BORROWER CORPORATE OR PARTNERSHIP BORROWER
_____________________________(Seal) METRO INFORMATION SERVICES, INC.
______________________________ By:______________________________(Seal)
Print Individual's Name
_____________________________(Seal) Name:_________________________________
Title:________________________________
______________________________ _______________________________________
Print Individual's Name Attest (if Applicable)
[Corporate Seal]
<PAGE>
ATTACHMENT A:
INTEREST RATE:
The Borrower shall have the option of selecting one of the following interest
rates on its daily borrowings:
DAILY BORROWINGS
LIBOR RATE DAILY: Interest on the unpaid principal balance, from time to
time, until paid in full at a rate per annum of 150 basis points above the
LIBOR Rate in effect from time to time. As used herein, the term LIBOR Rate
is the rate of interest announced from time to time by the Bank as its LIBOR
Rate and represents a reference used by the bank in determining the interest
rate on certain loans and is not intended to be the lowest rate of interest
charged on any extension of credit to any customer. The LIBOR Rate shall
change daily and is adjusted for the Bank's Eurocurrency reserve requirements.
INTERMEDIATE TERM BORROWINGS
INTERMEDIATE TERM BORROWINGS RATE: Under the availability of the above loan
amount, the Borrower can elect to borrow fixed dollar amounts for a fixed
term of either 30, 60, 120, 180, or 360 days. These intermediate borrowings
will be subject to the same terms and conditions as the daily borrowings, but
will carry an interest rate that will be fixed for the term of the borrowing.
These intermediate term borrowings will not be eligible for prepayment. The
rate on these borrowings will be set based on the LIBOR Rate for the
applicable borrowing term plus 150 basis points. In the event that an
intermediate term borrowing is not paid in full upon its agreed terms it will
become part of the daily borrowings and carry the then applicable interest
rate. These intermediate term borrowings will be evidenced by individual
notes set up at the time of the borrowing. These borrowings must be in
increments of $500,000.00 or greater.
BORROWER:
Metro Information Services, Inc.
By:______________________________
Title:___________________________
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.7 SECURITY AGREEMENT DATED AS OF APRIL 30, 1996 BY AND BETWEEN
CRESTAR BANK AND REGISTRANT.
SECURITY AGREEMENT [LOGO]
This Security Agreement is made by Metro Information Services, Inc. (the
Owner) for the use and benefit of Crestar Bank (the Bank).
1. SECURITY AGREEMENT. In order to induce the Bank from time to time to
extend or continue to extend credit to Metro Information Services, Inc. (the
Borrower), the Owner (which may include the Borrower) hereby grants the Bank,
its successors and assigns, a security interest in the collateral and all
proceeds, rents and profits thereof and all revenues from the right to use
the collateral as described below (the Collateral) to secure the payment of
all present and future indebtedness of every kind and description, however
evidenced, of the Borrower to the Bank, whether such indebtedness is direct
or indirect, fixed or contingent, liquidated or unliquidated, including any
extensions, modifications or renewals thereof (the Indebtedness) and to
secure the performance by the Owner of the agreements and warranties
contained in this Security Agreement.
2. COLLATERAL. As used in this Security Agreement, the term "Collateral,"
whether now existing or hereafter acquired, shall mean (check all that are
applicable):
IF THE COLLATERAL IS NOT SPECIFICALLY DESIGNATED BY A CHECK MARK, THEN THE
OWNER GRANTS THE BANK A BLANKET SECURITY INTEREST.
// Blanket All accounts ("Accounts"), inventory ("Inventory"), furniture,
Security fixtures and equipment ("Equipment"), general intangibles
Interest ("General Intangibles"), instruments, documents and chattel
paper, including, without limitation, all goods represented
thereby and all goods that may be reclaimed or repossessed
from or returned by account debtors and all proceeds,
products, rents and profits thereof (as all such terms are
defined in the Uniform Commercial Code).
// All or a portion of the Collateral will be
attached as a fixture to realty located at
-------------------------------------------.
/x/ Accounts All of the Owner's rights, now existing or arising in the
and future, to payment for goods sold or leased or for services
General rendered, whether or not earned by performance, and whether or
Intangibles not such right to payment is evidenced by an instrument,
document or chattel paper (the "Accounts"), together with
all interest of the Owner in goods, the sale or lease of
which shall have given rise or may give rise to any Account,
including Notes Receivable and all of the Owner's personal
property, including things in action, all returned goods,
reclaimed and repossessed goods, chattel paper, documents,
instruments and money, including, without limitation,
returned and unearned insurance premiums, tax refunds,
contract rights and causes in action of any kind and nature
whatsoever ("General Intangibles") and all proceeds and
products thereof and all substitutions and replacements
therefore.
// Inventory, All goods of every nature which are held for sale or
Accounts, furnished or are to be furnished under contracts of service
and General or sale or lease, supplies, stock-in-trade, all raw
Intangibles materials, work-in-process, finished goods, all items of
personal property, and all returned, reclaimed and
repossessed goods, whether now in the Owner's possession
or control, in transit, in storage, or hereafter acquired
by way of replacement, substitution, addition or otherwise
and all other inventory as defined in the Uniform Commercial
Code ("Inventory"), all accounts as defined in the Uniform
Commercial Code ("Accounts"). General Intangibles and all
proceeds, products, rents and profits thereof.
/x/ Furniture, All of the Owner's furniture, fixtures, equipment, and
Fixtures, leasehold improvements including all equipment as defined
and in the Uniform Commercial Code ("Equipment"), and
Equipment including, but not limited to, any leases, rental
agreements, chattel paper, rental payments and insurance
proceeds together with all accessories, accessions,
attachments, parts, replacements, substitutions,
improvements, repairs installed in or affixed to any
Equipment, and all proceeds and produces thereof.
// All or a portion of the Collateral will be attached as
a fixture to realty located at
------------------------
------------------------------------------------------.
// Equipment All of the following Equipment or Consumer Goods:
and
Consumer
Goods
______________________________________________________________
MAKE BODY TYPE YEAR MODEL SERIAL NUMBER/MOTOR NUMBER
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
including, but not limited to, any leases, rental
agreements, chattel paper, rental payments and insurance
proceeds together with all licenses, tires, tools, equipment
accessories and other accessions now or hereafter installed
in or affixed to the Equipment or Consumer Goods are all
substitutions, renewals and replacements thereof, and all
proceeds, products, rents and profits thereof.
// All or a portion of the Collateral will be attached
as a fixture to realty located at
-------------------
----------------------------------------------------.
// Securities, The following securities, instruments, including unsecured
Instruments, notes secured by deeds of trust or otherwise, certificates of
Certificates deposit, documents, including documents of title, documentary
of Deposit, drafts, accounts, letters of credit, chattel paper, general
Documents, intangibles, including interests in estates and trusts, and
Chattel Paper, other property described as:
and General -------------------------------
Intangibles -----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
---------------------- and all proceeds and products thereof
and all substitutions and replacements therefore.
<PAGE>
The Owner also grants the Bank a security interest in all
rights to which an owner of the Collateral is now or may
become entitled by virtue of owning such Collateral
including, without limitation, interest, cash dividends,
stock dividends and stock rights, all of which shall, when
received, and upon request by the Bank, be delivered to the
Bank with written authority to sell, transfer or
rehypothecate the same.
If the Collateral includes all rights, title and interest
in an Estate or Trust, the security interest shall not
apply to any shares of capital stock of Crestar Financial
Corporation or any of its affiliates, or to any units of
participation in the Bank's Common Trust Fund held by the
Estate or Trust, but shall apply to any proceeds from the
sale of such stocks and units or cash dividends thereof.
3. ACCOUNTS. If the Collateral includes Accounts:
a) The Owner warrants that each and every Account, now owned or hereafter
acquired, is a bona fide existing obligation, valid and enforceable
against the account debtor, for goods sold or leased and delivered or
services rendered in the ordinary course of business; it is subject to
no dispute, defense or offset; the Owner has good title in the Account
and has full right and power to grant the Bank a security interest in
the Collateral;
b) The Owner will immediately notify the Bank of any Account to which the
above warranties are or become untrue;
c) The Owner will prepare and deliver to the Bank, at the Bank's request,
a listing and aging of all Accounts and any further schedules or
information that the Bank may require.
d) The Bank shall have the right at any time to notify account debtors of
its security interest in the Accounts and require payments to be made
directly to the Bank. The Owner hereby appoints the Bank and any
officer or employee of the Bank, as the Bank may from time to time
designate, as its attorneys-in-fact for the Owner, to sign and endorse
in the name of the Owner, to give notice in the name of the Owner, and
to perform all other actions necessary or desirable at the reasonable
discretion of the Bank to effect these provisions and carry out the
intent hereof, all at the cost and expense of the Owner. The Owner
hereby ratifies and approves all acts of such attorneys-in-fact and
neither the Bank nor any other such attorneys-in-fact will be liable
for any acts of commission or omission nor for any error of judgment or
mistake of fact or law. This power being coupled with an interest is
irrevocable so long as any Account or General Intangible assigned to
the Bank remains unpaid and the Borrower has any Indebtedness to the
Bank. The costs of such collection and enforcement, including
attorneys' fees and out-of-pocket expenses, shall be borne solely by
the Owner whether the same are incurred by the Bank or the Owner;
e) At the option of the Bank, all payments on the Accounts received by the
Owner shall be remitted to the Bank in their original form on the day
of receipt; all notes, checks, drafts and other instruments so received
shall be duly endorsed to the order of the Bank. At the Bank's
election, the payments shall be deposited into a special deposit
account ("Special Account") maintained with the Bank. The Bank may
designate with each such deposit the particular Account upon which
payment was made. The Special Account shall be held by the Bank as
security for the Indebtedness. Prior to depositing payments on the
Accounts into the Special Account, the Owner agrees that it will not
commingle such payments with any of the Owner's funds or property, but
will hold them separate and apart and in trust for the Bank. The Bank
will have the power to withdraw from the Special Account. The Bank may
at any time and from to time, in its sole discretion, apply any part of
the funds in the Special Account to the Indebtedness whether or not the
same is due. Upon full and final satisfaction of the Indebtedness plus
termination of any commitment to extend additional funds, the Bank will
pay to the Owner any excess funds, whether received by the Bank as a
deposit in the Special Account or as a direct payment on any of the
Indebtedness;
f) If any of the Owner's Accounts arise out of contracts with the United
States or any department, agency, or instrumentality thereof, the
Owner will immediately notify the Bank in writing and execute any
instruments and take any steps required by the Bank in order that all
monies due and to become due under such contracts shall be assigned to
the Bank and in order that proper notice be given under the Federal
Assignment of Claims Act;
g) The Bank shall not be liable and shall suffer no loss on account of
loss or deprivation of any Account due to acts or omissions of the Bank
unless the Bank's conduct is willful and malicious, and the Bank shall
have no duty to take any action to preserve the Collateral or collect
Accounts.
4. INVENTORY. If the Collateral includes Inventory:
a) The Owner agrees to maintain books and records pertaining to the
Inventory in such detail, form and scope as the Bank shall require. The
Owner shall promptly advise the Bank of any substantial changes
relating to the type, quality or quantity of the Inventory or any event
which would have a material effect on the value of the Inventory or on
the security interest granted to the Bank. Upon reasonable notice by
the Bank, the Owner shall assemble and make readily available for
inspection and examination all of the Inventory and all books and
records pertaining to the Inventory at any time;
b) If the Inventory remains in the possession or control of any of the
Owner's agents or processors, the Owner shall notify such agents or
processors of the Bank's security interest, and upon request, instruct
them to hold such Inventory for the Bank's account and subject to the
Bank's instructions;
c) The Owner will prepare and deliver to the Bank, at the Bank's request,
a listing of all Inventory and such information regarding the Inventory
as the Bank may require.
5. SECURITIES, INSTRUMENTS, CERTIFICATES OF DEPOSIT, DOCUMENTS, CHATTEL PAPER
AND GENERAL INTANGIBLES. If the Collateral includes securities, instruments,
certificates of deposit, documents, chattel paper or general intangibles:
a) The Owner represents and warrants, as may be applicable, that
(i) The Owner has good and marketable title to the Collateral. The
Collateral is valid and genuine and represents a bona fide,
binding, legal obligation of the maker, issuer, or grantor, and
all signatures are genuine;
(ii) The Collateral is in full force and effect and is not in default
and no prepayments have been made;
(iii) The Collateral is not represented by a judgment or any other
document not provided to the Bank;
(iv) The Collateral is not subject to any assignment, claim, lien,
right of setoff or security interest of any other party;
(v) Unless otherwise stated, the face amount on the Collateral is
the correct amount actually and unconditionally due or to become
due according to the terms of the Collateral, and such amount is
not disputed or subject to any setoff, credit, deduction, or
counterclaim;
(vi) With respect to the security on the Collateral, the lien or
security interest represented thereby is not subject to prior
claim, lien, or security interest of any other party, unless
otherwise stated herein, or in the document evidencing such
security;
(vii) With respect to the security on the Collateral, it has been
properly perfected by the filing or recording of all necessary
financing statements, deeds of trust or other documents and the
payment of all recording, transfer and other taxes and fees made
in the appropriate public offices.
b) At any time, and from time to time, whether before or after default,
without notice, and at the expense of the Owner, the Bank in its name
or in the name of its nominee or of the Owner, may, but shall not be
obligated to:
(i) Notify the obligors on any Collateral to make payment to the
Bank of any or all dividends, interest, principal payments and
other sums now or hereafter payable upon or on account of the
Collateral, may collect the same by legal proceedings or
otherwise, and may perform any contract or endorse in the name
of the Owner any checks, drafts, notes, instruments or other
documents which constitute the Collateral;
(ii) Enter into any extension, reorganization, deposit, merger or
consolidation agreement or any agreement in any way relating to
or affecting the Collateral and in connection therewith may
deposit or surrender control of the Collateral, accept other
property in exchange for the Collateral and do and perform such
acts and things as it may deem proper, and any money or property
received in exchange for the Collateral may be either applied to
any Indebtedness or may be held by the Bank pursuant to the
provisions of this Security Agreement;
(iii) Make any compromise or settlement it deems desirable or proper
with reference to the Collateral;
(iv) Insure, process and preserve the Collateral;
(v) Cause the Collateral to be transferred to its name or the name
of its nominee;
(vi) Exercise as to the Collateral all the rights, powers and
remedies of an owner.
6. REPRESENTATIONS AND WARRANTIES. The Owner represents and warrants to the
Bank as follows:
a) The Owner is and will continue to be the absolute owner of the
Collateral and that there are no other liens or security interests
affecting the Collateral other than the security interest granted in
this Security Agreement except those previously disclosed to the Bank
in writing by the Owner, if the Owner is acting in the capacity of
trustee, administrator or executor of an estate, such fact shall be
disclosed and evidence of capacity shall be provided to the Bank;
b) The Owner will defend the Collateral against the claims and demands of
all parties. The Owner will not, without prior written consent of the
Bank, grant any security interest in the Collateral and will keep it
free from any lien, encumbrance or security interest;
c) The Owner represents and warrants that the Collateral never has been,
and never will be so long as this Agreement remains a lien on the
Collateral, used for the generation, collection, manufacture, storage,
treatment, disposal, release or threatened release of any hazardous
substance, as those terms are defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), Superfund
Amendments and Reauthorization Act ("SARA"), applicable state laws,
or regulations adopted pursuant to either of the foregoing. The Owner
agrees to comply with any federal, state or local law, statute,
ordinance or regulation, court or administrative order or decree or
private agreement regarding materials which requires special handling
<PAGE>
in collection, storage, treatment or disposal because of their impact on
the environment ("Environmental Requirements"). The Owner agrees to
indemnify and hold the Bank harmless against any and all claims, losses
and expenses resulting from a breach of this provision of this Agreement
and the Owner will pay or reimburse the Bank for all costs and expenses
for expert opinions or investigations required or requested by the Bank
which, in the Bank's sole discretion, are necessary to ensure compliance
with this provision of this Agreement. This obligation to indemnify shall
survive the payment of this indebtedness and the satisfaction of the
Agreement;
d) The Collateral is and will be used or bought for use primarily for the
following purpose:
// personal, family or household; // farm; /x/ business;
e) The Owner warrants and represents that all Collateral has been produced
in compliance with the Fair Labor Standards Act or other applicable wage
and employee law, rule, regulation or order, and that no existing or
future liability shall occur as a result thereof. The Owner may contest,
in good faith, the applicability of any such law, rule, regulation or order,
including prosecuting any appeals, so long as the Bank's interest in the
Collateral, in the opinion of the Bank, is not jeopardized thereby;
f) The Owner, if an individual, is above the age of majority and has the
legal capacity to enter into this Security Agreement:
g) If an individual, the Owner's home address is _______________________;
h) The Owner, if a corporation, is duly organized and existing under the laws
of Virginia: is duly qualified and in good standing as a foreign
corporation in every jurisdiction where such qualification is necessary;
the execution and performance of this Security Agreement have been duly
authorized by action of its Board of Directors, no action of its
shareholders being necessary; the execution and performance of this
Security Agreement will not violate or contravene any provisions of law or
regulation or its Articles of Incorporation, Shareholder Agreement,
By-Laws or other agreements to which it is a party or by which it is
bound; and that no consent or approval of any governmental agency or
authority is required in making or performing the obligations under this
Security Agreement;
i) The Owner, if a partnership, is duly qualified and in good standing to do
business in every jurisdiction where such qualification is necessary; the
execution and performance of this Security Agreement have been duly
authorized by its partners, no further actions of its partners is
necessary; the execution and performance of this Security Agreement will not
violate or contravene any provisions of law or regulation of its
Partnership Agreement or other agreements to which it is a party or by
which it is bound; and that no consent or approval of any governmental
agency or authority is required in making or performing the obligations
under this Security Agreement;
j) If a corporation, partnership or proprietorship, the location of the
Owner's principal place of business in Virginia (Jurisdiction) is
Virginia Beach (City or County) and it does // does not /x/ have a place
of business in another city or county in that jurisdiction (list other
jurisdiction if applicable);
k) The Collateral will be located at 607 Lynnhaven Parkway, Va. Beach, Va.
23450;
l) The Owner will maintain the Collateral in the above locations. The
collateral shall not be moved from the above locations without the prior
written consent of the Bank. The Owner must notify the Bank in writing at
least 30 days prior to any change of its name, corporate structure or
identity;
m) The Owner maintains its books of account and records only at 607 Lynnhaven
Parkway, Va. Beach, Va. 23450;
n) All information supplied and statements made to the Bank in any financial
or credit statement or application are true, correct, complete, valid and
genuine in all material respects.
The Owner further represents (check if applicable)
// The Collateral is being acquired with funds simultaneously advanced
to the Borrower by the Bank, and such funds will be used for no other
purpose.
7. COVENANTS.
a) The Owner shall maintain complete and accurate books of account and
records, and its principal books of account and records, including all
records concerning Accounts and contract rights, shall be kept and
maintained at the place(s) specified above. The Owner shall not move such
books of account and records without giving the Bank at least 30 days prior
written notice and executing and delivering to the Bank financing
statements satisfactory to the Bank prior to any such move. All accounting
records and financial reports furnished to the Bank shall be maintained and
prepared in accordance with generally accepted accounting principles
consistently applied. It is specifically agreed that the Bank shall have
and the Owner hereby grants to the Bank a security interest in all books
of account and records of the Owner and shall have access to them at any
time for inspection, verification, examination and audit;
b) The Owner shall furnish to the Bank such financial and business
information and reports in form and content satisfactory to the Bank as and
when the Bank may from time to time require;
c) The Owner, if a corporation, shall maintain its corporate existence in
good standing and shall not consolidate or merge with or acquire the stock
of any other corporation without the prior written consent of the Bank. If
the Owner is a corporation, the Owner shall, at the request of the Bank,
qualify as a foreign corporation and obtain all requisite licenses and
permits in each jurisdiction where the Owner does business. The Owner
shall not discontinue business, liquidate, sell, transfer, assign or
otherwise dispose of any of its assets, except with the prior written
permission of the Bank, provided, however, that it may sell in the
ordinary course of business and for a full consideration in money or
money's worth, any product, merchandise or service produced or marketed
by it. The Bank's security interest shall attach to all proceeds of all
sales or dispositions of the Collateral;
d) The Owner shall maintain all of the Collateral in good condition and
repair. The Bank shall have the right to inspect the Collateral at any
reasonable time and shall have the right to obtain such appraisals,
reappraisals, appraisal updates or environmental inspections as the
Bank, in its sole discretion, may deem necessary from time to time.
e) The Owner shall at all times keep insurable Collateral insured against
any and all risks, including, without limitation, fire, and such other
insurance as may be required by the Bank from time to time; and in such
amounts as may be satisfactory to the Bank. The Bank shall be named as
Loss Payee on any such insurance policies. Insurance may be purchased
from an insurer of the Owner's choice, except as otherwise required by
law. The Owner shall pay and discharge all taxes, assessments and charges
of every kind prior to the date when such taxes, assessments or charges
shall become delinquent and provide proof of such payments to the Bank,
upon request. However, nothing contained in this Security Agreement shall
require the Owner to pay any such taxes, assessments and charges so long
as it shall contest its validity in good faith and shall post any bond or
security required by the Bank against the payment. Upon the failure of the
Owner to pay such required amounts, the Bank, at its option, and at the
Owner's expense, may obtain such insurance or pay such taxes, assessments
or charges with the costs or premiums becoming part of the indebtedness at
the option of the Bank, such amounts may be payable on demand. Any
insurance obtained by the Bank, at its option, may be single or dual
interest, protecting its rights, rights of the Owner or joint rights. Any
insurance obtained by the Bank may provide, at its option, that such
insurance will pay the lesser of the unpaid balance of the indebtedness
or the repair or replacement value of the Collateral. The Owner authorizes
the Bank to give effect to any of these options without prior notice to
Owner or further consent from Owner. No matter which insurance coverage
or repayment options the Bank chooses, the collateral will secure payment
of these amounts. The Bank may use the proceeds of any insurance obtained
by Owner or by the Bank to repair or replace the collateral or, if the
Bank elects to do so, to repay part or all of the indebtedness, and the
Borrowers will still be responsible to repay any remaining unpaid balance
of the indebtedness. Owner assigns to the Bank all amounts payable
under the insurance, including unearned premiums, directing the insurer to
make payment to the Bank, and Owner appoints us attorney-in-fact to
endorse any draft.
f) The Owner will not pledge or grant any security interest in any of the
Collateral to anyone except the Bank, or permit any lien or encumbrance to
attach to any of the Collateral, or any levy to be made on the Collateral,
or any financing statement (except financing statements in favor of the
Bank) to be on file against the Collateral.
g) The Owner agrees that it will not permit any return of merchandise, the
sale of which gave rise to any of the Accounts, except in the usual and
regular course of business.
8. DEFAULT. In addition to any right which the Bank may have to demand
payment of the Indebtedness under any other agreement, upon the occurrence of
any of the following events of default, the Bank, at its option, may declare
any or all of the Indebtedness immediately due and payable and may exercise
any and all of the rights and remedies of default of a secured party under
the Uniform Commercial Code and other applicable law and all rights provided
herein, all of which rights and remedies shall, to the full extent permitted
by law, be cumulative;
a) If the Borrower fails to pay when due any indebtedness or shall otherwise
be in default under any agreement of the Borrower with the Bank or with
Crestar Financial Corporation, or any subsidiary or affiliate of Crestar
Financial Corporation, or any subsidiary or affiliate of such subsidiary or
affiliate (whether now existing or hereafter organized or acquired); or
b) The failure of the Owner to observe or perform any of the terms or
provisions of this Security Agreement, or any such default by the Borrower,
any endorser, or any guarantor of any indebtedness of the Borrower to the
Bank (a Party); or
c) The breach of any of the Owner's representations or warranties in this
Security Agreement or any other agreement with the Bank; or
d) The death, dissolution, merger, consolidation or termination of existence
of the Owner or any Party; or
<PAGE>
e) The insolvency or inability to pay debts as they mature of the Owner or
any Party, or the application for the appointment of a receiver for any
of them, or the filing of a petition under any provision of the
Bankruptcy Code or other insolvency law, statute or proceeding by or
against any of them, or any assignment for the benefit of creditors by
or against any of them; or
f) The entry of a judgment against the Owner or any Party or the issuance
or service of any attachment, levy or garnishment against the Owner or
any Party or the property of any of them or the repossession or seizure
of property of the Owner or any Party;
g) Any deterioration or impairment of the Collateral or any part of the
Collateral or any decline or depreciation in the value or market value
of the Collateral (whether actual or reasonably anticipated), which
causes the Collateral, in the judgment of the Bank, to become
unsatisfactory as to character or value; or
h) A determination by the Bank that a material adverse change in the
financial condition of the Owner or any Party has occurred since the
date of this Security Agreement; or
i) The Owner or any Party commits fraud or makes a material
misrepresentation at any time in connection with this Security
Agreement.
The Bank may require the Owner to assemble the Collateral and make it
available to the Bank at a place to be designated by the Bank which is
reasonably convenient to the Bank and the Owner. The Bank may take possession
of the Collateral without a court order. The Owner shall pay to the Bank on
demand all legal expenses and reasonable attorneys' fees (not to exceed 15%
of Indebtedness then owed if the Bank is Crestar Bank, N.A. or Crestar Bank MD
or 25% of Indebtedness then owned if the Bank is Crestar Bank) if the Bank
refers this Security Agreement to an attorney who is not a salaried employee
of the Bank, appraisal fees and all expenses incurred or paid by the Bank, in
protecting and enforcing the rights of the Bank under this Security
Agreement, including the Bank's right to take possession of the Collateral
and its proceeds, and to hold, prepare for sale, sell and dispose of the
Collateral. Any required notice by the Bank of sale or other disposition on
default, when placed in the mail and addressed to or left upon the premises
of the Owner, at the address specified next to the Owner's signature below or
such other address of the Owner as may from time to time be shown on the
Bank's records, at least ten days prior to such action shall constitute
reasonable notice to the Owner.
9. TERM. This Security Agreement shall be a continuing agreement and shall
remain in full force and effect irrespective of any interruptions in the
business relations of the Borrower with the Bank and shall apply to any
ultimate balance which shall remain due by the Borrower to the Bank;
provided, however, that the Owner may by written notice terminate this
Security Agreement with respect to all Indebtedness of the Borrower incurred
or contracted by the Borrower or acquired by the Bank after the date on which
such notice is personally delivered to or mailed via registered mail and
accepted by the Borrower's lending officer.
10. EXECUTION BY MORE THAN ONE PARTY. The term "Owner" as used in this
Security Agreement shall, if this instrument is signed by more than one
Party, mean the "Owner and each of them" and each shall be jointly and
severally obligated and liable. If any Party shall be a partnership, the
agreements and obligations on the part of the Owner shall remain in force and
applicable regardless of any changes in the individuals composing the
partnership and the term "Owner" shall include any altered or successive
partnerships and the predecessor partnerships and their partners shall not be
released from any obligation or liability.
11. WAIVERS BY THE OWNER. The Owner hereby waives (1) notice of acceptance
of this Security Agreement and of any extensions or renewals of credit by the
Bank to the Borrower; (2) presentment and demand for payment of the
Indebtedness; (3) protest and notice of dishonor or default to the Owner or
to any other party with respect to the Indebtedness; (4) all other notices to
which the Owner might otherwise be entitled; and (5) if for business
purposes, the benefit of the Homestead Exemption. The Owner further waives
any right to require that any action be brought against the Borrower or any
other party, to require that resort be had to any security or to any balance
of any deposit account or credit on the books of the Bank in favor of the
Borrower or any other party. The Owner further agrees that it shall not be
subrogated and will not enforce on its part or behalf any right of action
which the Bank may have against the Borrower until every Indebtedness secured
under this Security Agreement is paid in full.
12. NO OBLIGATIONS TO EXTEND CREDIT. This contract shall not be construed
to impose any obligation on the Bank to extend or continue to extend any
credit at any time.
13. INDEMNITY. The Owner agrees to indemnify and hold harmless the Bank and
its subsidiaries, affiliates, successors, parents, and assigns and their
respective agents, directors, employees, and officers from and against any
and all complaints, claims, defenses, demands, actions, bills, causes of
action (including, without limitation, costs and attorneys' fees), and losses
of every nature and kind whatsoever, which may be raised or sustained by any
directors, officers, employees, shareholders, creditors, regulators,
successors in interest, or receivers of the Borrower or any third party as a
result of or arising out of, directly or indirectly, the Bank extending
credit as evidenced by the Indebtedness to the Borrower, and taking the
Collateral as security for the Indebtedness, and the Owner further agrees to
be liable for any and all judgments which may be recovered in any such
action, claim, proceeding, suit, or bill, including any compromise or
settlement thereof, and defray any and all expenses, including, without
limitation, costs and attorneys' fees, that may be incurred in or by reason
of such actions, claims, proceedings, suits, or bills.
14. FINANCING STATEMENTS. The Owner will deliver such instruments of
further assignment or assurance as the Bank may from time to time request to
carry out the intent of this Security Agreement, and will join with the Bank
in executing financing statements and other documents in form satisfactory to
the Bank and pay the cost of filing the same, including all recordation,
transfer and other taxes and fees, continuation statements and any other
documents in any public office deemed advisable by the Bank. The Owner agrees
that a carbon, photographic or other reproduction of a financing statement or
this Security Agreement shall be sufficient as a financing statement.
15. SUCCESSOR IN INTEREST. This Security Agreement shall be binding upon
the Owner, its successors and assigns, and the benefits hereof shall inure to
the Bank, its successors and assigns.
16. WAIVER BY THE BANK. The Bank may waive any default or remedy any
default without waiving the default remedied or any other period or
subsequent default. The Bank's failure to exercise any right or take any
action under this Security Agreement shall not constitute a waiver of that or
any other right or action.
17. WAIVER OF JURY TRIAL. To the extent legally permissible, the Owner
waives all right to trial by jury in any litigation relating to transactions
under this Security Agreement, whether sounding in contract, tort or
otherwise.
18. GOVERNING LAW. The laws of the jurisdiction in which the Bank is
located shall govern the construction of this Security Agreement and the
rights and duties of the Owner and Parties.
The undersigned have executed or caused this Security Agreement to be
executed, under seal, as of this 1st day of May, 1993.
--- --- --
<TABLE>
<S> <S>
607 Lynnhaven Parkway Metro Information Services, Inc.
- --------------------------------- --------------------------------
Street and Number Owner
Virginia Beach, Virginia 23450 By /s/ John H. Fain JOHN H. FAIN
- --------------------------------- -----------------------PRESIDENT
City State ZIP (Name and Title) (SEAL)
- --------------------------------- -------------------------- (SEAL)
Street and Number Owner
- --------------------------------- By -----------------------
City State ZIP (Name and Title)
</TABLE>
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.8 PROMISSORY NOTE DATED AS OF APRIL 30, 1996 BY AND
BETWEEN CRESTAR BANK AND REGISTRANT.
COMMERCIAL NOTE - CRESTAR BANK {LOGO}
BORROWER: Metro Information Services, Inc.
LOAN AMOUNT: Two Million Dollars and no cents ($2,000,000.00)
BORROWER'S ADDRESS: P.O. Box 8888
607 Lynnhaven Pkwy
Va. Beach, VA 23450-8888
OFFICER: Joel S Rhew ______ (initials) DATE: May 1, 1996
ACCOUNT NO: 04300034372843 NOTE NO: 0001 NOTE TYPE: Renewal Loan
______________________________________________________________________________
For Value Received, the undersigned (whether one or more) jointly and
severally promise to pay to the order of Crestar Bank (the "Bank") at any of
its offices, or at such place as the Bank may designate in writing, without
offset and in immediately available funds, the Loan Amount shown above,
including or plus interest, and any other amounts due, upon the terms
specified below.
LOAN TYPE AND REPAYMENT TERMS
LOAN TYPE: Revolving Master Borrowing Line
This is an open end revolving line of credit. You may
borrow an aggregate principal amount up to the Loan Amount
shown above outstanding at any one time.
REPAYMENT TERMS: Principal on demand, plus interest, but the undersigned
shall be liable for only so much of the Loan Amount as shall
be equal to the total advanced to or for the undersigned, or
any of them, by the Bank from time to time, less all
payments made by or for the undersigned and applied by the
Bank to principal, plus interest on each such advance, and
any other amounts due all as shown on the Bank's books and
records, which shall be prima facie evidence of the amount
owed.
This Master Borrowing arrangement will terminate upon
written notice from the Bank to the undersigned, or if such
notice is not sooner given, 12 months from the date of this
Note, unless an alternate termination date is indicated in
the "Agreement", as defined below.
The Bank shall have the right to demand payment at any time
even if an event of default (as identified in this Note) has
not occurred.
ADDITIONAL TERMS AND CONDITIONS:
This Note is governed by additional terms and conditions contained in a
Commitment Letter between the undersigned and the Bank dated April 30, 1996,
and any modifications, renewals, extensions or replacements thereof (the
"Agreement"), which is incorporated in this Note by reference. In the event
of a conflict between any term or condition contained in this Note and in the
Agreement, such term or condition of the Agreement shall control.
INTEREST
Accrued interest will be payable on the last day of each month beginning on
May 31, 1996.
Interest will accrue daily on an actual/360 basis (that is, on the actual
number of days elapsed over a year of 360 days).
Each scheduled payment made on this Note will be applied to accrued interest
before it is applied to principal. Interest will accrue from the date of this
Note on the unpaid balance and will continue to accrue after maturity,
whether by acceleration or otherwise, until this Note is paid in full. If
this is a variable rate transaction, the interest rate is prospectively
subject to increase or decrease without prior notice, and if this is a
Term-Variable Payment loan, adjustments in the payment schedule will be made
as necessary. If the stated Rate (as defined below) is based on a Prime Rate
of Crestar Bank, the interest rate is subject to increase or decrease at the
sole option of the Bank.
Subject to the above, interest per annum payable on this Note (the "Rate")
will be the "Prime Rate" (as defined in this Note). The "Prime Rate" shall be
the borrower's option of the following rates: (A) the rate established from
time to time by the Bank and recorded
_______________________________________________________________________________
IMPORTANT NOTICE
THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES
A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND ALLOWS THE CREDITOR
TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE.
_______________________________________________________________________________
Page 1
<PAGE>
in its Central Credit Administration Division as a reference rate for fixing
the lending rate for commercial loans or (B) 1.65% plus LIBOR rate or
(C) 1.65% plus Crestar Money Market Rate. The Prime Rate is a
reference rate only and does not necessarily represent the lowest rate of
interest charged for such borrowings. Adjustments to the Rate shall be
effective as of: Crestar Prime: as of the date the Prime Rate changes or if
LIBOR: at specified maturities or if Crestar Money Market: float on a daily
basis.
This Note represents a renewal and refinance of the balance owed on note
number 043000343728430001 dated June 16, 1995, in the original principal
amount of $2,000,000.00.
COLLATERAL
Any collateral pledged to the Bank to secure any of the undersigned's
existing or future liabilities to the Bank shall secure this Note. To the
extent permitted by law, each of the undersigned grants to the Bank a
security interest in and a lien upon all deposits or investments maintained
by the undersigned with, and all indebtedness owed to the undersigned by, the
Bank or any of its affiliates.
This Note is also secured by the following collateral and proceeds thereof.
All accounts, contract rights, chattel paper, instruments, documents and
general intangibles now existing or hereafter acquired and all proceeds and
products thereof as more particularly described in a Security Agreement by
Metro Information Services, Inc. date May 1, 1993.
All of this security is referred to collectively as the "Collateral." The
Collateral is security for the payment of this Note and any other liability
(including overdrafts and future advances) of the undersigned to the Bank,
however evidenced, now existing or hereafter incurred, matured or unmatured,
direct or indirect, absolute or contingent, several, joint, or joint and
several, including any extensions, modifications or renewals. The proceeds of
any Collateral may be applied against the liabilities of the undersigned to
the Bank in any order at the option of the Bank.
LOAN PURPOSE AND UPDATED FINANCIAL INFORMATION REQUIRED
The undersigned warrant and represent that the loan evidenced by this Note is
being made solely for the purpose of acquiring or carrying on a business,
professional or commercial activity or acquiring real or personal property as
an investment (other than a personal investment) or for carrying on an
investment activity (other than a personal investment activity). The
undersigned agree to provide to the Bank updated financial information,
including, but not limited to, tax returns, current financial statements in
form satisfactory to the Bank, as well as additional information, reports or
schedules (financial or otherwise), all as the Bank may from time to time
request.
DEFAULT, ACCELERATION AND SETOFF
Any one of the following will constitute an event of default under the terms
of this Note: (1) the failure to make when due any instalment or other
payment, whether of principal, interest, late charges or other authorized
charges due under this Note, or the failure to pay the amount demanded by the
Bank if this Note is payable on demand; (2) the death, dissolution, merger,
acquisition, consolidation or termination of existence of the undersigned,
any guarantor of the indebtedness of any of the undersigned to the Bank, any
endorser, or any other party to this Note (collectively called a "Party");
(3) the insolvency or inability to pay debts as they mature of any Party, or
the application for the appointment of a receiver for any Party or the filing
of a petition under any provision of the Bankruptcy Code or other insolvency
law, statute or proceeding by or against any Party or any assignment for the
benefit of creditors by or against any Party; (4) the entry of a judgment
against any Party or the issuance or service of any attachment, levy or
garnishment against any Party or the property of any Party, or the
repossession or seizure of property of any Party; (5) a determination by the
Bank that it deems itself insecure or that a material adverse change in the
financial condition of any Party or decline or depreciation in the value or
market value of any Collateral has occurred since the date of this Note or is
reasonably anticipated; (6) the failure of any Party to perform any other
obligation to the Bank under this Note or under any other agreement with the
Bank; (7) the occurrence of an event of default with respect to any existing
or future indebtedness of any Party to the Bank or any other creditor of the
Party; (8) a material change in the ownership, control or management of any
Party that is an entity, unless such change is approved by the Bank in its
sole discretion; (9) if any Party gives notice to the Bank purporting to
terminate its obligations under or with respect to this Note; (10) the sale
or transfer by a Party of all or substantially all of its assets other than
in the ordinary course of business; or (11) any Party commits fraud or makes
a material misrepresentation at any time in connection with this Note. If an
event of default occurs, or in the event of non-payment of this Note in full
at maturity, the entire unpaid balance of this Note will, at the option of
the Bank, become immediately due and payable, without notice or demand. Upon
the occurrence of an event of default, the Bank will be entitled to interest
on the unpaid balance at the stated Rate plus 2.00% (the "Default Rate"),
unless otherwise required by law, until paid in full. To the extent permitted
by law, upon default, the Bank will have the right, in addition to all other
remedies permitted by law, to set off the amount due under this Note or due
under any other obligation to the Bank against any and all accounts, whether
checking or savings or otherwise, credits, money, stocks, bonds or other
security or property of any nature on deposit with, held by, owed by, or in
the possession of, the Bank or any of its affiliates to the credit of or for
the account of any Party, without notice to or consent by any Party. The
remedies provided in this Note and any other agreement between the Bank and
any Party are cumulative and not exclusive of any remedies provided by law.
CAPITAL ADEQUACY
Page 2
<PAGE>
Should the Bank, after the date of this Note, determine that the adoption of
any law or regulation regarding capital adequacy, or any change in its
interpretation or administration, has or would have the effect of reducing
the Bank's rate of return under this Note to a level below that which the
Bank could have achieved but for the adoption or change, by an amount which
the Bank considers to be material, then, from time to time, 30 days after
written demand by the Bank, the undersigned shall pay to the Bank such
additional amounts as will compensate the Bank for the reduction. Each demand
by the Bank will be made in good faith and accompanied by a certificate
claiming compensation under this paragraph and stating the amounts to be paid
to it and the basis for the payment.
LATE CHARGES AND OTHER AUTHORIZED CHARGES
If any portion of a payment is at least ten (10) days past due, the
undersigned agree to pay a late charge of 5.00% of the amount which is past
due. Unless prohibited by applicable law, the undersigned agree to pay the
fee established by the Bank from time to time for returned checks if a
payment is made on this Note with a check and the check is dishonored for any
reason after the second presentment. In addition, as permitted by applicable
law, the undersigned agree to pay the following: (1) all expenses, including,
without limitation, all court or collection costs, and attorneys' fees of 25%
of the unpaid balance of this Note, or actual attorneys' fees if in excess of
such amount, whether suit be brought or not, incurred in collecting this
Note; (2) all costs incurred in evaluating, preserving or disposing of any
Collateral granted as security for the payment of this Note, including the
cost of any audits, appraisals, appraisal updates, reappraisals or
environmental inspections which the Bank from time to time in its sole
discretion may deem necessary; (3) any premiums for property insurance
purchased on behalf of the undersigned or on behalf of the owner(s) of the
Collateral pursuant to any security instrument relating to the Collateral;
(4) any expenses or costs incurred in defending any claim arising out of the
execution of this Note or the obligation which it evidences, or otherwise
involving the employment by the Bank of attorneys with respect to this Note
and the obligations it evidences; and (5) any other charges permitted by
applicable law. The undersigned agree to pay these authorized charges on
demand or, at the Bank's option, the charges may be added to the unpaid
balance of the Note and will accrue interest at the stated Rate. Upon the
occurrence of an event of default, interest will accrue at the Default Rate.
WAIVERS
The undersigned and each other Party waive presentment, demand, protest,
notice of protest and notice of dishonor and waive all exemptions, whether
homestead or otherwise, as to the obligations evidenced by this Note. The
undersigned and each other Party waive any rights to require the Bank to
proceed against any other Party or person or any Collateral before proceeding
against the undersigned or any of them, or any other Party, and agree that
without notice to any Party and without affecting any Party's liability, the
Bank, at any time or times, may grant extensions of the time for payment or
other indulgences to any Party or permit the renewal or modification of this
Note, or permit the substitution, exchange or release of any Collateral for
this Note and may add or release any Party primarily or secondarily liable.
The undersigned and each other Party agree that the Bank may apply all monies
made available to it from any part of the proceeds of the disposition of any
Collateral or by exercise of the right of setoff either to the obligations
under this Note or to any other obligations of any Party to the Bank, as the
Bank may elect from time to time. The undersigned also waive any rights
afforded to them by Sections 49-25 and 49-26 of the Code of Virginia of 1950
as amended.
TO THE EXTENT LEGALLY PERMISSIBLE, THE UNDERSIGNED WAIVE ANY RIGHT TO TRIAL
BY JURY IN ANY LITIGATION RELATING TO TRANSACTIONS UNDER THIS NOTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE.
JUDGMENT BY CONFESSION
The undersigned hereby duly constitute and appoint Betty C. Bradshaw or David
A. Durham or David Singleton as the true and lawful attorney-in-fact for them
in any or all of their names, place and stead, and upon the occurrence of an
event of default, to confess judgment against them, or any of them, in the
Circuit Court for the City of Norfolk or Virginia Beach, Virginia upon this
Note and all amounts owed thereunder, including all costs of collection,
attorneys' fees equal to 25% of the unpaid principal balance hereof and court
costs, hereby ratifying and confirming the acts of said attorney-in-fact as
if done by themselves, expressly waiving benefit of any homestead or other
exemption laws.
SEVERABILITY, AMENDMENTS AND NO WAIVER BY BANK
Any provision of this Note which is prohibited or unenforceable will be
ineffective to the extent of the prohibition or unenforceability without
invalidating the remaining provisions of this Note. No amendment,
modification, termination or waiver of any provision of this Note, nor
consent to any departure by the undersigned from any term of this Note, will
in any event be effective unless it is in writing and signed by an authorized
employee of the Bank, and then the waiver or consent will be effective only
in the specific instance and for the specific purpose for which given. If the
interest Rate is tied to an external index and the index becomes unavailable
during the term of this loan, the Bank may designate a substitute index with
notice to the Borrower. No failure or delay on the part of the Bank to
exercise any right, power or remedy under this Note may be construed as a
waiver of the right to exercise the same or any other right at any time.
LIABILITY, SUCCESSORS AND ASSIGNS AND GOVERNING LAW
Each of the undersigned shall be jointly and severally obligated and liable
on this Note. This Note shall apply to and bind each of the undersigned's
heirs, personal representatives, successors and assigns and shall inure to the
benefit of the Bank, its successors and assigns. This Note shall be governed
by the internal laws of the Commonwealth of Virginia and applicable federal
law.
Page 3
<PAGE>
By signing below, the undersigned agree to the terms of this Note and
acknowledge receipt of a loan in the Loan Amount shown above.
Metro Information Services, Inc.
By: /s/ JOHN H. FAIN
_______________________________ (Seal)
John H. Fain, President
Page 4
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.9 SECURITY AGREEMENT DATED AS OF APRIL 30, 1996 BY
AND BETWEEN SIGNET BANK AND REGISTRANT.
[LOGO]
<TABLE>
<CAPTION>
COMMERCIAL SECURITY AGREEMENT
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$2,000,000.00 05-08-1995 05-31-1996 300 4435 14531
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
BORROWER: Metro Information Services, Inc. LENDER: SIGNET BANK/VIRGINIA
607 Lynnhaven Parkway Plume Street Branch
Virginia Beach, VA 23450 500 Plume Street East
8th Floor
Norfolk, VA 23510
_______________________________________________________________________________
_______________________________________________________________________________
THIS COMMERCIAL SECURITY AGREEMENT is entered into between Metro Information
Services, Inc. (referred to below as "Grantor"); and SIGNET BANK/VIRGINIA
(referred to below as "Lender"). For valuable consideration, Grantor grants
to Lender a security interest in the Collateral to secure the Indebtedness
and agrees that Lender shall have the rights stated in this Agreement with
respect to the Collateral, in addition to all other rights which Lender may
have by law.
DEFINITIONS. The following words shall have the following meanings when used
in this Agreement. Terms not otherwise defined in this Agreement shall have
the meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
AGREEMENT. The word "Agreement" means this Commercial Security Agreement,
as this Commercial Security Agreement may be amended or modified from time
to time, together with all exhibits and schedules attached to this
Commercial Security Agreement from time to time.
COLLATERAL. The word "Collateral" means the following described property
of Grantor, whether now owned or hereafter acquired, whether now existing
or hereafter arising, and wherever located:
All chattel paper, accounts, contract rights and general intangibles
In addition, the word "Collateral" includes all the following, whether
now owned or hereafter acquired, whether now existing or hereafter
arising, and wherever located:
(a) All accessions, accessories, increases, and additions to and all
replacements of and substitutions for any property described above.
(b) All products and produce of any of the property described in this
Collateral section.
(c) All accounts, contract rights, general intangibles, instruments,
rents, monies, payments, and all other rights, arising out of a sale,
lease, or other disposition of any of the property described in this
Collateral section.
(d) All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property
described in this Collateral section.
(e) All records and data relating to any of the property described in
this Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of
Grantor's right, title, and interest in and to all computer software
required to utilize, create, maintain, and process any such records or
data on electronic media.
EVENT OF DEFAULT. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "Events of Default."
GRANTOR. The word "Grantor" means Metro Information Services, Inc., its
successors and assigns.
GUARANTOR. The word "Guarantor" means and includes without limitation
each and all of the guarantors, sureties, and accommodation parties in
connection with the Indebtedness and their personal representatives,
successors and assigns.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
the Note, including all principal, interest, and fees, costs, and
expenses, if any, together with all modifications of and renewals,
replacements and substitutions for any of the foregoing. "Indebtedness"
also includes all other present and future liabilities and obligations of
Grantor to Lender, whether direct or indirect, matured or unmatured, and
whether absolute or contingent, joint, several or joint and several, and
no matter how the same may be evidenced or shall arise.
LENDER. The word "Lender" means SIGNET BANK/VIRGINIA, its successors and
assigns.
NOTE. The word "Note" means the note or credit agreement dated May 8,
1995, in the principal amount of $2,000,000.00 from Grantor to Lender,
together with all modifications of and renewals, replacements, and
substitutions for the note or credit agreement.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages,
deeds of trust, and all other instruments, agreements and documents,
whether now or hereafter existing, executed in connection with the
Indebtedness.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Grantor given to Lender
by law, Lender shall have, with respect to Grantor's obligations to Lender
under this Agreement and to the extent permitted by law, a contractual
possessory security interest in and a right of setoff against, and Grantor
hereby assigns, conveys, delivers, pledges, and transfers to Lender all of
Grantor's right, title, and interest in and to all deposits, money, accounts,
and other property of Grantor now or hereafter in the possession of or on
deposit with Lender, whether held in a general or special account or
deposit, whether held jointly with someone else, or whether held for
safekeeping or otherwise, excluding however all IRA, Keogh, and trust
accounts. Every such security interest and right of setoff may be exercised
without demand upon or notice to Grantor. No security interest or right of
setoff shall be deemed to have been waived by any act or conduct on the part
of Lender or by any neglect to exercise such right of setoff or to enforce
such security interest or by any delay in so doing. Every right of setoff and
security interest shall continue in full force and effect until such right of
setoff or security interest is specifically waived or released by an
instrument in writing executed by Lender.
OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:
PERFECTION OF SECURITY INTEREST. Grantor agrees to execute such
financing statements and to take whatever other actions are requested by
Lender to perfect and continue Lender's security interest in the
Collateral. Upon request of Lender, Grantor will deliver in Lender any and
all of the documents evidencing or constituting the Collateral, and
Grantor will note Lender's interest upon any and all chattel paper if not
delivered to Lender for possession by Lender. Grantor hereby appoints
Lender as its irrevocable attorney-in-fact for the purpose of executing
any documents necessary to perfect or to continue the security interest
granted in this Agreement. Lender may at any time, and without further
authorization from Grantor, file a carbon, photographic or other
reproduction of any financing statement or of this Agreement for use as a
<PAGE>
05-08-1995 COMMERCIAL SECURITY AGREEMENT Page 2
(Continued)
- ------------------------------------------------------------------------------
financing statement. Grantor will reimburse Lender for all expenses for the
perfection and the continuation of the perfection of Lender's security
interest in the Collateral. Grantor promply will notify Lender before any
change in Grantor's name including any change to the assumed business names
of Grantor. THIS IS A CONTINUING SECURITY AGREEMENT AND WILL CONTINUE IN
EFFECT EVEN THOUGH ALL OR ANY PART OF THE INDEBTEDNESS IS PAID IN FULL AND
EVEN THOUGH FOR A PERIOD OF TIME GRANTOR MAY NOT BE INDEBTED TO LENDER.
NO VIOLATION. The execution and delivery of this Agreement will not violate
any law or agreement governing Grantor or to which Grantor is a party, and
its certificate or articles of incorporation and bylaws do not prohibit any
term or condition of this Agreement.
ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
accounts, contract rights, chattel paper, or general intangibles, the
Collateral is enforceable in accordance with its terms, is genuine, and
complies with applicable laws concerning form, content and manner of
preparation and execution, and all persons appearing to be obligated on the
Collateral have authority and capacity to contract and are in fact
obligated as they appear to be on the Collateral. At the time any account
becomes subject to a security interest in favor of Lender, the account shall
be a good and valid account representing an undisputed, bona fide
indebtedness incurred by the account debtor, for merchandise held subject to
delivery instructions or theretofore shipped or delivered pursuant to a
contract of sale, or for services theretofore performed by Grantor with or
for the account debtor, there shall be no setoffs or counterclaims against
any such account; and no agreement under which any deductions or discounts
may be claimed shall have been made with the account debtor except those
disclosed to Lender in writing.
REMOVAL OF COLLATERAL. Grantor shall keep the Collateral (or to the extent
the Collateral consists of intangible property such as accounts, the records
concerning the Collateral) at Grantor's address shown above, or at such other
locations as are acceptable to Lender. Except in the ordinary course of its
business, including the sales of inventory, Grantor shall not remove the
Collateral from its existing locations without the prior written consent of
Lender. To the extent that the Collateral consists of vehicles, or other
titled property, Grantor shall not take or permit any action which would
require application for certificates of title for the vehicles outside the
Commonwealth of Virginia, without the prior written consent of Lender.
TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall not
sell, offer to sell, or otherwise transfer or dispose of the Collateral.
Grantor shall not pledge, mortgage, encumber or otherwise permit the
Collateral to be subject to any lien, security interest, encumbrance,
or charge, other than the security interest provided for in this Agreement,
without the prior written consent of Lender. This includes security interests
even if junior in right to the security interests granted under this
Agreement. Unless waived by Lender, all proceeds from any disposition of the
Collateral (for whatever reason) shall be held in trust for Lender and shall
not be commingled with any other funds; provided however, this requirement
shall not constitute consent by Lender to any sale or other disposition. Upon
receipt, Grantor shall immediately deliver any such proceeds to Lender.
TITLE. Grantor represents and warrants to Lender that it holds good and
marketable title to the Collateral, free and clear of all liens and
encumbrances except for the lien of this Agreement. No financing statement
covering any of the Collateral is on file in any public office other than
those which reflect the security interest created by this Agreement or to
which Lender has specifically consented. Grantor shall defend Lender's rights
in the Collateral against the claims and demands of all other persons.
COLLATERAL SCHEDULES AND LOCATIONS. As often as Lender shall require, and
insofar as the Collateral consists of accounts and general intangibles,
Grantor shall deliver to Lender schedules of such Collateral, including such
information as Lender may require, including without limitation names and
addresses of account debtors and agings of accounts and general intangibles.
Such information shall be submitted for Grantor and each of its subsidiaries
or related companies.
MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor shall maintain all tangible
Collateral in good condition and repair. Grantor will not commit or permit
damage to or destruction of the Collateral or any part of the Collateral.
Lender and its designated representatives and agents shall have the right at
all reasonable times to examine, inspect, and audit the Collateral wherever
located.
TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, its use or operation, upon this
Agreement, upon any promissory note or notes evidencing the Indebtedness, or
upon any of the other Related Documents. Grantor may withhold any such
payment or may elect to contest any lien if Grantor is in good faith
conducting an appropriate proceeding to contest the obligation to pay and so
long as Lender's interest in the Collateral is not jeopardized in Lender's
sole opinion. If the Collateral is subject to a lien which is not discharged
within fifteen (15) days. Grantor shall deposit with Lender cash, a
sufficient corporate surety bond or other security satisfactory to Lender in
an amount adequate to provide for the discharge of the lien plus any
interest, costs, attorneys' fees or other charges that could accrue as a
result of foreclosure or sale of the Collateral. In any contest Grantor shall
defend itself and Lender and shall satisfy any final adverse judgment before
enforcement against the Collateral. Grantor shall name Lender as an
additional obligee under any surety bond furnished in the contest proceeds.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly with
all laws, ordinances, rules and regulations of all governmental authorities,
now or hereafter in effect, applicable to the ownership, production,
disposition, or use of the Collateral. Grantor may contest in good faith any
such law, ordinance or regulation and withhold compliance during any
proceeding, including appropriate appeals, so long as Lender's interest in
the Collateral, in Lender's opinion, is not jeopardized.
HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral
never has been, and never will be so long as this Agreement remains a lien on
the Collateral, used for the generation, manufacture, storage,
transportation, treatment, disposal, release or threatened release of any
hazardous waste or substance, as those terms are defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended,
42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 49 U.S.C. Section 6901, et seq., or other
applicable state or Federal laws, rules, or regulations adopted pursuant to
any of the foregoing. The terms "hazardous waste" and "hazardous substance"
shall also include, without limitation, petroleum and petroleum by-products or
any fraction thereof and asbestos. The representations and warranties
contained herein are based on Grantor's due diligence in investigating the
Collateral for hazardous wastes and substances. Grantor hereby (a) releases
and waives any future claims against Lender for indemnity or contribution in
the event Grantor becomes liable for cleanup or other costs under any such
laws, and (b) agrees to indemnify and hold harmless Lender against any and
all claims and losses resulting from a breach of this provision of this
Agreement. This obligation to indemnify shall survive the payment of the
indebtedness and the satisfaction of this Agreement.
MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all
risks insurance, including without limitation fire, theft and liability
coverage together with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverage and basis acceptable to
Lender and issued by a company or companies acceptable to Lender. Grantor,
upon request of Lender, will deliver to Lender from time to time the policies
or certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without at
least thirty (30) days' prior written notice to Lender and not including any
disclaimer of the insurer's liability for failure to give such a notice. Each
insurance policy also shall include an endorsement providing that coverage in
favor of Lender will not be impaired in any way by any act, omission or
default of Grantor or any other person. In connection with all policies
covering assets in which Lender holds or is offered a security interest,
Grantor will provide Lender with such loss payouts or other endorsements as
Lender may require. If Grantor at any time fails to obtain or maintain any
insurance as required under this Agreement, Lender may (but shall not be
obligated to) obtain such insurance as Lender deems appropriate, including if
it so chooses, "single interest insurance," which will cover only Lender's
interest in the Collateral.
<PAGE>
05-08-1995 COMMERCIAL SECURITY AGREEMENT Page 3
(Continued)
- ------------------------------------------------------------------------------
APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender
of any loss or damage to the Collateral. Lender may make proof of loss
if Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed
Collateral, Lender shall, upon satisfactory proof of expenditure, pay or
reimburse Grantor from the proceeds for the reasonable cost of repair or
restoration. If Lender does not consent to repair or replacement of the
Collateral, Lender shall retain a sufficient amount of the proceeds to
pay all of the Indebtedness, and shall pay the balance to Grantor. Any
proceeds which have not been disbursed within six (6) months after their
receipt and which Grantor has not committed to the repair or restoration
of the Collateral shall be used to prepay the Indebtedness.
INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to
Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request including the following:
(a) the name of the insurer; (b) the risks insured; (c) the amount of
the policy; (d) the property insured; (e) the then current value on the
basis of which insurance has been obtained and the manner of determining
that value; and (f) the expiration date of the policy. In addition,
Grantor shall upon request by Lender (however not more often than
annually) have an independent appraiser satisfactory to Lender
determine, as applicable, the cash value or replacement cost of the
Collateral.
GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and
except as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to
possession and beneficial use shall not apply to any Collateral where
possession of the Collateral by Lender is required by law to perfect Lender's
security interest in such Collateral. Until otherwise notified by Lender,
Grantor may collect any of the Collateral consisting of accounts. At any time
and even though no Event of Default exists, Lender may exercise its rights to
collect the accounts and to notify account debtors to make payments directly
to Lender for application to the Indebtedness. If Lender at any time has
possession of any Collateral, whether before or after an Event of Default,
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral if Lender takes such action for that purpose
as Grantor shall request or as Lender, in Lender's sole discretion, shall
deem appropriate under the circumstances, but failure to honor any request by
Grantor shall not of itself be deemed to be a failure to exercise reasonable
care. Lender shall not be required to take any steps necessary to preserve
any rights in the Collateral against prior parties, nor to protect, preserve
or maintain any security interest given to secure the Indebtedness.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without
limitation all taxes, liens, security interests, encumbrances, and other
claims, at any time levied or placed on the Collateral. Lender also may
(but shall not be obligated to) pay all costs for insuring, maintaining and
preserving the Collateral. All such expenditures incurred or paid by Lender
for such purposes will then bear interest at the rate charged under the Note
from the date incurred or paid by Lender to the date of repayment by
Grantor. All such expenses shall become a part of the Indebtedness and, at
Lender's option, will (a) be payable on demand, (b) be added to the balance
of the Note and be apportioned among and be payable with any installment
payments to become due during either (i) the term of any applicable insurance
policy or (ii) the remaining term of the Note, or (c) be treated as a balloon
payment which will be due and payable at the Note's maturity. This Agreement
also will secure payment of these amounts. Such right shall be in addition to
all other rights and remedies to which Lender may be entitled upon the
occurrence of an Event of Default.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any payment when due
on the Indebtedness.
OTHER DEFAULTS. Failure of Grantor to comply with or to perform any
other term, obligation, covenant or condition contained in this Agreement
or in any of the Related Documents or in any other agreement between
Lender and Grantor.
INSOLVENCY. The dissolution or termination of Grantor's existence as a
going business, the insolvency of Grantor, the appointment of a receiver
for any part of Grantor's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Grantor.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
governmental agency against the Collateral or any other collateral
securing the Indebtedness. This includes a garnishment of any of Grantor's
deposit accounts with Lender.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or such Guarantor
dies or becomes incompetent.
INSECURITY. Lender, in good faith, deems itself insecure.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a
secured party under the Virginia Uniform Commercial Code. In addition and
without limitation, Lender may exercise any one or more of the following
rights and remedies:
ACCELERATE INDEBTEDNESS. Lender may declare the entire Indebtedness,
including any prepayment penalty which Grantor would be required to pay,
immediately due and payable, without notice.
ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all
or any portion of the Collateral and any and all certificates of title
and other documents relating to the Collateral. Lender may require
Grantor to assemble the Collateral and make it available to Lender at a
place to be designated by Lender. Lender also shall have full power to
enter upon the property of Grantor to take possession of and remove the
Collateral. If the Collateral contains other goods not covered by this
Agreement at the time of repossession, Grantor agrees Lender may take
such other goods, provided that Lender makes reasonable efforts to
return them to Grantor after repossession.
SELL THE COLLATERAL. Lender shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds thereof in
its own name or that of Grantor. Lender may sell the Collateral at public
auction or private sale. Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized
market, Lender will give Grantor reasonable notice of the time after
which any private sale or any other intended disposition of the
Collateral is to be made. The requirements of reasonable notice
shall be met if such notice is given at least ten (10) days before the
time of the sale or disposition. All expenses relating to the disposition
of the Collateral, including without limitation the expenses of
retaking, holding, insuring, preparing for sale and selling the
Collateral, shall become a part of the Indebtedness secured by this
agreement and shall be payable on demand, with interest at the Note rate
from date of expenditure until repaid.
APPOINT RECEIVER. To the extent permitted by applicable law, Lender
shall have the following rights and remedies regarding the appointment
of a receiver: (a) Lender may have a receiver appointed as a matter of
right, (b) the receiver may be an employee of Lender and may serve
without bond, and (c) all fees of the receiver and his or her attorney
shall become part of the Indebtedness secured by this Agreement and shall
be payable on demand, with interest at the Note rate from date of
expenditure until repaid.
COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a
receiver, may collect the payments, rents, income, and revenues from the
Collateral. Lender may at any time in its discretion transfer any
Collateral into its own name or that of its nominee and receive the
payments, rents, income, and revenues therefrom and hold the same as
security for the Indebtedness or apply it to payment of the Indebtedness
in such order of preference as Lender may determine. Insofar as the
Collateral consists of accounts, general intangibles, insurance policies,
instruments, chattel paper, choses in action, or similar property, Lender
may demand, collect, receipt for, settle, compromise, adjust, sue for,
foreclose, or
<PAGE>
05-18-1995 COMMERCIAL SECURITY AGREEMENT Page 4
(Continued)
- ------------------------------------------------------------------------------
realize on the Collateral as Lender may determine, whether or not
Indebtedness or Collateral is then due. For these purposes, Lender may, on
behalf of and in the name of Grantor, receive, open and dispose of mail
addressed to Grantor, change any address to which mail and payments are to
sent; and endorse notes, checks, drafts, money orders, documents of title,
instruments and items pertaining to payment, shipment, or storage of any
Collateral. To facilitate collection, Lender may notify account debtors
and obligors on any Collateral to make payments directly to Lender.
OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the Collateral.
Lender may obtain a judgment against Grantor for any deficiency remaining
on the Indebtedness due to Lender after application of all amounts
received from the exercise of the rights provided in this Agreement.
Grantor shall be liable for a deficiency even if the transaction described
in this subsection is a sale of accounts or chattel paper.
OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies
of a secured creditor under the provisions of the Uniform Commercial Code,
as may be amended from time to time. In addition. Lender shall have and
may exercise any or all other rights and remedies it may have available
at law, in equity, or otherwise.
CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether
evidenced by this Agreement or the Related documents or by any other
writing, shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to purse any remedy shall not exclude
pursuit of any other remedy, and an election to make expenditures or to
take action to perform an obligation of Grantor under this Agreement,
after Grantor's failure to perform, shall not affect Lender's right to
declare a default and to exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
APPLICABLE LAW. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the Commonwealth of Virginia.
Lender and Grantor hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either party against
the other.
ATTORNEYS' FEES; EXPENSES. Grantor agrees that if Lender hires an attorney
to help enforce this Agreement or to collect any sums owing under this
Agreement, Grantor will pay, subject to any limits under applicable law,
Lender's attorney fees equal to 25.000% of the principal balance due on
the Note, and all of Lender's other collection expenses, whether or not
there is a lawsuit and including without limitation additional legal
expenses for bankruptcy proceedings.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purpose only and are not to be used to interpret or define the provisions
of this Agreement.
NOTICES. All notices required to be given under this Agreement shall be
given in writing and shall be effective when actually delivered if hand
delivered or when deposited with a nationally recognized overnight courier
or deposited as certified or registered mail in the United States mail,
first class, postage prepaid, addressed to the party to whom the notice
is to be given at the address shown above. Any party many change its
address for notices under this Agreement by giving formal written notice
to the other parties specifying that the purpose of the notice is to
change the party's address. To the extent permitted by applicable law if
there is more than one Grantor, notice to any Grantor will constitute
notice to all Grantors. For notice purposes, Grantor agrees to keep
Lender informed at all times of Grantor's current address(es).
POWER OF ATTORNEY. Grantor hereby appoints Lender as its true and lawful
attorney-in-fact, irrevocably, with full power of substitution to do the
following: (a) to demand, collect, receive, receipt for, sue and recover
all sums of money or other property which may now or hereafter become due,
owing or payable from the Collateral: (b) to execute, sign and endorse any
and all claims, instruments, receipts, checks, drafts or warrants issued
in payment for the Collateral: (c) to settle or compromise any and all
claims arising under the Collateral, and, in the place and stead of
Grantor, to execute and deliver its release and settlement for the claim;
and (d) to file any claim or claims or to take any action or institute or
take part in any proceedings, either in its own name or in the name of
Grantor, or otherwise, which in the discretion of Lender may seem to be
necessary or advisable. This power is given as security for the
Indebtedness, and the authority hereby conferred is and shall be
irrevocable and shall remain in full force and effect until renounced
by Lender.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
SUCCESSOR INTERESTS. Subject to the limitations set forth above on
transfer of the Collateral, this Agreement shall be binding upon and inure
to the benefit of the parties, their successors and assigns.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Grantor, shall
constitute a waiver of any of Lender's rights or of any of Grantor's
obligations as to any future transactions. Whenever the consent of Lender
is required under this Agreement, the granting of such consent by Lender
in any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent
may be granted or withheld in the sole discretion of Lender.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL
SECURITY AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
MAY 8, 1995.
GRANTOR;
Metro Information Services, Inc.
By: /s/ JOHN H. FAIN (SEAL)
--------------------------------
John H. Fain, President
<PAGE>
05-18-1995 COMMERCIAL SECURITY AGREEMENT Page 5
(Continued)
- ------------------------------------------------------------------------------
LENDER:
SIGNET BANK/VIRGINIA
BY: /s/ James A. Whitham
--------------------------------
Authorized Officer
- ------------------------------------------------------------------------------
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.10 PROMISSORY NOTE DATED AS OF APRIL 30, 1996 BY AND BETWEEN
SIGNET BANK AND REGISTRANT.
[LOGO]
PROMISSORY NOTE
<TABLE>
<CAPTION>
______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
$2,000,000.00 05-01-1996 05-31-1997 3053479715 300 10715
</TABLE>
_______________________________________________________________________________
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
_______________________________________________________________________________
BORROWER: METRO INFORMATION SERVICES, INC. LENDER: SIGNET BANK
607 LYNNHAVEN PARKWAY PLUME STREET BRANCH
VIRGINIA BEACH, VA 23450 500 PLUME STREET EAST
8TH FLOOR
NORFOLK, VA 23510
_______________________________________________________________________________
IMPORTANT NOTICE
THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH
CONSTITUTES A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND ALLOWS
THE CREDITOR TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE.
_______________________________________________________________________________
PRINCIPAL AMOUNT: $2,000,000.00 INITIAL RATE: 6.953% DATE OF NOTE: MAY 1, 1996
PROMISE TO PAY. Metro Information Services, Inc. ("Borrower") promises to
pay to SIGNET BANK ("Lender"), or order, in lawful money of the United
States of America, the principal amount of Two Million & 00/100 Dollars
($2,000,000.00) or so much as may be outstanding, together with interest on
the unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all outstanding
principal plus all accrued unpaid interest on May 31, 1997. In addition,
Borrower will pay regular monthly payments of accrued unpaid interest
beginning June 5, 1996, and all subsequent interest payments are due on the
same day of each month after that. Interest on this Note is computed on a
365/360 simple interest basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal
balance is outstanding. Borrower will pay Lender at Lender's address shown
above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied first
to accrued unpaid interest, then to principal, and any remaining amount to
any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate of this Note is subject to change
from time to time based on changes in an independent index which is the per
annum rate of interest, quoted by Lender in its sole discretion on the first
business day of each month, as the London Interbank Offered Rate (adjusted to
reflect the cost of reserve requirements as they exist from time to time) as
published by Reuters Monitor Money Rates Service (LIBO page) (or Telerate, as
BBA LIBOR on page 3750, if Reuters Limited is not available), or such other
page as may replace that page on that service for the purpose of
displaying rates or prices comparable to that Rate (rounded upwards, if
necessary, to the next higher 1/100%) for deposits in Dollars for a period of
thirty (30) days (the "Index"). The Index is not necessarily the lowest rate
charged by Lender on its loans. If the Index becomes unavailable during the
term of this loan, Lender may designate a substitute index after notice to
Borrower. Lender will tell Borrower the current Index rate upon Borrower's
request. Borrower understands that Lender may make loans based on other rates
as well. The interest rate change will not occur more often than each 30
days. The Index currently is 5.453% per annum. The interest rate to be
applied to the unpaid principal balance of this Note will be at a rate of
1.500 percentage points over the Index, resulting in an initial rate of
6.953% per annum. NOTICE: Under no circumstances will the interest rate on
this Note be more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Early payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower's obligation to continue to
make payments of accrued unpaid interest. Rather, they will reduce the
principal balance due.
DEFAULT. Borrower will be in default if any of the following happens: (a) the
failure of any "Party" (which term shall mean and include each Borrower,
endorser, surety and guarantor of this Note) to make any payment on this Note
or on any other indebtedness due Lender when due; (b) if any asset(s) of a
Party are attached, levied upon, seized or repossessed or if any asset(s) of
a Party should come into the possession of a receiver, trustee, custodian or
assignee for the benefit of creditors, or if a Party makes an assignment for
the benefit of creditors; (c) the failure of a Party to observe or perform
any obligation or covenant contained in any agreement, document or instrument
furnished in connection herewith or in any other agreement between a Party
and Lender; (d) any representation or warranty at any time made by a Party to
Lender in connection herewith or in any other agreement between a Party and
Lender, or in any document or instrument delivered to Lender in connection
herewith or pursuant to such other agreement, shall have been materially
false at the time it was made; (e) the termination or withdrawal of a Party's
guaranty with respect to any indebtedness due Lender; (f) any Party files a
petition in bankruptcy, petitions or applies in any tribunal for any receiver
or any trustee of a Party or any substantial part of its property, or
commences any proceeding relating to such party under any insolvency,
reorganization, management, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether new or hereafter in effect; (g)
if, within 30 days after the filing of a petition in bankruptcy against a
Party or the commencement of any proceeding against a Party seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such petition or proceeding shall not have dismissed, or, if,
within 30 days after the appointment, without the consent of acquisition of a
Party, of any trustee, receiver or liquidator of such Party or of all or any
substantial part of the property of the such Party, such appointment shall
not have been vacated; (h) the application or the appointment of a receiver
for a party or for property of a Party; (i) the making or sending of a notice
of an intended bulk sale by a Party; (j) commencement of any foreclosure,
levy, seizure or forfeiture proceeding, whether by judicial, self-help,
repossession, or any other method, by an creditor of a Party, any creditor of
the owner of any collateral securing this Note, or by any governmental agency
with respect to a Party or such collateral; (k) if any event occurs which is
or, with the passage of time and/or the giving of notice, could be a default
under or breach of the terms of any instrument or document evidencing a debt
or obligation of a Party to any third party and is not cured within five (5)
days after the occurrence thereof; (l) any judgment against a Party or any
attachment against it or its property remains unpaid, undischarged, unbonded
or undismissed for a period of 30 days, unless and to the extent that such
judgment is appealed in good faith in a court of higher jurisdiction and such
appeal remains pending; (m) if any proceeding is filed for the dissolution or
liquidation of a Party; (n) if any Party shall be enjoined or restrained in
any manner from conducting its business in whole or in part, and such
injunction shall not be dismissed or dissolved within thirty (30) days after
the filing thereof; (o) if any tax lien or notice thereof is filed against a
Party or any of the assets of a Party and remains undismissed, unpaid or
unbonded for a period of thirty (30) days; (p) if, without Lender's prior
written consent, any Party which is not a natural person enters into or
becomes a party to any merger, consolidation or share exchange or if any
Party sells, transfers, conveys or leases, except in the ordinary course of
business any significant part of its assets or properties or (if not a
natural person) alters its capital structure, business activities or scope of
operations; (q) if, without Lender's prior written consent, there is a sale,
exchange or transfer of the voting control or any significant portion of the
stock or ownership interest of any Party which is not a natural person; (r)
if any Party who is a natural person shall die or become incompetent; or (s)
the good faith determination by Lender that a material adverse change in the
financial condition of a Party has occurred since the date hereof or that
Lender's prospect of payment hereunder has been materially impaired.
<PAGE>
05-01-1996 PROMISSORY NOTE Page 2
(Continued)
_______________________________________________________________________________
_______________________________________________________________________________
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid
principal balance on this Note and all accrued unpaid interest, together with
all other applicable fees, costs and charges, if any, immediately due and
payable, without notice, and then Borrower will pay that amount. Upon
default, including failure to pay upon final maturity, Lender, at its option,
may also, if permitted under applicable law, increase the variable interest
rate on this Note to 4.500 percentage points over the Index. The interest
rate will not exceed the maximum rate permitted by applicable law.
Furthermore, subject to any limits under applicable law, upon default,
Borrower also agrees to pay Lender's attorney fees equal to 25.000% of the
principal balance due on the Note, and all of Lender's other collection
expenses, whether or not there is a lawsuit and including without limitation
legal expenses for bankruptcy proceedings. This Note shall be governed by,
construed and enforced in accordance with the laws of the Commonwealth of
Virginia. Lender and Borrower hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either party against the other.
CONFESSION OF JUDGMENT. Upon a default in payment of the Indebtedness at
maturity, whether by acceleration or otherwise, Borrower hereby irrevocably
authorizes and empowers Donald E. Miles or Thomas L. Hotchkiss as Borrower's
attorney-in-fact to appear in the City of Richmond clerk's office and to
confess judgment against Borrower for the unpaid amount of this Note as
evidenced by an affidavit signed by an officer of Lender setting forth the
amount then due, plus attorneys' fees as provided in this Note, plus costs of
suit, and to release all errors, and waive all rights of appeal. If a copy of
this Note, verified by an affidavit, shall have been filed in the proceeding,
it will not be necessary to file the original as a warrant of attorney.
Borrower waives the right to any stay of execution and the benefit of all
exemption laws now or hereafter in effect. No single exercise of the
foregoing warrant and power to confess judgment will be deemed to exhaust the
power, whether or not any such exercise shall be held by any court to be
invalid, voidable, or void; but the power will continue undiminished and may
be exercised from time to time as Lender may elect until all amounts owing on
this Note have been paid in full.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $15.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Borrower given to Lender
by law, Lender shall have, with respect to Borrower's obligations to Lender
under this Note and to the extent permitted by law, a contractual possessory
security interest in and a right of setoff against, and Borrower hereby
assigns, conveys, delivers, pledges, and transfers to Lender all of
Borrower's right, title, and interest in and to all deposits, moneys,
securities, and other property of Borrower now or hereafter in the possession
of or on deposit with Lender, whether held in a general or special account or
deposit, whether held jointly with someone else, or whether held for
safekeeping or otherwise, excluding however all IRA, Keogh, and trust
accounts. Every such security interest and right of setoff may be exercised
without demand upon or notice to Borrower. No security interest or right of
setoff shall be deemed to have been waived by any act or conduct on the part
of Lender or by any neglect to exercise such right or setoff or to enforce
such security interest or by any delay in so doing. Every right of setoff and
security interest shall continue in full force and effect until such right of
setoff or security interest is specifically waived or released by an
instrument in writing executed by Lender.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances
hereunder shall be conclusively presumed to have been made to and for the
benefit of and at the request of Borrower when: (1) deposited or credited to
an account of Borrower with Lender, notwithstanding that such advance was
requested, orally or in writing, by someone other than the person(s) signing
below or that someone other than the person(s) signing below is authorized to
draw on such account and may or does withdraw the whole or part of any such
advance; or (2) made in accordance with oral or written instructions of
Borrower or anyone signing below for or on behalf of Borrower. Lender is
hereby authorized to maintain records of the date and amount of each advance,
the date and amount of any payment of principal or interest and the principal
balance then remaining unpaid hereon. Borrower hereby agrees that the amount
so evidenced in such records shall, for all purposes, constitute prima facie
evidence thereof and shall be binding upon Borrower, absent manifest error.
LATE CHARGE. Borrower agrees to pay to Lender on demand a late charge not to
exceed 5% of the amount of any payment of principal or interest, or both,
that is more than ten (10) days past due.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law
waive presentment, demand for payment, protest and notice of dishonor. Upon
any change in the terms of this Note, and unless otherwise expressly stated
in writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length
of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the
party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER
AGREES TO THE TERMS OF THE NOTE.
BORROWER:
METRO INFORMATION SERVICES, INC.
By: /s/ John H. Fain (SEAL)
----------------------------
John H. Fain, President
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.11 EMPLOYMENT AGREEMENT DATED DECEMBER 10, 1996 BY
AND BETWEEN REGISTRANT AND JOHN H. FAIN.
FORM OF
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is dated as of December 10,
1996, between Metro Information Services, Inc., a Virginia corporation (the
"Company"), and John H. Fain ("Executive").
PRELIMINARY STATEMENTS
A. Executive is employed by the Company as [its President and Chief
Executive Officer].
B. The Company and the Executive desire to enter into this agreement to
establish the terms and conditions of Executive's employment with the Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is acknowledged by the parties, the parties agree as
follows:
1. EMPLOYMENT PERIOD. The Company agrees to employ Executive and
Executive accepts such employment for the period beginning January 1, 1997
and ending on the first to occur of (a) December 31, 1997 and (b) the
termination of Executive's employment pursuant to paragraph 6 (the
"Employment Period"); provided, however, the Employment Period will be
continued for successive one-year periods unless at least 90 days before the
end of the initial or any subsequent term either the Company or the
<PAGE>
Executive gives the other notice of termination of this Agreement.
2. SERVICES. During the Employment Period, Executive will render such
services of an executive and administrative character to the Company as it
may from time to time direct. During the Employment Period, Executive will
devote his best efforts and all of his business time and attention (except
for vacation periods and reasonable periods of illness or other incapacity)
to the business of the Company, and will not perform any services of any
nature for any enterprise other than the Company without the prior consent of
the Company's board of directors (the "Board of Directors").
3. BASE SALARY. Beginning January 1, 1997 and thereafter during the
Employment Period, the Company will pay Executive salary at a per annum rate
of Three Hundred Thousand Dollars ($300,000) (the "Base Salary"). The
Company may increase or decrease the Base Salary at any time and from
time to time. Any increase or decrease in Executive's Base Salary shall be
made in accordance with Executive's annual compensation plan as approved by
the Company's Board of Directors.
4. BENEFITS. Executive will be entitled to receive from the Company, in
addition to the salary set forth in paragraph 3 above, all benefits provided
generally to full time employees of the Company. Any alteration of the
benefits that Executive is entitled to receive from the Company shall be made
in accordance with Executive's annual Compensation plan as approved by the
Company's Board of Directors.
5. Intentionally Omitted
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<PAGE>
6. TERMINATION OF EMPLOYMENT.
a. The Employment Period will automatically end on Executive's
voluntary resignation, termination by the Board of Directors with or without
cause, termination by the Board of Directors with or without cause,
termination by the Board of Directors in the event of Executive's disability
(as determined by the Board of Directors in its good faith judgment) or
Executive's death; PROVIDED, that Executive's resignation will be effective
not less than three months after Executive has given written notice thereof
to the Board of Directors; PROVIDED FURTHER, that Executive's termination
with or without cause will be effective only after the Board of Directors has
determined in its good faith judgment that such termination is in the best
interests of the Company and written notice of such termination has been
delivered to Executive.
b. In the event of termination for disability or without cause,
Executive will be entitled to be paid his salary by the Company and to
receive the benefits set forth in paragraph 4 until December 31 of the year
in which such termination occurs or 90 days after the date of such
termination occurs, whichever is the longer. Such salary will be payable
semi-monthly at the rate in effect at the time of termination. Executive
will have no duty to mitigate the company's damages by taking other
employment after his termination by the Company without cause and any
compensation earned by him in such other employment will not be deducted from
any amount payable to him hereunder. In the event of Executive's disability,
however, the amounts payable to him hereunder will be reduced by any amounts
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<PAGE>
received by Executive from disability insurance purchased by the Company for
Executive.
c. "Disability," for purposes hereof, means any physical or mental
condition which prevents Executive from performing his duties hereunder, for
180 days, whether or not consecutive, in any 12-month period. In the event
of disagreement between the Board of Directors and Executive whether
"disability" exists, the disagreement will be resolved by arbitration pursuant
to paragraph 9 below.
d. "Cause" for which the Board of Directors may terminate
Executive's employment means, (i) the commission of a crime involving the
Company or any entity in which it has an interest or (ii) a breach or
breaches of Executive's fiduciary duty to the Company or its shareholders
which individually or in the aggregate are materially adverse to the
Company's business or financial condition or prospects; and, in either case,
as finally determined by a court of competent jurisdiction. "Finally
determined" means after all direct appeals to appellate courts of competent
jurisdiction are exhausted. While "materially adverse" as used in clause
(ii) above is not limited to the following instances, (x) any substantial
breach of Executive's duties under paragraphs 2, 7, 8 or 9 of this Agreement,
and (y) any willful or grossly negligent breach or breaches (whether or not
related) of Executive's fiduciary duties to the Company which, individually
or in the aggregate, result in the Company's suffering damages of $100,000 or
more, will be deemed PRIMA FACIE "materially adverse" within the meaning of
clause (ii).
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<PAGE>
e. In the event that the Board of Directors determines, in its good
faith judgment, that Executive has committed a crime involving the Company or
any entity in which it has an interest, it may suspend Executive without pay
pending final determination of the charges, but only after Executive has been
charged with such crime by competent law-enforcement authorities by warrant,
summons, information, indictment or otherwise. During the period of
suspension, the company will continue to provide Executive with the insurance
benefits which it provided pursuant to paragraph 4 above immediately before
his suspension. In the event that the criminal charges against Executive are
finally determined without a conviction of Executive of the crime charged or
any lesser offense included under such crime, the Company will reinstate
Executive and resume paying him the salary and providing him with the other
benefits to which he is entitled hereunder, with the salary payable
retroactively to the date of suspension (with interest at 8% per annum on all
amounts not paid during the period of suspension, calculated from the
respective dates these amounts would have been payable).
f. In the event that the Board of Directors determines, in
its good faith judgment, that Executive has committed a breach of fiduciary
duty of a type justifying termination with Cause, the Board may immediately
suspend Executive. During such suspension, however, Executive will continue
to be paid the salary provided in paragraph 3 and receive the benefits
provided for in paragraph 4, regardless of any other employment Executive may
take. In the event of final
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<PAGE>
determination by a court of competent jurisdiction that Executive has
breached his fiduciary duty to the Company or its stockholders within the
meaning of paragraph 7(d)(ii) above, Executive will, on demand by the Board
of Directors, reimburse the Company for all salary and benefits received by
him from the Company from the date of suspension, together with interest
thereon at 8% per annum from the respective dates of payment.
7. CONFIDENTIAL INFORMATION. Executive acknowledges that all
computer systems, programs, reports, designs, drawings, memoranda,
discoveries, inventions, state of the art technology, data, notes, records,
files, proposals, plans, lists, documents and any other information
containing or referring to confidential or proprietary information or
concerning the business or affairs of the Company or any of its clients (the
"Proprietary Information"), whether prepared or developed or both by
Executive or others, and all copies thereof are property of the Company or
its clients, respectively. Executive agrees that he will not disclose to any
unauthorized person any Proprietary Information nor will he use for his own
account any Proprietary Information without the written consent of the
Company, which consent may be denied for any reason or no reason. On the
termination of Executive's employment with the Company for any reason (or at
any earlier time that such request is made by the Company), Executive will
deliver to the Company all Proprietary Information and any copies thereof
which Executive may possess or have under his control. Executive agrees not
to copyright or attempt to copyright any Proprietary Information or any
computer system or any findings or
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<PAGE>
recommendations or other data prepared in connection with the Proprietary
Information or Executive's performance of duties with the Company or both.
8. NON-COMPETE. As a significant inducement to the Company to
enter into this Agreement, Executive agrees that:
a. as long as Executive is employed by the Company in any
capacity, during or after the Employment Period, Executive will not, directly
or indirectly, own any interest in, manage, control, participate in, render
services for or in any other manner engage in any other activity (all of the
foregoing being hereinafter referred to as having or acquiring an "interest")
in any information technology services business (whether or not a client of
the Company), without the prior consent of the Board of Directors;
b. beginning on the determination of Executive's employment
with the Company and ending two years after such termination for any reason
(the "Non-Compete Period"), Executive will not have or acquire an interest in
any enterprise which is "in competition" with the Company, as "in
competition" is defined below; and
c. after the end of the Non-Compete Period, Executive will
not acquire any interest in any enterprise "in competition" with the Company
as long as he owns 1% or more of any class of the capital stock of the
Company.
An enterprise will be deemed to be "in competition" with the
Company if (i) such enterprise is involved, directly or indirectly with
providing information technology services, or
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<PAGE>
(ii) in the case of any enterprise other than an enterprise providing
information technology services, Executive's intended relationship to such
enterprise would, in the reasonable good faith judgment of the Board of
Directors, create problems for the Company or any of its affiliates, or (iii)
is a client of the Company or has been a client of the Company during the
24-month period before the beginning of the Non-Compete Period. To enable the
Board of Directors to make the determination required by clauses (ii) or
(iii) of the immediately preceding sentence, Executive will, during the
Non-Compete Period and as long thereafter as he owns any of the capital stock
of the Company, inform the Board of Directors in writing, at least 30 days
before acquiring any interest in any enterprise, of his intention to acquire
such interest. The notice will set forth sufficient information about that
enterprise to enable the Company to determine whether the enterprise is "in
competition" with the Company.
If, at the time of enforcement of this Agreement, a court of competent
jurisdiction should hold that the restrictions contained in this paragraph 8
are unreasonable under circumstances then existing, the Company and Executive
agree that the maximum period, scope, or geographical area reasonable under
such circumstances will be substituted for the stated period, scope, or area.
9. STAFF RELATIONSHIPS. Executive acknowledges that the Company's
employees and its relationships with its employees are valuable assets of the
Company. Executive agrees that he will
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<PAGE>
not, at any time during the term of his employment and during the Non-Compete
Period, directly or indirectly, engage in any of the following activities, as
an individual, independent contractor, officer, partner, member, employee,
agent, consultant, shareholder or investor:
a. employ, hire, engage, contract with or enter into any type of
business arrangement with any employee of the Company or any Prospect
(defined below) or solicit or seek to solicit any employee of the Company or
any Prospect to cease being an employee of the Company or seeking to have such
employee or Prospect enter into the employment of or enter into any business
arrangement with any other entity. For purposes of this Agreement, the term
"Prospect" means any individual or entity which is a candidate recorded on
the Company's Staff Sourcing Network or is an employee of any entity with
which the Company has entered into discussions or agreements concerning its
acquisition or a strategic alliance or with which the Company has another
contractual arrangement. During the Non-Compete Period, Prospects shall be
those Prospects in existence at the beginning of the Non-Compete Period.
10. ARBITRATION. If there is any disagreement between the Company and
Executive whether a resignation by Executive was "voluntary" for purposes of
paragraphs 6 or 8, whether there was "Cause" for the Board of Directors to
terminate Executive's employment for purposes of paragraph 6, whether
Executive is "disabled" for purposes of paragraph 6 or whether an enterprise
in which Executive desires to acquire an interest is "in competition"
-9-
<PAGE>
with the Company for purposes of paragraph 8, the Company and Executive will
make a good faith effort to resolve such disagreement between themselves. If
they fail to so resolve it, they agree to submit the issue to a binding
arbitrator proposed by the Company reasonably satisfactory to Executive.
Executive agrees to pay all costs of such arbitration and to abide by the
results if the Company prevails in the arbitration and the Company agrees to
pay all the costs of the arbitration and to abide by the results if Executive
prevails in the arbitration.
11. REMEDIES. The parties will be entitled to enforce their rights
under this Agreement specifically, to recover damages by reason of any breach
of any provision hereof, and to exercise all other rights existing in their
favor. The Company and Executive agree and acknowledge that money damages
may not be an adequate remedy for any breach by Executive of the provisions
of this Agreement (including paragraph 8) and that the Company may in its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief to enforce, or prevent any
violations of, the provisions of this Agreement.
12. MODIFICATION, AMENDMENT, WAIVER. No modification, amendment or
waiver of any provision of this Agreement will be effective unless set forth
in a writing signed by the Company and Executive and approved by the Board of
Directors. The Company's or Executive's failure at any time to enforce any
provision of this Agreement will in no way be construed as a waiver of such
provision and will not affect the right of the Company and Executive
-10-
<PAGE>
thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
13. SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such provision will be ineffective only to the
extent of such invalidity, illegality or unenforceability in such
jurisdiction, without invalidating the remainder of this Agreement in such
jurisdiction or any provision hereof in any other jurisdiction.
14. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience and do not constitute a part of this
Agreement.
15. CHOICE OF LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by and
interpreted in accordance with the internal law, and not the law of
conflicts, of the Commonwealth of Virginia.
16. NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of any of the provisions of this
Agreement will be in writing and will, except as otherwise provided herein,
be deemed to have been given when delivered personally or mailed by certified
or registered mail, return receipt requested and postage prepaid, to the
recipient c/o Metro Information Services, Inc., Suite 300, 200 Golden Oak
Court, Virginia Beach, Virginia 23452, or at such other address as the
recipient party has specified by prior written notice to the
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<PAGE>
sending party.
IN WITNESS, the undersigned parties have executed this Agreement as
of the date first written above.
METRO INFORMATION SERVICES, INC.
By
-----------------------------
Its
-------------------------
EXECUTIVE:
----------------------------------
JOHN H. FAIN
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<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.12 EMPLOYMENT AGREEMENT DATED DECEMBER 10, 1996 BY AND BETWEEN
REGISTRANT AND ANDREW J. DOWNING.
FORM OF
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is dated as of December
10, 1996, between METRO INFORMATION SERVICES, INC., a Virginia corporation
(the "Company"), and ANDREW J. DOWNING ("Executive").
PRELIMINARY STATEMENTS
A. Executive is employed by the Company as its Executive Vice
President and Chief Operating Officer.
B. The Company and the Executive desire to enter into this agreement
to establish the terms and conditions of Executive's employment with the
Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is acknowledged by the parties, the parties agree as
follows:
1. EMPLOYMENT PERIOD. The Company agrees to employ Executive and
Executive accepts such employment for the period beginning January 1, 1997
and ending on the first to occur of (a) December 31, 1997 and (b) the
termination of Executive's employment pursuant to paragraph 6 (the
"Employment Period"); provided, however, the Employment Period will be
continued for successive one-year periods unless at least 90 days before the
end of the initial or any subsequent term either the Company or the
<PAGE>
Executive gives the other notice of termination of this Agreement.
2. SERVICES. During the Employment Period, Executive will render
such services of an executive and administrative character to the Company as
it may from time to time direct. During the Employment Period, Executive
will devote his best efforts and all of his business time and attention
(except for vacation periods and reasonable periods of illness or other
incapacity) to the business of the Company, and will not perform any services
of any nature for any enterprise other than the Company without the prior
consent of the Company's board of directors (the "Board of Directors").
3. BASE SALARY. Beginning January 1, 1997 and thereafter during
the Employment Period, the Company will pay Executive salary at a per annum
rate of Two Hundred Forty Thousand Dollars ($240,000) (the "Base Salary").
The Company may increase or the Base Salary at any time and
from time to time. Any increase or decrease in Executive's Base Salary shall
be made in accordance with Executive's annual compensation plan as approved
by the Company's Board of Directors.
4. BENEFITS. Executive will be entitled to receive from the
Company, in addition to the salary set forth in paragraph 3 above, all
benefits provided generally to full time employees of the Company. Any
alteration of the benefits that Executive is entitled to receive from the
Company shall be made in accordance with Executive's annual compensation plan
as approved by the Board of Directors.
5. Intentionally Omitted
<PAGE>
6. TERMINATION OF EMPLOYMENT.
a. The Employment Period will automatically end on Executive's
voluntary resignation, termination by the Board of Directors with or without
cause, termination by the Board of Directors in the event of Executive's
disability (as determined by the Board of Directors in its good faith
judgment) or Executive's death; PROVIDED, that Executive's resignation will
be effective not less than three months after Executive has given written
notice thereof to the Board of Directors; PROVIDED FURTHER, that Executive's
termination with or without cause will be effective only after the Board of
Directors has determined in its good faith judgment that such termination is
in the best interests of the Company and written notice of such termination
has been delivered to Executive.
b. In the event of termination for disability or without
cause, Executive will be entitled to be paid his salary by the Company and to
receive the benefits set forth in paragraph 4 until
December 31 of the year in which such termination occurs or 90 days after the
date of such termination occurs, whichever is the longer. Such salary will
be payable semi-monthly at the rate in effect at the time of termination.
Executive will have no duty to mitigate the Company's damages by taking other
employment after his termination by the Company without cause and any
compensation earned by him in such other employment will not be deducted from
any amount payable to him hereunder. In the event of Executive's disability,
however, the amounts payable to him hereunder will be reduced by any amounts
<PAGE>
received by Executive from disability insurance purchased by the Company for
Executive.
c. "Disability," for purposes hereof, means any
physical or mental condition which prevents Executive from performing his
duties hereunder, for 180 days, whether or not consecutive, in any 12-month
period. In the event of disagreement between the Board of Directors and
Executive whether "disability" exists, the disagreement will be resolved by
arbitration pursuant to paragraph 9 below.
d. "Cause" for which the Board of Directors may terminate
Executive's employment means, (i) the commission of a crime involving the
Company or any entity in which it has an interest or (ii) a breach or
breaches of Executive's fiduciary duty to the Company or its shareholders
which individually or in the aggregate are materially adverse to the
Company's business or financial condition or prospects; and, in either case,
as finally determined by a court of competent jurisdiction. "Finally
determined" means after all direct appeals to appellate courts of competent
jurisdiction are exhausted. While "materially adverse" as used in clause (ii)
above is not limited to the following instances, (x) any substantial breach
of Executive's duties under paragraphs 2, 7, 8 or 9 of this Agreement, and
(y) any willful or grossly negligent breach or breaches (whether or not
related) of Executive's fiduciary duties to the Company which, individually
or in the aggregate, result in the Company's suffering damages of $100,000 or
more, will be deemed PRIMA FACIE "materially adverse" within the meaning of
clause (ii).
<PAGE>
e. In the event that the Board of Directors determines, in
its good faith judgment, that Executive has committed a crime involving the
Company or any entity in which it has an interest, it may suspend Executive
without pay pending final determination of the charges, but only after
Executive has been charged with such crime by competent law-enforcement
authorities by warrant, summons, information, indictment or otherwise.
During the period of suspension, the Company will continue to provide
Executive with the insurance benefits which it provided pursuant to paragraph
4 above immediately before his suspension. In the event
that the criminal charges against Executive are finally determined without a
conviction of Executive of the crime charged or any lesser offense included
under such crime, the Company will reinstate Executive and resume paying him
the salary and providing him with the other benefits to which he is entitled
hereunder, with the salary payable retroactively to the date of suspension
(with interest at 8% per annum on all amounts not paid during the period of
suspension, calculated from the respective dates these amounts would have
been payable).
f. In the event that the Board of Directors
determines, in its good faith judgment, that Executive has committed a breach
of fiduciary duty of a type justifying termination with Cause, the Board may
immediately suspend Executive. During such suspension, however, Executive
will continue to be paid the salary provided in paragraph 3 and receive the
benefits provided for in paragraph 4, regardless of any
other employment Executive may take. In the event of final
<PAGE>
determination by a court of competent jurisdiction that Executive has
breached his fiduciary duty to the Company or its stockholders within the
meaning of paragraph 7(d)(ii) above, Executive will, on demand by the Board
of Directors, reimburse the Company for all salary and benefits received by
him from the Company from the date of suspension, together with interest
thereon at 8% per annum from the respective dates of payment.
7. CONFIDENTIAL INFORMATION. Executive acknowledges that all
computer systems, programs, reports, designs, drawings, memoranda,
discoveries, inventions, state of the art technology, data, notes, records,
files, proposals, plans, lists, documents and any other information
containing or referring to confidential or proprietary information or
concerning the business or affairs of the Company or any of its clients (the
"Proprietary Information"), whether prepared or developed or both by
Executive or others, and all copies thereof are property of the Company or
its clients, respectively. Executive agrees that he will not disclose to any
unauthorized person any Proprietary Information nor will he use for his own
account any Proprietary Information without the written consent of the
Company, which consent may be denied for any reason or no reason. On the
termination of Executive's employment with the Company for any reason (or at
any earlier time that such request is made by the Company), Executive will
deliver to the Company all Proprietary Information and any copies thereof
which Executive may possess or have under his control. Executive agrees not
to copyright or attempt to copyright any Proprietary Information or any
computer system or any findings or
<PAGE>
recommendations or other data prepared in connection with the Proprietary
Information or Executive's performance of duties with the Company or both.
8. NON-COMPETE. As a significant inducement to the Company to
enter into this Agreement, Executive agrees that:
a. as long as Executive is employed by the Company in any
capacity, during or after the Employment Period, Executive will not,
directly or indirectly, own any interest in, manage, control, participate in,
render services for or in any other manner engage in any other activity (all
of the foregoing being hereinafter referred to as having or acquiring an
"interest") in any information technology services business (whether or not a
client of the Company), without the prior consent of the Board of Directors;
b. beginning on the termination of Executive's employment with
the Company and ending two years after such termination for any reason (the
"Non-Compete Period"), Executive will not have or acquire an interest in any
enterprise which is "in competition" with the Company, as "in competition" is
defined below; and
c. after the end of the Non-Compete
Period, Executive will not acquire any interest in any enterprise "in
competition" with the Company as long as he owns 1% or more of any class of
the capital stock of the Company.
An enterprise will be deemed to be "in competition" with the
Company if (i) such enterprise is involved, directly or indirectly with
providing information technology services, or
<PAGE>
(ii) in the case of any enterprise other than an enterprise providing
information technology services, Executive's intended relationship to such
enterprise would, in the reasonable good faith judgment of the Board of
Directors, create problems for the Company or any of its affiliates, or (iii)
is a client of the Company or has been a client of the Company during the
24-month period before the beginning of the Non-Compete Period. To enable the
Board of Directors to make the determination required by clauses (ii) or (iii)
of the immediately preceding sentence, Executive will, during the Non-Compete
Period and as long thereafter as he owns any of the capital stock of the
Company, inform the Board of Directors in writing, at least 30 days before
acquiring any interest in any enterprise, of his intention to acquire such
interest. The notice will set forth sufficient information about that
enterprise to enable the Company to determine whether the enterprise is
"in competition" with the Company.
If, at the time of enforcement of this Agreement, a court of
competent jurisdiction should hold that the restrictions contained in this
paragraph 8 are unreasonable under circumstances then existing, the Company
and Executive agree that the maximum period, scope, or geographical area
reasonable under such circumstances will be substituted for the stated
period, scope, or area.
9. STAFF RELATIONSHIPS. Executive acknowledges that the Company's
employees and its relationships with its employees are valuable assets of the
Company. Executive agrees that he will
<PAGE>
not, at any time during the term of his employment and during the Non-Compete
Period, directly or indirectly, engage in any of the following activities, as
an individual, independent contractor, officer, partner, member, employee,
agent, consultant, shareholder or investor:
a. employ, hire, engage, contract with or enter into any type
of business arrangement with any employee of the Company or any Prospect
(defined below) or solicit or seek to solicit any employee of the Company or
any Prospect to cease being an employee of the Company or seeking to have
such employee or Prospect enter into the employment of or enter into any
business arrangement with any other entity. For purposes of this Agreement,
the term "Prospect" means any individual or entity which is a candidate
recorded on the Company's Staff Sourcing Network or is an employee of any
entity with which the Company has entered into discussions or agreements
concerning its acquisition or a strategic alliance or with which the Company
has another contractual arrangement. During the Non-Compete Period,
Prospects shall be those Prospects in existence at the beginning of the
Non-Compete Period.
10. ARBITRATION. If there is any disagreement between the Company
and Executive whether a resignation by Executive was "voluntary" for purposes
of paragraphs 6 or 8, whether there was "Cause" for the Board of Directors to
terminate Executive's employment for purposes of paragraph 6, whether
Executive is "disabled" for purposes of paragraph 6 or whether an enterprise
in which Executive desires to acquire an interest is "in competition"
<PAGE>
with the Company for purposes of paragraph 8, the Company and Executive will
make a good faith effort to resolve such disagreement between themselves. If
they fail to so resolve it, they agree to submit the issue to a binding
arbitrator proposed by the Company reasonably satisfactory to Executive.
Executive agrees to pay all costs of such arbitration and to abide by the
results if the Company prevails in the arbitration and the Company agrees to
pay all the costs of the arbitration and to abide by the results if Executive
prevails in the arbitration.
11. REMEDIES. The parties will be entitled to enforce their rights
under this Agreement specifically, to recover damages by reason of any breach
of any provision hereof, and to exercise all other rights existing in their
favor. The Company and Executive agree and acknowledge that money damages may
not be an adequate remedy for any breach by Executive of the provisions of
this Agreement (including paragraph 8) and that the Company may in its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief to enforce, or prevent any
violations of, the provisions of this Agreement.
12. MODIFICATION, AMENDMENT, WAIVER. No modification, amendment
or waiver of any provision of this Agreement will be effective unless set
forth in a writing signed by the Company and Executive and approved by the
Board of Directors. The Company's or Executive's failure at any time to
enforce any provision of this Agreement will in no way be construed as a
waiver of such provision and will not affect the right of the Company and
Executive
<PAGE>
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
13. SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such provision will be ineffective only to the
extent of such invalidity, illegality or unenforceability in such
jurisdiction, without invalidating the remainder of this Agreement in such
jurisdiction or any provision hereof in any other jurisdiction.
14. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience and do not constitute a part of this
Agreement.
15. CHOICE OF LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by and
interpreted in accordance with the internal law, and not the law of
conflicts, of the Commonwealth of Virginia.
16. NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of any of the provisions of this
Agreement will be in writing and will, except as otherwise provided herein,
be deemed to have been given when delivered personally or mailed by certified
or registered mail, return receipt requested and postage prepaid, to the
recipient c/o Metro Information Services, Inc., Suite 300, 200 Golden Oak
Court, Virginia Beach, Virginia 23452, or at such other address as the
recipient party has specified by prior written notice to the
<PAGE>
sending party.
IN WITNESS, the undersigned parties have executed this Agreement as of
the date first written above.
METRO INFORMATION SERVICES, INC.
By
--------------------------------
Its
--------------------------
EXECUTIVE:
-----------------------------------
ANDREW J. DOWNING
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.13 EMPLOYMENT AGREEMENT DATED DECEMBER 10, 1996 BY AND BETWEEN
REGISTRANT AND FRANK B. BRACKEN, JR.
FORM OF
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is dated as of December
10, 1996, between METRO INFORMATION SERVICES, INC., a Virginia corporation
(the "Company"), and FRANK B. BRACKEN, JR. ("Executive").
PRELIMINARY STATEMENTS
A. Executive is employed by the Company as a Vice President of
Operations.
B. The Company and the Executive desire to enter into this agreement
to establish the terms and conditions of Executive's employment with the
Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is acknowledged by the parties, the parties agree as
follows:
1. EMPLOYMENT PERIOD. The Company agrees to employ Executive and
Executive accepts such employment for the period beginning January 1, 1997 and
ending on the first to occur of (a) December 31, 1997 and (b) the termination of
Executive's employment pursuant to paragraph 6 (the "Employment Period");
provided, however, the Employment Period will be continued for successive
one-year periods unless at least 90 days before the end
<PAGE>
of the initial or any subsequent term either the Company or the Executive gives
the other notice of termination of this Agreement.
2. SERVICES. During the Employment Period, Executive will render
such services of an executive and administrative character to the Company as it
may from time to time direct. During the Employment Period, Executive will
devote his best efforts and all of his business time and attention (except for
vacation periods and reasonable periods of illness or other incapacity) to the
business of the Company, and will not perform any services of any nature for any
enterprise other than the Company without the prior consent of the Company's
board of directors (the "Board of Directors").
3. BASE SALARY. Beginning January 1, 1997 and thereafter during the
Employment Period, the Company will pay Executive salary at a per annum rate of
One Hundred Eighty Thousand Dollars ($180,000) (the "Base Salary"). The
Company may increase or decrease the Base Salary at any time and from time to
time, by action of the Board of Directors. Any increase or decrease in
Executive's Base Salary shall be made in accordance with Executive's annual
compensation plan as approved by the Company's Board of Directors.
4. BENEFITS. Executive will be entitled to receive from the
Company, in addition to the salary set forth in paragraph 3 above, all benefits
provided generally to full time employees of the Company. Any alteration of
the benefits that Executive is entitled to receive from the Company shall be
made in accoreance with Executive's annual compensation plan as approved by
the Company's Board of Directors.
5. Intentionally Omitted
- 2 -
<PAGE>
6. TERMINATION OF EMPLOYMENT.
a. The Employment Period will automatically end on Executive's
voluntary resignation, termination by the Board of Directors with or without
cause, termination by the Board of Directors in the event of Executive's
disability (as determined by the Board of Directors in its good faith judgment)
or Executive's death; PROVIDED, that Executive's resignation will be effective
not less than three months after Executive has given written notice thereof to
the Board of Directors; PROVIDED FURTHER, that Executive's termination with or
without cause will be effective only after the Board of Directors has determined
in its good faith judgment that such termination is in the best interests of the
Company and written notice of such termination has been delivered to Executive.
b. In the event of termination for disability or without cause,
Executive will be entitled to be paid his salary by the Company and to receive
the benefits set forth in paragraph 4 until December 31 of the year in which
such termination occurs or 90 days after the date of such termination occurs,
whichever is the longer. Such salary will be payable semi-monthly at the rate
in effect at the time of termination. Executive will have no duty to mitigate
the Company's damages by taking other employment after his termination by the
Company without cause and any compensation earned by him in such other
employment will not be deducted from any amount payable to him hereunder. In
the event of Executive's disability, however, the
- 3 -
<PAGE>
amounts payable to him hereunder will be reduced by any amounts received by
Executive from disability insurance purchased by the Company for Executive.
c. "Disability," for purposes hereof, means any physical or
mental condition which prevents Executive from performing his duties hereunder,
for 180 days, whether or not consecutive, in any 12-month period. In the event
of disagreement between the Board of Directors and Executive whether
"disability" exists, the disagreement will be resolved by arbitration pursuant
to paragraph 9 below.
d. "Cause" for which the Board of Directors may terminate
Executive's employment means, (i) the commission of a crime involving the
Company or any entity in which it has an interest or (ii) a breach or breaches
of Executive's fiduciary duty to the Company or its shareholders which
individually or in the aggregate are materially adverse to the Company's
business or financial condition or prospects; and, in either case, as finally
determined by a court of competent jurisdiction. "Finally determined" means
after all direct appeals to appellate courts of competent jurisdiction are
exhausted. While "materially adverse" as used in clause (ii) above is not
limited to the following instances, (x) any substantial breach of Executive's
duties under paragraphs 2, 7, 8 or 9 of this Agreement, and (y) any willful or
grossly negligent breach or breaches (whether or not related) of Executive's
fiduciary duties to the Company which, individually or in the aggregate, result
in the Company's suffering damages of
- 4 -
<PAGE>
$100,000 or more, will be deemed PRIMA FACIE "materially adverse" within the
meaning of clause (ii).
e. In the event that the Board of Directors determines, in its
good faith judgment, that Executive has committed a crime involving the Company
or any entity in which it has an interest, it may suspend Executive without pay
pending final determination of the charges, but only after Executive has been
charged with such crime by competent law-enforcement authorities by warrant,
summons, information, indictment or otherwise. During the period of suspension,
the Company will continue to provide Executive with the insurance benefits which
it provided pursuant to paragraph 4 above immediately before his suspension.
In the event that the criminal charges against Executive are finally determined
without a conviction of Executive of the crime charged or any lesser offense
included under such crime, the Company will reinstate Executive and resume
paying him the salary and providing him with the other benefits to which he is
entitled hereunder, with the salary payable retroactively to the date of
suspension (with interest at 8% per annum on all amounts not paid during the
period of suspension, calculated from the respective dates these amounts would
have been payable).
f. In the event that the Board of Directors determines, in its
good faith judgment, that Executive has committed a breach of fiduciary duty of
a type justifying termination with Cause, the Board may immediately suspend
Executive. During such suspension, however, Executive will continue
- 5 -
<PAGE>
to be paid the salary provided in paragraph 3 and receive the benefits provided
for in paragraph 4, regardless of any other employment Executive may take. In
the event of final determination by a court of competent jurisdiction that
Executive has breached his fiduciary duty to the Company or its stockholders
within the meaning of paragraph 7(d)(ii) above, Executive will, on demand by
the Board of Directors, reimburse the Company for all salary and benefits
received by him from the Company from the date of suspension, together with
interest thereon at 8% per annum from the respective dates of payment.
7. CONFIDENTIAL INFORMATION. Executive acknowledges that all
computer systems, programs, reports, designs, drawings, memoranda,
discoveries, inventions, state of the art technology, data, notes, records,
files, proposals, plans, lists, documents and any other information
containing or referring to confidential or proprietary information or
concerning the business or affairs of the Company or any of its clients (the
"Proprietary Information"), whether prepared or developed or both by
Executive or others, and all copies thereof are property of the Company or
its clients, respectively. Executive agrees that he will not disclose to any
unauthorized person any Proprietary Information nor will he use for his own
account any Proprietary Information without the written consent of the
Company, which consent may be denied for any reason or no reason. On the
termination of Executive's employment with the Company for any reason (or at
any earlier time that such request is made by the Company), Executive will
deliver to the
- 6 -
<PAGE>
Company all Proprietary Information and any copies thereof which Executive may
possess or have under his control. Executive agrees not to copyright or attempt
to copyright any Proprietary Information or any computer system or any findings
or recommendations or other data prepared in connection with the Proprietary
Information or Executive's performance of duties with the Company or both.
8. NON-COMPETE. As a significant inducement to the Company to enter
into this Agreement, Executive agrees that:
a. as long as Executive is employed by the Company in any
capacity, during or after the Employment Period, Executive will not, directly
or indirectly, own any interest in, manage, control, participate in, render
services for or in any other manner engage in any other activity (all of the
foregoing being hereinafter referred to as having or acquiring an "interest") in
any information technology services business (whether or not a client of the
Company), without the prior consent of the Board of Directors;
b. beginning on the termination of Executive's employment with
the Company and ending two years after such termination for any reason (the
"Non-Compete Period"), Executive will not have or acquire an interest in any
enterprise which is "in competition" with the Company, as "in competition" is
defined below; and
c. after the end of the Non-Compete Period, Executive will not
acquire any interest in any enterprise "in
- 7 -
<PAGE>
competition" with the Company as long as he owns 1% or more of any class of the
capital stock of the Company.
An enterprise will be deemed to be "in competition" with the
Company if (i) such enterprise is involved, directly or indirectly with
providing information technology services, or (ii) in the case of any enterprise
other than an enterprise providing information technology services, Executive's
intended relationship to such enterprise would, in the reasonable good faith
judgment of the Board of Directors, create problems for the Company or any of
its affiliates, or (iii) is a client of the Company or has been a client of the
Company during the 24-month period before the beginning of the Non-Compete
Period. To enable the Board of Directors to make the determination required by
clauses (ii) or (iii) of the immediately preceding sentence, Executive will,
during the Non-Compete Period and as long thereafter as he owns any of the
capital stock of the Company, inform the Board of Directors in writing, at
least 30 days before acquiring any interest in any enterprise, of his intention
to acquire such interest. The notice will set forth sufficient information
about that enterprise to enable the Company to determine whether the enterprise
is "in competition" with the Company.
If, at the time of enforcement of this Agreement, a court of
competent jurisdiction should hold that the restrictions contained in this
paragraph 8 are unreasonable under circumstances then existing, the Company and
Executive agree that the maximum period, scope, or geographical area reasonable
under such
- 8 -
<PAGE>
circumstances will be substituted for the stated period, scope, or area.
9. STAFF RELATIONSHIPS. Executive acknowledges that the Company's
employees and its relationships with its employees are valuable assets of the
Company. Executive agrees that he will not, at any time during the term of his
employment and during the Non-Compete Period, directly or indirectly, engage in
any of the following activities, as an individual, independent contractor,
officer, partner, member, employee, agent, consultant, shareholder or investor:
a. employ, hire, engage, contract with or enter into any type
of business arrangement with any employee of the Company or any Prospect
(defined below) or solicit or seek to solicit any employee of the Company or any
Prospect to cease being an employee of the Company or seeking to have such
employee or Prospect enter into the employment of or enter into any business
arrangement with any other entity. For purposes of this Agreement, the term
"Prospect" means any individual or entity which is a candidate recorded on the
Company's Staff Sourcing Network or is an employee of any entity with which the
Company has entered into discussions or agreements concerning its acquisition or
a strategic alliance or with which the Company has another contractual
arrangement. During the Non-Compete Period, Prospects shall be those Prospects
in existence at the beginning of the Non-Compete Period.
- 9 -
<PAGE>
10. ARBITRATION. If there is any disagreement between the Company
and Executive whether a resignation by Executive was "voluntary" for purposes of
paragraphs 6 or 8, whether there was "Cause" for the Board of Directors to
terminate Executive's employment for purposes of paragraph 6, whether Executive
is "disabled" for purposes of paragraph 6 or whether an enterprise in which
Executive desires to acquire an interest is "in competition" with the Company
for purposes of paragraph 8, the Company and Executive will make a good faith
effort to resolve such disagreement between themselves. If they fail to so
resolve it, they agree to submit the issue to a binding arbitrator proposed by
the Company reasonably satisfactory to Executive. Executive agrees to pay all
costs of such arbitration and to abide by the results if the Company prevails in
the arbitration and the Company agrees to pay all the costs of the arbitration
and to abide by the results if Executive prevails in the arbitration.
11. REMEDIES. The parties will be entitled to enforce their rights
under this Agreement specifically, to recover damages by reason of any breach of
any provision hereof, and to exercise all other rights existing in their favor.
The Company and Executive agree and acknowledge that money damages may not be an
adequate remedy for any breach by Executive of the provisions of this Agreement
(including paragraph 8) and that the Company may in its sole discretion apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive
- 10 -
<PAGE>
relief to enforce, or prevent any violations of, the provisions of this
Agreement.
12. MODIFICATION, AMENDMENT, WAIVER. No modification, amendment or
waiver of any provision of this Agreement will be effective unless set forth in
a writing signed by the Company and Executive and approved by the Board of
Directors. The Company's or Executive's failure at any time to enforce any
provision of this Agreement will in no way be construed as a waiver of such
provision and will not affect the right of the Company and Executive thereafter
to enforce each and every provision of this Agreement in accordance with its
terms.
13. SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such provision will be ineffective only to the extent of such
invalidity, illegality or unenforceability in such jurisdiction, without
invalidating the remainder of this Agreement in such jurisdiction or any
provision hereof in any other jurisdiction.
14. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience and do not constitute a part of this Agreement.
15. CHOICE OF LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be
- 11 -
<PAGE>
governed by and interpreted in accordance with the internal law, and not the law
of conflicts, of the Commonwealth of Virginia.
16. NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of any of the provisions of this Agreement
will be in writing and will, except as otherwise provided herein, be deemed to
have been given when delivered personally or mailed by certified or registered
mail, return receipt requested and postage prepaid, to the recipient c/o Metro
Information Services, Inc., Suite 300, 200 Golden Oak Court, Virginia Beach,
Virginia 23452, or at such other address as the recipient party has specified
by prior written notice to the sending party.
IN WITNESS, the undersigned parties have executed this Agreement as of
the date first written above.
METRO INFORMATION SERVICES, INC.
By
---------------------------------
Its
---------------------------
EXECUTIVE:
------------------------------------
FRANK B. BRACKEN, JR.
- 12 -
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.14 EMPLOYMENT AGREEMENT DATED DECEMBER 10, 1996 BY AND BETWEEN
REGISTRANT AND RICHARD C. JAECKLE.
FORM OF
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is dated as of December
10, 1996, between METRO INFORMATION SERVICES, INC., a Virginia corporation
(the "Company"), and RICHARD C. JAECKLE ("Executive").
PRELIMINARY STATEMENTS
A. Executive is employed by the Company as a Vice President of
Operations.
B. The Company and the Executive desire to enter into this agreement
to establish the terms and conditions of Executive's employment with the
Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is acknowledged by the parties, the parties agree as
follows:
1. EMPLOYMENT PERIOD. The Company agrees to employ Executive and
Executive accepts such employment for the period beginning January 1, 1997 and
ending on the first to occur of (a) December 31, 1997 and (b) the termination of
Executive's employment pursuant to paragraph 6 (the "Employment Period");
provided, however, the Employment Period will be continued for successive
one-year periods unless at least 90 days before the end of the initial or any
subsequent term either the Company or the
<PAGE>
Executive gives the other notice of termination of this Agreement.
2. SERVICES. During the Employment Period, Executive will render
such services of an executive and administrative character to the Company as it
may from time to time direct. During the Employment Period, Executive will
devote his best efforts and all of his business time and attention (except for
vacation periods and reasonable periods of illness or other incapacity) to the
business of the Company, and will not perform any services of any nature for any
enterprise other than the Company without the prior consent of the Company's
board of directors (the "Board of Directors").
3. BASE SALARY. Beginning January 1, 1997 and thereafter during the
Employment Period, the Company will pay Executive salary at a per annum rate of
One Hundred Eighty Thousand Dollars ($180,000) (the "Base Salary"). The Company
may increase or decrease the Base Salary at any time and from time to time.
Any increase or decrease in Executive's Base Salary Shall be made in
accordance with Executive's annual compensation plan as approved by the
Company's Board of Directors.
4. BENEFITS. Executive will be entitled to receive from the
Company, in addition to the salary set forth in paragraph 3 above, all benefits
provided generally to full time employees of the Company. Any alteration of
the benefits that Executive is entitled to receive from the Company shall be
made in accordance with Executive's annual compensation plan as approved by
the Company's Board of Directors.
5. Intentionally Omitted.
-2-
<PAGE>
6. TERMINATION OF EMPLOYMENT.
a. The Employment Period will automatically end on Executive's
voluntary resignation, termination by the Board of Directors with or without
cause, termination by the Board of Directors in the event of Executive's
disability (as determined by the Board of Directors in its good faith judgment)
or Executive's death; PROVIDED, that Executive's resignation will be effective
not less than three months after Executive has given written notice thereof to
the Board of Directors; PROVIDED FURTHER, that Executive's termination with or
without cause will be effective only after the Board of Directors has determined
in its good faith judgment that such termination is in the best interests of the
Company and written notice of such termination has been delivered to Executive.
b. In the event of termination for disability or without cause,
Executive will be entitled to be paid his salary by the Company and to receive
the benefits set forth in paragraph 4 until December 31 of the
year in which such termination occurs or 90 days after the date of such
termination occurs, whichever is the longer. Such salary will be payable
semi-monthly at the rate in effect at the time of termination. Executive
will have no duty to mitigate the Company's damages by taking other
employment after his termination by the Company without cause and any
compensation earned by him in such other employment will not be deducted from
any amount payable to him hereunder. In the event of Executive's disability,
however, the amounts payable to him hereunder will be reduced by any amounts
-3-
<PAGE>
received by Executive from disability insurance purchased by the Company for
Executive.
c. "Disability," for purposes hereof, means any physical or
mental condition which prevents Executive from performing his duties hereunder,
for 180 days, whether or not consecutive, in any 12-month period. In the event
of disagreement between the Board of Directors and Executive whether
"disability" exists, the disagreement will be resolved by arbitration pursuant
to paragraph 9 below.
d. "Cause" for which the Board of Directors may terminate
Executive's employment means, (i) the commission of a crime involving the
Company or any entity in which it has an interest or (ii) a breach or breaches
of Executive's fiduciary duty to the Company or its shareholders which
individually or in the aggregate are materially adverse to the Company's
business or financial condition or prospects; and, in either case, as finally
determined by a court of competent jurisdiction. "Finally determined" means
after all direct appeals to appellate courts of competent jurisdiction are
exhausted. While "materially adverse" as used in clause (ii) above is not
limited to the following instances, (x) any substantial breach of Executive's
duties under paragraphs 2, 7, 8 or 9 of this Agreement, and (y) any willful
or grossly negligent breach or breaches (whether or not related) of
Executive's fiduciary duties to the Company which, individually or in the
aggregate, result in the Company's suffering damages of $100,000 or more,
will be deemed PRIMA FACIE "materially adverse" within the meaning of clause
(ii).
-4-
<PAGE>
e. In the event that the Board of Directors determines, in its
good faith judgment, that Executive has committed a crime involving the Company
or any entity in which it has an interest, it may suspend Executive without pay
pending final determination of the charges, but only after Executive has been
charged with such crime by competent law-enforcement authorities by warrant,
summons, information, indictment or otherwise. During the period of suspension,
the Company will continue to provide Executive with the insurance benefits which
it provided pursuant to paragraph 4 above immediately before
his suspension. In the event that the criminal charges against Executive are
finally determined without a conviction of Executive of the crime charged or any
lesser offense included under such crime, the Company will reinstate Executive
and resume paying him the salary and providing him with the other benefits to
which he is entitled hereunder, with the salary payable retroactively to the
date of suspension (with interest at 8% per annum on all amounts not paid during
the period of suspension, calculated from the respective dates these amounts
would have been payable).
f. In the event that the Board of Directors determines, in its
good faith judgment, that Executive has committed a breach of fiduciary duty of
a type justifying termination with Cause, the Board may immediately suspend
Executive. During such suspension, however, Executive will continue to be paid
the salary provided in paragraph 3 and receive the benefits provided for in
paragraph 4, regardless of any other employment Executive may
take. In the event of final
-5-
<PAGE>
determination by a court of competent jurisdiction that Executive has breached
his fiduciary duty to the Company or its stockholders within the meaning of
paragraph 7(d)(ii) above, Executive will, on demand by the Board of Directors,
reimburse the Company for all salary and benefits received by him from the
Company from the date of suspension, together with interest thereon at 8% per
annum from the respective dates of payment.
7. CONFIDENTIAL INFORMATION. Executive acknowledges that all
computer systems, programs, reports, designs, drawings, memoranda,
discoveries, inventions, state of the art technology, data, notes, records,
files, proposals, plans, lists, documents and any other information
containing or referring to confidential or proprietary information or
concerning the business or affairs of the Company or any of its clients (the
"Proprietary Information"), whether prepared or developed or both by
Executive or others, and all copies thereof are property of the Company or
its clients, respectively. Executive agrees that he will not disclose to any
unauthorized person any Proprietary Information nor will he use for his own
account any Proprietary Information without the written consent of the
Company, which consent may be denied for any reason or no reason. On the
termination of Executive's employment with the Company for any reason (or at
any earlier time that such request is made by the Company), Executive will
deliver to the Company all Proprietary Information and any copies thereof
which Executive may possess or have under his control. Executive agrees not
to copyright or attempt to copyright any Proprietary Information or any
computer system or any findings or
-6-
<PAGE>
recommendations or other data prepared in connection with the Proprietary
Information or Executive's performance of duties with the Company or both.
8. NON-COMPETE. As a significant inducement to the Company to enter
into this Agreement, Executive agrees that:
a. as long as Executive is employed by the Company in any
capacity, during or after the Employment Period, Executive will not, directly
or indirectly, own any interest in, manage, control, participate in, render
services for or in any other manner engage in any other activity (all of the
foregoing being hereinafter referred to as having or acquiring an "interest") in
any information technology services business (whether or not a client of the
Company), without the prior consent of the Board of Directors;
b. beginning on the termination of Executive's employment with
the Company and ending two years after such termination for any reason (the
"Non-Compete Period"), Executive will not have or acquire an interest in any
enterprise which is "in competition" with the Company, as "in competition" is
defined below; and
c. after the end of the Non-Compete Period, Executive will not
acquire any interest in any enterprise "in competition" with the Company as long
as he owns 1% or more of any class of the capital stock of the Company.
An enterprise will be deemed to be "in competition" with the
Company if (i) such enterprise is involved, directly or indirectly with
providing information technology services, or
-7-
<PAGE>
(ii) in the case of any enterprise other than an enterprise providing
information technology services, Executive's intended relationship to such
enterprise would, in the reasonable good faith judgment of the Board of
Directors, create problems for the Company or any of its affiliates, or (iii)
is a client of the Company or has been a client of the Company during the
24-month period before the beginning of the Non-Compete Period. To enable
the Board of Directors to make the determination required by clauses (ii) or
(iii) of the immediately preceding sentence, Executive will, during the
Non-Compete Period and as long thereafter as he owns any of the capital stock
of the Company, inform the Board of Directors in writing, at least 30 days
before acquiring any interest in any enterprise, of his intention to acquire
such interest. The notice will set forth sufficient information about that
enterprise to enable the Company to determine whether the enterprise is "in
competition" with the Company.
If, at the time of enforcement of this Agreement, a court of
competent jurisdiction should hold that the restrictions contained in this
paragraph 8 are unreasonable under circumstances then existing, the Company and
Executive agree that the maximum period, scope, or geographical area reasonable
under such circumstances will be substituted for the stated period, scope, or
area.
9. STAFF RELATIONSHIPS. Executive acknowledges that the Company's
employees and its relationships with its employees are valuable assets of the
Company. Executive agrees that he will
-8-
<PAGE>
not, at any time during the term of his employment and during the Non-Compete
Period, directly or indirectly, engage in any of the following activities, as an
individual, independent contractor, officer, partner, member, employee, agent,
consultant, shareholder or investor:
a. employ, hire, engage, contract with or enter into any type
of business arrangement with any employee of the Company or any Prospect
(defined below) or solicit or seek to solicit any employee of the Company or any
Prospect to cease being an employee of the Company or seeking to have such
employee or Prospect enter into the employment of or enter into any business
arrangement with any other entity. For purposes of this Agreement, the term
"Prospect" means any individual or entity which is a candidate recorded on the
Company's Staff Sourcing Network or is an employee of any entity with which the
Company has entered into discussions or agreements concerning its acquisition or
a strategic alliance or with which the Company has another contractual
arrangement. During the Non-Compete Period, Prospects shall be those Prospects
in existence at the beginning of the Non-Compete Period.
10. ARBITRATION. If there is any disagreement between the Company
and Executive whether a resignation by Executive was "voluntary" for purposes of
paragraphs 6 or 8, whether there was "Cause" for the Board of Directors to
terminate Executive's employment for purposes of paragraph 6, whether Executive
is "disabled" for purposes of paragraph 6 or whether an enterprise in which
Executive desires to acquire an interest is "in competition"
-9-
<PAGE>
with the Company for purposes of paragraph 8, the Company and Executive will
make a good faith effort to resolve such disagreement between themselves. If
they fail to so resolve it, they agree to submit the issue to a binding
arbitrator proposed by the Company reasonably satisfactory to Executive.
Executive agrees to pay all costs of such arbitration and to abide by the
results if the Company prevails in the arbitration and the Company agrees to pay
all the costs of the arbitration and to abide by the results if Executive
prevails in the arbitration.
11. REMEDIES. The parties will be entitled to enforce their rights
under this Agreement specifically, to recover damages by reason of any breach of
any provision hereof, and to exercise all other rights existing in their favor.
The Company and Executive agree and acknowledge that money damages may not be an
adequate remedy for any breach by Executive of the provisions of this Agreement
(including paragraph 8) and that the Company may in its sole discretion apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief to enforce, or prevent any violations of, the
provisions of this Agreement.
12. MODIFICATION, AMENDMENT, WAIVER. No modification, amendment or
waiver of any provision of this Agreement will be effective unless set forth in
a writing signed by the Company and Executive and approved by the Board of
Directors. The Company's or Executive's failure at any time to enforce any
provision of this Agreement will in no way be construed as a waiver of such
provision and will not affect the right of the Company and Executive
-10-
<PAGE>
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
13. SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such provision will be ineffective only to the extent of such
invalidity, illegality or unenforceability in such jurisdiction, without
invalidating the remainder of this Agreement in such jurisdiction or any
provision hereof in any other jurisdiction.
14. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience and do not constitute a part of this Agreement.
15. CHOICE OF LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by and
interpreted in accordance with the internal law, and not the law of conflicts,
of the Commonwealth of Virginia.
16. NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of any of the provisions of this Agreement
will be in writing and will, except as otherwise provided herein, be deemed to
have been given when delivered personally or mailed by certified or registered
mail, return receipt requested and postage prepaid, to the recipient c/o Metro
Information Services, Inc., Suite 300, 200 Golden Oak Court, Virginia Beach,
Virginia 23452, or at such other address as the recipient party has specified
by prior written notice to the
-11-
<PAGE>
sending party.
IN WITNESS, the undersigned parties have executed this Agreement as of
the date first written above.
METRO INFORMATION SERVICES, INC.
By
---------------------------------
Its
---------------------------
EXECUTIVE:
-----------------------------------
RICHARD C. JAECKLE
-12-
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.15 EMPLOYMENT AGREEMENT DATED DECEMBER 10, 1996 BY AND BETWEEN
REGISTRANT AND KATHLEEN A. NEFF.
FORM OF
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is dated as of December
10, 1996, between METRO INFORMATION SERVICES, INC., a Virginia corporation
(the "Company"), and KATHLEEN A. NEFF ("Executive").
PRELIMINARY STATEMENTS
A. Executive is employed by the Company as a Vice President of
Operations.
B. The Company and the Executive desire to enter into this agreement
to establish the terms and conditions of Executive's employment with the
Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is acknowledged by the parties, the parties agree as
follows:
1. EMPLOYMENT PERIOD. The Company agrees to employ Executive and
Executive accepts such employment for the period beginning January 1, 1997
and ending on the first to occur of (a) December 31, 1997 and (b) the
termination of Executive's employment pursuant to paragraph 6 (the
"Employment Period"); provided, however, the Employment Period will be
continued for successive one-year periods unless at least 90 days before the
end of the initial or any subsequent term either the Company or the
<PAGE>
Executive gives the other notice of termination of this Agreement.
2. SERVICES. During the Employment Period, Executive will render
such services of an executive and administrative character to the Company as
it may from time to time direct. During the Employment Period, Executive
will devote her best efforts and all of her business time and attention
(except for vacation periods and reasonable periods of illness or other
incapacity) to the business of the Company, and will not perform any services
of any nature for any enterprise other than the Company without the prior
consent of the Company's board of directors (the "Board of Directors").
3. BASE SALARY. Beginning January 1, 1997 and thereafter during
the Employment Period, the Company will pay Executive salary at a per annum
rate of One Hundred Eighty Thousand Dollars ($180,000) (the "Base Salary").
The Company may increase or decrease the Base Salary at any time and
from time to time. Any increase or decrease in Executive's Base Salary shall
be made in accordance with Executive's annual compensation plan as approved
by the Company's Board of Directors.
4. BENEFITS. Executive will be entitled to receive from the
Company, in addition to the salary set forth in paragraph 3 above, all
benefits provided generally to full time employees of the Company. Any
alteration of the benefits that Executive is entitled to receive from the
Company shall be made in accordance with Executive's annual compensation plan
as approved by the Company's Board of Directors.
5. Intentionally Omitted
- 2 -
<PAGE>
6. TERMINATION OF EMPLOYMENT.
a. The Employment Period will automatically end on
Executive's voluntary resignation, termination by the Board of Directors with
or without cause, termination by the Board of Directors in the event of
Executive's disability (as determined by the Board of Directors in its good
faith judgment) or Executive's death; PROVIDED, that Executive's resignation
will be effective not less than three months after Executive has given
written notice thereof to the Board of Directors; PROVIDED FURTHER, that
Executive's termination with or without cause will be effective only after
the Board of Directors has determined in its good faith judgment that such
termination is in the best interests of the Company and written notice of
such termination has been delivered to Executive.
b. In the event of termination for disability or without
cause, Executive will be entitled to be paid her salary by the Company and to
receive the benefits set forth in paragraph 4 until December 31 of the year
in which such termination occurs or 90 days after the date of such
termination occurs, whichever is the longer. Such salary will be payable
semi-monthly at the rate in effect at the time of termination. Executive will
have no duty to mitigate the Company's damages by taking other employment
after her termination by the Company without cause and any compensation
earned by her in such other employment will not be deducted from any amount
payable to her hereunder. In the event of Executive's disability, however,
the amounts payable to her hereunder will be reduced by any amounts
- 3 -
<PAGE>
received by Executive from disability insurance purchased by the Company for
Executive.
c. "Disability," for purposes hereof, means any physical or
mental condition which prevents Executive from performing her duties
hereunder, for 180 days, whether or not consecutive, in any 12-month period.
In the event of disagreement between the Board of Directors and Executive
whether "disability" exists, the disagreement will be resolved by arbitration
pursuant to paragraph 9 below.
d. "Cause" for which the Board of Directors may terminate
Executive's employment means, (i) the commission of a crime involving the
Company or any entity in which it has an interest or (ii) a breach or
breaches of Executive's fiduciary duty to the Company or its shareholders
which individually or in the aggregate are materially adverse to the
Company's business or financial condition or prospects; and, in either case,
as finally determined by a court of competent jurisdiction. "Finally
determined" means after all direct appeals to appellate courts of competent
jurisdiction are exhausted. While "materially adverse" as used in clause (ii)
above is not limited to the following instances, (x) any substantial breach
of Executive's duties under paragraphs 2, 7, 8 or 9 of this Agreement, and
(y) any willful or grossly negligent breach or breaches (whether or not
related) of Executive's fiduciary duties to the Company which, individually
or in the aggregate, result in the Company's suffering damages of $100,000 or
more, will be deemed PRIMA FACIE "materially adverse" within the meaning of
clause (ii).
- 4 -
<PAGE>
e. In the event that the Board of Directors determines, in
its good faith judgment, that Executive has committed a crime involving the
Company or any entity in which it has an interest, it may suspend Executive
without pay pending final determination of the charges, but only after
Executive has been charged with such crime by competent law-enforcement
authorities by warrant, summons, information, indictment or otherwise.
During the period of suspension, the Company will continue to provide
Executive with the insurance benefits which it provided pursuant to paragraph
4 above immediately before her suspension. In the event that the criminal
charges against Executive are finally determined without a conviction of
Executive of the crime charged or any lesser offense included under such
crime, the Company will reinstate Executive and resume paying her the salary
and providing her with the other benefits to which she is entitled hereunder,
with the salary payable retroactively to the date of suspension (with
interest at 8% per annum on all amounts not paid during the period of
suspension, calculated from the respective dates these amounts would have
been payable).
f. In the event that the Board of Directors determines, in
its good faith judgment, that Executive has committed a breach of fiduciary
duty of a type justifying termination with Cause, the Board may immediately
suspend Executive. During such suspension, however, Executive will continue
to be paid the salary provided in paragraph 3 and receive the benefits
provided for in paragraph 4, regardless of any other employment Executive may
take. In the event of final
- 5 -
<PAGE>
determination by a court of competent jurisdiction that Executive has
breached her fiduciary duty to the Company or its stockholders within the
meaning of paragraph 7(d)(ii) above, Executive will, on demand by the Board
of Directors, reimburse the Company for all salary and benefits received by
her from the Company from the date of suspension, together with interest
thereon at 8% per annum from the respective dates of payment.
7. CONFIDENTIAL INFORMATION. Executive acknowledges that all
computer systems, programs, reports, designs, drawings, memoranda,
discoveries, inventions, state of the art technology, data, notes, records,
files, proposals, plans, lists, documents and any other information
containing or referring to confidential or proprietary information or
concerning the business or affairs of the Company or any of its clients (the
"Proprietary Information"), whether prepared or developed or both by
Executive or others, and all copies thereof are property of the Company or
its clients, respectively. Executive agrees that she will not disclose to
any unauthorized person any Proprietary Information nor will she use for her
own account any Proprietary Information without the written consent of the
Company, which consent may be denied for any reason or no reason. On the
termination of Executive's employment with the Company for any reason (or at
any earlier time that such request is made by the Company), Executive will
deliver to the Company all Proprietary Information and any copies thereof
which Executive may possess or have under her control. Executive agrees not
to copyright or attempt to copyright any Proprietary Information or any
computer system or any findings or
- 6 -
<PAGE>
recommendations or other data prepared in connection with the Proprietary
Information or Executive's performance of duties with the Company or both.
8. NON-COMPETE. As a significant inducement to the Company to
enter into this Agreement, Executive agrees that:
a. as long as Executive is employed by the Company in any
capacity, during or after the Employment Period, Executive will not,
directly or indirectly, own any interest in, manage, control, participate in,
render services for or in any other manner engage in any other activity (all
of the foregoing being hereinafter referred to as having or acquiring an
"interest") in any information technology services business (whether or not a
client of the Company), without the prior consent of the Board of Directors;
b. beginning on the termination of Executive's employment
with the Company and ending two years after such termination for any reason
(the "Non-Compete Period"), Executive will not have or acquire an interest in
any enterprise which is "in competition" with the Company, as "in
competition" is defined below; and
c. after the end of the Non-Compete Period, Executive will
not acquire any interest in any enterprise "in competition" with the Company
as long as she owns 1% or more of any class of the capital stock of the
Company.
An enterprise will be deemed to be "in competition" with the
Company if (i) such enterprise is involved, directly or indirectly with
providing information technology services, or
- 7 -
<PAGE>
(ii) in the case of any enterprise other than an enterprise providing
information technology services, Executive's intended relationship to such
enterprise would, in the reasonable good faith judgment of the Board of
Directors, create problems for the Company or any of its affiliates, or (iii)
is a client of the Company or has been a client of the Company during the
24-month period before the beginning of the Non-Compete Period. To enable
the Board of Directors to make the determination required by clauses (ii) or
(iii) of the immediately preceding sentence, Executive will, during the
Non-Compete Period and as long thereafter as she owns any of the capital
stock of the Company, inform the Board of Directors in writing, at least 30
days before acquiring any interest in any enterprise, of her intention to
acquire such interest. The notice will set forth sufficient information
about that enterprise to enable the Company to determine whether the
enterprise is "in competition" with the Company.
If, at the time of enforcement of this Agreement, a court of
competent jurisdiction should hold that the restrictions contained in this
paragraph 8 are unreasonable under circumstances then existing, the Company
and Executive agree that the maximum period, scope, or geographical area
reasonable under such circumstances will be substituted for the stated
period, scope, or area.
9. STAFF RELATIONSHIPS. Executive acknowledges that the Company's
employees and its relationships with its employees are valuable assets of the
Company. Executive agrees that she will
- 8 -
<PAGE>
not, at any time during the term of her employment and during the Non-Compete
Period, directly or indirectly, engage in any of the following activities, as
an individual, independent contractor, officer, partner, member, employee,
agent, consultant, shareholder or investor:
a. employ, hire, engage, contract with or enter into any type
of business arrangement with any employee of the Company or any Prospect
(defined below) or solicit or seek to solicit any employee of the Company or
any Prospect to cease being an employee of the Company or seeking to have
such employee or Prospect enter into the employment of or enter into any
business arrangement with any other entity. For purposes of this Agreement,
the term "Prospect" means any individual or entity which is a candidate
recorded on the Company's Staff Sourcing Network or is an employee of any
entity with which the Company has entered into discussions or agreements
concerning its acquisition or a strategic alliance or with which the Company
has another contractual arrangement. During the Non-Compete Period,
Prospects shall be those Prospects in existence at the beginning of the
Non-Compete Period.
10. ARBITRATION. If there is any disagreement between the Company
and Executive whether a resignation by Executive was "voluntary" for purposes
of paragraphs 6 or 8, whether there was "Cause" for the Board of Directors to
terminate Executive's employment for purposes of paragraph 6, whether
Executive is "disabled" for purposes of paragraph 6 or whether an enterprise
in which Executive desires to acquire an interest is "in competition"
- 9 -
<PAGE>
with the Company for purposes of paragraph 8, the Company and Executive will
make a good faith effort to resolve such disagreement between themselves. If
they fail to so resolve it, they agree to submit the issue to a binding
arbitrator proposed by the Company reasonably satisfactory to Executive.
Executive agrees to pay all costs of such arbitration and to abide by the
results if the Company prevails in the arbitration and the Company agrees to
pay all the costs of the arbitration and to abide by the results if Executive
prevails in the arbitration.
11. REMEDIES. The parties will be entitled to enforce their rights
under this Agreement specifically, to recover damages by reason of any breach
of any provision hereof, and to exercise all other rights existing in their
favor. The Company and Executive agree and acknowledge that money damages may
not be an adequate remedy for any breach by Executive of the provisions of
this Agreement (including paragraph 8) and that the Company may in its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief to enforce, or prevent any
violations of, the provisions of this Agreement.
12. MODIFICATION, AMENDMENT, WAIVER. No modification, amendment or
waiver of any provision of this Agreement will be effective unless set forth
in a writing signed by the Company and Executive and approved by the Board of
Directors. The Company's or Executive's failure at any time to enforce any
provision of this Agreement will in no way be construed as a waiver of such
provision and will not affect the right of the Company and Executive
- 10 -
<PAGE>
thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
13. SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such provision will be ineffective only to the
extent of such invalidity, illegality or unenforceability in such
jurisdiction, without invalidating the remainder of this Agreement in such
jurisdiction or any provision hereof in any other jurisdiction.
14. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience and do not constitute a part of this
Agreement.
15. CHOICE OF LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by and
interpreted in accordance with the internal law, and not the law of
conflicts, of the Commonwealth of Virginia.
16. NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of any of the provisions of this
Agreement will be in writing and will, except as otherwise provided herein,
be deemed to have been given when delivered personally or mailed by certified
or registered mail, return receipt requested and postage prepaid, to the
recipient c/o Metro Information Services, Inc., Suite 300, 200 Golden Oak
Court, Virginia Beach, Virginia 23452, or at such other address as the
recipient party has specified by prior written notice to the
- 11 -
<PAGE>
sending party.
IN WITNESS, the undersigned parties have executed this Agreement as of
the date first written above.
METRO INFORMATION SERVICES, INC.
By
---------------------------------
Its
---------------------------
EXECUTIVE:
------------------------------------
KATHLEEN A. NEFF
- 12 -
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.16 LEASE DATED SEPTEMBER 19, 1996 BY AND BETWEEN TIDEWATER PARTNERS
LIMITED PARTNERSHIP AND REGISTRANT FOR PREMISES LOCATED AT SUITE
300, 200 GOLDEN OAK COURT, VIRGINIA BEACH, VIRGINIA 23452.
OFFICE LEASE AGREEMENT
by and between
TIDEWATER PARTNERS LIMITED PARTNERSHIP
and
METRO INFORMATION SERVICES
<PAGE>
TABLE OF CONTENTS
1. TERM, PREMISES
1.1 Term, Possession of Premises, Delayed Delivery
1.2 Acceptance of Premises
1.3 Premises
2. RENT; DEPOSITS
2.1 Rent; When Due; Where Paid
2.2 Deposit
2.3 Additional Rent
2.4 Payment of Additional Rent
2.5 Pro-Rata Definition
2.6 Rent Escalation
3. USE; RESTRICTION ON USE; BUILDING
REGULATIONS; QUIET ENJOYMENT; SERVICES
BY LANDLORD
3.1 Use
3.2 Building Rules and Regulations
3.3 Quiet Enjoyment
3.4 Services by Landlord; Times and Level Furnished
4. ASSIGNMENT; SUBLET; RECAPTURE OF PREMISES;
MORTGAGE BY LANDLORD; SUBORDINATION;
ATTORNMENT; ESTOPPEL CERTIFICATE; NOTICE
TO MORTGAGEE; SALE BY LANDLORD
4.1 Assignment; Sublet
4.2 Corporate Transfer
4.3 Recapture of Premises
4.4 Mortgage by Landlord
4.5 Subordination
4.6 Attornment
4.7 Estoppel Certificate
4.8 Sale by Landlord
5. MAINTENANCE AND REPAIRS; RIGHT OF ENTRY;
ALTERATIONS; LIENS; SIGNS
5.1 Maintenance and Repairs by Tenant
5.2 Landlord's Right of Entry
5.3 Maintenance by Landlord
5.4 Alterations by Tenant
5.5 Alterations by Landlord
<PAGE>
5.6 Liens
5.7 Signs
6. INSURANCE, INDEMNITY, SUBORDINATION
6.1 Insurance by Landlord
6.2 Insurance by Tenant
6.3 Insurance Rating
6.4 Indemnity
6.5 Waiver of Subrogation
7. DAMAGE AND DESTRUCTION
7.1 Damage Caused by Tenant
7.2 Damage Not Caused by Tenant
7.3 Delay Beyond Landlord's Control
8. CONDEMNATION
8.1 Condemnation; Award; Termination
<PAGE>
TABLE OF CONTENTS
Continued
9. SURRENDER OF PREMISES
9.1 Surrender at Expiration
9.2 Removal of Property
10. HOLDING OVER
10.1 Holding Over
11. DEFAULT; REMEDIES
11.1 Defaults by Tenant
11.2 Remedies of Landlord
11.3 Default by Landlord and Remedies of Tenant
11.4 Limitation of Landlord's Liability
11.5 Non-Waiver of Defaults
12. MISCELLANEOUS PROVISIONS
12.1 Waiver
12.2 Consent Not Unreasonably Withheld
12.3 Attorney's Fees
12.4 Designated Parties
12.5 Successors
12.6 Relationship of Parties
12.7 Severability
12.8 Gender
12.9 Building Name
12.10 Brokerage Commissions
12.11 Corporate Authority
12.12 Common and Parking Areas
12.13 Recording
12.14 Notices
12.15 Joint and Several Liability
12.16 Entire Agreement; Captions
ADDENDUM
EXHIBITS
Exhibit A - Rules & Regulations
<PAGE>
Exhibit B - Suite Layout
Exhibit C - Acceptance Letter
<PAGE>
OFFICE LEASE AGREEMENT
by and between
TIDEWATER PARTNERS LIMITED PARTNERSHIP
and
METRO INFORMATION SERVICES
AUGUST 26, 1996
1. TERM; ACCEPTANCE OF PREMISES; PREMISES
1.1 TERM; POSSESSION OF PREMISES; DELAYED DELIVERY. The term of this
Lease shall commence on the "Commencement Date" (as defined below) and shall
end on 11/30/2001 (the "Expiration Date"). Commencement Date is the date
Landlord delivers possession of the Premises to Tenant, which shall not be
later than 12/01/96. Written notice from Landlord to Tenant that the
Premises are available as of a specified date shall constitute delivery of
possession of the Premises as of that date. The Premises shall be deemed
ready for possession upon the completion of all standard tenant finish out
items. Completion of tenant upgrades, custom finish out items or punch list
items shall not be required in order for the Premises to be deemed ready for
occupancy. If possession is not delivered to Tenant by 12/01/96 and the
cause for delay is not the fault of Tenant or its agents, the Commencement
Date shall be extended to the date possession is delivered to Tenant and the
Expiration Date shall be extended a like number of days as the delay period.
The Lease shall not be void or voidable nor shall Landlord be liable to
Tenant for any loss or damage due to the delay. If the cause for the delay
is the fault of Tenant or its agents, the delay shall not affect the
Commencement Date and Tenant shall begin paying rent on that date unless
otherwise provided by Landlord.
1.2 ACCEPTANCE OF PREMISES. Occupying all or any portion of the
Premises by Tenant shall be conclusive that the Premises are in satisfactory
condition and acceptable to Tenant subject only to latent defects and
deficiencies listed in writing by Tenant and delivered to Landlord within ten
(10) days after Tenant's initial occupancy. The Tenant shall execute and
deliver to Landlord the Acceptance Letter contained in Exhibit C within ten
(10) days after Tenant's occupancy.
1.3 PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the Premises designated as Suite 300 in the Building known as
REFLECTIONS II located at 200 GOLDEN OAK COURT, VIRGINIA BEACH, VIRGINIA
23452. The Premises are located on the THIRD floor of the Building and
consist of certain office space representing approximately 19,229 square feet
of Rentable Area. The Rentable Area of the Premises represents 26% of the
Building's Rentable Area.
The term "Rentable Area" shall have the meaning set forth in "Standard
Method for Measuring Floor Area in Office Buildings", Building Owners and
Managers Association International, American National Standard, approved July
31, 1980.
<PAGE>
2. RENT; DEPOSITS
2.1 RENT WHEN DUE; WHERE PAID. All monies payable by Tenant to Landlord
under this Lease shall be deemed to be rent. Beginning on the Commencement
Date, rent shall be paid to Landlord in advance, in monthly installments on
the first day of each calendar month, during the entire term of this Lease,
without deduction, set-off or counterclaim, in lawful money of the United
States at the address of Landlord as set forth in this Lease, or to such
other person or entity or to such other address as Landlord may designate in
writing. Tenant's obligation to pay all rent due under this Lease shall
survive the expiration or earlier termination of this Lease. Should
Commencement Date be on a day other than the first day of the month or
terminate on a day other than the last day of the month, the rent for such
partial month shall be pro-rated based on a 365-day year and shall be paid on
Commencement Date.
2.1.1 BASIC RENT. Tenant agrees to pay to Landlord a Basic Rent
of $24,837.46 per month ($298,049.50 per year), adjusted annually as provided
in Section 2.6.
2.1.2 INTEREST RATE ON DELINQUENCIES. If Tenant shall fail to
pay any monthly installment of Basic Rent or any Additional Rent or other
charges when due, such unpaid amounts shall bear interest at the rate of the
lesser of 15% per annum or the highest lawful rate under applicable law from
the due date until paid. Tenant shall at the time the late payment is made
pay such interest plus a penalty equal to 5% of the amount of delinquent
rent. This provision shall not be construed to adjust, alter or modify the
date when monthly installments of rent are due, nor shall the payment of any
interest required by this Section be deemed to cure or excuse any default by
Tenant under this Lease.
2.2 DEPOSITS. Tenant, concurrently with the execution of this Lease,
has deposited with Landlord the amounts described in sections 2.2.1 and 2.2.2
below.
2.2.1 GOOD FAITH DEPOSIT. Tenant has deposited with Landlord a
Good Faith Deposit in the amount of $24,837.46 to be held by Landlord without
interest, and which shall be applied to the first payment of the Basic Rent
as defined in Section 2.1.1. Should Tenant fail, for any reason, to enter
into occupancy of the Premises when possession of same have been delivered by
Landlord, the Good Faith Deposit shall be forfeited by Tenant without
prejudice to any other remedy under law the Landlord may have.
2.2.2 SECURITY DEPOSIT. INTENTIONALLY DELETED
2.3 ADDITIONAL RENT. Tenant shall pay, monthly, as Additional Rent any
money required to be paid pursuant to Sections 2.3.1, 2.3.2 and 2.4
designated "Additional Rent" and all other sums of money or charges required
to be paid by Tenant under this Lease, whether or not the same be designated
Additional Rent.
2.3.1 ADDITIONAL RENT - OPERATING COSTS. INTENTIONALLY DELETED
2.3.2 ADDITIONAL RENT - PROPERTY TAXES. Tenant shall pay its
pro-rata share of all Property Taxes in excess of $70,728.96 ($.96 per square
foot of Rentable Area) in any calendar year levied and assessed upon the
Building and the land upon which the Building
<PAGE>
is situated. Property Taxes shall include any taxes and assessments which
may hereafter be substituted for real estate taxes by the applicable taxing
authorities, including general and special impositions on the Building and
grounds and any taxes on rent or rental income imposed in lieu of or in
addition to real estate taxes. Tenants pro rata share shall be adjusted to
reflect the actual period of occupancy during the calendar year. In
addition, Tenant shall be liable for all taxes levied or assessed against
personal property, furniture, or fixtures placed by or on behalf of Tenant in
the Premises.
2.4 PAYMENT OF ADDITIONAL RENT. Prior to January 1 of each calendar
year Landlord may make a reasonable estimate of Tenant's pro-rata share of
excess <#>operating costs and</#> property taxes for the calendar year, and
this amount shall be divided into twelve (12) equal monthly installments.
Tenant shall pay to Landlord as Additional Rent, concurrently with the
regular monthly rent payment, an amount equal to one (1) monthly installment
until the next calendar year's estimate is rendered. In addition, Landlord
shall endeavor to give to Tenant by March 31 of each year a statement of the
increase in rent payable by Tenant pursuant to Section 2.3 relative to the
immediately preceding calendar year, but failure by Landlord to give such a
statement shall not constitute a waiver by Landlord of its right to require
Additional Rent. Upon receipt of such statement applicable to the first
calendar year, Tenant shall pay in full the total amount of any rental
increase due for the first calendar year. If, according to this statement,
Tenant's Pro Rata Share of such costs exceeds Tenant's payments made pursuant
to Sections 2.3 and 2.4, Tenant shall pay Landlord the deficiency within ten
(10) days after the date of such statement. If said payments exceed Tenant's
Pro Rata Share of excess <#>operating costs and</#> property taxes, Tenant
shall be entitled to offset the excess against the next payments thereafter
to become due Landlord pursuant to this Section. When the final
determination is made of Tenant's pro-rata share of excess <#>operating costs
and</#> property taxes for the year in which this Lease terminates and Tenant
vacates the Premises, Tenant shall immediately pay any increase due over the
excess costs already paid and conversely any overpayment made in the event
said costs are lower than previously estimated shall be immediately rebated
by Landlord to Tenant. Termination of the Lease shall not impair the
Tenant's obligation to pay any Additional Rent owed to Landlord.
2.5 PRO-RATA DEFINITION. The term "Tenant's Pro-Rata Share" is defined
as the ratio of the Rentable Area of the Premises to the total Rentable Area
of the Building. The percentage is shown in Section 1.3.
2.6 RENT ESCALATION. The Basic Rent to be paid monthly to Landlord by
Tenant shall be increased annually on the anniversary of this Lease each year
by THREE PERCENT (3%).
3. USE; RESTRICTIONS ON USE; BUILDING REGULATIONS; QUIET-ENJOYMENT; SERVICES
BY LANDLORD.
<PAGE>
3.1 USE. Premises shall be used for GENERAL OFFICE USE and for no other
purpose. Tenant shall, at Tenant's expense, comply with all laws, rules,
regulations, requirements, and ordinances enacted or imposed by any
governmental unit having jurisdiction over the Building, Premises, Landlord
or Tenant.
3.2 BUILDING RULES AND REGULATIONS. Tenant shall obey all rules and
regulations (including restrictions) of the Building as imposed by Landlord
and set forth in Exhibit A and incorporated as a part of this Lease.
Landlord shall have the right to make changes or additions to such rules and
regulations provided such changes or additions, except those affecting the
safety and operation of the Building or Premises, do not unreasonably affect
Tenant's use of the Premises. Landlord shall not be liable for failure of
any tenant to obey such rules and regulations. Failure by Landlord to
enforce any current or subsequent rules or regulations against any tenant of
the Building shall not constitute a waiver thereof.
3.3 QUIET ENJOYMENT. Landlord agrees that, subject to terms, covenants
and conditions of this Lease, Tenant may, upon observing and complying with
all terms, covenants and conditions of this Lease, peaceably and quietly
occupy the Premises.
3.4 SERVICES BY LANDLORD; TIMES AND LEVEL FURNISHED. Landlord shall
furnish Tenant those services hereafter described. Janitorial service and
refuse removal shall be furnished after normal business hours. All other
services shall be furnished during the hours of <#>8:00</#> 7:30 a.m. to <#>
6:00</#> 7:30 p.m. on weekdays and 9:00 a.m. to 12:00 p.m. on Saturdays
(except all holidays). If, upon request of Tenant, its agents or employees,
such services are provided to Premises on Saturdays, Sundays, holidays or
times other than specified, or are of a level in excess of those described,
Tenant shall reimburse Landlord for the cost of those services provided based
upon Landlord's schedule of rates in effect at the time such services are
furnished. If any services to be provided are suspended or interrupted by
strikes, repairs, alterations, orders from any governmental authority or any
cause beyond Landlord's reasonable control, Landlord shall not be liable for
any costs or damages incurred by Tenant. Suspension or interruption shall not
result in any abatement of rent, be deemed an eviction or relieve Tenant of
performance of Tenant's obligations under this Lease.
3.4.1 SERVICES PROVIDED. Landlord will furnish the Premises,
without additional charge (except as provided in Sections 2.3 and 2.4),
subject to all the provisions of 3.4 above, janitorial service in accordance
with standards determined by Landlord and the terms of this Lease unless such
service is separately metered or contracted by Tenant. Landlord shall
provide all necessary utility services other than those separately metered;
refuse removal; replacing of light bulbs for standard fixtures; heating,
ventilating and air conditioning; lighting; and electric power for general
and customary lighting and small business machines such as electric
typewriters, small calculators, copying machines and personal computers but
excluding mainframe or multi-station computers. Tenant shall pay for any
extra electric energy used
<PAGE>
because of Tenant's particular equipment requirements.
<PAGE>
4. ASSIGNMENT; SUBLET; RECAPTURE OF PREMISES; MORTGAGE BY LANDLORD;
SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATE; NOTICE TO MORTGAGEE; SALE
BY LANDLORD.
4.1 ASSIGNMENT; SUBLET. Tenant shall not assign, pledge, grant a
security interest in or mortgage this Lease, or sublet all or any portion of
the Premises without Landlord's prior written consent, which, if consented to
by Landlord, shall be in a form acceptable to Landlord. No assignment,
mortgaging or subletting, if consented to by Landlord, shall relieve Tenant
of its obligations under this Lease. Consent by Landlord shall not operate
as a waiver of the necessity for consent to any subsequent assignment,
mortgaging or subletting and the terms of such consent shall be binding upon
the assignee, mortgagee or subtenant. Tenant hereby irrevocably assigns, for
purposes of collateral, the rent of any and all assignees and sublessees and,
upon instruction from Landlord, shall notify any assignee or sublessee to
make such payments directly to Landlord. For convenience purposes, the
Landlord may, at his option, make arrangements to collect the rent directly
from the assignee or subtenant. Additionally, if the Tenant does sublet
Premises, in whole or in part, then it is hereby mutually agreed that
Landlord shall have the right to 75% of any additional rental income which is
the result of such sublease. For purposes of this section, "Additional
Rental Income" is defined as the difference between all rent paid by
subtenant and all rent owed by Tenant to Landlord hereunder. Tenant shall
submit periodic reports to Landlord computing any subrental payments due to
Landlord and enclosing the payments.
4.2 CORPORATE TRANSFER. Any transfer of this Lease by merger,
consolidation or liquidation, or any change in the ownership of or power to
vote the majority of Tenant's outstanding voting stock, shall constitute an
assignment whether the result of a single or series of transactions. Unless
Tenant's stock is listed on a recognized security exchange or if less than
eighty percent (80%) of its stock is owned by a corporation whose stock is
listed on a recognized security exchange, an assignment forbidden under this
Lease shall include one or more sales or transfers, by operation of law or
otherwise, or creation of new stock, by which an aggregate of more than fifty
percent (50%) of Tenant's stock shall be vested in a party or parties who are
non-stockholders as of the Commencement Date of this Lease.
4.3 RECAPTURE OF PREMISES. Tenant's request for Landlord's consent to
the assigning this Lease or subletting all or any part of the Premises shall
contain an offer to Landlord to recapture, at the then square foot rental
rate or the rental Tenant proposes to obtain, whichever is lower, all or such
part of the Premises which Tenant proposes to assign or sublet. Upon receipt
of such offer, Landlord shall have the option, to be exercised within sixty
(60) days following receipt, to accept the Tenant's offer to permit Landlord
to recapture. If accepted, Tenant shall execute an assignment of the Lease
or a sublease to Landlord in a form acceptable to Landlord, with Landlord
having the right to sublease or subrent to others. In such event, Tenant
shall not be relieved of its liability under this Lease. If Landlord
<PAGE>
exercises its option to recapture and the assignment or sublease from Tenant
provides for a rental rate equal to the rental rate in effect as of the date
the option is exercised, Tenant shall be released of all further liability
under this Lease, as of the effective date of the assignment or sublease,
with respect to that portion of the Premises subject to the assignment or
sublease.
4.4 MORTGAGE BY LANDLORD. Landlord shall have the right to transfer,
assign, pledge, grant a security interest in, mortgage or convey in whole or
in part the Building and any and all of its rights under this Lease, and
nothing herein shall be construed as a restriction upon Landlord's so doing.
4.5 SUBORDINATION. This Lease is and shall be subject and subordinate
in all respects to any and all mortgages, deeds of trust and ground leases
now or hereafter placed on the Building or the land upon which the Building
is situated, and to all renewals, modifications, consolidations, replacements
and extensions thereof.
4.6 ATTORNMENT. If the interest of Landlord is transferred to any
person or entity by reason of foreclosure or other proceedings for
enforcement of any mortgage, deed of trust or security interest or by
delivery of a deed in lieu of foreclosure or other proceedings, or by reason
of sale, assignment or other transfer of Landlord's interest in the Building,
Tenant shall immediately and automatically attorn to such person or entity.
In event of such transfer, this Lease and Tenant's rights hereunder shall
continue undisturbed so long as Tenant is not in default. Tenant shall, at
Landlord's request, execute an agreement providing for subordination of the
Lease. Tenant agrees that the termination of any ground lease shall not
result in termination of this Lease.
4.7 ESTOPPEL CERTIFICATE. Tenant agrees, at any time and from time to
time, upon not less than ten (10) days prior written notice by Landlord, to
execute, acknowledge and deliver to Landlord or any person designated by
Landlord, a statement in writing (i) certifying that this Lease is unmodified
and in full force and effect, or, if there have been modifications specifying
the same; (ii) certifying that Tenant has accepted possession of the
Premises, and that any improvements required by the terms of this Lease to be
made by the Landlord have been completed to the satisfaction of the Tenant
or, if not, describing such unsatisfactory improvements; (iii) stating that
no rent under this Lease has been paid more than thirty (30) days in advance
of its due date; (iv) stating the address to which notices to Tenant should
be sent; (v) certifying that Tenant, as of the date of any such
certification, has no charge, lien or claim of set-off under this Lease, or
otherwise, against rents or other charges due or to become due hereunder;
(vi) stating whether or not, to the best of Tenant's knowledge, Landlord is
in default in the performance of any covenant, agreement or condition
contained in this Lease, and, if so, specifying each such default of which
Tenant may have knowledge; and (vii) containing any other statement as
Landlord may reasonably request. Any such
<PAGE>
statement delivered pursuant to this Section may be relied upon by any owner
of the Building, any prospective purchaser of the Building, any mortgagee or
prospective mortgagee of the Building or of Landlord's interest, or any
prospective assignee of any such mortgagee.
4.8 SALE BY LANDLORD. In the event Landlord transfers its interest in
the Building, Landlord shall thereby be released from any further obligation
hereunder, and Tenant agrees to look solely to the successor in interest of
the Landlord for the performance of such obligations.
5. MAINTENANCE AND REPAIRS; RIGHT OF ENTRY; ALTERATIONS; LIENS; SIGNS.
5.1 MAINTENANCE AND REPAIRS BY TENANT. Tenant shall maintain the
Premises and any alterations and additions to the Premises in good condition.
Tenant shall repair or replace any damage or injury to the Premises or the
Building caused by Tenant, its agents, employees or invitees. All
maintenance and repairs made by Tenant shall be performed only by licensed
contractors approved by Landlord. Tenant shall require its contractor to
comply with Landlord's regulations and any other reasonable requirements
regarding all work to be performed.
5.1.1 LANDLORD'S RIGHT TO MAINTAIN OR REPAIR. If, within ten
days following occurrence, Tenant fails to repair or replace any damage to
the Premises or Building caused by Tenant, its agents, employees or invitees,
Landlord may, at its option, cause all required maintenance, repairs or
replacements to be made. Tenant shall promptly pay Landlord all costs
incurred in connection therewith plus interest thereon at the rate of the
lesser of 15% per annum or the highest lawful rate under applicable law from
the due date until paid.
5.2 LANDLORD'S RIGHT OF ENTRY. Landlord, its agents, contractors or
employees shall have the right to enter the Premises at reasonable hours to
make inspections, alterations, or repairs to the Building or the Premises and
to show the Premises to prospective purchasers or tenants. In event of
emergency Landlord, its agents, contractors or employees shall have the right
of entry at any time and may perform any acts related to safety, protection,
preservation or improvement of the Building or the Premises. Except for
repair of casualty damage as provided in Section 7.2, Tenant shall not be
entitled to any abatement or reduction of rent because of work performed
within the Building or Premises by Landlord.
5.3 MAINTENANCE BY LANDLORD. Landlord shall maintain all public or
common areas located in the Building.
5.4 ALTERATIONS BY TENANT. Tenant shall make no changes, additions,
alterations or improvements to the Premises without the prior written consent
of Landlord and subject to all
<PAGE>
rules, requirements and conditions imposed by Landlord at the time such
consent is given. Landlord shall have the right to withhold its consent and
condition the same upon provision by Tenant of adequate security.
5.5 ALTERATIONS BY LANDLORD. Landlord may make repairs, changes or
additions to the structure, systems, facilities and equipment in the Premises
where necessary to serve the Premises or the Building. Landlord may also
make changes, alterations or additions to any part of the Building not
forming part of the Premises and change the location of public areas of the
Building.
5.6 LIENS. If, because of any act or omission of Tenant or any person
claiming by, through, or under Tenant, any mechanic's lien or other lien
shall be filed against the Premises or the Building or against other property
of Landlord (whether or not such lien is valid or enforceable as such),
Tenant shall, at its own expense, cause the same to be discharged of record
within thirty-five (35) days after the date of filing thereof, and shall also
indemnify Landlord and hold it harmless from any and all claims, losses,
damages, judgments, settlements, costs and expenses, including attorneys'
fees, resulting therefrom or by reason thereof. Landlord may, but shall not
be obligated to, pay or post security for the claim upon which such lien is
based so as to have such lien released of record; and, if Landlord does so,
then Tenant shall pay to Landlord, as Additional Rent, upon demand, the
amount of such claim or security, plus all other costs and expenses incurred
in connection therewith, plus interest thereon at the rate of the lesser of
fifteen percent (15%) per annum or the highest lawful rate under applicable
law until paid.
5.7 SIGNS. Tenant shall not inscribe any inscription or post, place or
in any manner display any sign, notice, picture, placard, poster or
advertising matter anywhere in or about the Building or Premises at places
visible (either directly or indirectly as an outline or shadow on a glass
pane) from anywhere outside the Premises without the Landlord's prior written
consent. Upon expiration or sooner termination of this Lease, Tenant shall
remove all such signs or advertising consented to by Landlord and shall
repair any damage caused by such removal. (EXTERIOR SIGNAGE - SEE ADDENDUM)
6. INSURANCE, INDEMNITY, SUBROGATION.
6.1 INSURANCE BY LANDLORD. Landlord may maintain insurance for those
perils and in amounts which would be considered prudent for similar income
type property situated in the general area of the Building or which is
required by any mortgagee or creditor of Landlord.
6.2 INSURANCE BY TENANT.
<PAGE>
6.2.1 TENANT'S LIABILITY INSURANCE. Tenant shall at all times
during the term hereof and at its cost and expense, for the mutual benefit of
Landlord and Tenant, purchase and maintain with an insurance company,
comprehensive general liability insurance coverage in an adequate amount, as
determined by Landlord's insurance broker or adviser, but not less than One
Million Dollars ($1,000,000.00) combined single limit of coverage for
personal injury, death and property damage. The insurance carrier shall be
satisfactory to Owner and licensed in the state in which the Premises are
located. The insurance carrier shall at all times during the term of this
Lease have a policyholder's rating of not less than "A+/7" in the most
current edition of Best's Insurance Reports. The comprehensive general
liability policy shall also include contractual coverage of Tenant's
obligations under Section 6.4 below. In no event shall the limits of such
policy be considered as limiting the liability of Tenant under this Lease.
Tenant shall deliver to Landlord with evidence of such insurance prior to
occupancy evidencing the obligation of the insurer to provide Landlord with
not less than thirty (30) days written notice prior to any reduction or
cancellation of such insurance. Any insurance required of Tenant under this
Lease may be furnished by Tenant under a blanket policy carried by it. Such
blanket policy shall contain an endorsement that names Owner as an additional
insured, references the Premises, and guarantees a minimum limit available
for the Premises equal to the insurance amounts required in this Lease. Each
policy evidencing the insurance to be carried by Tenant under this Lease
shall contain a clause that such policy and the coverage evidenced thereby
shall be primary with respect to any policies carried by Owner, and that any
coverage carried by Owner shall be excess insurance.
6.2.2 TENANT'S PROPERTY INSURANCE. Tenant shall at its own expense
maintain in full force and effect on all of its inventory, furnishings,
fixtures and equipment in the Premises, a policy or policies of fire and
extended coverage insurance with vandalism and malicious mischief
endorsements to the extent of at least eighty percent (80%) of their
insurable actual cash value, providing that deductible amounts under such
policy or policies of insurance shall be used for the repair or replacement
of the fixtures and equipment so insured. Landlord will sign all documents
necessary or proper in connection with the settlement of any claims or loss
by Tenant. Landlord will not carry insurance on Tenant's possessions, nor on
any leasehold improvements made by Tenant.
6.2.3 CONAMING OF LANDLORD AND LANDLORD'S MANAGING AGENT. The
insurance policy or policies for the insurance required in Sections 6.2.1 and
6.2.2 above shall name Landlord and Landlord's Managing Agent as additional
insureds and shall provide that they may not be cancelled on less than thirty
(30) days prior written notice to Landlord and Landlord's Managing Agent.
Tenant shall furnish Landlord and Landlord's Managing Agent with Evidence of
Insurance evidencing all required coverage. Should Tenant fail to carry such
insurance and furnish Landlord and Landlord's Managing Agent with such
evidence of such insurance after a request to do so, Landlord and Landlord's
Managing Agent shall have the right to obtain such insurance and collect the
cost thereof from Tenant as additional rent plus
<PAGE>
interest thereon at the rate of the lesser of 15% per annum or the highest
lawful rate under applicable law from the due date until paid.
6.3 INSURANCE RATING. Tenant will not conduct or permit to be conducted
any activity, or place any equipment in or about the Premises, which will, in
any way, increase the rate of fire insurance or other insurance on the
Building; and if any increase in the rate of fire insurance or other
insurance is stated by any insurance company or by the applicable Insurance
Rating Bureau to be due to activity or equipment in or about the Premises,
such statement shall be conclusive evidence that the increase in such rate is
due to such activity or equipment and as a result thereof, Tenant shall be
liable for such increase and shall reimburse Landlord therefor.
6.4 INDEMNITY. Tenant will indemnify and save Landlord harmless from
and against any and all claims, actions, damages, liability and expense in
connection with loss of life, personal injury and/or damage to property
arising from or out of any occurrence in, upon or at the Premises, or the
occupancy or use by Tenant of the Premises or any part thereof, or occasioned
wholly or in part by any act or omission of Tenant, its agents, contractors,
employees, servants, lessees or concessionaires, clients or customers. In
case Landlord shall, without material fault on his part, be made a party to
any litigation commenced by or against Tenant, Tenant shall protect and hold
Landlord harmless and shall pay all costs, expenses and reasonable attorney's
fees incurred or paid by Landlord in connection with such litigation.
6.5 WAIVER OF SUBROGATION. Landlord and Tenant hereby waive, to the
extent of net proceeds collected under insurance policies, any rights each
may have against the other on account of any loss or damage occasioned to
Landlord or Tenant, as the case may be, their respective property, or the
Building.
<PAGE>
7. DAMAGE AND DESTRUCTION.
7.1 DAMAGE CAUSED BY TENANT. In event of damage to the Premises or the
Building by fire or other causes resulting from fault or negligence of
Tenant, its agents, employees or invitees, such damage shall be promptly
reported to Landlord and shall be repaired by and at expense of Tenant under
direction and supervision of Landlord. There shall be no abatement of rent
during the period of repair.
7.2 DAMAGE NOT CAUSED BY TENANT. In the event the Building or the
Premises shall be destroyed or rendered untenantable, either in whole or in
part, by fire or other casualty not resulting from the fault or negligence of
Tenant, its agents, employees or invitees, Landlord may, at its option,
restore the Building or Premises to as near their previous condition as is
reasonably possible, and in the meantime the rent shall be abated in the same
proportion as the untenantable portion of the Premises bears to the whole
thereof; but unless Landlord, within sixty days after the happening of any
such casualty, shall notify Tenant of its election to so restore, this Lease
shall thereupon terminate and Tenant shall vacate the Premises. Such
restoration by Landlord shall not include replacement of furniture, equipment
or other items that do not become part of the Building or any improvements to
the Premises in excess of those provided for in the allowance for building
standard items as of the Commencement Date of this Lease. Restoration of the
Premises required beyond Landlord's obligation shall be performed by the
Tenant at no cost to the Landlord.
7.3 DELAY BEYOND LANDLORD'S CONTROL. Landlord shall not be penalized
for any delay in commencing or completing repairs caused by adjustment of
insurance claims, governmental requirements or any cause beyond landlord's
reasonable control.
8. CONDEMNATION.
8.1 CONDEMNATION; AWARD; TERMINATION. If the Building or Premises shall
be taken or condemned for any public purpose, or for any reason whatsoever,
to such an extent as to render either or both untenantable, either Landlord
or Tenant shall have the option to terminate this Lease effective as of the
date of taking or condemnation. If the taking or condemnation does not
render the Building and the Premises untenantable, this Lease shall continue
in effect and Landlord shall promptly restore the portion not taken to the
extent possible to the condition existing prior to the taking, but in no
event shall Landlord be required to expend any amounts in excess of the net
condemnation proceeds received by Landlord. If, as a result of such
restoration, the area of the Premises is reduced, the rent shall be reduced
proportionately. All proceeds from any taking or condemnation shall be paid
to Landlord. Tenant waives all claims against such proceeds. A voluntary
sale or conveyance in lieu of but under the threat of condemnation shall be
considered a taking or condemnation
<PAGE>
for public purpose.
9. SURRENDER OF PREMISES.
9.1 SURRENDER AT EXPIRATION. Upon expiration or other termination of
this Lease, Tenant shall immediately surrender possession of the Premises to
Landlord in substantially the condition in which Tenant is required to
maintain the Premises except for reasonable wear and tear (and damage by fire
or casualty if not the result of fault or negligence of Tenant, its agents,
employees or invitees).
9.1.1 SUBSTITUTE PREMISES. INTENTIONALLY DELETED
9.2 REMOVAL OF PROPERTY. All alterations, additions and improvements,
other than unattached, movable furniture, furnishings or equipment made to
the Premises at the expense of Tenant, shall become a part of the Premises
and shall remain upon and be surrendered with the Premises as a part thereof.
Any unattached movable furniture, furnishings or equipment not removed by
the Tenant prior to the expiration or termination of this Lease shall become,
at Landlord's option, the property of Landlord and shall be surrendered with
the Premises as a part thereof. Upon expiration or other termination of this
Lease, Tenant (i) shall remove only such alterations, additions and
improvements (including telephone cable) as Landlord requests in writing;
(ii) shall, except for these alterations, additions and improvements not
required to be removed, restore the Premises to the same condition existing
upon delivery of possession thereto under this Lease, reasonable wear (but
not soil and grime) excepted; and (iii) shall surrender to Landlord, at the
place then fixed for payment of rent, all keys for the Premises and shall
inform Landlord of all combinations on locks, safes, and vaults, if any, in
the Premises. Tenant's obligation to observe this Section 9.2 shall survive
the expiration or other termination of this Lease.
10. HOLDING OVER.
10.1 HOLDING OVER. If Tenant shall fail to vacate the Premises upon
expiration or sooner termination of this Lease, Landlord may at any time
reenter by any applicable legal process or otherwise in accordance with the
provisions of this Lease. Any holding over shall be with Landlord's consent
and Tenant shall be a month-to-month Tenant and subject to all laws of the
state in which the Building is situated and to the terms and conditions of
this Lease, so far as applicable. The rent to be paid Landlord by Tenant
during such continued occupancy shall be for each month of continued
occupancy, an amount equal to one and one-<#>half</#> QUARTER times the rent
that would otherwise be owed hereunder for the month the Lease expires or is
terminated. No receipt of money by Landlord from Tenant after expiration
<PAGE>
or termination of this Lease shall reinstate or extend this Lease or affect
any prior notice given by Landlord to Tenant. If Tenant fails to surrender
the Premises upon the expiration of this Lease, despite demand to do so by
Landlord, Tenant shall indemnify and hold Landlord harmless from all loss or
liability, including without limitation, any claim made by any succeeding
tenant founded on or resulting from such failure to surrender.
11. DEFAULT; REMEDIES.
11.1 DEFAULTS BY TENANT. The occurrence of any one or more of the
following events shall be a default under and breach of this Lease by Tenant:
11.1.1 FAILURE TO PAY RENT. Tenant shall fail to make any
required payment of the Basic Rent or Additional Rent or other charges within
ten (10) days after the same shall be due and payable, or any other amounts
due Landlord from Tenant including any amounts owed by Tenant for Building
Non-Standard Work within thirty (30) days after the same shall be due and
payable.
11.1.2 FAILURE TO PERFORM. Tenant shall fail to perform or
observe any term, condition, covenant or obligation required to be performed
or observed by it under this Lease for a period of thirty (30) days after
notice thereof from Landlord; provided, however, that if the term, condition,
covenant or obligation to be performed by Tenant is of such nature that the
same cannot reasonably be performed within such thirty day period, such
failure shall not constitute a default if Tenant commences such performance
within said thirty-day period and thereafter diligently undertakes to
complete the same and does so complete the required action within a
reasonable time but in any case not longer than sixty (60) days.
11.1.3 VACATION; ABANDONMENT; FAILURE TO OCCUPY. Tenant shall
vacate or abandon the Premises for any period, or fail to occupy for a period
of thirty (30) days the Premises or any substantial portion thereof.
11.1.4 TRUSTEESHIP; ASSIGNMENT; ATTACHMENT. A trustee or
receiver shall be appointed to take possession of substantially all of
Tenant's assets in, on or about the Premises or of Tenant's interest in this
Lease (and Tenant does not regain possession within sixty (60) days after
such appointment); Tenant makes a general assignment for the benefit of
creditors; or substantially all of Tenant's assets in, on or about the
Premises or Tenant's interest in this Lease are attached or levied under
execution (and Tenant does not discharge the same within thirty (30) days
thereafter).
11.1.5 BANKRUPTCY. A petition in bankruptcy, insolvency, or for
reorganization or arrangement is filed by or against Tenant pursuant to any
federal or state statute (and, with
<PAGE>
respect to any such petition filed against it, Tenant fails to secure a stay
or discharge thereof within sixty (60) days after the filing of the same).
11.2 REMEDIES OF LANDLORD. Upon the occurrence of any event of default
set forth in Section 11.1, Landlord shall have the following rights and
remedies, in addition to those provided by law, any one or more of which may
be exercised without further notice to or demand upon Tenant:
11.2.1 CURE. Landlord may apply the Security Deposit or re-enter
the Premises and cure any default of Tenant, in which event Tenant shall
reimburse Landlord as Additional Rent for any costs and expenses which
Landlord may incur to cure such default; and Landlord shall not be liable to
Tenant for any loss or damage which Tenant may sustain by reason of
Landlord's action, regardless of whether caused by Landlord's negligence or
otherwise.
11.2.2 TERMINATION; RE-LET. Landlord shall have the right, in
addition to all other rights and remedies provided by law, to re-enter the
Premises peaceably or by force, with or without process of law, and to take
possession thereof and to terminate this Lease. No such termination of this
Lease nor recovering possession of the Premises, however, shall deprive
Landlord of any action or remedy against Tenant for possession, rent (accrued
or to accrue) or damages, nor constitute a waiver of any lien of Landlord on
the property of Tenant and Landlord may to the extent permitted by law (but
shall not be obligated to) re-let the Premises in whole or in part for the
unexpired portion of the Lease term and Tenant shall be obligated to
reimburse Landlord for all of its expenses in connection with such retaking
and re-letting, including any loss of rental which might result. Landlord
shall in no event be liable in any way whatsoever for failure to relet the
Premises, or in the event that the Premises are relet, for failure to collect
the rent under such reletting, and in no event shall Tenant be entitled to
receive the excess, if any, of such net rent collected over the sums payable
by Tenant to Landlord hereunder. To the extent permitted by law, Tenant
waives any notice to quit or other provision of applicable law requiring
notice or delay in an action to evict or dispossess Tenant, and all rights of
redemption under any law in the event Tenant is evicted or dispossessed for
any cause.
11.2.3 ACCELERATION. Landlord reserves the right to accelerate
the whole or any part of the rent for the entire unexpired balance of the
term of this Lease, as well as all other charges and expenses herein agreed
to be paid by Tenant. Such rent charges and expenses if so accelerated
shall, in addition to any and all installments of rent already due and
payable and in arrears, be deemed due and payable as if, by the terms and
provision of this Lease, such accelerated rent and other charges and expenses
were on that date payable in advance.
<PAGE>
11.2.4 SUIT. Landlord may sue for specific performance,
injunctive relief or to recover damages for any loss resulting from the
breach.
11.2.5 INTEREST ON UNPAID RENT. Interest on unpaid rent shall be
charged as specified in Section 2.1.2.
11.3 DEFAULT BY LANDLORD AND REMEDIES OF TENANT. It shall be a default
under and breach of this Lease by Landlord if it shall fail to perform or
observe any term, condition, covenant or obligation required to be performed
or observed by it under this Lease for a period of thirty (30) days after
notice thereof from Tenant; provided, however, that if the term, condition,
covenant or obligation to be performed by Landlord is of such nature that the
same cannot reasonably be performed within such thirty-day period, such
occurrence shall not constitute a default if Landlord commences such
performance within said thirty (30) day period and thereafter diligently
undertakes to complete the same. Upon the occurrence of any such default,
Tenant may sue for injunctive relief or to recover damages for any loss
resulting from the breach, but Tenant shall not be entitled to terminate this
Lease or withhold or abate any rent due hereunder.
11.4 LIMITATION OF LANDLORD'S LIABILITY. If Landlord shall fail to
perform or observe any term, condition, covenant or obligation required to be
performed or observed by it under this Lease after notice thereof and an
opportunity to cure as provided in Section 11.3, and if Tenant shall, as a
consequence thereof, recover a money judgment against Landlord, Tenant agrees
that it shall look solely to Landlord's right, title and interest in and to
the Building for the collection of such judgment; and Tenant further agrees
that no other assets of Landlord shall be subject to levy, execution or other
process for the satisfaction of Tenant's judgment and that Landlord (and its
partners, if any) shall not be personally liable for any deficiency.
11.4.1 LANDLORD DEFINED. The references to "Landlord" in this
Lease shall be limited to mean and include only the owner or owners, at the
time, of the fee simple interest in the Building. In the event of a sale or
transfer of such interest (except a mortgage or other transfer as security
for a debt), the "Landlord" named herein, or, in the case of a subsequent
transfer, the transferor, shall, after the date of such transfer, be
automatically released from all personal liability for the performance or
observance of any term, condition, covenant or obligation required to be
performed or observed by Landlord hereunder; and the transferee shall be
deemed to have assumed all of such terms, conditions, covenants and
obligations.
11.5 NON-WAIVER OF DEFAULTS. The failure or delay by either party hereto
to exercise or enforce at any time any of the rights or remedies or other
provisions of this Lease shall not be construed to be a waiver thereof, nor
affect the validity of any part of this Lease or the right of either party
thereafter to exercise or enforce each and every such right or remedy or
other
<PAGE>
provision. No waiver of any default and breach of the Lease shall be deemed
to be a waiver of any other default and breach. The receipt by Landlord of
less than the full rent due shall not be construed to be other than a payment
on account of rent then due, nor shall any statement on Tenant's check or any
letter accompanying Tenant's check be deemed an accord and satisfaction, and
Landlord may accept such payment without prejudice to Landlord's right to
recover the balance of the rent due or to pursue any other remedies provided
in this Lease. No act or omission by Landlord or its employees or agents
during the term of this Lease shall be deemed an acceptance of a surrender of
the Premises, and no agreement to accept such a surrender shall be valid
unless in writing and signed by Landlord.
12. MISCELLANEOUS PROVISIONS.
12.1 WAIVER. The failure of Landlord to insist upon strict performance
of any of the covenants and agreements of this Lease, or to exercise any
option herein conferred in any one or more instances, shall not be considered
to be a waiver or relinquishment of such performance by Tenant or right of
Landlord, and all covenants, agreements and options shall remain in full
force and effect.
12.2 CONSENT NOT UNREASONABLY WITHHELD. Unless otherwise specifically
provided, whenever consent or approval of Landlord or Tenant is required
under the terms of this Lease, such consent or approval shall not be
unreasonably withheld or delayed. Tenant's sole remedy, if Landlord
unreasonably withholds or delays consent or approval, shall be an action for
specific performance and Landlord shall not be liable for damages. If either
party withholds any consent or approval, such party shall on written request
deliver to the other party a written statement giving the reasons therefor.
12.3 ATTORNEYS FEES. All costs and expenses, including attorneys fees in
a reasonable amount, incurred by Landlord or Tenant in enforcing the
obligations of either under this Lease, shall be paid by the defaulting party
to the prevailing party upon demand, once a default is determined to have
occurred, whether by judgment or otherwise.
12.4 DESIGNATED PARTIES. Landlord may act in any matter provided for
herein through its property manager or any other person who shall from time
to time be designated by Landlord by notice to Tenant. Tenant may designate
in writing a person to act on its behalf in any matter provided for herein
and may, by written notice, change such designation. In the absence of such
designation, the person or persons executing this Lease for Tenant shall be
deemed to be authorized to act on behalf of Tenant in any matter provided for
herein.
12.5 SUCCESSORS. All covenants, agreements, terms and conditions
contained in this Lease shall apply to and be binding upon and inure to the
benefit of Landlord and Tenant and their respective heirs, executors,
administrators, successors and assigns. If there is more
<PAGE>
than one Tenant, the obligations hereunder imposed upon Tenant shall be joint
and several. No rights, however, shall inure to the benefit of any assignee
or subtenant of Tenant unless Landlord has given its consent to the
assignment or sublease in accordance with Section 4.
12.6 RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall
create any relationship between the Landlord and Tenant other than that of
Landlord and Tenant, and it is acknowledged and agreed that Landlord does not
in any way or for any purpose become a partner of Tenant in the conduct of
Tenant's business, or a joint venturer or a member of a joint or common
enterprise with Tenant.
12.7 SEVERABILITY. If any clause or provision of this Lease is held to
be illegal, invalid or unenforceable under present or future law effective
during the term of this Lease, the remainder of this Lease shall not be
affected thereby. In lieu of such clause or provision held to be illegal,
invalid or unenforceable there shall be added, as a part of this Lease, a
clause or provision as similar in terms as possible which shall be legal,
valid and enforceable.
12.8 GENDER. Words of any gender used in this Lease shall be held and
construed to include any other gender and words in the singular number shall
be held to include the plural, unless the context otherwise requires.
12.9 BUILDING NAME. Landlord reserves the right at any time and from
time to time to change the name, number or designation by which the Building
is commonly known.
12.10 BROKERAGE COMMISSIONS.
12.10.1 BROKER NAMES.
N/A
12.10.2 PAYMENT OF LEASING COMMISSIONS. The parties hereby
acknowledge, represent and warrant that the only real estate broker or
brokers involved in the negotiation and execution of this Lease is that, or
are those named in Section 12.10.1 above and that no other broker or person
is entitled to any leasing commission or compensation as a result of the
negotiation or execution of this Lease. Tenant agrees to indemnify Landlord
and hold Landlord harmless from and against any and all costs, expenses or
liability for commission or other compensation or charges claimed by or
awarded to any broker or agent with respect to this Lease.
12.11 CORPORATE AUTHORITY. If Tenant is a corporation, Tenant
warrants that it has legal authority to operate and is authorized to do
business in the state in which the Premises are situated. Tenant also
warrants that the person or persons executing this Lease on behalf of Tenant
has authority to do so and fully obligate Tenant to all terms and provisions
of this
<PAGE>
Lease. Tenant shall, upon request from Landlord, furnish Landlord with a
certified copy of resolutions of the Tenant's Board of Directors authorizing
this Lease and granting authority to execute it to the person or persons who
have executed it on Tenant's behalf.
12.12 COMMON AND PUBLIC AREAS. All hallways, passageways, stairways
and elevators in the Building, parking areas, driveways, entrances and exits
thereto, truck-ways, pedestrian sidewalks and ramps, landscaped areas and
other areas and improvements located on the Premises are provided for the
general non-exclusive use, in common, of Tenant, Landlord and all other
tenants of the Building, their employees, guests and invitees. Such parking
and other common areas shall at all times be subject to regulation and
management by Landlord, and Tenant agrees to abide by any rules and
regulations with respect thereto and to use its best efforts to cause its
employees, guests and invitees to do the same. Without limitation on
Landlord's general right to promulgate any such rules and regulations,
Landlord reserves the right to change the area, level, location and
arrangement of the parking areas and other facilities referred to herein; to
restrict parking by tenants and/or their patrons, provided that adequate
parking for the Building's tenants is maintained; to close temporarily all or
any portion of the parking areas or facilities for repairs or maintenance or
otherwise; to control the amount of lighting, security and traffic control,
if any; and to take such other actions as Landlord shall deem necessary or
desirable with a view to the convenient use thereof by all tenants, their
employees, guests and invitees. Landlord also reserves the right at any
time, without the same constituting an actual or constructive eviction and
without incurring any liability to Tenant therefor, to change the arrangement
and/or location of public corridors, passageways, elevators, mechanical areas
and rooms, stairways and stairs, rest rooms, or other common areas of the
Building.
12.13 RECORDING. Tenant shall not record this Lease without the
written consent of Landlord; however, upon the request of Landlord, Tenant
shall join in the execution of a memorandum or so-called "short form" of this
Lease for the purposes of recordation. Said memorandum or short form of this
Lease shall describe the Parties, the Premises and the term of this Lease and
shall incorporate this Lease by reference. Landlord may also, at its option,
record this entire Lease.
12.14 NOTICES. All notices under this Lease shall be in writing and
delivered in person or sent by prepaid registered or certified mail to
Landlord at the same place to which rent payments are made, to the Tenant at
the Premises, to Landlord's Office of General Counsel and to such addresses
as hereafter may be designated by either party in writing. Notices mailed
shall be deemed given on the date following the date of mailing.
Landlord's Address: With Copy to:
TIDEWATER PARTNERS LIMITED PARTNERSHIP TIDEWATER PARTNERS LTD PARTNERSHIP
c/o OLYMPIA DEVELOPMENT CORPORATION c/o BOZZUTO & ASSOCIATES
<PAGE>
2809 SOUTH LYNNHAVEN ROAD, SUITE 310 6401 GOLDEN TRIANGLE DRIVE
VIRGINIA BEACH, VIRGINIA 23452 GREENBELT, MARYLAND 20770
Tenant Address for Notices: With Copy to:
METRO INFORMATION SERVICES METRO INFORMATION SERVICES
REFLECTIONS II, SUITE 300 REFLECTIONS III, SUITE 150
VIRGINIA BEACH, VIRGINIA 23452 VIRGINIA BEACH, VIRGINIA 23452
12.15 JOINT AND SEVERAL LIABILITY. If Tenant is composed of more than
one signatory to this Lease, each signatory will be jointly and severally
liable with each other signatory for payment and performance according to
this Lease.
12.16 FORCE MAJEURE. If, by reason of (i) strike, (ii) labor problems,
(iii) government pre-emption in connection with a national emergency, (iv)
any rule, order or regulation of any governmental agency, (v) conditions of
supply or demand which are affected by war or other national, state or
municipal emergency, or any other cause, or (vi) any cause beyond Landlord's
reasonable control, including inclement weather, Landlord shall be unable to
fulfill its obligations under this Lease or shall be unable to supply any
service which Landlord is obligated to supply, this Lease and Tenant's
obligation to pay rent hereunder shall in no wise be affected, impaired or
excused.
12.17 ENTIRE AGREEMENT; CAPTIONS. This Lease, including Exhibits A, B
and C hereto, and any Addendums contain the entire agreement of the Parties
and no prior or contemporaneous representations, promises or agreements, oral
or otherwise, between the Parties not contained in this Lease shall be of any
force and effect. Neither this Lease nor any provision hereof may be
changed, waived, discharged or terminated except in writing executed by
Landlord and Tenant or the party against whom any waiver is sought. The
captions for sections of this Lease are for convenience only and shall have
no effect upon the construction or interpretation of any part of this Lease.
Acknowledged and Accepted this 19th day of September, 1996.
TENANT LANDLORD
METRO INFORMATION SERVICES TIDEWATER PARTNERS LIMITED PARTNERSHIP
By: Olympia Development Corporation,
By: /s/ Steven A. Lurus Manager and Authorized Agent
----------------------
Name: Steven A. Lurus
Title: Secretary By: /s/ Cecil V. Cutchins
------------------------
Cecil V. Cutchins, President
TIDEWATER PARTNERS LIMITED PARTNERSHIP
By: SCI Holdings Corporation
By: /s/ G. Trevor Victor
----------------------
G. Trevor Victor, Vice President
<PAGE>
CORPORATE SEAL
<PAGE>
ADDENDUM TO OFFICE LEASE AGREEMENT
by and between
TIDEWATER PARTNERS LIMITED PARTNERSHIP
and
METRO INFORMATION SERVICES
This Lease Addendum, by and between Tidewater Partners Limited Partnership
("Landlord") and Metro Information Services ("Tenant"), is hereby made a part
of and incorporated by reference into a certain Lease dated August 26, 1996
and attached hereto. This Addendum shall supersede all agreements between
the above mentioned Parties.
1. UNDERGROUND PARKING. Tenant shall have the use of seven (7) underground
parking spaces which shall be assigned to Tenant by Landlord.
2. SUITE MODIFICATIONS. Landlord agrees to provide an allowance not to exceed
$5.00 per square foot of rentable area, or $96,145.00, for suite
modifications and subject to the space plan attached hereto as Exhibit B.
3. EXTERIOR SIGNAGE. Tenant shall have the right to display signage on the
exterior of the Building, subject to Landlord's approval and any
governmental regulations. Said sign shall be provided, maintained and
removed at the expiration of the Lease term at Tenant's sole cost. Said
sign shall be located within the "brick band" between the windows of the
third and fourth floors. Tenant shall be responsible for any damage caused
to the Building as a result of such signage, and the installation or
removal thereof.
4. FIRST RIGHT OF REFUSAL - Landlord will give Tenant a one time first right
of refusal on any space that may become available on the fourth floor of
Reflections II. Upon receipt of notice to Tenant by Landlord that the
space is available for lease, which notice shall also set forth the current
market rate for such space, Tenant shall have forty-eight (48) hours to
respond in writing to Landlord if Tenant wants to lease the additional
space at that current market rate. If Landlord does not receive written
notice from Tenant of Tenant's acceptance to lease the entirety of the
offered space at the current market rate, Landlord will assume Tenant is
not interested and the First Right of Refusal will thereafter become null
and void. This First Right of Refusal shall be subordinate to any
previously granted rights to others to lease the space as described herein.
5. LEASE COMMENCEMENT DELAY - In the event that the Premises are not vacated
by the current tenant on or before October 31, 1996, the Commencement Date
of this Lease shall be delayed to a date thirty (30) days after the date on
which the current tenant vacates the Premises. Additionally, in the event
that the Tenant is not allowed access to the area located on the East side
of the elevator lobby on or before October 1, 1996 for the purpose of
installing electrical and communication wiring, the Commencement Date of
this Lease
<PAGE>
shall be delayed to a date sixty (60) days after the date on which the
Tenant is allowed access to the area located on the East side of the
elevator lobby.
All other terms and conditions of the Lease not modified by this Addendum shall
remain in full force and effect.
Acknowledged and Accepted this 19th day of Sepetember, 1996 by:
LANDLORD TENANT
TIDEWATER PARTNERS LIMITED PARTNERSHIP METRO INFORMATION SERVICES
BY: Olympia Development Corporation, BY: /s/ Steven A. Lurus
Manager & Authorized Agent ---------------------
Name: Steven A. Lurus
Title: Secretary
BY: /s/ Cecil V. Cutchins
----------------------------
Cecil V. Cutchins, President CORPORATE SEAL
TIDEWATER PARTNERS LIMITED PARTNERSHIP
By: SCI Holdings Corporation
By: /s/ G. Trevor Victor
---------------------------------
G. Trevor Victor, Vice President
<PAGE>
EXHIBIT A
RULES AND REGULATIONS
The rules and regulations set forth in this Exhibit shall be and hereby are
made a part of the Lease to which they are attached. Whenever the term
"Tenant" is used in these rules and regulations, it shall be deemed to
include Tenant, its employees or agents and any other persons permitted by
Tenant to occupy or enter the Premises. The following rules and regulations
may from time to time be modified by Landlord as provided in the Lease.
1. OBSTRUCTION. The sidewalks, entries, passages, corridors, halls, lobbies,
stairways, elevators and other common facilities of the Building shall be
controlled by Landlord and shall not be obstructed by Tenant or used for
any purpose other than ingress or egress to and from the Premises. Tenant
shall not place any item in any of such locations, whether or not any such
item constitutes an obstruction, without the prior written consent of
Landlord. Landlord shall have the right to remove any obstruction or any
such item without notice to Tenant and at the expense of Tenant, and to
control and prevent access thereto of all persons whose presence in the
judgment of Landlord would be prejudicial to the safety, character,
reputation and interest of the Building and its tenants, provided that
nothing herein contained shall be construed to prevent such access to
persons with whom any tenant normally deals in the ordinary course of its
business, unless such persons are engaged in illegal activities. No tenant
and no employee or invitee of any tenant shall go upon the roof of the
Building. Landlord shall have the right at any time without the same
constituting an actual or constructive eviction and without incurring any
liability to Tenant therefore to change the arrangement and/or location of
entrances or passageways, doors or doorways, corridors, elevators, stairs,
toilets or other common areas of the Building.
2. ORDINARY BUSINESS HOURS. Whenever used in the Lease or in these
regulations, the ordinary business hours of the Building shall be from 8:00
A.M. to 6:00 P.M. Monday through Friday of each week, excluding the legal
holidays of New Year's Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
3. DELIVERIES. Tenant shall insure that all deliveries of supplies to the
Premises shall be made only upon the elevator designated by Landlord for
deliveries and only during the ordinary business hours of the Building. If
any person delivering supplies to Tenant damages the elevator or any other
part of the Building, Tenant shall pay to Landlord upon demand the amount
required to repair such damage. Landlord's employees shall not receive
deliveries for Tenant and, in the event that they do so in violation of
this provision, such employees shall be deemed to be agents of Tenants.
<PAGE>
4. FURNITURE. Furniture and equipment shall be moved in or out of the
Building only upon the elevator designated by Landlord for deliveries and
then only during such hours and in such manner as may be prescribed by
Landlord. Landlord shall have the right to approve or disapprove the
movers or moving company employed by Tenant and Tenant shall cause such
movers to use only the loading facilities and elevator designated by
Landlord. If Tenant's movers damage the elevator or any other part of the
Building, Tenant shall pay to Landlord upon demand the amount required to
repair such damage.
5. HEAVY ARTICLES. No safe or article, the weight of which may, in the
reasonable opinion of Landlord, constitute a hazard to or damage the
Building or its equipment, shall be moved into the Premises. Safes and
other heavy equipment, the weight of which will not constitute a hazard to
or damage the Building or its equipment shall be moved into, from or about
the Building only during such hours and in such manner as shall be
prescribed by Landlord, and Landlord shall have the right to designate the
location of such articles in the Premises.
6. NUISANCE. Tenant shall not use, allow, or permit the Premises to be used
for any improper or objectionable purposes. Tenant shall not do or permit
anything to be done in the Premises, or bring or keep anything therein
which would in any way constitute a nuisance or waste, or obstruct or
interfere with the rights of other tenants of the Building, or in any way
injure or annoy them, or conflict with the laws relating to fire, or with
any regulations of the fire department, or with any insurance policy upon
the Building or any part thereof, or conflict with any law, rule,
regulation, requirement, or ordinances of any governmental authority having
jurisdiction over the Building.
7. BUILDING SECURITY. Landlord may restrict access to and from the Premises
and the Building outside of the ordinary business hours of the Building for
reasons of Building security. Landlord may require identification of
persons entering and leaving the Building during this period and, for the
purpose, may issue building passes to tenants of the Building.
8. PASS KEY. The janitor of the Building may at all times keep a pass key to
the Premises, and he and other agents of Landlord shall at all times be
allowed admittance to the Premises.
9. LOCKS AND KEYS FOR PREMISES. No additional lock or locks shall be placed
by Tenant on any door in the Building and no existing lock shall be changed
unless written consent of Landlord shall first have been obtained. A
reasonable number of keys to the Premises and to the toilet rooms if locked
by Landlord will be furnished by Landlord, and Tenant shall not have any
duplicate key made. At the termination of this tenancy Tenant shall
promptly return to Landlord all keys to offices and toilet rooms.
10. USE OF WATER FIXTURES. Water closets and other water fixtures shall not be
used for any
<PAGE>
purpose other than that for which the same are intended, and any damage
resulting to the same from misuse on the part of Tenant shall be paid for
by Tenant. No person shall waste water by tying back or wedging the
faucets or in any other manner.
11. NO ANIMALS, EXCESSIVE NOISE. No animals shall be allowed in the offices,
halls, corridors or elevators in the Building. No person shall disturb the
occupants of this or adjoining buildings or space by the use of any radio
or musical instrument or by the making of loud or improper noises.
12. NO SMOKING OF TOBACCO I.E. CIGARETTES, CIGARS, PIPES, ETC. The smoking of
tobacco products of any kind is strictly prohibited in the Building and on
the Premises at all times.
13. VEHICLES. Bicycles or other vehicles shall not be permitted anywhere
inside or on the sidewalks outside of the Building, except in those areas
designated by Landlord for bicycle parking.
14. TRASH. Tenant shall not allow anything to be exhibited to the outside of
the Building, nor shall anything be thrown by Tenant out of the window or
doors, or down the corridors, elevator shafts, or ventilating ducts or
shafts of the Building. All trash shall be placed in receptacles provided
by Tenant on the Premises or in any receptacles provided by Landlord for
the Building.
15. WINDOWS. No window shades, blinds, screens or draperies will be attached
or detached by Tenant and no awnings shall be placed over the windows
without Landlord's prior written consent. Tenant agrees to abide by
Landlord's rules with respect to maintaining uniform curtains, draperies
and linings at all windows and hallways so that the Building will present a
uniform exterior appearance. Tenant will use its best efforts to have all
curtains, draperies, and blinds closed at the end of each day in order to
help conserve energy. Tenant, except in the case of fire or other
emergency, shall not open any outside window because the opening of windows
interferes with the proper functioning of the Building heating and air
conditioning systems.
16. HAZARDOUS OPERATIONS AND ITEMS. Tenant shall not install or operate any
steam or gas engine or boiler, or carry on any mechanical business in the
Premises without Landlord's prior written consent, which consent may be
withheld in Landlord's absolute discretion. The use of oil, gas or
inflammable liquids for heating, lighting or any other purpose is expressly
prohibited. Explosives or other articles deemed extra hazardous shall not
be brought into the Building.
17. HOURS FOR REPAIRS, MAINTENANCE AND ALTERATION. Any repairs, maintenance or
alterations required or permitted to be done by Tenant under the Lease
shall be done only during the ordinary business hours of the Building
unless Landlord shall have first consented to such work being done outside
of such times. If Tenant desires to have
<PAGE>
such work done by Landlord's employees on Saturdays, Sundays, holidays or
weekdays outside of ordinary business hours and Tenant agrees to the same,
Tenant shall pay the extra cost of such labor, in addition to other costs
which are the responsibility of Tenant under the Lease. An exception to
this provision shall be made for normal picture hanging.
18. NO DEFACING. Except as permitted by Landlord, Tenant shall not mark upon,
paint signs upon, cut, drill into, drive nails or screws into, or in any
way deface the walls, ceilings, partitions or floors of the Premises or of
the Building, and any defacement, damage or injury caused by Tenant shall
be paid for by Tenant.
19. CHAIR PADS. During the entire term of this lease, Tenant shall, at its
expense, install and maintain under all caster chairs a chair pad or carpet
casters to protect the carpeting.
20. SOLICITATION: FOOD AND BEVERAGES. Landlord reserves the right to
restrict, control or prohibit canvassing, soliciting and peddling within
the Building. Tenant shall not grant any concessions, licenses or
permission for the sale or taking of orders for food or services or
merchandise in the Premises, nor install or permit the installation or use
of any machine or equipment for dispensing goods or foods or beverages in
the Building, nor permit the preparation, serving, distribution or delivery
of food or beverages in the Premises without the approval of Landlord and
in compliance with arrangements prescribed by Landlord. Only persons
approved by Landlord shall be permitted to serve, distribute or deliver
food and beverages within the Building, or to use the elevators or public
areas of the Building for that purpose.
21. CAPTIONS. The caption for each of these rules and regulations is added as
a matter of convenience only and shall be considered of no effect in the
construction of any provision or provisions of these rules and regulations.
22. SECURITY OF PREMISES. Tenant shall see that the doors of the Premises and
Building are securely locked before leaving and that all water, gas and
electricity within the Premises is also shut off before leaving. For any
default or carelessness in this regard, Tenant shall make good all injuries
sustained by other tenants or occupants of the Building or Landlord. On
multiple-tenancy floors, all tenants shall keep the doors to the Building
corridors closed at all times except for ingress and egress.
23. PARKING. Cars are to park in properly marked spaces only. Under no
circumstances are cars to (a) park in spaces reserved for other tenants,
(b) park in driveways, (c) park in front of entrances to the Building or
(d) park in unmarked areas. Landlord shall have the right to cause
improperly parked cars to be towed at the owner's expense. It is
understood that Landlord shall have the right to charge a monthly rental
fee for covered reserved parking.
<PAGE>
24. REST ROOMS. Tenant will endeavor to keep the common rest rooms in a clean,
neat, and orderly fashion. Tenant will not create or cause to be created
any extraordinary housekeeping problems in the common rest rooms.
25. INSURANCE. Tenant shall not do or permit to be done anything which will
invalidate or increase the cost of any insurance coverage on the Building
or the Premises.
26. UTILITY LINES. Tenant shall not overload, damage, or obstruct any utility
lines providing services to the Building or Premises.
27. STORAGE OF MERCHANDISE/FOOD PREPARATION. The Premises shall not be used
for the storage of merchandise held for sale to the general public or for
lodging. No cooking shall be done or permitted on the Premises except
private use by Tenant of equipment approved by Landlord for brewing coffee,
tea, hot chocolate and similar beverages shall be permitted, provided that
such is in accordance with all applicable governmental laws, codes,
ordinances, rules and regulations.
28. JANITORIAL SERVICES. No tenant shall employ any person or persons other
than the janitor of Landlord for the purpose of cleaning its premises
unless otherwise agreed to by Landlord in writing. Except with the written
consent of Landlord, no person or persons other than those approved by
Landlord shall be permitted to enter the Building for the purpose of
cleaning the same. No tenant shall cause any unnecessary labor by reason
of such tenant's carelessness or indifference in the preservation of good
order and cleanliness.
29. DIRECTORY. The directory of the Building will be provided for the display
of the company name and location of the tenants at the expense of Landlord.
Landlord shall provide Tenant, free of charge, one directory strip in the
Building Directory and either one building standard plaque or white vinyl
lettering stating the name of the company. The location of Tenant's suite
in the Building shall dictate the type of signage to be provided. Tenant
may request additional signage from Landlord. Landlord's consent to
requests for additional signage will be at the discretion of the Landlord
and at Tenant's expense. Landlord reserves the right to restrict the
amount of directory space utilized by any tenant.
30. REQUESTS FOR SERVICES. The requirements of tenants will be attended to
only upon application in writing at the office of the Building. Employees
of Landlord shall not perform any work or do anything outside of their
regular duties unless under special instructions from Landlord.
31. OTHER MATTERS. These Rules and Regulations are in addition to, and shall
not be construed to in any way modify or amend, in whole or in part, the
agreements, covenants, conditions and provisions of any lease of premises
in the Building.
<PAGE>
EXHIBIT B
SUITE LAYOUT
To Be Attached
<PAGE>
EXHIBIT C
ACCEPTANCE LETTER
Gentlemen:
The undersigned, as Tenant under that certain Lease dated August 26, 1996 made
with Tidewater Partners Limited Partnership, does hereby certify:
1. That its leased premises (the "Premises") at the above location have been
substantially completed in accordance with the terms of the Lease, that it
has accepted possession of said premises and that it now occupies the same;
2. That it began paying rent effective _______________, and that, save only as
may be required by the terms of the Lease, no rental has been paid in
advance;
3. That there exist no defenses or offsets to enforcement of the Lease by the
Landlord and that there are as of the date hereof, no defaults or breaches
on the part of the Landlord under the Lease known to the undersigned;
4. That the Lease is now in full force and effect and has not been amended,
modified or assigned, except by agreements dated <*>NONE</*> (if none,
so state).
BY: METRO INFORMATION SERVICES
By: ___________________________________ _______________
Date
<PAGE>
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
Tenant Name: Metro Information Services
Building/Suite: Reflections II, Suite 300
THIS AGREEMENT is dated the 26th day of August, 1996, and is made by
and among CONNECTICUT GENERAL LIFE INSURANCE COMPANY, having an address c/o
CIGNA INVESTMENTS, INC., 900 COTTAGE GROVE ROAD, BLOOMFIELD, CONNECTICUT 06002,
ATTN: REAL ESTATE INVESTMENT SERVICES S-319 ("Mortgagee"), METRO INFORMATION
SERVICES, having an address of REFLECTIONS III, SUITE 150 ("Tenant"), and
TIDEWATER PARTNERS LIMITED PARTNERSHIP, having an address of REFLECTIONS I,
SUITE 310, VIRGINIA BEACH, VIRGINIA 23452 ("Landlord").
RECITALS:
A. Tenant has entered into a lease ("Lease") dated AUGUST 26, 1996, with
TIDEWATER PARTNERS LIMITED PARTNERSHIP as lessor ("Landlord"), covering the
premises known as REFLECTIONS II, SUITE 300 (the "Premises") within the property
known as REFLECTIONS - THE CORPORATE PARK AT LYNNHAVEN , more particularly
described as shown on Exhibit A, attached hereto (the "Real Property").
B. Mortgagee has agreed to make or has made a mortgage loan in the amount
of $24,950,000.00 to Landlord, secured by a mortgage or the Real Property (the
"Mortgage"), and the parties desire to set forth their agreement herein.
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. The Lease and all extensions, renewals, replacements or
modifications thereof are and shall be subject and subordinate to the Mortgage
and all terms and conditions thereof insofar as it affects the Real Property of
which the Premises form a part, and to all renewals, modifications,
consolidations, replacements and extensions thereof, to the full extent of
amounts secured thereby and interest thereon.
2. Tenant shall attorn to and recognize any purchaser at a
foreclosure sale under the Mortgage, any transferee who acquires the Premises by
deed in lieu of foreclosure, and the successors and assigns of such
purchaser(s), as its landlord for the unexpired balance (and any extensions, if
exercised) of the term of the Lease on the same terms and conditions set forth
in the Lease.
<PAGE>
3. If it becomes necessary to foreclose the Mortgage, Mortgagee
shall neither terminate the Lease nor join Tenant in summary or foreclosure
proceedings so long as tenant is not in default under any of the terms,
covenants, or conditions of the Lease.
4. If Mortgagee succeeds to the interest of Landlord under the
Lease, Mortgagee shall not be:
a. liable for any act or omission of any prior landlord
(including Landlord);
b. liable for the return of any security deposit unless such
deposit has been delivered to Mortgagee by Landlord or is an escrow fund
available to Mortgagee;
c. subject to any offsets or defenses that Tenant might have
against any prior landlord (including Landlord);
d. bound by any rent or additional rent that Tenant might have
paid for more than the current month to any prior landlord (including Landlord);
e. bound by any amendment, modification, or termination of the
Lease made without Mortgagee's consent;
f. personally liable under the Lease, Mortgagee's liability
thereunder being limited to its interest in the Real Property; or
g. bound by any notice of termination given by Landlord to
Tenant without Mortgagee's prior written consent thereto.
5. This Agreement shall be binding on and shall inure to the benefit
of the parties hereto and their successors and assigns.
6. Tenant shall give Mortgagee, by certified mail, return receipt
requested, or by commercial overnight delivery service, a copy of any notice of
default served on Landlord, at Mortgagee's address set forth above or at such
other address as to which Tenant has been notified in writing. If Landlord
shall have failed to cure such default within the time provided for in the
Lease, then Mortgagee shall have an additional ten (10) days within which to
cure any default capable of being cured by the payment of money and an
additional thirty (30) days within which to cure any other default or if such
default cannot be cured within that time, then such additional time as may be
necessary to cure such default shall be granted if within such thirty (30) days
Mortgagee has commenced and is diligently pursuing the remedies necessary to
cure such default (including, but not limited to, commencement of foreclosure
proceedings, if necessary to effect such cure), in which even the Lease shall
not be terminated while such remedies are being so diligently pursued.
<PAGE>
7. Landlord has agreed under the Mortgage and other loan documents
that rentals payable under the Lease shall be paid directly by Tenant to
Mortgagee upon default by Landlord under the Mortgage. After receipt of notice
from Mortgagee to Tenant, at the address set forth above or at such other
address as to which Mortgagee has been notified in writing, that rentals under
the lease should be paid to Mortgagee, Tenant shall pay to Mortgagee, or at the
direction of Mortgagee, all monies due or to become due to Landlord under the
Lease. Tenant shall have no responsibility to ascertain whether such demand by
Mortgagee is permitted under the Mortgage, or to inquire into the existence of a
default. Landlord hereby waives any right, claim, or demand it may now or
hereafter have against Tenant by reason of such payment to Mortgagee, and any
such payment shall discharge the obligations of Tenant to make such payment to
Landlord.
8. Tenant declares, agrees and acknowledges that Mortgagee, in
making disbursements pursuant to any agreement relating to the Loan, is under no
obligation or duty to, nor has Mortgagee represented that it will, see to the
application of such proceeds by the person or persons to whom Mortgagee
disburses such proceeds, and any application or use of such proceeds for
purposes other than those provided for in such agreement shall not defeat the
subordination herein made in whole or in part.
IN WITNESS THEREOF, the parties hereto have executed these presents as
of the day and year first above written.
Mortgagee: CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By: ______________________ ___________________
Its: ______________________ Date
Tenant: METRO INFORMATION SERVICES
By: ______________________ ___________________
Its: ______________________ Date
Landlord: TIDEWATER PARTNERS LIMITED PARTNERSHIP
BY: OLYMPIA DEVELOPMENT CORPORATION
MANAGER & AUTHORIZED AGENT
By: ______________________ __________________
Cecil V. Cutchins Date
President
<PAGE>
STATE OF CONNECTICUT '
COUNTY OF HARTFORD '
On this ________ day of ________________, 19___, personally appeared
_________________________, who acknowledged himself to be the
_______________________ of CIGNA Investment, Inc., a corporation, duly
authorized to sign on behalf of _____________________________, a corporation,
and that he, being authorized so to do, executed the foregoing instrument for
the purposes therein contained by signing the name of the corporation.
IN WITNESS THEREOF, I hereunto set my hand.
___________________________________ My Commission Expires:
Notary Public
COMMONWEALTH OF VIRGINIA '
CITY OF VIRGINIA BEACH '
On this, the ____ day of _______________, before me, notary public, the
undersigned officer personally appears _________________________, who
acknowledged himself to be the _________________________ of Metro Information
Services, a ______________ corporation, and the foregoing instrument for the
purposes therein contained, by signing the name of the corporation by himself as
such officer.
IN WITNESS THEREOF, I hereunto set my hand and official seal the day and year
aforesaid.
___________________________________ My Commission Expires:
Notary Public
COMMONWEALTH OF VIRGINIA '
CITY OF VIRGINIA BEACH '
On this ______ day of ____________________ in the year ________ before me,
B. A. Sigler, a Notary Public of said Commonwealth, duly commissioned and sworn,
personally appeared Cecil V. Cutchins, President of Olympia Development
Corporation, Manager and Authorized Agent of Tidewater Partners Limited
Partnership, known to me to be a general partner of a limited partnership that
executed the within instrument, and acknowledged to me that such partnership
executed the same.
<PAGE>
___________________________________ My Commission Expires: 01/31/99
Notary Public
<PAGE>
EXHIBIT A
Description of Premises
The Premises, known as Suite 300 in Reflections II within Reflections - The
Corporate Park at Lynnhaven, located at 200 Golden Oak Court in Virginia Beach,
Virginia 23452, consists of approximately 19,229 Rentable Square Feet.
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.17 REVISED AND RESTATED LEASE DATED AS OF JANUARY 1, 1986 BY AND
BETWEEN C-F LYNNHAVEN ASSOCIATES AND REGISTRANT FOR PREMISES
LOCATED AT 607 LYNNHAVEN PARKWAY, VIRGINIA BEACH, VIRGINIA 23452.
REVISED AND RESTATED LEASE AGREEMENT
THIS REVISED AND RESTATED LEASE (the "Lease") is made and entered
into as of the 1st day of January, 1986, by and between C-F LYNNHAVEN
ASSOCIATES, a Virginia general partnership ("Lessor"), and METRO INFORMATION
SERVICES, INC., a Virginia corporation ("Lessee"), such terms to include
Sublessor and Sublessee whenever the context so requires or admits, revising
and restating a Lease Agreement originally effective December 1, 1985.
I. PROPERTY LEASED
1.1 DEMISE. In consideration of the covenants hereinafter to be
performed and in payment of rentals and additional charges to be paid by
Lessee in accordance with the provisions of this Lease, Lessor leases unto
Lessee and Lessee takes and hires from Lessor the following described
property (the "demised premises").:
See Exhibit "A" attached hereto and made a part hereof.
1.2 COVENANT OF QUIET ENJOYMENT. The Lessor covenants, subject to
the due performance of all of the terms and conditions of the Lease, that
Lessee shall be entitled to the peaceful enjoyment and underturned possession
of the premises for the term hereof.
II. TERM
2.1 TERM. The term of this Lease shall commence on December 1,
1985 and shall expire on November 30, 2005.
2.2 EARLY TERMINATION. In addition to Lessor's other rights to
terminate this Lease, Lessor shall have the right to terminate this Lease on
any anniversary of this Lease on or after November 30, 1990, (a "Termination
Date") on the following terms and conditions:
(a) Lessor is not indebted to United Virginia Bank in any
amount on the Termination Date.
(b) Lessor has provided Lessee ninety (90) days prior written
notice prior to the Termination Date.
<PAGE>
2.3 POSSESSION. Possession of the demised premises shall be
delivered to the Lessee upon the commencement date.
2.4 HOLDOVER. Any holdover at the expiration of the lease term
with the consent of the Lessor shall be on a month- to-month basis, which
tenancy may thereafter be terminated by Lessor giving Lessee not less than
ten (10) days notice. During any such holdover tenancy, Lessee agrees to pay
monthly to Lessor rentals and other charges in the same manner as hereinafter
provided and agrees to continue to be bound by all of the terms of this Lease
so far as are then applicable.
2.5 END OF TERM. Upon the expiration of the Lease, and any
extensions, Lessee having fully complied with the terms and conditions,
Lessor hereby waives any right to claim any equipment, personal property or
trade fixtures located in or attached to the demised premises which are owned
by Lessee, and same may be removed by Lessee provided that the premises are
restored to their original condition, with normal wear and tear excepted.
III. CONSIDERATION
3.1 RENT. From January 1, 1986 until November 30, 1990, Lessee
agrees to pay to Lessor monthly rent on the first day of the each month
Eleven Thousand Dollars ($11,000.00). Each year thereafter, the Lessor and
Lessee shall determine a monthly rent to apply during such year. The amount
of such rental shall in no circumstance be less than the rental during a
preceding year plus an increase attributable to the increase in the cost of
living during the preceding term by reference to the Department of Labor,
Bureau of Labor Statistics Consumer Price Index (1967 = 100) - All items,
U.S. Cities.
3.2 ADDITIONAL CHARGES. All costs expenses and charges of every
kind and nature relating to the demised premises (except the taxes of Lessor
referred to herein and any payments on account of interest of principal under
any mortgage or deed of trust which shall be a lien on the fee of the demised
premises), which may arise or become due during the initial term or any
renewal term of this Lease shall be paid by Lessee, and that Lessor shall be
indemnified and saved harmless by Lessee from and against the same, except
Lessor shall pay all real estate taxes with respect to the demised premises,
all condominium fees, electric, water, and other utilities, cleaning and
janitorial services and insurance with respect to the demised premises as set
forth hereinafter. The rent shall be paid to Lessor without notice or demand
and without abatement, deduction or set-off, except as otherwise expressly
herein provided. All taxes, charges, costs and expenses which Lessee assumes
or agrees to pay under any provisions of this Lease together with all
interest and penalties that may accrue thereon in the event of Lessee's
failure to pay same as herein provided, all other damages, costs and
expenses, including without limitation witness fees, attorneys fees,
deposition and other legal and court costs which Lessor may suffer or incur,
and any and all other sums
<PAGE>
which may become due, by reason with the agreements, terms, covenants and
conditions of this Lease on Lessee's part to be performed, shall be deemed to
be additional rent and in the event of nonpayment, Lessor shall have all the
rights and remedies herein provided in the case of non-payment of rent. All
rental payments delinquent for a period in excess of ten (10) days shall be
subject to late charges being assessed at the rate of twenty percent (20) per
annum.
IV. THE PREMISES
4.1 USE. Lessee will operate computer services business on
the demised premises. The premises will be used for no other purpose.
4.2 REPAIRS AND MAINTENANCE. Lessee shall, at all times during the
term, and at its own cost and expense, keep and maintain in good order and
condition the offices and all improvements on the demised Premises and their
full equipment and appurtenances, and make all repairs thereto and any
restorations, replacements, and renewals thereof, structural and
non-structural, seen or unforeseen, howsoever the necessity or desirability
for repairs may occur; and shall use all reasonable precaution to prevent
waste, damage or injury.
Notwithstanding the obligation of the Lessee hereunder to make all
necessary repairs to the demised premises, the Lessor may enter upon the
premises and make such repairs or alterations as may be necessary for the
safety and preservation thereof provided, however, that, except in the case
of emergency, the Lessor shall give Lessee ten (10) days notice before making
any repairs. In the event that Lessee shall fail or neglect to make such
repairs, Lessor or its agents may enter upon the premises for the purpose of
making such repairs and all costs and expenses consequent thereon, with
interest thereon, shall be repaid by the Lessee to the Lessor as additional
rent. The receipted payment by the Lessor for the making of such repairs,
alterations, or improvements shall be prima facie evidence of the
reasonableness of such charges therefor and that the same have been paid by
the Lessor.
Lessor shall, at all times during the term of this Lease, at
Lessor's sole cost and expense, provide standard janitorial and cleaning
services three (3) times each week. The janitorial services and cleaning
services shall include, but not be limited to, emptying trash and waste,
vacuuming carpeted areas, mopping uncarpeted areas, cleaning water closets,
dusting furniture, and pictures, and other similar services. It shall not
include cleaning carpets, waxing floors, painting, or similar services.
4.3 ALTERATIONS. Lessee shall not alter or renovate the exterior
nor interior of the Premises without prior written changes to be made to
Lessor at least thirty (30) days prior to commencement of renovations and
Lessee shall bear all expenses involved with said renovation. In the event
such consent is given,
<PAGE>
all work shall be performed in a good workmanlike manner in accordance with
accepted building practices and so as not to weaken or impair the structure
or lessen the value of the building.
Lessee shall not, at any time, make any alteration rebuilding,
replacement, change, addition, or improvement in or to the demised premises
or to any building thereon, unless:
(a) the same shall be performed in a first class workmanlike
manner, at Lessee's sole expense, and shall not weaken or impair the
structural strength, or lessen the value of such buildings as shall be on the
demised premises at the time, or change the purpose for which such buildings
may be used;
(b) the same shall be made according to plans and
specifications therefor, which shall be first submitted to and approved in
writing by Lessor;
(c) before the commencement of any such work, such plans and
specifications shall be approved by all governmental having an interest
therein;
(d) before the commencement of any such work, Lessee shall pay
the amount of any increase in premiums on insurance policies on account of
endorsements to be made thereon covering the risk during the course of such
work, and workmen's compensation insurance covering all persons employed in
connection with the work;
(e) if the estimated cost of such work shall exceed
$10,000.00, Lessee shall furnish to Lessor a surety bond in a company
acceptable to Lessor, in an amount equal to the estimated cost of such work,
or other security satisfactory to Lessor, guaranteeing the completion of such
work, free and clear of all liens and encumbrances;
(f) with respect to each contract for labor, services,
materials, or supplies in connection with any such alteration, addition or
improvement which shall contemplate or call for an aggregate expenditure
therefor of more than $10,000.00 before the commencement of any such work,
Lessee shall deliver to Lessor either (1) a duplicate original of such
contract, if in writing, which shall provide that no lien or claim shall
thereby be created or arise or be filed by anyone thereunder upon or against
the demised premises or any of the equipment thereof, or (2) a written waiver
by the architect, engineer, contractor, subcontractor, materialman, mechanic,
or other person contracting to furnish such labor, services, materials or
supplies, of all right of lien which he or it might otherwise have upon or
against the demised premises or the improvements to be altered, repaired,
improved or constructed, or the interest of Lessor therein.
All buildings, alterations, replacements, additions, improvements,
equipment and appurtenances on or in the demised
<PAGE>
premises at the commencement of the term, and which may be erected, installed
or affixed on or in the demised premises during the term, shall be deemed to
be and immediately become part of the realty and the sole property of Lessor,
and shall be deemed to be part of the demised premises.
4.4 LIENS. Should Lessee cause any alternations, replacements,
additions, improvements or repairs to be made to the demised premises, or
cause any labor to be performed or material to be furnished therein, thereon
or thereto, neither Lessor nor the demised premises shall under any
circumstances be liable for the payment of any expense incurred, but all such
alterations, replacements, additions, improvement, and repairs, and labor and
material, shall be made and performed at Lessee's expense. If, because of
any act or omission of Lessee, any mechanic's or other lien, charge or order
for the payment of money shall be filed against the demised premises or
improvements thereon, or against Lessor, Lessee shall, at its own cost and
expense, cause the same to be cancelled and discharged of record or bonded
within ten (10) days after notice of filing thereof.
4.5 SIGNS. Any, sign or symbol placed upon any portion of the
building or premises by the Lessee shall be subject to the prior written
approval of the Lessor.
4.6 INSPECTION. Fee owner, Lessor, or their representatives, shall
have the right to enter the premises at reasonable hours of any business day
during the term to ascertain if the premises are in proper repair and
condition.
4.7 LICENSE AND LAWS. The Lessee shall, at its own cost and
expense, obtain all necessary licenses and/or permits which may be required
for the conduct of its business; and Lessee shall, at its own cost and
expense, promptly observe and comply with all present and future laws,
ordinances, requirements, orders, directions, rules and regulations of
governmental authorities having or claiming jurisdiction over the demised
premises or appurtenances or any part thereof or the conduct of Lessee's
business thereon. Lessee, after notice to Lessor, may, by appropriate
proceedings conducted promptly at Lessee's own expense, in Lessee's name
and/or (whenever necessary) Lessor's name, contest in good faith the validity
or enforcement of any such statute, law, ordinance, regulation or order. So
long as (i) such deferment shall not subject Lessor to a fine or other
criminal liability, (ii) Lessee shall be diligently prosecuting such contest
to a final determination by the governmental authority or body having
jurisdiction thereof, and (iii) Lessee shall have furnished Lessor with such
security as Lessor may request in connection with such contest.
4.8 DAMAGE OR DESTRUCTION. If, during the term, the buildings,
improvements on the equipment on, in or appurtenant to thereafter erected
thereon or therein shall be destroyed or damaged in whole or in part by fire
or other cause, Lessee shall cost and
<PAGE>
expense, shall promptly repair, replace, and rebuild the possible to the
character of the buildings and improvements and the equipment therein
existing immediately prior to such occurrence; and Lessor shall in no event
be called upon to repair, replace, or rebuild any such buildings,
improvements or equipment, or to pay any of the costs or expenses thereof
beyond or in excess of the insurance proceeds as herein provided.
All insurance proceeds received by Lessor on account of such damage
or destruction, less the actual cost, fees, and expenses, if any, incurred in
connection with adjustment of the loss, shall be applied by Lessor to pay or
reimburse Lessee for the payment of the cost of the aforesaid restoration,
including the cost of temporary repairs or for the protection of property
pending the completion of permanent restoration, and shall be paid out from
time to time as such restoration progresses upon the written request of
Lessee which shall be accompanied by evidence satisfactory to Lessor that:
(a) (1) the sum then requested either has been paid by Lessee
or is justly due to contractors, subcontractors, materialmen, or other
persons who have rendered services or furnished materials for the restoration
therein specified, and that the sum then requested does not exceed the value
of the services and materials described in the certificate;
(2) except for the amount, if any, stated pursuant to the
foregoing to be due for services or materials, there is no outstanding
indebtedness known to the persons signing such certificate, after due
inquiry, which is then due for labor, wages, materials, supplies, or services
in connection with such restoration;
(3) the cost of the restoration required to be done in
order to complete the same, does not exceed the insurance money; and
(4) that there have not been filed with respect to not
been discharged of record, except such as will be discharged Lessor or the
Insurance Trustee shall, out of such insurance or cause to be paid to Lessee
or the persons named pursuant to this Section, the respective amounts stated
therein to have been paid by Lessee or to be due to them, as the case may be.
If the insurance money and other funds deposited with Lessor or the
Insurance Trustee, less the actual cost, fees and expenses, if any, incurred
in connection with the adjustment of the loss, shall be insufficient to pay
the entire cost of such restoration, Lessee will pay the deficiency.
Upon receipt by Lessor or the Insurance Trustee of that the
restoration has been completed and paid for in full and that there are no
liens of the character referred to therein, any balance of the insurance
money held by Lessor or the Insurance
<PAGE>
Trustee, if any, shall be paid to Lessee.
At least twenty (20) days before the commencement of such repairs,
replacement or rebuilding, Lessee shall notify Lessor of its intention to
commence the same. This Lease shall not terminate, nor shall the rental and
other charges payable hereunder be abated or be affected in any manner.
4.9 WARRANTIES; DISCLAIMER. Lessor shall provide Lessee with the
benefit of any warranties provided by the building contractor or any building
subcontractor. Lessor expressly disclaims any other warranty, either express
or implied, and Lessee acknowledges that neither Lessor nor its agents have
made any representations or promises with respect to the demised premises,
site improvements and appurtenances, except as herein expressly set forth,
and no rights, easements, or licenses are acquired by Lessee by implication
or otherwise except as expressly set forth herein. Taking possession of the
demised premises by Lessee shall be conclusive evidence, as between Lessor
and Lessee, their successors or any permitted assigns that the Lessee has
accepted the premises "AS IS."
Nothing herein shall be construed as a limitation of Lessor's rights
to pursue any cause of action it may have against any third parties for
defects in materials or workmanship.
V. TAXES AND OTHER CHARGES
5.1 Lessor shall pay before the last day on which payment may be
made without penalty or interest, all real property taxes, assessments, and
other governmental impositions and charges of every kind and nature
whatsoever, which shall or may during the term be assessed, imposed, become
due and payable in connection with the occupancy or possession of the demised
premises or any buildings, appurtenances therein, and all taxes assessed or
imposed in lieu of or in addition to the foregoing under virtue of all
present or future laws or regulations of all governmental authorities
whatsoever. Lessee shall pay before the last day on which payment may be
made all personal property taxes and utility charges, other than as set forth
herein, and other governmental assessments with respect to the demised
premises on the equipment thereon. All such taxes, assessments, and utility
charges, other than as set forth herein, assessed or imposed for each fiscal
period in which the term of this Lease commences and terminates shall be
apportioned.
5.2 Lessor shall pay or reimburse Lessee for all electric, water,
and sewer utility charges during the term of this Lease when the same become
due. Lessor's obligations shall be for standard electric, water and sewer
charges and shall not extend to any extraordinary charges such as providing
new service to the building, excavation, repairs to any breaks or
discontinuance of services. Nothing in the foregoing shall create in Lessee a
right against Lessor for interruptions in any utility services. Lessee
<PAGE>
shall be responsible for all other utilities including, without limitation,
gas, steam, telephone or cable television.
VI. INSURANCE
6.1 During the term of this Lease, Lessor, at its own cost and
expense, shall keep all buildings and improvements on or appurtenant to the
demised premises at the commencement of the term and thereafter erected
thereon or therein, insured against loss or damage by perils of fire,
lightning, wind, hail, explosion, riot, riot attending a strike, civil
commotion, aircraft, vehicles, smoke, vandalism and malicious mischief in an
amount sufficient to cover the cost of replacing the building(s) and
improvements (without deduction for depreciation), exclusive of foundation
supports below the surface of the ground, and the costs of excavation,
underground pipes, flues, wiring, and drains.
During the term of this Lease, Lessee, at its own cost and expense,
shall:
(a) Provide and keep in force comprehensive general public
liability insurance against claims for personal injury, death or property
damage occurring on, in or about the demised premises or the adjoining
streets, property and passageways, such insurance to afford minimum
protection, during the term of this Lease, of not less than $1,000,000 in
respect of personal injury or death to any on person, and of not less than
$1,000,000 in respect of any one occurrence and not less than aggregate
property damage during any policy year).
(b) Provide and keep in force plat glass insurance covering
the glass in the demised premises, unless waived by Lessor;
(c) Upon request of Lessor to provide and keep in force rent
insurance (and/or, as the case may require, use and occupancy insurance) in
an amount not less than the annual net rent plus the estimated annual taxes,
water charges, sewer rents and installments of assessments and the annual
premiums for the insurance required by this Article.
(d) Provide and keep in force such other insurance and in such
amounts as may from time to time be required by Lessor or any mortgagee
against such other insurable hazards as at the time are commonly insured
against in the case of premises similarly situated.
6.2 All insurance provided by Lessee as required by Lessor shall be
carried in favor of Lessor and Lessee, as their respective interest may
appear, and any underlying Lessor, fee owner or affiliate corporation,
trustee or mortgagee designated by Lessor. If requested by Lessor, such
insurance against fire or other casualty shall include the interest of the
holder of any mortgage on the fee and shall provide that loss, if any, shall
be
<PAGE>
payable to such holder under a standard mortgagee clause. All such insurance
shall be taken in such responsible companies, licensed to do business in the
state of which the demised premises are located, as Lessor shall approve and
the policies there for shall at all times be held by Lessor or, when
appropriate, by the holder of any such mortgage, in which case copies of the
policies shall be delivered by Lessee to Lessor. All such policies shall be
non-assessable and shall require twenty (20) days notice by registered mail
to Lessor of any cancellation thereof or change affective Lessor's coverage
thereunder.
6.3 Claims for loss resulting to the demised premises covered under
any policies provided for in this Lease shall be adjusted with the insurance
companies (a) by Lessee in the case of any particular casualty resulting in
damage or destruction not exceeding $10,000 in the aggregate, or (b) by
Lessor and Lessee, in the case of any particular casualty resulting in damage
or destruction exceeding $10,000 in the aggregate. Subject to the rights of
the holder of any mortgage to which the Lease is or shall be subject and
subordinate, the proceeds of any such insurance, as so adjusted, shall be
payable as follows:
(a) With respect to any loss not exceeding $10,000 in the
aggregate, such loss shall be paid to Lessee who shall hold the proceeds in
trust for the purpose of paying the costs of repair and restoration; and
(b) With respect to losses exceeding $10,000 in the aggregate,
the loss shall be paid to Lessor and shall be applied to pay the costs of
repair and restoration.
6.4 Lessee shall procure policies for all such insurance for
periods of not less than one year and shall deliver to Lessor such Policies
or certificates thereof with evidence of the payment of premiums thereto, and
shall procure renewals thereof from time to time at least twenty (20) days
before the expiration thereof.
6.5 Lessee and Lessor shall cooperate in connection with the
collection of any insurance moneys that may be due in the event of loss, and
Lessee shall execute and deliver to Lessor such proofs of loss and other
instruments which may be required for the purpose of obtaining the recovery
of any such insurance moneys. All insurance policies shall be written with
insurance companies rated AAA or better by Best's Insurance Guide.
VII. INDEMNIFICATION
7.1 Lessee shall indemnify and save harmless Lessor against and
from all costs, expenses, liabilities, losses, damages, injunctions, suits,
actions, fines, penalties, claims and demands of every kind or nature,
including reasonable counsel fees, by or on behalf of any person, party or
governmental authority whatsoever arising out of (a) any failure by Lessee to
perform any of the
<PAGE>
agreements, terms covenants on conditions of this Lease on Lessee s part to
be performed, (b) any accident, injury or damage which shall happen in or
about the demised premises, however occurring, and any matter or these
growing out of the condition, occupation, maintenance, alteration, repair,
use or operation of the demised premises, or any part thereof.
VIII. ENFORCEMENT
8.1 Each of the following events shall be a default hereunder by
Lessee and a breach of this Lease:
(a) If Lessee shall file a petition in bankruptcy or
insolvency or for reorganization or arrangement under the bankruptcy laws of
the United States or any insolvency act of any state or shall voluntarily
take advantage of any such law or act by answer or otherwise or shall be
dissolved or shall make an assignment for the benefit of creditors.
(b) If involuntary proceedings under any such bankruptcy law
or insolvency act or for the dissolution of a corporation shall be instituted
against Lessee or of a receiver or trustee shall be appointed of all of the
property of Lessee and such proceedings shall not be dismissed or such
receivership or trusteeship vacated within thirty (30) days after such
institution or appointment.
(c) If Lessee shall fail to pay Lessor any rent as and when
the same shall become due and payable and shall lot make such payment within
twenty (20) days after notice thereof by Lessor to Lessee.
(d) If Lessee shall fail to perform any of the agreements,
terms, covenants or conditions hereof on Lessee's part to be performed and
such non-performance shall continue for a period within which performance is
required to be made by specific provision of this Lease or if no such period
is so provided for a period of twenty (20) days after notice thereof by
Lessor to Lessee or, if such performance cannot be reasonably had within such
thirty (30) day period, Lessee shall not in good faith have commenced such
performance within such thirty day period and shall not diligently proceed
therewith to completion.
(e) If Lessee shall vacate or abandon the demised premises.
(f) If this Lease or the estate of Lessee hereunder shall be
transferred to or upon any other person or party, except in a manner permitted.
If any such event of default as described in this subsection
8.1 shall occur and be continuing, Lessor shall have the might to terminate
this Lease by giving to Lessee not less than twenty (20) days notice, and
upon the expiration of the time fixed
<PAGE>
in such notice, this Lease and the term hereof shall expire in the same
manner and with the same force and effect, except as to Lessee's liability,
as if the expiration of the time fixed in such notice of cancellation were
the end of the term originally demised.
8.2 After expiration of the applicable period of notice, or without
notice in the event of any emergency, Lessor at its option may, but shall not
be obligated to, make any payment required of Lessee herein or comply with
any agreement, term, covenant or condition, required hereby to be performed
by Lessee and the amount so paid, together with interest thereon at the rate
of the highest legal rate permitted from the date of such payment by Lessor,
shall be deemed to be additional rent hereunder payable by Lessee and
collectible as such. Lessor shall have the right to enter the demised
premises for the purpose of correcting or remedying any such default, out
neither any such expenditure nor any such performance by Lessor shall be
deemed to waive or release Lessee's default or the right of Lessor to take
such action as may be otherwise permissible hereunder in the case of such
default.
8.3 In the event of cancellation or termination of this Lease
either by operation of law or otherwise, Lessor may re-enter and repossess
the demised premises, using such force for that purpose as may be necessary
without being liable to prosecution therefor, and Lessee shall nevertheless
remain and continue liable to Lessor in a sum equal to all net rent,
additional rent and other charges payable hereunder for the remainder of the
term originally demised.
If Lessor shall so re-enter, Lessor may repair and alter the demised
premises in such manner as to Lessor may seem necessary or advisable, and/or
let or relet the demised premises the term herein originally demised or for a
longer period, in Lessor's name or as the agent of Lessee, and out of any
rent collected or received from subtenants.
8.4 Should any rent collected by Lessor as provided in above after
the payments therein mentioned be insufficient to fully Pay to Lessor a sum
equal to all rent or additional rent or both reserved herein and other
charges payable hereunder for the deficiency shall be paid by Lessee
immediately.
8.5 In any of the circumstances mentioned above in which Lessor
shall have the right to hold Lessee liable, Lessor so liable, forthwith to
recover against Lessee as damages for loss of the bargain and not as a
Penalty, in addition to any other damages becoming due, an aggregate sum
which, at the time of the termination of this Lease or of the recovery of
possession of the demised premises by Lessor, as the case may be, represents
the then present worth of the excess, of any, of the aggregate of the rent
and additional rent and all other charges payable by Lessee hereunder that
would have accrued for balance of the term over the aggregate rental value of
the demised premises for the balance of such term.
<PAGE>
8.6 Suit or suits for the recovery of the deficiency or damage or
for any installment or installments of rent and additional rent hereunder, or
for a sum equal to any such installment or installments may be brought by
Lessor, from time to time at Lessor's election, and nothing in this Lease
contained shall be deemed to require Lessor to await the date whereon this
Lease or the term hereof would have expired by limitations had there been no
such default be Lessee or no such cancellation or termination.
8.7 Lessee hereby expressly waives service of any notice of
intention to re-enter. Lessee hereby waives any and all rights to recover or
to regain possession of the demised premises or to reinstate or to redeem
this Lease or other right of redemption as permitted or provided by or under
any statute, law or decision now or hereafter in force and effect. No
receipt of moneys by Lessor from Lessee, after the cancellation or
termination hereof in any lawful manner, shall reinstate, continue or extend
the term, or affect any notice theretofore given to Lessee or operate as a
waiver of the right of Lessor to enforce the payment of rent and additional
rent then due or thereafter falling due, or operate as a waiver of the right
of Lessor to recover possession of the demised by proper suit, action,
proceeding or other remedy, and any and all such moneys so collected shall be
deemed to be payments on account of the use and occupation of the demised
premises, or at the election of the Lessor, on account of Lessee's liability
hereunder.
8.8 Nothing in this Article shall limit or prejudice the right of
Lessor to prove and obtain as liquidated damages in any bankruptcy,
insolvency, receivership, reorganization or dissolution proceeding an amount
equal to the maximum allowed by any statute or rule of low governing such
proceeding and in effect at the time when such damages are to be proved,
whether or not such amount be greater, equal to or less than the amount of
the damages referred to in any of the preceding sections.
8.9 In the event of a breach or a threatened breach by Lessee of
any of the agreements, terms, covenants or conditions hereof, Lessor shall
have the right of injunction to restrain the same and the right to invoke any
remedy allowed by law or in equity, as if specific remedies indemnity or
reimbursement were not herein provided.
8.10 The rights and remedies of Lessor are distinct, separate and
cumulative, and no one of them, whether or not exercised by Lessor, shall be
deemed to be in exclusion of any of the others.
8.11 The failure of Lessor to insist upon a strict performance of
any of the agreements, terms, covenants and conditions hereof shall not be
deemed a waiver of any rights or remedies that Lessor may have and shall not
be deemed a waiver of any subsequent breach or default in any of such
agreements, terms,
<PAGE>
covenants and conditions.
IX. RENT ABATEMENT
9.1 Except as may hereinafter provided, no abatement, diminution,
or reduction of rent, charges or other compensation shall be claimed by or
allowed to Lessee, or any person claiming under it, under any circumstances,
whether for inconvenience, discomfort, interruption or business, or otherwise.
X. CONDEMNATION
10.1 In the event that the demised premises or any part thereof shall
be taken in condemnation Proceedings or by exercise of any right of eminent
domain or by settlement agreement in lieu thereof between Lessor and those
authorized to exercise such right, Lessor shall be entitled to collect the
entire award made without deduction for any estate hereby vested in or owned
by Lessee, subject to the rights of the fee simple owner of the real
property, which constitutes a part of the demised premises, if Lessor is not
fee simple owner, and to the rights of holder of any mortgage to which this
Lease is or shall be subject and subordinate, and subject also to Lessee's
rights as hereinafter set forth. Lessee agrees to execute any and all
documents that may be required in order to facilitate collection by Lessor of
any and all such awards. Lessee shall have no right to participate in any
condemnation proceedings or agreement except for the purpose of protection
Lessee's interest hereunder.
Lessor shall be entitled to one hundred percent (100%) and of any
net condemnation award.
10.2 If at any time during the term of this Lease, the whole or
substantially all of the demised premises shall be so taken or condemned,
this Lease shall terminate and expire on the date upon which title shall vest
in the condemning authority and the net rent provided to be paid by Lessee
shall be apportioned and paid to such date. For the purposes of this
Section, "substantially all of the demised premises" shall be deemed to have
been taken if the position of the demised premises not so taken, and taking
into consideration the amount of the net award available for such purpose,
cannot be so repaired or reconstructed as to constitute a complete, rentable
structure capable of producing a proportionately fair and reasonable net
annual income after payment of all operating expenses thereof, the net rent,
as the same may be reduced as a result of such taking, additional rent and
all other charges hereunder payable, and after performance of all covenants,
agreements terms and provisions herein and by law provided to be performed
and paid by Lessee.
10.3 In the event of a partial taking, which shall not result in
termination of this Lease, Lessee shall promptly proceed to rebuild, repair
and restore the remainder of the building on the demised premises if affected
thereby to a complete, independent and
<PAGE>
self-contained architectural unit, for the purposes in use before the taking,
and Lessor shall pay to Lessee, subject to the same provisions and
limitations specified herein respecting insurance proceeds, the cost of
restoration but in no event to exceed a sum equal to the amount of the
separate award made for consequential damage. Any deficiency will be paid by
Lessee. Such work and the performance thereof shall be subject to and shall
be performed in accordance with the provisions respecting alterations, except
that the surety company bond shall be in the amount, of any, by which the
estimated cost of the work exceeds said separate award from consequential
damage. In the event that there is no separate award for consequential
damage, the same shall be fixed and settled by arbitration as herein provided.
If this Lease does not terminate as provided herein, the rental
after the date of taking shall be the rental payable by Lessee immediately
prior to the taking, reduced by proportionately by the square footage of the
building taxes.
10.4 Nothing in this article shall be construed as precluding Lessee
from pursuing any independent action permitted by law or from participating
in the condemnation proceedings for the purpose of securing an independent
award for loss of business or damage to trade fixtures.
XI. SUBORDINATION
11.1 This Lease shall be fully subordinate to any mortgage and/or
collateral assignment of lease against the premises which the fee owner,
Lessor and/or its assigns may have or hereafter obtain upon the premises.
Any such sums paid by Lessee on Lessor's behalf shall be credited to rent due
hereunder. The Lessee hereby grants a power of attorney to the Lessor with
full power to act as its attorney in fact and to execute on behalf of the
Lessee any and all documents that may be required by a mortgagee and/or
assignee evidencing the Lessee's full subordination of the Lessee's interest
to any mortgage and/or collateral assignment of lease that may be entered
into by the Lessor, fee owner or its assigns. In the event the mortgagee
assignee requires the Lessee to execute such documents to evidence the full
subordination of the Lessee's interest, the Lessee hereby agrees to execute
any and all documents that may be requested. However, the Lessee shall not
be required to execute any promissory notes or other evidences of
indebtedness which would create any personal liability on behalf of the
Lessee.
XII. ASSIGNMENT
12.1 As between Lessor and Lessee, this Lease shall be fully
assignable by the Lessor or its assigns. Neither Lessee, nor Lessee's
successors or assigns, shall (unless hereinafter expressly Permitted to do
so) assigns, mortgage, pledge or encumber this Lease in whole or in part, or
sublet the demised premises, in whole or in part, or permit the same or any
portion thereof to be used or
<PAGE>
occupied by others, or enter into a management contract or other arrangement
whereby the demised premises shall be managed and operated by anyone other
than the then owner of Lessee's leasehold estate hereunder, nor shall this
Lease be assigned or transferred by operation of law, without the prior
consent in writing of Lessor in each instance which consent shall not be
unreasonably withheld and subject to the prior consent of any mortgagee or
holder of a deed of trust of the demised premises. If this Lease be assigned
or transferred, or if all or any part of the demised premises be sublet or
occupied by anybody other than Lessee, Lessor may collect rent from the
assignee, transferee, subtenant or occupant, and apply the net amount
collected to the rent reserved herein, but no such assignment, subletting,
occupancy or collection shall be deemed a waiver of any agreement, term,
covenant, or condition hereof, or the acceptance of the assignee, transferee,
subtenant or occupant as lessee, or a release of Lessee from the performance
or further performed by Lessee of the agreements, terms, covenants and
conditions hereof, and Lessee shall continue liable hereunder in accordance
with the agreements, terms, covenants and conditions hereof. The consent by
Lessor to an assignment, mortgage, pledge, encumbrance, transfer, management
contract or subletting shall not in any way be construed to relieve Lessee
from obtaining the express consent in writing of Lessor to any further
assignment, mortgage, pledge, encumbrance, transfer or subletting.
12.2 If the sale, assignment, transfer or other Disposition of any of
the issued and outstanding capital stock of Lessee (or of any successor or
assignee of Lessee which is a corporation), or of the interest of any general
partner of a partnership owning the leasehold estate created hereby, or of
the interest of any member of a joint venture, syndicate or other group which
may collectively own such leasehold estate, shall result in changing the
control of Lessee or such other corporation or such partnership, joint
venture, syndicate or other group, such sale, assignment, transfer or other
disposition shall be deemed an assignment of this Lease and shall be subject
to all of the provisions of this Lease with respect to assignments. For the
purpose of this paragraph, "control" of any corporation shall be deemed to be
vested in the person or persons owning more than forty percent (40%) of the
voting power for the election of the Board of Directors of such corporation
and "control" of a partnership, joint venture, syndicate or other group shall
be deemed to be vested in the person or persons owning more than forty
percent (40%) of the general partners' interest in such partnership or of the
total interest in such joint venture, syndicate or other group. A statement
shall be furnished by Lessee, its successors or permitted assigns, to Lessor
listing the names and addresses of all stockholders in any corporation or
general partners in any Partnership holding this lease, showing the number of
shares of stock owned by each stockholder of such corporation, or the
respective interests of the partners in such partnership, as the case may be;
provided, however, that, if at any time during the term of this Lease any
corporation holding this Lease is listed on any recognized Stock Exchange,
then a list of its stockholders
<PAGE>
shall be required.
12.3 No assignment made with Lessor's consent or as hereinabove
permitted, shall be effective until there shall have been delivered to Lessor
an executed counterpart of such assignment containing an agreement, in
recordable form, executed by the assignor and the proposed assignee, wherein
and whereby such assignee assumes due performance of the obligations on the
assignor's part to be performed under this Lease to the end of the term
hereof.
XIII. MISCELLANEOUS
13.1 ARBITRATION. In such cases where this Lease provides for the
settlement of a dispute or question by arbitration, the same shall be settled
by arbitration in the City of Virginia Beach, Virginia, in accordance with
the rules then obtaining of the American Arbitration Association, and
judgment upon the award rendered may be entered in any court having
jurisdiction thereof.
13.2 NOTICES. Every notice, approval, consent or other communication
authorized or required by this Lease shall be effective if given in writing
and sent by United States Registered or Certified Mail, Return Receipt
Requested, with postage prepaid, and addressed directly to Lessor at its
offices 607 Lynnhaven Parkway, P.O. Box 8888, Virginia Beach, Virginia 23450,
and to Lessee at the premises, or at such other address as either party shall
from time to time designate in writing. All payments to the Lessor shall be
made at the address designated for notices to the Lessor.
13.3 CONSTRUCTION. In the event that any of the provisions of this
Lease shall by court order be held invalid or in contravention of any of the
laws of the United States Government or any state thereof having jurisdiction
over the subject matter hereof or of any dispute arising hereunder, such
invalidation shall not serve to effect the remaining portion of this Lease
Agreement. To the extent permitted by the laws of the state wherein the
demised premises are situated, this Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia.
13.4 SUCCESSORS. This Lease shall bind Lessor and Lessee and their
successors, heirs, assigns, administrators, legal representatives, as the
case may be.
13.5 RECORDING. Lessee shall upon request of Lessor execute a short
form of this Lease by a written document witnessed and acknowledged in form
capable of being recorded in the public records. Lessee shall not record
this Lease or a short form thereof without prior written consent of Lessor.
13.6 COUNTERPARTS. This Lease is being executed simultaneously in
counterparts, any one of which shall be deemed an
<PAGE>
original.
13.7 NO AGENCY. The parties hereto agree that the business
relationship created hereby is solely that of Lessor and Lessee. Nothing
herein contained shall constitute Lessee as an agent, legal representative,
partner, subsidiary, joint venturer and shall not bind or obligate Lessor in
any way, manner or thing whatsoever, nor represent that it has any right to
do so.
13.8 BINDING EFFECT. This Lease shall become immediately binding upon
the parties hereto upon the date of the last Party signing hereunder
notwithstanding that the term of this Lease shall commence upon a future date.
13.9 HEADINGS. The headings or titles of the paragraphs and
subparagraphs are inserted solely for the convenience of reference and shall
not constitute a part of this Lease, nor limit, define or describe the scope
or intent of this Lease.
13.10 DEFINITIONS.
(a) The term "Lessor" as used herein shall mean only the owner
for the time being in fee of the demised premises, or the owner of the
leasehold estate created by an underlying lease, or the mortgagee of the fee
or of such underlying lease, in possession for the time being of the demised
premises, so that in the event of any sale or sales of the demised premises,
or of the making of any such underlying lease, or of any transfer or
assignment or other conveyance of such underlying lease and the leasehold
estate thereby created, the seller, lessor, transferor or assignor shall be
and hereby is entirely freed and relieved of all agreements, covenants and
obligations of Lessor herein, and it shall be deemed and construed without
further agreement between the parties or their successors in interest or
between the parties and the purchaser, lessee, transferee or assignee on any
such sale, leasing, transfer or assignment that such purchaser, lessee,
transferee or assignee has assumed and agreed to carry out any and all
agreements, covenants and obligations of Lessor hereunder.
(b) The term "Lessee" shall mean the Lessee named herein, and
from and after any valid assignment of the whole of Lessee's interest in this
Lease pursuant to the provision hereof, the assignee thereof.
(c) The terms "mortgagee" or "holder of a deed of trust" shall
include the other and any individual, firm, partnership, corporation, joint
venture, investment trust bank or institution, or other business group or
association lending funds to Lessor upon the security of Lessor's interest in
this Lease and the premises demised herein whether or not such mortgage or
deed of trust be recorded or upon Lessor s independent covenant not to
otherwise encumber this Lease or the demised premises.
(d) The term "equipment" as used herein means only
<PAGE>
that equipment used in conjunction with the building, such as heating,
ventilating and air conditioning systems, water heaters or softeners and
items of similar nature, and does not include Lessee's computer equipment.
(e) The term "trade fixtures" shall be deemed to include all
detached or detachable computer equipment.
IN WITNESS WHEREOF, the Lessor and the Lessee have respectively
signed and sealed this Lease as of the day and year first above written.
C-F LYNNHAVEN ASSOCIATES, Lessor
By /s/ CHRIS A. CRUMLEY
-----------------
General Partner
METRO INFORMATION SERVICES, INC., Lessee
BY /s/ JOHN H. FAIN
-------------
its President
COMMONWEALTH OF VIRGINIA
AT LARGE
Before me a Notary Public, in and for the Commonwealth of Virginia,
personally appeared CHRIS A. CRUMLEY, General Partner of C-F Lynnhaven
Associates, who acknowledged the signing of the foregoing Lease Agreement for
the purposes therein mentioned this 23RD day of JANUARY, 1987.
/s/ BILLIE W. CHANDLER
----------------------
Notary Public
My Commission Expires: 5/1/88
COMMONWEALTH OF VIRGINIA
AT LARGE
Before me a Notary Public, in and for the Commonwealth of Virginia,
personally appeared JOHN H. FAIN, President of Metro Information Services,
Inc., acknowledged the signing of the foregoing Lease Agreement for the
purposes therein mentioned this 23RD day of JANUARY, 1987.
/s/ BILLIE W. CHANDLER
----------------------
<PAGE>
Notary Public
My Commission Expires: 5/1/88
---------------------------
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 10.18 TAX INDEMNIFICATION AGREEMENT DATED AS OF BY AND BETWEEN
SHAREHOLDERS OF REGISTRANT AND REGISTRANT
FORM OF
TAX INDEMNIFICATION AGREEMENT
This Tax Indemnification Agreement, dated as of , 1996, is
entered into by and among Metro Information Services, Inc., a Virginia
corporation and its successors and assigns (the "Company"), and the
undersigned shareholders of the Company set forth on SCHEDULE I attached
hereto (collectively, the "Shareholders" and individually, a "Shareholder").
R E C I T A L S
A. In 1987, the Company elected to be treated as an S corporation
under subchapter S of the Internal Revenue Code of 1986, as amended (the
"Code").
B. As an S corporation, the Company has not paid federal and certain
state income taxes at the corporate level.
C. In connection with its public offering (the "Public Offering") of
Common Stock, par value $.01 per share, the Company plans to terminate its
S corporation status effective as of January 1, 1997.
D. Each Shareholder has received distributions from the Company with
respect to the Company's shares.
<PAGE>
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each of the Shareholders agrees, jointly and severally, to the
following:
1. INDEMNIFICATION. Each Shareholder agrees, jointly, to indemnify and
hold harmless the Company against, and to reimburse the Company for, any
corporate level income taxes (state and federal) which are imposed on the
Company with respect to any period ending on or before December 31, 1996 and
any interest and penalties associated therewith (collectively, the
"Assessment") to which the Company may become subject. Each Shareholder shall
make any payment required hereunder within 14 days after receipt of notice
from the Company that a final determination or final settlement has occurred
and a payment is due by the Company to an appropriate taxing authority. The
cumulative liability of each Shareholder for all Assessments hereunder shall
not exceed the aggregate amount of distributions made by the Company to such
Shareholder with respect to stock of the Company since the earlier of (i) the
date of the Company's election to be treated as an S corporation and (ii) the
date a Shareholder became a Shareholder of the Company, which aggregate
amount is set forth opposite the name of each Shareholder on SCHEDULE I;
provided, however, the cumulative liability of John H. Fain ("Fain") shall be
an amount equal to the difference between the aggregate amount distributed by
the Company since it became an S corporation and the aggregate amount
distributed to all other Shareholders, which amount is set forth opposite
Fain's name on SCHEDULE I. If any Shareholder has an indemnification claim
asserted against him under this Agreement which exceeds his pro rata share of
the Assessment, that Shareholder shall have the right of contribution against
all other Shareholders for an amount equal to the excess of the amount
asserted against him over his pro
Metro Information Services, Inc. Page 2
Tax Indemnification Agreement
<PAGE>
rata share of the Assessment. In no case, however, shall a Shareholder be
entitled to receive a contribution payment from another Shareholder unless he
has made or will make contemporaneously an indemnification payment to the
Company in excess of his pro rata share of the Assessment. For purposes of
this Agreement, each Shareholder's pro rata share of each Assessment will
equal the amount of the Assessment multiplied by the percentage appearing
next to the Shareholder's name on SCHEDULE I.
2. NOTICE AND CONTROL OF PROCEEDINGS. The Company and each of the
Shareholders agree that, within 10 days of receiving written notice of any
income tax examinations, claims, settlements, proposed adjustments or related
matters that may affect in any way the income tax liability of the Company
for any period ending on or before December 31, 1996, the Company shall
provide a copy to each Shareholder and any Shareholder receiving such a
notice shall provide a copy to the Company which, in turn, shall provide a
copy to each other Shareholder. On the receipt of any such notice, the
Company, at its sole expense and in the exercise of its good faith business
judgment, shall respond or defend, as appropriate, to attempt to minimize or
eliminate any potential income tax liability or, based on the advice of its
tax advisors, settle any such claim. Notwithstanding the foregoing, however,
the Company shall not compromise or settle any matter which could give rise
to liability under this Agreement if Shareholders having more than 30% of the
aggregate amount shown on SCHEDULE I object in writing within 30 days of
receiving written notice of such proposed compromise or settlement from the
Company and each objecting Shareholder (i) agrees in writing that the
Company's liability with respect to any proposed Assessment is eligible for
indemnification as provided in Section 1 of this Agreement and (ii)
demonstrates to the reasonable satisfaction of the Company
Metro Information Services, Inc. Page 3
Tax Indemnification Agreement
<PAGE>
that such Shareholder has the financial resources to pay his pro rata share
of such matter. The Company and each Shareholder agree to execute all
instruments required to effectuate the provisions of this Section 2,
including without limitation, powers of attorney.
3. COOPERATION. The parties will make available to one another, as
reasonably requested, and to any taxing authority, all information, records or
documents relating to the liability for taxes covered by this Agreement and
will preserve any such information, records or documents until the expiration
of the applicable statute of limitations or extensions thereof. The party
requesting such information shall reimburse the other party for all reasonable
out-of-pocket costs incurred in producing such information.
4. GOVERNING LAW AMENDMENTS. This Indemnification Agreement shall be
governed by, and construed and interpreted in accordance with, the laws of
the Commonwealth of Virginia. This Indemnification Agreement may not be
amended or terminated without the consent of a majority of the Independent
directors of the Company.
5. COUNTERPARTS. This Indemnification Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the date and year first above written.
METRO INFORMATION SERVICES, INC.
By:
------------------------------
John H. Fain, President
Metro Information Services, Inc. Page 4
Tax Indemnification Agreement
<PAGE>
________________________________
John H. Fain
________________________________
Janet A. Ellis
________________________________
Andrew J. Downing
________________________________
Steven A. Lurus
________________________________
Deborah D. Russell
________________________________
Richard C. Jaeckle
________________________________
Godfrey P. Grier
________________________________
John Wildermuth
________________________________
Lena M. Caporaletti
________________________________
Terry E. Burgess
________________________________
Brad Breseman
Metro Information Services, Inc. Page 5
Tax Indemnification Agreement
<PAGE>
________________________________
R. Lawrence Whitley
THE FAIN IRREVOCABLE TRUST dated
December 27, 1993
By: ____________________________
Joyce Lynn Fain, Co-Trustee
By: ____________________________
Cynthia Akins, Co-Trustee
________________________________
Cynthia Akins, as Custodian for
Christopher R. Fain under the
Virginia Uniform Transfers to
Minors Act
________________________________
Cynthia Akins, as Custodian for
Lauren C. Fain under the
Virginia Uniform Transfers to
Minors Act
________________________________
Marvin L. Welton
________________________________
Kathleen A. Neff
________________________________
Frank B. Bracken, Jr.
Metro Information Services, Inc. Page 6
Tax Indemnification Agreement
<PAGE>
________________________________
William E. Hassenger, Jr.
________________________________
Marilynn C. Moschel
________________________________
William H. Patton
________________________________
Michael G. Martin
________________________________
Dan E. Riley
________________________________
Robert M. Council
________________________________
R. Gilbert Reynolds
________________________________
Dennis W. Walsh
________________________________
Joseph C. Barber
________________________________
Daniel W. Kittrell
65029028/inderoagm2.bdb
Metro Information Services, Inc. Page 7
Tax Indemnification Agreement
<PAGE>
Schedule I
to Metro Information Services, Inc.
Tax Indemnification Agreement
Name of Shareholder Total Distributions Received Percentage
John H. Fain $ %
Janet A. Ellis
Andrew J. Downing
Steven A. Lurus
Deborah D. Russell
Richard C. Jaeckle
Godfrey P. Grier
John Wildermuth
Lena M. Caporaletti
Terry E. Burgess
Brad Breseman
R. Lawrence Whitley
THE FAIN IRREVOCABLE TRUST
dated December 27, 1993, Joyce Lynn
Fain and Cynthia Akins as Co-Trustees
Cynthia Akins, as Custodian for
Christopher R. Fain under the
Virginia Uniform Transfers to
Minors Act
Metro Information Services, Inc. Page 8
Tax Indemnificaiton Agreement
<PAGE>
Schedule I
to Metro Information Services, Inc.
Tax Indemnification Agreement
(continued)
Name of Shareholder Total Distributions Received Percentage
Cynthia Akins, as Custodian for $ %
Lauren C. Fain under the
Virginia Uniform Transfers to
Minors Act
Marvin L. Welton
Kathleen A. Neff
Frank B. Bracken, Jr.
William E. Hassenger, Jr.
Marilynn C. Moschel
William H. Patton
Michael G. Martin
Dan E. Riley
Robert M. Council
Roy Gilbert Reynolds
Dennis W. Walsh
Joseph C. Barber
Daniel W. Kittrell
TOTAL --------------------------- ---------
100%
--------------------------- ---------
--------------------------- ---------
Metro Information Services, Inc. Page 9
Tax Indemnificaiton Agreement
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 23.1 CONSENT OF KPMG PEAT MARWICK LLP, INDEPENDENT AUDITORS.
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholders
Metro Information Services, Inc.
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the Prospectus.
KPMG Peat Marwick LLP
Norfolk, Virginia
_______________, 199___
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 23.2 CONSENT OF CLARK & STANT, P.C., A VIRGINIA PROFESSIONAL
CORPORATION (INCLUDED IN EXHIBIT 5.1).
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 23.3 CONSENT OF ___________________ TO SERVE AS DIRECTOR.
FORM OF CONSENT OF NEW DIRECTOR
CONSENT OF ____________________
In reference to the Registration Statement on Form S-1 and the related
Prospectus of Metro Information Services, Inc. (File No. 333-16585), I hereby
consent to the references to me under the caption "MANAGEMENT - Executive
Officers and Directors" of such Registration Statement and confirm that I
have agreed to join the Board of Directors of Metro Information Services,
Inc. upon the consummation of the offering contemplated by such Registration
Statement.
_____________, __________ _____________________________
City, State Name
_________________________
Date Signed
<PAGE>
EXHIBITS FOR S-1 REGISTRATION STATEMENT
OF METRO INFORMATION SERVICES, INC.
EXHIBIT 27.1 FINANCIAL DATA SCHEDULE.
Previously filed.
