<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 2, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
THE HUNTER GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
MARYLAND 7389 52-1283112
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
</TABLE>
------------------------
100 EAST PRATT STREET, SUITE 1600
BALTIMORE, MARYLAND 21202
(410) 576-1515
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------------
TERRY L. HUNTER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
THE HUNTER GROUP, INC.
100 EAST PRATT STREET, SUITE 1600
BALTIMORE, MARYLAND 21202
(410) 576-1515
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
Copies of all communications,
including all communications sent to the agent for service, should be sent to:
<TABLE>
<S> <C>
EARL S. WELLSCHLAGER, ESQUIRE LOUIS J. BEVILACQUA, ESQUIRE
PIPER & MARBURY L.L.P. CADWALADER, WICKERSHAM & TAFT
36 SOUTH CHARLES STREET 100 MAIDEN LANE
BALTIMORE, MARYLAND 21201 NEW YORK, NEW YORK 10038
(410) 539-2530 (212) 504-6057
</TABLE>
------------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date 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 AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) UNIT(2) PRICE(2) FEE
<S> <C> <C> <C> <C>
4,715,000
Common Stock, without par value................. shares $12.00 $56,580,000 $17,145
</TABLE>
(1) Includes 675,000 shares of Common Stock subject to an option to the
Underwriters solely to cover over-allotments, if any. See "Underwriting."
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) under the Securities Act.
------------------------------
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 2, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
4,100,000 SHARES
[LOGO]
COMMON STOCK
OF THE 4,100,000 SHARES OF COMMON STOCK OFFERED HEREBY, 2,300,000 SHARES ARE
BEING SOLD BY THE HUNTER GROUP, INC. ("HUNTER" OR THE "COMPANY") AND 1,800,000
SHARES ARE BEING SOLD BY THE SELLING STOCKHOLDER. THE COMPANY WILL NOT RECEIVE
ANY OF THE PROCEEDS FROM THE SALE OF SHARES BY THE SELLING STOCKHOLDER. SEE
"PRINCIPAL STOCKHOLDERS AND SELLING STOCKHOLDER."
PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THE COMMON STOCK
OF THE COMPANY. SEE "UNDERWRITING" FOR A DISCUSSION OF FACTORS CONSIDERED IN
DETERMINING THE INITIAL PUBLIC OFFERING PRICE. APPLICATION HAS BEEN MADE FOR
QUOTATION OF THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL
"HNTR."
SEE "RISK FACTORS" BEGINNING ON PAGE 8 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT (1) COMPANY (2) STOCKHOLDER
<S> <C> <C> <C> <C>
PER SHARE........... $ $ $ $
TOTAL (3)........... $ $ $ $
</TABLE>
(1) SEE "UNDERWRITING" FOR INFORMATION CONCERNING INDEMNIFICATION OF THE
UNDERWRITERS AND OTHER MATTERS.
(2) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY, ESTIMATED AT $ .
(3) THE COMPANY AND THE SELLING STOCKHOLDER HAVE GRANTED TO THE UNDERWRITERS A
30-DAY OPTION TO PURCHASE UP TO 615,000 ADDITIONAL SHARES OF COMMON STOCK
SOLELY TO COVER OVER-ALLOTMENTS, IF ANY. IF THE UNDERWRITERS EXERCISE THIS
OPTION IN FULL, THE PRICE TO PUBLIC WILL TOTAL $ , THE UNDERWRITING
DISCOUNT WILL TOTAL $ , THE PROCEEDS TO COMPANY WILL TOTAL
$ AND THE PROCEEDS TO THE SELLING STOCKHOLDER WILL TOTAL
$ . SEE "UNDERWRITING."
THE SHARES OF COMMON STOCK ARE OFFERED BY THE SEVERAL UNDERWRITERS NAMED
HEREIN WHEN, AS AND IF DELIVERED TO AND ACCEPTED BY THE UNDERWRITERS AND SUBJECT
TO THEIR RIGHT TO REJECT ANY ORDER IN WHOLE OR IN PART. IT IS EXPECTED THAT
DELIVERY OF THE CERTIFICATES REPRESENTING SUCH SHARES WILL BE MADE AGAINST
PAYMENT THEREFOR AT THE OFFICE OF MONTGOMERY SECURITIES ON OR ABOUT
, 1997.
-------------------
NATIONSBANC MONTGOMERY SECURITIES, INC.
BANCAMERICA ROBERTSON STEPHENS
J.P. MORGAN & CO.
, 1997
<PAGE>
THE HUNTER GROUP, INC.
[Graphics to be inserted]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK
OFFERED HEREBY, INCLUDING OVER-ALLOTMENT, THE ENTRY OF STABILIZING BIDS,
SYNDICATE COVERING TRANSACTIONS OR THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION CONTAINED IN THIS PROSPECTUS, INCLUDING "RISK FACTORS" AND THE
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO. EXCEPT AS OTHERWISE NOTED,
ALL INFORMATION IN THIS PROSPECTUS (I) ASSUMES NO EXERCISE OF THE UNDERWRITERS'
OVER-ALLOTMENT OPTION AND (II) GIVES EFFECT TO A 26-FOR-1 SPLIT OF THE SHARES OF
COMMON STOCK TO BE EFFECTED PRIOR TO CONSUMMATION OF THIS OFFERING. SEE
"UNDERWRITING" AND "DESCRIPTION OF CAPITAL STOCK."
THE COMPANY
The Hunter Group, Inc. ("Hunter" or the "Company") provides management
consulting, systems implementation and education services to organizations
seeking to deploy enterprise software applications, including enterprise
resource planning ("ERP") software applications. The Company's core expertise is
in providing implementation services for the human resources, financial and
distribution software applications developed by PeopleSoft Inc. ("PeopleSoft")
and other third-party ERP software vendors. The Company has provided
implementation services for PeopleSoft's human resources applications since 1989
and for its financial and distribution applications since 1993. The Company's
expanded management consulting practice and its new education services practice,
together with its core ERP implementation services practice, provide a
comprehensive Concept-to-Completion-TM- solution. The Company recently formed
relationships with J.D. Edwards & Company ("J.D. Edwards") and Lawson Software
("Lawson"), two rapidly growing ERP software application vendors, to provide the
Concept-to-Completion-TM- suite of services for their software applications.
Intense global competition is driving organizations to reengineer business
processes, information systems and job functions to reduce costs, improve
operating efficiencies and enhance their quality of products and services. Rapid
advances in technology have enhanced the ability of organizations to further
strengthen their competitiveness through the implementation of distributed
computing platforms and software solutions. As an integral part of adopting
client/server architectures, many companies are replacing their legacy and
generally disparate software applications with fully integrated, packaged,
enterprise software applications, including ERP applications. In general,
organizations' internal information technology ("IT") departments lack the
resources and business expertise to implement complex ERP applications. As a
result, many organizations utilize third-party IT service providers to perform
the IT services related to implementing and supporting ERP applications.
According to industry sources, the global demand for ERP-related consulting
services was estimated to be $11 billion in 1996 and is expected to grow to $18
billion by 1998.
The goal of the Company's Concept-to-Completion-TM- approach is to provide
services that improve the productivity of a client's technology investment by
leveraging the client-specific knowledge gained throughout the process, which
includes strategic planning, process improvement, change management, vendor
selection, implementation, end-user training and post-implementation support.
The Company staffs engagements with project teams consisting of consultants with
strong technical competency and consultants with functional expertise and
applies methodologies that have been refined through hundreds of client
engagements. The Company's flexible and highly developed implementation
methodologies are designed to provide high quality services resulting in
measurable operational improvements to clients.
The Company intends to continue to drive its revenue growth by expanding its
product line expertise and vertical market focus, expanding its strategic
relationships with software application vendors, leveraging its established base
of more than 1,000 clients and expanding its global presence. The Company has
expanded its relationships with additional ERP software vendors in an effort to
serve a broader client base and to penetrate additional segments of the ERP
market, including manufacturing. The Company provides its services to clients in
a diverse array of industries. These clients include Commonwealth of Virginia,
Duke Energy, El Paso Natural Gas Corporation, First Chicago NBD Corporation,
Genuine Parts Company, Glaxo Wellcome, Inc., Host Marriott Corporation, Sonoco,
Warner-Lambert Company and Western Digital Corporation, among others.
The Company was incorporated in Maryland in 1983. Its principal executive
offices are located at 100 East Pratt Street, Suite 1600, Baltimore, Maryland
21202, and its telephone number is (410) 576-1515.
4
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company.......... 2,300,000 shares
Common Stock offered by the
Selling Stockholder........................ 1,800,000 shares
Common Stock to be outstanding after this
offering................................... 10,100,000 shares(l)
Use of proceeds.............................. For (i) repayment of approximately $5.0
million of the Company's outstanding
borrowings under its revolving credit
facility and (ii) for working capital and
other general corporate purposes, including
expansion into new business lines and
acquisitions of complementary businesses. See
"Use of Proceeds."
Proposed Nasdaq National Market symbol....... HNTR
</TABLE>
- ------------------------
(1) Excludes 1,535,066 shares issuable upon exercise of stock options
outstanding on June 30, 1997, at a weighted average exercise price of $2.11
per share. See "Capitalization" and "Management-- Employee Benefit Plans."
5
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
STATEMENT OF OPERATIONS DATA:
Fee revenue............................ $ 4,216 $ 5,654 $ 10,712 $ 19,554 $ 39,215 $ 14,646 $ 26,927
Gross margin........................... 2,849 3,523 6,783 10,055 18,035 5,422 11,758
Operating income (loss)................ (123) 1,034 1,990 (475) 1,398 (2,671) (1,119)
Net income (loss)...................... (158) 592 1,173 (399) 443 (1,743) (807)
Net income (loss) per share (1)........ $ (0.02) $ 0.07 $ 0.14 $ (0.05) $ 0.05 $ (0.22) $ (0.10)
Weighted average shares outstanding
(1).................................. 7,800 8,126 8,255 7,800 8,849 7,800 7,800
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1997
----------------------
<S> <C> <C>
AS
ACTUAL ADJUSTED(2)
--------- -----------
BALANCE SHEET DATA:
Cash...................................................................................... $ 531
Working capital........................................................................... (791)
Total assets.............................................................................. 17,285
Total debt................................................................................ 4,277
Stockholders' equity...................................................................... $ 438
</TABLE>
- ------------------------
(1) See Note 1 of the Consolidated Financial Statements.
(2) As adjusted to give effect to the sale of the 2,300,000 shares of Common
Stock offered hereby by the Company at an assumed public offering price of
$ per share and application of the net proceeds therefrom as
described in "Use of Proceeds."
6
<PAGE>
FORWARD-LOOKING STATEMENTS
Certain statements contained in "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business" and
elsewhere in this Prospectus, including, without limitation, statements
regarding the Company's intention to expand its application expertise and
penetrate additional markets, develop its relationship with PeopleSoft, and
enhance its middle market focus, and the Company's intentions with regard to
capital expenditures and other statements herein regarding matters that are not
historical facts, are forward-looking statements. Such forward-looking
statements include risks and uncertainties; consequently, actual results may
differ materially from those expressed or implied thereby. Factors that could
cause actual results to differ materially include, without limitation, those
discussed under "Risk Factors." These forward-looking statements speak only as
of the date of this Prospectus. The Company disclaims any obligation or
undertaking to disseminate any updates or revisions to any forward-looking
statement contained herein to reflect any change in the Company's expectations
with regard thereto or any change in events, conditions or circumstances on
which any such statement is based.
------------------------
The Hunter Group, Inc. has applied to register "The Hunter Group, Inc." as a
trademark of the Company. The Company uses the phrases,
"Concept-to-Completion-TM-," "Delivering Solutions for Global Information
Management-TM-," "Interactive Design/Prototyping-TM-" and the names of certain
of the Company's methodologies to identify its services. All other trademarks or
service marks appearing in this Prospectus are trademarks or registered service
marks of the companies that utilize them.
7
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE SHARES
OF COMMON STOCK OFFERED HEREBY.
VARIABILITY OF QUARTERLY OPERATING RESULTS; SEASONALITY
The Company's operating results have fluctuated from period to period in the
past and may fluctuate significantly in future periods. These variations result
from a number of factors, such as: the number, significance, mix and timing of
client projects; the number of business days in a particular period; the
contractual terms and degree of completion of client projects; project delays;
hiring of consultants; variations in utilization rates and average billing rates
for consultants and project managers due to vacations, holidays, weather-related
and other events outside the control of the Company, and the integration of
newly hired consultants; frequency of training classes and demand for vendor
training; integration of acquired entities; opening of new offices; and general
economic conditions. In particular, the Company's quarterly operating results
are affected by a seasonal downturn in consultant utilization during the first
half of the year due to the typical budget cycles for IT departments. Because a
significant percentage of the Company's expenses, particularly personnel costs
and rent, are relatively fixed in advance of any particular quarter, shortfalls
in revenue caused by these and other factors may cause significant variations in
operating results in any particular quarter. In addition, the Company's expenses
related to professional development and recruiting are typically higher during
the first half of the year as the Company conducts most of its hiring and
training during this period to accommodate projects commencing later in the
year. It is difficult to forecast the timing of revenue because project cycles
depend on factors such as the size and scope of assignments and circumstances
specific to particular clients. Seasonal factors such as weather-related
shutdowns in major markets, holidays and vacation days, total business days in a
quarter or the business practices of clients, such as deferring commitments on
new projects until after the end of a fiscal quarter or fiscal year, could have
a material adverse effect on the Company's business, financial condition and
results of operations. Given the possibility of such fluctuations, the Company
believes that comparisons of its results of operations for preceding quarters
are not necessarily meaningful and that such results for one quarter should not
be relied upon as an indication of future performance. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Selected Quarterly Results of Operations."
DEPENDENCE ON PEOPLESOFT
The Company is highly dependent on its relationship with PeopleSoft, a
provider of ERP software products. During 1996, management estimates that
approximately 72% of the Company's revenue was derived from projects in which it
implemented IT solutions employing PeopleSoft products. During the same period,
all of the Company's revenue from training services was generated by training in
PeopleSoft products. As a result, the Company is largely dependent on
PeopleSoft's marketing efforts and continued success. The Company participates
in a number of PeopleSoft programs that enable the Company to obtain early
information about new software products and courseware and to benefit from the
increased credibility and enhanced reputation resulting from vendor
accreditation. A failure to maintain the alliance with PeopleSoft may
significantly interfere with the Company's ability to provide services to
existing or potential clients. Neither PeopleSoft nor any other key provider of
software products has any obligation to continue its relationship with the
Company. Significant changes to the vendor-sponsored programs in which the
Company participates or any deterioration in the relationship between the
Company and PeopleSoft could result in the loss of vendor certifications, or a
reduction in the number of client referrals or other vendor actions, any of
which could adversely affect the Company's ability to compete successfully and,
thus, have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business--Industry Alliances and
Relationships."
8
<PAGE>
NEED TO ATTRACT AND RETAIN QUALIFIED EMPLOYEES
The Company's continued success and future growth will depend upon its
ability to attract, develop and retain a sufficient number of experienced and
highly skilled professional employees. Personnel qualified to deliver most of
the Company's services are in high demand and are likely to remain a limited
resource in the future. Many of the companies with which the Company competes
for qualified professionals have substantially greater financial and other
resources than the Company and may offer more attractive compensation and
benefits packages. There can be no assurance that the Company will be able to
recruit, develop and retain a sufficient number of experienced and highly
skilled professionals to staff its consulting projects and meet demand for
instructor-led classes. An inability of the Company to recruit, train and
maintain a sufficient number of professional personnel could have a material
adverse effect on the Company's business prospects and results of operations,
particularly its ability to complete existing projects or secure new projects.
Many new employees are not immediately available to staff client projects
because they require additional training. Failure by the Company to anticipate
project staffing needs correctly, resulting in under or overstaffing, could have
a material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Human Resources."
MANAGEMENT OF GROWTH
The Company's rapid growth has placed significant demands on the Company's
management, administrative, operating and financial resources. Over the past two
years, the Company has increased its total employee headcount from 123 to 426
and opened or acquired additional consulting offices in North America, London,
Singapore and Australia. The Company's revenue increased 84% to $26.9 million
for the six months ended June 30, 1997 from $14.6 million for the six months
ended June 30, 1996 and increased 100% to $39.2 million in 1996 from $19.6
million in 1995. The Company's ability to manage future growth will depend on
its ability to continue to enhance its operating, financial and management
information systems and to expand, develop, motivate and manage effectively a
changing and expanding professional work force. When many consultants begin
employment with the Company, their first several weeks are spent in an intensive
internal "boot camp" training program, which is conducted at the Company's
Atlanta facility. As a result, there may be a significant time lag between the
date a consultant is hired and the date such consultant can begin generating
revenue for the Company. In addition, the Company's future success will depend
in large part on its ability to continue to set rates and fees accurately,
maintain high rates of employee utilization and maintain project quality,
particularly if the average size of the Company's projects continues to
increase. If the Company is unable to manage growth effectively, the quality of
the Company's services, its ability to retain key personnel and its business,
financial condition and results of operations could be materially adversely
affected. Furthermore, there can be no assurance that the Company's business
will continue to expand. The Company's growth could be adversely affected by
client dissatisfaction with prior Company services, reductions in clients'
spending allocations for services that the Company provides, increased
competition, possible pricing or labor cost pressures, and general economic
trends. The Company believes the net proceeds from this offering together with
its current cash balances, cash provided by future operations and its revolving
credit facility, will be sufficient to meet the Company's working capital and
cash needs for at least the next 12 months. To the extent that such amounts are
unavailable or insufficient to finance the Company's capital requirements, the
Company will be required to raise additional funds through equity or debt
financing. No assurance can be given that such financing will be available on
terms acceptable to the Company, and, if available, such financing may result in
further dilution to the Company's stockholders and higher interest expense. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--The Hunter Strategy."
9
<PAGE>
DEPENDENCE ON KEY PERSONNEL
The success of the Company is highly dependent upon the efforts and
abilities of its founder, Terry L. Hunter, who is the President and Chief
Executive Officer of the Company, and certain other key employees of the
Company. While most of these individuals are parties to employment agreements
with the Company containing noncompetition, nondisclosure and nonsolicitation
covenants, there can be no assurance that these agreements will prevent the loss
of the services of any of these individuals. The Company currently maintains and
is the beneficiary of a key man life insurance policy in the amount of $1.0
million on the life of Mr. Hunter, but it does not maintain insurance on the
lives of any other employees. The loss of the services of Mr. Hunter or any of
these key employees could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management."
PROJECT RISKS
Client engagements are generally terminable with little or no notice or
penalty, and a client's unanticipated decision to terminate or postpone a
project may result in higher than expected numbers of unassigned Company
professionals, which could have a material adverse effect on the Company's
business, financial condition and results of operations. Furthermore, many of
the Company's engagements involve projects which are critical to the operations
of its clients' businesses and which provide benefits that may be difficult to
quantify. As a result, the Company is subject to potential claims by
dissatisfied clients that the Company's services or actions did not achieve the
results expected by those clients or adversely affected the clients' operations.
Any such claim could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company's failure to meet a
client's expectations or the client's belief that Hunter may have contributed to
operating downtime could damage its relationship with that client and could
damage the Company's reputation, thereby adversely affecting its ability to
attract new or repeat business. In addition, approximately 89% of the Company's
July 1997 billings were on a time and materials basis. The remainder of the
Company's contracts were on a fixed-price basis. The relative percentage between
time and materials contracts and fixed-price contracts may vary in the future.
The failure of the Company to complete a project to the client's satisfaction
within the fixed price exposes the Company to potentially unrecoverable cost
overruns, which could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company also may establish a
price before the design specifications are finalized, which could result in a
fixed price that is too low and, therefore, adversely affects the Company's
business, financial condition and results of operations. In addition, the
Company in the past has been required to commit unanticipated additional
resources to complete certain projects, which negatively affected the Company's
profitability on such projects.
DEPENDENCE ON LARGE PROJECTS
The Company has derived, and believes that it will continue to derive, a
significant portion of its revenue from certain large client projects. The
Company's five largest clients accounted for approximately 32% and 29% of its
revenue for the six months ended June 30, 1997 and 1996, respectively, and one
of these clients accounted for 11% of revenue for the six months ended June 30,
1997. The volume of work performed for specific clients is likely to vary from
year to year, and a major client in one year may not use the Company's services
in a subsequent year. The loss of any large project could have a material
adverse effect on the Company's business, financial condition and results of
operations. Furthermore, a decision by any large client not to proceed with a
project to the stage anticipated by the Company could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Business."
10
<PAGE>
RAPID TECHNOLOGICAL CHANGE
The Company's future success will depend on its ability to maintain its
expertise in rapidly advancing technologies, as well as to respond quickly to
evolving industry trends and client needs. There can be no assurance that the
Company will be successful in adapting to these advances in technology or in
addressing changing client needs on a timely basis or, if the Company does gain
such expertise, that it will be able to market new services successfully. There
can be no assurance that the Company will satisfactorily complete projects where
unproven technologies or tools are critical to the projects' success. In
addition, there can be no assurance that the services or technologies developed
by others will not significantly reduce demand for the Company's services or
render the Company's services obsolete. See "Business."
COMPETITION
The Company's service areas are highly competitive and are subject to low
barriers to entry and rapid change. The Company faces competition for client
assignments from a number of companies having significantly greater financial,
technical and marketing resources and greater name recognition than the Company.
Principal competitors for the Company's services include the consulting
practices of the six largest international accounting firms (the "Big Six"), and
the professional services groups of many large technology and management
consulting companies. The Company also competes with smaller service providers
whose specific, more narrowly focused service offerings may be more attractive
to potential clients than the Company's multidimensional approach. In addition,
several software vendors, including PeopleSoft, have developed and may expand
their own consulting, training and implementation capabilities. Furthermore,
clients may elect to use their internal resources instead of utilizing the
Company's services. There can be no assurance that the Company will compete
successfully with potential clients' internal resources or with existing or new
competitors.
The Company believes that the principal competitive factors in its industry
are quality of service, breadth of service offerings, reputation, ability to
provide measurable results, lower overall cost of projects, and having a large,
referenceable client base. The Company believes that its ability to compete also
depends in part on a number of competitive factors beyond its control, including
the ability of its competitors to hire, retain and motivate project managers and
other senior technical staff; the ownership by competitors of software used by
potential clients; the existence of long-term relationships between competitors
and certain potential clients; the development by others of products and
services that are competitive with the Company's services; the price at which
others offer comparable services; and the extent of its competitors'
responsiveness to client needs. There can be no assurance that the Company will
be able to compete effectively on pricing or other requirements with current and
future competitors or that competitive pressures faced by the Company will not
cause the Company's revenue or gross margins to decline or otherwise have a
material adverse effect on its business, financial condition and results of
operations. See "Business--Competition."
LIMITED PROTECTION OF INTELLECTUAL PROPERTY
The Company's success is highly dependent upon its specialized expertise,
methodologies and customized templates, programs and tools. To protect its
proprietary information, the Company relies only on a combination of
nondisclosure and other contractual agreements, and trademark laws. There can be
no assurance that the steps taken by the Company to protect its proprietary
rights will be adequate to prevent misappropriation of such rights or that third
parties will not independently develop functionally equivalent or superior
methodologies or tools. Because the Company's engagements are on a work-for-hire
basis, the Company generally assigns ownership of all materials the Company
develops specifically for its clients to those clients upon project completion.
In addition, the Company has applied to register its name as a trademark in the
United States, and a preliminary objection has been raised to this registration
by the Trademark Office. There can be no assurance that the Company will be
successful in registering its name. There can be no assurance that third parties
will not assert infringement claims against the
11
<PAGE>
Company in the future that would result in costly litigation or license
arrangements regardless of the merits of such claims. See
"Business--Intellectual Property and Other Proprietary Rights."
CONTROL BY PRINCIPAL STOCKHOLDER
Terry L. Hunter will beneficially own approximately 59.4% of the shares of
Common Stock outstanding upon completion of this offering. As a result, Mr.
Hunter will be able to control the outcome of all matters requiring a
stockholder vote, including the election of the entire Board of Directors and
the approval of significant corporate matters such as change of control
transactions, thereby controlling the affairs and management of the Company. See
"Principal Stockholders and Selling Stockholder."
RISKS OF CONDUCTING INTERNATIONAL OPERATIONS
The Company has utilized and will continue to utilize substantial resources
to build its international service and support infrastructure. International
operations and the provision of services in foreign markets are subject to a
number of special risks, including trade barriers, exchange controls, national
and regional labor strikes, difficulties in building and managing foreign
operations, political risks and risks of increases in duties, taxes and
governmental royalties, as well as changes in laws and policies governing
operations of foreign-based companies. The Company may also face risks from
foreign currency fluctuations. To date, the Company has not entered into any
forward exchange contracts or other hedging activities in anticipation of
foreign currency fluctuations, but may do so in the future. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business--The Hunter Strategy."
RISKS ASSOCIATED WITH ACQUISITION STRATEGY
One of the key elements of the Company's growth strategy is to pursue
acquisitions that could provide additional well-trained, high-quality
professionals, new service offerings, additional industry expertise, a broader
client base or an expanded geographic presence. There can be no assurance that
the Company will be able to identify acceptable acquisition candidates or
complete the acquisition of any identified candidates. A substantial portion of
the Company's capital resources, including a portion of the net proceeds from
this offering, could be used for these acquisitions. The Company may require
additional debt or equity financings for future acquisitions, which may not be
available on terms favorable to the Company, if at all. There also can be no
assurance that the Company will be able to integrate an acquisition successfully
into the Company's operations or that any acquired business will be able to be
operated profitably by the Company. As a result of these factors, an acquisition
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business-- The Hunter Strategy."
POTENTIAL DECREASE IN SERVICES AFTER THE YEAR 2000
As the year 2000 approaches, many potential clients are evaluating their
legacy systems and must decide whether to repair or replace existing
applications that have year 2000 operability issues. While the Company believes
that such evaluations are favorably affecting demand for its services, this
demand driver is likely to dissipate as year 2000 issues are resolved. Given the
lack of precedent for an issue of this magnitude, the Company's ability to
accurately forecast the effect of the issue on quarter to quarter revenue
achievement is limited. A core element of the Company's growth strategy is to
use the business relationships and the knowledge of its clients' computer
systems obtained in providing its services to generate additional IT projects
for these clients. There can be no assurance, however, that the Company will be
successful in generating additional business from these clients. See
"Business--The Hunter Strategy."
12
<PAGE>
DILUTION
Investors participating in this offering will incur immediate and
substantial dilution of $ per share in the net tangible book value of
their shares from the initial public offering price. To the extent that
currently outstanding options to purchase Common Stock are exercised, there will
be further dilution. See "Dilution."
EFFECT OF ANTI-TAKEOVER PROVISIONS
The Company's Amended and Restated Articles of Incorporation (the "Charter")
and the Amended and Restated By-Laws (the "By-Laws") include provisions that may
have the effect of discouraging a non-negotiated takeover of the Company and
preventing certain changes of control. These provisions, among other things (i)
classify the Company's Board of Directors into three classes serving staggered,
three-year terms; (ii) permit the Company's Board of Directors, without further
stockholder approval, to issue up to 5.0 million shares of preferred stock and
to determine the price, rights, conversion ratios, preferences and privileges of
that stock at the time of issuance; (iii) require a two-thirds vote of the
Company's stockholders to approve any amendment, addition, or termination of the
By-laws of the Company; and (iv) restrict the ability of stockholders to call
special meetings of the stockholders, nominate individuals for election to the
Board of Directors, or submit stockholder proposals. Furthermore, the Company is
subject to the anti-takeover provisions of the Maryland General Corporation Law,
which prohibit the Company from engaging in a "business combination" with an
"interested stockholder" for a period of five years after the date of the
transaction in which the person first becomes an "interested stockholder,"
unless the business combination is approved in a prescribed manner. The Company
is also subject to the control share acquisition provisions of the Maryland
General Corporation Law, which provide that shares acquired by a person with
certain levels of voting power have no voting rights unless approved by a
stockholder vote of two-thirds of the votes entitled to be cast, excluding
shares owned by the acquiror and by the Company's officers and
employee-directors, and in certain circumstances, such shares may be redeemed by
the Company. The application of these statutes and certain other provisions of
the Company's Charter and By-Laws could have the effect of discouraging,
delaying or preventing a change of control of the Company not approved by the
Board of Directors, which could adversely affect the market price of the
Company's Common Stock. See "Description of Capital Stock."
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of shares of Common Stock in a public market
following this offering could adversely affect the market price of the Common
Stock. On the date of this Prospectus, in addition to the 4,100,000 shares
offered hereby, approximately shares of Common Stock, which are not
subject to 180-day lock-up agreements (the "Lock-Up Agreements") with the
Representatives of the Underwriters, will be eligible for immediate sale in the
public market pursuant to Rule 144(k) under the Securities Act of 1933, as
amended (the "Securities Act"). Approximately additional shares of Common
Stock beneficially owned, which are not subject to Lock-Up Agreements, will be
eligible for sale in the public market in accordance with Rule 144 or Rule 701
under the Securities Act beginning 90 days after the date of this Prospectus.
Upon expiration of the Lock-Up Agreements 180 days after the date of this
Prospectus (and assuming no exercise of outstanding options), approximately
additional shares of Common Stock will be available for sale in the public
market, subject to the provisions of Rule 144 under the Securities Act.
Following the consummation of this offering, the Company intends to register an
aggregate of shares of Common Stock to be issuable under the Omnibus Stock
Plan and shares of Common Stock issuable under the Employee Stock Purchase
Plan. See "Management-- Employee Benefit Plans." Holders of approximately
shares of Common Stock (including shares of Common Stock that may be
acquired pursuant to the exercise of vested options held by them and exercisable
within 60 days) have agreed, pursuant to the Lock-Up Agreements, not to sell,
offer, contract or grant any option to sell, pledge, transfer, establish an open
put equivalent position or otherwise
13
<PAGE>
dispose of such shares for 180 days after the date of the final Prospectus. The
Company is unable to predict the effect that sales made pursuant to Rule 144
under the Securities Act, or otherwise, may have on the then prevailing market
price of the Common Stock. Sales pursuant to Rule 144 under the Securities Act
or an exemption from registration may have an adverse effect on the market price
for the Common Stock and could impair the Company's ability to raise capital
through an offering of its equity securities. See "Description of Capital
Stock," "Shares Eligible for Future Sale" and "Underwriting."
NO PRIOR MARKET FOR COMMON STOCK; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that an active public market for the Common
Stock will develop or be sustained after this offering or that the market price
of the Common Stock will not decline below the initial public offering price.
The initial public offering price will be determined by negotiations among the
Company and the Representatives of the Underwriters and may not be indicative of
market prices of the Common Stock after this offering. See "Underwriting" for a
discussion of the factors considered in determining the initial public offering
price. The market price of the Common Stock may be subject to significant
fluctuations in response to variations in quarterly operating results and other
events or factors, such as announcements of new services by the Company or its
competitors and changes in financial estimates by securities analysts. Moreover,
the stock market and the market prices of the shares of many technology
companies in recent years have experienced significant price and volume
fluctuations. These fluctuations often have been unrelated to the operating
performance of specific public companies. Broad market fluctuations, as well as
economic conditions generally and in technology industries specifically, may
adversely affect the market price of the Common Stock.
DISCRETION AS TO THE USE OF PROCEEDS
The Company has not yet identified specific uses for a significant portion
of the net proceeds from this offering. The Company's management will retain
broad discretion to allocate net proceeds. Purchasers of the shares of Common
Stock offered hereby will be entrusting their funds to the Company's management,
upon whose judgment they must depend, and will have limited information
concerning the specific working capital requirements and general corporate
purposes to which the funds ultimately will be applied. See "Use of Proceeds."
14
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,300,000 shares of
Common Stock offered by the Company hereby are estimated to be approximately
$ million ($ million if the Underwriters' over-allotment option is
exercised in full), after deducting the underwriting discount and estimated
offering expenses. The Company will not receive any of the net proceeds from the
sale of shares by the Selling Stockholder. See "Principal Stockholders and
Selling Stockholder."
The Company intends to use approximately $5.0 million of the net proceeds
from this offering to repay the Company's outstanding borrowings under its
revolving credit facility with a financial institution, which bear interest at
the lower of the financial institution's prime rate of interest or 250 basis
points above 30-day LIBOR (a rate of 8.19% on June 30, 1997) plus an additional
0.75% fee per month based on the monthly maximum loan amount. Amounts
outstanding under the Company's revolving credit facility were used for working
capital purposes.
The Company plans to use the balance of the net proceeds from this offering
for working capital and other general corporate purposes, including expansion
into new business lines and the acquisition of complementary businesses. Pending
such uses, the Company intends to invest the net proceeds from this offering in
short-term, investment-grade, interest-bearing instruments.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its Common
Stock. The Company currently intends to retain future earnings, if any, to
finance operations and expansion of its business and, therefore, does not
anticipate paying any cash dividends in the foreseeable future. Future cash
dividends, if any, will be determined by the Board of Directors and will be
based upon the Company's results of operations, capital, financial condition and
other factors deemed relevant by the Board of Directors. Under the terms of the
Company's revolving credit facility, there are certain restrictions on the
Company's ability to declare and pay dividends. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources."
15
<PAGE>
CAPITALIZATION
The following table sets forth as of June 30, 1997 the actual capitalization
of the Company and as adjusted to reflect an increase in the number of shares of
authorized Common Stock to 50,000,000 and Preferred Stock to 5,000,000, the
issuance and sale of the 2,300,000 shares of Common Stock offered by the Company
hereby and the application of the estimated net proceeds therefrom. This table
should be read in conjunction with the Company's Consolidated Financial
Statements and Notes thereto appearing elsewhere in this Prospectus. See "Use of
Proceeds," and "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."
<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------
<S> <C> <C>
ACTUAL AS ADJUSTED(1)
--------- ---------------
<CAPTION>
(IN THOUSANDS, EXCEPT
SHARE DATA)
<S> <C> <C>
Revolving credit facility............................................................... $ 3,881 $
Current portion of notes payable and capital leases..................................... 187
Notes payable and capital leases, less current portion.................................. 209
--------- ------
4,277
--------- ------
Stockholder's equity:
Preferred stock, no par value; 5,000,000 shares authorized; none issued and --
outstanding.........................................................................
Common stock, no par value; 50,000,000 shares authorized; 7,800,000 shares issued and 1
outstanding actual; 10,100,000 shares issued and outstanding as adjusted(1).........
Additional paid-in capital............................................................ 202
Retained earnings..................................................................... 547
Cumulative foreign currency translation adjustment.................................... (62)
Stockholder's note receivable......................................................... (250)
--------- ------
Total stockholder's equity.......................................................... 438
--------- ------
Total capitalization.............................................................. $ 4,715 $
--------- ------
--------- ------
</TABLE>
- ------------------------
(1) Excludes 1,535,066 shares issuable upon exercise of stock options
outstanding on June 30, 1997. All share amounts exclude 1,040,234 shares
available for issuance under the Company's Employee Non-Qualified Stock
Option Plan, shares reserved for issuance in connection with grants
under the Company's Omnibus Stock Plan and shares reserved for
issuance in connection with the Company's Employee Stock Purchase Plan. See
"Management--Employee Benefit Plans" and Note 7 of the Consolidated
Financial Statements.
16
<PAGE>
DILUTION
As of June 30, 1997, the net tangible book value of the Company was $438,000
or $.06 per share of Common Stock. After giving effect to the sale by the
Company of the 2,300,000 shares of Common Stock offered hereby, assuming an
initial public offering price of $ per share and after deducting the
underwriting discount and estimated offering expenses, the Company's pro forma
net tangible book value as of June 30, 1997 would have been $ , or
$ per share. This represents an immediate increase in pro forma net
tangible book value of $ per share to existing stockholders and an
immediate dilution of $ per share to new investors. The following table
illustrates the per share dilution:
<TABLE>
<S> <C> <C>
Initial public offering price per share.................. $
Net tangible book value per share as of
June 30, 1997...................................... $ 0.06
Increase per share attributable to new investors.....
---------
Pro forma net tangible book value after this offering....
---------
Dilution per share to new investors...................... $
---------
---------
</TABLE>
The following table summarizes, on a pro forma basis as of June 30, 1997,
the number of shares of Common Stock purchased from the Company, the total
consideration paid and the average consideration paid per share by the existing
stockholders and by the new investors, assuming an initial public offering price
of $ per share but before deducting the underwriting discount and
estimated offering expenses:
<TABLE>
<CAPTION>
TOTAL CONSIDERATION
SHARES PURCHASED AVERAGE
------------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------ ----------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Existing stockholders................................... 7,800,000 77.2% $ 1,000 % $
New investors........................................... 2,300,000 22.8
------------ ----- --------- -----
Total................................................. 10,100,000 100.0% $ 100.0%
------------ ----- --------- -----
------------ ----- --------- -----
</TABLE>
As of June 30, 1997, there were also outstanding options to purchase an
additional 1,535,066 shares of Common Stock at a weighted average exercise price
of $2.11 per share. To the extent these options are exercised, there will be
further dilution to new investors in the net tangible book value of their
shares. See "Capitalization," "Management--Employee Benefit Plans" and Note 7 of
the Consolidated Financial Statements.
17
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The consolidated statements of operations data for the years ended December
31, 1994, 1995 and 1996, and the consolidated balance sheet data as of December
31, 1995 and 1996 are derived from, and are qualified by reference to, the
audited consolidated financial statements included elsewhere in this Prospectus.
The consolidated statements of operations data for the years ended December 31,
1992 and 1993 and the consolidated balance sheet data as of December 31, 1992
and 1993 are derived from unaudited consolidated financial statements, and the
consolidated balance sheet data as of December 31, 1994 are derived from audited
consolidated financial statements, not included herein. The consolidated
statements of operations data for the six months ended June 30, 1996 and 1997
and the consolidated balance sheet data as of June 30, 1997 are derived from
unaudited consolidated financial statements included elsewhere in this
Prospectus. The unaudited consolidated financial statements have been prepared
by the Company on a basis consistent with the Company's audited consolidated
financial statements and, in the opinion of management, include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the information. Historical results are not necessarily
indicative of results to be expected in the future. The following selected
consolidated financial data of the Company set forth below should be read in
conjunction with the Consolidated Financial Statements of the Company, including
the Notes thereto, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Fee revenue................................ $ 4,216 $ 5,654 $ 10,712 $ 19,554 $ 39,215 $ 14,646 $ 26,927
Project costs and expenses................. 1,367 2,131 3,929 9,499 21,180 9,224 15,169
--------- --------- --------- --------- --------- --------- ---------
Gross margin............................. 2,849 3,523 6,783 10,055 18,035 5,422 11,758
--------- --------- --------- --------- --------- --------- ---------
Costs and expenses:
Sales and marketing...................... 490 471 726 2,163 2,917 1,214 1,868
Professional development, recruiting and
other expenses......................... 365 388 1,307 2,524 3,867 2,166 4,380
General and administrative............... 2,117 1,630 2,760 5,843 9,853 4,713 6,629
--------- --------- --------- --------- --------- --------- ---------
Total costs and expenses............... 2,972 2,489 4,793 10,530 16,637 8,093 12,877
--------- --------- --------- --------- --------- --------- ---------
Operating income (loss).................... (123) 1,034 1,990 (475) 1,398 (2,671) (1,119)
--------- --------- --------- --------- --------- --------- ---------
Other income (expense):
Interest and other income (expense)...... 137 (97) 52 89 18 11 57
Interest expense......................... (170) (199) (41) (15) (170) (41) (197)
--------- --------- --------- --------- --------- --------- ---------
Total other income (expense), net...... (33) (296) 11 74 (152) (30) (140)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes...... (156) 738 2,001 (401) 1,246 (2,701) (1,259)
Income tax provision (benefit)............. 2 146 828 (2) 803 (958) (452)
--------- --------- --------- --------- --------- --------- ---------
Net income (loss)........................ $ (158) $ 592 $ 1,173 $ (399) $ 443 $ (1,743) $ (807)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) per share (1).......... $ (0.02) $ 0.07 $ 0.14 $ (0.05) $ 0.05 $ (0.22) $ (0.10)
Weighted average shares outstanding...... 7,800 8,126 8,255 7,800 8,849 7,800 7,800
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 JUNE 30, 1997
--------- --------- --------- --------- --------- -------------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash......................................... $ 22 $ 25 $ 45 $ 125 $ 331 $ 531
Working capital.............................. (560) 119 985 57 534 (791)
Total assets................................. 659 1,094 3,670 6,600 12,077 17,285
Total debt................................... 161 335 606 1,306 2,036 4,277
Stockholder's equity......................... (454) 138 1,061 663 1,391 438
</TABLE>
- ------------------------
(1) See Note 1 of the Consolidated Financial Statements.
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
"SELECTED CONSOLIDATED FINANCIAL DATA" AND THE COMPANY'S CONSOLIDATED FINANCIAL
STATEMENTS AND NOTES THERETO, WHICH ARE INCLUDED ELSEWHERE IN THIS PROSPECTUS.
THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS
COULD DIFFER MATERIALLY. SEE "RISK FACTORS."
OVERVIEW
Hunter provides management consulting, systems implementation and education
services to organizations seeking to deploy enterprise software applications,
including ERP software applications. The Company's core expertise is in
providing implementation services for the human resources, financial and
distribution software applications developed by PeopleSoft and other third-party
ERP software vendors. The Company has provided implementation services for
PeopleSoft's human resources applications since 1989 and for its financial and
distribution applications since 1993. The goal of the Company's Concept-to-
Completion-TM- approach is to provide services that improve the productivity of
a client's technology investment by leveraging the client-specific knowledge
gained throughout the process, including strategic planning, process
improvement, change management, vendor selection, implementation, end-user
training and post-implementation support. The Company recently formed
relationships with J.D. Edwards and Lawson, two rapidly growing ERP software
application vendors, to provide the Concept-to-Completion-TM- suite of services
for their software applications. The Company has expanded its relationships with
these additional ERP software vendors in an effort to serve a broader client
base and to penetrate additional segments of the ERP market, such as
manufacturing.
The Company provides its services to clients in a diverse array of
industries. These clients include Commonwealth of Virginia, Duke Energy, El Paso
Natural Gas Corporation, First Chicago NBD Corporation, Genuine Parts Company,
Glaxo Wellcome, Inc., Host Marriott Corporation, Sonoco, Warner-Lambert Company
and Western Digital Corporation, among others. The Company derived 14% and 9% of
its fee revenue from international clients for the six months ended June 30,
1997 and 1996, respectively. The Company's top five clients for the six months
ended June 30, 1997 and the years ended December 31, 1996, 1995 and 1994
generated an aggregate of 32%, 29%, 37% and 54% of total fee revenue,
respectively, and one client accounted for 11% of fee revenue for the six months
ended June 30, 1997, and another client accounted for 12% and 27% of fee revenue
for the years ended December 31, 1995 and 1994, respectively.
The Company's fee revenue consists of fees for professional services, which
excludes client reimbursable expenses. The majority of the Company's fee revenue
is derived from contracts on a time and materials basis and is recognized as the
services are performed. The remainder of the Company's contracts are on a
fixed-price basis, and fee revenue from those contracts is recognized using the
percentage of completion method based upon the number of labor hours incurred
compared to the total estimated labor hours at estimated realizable rates. Under
the percentage of completion method, the Company must estimate the percentage of
completion of each project at the end of each financial reporting period.
Estimates are subject to adjustment as a project progresses to reflect changes
in projected completion costs or dates. The cumulative effect of any revision in
estimates of the percentage of completion, or the effect of identifiable losses
on cost over-runs, is reflected in the financial reporting period in which the
change in the estimate or the loss becomes known. The Company bears the risk of
cost over-runs and inflation with respect to its fixed-price projects. In order
to mitigate these risks, the Company may subdivide its projects into smaller
phases. In these cases, the Company and its clients agree on a fixed-price and
fixed-time frame prior to the commencement of each phase of a project. These
agreements may be revised, subject to approval by the Company and its clients,
when a significant change in the scope or cost of a phase arises that neither
the Company nor the client had anticipated. Since the Company bears the risk of
cost over-runs and inflation associated with fixed-price, fixed-time frame
projects, the Company's operating results
19
<PAGE>
may be adversely affected by inaccurate estimates of contract completion costs
and dates. Client engagements are generally terminable with little or no notice
or penalty, and a client's unanticipated decision to terminate or postpone a
project may result in higher than expected unassigned Company professionals. The
Company's projects are typically completed in as few as one to as many as 24
months.
Since its inception, the Company has reported its financial results for
income tax purposes using the cash method of accounting while maintaining its
books for financial reporting purposes on the accrual method. Upon completion of
this offering, the Company will change its method of accounting for income tax
reporting purposes from the cash method to the accrual method. As a result,
substantially all of the deferred tax liability accumulated on the balance sheet
will become due and payable over a four-year period.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage of
fee revenue of certain line items included in the Company's consolidated
statement of operations:
<TABLE>
<CAPTION>
PERCENTAGE OF FEE REVENUE
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
<CAPTION>
1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Fee revenue..................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Project costs and expenses...................................... 36.7 48.6 54.0 63.0 56.3
Gross margin.................................................... 63.3 51.4 46.0 37.0 43.7
Sales and marketing expenses.................................... 6.8 11.0 7.4 8.3 7.0
Professional development, recruiting and other expenses......... 12.2 12.9 9.9 14.8 16.3
General and administrative expenses............................. 25.7 29.9 25.1 32.1 24.6
Operating income (loss)......................................... 18.6 (2.4) 3.6 (18.2) (4.2)
Total other income (expense), net............................... 0.1 0.4 (0.4) (0.2) (0.5)
Income (loss) before taxes...................................... 18.7 (2.0) 3.2 (18.4) (4.7)
Income tax provision (benefit).................................. 7.7 (0.0) 2.0 (6.5) (1.7)
Net income (loss)............................................... 11.0% (2.0)% 1.2% (11.9)% (3.0)%
</TABLE>
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
FEE REVENUE. Fee revenue increased by $12.3 million, or 84%, to $26.9
million for the six months ended June 30, 1997 from $14.6 million for the six
months ended June 30, 1996. The Company experienced growth in fee revenue from
each of its service offerings, especially enterprise software implementation
services which increased by $11.9 million, or 98%, to $24.1 million for the six
months ended June 30, 1997 from $12.2 million for the six months ended June 30,
1996. International fee revenue increased to $3.7 million for the six months
ended June 30, 1997 from $909,000 for the six months ended June 30, 1996
primarily due to the enhanced performance of Hunter's U.K. subsidiary, which
commenced operations in September 1995. The increase in fee revenue resulted
from an increase in the number of engagements and average billing rates.
PROJECT COSTS AND EXPENSES. Project costs and expenses consist of
compensation and benefits to the Company's professional staff, as well as fees
paid to subcontractors and leasing costs for capital equipment provided to the
professional staff. Project costs and expenses increased by $6.0 million, or
65%, to $15.2 million for the six months ended June 30, 1997 from $9.2 million
for the six months ended June 30, 1996. The increase in absolute dollars
resulted from an increase in the number of consultants required to staff a
greater number of engagements. Project costs and expenses as a percentage of fee
revenue decreased to 56% for the six months ended June 30, 1997 from 63% for the
six months ended June 30, 1996 primarily due to an increase in professional
staff utilization.
20
<PAGE>
SALES AND MARKETING EXPENSES. Sales and marketing expenses consist of
salaries, benefits and sales commissions for sales and marketing personnel as
well as general marketing costs. Sales and marketing expenses increased by
$654,000, or 54%, to $1.9 million for the six months ended June 30, 1997 from
$1.2 million for the six months ended June 30, 1996. The increase in absolute
dollars resulted from an increase in general marketing costs, commissions paid
to sales personnel and the number of sales personnel. Sales and marketing
expenses as a percentage of fee revenue decreased to 7% for the six months ended
June 30, 1997 from 8% for the six months ended June 30, 1996 primarily due to
fee revenue growth outpacing sales and marketing expense increases on a
percentage basis.
PROFESSIONAL DEVELOPMENT, RECRUITING AND OTHER EXPENSES. Professional
development, recruiting and other expenses consist of recruiting costs, costs to
train new and existing personnel, and non-reimbursable travel expenses.
Professional development, recruiting and other expenses increased by $2.2
million, or 100%, to $4.4 million for the six months ended June 30, 1997 from
$2.2 million for the six months ended June 30, 1996. Professional development,
recruiting and other expenses as a percentage of fee revenue increased to 16%
for the six months ended June 30, 1997 from 15% for the six months ended June
30, 1996. The increase in professional development, recruiting and other
expenses, both in absolute dollars and as a percentage of fee revenue, was due
to increased professional staff hiring in addition to training costs associated
with the delivery of the Company's internal training program that commenced in
April 1997.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist of salaries for corporate, accounting, executive and administrative
personnel and other corporate overhead, including costs related to
telecommunications and facilities. General and administrative expenses increased
by $1.9 million, or 40%, to $6.6 million for the six months ended June 30, 1997
from $4.7 million for the six months ended June 30, 1996. The increase in
absolute dollars resulted primarily from new investments for facilities in
Chicago and Toronto and the expansion of existing facilities in Baltimore,
Australia and Singapore, as well as additions to management and continued
expansion of the Company's telecommunications, networks and systems. General and
administrative expenses as a percentage of fee revenue decreased to 25% for the
six months ended June 30, 1997 from 32% for the six months ended June 30, 1996
primarily due to the continued realization of operating leverage from the
Company's extensive prior investment in domestic and international
infrastructure.
TOTAL OTHER INCOME (EXPENSE), NET. Total other income (expense), net
primarily consists of interest expense incurred by the Company on its revolving
credit facility and other debt, and interest income generated from the Company's
cash balances. Total other expense, net increased to $140,000 for the six months
ended June 30, 1997 from $30,000 for the six months ended June 30, 1996.
INCOME TAX PROVISION (BENEFIT). Income tax provision (benefit) represents
combined federal, state and foreign taxes. The effective income tax rate was a
36% tax benefit for the six months ended June 30, 1997 and June 30, 1996. The
June 30, 1997 effective rate represents the effect of federal and state taxes
for U.S. income and the recognition of certain foreign tax losses not previously
benefited, offset by the effect of certain costs not deductible for tax and
certain foreign tax losses created during the period not being benefited due to
the uncertainty of realization of these net operating losses. The June 30, 1996
effective rate represents the effect of federal and state taxes for U.S. income,
offset by the effect of certain costs not deductible for tax and certain foreign
tax losses not being benefited. See Note 5 of the Consolidated Financial
Statements.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
FEE REVENUE. Fee revenue increased by $19.6 million, or 100%, to $39.2
million in 1996 from $19.6 million in 1995. The Company experienced growth in
fee revenue from each of its service offerings, especially enterprise software
implementation services which increased by $14.7 million, or 83%, to $32.5
million in 1996 from $17.8 million in 1995. International fee revenue increased
to $3.4 million in 1996 from
21
<PAGE>
$138,000 in 1995 primarily due to the commencement of operations of Hunter's
U.K. subsidiary in September 1995. The increase in fee revenue was also driven
by an increase in the number of engagements and average billing rates.
PROJECT COSTS AND EXPENSES. Project costs and expenses increased by $11.7
million, or 123%, to $21.2 million in 1996 from $9.5 million in 1995, and
increased to 54% of fee revenue in 1996 from 49% of fee revenue in 1995. The
increase, both in absolute dollars and as a percentage of revenue, resulted from
an increase in the number of consultants required to staff a greater number of
engagements coupled with a decline in professional staff utilization as the
Company significantly increased its hiring of professional staff.
SALES AND MARKETING EXPENSES. Sales and marketing expenses increased by
$754,000, or 34%, to $2.9 million in 1996 from $2.2 million in 1995, and
decreased to 7% of fee revenue in 1996 from 11% of fee revenue in 1995. The
increase in absolute dollars resulted primarily from an increase in commissions
paid to sales personnel, as well as an increase in marketing personnel and
activities. The decrease in sales and marketing expenses as a percentage of fee
revenue was primarily due to fee revenue growth outpacing sales and marketing
expense increases on a percentage basis.
PROFESSIONAL DEVELOPMENT, RECRUITING AND OTHER EXPENSES. Professional
development, recruiting and other expenses increased by $1.4 million, or 56%, to
$3.9 million in 1996 from $2.5 million in 1995, and decreased to 10% of fee
revenue in 1996 from 13% of fee revenue in 1995. The increase in professional
development, recruiting and other expenses in absolute dollars resulted
predominantly from increased costs related to professional staff hiring and the
associated training costs. The decrease in professional development, recruiting
and other expenses as a percentage of fee revenue was primarily due to fee
revenue growth outpacing professional development, recruiting and other expenses
increases on a percentage basis.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased by $4.1 million, or 71%, to $9.9 million in 1996 from $5.8 million in
1995, and decreased to 25% of fee revenue in 1996 from 30% of fee revenue in
1995. The increase in absolute dollars resulted primarily from additions to
management and related compensation as well as from new investments for
facilities in Dallas and Irvine, and continued expansion of the Company's
telecommunications, networks and systems. The decrease in general and
administrative expenses as a percentage of fee revenue was primarily due to the
continued realization of benefits associated with the Company's extensive
investment in domestic and international infrastructure. Included in general and
administrative expenses in 1996 is the aggregate amount of $315,000 attributable
to non-cash compensation in connection with Company stock option activity.
TOTAL OTHER INCOME (EXPENSE), NET. Total other expense, net was $152,000 in
1996, and total other income, net was $74,000 in 1995.
INCOME TAX PROVISION (BENEFIT). The Company's effective rate changed to a
64% tax provision in 1996 from a 1% tax benefit in 1995. In 1996, U.S.
operations generated tax expense, which was offset by nondeductible expenses and
the Company's inability to recognize a tax benefit for international losses. In
1995, the Company generated a nominal tax loss from U.S. operations, and
recognized no tax benefit for its international losses. See Note 5 of the
Consolidated Financial Statements.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
FEE REVENUE. Fee revenue increased by $8.9 million, or 83%, to $19.6
million in 1995 from $10.7 million in 1994. The Company experienced growth in
fee revenue from each of its service offerings, especially enterprise software
implementation services which increased by $8.0 million, or 82%, to $17.8
million in 1995 from $9.8 million 1994. The increase in fee revenue was driven
by an increase in the number of engagements, which was partially offset by a
decrease in average billing rates.
22
<PAGE>
PROJECT COSTS AND EXPENSES. Project costs and expenses increased by $5.6
million, or 144%, to $9.5 million in 1995 from $3.9 million in 1994, and
increased to 49% of fee revenue in 1995 from 37% of fee revenue in 1994. The
increase, both in absolute dollars and as a percentage of fee revenue, resulted
from an increase in the number of consultants required to staff a greater number
of engagements coupled with a decrease in professional staff utilization.
SALES AND MARKETING EXPENSES. Sales and marketing expenses increased by
$1.5 million, or 207%, to $2.2 million in 1995 from $726,000 in 1994, and
increased to 11% of fee revenue in 1995 from 7% of fee revenue in 1994. The
increase in sales and marketing expenses, both in absolute dollars and as a
percentage of fee revenue, was primarily due to an increase in commissions paid
to sales personnel, as well as the expansion in the number of sales and
marketing personnel in 1995.
PROFESSIONAL DEVELOPMENT, RECRUITING AND OTHER EXPENSES. Professional
development, recruiting and other expenses increased by $1.2 million, or 92%, to
$2.5 million in 1995 from $1.3 million in 1994, and increased to 13% of fee
revenue in 1995 from 12% of fee revenue in 1994. The increase in professional
development, recruiting and other expenses, both in absolute dollars and as a
percentage of fee revenue, was primarily due to recruiting costs for senior
management and recruiting and training costs for other professional staff to
support the increase in demand for the Company's services.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased by $3.0 million, or 107%, to $5.8 million in 1995 from $2.8 million in
1994, and increased to 30% of fee revenue in 1995 from 26% of fee revenue in
1994. The increase in general and administrative expenses, both in absolute
dollars and as a percentage of fee revenue, resulted primarily from additional
salary and benefit costs for senior management and administrative personnel, as
well as additional corporate infrastructure to support domestic and
international expansion, including new facilities in London, New York, San
Francisco and Boston and expansion of facilities in Baltimore and Atlanta.
TOTAL OTHER INCOME (EXPENSE), NET. Total other income, net increased to
$74,000 in 1995 from $11,000 in 1994.
INCOME TAX PROVISION (BENEFIT). The Company's effective tax rate decreased
to a 1% tax benefit in 1995 from a 41% tax provision in 1994. The 1995 effective
rate represents a nominal tax loss for U.S. operations offset by nondeductible
expenses and the Company's inability to recognize a tax benefit for
international losses. The 1994 effective rate represents federal and state taxes
offset by the effect of certain nondeductible expenses. There were no
international operations in 1994. See Note 5 of the Consolidated Financial
Statements.
23
<PAGE>
SELECTED QUARTERLY OPERATING RESULTS
The following tables set forth a summary of the Company's unaudited
quarterly consolidated income statement data for each of the eight quarters in
the two-year period beginning July 1, 1995 and ending June 30, 1997, as well as
the percentage of the Company's fee revenue represented by each item. This
information has been derived from unaudited interim consolidated financial
statements that, in management's opinion, have been prepared on a basis
consistent with the Consolidated Financial Statements contained elsewhere in
this Prospectus and include all adjustments consisting only of normal recurring
adjustments, necessary for a fair statement of such information, when read in
conjunction with the Consolidated Financial Statements and Notes thereto. The
operating results for any quarter are not necessarily indicative of results for
any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1995 1995 1996 1996 1996 1996 1997 1997
--------- -------- -------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Fee revenue............................... $ 5,202 $ 6,052 $ 6,396 $8,250 $ 11,636 $ 12,933 $ 12,404 $ 14,523
Project costs and expenses................ 2,457 2,966 4,324 4,900 5,279 6,677 7,034 8,135
--------- -------- -------- -------- --------- -------- -------- --------
Gross margin.......................... 2,745 3,086 2,072 3,350 6,357 6,256 5,370 6,388
--------- -------- -------- -------- --------- -------- -------- --------
Costs and expenses:
Sales and marketing..................... 639 764 568 646 757 946 861 1,007
Professional development, recruiting and
other expenses........................ 592 808 1,350 816 714 987 1,913 2,467
General and administrative.............. 1,495 2,070 2,408 2,305 2,383 2,757 3,398 3,231
--------- -------- -------- -------- --------- -------- -------- --------
Total costs and expenses.............. 2,726 3,642 4,326 3,767 3,854 4,690 6,172 6,705
--------- -------- -------- -------- --------- -------- -------- --------
Operating income (loss)................... 19 (556) (2,254) (417) 2,503 1,566 (802) (317)
--------- -------- -------- -------- --------- -------- -------- --------
Other income (expense):
Interest income......................... 26 14 9 2 3 4 31 26
Interest expense........................ (3) (8) (35) (6) (73) (56) (51) (146)
--------- -------- -------- -------- --------- -------- -------- --------
Total other income (expense), net..... 23 6 (26) (4) (70) (52) (20) (120)
--------- -------- -------- -------- --------- -------- -------- --------
Income (loss) before income taxes..... 42 (550) (2,280) (421) 2,433 1,514 (822) (437)
Income tax provision (benefit)............ 43 (89) (884) (74) 1,035 726 (306) (146)
--------- -------- -------- -------- --------- -------- -------- --------
Net income (loss)..................... $ (1) $ (461) $ (1,396) $ (347) $ 1,398 $ 788 $ (516) $ (291)
--------- -------- -------- -------- --------- -------- -------- --------
--------- -------- -------- -------- --------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
AS A PERCENTAGE OF FEE REVENUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
QUARTER ENDED
---------------------------------------------------------------------------------------------
<CAPTION>
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1995 1995 1996 1996 1996 1996 1997 1997
--------- -------- -------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fee revenue................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Project costs and expenses.... 47.2 49.0 67.6 59.4 45.4 51.6 56.7 56.0
--------- -------- -------- -------- --------- -------- -------- --------
Gross margin.............. 52.8 51.0 32.4 40.6 54.6 48.4 43.3 44.0
--------- -------- -------- -------- --------- -------- -------- --------
Costs and expenses:
Sales and marketing......... 12.3 12.6 8.9 7.8 6.5 7.3 6.9 6.9
Professional development,
recruiting and other
expenses.................. 11.4 13.4 21.1 9.9 6.1 7.6 15.4 17.0
General and
administrative............ 28.7 34.2 37.6 28.0 20.5 21.4 27.4 22.3
--------- -------- -------- -------- --------- -------- -------- --------
Total costs and
expenses................ 52.4 60.2 67.6 45.7 33.1 36.3 49.7 46.2
--------- -------- -------- -------- --------- -------- -------- --------
Operating income (loss)....... 0.4 (9.2) (35.2) (5.1) 21.5 12.1 (6.4) (2.2)
--------- -------- -------- -------- --------- -------- -------- --------
Other income (expense):
Interest income............. 0.5 0.2 0.1 0.0 0.0 0.0 0.2 0.2
Interest expense............ (0.1) (0.1) (0.5) (0.0) (0.6) (0.4) (0.4) (1.0)
--------- -------- -------- -------- --------- -------- -------- --------
Total other income
(expense), net.......... 0.4 0.1 (0.4) (0.0) (0.6) (0.4) (0.2) (0.8)
--------- -------- -------- -------- --------- -------- -------- --------
Income (loss) before
income taxes............ 0.8 (9.1) (35.6) (5.1) 20.9 11.7 (6.6) (3.0)
Income tax provision
(benefit)..................... 0.8 (1.5) (13.8) (0.9) 8.9 5.6 (2.5) (1.0)
--------- -------- -------- -------- --------- -------- -------- --------
Net income (loss)......... (0.0)% (7.6)% (21.8)% (4.2)% 12.0% 6.1% (4.1)% (2.0)%
--------- -------- -------- -------- --------- -------- -------- --------
--------- -------- -------- -------- --------- -------- -------- --------
</TABLE>
24
<PAGE>
The Company's operating results have fluctuated from period to period in the
past and may fluctuate significantly in future periods. These variations result
from a number of factors, such as the number, significance and mix of client
projects commenced or completed during a period and the number of business days
in a particular period. It is difficult to forecast the timing of fee revenue
because project cycles depend on factors such as the size and scope of
assignments and circumstances specific to particular clients. In particular, the
Company's quarterly operating results are affected by a seasonal downturn in
consultant utilization during the first half of the year due to the typical
budget cycles for IT departments. Additionally, employee utilization rates vary
from period to period, not only due to changes in the Company's volume of
business but also because of the timing of employee vacations, holidays,
weather-related and other events outside the control of the Company, hiring and
training, the amount of time spent by employees on marketing, and project
curtailments or postponements. The Company's most significant expenses relate to
salaries and benefits for its professional staff. Since these expenses are
generally fixed, the Company's results of operations in a particular period may
be materially adversely affected if fee revenue falls below expectations. In
addition, the Company's expenses related to professional development and
recruiting are typically higher during the first half of the year as the Company
conducts most of its hiring and training during this period to accommodate new
projects commencing later in the year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital need is for working capital and capital
expenditures required to support its growth. Since its inception, the Company
has financed its operations and capital expenditures primarily with its
revolving credit facility, leasing activities and cash flows from operations.
The Company's cash balance was $531,000 as of June 30, 1997, $331,000 as of
December 31, 1996, and $125,000 as of December 31, 1995. The Company's working
capital (deficit) was $(791,000) as of June 30, 1997, $534,000 as of December
31, 1996, and $57,000 as of December 31, 1995. The negative working capital as
of June 30, 1997 reflected the seasonal downturn in professional staff
utilization and costs associated with the hiring and training of professional
staff, which typically occurs in the first half of the year to accomodate
projects commencing later in the year.
The Company's operating activities provided cash of $614,000 and $57,000 for
the six months ended June 30, 1997 and for the year ended December 31, 1994,
respectively, and used cash of $1.3 million and $387,000 for the years ended
December 31, 1996 and 1995, respectively. The cash provided by operations during
the six months ended June 30, 1997 was attributable to increases in accounts
payable and accrued expenses of $5.3 million, including an increase in
management incentive bonuses of approximately $562,000, and deferred fee revenue
of $1.2 million partially offset by increases in accounts receivable of $4.5
million, deferred income taxes of $592,000, other current assets of $613,000 and
a net loss of $807,000. From time to time, in the normal course of business, the
Company utilizes its accounts payable and accrued expenses as well as advances
from customers to finance operations. The Company's use of cash during 1996 was
primarily caused by an increase in accounts receivable of $5.1 million,
partially offset by increases in accounts payable and accrued expenses of $1.4
million, deferred income taxes of $803,000, deferred fee revenue of $508,000 and
net income of $443,000. The Company's use of cash during 1995 was primarily
caused by a net loss of $399,000 and an increase in accounts receivable of $2.4
million. These uses of cash were offset by an increase in accounts payable and
accrued expenses of $2.6 million. The cash provided by operations during 1994
was attributable to net income of $1.2 million, increases in deferred income
taxes of $819,000 and deferred fee revenue of $577,000, offset by an increase in
accounts receivable of $2.3 million.
Investing activities used cash of $331,000, $385,000, $194,000 and $55,000
for the six months ended June 30, 1997 and for the years ended December 31,
1996, 1995 and 1994, respectively. Cash used in investing activities primarily
consisted of purchases of computer and office equipment, office furniture and
leasehold improvements. During 1997, the Company expects to make between $2.0
million and $3.0 million in capital expenditures, primarily for computer
equipment, office furniture and equipment, and
25
<PAGE>
leasehold improvements to support the anticipated growth in its professional and
administrative staff. These expenditures are expected to be primarily financed
from operating equipment leases with the remainder to be funded from available
cash or asset-based borrowings.
Financing activities provided cash of $62,000, $1.8 million, $660,000 and
$18,000 for the six months ended June 30, 1997 and for the years ended December
31, 1996, 1995 and 1994, respectively. In all periods, financing activities
consisted primarily of borrowings and repayments under the Company's revolving
credit facility.
The Company has an $8.0 million secured revolving credit facility with a
financial institution, which bears interest at the lower of the financial
institution's prime rate of interest or 250 basis points above 30-day LIBOR (a
rate of 8.19% on June 30, 1997) plus an additional 0.75% fee per month based on
the monthly maximum loan amount. The Company utilizes this revolving credit
facility to finance a portion of its working capital needs. There was a $3.9
million outstanding balance on June 30, 1997, a $1.6 million outstanding balance
on December 31, 1996 and a $1.1 million outstanding balance on December 31,
1995. The Company will use a portion of the net proceeds of the offering to
repay amounts outstanding under its revolving credit facility. See "Use of
Proceeds."
The Company does not believe that its international operations currently
subject it to material currency fluctuation risks; however, as international
operations expand or in the event foreign currency markets become volatile, the
Company could be exposed to such risks. Fee revenue from international
operations is primarily denominated in the local currency. The Company does not
plan to repatriate earnings from the United Kingdom to the United States nor
make significant advances to the United Kingdom. As the Company's international
operations expand, and to the extent that its inter-company funding polices
change, management intends to continue to evaluate the impact of potential
fluctuations in foreign exchange rates on the Company's results of operations
and liquidity. Should management determine that foreign exchange rate
fluctuations are likely to impact materially the Company's results of operations
or liquidity, the Company may enter into forward exchange contracts or engage in
other hedging activities in order to mitigate such risks.
The Company believes the net proceeds from this offering together with its
current cash balances, cash provided by future operations and its revolving
credit facility, will be sufficient to meet the Company's working capital and
cash needs for at least the next 12 months. To the extent that such amounts are
unavailable or insufficient to finance the Company's capital requirements, the
Company will be required to raise additional funds through equity or debt
financing. No assurance can be given that such financing will be available on
terms acceptable to the Company, and, if available, such financing may result in
further dilution to the Company's stockholders and higher interest expense.
ACCOUNTING PRONOUNCEMENTS
In 1997, the Financial Accounting Standards Board issued the following
Statements of Financial Accounting Standards ("FAS"):
NO. 128--"EARNINGS PER SHARE." This Statement, which becomes effective for
fiscal years ending after December 15, 1997, revises disclosure requirements,
and increases the comparability of earnings per share data on an international
basis. In simplifying the earnings per share computations, the presentation of
primary earnings per share is replaced with basic earnings per share, with the
principal difference being that common stock equivalents are not considered in
computing basic earnings per share. In addition, FAS 128 requires dual
presentation of basic diluted earnings per share. FAS 128 is effective for
financial statements issued for periods ending after December 15, 1997. The
Company's pro forma basic earnings per share under FAS 128 would have been $0.06
for the year ended December 31, 1996 and ($0.10) for the six months ended June
30, 1997 and dilutive earnings per share under FAS 128 would not differ
significantly from the reported pro forma net income per share.
26
<PAGE>
NO. 129--"DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURES." This
statement becomes effective for fiscal years ending after December 15, 1997, and
continues the previous requirements to disclose certain information about an
entity's capital structure found in previously issued Opinions and Standards.
The Company currently follows the provisions of this statement.
NO. 130--"REPORTING COMPREHENSIVE INCOME." This statement becomes effective
for fiscal years ending December 15, 1997, and requires that changes in the
amounts of comprehensive income items be shown in a primary financial statement.
The Company intends to adopt the disclosures required by this statement for the
year ending December 31, 1997.
NO. 131--"DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION." This statement becomes effective for fiscal years ending after
December 15, 1997, and changes the way public companies report information about
segments of their business in their annual financial statements and requires
them to report selected segment information in their quarterly reports issued to
shareholders. The Company intends to adopt the disclosures required by this
statement for the year ending December 31, 1997.
27
<PAGE>
BUSINESS
OVERVIEW
Hunter provides management consulting, systems implementation and education
services to organizations seeking to deploy enterprise software applications,
including ERP software applications. The Company's core expertise is in
providing implementation services for the human resources, financial and
distribution software applications developed by PeopleSoft and other third-party
ERP software vendors. Hunter has provided implementation services for
PeopleSoft's human resources applications since 1989 and for its financial and
distribution applications since 1993. The goal of the Company's Concept-to-
Completion-TM- approach is to provide services that improve the productivity of
a client's technology investment by leveraging the client-specific knowledge
gained throughout the process. The Company recently formed relationships with
J.D. Edwards and Lawson, two rapidly growing ERP software application vendors,
to provide the Concept-to-Completion-TM- suite of services for their software
applications. The Company has expanded its relationships with these ERP software
vendors in an effort to serve a broader client base and to penetrate additional
segments of the ERP market, such as manufacturing.
The Company provides its services to clients in a diverse array of
industries, including Commonwealth of Virginia, Duke Energy, El Paso Natural Gas
Corporation, First Chicago NBD Corporation, Genuine Parts Company, Glaxo
Wellcome, Inc., Host Marriott Corporation, Sonoco, Warner-Lambert Company and
Western Digital Corporation, among others. The Company derived 14% of its
revenue from international clients for the six months ended June 30, 1997.
INDUSTRY BACKGROUND
Intense global competition is driving organizations to reengineer business
processes, information systems and job functions to reduce costs, improve
operating efficiencies and enhance their quality of products and services. Such
business process reengineering initiatives typically focus on the use of
technology to improve productivity, automate repetitive processes and make
information readily available to broader groups within the organization. Rapid
advances in technology have enhanced the ability of organizations to further
strengthen their competitiveness through the implementation of distributed
computing platforms and software solutions. In particular, organizations are
migrating from mainframe systems to scalable client/server architectures, which
provide improved flexibility and functionality.
As an integral part of adopting client/server architectures, many companies
are replacing their legacy and generally disparate software applications with
fully integrated, packaged, enterprise software applications, including ERP
applications. These applications address critical business functions such as
manufacturing, distribution, finance and human resources and are designed to
reduce costs, improve operating efficiencies, shorten product development
cycles, improve the quality of products and services and enhance client service.
Client/server ERP applications have extended the functionality of traditional
ERP applications beyond the traditional user to include the employee, the
applicant, the vendor and the client. The adoption of client/server
architectures is also being affected by major external events such as the year
2000 problem and the conversion to the eurocurrency, which are causing many
organizations to accelerate their replacement of legacy systems.
ERP applications and their associated client/server systems are inherently
complex and generally require lengthy and costly implementation efforts,
extensive end-user training and substantial ongoing support. Implementing these
systems typically requires integrating the application with environments
consisting of multiple computing platforms, operating systems, existing
applications, databases and networking protocols, and requires specialized
business knowledge to customize the application's functionality for the client's
needs and organizational structure. In addition, these systems require ongoing
modifications to support an organization's continuously changing business
practices. The ability of organizations to integrate, deploy and maintain
redesigned business processes and related technology in a timely
28
<PAGE>
and cost-effective manner is critical to the success of the overall
reengineering initiatives and future competitiveness of these organizations.
In general, organizations' internal IT departments lack the resources and
business expertise to implement complex ERP applications. Many internal IT
departments have been subject to downsizing, with much of their remaining
resources devoted to maintaining existing systems rather than developing or
implementing new applications. Moreover, as emerging technologies continue to
expand and evolve, it becomes increasingly difficult and costly for internal IT
staffs to leverage these technologies. The year 2000 problem has exacerbated the
capacity constraints of internal IT departments by further absorbing their
limited resources. In addition, due to a shortage of IT professionals and the
relatively high cost of building the IT infrastructure, organizations are
generally reluctant to expand internal capabilities to accommodate a single
project. As a result, many organizations utilize third-party IT service
providers to perform the IT services related to implementing and supporting
complex ERP applications. According to industry sources, the global demand for
ERP-related consulting services was estimated to be $11 billion in 1996 and is
expected to grow to $18 billion by 1998.
As organizations increasingly utilize third-party IT service providers, they
require comprehensive solutions and services that extend beyond implementation
services to include front-end management consulting along with
post-implementation support and training. With these fully integrated solutions,
organizations seek to leverage the knowledge gained throughout the process to
reduce implementation time frames and their associated costs. In addition,
organizations are seeking solution providers that utilize flexible and adaptable
methodologies to accommodate the particular needs of the engagement; employ
skilled and experienced individuals and "best-practice" methodologies to ensure
the efficient and effective completion of projects; assist in managing the
adaptation and acceptance of new technologies and associated processes among the
client's personnel; and are equipped to handle their increasing global needs.
THE HUNTER SOLUTION
The Company provides a complete range of information management consulting
services that support enterprise applications from leading software vendors. The
Company's focus is on assisting organizations with the full range of activities
associated with the planning, selection and implementation of, and training for,
enterprise solutions designed for the human resources, finance and distribution
functions. The Company's services are designed to offer the following client
benefits:
COMPREHENSIVE CONCEPT-TO-COMPLETION-TM- APPROACH. The Company is organized
around three major practice areas, which together with its core principles,
comprise its Concept-to-Completion-TM- approach, designed to enable client
organizations to improve the productivity of both technology and staff. These
practice areas are Management Consulting, which is part of Hunter's Business
Strategies and Solutions practice, Implementation Services and Education
Services. Underlying each of the Company's practice areas is an emphasis on
project management, continuous change management and enabling technology
integration. The Company can assist an organization through any component of a
project or through the entire business solutions lifecycle, which typically
includes: visioning and strategic planning; process improvement through
reengineering and workflow design; requirements definition and specification;
change management; vendor product evaluation and selection; vendor product
adaptation; systems conversion and migration; full-scale implementation support;
end-user training; and post-implementation support.
FLEXIBLE AND ADAPTABLE SOLUTION. The Company's methodologies are adaptable
to the particular requirements of a client engagement, and the Company believes
that it efficiently provides a client with predictable engagement results that
meet the client's business objectives. In addition, the Company seeks to provide
the right skill at the right time as part of its service offering strategy,
which is designed to produce cost effective solutions for clients. To achieve
this, the Company staffs its engagements with a core
29
<PAGE>
project team of consultants supplemented as needed by consultants with
specialized expertise. The Company's combination of application expertise and
adaptable methodologies provides flexible solutions designed to improve the
return on an organization's technology investment.
SKILLED AND EXPERIENCED CONSULTANTS. A critical element of the Company's
success has been its ability to attract, develop and retain a highly skilled and
motivated professional staff. The Company seeks to hire experienced
professionals with diverse backgrounds and skills in specific functional areas
and IT disciplines. Project teams usually consist of consultants with a
functional expertise in areas such as human resources, finance or distribution
as well as consultants with a technical background. The Company believes that it
is able to leverage the complementary talents of its project teams to achieve
timely and effective implementations, which can result in lower costs to
clients.
EXPERTISE IN HUMAN RESOURCES, FINANCIAL AND DISTRIBUTION DISCIPLINES. The
Company has built its reputation based on providing management consulting,
implementation and education services addressing the human resources, financial
and distribution disciplines. As a result, the Company believes it has developed
a core technical competency and particular functional expertise in these
critical areas. The Company has created a library of "best practices" for the
successful implementation of applications supporting these disciplines, which it
applies to specific client engagements in accordance with a client's industry
and particular needs.
CLIENT-DRIVEN RESULTS. The Company recognizes that the successful
deployment of new systems is contingent upon end-user acceptance of new
applications. Therefore, the Company's project managers and consultants focus on
enhancing the performance of the end-users of applications implemented by the
Company. To this end, the Company uses change management techniques to promote
ongoing communication and total organizational acceptance. This ensures that
end-users are involved in all facets of a project and that the solutions
designed and implemented by the Company meet the client's objectives. The
Company seeks to provide services that produce measurable improvements in its
clients' productivity and an acceptable return on its technology investment,
resulting in long-term relationships.
THE HUNTER STRATEGY
The Company's objective is to become a leading provider of information
management solutions in the enterprise application marketplace. The Company's
strategy includes the following key elements:
LEVERAGE EXISTING CLIENT BASE. The Company believes that having a large
base of referenceable clients is a critical competitive advantage in its
markets. During its 16 years of operations, the Company has provided services
for more than 1,000 clients. Many of these clients are undergoing an evaluation
of their older systems and are looking to upgrade current applications. The
Company intends to leverage its strong relationships with existing clients to
become the service provider of choice for these system overhauls. In addition,
the Company intends to continue to sell its newer service offerings, such as
end-user training and product line expansion to its extensive existing client
base.
EXPAND APPLICATION EXPERTISE AND VERTICAL MARKET FOCUS. The Company has
developed substantial expertise in the implementation of human resources,
financial and distribution applications. The Company intends to leverage its
understanding of core client/server architectures and technology integration to
expand its capabilities to provide Concept-to-Completion-TM- services for
additional core ERP applications, such as manufacturing, and has been
aggressively hiring consultants to serve these markets. As the Company develops
its expertise in these areas, it intends to further penetrate targeted vertical
markets, including manufacturing, retail, public sector and higher education.
LEVERAGE AND DEVELOP STRATEGIC RELATIONSHIPS. The Company has an
established strategic relationship with PeopleSoft and has participated in
numerous collaborative efforts with PeopleSoft, including product testing and
the development of beta sites and education materials. The Company intends to
expand its
30
<PAGE>
relationship with PeopleSoft as PeopleSoft enters new application areas and
vertical markets. Recently, the Company was named one of 11 charter members in
PeopleSoft's manufacturing initiative. In addition, the Company, jointly with a
retail consulting firm, was named one of three charter members in PeopleSoft's
retail initiative. The Company is developing additional strategic alliances with
other rapidly growing ERP application vendors. Hunter has recently formed
relationships with J.D. Edwards and Lawson and is developing implementation and
education services addressing the full range of applications provided by these
vendors. The Company will continue to pursue alliances and relationships with
these and other vendors to further expand its service offerings and remain
current with advances in technology.
ENHANCE MIDDLE MARKET FOCUS. The Company differentiates itself from
traditional systems integration service providers by focusing on the needs of
mid-sized companies in addition to those of larger companies. Hunter believes
that its expertise and advanced implementation methodologies enable it to serve
the unique needs of this segment of the market in a cost-effective manner. The
Company believes that it is well positioned to take advantage of current
initiatives being conducted by certain ERP vendors to target companies in the
middle market.
MAINTAIN EMPHASIS ON RECRUITING AND RETAINING SKILLED PROFESSIONALS. The
ability to attract, develop and retain experienced, highly skilled professionals
is critical to the growth and future success of the Company. The Company intends
to continue to expand and refine its recruiting process to attract and retain
the best available work force. The Company believes that by providing employees
with a challenging and fulfilling work environment, a competitive compensation
structure, and equity incentives, it will continue to be able to attract and
retain high-quality professionals. In addition, the Company has developed a
series of rigorous training programs that are designed to enhance the technical,
management and business skills of its consultants.
CONTINUE TO EXPAND GLOBAL PRESENCE. The Company currently serves clients
located throughout North America, Europe and Asia. Approximately 86% of the
Company's revenue is generated from clients located in North America. In the
past two years, the Company has expanded the number of its offices in North
America from six to 15. The Company established offices in London and Singapore
in 1995 and 1996, respectively, and offices in Sydney and Melbourne in 1997. The
Company intends to expand its international presence in conjunction with the
expansion plans of its ERP vendor partners and to address the requirements of
its international clients.
PURSUE STRATEGIC ACQUISITIONS. The Company intends to evaluate strategic
acquisitions of complementary service providers that may provide well-trained,
high-quality professionals, new service offerings, additional industry
expertise, a broader client base or an expanded geographic presence.
HUNTER SERVICES
The Company provides information management services to organizations
seeking to optimize their investment in enterprise software applications offered
by leading software vendors. The Company provides organizations with a full
range of services associated with the planning, selection and implementation of,
and training for, enterprise solutions related to the human resources, financial
and distribution functions. The Company is organized around three major practice
areas, which together with its core principles, comprise its
Concept-to-Completion-TM- approach. These practice areas are Management
Consulting, which is part of Hunter's Business Strategies and Solutions
practice, Implementation Services and Education Services.
The core principles underlying the Company's Concept-to-Completion-TM-
approach are the following:
- BUSINESS ORIENTATION. The Company recognizes that business strategies,
processes and operations are the fundamental drivers for technology
decisions. Therefore, the Company believes that successful technology
solutions should be designed and implemented to enable the client's
personnel to understand, accept and support a process that produces
measurable bottomline results
31
<PAGE>
through the effective use of technology. This philosophy of integrating
people, process, technology and measurements is a distinguishing
characteristic of Hunter's service approach.
- FUNCTIONAL EXPERTISE. The Company recognizes that strong functional
expertise is critical to the successful design and implementation of
business systems. The extensive operating experience of the Company's
consultants enable them to link operational objectives, desired process
outcomes and system capabilities.
- END-USER OWNERSHIP. Hunter involves end-users through the entire process
as the primary decision-makers and "owners" of the project. The Company
seeks to create realistic expectations in order to facilitate acceptance
of change and to establish a sense of ownership, while mitigating the
pressures of participating in a project team and minimizing demands on
end-users' time.
- KNOWLEDGE TRANSFER. Hunter works closely with its clients' personnel to
augment and accelerate their learning during the project, and provides its
clients with the knowledge necessary to manage their new processes and
operate their new systems. The Company believes that a critical measure of
the success of any project is the end-user's ability to assume
responsibility when the engagement is completed.
MANAGEMENT CONSULTING SERVICES
The Company's management consulting group assists clients in the redesign
and improvement of business processes, and the evaluation, selection and
effective use of innovative technologies in support of business objectives.
Using proven methodologies and established tools, the Company assists clients
with the full range of management consulting activities, including:
STRATEGIC PLANNING. Using a structured interview process with senior
personnel, the Company creates a vision of the future business environment that
ensures the alignment of business, functional and technology strategies. This
vision becomes the basis for establishing consensus on the project's direction,
scope and critical success factors.
BUSINESS PROCESS REENGINEERING. Using the strategic planning results,
combined with industry "best practices," the Company redesigns processes and
develops an implementation strategy describing the actions required to implement
the recommended solution.
VENDOR EVALUATION AND SELECTION. The Company facilitates the evaluation and
selection of vendor products, and can assist organizations with the
specification and requirements for software and related hardware.
IMPACT ANALYSIS AND BUSINESS CASE DEVELOPMENT. The Company links current to
future processes by describing the impact of the various process improvements in
terms of process, people, technology and measurements, using both qualitative
and quantitative measures. Hunter then develops a business case analysis that
justifies the project costs by quantifying the business benefits of the new
processes.
IMPLEMENTATION SERVICES
The Company offers comprehensive implementation services that utilize a
structured methodology and combine "best practices" knowledge, the technical and
functional skills of Hunter consultants and the business process knowledge of
client staff. A full system implementation involves the following phases:
INTERACTIVE DESIGN/PROTOTYPING-TM-. Interactive Design/Prototyping-TM- is a
Hunter approach to project sizing and system/business process design intended to
accelerate a project by identifying all required system adaptations and
developing a comprehensive implementation plan and a system prototype before
implementation begins. The Interactive Design/Prototyping-TM- phase involves
end-users by immediately applying their knowledge of the organization's business
functions to the systems being designed. During an
32
<PAGE>
Interactive Design/Prototyping-TM- session, team members work with the Company's
application experts in focus sessions that set forth particular functional
processes and map the capabilities of the applications to an organization's
current or desired business processes. At the conclusion of a session, users
have a specific understanding of how the system will support their requirements.
This "fit assessment" allows the project team to identify gaps in functionality
and explore alternatives for resolution. The end product of the Interactive
Design/Prototyping-TM- phase is a working prototype.
SYSTEM DESIGN AND ADAPTATION. During the system design and adaptation
phase, detailed specifications are developed for adaptations documented during
the Interactive Design/Prototyping-TM- phase. The purpose of this phase is to
provide specifications enabling a client's technical personnel to work in
conjunction with Hunter team members to implement the system design and guide
adaptations of the system.
CONVERSIONS AND INTERFACES. The conversion and interface phase consists of
an extensive, detailed effort to reconstruct data and develop interfaces to and
from existing applications. To accomplish the conversion and implementation
effort, Hunter's project team members work as part of the implementation team
from interface specification and development to conversion planning and
execution.
SYSTEM TESTING AND CUTOVER. The Company's approach to system testing and
cutover is structured to ensure that all modifications and new developments are
tested in a manner that facilitates the early detection of problems and errors.
Simple conditions are tested first, followed by increasingly complex conditions
until all inputs, processes and outputs have been thoroughly tested. During
cutover, the system becomes operational after user acceptance, which is based
upon the system performing in accordance with stated objectives and
organizational requirements.
POST-IMPLEMENTATION SUPPORT. The Company's post-implementation services
include ongoing support and maintenance. This can include support for
enhancements and modifications, design and development of additional system
customizations, version upgrade support, and report writing.
EDUCATION SERVICES
The Company offers a wide variety of education services including planning,
materials customization, user procedures documentation, computer-based training,
and instructor-led training delivery, primarily for end-users of PeopleSoft's
human resources and financial applications.
Hunter has developed proprietary, process-oriented courseware that can be
used without modification for training the end-user. If a client desires
customized training materials representative of their environment, the Company's
courseware is used as the development base, thereby significantly reducing the
time and cost needed to prepare customized training materials. The Company's
Education Services staff work closely with the software implementation team to
ensure that key concepts, work processes and adaptations of the new system are
incorporated into customized training materials.
Instructor-led training is delivered on-site at client locations or in
Hunter's new training facility in Atlanta, Georgia. Hunter also offers a mobile
training environment to serve clients. Hunter also offers a mobile training
environment to serve clients whose technical infrastructure does not support a
working training environment, where technical resources are not readily
available or when a client requires training of geographically dispersed groups.
In addition to providing education services for Hunter's clients, the
Education Services group also provides internal training to Hunter employees.
All new employees attend New Hire Orientation to learn Hunter policies and
procedures, technology training and methodology overview. A product "boot camp,"
which offers an intensive PeopleSoft human resources and financials curriculum,
is available for consultants.
33
<PAGE>
The Company currently offers the following Education Services courses, which
are typically modified to incorporate the specific requirements of a client:
<TABLE>
<CAPTION>
PEOPLESOFT HUMAN RESOURCES PEOPLESOFT FINANCIALS
CURRICULUM COURSES CURRICULUM COURSES
- ------------------------------------------ ------------------------------------------
<S> <C>
HR--Getting Started +++ Financials--Getting Started +++
Recruitment ++ General Ledger +++
Personnel Administration +++ Accounts Payable +++
Personnel Administration with Position Accounts Receivable +++
Management +++ Purchasing +
Personnel Administration with Project Costing +
International/Global ++ Query/Crystal Reporting (FIN) +++
Basic Benefits +++ nVision Reporting for Financials +++
Basic Payroll +++ PEOPLESOFT TECHNICAL
Intermediate Payroll +++ CURRICULUM COURSES
------------------------------------------
Advanced Payroll ++ PeopleTools Basics +++
Year End Processing +++
Training Administration +++
Query/Crystal Reporting (HR) +++
</TABLE>
- ------------------------
+Version 5.x
++Version 6.x
RELATED SERVICES
In addition to Management Consulting, Hunter's Business Strategies and
Solutions practice includes the following services that use the
Concept-to-Completion-TM- approach:
GLOBAL STRATEGIES AND SOLUTIONS. The Company supports its clients' global
strategies, process reengineering and information systems implementation
projects with a global team comprised of professionals experienced in the
management and delivery of complex multi-national projects. The Global
Strategies and Solutions practice offers a global version of the Company's
Concept-to-Completion-TM- solution, along with specialized services such as
consulting on international data security and country-specific regulatory
requirements.
WORKFLOW AUTOMATION. Workflow automation involves the automation of
business processes using technology to optimize the distribution and flow of
information, ensure the completion of business transactions and measure process
efficiency. The Company provides comprehensive workflow automation services
utilizing a variety of leading methodologies and application tools from vendors
such as Edify Corporation, NetDynamics, Inc., Seeker Software, Inc. and Lotus
Development Corporation. This service combines the power of business process
reengineering with the ability to select the best technology components for a
particular requirement. For example, the Company provides expert assistance to
organizations implementing technologies to automate the recruitment function and
applies creative solutions to increase the productivity and efficiency of the
recruitment process, using solutions from vendors such as Restrac, Inc. and
Resumix, Inc.
SERVICE DELIVERY
The Company's Concept-to-Completion-TM- approach is supported by a service
delivery model that provides its employees with clearly defined roles and
accountability across all levels. The Company's service delivery incorporates
the following processes, which it believes are essential to the delivery of any
successful client engagement:
34
<PAGE>
PROJECT MANAGEMENT. The Company's project management process includes
controls and review techniques designed to identify and assess project risks,
and ensure each project is delivered in a high-quality, cost-effective and
timely manner. The project manager has primary responsibility for the success of
each engagement, including managing project costs and staff schedules, service
quality and the client relationship. The project management process places
significant emphasis on client feedback through regular client "alignment
meetings." During and upon completion of an engagement, the Company assesses the
extent to which the project team has met client expectations and the
effectiveness of the project management process, and uses this analysis to
support the Company's continuous improvement process.
CHANGE MANAGEMENT. Change management encompasses all activities aimed at
helping an organization successfully accept and adopt new ways of doing
business. Effective change management enables the transformation of people,
organizations, work, attitudes and technologies to meet evolving business needs.
The Company's consultants use a variety of change management techniques to
maximize client involvement, deliver effective communication and increase the
overall success of the project. The Company's formula for proactive planning
encourages the client's management to prepare its personnel for change, thereby
minimizing the resistance that typically affects both employee morale and
overall organizational performance.
TECHNOLOGY INTEGRATION. Hunter provides comprehensive technology services
to ensure that innovative technologies and systems architectures are deployed in
conjunction with new or redesigned business processes and client/server systems.
Hunter consultants have significant experience with network design and
management, database administration, performance monitoring and tuning, capacity
planning and overall systems administration.
INDUSTRY ALLIANCES AND RELATIONSHIPS
The Company relies on relationships with providers of software products,
such as PeopleSoft and, to a lesser extent, J.D. Edwards and Lawson.
Hunter entered into a relationship with PeopleSoft in 1989 and became a
PeopleSoft implementation partner in 1993. PeopleSoft designs, develops, markets
and supports a family of enterprise client/server application software products
for use throughout large and medium-sized organizations worldwide, including
higher education institutions and federal, state, provincial and local
government agencies. The Company has participated in numerous collaborative
efforts with PeopleSoft, including product testing and the development of beta
sites and education materials and has completed more than 250 PeopleSoft
projects. The Company was recently named a partner in PeopleSoft's retail and
manufacturing industry business units initiative. The Company believes that its
participation in this initiative, which is designed to expand PeopleSoft's
focused product offerings into vertical markets, will support its growth efforts
by facilitating longer-term relationships with clients. Under the terms of its
agreements with Hunter, PeopleSoft has agreed to grant Hunter a non-exclusive
license to use certain PeopleSoft software; to provide Hunter with training,
support and updates to licensed products; to designate Hunter as a Service
Alliance Partner in its Global Alliance Program; and to distribute a profile of
Hunter to end-users and prospective clients of PeopleSoft. The agreements are
renewable on an annual basis and are terminable by either party upon 30 days
written notice.
In April 1997, the Company entered into agreements with Lawson, a
Minneapolis-based ERP software company with 1996 revenue exceeding $120 million.
Lawson offers a suite of web-deployable client/server business applications
including human resources, financial, procurement and supply-chain modules under
the LAWSON INSIGHT name. Hunter is one of Lawson's nine Global Alliance
Integrated Network Enterprise Consultant Partners. Lawson and the Company have
agreed to include each other, where appropriate and practical, in opportunities
involving each other's potential clients. These agreements may be terminated by
either party upon 60 days written notice.
35
<PAGE>
In July 1997, the Company entered into agreements with J.D. Edwards, an ERP
software provider that is currently releasing a new suite of client/server
business applications (OneWorld) including human resources, financial,
distribution and manufacturing modules. Under the terms of the agreements with
J.D. Edwards, Hunter is an implementation partner in the United States, the
United Kingdom, Canada and Singapore. These agreements are subject to
termination by either party upon 60 days written notice or without notice upon
the occurrence of certain events.
Hunter has also entered into agreements with other software vendors
including Resumix, Inc., Restrac, Inc., Edify Corporation, NetDynamics, Inc.,
Seeker Software, Inc., Lotus Development Corporation and Healtheon Corporation.
CLIENTS
Hunter and its consultants have assisted more than 1,000 clients to
formulate strategy, redesign processes, implement enterprise information
management systems and/or deliver end-user training. The Company's clients
represent a broad cross section of domestic and international organizations,
both in the public and private sectors. The following is a partial list of
clients, each of whom accounted for cumulative revenues of at least $500,000
since January 1, 1995:
<TABLE>
<S> <C>
Arkwright Mutual Insurance Company Genuine Parts Company
Case Corporation Glaxo Wellcome, Inc.
Commonwealth of Virginia Host Marriott Corporation
Duke Energy Pennsylvania Power & Light
El Paso Natural Gas Corporation Sonoco
First Chicago NBD Corporation Warner-Lambert Company
Western Digital Corporation
</TABLE>
SALES AND MARKETING
The Company's sales organization includes 13 business development managers
who are responsible for a designated geographic region or practice area. As part
of the business development process, business development managers team with
Hunter consultants to participate in sales calls and client presentations and
help develop proposals. Senior management is also actively involved in the
business development process. The Company seeks to leverage existing client and
strategic relationships to increase its exposure within and across industries
and ultimately expand its client base. In addition, the Company works closely
with software vendors, particularly PeopleSoft, Lawson and J.D. Edwards, to
identify potential client engagements.
The marketing function is designed to enhance awareness of the Company's
services in the marketplace and to generate leads. The Company markets its
services through the use of promotional materials, public relations,
advertising, direct mail campaigns, published articles, speaking engagements,
and its web site, and by participating in tradeshows and conferences. The
Company has five employees devoted to the marketing function.
HUMAN RESOURCES
The Company's continued success and future growth will depend upon its
ability to attract, develop and retain a sufficient number of experienced and
highly skilled professional employees. As of June 30, 1997, the Company employed
426 persons, 331 of whom were employed as consultants.
RECRUITING AND EMPLOYEE RETENTION. Hunter places significant emphasis on
attracting, developing and retaining an experienced and highly skilled work
force. Many of the Company's senior consultants possess more than 20 years
experience in management consulting and strategic planning. Generally,
implementation consultants have two to seven years of experience, project
managers have five to ten years of
36
<PAGE>
experience and project executives have ten to 25 years of experience. The
Company recruits personnel through a variety of methods, including
advertisements in newspapers and technical publications. The Company has a
policy of promoting from within whenever appropriate and also actively recruits
employees with in-depth expertise in technical or functional disciplines in
which the Company currently provides services or expects to provide services in
the future. The Company employs two full-time recruiters and utilizes external
recruiters.
The Company has developed its culture, its emphasis on training and its
compensation package to attract, develop and retain qualified and motivated
professionals. The Company seeks to provide a challenging work environment and
competitive compensation system. The Company's incentive structure is designed
to reward employees who achieve superior results. Hunter's culture focuses on
encouraging consultants to strive for higher levels of performance, with the
primary criterion for success defined as exceeding client expectations.
TRAINING AND DEVELOPMENT. The Company hires established professionals with
diverse backgrounds and skills in appropriate human resources, financial,
distribution, manufacturing and IT disciplines. These skills are enhanced
through consultants' participation on project teams, training provided both
internally and by the Company's business partners, through automated business
tools such as Lotus Notes, and a strong organizational culture that emphasizes
cross-training and teamwork. Teamwork and challenging work assignments are
designed to ensure that consultants continuously develop new skills. The Company
believes that its use of internally-developed, standardized tools and
methodologies and its adherence to a structured project management process
enable the Company to deliver consistent, high-quality services while increasing
the size of its work force. The Company places a significant emphasis on
training its employees to understand and utilize the Company's service
methodologies and management processes. The Company provides this training
through a combination of internally developed and externally provided courses.
Employees also participate in internal and external training in vendor-specific
software applications.
Newly employed consultants spend their first several weeks with the Company
in an intensive internal "boot camp" training program, which is conducted at the
Company's Atlanta facility. This boot camp provides orientation to the Company's
policies, procedures and culture, and includes focused product-specific
training. This training has been designed to shorten the time it takes
consultants to become productive on client engagements.
COMPETITION
The Company's service areas are highly competitive and subject to rapid
change. Principal competitors of the Company include the consulting practices of
the Big Six, and professional services groups of many large technology and
management consulting companies that may have significantly greater financial,
technical and marketing resources and greater name recognition than the Company.
The Company also competes with smaller service providers whose specific, more
narrowly focused service offerings may be more attractive to potential clients
than the Company's multidimensional approach. In addition, several software
vendors, including PeopleSoft, have developed and may expand their own
consulting, training and implementation capabilities. Furthermore, clients may
elect to use their internal resources instead of utilizing the Company's
services. There can be no assurance that the Company will compete successfully
with potential clients' internal resources or with existing or new competitors.
The Company believes that the principal competitive factors in its industry are
quality of service, breadth of service offerings, reputation, ability to provide
measurable results, lower overall cost of projects, and having a large,
referenceable client base. The Company believes it competes effectively with
respect to each of these factors.
37
<PAGE>
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
The Company relies only on a combination of nondisclosure and other
contractual arrangements, and trademark laws to protect its proprietary
information. The Company generally enters into confidentiality agreements with
its employees, thereby seeking to limit distribution of proprietary information.
Software developed and other materials prepared by the Company in connection
with client engagements are usually assigned to the clients. The Company retains
the right to its general know-how and general applications such as software
diagnostic and development tools and standard training and reporting materials.
The Company may file copyright applications for certain intellectual property it
develops in the future.
The Company has applied to register its name as a trademark in the United
States, and a preliminary objection has been raised to this registration by the
Trademark Office. There can be no assurance that the Company will be successful
in registering its name. The Company uses the phrases
"Concept-to-Completion-TM-," "Delivering Solutions for Global Information
Management-TM-," "Interactive Design/Prototyping-TM-" and the names of certain
of the Company's methodologies to identify its services. The Company holds no
patents.
FACILITIES
Hunter leases approximately 17,500 square feet of space for its headquarters
in Baltimore, Maryland. This lease expires on September 30, 2005. The Company
also leases ten additional offices covering an aggregate of approximately 33,900
square feet in Atlanta, Boston, Chicago, Dallas, Irvine, London, New York, San
Francisco, Singapore and Toronto. The Company also has "executive-style"
offices, ranging from 100 to 300 square feet per office, in Charlotte, Denver,
Honolulu, Philadelphia, Richmond, Vancouver, Melbourne and Sydney. None of these
leases expire prior to March 1998. Aggregate annual rent for the Company's
corporate headquarters and offices is approximately $1.4 million. The Company's
strategy is to locate offices in areas where it has significant client work.
From time to time, the Company uses office space provided at client sites to
facilitate performance of its services and maximize client contact. The Company
expects to either expand or relocate its offices in Boston, New York and London
in 1998. The Company anticipates that additional office space will be required
within the next 12 months and believes appropriate facilities can be leased as
needed.
LEGAL PROCEEDINGS
From time to time, the Company is a party to routine litigation arising in
the ordinary course of business. However, the Company is not currently a party
to any material litigation.
38
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- -----------------------------------------------------------------------
<S> <C> <C>
Terry L. Hunter.................... 50 President, Chief Executive Officer and Director
David P. Andros.................... 54 Senior Vice President--Business Strategies and Solutions
Loren D. Burnett................... 40 Senior Vice President, Chief Financial Officer, Treasurer and Director
Judy I. Dunnington................. 51 Senior Vice President--Corporate Systems
Bradford S. Everett................ 47 Executive Vice President--North American Operations
and Director
Mary T. Weaver..................... 44 Senior Vice President--Education Services, Secretary and Director
Thomas W. Whartenby................ 51 Senior Vice President--Alliances and Marketing and Director
Richard Wheeler.................... 44 Senior Vice President--International Operations
</TABLE>
TERRY L. HUNTER has served as President, Chief Executive Officer and a
Director of the Company since its formation in 1983. Prior to founding the
Company, Mr. Hunter consulted with various companies and software vendors on the
design and development of human resources systems. From 1971 to 1981, he served
as Managing Vice President of the Employee Information Systems Consulting
division of Alexander & Alexander and held various positions at Benefacts from
1965 to 1971. Mr. Hunter has a total of 34 years experience in the human
resources systems and consulting field.
DAVID P. ANDROS has been Senior Vice President--Business Strategies and
Solutions since January 1997. Mr. Andros served as Vice President--Management
Consulting from 1995 to 1997. Prior to joining the Company, Mr. Andros was Chief
Information Officer for Finance, Human Resources and Office Systems for IBM
Corporation. Mr. Andros has more than 30 years experience in the human resources
and financial systems areas.
LOREN D. BURNETT has been Senior Vice President, Chief Financial Officer,
Treasurer and a Director of the Company since February 1997. Prior to joining
the Company, Mr. Burnett served as Chief Financial Officer of MAXM Systems
Corporation from 1991 to 1997 and held various management positions with MCI
Communications Corp., NTS Corp. and Coopers & Lybrand L.L.P. from 1979 to 1991.
Mr. Burnett has over 14 years of experience as a senior financial executive for
rapidly growing technology companies. Mr. Burnett has been a Certified Public
Accountant since 1981.
JUDY I. DUNNINGTON has been Senior Vice President--Corporate Systems since
May 1997. Ms. Dunnington served as Vice President of the Southern Region from
1995 to 1997, as Regional Manager from 1994 to 1995, as Project Director from
1992 to 1994 and in various other positions with the Company since 1985. Prior
to joining the Company, Ms. Dunnington was Manager of Employee Services for
Crown Central Petroleum Corp. Ms. Dunnington has over 20 years of experience in
the human resources information management field.
BRADFORD S. EVERETT has served as Executive Vice President--North American
Operations since August 1997 and as a Director since September 1997. Mr. Everett
was Senior Vice President--Global Operations and Chief Operating Officer from
1996 to 1997 and Western Region/Asia Pacific Executive from 1995 to 1996. Prior
to joining the Company, Mr. Everett served as a Vice President of professional
services for Walker Interactive, a leading financial systems software
manufacturer. Mr. Everett has more than 25 years experience in management
information systems, systems integration, financial systems implementation,
consulting and operations management.
MARY T. WEAVER has been Senior Vice President--Education Services since 1996
and a Director and Secretary of the Company since 1991. Ms. Weaver was Senior
Vice President for the Company's financial
39
<PAGE>
consulting practice from 1995 to 1996. Ms. Weaver served as Chief Financial
Officer and Treasurer from 1991 to 1995 and was Controller/Treasurer from 1988
to 1991. Ms. Weaver has been a Certified Public Accountant since 1978.
THOMAS W. WHARTENBY has been Senior Vice President--Alliances and Marketing
since 1996 and a Director of the Company since 1991. Mr. Whartenby served as
Senior Vice President and Chief Operating Officer from 1995 to 1996. Prior to
joining the Company, Mr. Whartenby was Regional Operations Manager with
McCormack & Dodge Corporation and Director of Client Services for American
Management Services, Inc. Mr. Whartenby has over 20 years experience in
management information systems, systems integration, consulting and operations
management.
RICHARD WHEELER has been Senior Vice President--International Operations
since August 1997. Mr. Wheeler served as Vice President of European Operations
from 1995 to 1997. Prior to joining the Company, Mr. Wheeler was a principal in
the London office of Coopers & Lybrand L.L.P., where he headed the human
resources technology group for the United Kingdom and Europe.
The Company's Board of Directors is composed of seven members. Currently,
there are two vacancies. Within 90 days following the consummation of this
offering, the Company intends to fill those vacancies with individuals who will
be neither officers nor employees of the Company or its affiliates.
The Company's Board of Directors is divided into three classes. Directors of
each class will be elected at the annual meeting of stockholders held in the
year in which the term for such class expires and will serve for three years
thereafter. Class I directors, whose term will expire at the first annual
meeting after this offering, currently consist of Mr. Hunter; Class II
directors, whose term will expire at the second annual meeting after this
offering, currently consist of Messrs. Everett and Whartenby; Class III
directors, whose term will expire at the third annual meeting after this
offering, currently consist of Ms. Weaver and Mr. Burnett. Each of the two
additional directors appointed after this offering will be appointed to
different classes as determined by the Board of Directors.
COMMITTEES OF THE BOARD OF DIRECTORS
Within 90 days following the consummation of this offering, the Board of
Directors will establish an Audit Committee and a Compensation Committee.
Effective upon their election to the Board of Directors, the independent
directors will serve as the members of the Audit Committee and the Compensation
Committee. The Audit Committee's principal functions will include making
recommendations to the Board of Directors regarding the annual selection of
independent public accountants, reviewing the proposed scope of each annual
audit and reviewing the recommendations of the independent public accountants
resulting from the audit of the Company's consolidated financial statements. The
Compensation Committee's principal function will be to establish the
compensation of the Chief Executive Officer and other senior officers of the
Company and to establish and administer the Company's compensation programs,
including the grant of awards under the Company's Employee Non-Qualified Stock
Option Plan and the Omnibus Stock Plan. See "--Employee Benefit Plans." The
Board of Directors may from time to time establish other committees to
facilitate the management of the Company.
DIRECTOR COMPENSATION
Prior to this offering, directors received no compensation for their service
on the Board of Directors. Upon completion of this offering, directors who are
not employees of the Company or its affiliates will receive an annual retainer
in shares of Common Stock having a fair market value of $10,000 on the date of
issuance. Directors will be reimbursed for out-of-pocket expenses incurred in
connection with their service as directors. In addition, each director is
eligible to receive awards pursuant to the Company's Omnibus Stock Plan.
Directors who are officers or employees of the Company will not receive any
additional compensation for their services as directors. See "--Employee Benefit
Plans--1997 Omnibus Stock Plan."
40
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the annual and
long-term compensation earned in 1996 by the Chief Executive Officer and certain
other executive officers of the Company (collectively, the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) -------------------
NUMBER OF
---------------------- SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS UNDERLYING OPTIONS COMPENSATION(2)
- ------------------------------------------------- ---------- ---------- ------------------- ----------------
<S> <C> <C> <C> <C>
Terry L. Hunter.................................. $ 225,000 $ 250,000 -- $ 8,543
President and Chief Executive Officer
David P. Andros.................................. 150,000 $ 30,000 6,578 1,572
Senior Vice President--Business
Strategies and Solutions
Loren D. Burnett (3)............................. -- -- -- --
Senior Vice President, Chief
Financial Officer and Treasurer
Judy I. Dunnington............................... 164,238 80,000 -- 10,216
Senior Vice President--Corporate
Systems
Bradford S. Everett.............................. 173,750 -- 16,198 8,732
Executive Vice President--North
American Operations
Mary T. Weaver................................... 150,000 18,750 4,108 10,073
Senior Vice President--Education
Services and Secretary
Thomas W. Whartenby.............................. 185,000 46,250 -- 8,495
Senior Vice President--Alliances
and Marketing
Richard Wheeler.................................. 124,062 25,963 5,928 13,032
Senior Vice President--International
Operations
</TABLE>
- ------------------------
(1) Perquisites and other personal benefits, securities or property constituted
less than the lesser of $50,000 or 10% of the total annual salary and bonus
for each Named Executive Officer.
(2) Includes premiums for life and medical insurance of $3,793, $1,572, $0,
$5,466, $3,982, $5,323, $3,745 and $1,872, and contributions by the Company
to its defined contribution plans of $4,750, $0, $0, $4,750, $4,750, $4,750,
$4,750 and $11,160 on behalf of Mr. Hunter, Mr. Andros, Mr. Burnett, Ms.
Dunnington, Mr. Everett, Ms. Weaver, Mr. Whartenby and Mr. Wheeler,
respectively.
(3) Mr. Burnett joined the Company in February 1997.
41
<PAGE>
The following table sets forth information regarding options granted to the
Named Executive Officers during the year ended December 31, 1996:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(1) VALUE AT ASSUMED
----------------------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS FAIR MARKET APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE VALUE PER OPTION TERM(3)
OPTIONS EMPLOYEES PRICE PER SHARE ON DATE EXPIRATION --------------------
NAME GRANTED IN FISCAL YEAR SHARE(2) OF GRANT(2) DATE 0% 5%
- -------------------------------- ----------- ----------------- ----------- ------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Terry L. Hunter................. -- -- -- -- -- -- --
David P. Andros................. 6,578 3% $ 1.52 $ 4.04 12/31/06 $ 16,554 $ 33,260
Loren D. Burnett................ -- -- -- -- -- -- --
Judy I. Dunnington.............. -- -- -- -- -- -- --
Bradford S. Everett............. 16,198 7 1.52 4.04 12/31/06 40,763 81,902
Mary T. Weaver.................. 4,108 2 1.52 4.04 12/31/06 10,338 20,771
Thomas W. Whartenby............. -- -- -- -- -- -- --
Richard Wheeler................. 5,928 3 1.52 4.04 12/31/03 14,927 24,677
<CAPTION>
NAME 10%
- -------------------------------- ---------
<S> <C>
Terry L. Hunter................. --
David P. Andros................. $ 58,892
Loren D. Burnett................ --
Judy I. Dunnington.............. --
Bradford S. Everett............. 145,018
Mary T. Weaver.................. 36,778
Thomas W. Whartenby............. --
Richard Wheeler................. 37,648
</TABLE>
- ------------------------
(1) Options were granted pursuant to and in accordance with the Company's
Employee Non-Qualified Stock Option Plan. See "--Employee Benefit
Plans--1991 Employee Non-Qualified Stock Option Plan."
(2) The exercise price was less than the fair market value of the Common Stock
as estimated by the Company on the date of grant.
(3) The assumed annual rates of stock price appreciation used to calculate
potential gains to optionees are mandated by the rules of the Securities and
Exchange Commission. The potential realizable value does not represent the
Company's prediction of its stock price performance. There can be no
assurance that the stock price will actually appreciate over the option term
at the assumed levels or at any other level.
42
<PAGE>
The following table sets forth the aggregate dollar value of all options
exercised and the total number of unexercised options held on December 31, 1996,
by the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED VALUE ------------------------ -----------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------------------ --------------- --------------- ------------------------ -----------------------
<S> <C> <C> <C> <C>
Terry L. Hunter..................... -- -- --/-- --/--
David P. Andros..................... -- -- 15,470/35,620 $47,471/$123,848
Loren D. Burnett.................... -- -- --/-- --/--
Judy I. Dunnington.................. -- -- 14,300/57,148 49,412/ 197,468
Bradford S. Everett................. -- -- 29,484/53,196 86,084/ 181,501
Mary T. Weaver...................... -- -- 350,506/-- 1,353,696/--
Thomas W. Whartenby................. -- -- 346,398/-- 1,343,358/--
Richard Wheeler..................... -- -- 10,738/19,266 31,015/ 64,474
</TABLE>
- ------------------------
(1) Value equals the per share fair market value of $4.04 of the Common Stock on
December 31, 1996, as estimated by the Company on the date of grant.
EMPLOYEE BENEFIT PLANS
1991 EMPLOYEE NON-QUALIFIED STOCK OPTION PLAN. The Company's 1991 Employee
Non-Qualified Stock Option Plan (the "Employee Non-Qualified Stock Option Plan")
was adopted as of July 1, 1991, to provide long-term performance incentives to
employees of the Company. Under the Employee Non-Qualified Stock Option Plan,
the Board of Directors or a committee of directors designated by the Board (the
"Administrator") is authorized to grant to employees of the Company, or of any
subsidiary, options to purchase shares of Common Stock of the Company. All
options granted pursuant to the Employee Non-Qualified Stock Option Plan are
non-qualified stock options, not intended to qualify as incentive stock options
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
There are an aggregate of 2,600,000 shares reserved for issuance upon exercise
of options granted under the Employee Non-Qualified Stock Option Plan, subject
to adjustment upon the occurrence of events that affect the capitalization of
the Company.
Under the Employee Non-Qualified Stock Option Plan, the Administrator has
the authority to select the persons to whom options are granted and to determine
the terms of each option, including (i) the number of shares of Common Stock
subject to such option; (ii) when the option becomes exercisable; (iii) the
option exercise price, which may be more or less than the fair market value of
the Common Stock as of the date of the grant; and (iv) the duration of the
option. Options granted under the Employee Non-Qualified Stock Option Plan
expire as of the date specified by the Administrator, provided that the option
may not be exercised more than ten years after the grant date and may terminate
earlier as a result of termination of employment. The Company has the right,
upon the exercise of an option granted under the Employee Non-Qualified Stock
Option Plan, to purchase the option from the option holder for an amount,
payable at least 20% in cash and the balance by delivery of a four-year note,
equal to the value of the underlying shares reduced by the exercise price of the
option. Exercise of options granted under the Employee Non-Qualified Stock
Option Plan is conditioned upon the option holder becoming a party to the
Company's stockholders' agreement. See "Certain Transactions."
As of December 31, 1996, options to purchase an aggregate of 1,210,456
shares of Common Stock under the Employee Non-Qualified Stock Option Plan, at
option prices ranging from $0.16 to $1.52 per share, were held by 21 employees
of the Company. Of this amount, options to purchase shares will be
exercisable as of, or within 60 days of, the date of this Prospectus and options
to purchase an additional
43
<PAGE>
and shares of Common Stock will become exercisable on January 1,
1998 and January 1, 1999, respectively, assuming the December 31, 1996 option
holders remain employees of the Company.
In connection with the adoption of the 1997 Omnibus Stock Plan in September
1997, the Board of Directors determined that it would not make any future grants
under the Employee Non-Qualified Stock Option Plan after consummation of this
offering.
1997 OMNIBUS STOCK PLAN. In September 1997, the Board of Directors of the
Company adopted and the Company's sole stockholder approved the 1997 Omnibus
Stock Plan (the "Omnibus Stock Plan"). The Company has reserved an aggregate of
shares of Common Stock for issuance under the Omnibus Stock Plan. The
number of shares reserved for issuance under the Omnibus Stock Plan may be
adjusted upon the occurrence of events that affect the capitalization of the
Company. The purpose of the Omnibus Stock Plan is to promote the long-term
growth and profitability of the Company by providing individuals with incentives
to improve stockholder value and contribute to the growth and financial success
of the Company, and by enabling the Company to attract, retain and reward the
best available persons for positions of substantial responsibility. The Omnibus
Stock Plan provides for the grant of non-qualified stock options, incentive
stock options within the meaning of Section 422 of the Code, stock appreciation
rights, restricted and non-restricted stock awards, phantom stock awards and
performance awards, each of which may be granted separately or in tandem with
other awards. Participation in the Omnibus Stock Plan is open to all employees,
officers and directors of the Company or any of its affiliated entities, however
only employees of the Company or its subsidiaries may receive incentive stock
option awards. No options or other grants have been granted under the Omnibus
Stock Plan to date.
The Omnibus Stock Plan is administered by the Administrator. The
Administrator has the authority to: (i) determine the eligible persons to whom,
and the time or times at which, awards shall be granted; (ii) determine the
types of awards to be granted; (iii) determine the number of shares to be
covered by or used for reference purposes for each award; (iv) impose such
terms, limitations, restrictions and conditions upon any such award as the
Administrator shall deem appropriate; (v) modify, amend, extend or renew
outstanding awards, or accept the surrender of outstanding awards and substitute
new awards (provided, however, that except in specified circumstances, any
modification that would materially adversely affect any outstanding award shall
not be made without the consent of the grantee); (vi) accelerate or otherwise
change the time in which an award may be exercised or becomes payable and to
waive or accelerate the lapse, in whole or in part, of any restriction or
condition with respect to such award, including, without limitation, any
restriction or condition with respect to the vesting or exercisability of an
award following termination of any grantee's employment; and (vii) establish
objectives and conditions, if any, for earning awards and determining whether
awards will be paid after the end of a performance period. In addition, the
Administrator is authorized to make adjustments in the terms and conditions of,
and the criteria included in, awards in recognition of unusual or nonrecurring
events affecting the Company, or the financial statements of the Company or any
subsidiary, or of changes in applicable laws, regulations or accounting
principles, whenever the Administrator determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Omnibus Stock Plan.
Options intended to qualify as incentive stock options under Section 422 of
the Code must have an exercise price at least equal to fair market value on the
date of grant, but non-qualified stock options may be granted with an exercise
price less than fair market value. Incentive stock options may not be
exercisable more than ten years from the date the option is granted. If any
employee of the Company or any subsidiary owns or is deemed to own at the date
of grant shares of stock representing in excess of 10% of the combined voting
power of all classes of stock of the Company, the exercise price for the
incentive stock options granted to such employee may not be less than 110% of
the fair market value of the underlying shares on that date and the option may
not be exercisable more than five years from the date the option is granted. The
option exercise price may be paid in cash, by tender of shares of Common Stock,
by a combination of cash and shares or by any other means the Administrator
approves. Awards of stock
44
<PAGE>
appreciation rights, stock and phantom stock awards and performance awards may
be settled in cash, shares of Common Stock or a combination of both, in the
discretion of the Administrator.
The Board of Directors of the Company may terminate, amend or modify the
Omnibus Stock Plan or any portion thereof at any time, except that all awards
made prior to termination of the Omnibus Stock Plan will remain in effect until
such awards have been satisfied or terminated in accordance with the terms of
the Omnibus Stock Plan and such awards.
1998 EMPLOYEE STOCK PURCHASE PLAN. In September 1997, the Board of
Directors of the Company adopted the 1998 Employee Stock Purchase Plan (the
"Employee Stock Purchase Plan") to become effective January 1, 1998. The
Employee Stock Purchase Plan authorizes the issuance of shares of Common
Stock through payroll deductions to employees of the Company and its
participating subsidiaries.
Employees of the Company and participating subsidiaries, who are regularly
scheduled to work 20 or more hours per week and at least five months in any
calendar year, and who have been employed as such for at least three months and
do not own, or have the right to acquire, 5% or more of the voting stock of
Company, will be eligible to participate in the Employee Stock Purchase Plan.
The Employee Stock Purchase Plan will be administered by the Administrator. The
Administrator will be able to make rules and regulations and take any other
appropriate actions to administer the Employee Stock Purchase Plan.
Each offering under the Employee Stock Purchase Plan will be for a
designated time period established by the Administrator not to exceed 27 months
in length (the "Offering Period"). Eligible employees may elect to enroll in the
Employee Stock Purchase Plan as of the first day of any Offering Period.
Eligible employees will be re-enrolled automatically for each new Offering
Period; provided, however, that employees will be able to cancel their
enrollment at any time in accordance with the Employee Stock Purchase Plan
rules. Participating employees may contribute from 1% to 10% (in whole
percentages) of base salary through payroll deductions. Participating employees
will be able to decrease or discontinue the contribution percentage once during
any Offering Period by submitting a new payroll deduction authorization form,
but will not be able to increase the contribution percentage during an Offering
Period. On the last business day of each Offering Period (the "Exercise Date"),
the employee's payroll deductions will be used to purchase shares of the
Company's Common Stock for the employee. The price of the shares purchased will
be determined in advance by the Administrator, but in no event will be lower
than the lesser of (i) 85% of the stock's fair market value on the commencement
date of the Offering Period or (ii) 85% of the stock's fair market value on the
Exercise Date. The maximum aggregate value of purchases which an employee will
be able to make in a single calendar year is $25,000, based on the fair market
value of such Common Stock determined at the commencement date of the applicable
Offering Periods in which the employee participated. Participation in the
Employee Stock Purchase Plan terminates when a participating employee's
employment with the Company or its subsidiaries ceases for any reason, the
employee withdraws or the Employee Stock Purchase Plan is terminated or amended
such that the employee is no longer eligible to participate.
The Board of Directors may terminate, amend or modify the Employee Stock
Purchase Plan or any portion thereof at any time.
401(K) SAVINGS PLAN. The Company maintains The Hunter Group, Inc. 401(k)
Plan, a defined contribution plan with a cash or deferred arrangement as
described in Section 401(k) of the Code (the "401(k) Plan"). The 401(k) Plan is
intended to qualify under Section 401(a) of the Code, whereby contributions, and
income earned thereon, are not taxable to employees until withdrawn. Generally
all employees of the Company are eligible to participate in the 401(k) Plan as
of the first month following employment. After an employee has completed 12
months of service, the employee is eligible to receive the Company's matching
contribution. The 401(k) Plan provides that each participant may make elective
pre-tax salary deferral contributions of up to 10% of his or her annual
compensation, subject to statutory limits. The Company makes discretionary
matching contributions to the 401(k) Plan which for the years ended December 31,
1994, 1995 and 1996 were equal to 50% of each employee's contribution.
Participants are at all times fully vested in amounts credited to their
accounts. The trustee of the 401(k) Plan invests
45
<PAGE>
each employee's account at the direction of the employee, who may choose among
several investment alternatives, which do not include shares of the Company's
Common Stock. The Company made aggregate contributions to the 401(k) Plan of
$86,000, $158,000, $336,000 and $336,000 for the years ended December 31, 1994,
1995 and 1996 and for the six months ended June 30, 1997, respectively.
EMPLOYMENT AGREEMENTS
The Company requires its management and key employees to sign employment
agreements upon joining the Company. The Company has entered into employment
agreements with each Named Executive Officer. The employment agreements provide
for annual base salaries of $138,000, $168,000, $150,000, $60,000, $85,200 and
L80,040 for Mr. Andros, Mr. Burnett, Mr. Everett, Ms. Weaver, Mr. Whartenby and
Mr. Wheeler, respectively. The annual base salaries of Mr. Hunter and Ms.
Dunnington are not determined by their employment agreements. The employment
agreements generally contain confidentiality provisions and covenants not to
compete during the term of employment and for a period of time after termination
of employment. Mr. Burnett's employment agreement grants stock options that will
fully vest in the event of an initial public offering or change of control event
and also provides that in the event of a merger or acquisition of the Company by
another entity in which his position is eliminated or radically altered, the
Company must pay up to nine months severance consideration in the form of salary
continuation. Mr. Andros' and Mr. Everett's employment agreements provide that
in the event of a merger or acquisition resulting in a change in ownership or
capitalization structure and their positions are eliminated or radically altered
their respective stock options will fully vest.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to this offering, the Company has had no separate compensation
committee or other board committee performing equivalent functions. As a result,
the functions of a compensation committee were performed by Mr. Hunter. None of
the directors expected to serve on the Compensation Committee is or will be an
officer or employee of the Company. During the year ended December 31, 1996, no
executive officer of the Company served (i) as a member of the compensation
committee (or other board committee performing equivalent functions or, in the
absence of any such committee, the entire board of directors) of another entity,
one of whose executive officers served on the Board of Directors of the Company,
(ii) as a director of another entity, one of whose executive officers served on
the Board of Directors of the Company, or (iii) as a member of the compensation
committee (or other board committee performing equivalent functions or, in the
absence of any such committee, the entire board of directors) of another entity,
one of whose executive officers served as a director of the Company.
CERTAIN TRANSACTIONS
The Company's Employee Non-Qualified Stock Option Plan provides that, upon
exercise of any options, the exercising stockholders must become parties to the
Company's Stockholders' Agreement. The Stockholders' Agreement sets forth
certain transfer restrictions designed to ensure continuity in the ownership and
management of the Company. In general, the Stockholders' Agreement provides that
no stockholder may transfer his or her shares without the written consent of
two-thirds of the issued and outstanding shares, subject to the Company's right
of first refusal, certain stockholder registration rights, and specific notice,
pricing and timing provisions. Pursuant to the Stockholders' Agreement, the
Company has the first right and option to purchase any or all of the shares
relating to a proposed transfer by a stockholder, on the same terms proposed to
the transferee. If the Company does not fully exercise its option, the remaining
shares may be transferred to the proposed transferee, who must then become a
party to the Stockholders' Agreement. The Stockholders' Agreement also provides
that if a Control Group (as defined in the Stockholders' Agreement) proposes to
enter into a change of control transaction (as defined in the Stockholders'
Agreement), whereby stockholder approval is required by law, the Control Group
may require each other stockholder that is a party to the Stockholders'
Agreement ( the "Minority Group") to vote in favor of such transaction. The
Stockholders' Agreement further provides the Minority Group an option to be
included proportionally in any sale or tender of shares of Common Stock in
accordance with
46
<PAGE>
any change of control transaction, and the Company may also require each member
of the Minority Group to participate in such transaction. The Stockholders'
Agreement also contains certain restrictive covenants whereby the stockholder
agrees not to (i) employ or solicit a Company employee or like affiliated
person, (ii) render advisory or consulting services similar to those offered by
the Company to any client or pursued client of the Company, and (iii) render
services described in clause (ii) above to any competitor of the Company. If the
Company proposes to register any of its securities under the Securities Act for
sale to the public, the Stockholders' Agreement provides the stockholder certain
registration rights. A stockholder may request that the Company include its
shares in the registration statement subject to the discretion of the managing
underwriter who may validly deny inclusion if the managing underwriter believes
that such inclusion would adversely affect the marketing of the securities sold
by the Company.
Terry L. Hunter, the Company's President and Chief Executive Officer,
borrowed an aggregate of $250,000 from the Company in 1994 in connection with
the acquisition of his personal residence. This indebtedness is evidenced by two
demand notes (the "Notes"). The Notes bear interest at 5.0% per annum. The
principal amount outstanding under the notes totalled $250,000 as of December
31, 1995, December 31, 1996 and June 30, 1997.
PRINCIPAL STOCKHOLDERS AND SELLING STOCKHOLDER
The following table sets forth information with respect to the beneficial
ownership of the Common Stock as of the date of this Prospectus and as adjusted
to reflect the sale by the Company of the shares offered hereby with respect to
(i) each of the directors of the Company, (ii) each of the Named Executive
Officers, (iii) each person known to the Company to own beneficially more than
5% of the Company's Common Stock and (iv) all officers and directors as a group.
Unless otherwise indicated, each person named in the table has sole voting power
and investment power, subject to community property laws where applicable.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO
OFFERING(1) NUMBER OWNED AFTER OFFERING(1)
----------------------- OF SHARES -----------------------
NAME OF BENEFICIAL OWNER(1) NUMBER PERCENT BEING OFFERED NUMBER PERCENT
- ---------------------------------------------------- ---------- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Terry L. Hunter..................................... 7,800,000 100.0% 1,800,000 6,000,000 59.4%
David P. Andros(2).................................. 31,044 * -- 31,044 *
Loren D. Burnett (2)................................ 64,792 * -- 64,792 *
Judy I. Dunnington (2).............................. 39,312 * -- 39,312 *
Bradford S. Everett (2)............................. 52,754 * -- 52,754 *
Mary T. Weaver (2).................................. 350,506 4.3 -- 350,506 3.3
Thomas W. Whartenby (2)............................. 346,398 4.3 -- 346,398 3.3
Richard Wheeler (2)................................. 19,162 * -- 19,162 *
All officers and directors as a group
(12 persons)...................................... 8,839,142 100.0% 1,800,000 7,039,142 63.2%
</TABLE>
- ------------------------
* Less than 1% of the outstanding Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. The address of each beneficial
owner is c/o The Hunter Group, Inc., 100 East Pratt Street, Suite 1600,
Baltimore, Maryland 21202.
(2) Represents shares of Common Stock subject to outstanding stock options which
are exercisable within 60 days of the date of this Prospectus.
47
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following summary description of the capital stock of the Company is
qualified in its entirety by reference to the Company's Charter and By-Laws,
copies of which are filed as exhibits to the Registration Statement of which
this Prospectus forms a part.
The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock, no par value, and 5,000,000 shares of Preferred Stock, no par
value. As of the date of this Prospectus, there were 7,800,000 shares of Common
Stock outstanding, all held of record by one person, and no shares of Preferred
Stock outstanding.
COMMON STOCK
Holders of the Common Stock are entitled to one vote per share on all
matters submitted to the stockholders for a vote. There are no cumulative voting
rights in the election of directors. Accordingly, holders of a majority of the
shares of Common Stock entitled to vote in any election of directors may elect
all of the directors standing for election. Subject to preferences that may be
applicable to any Preferred Stock outstanding at the time, holders of shares of
Common Stock are entitled to receive such dividends as may be declared and paid
by the Board of Directors out of funds legally available therefor and to share,
ratably, in the net assets, if any, of the Company upon liquidation. The
stockholders have no preemptive rights to purchase any shares of the Company's
capital stock. All outstanding shares of Common Stock are, and the shares of
Common Stock offered hereby will be, when issued and paid for, duly authorized,
validly issued, fully paid and nonassessable. The rights, preferences and
privileges of holders of Common Stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of Preferred
Stock which the Board of Directors may designate and the Company may issue in
the future.
At present there is no established trading market for the Common Stock.
Application has been made for quotation of the Common Stock on the Nasdaq
National Market under the symbol "HNTR."
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company, New York, New York.
CERTAIN PROVISIONS OF CHARTER AND BY-LAWS AFFECTING STOCKHOLDERS
CLASSIFIED BOARD OF DIRECTORS. The Company's Board of Directors is divided
into three classes of directors, designated Class I, Class II and Class III.
Each class shall consist, as nearly as possible, of one-third of the total
number of directors. The term of the initial Class I directors will expire on
the date of the 1998 annual meeting of stockholders (an "Annual Meeting"); the
term of the initial Class II directors will expire on the date of the 1999
Annual Meeting; and the term of the initial Class III directors will expire on
the date of the 2000 Annual Meeting. At each Annual Meeting, beginning in 1998,
successors to the class of directors whose term expires at that Annual Meeting
will be elected for a three-year term. See "Management--Executive Officers and
Directors." At least two annual meetings of stockholders, instead of one,
generally will be required to change the majority of the Company's Board of
Directors.
SPECIAL MEETINGS OF STOCKHOLDERS. The By-Laws provide that special meetings
of the stockholders of the Company may be called by the Chairman of the Board of
Directors, the Chief Executive Officer or the President of the Company. The
By-Laws also provide that a special meeting of the stockholders of the Company
shall be called upon the written request of stockholders entitled to cast a
majority of all votes entitled to be cast at the meeting.
ADVANCE NOTICE REQUIREMENTS OF STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. The By-Laws provide that stockholders seeking to bring business
before or to nominate directors at any meeting of stockholders, must provide
timely notice thereof in writing. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive officers of the
Company not less than 60 days nor more than 90 days prior to any such meeting of
stockholders; provided, however, that (i) in the event that the annual meeting
is called for a date that is not less than 61 days before notice of such meeting
48
<PAGE>
is given, or (ii) in the case of the annual meeting of stockholders held during
1998 of the Company, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth day following the day
on which notice of the date of the annual meeting was mailed or public
disclosure of the date of the annual meeting was made, whichever first occurs.
The By-Laws also specify certain requirements for a stockholder's notice to be
in proper written form. These provisions may preclude some stockholders from
bringing matters before the stockholders or from making nominations for
directors. Under the Charter, directors may be removed for cause only upon the
affirmative vote of at least 80% of the shares of capital stock entitled to vote
in the election of directors. Under the By-Laws, the number of directors is
currently fixed at seven, which number may be changed only upon the vote of two-
thirds of the directors then in office.
The foregoing provisions of the Charter and all provisions of the By-Laws
may be amended or repealed by the stockholders only upon the affirmative vote of
at least 80% of the shares of capital stock entitled to vote thereon. The
By-Laws also may be amended or repealed by the Board of Directors only upon the
vote of at least two-thirds of the directors then in office. These provisions of
the Charter and By-Laws could have the effect of discouraging takeover proposals
and delaying or preventing a change in control of the Company not approved by
the Board of Directors.
CERTAIN PROVISIONS OF MARYLAND LAW
BUSINESS COMBINATIONS. Under Section 3-601 ET SEQ. of the Maryland General
Corporation Law (the "Business Combination Statute"), certain "business
combinations" (including mergers or similar transactions subject to a statutory
stockholder vote and additional transactions involving transfers of assets or
securities in specific amounts) between a Maryland corporation subject to the
Business Combination Statute and any person who beneficially owns 10% or more of
the voting power of the corporation's shares or any affiliate of the corporation
who, at any time within the preceding two years, was the beneficial owner of 10%
or more of the voting power of the then-outstanding voting stock of the
corporation (an "Interested Stockholder"), or an affiliate thereof, are
prohibited for five years after the most recent date on which the Interested
Stockholder became an Interested Stockholder unless an exemption is available.
Thereafter, any such business combination must be recommended by the board of
directors of the corporation and approved by the affirmative vote of at least:
(i) 80% of the votes entitled to be cast by all holders of outstanding voting
shares of the corporation; and (ii) two-thirds of the votes entitled to be cast
by holders of outstanding voting shares of the corporation other than shares
held by the Interested Stockholder with whom the business combination is to be
effected, unless the corporation's stockholders receive a minimum price (as
described in the Business Combination Statute) for their shares and the
consideration is received in cash or in the same form as previously paid by the
Interested Stockholder for its shares. The Business Combination Statute does not
apply, however, to business combinations that are (a) exempted in the
corporation's charter prior to the time the corporation became subject to the
Business Combination Statute or (b) approved or exempted by the board of
directors prior to the time that the Interested Stockholder becomes an
Interested Stockholder. After a corporation becomes subject to the Business
Combination Statute, in order to amend the corporation's charter to elect not to
be subject to the foregoing requirements with respect to one or more Interested
Stockholders, the affirmative vote of at least 80% of the votes entitled to be
cast by all holders of outstanding shares of voting stock and two-thirds of the
votes entitled to be cast by holders of outstanding shares of voting stock who
are not Interested Stockholders is required. The Company's Charter contains a
provision whereby the Company elects not to be subject to the foregoing
requirements with regard to Terry L. Hunter.
CONTROL SHARE ACQUISITIONS. Section 3-701 ET SEQ. of the Maryland General
Corporation Law provides that control shares of a Maryland corporation acquired
in a control share acquisition have no voting rights except to the extent
approved by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares of stock owned by the acquiror or by officers or directors who
are employees of the corporation. "Control shares" are voting shares of stock
which, if aggregated with all other such shares of stock previously acquired by
the acquiror, or in respect of which the acquiror is able to exercise or direct
49
<PAGE>
the exercise of voting power except solely by virtue of a revocable proxy, would
entitle the acquiror to exercise voting power in electing directors within one
of the following ranges of voting power: (i) one-fifth or more but less than
one-third; (ii) one-third or more but less than a majority or (iii) a majority.
Control shares do not include shares the acquiring person is then entitled to
vote as a result of having previously obtained stockholder approval. A "control
share acquisition" means the acquisition of control shares, subject to certain
exceptions.
A person who has made or proposes to make a control share acquisition, upon
satisfaction of certain conditions (including an undertaking to pay expenses and
delivery of an "acquiring person statement"), may compel the corporation's board
of directors to call a special meeting of stockholders to be held within 50 days
of demand to consider the voting rights of the shares. If no request for a
meeting is made, the corporation may itself present the question at any
stockholders' meeting.
Unless the charter or by-laws provide otherwise, if voting rights are not
approved at the meeting or if the acquiring person does not deliver an acquiring
person statement within ten days following a control share acquisition, then
subject to certain conditions and limitations, the corporation may redeem any or
all of the control shares (except those for which voting rights have previously
been approved) for fair value determined, without regard to the absence of
voting rights for the control shares, as of the date of the last control share
acquisition or of any meeting of stockholders at which the voting rights of such
shares are considered and not approved. Moreover, unless the articles or by-laws
provide otherwise, if voting rights for control shares are approved at a
stockholders' meeting and the acquiror becomes entitled to exercise or direct
the exercise of a majority or more of all voting power, other stockholders may
exercise appraisal rights. The fair value of the shares as determined for
purposes of such appraisal rights may not be less than the highest price per
share paid by the acquiror in the control share acquisition.
The control share acquisition statute does not apply to shares acquired in a
merger, consolidation or share exchange if the corporation is a party to the
transaction, or to acquisitions approved or exempted by the charter or by-laws
of the corporation. The Company's Charter exempts the applicability of the
control share acquisitions made by Terry L. Hunter.
The Business Combination Statute and the control share acquisition statute
could have the effect of discouraging takeover proposals and delaying or
preventing a change of control of the Company not approved by its Board of
Directors.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for the securities
of the Company. Upon completion of this offering, based upon the number of
shares outstanding at September 30, 1997, there will be 10,100,000 shares of
Common Stock of the Company outstanding (assuming no exercise of the
Underwriters' over-allotment option or options outstanding under the Company's
stock option plans). Of these shares, the 4,100,000 shares sold in this offering
will be freely tradable without restriction or further registration under the
Securities Act of 1933, as amended (the "Securities Act"), except that any
shares purchased by "affiliates" of the Company, as that term is defined in Rule
144 ("Rule 144") under the Securities Act ("Affiliates"), may generally only be
sold in compliance with the limitations of Rule 144 described below.
SALES OF RESTRICTED SHARES
The remaining 6,000,000 shares of Common Stock are deemed "restricted
securities" under Rule 144. Of the restricted securities, approximately
shares of Common Stock, which are not subject to the 180-day lock-up
agreements (the "Lock-Up Agreements") with the Representatives of the
Underwriters, will be eligible for immediate sale in the public market pursuant
to Rule 144(k) under the Securities Act. Approximately additional shares
of Common Stock, which are not subject to Lock-Up Agreements, will be eligible
for sale in the public market in accordance with Rule 144 or Rule 701 under the
Securities Act beginning 90 days after the date of this Prospectus. Upon
expiration of the Lock-Up Agreements 180
50
<PAGE>
days after the date of this Prospectus (and assuming no exercise of any
outstanding options), approximately additional shares of Common Stock will
be available for sale in the public market, subject to the provisions of Rule
144 under the Securities Act.
The officers and directors of the Company, and certain securityholders,
which executive officers, directors and securityholders in the aggregate hold
approximately shares of Common Stock (including shares of Common
Stock that may be acquired pursuant to the exercise of vested options held by
them and exercisable within 60 days of September 30, 1997) on the date of this
Prospectus, have agreed that, for a period of 180 days after the date of this
Prospectus, they will not sell, offer, contract or grant any option to sell,
pledge, transfer, establish an open put equivalent position or otherwise dispose
of any shares of Common Stock, any options to purchase shares of Common Stock or
any shares convertible into or exchangeable for shares of Common Stock, owned
directly by such persons or with respect to which they have the power of
disposition, without the prior written consent of NationsBanc Montgomery
Securities, Inc.
In general, under Rule 144 as currently in effect, beginning 90 days after
the effective date of the Registration Statement of which this Prospectus is a
part, a stockholder, including an Affiliate, who has beneficially owned his or
her restricted securities (as that term is defined in Rule 144) for at least one
year from the later of the date such securities were acquired from the Company
or (if applicable) the date they were acquired from an Affiliate of the Company
is entitled to sell, within any three-month period, a number of such shares that
does not exceed the greater of 1% of the then outstanding shares of Common Stock
(10,100,000 shares immediately after this offering) or the average weekly
trading volume in the Common Stock during the four calendar weeks preceding the
date on which notice of such sale was filed under Rule 144, provided certain
requirements concerning availability of public information, manner of sale and
notice of sale are satisfied. In addition, under Rule 144(k), if a period of at
least two years has elapsed between the later of the date restricted securities
were acquired from the Company or (if applicable) the date they were acquired
from an Affiliate of the Company, a stockholder who is not an Affiliate of the
Company at the time of sale and has not been an Affiliate of the Company for at
least three months prior to the sale is entitled to sell the securities
immediately without compliance with the foregoing requirements under Rule 144.
Securities issued in reliance on Rule 701 (such as shares of Common Stock
acquired pursuant to the exercise of certain options granted under the Company's
Employee Non-Qualified Stock Option Plan) are also restricted securities and,
beginning 90 days after the effective date of the Registration Statement of
which this Prospectus is a part, may be sold by stockholders other than
Affiliates of the Company subject only to the manner of sale provisions of Rule
144 and by Affiliates under Rule 144 without compliance with its one-year
holding period requirement.
OPTIONS AND STOCK AWARDS
The Company intends to file registration statements on Form S-8 under the
Securities Act to register all shares of Common Stock issuable under the Omnibus
Stock Plan and the Employee Stock Purchase Plan. Shares issued pursuant to
awards under those plans granted or exercised after the effective date of the
Form S-8 registration statements will be eligible for resale in the public
market without restriction, subject to Rule 144 limitations applicable to
Affiliates and the Lock-up Agreements noted above, if applicable.
EFFECT OF SALES OF SHARES
Prior to this offering, there has been no public market for the Common Stock
of the Company, and no prediction can be made as to the effect, if any, that
market sales of shares of Common Stock or the availability of shares for sale
will have on the market price of the Common Stock prevailing from time to time.
Nevertheless, sales of significant numbers of shares of the Common Stock in the
public market could adversely affect the market price of the Common Stock and
could impair the Company's future ability to raise capital through an offering
of its equity securities.
51
<PAGE>
UNDERWRITING
The underwriters named below (the "Underwriters"), represented by
NationsBanc Montgomery Securities, Inc., BancAmerica Robertson Stephens and J.P.
Morgan Securities Inc. (the "Representatives"), have severally agreed, subject
to the terms and conditions set forth in the Underwriting Agreement, to purchase
from the Company and the Selling Stockholder the number of shares of Common
Stock indicated below opposite their respective names at the initial public
offering price less the underwriting discount set forth on the cover page of
this Prospectus. The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain terms and conditions precedent and that the
Underwriters are committed to purchase all of such shares, if any are purchased.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- --------------------------------------------------------------------------------- ----------
<S> <C>
NationsBanc Montgomery Securities, Inc. .........................................
BancAmerica Robertson Stephens...................................................
J.P. Morgan Securities Inc. .....................................................
----------
Total........................................................................ 4,100,000
----------
----------
</TABLE>
The Representatives have advised the Company and the Selling Stockholder
that the Underwriters initially propose to offer the Common Stock to the public
on the terms set forth on the cover page of this Prospectus. The Underwriters
may allow to selected dealers a concession of not more than $ per share,
and the Underwriters may allow, and any such dealers may reallow, a concession
of not more than $ per share to certain other dealers. After the initial
public offering, the offering price and other selling terms may be changed by
the Representatives. The Common Stock is offered subject to receipt and
acceptance by the Underwriters and to certain other conditions, including the
right to reject orders in whole or in part.
The Company and the Selling Stockholder have granted an option to the
Underwriters, exercisable during the 30-day period after the date of this
Prospectus, to purchase up to a maximum of additional shares of Common
Stock to cover over-allotments, if any, at the same price per share as the
initial shares to be purchased by the Underwriters. To the extent the
Underwriters exercise this option, each of the Underwriters will be committed,
subject to certain conditions, to purchase such additional shares in
approximately the same proportion as set forth in the above table. The
Underwriters may purchase such shares only to cover over-allotments made in
connection with this offering.
The Company, the Selling Stockholder, each director and officer of the
Company and certain other of its stockholders, as well as certain other holders
of options, warrants or other rights to purchase Common Stock, who immediately
following this offering (assuming no exercise of the over-allotment option)
collectively will beneficially own approximately shares of Common Stock
(and options for the purchase of additional shares which will be
exercisable as of, or within 60 days of, September 30, 1997), have agreed not to
directly or indirectly offer for sale, sell, solicit an offer to sell, contract
or grant an option to sell, pledge, transfer, establish an open put equivalent
position or otherwise dispose of any rights with respect to any shares of Common
Stock, any options or warrants to purchase Common Stock, or any securities
convertible or exchangeable for equity securities, owned directly by such
holders or with respect to which they have the power of disposition for a period
of 180 days after the date of this Prospectus without the prior written consent
of NationsBanc Montgomery Securities, Inc. NationsBanc Montgomery Securities,
Inc. may, in its sole discretion and at any time without notice, release all or
any portion of the securities subject to these lock-up agreements. In addition,
the Company has agreed not to
52
<PAGE>
directly or indirectly offer for sale, sell, solicit an offer to sell, contract
or grant an option to purchase, pledge, transfer or otherwise dispose of any
shares of Common Stock, options, warrants to Purchase Common Stock or any
securities convertible or exchangeable for equity securities, other than the
shares of Common Stock offered hereby or pursuant to its stock plans or upon the
exercise of outstanding options or warrants, for a period of 180 days after the
date of this Prospectus without the prior written consent of NationsBanc
Montgomery Securities, Inc. See "Shares Eligible for Future Sale."
The Underwriting Agreement provides that the Company and the Selling
Stockholder will indemnify the Underwriters against certain liabilities,
including civil liabilities under the Securities Act, or will contribute to
payments the Underwriters may be required to make in respect thereof.
In connection with this offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock, including over-allotment, stabilization, syndicate covering
transactions and imposition of penalty bids. In an over-allotment, the
Underwriters would allot more shares of Common Stock to their customers in the
aggregate than are available for purchase by the Underwriters under the
Underwriting Agreement. Stabilizing means the placing of any bid, or the
effecting of any purchase, for the purpose of pegging, fixing or maintaining the
price of a security. In a syndicate covering transaction, the Underwriters would
place a bid or effect a purchase to reduce a short position created in
connection with this offering. Pursuant to a penalty bid, NationsBanc Montgomery
Securities, Inc., on behalf of the Underwriters, would be able to reclaim a
selling concession from an Underwriter if shares of Common Stock originally sold
by such Underwriter are purchased in syndicate covering transactions. These
transactions may result in the price of the Common Stock being higher than the
price that might otherwise prevail in the open market. These transactions may be
effected on the Nasdaq National Market, in the over-the-counter market or
otherwise and, if commenced, may be discontinued at any time.
The Representatives have advised the Company that the Underwriters will not
comfirm sales to any accounts over which they exercise discretionary authority
in excess of 5% of the number of shares of Common Stock offered hereby.
Prior to this offering, there has been no public market for the Common Stock
of the Company. Consequently, the initial public offering price has been
determined through negotiations among the Company and the Representatives. Among
the factors considered in such negotiations were the history of, and prospects
for, the Company and the industry in which it competes, an assessment of the
Company's management, the present state of the Company's development, the
prospects for future earnings of the Company, the prevailing market conditions
at the time of this offering, market valuations of publicly traded companies
that the Company and the Representatives believe to be comparable to the
Company, and other factors deemed relevant.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
and certain other matters will be passed upon for the Company and the Selling
Stockholder by Piper & Marbury L.L.P., Baltimore, Maryland. Certain legal
matters in connection with this offering will be passed upon for the
Underwriters by Cadwalader, Wickersham & Taft, New York, New York.
EXPERTS
The consolidated financial statements as of December 31, 1995 and 1996 and
for each of the years in the three-year period ended December 31, 1996 and
financial statement schedule included in this Prospectus and elsewhere in the
Registration Statement have been included herein in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
53
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-1 (together with all
amendments, schedules and exhibits thereto, the "Registration Statement") under
the Securities Act with respect to the shares of Common Stock offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information with respect to the Company and the
Common Stock offered hereby, reference is made to the Registration Statement.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document are not necessarily complete, and in each instance, reference
is made to the copy of such contract, agreement or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. The Registration Statement may be inspected
without charge at the public reference facilities maintained by the Commission
in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at Seven World Trade Center, 13th
Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. In addition, the Company is required to file
electronic versions of these documents with the Commission through the
Commission's Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system.
The Commission maintains a web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission at http://www.sec.gov.
The Company intends to furnish to its stockholders annual reports containing
audited consolidated financial statements and quarterly reports containing
interim unaudited financial information for the first three quarters of each
fiscal year.
54
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants..................................................... F-2
Consolidated Balance Sheets as of December 31, 1995 and 1996 and June 30, 1997
(unaudited)......................................................................... F-3
Consolidated Statements of Operations for the years ended December 31, 1994, 1995,
1996 and the six months ended June 30, 1996 (unaudited) and June 30, 1997
(unaudited)......................................................................... F-4
Consolidated Statements of Stockholder's Equity for the years ended December 31, 1994,
1995, 1996 and the six months ended June 30, 1997 (unaudited)....................... F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1995,
1996 and the six months ended June 30, 1996 (unaudited) and June 30, 1997
(unaudited)......................................................................... F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE>
Upon consummation of the stock transactions and upon assumption of a public
offering price per share, discussed in Note 1 to the consolidated financial
statements, we will be in position to issue the following report:
COOPERS & LYBRAND L.L.P.
REPORT OF INDEPENDENT ACCOUNTANTS
------------------------
To the Board of Directors
The Hunter Group, Inc.
We have audited the accompanying consolidated balance sheets of The Hunter
Group, Inc. and Subsidiaries as of December 31, 1995 and 1996, and the related
consolidated statements of operations, stockholder's equity and cash flows for
each of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of The Hunter
Group, Inc. and Subsidiaries as of December 31, 1995 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
<TABLE>
<S> <C>
Baltimore, Maryland
February 14, 1997, except for
Notes 1 and 3, as to which
the dates are September 26,
1997 and September 30,
1997,
respectively
</TABLE>
F-2
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996 JUNE 30,1997
--------- --------- -------------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
Current assets:
Cash........................................................................ $ 125 $ 331 $ 531
Accounts receivable, net.................................................... 5,360 10,302 14,505
Other assets................................................................ 307 321 811
--------- --------- -------------
Total current assets.................................................... 5,792 10,954 15,847
Property and equipment, net................................................... 501 911 1,159
Other assets, net............................................................. 307 212 279
--------- --------- -------------
Total assets............................................................ $ 6,600 $ 12,077 $ 17,285
--------- --------- -------------
--------- --------- -------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Revolving credit facility................................................... $ 1,050 $ 1,565 $ 3,881
Current portion of notes payable and capital leases......................... 54 205 187
Accounts payable and accrued expenses....................................... 3,175 5,883 9,043
Income taxes payable........................................................ -- -- 140
Deferred revenue............................................................ 494 1,002 2,214
Deferred income taxes....................................................... 962 1,765 1,173
--------- --------- -------------
Total current liabilities............................................... 5,735 10,420 16,638
Notes payable and capital leases, less current portion........................ 202 266 209
--------- --------- -------------
Total liabilities....................................................... 5,937 10,686 16,847
--------- --------- -------------
Stockholder's equity:
Preferred stock, no par value; 5,000,000 shares authorized; none issued or
outstanding............................................................... -- -- --
Common stock, no par value; 50,000,000 shares authorized;
7,800,000 shares issued and outstanding................................... 1 1 1
Additional paid in capital.................................................. -- 202 202
Retained earnings........................................................... 911 1,354 547
Cumulative foreign currency translation adjustment.......................... 1 84 (62)
Stockholder's notes receivable.............................................. (250) (250) (250)
--------- --------- -------------
Total stockholder's equity.............................................. 663 1,391 438
--------- --------- -------------
Total liabilities and stockholder's equity.............................. $ 6,600 $ 12,077 $ 17,285
--------- --------- -------------
--------- --------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------------- --------------------------
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1996 1997
------------ ------------ ------------ ------------ ------------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Fee revenue................................ $ 10,712 $ 19,554 $ 39,215 $ 14,646 $ 26,927
Project costs and expenses................. 3,929 9,499 21,180 9,224 15,169
------------ ------------ ------------ ------------ ------------
Gross margin......................... 6,783 10,055 18,035 5,422 11,758
------------ ------------ ------------ ------------ ------------
Costs and expenses:
Sales and marketing...................... 726 2,163 2,917 1,214 1,868
Professional development, recruiting and
other.................................. 1,307 2,524 3,867 2,166 4,380
General and administrative............... 2,760 5,843 9,853 4,713 6,629
------------ ------------ ------------ ------------ ------------
Total costs and expenses............. 4,793 10,530 16,637 8,093 12,877
------------ ------------ ------------ ------------ ------------
Operating income (loss).................... 1,990 (475) 1,398 (2,671) (1,119)
------------ ------------ ------------ ------------ ------------
Other income (expense):
Interest and other income................ 52 89 18 11 57
Interest expense......................... (41) (15) (170) (41) (197)
------------ ------------ ------------ ------------ ------------
Total other income (expense), net.... 11 74 (152) (30) (140)
------------ ------------ ------------ ------------ ------------
Income (loss) before income taxes.... 2,001 (401) 1,246 (2,701) (1,259)
Income tax provision (benefit)............. 828 (2) 803 (958) (452)
------------ ------------ ------------ ------------ ------------
Net income (loss).................... $ 1,173 $ (399) $ 443 $ (1,743) $ (807)
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Net income (loss) per share................ $ 0.14 $ (0.05) $ 0.05 $ (0.22) $ (0.10)
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Weighted average common shares and
equivalents outstanding.................. 8,255 7,800 8,849 7,800 7,800
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
CUMULATIVE
FOREIGN
COMMON STOCK ADDITIONAL CURRENCY STOCKHOLDER'S
----------------------- PAID-IN RETAINED TRANSLATION NOTES
SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT RECEIVABLES
---------- ----------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Balance at January 1, 1994................ 7,800,000 $1 -- $ 137 -- --
Loan to stockholder....................... -- -- -- -- -- $ (250)
Net income................................ -- -- -- 1,173 -- --
---------- ----- ----- ----------- ----- -----
Balance at December 31, 1994.............. 7,800,000 1 -- 1,310 -- (250)
Foreign currency translation adjustment... -- -- -- -- $ 1 --
Net loss.................................. -- -- -- (399) -- --
---------- ----- ----- ----------- ----- -----
Balance at December 31, 1995.............. 7,800,000 1 -- 911 1 (250)
Compensation expense in connection with
grant of stock options.................. -- -- $ 202 -- -- --
Foreign currency translation adjustment... -- -- -- -- 83 --
Net income................................ -- -- -- 443 -- --
---------- ----- ----- ----------- ----- -----
Balance at December 31, 1996.............. 7,800,000 1 202 1,354 84 (250)
Foreign currency translation adjustment
(unaudited)............................. -- -- -- -- (146) --
Net loss (unaudited)...................... -- -- -- (807) -- --
---------- ----- ----- ----------- ----- -----
Balance at June 30, 1997 (unaudited)...... 7,800,000 $1 $ 202 $ 547 $ (62) $ (250)
---------- ----- ----- ----------- ----- -----
---------- ----- ----- ----------- ----- -----
<CAPTION>
TOTAL
---------
<S> <C>
Balance at January 1, 1994................ $ 138
Loan to stockholder....................... (250)
Net income................................ 1,173
---------
Balance at December 31, 1994.............. 1,061
Foreign currency translation adjustment... 1
Net loss.................................. (399)
---------
Balance at December 31, 1995.............. 663
Compensation expense in connection with
grant of stock options.................. 202
Foreign currency translation adjustment... 83
Net income................................ 443
---------
Balance at December 31, 1996.............. 1,391
Foreign currency translation adjustment
(unaudited)............................. (146)
Net loss (unaudited)...................... (807)
---------
Balance at June 30, 1997 (unaudited)...... $ 438
---------
---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................................. $ 1,173 $ (399) $ 443 $ (1,743) $ (807)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization................................... 117 62 145 67 139
Provision for doubtful accounts................................. 50 38 128 13 357
Deferred income taxes........................................... 819 (2) 803 (958) (592)
Non-cash gain on debt forgiveness............................... -- -- (48) (48) --
Compensation expense in connection with stock options granted... -- -- 202 101 --
Compensation expense in connection with repurchase of stock
options....................................................... -- -- 113 -- --
Loss on asset disposal.......................................... 60 -- -- -- --
Increase (decrease) in cash resulting from changes in assets and
liabilities:
Accounts receivable........................................... (2,303) (2,375) (5,070) (1,521) (4,549)
Other current assets.......................................... (422) 176 (11) 73 (613)
Non current assets............................................ (3) (282) 95 131 35
Accounts payable and accrued expenses......................... (11) 2,628 1,356 1,378 5,293
Income taxes payable.......................................... -- -- -- -- 140
Deferred revenue.............................................. 577 (233) 508 460 1,211
--------- --------- --------- --------- ---------
Net cash provided (used) by operating activities.................... 57 (387) (1,336) (2,047) 614
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Capital expenditures.............................................. (55) (194) (385) (113) (331)
--------- --------- --------- --------- ---------
Net cash used by investing activities............................... (55) (194) (385) (113) (331)
--------- --------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from revolving credit facility, net...................... 525 1,050 515 1,752 916
Cash overdrafts................................................... -- 225 1,400 306 (722)
Payments on short-term financing.................................. (1) (527) -- 11 (60)
Payments on capital lease obligations............................. -- (88) (69) (29) (72)
Payments on long-term financing................................... (256) -- -- -- --
Loan distribution................................................. (250) -- -- -- --
--------- --------- --------- --------- ---------
Net cash provided by financing activities........................... 18 660 1,846 2,040 62
--------- --------- --------- --------- ---------
Effect of exchange rate changes on cash............................. -- 1 81 (5) (145)
--------- --------- --------- --------- ---------
Net increase (decrease) in cash..................................... 20 80 206 (125) 200
Cash at beginning of period......................................... 25 45 125 125 331
--------- --------- --------- --------- ---------
Cash at end of period............................................... $ 45 $ 125 $ 331 $ -- $ 531
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Cash paid during the year for:
Interest.......................................................... $ 41 $ 15 218 $ 89 $ 197
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Income taxes...................................................... $ 38 $ 8 $ 2 $ 2 $ 4
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Non-cash investing activity:
Property and equipment acquired through capital leases............ -- $ 272 $ 170 $ 39 $ 57
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
NATURE OF OPERATIONS
The Hunter Group, Inc., a Maryland corporation, was founded in 1983. The
Company provides management consulting, systems implementation and educational
services to organizations seeking to deploy enterprise software applications,
including enterprise resource planning software applications. Headquartered in
Baltimore, Maryland, the Company has offices in major business centers in North
America, Europe and Asia. In 1995, the Company established Hunter Consulting
Associates Limited, a wholly-owned subsidiary organized under the laws of the
United Kingdom. In 1996, the Company established THG Consulting Inc., The Hunter
Group (Singapore) PTE Ltd., and Hunter Consulting Associates Pty. Limited,
wholly-owned subsidiaries organized under the laws of Canada, Singapore and
Australia, respectively. In 1997, the Company established The Hunter Group
International, Inc., a wholly-owned subsidiary of the Company organized under
the laws of Delaware. The Hunter Group, Inc. and its subsidiaries are
collectively referred to herein as the "Company."
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of The Hunter
Group, Inc., and its wholly-owned subsidiaries. All material intercompany
balances and transactions have been eliminated in consolidation.
REVENUE RECOGNITION
The Company's revenue is composed of fees for professional services which
excludes client reimbursable expenses. The majority of the Company's revenue is
from contracts on a time and materials basis and is recognized as the services
are performed. The remainder of the Company's contracts are on a fixed-price
basis, and revenue from those contracts is recognized using the percentage of
completion method based upon the number of labor hours incurred compared to the
total estimated hours at estimated realizable rates. Under the percentage of
completion method, the Company must estimate the percentage of completion of
each project at the end of each financial reporting period. Estimates are
subject to adjustment as a project progresses to reflect changes in projected
completion costs or dates. Progress payments received in advance from clients
are applied first to any amount of unbilled accounts receivable on the related
contracts. Any excess of the payments received in advance over the related
unbilled accounts receivable is recorded as a deferred revenue.
STOCK SPLIT
On September 26, 1997, the Board of Directors authorized management of the
Company to file a registration statement with the Securities and Exchange
Commission permitting the Company to sell shares of its common stock, no par
value (the "Common Stock") in an initial public offering (the "IPO"). In
addition, the Board of Directors authorized: (i) a 26-for-1 stock split on the
Company's Common Stock; (ii) an increase in the authorized Common Stock to
50,000,000 shares; and (iii) 5,000,000 shares of preferred stock, no par value
(the "Preferred Stock"), to be made effective prior to the effectiveness of the
IPO. All references to Common Stock, options and per share data have been
restated to give effect to the stock split.
F-7
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
EARNINGS PER SHARE
Common equivalent shares are included in the per share calculations where
the effect of their inclusion would be dilutive. Common equivalent shares
consist of common shares issuable upon the assumed exercise of outstanding stock
options. Pursuant to Securities and Exchange Commission Staff Accounting
Bulletin ("SAB") No. 83, the common equivalent shares issued by the Company
during the twelve months preceding the anticipated effective date of the
Registration Statement relating to the Company's IPO, using the treasury stock
method and an assumed public offering price should be included in weighted
average common shares and share equivalents outstanding in the calculation of
net income (loss) per common share for all periods presented. However, the
Company has not determined an estimated public offering price per share.
Therefore, earnings per share as presented on the consolidated statement of
operations has not been calculated in accordance with SAB No. 83. At such time
as an assumed public offering price per share becomes estimable, the Company
will present its earnings per share in accordance with the SAB.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS 128"). FAS
128 simplifies the existing earnings per share ("EPS") computations under
Accounting Principles Board Opinion No. 15, "Earnings Per Share," revises
disclosure requirements, and increases the comparability of EPS data on an
international basis. In simplifying the EPS computations, the presentation of
primary EPS is replaced with basic EPS, with the principal difference being that
common stock equivalents are not considered in computing basic EPS. In addition,
FAS 128 requires dual presentation of basic diluted EPS. FAS 128 is effective
for financial statements issued for periods ending after December 15, 1997. The
Company's pro forma basic EPS under FAS 128 would have been $0.06 and $(0.10)
for the year ended December 31, 1996 and for the period ended June 30, 1997,
respectively, and dilutive EPS under FAS 128 would not differ significantly from
the reported pro forma net income per share.
RISK, UNCERTAINTIES AND CONCENTRATIONS
The Company is subject to credit risk through trade receivables. Credit risk
with respect to trade receivables is minimized because of the diversification of
the Company's operations, as well as its large client base and its geographical
dispersion. The Company performs ongoing evaluations of its receivables and
frequently obtains retainers at the onset of client engagements. In management's
opinion, the Company has provided sufficient provisions to prevent a significant
impact of credit losses to the financial statements.
The Company relies on relationships with Peoplesoft, Inc. ("PeopleSoft"), a
provider of software products. The majority of the Company's fee revenue has
been derived from services employing PeopleSoft products. The Company is largely
dependent on PeopleSoft's marketing efforts and continued success.
The Company's top five clients in 1994, 1995, 1996 and the six months ended
June 30, 1997 generated an aggregate of 54%, 37%, 29% and 32% of revenue,
respectively. In 1994 and 1995, one client accounted for 27% and 12%,
respectively, of revenue. For the six months ended June 30, 1997 another client
accounted for 11% of revenue.
Five clients accounted for 41%, 34% and 38% of total accounts receivable as
of December 31, 1995 and 1996 and June 30, 1997, respectively.
F-8
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
Client engagements are generally terminable with little or no notice or
penalty, and a client's unanticipated decision to terminate or postpone a
project may result in higher than expected numbers of unassigned Company
professionals. Furthermore, the Company is subject to potential claims by
dissatisfied clients that the Company's services or actions did not achieve the
results expected by those clients or adversely affected the clients' operations.
The failure of the Company to complete a project to the client's satisfaction
within the fixed price exposes the Company to potentially unrecoverable cost
overruns. The Company also may establish a price before the design
specifications are finalized, which could result in a fixed price that is too
low and, therefore, adversely affects the Company's business, financial
condition and results of operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values and carrying amounts of the Company's financial instruments,
primarily accounts receivable and payable and the revolving credit facility, are
approximately equivalent. The financial instruments are classified as current
and will be liquidated within the next operating cycle.
STOCK-BASED COMPENSATION
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 ("SFAS 123") "Accounting for
Stock-Based Compensation," which is effective for financial statements for
fiscal years beginning as December 15, 1995. SFAS 123 provides alternative
valuation methods for stock-based compensation, while still incorporating the
provisions of Accounting Principles Board Opinion No. 25 ("APB 25") as generally
accepted accounting principles for stock-based compensation. The Company
accounts for its stock-based compensation according to the original provisions
of APB 25, and has included pro forma disclosures in these footnotes using the
measurement provisions of SFAS 123.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and related notes to financial statements. Actual results could
differ from those estimates.
VALUATION OF ACCOUNTS RECEIVABLE
Accounts receivable are stated at face value. An allowance for doubtful
accounts is provided using the specific identification method. As of December
31, 1995 and 1996 and June 30, 1997, the allowance for doubtful accounts was
$10,000, $132,000 and $466,000, respectively.
PROPERTY AND EQUIPMENT
Property and equipment, consisting primarily of computer related equipment,
is stated at cost. Expenditures for maintenance, repairs and minor renewals are
expensed as incurred, while significant renewals and betterments are
capitalized. Property and equipment is presented on the balance sheets net of
accumulated depreciation and amortization of $286,000, $377,000 and $386,000 at
December 31, 1995 and 1996, and June 30, 1997, respectively.
F-9
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
Depreciation is provided by using accelerated and straight-line methods over
the estimated useful lives, approximately five years, of the depreciable assets.
ACCRUED LIABILITIES
Included in accrued liabilities as of December 31, 1996 is $615,000 relating
to quarterly incentive plan bonuses payable to Company professional staff, and
as of June 30, 1997 is $1,125,000 of accrued discretionary bonuses payable at
year end to management and general and administrative staff.
INCOME TAXES
Income taxes are provided for the tax effect of transactions reported in the
financial statements and consists of taxes currently due plus deferred taxes
related primarily to differences between the basis of financial and income tax
reporting. Deferred tax assets and liabilities represent the future tax return
consequences of those differences, which will either be deductible or taxable
when the assets and liabilities are recovered or settled. The Company provides a
valuation allowance against net deferred income tax assets if, based upon
available evidence, it is more likely than not that some or all of the deferred
income tax assets may not be realized.
FOREIGN CURRENCY TRANSLATION ADJUSTMENT
The assets and liabilities of the Company's foreign subsidiaries whose
functional currencies are other than the U.S. dollar are translated at current
rates of exchange. Income and expense items are translated at the weighted
average exchange rate for the year. The resulting foreign currency translation
adjustments are recorded directly into the foreign currency translation
component of stockholder's equity. Gains and losses from transactions
denominated in foreign currencies are reflected in operations.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The information presented as of June 30, 1997 and for the six months ended
June 30, 1997 and 1996 has not been audited. In the opinion of management, the
unaudited interim consolidated balance sheet and statements of operations,
stockholder's equity and cash flows include all adjustments consisting solely of
normal recurring adjustments necessary to present fairly the Company's
consolidated financial position, results of operations and cash flows as of and
for the periods indicated.
2. RELATED PARTY TRANSACTIONS:
During 1994, an individual who is the sole stockholder and Chief Executive
Officer of The Hunter Group, Inc. borrowed $250,000 under two demand notes.
Accrued interest receivable on these notes as of December 31, 1995 and 1996 and
June 30, 1997 was $14,000, $26,000 and $33,000, respectively. The notes accrue
interest at 5%. The principal amount of this note receivable is included as a
component of stockholder's equity.
Included in accounts payable and accrued expenses on the consolidated
balance sheets at December 31, 1996 and June 30, 1997 is the amount of $250,000,
payable as bonus to the Company's sole stockholder.
F-10
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. RELATED PARTY TRANSACTIONS: (CONTINUED)
During 1996, accrued interest to the Company's sole stockholder of $48,000,
in the aggregate, was forgiven.
3. REVOLVING CREDIT FACILITY:
During 1995, the Company entered into a revolving credit facility (the
"Facility") with a financial institution that is collateralized by all accounts
receivable of the Company. The Facility was limited to the lesser of $3.0
million or 85% of aggregate accounts receivable, and bore interest at the lower
of the bank's prime rate or 2.5 percentage points above the 30 day LIBOR rate.
The weighted average interest rate for 1995 was 8.35%. As of December 31, 1995,
the interest rate was 8.35%.
During 1996, the Facility was converted to a demand note with an original
expiration date of April 30, 1997, subsequently extended until June 30, 1997.
The demand note was limited to the lesser of $3.6 million or a formula for
eligible accounts receivable. The note bore interest at 3.50 percentage points
above LIBOR. The weighted average interest rate for 1996 was 9.01%. As of
December 31, 1996, the interest rate was 9.875%.
As of December 31, 1996 and 1995, the unused portion of the note and line
amounted to $2.04 million and $1.95 million, respectively. The Facility had an
unused commitment fee of 0.375% during 1995. This fee was removed upon
conversion to a demand note in 1996.
Effective June 30, 1997, the Facility was amended and the availability under
the Facility was increased to the lesser of $8.0 million or a formula for
eligible accounts receivable. The Facility bears interest at the lower of the
financial institution's prime interest rate or 250 basis points above 30-day
LIBOR (a rate of 8.19% at June 30, 1997) plus an additional 0.75% fee per month
based on the monthly maximum loan amount. The weighted average interest rate for
the six months ended June 30, 1997 was 8.87%. Currently, the Facility has an
unused commitment fee of 0.30% per month. The Facility is collateralized by the
receivables, equipment and all other property of the Company.
The terms of the Facility provided for compliance with certain covenants
including tangible net worth and net income levels and a leverage ratio. Because
of the operating loss reported by the Company for the year ended December 31,
1995 and other conditions in 1996, the Company was not in compliance with such
covenants. On February 14, 1997, the financial institution granted waivers of
these technical defaults. On September 30, 1997, the financial institution
amended certain covenants of the Facility.
F-11
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. LEASES:
The Company is obligated under various operating and capital lease
agreements, primarily for office space and equipment through 2003. As of
December 31, 1996, future minimum lease payments under these non-cancelable
operating and capital leases for the years ending December 31 are as follows:
<TABLE>
<CAPTION>
OPERATING CAPITAL
------------ ----------
<S> <C> <C>
1997................................................................ $ 2,112,000 $ 163,000
1998................................................................ 1,538,000 136,000
1999................................................................ 933,000 87,000
2000................................................................ 683,000 37,000
2001 and thereafter................................................. 333,000 --
------------ ----------
Total minimum payments.............................................. $ 5,599,000 423,000
------------
------------
Less: portion representing interest............................... 65,000
----------
Present value of capital lease obligations.......................... 358,000
Less: current portion............................................. 128,000
----------
Capital lease obligations, non-current.............................. $ 230,000
----------
----------
</TABLE>
Rental expense was $312,000, $448,000, $955,000 and $1,514,000 for the years
ended December 31, 1994, 1995 and 1996 and for the six months ended June 30,
1997, respectively.
The cost and accumulated amortization of assets, primarily for office
equipment and software, under capital leases are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- JUNE 30,
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Cost..................................................... $272,000 $443,000 $500,000
Accumulated amortization................................. 15,000 72,000 122,000
---------- ---------- ----------
$257,000 $371,000 $378,000
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
F-12
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES:
The provision (benefit) for income taxes for the years ended December 31,
1994, 1995 and 1996 and the six month periods ended June 30, 1997 and 1996
consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
--------------------------------- ------------------------
1994 1995 1996 1996 1997
---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Current:
Federal....................... $ 1,500 -- -- -- --
State......................... 6,600 -- -- -- --
Foreign....................... -- -- -- -- $ 140,000
---------- --------- ---------- ----------- -----------
8,100 -- -- -- 140,000
---------- --------- ---------- ----------- -----------
Deferred:
Federal....................... 675,000 $ (1,500) $ 633,000 $ (808,000) (509,000)
State......................... 144,400 (500) 170,000 (150,000) (83,000)
Foreign....................... -- -- -- -- --
---------- --------- ---------- ----------- -----------
819,400 (2,000) 803,000 (958,000) (592,000)
---------- --------- ---------- ----------- -----------
Total................... $ 827,500 $ $(2,000) $ 803,000 $ (958,000) $ (452,000)
---------- --------- ---------- ----------- -----------
---------- --------- ---------- ----------- -----------
</TABLE>
For the years ended December 31, 1994, 1995 and 1996 and the six months
ended June 30, 1996 and 1997, the components of income (loss) before income
taxes totaled $2,001,000, $(105,000), $1,655,000, $(2,280,000), and $(1,352,000)
for U.S. operations and $0, $(296,000), $(409,000), $(421,000), and $93,000 for
international operations, respectively.
The income tax provision (benefit) differs from the expected income tax
provision (benefit) using the statutory federal income tax rate as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------
Tax provision (benefit) at statutory rate...................... 34.0% (34.0)% 34.0% (34.0)% (34.0)%
State taxes, net of federal benefit............................ 6.2 -- 10.3 (4.9) (6.5)
Foreign taxes.................................................. -- 25.2 11.1 1.4 (1.1)
Other.......................................................... 1.2 8.3 9.0 2.0 5.7
--- --------- --- --------- ---------
41.4% (0.5)% 64.4% (35.5)% (35.9)%
--- --------- --- --------- ---------
--- --------- --- --------- ---------
</TABLE>
F-13
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES: (CONTINUED)
The components of the net deferred income tax liability at December 31, 1995
and 1996 and June 30, 1997 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- JUNE 30,
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Deferred income tax assets:
Deferred compensation expense...................................... $ -- $ 77,000 $ 77,000
Other.............................................................. 52,000 80,000 48,000
Net operating loss carryforwards................................... 339,000 268,000 94,000
Valuation allowance................................................ (108,000) (131,000) (85,000)
------------- ------------- -------------
Total deferred income tax assets................................. 283,000 294,000 134,000
------------- ------------- -------------
Deferred income tax liabilities:
Accrual to cash adjustments........................................ (1,187,000) (1,914,000) (1,101,000)
Depreciation....................................................... (58,000) (102,000) (103,000)
Other.............................................................. -- (43,000) (103,000)
------------- ------------- -------------
Total deferred income tax liabilities............................ (1,245,000) (2,059,000) (1,307,000)
------------- ------------- -------------
Net deferred tax liabilities................................... $ (962,000) $ (1,765,000) $ (1,173,000)
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
As of June 30, 1997, the Company had net operating loss carryforwards of
approximately $23,000 and $195,000 for U.S. and U.K. income tax reporting
purposes, respectively, which expire at various dates beginning December 2010.
As of June 30, 1997, the Company's other foreign subsidiaries have net operating
loss carryforwards of approximately $200,000.
During 1997, the Company reduced the valuation allowance from $131,000 to
$85,000 reflecting the utilization of losses associated with U.K. net operating
losses offset by an increase for other international net operating losses
reflecting the uncertainty of realizing those assets.
Since its inception, the Company has reported its financial results for
income tax purposes using the cash method of accounting while maintaining its
books for financial reporting purposes using the accrual method. Upon completion
of the IPO, the Company will change its method of accounting for income tax
reporting purposes from the cash method to the accrual method. As a result,
substantially all of the deferred tax liability accumulated on the balance sheet
will become due and payable over a four-year period.
6. RETIREMENT PLANS:
The Hunter Group, Inc. initiated a 401(k) defined contribution plan (the
"401(k) Plan") effective January 1, 1986, which is available to all eligible
employees. A participant may elect to contribute up to 10% of compensation via
salary deferrals. After an employee has completed 12 months of service, The
Hunter Group, Inc. makes discretionary matching contributions to the 401(k) Plan
which for the years ended December 31, 1994, 1995 and 1996 were equal to 50% of
the employees' contribution. Total contributions amounted to $86,000, $158,000
and $336,000 and $336,000 for the years ended December 31, 1994, 1995 and 1996
and for the six months ended June 30, 1997, respectively.
F-14
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. RETIREMENT PLANS: (CONTINUED)
The Company's subsidiaries have also established defined contribution plans
for their employees. Total contributions under these plans amounted to $0,
$9,000, $66,000 and $65,000, for the years ended December 31, 1994, 1995 and
1996 and for the six months ended June 30, 1997, respectively.
7. STOCK OPTION AND PURCHASE PLANS:
1991 EMPLOYEE NON-QUALIFIED STOCK OPTION PLAN
In 1991, the Company adopted the 1991 Employee Non-Qualified Stock Option
Plan (the "Employee Non-Qualified Stock Option Plan") to provide long-term
performance incentives to Company employees. All options granted are
non-qualified options. The Board of Directors determines the option price, which
may be different than the fair market value of the Common Stock at the date of
option grant. The Company has reserved 2,600,000 shares for issuance under the
Employee Non-Qualified Stock Option Plan. Options vest and expire as determined
at the grant date by the Board of Directors, provided that no options may be
exercised later than ten years after the grant of the option. Option prices
range from $0.16 to $8.42 per share. As of June 30, 1997, 1,040,234 shares were
available for issuance under the Employee Non-Qualified Stock Option Plan.
1997 OMNIBUS STOCK PLAN
In September 1997, the Company established the 1997 Omnibus Stock Plan (the
"Omnibus Stock Plan"). The Omnibus Stock Plan provides for the grant of
non-qualified stock options, incentive stock options as defined under the
Internal Revenue Code, stock appreciation rights, restricted and non-restricted
stock awards, phantom stock awards and performance awards, each of which may be
granted separately or in tandem with other awards. The Omnibus Stock Plan is
open to all employees, officers and directors of the Company or any of its
affiliated entities; however, only employees of the Company or its subsidiaries
may receive incentive stock option awards. The Omnibus Stock Plan is
administered by the Board of Directors or a committee of directors designated by
the Board of Directors (the "Administrator"), who has the authority to determine
all characteristics of any awards or grants. Stock options intended to qualify
as incentive stock options as defined under the Internal Revenue Code must have
an exercise price at least equal to fair market value on the date of grant, but
non-qualified stock options may be granted with an exercise price less than fair
market value. Incentive stock options may not be exercisable more than ten years
from the date the option is granted. Awards of stock appreciation rights, stock
and phantom stock awards, and performance awards may be settled in cash, shares
of Common Stock, or a combination of both, at the discretion of the
Administrator. The Company has reserved an aggregate of shares of Common
Stock for issuance under the Omnibus Stock Plan; however, no options or others
grants have been granted under the Omnibus Stock Plan to date.
1998 EMPLOYEE STOCK PURCHASE PLAN
In September 1997, the Company established the 1998 Employee Stock Purchase
Plan (the "Employee Stock Purchase Plan") to be effective January 1, 1998. The
Employee Stock Purchase Plan allows eligible employees the right to purchase
Common Stock during designated time periods established by the Board of
Directors not to exceed 27 months in length (the "Offering Period"). During the
Offering Period, participating employees may contribute, through payroll
deductions, 1% to 10% of their base salary. On the last day of the Offering
Period (the "Exercise Date"), the employee's payroll deductions will be used to
purchase shares of the Company's Common Stock for the employee. The price of the
shares
F-15
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. STOCK OPTION AND PURCHASE PLANS: (CONTINUED)
purchased will be determined in advance by the Board of Directors, but in no
event will be lower than the lesser of (i) 85% of the stock's fair market value
on the commencement date of the Offering Period or (ii) 85% of the stock's fair
market value on the Exercise Date. The Company has reserved shares of
Common Stock for issuance under the plan and there have been no issuances to
date.
The Company accounts for fair value of its grants under the Employee
Non-Qualified Stock Option Plan in accordance with APB 25. Accordingly,
compensation expense of $202,000 was recognized in 1996, attributable to options
granted with exercise prices below the estimated fair market value of the
underlying shares of common stock. Had compensation expense been determined
based on the fair value at the grant dates for awards under the Employee
Non-Qualified Stock Option Plan consistent with the method of SFAS 123, the
Company's net income would have been as indicated in the pro forma table below:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- JUNE 30,
1995 1996 1997
----------- ---------- -----------
<S> <C> <C> <C>
Net income (loss):
As reported.......................................... $ (399,000) $ 443,000 $ (807,000)
Pro forma............................................ (413,000) 427,000 (844,000)
Net income (loss) per share:
As reported.......................................... (0.05) 0.05 (0.10)
Pro forma............................................ (0.05) 0.05 (0.11)
</TABLE>
The fair value of each option is estimated on the date of grant using a
Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants during the periods ended December 31, 1995 and 1996
and the six month period ended June 30, 1997: dividend yield of 0%, expected
volatility of 0%, risk-free interest rate of 5.82% and 6.61% and expected terms
of 4 years.
A summary of the status of the Employee Non-Qualified Stock Option Plan as
of December 31, 1995 and 1996 and June 30, 1997, is presented below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
SIX MONTHS ENDED
1995 1996 JUNE 30, 1997
----------------------------------- --------------------------------- ----------------------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE EXERCISE AVERAGE EXERCISE AVERAGE
NO. OF EXERCISE PRICE NO. OF EXERCISE PRICE NO. EXERCISE EXERCISE
OPTIONS PRICE RANGE OPTIONS PRICE RANGE OF OPTIONS PRICE PRICE RANGE
---------- ----------- ---------- --------- ----------- --------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Outstanding
beginning of
period........ 784,524 $ 0.18 $0.16-0.30 1,143,896 $ 0.31 $0.16-0.69 1,210,456 $ 0.46 $ 0.16-1.52
Exercised....... -- -- -- (24,700) 0.54 0.54 -- -- --
Canceled........ -- -- -- (141,362) 0.62 0.54-1.05 -- -- --
Granted......... 359,372 0.59 0.54-0.69 232,622 1.08 0.76-1.52 324,610 8.42 8.42
---------- --------- --------- --------------
Outstanding end
of period..... 1,143,896 0.31 0.16-0.69 1,210,456 0.46 0.16-1.52 1,535,066 2.11 0.16-8.42
---------- ----------- ---------- --------- ----- --------- -------------- ----------- -----------
---------- ----------- ---------- --------- ----- --------- -------------- ----------- -----------
Options
exercisable at
end of
period........ 784,524 $ 0.18 $0.16-0.30 926,536 $ 0.33 $0.16-1.52 998,140 $ 0.35 $ 0.16-1.52
---------- ----------- ---------- --------- ----- --------- -------------- ----------- -----------
---------- ----------- ---------- --------- ----- --------- -------------- ----------- -----------
Weighted-average
fair value of
options
granted during
the period.... $ 0.79 $ 1.42 $ 8.42
----------- ----- -----------
----------- ----- -----------
</TABLE>
F-16
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. STOCK OPTION AND PURCHASE PLANS: (CONTINUED)
As of June 30, 1997, the weighted average remaining contractual life of the
outstanding options was 6.2 years. In 1996, the weighted fair value of options
granted during the period with an exercise price less than the estimated fair
market value of the underlying Common Stock was $4.04.
As of June 30, 1997, information regarding the range of exercise prices for
outstanding options is as follows:
<TABLE>
<CAPTION>
TOTAL EXERCISABLE
- --------------------------------------------------------------- ----------------------
<C> <C> <C> <S> <C> <C>
WEIGHTED
WEIGHTED AVERAGE AVERAGE
EXERCISE PRICE NO. OF WEIGHTED AVERAGE REMAINING NO. OF EXERCISE
RANGE OPTIONS EXERCISE PRICE CONTRACTUAL LIFE OPTIONS PRICE
- -------------- ---------- ----------------- ---------------- --------- -----------
<CAPTION>
<C> <C> <C> <S> <C> <C>
$0.16-$0.30 784,524 $ 0.18 4.3 years 784,524 $ 0.18
0.56-0.69 235,898 0.61 8.1 111,020 0.61
0.76-1.05 109,278 0.82 8.7 21,840 0.82
1.52 80,756 1.52 9.6 80,756 1.52
8.42 324,610 8.42 9.7 -- --
---------- ---------
1,535,066 998,140
---------- ---------
---------- ---------
</TABLE>
Upon consummation of the IPO, options to purchase 77,792 shares of the
Company's Common Stock will become immediately exercisable at an exercise price
of $8.42 per share.
As of December 31, 1995 and 1996 and June 30, 1997, the pro forma tax
effects under SFAS 109 would not be material to the consolidated financial
statements.
A former officer of the Company exercised options to purchase 24,700 shares
of Common Stock in October 1996. Upon ceasing employment, the Company promised
to pay this individual $113,000 instead of issuing shares. This promise was
evidenced in January 1997 by a $113,000 non-interest bearing note, which is
payable in five installments, $40,000 in January 1997, followed by four
semi-annual equal installments of $18,250 that began in May 1997. The amount of
the note was based on the Company's estimate of fair market value of the
underlying stock at the time of his exercise. The Company has recorded a noncash
charge to its consolidated statement of operations to reflect this transaction.
8. OPERATING INFORMATION:
The Company's operations are conducted in one business segment which
includes the following practice areas: Business Strategies and Solutions,
Implementation Services and Education Services. Implementation Services
accounted for $9,840,000, $17,822,000, $32,517,000, $12,228,000 and $24,104,000
of revenue for the years ended December 31, 1994, 1995 and 1996 and the six
months ended June 30, 1996 and 1997, respectively.
F-17
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. GEOGRAPHIC OPERATIONS:
Fee revenue and operating income (loss) for the years ended December 31,
1994, 1995, 1996 and for the six months ended June 30, 1996 and 1997 and assets
as of December 31, 1995, 1996 and June 30, 1997 by geographic area of all
consolidated subsidiaries were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------- --------------------
1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Fee revenue
North America............................................ $ 10,712 $ 19,416 $ 35,794 $ 13,737 $ 23,241
Europe................................................... -- 138 2,741 734 3,518
Other.................................................... -- -- 680 175 168
--------- --------- --------- --------- ---------
Total.................................................. $ 10,712 $ 19,554 $ 39,215 $ 14,646 $ 26,927
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Operating income (loss)
North America............................................ $ 1990 $ (180) $ 1,462 $ (2,369) $ (1,178)
Europe................................................... -- (295) (257) (310) 341
Other.................................................... -- -- 193 8 (282)
--------- --------- --------- --------- ---------
Total.................................................. $ 1,990 $ (475) $ 1,398 $ (2,671) $ (1,119)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Assets:
North America............................................ $ 6,264 $ 10,401 $ 14,330
Europe................................................... 336 1,609 2,699
Other.................................................... -- 67 256
--------- --------- ---------
Total.................................................. $ 6,600 $ 12,077 $ 17,285
--------- --------- ---------
--------- --------- ---------
</TABLE>
10. NEW ACCOUNTING PRONOUNCEMENTS:
In 1997, the Financial Accounting Standards Board issued the following
Statements of Financial Standard ("FAS"):
NO. 129--"DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURES"
This statement becomes effective for fiscal years ending after December 15,
1997, and continues the previous requirements to disclose certain information
about an entity's capital structure found in previously issued Opinions and
Standards. The Company currently follows the provisions for this statement.
NO. 130--"REPORTING COMPREHENSIVE INCOME"
This statement becomes effective for fiscal years ending December 15, 1997,
and requires that changes in the amounts of comprehensive income items be shown
in a primary financial statement. The Company intends to adopt the disclosures
required by this statement for the year ending December 31, 1997.
NO. 131--"DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION"
This statement becomes effective for fiscal years ending after December 15,
1997, and changes the way public companies report information about segments of
their business in their financial statements and requires them to report
selected segment information in their quarterly reports issued to stockholders.
The Company intends to adopt the disclosures required by this statement for the
year ending December 31, 1997.
F-18
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY SECURITIES OTHER THAN THE SHARES OF COMMON STOCK TO WHICH IT RELATES
OR AN OFFER TO, OR A SOLICITATION OF, ANY PERSON IN ANY JURISDICTION WHERE SUCH
AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
----------------------
TABLE OF CONTENTS
----------------------
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PROSPECTUS SUMMARY.............................. 4
RISK FACTORS.................................... 8
USE OF PROCEEDS................................. 15
DIVIDEND POLICY................................. 15
CAPITALIZATION.................................. 16
DILUTION........................................ 17
SELECTED CONSOLIDATED FINANCIAL DATA............ 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.................................... 19
BUSINESS........................................ 28
MANAGEMENT...................................... 39
CERTAIN TRANSACTIONS............................ 46
PRINCIPAL STOCKHOLDERS AND SELLING STOCKHOLDER.. 47
DESCRIPTION OF CAPITAL STOCK.................... 48
SHARES ELIGIBLE FOR FUTURE SALE................. 50
UNDERWRITING.................................... 52
LEGAL MATTERS................................... 53
EXPERTS......................................... 53
ADDITIONAL INFORMATION.......................... 54
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS...... F-1
</TABLE>
------------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
4,100,000 SHARES
[LOGO]
COMMON STOCK
-----------------
PROSPECTUS
-------------------
NATIONSBANC MONTGOMERY SECURITIES, INC.
BANCAMERICA ROBERTSON STEPHENS
J.P. MORGAN & CO.
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with this
Registration Statement. The Company will pay all expenses of the offering. All
of such expenses are estimates, other than the filing fees payable to the
Securities and Exchange Commission, National Association of Securities Dealers,
Inc. and the Nasdaq National Market.
<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee...................... $ 17,145
NASD Filing Fee.................................................... 6,158
Nasdaq Listing Fee................................................. 42,750
Printing Fees and Expenses......................................... *
Legal Fees and Expenses............................................ *
Directors' and Officers' Insurance Premium......................... *
Accounting Fees and Expenses....................................... *
Blue Sky Fees and Expenses......................................... *
Miscellaneous...................................................... *
---------
TOTAL.......................................................... $
---------
---------
</TABLE>
- ------------------------
* To be completed in an amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Charter provides that, to the fullest extent that limitations
on the liability of directors and officers are permitted by the Maryland General
Corporation Law, no director or officer of the Company shall have any liability
to the Company or its stockholders for monetary damages. The Maryland General
Corporation Law provides that a corporation's charter may include a provision
which restricts or limits the liability of its directors or officers to the
corporation or its stockholders for money damages except: (1) to the extent that
it is provided that the person actually received an improper benefit or profit
in money, property or services, for the amount of the benefit or profit in
money, property or services actually received, or (2) to the extent that a
judgment or other final adjudication adverse to the person is entered in a
proceeding based on a finding in the proceeding that the person's action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. The Company's
Charter and By-Laws provide that the Company shall indemnify and advance
expenses to its currently acting and its former directors to the fullest extent
permitted by the Maryland General Corporation Law and that the Company shall
indemnify and advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with law.
The Charter and By-Laws provides that the Company will indemnify its
directors and officers and may indemnify employees or agents of the Company to
the fullest extent permitted by law against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Company. In addition, the Company's Charter provides that its
directors and officers will not be liable to stockholders for money damages,
except in limited instances. However, nothing in the Charter or By-Laws of the
Company protects or indemnifies a director, officer, employee or agent against
any liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. To the extent that a director has been
successful in defense of any proceeding, the Maryland General Corporation Law
provides that he shall be indemnified against reasonable expenses incurred in
connection therewith.
II-1
<PAGE>
The form of underwriting agreement, filed as Exhibit 1.01 hereto, contains
provisions by which the Underwriters agree to indemnify the Registrant and each
officer, director and controlling person of the Registrant against certain
liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
In the three years preceding the filing of this registration statement, the
Company has issued shares of Common Stock in the following transactions, each of
which was intended to be exempt from the registration requirements of the
Securities Act of 1933, as amended, by virtue of Section 4(2) thereunder.
From January 1, 1994 to the present, the Company has granted options to
purchase a total of shares of Common Stock at exercise prices ranging from
$ per share to $ per share. No underwriters were involved in
connection with the sales of these securities.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- ----------------------------------------------------------------------------------------------------
<C> <S>
1.01 Form of Underwriting Agreement.*
3.01 Form of Amended and Restated Charter.
3.02 Form of Amended and Restated By-Laws.
4.01 Specimen Common Stock Certificate.
5.01 Opinion of Piper & Marbury L.L.P.*
10.01 1991 Employee Non-Qualified Stock Option Plan.
10.02 1998 Employee Stock Purchase Plan.*
10.03 1997 Omnibus Stock Plan.
10.04(a) Amended and Restated Loan and Security Agreement.
10.04(b) Amendment No. 1 to Amended and Restated Loan and Security Agreement.
10.05(a) Implementation Partners Agreement between Registrant and PeopleSoft, Inc. dated October 1, 1993.**
10.05(b) First Amendment to Implementation Partner Agreement dated October 1, 1994.**
10.05(c) Amendment to Implementation Partners Agreement dated October 1, 1994.
10.05(d) Third Amendment to Implementation Partners Agreement dated August 31, 1995.**
10.05(e) Fourth Amendment to Implementation Partners Agreement dated October 13, 1995.
10.05(f) Fifth Amendment to Implementation Partners Agreement dated May 8, 1996.**
10.05(g) Sixth Amendment to Implementation Partners Agreement dated May 8, 1996.**
10.05(h) Seventh Amendment to Implementation Partners Agreement dated October 11, 1996.**
10.05(i) Eighth Amendment to Implementation Partners Agreement dated January 8, 1997.**
10.05(j) Ninth Amendment to Implementation Partners Agreement dated February 26, 1997.**
10.05(k) Tenth Amendment to Implementation Partners Agreement dated June 20, 1997.**
10.05(l) Amendment to License Agreement as part of Implementation Partners Agreement dated November 10,
1995.**
10.05(m) Extension to Implementation Partners Agreement dated October 1, 1995.
10.05(n) Extension to Implementation Partners Agreement dated October 1, 1996.
10.05(o) Extension to Implementation Partners Agreement dated September 4, 1997.
10.05(p) Non-Exclusive Enterprise Consulting Partner Agreement between Registrant and Lawson Software dated
April 10, 1997.**
10.05(q) Consulting Service Provider Agreement between Registrant and J. D. Edwards World Solutions Company
dated July 24, 1997.**
10.05(r) Consulting Firm Software License Agreement between Registrant and J. D. Edwards World Solutions
dated July 24, 1997.**
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- ----------------------------------------------------------------------------------------------------
<C> <S>
10.06 Putnam Flexible 401(k) and Profit Sharing Plan.
10.07(a) Terry L. Hunter Employment Agreement.
10.07(b) David P. Andros Employment Agreement.
10.07(c) Loren D. Burnett Employment Agreement.
10.07(d) Judy I. Dunnington Employment Agreement.
10.07(e) Bradford S. Everett Employment Agreement.
10.07(f) Mary T. Weaver Employment Agreement.
10.07(g) Thomas W. Whartenby Employment Agreement.
10.07(h) Richard Wheeler Employment Agreement.
10.08 Form of Stockholders' Agreement.
10.09 Form of Indemnification Agreement.
11.01 Statement Regarding Computation of Per Share Earnings.
21.01 Subsidiaries of the Registrant.
21.02(a) Real Property Lease between The Hunter Group, Inc. and 100 East Pratt Street Limited Partnership
dated January 18, 1995.
21.02(b) First Amendment to Real Property Lease (16th) floor, dated September 8, 1995.
21.02(c) Second Amendment to Real Property Lease (25th) floor, dated April 1, 1997.
21.02(d) Third Amendment to Real Property Lease (16th) floor, dated August 15, 1997.
23.01 Consent of Coopers and Lybrand L.L.P.
23.02 Consent of Piper & Marbury L.L.P. (included in Exhibit 5.01).*
24.01 Power of Attorney (included on signature pages hereto).
27.01 Financial Data Schedule.
</TABLE>
- ------------------------
* To be filed by amendment.
** Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment and have been filed separately with the Securities
and Exchange Commission.
(b) Financial Statement Schedule:
<TABLE>
<CAPTION>
SCHEDULE
NUMBER DESCRIPTION PAGE NO.
- ---------- --------------------------------------- -------------
<S> <C> <C>
VII Valuation and Qualifying Accounts S-3
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in this Registration Statement
or otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling persons of the Registrant
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 Registrant 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 Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
II-3
<PAGE>
(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 upon 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-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Baltimore, State of
Maryland on this 2nd day of October, 1997.
<TABLE>
<S> <C> <C>
THE HUNTER GROUP, INC.
By: /s/ TERRY L. HUNTER
-----------------------------------------
Terry L. Hunter
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Terry L. Hunter and Loren D. Burnett (with full
power to each of them to act alone) as his or her true and lawful
attorney-in-fact and agent, with full power of substitution, for him or her and
in his or her name, place and stead in any and all capacities to sign any or all
amendments or post-effective amendments to this Registration Statement,
including amendments made pursuant to Rule 462 under the Securities Act of 1933,
as amended, and to file the same with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, to sign
any and all applications, registration statements, notices or other document
necessary or advisable to comply with the applicable state securities laws, and
to file the same, together with all other documents in connection therewith,
with the appropriate state securities authorities, granting unto said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, thereby ratifying
and confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ TERRY L. HUNTER
- ------------------------------ President, Chief Executive October 2, 1997
Terry L. Hunter Officer and Director
/s/ LOREN D. BURNETT Senior Vice President,
- ------------------------------ Chief Financial Officer, October 2, 1997
Loren D. Burnett Treasurer and Director
/s/ BRADFORD S. EVERETT Senior Vice President--
- ------------------------------ North American October 2, 1997
Bradford S. Everett Operations and Director
/s/ MARY T. WEAVER Senior Vice President--
- ------------------------------ Education Services, October 2, 1997
Mary T. Weaver Secretary and Director
/s/ THOMAS W. WHARTENBY Senior Vice President--
- ------------------------------ Alliances and Marketing October 2, 1997
Thomas W. Whartenby and Director
II-5
<PAGE>
Upon consummation of the stock transactions and upon assumption of a public
offering price per share, discussed in Note 1 to the consolidated financial
statements, we will be in position to issue the following report:
COOPERS & LYBRAND L.L.P.
REPORT OF INDEPENDENT ACCOUNTANTS
------------------------
To the Board of Directors
The Hunter Group, Inc.
We have audited the accompanying consolidated balance sheets of The Hunter
Group, Inc. and Subsidiaries as of December 31, 1995 and 1996, and the related
consolidated statements of operations, stockholder's equity and cash flows for
each of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of The Hunter
Group, Inc. and Subsidiaries as of December 31, 1995 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
Baltimore, Maryland
<TABLE>
<S> <C>
February 14, 1997, except for
Notes 1 and 3, as to which
the dates are September 26,
1997 and September 30,
1997, respectively
</TABLE>
S-1
<PAGE>
Upon consummation of the stock transactions and upon assumption of a public
offering price per share, discussed in Note 1 to the consolidated financial
statements, we will be in position to issue the following report:
COOPERS & LYBRAND L.L.P.
REPORT OF INDEPENDENT ACCOUNTANTS
------------------------
To the Board of Directors
The Hunter Group, Inc.
In connection with our audits of the consolidated financial statements of
The Hunter Group, Inc. and Subsidiaries as of December 31, 1995 and 1996, and
for each of the three years in the period ended December 31, 1996, which
financial statements are included in the Prospectus, we have also audited the
financial statement schedule listed in Item 16 herein.
In our opinion, this financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information required to be included therein.
<TABLE>
<S> <C>
Baltimore, Maryland
February 14, 1997, except for
Notes 1 and 3, as to which
the dates are September 26,
1997 and September 29,
1997, respectively
</TABLE>
S-2
<PAGE>
THE HUNTER GROUP, INC. AND SUBSIDIARIES
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
CHARGED
BALANCE TO
AT COSTS
BEGINNING AND BALANCE AT END
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS OF YEAR
- -------------------------------------------------------------- ------------- ----------- ------------- -----------------
<S> <C> <C> <C> <C>
Allowance for Doubtful Accounts Receivable:
Year ended December 31, 1996.................................. $ 10 $ 128 $ 6 $ 132
--- ----- --- -----
--- ----- --- -----
Year ended December 31, 1995.................................. $ 41 $ 38 $ 69 $ 10
--- ----- --- -----
--- ----- --- -----
Year ended December 31, 1994.................................. $ 26 $ 50 $ 35 $ 41
--- ----- --- -----
--- ----- --- -----
</TABLE>
S-3
<PAGE>
Exhibit 3.01
THE HUNTER GROUP, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
THE HUNTER GROUP, INC., a Maryland corporation, having its principal
office in Baltimore City, Maryland (which is hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended and restated
in its entirety to read as follows:
******
FIRST: The name of the corporation (which is hereinafter
called the "Corporation") is:
THE HUNTER GROUP, INC.
SECOND: (a) The purposes for which and any of which the
Corporation is formed and the business activities and objects to be
carried on and promoted by it are:
(1) To engage in the business of providing information
management consulting services including, systems design, analysis,
selection and implementation, computer programming and related
training and other professional services to individuals and
businesses; acquire by purchase, manufacture or otherwise, all
materials, supplies and other articles necessary or convenient to
use in connection with and in carrying on said business, in any
matter permitted by law.
(2) To engage in any one or more businesses or
transactions, or to acquire all or any portion of any entity
engaged in any one or more businesses or transactions which the
Board of Directors of the Corporation may from time to time
authorize or approve, whether or not related to the business
described elsewhere in this Article or to any other business at the
time or theretofore engaged in by the Corporation.
(b) The foregoing enumerated purposes, business
activities and objects shall be in no way limited or restricted by
reference to, or inference from, the terms of any other clause of
this or any other Article of the charter of the Corporation, and
each shall be regarded as independent; and they are intended to be
and shall be construed as powers as well as purposes and
-1-
<PAGE>
objects of the Corporation and shall be in addition to and not in
limitation of the general powers of corporations under the General
Laws of the State of Maryland.
THIRD: The present address of the principal office of the
Corporation in this State is 100 East Pratt Street, Suite 1600,
Baltimore, Maryland 21202.
FOURTH: The name and address of the resident agent of the
Corporation in this State are The Corporation Trust Incorporated,
32 South Street, Baltimore, MD 21202. Said resident agent is a
Maryland corporation.
FIFTH: (a) The total number of shares of capital stock
of all classes which the Corporation has authority to issue is
55,000,000 shares of capital stock, without par value, of which
50,000,000 shares are initially classified as "Common Stock" and
5,000,000 shares are initially classified as "Preferred Stock."
The Board of Directors may classify and reclassify any unissued
shares of capital stock by setting or changing in any one or more
respects the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications
or terms or conditions of redemption of such shares of capital
stock.
(b) The following is a description of the preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and
conditions of redemption of the Common Stock of the Corporation:
(1) Each share of Common Stock shall have one vote,
and, except as otherwise provided in respect of any class of
capital stock hereafter classified or reclassified, the exclusive
voting power for all purposes shall be vested in the holders of the
Common Stock.
(2) Subject to the provisions of law and any
preferences of any class or series of capital stock hereafter
classified or reclassified, dividends, including dividends payable
in shares of another class of the Corporation's capital stock, may
be paid on the Common Stock of the Corporation at such time and in
such amounts as the Board of Directors may deem advisable.
(3) In the event of any liquidation, dissolution or
winding up of the affairs of, whether voluntary or involuntary, the
holders of the Common Stock shall be entitled, after payment or
provision for payment of the debts and other liabilities of the
Corporation and the amount to which the holders of any class of
capital stock hereafter classified or reclassified having a preference
on distributions in the liquidation, dissolution or winding up of the
Corporation shall
-2-
<PAGE>
be entitled, together with the holders of any other class of
capital stock hereafter classified or reclassified not having a
preference on distributions in the liquidation, dissolution or
winding up of the Corporation, to share ratably in the remaining
net assets of the Corporation.
(c) Subject to the foregoing, the power of the Board of
Directors to classify and reclassify any of the shares of capital
stock shall include, without limitation, subject to the provisions
of the Charter, authority to classify or reclassify any unissued
shares of such stock into a class or classes of preferred stock,
preference stock, special stock or other stock, and to divide
and classify shares of any class into one or more series of such
class, by determining, fixing, or altering one or more of the
following:
(1) The distinctive designation of such class or
series and the number of shares to constitute such class or series;
provided that, unless otherwise prohibited by the terms of such or
any other class or series, the number of shares of any class or
series may be decreased by the Board of Directors in connection
with any classification or reclassification of unissued shares and
the number of shares of such class or series may be increased by
the Board of Directors in connection with any such classification
or reclassification, and any shares of any class or series which
have been redeemed, purchased, otherwise acquired or converted into
shares of Common Stock or any other class or series shall become
part of the authorized capital stock and be subject to
classification and reclassification as provided in this
sub-paragraph (c).
(2) Whether or not and, if so, the rates, amounts and
times at which, and the conditions under which, dividends shall be
payable on shares of such class or series, whether any such
dividends shall rank senior or junior to or on a parity with the
dividends payable on any other class or series of stock, and the
status of any such dividends as cumulative, cumulative to a limited
extent or non-cumulative and as participating or non-participating.
(3) Whether or not shares of such class or series
shall have voting rights, in addition to any voting rights provided
by law and, if so, the terms of such voting rights.
(4) Whether or not shares of such class or series
shall have conversion or exchange privileges and, if so, the terms
and conditions thereof, including provision for adjustment of the
conversion or exchange rate in such events or at such times as the
Board of Directors shall determine.
(5) Whether or not shares of such class or series
shall be subject to redemption and, if so, the terms and conditions
of such redemption, including the date or dates upon or after which
they shall be
-3-
<PAGE>
redeemable and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates, and whether or not there shall be any sinking
fund or purchase account in respect thereof, and if so, the terms
thereof.
(6) The rights of the holders of shares of such class
or series upon the liquidation, dissolution or winding up of the
affairs of, or upon any distribution of the assets of, the
Corporation, which rights may vary depending upon whether such
liquidation, dissolution or winding up is voluntary or involuntary
and, if voluntary, may vary at different dates, and whether such
rights shall rank senior or junior to or on a parity with such
rights of any other class or series of stock.
(7) Whether or not there shall be any limitations
applicable, while shares of such class or series are outstanding,
upon the payment of dividends or making of distributions on, or the
acquisition of, or the use of monies for purchase or redemption of,
any stock of the Corporation, or upon any other action of the
Corporation, including action under this sub-paragraph (c), and,
if so, the terms and conditions thereof.
(8) Any other preferences, rights, restrictions,
including restrictions on transferability, and qualifications of
shares of such class or series, not inconsistent with law and the
Charter of the Corporation.
(d) For the purposes hereof and of any articles
supplementary to the Charter providing for the classification or
reclassification of any shares of capital stock or of any other
Charter document of the Corporation (unless otherwise provided in
any such articles or document), any class or series of capital
stock of the Corporation shall be deemed to rank:
(1) prior to another class or series either as to
dividends or upon liquidation, if the holders of such class or
series shall be entitled to the receipt of dividends or of amounts
distributable on liquidation, dissolution or winding up, as the
case may be, in preference or priority to holders of such other
class or series;
(2) on a parity with another class or series either as
to dividends or upon liquidation, whether or not the dividend
rates, dividend payment dates or redemption or liquidation price
per share thereof be different from those of such others, if the
holders of such class or series shall be entitled to receipt of
dividends or amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in proportion to their respective
dividend rates or redemption or liquidation prices, without
preference or priority over the holders of such other class or
series; and
-4-
<PAGE>
(3) junior to another class or series either as to
dividends or upon liquidation, if the rights of the holders of such
class or series shall be subject or subordinate to the rights of
the holders of such other class or series in respect of the receipt
of dividends or the amounts distributable upon liquidation,
dissolution or winding up, as the case may be.
SIXTH: (a) The number of directors of the Corporation
shall be seven, which number may only be increased or decreased, in
the manner prescribed in the By-Laws, but shall never be less than
the minimum number permitted by the General Laws of the State of
Maryland now or hereafter in force.
(b) Subject to the rights of the holders of any class or
series of Preferred Stock then outstanding, newly created
directorships resulting from any increase in the number of
directors constituting the Board of Directors or any vacancies on
the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office, or other cause
shall be filled by a majority vote of the stockholders or the
directors then in office. A director so chosen by the stockholders
shall hold office for the balance of the term then remaining. A
director so chosen by the remaining directors shall hold office
until the next annual meeting of stockholders, at which time the
stockholders shall elect a director to hold office for the balance
of the term then remaining. No decrease in the number of directors
constituting the Board of Directors shall affect the tenure of
office of any director.
(c) Whenever the holders of any one or more class or
series of Preferred Stock then outstanding shall have the right,
voting separately as a class, to elect one or more directors, the
Board of Directors shall consist of said directors so elected in
addition to the number of directors established in accordance with
the provisions of paragraph (a) of this Article SIXTH.
Notwithstanding the foregoing, and except as otherwise may be
required by law, whenever the holders of any one or more classes or
series of Preferred Stock shall have the right, voting separately
as a class, to elect one or more directors of the Corporation, the
terms of the director or directors elected by such holders shall
expire at the next succeeding annual meeting of stockholders.
(d) Subject to the rights of the holders of any class or
series of Preferred Stock then outstanding voting separately as a
class, to elect one or more directors, any director, or the entire
Board of Directors, may be removed from office at any time, but
only for cause and then only by the affirmative vote of the holders
of at least 80% of the combined voting power of all classes of
shares of capital stock entitled to vote in the election for
directors voting together as a single class.
-5-
<PAGE>
(e) The directors of the Corporation, other than those
who may be elected by the holders of any class or series of
Preferred Stock, shall be divided into three classes, designated
Class I, Class II and Class III. Each class shall consist, as
nearly as may be possible, of one-third of the total number of
directors constituting the entire Board of Directors. The term of
the initial Class I directors shall expire on the date of the 1998
annual meeting; the term of the initial Class II directors shall
expire on the date of the 1999 annual meeting; and the term of the
initial Class III directors shall expire on the date of the 2000
annual meeting. At each annual meeting of the stockholders
beginning in 1998, successors to the class of directors whose
term expires at that annual meeting shall be elected by a plurality
vote of all shares cast at such meeting to hold office for a
three-years term. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as
to maintain the number of directors in each class as nearly equal
as possible.
(1) The following persons shall serve as directors
until the 1998 annual meeting of stockholders:
Terry L. Hunter
(2) The following persons shall serve as directors
until the 1999 annual meeting of stockholders:
Bradford S. Everett
Thomas W. Whartenby
(3) The following persons shall serve as directors
until the 2000 annual meeting of stockholders:
Mary T. Weaver
Loren D. Burnett
(f) A director shall hold office until the annual meeting
for the year in which his or her term expires and until his or her
successor shall be elected and shall qualify, subject, however, to
prior death, resignation, retirement, disqualification or removal
from office.
SEVENTH: (a) The following provisions are hereby adopted
for the purpose of defining, limiting, and regulating the powers of
the Corporation and of the Board of Directors and stockholders:
(1) The Board of Directors is hereby empowered to
authorize the issuance from time to time of shares of the
Corporation's capital stock of any class or series, whether now or
hereafter authorized, or securities convertible into shares of its
capital stock of any class or series, now or hereafter
-6-
<PAGE>
authorized, for such consideration as may be deemed advisable by
the Board of Directors and without any action by the stockholders.
(2) No holder of any capital stock or any other
securities of the Corporation, whether now or hereafter authorized,
shall have any preemptive right to subscribe for or purchase any
stock or any other securities of the Corporation other than such,
if any, as the Board of Directors, in its sole discretion, may
determine and at such price or prices and upon such other terms as
the Board of Directors, in its sole discretion, may fix; and any
capital stock or other securities which the Board of Directors may
determine to offer for subscription may, as the Board of Directors
in its sole discretion shall determine, be offered to the holders
of any class, series or type of capital stock or other securities
at the time outstanding to the exclusion of the holders of any or
all other classes, series or types of capital stock or other
securities at the time outstanding.
(3) The Board of Directors of the Corporation shall,
consistent with applicable law, have power in its sole discretion
to determine from time to time, in accordance with sound accounting
practice or other reasonable valuation methods, what constitutes
annual or other net profits, earnings, surplus, or net assets in
excess of capital; to fix and vary from time to time the amount to
be reserved as working capital, or determine that retained earnings
or surplus shall remain in the hands of the Corporation; to set
apart out of any funds of the Corporation such reserve or reserves
in such amount or amounts and for such proper purpose or purposes
as it shall determine and to abolish any such reserve or any part
thereof; to distribute and pay distributions or dividends in
capital stock, cash or other securities or property, out of surplus
or any other funds or amounts legally available therefor, at such
times and to the stockholders of record on such dates as it may,
from time to time, determine; and to determine whether and to what
extent and at what times and places and under what conditions and
regulations the books, accounts and documents of the Corporation,
or any of them, shall be open to the inspection of stockholders,
except as otherwise provided by statute or by the By-Laws, and,
except as so provided, no stockholder shall have any right to
inspect any book, account or document of the Corporation unless
authorized so to do by resolution of the Board of Directors.
(4) Except as otherwise expressly provided in the
Corporation's Charter, notwithstanding any provision of law
requiring the authorization of any action by a greater proportion
than a majority of the total number of shares of all classes of
capital stock or of the total number of shares of any class of
capital stock, such action shall be valid and effective if
authorized by the affirmative vote of the holders of a majority of
the total number of shares of all classes outstanding and entitled
to vote thereon.
-7-
<PAGE>
(5) The Corporation shall indemnify (A) its directors
and officers, whether serving the Corporation or, at its request,
any other entity, to the full extent required or permitted by the
General Laws of the State of Maryland now or hereafter in force,
including the advance of expenses under the procedures and to the
full extent permitted by law and (B) its other employees and agents
to such extent as shall be authorized by the Board of Directors or
the Corporation's By-Laws and be permitted by the General Laws of
the State of Maryland now or hereafter in force. The foregoing
rights of indemnification shall not be exclusive of any other
rights to which those seeking indemnification may be entitled. The
Board of Directors may take such action as is necessary to carry
out these indemnification provisions and is expressly empowered to
adopt, approve and amend from time to time such By-Laws,
resolutions or contracts implementing such provisions or such
further indemnification arrangements as may be permitted by the
General Laws of the State of Maryland now or hereafter in force, .
No amendment of the Charter of the Corporation or repeal of any of
its provisions shall limit or eliminate the right to
indemnification provided hereunder with respect to acts or
omissions occurring prior to such amendment or repeal.
(6) To the fullest extent permitted by Maryland
statutory or decisional law, as amended or interpreted, no director
or officer of the Corporation shall be personally liable to the
Corporation or its stockholders for money damages. No amendment of
the Charter of the Corporation or repeal of any of its provisions
shall limit or eliminate the limitation on liability provided to
directors and officers provided hereunder with respect to acts or
omissions occurring prior to such amendment or repeal.
(7) (A) Nominations for the election of directors and
proposals for any new business to be taken up at any annual or
special meeting of stockholders may be made by the Board of
Directors of the Corporation or by any stockholder of the
Corporation entitled to vote generally in the election of
directors. In order for a stockholder of the Corporation to make
any such nominations and/or proposals, he or she shall give notice
thereof in writing, delivered or mailed by first class United
States mail, postage prepaid, to the Secretary of the Corporation
not less than 60 days nor more than 90 days prior to any such
meeting; provided, however, that if less than 61 days notice of the
meeting is given to stockholders, such written notice shall be
delivered or mailed, as prescribed, to the Secretary of the
Corporation not later than the close of the tenth day following the
day on which notice of the meeting was delivered or mailed to
stockholders. Each such notice given by a stockholder with respect
to nominations for the election of directors shall set forth (i)
the name, age, business address and, if known, residence address of
each nominee proposed in such notice, (ii) the principal occupation
or employment of each such nominee, (iii) the number of shares of
capital stock of all series or classes of the Corporation which
-8-
<PAGE>
are beneficially owned by each such nominee, (iv) such other
information as would be required to be included in a proxy
statement soliciting proxies for the election of the proposed
nominee pursuant to Regulation 14A of the Securities Exchange Act
of 1934, as amended, including, without limitation, such person's
written consent to being named in the proxy statement as a nominee
and to serving as a director, if elected, and (v) as to the
stockholder giving such notice, his or her name and address as they
appear on the Corporation's books and the class or series and
number of shares of the Corporation which are beneficially owned by
such stockholder. In addition, the stockholder making such
nomination shall promptly provide any other information reasonably
requested by the Corporation.
(B) Each such notice given by a stockholder to the
Secretary with respect to proposals to bring before a meeting shall
set forth in writing as to each matter: (i) a brief description of
the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting; (ii) the name
and address, as they appear on the Corporation's books, of the
stockholder proposing such business; (iii) the class or series and
number of shares of the Corporation which are beneficially owned by
the stockholder; and (iv) any material interest of the stockholder
in such business. Notwithstanding anything in this Charter to the
contrary, no business shall be conducted at the meeting except in
accordance with the procedures set forth in this sub-paragraph (7).
(C) The Chairman of the annual or special meeting of
stockholders may, if the facts warrant, determine and declare at
such meeting that a nomination or proposal was not made in
accordance with the foregoing procedure, and, if he or she should
so determine, he or she shall so declare to the meeting, and the
defective nomination or proposal shall be disregarded. This
provision shall not require the holding of any adjourned or special
meeting of stockholders for the purpose of considering such
defective nomination or proposal.
-9-
<PAGE>
(8) With the exception of any Business Combination (as
defined in Section 3-601 of the Corporations and Associations
Article of the Annotated Code of Maryland) between the Corporation
and Terry L. Hunter, members of his immediate family, trusts for
his or their benefit or charitable foundations controlled by Terry
L. Hunter or members of his immediate family, the Corporation shall
be subject to the provisions of Section 3-601 et seq. of the
Corporations and Associations Articles of the Annotated Code of
Maryland.
(9) Acquisitions of the capital stock of the Corporation
by Terry L. Hunter, members of his immediate family, trusts for his
or their benefit or charitable foundations controlled by Terry L.
Hunter or
-10-
<PAGE>
members of his immediate family shall be exempt from the provisions
of Section 3-701 et seq. of the Corporations and Associations
Articles of the Annotated Code of Maryland.
(10) In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors of the Corporation is
expressly authorized to make, repeal, alter, amend and rescind the
By-Laws of the Corporation upon vote of not less than two-thirds of
the Directors then in office. Notwithstanding any other provision
of this Charter or the By-Laws of the Corporation (and
notwithstanding the fact that some lesser percentage may be
specified by law), the By-Laws shall not be made, repealed,
altered, amended or rescinded by the stockholders of the
Corporation except by the vote of the holders of not less than 80%
of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered
for this purpose as one class) cast at a meeting of the
stockholders called for that purpose (provided that notice of such
proposed adoption, repeal, alteration, amendment or rescission is
included in the notice of such meeting).
(b) The Corporation reserves the right to amend, alter,
change or repeal any provision contained in the Charter, including
any amendments changing the terms or contract rights, as expressly
set forth in the Charter, of any of its outstanding capital stock
by classification, reclassification or otherwise, by a majority of
the directors adopting a resolution setting forth the proposed
change, declaring its advisability, and either calling a special
meeting of the stockholders entitled to vote on the proposed
change, or directing the proposed change to be considered at the
next annual meeting of the stockholders. Unless otherwise provided
herein, the proposed change will be effective only if it is adopted
upon the affirmative vote of the holders of not less than a
majority of the aggregate votes entitled to be cast thereon
(considered for this purpose as a single class); provided however,
that any amendment to, repeal of or adoption of any provision
inconsistent with Article SIXTH or this Article SEVENTH will be
effective only if it is adopted upon the affirmative vote of not
less than 80% of the aggregate votes entitled to be cast thereon
(considered for this purpose as a single class).
(c) The enumeration and definition of particular powers
of the Board of Directors included in the foregoing shall in no way
be limited or restricted by reference to or inference from the
terms of any other clause of this or any other Article of the
Charter of the Corporation, or construed as or deemed by inference
or otherwise in any manner to exclude or limit any powers conferred
upon the Board of Directors under the General Laws of the State of
Maryland now or hereafter in force.
-11-
<PAGE>
EIGHTH: The duration of the Corporation shall be perpetual.
******
SECOND: (a) As of immediately before the amendment and restatement the
total number of shares of capital stock of all classes which the Corporation
has authority to issue is 500,000 shares, without par value.
(b) As amended the total number of shares of capital
stock of all classes which the Corporation has authority to issue
is 55,000,000 shares, without par value.
(c) The shares of capital stock of the Corporation are
divided into classes, and a description, as amended, of each class,
including the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption is set forth in Article
FIFTH.
THIRD: The foregoing amendment and restatement of the Charter of the
Corporation has been advised by the Board of Directors and approved by the
sole stockholder of the Corporation.
-12-
<PAGE>
IN WITNESS WHEREOF, The Hunter Group, Inc. has caused these presents
to be signed in its name and on its behalf by its President and witnessed by
its Secretary on October, 1997.
WITNESS: THE HUNTER GROUP, INC.
By:
- ------------------------------ -------------------------------
Mary T. Weaver Terry L. Hunter
Secretary President
THE UNDERSIGNED, Terry L. Hunter, President of The Hunter Group, Inc.,
who executed on behalf of the Corporation the foregoing Articles of Amendment
and Restatement of which this certificate is made a part, hereby acknowledges
in the name and on behalf of said Corporation the foregoing Articles of
Amendment and Restatement to be the corporate act of said Corporation and
hereby certifies that to the best of his knowledge, information, and belief
the matters and facts set forth therein with respect to the authorization and
approval thereof are true in all material respects under the penalties of
perjury.
------------------------------------
Terry L. Hunter
President
-13-
<PAGE>
Exhibit 3.02
THE HUNTER GROUP, INC.
AMENDED AND RESTATED BY-LAWS
ARTICLE I
STOCKHOLDERS
SECTION 1.01. Annual Meeting. The Corporation shall hold an annual
meeting of its stockholders to elect directors and transact any other business
within its powers, either at 10:00 a.m. on the last Thursday of May in each
year if not a legal holiday, or at such other time on such other day falling
on or before the 30th day thereafter as shall be set by the Board of
Directors. Except as otherwise provided in the Charter or by statute, any
business may be considered at an annual meeting without the purpose of the
meeting having been specified in the notice. Failure to hold an annual
meeting does not invalidate the Corporation's existence or affect any
otherwise valid corporate acts.
SECTION 1.02. Special Meeting. At any time in the interval between
annual meetings, a special meeting of the stockholders may be called by the
Chairman of the Board or the President or by a majority of the Board of
Directors by vote at a meeting or in writing (addressed to the Secretary of
the Corporation) with or without a meeting. Special meetings of the
stockholders shall be called by the Secretary at the request of the
stockholders only as may be required by statute. A request for a special
meeting shall state with specificity the purpose of the meeting and the
matters proposed to be acted on thereat. The Secretary shall inform the
stockholders who make the request of the reasonably estimated costs of
preparing and mailing a notice of the meeting and, upon payment of these costs
by such stockholders to the Corporation, notify each stockholder entitled to
notice of and to vote at the meeting. Unless requested by stockholders
entitled to cast a majority of all the votes entitled to be cast at the
meeting, a special meeting need not be called to consider any matter which is
substantially the same as a matter voted on at any special meeting of
stockholders held in the preceding 12 months.
SECTION 1.03. Place of Meetings. Meetings of stockholders shall be held
at such place in the United States as is set from time to time by the Board of
Directors.
SECTION 1.04. Notice of Meetings; Waiver of Notice. Not less than ten
nor more than 90 days before each stockholders' meeting, the Secretary of the
Corporation shall give written notice of the meeting to each stockholder
entitled to vote at the meeting and each other stockholder entitled to notice
of the meeting. The notice shall state the time and place of the meeting and,
if the meeting is a special meeting or if notice of the purpose is required by
statute, the purpose of the meeting. Notice shall be deemed given to a
stockholder when it is personally delivered to him or her, left at his or her
residence
-1-
<PAGE>
or usual place of business, or mailed to him or her at his or her address as
it appears on the records of the Corporation. Notwithstanding the foregoing
provisions, each person who is entitled to notice waives notice if he or she,
before or after the meeting, signs a waiver of the notice which is filed with
the records of stockholders' meetings, or is present at the meeting in person
or by proxy.
SECTION 1.05. Quorum; Voting. Unless statute or the Charter provides
otherwise, at a meeting of stockholders the presence in person or by proxy of
stockholders entitled to cast a majority of all the votes entitled to be cast
at the meeting constitutes a quorum, and a majority of all the votes cast at a
meeting at which a quorum is present is sufficient to approve any matter which
properly comes before the meeting, except that a plurality of all the votes
cast at a meeting at which a quorum is present is sufficient to elect a
director.
SECTION 1.06. Adjournments. Whether or not a quorum is present, a
meeting of stockholders convened on the date for which it was called may be
adjourned from time to time without further notice by a majority vote of the
stockholders present in person, by the chairman of the meeting, by a majority
of the Board of Directors, or by proxy to a date not more than 120 days after
the original record date. Any business which might have been transacted at
the meeting as originally noticed may be deferred and transacted at any such
adjourned meeting at which a quorum shall be present.
SECTION 1.07. General Right to Vote; Proxies. Unless the Charter
provides for a greater or lesser number of votes per share or limits or denies
voting rights, each outstanding share of capital stock, regardless of class or
series, is entitled to one vote on each matter submitted to a vote at a
meeting of stockholders. In all elections for directors, each share of stock
may be voted for as many individuals as there are directors to be elected and
for whose election the share is entitled to be voted. A stockholder may vote
the stock the stockholder owns of record either in person or by proxy. A
stockholder may sign a writing authorizing another person to act as proxy.
Signing may be accomplished by the stockholder or the stockholder's authorized
agent signing the writing or causing the stockholder's signature to be affixed
to the writing by any reasonable means, including facsimile signature. A
stockholder may authorize another person to act as proxy by transmitting, or
authorizing the transmission of, a facsimile, telegram, cablegram, datagram,
or other means of electronic transmission to the person authorized to act as
proxy or to a proxy solicitation firm, proxy support service organization, or
other person authorized by the person who will act as proxy to receive the
transmission. Unless a proxy provides otherwise, it is not valid more than 11
months after its date. A proxy is revocable by a stockholder at any time
without condition or qualification unless the proxy states that it is
irrevocable and the proxy is coupled with an interest. A proxy may be made
irrevocable for so long as it is coupled with an interest. The interest with
which a proxy may be coupled includes an interest in the stock to be voted
under the proxy or another general interest in the Corporation or its assets
or liabilities.
-2-
<PAGE>
SECTION 1.08. List of Stockholders. At each meeting of stockholders, a
full, true and complete list of all stockholders entitled to vote at such
meeting, showing the number and class of shares held by each and certified by
the transfer agent for such class or by the Secretary, shall be furnished by
the Secretary.
SECTION 1.09. Conduct of Business and Voting. At all meetings of
stock-holders, unless the voting is conducted by inspectors as provided by
law, the proxies and ballots shall be received, and all questions touching the
qualification of voters and the validity of proxies, the acceptance or
rejection of votes and procedures for the conduct of business not otherwise
specified by these By-Laws, the Charter or statute, shall be decided or
determined by the chairman of the meeting. If demanded by stockholders,
present in person or by proxy, entitled to cast 10% in number of votes
entitled to be cast, or if ordered by the chairman of the meeting, the vote
upon any election or question shall be taken by ballot and, upon like demand
or order, the voting shall be conducted by two inspectors, in which event the
proxies and ballots shall be received, and all questions touching the
qualification of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided by such inspectors. Unless so demanded or
ordered, no vote need be by ballot and voting need not be conducted by
inspectors. The stockholders at any meeting may choose an inspector or
inspectors to act at such meeting, and in default of such election the
chairman of the meeting may appoint an inspector or inspectors. No candidate
for election as a director at a meeting shall serve as an inspector thereat.
SECTION 1.10. Informal Action by Stockholders. Any action required or
permitted to be taken at a meeting of stockholders may be taken without a
meeting if there is filed with the records of stockholders meetings an
unanimous written consent which sets forth the action and is signed by each
stockholder entitled to vote on the matter and a written waiver of any right
to dissent signed by each stockholder entitled to notice of the meeting but
not entitled to vote thereat.
SECTION 1.11. Stockholder Proposals and Nominations. For any
stockholder proposal to be presented in connection with an annual meeting of
stockholders of the Corporation, including any proposal relating to the
nomination of a director to be elected to the Board of Directors of the
Corporation, the stockholders must have given timely notice thereof in writing
to the Secretary of the Corporation. To be timely, a stockholder's notice
shall be in writing, delivered or mailed via first class United States mail,
postage prepaid, to the Secretary at the principal executive offices of the
Corporation not less than 60 days nor more than 90 days prior to any such
meeting; provided, however, that if less than 61 days notice of the meeting is
given to stockholders, such written notice shall be delivered or mailed, as
prescribed, to the Secretary of the Corporation not later than the close of
the tenth day following the day on which notice of the meeting was delivered
or mailed to stockholders. Each such notice given by a stockholder with
respect to nominations for the election of directors shall set forth (a) the
name, age, business address and, if known, residence address of each
-3-
<PAGE>
nominee proposed in such notice, (b) the principal occupation or employment of
each such nominee, (c) the number of shares of capital stock of all series or
classes of the Corporation which are beneficially owned by each such nominee,
(d) such other information as would be required to be included in a proxy
statement soliciting proxies for the election of the proposed nominee pursuant
to Regulation 14A of the Securities Exchange Act of 1934, as amended,
including, without limitation, such person's written consent to being named in
the proxy statement as a nominee and to serving as a director, if elected, and
(e) as to the stockholder giving such notice, his or her name and address as
they appear on the Corporation's books and the class or series and number of
shares of the Corporation which are beneficially owned by such stockholder.
In addition, the stockholder making such nomination shall promptly provide any
other information reasonably requested by the Corporation. Each such notice
given by a stockholder to the Secretary of the Corporation with respect to
proposals to bring before a meeting shall set forth in writing as to each
matter: (i) a brief description of the business desired to be brought before
the meeting and the reasons for conducting such business at the meeting; (ii)
the name and address, as they appear on the Corporation's books, of the
stockholder proposing such business; (iii) the class or series and number of
shares of the Corporation which are beneficially owned by the stockholder; and
(iv) any material interest of the stockholder in such business.
Notwithstanding anything in these By-Laws to the contrary, no business shall
be conducted at the meeting except in accordance with the procedures set forth
in this Section 1.11. The chairman of the annual or special meeting of
stockholders may, if the facts warrant, determine and declare at such meeting
that a nomination or proposal was not made in accordance with the foregoing
procedure, and, if he or she should so determine, he or she shall so declare
to the meeting, and the defective nomination or proposal shall be disregarded.
This provision shall not require the holding of any adjourned or special
meeting of stockholders for the purpose of considering such defective
nomination or proposal.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.01. Function of Directors. The business and affairs of the
Corporation shall be managed under the direction of its Board of Directors.
All powers of the Corporation may be exercised by or under authority of the
Board of Directors, except as conferred on or reserved to the stockholders by
statute or by the Charter or these By-Laws.
SECTION 2.02. Number of Directors. The Corporation shall have at least
three directors; provided that, if there is no stock outstanding, the number
of Directors may be less than three but not less than one, and, if there is
stock outstanding and so long as there are less than three stockholders, the
number of Directors may be less than three but not less than the number of
stockholders. The Corporation shall have the number of directors
-4-
<PAGE>
provided in the Charter until changed, as permitted in the Charter, as herein
provided. Two-thirds of the Board of Directors then in office may alter the
number of directors set by paragraph (a) of Article SIXTH of the Charter to
not exceeding 25 nor less than the minimum number then permitted by the
General Laws of the State of Maryland, but the action may not affect the
tenure of office of any director.
SECTION 2.03. Election and Tenure of Directors. The directors shall be
divided into three classes as nearly equal in number as possible. At each
successive annual meeting of stockholders, the holders of stock present in
person or by proxy at such meeting and entitled to vote thereat shall elect
members of each successive class to serve for three year terms and until their
successors are elected and qualify. If the number of directors constituting
the Board of Directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of directors in
each class as nearly equal as possible, and any additional director of any
class shall, subject to Section 2.05, hold office for a term that shall
coincide with the remaining term of that class, but in no case shall a
decrease in the number of directors constituting the Board of Directors affect
the tenure of office of any incumbent director.
SECTION 2.04. Removal of Director. Subject to the rights of the holders
of any class separately entitled to elect one or more directors, any director,
or the entire Board of Directors, may be removed from office at any time, but
only for cause and then only by the affirmative vote of the holders of at
least 80% of the combined voting power of all classes of shares of capital
stock entitled to vote in the election for directors.
SECTION 2.05. Vacancy on Board. Subject to the rights of the holders of
any class or series of Preferred Stock then outstanding, newly created
directorships resulting from any increase in the number of directors
constituting the Board of Directors or any vacancies on the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office, or other cause shall be filled by a majority vote of the stockholders
or the directors then in office. A director so chosen by the stockholders
shall hold office for the balance of the term then remaining. A director so
chosen by the remaining directors shall hold office until the next annual
meeting of stockholders, at which time the stockholders shall elect a director
to hold office for the balance of the term then remaining.
SECTION 2.06. Regular Meetings. After each meeting of stockholders at
which directors shall have been elected, the Board of Directors shall meet as
soon as practicable for the purpose of organization and the transaction of
other business. In the event that no other time and place are specified by
resolution of the Board, the President or the Chairman of the Board, with
notice in accordance with Section 2.08, the Board of Directors shall meet
immediately following the close of, and at the place of, such stockholders'
meeting. Any other regular meeting of the Board of Directors shall be held on
such date and at any place as may be designated from time to time by the Board
of Directors.
-5-
<PAGE>
SECTION 2.07. Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman of the Board or the
President or by one-third of the Board of Directors by vote at a meeting, or
in writing with or without a meeting. A special meeting of the Board of
Directors shall be held on such date and at any place as may be designated
from time to time by the Board of Directors. In the absence of designation
such meeting shall be held at such place as may be designated in the call.
SECTION 2.08. Notice of Meeting. Except as provided in Section 2.06,
the Secretary shall give notice to each director of each regular and special
meeting of the Board of Directors. The notice shall state the time and place
of the meeting. Notice is deemed given to a director when it is delivered
personally to him or her, left at his or her residence or usual place of
business, or sent by telegraph, facsimile transmission or telephone, at least
24 hours before the time of the meeting or, in the alternative by mail to his
or her address as it shall appear on the records of the Corporation, at least
72 hours before the time of the meeting. Unless the By-Laws or a resolution
of the Board of Directors provides otherwise, the notice need not state the
business to be transacted at or the purposes of any regular or special meeting
of the Board of Directors. No notice of any meeting of the Board of Directors
need be given to any director who attends except where a director attends a
meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened, or to any
director who, in writing executed and filed with the records of the meeting
either before or after the holding thereof, waives such notice. Any meeting
of the Board of Directors, regular or special, may adjourn from time to time
to reconvene at the same or some other place, and no notice need be given of
any such adjourned meeting other than by announcement.
SECTION 2.09. Action by Directors. Unless statute or the Charter or
By-Laws requires a greater proportion, the action of a majority of the
directors present at a meeting at which a quorum is present is action of the
Board of Directors. A majority of the entire Board of Directors shall
constitute a quorum for the transaction of business. In the absence of a
quorum, the directors present by majority vote and without notice other than
by announcement may adjourn the meeting from time to time until a quorum shall
attend. At any such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting as
originally notified. Any action required or permitted to be taken at a
meeting of the Board of Directors may be taken without a meeting, if an
unanimous written consent which sets forth the action is signed by each member
of the Board and filed with the minutes of proceedings of the Board.
SECTION 2.10. Meeting by Conference Telephone. Members of the Board of
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting
can hear each other at the same time. Participation in a meeting by these
means constitutes presence in person at a meeting, but shall not constitute
attendance for the purpose of compensation pursuant to Section 2.11.
-6-
<PAGE>
SECTION 2.11. Compensation. By resolution of the Board of Directors a
fixed sum and expenses, if any, for attendance at each regular or special
meeting of the Board of Directors or of committees thereof, and other
compensation for their services as such or on committees of the Board of
Directors, may be paid to directors, either in the form of cash, stock,
options or otherwise. Directors who are full-time employees of the
Corporation need not be paid for attendance at meetings of the board or
committees thereof for which fees are paid to other directors. A director who
serves the Corporation in any other capacity also may receive compensation for
such other services, pursuant to a resolution of the directors.
SECTION 2.12. Resignation. Any director may resign at any time by
sending a written notice of such resignation to the home office of the
Corporation addressed to the Chairman of the Board or the President. Unless
otherwise specified herein such resignation shall take effect upon receipt
thereof by the Chairman of the Board or the President.
SECTION 2.13. Presumption of Assent. A director of the Corporation who
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent or abstention shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who votes in favor of such action.
SECTION 2.14. Advisory Directors. The Board of Directors may by
resolution appoint advisory directors to the Board, who may also serve as
directors emeriti, and shall have such authority and receive such compensation
and reimbursement as the Board of Directors shall provide. Advisory directors
or directors emeriti shall not have the authority to participate by vote in
the transaction of business.
ARTICLE III
COMMITTEES
SECTION 3.01. Committees. The Board of Directors may appoint from among
its members an Executive Committee, an Audit Committee, a Compensation
Committee and other committees composed of at least the number of directors
required under Maryland General Corporation Law, as in effect from time to
time, and delegate to these committees any of the powers of the Board of
Directors, except the power to authorize dividends on stock, elect directors,
issue stock other than as provided in the next sentence, recommend to the
stockholders any action which requires stockholder approval, amend the
By-Laws, or approve any merger or share exchange which does not require
-7-
<PAGE>
stockholder approval. If the Board of Directors has given general
authorization for the issuance of stock providing for or establishing a method
or procedure for determining the maximum number of shares to be issued, a
committee of the Board, in accordance with that general authorization or any
stock option or other plan or program adopted by the Board of Directors, may
authorize or may fix the terms of stock subject to classification or
reclassification and the terms on which any stock may be issued, including all
terms and conditions required or permitted to be established or authorized by
the Board of Directors.
SECTION 3.02. Committee Procedure. Each committee may fix rules of
procedure for its business. A majority of the members of a committee shall
constitute a quorum for the transaction of business and the act of a majority
of those present at a meeting at which a quorum is present shall be the act of
the committee. The members of a committee present at any meeting, whether or
not they constitute a quorum, may appoint a director to act in the place of an
absent member. Any action required or permitted to be taken at a meeting of a
committee may be taken without a meeting, if an unanimous written consent
which sets forth the action is signed by each member of the committee and
filed with the minutes of the committee. The members of a committee may
conduct any meeting thereof by conference telephone in accordance with the
provisions of Section 2.10.
SECTION 3.03. Emergency. In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Corporation by its directors and officers as contemplated by
the Charter and the By-Laws, any two or more available members of the then
incumbent Executive Committee shall constitute a quorum of that Committee for
the full conduct and management of the affairs and business of the Corporation
in accordance with the provisions of Section 3.01. In the event of the
unavailability, at such time, of a minimum of two members of the then
incumbent Executive Committee, the available directors shall elect an
Executive Committee consisting of any two members of the Board of Directors,
whether or not they be officers of the Corporation, which two members shall
constitute the Executive Committee for the full conduct and management of the
affairs of the Corporation in accordance with the foregoing provisions of this
Section. This Section shall be subject to implementation by resolution of the
Board of Directors passed from time to time for that purpose, and any
provisions of the By-Laws (other than this Section) and any resolutions which
are contrary to the provisions of this Section or to the provisions of any
such implementary resolutions shall be suspended until it shall be determined
by any interim Executive Committee acting under this Section that it shall be
to the advantage of the Corporation to resume the conduct and management of
its affairs and business under all the other provisions of the By-Laws.
SECTION 3.04. Audit Committee. The principal functions of the Audit
Committee, if one shall be formed, shall include making recommendations to the
Board of Directors regarding the annual selection of independent public
accountants, reviewing
-8-
<PAGE>
the proposed scope of each annual audit and reviewing the recommendations of
the independent public accountants as a result of their audit of the
Corporation's financial Statements. In general, the Audit Committee shall
perform such duties as are customarily performed by an audit committee of a
corporation and shall perform such other duties and have such other powers as
are from time to time assigned to it by the Board of Directors.
SECTION 3.05. Compensation Committee. The principal functions of the
Compensation Committee, if one shall be formed, shall include establishing the
compensation of officers of the Corporation and to establish and administer
the Corporation's compensation programs, including but not limited to the
grant of awards under the Corporation's 1991 Employee Non-Qualified Stock
Option Plan, 1997 Omnibus Stock Plan and 1998 Employee Stock Purchase Plan.
In general, the Compensation Committee shall perform such duties as are
customarily performed by a compensation committee of a corporation and shall
perform such other duties and have such other powers as are from time to time
assigned to it by the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 4.01. Executive and Other Officers. The Corporation shall have
a Chairman of the Board, a President, one or more Vice Presidents, a Secretary
and a Treasurer. The Board of Directors shall designate who shall serve as
chief executive officer, who shall have general supervision of the business
and affairs of the Corporation, and may designate a chief operating officer,
who shall have supervision of the operations of the Corporation; a chief
financial officer, who shall have supervision of the financial and accounting
functions of the Corporation; and a chief information officer, who shall have
supervision of the Corporation's information systems. In the absence of any
designation the Chairman of the Board shall serve as chief executive officer
and the President shall serve as chief operating officer. The same person may
hold the offices of Chairman of the Board and President. The Corporation may
also have one or more Vice-Presidents, assistant officers, and subordinate
officers as may be established by the Board of Directors. A person may hold
more than one office in the Corporation except that no person may serve
concurrently as both President and Vice-President of the Corporation. The
Chairman of the Board shall be a director; the other officers may be
directors.
SECTION 4.02. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the Board of Directors and of the stockholders at
which he or she shall be present. Unless otherwise specified by the Board of
Directors, he or she shall be the chief executive officer of the Corporation.
In general, he or she shall perform such duties as are customarily performed
by the chief executive officer of a corporation and may perform any duties of
the President and shall perform such other duties and have
-9-
<PAGE>
such other powers as are from time to time assigned to him or her by the Board
of Directors.
SECTION 4.03. President. Unless otherwise provided by resolution of the
Board of Directors, the President, in the absence of the Chairman of the
Board, shall preside at all meetings of the Board of Directors and of the
stockholders at which he or she shall be present. Unless otherwise specified
by the Board of Directors, the President shall be the chief operating officer
of the Corporation and perform the duties customarily performed by chief
operating officers. He or she may execute, in the name of the Corporation,
all authorized deeds, mortgages, bonds, contracts or other instruments, except
in cases in which the signing and execution thereof shall have been expressly
delegated to some other officer or agent of the Corporation. In general, he
or she shall perform such other duties customarily performed by a president of
a corporation and shall perform such other duties and have such other powers
as are from time to time assigned to him or her by the Board of Directors or
the chief executive officer of the Corporation.
SECTION 4.04. Vice-Presidents. Each Vice-President, Senior
Vice-President or Executive Vice-President, at the request of the chief
executive officer or the President, or in the President's absence or during
his or her inability to act, shall perform the duties and exercise the
functions of the President, and when so acting shall have the powers of the
President. If there be more than one such Vice-President, the Board of
Directors may determine which one or more of such Vice-Presidents shall
perform any of such duties or exercise any of such functions, or if such
determination is not made by the Board of Directors, the chief executive
officer, or the President may make such determination; otherwise any of the
Vice-Presidents may perform any of such duties or exercise any of such
functions. Each Vice-President, Senior-Vice President or Executive
Vice-President shall perform such other duties and have such other powers, and
have such additional descriptive designations in their titles (if any), as are
from time to time assigned to them by the Board of Directors, the chief
executive officer, or the President.
SECTION 4.05. Secretary. The Secretary shall keep the minutes of the
meetings of the stockholders, of the Board of Directors and of any committees,
in books provided for the purpose; he or she shall see that all notices are
duly given in accordance with the provisions of the By-Laws or as required by
law; he or she shall be custodian of the records of the Corporation; he or she
may witness any document on behalf of the Corporation, the execution of which
is duly authorized, see that the corporate seal is affixed where such document
is required or desired to be under its seal, and, when so affixed, may attest
the same. In general, he or she shall perform such other duties customarily
performed by a secretary of a corporation, and shall perform such other duties
and have such other powers as are from time to time assigned to him or her by
the Board of Directors, the chief executive officer, or the President.
SECTION 4.06. Treasurer. The Treasurer, who shall also be the Chief
Financial Officer if one shall be elected, shall have charge of and be
responsible for all
-10-
<PAGE>
funds, securities, receipts and disbursements of the Corporation, and shall
deposit, or cause to be deposited, in the name of the Corporation, all moneys
or other valuable effects in such banks, trust companies or other depositories
as shall, from time to time, be selected by the Board of Directors; he or she
shall render to the President and to the Board of Directors, whenever
requested, an account of the financial condition of the Corporation. In
general, he or she shall perform such other duties customarily performed by a
treasurer of a corporation, and shall perform such other duties and have such
other powers as are from time to time assigned to him or her by the Board of
Directors, the chief executive officer, or the President.
SECTION 4.07. Assistant and Subordinate Officers. The assistant and
sub-ordinate officers of the Corporation are all officers below the office of
Group Vice-President, Secretary, or Treasurer. The assistant or subordinate
officers shall have such duties as are from time to time assigned to them by
the Board of Directors, the Chief Executive Officer, or the President.
SECTION 4.08. Election, Tenure and Removal of Officers. The Board of
Directors shall elect the officers of the Corporation. The Board of Directors
may from time to time authorize any committee or officer to appoint assistant
and subordinate officers. Election or appointment of an officer, employee or
agent shall not of itself create contract rights. All officers shall be
appointed to hold their offices, respectively, during the pleasure of the
Board. The Board of Directors (or, as to any assistant or subordinate
officer, any committee or officer authorized by the Board) may remove an
officer at any time. The removal of an officer does not prejudice any of his
or her contract rights. The Board of Directors (or, as to any assistant or
subordinate officer, any committee or officer authorized by the Board) may
fill a vacancy which occurs in any office for the unexpired portion of the
term.
SECTION 4.09. Compensation. The Board of Directors shall have power to
fix the salaries and other compensation and remuneration, of whatever kind, of
all officers of the Corporation. No officer shall be prevented from receiving
such salary by reason of the fact that he or she is also a director of the
Corporation. The Board of Directors may authorize any committee, including
the Compensation Committee, or officer, upon whom the power of appointing
assistant and subordinate officers may have been conferred, to fix the
salaries, compensation and remuneration of such assistant and subordinate
officers.
ARTICLE V
DIVISIONAL TITLES
SECTION 5.01. Conferring Divisional Titles. The Board of Directors may
from time to time confer upon any employee of a division of the Corporation
the title of
-11-
<PAGE>
President, Vice President, Director, Treasurer or Controller of such division
or any other title or titles deemed appropriate, or may authorize the Chairman
of the Board or the President to do so. Any such titles so conferred may be
discontinued and withdrawn at any time by the Board of Directors, or by the
Chairman of the Board or the President if so authorized by the Board of
Directors. Any employee of a division designated by such a divisional title
shall have the powers and duties with respect to such division as shall be
prescribed by the Board of Directors, the Chairman of the Board or the
President.
SECTION 5.02. Effect of Divisional Titles. The conferring of divisional
titles shall not create an office of the Corporation under Article IV unless
specifically designated as such by the Board of Directors; but any person who
is an officer of the Corporation may also have a divisional title.
ARTICLE VI
STOCK
SECTION 6.01. Certificates for Stock. Each stockholder is entitled to
certificates which represent and certify the shares of stock he or she holds
in the Corporation. Each stock certificate shall include on its face the name
of the Corporation, the name of the stockholder or other person to whom it is
issued, and the class of stock and number of shares it represents. It shall
be in such form, not inconsistent with law or with the Charter, as shall be
approved by the Board of Directors or any officer or officers designated for
such purpose by resolution of the Board of Directors. Each stock certificate
shall be signed by the Chairman of the Board, the President, or a
Vice-President, and countersigned by the Secretary, an Assistant Secretary,
the Treasurer, or an Assistant Treasurer. Each certificate may be sealed with
the actual corporate seal or a facsimile of it or in any other form and the
signatures may be either manual or facsimile signatures. A certificate is
valid and may be issued whether or not an officer who signed it is still an
officer when it is issued.
SECTION 6.02. Transfers. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of certificates of stock; and
may appoint transfer agents and registrars thereof. The duties of transfer
agent and registrar may be combined.
SECTION 6.03. Record Dates or Closing of Transfer Books. The Board of
Directors may set a record date or direct that the stock transfer books be
closed for a stated period for the purpose of making any proper determination
with respect to stockholders, including which stockholders are entitled to
notice of a meeting, vote at a meeting, receive a dividend, or be allotted
other rights. The record date may not be prior to the close of business on
the day the record date is fixed nor, subject to Section 1.06, more than 90
days before the date on which the action requiring the determination will be
-12-
<PAGE>
taken; the transfer books may not be closed for a period longer than 20 days;
and, in the case of a meeting of stockholders, the record date or the closing
of the transfer books shall be at least ten days before the date of the
meeting.
SECTION 6.04. Stock Ledger. The Corporation shall maintain a stock
ledger which contains the name and address of each stockholder and the number
of shares of stock of each class which the stockholder holds. The stock
ledger may be in written form or in any other form which can be converted
within a reasonable time into written form for visual inspection. The
original or a duplicate of the stock ledger shall be kept at the offices of a
transfer agent for the particular class of stock, or, if none, at the
principal office in the State of Maryland or the principal executive offices
of the Corporation.
SECTION 6.05. Certification of Beneficial Owners. The Board of
Directors may adopt by resolution a procedure by which a stockholder of the
Corporation may certify in writing to the Corporation that any shares of stock
registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth
the class of stockholders who may certify; the purpose for which the
certification may be made; the form of certification and the information to be
contained in it; if the certification is with respect to a record date or
closing of the stock transfer books, the time after the record date or closing
of the stock transfer books within which the certification must be received by
the Corporation; and any other provisions with respect to the procedure which
the Board considers necessary or desirable. On receipt of a certification
which complies with the procedure adopted by the Board in accordance with this
Section, the person specified in the certification is, for the purpose set
forth in the certification, the holder of record of the specified stock in
place of the stockholder who makes the certification.
SECTION 6.06. Lost Stock Certificates. The Board of Directors of the
Corporation may determine the conditions for issuing a new stock certificate
in place of one which is alleged to have been lost, stolen, or destroyed, or
the Board of Directors may delegate such power to any officer or officers of
the Corporation. In their discretion, the Board of Directors or such officer
or officers may refuse to issue such new certificate save upon the order of
some court having jurisdiction in the premises.
ARTICLE VII
FINANCE
SECTION 7.01. Checks, Drafts, Etc. All checks, drafts and orders for
the payment of money, notes and other evidences of indebtedness, issued in the
name of the Corporation, shall, unless otherwise provided by resolution of the
Board of Directors, be signed by the President, a Vice-President or an
Assistant Vice-President and
-13-
<PAGE>
countersigned by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary.
SECTION 7.02. Annual Statement of Affairs. The President or chief
accounting officer shall prepare annually a full and correct statement of the
affairs of the Corporation, to include a balance sheet and a financial
statement of operations for the preceding fiscal year. The statement of
affairs shall be submitted at the annual meeting of the stockholders and,
within 20 days after the meeting, placed on file at the Corporation's
principal office.
SECTION 7.03. Fiscal Year. The fiscal year of the Corporation shall be
the twelve calendar months period ending December 31 in each year, unless
otherwise provided by the Board of Directors.
SECTION 7.04. Dividends. If declared by the Board of Directors at any
meeting thereof, the Corporation may pay dividends on its shares in cash,
property, or in shares of the capital stock of the Corporation, unless such
dividend is contrary to law or to a restriction contained in the Charter.
SECTION 7.05. Contracts. To the extent permitted by applicable law, and
except as otherwise prescribed by the Charter or these By-Laws with respect to
certificates for shares, the Board of Directors may authorize any officer,
employee, or agent of the Corporation to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the Corporation.
Such authority may be general or confined to specific instances.
SECTION 7.06. Loans. No loans shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by the Board of Directors. Such authority may be general or
confined to specific instances.
SECTION 7.07. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in any of its duly authorized depositories as the Board of Directors may
select.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Procedure. Any indemnification, or payment of expenses in
advance of the final disposition of any proceeding, shall be made promptly,
and in any event within 60 days, upon the written request of the director or
officer entitled to seek indemnification (the "Indemnified Party"). The right
to indemnification and advances hereunder shall be enforceable by the
Indemnified Party in any court of competent
-14-
<PAGE>
jurisdiction, if (i) the Corporation denies such request, in whole or in part,
or (ii) no disposition thereof is made within 60 days. The Indemnified
Party's costs and expenses incurred in connection with successfully
establishing his or her right to indemnification, in whole or in part, in any
such action shall also be reimbursed by the Corporation. It shall be a
defense to any action for advance for expenses that (a) a determination has
been made that the facts then known to those making the determination would
preclude indemnification or (b) the Corporation has not received both (i) an
undertaking as required by law to repay such advances in the event it shall
ultimately be determined that the standard of conduct has not been met and
(ii) a written affirmation by the Indemnified Party of such Indemnified
Party's good faith belief that the standard of conduct necessary for
indemnification by the Corporation has been met.
SECTION 8.02. Exclusivity, Etc. The indemnification and advance of
expenses provided by the Charter and these By-Laws shall not be deemed
exclusive of any other rights to which a person seeking indemnification or
advance of expenses may be entitled under any law (common or statutory), or
any agreement, vote of stockholders or disinterested directors or other
provision that is consistent with law, both as to action in his or her
official capacity and as to action in another capacity while holding office or
while employed by or acting as agent for the Corporation, shall continue in
respect of all events occurring while a person was a director or officer after
such person has ceased to be a director or officer, and shall inure to the
benefit of the estate, heirs, executors and administrators of such person.
All rights to indemnification and advance of expenses under the Charter of the
Corporation and hereunder shall be deemed to be a contract between the
Corporation and each director or officer of the Corporation who serves or
served in such capacity at any time while this By-Law is in effect. Nothing
herein shall prevent the amendment of this By-Law, provided that no such
amendment shall diminish the rights of any person hereunder with respect to
events occurring or claims made before its adoption or as to claims made after
its adoption in respect of events occurring before its adoption. Any repeal
or modification of this By-Law shall not in any way diminish any rights to
indemnification or advance of expenses of such director or officer or the
obligations of the Corporation arising hereunder with respect to events
occurring, or claims made, while this By-Law or any provision hereof is in
force.
SECTION 8.03. Severability; Definitions. The invalidity or
unenforceability of any provision of this Article VIII shall not affect the
validity or enforceability of any other provision hereof. The phrase "this
By-Law" in this Article VIII means this Article VIII in its entirety.
-15-
<PAGE>
ARTICLE IX
SUNDRY PROVISIONS
SECTION 9.01. Books and Records. The Corporation shall keep correct and
complete books and records of its accounts and transactions and minutes of the
proceedings of its stockholders and Board of Directors and of any executive or
other committee when exercising any of the powers of the Board of Directors.
The books and records of a Corporation may be in written form or in any other
form which can be converted within a reasonable time into written form for
visual inspection. Minutes shall be recorded in written form but may be
maintained in the form of a reproduction. The original or a certified copy of
the By-Laws shall be kept at the principal office of the Corporation.
SECTION 9.02. Corporate Seal. The Board of Directors shall provide a
suitable seal, bearing the name of the Corporation, which shall be in the
charge of the Secretary. The Board of Directors may authorize one or more
duplicate seals and provide for the custody thereof. If the Corporation is
required to place its corporate seal to a document, it is sufficient to meet
the requirement of any law, rule, or regulation relating to a corporate seal
to place the word "Seal" adjacent to the signature of the person authorized to
sign the document on behalf of the Corporation.
SECTION 9.03. Bonds. The Board of Directors may require any officer,
agent or employee of the Corporation to give a bond to the Corporation,
conditioned upon the faithful discharge of his or her duties, with one or more
sureties and in such amount as may be satisfactory to the Board of Directors.
SECTION 9.04. Voting Stock in Other Corporations. Stock of other
corpor-ations or associations, registered in the name of the Corporation, may
be voted by the President, a Vice-President, or a proxy appointed by either of
them. The Board of Directors, however, may by resolution appoint some other
person to vote such shares, in which case such person shall be entitled to
vote such shares upon the production of a certified copy of such resolution.
SECTION 9.05. Mail. Any notice or other document which is required by
these By-Laws to be mailed shall be deposited in the United States mails,
postage prepaid.
SECTION 9.06. Execution of Documents. A person who holds more than one
office in the Corporation may not act in more than one capacity to execute,
acknowledge, or verify an instrument required by law to be executed,
acknowledged, or verified by more than one officer.
SECTION 9.07. Amendments. Subject to the special provisions of Section
2.02, these By-Laws may be repealed, altered, amended or rescinded and new
By-Laws may be
-16-
<PAGE>
adopted (a) by the stockholders of the Corporation by vote of not less than
80% of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this purpose as
one class) cast at any meeting of the stockholders called for that purpose
(provided that notice of such proposal is included in the notice of such
meeting) or (b) by the Board of Directors by a vote of not less than
two-thirds of the Board of Directors then in office at a meeting held in
accordance with the provisions of these By-Laws.
SECTION 9.07. Reliance. Each director, officer, employee and agent of
the Corporation shall, in the performance of his or her duties with respect to
the Corporation, be fully justified and protected with regard to any act or
failure to act in reliance in good faith upon the books of account or other
records of the Corporation, upon an opinion of counsel or upon reports made to
the Corporation by any of its officers or employees or by the adviser,
accountants, appraisers or other experts or consultants selected by the Board
of Directors or officers of the Corporation, regardless of whether such
counsel or expert may also be a director.
-17-
<PAGE>
Exhibit 4.01
The Hunter Group, Inc.
COMMON STOCK COMMON STOCK
NO PAR VALUE NO PAR VALUE
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
THIS CERTIFIES that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK NO PAR VALUE PER
SHARE OF
The Hunter Group, Inc. (the "Corporation") transferable on the books of the
Corporation by the owner hereof in person or by duly authorized attorney upon
surrender of this Certificate properly endorsed.
This Certificate and the shares represented hereby, are issued and shall be
held subject to all the provisions of the articles of incorporation of the
Corporation, and any amendments thereto.
Each share of the common stock shall have equal rights, privileges and
preferences and shall be entitled to one vote per share. This Certificate is
not valid until countersigned and registered by the Transfer Agent and
Registrar.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed by the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
Secretary
President/CEO
COUNTERSIGNED AND REGISTERED:
American Stock Transfer & Trust Company
TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED OFFICER
<PAGE>
EXHIBIT 10.01
THE HUNTER GROUP, INC.
EMPLOYEE NON-QUALIFIED STOCK OPTION PLAN
The Hunter Group, Inc., a Maryland corporation (the "Company"), hereby
establishes the Hunter Group Stock Option Plan set forth herein (as the same
may be amended from time to time, the "Plan"), effective as of the date
specified herein.
ARTICLE I
GENERAL
1.1 Purpose. The Company desires to afford certain of its key
employees, and the key employees of any subsidiary or parent corporation of
the Company now existing or hereafter formed or acquired, who are responsible
for the continued growth of the Company (or such subsidiary or parent
corporation) long-term performance incentives in the form of options (the
"Options") to acquire shares of common stock, without par value, of the
Company ("Common Stock"). Options granted pursuant to the Plan are a matter
of separate inducement and are not in lieu of any salary or other
compensation for the services of any key employee. The Options granted under
the Plan are intended to be options that do not meet the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") for
incentive options ("Non-Qualified Options").
1.2 Effective Date; Duration. This Plan is the plan referred to in the
agreements listed on Schedule 1 hereto (the "Existing Agreements") as "The
Hunter Group Stock Option Plan," or "The Hunter Group's Stock Appreciation
Rights Plan," and shall be deemed effective as of July 1, 1991 (the
"Effective Date"). Upon the written acknowledgment of this Plan by the
parties to the Existing Agreements, any "stock options," "stock appreciation
rights," "grants" other awards referred to in the Existing Agreements shall
be deemed to mean Options granted pursuant to this Plan. Except as provided
in Article XVII, the Plan shall remain in effect until all Options granted
under the Plan have been satisfied by the issuance of Shares (defined below),
provided that no Option shall be granted ten years after the Effective Date.
1.3 Definitions.
(a) "Board" and "Board of Directors" shall mean the Board of
Directors of the Company.
(b) "Change of Control" shall mean (i) the sale of all or
substantially all of the assets of the Company, (ii) the sale of more than
fifty percent (50%) of the outstanding Common Stock in a non-public sale,
(iii) the dissolution or liquidation of the Company, or (iv) any merger or
consolidation of the Company if immediately after such transaction either (A)
persons who were directors of the Company immediately prior to such
transaction do not constitute at least a majority of the directors of the
surviving entity, or (B) persons who hold a majority of the
<PAGE>
common stock of the surviving entity are not persons who held Common Stock of
the Company immediately prior to such transaction.
(c) "Closing Purchase Price" shall mean the purchase price for
Options repurchased by the Company, as estimated and calculated for the
closing of such a repurchase transaction in accordance with Section 10.3
below.
(d) "Common Stock" shall have the meaning set forth in Section
1.1 above.
(e) "Estimated EBIT" shall mean the Company's estimated earnings
before interest on long-term obligations and taxes for any fiscal year, as
determined by the Board in its sole and absolute discretion.
(f) "Estimated Fee Income" shall mean the Company's estimated
income from consulting fees for any fiscal year, as determined by the Board
in its sole and absolute discretion.
(g) "Estimated Share Value" shall mean the value of Shares as of
the end of any fiscal year, determined with reference to Estimated EBIT and
Estimated Fee Income, as more fully described in Section 10.3(b) below.
(h) "Exercised Vested Options" are Vested Options as to which an
Exercise Notice has been delivered, but with respect to which the Company has
not yet issued Shares or repurchased Options.
(i) "Exercised Notice" shall have the meaning set forth in
Section 6.1 hereto.
(j) "Exercise Price" shall mean the price per Share at which any
particular Option may be exercised.
(k) "Final EBIT" shall mean the Company's earnings before
interest on long-term obligations and taxes, consistent with its regularly
prepared financial statement, as adjusted in the Board's sole and absolute
discretion for certain extraordinary or non-recurring events for any fiscal
year.
(l) "Final Fee Income" shall mean the Company's income from
consulting fees, consistent with its regularly prepared financial statement
for any fiscal year.
(m) "Final Purchase Price" shall mean the purchase price at which
the Company shall repurchase Options, calculated in accordance with Article X
below.
(n) "Final Share Value" shall mean the value of Shares as of the
end of any fiscal year, determined with reference to Final EBIT and Final Fee
Income, as more fully described in Section 10.3(c) below.
-2-
<PAGE>
(o) "Option" shall mean an option granted to a Participant
hereunder to purchase newly issued Shares from the Company.
(p) "Participant" shall mean any person meeting the criteria
described in Article IV below who has been awarded an Option or Options
hereunder.
(q) "Permanent Disability" shall mean a mental or physical
condition that, in the opinion of a licensed physician approved by the Board
in its sole and absolute discretion, renders a Participant permanently
incapable of satisfactorily performing his or her usual duties for the
Company or the duties of such other position as the Company may make
available to him for which he is qualified by reason of training, education
or experience.
(r) "Resign" or "Resignation" shall refer to the resignation by a
Participant of his or her employment with the Company other than in
connection with his or her Retirement.
(s) "Retire" or "Retirement" shall refer to the resignation by a
Participant of his or her employment with the Company on or after age 62, or
the Participant's retirement, with the Company's consent, prior to age 62.
(t) "Shares" shall mean shares of Common Stock issuable upon
exercise of Options granted pursuant to the Plan.
(u) "Share Certificate" shall mean a certificate representing
Shares issued pursuant to the exercise of Options granted hereunder.
(v) "Stock Option Certificate" shall mean a certificate,
substantially in the form of Exhibit A hereto, evidencing Options granted to
a Participant.
(w) "Stockholders' Agreement" shall mean the Stockholders'
Agreement among the Company and its Stockholders, the form of which is
attached as Exhibit B hereto.
(x) "Termination for Cause" shall mean, (i) with respect to an
employee who is a party to a written employment agreement with the Company
containing a definition of "for cause" or "cause" (or words of like import)
for purposes of termination of employment thereunder by the Company, "for
cause" or "cause" as defined in such agreement, or (ii) with respect to an
employee who is not a party to such a written employment agreement with the
Company, then upon a determination by the Board, in its sole and absolute
discretion, that one or more of the following has occurred: (A) any
intentional or willful failure by an employee to substantially perform his or
her employment duties, (B) an employee's gross negligence or willful
misconduct which is significantly injurious to the Company or any of its
subsidiaries or affiliates, (C) any material breach by an employee of any
covenant contained in the instrument pursuant to which an Option is granted
to such an employee under the Plan, or any material breach under any other
agreement with the Company to which the employee is a party, or (D) an
employee's conviction of or entry of a plea of nolo contendere in respect of
any felony, or of a
-3-
<PAGE>
misdemeanor which results in or is reasonably expected to result in material
economic or reputational injury to the Company or any of its subsidiaries or
affiliates.
(y) "Triggering Event" means the termination of a Participant's
employment with the Company, which termination gives rise to the Company's
repurchase of Options from such Participant hereunder, or, in the absence of
a termination of employment, the delivery of an Exercise Notice by a
Participant, which gives rise to the Company's repurchase of Options pursuant
to Section 6.3 below.
(z) "Unexercised Vested Options" are Vested Options as to which
an Exercise Notice has not been delivered.
(aa) "Unvested Options" shall mean those Options granted to a
Participant as to which such Participant does not have a current right to
exercise.
(bb) "Vested Options" shall mean those Options granted to a
Participant as to which such Participant has a current right to exercise.
ARTICLE II
AMOUNT OF STOCK SUBJECT TO THE PLAN
2.1 Number of Shares. The total number of Shares which may be purchased
or acquired pursuant to the exercise of Options granted under the Plan shall
not exceed, in the aggregate, One Hundred Thousand (100,000) subject to
adjustment as provided in Section 9.1 hereof.
2.2 Repurchase, Expiration and Termination. If and to the extent that
Options granted under the Plan are repurchased or canceled by the Company
pursuant to Section 8.1 or 8.2 below or otherwise, or expire or terminate
without having been exercised, the Shares covered by such expired or
terminated Options shall again be subject to Options granted or to be granted
under the Plan.
ARTICLE III
ADMINISTRATION
3.1 In General. The Plan shall be administered by the Board, provided
that the Board may delegate any or all of its administrative duties to a
committee consisting of two (2) or more directors and, to the extent such a
delegation is made, all references herein to the Board shall be deemed to
refer to such committee. In addition to the items set forth in Section 3.2
below and elsewhere in this Plan, the Board shall have the full and final
authority to conclusively construe and interpret the provisions of the Plan
and the Options granted thereunder and decide all
-4-
<PAGE>
questions of fact arising in its application, and to make all other
determinations necessary or advisable for the administration of the Plan and
Options.
3.2 Authority of the Board. In furtherance and not in limitation of the
Board's authority granted under Section 3.1 above and elsewhere under this
Plan, the Board shall have authority, in its discretion, to take any of the
following actions:
(a) To determine the employees to whom Options shall be granted,
the time when such Options shall be granted, the number of Shares which shall
be subject to each Option, the Exercise Price of each Option, the period(s)
during which such Options shall be exercisable (whether in whole or in part)
and the other terms and provisions thereof.
(b) To amend the Plan and any Options granted thereunder and to
prescribe, amend and rescind rules and regulations relating to the Plan,
subject to Articles XVI and XVII below.
(c) To require, in its discretion, as a condition of any Option
grant or exercise, that the Participant agree (i) not to sell or otherwise
dispose of Shares acquired pursuant to the exercise of any Option for some
period of time following the date of the acquisition or exercise of such
Option, and (ii) to certain covenants concerning confidential information
relating to the Company and its subsidiaries and affiliates and the ownership
and protection of certain intellectual property developed during such
employee's period of employment.
(d) To establish, in its discretion, performance standards for
determining the periods during which Options shall be exercisable and the
number of Shares issuable upon such exercise, including, without limitation,
standards based on the earnings of the Company and/or its subsidiaries for
various fiscal periods. The Board shall define any such performance criteria
and, from time to time, the Board in its sole discretion in administering the
Plan may make adjustments to any such performance criteria for any fiscal
period so that extraordinary or unusual charges or credits, acquisitions,
mergers, consolidations, and other corporate transactions and other elements
of or factors influencing the calculations of earnings or any other
performance standard do not distort or affect the operation of the Plan in a
manner inconsistent with the achievement of its purpose.
(e) To employe such legal counsel, consultants and agents as it
may deem desirable for the administration of the Plan and rely upon any
opinion or computation received from any such legal counsel, consultant or
agent. Expenses incurred by the Board in the engagement of such counsel,
consultant or agent shall be paid by the Company.
(f) To enter into an agreement with any Participant for the
repurchase of such Participant's Options, provided that the Purchase Price
for such Options is determined in accordance with Article X below.
-5-
<PAGE>
(g) To perform any and all other acts necessary or proper for the
administration of the Plan.
3.3 NON-UNIFORM DETERMINATIONS. The Board's determinations under the
Plan, including, without limitation, determinations of the persons to receive
Options, the form, amount and timing of such Options, the terms and provisions
of such Options and the Stock Option Certificates evidencing same, need not
be uniform and may be made by the Board selectively among Participants,
regardless of whether such Participants are similarly situated.
3.4 DETERMINATIONS CONCLUSIVE: INDEMNIFICATION. The determination of
the Board on matters referred to in this Article III and elsewhere in this
Plan shall be conclusive. No member or former member of the Board shall be
liable for, and the Company shall indemnify and hold harmless each member and
former member of the Board from and against any claims, actions or damages
arising out of any action or determination made by such Board member or
former Board member in good faith with respect to, the Plan or any award of
Options granted hereunder.
ARTICLE IV
ELIGIBILITY
4.1 KEY EMPLOYEES. Persons eligible to become Participants hereunder
shall be limited to key employees of the Company or of any subsidiary
corporation or parent corporation of the Company, who, in the opinion of the
Board, are in positions in which their actions, decisions and counsel
significantly impact upon the growth and financial success of the Company.
Any person who shall have retired from active employment by the Company or a
subsidiary corporation shall not be eligible to receive any Options.
4.2 NO RIGHT TO PARTICIPATE. The Plan does not create a right in any
employee to become a Participant in the Plan or otherwise to have any Options
granted to him or her.
ARTICLE V
EFFECTIVENESS OF OPTIONS:
STOCK OPTION CERTIFICATE
5.1 CONDITION TO EFFECTIVENESS OF OPTION. Notwithstanding anything
contained herein to the contrary, no Option granted hereunder shall be deemed
effective unless, within thirty (30) days after the date of the Stock Option
Certificate or such other date as may otherwise be determined by the Board,
the Participant shall have executed and returned one copy of the Stock Option
Certificate to the Company at its principal place of business. Each Stock
Option Certificate, which may be executed in separate counterparts, each of
which shall be deemed to be an original and all of which taken together
constitute one and the same agreement, shall be binding upon each of the
Company and the Participant.
6
<PAGE>
5.2 STOCK OPTION CERTIFICATE. Each Option shall be evidenced by a Stock
Option Certificate substantially in the form of Exhibit A hereto, or in such
other form as the Board shall approve from time to time, provided that the
Stock Option Certificate shall incorporate therein by reference all of the
terms and provisions of this Plan, and contain in substance the following
terms, as well as any other terms deemed necessary or desirable by the Board:
(a) The Exercise Price per Share deliverable upon the exercise of
an Option, which Exercise Price shall be fixed by the Board in its sole
discretion, and may be more or less than the fair market value of the Common
Stock on the day the Option is granted; and
(b) The period or periods of time, as determined by the Board,
within which the Option may be exercised by the Participant, in whole or in
part, provided that the Option may not be exercised later than ten years
after the date of the grant of the Option. The Board shall have the power to
permit, in its discretion, an aceleration of such exercise terms under such
circumstances and upon such terms and conditions as it deems appropriate.
ARTICLE VI
EXERCISE OF OPTIONS
6.1 NOTICE FROM PARTICIPANT. Options granted under the Plan shall be
exercised by a Participant as to all or part of the Shares covered thereby by
the giving of written notice of the exercise thereof in the form attached as
Exhibit A to the Stock Option Certificate to the Chief Financial Officer of
the Company at the principal business office of the Company, specifying the
number of Shares with respect to which such Options are being exercised and
specifying a business day not more than fifteen (15) days from the date such
notice is given for the payment of the purchase price against delivery of the
Shares being purchased (the "EXERCISE NOTICE").
6.2 CONDITIONS TO ISSUANCE OF SHARES. Subject to Section 6.3 below and
the terms and conditions of Articles VIII and XII through XV hereof and those
set forth in the Stock Option Certificate, upon the exercise of an Option in
accordance with Section 6.1 above, the Company shall cause the purchased
Shares to be issued on the date specified in the notice of exercise, provided
that it shall have received, at its principal business office (i) the full
amount of the Exercise Price for the Shares in cash or by certified check,
(ii) a copy of the Stockholders' Agreement executed by the Participant,
which shall apply to the Shares to be issued to the Participant under the
Option and to all other Shares owned by the participant, however and whenever
acquired, (iii) any other items required under the Stock Option Certificate,
and (iv) any other items referred to elsewhere in this Plan. Any Share
Certificates for the Shares so purchase shall be delivered to the
Participant at the principal business office of the Company.
6.3 COMPANY'S RIGHT TO REPURCHASE OPTIONS. Notwithstanding anything
contained herein to the contrary, upon receipt of an Exercise Notice
delivered by a Participant in accordance with Section 6.1 above, whether in
connection with the termination of such
7
<PAGE>
Participant's employment as described in Section 8.2 below or otherwise, the
Company shall have the right and option to purchase, by the date specified in
the Exercise Notice for the delivery of the purchase price and issuance of
Shares, all or any portion of the Option being exercised for a purchase price
determined in accordance with Article X below.
6.4 PROCEEDS. The cash proceeds of the sale of Shares pursuant to the
exercise of Options shall be added to the general funds of the Company and
used for its general corporate purposes as the Board of Directors shall
determine.
ARTICLE VII
TERM OF OPTIONS AND LIMITATIONS ON
TRANSFERABILITY AND THE RIGHT TO EXERCISE
7.1 RIGHT TO EXERCISE OPTIONS. Except as otherwise specifically set
forth in this Plan, any Option shall be exercisable at such times, in such
amounts, and during such period or periods as the Committee shall determine
at the date of the grant of such Option and such terms shall be reflected in
the Stock Option Certificate.
7.2 ACCELERATION OF RIGHT TO EXERCISE. Subject to the provisions of
Article XVI, the Board shall have the right to accelerate, in whole or in
part, from time to time, conditionally or unconditionally, rights to exercise
any Option granted hereunder.
7.3 EXPIRATION OF OPTIONS. To the extent that an Option is not exercised
within the period of exercisability specified therein, it shall expire as to
the then unexercised part.
7.4 NO FRACTIONAL SHARES. In no event shall an Option granted hereunder
be exercised for a fraction of a Share.
7.5 NON-TRANSFERABILITY OF OPTIONS. No Option granted hereunder shall be
transferable, whether by operation of low or otherwise, other than by will or
the laws of descent and distribution, and any Option granted hereunder shall
be exercisable during the lifetime of the holder only by such holder. Except
as provided above, Options may not be assigned, transferred, pledged,
hypothecated or disposed of in any way (whether by operation of law
or otherwise) and shall not be subject to execution, attachment or similar
process.
ARTICLE VIII
DISPOSITION OF OPTIONS UPON TERMINATION OF EMPLOYMENT
8.1 TERMINATIONS FOR CAUSE. Upon the Termination for Cause of any
Participant, all Options granted to the Participant (including Exercised
Vested Options, Unexercised Vested Options and Unvested Options) shall be
terminated and canceled immediately upon the date of the Termination for
Cause.
8
<PAGE>
8.2 ALL OTHER TERMINATIONS OF EMPLOYMENT. Upon the termination of
employment of a Participant for any reason other than a Termination for
Cause, the disposition of Options shall be governed by this Section 8.2.
(a) UNVESTED OPTIONS. Upon termination of the employment of any
Participant with the Company, all Unvested Options owned by such employee
shall terminate and become null and void, except as otherwise specified in
Section 8.2(b)(iii) or 9.2 or in the Stock Option Certificate.
(b) UNEXERCISED VESTED OPTIONS.
(i) RESIGNATION OR RETIREMENT. In the case of any Resignation
or Retirement of a Participant, any Unexercised Vested Options owned by such
Participant on the last day of such Participant's full-time employment with
the Company shall terminate and become null and void.
(ii) TERMINATION BY COMPANY. In the case of the termination by
the Company of a Participant's employment (other than in connection with a
Change of Control or as contemplated under Section 8.1 above), the
Unexercised Vested Options owned by such Participant shall terminate and
become null and void on the last day of such Participant's full-time
employment with the Company, provided that if the Company has given the
Participant fewer than five (5) days advance notice of employment
termination, the Participant's Unexercised Vested Options shall terminate and
become null and void five (5) days after such notice is given or, if no
advance notice is given, five (5) days after the Participant's last day of
employment with the Company.
(iii) DEATH OR PERMANENT DISABILITY.
(A) Upon the termination of employment of a Participant
due to his or her death or Permanent Disability, any Unvested Options that
are scheduled to vest within twelve (12) months after such death or Permanent
Disability occurs shall become immediately and fully vested as of the date of
the Participant's death or Permanent Disability; provided, however, that all
of such Participant's Unexercised Vested Options (including those accelerated
pursuant to the foregoing clause) shall terminate and become null and void
ninety (90) days after the date of death or determination of Permanent
Disability.
(B) For purposes of this Section 8.2(b)(iii), all
references to a "Participant" shall be deemed to include the personal or
legal representatives, heirs, beneficiaries, legatees or devisees of a
Participant who is deceased or Permanently Disabled, as the case may be.
(c) EXERCISED VESTED OPTIONS. Except as provided in Section 8.1
above, any Exercised Vested Options owned by a Participant at the time of
termination of his or her
9
<PAGE>
employment shall be treated wholly in accordance with Article VI above,
without regard to such termination.
8.3 TRANSFERS: SUBSIDIARIES.
(a) NO TERMINATION UPON TRANSFER. A termination of employment shall
not be deemed to occur by reason of (i) the transfer of a Participant from
employment by the Company to employment by a subsidiary corporation or a
parent corporation of the Company, or (ii) the transfer of an employee from
employment by a subsidiary corporation or a parent corporation of the Company
to employment by the Company or by another subsidiary corporation or parent
corporation of the Company.
(b) DISSOLUTION OR SALE OF SUBSIDIARY. Upon the substantially
complete liquidation or dissolution of a subsidiary corporation of the
Company, or if the Company ceases to own, directly or indirectly, stock
possessing 50% or more of the total combined voting power of all classes of
stock of such subsidiary corporation, any Participant employed by such
subsidiary corporation will be deemed to have been terminated by the Company,
and any Options then held by such Participant shall be subject to Section 8.2
above.
ARTICLE IX
ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS
9.1 CHANGES IN OUTSTANDING CAPITAL STOCK. Upon any change in the
outstanding capital stock of the Company through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, reverse split,
split-up, split-off, combination of shares, exchange of shares, or other like
change, regardless of whether or not such change involves a Change of
Control, the Board shall be entitled to make any such adjustment to each
outstanding Option that it, in its sole discretion, deems appropriate. The
term "Shares" after any such change shall refer to the securities, cash
and/or property then receivable upon exercise of an Option. In addition, in
the event of any such change, the Board shall make any further adjustment as
may be appropriate to the maximum number of Shares which may be acquired
under the Plan pursuant to the exercise of Options and the number of Shares
and prices per Share subject to outstanding Options as shall be equitable to
prevent dilution or enlargement of rights under such Options, and the
determination of the Board as to these matters shall be conclusive.
9.2 CHANGE OF CONTROL.
(a) Notwithstanding any other provision of the Plan, in the event of
a Change of Control, the Board may, in its sole and absolute discretion, and
without obtaining Participant approval, take any one or more of the following
actions:
10
<PAGE>
(i) Accelerate the vesting of any outstanding Unvested
Options (or portion thereof), or declare any outstanding Unvested
Options terminated, null and void upon such Change of Control; and/or
(ii) Require any or all Option holders to surrender any
outstanding Options (or portion thereof) to the Company for
cancellation for a purchase price determined and paid in
accordance with Article X below.
(b) If, within the twelve (12) month period following a Change of
Control, the employment of a Participant is terminated by the Company due to
the redundancy of the Participant's employment position with the employment
position of one or more other employees of the Company, but in no case in
connection with a Termination for Cause, each Unvested Option theretofore
granted to the Participant, to the extent any such Unvested Options are
outstanding, shall become immediately vested and exercisable and the Company, at
the election of the Participant, shall have the obligation to repurchase from
the Participant all of his or her Options. The purchase price for such
Options shall be determined and paid in accordance with Article X below. Any
such Options which are not repurchased by the Company shall remain in full
force and effect until exercise or expiration thereof in accordance with
their terms.
(c) In any Change of Control transaction (including, without
limitation, a reorganization in which the holders of Shares receive
securities of another corporation), any Options granted hereunder, to the
extent any such Options are outstanding after the effective date of such
transaction, will pertain to and apply to the securities to which a holder of
Shares at the time of the Change of Control transaction is entitled to
receive in connection therewith.
ARTICLE X
PURCHASE PRICE FOR OPTIONS: PAYMENT
10.1 General.
(a) If there is then a public market for the Common Stock, the
purchase price for Options repurchased by the Company pursuant to Sections
6.3, 8.2(b)(i), 8.2(b)(ii), 8.2(b)(iii), 9.2(a) or 9.2(b) above shall be
equal to the closing share price on the date of the Triggering Event, reduced
by the Exercise Price per Share with respect to each Share that would be
issuable upon exercise of the Options being repurchased.
(b) If there is no public market for the Common Stock on the date
of a Triggering Event, the purchase price for Options repurchased by the
Company pursuant to Sections 6.3, 8.2(b)(i), 8.2(b)(ii), 8.2(b)(iii), 9.2(a)
or 9.2(b) above shall be equal to the greater of (i) the value of the
consideration paid for Shares in the Change of Control transaction, if
Options are repurchased by the Company pursuant to Sections 9.2(a) or 9.2(b)
above, or (ii) the Final Purchase Price, determined in accordance with
Sections 10.3 and 10.4 below, in each case
-11-
<PAGE>
reduced by the Exercise Price per Share with respect to each Share that would
be issuable upon exercise of the Options being repurchased.
10.2 Payment.
(a) Payment of the purchase price for any Options purchased by the
Company under this Agreement shall be made by the Company, provided that the
Participant releases its rights under the Plan by executing and delivering to
the company a release in the form attached hereto as Exhibit C, as follows:
(i) and amount equal to at least twenty percent (20%) of the purchase price
(or, if the purchase price is to be equal to the Final Purchase Price, then
twenty percent (20%) of the Closing Purchase Price) shall be paid in cash at
the time of the Option repurchase, and (ii) the balance of the purchase price
shall be paid in no more than four (4) equal annual installments in
accordance with the terms of a promissory note in the form attached hereto as
Exhibit D (the "Note") in an original principal amount equal to the balance
of the purchase price (or, if the purchase price is to be equal to the Final
Purchase Price, the balance of the Closing Purchase Price), with interest on
the outstanding principal balance set at the rate then applicable to the
Company's line of credit less one percent (1%). If the purchase price is to
be equal to the Final Purchase Price, then the principal amount of the Note
and the payments thereunder shall be adjusted upon determination of the Final
Purchase Price in accordance with Section 10.2(b) below.
(b) If the purchase price is to be equal to the Final Purchase
Price, the company shall determine the Final Purchase Price within one-hundred
twenty (120) days after the end of the fiscal year in which the Triggering
Event takes place. To the extent that the Final Purchase Price exceeds or is
less than the Closing Purchase Price, the principal amount of the Promissory
Note will be deemed to be increased or decreased, respectively, by the amount
of such excess or shortfall. Any remaining payments of principal under the
Promissory Note shall be ratably adjusted in a like manner, and interest
shall be deemed to have commenced to accrue on the principal amount, as
adjusted, as of the original date of the Note.
10.3 Determination of Closing Purchase Price.
(a) The Closing Purchase Price shall be equal to:
(i) the Final Share Value as of the end of the fiscal year
immediately prior to the fiscal year in which the Triggering Event takes
place, plus or minus, as the case may be,
(ii) (x) the difference between the Estimated Share Value as of
the end of the fiscal year in which the Triggering Event takes place, less
the Final Share Value as of the end of the fiscal year immediately preceding
the fiscal year in which the Triggering Event takes place, times
-12-
<PAGE>
(y) the number of whole months in the fiscal year in
which the Triggering Event takes place that elapsed prior to the date of the
Triggering Event, divided by twelve.
(iii) The Closing Purchase Price, as determined in accordance
with items (i) and (ii) above, or any of the components thereof, may be
adjusted in any manner deemed appropriate or advisable by the Board of
Directors in its sole discretion, or the Board of Directors, in its sole
discretion, may determine the Closing Purchase Price taking into account any
other valuation factors it deems appropriate, whether or not described under
this Section 10.3.
(b) For purposes of the foregoing, "Estimated Share Value" shall be
equal to the production of:
(i) the sum of: (x) 80% of the product of 1.6 times
Estimated Fee Income, plus (y) 20% of the product of 8 times Estimated EBIT,
times
(ii) a fraction, the numerator of which shall be equal to
the number of Shares issuable upon exercise of the Option(s) being
repurchased, and the denominator of which shall be equal to the sume of:
(x) the total number of shares of Common Stock issued
and outstanding on the last day of the month immediately preceding the
Triggering Event, plus
(y) the total number of Shares issuable upon exercise
of all Options issued and outstanding on the last day of the month
immediately preceding the Triggering Event.
(c) For purposes of the foregoing, " Final Share Value" shall be
calculated in the same manner as the Estimated Share Value, except that Final
Fee Income and Final EBIT shall be used in place of Estimated Fee Income and
Estimated EBIT, respectively.
10.4 Determination of Final Purchase Price. The Final Purchase Price
shall be calculated or otherwise determined in the same manner as the Closing
Purchase Price, except that the Final Share Value, rather than Estimated
Share Value, shall be used with respect to the fiscal year in which the
Triggering Event takes place.
ARTICLE XI
RIGHT TO TERMINATE EMPLOYMENT
The Plan shall not impose any obligation on the Company or on any
subsidiary corporation or parent corporation thereof to continue the
employment of any holder of Options or Shares and it shall not impose any
obligation on the part of any holder of Options or Shares to
-13-
<PAGE>
remain in the employ of the Company or of any subsidiary corporation or
parent corporation thereof.
ARTICLE XII
PURCHASE FOR INVESTMENT
The Board may require an employee, as a condition upon exercise of any
Option granted hereunder, to executive and deliver to the company (a) stock
powers with respect to Shares underlying a particular Option and required to
be held by a custodian, and (b) a written statement, in form satisfactory to
the Board in which the employee represents and warrants that Shares are being
acquired for such employee's own account for investment only and not with a
view to the resale or distribution thereof. The employee shall, at the
request of the Board, be required to represent and warrant in writing that
any subsequent resale or distribution of Shares by the employee shall be made
only pursuant to either (i) a Registration Statement on an appropriate form
under the Securities Act of 1933, as amended (the "Securities Act"),which
Registration Statement has become effective and is current with regard to the
Shares being sold, or (ii) a specific exemption from the registration
requirements of the Securities Act, but in claiming such exemption the
employee shall, prior to any offer of sale or sale of such Shares, obtain a
prior favorable written opinion of counsel, in form and substance satisfactory
to counsel for the Company, as to the application of such exemption thereto.
ARTICLE XIII
SHARES AND SHARE CERTIFICATES
13.1 Share Certificates. Any Share Certificates for Shares issued upon
exercise of Options granted hereunder shall be issued by the Comapny and
registered only in the name of the person exercising the Option.
13.2 Stockholders' Agreement. Shares purchased pursuant to Options
granted under this Plan shall be subject to all of the terms and conditions,
including, without limitation, repurchase by the Company, set forth in the
Stockholders' Agreement and any other terms that may be set forth in the
Stock Option Certificate.
13.3 Legend. The Company may endorse such legend or legends upon the
Stock Option Certificates and Share Certificates issued pursuant to the Plan
and, if a transfer agent has been engaged by the Company, may issue such
"stop transfer" instructions to its transfer agent in respect of such Shares
as, in its discretion, it determines to be necessary or appropriate to (i)
prevent a violation of, or to perfect an exemption from, the registration
requirements of the Securities Act, or (ii) implement the provisions of the
Plan and any agreement between the Company and the optionee or grantee with
respect to such Shares.
-14-
<PAGE>
13.4 Expenses. The Company shall pay all issue and transfer taxes with
respect to the issuance of Shares, as well as all fees and expenses
necessarily incurred by the Company in connection with such issuance. If the
issuance of Shares requires the filing of a Registration Statement under the
Securities Act or an amendment of a previously filed Registration Statement,
the person to receive the Shares shall bear all fees and expenses relating to
such filing. However, if the Company is filing a Registration Statement or
amendment for its own corporate purposes (and the Company so states), the
person to receive the Shares shall bear only the fees and expenses that are
attributable solely to the inclusion of such Shares in the Registration
Statement or amendment.
13.5 Fully Paid, Non-Assessable Shares. All Shares issued as provided
herein shall be fully paid and non-assessable to the extent permitted by law.
ARTICLE XIV
WITHHOLDING TAXES
The Company may require a Participant exercising an Option granted
hereunder (or require a Participant upon any repurchase by the Company of an
Option) to reimburse the corporation that employs such Participant for any
taxes required by any government to be withheld or otherwise deducted and
paid by such corporation in respect of the issuance or disposition of the
Shares to be issued upon Option exercise, or upon any Option repurchase. In
lieu thereof, the corporation that employs such Participant shall have the
right to withhold the amoount of such taxes from any other sums due or to
become due from such corporation to the Participant upon such terms and
conditions as the Board shall prescribe. The corporation that employs such
Participant may, in its discretion, hold the Share Certificate to which the
Participant is entitled upon the exercise of an Option or offset any unpaid
portion of the Purchase Price for any Option, as security for the payment of
such withholding tax liability.
ARTICLE XV
LISTING OF SHARES AND RELATED MATTERS
The Board may delay any award, issuance or delivery of Shares if it
determines that listing, registration or qualification of Shares or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the sale or purchase of
Shares under the Plan, until such listing, registration, qualification,
consent or approval shall have been effected or obtained, or otherwise
provided for, free of any conditions not acceptable to the Board.
-15-
<PAGE>
ARTICLE XVI
AMENDMENT OF THE PLAN
The Board may, in its sole and absolute discretion from time to
time, amend the Plan, provided that no amendment shall be made without the
approval of the stockholders of the Company that will (i) increase the total
number of Shares reserved for Options under the Plan (other than an increase
resulting from an adjustment provided for in Article IX), (ii) modify the
provisions of the Plan relating to eligibility, or (iii) materially increase
the benefits accruing to Participants under the Plan. The Board shall be
authorized to amend the Plan (including the form of any exhibit thereto) and
the Options granted thereunder, provided that the rights and obligations
under any Option granted before amendment of the Plan or any unexercised
portion of such Option shall not be materially and adversely affected by
amendment of the Plan or such Option (as determined in the sole and absolute
discretion of the Board) without the consent of the holder of such OPtion.
ARTICLE XVII
TERMINATION OR SUSPENSION OF THE PLAN
Notwithstanding the provisions of Section 1.2 above, the Board may at
any time suspend or terminate the Plan. Options may not be granted while
the Plan is suspended or after it is terminated. Rights and obligations under
any Option granted while the Plan is in effect shall not be altered or
impaired by suspension or termination of the Plan, except upon the consent of
the person to whom the Option was granted. The power of the Board to construe
and administer any Options granted prior to the termination or suspension of
the Plan under Article III shall continue after such termination or during
such suspension.
ARTICLE XVIII
MISCELLANEOUS
18.1 Governing Law. The Plan and such Options as may be granted
thereunder and all related matters shall be governed by, and construed and
enforced in accordance with, the laws of the State of Maryland.
18.2 Partial Invalidity. The invalidity or unenforceability of any
provision hereof shall not be deemed to affect the validity or enforceability
of any other provision.
18.3 No Rights as Stockholder. A Participant will not be deemed to be
the holder of, or to have any of the rights of a holder with respect to, any
Shares subject to Options granted hereunder unless and until (a) the Option
is exercised under its terms, (b) the company has issued and delivered the
Share Certificates to the Participant,and (c) the Participant's name has been
entered as a stockholder of record on the books of the Company.
16
<PAGE>
EXHIBIT A
TO
EMPLOYEE NON-QUALIFIED STOCK OPTION PLAN
STOCK OPTION CERTIFICATE
PARTICIPANT __________________________________
ADDRESS __________________________________
__________________________________
TOTAL NUMBER OF SHARES UNDER OPTION: ________________
DATE OF THIS CERTIFICATE/AWARD DATE: _________________
This STOCK OPTION CERTIFICATE is issued pursuant to THE HUNTER GROUP,
INC. EMPLOYEE NON-QUALIFIED STOCK OPTION PLAN, effective July 1, 1991,
authorized and approved by the Board of Directors of The Hunter Group, Inc.,
a Maryland corporation (the "Company") on ___________________, 1996 (the
"Plan"). Unless the context otherwise required, all terms defined in the Plan
shall have the same meaning when used herein. The Plan provides for the grant
of OPtions to certain key employees of The Hunter Group, Inc. (the "Company")
and any subsidiary or parent corporation of the Company. A copy of the Plan
is annexed hereto as Exhibit A and shall be deemed a part hereto as if fully
set forth herein.
This Option is not intended to qualify as an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.
Subject to the terms and conditions set forth herein and in the Plan, as
the same may be from time to time amended, the Company hereby grants to you,
as of the date of this Certificate, as a matter of separate inducement and
not in lieu of any salary or other compensation for your services, an Option
to purchase an aggregate of _____________ Shares of the Company's Common
Stock at a price of $________ per Share. For purposes of the purchase by the
Company of Options (pursuant to the Plan) or Shares (pursuant to the
Stockholders' Agreement), the current estimated value per Share of the
Company's Common Stock, calculated in accordance with Section 10.3 of the
Plan and Section 5.3 of the Stockholders' Agreement is $____________. Please
note that this value is stated for your reference only and will increase or
decrease commensurate with the Company's financial performance, as well as
the total number of Shares and Options from time to time outstanding. The
value of the Shares and any component used in determining the value of the
Shares is also subject to adjustment by the Board of Directors in its sole
discretion. There can be no guarantee, and no representation is made by the
Company, that the estimated value of the Shares subject to the Option being
granted to you will remain at $_________ per Share at the time your Option
vests or is exercised, or at the time your Option or Shares are purchased by
the Company, or that the estimated value will approximate the
<PAGE>
actual value of such Shares, as determined by the Board after the close of
any fiscal year of the Company.
Subject to the conditions, provisions and limitations contained in the
Plan and this Certificate, this Option or any part thereof may be exercised
by you by completing and delivering a copy of the Exercise Notice attached as
Exhibit B hereto and fulfilling the other requirements and conditions of
exercise set forth in the Plan and as may be required by the Board of
Directors, beginning on _____________________, 19___, as set forth below;
Beginning on ________________, 19___, you may purchase up to ___________
Shares.
Beginning on ________________, 19___, you may purchase up to an
additional _____________ Shares. Beginning on _______________, 19____, you
may purchase up to an additional ______________ Shares.
In no event shall you exercise this Option for a fraction of a Share.
The unexercised portion of the Option granted herein will automatically
and without notice terminate and become null and void upon the expiration of
ten (10) years from the date of the grant of this Option or sooner under
certain circumstances described in the Plan.
Any exercise of this Option shall be in writing addressed to the Chief
Financial Officer of the Company at the principal place of business of the
Company; shall indicate the Option Certificate Number, the number of Shares
as to which the Option is being exercised and the Exercise Price therefor;
and shall be accompanied by (i) a certified or bank cashier's check payable
to the order of the Company in the full amount of the Exercise Price of the
Shares so purchased, and (ii) a copy of the Stockholders' Agreement attached
as Exhibit B to the Plan executed by you, if one is not already on file with
the Company.
This Option is not transferable by you other than by will or the laws of
of descent and distribution, and is exercisable, during your lifetime, only by
you. This Option may not be assigned, transferred (except by will or the laws
of descent and distribution), pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar proceeding. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of this Option contrary to the provisions
hereof, and the levy of any attachment or similar proceeding upon the Option,
shall be null and void and without effect.
You hereby acknowledge that the Company may endorse appropriate legends
upon the certificate(s) evidencing the Shares as the Company, in its sole
discretion, determines to be necessary or appropriate to (i) implement the
terms of the Plan and/or (ii) to comply with applicable securities laws.
You hereby covenant and agree with the Company that if, at the time of
exercise of this Option, the Company has not duly registered the Shares
subject to this option under the
2
<PAGE>
Securities act of 1933 as amended (the "Act"), (i) that you are purchasing
the shares for your own account and not with a view to the resale or
distribution thereof and (ii) that any subsequent offer or sale of any such
Shares will be made either pursuant to (x) an effective Registration
Statement on an appropriate form under the Act, or (y) a specific exemption
from the registration requirements of the Act, but in claiming such
exemption, you shall, prior to any offer or sale of such Shares, obtain a
favorable written opinion from counsel for or approved by the Company as to
the applicability of such exemption.
As provided in the Plan, the Company may withhold from sums sue or to
become due to you from the Company an amount necessary to satisfy its
obligation to withhold taxes incurred by reason of the exercise of this
Option, or may require you to reimburse the Company in such amount. The
Company may hold the Share Certificate(s) to which you are entitled upon the
exercise of this Option as security for the payment of withholding tax
liability, until cash sufficient to pay such liability has been accumulated.
The provisions of this Stock Option Certificate are subject to all of
the terms, conditions, limitations and restrictions contained in the Plan,
which shall be controlling tin the event of any conflicting or inconsistent
provisions.
Under certain circumstances more fully described in the Plan, the Option
granted under this Stock Option Certificate may be subject to repurchase by
the Company until such time as the Company has actually issued you Shares in
respect of the Option, notwithstanding your prior delivery to the Company of
all items required for the exercise of the Option. Also as described in the
Plan, the time or times at which OPtions may be exercised and the date or
dates upon which unexercised Options will lapse as set forth herein may be
subject to change in the discretion of the Board or under the other
circumstances described in the Plan.
This Stock Option Certificate is not a contract of employment and the
terms of your employment shall not be affected hereby or by any agreement
referred to herein except to the extent specifically so provided herein or
therein. Nothing herein shall be construed to impose any obligation on the
Company to continue your employment, and it shall not impose any obligation
on your part to remain in the employ of the Company.
[IT IS A CONDITION TO THE EFFECTIVENESS OF THIS OPTION AND THE OBLIGATION
OF THE COMPANY TO ISSUE ANY SHARES HEREUNDER THAT, WITHIN THIRTY (30) DAYS
AFTER THE DATE HEREOF, YOU SHALL HAVE EXECUTED AND RETURNED TO THE CHIEF
FINANCIAL OFFICER OF THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS, AND THE
COMPANY SHALL BE ACTUALLY IN RECEIPT OF, A COUNTERPART COPY OF THIS STOCK
OPTION CERTIFICATE. BY EXECUTING AND RETURNING THIS STOCK OPTION CERTIFICATE,
YOU WILL BE DEEMED TO HAVE ACCEPTED ALL OF THE TERMS AND CONDITIONS OF THE
OPTION SET FORTH HEREIN AND IN THE PLAN. IF YOU HAVE NOT EXECUTED AND
RETURNED A COPY OF THIS STOCK OPTION
3
<PAGE>
CERTIFICATE AS PROVIDED ABOVE, THE OPTION EVIDENCED HEREBY SHALL
AUTOMATICALLY AND WITHOUT ANY FURTHER NOTICE TERMINATE AND BE NULL AND VOID.]
BY SIGNING BELOW, YOU HEREBY ACKNOWLEDGE THAT THE OPTIONS EVIDENCED
HEREBY CONSTITUTE AND REPRESENT ALL OF THE AWARDS (INCLUDING, WITHOUT
LIMITATION, ANY AND ALL OPTIONS, STOCK OPTIONS, STOCK OPTION GRANTS, SARS,
STOCK APPRECIATION RIGHTS, STOCK GRANTS AND OTHER RIGHTS TO ACQUIRE EQUITY
SECURITIES OF THE COMPANY OR EQUITY EQUIVALENTS OR OTHER AWARDS OF ANY KIND
OR NATURE) REFERRED TO IN THAT CERTAIN AGREEMENT DATED _________________, 199
___ BETWEEN THE UNDERSIGNED AND THE COMPANY AND IN ANY OTHER ORAL OR WRITTEN
COMMITMENT OR AGREEMENT MADE BY THE COMPANY PRIOR TO THE DATE OF THIS
CERTIFICATE (COLLECTIVELY, THE "EXISTING AGREEMENT"), AND DO NOT CONSTITUTE
ANY ADDITIONAL OPTIONS, AWARDS OR RIGHTS OF ANY KIND OR NATURE. THE
UNDERSIGNED FURTHER ACKNOWLEDGES AND AGREES, IN CONSIDERATION OF THE ADOPTION
OF THE PLAN BY THE COMPANY AND THE DELIVERY OF THIS CERTIFICATE TO THE
UNDERSIGNED, THAT THE PLAN REFERRED TO HEREIN IS THE OPTION PLAN CONTEMPLATED
BY THE EXISTING AGREEMENT AND THAT ALL OF THE TERMS AND CONDITIONS SET FORTH
THEREIN SHALL GOVERN ALL ASPECTS OF THIS OPTION.]
THE HUNTER GROUP, INC.
By: ___________________________ (SEAL)
Name: ________________________________
Title: _______________________________
ACCEPTED:
__________________________________
Signature of Participant
__________________________________
Name of Participant - Please Print
Date: ____________________________
4
<PAGE>
EXHIBIT 10.03
THE HUNTER GROUP, INC.
1997 OMNIBUS STOCK PLAN
1. Establishment, Purpose and Types of Awards
THE HUNTER GROUP, INC. hereby establishes the THE HUNTER GROUP, INC. 1997
OMNIBUS STOCK PLAN (the "Plan"). The purpose of the Plan is to promote the
long-term growth and profitability of THE HUNTER GROUP, INC. (the
"Corporation") by (i) providing key people with incentives to improve
stockholder value and to contribute to the growth and financial success of
the Corporation, and (ii) enabling the Corporation to attract, retain and
reward the best-available persons for positions of substantial responsibility.
The Plan permits the granting of stock options (including incentive stock
options qualifying under Code section 422 and nonqualified stock options),
stock appreciation rights, restricted or unrestricted stock awards, phantom
stock, performance awards, or any combination of the foregoing.
2. Definitions
Under this Plan, except where the context otherwise indicates, the
following definitions apply:
(a) "Affiliate" shall mean any entity, whether now or hereafter
existing, which controls, is controlled by, or is under common control with,
the Corporation (including, but not limited to, joint ventures, limited
liability companies, and partnerships). For this purpose, "control" shall
mean ownership of 50% or more of the total combined voting power or value of
all classes of stock or interests of the entity.
(b) "Award" shall mean any stock option, stock appreciation right, stock
award, phantom stock award, or performance award.
(c) "Board" shall mean the Board of Directors of the Corporation.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder.
(e) "Common Stock" shall mean shares of common stock of the Corporation,
no par value.
(f) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(g) "Fair Market Value" of a share of the Corporation's Common Stock for
any purpose on a particular date shall be determined in a manner such as the
Administrator shall in good faith determine to be appropriate; provided that
in the event the Common Stock shall become registered under Section 12 of the
Exchange Act, then thereafter the Fair Market Value of the Corporation's
Common Stock for any purpose on a particular date shall mean the last
reported sale price per share of Common Stock, regular way, on such date or,
in case no such sale takes place on such date, the average of the closing bid
and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on a national securities exchange or included for
quotation on the Nasdaq-National Market, or if the Common Stock is not so
listed or admitted to trading or included for quotation, the last quoted
price, or if the Common Stock is not so quoted, the average of the high bid
and low asked prices, regular way, in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System or, if such system is no longer in use, the principal other
automated quotations system that may then be in use or, if the Common Stock
is not quoted by any such organization, the average of the closing bid and
asked prices, regular way, as furnished by a professional market maker making
a market in the Common Stock as selected in good faith by the Administrator
or by such other source or sources as shall be selected in
<PAGE>
good faith by the Administrator. If, as the case may be, the relevant date
is not a trading day, the determination shall be made as of the next
preceding trading day. As used herein, the term "trading day" shall mean a
day on which public trading of securities occurs and is reported in the
principal consolidated reporting system referred to above, or if the Common
Stock is not listed or admitted to trading on a national securities exchange
or included for quotation on the Nasdaq-National Market, any business day.
(h) "Grant Agreement" shall mean a written document memorializing the
terms and conditions of an Award granted pursuant to the Plan and shall
incorporate the terms of the Plan.
(i) "Parent" shall mean a corporation, whether now or hereafter
existing, within the meaning of the definition of "parent corporation"
provided in Code section 424(e), or any successor thereto.
(j) "Rule 16b-3" shall mean Rule 16b-3 as in effect under the Exchange
Act on the effective date of the Plan, or any successor provision prescribing
conditions necessary to exempt the issuance of securities under the Plan (and
further transactions in such securities) from Section 16(b) of the Exchange
Act.
(k) "Subsidiary" and "subsidiaries" shall mean only a corporation or
corporations, whether now or hereafter existing, within the meaning of the
definition of "subsidiary corporation" provided in Section 424(f) of the
Code, or any successor thereto.
3. Administration
(a) Administration of the Plan. The Plan shall be administered by the
Board or by such committee or committees as may be appointed by the Board
from time to time (the Board, committee or committees hereinafter referred to
as the "Administrator").
(b) Powers of the Administrator. The Administrator shall have all the
powers vested in it by the terms of the Plan, such powers to include
authority, in its sole and absolute discretion, to grant Awards under the
Plan, prescribe Grant Agreements evidencing such Awards and establish
programs for granting Awards.
The Administrator shall have full power and authority to take all other
actions necessary to carry out the purpose and intent of the Plan, including,
but not limited to, the authority to: (i) determine the eligible persons to
whom, and the time or times at which Awards shall be granted; (ii) determine
the types of Awards to be granted; (iii) determine the number of shares to be
covered by or used for reference purposes for each Award; (iv) impose such
terms, limitations, restrictions and conditions upon any such Award as the
Administrator shall deem appropriate; (v) modify, amend, extend or renew
outstanding Awards, or accept the surrender of outstanding Awards and
substitute new Awards (provided however, that, except as provided in Section
7(d) of the Plan, any modification that would materially adversely affect any
outstanding Award shall not be made without the consent of the holder); (vi)
accelerate or otherwise change the time in which an Award may be exercised or
becomes payable and to waive or accelerate the lapse, in whole or in part, of
any restriction or condition with respect to such Award, including, but not
limited to, any restriction or condition with respect to the vesting or
exercisability of an Award following termination of any grantee's employment;
and (vii) establish objectives and conditions, if any, for earning Awards and
determining whether Awards will be paid after the end of a performance period.
The Administrator shall have full power and authority, in its sole and
absolute discretion, to administer and interpret the Plan and to adopt and
interpret such rules, regulations, agreements, guidelines and instruments for
the administration of the Plan and for the conduct of its business as the
Administrator deems necessary or advisable.
-2-
<PAGE>
(c) Non-Uniform Determinations. The Administrator's determinations
under the Plan (including without limitation, determinations of the persons
to receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the Grant Agreements evidencing such Awards)
need not be uniform and may be made by the Administrator selectively among
persons who receive, or are eligible to receive, Awards under the Plan,
whether or not such persons are similarly situated.
(d) Limited Liability. To the maximum extent permitted by law, no
member of the Administrator shall be liable for any action taken or decision
made in good faith relating to the Plan or any Award thereunder.
(e) Indemnification. To the maximum extent permitted by law and by the
Corporation's charter and by-laws, the members of the Administrator shall be
indemnified by the Corporation in respect of all their activities under the
Plan.
(f) Effect of Administrator's Decision. All actions taken and decisions
and determinations made by the Administrator on all matters relating to the
Plan pursuant to the powers vested in it hereunder shall be in the
Administrator's sole and absolute discretion and shall be conclusive and
binding on all parties concerned, including the Corporation, its
stockholders, any participants in the Plan and any other employee of the
Corporation, and their respective successors in interest.
4. Shares Available for the Plan; Maximum Awards
Subject to adjustments as provided in Section 7(d) of the Plan, the
shares of Common Stock that may be issued with respect to Awards granted
under the Plan shall not exceed an aggregate of ____________ shares of Common
Stock. The Corporation shall reserve such number of shares for Awards under
the Plan, subject to adjustments as provided in Section 7(d) of the Plan. If
any Award, or portion of an Award, under the Plan expires or terminates
unexercised, becomes unexercisable or is forfeited or otherwise terminated,
surrendered or canceled as to any shares, or if any shares of Common Stock
are surrendered to the Corporation in connection with any Award (whether or
not such surrendered shares were acquired pursuant to any Award), the shares
subject to such Award and the surrendered shares shall thereafter be
available for further Awards under the Plan; provided, however, that any such
shares that are surrendered to the Corporation in connection with any Award
or that are otherwise forfeited after issuance shall not be available for
purchase pursuant to incentive stock options intended to qualify under Code
section 422.
5. Participation
Participation in the Plan shall be open to all employees, officers, and
directors of the Corporation, or of any Affiliate of the Corporation, as may
be selected by the Administrator from time to time.
6. Awards
The Administrator, in its sole discretion, establishes the terms of all
Awards granted under the Plan. Awards may be granted individually or in
tandem with other types of Awards. All Awards are subject to the terms and
conditions provided in the Grant Agreement.
(a) Stock Options. The Administrator may from time to time grant to
eligible participants Awards of incentive stock options as that term is
defined in Code section 422 or nonqualified stock options; provided, however,
that Awards of incentive stock options shall be limited to employees of the
Corporation or of any Parent or Subsidiary of the Corporation. Options
intended to qualify as incentive stock options under Code section 422 must
have an exercise price at least equal to Fair Market Value on the date of
grant, but nonqualified stock options may be granted with an exercise price
less than Fair Market Value. No stock option
-3-
<PAGE>
shall be an incentive stock option unless so designated by the Administrator
at the time of grant or in the Grant Agreement evidencing such stock option.
(b) Stock Appreciation Rights. The Administrator may from time to time
grant to eligible participants Awards of Stock Appreciation Rights ("SAR").
An SAR entitles the grantee to receive, subject to the provisions of the Plan
and the Grant Agreement, a payment having an aggregate value equal to the
product of (i) the excess of (A) the Fair Market Value on the exercise date
of one share of Common Stock over (B) the base price per share specified in
the Grant Agreement, times (ii) the number of shares specified by the SAR, or
portion thereof, which is exercised. Payment by the Corporation of the
amount receivable upon any exercise of an SAR may be made by the delivery of
Common Stock or cash, or any combination of Common Stock and cash, as
determined in the sole discretion of the Administrator. If upon settlement
of the exercise of an SAR a grantee is to receive a portion of such payment
in shares of Common Stock, the number of shares shall be determined by
dividing such portion by the Fair Market Value of a share of Common Stock on
the exercise date. No fractional shares shall be used for such payment and
the Administrator shall determine whether cash shall be given in lieu of such
fractional shares or whether such fractional shares shall be eliminated.
(c) Stock Awards. The Administrator may from time to time grant
restricted or unrestricted stock Awards to eligible participants in such
amounts, on such terms and conditions, and for such consideration, including
no consideration or such minimum consideration as may be required by law, as
it shall determine. A stock Award may be paid in Common Stock, in cash, or
in a combination of Common Stock and cash, as determined in the sole
discretion of the Administrator.
(d) Phantom Stock. The Administrator may from time to time grant Awards
to eligible participants denominated in stock-equivalent units ("phantom
stock") in such amounts and on such terms and conditions as it shall
determine. Phantom stock units granted to a participant shall be credited to
a bookkeeping reserve account solely for accounting purposes and shall not
require a segregation of any of the Corporation's assets. An Award of
phantom stock may be settled in Common Stock, in cash, or in a combination of
Common Stock and cash, as determined in the sole discretion of the
Administrator. Except as otherwise provided in the applicable Grant
Agreement, the grantee shall not have the rights of a stockholder with
respect to any shares of Common Stock represented by a phantom stock unit
solely as a result of the grant of a phantom stock unit to the grantee.
(e) Performance Awards. The Administrator may, in its discretion, grant
performance awards which become payable on account of attainment of one or
more performance goals established by the Administrator. Performance awards
may be paid by the delivery of Common Stock or cash, or any combination of
Common Stock and cash, as determined in the sole discretion of the
Administrator. Performance goals established by the Administrator may be
based on the Corporation's or an Affiliate's operating income or one or more
other business criteria selected by the Administrator that apply to an
individual or group of individuals, a business unit, or the Corporation or an
Affiliate as a whole, over such performance period as the Administrator may
designate.
7. Miscellaneous
(a) Withholding of Taxes. Grantees and holders of Awards shall pay to
the Corporation, or make provision satisfactory to the Administrator for
payment of, any taxes required to be withheld in respect of Awards under the
Plan no later than the date of the event creating the tax liability. The
Corporation may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to the grantee or
holder of an Award. In the event that payment to the Corporation of such tax
obligations is made in shares of Common Stock, such shares shall be valued at
Fair Market Value on the applicable date for such purposes.
-4-
<PAGE>
(b) Loans. The Corporation may make or guarantee loans to grantees to
assist grantees in exercising Awards and satisfying any withholding tax
obligations.
(c) Transferability. Except as otherwise determined by the
Administrator, and in any event in the case of an incentive stock option or a
stock appreciation right granted with respect to an incentive stock option,
no Award granted under the Plan shall be transferable by a grantee otherwise
than by will or the laws of descent and distribution. Unless otherwise
determined by the Administrator in accord with the provisions of the
immediately preceding sentence, an Award may be exercised during the lifetime
of the grantee, only by the grantee or, during the period the grantee is
under a legal disability, by the grantee's guardian or legal representative.
(d) Adjustments; Business Combinations. In the event of changes in the
Common Stock of the Corporation by reason of any stock dividend, split-up,
recapitalization, merger, consolidation, business combination or exchange of
shares and the like, the Administrator shall, in its discretion, make
appropriate adjustments to the maximum number and kind of shares reserved for
issuance or with respect to which Awards may be granted under the Plan as
provided in Section 4 of the Plan and to the number, kind and price of shares
covered by Awards granted, and shall, in its discretion and without the
consent of holders of Awards, make any other adjustments in Awards, including
but not limited to reducing the number of shares subject to Awards or
providing or mandating alternative settlement methods such as settlement of
the Awards in cash or in shares of Common Stock or other securities of the
Corporation or of any other entity, or in any other matters which relate to
Awards as the Administrator shall, in its sole discretion, determine to be
necessary or appropriate.
Notwithstanding anything in the Plan to the contrary and without the
consent of holders of Awards, the Administrator, in its sole discretion, may
make any modifications to any Awards, including but not limited to
cancellation, forfeiture, surrender or other termination of the Awards in
whole or in part regardless of the vested status of the Award, in order to
facilitate any business combination that is authorized by the Board to comply
with requirements for treatment as a pooling of interests transaction for
accounting purposes under generally accepted accounting principles.
The Administrator is authorized to make, in its discretion and without
the consent of holders of Awards, adjustments in the terms and conditions of,
and the criteria included in, Awards in recognition of unusual or
nonrecurring events affecting the Corporation, or the financial statements of
the Corporation or any Subsidiary, or of changes in applicable laws,
regulations, or accounting principles, whenever the Administrator determines
that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan.
(e) Substitution of Awards in Mergers and Acquisitions. Awards may be
granted under the Plan from time to time in substitution for Awards held by
employees or directors of entitities who become or are about to become
employees or directors of the Corporation or an Affiliate as the result of a
merger or consolidation of the employing entity with the Corporation or an
Affiliate, or the acquisition by the Corporation or an Affiliate of the
assets or stock of the employing entity. The terms and conditions of any
substitute Awards so granted may vary from the terms and conditions set forth
herein to the extent that the Administrator deems appropriate at the time of
grant to conform the substitute Awards to the provisions of the awards for
which they are substituted.
(f) Termination, Amendment and Modification of the Plan. The Board may
terminate, amend or modify the Plan or any portion thereof at any time.
(g) Non-Guarantee of Employment or Service. Nothing in the Plan or in
any Grant Agreement thereunder shall confer any right on an individual to
continue in the service of the Corporation or shall interfere in any way with
the right of the Corporation to terminate such service at any time.
-5-
<PAGE>
(h) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Corporation and a grantee or any other
person. To the extent that any grantee or other person acquires a right to
receive payments from the Corporation pursuant to an Award, such right shall
be no greater than the right of any unsecured general creditor of the
Corporation.
(i) Governing Law. The validity, construction and effect of the Plan,
of Grant Agreements entered into pursuant to the Plan, and of any rules,
regulations, determinations or decisions made by the Administrator relating
to the Plan or such Grant Agreements, and the rights of any and all persons
having or claiming to have any interest therein or thereunder, shall be
determined exclusively in accordance with applicable federal laws and the
laws of the State of Maryland, without regard to its conflict of laws
principles.
(j) Effective Date; Termination Date. The Plan is effective as of the
date on which the Plan was adopted by the Board, subject to approval of the
stockholders within twelve months before or after such date. No Award shall
be granted under the Plan after the close of business on the day immediately
preceding the tenth anniversary of the effective date of the Plan. Subject
to other applicable provisions of the Plan, all Awards made under the Plan
prior to such termination of the Plan shall remain in effect until such
Awards have been satisfied or terminated in accordance with the Plan and the
terms of such Awards.
-6-
<PAGE>
EXHIBIT 10.04(a)
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ("Agreement")
is made this 20th day of June, 1997, by and among THE HUNTER GROUP, INC., a
Maryland corporation ("THG"), THG CONSULTING INC., a corporation organized under
the laws of Canada ("THG Canada"), THE HUNTER GROUP (SINGAPORE) PTE LTD, a
corporation incorporated under The Companies Act of the Republic of Singapore
("THG Singapore"), HUNTER CONSULTING ASSOCIATES, PTY. LIMITED, a corporation
organized under the laws of New South Wales, Australia ("THG Australia"), HUNTER
CONSULTING ASSOCIATES, LIMITED, a corporation organized under the laws of Great
Britain ("THG England"), and THE HUNTER GROUP INTERNATIONAL, INC., a Delaware
corporation ("THG International," and THG Canada, THG Singapore, THG Australia,
THG England and THG International collectively, "Affiliate Borrowers" and each
individually an "Affiliate Borrower," and THG and Affiliate Borrowers
collectively, "Borrowers," and each individually a "Borrower"), and SIGNET BANK,
a Virginia banking corporation ("Bank").
RECITALS
WHEREAS, THG and Bank are parties to a certain Loan Agreement dated
November 17, 1995 (as heretofore amended, the "Original Loan Agreement"),
pursuant to which, on the terms and conditions therein contained, Bank has
agreed to extend credit to THG in the principal amount of $6,000,000.00; and
WHEREAS, THG and each of Affiliate Borrowers are engaged as an
integrated and intertwined group of entities in the business of integrating
enterprise-wide software systems; and
WHEREAS, Borrowers have requested Bank to extend credit to
Borrowers, jointly and severally, in the aggregate principal amount of Eight
Million Dollars ($8,000,000.00); and
WHEREAS, Borrowers acknowledge that Bank would not have entered into
this Agreement but for the joint and several obligations of all of Borrowers
with respect to the loans to be extended and the security interests to be
granted by each Borrower to collateralize all of such credit; and
WHEREAS, in order to give effect to the increase in credit
availability under the Original Loan Agreement, the addition of the Affiliate
Borrowers as borrowers under the Loan Agreement and to reflect the revised terms
and conditions with respect the borrowings thereunder, Borrowers and Bank have
<PAGE>
agreed to amend and restate the Loan Agreement and the Security Agreement (as
therein defined) in their entireties as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, Borrowers and Bank do hereby amend and restate the Loan Agreement and
the Security Agreement (as therein defined) in their entireties, and do hereby
agree, as follows:
1. CONSTRUCTION AND DEFINITION OF TERMS
All terms used herein without definition which are defined by the
Maryland Uniform Commercial Code shall have the meanings assigned to them by the
Maryland Uniform Commercial Code unless and to the extent varied by this
Agreement. Unless the context otherwise requires, all of the accounting terms
used herein without definition shall have the meanings assigned to them as
determined by GAAP except to the extent varied by this Agreement. Unless
otherwise specifically indicated, whenever the phrase "satisfactory to Bank" is
used in this Agreement such phrase shall mean "satisfactory to Bank in its sole
but reasonable discretion." The use of any gender or the neuter herein shall
also refer to the other gender or the neuter and the use of the plural shall
also refer to the singular, and vice versa. In addition to the terms defined
elsewhere in this Agreement, unless the context otherwise requires, when used
herein, the following terms shall have the following meanings:
"Acceptable Receivables" shall mean, as of any time, such billed
Receivables of THG as are, but only in the amount such Receivables are,
acceptable to Bank from time to time, in its discretion exercised reasonably and
in good faith, as a basis for advances to Borrowers hereunder. Without
limitation of the foregoing, except as otherwise agreed by Bank from time to
time, Acceptable Receivables shall not include (a) any Receivable which is not
lawfully owned by THG, which is subject to any Lien except for Permitted Liens,
or in which Bank does not have a perfected first priority security interest; (b)
any Receivable which is not valid or enforceable or does not represent a bona
fide, undisputed indebtedness to THG of the obligor thereon; (c) any Receivables
to the extent that the Receivable is subject to any defense, setoff,
counterclaim, retainage, holdback, credit, discount, allowance, adjustment,
deduction or reduction of any kind; (d) any Receivable which remains unpaid on
the ninety-first (91st) day after its billing by THG; (e) all Receivables due
from any obligor of THG if a Receivable or Receivables due from such obliger in
an amount equal to fifty percent (50%) or more than the aggregate amount of all
Receivables payable by such obliger remain unpaid on the ninety-first (91st) day
after its (or their) billing by THG; (f) any Receivable to the extent that any
goods, the sale of which gave rise to the Receivable, have been returned,
rejected, lost or damaged prior to acceptance thereof by the buyer or lessee;
(g) any Receivable which arose from the sale of goods by THG, if such goods have
not been delivered by THG and accepted, or if such sale was not an absolute sale
or was a
-2-
<PAGE>
sale on consignment, on approval or on a sale-or-return basis, or if such sale
is subject to any repurchase or return agreement, or if such sale is subject to
any other term by reason of which the obligation of the obligor thereon is
contingent or conditional; (h) any Receivable arising in connection with the
performance of services, if such services have not been performed; (i) any
Receivable which did not arise in the ordinary course of the business of THG;
(j) any Receivables which are due from a person to the extent THG is or becomes
an account debtor or obligor of such person by virtue of any obligation of THG
to such person not relating to such Receivables; (k) any Government Receivable
to the extent that sums due or to become due to THG in connection therewith
which are required to be assigned to Bank in accordance with the provisions of
Subsection 3.02(k) hereof have not been so assigned; (l) any Receivable with
respect to which the obligor thereon is insolvent, is unable to pay its debts as
they mature, or is the subject of any pending, imminent or threatened
bankruptcy, reorganization, insolvency, readjustment of debt, trusteeship,
receivership, dissolution or liquidation law, statute or proceeding; (m) any
Receivable with respect to which the obligor thereon is an Affiliate; (n) any
Receivable with respect to which the obligor thereon is not an individual if the
obligor's principal place of business is not located in the United States of
America; or (o) any Receivable with respect to which the obligor thereon is an
individual, if the obligor's residence is not located in the United States of
America. Bank may determine from time to time, in its discretion exercised in
good faith and notwithstanding any previous contrary determinations made by
Bank, to exclude from Acceptable Receivables specific Receivables, categories or
types of Receivables, or specific components of Receivables. Such determinations
may be based upon evaluations of risk or any other factors deemed relevant by
Bank reasonably and in good faith, whether or not such factors have theretofore
been used, contemplated or foreseen as a basis for limiting Acceptable
Receivables. Borrowers shall be provided with prior written notice of any such
determination, which shall be deemed effective as of the effective date of the
next Borrowing Base Certificate to be delivered by Borrowers pursuant to
Subsection 3.03(g) which is not lees than ten (10) days following the giving of
such notice.
"Adjustment Date" shall mean each day which is the later of (a) the
first day of the first month to commence following the delivery to Bank of the
financial Statements of Borrowers as required under Subsection 6.01(a) hereof
for any month which is the last month in any quarterly accounting period of
Borrowers, commencing with the quarterly accounting period ending June 30, 1997,
or (b) the fifth (5th) Banking Day following the delivery to Bank of such
financial statements.
"Advance" shall mean each advance under the Loan.
"Affiliate" shall mean: (a) any person in which a Borrower legally
or beneficially owns or holds, directly or indirectly, any capital stock, member
interest, partnership interest or other equity interest; (b) any person that is
a partner in or of a Borrower, a partnership in which a Borrower is a partner, a
joint venture in
-3-
<PAGE>
which a Borrower is a joint venturer, or a joint venturer in or of a Borrower;
(c) any person that is a director, officer, employee, stockholder. member,
partner (legally or beneficially) or other affiliate of any of the foregoing or
of a Borrower; and (d) any person that directly or indirectly controls, is under
the control of, or is under common control with, a Borrower, including, without
limitation, any person that directly or indirectly has the right or power to
direct the management or policies of a Borrower and any person whose management
or policies a Borrower directly or indirectly has the right or power to direct.
"Applicable LIBOR Margin" shall mean two and one-half percent
(2.50%); provided, however, that the Applicable LIBOR Margin is subject to
periodic adjustment in the manner further described in this paragraph. If on any
Adjustment Date on which the Monthly LIBOR Option is in effect (the "Applicable
LIBOR Margin Adjustment Date") (a) no Event of Default, shall have occurred and
be continuing, and (b) Borrowers' financial statements delivered in accordance
with Subsection 6.01(a) hereof indicate that at the conclusion of the Applicable
Measurement Period the ratio of Consolidated Liabilities to Consolidated
Tangible Net Worth was (i) less than or equal to 1.5 to 1.0, the Applicable
LIBOR Margin shall be adjusted effective as of such Applicable LIBOR Margin
Adjustment Date to be one and three-quarters percent (1.75%), (ii) greater than
1.5 to 1.0, but less than or equal to 2.5 to 1.0, the Applicable LIBOR Margin
shall be adjusted effective as of such Applicable LIBOR Margin Adjustment Date
to be two percent (2.0%), (iii) greater than 2.5 to 1.0, but less than or equal
to 3.0 to 1.0, the Applicable LIBOR Margin shall be adjusted effective as of
such Applicable LIBOR Margin Adjustment Date to be two and one-quarter percent
(2.25%), and (iv) greater than 3.0 to 1.0, the Applicable LIBOR Margin shall be
adjusted effective as of such Applicable LIBOR Margin Adjustment Date to be two
and one-half percent (2.50%). Notwithstanding the foregoing, the Applicable
LIBOR Margin from Closing until the initial Applicable LIBOR Margin Adjustment
Date shall be two and one-half percent (2.50%).
"Applicable Measurement Period" shall mean, with respect to any
Adjustment Date, the quarterly accounting period of Borrowers immediately
preceding such Adjustment Date for which Borrowers shall have provided the
monthly financial statements required pursuant to Subsection 6.01(a) hereof.
"Applicable Prime Rate Margin" shall mean one-quarter of one percent
(0.25%); provided, however, that the Applicable Prime Rate Margin is subject to
periodic adjustment in the manner further described in this paragraph. If on any
Adjustment Date on which the Prime Rate Option is in effect (the "Applicable
Prime Rate Margin Adjustment Date") (a) no Event of Default, shall have occurred
and be continuing, and (b) Borrowers' financial statements delivered in
accordance with Subsection 6.01(a) hereof indicate that at the conclusion of the
Applicable Measurement Period the ratio of Consolidated Liabilities to
Consolidated Tangible Net Worth was (i) less than or equal to 3.0 to 1.01, the
-4-
<PAGE>
Applicable Prime Rate Margin shall be adjusted effective as of such Applicable
Prime Rate Margin Adjustment Date to be zero percent (0.00%), and (ii) greater
than 3.0 to 1.0, the Applicable Prime Rate Margin shall be adjusted effective as
of such Applicable Prime Rate Margin Adjustment Date to be one-quarter of one
percent (0.25%).
"Available Funds" shall mean the gross balance in the Management
Account, less Instruments presented for payment and less the aggregate amount of
all deposited items which Bank has not credited to the Management Account as
available.
"Banking Day" shall mean any day that banks in the State of Maryland
are not required or permitted to be closed.
"Borrowing Base Certificate" shall mean a Certified written schedule
and aging of Receivables in such form and containing such information as may
from time to time be required by Bank.
"Business Premises" shall mean 100 East Pratt Street, Suite 1600,
Baltimore, Maryland 21202, and each of the premises identified in Schedule 4.09
attached hereto and incorporated by reference herein.
"Certified" shall mean that the information, statement, schedule,
report or other document required to be "Certified" contains a representation by
a Borrower, that to such Borrower's knowledge and belief after diligent inquiry,
such information, statement, schedule, report or other document is true and
complete in all material respects.
"Closing" shall mean the first date on which funds are advanced to
Borrowers hereunder.
"Closing Agreement" shall mean that certain Closing Agreement of
even date herewith by and among Borrowers and Bank.
"Code" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time.
"Collateral" shall mean: (a) all Receivables, and Inventory and
Equipment and, in addition, all other property of each Borrower in which Bank
has, or may in the future acquire or be granted, a Lien hereunder or under any
of the Other Agreements; (b) all amounts now or in the future owed by Bank to
any Borrower and all property and funds of each Borrower (including deposit
accounts, certificates of deposit, and investments made or managed by Bank on
behalf of such Borrower), now owned or hereafter acquired by each Borrower and
now or hereafter in Bank's possession or control; (c) all present and future
substitutions, replacements, appurtenances, accessories, accessions and
materials and supplies
-5-
<PAGE>
relating to any of the foregoing; (d) all of each Borrower's present and future
books and records in any form, in or on any media, including data processing
materials in any form (including software, tapes, discs and the like), whether
in the possession of such Borrower or any other person; and (e) all present and
future proceeds and products of all of the foregoing in any form whatsoever and
all rights, including rights to the payment of money for any reason, arising on
account of any sale, assignment, lease, rental, license, exchange, liquidation,
condemnation, taking, theft or any disposition of any nature of, or any damage
or casualty to, or any loss with respect to, any of the foregoing or any rights
or interests of any Borrower in any of the foregoing, including, without
limitation, cash proceeds (including all payments under any indemnities,
warranties or guaranties payable with respect to any of the foregoing), noncash
proceeds and proceeds acquired with cash proceeds, whether any such proceeds
constitute consumer goods, farm products, equipment, inventory, documents of
title, chattel paper, accounts, instruments or general intangibles, and all
proceeds of insurance policies insuring any of the foregoing or any risks to any
Borrower associated with any of the foregoing.
"Consolidated Cash Flow" shall mean the consolidated net income of
Borrowers and Subsidiaries after tax plus depreciation less dividends paid on
account of capital stock of Borrowers and Subsidiaries.
"Consolidated Liabilities" shall mean the aggregate liabilities of
Borrowers and Subsidiaries.
"Consolidated Net Income" shall mean, with respect to Borrowers for
any measurement period, the consolidated net income (or net deficit) of
Borrowers for such period, which, for purposes of this Agreement, shall be equal
to aggregate revenues and other income of Borrowers for such period less the
aggregate for Borrowers during such period of (a) cost of goods sold, (b)
interest expense, (c) operating expenses, (d) selling, general and
administrative expenses, (e) taxes, (f) depreciation, depletion and amortizing
of properties, and (g) any other items that are treated as expenses under GAAP,
but excluding from the definition of Net Income, (i) extraordinary gains and
losses in accordance with GAAP, and (ii) any nonrecurring write-up or write-down
in the value of inventory in accordance with GAAP.
"Consolidated Tangible Net Worth" shall mean the aggregate assets of
Borrowers and Subsidiaries, exclusive of goodwill, trademarks, tradenames,
licenses and such other assets as are properly classified as intangible assets
according to generally accepted accounting principles, less Consolidated
Liabilities.
"Default" shall mean any event which, with the giving of notice or
passage of time (or both), would constitute an Event of Default.
-6-
<PAGE>
"Default Rate of Interest" shall mean a fixed per annum rate of
interest, adjusted as of the first day of each month, equal to the applicable
Monthly LIBO Rate plus four and one-half percent (4.5%). The Default Rate of
Interest shall become payable upon the giving of notice by Bank to Borrower as
further provided in Subsection 2.02(a)(i) hereof, and shall initially be
determined as of the first day of the calendar month in which such notice is
given.
"Domestic Borrower" shall mean a Borrower which is organized under
the laws of any State.
"Environmental Laws" shall mean all federal, state, local and
foreign laws relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including, without limitation,
ambient air, surface water, ground water, or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes, and any and all regulations, codes,
plans, orders, decrees, judgments, injunctions, notices or demand letters
issued, entered, promulgated or approved thereunder.
"Equipment" shall mean: (a) all equipment of each Borrower of every
type and description, now owned and hereafter acquired and wherever located,
including, without limitation, all machinery, vehicles and other rolling stock,
furniture, furnishings, tools, dies, leasehold improvements, fixtures, and
materials and supplies relating to any of the foregoing; (b) all present and
future documents of title and trust receipts relating to any of the foregoing;
(c) all present and future rights, claims and causes of action of each Borrower
in connection with purchases by such Borrower of (or contracts for the purchase
by such Borrower of), or warranties relating to, or damages to, goods held or to
be held by such Borrower as equipment; (d) all present and future warranties,
manuals and other written materials (and packaging thereof or relating thereto)
relating to any of the foregoing; (e) all present and future rights, claims and
causes of action of each Borrower in connection with any agreements pursuant to
which any suppliers, manufacturers or other persons have agreed or may agree,
conditionally or otherwise, to purchase or repurchase from such Borrower, in
bulk or otherwise, any goods held or to be held by such Borrower as equipment;
and (f) all present and future general intangibles of each Borrower in any way
relating to any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor legislation, and all
regulations, codes, plans, orders, decrees, judgments, injunctions, notices or
demand letters issued, entered, promulgated or approved thereunder.
-7-
<PAGE>
Event of Default" shall mean any of the events described in Section
8 hereof.
"Excess Funds" shall mean the amount by which Available Funds
exceeds the Target Balance.
"Foreign Borrower" shall mean a Borrower which is not a Domestic
Borrower.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time. In the event of a change
in GAAP affecting the covenants contained in Subsections 6.15 or 6.16 of this
Agreement or definitions contained in this Section 1 relating to such covenants,
such covenants and definitions shall continue to be applied as though such
change in GAAP had not occurred unless and until Bank and Borrowers shall agree
in writing to amend or adjust such covenants or definitions as deemed necessary
as a result of such change in GAAP.
"good faith" shall mean, with respect to a determination to be made
by Bank "in good faith," that Bank shall make such determination honestly and
not maliciously.
"Government Receivable" shall mean any Receivable which arises out
of a contract with the United States of America or any State, county,
municipality or any department, agency or instrumentality thereof.
"Hazardous Substance" shall mean any flammable explosives, radon,
radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum-based products, methane and
all other pollutants, contaminates, chemicals, industrial substances, industrial
wastes, toxic substances, toxic wastes, toxic materials, hazardous substances,
hazardous wastes and hazardous materials. The meaning of each term used in this
definition shall include, without limitation, the meaning or meanings assigned
to such term by any Environmental Laws.
"Indebtedness" shall include all items which would properly be
included in the liability section of a balance sheet in accordance with GAAP,
and shall also include all contingent liabilities. Without limitation of the
foregoing, operating leases of Borrower shall not be considered to be
Indebtedness hereunder.
"Instrument" shall mean any item for the payment of money drawn
upon, or any charge against, the Management Account.
"Inventory" shall mean: (a) all inventory of each Borrower of every
type and description, now owned and hereafter acquired and wherever located,
including, without limitation, raw materials, work in process, finished goods,
goods
-8-
<PAGE>
returned or repossessed, and goods held for demonstration, marketing or similar
purposes; (b) all present and future materials and supplies of each Borrower
used, usable or consumed in the course of such Borrower's business, whether
relating to the manufacture, assembly, installation, repair, packaging, packing
or shipment of goods by such Borrower, or relating to advertising or any other
aspect of such Borrower's business; (c) all present and future property of each
Borrower in or on which any of the foregoing is stored or maintained; (d) all
present and future warranties, manuals and other written materials (and
packaging thereof or relating thereto) relating to any of the foregoing; (e) all
present and future documents of title and trust receipts relating to any of the
foregoing; (f) all present and future customer lists of each Borrower; (g) all
present and future rights of each Borrower in connection with goods consigned to
or by such Borrower; (h) all present and future rights of each Borrower as an
unpaid seller of goods, including rights of stoppage in transit, detinue and
reclamation; (i) all present and future rights, claims and causes of action of
each Borrower in connection with purchases by such Borrower of (or contracts for
the purchase by such Borrower of), or warranties relating to, or damages to,
goods held or to be held by such Borrower as inventory; (i) all present and
future rights, claims and causes of action of each Borrower in connection with
any agreements pursuant to which any suppliers, manufacturers or other persons
have agreed or may agree, conditionally or otherwise, to purchase or repurchase
from such Borrower, in bulk or otherwise, any goods held or to be held by such
Borrower as inventory; and (k) all present and future general intangibles of
each Borrower in any way relating to any of the foregoing.
"Lien" shall mean any statutory or common law consensual or
nonconsensual mortgage, pledge, security interest, encumbrance, lien, right of
setoff, claim or charge of any kind, including, without limitation, any
conditional sale or other title retention transaction, any lease transaction in
the nature thereof and any secured transaction under the Uniform Commercial Code
of any jurisdiction.
"Loan" shall mean the revolving loan made by Bank to Borrowers
pursuant to Subsection 2.01 hereof.
"Management Account" shall mean deposit account number 4400397313
maintained by THG at Bank.
"Material Adverse Effect" shall mean a material adverse effect upon
or change in (a) the business, assets, operations, business prospects or
financial condition of (i) Borrowers and Subsidiaries measured as a whole, or
(ii) THG or any other Borrower or Subsidiary which, together with any other
Borrower or Subsidiary suffering or affected by the same material adverse effect
or change, has 20% or more of the Consolidated Tangible Net Worth of, or
contributed, during any of the four previous four quarterly accounting periods
of Borrowers, 20% or more of the Consolidated Cash Flow of, Borrowers and
Subsidiaries taken as a whole (THG
-9-
<PAGE>
and each such other Borrower or Subsidiary, a "Material Borrower or
Subsidiary"), (b) the ability of any Material Borrower or Subsidiary to conduct
its business, (c) the ability of any Borrower or any Other Obligor to perform
its respective obligations under this Agreement or under any of the Other
Agreements to which it is a party, (d) the binding nature, validity or
enforceability of this Agreement or any of the Other Agreements, (e) the
validity, perfection, priority or enforceability of the Liens in favor of Bank
securing the Obligations, (f) the prospect for the full and punctual payment and
performance of all of the Obligations, or (g) the rights and remedies of Bank
under this Agreement or any of the Other Agreements.
"Maximum Loan Amount" shall mean, subject to the terms of the
Closing Agreement (a) at any given time up to (and including) June 30, 1997, the
lesser of (i) the Receivables Loan Percentage multiplied by Acceptable
Receivables as disclosed in the most recent Borrowing Base Certificate provided
to Bank (subject to the provisions of Subsection 3.03(f) hereof), or (ii)
$6,000,000.00, and (b) at any given time after June 30, 1997, the lesser of (i)
the Receivables Loan Percentage multiplied by Acceptable Receivables as
disclosed in the most recent Borrowing Base Certificate provided to Bank
(subject to the provisions of Subsection 3.03(f) hereof), or (ii) $8,000,000.00.
Notwithstanding the foregoing, but subject to the terms of the Closing
Agreement, upon the giving to Bank of not less than ten (10) days written notice
prior to the first day of any calendar month commencing on or after July 1,
1997, Borrowers may elect to limit the Maximum Loan Amount during such month to
the lesser of (x) the amount determined under clause (b)(i), or (y)
$6,000,000.00 or $7,000,000.00 (as indicated by Borrowers in such notice).
"Monthly LIBO Rate" shall mean the rate per annum, as determined by
Bank in its sole discretion at Closing and on the first day of each month
thereafter, equal to the London Interbank Offered Rate (adjusted to reflect the
cost of insurance premiums and reserve requirements as they exist from time to
time) published by Bloomberg or Dow-Jones Telerate, as BBA LIBOR on page 3750
(or Reuters Monitor Money Rates Service (LIBO page), if Bloomberg or Dow
Jones-Telerate 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 on day, for a period of one month; provided, however, that if the first
day of any month is not a day on which such rate is available, such rate shall
be determined on the immediately preceding day on which such rate is available.
If more than one such rate appears on such page or its replacement, the Monthly
LIBO Rate shall be the arithmetic mean of such rates. The Monthly LIBO Rate
shall be adjusted as of the first day of each month.
"Monthly LIBOR Option" shall have the meaning given to such term in
Subsection 2.02(b) hereof.
- 10 -
<PAGE>
"Non-Default Rate of Interest" shall mean (a) at all times when the
Monthly LIBOR Option is in effect, a fixed per annum rate equal to the
applicable Monthly LIBO Rate plus the Applicable LIBOR Margin, and (b) at all
times when the Prime Rate Option is in effect, a fluctuating per annum rate
equal to the Prime Rate plus the Applicable Prime Rate Margin.
"Note" shall mean a promissory note of Borrowers in the form
attached hereto as Exhibit A, and all renewals, replacements and extensions
thereof.
"Obligations" shall mean, as the same may be amended, modified,
extended, renewed, supplemented, increased, refinanced, consolidated or replaced
from time to time, all present and future obligations, indebtedness and
liabilities of each Borrower to Bank of every kind and nature, whether arising
under this Agreement, the Other Agreements or otherwise (including, without
limitation, all principal amounts, including future advances, interest charges,
service charges, late charges, fees and all other charges and sums, as well as
all reasonable costs and reasonable expenses, including reasonable attorneys'
fees and expenses, payable or reimbursable by any Borrower under or pursuant to
this Agreement, the Other Agreements and otherwise), whether direct or indirect,
joint or several, contingent or non-contingent, matured or unmatured, accrued or
not accrued, liquidated or unliquidated, secured or unsecured, related or
unrelated to this Agreement, whether or not now contemplated, whether arising in
contract, tort or otherwise, whether or not any instrument or agreement relating
thereto specifically refers to this Agreement, and whether or not of the same
character or class as any Borrower's obligations under this Agreement,
including, without limitation, reimbursement obligations of each Borrower in
connection with letters of credit issued by Bank, obligations of each Borrower
in connection with overdrafts in any checking or other account of such Borrower
at Bank, all claims against each Borrower acquired by assignment to Bank, and
all claims of Bank against each Borrower arising or re-arising on account of or
as a result of any payment made by such Borrower or any Other Obligor with
respect to any obligations included in this definition which is rescinded or
recovered from or restored or returned by Bank under authority of any law, rule,
regulation, order of court or governmental agency, or in connection with any
compromise or settlement relating thereto or relating to any pending or
threatened action, suit or proceeding relating thereto, whether arising out of
any proceedings under the United States Bankruptcy Code or otherwise.
"Other Agreements" shall mean, as the same may be amended, modified,
extended, renewed, supplemented or replaced from time to time, any and all
agreements, contracts, promissory notes and other instruments (including the
Note), drafts, checks, bankers acceptances, security agreements, assignments,
pledge agreements, hypothecation agreements, indemnification agreements, letters
of credit and applications and agreements relating thereto, subordination
- 11 -
<PAGE>
agreements, mortgages, deeds of trust, leases, guaranties and other documents
(a) now and hereafter existing between Bank and any Borrower, (b) executed
and/or delivered in connection with this Agreement or any of the Obligations, or
(c) evidencing, guaranteeing, securing (directly or indirectly), subordinating
other obligations of any Borrower or any Other Obligor to, containing any
warranties, covenants, agreements or representations of any person relating to,
or in any other manner relating to, any of the Obligations or any obligation of
any Other Obligor in connection with any of the Obligations. The Other
Agreements shall include, without limitation, the instruments and documents
referred to in Subsection 5.01 hereof.
"Other Obligor" shall mean any person that is now or hereafter primarily
or secondarily, or contingently or non-contingently, liable for or obligated
upon or in connection with any of the Obligations, or, whether or not so liable,
that has granted any Lien to or for the benefit of Bank as security for any of
the Obligations or any obligations of any Other Obligor in connection with any
of the Obligations.
"Permitted Liens" shall mean; (a) Liens of Bank; (b) Liens for taxes not
delinquent or for taxes being diligently contested in good faith by a Borrower
by appropriate proceedings, subject to the conditions set forth in Subsection
6.02 hereof and provided such Lien is subordinate to any security interest of
Bank in the property encumbered by such Lien or if not subordinate (and pending
the outcome of such proceedings) Borrower has established appropriate reserves
in accordance with GAAP for the payment of the amount necessary for the release
of such Liens; (c) mechanic's, artisan's, materialman's, landlord's, carrier's
or other like Liens arising in the ordinary course of business with respect to
obligations which are not due or with respect to obligations which are being
diligently contested in good faith by a Borrower by appropriate proceedings,
provided appropriate reserves therefor are established by such Borrower in
accordance with GAAP; (d) Liens arising out of a judgment, order or award with
respect to which a Borrower shall in good faith be prosecuting diligently an
appeal or proceeding for review and with respect to which there shall be in
effect a subsisting stay of execution pending such appeal or proceeding for
review, provided appropriate reserves therefor are established by such Borrower
in accordance with GAAP and provided such Liens are subordinate to Bank's
security interest in the property encumbered by such Lien; (e) any deposit of
funds made in the ordinary course of business to secure obligations of a
Borrower under worker's compensation laws, unemployment insurance laws or
similar legislation, to secure public or statutory obligations of such Borrower,
to secure surety, appeal or customs bonds in proceedings to which such Borrower
is a party, or to secure such Borrower's performance in connection with bids,
tenders, contracts (other than contracts for the payment of money), leases or
subleases made by such Borrower in the ordinary course of business; (f) Purchase
Money Liens provided the expenditure related to any such Lien is permitted by
the provisions of Subsection 7.17 hereof; (g) the rights and interests of
lessors under operating leases pursuant
-12-
<PAGE>
to which a Borrower, as lessee, leases assets used in a Borrower's business; (h)
Liens specifically consented to by Bank in writing (including, without
limitation, those Liens described in the Schedule 4.08 attached hereto and made
a part hereof); and (i) other Liens not permitted within the scope of the
preceding clauses of this definition, provided that (i) the aggregate amount of
Indebtedness secured by such other Liens shall not exceed One Hundred and Fifty
Thousand Dollars ($150,000.00) at any time outstanding, and (ii) such Liens are
subordinate to the Liens of Bank in the property which is encumbered thereby.
"person" shall mean any individual, corporation, partnership, joint
venture, association, trust, government (or subdivision, agency or department
thereof) or any other entity of any kind.
"Preferred Stock Sale" shall have the meaning assigned to such term in
Subsection 6.17(a) hereof.
"Prime Rate" shall mean the rate of interest publicly announced by Bank
from time to time as its prime rate. The Prime Rate is not necessarily intended
to be the lowest rate of interest charged by Bank in connection with extensions
of credit to debtors, and Bank may price loans at, above or less than the Prime
Rate.
"Prime Rate Option" shall have the meaning given to such term in
Subsection 2.02(b) hereof.
"Purchase Money Liens" shall mean Liens on property acquired by a Borrower
or placed on any property of a Borrower in order to finance the acquisition
thereof, provided that (a) any such Lien is created within 90 days of the
acquisition of the property encumbered thereby, (b) the Indebtedness secured by
any Lien so created does not exceed 100% of the lesser of cost or fair market
value of the property covered thereby at the time of acquisition, and (c) such
Lien shall only attach to the property acquired with the proceeds of the
Indebtedness secured thereby.
"Receivables" shall mean: (a) all of each Borrower's present and future
accounts, contract rights, receivables, promissory notes and other instruments,
chattel paper, general intangibles and investment property; (b) all present and
future tax refunds of each Borrower and all present and future rights of each
Borrower to refunds or returns of prepaid expenses, including unearned insurance
premiums; (c) all present and future cash of each Borrower; (d) all deposit
accounts now or hereafter maintained or established by, for or on behalf of each
Borrower with any bank or other institution, and all balances of funds now or
hereafter on deposit in all such accounts, including, without limitation, all
checking accounts, collection accounts, lockbox accounts, disbursement accounts,
concentration accounts and all other deposit accounts of every kind and nature;
(e) all present and future judgments, orders, awards and decrees in favor of
each
-13-
<PAGE>
Borrower and causes of action in favor of each Borrower; (f) all present and
future claims, rights of indemnification and other rights of each Borrower under
or in connection with any contracts or agreements to which such Borrower is or
becomes a party or third party beneficiary; (g) all rights and claims of each
Borrower with respect to any deposits of money or other property made with any
lessors of any property, insurers, bonding agents or any other persons; (h) all
present and future rights and claims which each Borrower may now or hereafter
have under any insurance policies, contracts or coverages now or hereafter in
effect; (i) all goods previously or hereafter returned, repossessed or stopped
in transit, the sale, lease or other disposition of which contributed to the
creation of any account, instrument or chattel paper of a Borrower; (j) all
present and future rights of each Borrower as an unpaid seller of goods,
including rights of stoppage in transit, detinue and reclamation; (k) all rights
which each Borrower may now or at any time hereafter have, by law or agreement,
against any account debtor or other obligor of such Borrower, and all rights and
Liens which each Borrower may now or at any time hereafter have, by law or
agreement, against any property of any account debtor or other obligor of such
Borrower; (l) all present and future interests and rights of each Borrower,
including rights to the payment of money, under or in connection with all
present and future leases and subleases of real or personal property to which
such Borrower is a party, as lessor, sublessor, lessee or sublessee; (m) all
present and future customer lists of each Borrower; (n) all present and future
contingent and non-contingent rights of each Borrower to the payment of money
for any reason whatsoever, whether arising in contract, tort or otherwise,
whether or not such rights are otherwise included in this definition; and (o)
all present and future rights of each Borrower with respect to licenses,
patents, copyrights, franchises, trade names and trademarks.
"Receivables Loan Percentage" shall mean 80%.
"Review Date" shall mean April 30, 1999, or such other date as Bank may
agree in conformity with the requirements of Subsection 2.01(a) hereof.
"State" shall mean any State of the United States and the District of
Columbia.
"Subsidiary" shall include any person at least a majority of the
outstanding Voting Stock of which, now or in the future, is owned or controlled
by a Borrower, directly or indirectly through one or more Subsidiaries.
"Target Balance" shall mean $25,000.00.
"Voting Stock" shall mean (a) the shares of any class of capital stock of
a corporation having ordinary voting power to elect the directors, officers or
trustees thereof, including such shares that shall or might have voting power by
reason of the occurrence of one or more conditions or contingencies, (b) any
limited liability company interests, membership interests or other equivalent
interests or
-14-
<PAGE>
participations (however designated) of any limited liability company, and (c)
any general or limited partnership interests or other interests or
participations in any partnership, joint venture, trust or similar entity, in
each case whether or not evidenced by stock certificates or similar instruments.
2. THE LOANS
2.01 Revolving Loan. (a) Bank agrees to make advances to Borrowers from
time to time until the Review Date, subject to all of the terms and conditions
of this Agreement (the "Loan"). All requests by Borrowers for advances shall be
made in such manner and form and with such prior notice to Bank as Bank may
reasonably require from time to time. Each such request (other than a request
made under Subsection 2.01(d)) shall contain or be accompanied by such
information and documents (which shall be Certified if required by Bank)
concerning the Collateral, Borrowers' financial condition, use of the proceeds
of such advance and of advances previously made and/or any other matters as Bank
may from time to time require. In no event shall Bank be obligated to make any
advance hereunder if a Default or an Event of Default shall have occurred or if
such advance would cause the total principal amount of advances made and
outstanding hereunder to exceed the Maximum Loan Amount. Even if the total
principal amount of advances outstanding shall at any time and for any reason
exceed the Maximum Loan Amount, Borrowers and all guarantors shall nonetheless
be liable for the entire principal amount outstanding, with interest thereon at
the rate and calculated in the manner provided herein and in the Note, in
accordance with and subject to this Agreement, the Note and the guaranties of
such guarantors. If the total principal amount of advances outstanding under the
Loan shall at any time exceed the Maximum Loan Amount, Borrowers shall pay to
Bank within one (1) Banking Day after demand the amount of such excess, with
interest thereon at the rate and calculated in the manner provided herein and in
the Note. Borrowers agree that Borrowers shall be jointly and severally liable
for, and the Collateral shall secure, the repayment of each advance made by Bank
to or for any Borrower hereunder, with interest at the rate and calculated in
the manner provided herein and in the Note, whether or not such advance was duly
requested or authorized by any Borrower and whether or not any person requesting
such advance was duly authorized to make such request. Subject to all of the
terms and conditions of this Agreement and the Other Agreements, Borrowers may
borrow, repay and reborrow hereunder until the Review Date. All principal, all
accrued and unpaid interest and all other sums and charges owing to Bank
hereunder shall be due and payable on the Review Date without demand. Bank may,
in its sole discretion, agree, but only in writing, to extend the Review Date
for such time and upon such terms and conditions as Bank shall determine in its
sole discretion.
(b) Borrowers' joint and several obligation to repay the Loan with
interest shall be evidenced by, and the Loan shall be repaid with interest in
accordance with, the Note.
-15-
<PAGE>
(c) Borrowers jointly and severally agree to pay to Bank, in
consideration of Bank's making credit available to Borrowers under the Loan, a
monthly facility fee payable, for the prior calendar month or portion thereof,
on the first (1st) of each month after the date hereof. The facility fee shall
be calculated on the average daily unborrowed amount of the Maximum Loan Amount
during each calendar month or portion thereof at a rate per annum (based on a
year of 360 days for the actual number of days elapsed) re-established effective
as of each Adjustment Date which shall equal (i) thirty one-hundredths of one
percent (0.30%) if the ratio of Consolidated Liabilities to Consolidated
Tangible Net Worth at the conclusion of the Applicable Measurement Period is
greater than 3.0 to 1.0, and (ii) one-quarter of one percent (0.25%) if the
ratio of Consolidated Liabilities to Consolidated Tangible Net Worth at the
conclusion of the Applicable Measurement Period is equal to or less than 3.0 to
1.0; provided, however, that (x) from Closing until the first Adjustment Date
occurring after the delivery of the financial statements of Borrowers for the
monthly period ending March 31, 1997, the applicable rate shall be thirty one-
hundredths of one percent (0.30%), and (y) upon the occurrence and during the
continuance of any Event of Default, the facility fee shall accrue at the rate
of thirty one-hundredths of one percent (0.30%).
(d) In order to accommodate Borrowers' desire to manage their cash
by initiating borrowings and payments under Bank's target balance management
program, borrowings and payments under the Loan may be requested and made as
follows. Until termination of Bank's target balance management program,
presentment of any Instrument on the Management Account at a time when Excess
Funds in the Management Account are not sufficient to cover the Instrument fully
shall constitute a request by Borrowers for an advance. Bank may, in its sole
discretion, honor any such Instrument and make an advance to Borrowers under the
Loan in an amount at least equal to the face amount of the Instrument; provided,
however, that if (i) it would be appropriate for Bank to honor an Instrument but
for an insufficiency of funds in the Management Account, (ii) the Loan advance
necessary to provide sufficient funds in the Management Account to honor the
instrument would not cause the total principal amount of advances made and
outstanding hereunder to exceed or to further exceed the Maximum Loan Amount,
and (iii) no Default or Event of Default has occurred and is continuing, Bank
shall make an advance to Borrowers under the Loan in the amount necessary to
provide sufficient funds in the Management Account to honor the Instrument. Bank
will monitor the Management Account on each Banking Day to determine the amount
of Excess Funds, if any, in the Management Account, and Borrowers authorize Bank
to transfer Excess Funds from the Management Account and apply the same in
payment of the advances outstanding under the Loan. Borrowers further authorize
Bank to make advances to Borrowers from time to time under the Loan in the
amounts necessary to cause Available Funds to equal the Target Balance.
-16-
<PAGE>
(e) Borrowers shall pay to Bank a monthly service charge for the
services to be performed by Bank under its target balance management program,
which charge shall be determined according to the schedule of such charges as
the same may be established from time to time by Bank. Borrowers acknowledge
that the services to be performed by Bank under its target balance management
program are provided as a service accommodation to Borrowers and do not and
shall not constitute conditions to or consideration for the Obligations and,
therefore, Bank shall have no liability to Borrowers and Borrowers shall not be
entitled to any reduction in interest charged to Borrowers under the Loan on
account of any failure of Bank to cause any reduction to be made in the
principal amount outstanding under the Loan.
(f) At any time Bank may terminate the operation of the target
balance management program without prior notice to Borrowers; provided, however,
that unless a Default or Event of Default shall have occurred and be continuing,
Bank agrees to provide not less than two (2) Banking Days' written notice of any
such termination to Borrowers. Borrowers may terminate the operation of the
target balance management program upon two (2) Banking Days' written notice to
Bank of such termination. After termination of the target balance management
program, advances under the Loan shall be requested by Borrowers in such manner
and form and with such prior notice as Bank may from time to time require. Each
such request shall contain or be accompanied by such information and documents
(which shall be Certified if required by Bank) concerning the Collateral, the
financial condition of Borrowers, the use of the proceeds of such advance and of
advances previously made and/or any other matters as Bank may from time to time
require.
2.02 Interest. (a) Until the occurrence of an Event of Default, all
principal sums outstanding under the Loan and/or the Note shall bear interest at
the Non-Default Rate of Interest. After the occurrence of an Event of Default,
all principal sums outstanding under the Loan and/or the Note shall bear
interest until paid at the Default Rate of Interest; provided, however, that (i)
interest shall not be payable at the Default Rate of Interest until Bank shall
have notified Borrowers of Bank's election to charge the Default Rate of
Interest, and (ii) if the Event of Default on which the charging of the Default
Rate of Interest is based shall be cured or waived or otherwise discontinued,
then and thereafter (until the occurrence of a subsequent Event of Default)
interest shall be payable at the Non-Default Rate of Interest.
(b) Subject to the provisions of Subsection 2.02(a) above, Borrowers
may, at their option, elect to have interest on the Advances accrue at (a) a
fixed monthly rate equal to the Monthly LIBO Rate plus the Applicable LIBOR
Margin (the "Monthly LIBOR Option"), or (ii) a fluctuating rate equal to the
Prime Rate plus the Applicable Prime Rate Margin (the "Prime Rate Option"). At
Closing, the Monthly LIBOR Option shall be in effect. Borrowers may change from
the
-17-
<PAGE>
Prime Rate Option to the Monthly LIBOR Option (and vice versa) on two Banking
Days prior written notice to Bank; provided, however, that (i) any such change
shall only become effective on the first day of the month which is not less then
two Banking Days following the giving of such notice, and (ii) all Advances
shall be subject to the same Option selected by Borrowers (i.e., the Prime Rate
Option and the Monthly LIBOR Option may not exist simultaneously).
(c) Accrued interest on the Advances shall be payable monthly as
provided in the Note and shall be calculated on a year of 360 days based on the
actual number of days elapsed. The rate of interest on the Advances may
fluctuate and vary from time to time depending on changes in the Prime Rate or
in the Monthly LIBO Rate, as applicable. If the Prime Rate or the Monthly LIBO
Rate (as applicable) shall increase or decrease, then such rate of interest
shall automatically and contemporaneously increase or decrease (as the case may
be) so as to reflect such increase or decrease in the Prime Rate or the Monthly
LIBO Rate, as applicable.
2.03 Prepayment. Borrowers may at their option prepay any or all of the
Loan in whole at any time or in part from time to time without penalty or
premium. All prepayments shall be accompanied by the payment of accrued and
unpaid interest on the Loan to the date of payment. All payments may, in Bank's
discretion, be applied first to the payment of outstanding late charges (if
any), then to accrued and unpaid interest and then to the unpaid principal
balance.
2.05 Late Charge. If any payment required to be made by Borrowers
hereunder or under the Note (excluding in each case any accelerated payments and
payments due on the Review Date) is not paid within 15 days after the date on
which such payment is due, Borrowers shall pay to Bank on demand a late charge
equal to 5% of the amount of such payment.
3. SECURITY
3.01 Security Interest. As security for the payment and performance of all
of the Obligations, whether or not any instrument or agreement relating to any
Obligation specifically refers to this Agreement or the security interest
created hereunder, each Borrower hereby grants to Bank a lien and continuing
security interest in, and pledges and assigns to Bank, the Collateral. Bank's
security interest shall continually exist until (a) all Obligations have been
paid in full, and (b) there exits no commitment by Bank which could give rise to
any Obligations, whether or not all Obligations shall at any time or from time
to time be reduced to zero. Each Borrower shall make notations, satisfactory to
Bank, on its books and records disclosing the existence of Bank's security
interest in the Collateral. Bank shall have no liability or duty, either before
or after the occurrence of an Event of Default hereunder, on account of loss of
or damage to, or to collect or enforce any of its rights against, the
Collateral, or to preserve any
-18-
<PAGE>
rights against account debtors or other parties with prior interests in the
Collateral, the sole duty of Bank in this regard being to exercise reasonable
care with respect to tangible Collateral in its actual possession.
3.02 Covenants and Representations Concerning Collateral. With respect to
all of the Collateral, each Borrower covenants, warrants and represents that:
(a) No financing statement covering any of the Collateral is on file
in any public office or land or financing records except for financing
statements in favor of Bank and financing statements with respect to any
Permitted Liens described in Schedule 4.08 hereto and Borrowers are the legal
and beneficial owner of all of the Collateral, free and clear of all Liens,
except for Permitted Liens.
(b) The security interest in the Collateral granted Bank hereunder
shall be subject only to Permitted Liens which are entitled to priority under
applicable law and are not required to be subordinate to Bank's Liens under the
provisions of the "Permitted Liens" definition. No Borrower will, except in the
ordinary course of business, transfer, discount, sell, grant or assign any
interest in the Collateral nor, without Bank's prior written consent, permit any
other Lien to be created or remain thereon except for Permitted Liens. Upon the
filing of the financing statements identified in Subsection 5.01(e) with the
appropriate filing offices in each of jurisdictions in which a Business Premises
of THG is located, Bank will have a perfected Lien in all of the Collateral
owned by THG in which a Lien may be perfected by the filing a financing
statement.
(c) Borrowers will maintain the Collateral in good order and
condition, ordinary wear and tear excepted, and will use, operate and maintain
the Collateral in compliance in all material respects with all laws, regulations
and ordinances and in compliance in all material respects with all applicable
insurance requirements and regulations. Borrowers will promptly notify Bank in
writing of any litigation involving or affecting the Collateral which any
Borrower knows or has reason to believe is pending or threatened. Borrowers will
promptly pay when due all taxes and all transportation, storage, warehousing and
other such charges and fees affecting or arising out of or relating to the
Collateral and shall defend the Collateral, at Borrowers' expense, against all
claims and demands of any persons claiming any interest in the Collateral
adverse to any Borrower or Bank.
(d) At all reasonable times Bank and its agents and designees may
enter the Business Premises and any other premises of Borrowers and inspect the
Collateral and all books and records of Borrowers (in whatever form).
(e) Borrowers will maintain comprehensive casualty insurance on the
Collateral against such risks, in such amounts, with such loss
-19-
<PAGE>
deductible amounts and with such companies as may be satisfactory to Bank, and
each such policy shall contain a clause or endorsement satisfactory to Bank
naming Bank as mortgagee and a clause or endorsement satisfactory to Bank that
such policy may not be cancelled or altered and Bank may not be removed as
mortgagee without at least 30 days prior written notice to Bank. In all events,
the amounts of such insurance coverages shall conform to prudent business
practices and shall be in such minimum amounts that no Borrower will be deemed a
coinsurer under applicable insurance laws, regulations, policies or practices.
Each Borrower hereby assigns to Bank and grants to Bank a security interest in
any and all proceeds of such policies and authorizes and empowers Bank to adjust
or compromise any loss under such policies and to collect and receive all such
proceeds. Each Borrower hereby authorizes and directs each insurance company to
pay all such proceeds directly and solely to Bank and not to any Borrower and
Bank jointly. Each Borrower authorizes and empowers Bank to execute and endorse
in such Borrower's name all proof of loss, drafts, checks and any other
documents or instruments necessary to accomplish such collection, and any
persons making payments to Bank under the terms of this paragraph are hereby
relieved absolutely from any obligation or responsibility to see to the
application of any sums so paid. After deduction from any such proceeds of all
reasonable costs and reasonable expenses (including reasonable attorney's fees)
incurred by Bank in the collection and handling of such proceeds, the net
proceeds may be applied, at Bank's option, either toward replacing or restoring
the Collateral, in a manner and on terms satisfactory to Bank, or as a credit
against such of the Obligations, whether matured or unmatured, as Bank shall
determine in Bank's sole discretion.
(f) All books and records pertaining to the Collateral are located
at the Business Premises and no Borrower will change the location of such books
and records without the prior written consent of Bank, which consent shall not
be unreasonably withheld or delayed provided Borrowers shall have undertaken all
acts required to ensure the continued perfection and priority of Bank's Lien
therein and in any other Collateral affected by such change in location.
(g) Except for (i) any vehicles of a Borrower, (ii) Collateral in
transit to a Borrower or to customers of a Borrower, and (iii) mobile goods of a
type normally used in more than one jurisdiction, all of the Collateral is, and,
unless Bank shall consent otherwise in writing, shall remain located at the
Business Premises.
(h) Each Borrower shall do, make, execute and deliver all such
additional and further acts, things, deeds, assurances, instruments and
documents as Bank may reasonably request to vest in and assure to Bank its
rights hereunder or in any of the Collateral, including, without limitation, the
execution and delivery of financing statements, financing statement amendments
and/or continuation statements, assignments of trademarks and powers of attorney
in connection therewith, and Borrowers jointly and severally agree to pay all
-20-
<PAGE>
applicable taxes, filing fees and other reasonable costs (including reasonable
attorney's fees) paid or incurred by Bank in connection with the preparation and
filing or recordation thereof.
(i) A carbon, photographic or other reproduction of any financing
statement signed by a Borrower in connection with this Agreement shall be
sufficient as a financing statement.
(j) Whenever required by Bank, each Borrower shall promptly deliver
to Bank, with all endorsements and/or assignments required by Bank, all
instruments, chattel paper, guaranties and the like received by such Borrower
constituting, evidencing or relating to any of the Collateral or proceeds of any
of the Collateral.
(k) Borrowers shall identify in the information accompanying each
Borrowing Base Certificate any Government Receivable which causes all
outstanding Government Receivables (other than Governmental Receivables that
have been assigned to Bank in accordance with the Federal Assignment of Claims
Act and/or any other applicable federal, State and local laws and regulations
relating to the assignment of governmental obligations) to exceed (or to further
exceed) $100,000.00 and, if required by Bank, shall execute and deliver any
agreements, notices and/or assignments and do such other things as may be
satisfactory to Bank in order that all sums due and to become due to the
applicable Borrower with respect to such Receivable shall be duly assigned to
Bank in accordance with the Federal Assignment of Claims Act (31 United States
Code Section 1203; 41 United States Code Section 15) and/or any other applicable
federal, State and local laws and regulations relating to the assignment of
governmental obligations.
(l) Each Borrower agrees that until the Obligations shall have been
satisfied in full and this Agreement shall have been terminated, no Borrower
will, without Bank's prior written consent, (i) consign any Collateral to any
consignee, (ii) store or place any Collateral with any warehouseman, artisan,
processor, contractor or bailee, or (iii) enter into any agreement (for example,
a license agreement) which is inconsistent with any Borrower's obligations under
this Agreement. Each Borrower further agrees that it will not take any action,
or permit any action to be taken by others subject to its control, including
licensees, or to take any action, which would materially adversely affect the
validity or enforcement of the rights transferred to Bank under this Agreement.
3.03 Covenants and Representations Concerning Receivables. Each Borrower
covenants, warrants and represents that:
(a) Immediately upon learning thereof, Borrowers shall notify Bank
of any event or circumstance which disqualifies any account as an Acceptable
Receivable in whole or in part if (i) the amount of such disqualified account
(or disqualified portion of such account) exceeds $100,000.00. or (ii) as a
-21-
<PAGE>
result of the disqualification of such account (or portion of such account) the
amount of advances outstanding under the Loan would exceed (or further exceed)
the Maximum Loan Amount.
(b) Without Bank's prior written consent, no Borrower shall permit
or agree to any payment extension with respect to any Receivable other than in
the ordinary course of business nor permit or agree to any modification or
compromise with respect to any Receivable other than in the ordinary course of
business.
(c) If required by Bank, each Borrower shall keep segregated from
all other property of such Borrower and hold in trust for Bank and subject to
Bank's instructions, all goods rejected or returned by any account debtor and
all goods repossessed from or stopped in transit to any account debtor.
(d) Each account reported to Bank as an Acceptable Receivable is
genuine, valid, enforceable and in all respects what it purports to be and
represents a bona fide transaction completed and performed in accordance with
the contract(s), purchase order(s), invoice(s) and other documentation relating
thereto.
(e) All accounts shown on each Borrower's books and records and on
all invoices, purchase orders, reports, statements and schedules provided to
Bank are actually and unconditionally owing to such Borrower.
(f) No account has been or will be reported or scheduled to Bank as
an Acceptable Receivable which a Borrower knows or should know is not an
Acceptable Receivable and Borrowers shall pay to Bank upon demand the amount
advanced by Bank with respect to any account reported or scheduled to Bank as an
Acceptable Receivable which is not an Acceptable Receivable or which
subsequently becomes unacceptable; provided, however, that (i) Borrower shall
not be required to make any such payment if the exclusion of such account from
the Acceptable Receivables would not cause the total principal amount of
advances made and outstanding under the Loan to exceed the Maximum Loan Amount
(giving effect to the exclusion of such account), and (ii) if such account shall
have become unacceptable as a result of a change in Bank's criteria for
determining Acceptable Receivables, then such payment shall not be due until the
scheduled delivery date of the first Borrowing Base Certificate reflecting that
such account is no longer an Acceptable Receivable.
(g) Borrowers shall deliver to Bank within 25 days after the end of
each monthly accounting period of Borrowers, a Borrowing Base Certificate
effective as of the end of such accounting period accompanied by such documents
as may from time to time be required by Bank, and accompanied by such evidence
as may from time to time be required by Bank of the existence, date of creation
and amount of, and the names and addresses of account debtors and other obligors
with
-22-
<PAGE>
respect to, Receivables, including, without limitation, contracts, invoices,
purchase orders, acceptances and evidences of delivery or other performance by
Borrowers.
3.04 Collateral Collections. Bank shall have the right at any and all
times: (a) following the occurrence and during the continuance of an Event of
Default, to notify and/or require Borrowers to notify any or all account debtors
and other obligors on Receivables to make payments thereon directly to Bank or
in care of a post office lock box under the sole control of Bank established at
Borrowers' expense subject to Bank's customary arrangements and charges
therefor, and to take any or all action with respect to Receivables as Bank
shall determine in its sole discretion, including, without limitation, the right
to demand, collect, sue for and receive any money or property at any time due,
payable or receivable on account thereof, compromise and settle with any person
liable thereon, and extend the time of payment or otherwise change the terms
thereof, without incurring liability or responsibility to any Borrower or any
guarantor therefor; (b) following the occurrence and during the continuance of a
Default or an Event of Default, to require each Borrower to segregate and hold
in trust for Bank and, on the day of Borrower's receipt thereof, transmit to
Bank in the exact form received by such Borrower (except for such assignments
and endorsements as may be required by Bank), all cash, checks, drafts, money
orders and other items of payment constituting Collateral or proceeds of
Collateral for application, upon collection when applicable, against such of the
Obligations, whether matured or unmatured, as Bank shall determine in its sole
discretion; and/or (c) following the occurrence and during the continuance of a
Default or an Event of Default, to establish and maintain at Bank a "Repayment
Account," which shall be under the exclusive control of and subject to the sole
order of Bank and which shall be subject to the imposition of such customary
charges as are imposed by Bank from time to time upon such accounts, for the
deposit, as a tender of payment of the Obligations, of cash, checks, drafts,
money orders and other items of payment constituting Collateral or proceeds of
Collateral coming into Bank's possession pursuant to the terms of this Agreement
and from which Bank may, in its sole discretion, at any time and from time to
time, withdraw all or any part of the balance for application against such of
the Obligations, whether matured or unmatured, as Bank shall determine in its
sole discretion.
4. REPRESENTATIONS AND WARRANTIES
To induce Bank to enter into this Agreement, each Borrower represents and
warrants to Bank that:
4.01 Good Standing. Each Borrower and each Subsidiary is a corporation
duly organized, legally existing and in good standing under the laws of the
jurisdiction of its incorporation, has the power to own its property and to
carry on its business and is duly qualified to do business and is in good
standing in each
-23-
<PAGE>
jurisdiction in which the character of the properties owned by it therein or in
which the transaction of its business makes such qualification necessary.
4.02 Authority. Each Borrower has, and each Other Obligor which has
executed any Other Agreements in connection with this Agreement has, full power
and authority to enter into this Agreement and all Other Agreements executed by
it in connection with this Agreement, to execute and deliver all documents and
instruments required hereunder and thereunder, and to incur and perform the
obligations provided for herein and therein, all of which have been duly
authorized by all necessary corporate, limited liability company, partnership
and other action, and no consent or approval of any person, including, without
limitation, its stockholders, members, member representatives or partners, and
any governmental authority, which has not been obtained, is required as a
condition to the validity or enforceability hereof or thereof.
4.03 Binding Agreements. This Agreement and all Other Agreements executed
by any Borrower and/or Other Obligors in connection with this Agreement have
been duly executed and delivered by each Borrower and each such Other Obligor,
and constitute, and will continue to constitute, the valid and legally binding
obligations of each Borrower and each such Other Obligor, and are, and will
continue to be, fully enforceable against each Borrower and each such Other
Obligor in accordance with their terms, subject to bankruptcy and other laws
affecting the rights of creditors generally.
4.04 No Conflicting Agreements. The execution, delivery and performance by
each Borrower, and by each Other Obligor which has executed any Other Agreements
in connection with this Agreement, of this Agreement and all Other Agreements
executed by any Borrower and/or Other Obligors in connection with this
Agreement, and the borrowings hereunder, will not violate (i) any provision of
law or any order, rule or regulation of any court or governmental authority,
(ii) the corporate charter or bylaws of any Borrower, any Subsidiary or any
Other Obligor that is a corporation, the certificate of formation or limited
liability company agreement of any Subsidiary or any Other Obligor that is a
limited liability company, or the partnership agreement of any Subsidiary or
Other Obligor that is a partnership, or (iii) any instrument, contract,
agreement, indenture, mortgage, deed of trust or other document or obligation to
which any Borrower, any Subsidiary or any Other Obligor is a party or by which
any one or more of them, or any of their property, is bound.
4.05 Litigation. Except as provided in Schedule 4.05 attached hereto and
made a part hereof, there are no judgments, injunctions or similar orders or
decrees, claims, actions, suits or proceedings pending or, to the knowledge of
any Borrower, threatened against or affecting any Borrower, any Subsidiary or
any Other Obligor, or any property of any Borrower, any Subsidiary or any Other
Obligor, at law or in equity, by or before any court or any federal, State,
county,
-24-
<PAGE>
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which could result in any material adverse
change in the business, operations, prospects, properties or in the condition,
financial or otherwise, of any Borrower, and no Borrower or any Subsidiary is,
to the knowledge of any Borrower, in default with respect to any judgment,
order, writ, injunction, decree, rule or regulation of any court or any federal,
State, county, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which could have a
material adverse effect on any Borrower.
4.06 Financial Condition. (a) No Borrower, Subsidiary or Other Obligors is
insolvent (as defined in Section 101 of the United States Bankruptcy Code),
unable to pay its debts as they mature or engaged in business for which its
property is an unreasonably small capital.
(b) No Borrower, Subsidiary or Other Obligors is or has been the
subject of any bankruptcy, reorganization, insolvency, readjustment of debt,
trusteeship, receivership, dissolution or liquidation law, statute or
proceeding.
(c) The financial statements of Borrowers for the fiscal year ending
December 31, 1996, and for the three-month period ending March 31, 1997, and
heretofore delivered to Bank are true and complete, fairly present the financial
condition of Borrowers as at such dates and the results of their operations for
the periods then ended and were prepared in accordance with GAAP applied on a
consistent basis for prior periods. There is no Indebtedness of any Borrower as
of the date of such statements which is not reflected therein and no material
adverse change in the operations or financial condition of any Borrower has
occurred since the date of such statements. The pro forma quarterly financial
statements of Borrowers for the fiscal years ending December 31, 1997, and
December 31,1998, heretofore delivered to Bank, are complete and fairly present
Borrowers' projections for such periods; provided, however, that Bank
acknowledges that the projections for the fiscal year ending December 31, 1997,
are being revised to reduce projected operating income to a figure not less than
$3,000,000.00.
4.07 Taxes. Each Borrower, each Subsidiary and each Other Obligor has paid
or caused to be paid all federal, State, local and foreign taxes to the extent
that such taxes have become due and has filed or caused to be filed all federal,
State, local and foreign tax returns which are required to be filed by each
Borrower, each Subsidiary and each Other Obligor.
4.08 Title to Properties. Each Borrower has good and marketable title to
all of its properties and assets (including the Collateral) and all of the
properties and assets of each Borrower are free and clear of Liens, except for
Permitted Liens (including those liens disclosed in Schedule 4.08 attached
hereto and made a part hereof).
-25-
<PAGE>
4.09 Place of Business. Borrowers' only places of business are located at
the Business Premises and the chief executive office of THG is located at 100
East Pratt Street, Suite 1600, Baltimore, Maryland 21202. Borrowers will not
change such location(s) or have or maintain any other place of business without
Bank's prior written consent.
4.10 Financial Information. All financial statements, schedules, reports
and other information supplied to Bank by or on behalf of Borrowers (or any of
them) heretofore and hereafter are and will be true and complete.
4.11 Subsidiaries. Except for Subsidiaries of THG which are Borrowers and
Subsidiaries hereafter formed or acquired with Bank's prior written consent,
there are and will be no Subsidiaries.
4.12 Licenses and Permits. Each Borrower, each Subsidiary and each Other
Obligor that is not an individual has duly obtained and now holds all licenses,
permits, certifications, approvals and the like required by federal, State and
local laws of the jurisdictions in which such Borrower, such Subsidiary and such
Other Obligor conducts its business and each remains valid and in full force and
effect.
4.13 Certain Indebtedness. Except as identified in Schedule 7.01 attached
hereto and made a part hereof there is no Indebtedness of any Borrower owing to
any employee, officer, stockholder or director of any Borrower other than
accrued salaries, commissions and the like.
4.14 Broker's or Finder's Commissions. No broker's or finder's fee or
commission is or will be payable in connection with this Agreement or the
transactions contemplated hereby, and Borrowers jointly and severally agree to
save harmless and indemnify Bank from and against any claim, demand, action,
suit, proceeding or liability for any such fee or commission, including any
costs and expenses (including attorney's fees) incurred by Bank in connection
therewith. The provisions of this Subsection shall survive the termination of
this Agreement and Bank's security interest hereunder and the payment of all
other Obligations.
4.15 Outstanding Indebtedness: Defaults. No Borrower has any outstanding
Indebtedness except as permitted by Subsection 7.01 hereof. No Borrower,
Subsidiary or Other Obligor is in default under any instrument, contract,
agreement, indenture, mortgage, deed of trust or other document or obligation to
which such Borrower, Subsidiary or Other Obligor is a party or by which any one
or more of them, or any of their property, is bound.
4.16 Capital Stock. All of the issued and outstanding capital stock of
each Borrower is owned by those persons and in those amounts indicated in
Schedule 4.16 attached hereto and made a part hereof.
-26-
<PAGE>
4.17 Regulation U. No Borrower or Subsidiary owns or presently intends to
acquire any "margin stock" as defined in Regulation U (12 CFR Part 221) of the
Board of Governors of the Federal Reserve System. None of the proceeds of any
advances hereunder will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry a
margin stock or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of Regulation U. No Borrower or any agent
acting on such Borrower's behalf has taken or will take any action which might
cause this Agreement to violate Regulation U or any other regulation of the
Board of Governors of the Federal Reserve System or to violate the Securities
Exchange Act of 1934, in each case as in effect now or as the same may hereafter
be in effect.
4.18 Employee Matters. (a) With respect to each employee pension benefit
plan, as defined in Section 3(2) of the ERISA (a "Retirement Plan"), established
or maintained or to which contributions have been made by or for any Borrower,
or any Subsidiary (including, for purposes of this Section, any other entity,
whether or not incorporated, which is part of a controlled group including any
Borrower or which is under common control with any Borrower, as defined in
Sections 414(b) and (c) of the Code): (i) the Retirement Plan, including all
amendments, is the subject of a favorable determination letter from the Internal
Revenue Service (or an application for such a letter is presently pending); (ii)
the Retirement Plan is and has at all times been qualified, in form and
operation, under Section 401(a) of the Code; (iii) the Retirement Plan is and
has at all times been administered, maintained and operated in compliance with
its terms and with all applicable provisions of the Code, ERISA and all other
applicable federal, state and local laws (and all rules and regulations
promulgated thereunder); (iv) no Borrower or any Subsidiary, nor, to the
knowledge of any director or officer of any Borrower or any Subsidiary, any
other person or entity who or which is a party in interest as defined in Section
3(14) of ERISA, or a disqualified person as defined in Section 4975(e)(2) of the
Code, has acted or failed to act with respect to the Retirement Plan in any
manner which constitutes a breach of fiduciary responsibility within the meaning
of Title I, Part 4 of ERISA, a prohibited transaction within the meaning of
Section 4975 of the Code or Sections 406 through 408 of ERISA, or any other
violation of ERISA; (v) no contributions to the Retirement Plan are past due;
(vi) no proceedings, investigations, filings or other matters are pending before
the Internal Revenue Service, the Department of Labor or any court with respect
to the Retirement Plan or the operation thereof; (vii) if the Retirement Plan is
a multiemployer plan, as defined in Sections 3(37) or 4001(a)(3) of ERISA, no
Borrower or any Subsidiary has incurred, and no Borrower or any Subsidiary
expects to incur, any withdrawal liability which has not been satisfied in
connection with any complete or partial withdrawal from the Retirement Plan
occurring on or before the date hereof; and (viii) if subject thereto, the
Retirement Plan has been funded in accordance with the minimum funding standards
described in Section 412 of the Code and Title I, Subtitle B, Part 3 of ERISA
(for which
-27-
<PAGE>
purpose there is no "accumulated funding deficiency"), and in accordance with
principles that are actuarially sound for such Retirement Plan.
(b) With respect to each Retirement Plan which is a defined benefit
plan, as defined in Section 3(35) of ERISA: (i) no event has occurred within the
12 month period preceding the date hereof, or, to the knowledge of any director
or officer of any Borrower or any Subsidiary is threatened or about to occur,
which would materially adversely affect the actuarial status of the Retirement
Plan; (ii) no fact exists in connection with the Retirement Plan (or with
respect to any other defined benefit plan maintained by any Borrower or any
Subsidiary at any time after September 2, 1974) which constitutes a reportable
event (other than those for which notice has been waived by the Pension Benefit
Guaranty Corporation (the "PBGC")) under Section 4043(b) of ERISA or which
constitutes grounds for termination by, or other liability to, the PBGC pursuant
to Title IV of ERISA; (iii) all premiums due the PBGC have been timely paid; and
(iv) if the Retirement Plan were terminated, the termination would qualify under
the standard termination procedure, as described in Section 4041(b) of ERISA
(and Part 2617 of the PBGC regulations), without payment of any additional
contributions by any Borrower or any Subsidiary.
(c) With respect to each employee welfare benefit plan, as defined
in Section 3(1) of ERISA (a "Welfare Plan"), established or maintained or to
which contributions have been made by or for any Borrower or any Subsidiary: (i)
the Welfare Plan is and has at all times been administered, maintained and
operated in compliance with its terms and with all applicable provisions of
ERISA and the Code (including the continuation coverage requirements for group
health plans, commonly known as "COBRA requirements," under Sections 106(b),
162(i)(2) & (3), and 162(k) of the Code and Sections 601-607 of ERISA) and all
other applicable federal, state and local laws (and all rules and regulations
promulgated thereunder); (ii) no Borrower or any Subsidiary nor to the knowledge
of any director or officer of any Borrower or any Subsidiary, any other person
or entity who or which is a party in interest as defined in Section 3(14) of
ERISA, has acted or failed to act with respect to the Welfare Plan in any manner
which constitutes a breach of fiduciary responsibility within the meaning of
Title I, Part 4 of ERISA, a prohibited transaction within the meaning of
Sections 406 through 408 of ERISA, or any other violation of ERISA; (iii) no
contributions to the Welfare Plan are past due; (iv) no proceedings,
investigations, filings or other matters are pending before the Department of
Labor or any court, with respect to the Welfare Plan or the operation thereof;
and (v) the Welfare Plan is either unfunded or is funded solely through
insurance contracts.
(d) All Retirement Plans and Welfare plans (jointly "Benefit Plans")
are in substantial compliance with all applicable reporting, disclosure and
other requirements of the Code and ERISA.
-28-
<PAGE>
(e) There are no actions, suits or claims pending or, to the best
knowledge of any Borrower or any Subsidiary, threatened with respect to any
Benefit Plan, or any administrator or fiduciary thereof.
(f) There are no strikes, work stoppages, material grievance
proceedings or other material controversies pending, imminent or, to any
Borrower's knowledge and belief, threatened between any Borrower and any
employees of any Borrower or between any Borrower and any union or other
collective bargaining unit representing employees of any Borrower.
4.19 Compliance With Laws. No Borrower, Subsidiary or Other Obligor is in
violation of, or under investigation with respect to or threatened to be charged
or given notice of a violation of, any applicable law, rule, regulation, order
or judgment relating to any of its businesses, properties or operations,
including, without limitation, ERISA, any law, rule, regulation or order
regarding the collection, payment and deposit of employees' income, unemployment
and social security taxes or of sales, use or excise taxes, any Environmental
Laws, any laws pertaining to occupational safety and health or any laws relating
to public health.
4.20 Representations. All representations and information heretofore made
or supplied to Bank by or on behalf of any Borrower, any Subsidiary or any Other
Obligor, including, without limitation, all representations and information
heretofore made or supplied to Bank pursuant to or in connection with this
Agreement or any of the Other Agreements or any transaction involving or
affecting any Borrower, any Subsidiary or any other Obligor, were, at the time
made or supplied to Bank, true and complete in all material respects, and all
representations and information hereafter made or supplied to Bank by or on
behalf of any Borrower, any Subsidiary or any Other Obligor, including, without
limitation, all representations and information hereafter made or supplied to
Bank pursuant to or in connection with this Agreement or any of the Other
Agreements or any transaction involving or affecting any Borrower, any
Subsidiary or any Other Obligor, will be, at the time made or supplied to Bank,
true and complete in all material respects.
4.21 Solvency. Each Borrower has received, or has the right hereunder to
receive by way of subrogation, contribution or otherwise, consideration which is
the reasonable equivalent value of the obligations and liabilities that such
Borrower has incurred to Bank hereunder, under the Note and under the Other
Agreements. No Borrower is insolvent as defined in Section 101 of Title 11 of
the United States Code or any applicable state insolvency statute, nor, after
giving effect to the consummation of the transactions contemplated herein, will
any Borrower be rendered insolvent by the execution and delivery of this
Agreement, the Note or the Other Agreements to Bank No Borrower is engaged or
about to engage in any business or transaction for which the assets retained by
it shall be an unreasonably small capital, taking into consideration the
obligations to Bank
-29-
<PAGE>
incurred hereunder, under the Note and under the Other Agreements and its rights
to contribution against the other Borrowers. No Borrower intends to, nor does it
believe that it will, incur debts beyond the ability of Borrowers, taken as a
whole, to pay them as they mature.
4.22 Operations of Affiliate Borrowers. THG and each of Affiliate
Borrowers are engaged as an integrated and intertwined group of entities in the
business of integrating enterprise-wide software Systems.
5. CONDITIONS OF LENDING
Unless Bank shall otherwise agree, Bank shall have no obligation to
advance any funds to Borrowers hereunder unless each of the following conditions
precedent shall he satisfied as provided below:
5.01 Documents. There shall have been delivered to Bank, appropriately
completed and duly executed (when applicable), the following, each in form and
substance satisfactory to Bank: (a) the Note; (b) certificates of the
Secretaries of Borrowers (i) to the effect that resolutions in form and content
satisfactory to Bank authorizing the transactions contemplated hereby have been
duly adopted and remain in full force and effect, (ii) certifying the incumbency
and signatures of the officers of Borrowers authorized to execute this Agreement
and the Other Agreements, and (iii) certifying the Articles of Incorporation and
By-Laws of each of Borrowers as being true and complete; (c) evidence
satisfactory to Bank that all insurance coverages and all insurance clauses or
endorsements required pursuant to this Agreement and the Other Agreements are in
effect, together with copies of all insurance policies and endorsements; (d) a
written opinion of counsel to Borrowers, dated as of Closing and addressed to
Bank, relating to such matters in connection with the transactions contemplated
hereby as may be required by Bank; and (e) such financing statements as may be
required by Bank.
5.02 No Default. At Closing and at the time of every subsequent advance
under this Agreement, Bank shall be fully satisfied that (a) all of the
covenants, conditions, warranties and representations set forth herein and in
the Other Agreements have been complied with and are true and complete on and as
of such time with the same effect as though such covenants, conditions,
warranties and representations had been made on and as of such time (unless
stated to relate solely to an earlier date, in which case such representations
and warranties shall be true and correct as of such earlier date), (b) no
Default and no Event of Default shall have occurred, and (c) the documents and
matters required to be executed, delivered, opined and/or Certified pursuant to
Subsection 5.01 hereof shall be in full force and effect and/or true and
complete, as the case may be.
5.03 Deemed Representations. Each request for an advance hereunder and
acceptance by Borrowers of the proceeds thereof shall constitute a
-30-
<PAGE>
representation and warranty by Borrowers that the statements contained in
clauses (a), (b) and (c) of Subsection 5.02 above are true and correct both on
the date of such request and, unless Borrowers otherwise notify Bank prior to
the making of such advance, on the date of the making of such advance.
5.04 Legal Matters. At Closing, all legal matters in connection therewith
or incidental thereto shall be fully satisfactory to Bank's counsel.
5.05 Financial Condition at Closing. The financial condition of each
Borrower shall be satisfactory to Bank and there shall have been delivered to
Bank such written statements, schedules or reports in such form, containing such
information and accompanied by such documents as may be satisfactory to Bank
concerning the financial condition of any Borrower, any of the Collateral or any
other matter or matters as Bank may require.
5.06 Closing Fee. Pay to Bank the Closing Fee (as defined in Subsection
6.17 hereof.
6. AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees with Bank that, until (a) all
Obligations have been paid in full and (b) there exists no commitment by Bank
which could give rise to any Obligations, each Borrower will:
6.01 Financial Statements. Furnish to Bank in writing: (a) as soon as
available but in no event more than 45 days after the end of each monthly
accounting period of Borrowers, a consolidated and consolidating statement of
income and retained earnings of Borrowers and any Subsidiaries for such period
and for the period from the beginning of the current fiscal year of Borrowers to
the end of each period, and a consolidated and consolidating statement of cash
flows of Borrowers and any Subsidiaries for such period and for the period from
the beginning of the current fiscal year of Borrowers to the end of each period,
and a consolidated and consolidating balance sheet of Borrowers and any
Subsidiaries as at the end of such period, setting forth in each case in
comparative form figures for the budgeted results for such period and figures
for the corresponding periods in the preceding fiscal year of Borrowers, all in
detail and scope satisfactory to Bank, prepared in accordance with GAAP
consistently applied, Certified by the chief financial officer of THG and
accompanied by a certificate of that officer or of the chief executive officer
of THG stating whether any Default or Event of Default has occurred and, if so,
stating the facts with respect thereto: provided, further, that the financial
statements of Borrowers described in clause (a) which are provided for the last
calendar month of each quarterly accounting period of Borrowers shall also be
accompanied by a financial covenant compliance worksheet Certified by the chief
financial officer of THG or by the chief executive officer of THG and otherwise
in form and substance acceptable to Bank demonstrating Borrowers' compliance
with
-31-
<PAGE>
the provisions of Subsections 6.15 and 6.16 hereof; (b) as soon as available but
in no event more than 120 days after the end of each fiscal year of Borrowers, a
consolidated and consolidating statement of income and retained earnings of
Borrowers and any Subsidiaries for such year, and a consolidated and
consolidating statement of cash flows of Borrowers and any Subsidiaries for such
year, and a consolidated and consolidating balance sheet of Borrowers and any
Subsidiaries as at the end of such year, setting forth in each case in
comparative form corresponding figures for the preceding fiscal year of
Borrowers, all in detail and scope satisfactory to Bank, prepared in accordance
with GAAP consistently applied and examined and audited by independent certified
public accountants satisfactory to Bank, accompanied by a report of such
independent certified public accountants with respect to such financial
statements which is satisfactory to Bank, and accompanied by (i) a certificate
of the chief financial officer or the chief executive officer of THG stating
whether any Default or Event of Default has occurred and, if so, stating the
facts with respect thereto, and (ii) a financial covenant compliance worksheet
Certified by such officer or by the chief executive officer of THG and otherwise
in form and substance acceptable to Bank demonstrating Borrowers' compliance
with the provisions of Subsections 6.15 and 6.16 hereof; and (c) promptly upon
transmission thereof, copies of any financial statements, proxy statements,
reports and the like which any Borrower or any Subsidiary sends to its
shareholders, members or partners and copies of all registration statements
(with exhibits) and all regular, special or periodic reports which any Borrower
or any Subsidiary files with the United States Securities and Exchange
Commission (or any governmental body or agency succeeding to the functions of
the United States Securities and Exchange Commission) or with any national stock
exchange on which any Borrower's or Subsidiary's securities are listed and
copies of all press releases and other statements made available by any Borrower
or any Subsidiary to the public concerning material developments in the business
of any Borrower and/or any Subsidiary.
6.02 Taxes. Pay and discharge, and cause each Subsidiary to pay and
discharge, all taxes, assessments and governmental charges upon each Borrower
and each Subsidiary, its income and properties, prior to the date on which
penalties attach thereto unless and to the extent only that the same are being
diligently contested by a Borrower or a Subsidiary, as the case may be, in good
faith by appropriate proceedings, provided, however, that (a) Bank shall have
been given reasonable prior written notice of intention to contest, (b)
nonpayment of the same will not, in Bank's sole discretion, materially impair
any of the Collateral or Bank's rights or remedies with respect thereto or the
prospect for full and punctual payment of all of the Obligations, (c) such
Borrower or such Subsidiary at all times effectively stays or prevents any
official or judicial sale of or action against any of the Collateral by reason
of nonpayment of the same, and (d) such Borrower or such Subsidiary establishes
reasonable reserves for any liabilities being contested and for expenses arising
out of such contest in accordance with GAAP.
-32-
<PAGE>
6.03 Corporate Existence, Continuation of Business and Compliance with
Laws. Maintain, and cause each Subsidiary to maintain, its corporate existence
in good standing; maintain, and cause each Subsidiary to maintain, in good
standing its qualification to do business in each jurisdiction in which such
qualification is required by law; continue, and cause each Subsidiary to
continue, its business operations as now being conducted; and comply with, and
cause each Subsidiary to comply with, all applicable federal, State and local
laws, rules, ordinances, regulations and orders (including, without limitation,
ERISA and all Environmental Laws) in all material respects.
6.04 Litigation. Promptly notify Bank in writing of any action, suit or
proceeding at law or in equity by or before any court, governmental agency or
instrumentality which could result in any material adverse change in the
business, operations, prospects, properties or assets or in the condition,
financial or otherwise, of any Borrower or any Subsidiary.
6.05 Extraordinary Loss; Change in Condition. Promptly notify Bank in
writing of (a) any event causing extraordinary loss or depreciation of the value
of any Borrower's or any Subsidiary's assets (whether or not insured) and the
facts with respect thereto, and (b) the occurrence of any material adverse
change in any Borrower's, any Subsidiary's or any Other Obligor's business,
assets, operations, business prospects or financial condition.
6.06 Books and Records. Keep and maintain, and cause each Subsidiary to
keep and maintain, proper and current books and records in accordance with GAAP
consistently applied and permit access by Bank to, reproduction by Bank of,
copying by Bank from, and verification (by such means, including audits, as Bank
may determine) by Bank of any information contained in, such books and records.
6.07 Maintenance of Properties. Maintain, and cause each Subsidiary to
maintain, all properties and improvements necessary to the conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and cause replacements and repairs to be made when necessary for the proper
conduct of its business.
6.08 Patents, Franchises, etc. Maintain, preserve and protect all
licenses, patents, franchises, trademarks and trade names of each Borrower and
each Subsidiary or licensed by any Borrower or any Subsidiary which are
necessary to the conduct of the business of any Borrower or any Subsidiary as
now conducted, free of any conflict with the rights of any other person.
6.09 Insurance. (a) Maintain or cause to be maintained (i) comprehensive
casualty insurance policies insuring the Collateral, all other property of each
Borrower and all property of each Subsidiary against loss by fire, theft,
explosion, collision and such other risks, in such amounts, subject to such loss
-33-
<PAGE>
deductible amounts and with such responsible insurance companies as may be
satisfactory to Bank, in Bank's discretion exercised in good faith, and, in all
events, against such risks, in such amounts and subject to such loss deductible
amounts as are customary in such Borrower's or such Subsidiary's industry, as
applicable, and in such minimum amounts that no Borrower or Subsidiary will be
deemed a coinsurer under applicable insurance laws, regulations, policies or
practices, and (ii) endorsements to such insurance policies satisfactory to
Bank, in Bank's discretion exercised in good faith, naming Bank as loss payee
with respect to all Collateral insured thereunder; (b) maintain or cause to be
maintained (i) in the maximum amount available, flood insurance policies
insuring all property of each Borrower and each Subsidiary which is located in
an area that has been, or subsequently is, identified as having special flood or
mudslide hazards and in which the sale of flood insurance has been made
available under the National Flood Insurance Act of 1968, as amended from time
to time, and (ii) endorsements to such insurance policies satisfactory to Bank,
in Bank's discretion exercised in good faith, naming Bank as loss payee with
respect to all Collateral insured thereunder; (c) maintain, and cause each
Subsidiary to maintain, in amounts and with responsible insurance companies
satisfactory to Bank, in Bank's reasonable discretion, such additional insurance
against such risks and subject to such loss deductible amounts as may be
satisfactory to Bank, in Bank's reasonable discretion, including, without
limitation, personal injury and property damage liability insurance, automobile
liability insurance, professional liability insurance, product liability
insurance, worker's compensation insurance, business interruption insurance,
employee dishonesty insurance, and directors' and officers' liability insurance,
all such insurance in all events to insure against such risks, in such amounts
and subject to such loss deductible amounts as are customary in such Borrower's
or such Subsidiary's industry, as applicable; (d) maintain endorsements to all
insurance policies of Borrowers and Subsidiaries naming Bank as additional
insured, which endorsements shall be satisfactory to Bank, in Bank's discretion
exercised in good faith, and endorsements to such policies satisfactory to Bank,
in Bank's discretion exercised in good faith, providing that such policies may
not be cancelled or materially altered, and that Bank may not be removed as loss
payee or additional insured, without at least 30 days prior written notice to
Bank; and (e) deliver to Bank from time to time, and periodically if Bank shall
so require, evidence satisfactory to Bank that all insurance and policy
endorsements required pursuant to this Agreement and the Other Agreements are in
effect.
6.10 Information. (a) Deliver to Bank promptly upon Bank's request, and
periodically if Bank shall so require, such written statements, schedules or
reports (which shall be Certified if required by Bank) in such form, containing
such information and accompanied by such documents as may be satisfactory to
Bank from time to time concerning the Collateral, any Borrower's or any
Subsidiary's business, assets, operations, business prospects or financial
condition or any other matter or matters, including, without limitation, copies
of federal, State and local tax returns of Borrowers and Subsidiaries, and
permit
-34-
<PAGE>
Bank, its agents and designees, to discuss any Borrower's or any Subsidiary's
business, assets, operations, business prospects or financial condition with any
Borrower's or any Subsidiary's directors, officers, employees or agents; and (b)
promptly notify Bank in writing if any financial statement, schedule, report,
certificate or information previously or hereafter supplied to Bank by or on
behalf of any Borrower, any Subsidiary or any Other Obligor, including, without
limitation, any of the same previously or hereafter supplied to Bank pursuant to
or in connection with this Agreement or any of the Other Agreements or any
transaction involving or affecting any Borrower, any Subsidiary or any Other
Obligor, shall, to any Borrower's knowledge or belief, subsequently become
inaccurate or misleading in any material respect.
6.11 Use of Proceeds. Use the proceeds of advances made under the Loan
only for working capital and general corporate purposes (including, without
limitation, the payment of the costs, expenses and fees payable by Borrowers
under this Agreement and the Other Agreements).
6.12 Notice of Event of Default. Promptly notify Bank of the occurrence of
any Default or Event of Default and the facts with respect thereto.
6.13 Employee Benefit Plans. (a) At all times administer, maintain and
operate, and cause each Subsidiary at all times to administer, maintain and
operate, each of its Benefit Plans in conformity with all applicable provisions
of ERISA and other federal and state statutes relating to employee benefit plans
(including the continuation coverage requirements of ERISA and the Code for
group health plans under Sections 106(b), 162(i)(2) & (3), and 162(k) of the
Code and Sections 601-607 of ERISA); (b) at all times make, and cause each
Subsidiary at all times to make, all required contributions and premium payments
under each Benefit Plan for all periods after the date hereof; (c) comply with,
and cause each Subsidiary to comply with, all applicable reporting, disclosure
and other requirements of ERISA and the Code as they relate to Benefit Plans,
and furnish Bank with copies of all reports filed in connection therewith
promptly after the filing thereof; (d) notify Bank immediately of any fact,
including, without limitation, any reportable event under Section 4043(b) of
ERISA, arising in connection with any Retirement Plan which might constitute
grounds for the termination thereof by the PBGC; and (e) furnish to Bank,
promptly upon its request therefor, such additional information concerning any
Benefit Plan as Bank may request.
6.14 Environmental Laws. (a) At all reasonable times, permit Bank, and its
agents and designees, to enter upon and inspect all business premises owned,
leased, subleased, occupied, operated or used by any Borrower or any Subsidiary,
and to conduct thereon, at Borrowers' expense, such audit tests and
examinations, including subsurface exploration and testing, as Bank may deem
reasonably necessary to determine whether such Borrower's or such Subsidiary's
ownership, tenancy, occupation, operation and/or use of the premises, as the
case
-35-
<PAGE>
may be, and the conduct of the activities engaged in thereon, are in compliance
with Environmental Laws; (b) maintain, and cause all operators, tenants,
subtenants, licensees and occupants of all property owned, leased, subleased,
occupied, used or operated by any Borrower or any Subsidiary to maintain, all
such property free of all Hazardous Substances, and prevent all such property
from being used for the manufacture, generation, production, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
Hazardous Substances; (c) promptly upon its receipt thereof, provide Bank with
copies of all reports prepared by governmental and regulatory agencies, and all
environmental auditors, engineers and others relating to or in connection with
each Borrower's compliance with Environmental Laws; and (d) notify Bank in
writing, promptly upon learning thereof, of (i) any notice that any Borrower is
not in compliance in any material respect with all terms and conditions of all
permits, licenses and authorizations which are required under Environmental
Laws, or that any Borrower is not in compliance in any material respect with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws, and (ii) any notice or claim of any civil, criminal or
administrative action, suit, demand, claim, hearing, notice or demand letter,
notice of violation, investigation, or proceeding pending or threatened against
any Borrower relating in any way to Environmental Laws.
6.15 Tangible Net Worth. (a) Maintain Consolidated Tangible Net Worth of
not less than (i) $1,150,000.00 as of September 30, 1997; and (b) $2,500,000.00
commencing December 31, 1997, and at all times thereafter. Compliance with the
provisions of this Subsection 6.15(a) shall be measured as of the end of each
quarterly accounting period of Borrowers, commencing with the quarterly
accounting period ending September 30, 1997.
(b) Maintain a ratio of Consolidated Liabilities to Consolidated
Tangible Net Worth of not greater than (i) 6.0 to 1 from (and including)
December 31, 1997, through September 30, 1998, and (ii) 5.0 to 1 commencing
December 31, 1998, and at all times thereafter. Compliance with the provisions
of this Subsection 6.15(b) shall be measured as of the end of each quarterly
accounting period of Borrowers.
6.16 Net Income. Realize positive Consolidated Net Income for each
quarterly accounting period of Borrowers, commencing with the quarterly
accounting period ending September 30, 1997.
6.17 Additional Fees. (a) Pay to Bank (i) at Closing a fee (the "Closing
Fee") in the amount of $60,000.00, and (ii) on the first Banking Day of each
calendar month thereafter, a fee (the "Commitment Fee") in the amount of three-
quarters of one percent (0.75%) of the Maximum Loan Amount on such date
(determined with reference to the applicable fixed dollar amount expressed in
the "Maximum Loan Amount" definition and not the product of Acceptable
Receivables
-36-
<PAGE>
times the Receivables Loan Percentage). Payment of the Closing Fee and the
Commitment Fees shall be in addition to the payment of all other fees and
expenses payable under this Agreement, including, without limitation, those fees
and expenses payable pursuant to Subsections 2.01(c) and 10.02 hereof. Subject
to the provisions of Subsection 6.17(b), Subsection 6.17(c) and Subsection 6.18
below, the Closing Fee and Commitment Fees shall be deemed to have been earned
by Bank on the date of payment and shall not be subject to refund or rebate by
Bank.
(b) Notwithstanding the provisions of Subsection 6.17(a) above, in
the event the Obligations are paid in full and any Bank commitment which could
give rise to any future Obligations has been terminated, provided the source of
funding for such payment is not a borrowing from another bank or other financial
institution, (i) Borrowers shall be entitled to a ratable refund of the
Commitment Fee paid for the month in which such payment and termination occur
based upon the remaining portion of such month remaining after such payment and
termination, and (ii) any obligation to pay future Commitment Fees shall
terminate.
(c) Notwithstanding the provisions of Subsection 6.17(a) above, if
Borrowers do not elect the Warrant Option (as defined in Subsection 6.18 below)
Borrowers' obligation to pay certain Commitment Fees shall be suspended under
the circumstances described in this Subsection 6.17(c). If Borrowers certify to
Bank at any time, that Consolidated Tangible Net Worth is equal to or greater
than $6,000,000.00, Borrowers' obligation to pay additional Commitment Fees
shall be suspended; provided, however, that if the monthly financial statements
of Borrowers delivered to Bank in accordance with the provisions of Subsection
6.01(a) hereof for the last month of the quarterly accounting period during
which such certification has been delivered to Bank indicate that as of the last
day of such monthly accounting period (A) Consolidated Tangible Net Worth was
less than $6,000,000.00, or (B) the ratio of Consolidated Liabilities to
Consolidated Tangible Net Worth was greater than 2.5 to 1.0, Borrowers shall
upon the demand of Bank pay to Bank the Commitment Fees which would have been
payable but for such suspension, and the obligation of Borrowers to pay future
Commitment Fees shall resume. Further, if the financial statements of Borrowers
for the last month of any quarterly accounting period thereafter (a "Subsequent
Calendar Quarter") indicate that as of the last day of such monthly accounting
period (A) Consolidated Tangible Net Worth was less than $6,000,000.00, or (B)
the ratio of Consolidated Liabilities to Consolidated Tangible Net Worth was
greater than 2.5 to 1.0, Borrowers shall pay to Bank upon demand the Commitment
Fees which would otherwise have been payable during such calendar quarter.
6.18 Warrants. Issue or cause to be issued and delivered to Bank warrants
under the circumstances and in the manner provided in this Subsection. In lieu
of the payment of the Closing Fee and the Commitment Fees, on or before
September 30,1997, Borrowers shall have the option (the "Warrant Option") of
-37-
<PAGE>
electing to partially compensate Bank for extending credit to Borrower by
issuing warrants in accordance with the provisions of this Subsection 6.18.
(a) Borrowers shall elect the Warrant Option by providing Bank with
written notice of such election on or before September 30, 1997, together with a
warrant (the "Initial Warrant") to purchase 1% of the "Applicable Shares" as
hereinafter defined. Concurrently with the delivery of the Initial Warrant
pursuant to this Subsection, Bank shall refund to Borrowers the Closing Fee and
any Commitment Fees paid prior thereto. No other fees and expenses payable by
Borrowers under this Agreement (including, without limitation, those fees and
expenses payable pursuant to Subsections 2.01(c) and 10.02 hereof shall be
refundable by Bank, in whole or in part.
(b) In addition to the Initial Warrant issued pursuant to Subsection
6.18(a) above, if the Warrant Option has been elected by Borrowers, THG shall
issue and deliver to Bank a warrant to purchase 1% of the Applicable Shares in
the event Consolidated Tangible Net Worth is not equal to or greater than
$6,000,000.00 as of September 30, 1997, and shall issue and deliver to Bank a
warrant to purchase another 1% of the Applicable Shares in the event
Consolidated Tangible Net Worth is not equal to or greater than $6,000,000.00 as
of December 31, 1997. Borrowers shall cause the warrants which Bank is entitled
to receive under this Subsection 6.17(b) to be delivered to Bank concurrently
with the delivery of Borrowers' financial statements for the monthly periods
ending September 30, 1997, and December 31, 1997, as applicable.
(c) Notwithstanding the provisions of Subsections 6.18(a) and 6.18(b)
above, but subject to the provisions of Subsection 6.18(e) below, if the Warrant
Option has been elected by Borrowers and (i) as of the last day of any quarterly
accounting period of Borrowers, Consolidated Tangible Net Worth is equal to or
less than $6,000,000.00, or (ii) as of the last day of such or any subsequent
quarterly accounting period of Borrowers (the "Applicable Accounting Period"),
the ratio of Consolidated Liabilities to Consolidated Tangible Net Worth is
equal to or greater than 2.5 to 1.0, concurrently with the delivery to Bank of
the monthly financial statements of Borrowers for the last month of such
Applicable Accounting Period, THG shall issue and deliver to Bank a warrant to
purchase another 1% of the Applicable Shares.
(d) If the Warrant Option has been elected by Borrowers and (i) as of
the last day of any quarterly accounting period of Borrowers, Consolidated
Tangible Net Worth is equal to or greater than $6,000,000.00, and (ii) THG
requests Bank to approve an acquisition which, based upon pro forma projections
provided to Bank, would cause the ratio of Consolidated Liabilities to
Consolidated Tangible Net Worth to exceed (or to further exceed) 2.5 to 1.0,
concurrently with the consummation of such acquisition, but subject to the
provisions of Subsection 6.18(e) below, THG shall issue and deliver to Bank a
warrant to purchase another
-38-
<PAGE>
1% of the Applicable Shares; provided, however, that nothing in this Subsection
6.18(d) shall require Bank to approve any acquisition other than in accordance
with the provisions of this Agreement.
(e) Notwithstanding any other provision of this Subsection 6.18, (i)
Bank shall in no event be entitled to receive more than three (3) warrants
Pursuant to the terms of this Subsection, and (ii) in the event (A) all of the
Obligations shall be satisfied in full, and (B) no further commitment by Bank
which could give rise to any Obligations shall exist, the obligation of THG to
issue any additional warrants to Bank shall terminate; provided, however, that
the obligation of THG to issue additional warrants shall continue with respect
to those warrants for which the financial conditions precedent set forth in
Subsections 6.18(b), 6.18(c) or 6.18(d) above have been satisfied at the time
the events described in clauses (A) and (B) above have occurred, even if not yet
reflected in the financial statements theretofore delivered to Bank.
(f) THG agrees that it will obtain such shareholder consents and
amendments to its articles of incorporation as may be necessary from time to
time to authorize not less than the number of shares required in connection with
the exercise of the warrants described in this Subsection 6.18.
(g) The warrants shall be issued without additional consideration
payable by Bank and shall be in form and substance acceptable to both Bank and
THG and agreed to prior to THG's election hereunder. Without limitation of the
foregoing, each warrant shall be for a face amount of shares which would equal
one percent (1%) of the Applicable Shares (which number of shares shall be
subject to adjustment as provided in such warrant) and shall provide for a
purchase price per share equal to $84,000,000.00 divided by the number of
Applicable Shares on the date of such issuance.
(h) For purposes of this Section 6.18, "Applicable Shares" shall
equal, on the date of issuance of any warrant hereunder, the sum of (i) the
number of shares of THG issued and outstanding on the date of Closing; (ii) the
number of shares of THG issued to directors, officers and employees after the
date of Closing and on or prior to the date of issuance of such warrant; and
(iii) the product of (x) the number of shares of THG sold at a total valuation
of THG of less than $84,000,000 (excluding any shares sold to directors,
officers and employees and covered by (ii) above), after the date of Closing and
on or prior to the date of issuance of such warrant and (y) one (1) minus the
fraction determined by dividing the total valuation of THG at which such shares
are issued by $84,000,000; provided, however, that the number of Applicable
Shares shall in all cases be subject to adjustment for stock splits, dividends
and other matters affecting stockholders generally. The warrants and the shares
issuable upon the exercise of such warrants shall be subject to the terms of a
shareholders agreement in form and substance acceptable to both Bank and THG.
-39-
<PAGE>
6.19 Warrant Documents. Borrowers and Bank each covenant and agree to use
their best efforts to agree on the forms of warrant and shareholders agreement
referenced in Subsection 6.18 above as soon as possible after Closing.
7. NEGATIVE COVENANTS
Each Borrower covenants and agrees with Bank that, until (a) all
Obligations have been paid in full, and (b) there exists no commitment by Bank
which could give rise to any Obligations, no Borrower will, directly or
indirectly, without Bank's prior written consent:
7.01 Indebtedness. Create, incur, assume or permit to exist any
Indebtedness except (a) Indebtedness to Bank, (b) current Indebtedness incurred
in the ordinary course of business, (c) existing Indebtedness disclosed in
Schedule 7.01 attached hereto and made a part hereof, (d) Indebtedness secured
by Purchase Money Liens which are Permitted Liens, (e) Indebtedness of any
Borrower to any other Borrower which does not violate the provisions of
Subsection 7.05 hereof, (f) other Indebtedness not permitted within the scope of
the preceding clauses of this Subsection 7.01 in an amount not to exceed
$150,000.00 in the aggregate outstanding at any time, and (g) Indebtedness which
shall be consented to by Bank in writing in advance, in Bank's sole discretion
and, if required by Bank, subordinated to the Obligations by a written agreement
in form and substance satisfactory to Bank in its sole and absolute discretion.
Notwithstanding the foregoing, without the prior written consent of Bank THG
shall be permitted to repurchase stock of THG and/or stock options for the
purchase of stock of THG held by officers of THG whose employment has been
terminated and to issue promissory notes or other evidences of Indebtedness in
connection with such repurchase obligations provided (x) no Default or Event of
Default shall then exist and be continuing or would exist after giving effect
thereto, (y) the aggregate amount of Indebtedness incurred in connection with
the termination of any one officer does not exceed $200,000.00, and (z) the
aggregate amount of Indebtedness incurred in connection with all such
terminations does not exceed $600,000.00 at any time outstanding.
7.02 Liens. Create, incur, assume or permit to exist, directly or
indirectly, any Lien upon any of any Borrower's properties or assets, now owned
or hereafter acquired by any Borrower, other than Permitted Liens.
7.03 Merger, Sale of Assets, etc. (a) Enter into or be a party to any
merger, consolidation or share exchange, or suffer or permit to occur any
merger, consolidation or member interest or share exchange to which any
Borrower, any Subsidiary or any Other Obligor is a party, or suffer or permit
any of Borrower's or any Subsidiary's business, assets, operations or books and
records to be merged, consolidated or commingled with any business, assets,
operations or books and records of any other person; provided, however, that the
foregoing covenant shall not
-40-
<PAGE>
apply to any merger, consolidation or share exchange which is solely between
Borrowers, provided, that in any such merger, consolidation or share exchange to
which THG is a party, THG shall be the continuing or surviving entity; (b) sell,
assign, transfer, convey or lease any interest in all or any substantial part of
its property except in the ordinary course of a Borrower's business as now being
conducted; (c) purchase or otherwise acquire, or suffer or permit the purchase
or acquisition by any Subsidiary or any Other Obligor of, all or substantially
all of the assets of any other person, any assets of any other person in a
transaction which is subject to the Bulk Transfers Title of the Uniform
Commercial Code of any jurisdiction, or any shares of stock, member interests or
partnership interests of, or similar interest in, any other person; or (d) enter
into any transaction with any Affiliate except for transactions with Affiliates
entered into in the ordinary course of a Borrower's business on terms no less
favorable to a Borrower than would apply in a comparable arm's length
transaction with a person that is not an Affiliate.
7.04 Guaranties. Except as may be otherwise disclosed in Schedule 7.01 or
permitted pursuant to the provisions of this Subsection 7.04 or Subsection 7.07
below, guarantee or otherwise in any way become or be responsible for
obligations or Indebtedness of any other person, whether by agreement to
purchase the obligations or Indebtedness of any other person, by agreement for
the furnishing of funds to any other person for the purchase of goods, supplies
or services, or by way of stock purchase, capital contribution, advance or loan
for the purpose of paying or discharging obligations or Indebtedness of any
other person, or otherwise, except that a Borrower may endorse negotiable drafts
for collection in the ordinary course of business. Notwithstanding the
foregoing, THG shall be permitted to guaranty lease obligations of any other
Borrower arising in the ordinary course of such Borrower's business provided (a)
Borrowers shall notify Bank prior to incurring any lease obligation to be
guaranteed by THG which requires the payment of more than $100,000.00 in any
twelve-month period, and (b) Bank's consent shall be required with respect to
any proposed guaranty by THG which would cause the aggregate amount of
guaranteed lease payments payable by all Borrowers in any twelve-month period to
exceed (or to further exceed) $250,000.00.
7.05 Investments. Make any capital contribution to any other person or
purchase or acquire a beneficial interest in any stock, securities or evidences
of Indebtedness of, or make any investment or acquire any interest in, any other
person, except investments (a) in federally insured certificates of deposit or
in direct obligations of the United States of America maturing within one year
from the date of acquisition, or (b) in direct obligations of the Federal
National Mortgage Association, the Government National Mortgage Association or
other similar corporation created by act of the United States Congress which
mature within one year from the date of acquisition and which at the time of
acquisition have the highest rating obtainable from either Standard & Poor's
Corporation or Moody's Investors Service, Inc. Notwithstanding the foregoing,
without Bank's
-41-
<PAGE>
prior written consent THG shall be permitted in any twelve month period to make
capital contributions to any other Borrowers in an aggregate amount which, when
added to the amount of permitted redemptions of Borrower stock during such
period under Subsection 7.14 hereof, does not exceed $250,000.00.
7.06 Fiscal Year. Change its fiscal year.
7.07 Loans. Make or permit to exist any loan to any person, not including
advances for travel and the like made to officers and employees in the ordinary
course of business; provided, however, that without Bank's prior written consent
THG shall be permitted to make loans to other Borrowers in the ordinary course
of business. For purposes of this Subsection 7.07 and Subsection 7.05 hereof, a
loan from THG to a Borrower which is subordinate to or does not otherwise rank
pari passu with other unsecured Indebtedness of such Borrower (other than
Indebtedness which is entitled to priority under applicable law and not as a
result of any consensual act on the part of Borrower) shall be treated as a
capital contribution or investment by THG and not as a loan.
7.08 Subsidiaries. Form or acquire any Subsidiary. Without limitation of
the foregoing, Bank may condition its consent to the formation or acquisition of
any Subsidiary on such Subsidiary (a) becoming a party to this Agreement as a
Borrower hereunder by the execution by Borrowers and such Subsidiary and the
delivery to Bank of an amendment to this Agreement substantially in the form of
Exhibit B hereto (the "Amendment") and the satisfaction of the conditions
precedent to the effectiveness thereof contained therein, (b) becoming a party
to the Note as one of Makers thereunder by the execution by such Subsidiary and
delivery to Bank of an endorsement to the Note substantially in the form of
Exhibit A to the Amendment, and (c) becoming a party to each of the Other
Agreements pursuant to such documentation as Bank may require. Nothing in this
Subsection 7.08 shall require that Bank consent to the formation or acquisition
of any Subsidiary.
7.09 Change of Name. Change the name of any Borrower or permit any
Subsidiary to change such Subsidiary's name without (a) having provided Bank
with not less than thirty (30) days prior written notice of such change, and (b)
having executed and delivered to Bank such financing statements, financing
statement amendments and other documents which Bank may reasonably require in
order to protect and preserve the Liens of Bank in the Collateral and/or any of
Bank's rights and remedies hereunder or under any of the Other Agreements.
7.10 Trade Names. Except for the use by THG of "Hunter Consulting
Associates" in the States of Colorado and Texas, use any trade name other than
the applicable Borrower's true corporate name or permit any Subsidiary to use
any trade name other than such Subsidiary's true corporate name.
-42-
<PAGE>
7.11 Issuances. Issue any shares of its capital stock or permit any
Subsidiary to issue any shares of capital stock, member interests or partnership
interests of such Subsidiary; provided, however, that (a) Bank's consent shall
not be required with respect to the issuance of stock of THG, or options to
purchase stock of THG, to any officer or employee of THG, as part of such
officer's or employee's compensation, and (b) Bank's consent to the Preferred
Stock Sale shall not unreasonably be withheld if prior to the consummation of
such transaction Borrowers and Bank shall have amended this Agreement to
incorporate revised financial covenants satisfactory to Bank in its sole and
absolute discretion.
7.12 Employee Pension Plans. With respect to any Retirement Plan: (a)
engage, or knowingly permit any party in interest (as defined in Section 3(14)
of ERISA) or any disqualified person (as defined in Section 4975(e)(2) of the
Code) to engage, in any prohibited transaction; (b) knowingly incur, or permit
any Subsidiary to knowingly incur, any accumulated funding deficiency under
Section 302 of ERISA or Section 412 of the Code, whether or not waived; (c)
terminate, or permit any Subsidiary to terminate, any Retirement Plan in a
manner which could result in the imposition of a Lien on any property of any
Borrower or any Subsidiary pursuant to Section 4068 of ERISA; or (d) take, or
permit any Subsidiary to take, any action which would adversely affect the
qualification of any Retirement Plan.
7.13 Sale-Leaseback. Become or be, or suffer or permit any Subsidiary or
any Other Obligor to become or be, liable as lessee with respect to any lease of
any property (real, personal or mixed) which has been or is to be sold or
transferred by a Borrower, a Subsidiary or an Other Obligor to any person or
which a Borrower, Subsidiary or Other Obligor intends to use for substantially
the same purpose as any other property which has been or is to be sold or
transferred by a Borrower to any person in connection with such lease; provided,
however, that the provisions of this Subsection 7.13 shall not apply to (a)
transactions between Domestic Borrowers provided Bank at all times has and
retains a perfected first priority Lien on the property which is the subject of
such transaction, or (b) transactions which are solely between Foreign
Borrowers.
7.14 Stock Redemptions. Except as may be otherwise permitted without the
Bank's prior written consent in accordance with the provisions of Subsection
7.01 hereof, purchase, redeem, retire or otherwise acquire for value any shares
of any Borrower's capital stock or any other equity interest in any Borrower, or
suffer or permit any Subsidiary to purchase, redeem or otherwise acquire or
retire for value any shares of such Subsidiary's capital stock, or any member
interests, partnership interests or any other equity interest in such
Subsidiary; provided, however, that without Bank's prior written consent any
Affiliate Borrower shall be permitted to purchase, redeem, retire or otherwise
acquire for value any of its shares held by THG.
-43-
<PAGE>
7.15 Compensation, Bonuses. Pay to any officers or directors of Borrowers
or to any employees of Borrowers performing management or executive functions
(collectively, "Executive Management") compensation (including bonuses) in any
form for employment services (which shall not include pension benefits,
customary fringe benefits approved by Bank, benefits under incentive plans
approved by Bank or compensation payable in stock and/or stock options of THG)
in the fiscal year of Borrowers ending December 31, 1997, which exceeds, in the
aggregate, the amount determined in accordance with a plan presented to and
approved by Bank in writing prior to Closing. Borrowers shall not increase the
aggregate amount of such compensation to Executive Management for any fiscal
year of Borrowers subsequent to December 31, 1997, without Bank's prior written
consent; provided, however, that if no Default or Event of Default shall have
occurred and be continuing (a) such consent shall not unreasonably be withheld
or delayed (provided, however, that a period of ten (10) Banking Days from the
time Bank receives all information it requires to evaluate Borrowers' increased
compensation request to the conclusion of such evaluation shall not be deemed an
unreasonable delay), and (b) Bank shall not request Borrowers to decrease
compensation payable to Executive Management from the amount paid in the prior
fiscal year. Borrowers and Bank agree that at Closing the following individuals
(and their successors in office) comprise Executive Management: Terry L. Hunter
(President and Chief Executive Officer); Loren Burnett (Senior Vice President
and Chief Financial Officer); Brad Everett (Senior Vice President and Chief
Operating Officer); Mary Weaver (Senior Vice President); Thomas Whartenby
(Senior Vice President); David Andros (Senior Vice President); and Judy
Dunnington (Senior Vice President).
7.16 Dividends. Directly or indirectly declare or pay any dividend on, or
make any other distribution with respect to (whether by reduction of capital or
otherwise), any shares of its capital stock; provided, however, that any
Affiliate Borrower shall be permitted to declare and pay dividends to THG.
7.17 Asset Investments. Make any investment(s) in noncurrent assets (which
shall include fixed assets and capitalized value of leased equipment and leased
real property but shall exclude investments permitted under Subsection 7.05
hereof) during any calendar year which exceeds $1,500,000.00.
7.18 Funded Debt. Redeem, call for redemption, purchase or otherwise
acquire or retire, directly or indirectly, or make any optional prepayment of
principal on, any Funded Debt (other than Funded Debt owed to another Borrower),
or amend, alter or otherwise modify the provisions relating to any Funded Debt,
if the effect of such amendment, alteration or other modification would or might
be to accelerate such Funded Debt. For purposes of this Subsection, "Funded
Debt" shall include any obligation of a Borrower to any person other than Bank
payable more than one year from the date of its creation which, under GAAP, is
shown on the balance sheet as a liability (excluding reserves for deferred
income
-44-
<PAGE>
taxes and other reserves to the extent that such reserves do not constitute an
obligation).
8. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall constitute
an "Event of Default":
(a) Any representation or information previously or hereafter made or
supplied to Bank by or on behalf of any Borrower, any Subsidiary or any Other
Obligor, including, without limitation, any representation or information
previously or hereafter made or supplied to Bank pursuant to or in connection
with this Agreement or any of the Other Agreements or any transaction involving
or affecting any Borrower, any Subsidiary or any Other Obligor, shall prove to
have been, when made or supplied, false or misleading in any respect deemed
material by Bank in good faith.
(b) Failure of any Borrower to pay (i) any scheduled payment of
principal or interest under the Note within five (5) days after the due date
thereof, or (ii) any other of the Obligations, including, without limitation,
any other sum due Bank under this Agreement or any of the Other Agreements, when
and as the same shall become due, whether at the due date thereof, by demand, by
acceleration or otherwise.
(c) Occurrence of a default or event of default by any Borrower, any
Subsidiary or any Other Obligor with respect to, or acceleration or demand for
payment prior to maturity of, any Indebtedness of any Borrower, any Subsidiary
or any Other Obligor to any person which is deemed material by Bank in good
faith, or with respect to any Lien securing any Indebtedness of any Borrower,
any Subsidiary or any Other Obligor to any person which is deemed material by
Bank in good faith.
(d) Any Borrower, any Subsidiary or any Other Obligor shall (i) fail
to observe or perform any warranty, covenant, condition or agreement to be
observed or performed by such Borrower or such other person under Section 7 or
under Subsections 6.03, 6.06, 6.11, 6.12, 6.15 or 6.16 this Agreement; (ii) fail
to observe or perform any warranty, covenant, condition or agreement to be
observed or performed by such Borrower or such other person under Subsection
6.10 of this Agreement and such failure shall continue and not be cured for ten
(10) Banking Days, or (iii) fail to observe or perform any other warranty,
covenant, condition or agreement to be observed or performed by such Borrower or
such other person (other than the obligations specifically referred to elsewhere
in this Section 8) under this Agreement or any of the Other Agreements and,
provided that such failure is of a type which can be cured, such failure shall
continue and not be cured for 30 days after the earlier of (A) the date written
notice thereof is given from Bank to
-45-
<PAGE>
Borrowers, or (B) the date Bank is notified thereof (or should have been
notified thereof) pursuant to the provisions of Subsection 6.12 hereof.
(e) Any Borrower, any Subsidiary or any other Obligor shall (i) admit
in writing its insolvency or its inability to pay its debts as they mature, (ii)
make a general assignment for the benefit of creditors, whether conditional or
unconditional and whether or not such assignment is filed in court and whether
or not any court assumes jurisdiction thereof, (iii) commence a case under or
otherwise seek to take advantage of any bankruptcy, reorganization,, insolvency,
readjustment of debt, dissolution or liquidation law, statute or proceeding, or
(iv) by any act indicate its consent to, approval of or acquiescence in any such
proceeding or the appointment of any receiver of or trustee for any Borrower,
any Subsidiary or any such Other Obligor or a substantial part of its property,
or suffer any such receivership, trusteeship or proceeding to continue
undismissed for a period of 60 days.
(f) Any Borrower, any Subsidiary or any Other Obligor shall become a
debtor in any case under any chapter of the United States Bankruptcy Code and,
in the case of any involuntary proceeding, such proceeding shall continue
undismissed for a period of 60 days.
(g) Dissolution of, or entry of any order, judgment, award or decree
for the dissolution of, any Borrower, any Subsidiary or any Other Obligor that
is not a natural person.
(h) Entry of any unstayed judgment, order, award or decree against
any Borrower, any Subsidiary or any Other Obligor which is uninsured to an
extent deemed material by Bank in good faith, or which Bank determines in good
faith, when aggregated with all other judgments, orders, awards and decrees
outstanding against Borrowers, Subsidiaries and Other Obligors, could have a
Material Adverse Effect.
(i) Injunction or restraint of any Borrower, any Subsidiary or any
Other Obligor in any manner from conducting its business in whole or in part
deemed material by Bank in good faith if such injunction or restraint could have
a Material Adverse Effect.
(j) Any assets of any Borrower, any Subsidiary or any Other Obligor
shall be attached, levied upon, seized or repossessed or come into the
possession of a trustee, receiver or other custodian if such attachment, levy,
seizure or repossession could have a Material Adverse Effect.
(k) An adverse change deemed material by Rank in good faith (whether
or not such adverse change otherwise constitutes an Event of Default) shall
occur with respect to (i) the business, assets, operations, business prospects
or financial condition of (A) any Material Borrower or Subsidiary, or (B) the
-4-
<PAGE>
Borrowers, Subsidiaries and Other Obligors, taken as a whole, or (ii) the risks
to Bank attending the Collateral, (iii) any commitments of Bank which could give
rise to any Obligations, or (iv) the prospect for payment in full of the
Obligations.
(l) The death of any other Obligor that is an individual.
(m) Any Borrower, any Subsidiary or any Other Obligor shall be or
become insolvent (as defined in Section 101(31) of the United States Bankruptcy
Code) or unable to pay its debts as they mature.
(n) Termination of any contract, franchise, license, permit,
authorization, certificate or right of any Borrower, any Subsidiary or any Other
Obligor if such termination could have a Material Adverse Effect.
(o) Suspension or revocation of any license, permit, certification,
approval or the like required to be held by any Borrower, any Subsidiary or any
Other Obligor that is not an individual by federal, State, local or foreign laws
if such suspension or revocation could have a Material Adverse Effect.
(p) Occurrence of any change in any Borrower's management personnel
which Bank determines in good faith could have a Material Adverse Effect.
(q) Terry L. Hunter shall for any reason (including death) cease to
be the chief executive officer of THG, unless, within 60 days thereafter, THG
shall have engaged a replacement chief executive officer who is satisfactory to
Bank.
(r) Occurrence of any default or event of default under or as defined
in any of the Other Agreements which remains uncured beyond any applicable cure
period; provided that if such default or event of default is based on
circumstances within the scope of any other provision of this Section 8, then
such default or event of default shall not constitute an Event of Default under
this Agreement unless such facts or circumstances constitute an Event of Default
under such other provisions of this Section 8.
(s) Any Borrower, any Other Obligor or any other person shall revoke
or terminate, or attempt to revoke or terminate, or notify Bank of revocation or
termination of, any continuing obligations or agreements of such Borrower, such
Other Obligor or such other person relating in any way to any of the
Obligations, including, without limitation, any continuing obligations or
agreements of such Borrower, such Other Obligor or such other person under any
guaranty or subordination agreement.
(t) THG shall for any reason cease to own all of the issued and
outstanding capital stock of any Affiliate Borrower (excluding stock of THG
-47-
<PAGE>
Singapore currently owned by Terry L Hunter and Edward D. Postal as reflected in
Schedule 4.16 attached hereto).
9. RIGHT AND REMEDIES
9.01 Rights and Remedies of Bank. Upon the occurrence of an Event of
Default described in Subsections 8(e), 8(f) or 8(g) of this Agreement, all of
the Obligations shall automatically and immediately be due and payable. Upon and
during the continuance of an Event of Default, Bank may, without notice or
demand, exercise in any jurisdiction in which enforcement hereof is sought, the
following rights and remedies, in addition to the rights and remedies available
to Bank under the Other Agreements, the rights and remedies of a secured party
under the Uniform Commercial Code and all other rights and remedies available to
Bank under applicable law, all such rights and remedies being cumulative and
enforceable alternatively, successively or concurrently:
(a) Declare the Note, all interest accrued and unpaid thereon and all
other Obligations to be immediately due and payable and the same shall thereupon
become immediately due and payable without presentment, demand payment, protest
or notice of any kind, all of which are hereby expressly waived.
(b) Enforce the Liens granted to Bank hereunder and under the Other
Agreements by collecting or liquidating all or any part of the Collateral or
selling, assigning, leasing, renting, licensing or otherwise disposing of all or
any part of the Collateral or any interest therein, in one or more parcels, at
the same or different times, at public or private sale or disposition, or
otherwise.
(c) Establish and maintain at Bank, subject to Bank's customary
arrangements and charges therefor as established by Bank from time to time, a
repayment account, which shall be under the exclusive control of and subject to
the sole order of Bank, and require each Borrower to deposit in the repayment
account, not later than the first Banking Day following the day on which the
same are received by such Borrower, as a tender of payment of the Obligations or
as security for any contingent or future Obligations, all cash, checks, drafts,
money orders and other items of payment constituting Collateral, or collections
or other proceeds of Collateral.
(d) Institute any proceeding or proceedings to enforce the
Obligations and any Liens of Bank.
(e) Notify postal authorities to change the address for delivery of
mail addressed to any Borrower to such address as Bank may designate and
receive, open and dispose of all mail addressed to any Borrower.
(f) Indorse any Borrower's name on any promissory notes or other
instruments, acceptances, checks, drafts, money orders or other items of
-48-
<PAGE>
payment constituting Collateral, or collections or other proceeds of Collateral,
that may come into Bank's possession or control from time to time.
(g) Sign any Borrower's name on any invoices to, drafts against and
other notices and documents to account debtors or other obligors of such
Borrower and requests for verification of accounts and other amounts which may
he due to such Borrower.
(h) Execute proof of claim and loss on behalf of any Borrower.
(i) Apply all Collateral and proceeds of Collateral delivered to Bank
or coming into Bank's possession or control from time to time to any of the
Obligations, or hold the same as security for any contingent or future
Obligations.
(j) At Borrowers' expense, continue or complete) or cause to be
continued or completed, performance of any Borrower's obligations under any
contracts of any Borrower.
(k) Use, Operate, manage, control and exercise all rights of any
Borrower relating to, the Collateral and any other assets of any Borrower, and
collect all income and revenues therefrom.
(l) Terminate, or cease extending credit under, any or all
outstanding commitments or credit accommodations of Bank to any Borrower, any
Subsidiary or any Other Obligor.
(m) At any time and from time to time reduce the Maximum Loan Amount
and/or reduce the Receivables Loan Percentage.
(n) Take exclusive possession of any or all of the Collateral from
time to time and/or place a custodian in exclusive possession of any or all of
the Collateral from time to time and, so far as each Borrower may give authority
therefor, enter upon any premises on which any of the Collateral may be situated
and remove the same therefrom, each Borrower hereby waiving any and all rights
to prior notice and to judicial hearing with respect to repossession of
Collateral, and/or require any Borrower, at Borrowers' expense, to assemble and
deliver any or all of the Collateral to such place or places as Bank may
reasonably request.
(o) With respect to any accounts, notes, instruments, chattel paper,
tax refunds, contract rights, general intangibles or other debts or liabilities
payable to any Borrower securing the Obligations, notify any account debtors and
other obligors thereon to make payments thereon directly to Bank, take control
of the cash and noncash proceeds thereof, demand, collect, sue for and receive
any money or property at any time due, payable or receivable on account thereof,
compromise and settle with any person liable thereon, and extend the time of
-49-
<PAGE>
payment or otherwise change the terms thereof, without incurring liability or
responsibility therefor to any Borrower or any Other Obligor.
9.02 Disposition of Collateral. Each Borrower agrees that commercial
reasonableness and good faith require Bank to give Borrowers no more than ten
days prior written notice of the time and place of any public disposition of
Collateral or of the time after which any private disposition or any other
intended disposition is to be made. All sales or other dispositions of
Collateral may be made for cash, upon credit or for future delivery. In no event
shall Borrowers be credited with any part of the proceeds of liquidation, sale
or other disposition of any Collateral until final payment thereon has been
received by Bank in immediately available funds, and Bank shall have no
obligation to delay any liquidation, sale or other disposition because the same
may result in the imposition of any forfeiture, premium or penalty.
9.03 Costs and Expenses. Each Borrower jointly and severally agree to pay
to Bank, upon written demand by Bank from time to time, the amount of all
reasonable expenses, including reasonable attorneys' fees and expenses, paid or
incurred by Bank (a) in exercising or enforcing or consulting with counsel
concerning any of its rights hereunder, under the Other Agreements or under law,
or (b) in defending any and all non-meritorious or previously waived demands,
claims, counterclaims, cross-claims, causes of action, litigation and
proceedings of every kind and nature asserted, commenced or instituted against
Bank, or any of Bank's officers, directors or employees, by any Borrower, any
Subsidiary or any Other Obligor on account of, as a result of or relating to,
any action taken or not taken by Bank in connection with the Loan, any other of
the Obligations, the Collateral or enforcement or exercise by Bank of any rights
or remedies of Bank under this Agreement, under any of the Other Agreements or
under law. Each Borrower also jointly and severally agrees to pay to Bank, upon
written demand by Bank from time to time, interest on the outstanding amount of
such reasonable expenses paid by Bank, from the date of Bank's demand for
payment of such reasonable expenses until the same are paid in full, at the
highest rate and calculated in the manner provided in the Note.
10. MISCELLANEOUS
10.01 Performance for Borrowers. Each Borrower agrees and hereby
authorizes that Bank may, in Bank's sole discretion, but Bank shall not be
obligated to, whether or not an Event of Default shall have occurred, and
regardless of the Maximum Loan Amount, advance funds on behalf of any Borrower
without prior notice to any Borrower, in order to insure such Borrower's
compliance with any covenant, warranty, representation or agreement of such
Borrower made in or pursuant to this Agreement or any of the Other Agreements,
to continue or complete, or cause to be continued or completed, performance of
such Borrower's obligations under any contracts of such Borrower, to cover
overdrafts in any
-50-
<PAGE>
checking or other accounts of such Borrower at Bank or to preserve or protect
any right or interest of Bank in the Collateral or under or pursuant to this
Agreement or any of the Other Agreements, including, without limitation, the
payment of any insurance premiums or taxes and the satisfaction or discharge of
any judgment or any Lien upon the Collateral or other property or assets of such
Borrower and compliance by such Borrower with Environmental Laws; provided,
however, that (a) Bank agrees not to make any advance otherwise authorized under
this Subsection 10.01 without giving Borrowers at least ten (10) days prior
written notice of Bank's intention to do so, unless Bank shall determine in good
faith that any delay in making such advance could impair the Collateral, the
rights and remedies of Bank with respect to the Collateral, the rights and
remedies of Bank under this Agreement or any of the Other Agreements, or the
prospect for the full and punctual payment and performance of the Obligations,
and (b) the making of any such advance by Bank shall not constitute a waiver by
Bank of any Event of Default with respect to which such advance is made nor
relieve Borrowers of any such Event of Default. Any cost, expense or liability
incurred by Bank or imposed upon Bank arising out of or in connection with the
noncompliance by any Borrower with the provisions of any Environmental Laws
shall be treated as an advance of funds on behalf of Borrowers under this
Subsection 10.01, and Borrowers shall jointly and severally indemnify, defend
and save harmless Bank from and against any such cost, expense or liability.
Borrowers jointly and severally agree pay to Bank upon demand all advances made
by Bank under this Subsection 10.01 with interest thereon at the highest rate
and calculated in the manner provided in the Note. All such advances shall be
deemed to be included in the Obligations and secured by the security interest
granted Bank hereunder; provided, however, that the provisions of this
Subsection shall survive the termination of this Agreement and Bank's security
interest hereunder and the payment of all other Obligations.
10.02 Expenses. Whether or not any of the transactions contemplated hereby
shall be consummated, Borrowers jointly and severally agree to pay to Bank, upon
written demand by Bank from time to time, the amount of all reasonable expenses,
including reasonable attorneys' fees and expenses, paid or incurred by Bank in
connection with the preparation, or the amendment, modification, extension,
renewal, refinancing, supplementation, replacement, waiver, release or
termination, of this Agreement or any of the Other Agreements or any terms or
conditions hereof or thereof or any rights or interests of Bank, any Borrower or
any other person relating to any of the foregoing, or otherwise in connection
with the extension of credit hereunder and preparing for the extension of credit
hereunder. Borrowers jointly and severally agree to pay all reasonable expenses
in connection with the filing or recordation of all financing statements and
other documents as may be required by Bank at the time of, or subsequent to, the
execution of this Agreement, including, without limitation, all documentary
stamps, recordation and transfer taxes, filing fees and other reasonable costs
and taxes incident to recordation of any document in connection herewith, and,
if any such reasonable expenses shall be paid or incurred by Bank, to pay to
Bank upon written
-51-
<PAGE>
demand the amount of such reasonable expenses. Borrowers also jointly and
severally agree to pay to Bank, upon written demand by Bank from time to time,
interest on the outstanding amount of all reasonable expenses paid by Bank
referred to in this Subsection, from the date of Bank's demand for payment of
such reasonable expenses until the same are paid in full, at the highest rate
and calculated in the manner provided in the Note. Borrowers also jointly and
severally agree to indemnify, protect and defend Bank, and save Bank harmless,
from and against any and all claims, demands, damages, losses, liabilities,
obligations, penalties, litigation, defenses, judgments, suits, actions,
proceedings, reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses and reasonable experts' fees and
expenses) of any kind or nature whatsoever which may at any time be imposed
upon, paid or incurred by or asserted or awarded against Bank relating to,
resulting from or arising out of (a) the use of any property owned, leased,
subleased, occupied, used or operated by any Borrower or any Subsidiary for the
manufacture, generation, production, processing, distribution, use, treatment,
storage, disposal, transport or handling of any Hazardous Substances, (b) the
presence of any Hazardous Substances in or upon any such property, or (c) any
violation of any Environmental Law.
10.03 Applications of Collateral. Except as may be otherwise specifically
provided in this Agreement, all Collateral and proceeds of Collateral coming
into Bank's possession may be applied by Bank to any of the Obligations, whether
matured or unmatured, as Bank shall determine in its sole discretion.
10.04 Further Assurances, Power of Attorney. Each Borrower agrees promptly
to do, make, execute and deliver all such additional and further acts, things,
deeds, assurances, instruments and documents as Bank may request in good faith
to vest in and assure to Bank its rights hereunder or under any of the Other
Agreements or in any of the Collateral. Effective upon and during the
continuance of any Event of Default, each Borrower hereby appoints Bank and its
designees as attorney-in-fact of such Borrower, irrevocably and with power of
substitution, with authority to execute and deliver from time to time, in the
name and stead of such Borrower, all documents which such Borrower is required
to, but has failed or refused to, execute and deliver to Bank pursuant to this
Agreement or any of the Other Agreements, and with authority to take all of the
actions from time to time on behalf of such Borrower, and in the name and stead
of such Borrower, which Bank is authorized to take under this Agreement and the
Other Agreements or which Bank in its good faith discretion deems necessary or
advisable in order to cause such Borrower to be in compliance with any of the
terms of this Agreement or any of the Other Agreements or in order to carry out
and enforce this Agreement and the Other Agreements. Said attorney or designee
shall not be liable for any acts of commission or omission nor for any error of
judgment or mistake of fact or law which does not arise from its gross
negligence or willful misconduct. This power of attorney is coupled with an
interest and is irrevocable so long as any of the
-52-
<PAGE>
Obligations remain unpaid or unperformed or there exists any commitment by Bank
which could give rise to any Obligations.
10.05 Waiver of Trial by Jury. Each Borrower and Bank agrees that any
action, suit or proceeding involving any claim, counterclaim or cross-claim
arising out of or in any way relating, directly or indirectly, to this Agreement
or the Other Agreements, or any liabilities, rights or interests of any
Borrower, Bank or any other person arising out of or in any way relating,
directly or indirectly, to any of the foregoing, shall be tried by a court and
not by a jury. Each Borrower and Bank hereby waives any right to trial by jury
in any such action, suit or proceeding, with the understanding and agreement
that this waiver constitutes a waiver of trial by jury of all claims,
counterclaims and cross-claims against all parties to such actions, suits or
proceedings, including claims, counterclaims and cross-claims against parties
who are not parties to this Agreement or the Other Agreements. This waiver is
knowingly, willingly and voluntarily made by each Borrower and Bank, and each
Borrower and Bank acknowledges and agrees that this waiver of trial by jury is a
material aspect of the agreements between Borrowers and Bank and that no
representations of fact or opinion have been made by any person to induce this
waiver of trial by jury or to modify, limit or nullify its effect.
10.06 Additional Waivers by Borrowers. Each Borrower hereby waives, to the
extent the same may be waived under applicable law: (a) notice of acceptance by
Bank of this Agreement; (b) all claims, causes of action and rights of such
Borrower against Bank on account of actions taken or not taken by Bank in the
exercise of Bank's rights or remedies hereunder or under any of the Other
Agreements, or under law, provided that the same did not arise from Bank's gross
negligence or willful misconduct; (c) all claims and causes of action of such
Borrower against Bank for punitive, exemplary or other non-compensatory damages;
(d) all rights of redemption of such Borrower with respect to any of the
Collateral; (e) in the event Bank seeks to repossess any or all of the
Collateral by judicial proceedings, any bonds or demands for possession which
otherwise may be required; (f) all rights of such Borrower to have marshalled
the Collateral or any other security for any of the Obligations; (g)
presentment, protest, notice of protest and notice of nonpayment with respect to
all of the Obligations; (h) settlement, compromise or release of the obligations
of any Other Obligor or any other person primarily or secondarily liable upon or
obligated with respect to any of the Obligations; (i) substitution, impairment,
exchange or release of any direct or indirect security for any of the
Obligations; and (j) any duty or obligation of Bank to disclose to such Borrower
any information concerning any other customer or client, or prospective customer
or client, of Bank. Each Borrower agrees that Bank may exercise any or all of
its rights and/or remedies hereunder, under the Other Agreements and under law
without resorting to, without regard to, and regardless of the adequacy of, any
security or other sources of liability with respect to any of the Obligations.
-53-
<PAGE>
10.07 Waivers by Bank. Neither any failure nor any delay on the part of
Bank in exercising any right, power or remedy hereunder, under any of the Other
Agreements or under applicable law shall operate as a waiver thereof, nor shall
a single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. Without limitation
of the foregoing, the failure or delay of Bank to accrue interest on the Loan at
the Default Rate of Interest following the occurrence of an Event of Default
shall not operate as a waiver of such Event of Default or of Bank's right at any
time thereafter to accrue interest on the Loan at the Default Rate of Interest.
10.08 Payments, Setoff. All payments required to be made by any Borrower
hereunder shall be made by such Borrower without setoff, counterclaim or
deduction and shall be made to Bank in lawful money of the United States of
America at Bank's principal office (or at such other address as Bank may specify
to Borrowers in writing from time to time). If any payment required to be made
by any Borrower hereunder shall be due on any day that is not a Banking Day,
such payment may be made by such Borrower without default on the next succeeding
Banking Day but any interest-bearing portions of such payment shall continue to
accrue interest during such extension of time. Bank shall have the right from
time to time to charge and deduct from any deposit accounts of any Borrower at
Bank any amounts credited to such accounts and apply the same in order to pay
principal amounts, interest charges, service charges, fees, expenses or any
other sums or charges due and unpaid under this Agreement or any of the Other
Agreements. Bank shall have the right, in addition to all other rights and
remedies available to it, to set off against any Obligations due and unpaid any
sums or property owing to any Borrower by Bank or held or controlled by Bank for
any Borrower. Each Borrower hereby confirms Bank's right to banker's lien and
setoff, and nothing in this Agreement or any of the Other Agreements shall be
deemed to replace, supersede, limit, waive or prohibit Bank's right of banker's
lien and setoff.
10.09 Confession of Judgment. Each Borrower hereby authorizes any clerk of
court or any attorney-at-law to appear for such Borrower before any court,
having jurisdiction, within the United States or elsewhere, and, after one or
more complaints flied, confess judgment against such Borrower as of any time
after any of the Obligations are due (whether by demand, stated maturity,
acceleration or otherwise) for the unpaid balance of the Obligations, including
principal, interest, fees, court costs, late charges and expenses, together with
attorneys' fees equal to fifteen percent (15%) of the amount of such
Obligations, for collection and release of all errors, and without stay of
execution, and inquisition and extension upon any levy on real estate is hereby
waived and condemnation agreed to, and the exemption of personal property from
levy and sale is also hereby expressly waived, and no benefit of exemption shall
be claimed under any exemption law now in force or which may be hereafter
adopted. The foregoing authorities and powers to confess judgment shall not be
exhausted by one or more exercises of any of them or by any imperfect exercise
of any of them, shall not be extinguished by any judgment
-54-
<PAGE>
entered because of any of them and may be exercised before, during or after
sale, liquidation or other disposition by Bank of any property directly or
indirectly securing any of the Obligations or exercise or enforcement by Bank of
any other right or remedy of Bank with respect to the Obligations. Bank and
Borrowers agree that any agreements of Borrowers contained in this Agreement or
any of the Other Agreements to pay any costs or expenses, including attorneys'
fees and expenses, paid or incurred by Bank shall not be merged into, or
otherwise impaired by, any such judgment by confession, but Bank shall not be
entitled to recover on account of such costs or expenses any amount in excess of
the greater of (a) such costs or expenses included in any judgments by
confession (without duplication), or (b) such costs or expenses actually paid or
incurred by Bank. Notwithstanding the foregoing, Bank agrees that to the extent
Bank recovers an amount under this Subsection 10.09 (or under the confession of
judgment provisions of the Note) for application to its attorney's fees which
exceeds the actual and reasonable attorney's fees incurred in connection
therewith, following the satisfaction of all other Obligations such excess
amount shall be refunded to Borrowers.
10.10 Modifications. No modification or waiver of any provision of this
Agreement or any of the Other Agreements, and no consent by Bank to any failure
of any Borrower or any other person to comply with any provision of this
Agreement or any of the Other Agreements, shall in any event be effective unless
the same shall be in writing signed by the person against whom enforcement is
sought, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand upon
Borrowers in any case shall entitle Borrowers to any other or further notice or
demand in the same, similar or other circumstances.
10.11 Notices. Any notice or other communication in connection with this
Agreement, including demands for payment by Bank, shall be deemed to have been
given when hand delivered to the party to whom directed, or, if transmitted by
telex, facsimile transmission or by mail (whether or not registered or
certified), when telexed, transmitted by facsimile transmission or deposited in
the mail postage prepaid, respectively, provided that any such notice or
communication shall be hand delivered or transmitted to a party hereto as
provided below (or at such other address as such party shall specify in writing
to the other parties hereto):
(a) if to Borrowers, c/o The Hunter Group, Inc. at 100 East Pratt
Street, Suite 1600, Baltimore, Maryland 21202 [Fax No.: 410/752-2879] Attention:
Chief Financial Officer; and
(b) if to Bank, at Signet Bank, Post Office Box 1077, Baltimore,
Maryland 21203 [Fax No.: 410/625-6365].
10.12 Disclosure of Information. Each Borrower consents and agrees that
Bank may issue press releases concerning, and otherwise publicly
-55-
<PAGE>
announce or publicize, financings provided by Bank to Borrowers or Subsidiaries.
Each Borrower hereby authorizes Bank to disclose to any subsidiary or affiliate
of Bank, to any fiduciary institution (as "fiduciary institution" is defined in
Subtitle 3 of Title 1 of the Financial Institutions Article of the Annotated
Code of Maryland, or any successor legislation) or to any banking institution,
credit union or savings and loan association organized under the laws of any
State, and hereby authorizes all subsidiaries and affiliates of Bank, all
fiduciary institutions (as defined as above provided) and all banking
institutions, credit unions and savings and loan associations organized under
the laws of any State to disclose to Bank, the financial record of any Borrower
(as "financial record" is defined in Subtitle 3 of Title 1 of the Financial
Institutions Article of the Annotated Code of Maryland, or any successor
legislation).
10.13 Law, Jurisdiction, Transfers of Interests and Unenforceability. The
performance and construction of this Agreement and the Other Agreements shall be
governed by the internal laws of the State of Maryland (exclusive of principles
of conflicts of laws). Each Borrower agrees that any suit, action or proceeding
instituted by Bank with respect to any of the Obligations, the Collateral, this
Agreement or any of the Other Agreements may be brought in any State or federal
court located in the State of Maryland (in addition to such other courts in
which jurisdiction and venue may be appropriate), and each Borrower consents to
the in personam jurisdiction of such courts. Each Borrower irrevocably waives
any objection to, and any right of immunity from, the jurisdiction of such
courts or the execution of judgments resulting therefrom, on the grounds of
venue or the convenience of the forum. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, and each reference in this Agreement to any of the parties hereto shall
be deemed to include the successors and assigns of such party, including, in the
case of any Borrower, the debtor in possession or trustee in any case under any
chapter of the United States Bankruptcy Code in which any Borrower is debtor. No
Borrower may assign this Agreement or any of its rights hereunder without Bank's
prior written consent. Bank may at any time, in its discretion, assign, transfer
or pledge to any person, or grant to any person a Lien in, this Agreement, any
of the Other Agreements or any of its rights hereunder or thereunder. In
addition, Bank may sell, in such amounts, upon such terms and to such persons as
Bank may determine, participations in its interests under this Agreement and/or
any of the Other Agreements. In the case of each such assignment, transfer,
pledge, grant or sale (or offer to assign, transfer, pledge, grant or sell),
Bank may from time to time provide to the assignee, transferee, pledgee, secured
party or participant (or to any potential or prospective assignee, transferee,
pledgee, secured party or participant), any information and documents (or copies
thereof) relating to this Agreement and the Other Agreements and related
transactions, and relating to the business, assets, operations, business
prospects or financial condition of Borrowers, Subsidiaries and Other Obligors.
If any term, provision or condition, or any part thereof, of this Agreement or
any of the Other Agreements shall for any reason be
- 56-
<PAGE>
found or held invalid or unenforceable by any court or governmental agency, such
invalidity or unenforceability shall not affect the remainder of such term,
provision or condition, nor any other term, provision or condition, and this
Agreement and the Other Agreements shall survive and be construed as if such
invalid or unenforceable term, provision or condition had not been contained
herein or therein; provided, however, that if any rate of interest provided
under this Agreement does or shall exceed the maximum interest rate which
Borrowers are permitted by law to contract or agree to pay, then such rate of
interest shall immediately be deemed to be reduced to such maximum rate and all
previous payments of interest in excess of the maximum rate shall be deemed to
have been payments in reduction of principal and not of interest. All books and
records of Bank and statements of account rendered by Bank to Borrowers relating
to the Obligations shall be presumed to be accurate, absent manifest error.
10.14 Changes in Laws. In the event that, at any time or from time to time
after the date of this Agreement, the implementation of, or any change in, any
law or regulation, or any guideline or directive (whether or not having the
force of law), or the interpretation or administration thereof by any central
bank or other authority charged with the administration thereof, imposes,
modifies or deems applicable any capital adequacy, reserve or similar
requirement (including, without limitation, a request or requirement which
affects the manner in which Bank allocates capital resources to its commitments
and extensions of credit, including, without limitation, its extensions of
credit hereunder), and, as a result thereof, in the sole opinion of Bank, the
rate of return on Bank's capital as a consequence of its extensions of credit
hereunder, is reduced to a level below that which Bank could have achieved but
for such circumstances, then, in each such case, within 10 days after written
demand by Bank from time to time, Borrowers shall pay to Bank such additional
amount or amounts as shall compensate Bank for such reduction in rate of return.
A certificate of Bank as to any such additional amount or amounts, in the
absence of manifest error, shall be final and conclusive. In determining such
amount or amounts, Bank may use any reasonable averaging and attribution
methods.
10.15 LIBOR Unavailability; Illegality. (a) If Bank determines that, on
any date on which the Monthly LIBO Rate is to be determined such Rate cannot be
determined or does not reflect the cost of funds to Bank of making or funding
the Advances or any portion thereof, or (b) any change in applicable law or
regulations or in the interpretation thereof by any governmental authority
charged with the administration thereof shall make it unlawful for Bank to
continue to offer the Monthly LIBOR Option, Bank shall forthwith give notice of
such fact to Borrowers. In such event, and until such time as the conditions
specified in clauses (a) and/or (b) above (as applicable) shall no longer exist
the availability of the Monthly LIBOR Option shall be suspended and interest
shall accrue on the Advances in accordance with the Prime Rate Option.
-57 -
<PAGE>
10.16 No Novation. Borrowers and Bank intend that neither this Amended and
Restated Loan and Security Agreement, nor the execution and delivery of this
Amended and Restated Loan and Security Agreement or any other document executed
and delivered pursuant to or in connection with this Amended and Restated Loan
and Security Agreement, shall constitute or be construed to operate as a
novation of the Original Loan Agreement, the indebtedness THG pursuant to the
Original Loan Agreement or any lien or security interest heretofore created
pursuant to the Original Loan Agreement, the Security Agreement (as therein
defined) or any other document creating or granting a lien or security interest
to Agent to secure any Obligations of THG or any other person under or in
connection with the credit accommodations extended pursuant to the Original Loan
Agreement. Borrowers and Bank intend that by the execution and delivery of this
Amended and Restated Loan and Security Agreement the terms of such credit
accommodations shall be modified, restated and replaced in their entireties, but
the indebtedness with respect thereto and such liens and security interests
heretofore created shall not be extinguished or satisfied. Accrued and unpaid
interest on the Advances under the Original Loan Agreement shall be due and
payable with the first payment of interest due on the Advances hereunder.
10.17 Joint and Several Liability; Limited Recourse. Each of Borrowers
agrees that it is jointly and severally liable with each other Borrower to Bank
for the payment and performance of the Obligations.
10.18 Survival. All covenants, conditions, agreements, representations and
warranties made herein and in the Other Agreements shall survive the execution
and delivery hereof and thereof, shall survive Closing and shall continue in
full force and effect until all Obligations have been paid in full and there
exists no commitment by Bank which could give rise to any Obligations.
10.19 Merger and Integration. This Agreement and the attached Schedules
and Exhibits contain the entire agreement of the parties hereto with respect to
the matters covered and the transactions contemplated hereby, and no other
agreement, statement or promise made by any party hereto, or by any employee,
officer, agent or attorney of any party hereto, which is not contained herein,
shall be valid or binding.
10.20 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument.
10.21 Headings. The headings and subheadings contained in the titling of
this Agreement are intended to be used for convenience only and shall not be
used or deemed to limit or diminish any of the provisions hereof.
-58-
<PAGE>
10.22 Recitals. The Recitals hereto are hereby incorporated into and made
a part of this Agreement.
[SIGNATURES CONTAINED ON THE FOLLOWING PAGE]
-59-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Agreement under seal as of the date first above written.
ATTEST/WITNESS: THE HUNTER GROUP, INC.
/s/ A. Scott Preston By: /s/ Terry L. Hunter (SEAL)
- ---------------------- ----------------------
Name: Terry L. Hunter
Title: President
THG CONSULTING INC.
/s/ Loren D. Burnett By: /s/ Terry L. Hunter (SEAL)
- ---------------------- ----------------------
Name: Terry L. Hunter
Title: President
THE HUNTER GROUP (SINGAPORE)
PTE LTD
/s/ A. Scott Preston By: /s/ Terry L. Hunter (SEAL)
- ---------------------- ----------------------
Name: Terry L. Hunter
Title: President
HUNTER CONSULTING ASSOCIATES,
PTY. LIMITED
/s/ A. Scott Preston By: /s/ Terry L. Hunter (SEAL)
- ---------------------- ----------------------
Name: Terry L. Hunter
Title: President
-60-
<PAGE>
HUNTER CONSULTING ASSOCIATES,
LIMITED
/s/ Loren D. Burnett By: /s/ Terry L. Hunter (SEAL)
- ---------------------- -----------------------
Name: Terry L. Hunter
Title: President
THE HUNTER GROUP
INTERNATIONAL, INC.
/s/ A. Scott Preston By: /s/ Terry L. Hunter (SEAL)
- ---------------------- -----------------------
Name: Terry L. Hunter
Title: President
BORROWERS
SIGNET BANK
/s/ ILLEGIBLE By: /s/ Warren F. Boutilier (SEAL)
- ---------------------- -----------------------
Warren F. Boutilier
Vice President
BANK
-61-
<PAGE>
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this 20th day of June, 1997, before me, the
subscriber, a Notary Public of the State of Maryland, personally appeared Terry
L. Hunter, who acknowledged himself/herself to be the President of The Hunter
Group, Inc., and that he/she, as such President, being authorized so to do,
executed the foregoing instrument for the purposes therein contained, by
signing in my presence the name of the corporation by himself/herself as Terry
L. Hunter.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Lynn C. Moler
----------------------
Notary Public
My Commission expires:
LYNN C. MOLER
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES: AUGUST 1, 1999.
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this 20th day of June, 1997, before me, the
subscriber, a Notary Public of the State of Maryland, personally appeared Terry
L. Hunter, who acknowledged himself/herself to be the President of THG
Consulting Inc., and that he/she, as such President, being authorized so to do,
executed the foregoing instrument for the purposes therein contained, by signing
in my presence the name of the corporation by himself/herself as Terry L.
Hunter.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Lynn C. Moler
----------------------
Notary Public
My Commission expires:
LYNN C. MOLER
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES: AUGUST 1, 1999.
-62-
<PAGE>
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this 20th day of June, 1997, before me, the
subscriber, a Notary Public of the State of Maryland, personally appeared Terry
L. Hunter, who acknowledged himself/herself to be the President of The Hunter
Group (Singapore) Pte Ltd, and that he/she, as such President, being authorized
so to do, executed the foregoing instrument for the purposes therein contained,
by signing in my presence the name of the corporation by himself/herself as
Terry L. Hunter.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Lynn C. Moler
----------------------
Notary Public
My Commission expires:
LYNN C. MOLER
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES: AUGUST 1,1999.
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this 20th day of June, 1997, before me, the
subscriber, a Notary Public of the State of Maryland, personally appeared Terry
L. Hunter, who acknowledged himself/herself to be the President of Hunter
Consulting Associates, PTY., Limited, and that he/she, as such President, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained, by signing in my presence the name of the corporation by
himself/herself as Terry L. Hunter.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Lynn C. Moler
----------------------
Notary Public
My Commission expires:
LYNN C. MOLER
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES: AUGUST 1,1997.
-63-
<PAGE>
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this 20th day of June, 1997, before me, the
subscriber, a Notary Public of the State of Maryland, personally appeared Terry
L. Hunter, who acknowledged himself/herself to be the President of Hunter
Consulting Associates, Limited, and that he/she, as such President, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained, by signing in my presence the name of the corporation by
himself/herself as Terry L. Hunter.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Lynn C. Moler
----------------------
Notary Public
My Commission expires:
LYNN C. MOLER
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES: AUGUST 1,1999.
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this 20th day of June, 1997, before me, the
subscriber, a Notary Public of the State of Maryland, personally appeared Terry
L. Hunter, who acknowledged himself/herself to be the President of The Hunter
Group International, Inc., and that he/she, as such President, being authorized
so to do, executed the foregoing instrument for the purposes therein contained,
by signing in my presence the name of the corporation by himself/herself as
Terry L. Hunter.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Lynn C. Moler
----------------------
Notary Public
My Commission expires:
LYNN C. MOLER
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES: AUGUST 1,1999.
-64-
<PAGE>
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this 20th day of June, 1997, before me, the
subscriber, a Notary Public of the State of Maryland, personally appeared Warren
F. Boutilier, who acknowledged himself to be the Vice President of Signet Bank,
and that he, as such, being authorized so to do, executed the foregoing
instrument for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Lynn C. Moler
----------------------
Notary Public
My Commission expires:
10-1-98
- ----------------------
-65-
<PAGE>
EXHIBIT A
AMENDED AND RESTATED NOTE
$8,000,000.00 Baltimore, Maryland
__________________, 1997
FOR VALUE RECEIVED, THE HUNTER GROUP, INC., a Maryland corporation, THG
CONSULTING INC., a corporation incorporated under the laws of Canada, THE HUNTER
GROUP (SINGAPORE) PTE LTD, a corporation incorporated under The Companies Act of
the Republic of Singapore, HUNTER CONSULTING ASSOCIATES, PTY. LIMITED, a
corporation organized under the laws of New South Wales, Australia, HUNTER
CONSULTING ASSOCIATES LIMITED, a corporation organized under the laws of Great
Britain, and THE HUNTER GROUP INTERNATIONAL, INC., a Delaware corporation (each
individually a "Maker" and collectively, "Makers"), jointly and severally
promise to pay to the order of SIGNET BANK, a Virginia banking corporation
("Bank"), the lesser of (i) the principal sum of $8,000,000.00, or (ii) the
aggregate principal amount advanced and outstanding under the "Loan" as defined
in that certain Amended and Restated Loan and Security Agreement of even date
herewith among Makers and Bank (the "Agreement"), together with interest on the
unpaid principal balance outstanding from time to time, all as hereinafter set
forth. Capitalized terms used in this Note which are not defined shall have the
meanings assigned to such terms in the Agreement.
Interest from the date hereof on the principal amount outstanding from
time to time until the occurrence of an Event of Default shall be payable at the
Non-Default Rate of Interest. At Bank's election after the occurrence of an
Event of Default until this Note is paid in full, interest on the principal
amount outstanding from time to time shall be payable at the Default Rate of
Interest; provided, however, that (a) interest shall not be payable at the
Default Rate of Interest until Bank shall have notified Makers of Bank's
election to charge the Default Rate of Interest, and (b) if the Event of Default
on which the charging of the Default Rate of Interest is based Shall be cured or
waived or otherwise discontinued, then and thereafter (until the occurrence of a
subsequent Event of Default) interest shall be payable at the Non-Default Rate
of Interest. From the date hereof, interest accrued shall be paid by Makers to
Bank on or before the first (1st) day of each month, commencing July 1, 1997.
Interest shall be calculated on a year of 360 days based upon the actual number
of days elapsed.
Principal shall be repaid from time to time as may be necessary to bring
the principal amount outstanding into conformity with Subsection 2.01 of the
Agreement. The entire amount of the unpaid principal balance, together with all
accrued and unpaid interest thereon, shall be due and payable on the Review
Date.
<PAGE>
Payments of both principal and interest shall be paid in lawful money of
the United States of America in immediately available funds at the principal
office of Bank or at such other place as Bank may from time to time designate.
If any payment of principal and/or interest due hereunder (excluding any
accelerated payments and payments due on the Review Date) is not paid within 15
days after its due date, Makers shall pay to Bank on demand a late charge equal
to 5% of the amount of such payment.
This Note may be prepaid in whole at any time or in part from time to time
without premium or penalty.
If any payment of principal or interest shall be due on a Saturday, Sunday
or any other day on which banking institutions in the State of Maryland are
required or permitted to be closed, such payment shall be made on the next
succeeding business day and such extension of time shall be included in
computing interest hereunder. All payments hereunder may, in Bank's sole
discretion, be applied first to the payment of outstanding late charges (if
any), then to accrued and unpaid interest and the balance to the payment of
principal.
If any payment of principal and/or interest due hereunder is not paid
within five (5) days after its due date then, and at any time thereafter, Bank
may declare the entire unpaid principal balance hereof, together with all
accrued and unpaid interest thereon, to be immediately due and payable. This
Note is given in replacement of that certain Promissory Note dated November 17,
1995, as amended, made by The Hunter Group, Inc. to the order of Bank (the
"Original Note"), and is given pursuant to the terms of the Agreement. The
execution of this Note and the replacement of the Original Note hereby shall not
constitute or act as a novation, satisfaction or extinguishment of the
indebtedness evidenced by the Original Note, and accrued and unpaid interest
under the Original Note shall be due and payable with the first payment of
interest due hereunder. The Agreement contains, among others, provisions for
securing this Note, for accelerating the maturity hereof upon the happening of
certain specified events and for the addition of additional Makers hereof by
endorsement hereof.
Makers jointly and severally agree to pay to Bank and reimburse Bank for
any and all reasonable costs and expenses, including reasonable attorney's fees
and court costs, if any, incurred by Bank in connection with the enforcement or
collection hereof, both before and after the commencement of any action to
enforce or collect this Note, but whether or not any such action is commenced by
Bank. Each Maker waives presentment, protest and demand, notice of protest,
notice of dishonor and nonpayment of this Note and expressly agrees that this
Note or any payment hereunder may be extended from time to time without in any
way affecting the liability of any Maker hereunder.
-2-
<PAGE>
Each Maker acknowledges and warrants that the debt evidenced hereby is a
"commercial loan" within the meaning of Title 12 of the Commercial Law Article
of the Annotated Code of Maryland (1990 ed.). Each Maker warrants that all loan
proceeds will be used solely to carry on a business or commercial enterprise,
and for such purposes as may be permitted under the Agreement.
The rights and remedies of Bank hereunder and under the Agreement shall be
cumulative and concurrent and may be pursued singularly, successively or
together at the sole discretion of Bank, and may be exercised as often as
occasion therefor shall occur, and the failure to exercise any such right or
remedy shall in no event be construed as a waiver or release of the same or any
other right or remedy.
Each Maker hereby authorizes any clerk of court or any attorney-at-law to
appear for such Maker before any court, having jurisdiction, within the United
States or elsewhere, upon and during the continuance of an Event of Default,
and, after one or more complaints filed, confess judgment against such Maker as
of any time after any sum is due hereunder (whether by demand, stated maturity,
acceleration or otherwise) for the unpaid balance of this Note and all sums due
in connection herewith, including principal, interest, fees, court costs, late
charges and expenses, together with attorneys' fees equal to fifteen percent
(15%) of the total amount then due, for collection and release of all errors,
and without stay of execution, and inquisition and extension upon any levy on
real estate is hereby waived and condemnation agreed to, and the exemption of
personal property from levy and sale is also hereby expressly waived, and no
benefit of exemption shall be claimed under any exemption law now in force or
which may be hereafter adopted. The foregoing authorities and powers to confess
judgment shall not be exhausted by one or more exercises of any of them or by
any imperfect exercise of any of them, shall not be extinguished by any judgment
entered because of any of them and may be exercised before, during or after
sale, liquidation or other disposition by Bank of any property directly or
indirectly securing this Note or exercise or enforcement by Bank of any other
right or remedy of Bank with respect hereto. Bank and Makers agree that any
agreement of such Maker contained in this Note to pay any costs or expenses,
including attorneys' fees and expenses, paid or incurred by Bank shall not be
merged into, or otherwise impaired by, any such judgment by confession, but Bank
shall not be entitled to recover on account of such costs or expenses any amount
in excess of the greater of (a) such costs or expenses included in any judgments
by confession (without duplication), or (b) such costs or expenses actually paid
or incurred by Bank. Notwithstanding the foregoing, Bank agrees that to the
extent Bank recovers an amount under this paragraph (or under Subsection 10.09
of the Agreement) for application to its attorney's fees which exceeds the
actual and reasonable attorney's fees incurred in connection therewith,
following the satisfaction of all other Obligations such excess amount shall be
refunded to Makers.
-3-
<PAGE>
This Note, having been executed and delivered under seal in the State of
Maryland, is to be governed by, construed under and enforced in all respects
according to the internal laws of the State of Maryland.
ATTEST/WITNESS: THE HUNTER GROUP, INC.
By: (SEAL)
- ----------------------- -----------------------
Name:
------------------
Title:
-----------------
THG CONSULTING INC.
By: (SEAL)
- ----------------------- -----------------------
Name:
------------------
Title:
-----------------
THE HUNTER GROUP (SINGAPORE)
PTE LTD
By: (SEAL)
- ----------------------- -----------------------
Name:
------------------
Title:
-----------------
HUNTER CONSULTING ASSOCIATES
PTY. LIMITED
By: (SEAL)
- ----------------------- -----------------------
Name:
------------------
Title:
-----------------
-4-
<PAGE>
HUNTER CONSULTING ASSOCIATES
LIMITED
By: (SEAL)
- ----------------------- -----------------------
Name:
------------------
Title:
-----------------
THE HUNTER GROUP
INTERNATIONAL, INC.
By: (SEAL)
- ----------------------- -----------------------
Name:
------------------
Title:
-----------------
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this ___ day of ______________, 1997, before me,
the subscriber, a Notary Public of the State of Maryland, personally appeared
____________________, who acknowledged himself/herself to be the _______________
of The Hunter Group, Inc., and that he/she, as such _______________, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained, by signing in my presence the name of the corporation by
himself/herself as ____________________.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
----------------------
Notary Public
My Commission expires:
- ----------------------
-5-
<PAGE>
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this __ day of __________________, 1997, before
me, the subscriber, a Notary Public of the State of Maryland, personally
appeared _______________________, who acknowledged himself/herself to be the
_______________ of THG Consulting Inc., and that he/she, as such
______________________, being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing in my presence the
name of the corporation by himself/herself as ___________________.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
----------------------
Notary Public
My Commission expires:
- ----------------------
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this ___ day of ____________, 1997, before me,
the subscriber, a Notary Public of the State of Maryland, personally appeared
__________________, who acknowledged himself/herself to be the _____________ of
The Hunter Group (Singapore) Pte Ltd, and that he/she, as such _______________,
being authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing in my presence the name of the corporation by
himself/herself as ________________________.
IN WITNESS WHEREOF, I hereunto set my hand and official seal
----------------------
Notary Public
My Commission expires:
- ----------------------
-6-
<PAGE>
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this ____ day of _________________, 1997, before
me, the subscriber, a Notary Public of the State of Maryland, personally
appeared ______________________, who acknowledged himself/herself to be the
________________of Hunter Consulting Associates, PTY., Limited, and that he/she,
as such ______________, being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing in my presence the
name of the corporation by himself/herself as _________________________.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
----------------------
Notary Public
My Commission expires:
- ----------------------
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this __ day of _____________, 1997, before me,
the subscriber, a Notary Public of the State of Maryland, personally appeared
___________________, who acknowledged himself/herself to be the _____________of
Hunter Consulting Associates, Limited, and that he/she, as such
__________________, being authorized so to do, executed the foregoing instrument
for the purposes therein contained, by signing in my presence the name of the
corporation by himself/herself as ________________________.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
----------------------
Notary Public
My Commission expires:
- ----------------------
-7-
<PAGE>
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this ___ day of ______________, 1997, before me,
the subscriber, a Notary Public of the State of Maryland, personally appeared
____________________, who acknowledged himself/herself to be the _____________
of The Hunter Group International, Inc., and that he/she, as such
________________, being authorized so to do, executed the foregoing instrument
for the purposes therein contained, by signing in my presence the name of the
corporation by himself/herself as ___________________________.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
----------------------
Notary Public
My Commission expires:
- ----------------------
-8-
<PAGE>
EXHIBIT B
AMENDMENT NO. [_] TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. [_] TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
is dated as of the ___ day of _________, 199__, by and among THE HUNTER GROUP,
INC., a Maryland corporation ("THG"), THG CONSULTING INC., a corporation
incorporated under the laws of Canada ("THG Canada"), THE HUNTER GROUP
(SINGAPORE) PTE LTD, a corporation incorporated under The Companies Act of the
Republic of Singapore ("THG Singapore"). HUNTER CONSULTING ASSOCIATES PTY.
LIMITED, a corporation organized under the laws of New South Wales, Australia
("THG Australia"), HUNTER CONSULTING ASSOCIATES LIMITED, a corporation organized
under the laws of Great Britain ("THG England"), and THE HUNTER GROUP
INTERNATIONAL, INC., a Delaware corporation ("THG International"), [(other
existing Borrowers) [("________" and THG Canada, THG Singapore, THG Australia,
THG England, THG International and [__________], collectively, the "Existing
Borrowers"), [____________] ("Additional Borrower"), and SIGNET BANK, a Virginia
banking corporation ("Bank").
RECITALS
Reference is made to that certain Amended and Restated Loan and Security
Agreement made as of [___________], 1997, as the same has been or may have been
heretofore amended, by and among Existing Borrowers and Bank (the "Loan
Agreement"), pursuant to which Bank extended credit to Existing Borrowers in the
aggregate principal amount of Eight Million Dollars ($8,000,000.00). Existing
Borrowers and Additional Borrower have requested that Additional Borrower be
added to the Loan Agreement as an additional Borrower, to the Note (as defined
in the Loan Agreement) as an additional maker, and to such of the Other
Agreements as an additional party as Bank may require.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
set forth herein, and such other consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. All capitalized terms not otherwise defined herein which are defined in
the Loan Agreement shall have the same meanings assigned to them in the Loan
Agreement.
<PAGE>
2. All references herein, in the Loan Agreement and in the Note to "this
Loan Agreement", "this Agreement", "the Loan Agreement" and "the Agreement"
shall mean and include the Loan Agreement as amended by this Amendment.
3. Schedule 4.16 to the Loan Agreement is hereby amended and restated in
its entirety in the form of Schedule 4.16 attached hereto.
4. For all purposes of the Loan Agreement, Additional Borrower shall be a
Borrower and "Borrowers" shall mean and include, jointly and severally,
individually and collectively, Existing Borrowers and Additional Borrower. By
the execution hereof, Additional Borrower hereby acknowledges and agrees that it
shall be bound (a) to pay and perform all of the obligations of a Borrower under
the Loan Agreement, the Note and the Other Agreements, and (b) by all
representations and warranties, covenants and other terms of the Loan Agreement,
the Note and the Other Agreements made by or binding upon a Borrower, each of
which Additional Borrower shall be deemed to make and/or assume as of the date
hereof. Without limitation of the foregoing, Additional Borrower hereby grants
to Bank a lien and continuing security interest in, and pledges and assigns to
Bank, the Collateral. Additional Borrower further agrees to execute such
financing statements, such other instruments and agreements as Bank may require
to further evidence or confirm the matters addressed in this Amendment.
5. Without limitation of the provisions of Paragraph 4 above, the
Additional Borrower hereby specifically represents and warrants to Bank that (a)
its only places of business are located at [_________________________] and its
chief executive office is located at [__________________], (b) it has not filed
any petition seeking or acquiescing in any reorganization arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
law relating to bankruptcy or insolvency, nor has any such petition been filed
against it, (c) no general assignment of its property has been made for the
benefit of creditors, and no receiver, master, liquidator or trustee has been
appointed for it or any of its property, (d) it is not insolvent, and the
consummation of the transactions contemplated by this Amendment shall not render
it insolvent, and (e) it has sufficient capital or net worth to meet its
obligations. The locations listed in clause (a) above are hereby include within
the meaning of "Business Premises."
6. WITHOUT LIMITATION OF THE WAIVERS MADE BY ALL AMENDMENTS TO AND/OR
ENDORSEMENTS OF THE NOTE AS PROVIDED THEREIN (EACH OF WHICH SHALL BE BINDING ON
ADDITIONAL BORROWER), Additional Borrower hereby waives notice of each and every
one of the following acts, events and/or conditions and agrees that, without
necessity for any express reservation of rights against Additional Borrower,
neither the occurrence or existence of any such act, event or condition, nor
Bank's commission
<PAGE>
of or omission to do any such act, event or condition, in any number of
instances shall in any way release, discharge, impair or diminish any
obligations or liability of Additional Borrower under the Note: (a) the
amendment, modification, renewal, extension or refinancing of, or the granting
by Bank of any indulgence of any nature with respect to, or the invalidity,
voidability, unenforceability, compromise, settlement, release, waiver,
discharge or impairment in whole or in part, of, the Note, the Loan Agreement or
any of the Other Agreements, any of the Obligations or any obligation of any
maker, guarantor, surety, endorser, indemnitor or other person primarily or
secondarily liable for or obligated upon any of the Obligations; (b) any defense
of any other Borrower to payment of the Obligations or any defense to payment of
the Obligations of any maker, guarantor, surety, endorser, indemnitor or other
person primarily or secondarily liable for or obligated upon any of the
Obligations; (c) the addition of any maker, guarantor, surety, endorser,
indemnitor or other person primarily or secondarily liable for or obligated upon
any of the Obligations; (d) assumption of any of the Obligations by any other
person, whether by assignment, sale, merger, consolidation, sublease, conveyance
or otherwise; (e) the institution of any suit, the obtaining of any judgment or
the exercise of any other right or remedy against any other Borrower or any
maker, guarantor, surety, endorser, indemnitor or other person primarily or
secondarily liable for or obligated upon any of the Obligations, Additional
Borrower hereby agreeing that if any of the Obligations are not paid when due
(whether by demand, stated maturity, acceleration or otherwise) or if a default
or an Event of Default under or as defined in the Loan Agreement or any of the
Other Agreements shall occur, legal proceedings to enforce payment under the
Note may be instituted and prosecuted against Additional Borrower without first
having recourse to any other available security or other available right or
remedy; (f) the sale, exchange, pledge, release, disposition, surrender, loss,
destruction, damage to or impairment of, any property now or hereafter directly
or indirectly securing any of the Obligations; (g) the creation, perfection,
continuation, amendment, modification, invalidity, voidability,
unenforceability, compromise, settlement, subordination, release, waiver,
discharge, impairment or loss of priority, in whole or in part, of, any security
interest, lien or assignment directly or indirectly securing any of the
Obligations; and (h) any other event, circumstance or condition other than
complete and irrevocable payment in full of the Obligations.
7. Except as amended hereby, the Loan Agreement shall remain unchanged,
and the Loan Agreement, as so amended, shall continue in full force and effect
in accordance with its terms.
8. The effectiveness of this Amendment shall be subject to the
satisfaction of the condition that there shall have been delivered to Bank,
appropriately completed and duly executed (when applicable), the following, each
in form and substance satisfactory to Bank: (a) an Endorsement to Amended and
Restated Note substantially in the form of Exhibit A hereto, appropriately
completed and duly executed by Borrowers; (b) a certificate of the Secretary of
<PAGE>
Additional Borrower (i) to the effect that resolutions in form and content
satisfactory to Bank authorizing the transactions contemplated hereby have been
duly adopted and remain in full force and effect, and (ii) certifying the names
and titles of the officers of Additional Borrower and their signatures; (c)
evidence satisfactory to Bank that all insurance coverages of Additional
Borrower and all insurance clauses or endorsements required pursuant to the Loan
Agreement and the Other Agreements in connection therewith are in effect,
together with copies of all insurance policies and endorsements; (d) a written
opinion of counsel to Borrowers, dated as of the effective date hereof and
addressed to Bank, relating to such matters in connection with the transactions
contemplated hereby as may be required by Bank; (e) such financing statements
and/or amendments to existing financing statements as may be required by Bank;
and (f) a written agreement of the owner and landlord of each business premises
of Additional Borrower and each storage location maintained by Additional
Borrower which is not owned by Additional Borrower consenting to Bank's security
interest and enforcement of Bank's rights in connection therewith.
9. By its execution hereof, Borrowers jointly and severally agree to pay
to Bank upon its demand all expenses, including reasonable attorneys' fees and
expenses, paid or incurred by Bank in connection with the preparation of this
Amendment and each and every one of the other documents and instruments required
by Bank in connection herewith. Borrowers further jointly and severally agree to
pay all expenses in connection with the filing or recordation of all financing
statements and other documents as may be required by Bank at the time of, or
subsequent to, the execution of this Amendment, including, without limitation,
all documentary stamps, recordation and transfer taxes, filing fees and other
costs and taxes incident to recordation of any document in connection herewith,
and, if any such expenses shall be paid or incurred by Bank, to pay to Bank upon
written demand the amount of such expenses.
10. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which, when so
executed and delivered, shall be an original, but all such counterparts shall
together constitute one and the same instrument.
11. The Recitals hereto and all of the terms of the Loan Agreement are
hereby incorporated into and made a part hereof as though fully set forth
herein.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment No. [__] to
Loan and Security Agreement to be duly executed under seal by their duly
authorized respective officers as of the day and year first above written.
ATTEST/WITNESS: THE HUNTER GROUP, INC.
By: (SEAL)
- ----------------------- -----------------------
Name:
------------------
Title:
-----------------
THG CONSULTING INC.
By: (SEAL)
- ----------------------- -----------------------
Name:
------------------
Title:
-----------------
THE HUNTER GROUP (SINGAPORE)
PTE LTD
By: (SEAL)
- ----------------------- -----------------------
Name:
------------------
Title:
-----------------
HUNTER CONSULTING ASSOCIATES
PTY LIMITED
By: (SEAL)
- ----------------------- -----------------------
Name:
------------------
Title:
-----------------
<PAGE>
HUNTER CONSULTING ASSOCIATES
LIMITED
By: (SEAL)
- ----------------------- -----------------------
Name:
------------------
Title:
-----------------
THE HUNTER GROUP
INTERNATIONAL, INC.
By: (SEAL)
- ----------------------- -----------------------
Name:
------------------
Title:
-----------------
(OTHER "EXISTING BORROWERS")
By: (SEAL)
- ----------------------- -----------------------
Name:
------------------
Title:
-----------------
("ADDITIONAL BORROWER")
By: (SEAL)
- ----------------------- -----------------------
Name:
------------------
Title:
-----------------
BORROWERS
<PAGE>
SIGNET BANK
By: (SEAL)
- ----------------------- -----------------------
Name:
------------------
Title:
-----------------
BANK
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this ____ day of _____________, 199_, before me,
the subscriber, a Notary Public of the State of Maryland, personally appeared
[______________], who acknowledged himself/herself to be the [______________] of
The Hunter Group, Inc., and that (s)he, as such [_____________], being
authorized so to do, executed the foregoing instrument for the purposes therein
contained, by signing in my presence the name of the corporation by
himself/herself as [_______________________].
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------
Notary Public
My Commission expires:
- ----------------------
<PAGE>
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this ____ day of _________________, 199_, before
me, the subscriber, a Notary Public of the State of Maryland, personally
appeared [ ____________], who acknowledged himself/herself to be the
[____________] of THG Consulting Inc., and that he/she, as such [____________],
being authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing in my presence the name of the corporation by
himself/herself as [_______________].
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-----------------------
Notary Public
My Commission expires:
- ----------------------
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this __ day of _______________, 199__, before me,
the subscriber, a Notary Public of the State of Maryland, personally appeared
[___________], who acknowledged himself/herself to be the [__________] of The
Hunter Group (Singapore) Pte Limited, and that he/she, as such [_____________],
being authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing in my presence the name of the corporation by
himself/herself as [____________].
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
------------------------
Notary Public
My Commission expires:
- ----------------------
<PAGE>
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this ____ day of _________________, 199_, before
me, the subscriber, a Notary Public of the State of Maryland, personally
appeared [___________], who acknowledged himself/herself to be the [__________]
of Hunter Consulting Associates PTY. Limited, and that he/she, as such
[_____________], being authorized so to do, executed the foregoing instrument
for the purposes therein contained, by signing in my presence the name of the
corporation by himself/herself as [_____________].
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
------------------------
Notary Public
My Commission expires:
- ----------------------
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this __ day of ______________, 199__, before me,
the subscriber, a Notary Public of the State of Maryland, personally appeared
[____________], who acknowledged himself/herself to be the [_____________] of
Hunter Consulting Associates Limited, and that he/she, as such [__________],
being authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing in my presence the name of the corporation by
himself/herself as [__________________].
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
---------------------
Notary Public
My Commission expires:
- ----------------------
<PAGE>
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this ____ day of _____________, 199__, before me,
the subscriber, a Notary Public of the State of Maryland, personally appeared
[____________________], who acknowledged himself/herself to be the
[______________________] of The Hunter Group International, Inc., and that
he/she, as such [______________], being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by signing in my
presence the name of the corporation by himself/herself as [_________________].
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
----------------------
Notary Public
My Commission expires:
- ----------------------
[INSERT ADDITIONAL NOTARY FORMS FOR OTHER "EXISTING BORROWERS']
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this ____ day of _____________, 199__, before me,
the subscriber, a Notary Public of the State of Maryland, personally appeared
[______________], who acknowledged himself/herself to be the [________________]
of [Additional Borrower], and that he/she, as such [________________], being
authorized so to do, executed the foregoing instrument for the purposes therein
contained, by signing in my presence the name of the corporation by
himself/herself as [_______________].
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
------------------------
Notary Public
My Commission expires:
- ----------------------
<PAGE>
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this ___ day of ______________, 199__, before me,
the subscriber, a Notary Public of the State of Maryland, personally appeared
[_____________], who acknowledged himself/herself to be the [_________________]
of Signet Bank, and that (s)he, as such, being authorized so to do, executed the
foregoing instrument for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-----------------------
Notary Public
My Commission expires:
- ----------------------
<PAGE>
EXHIBIT A
ENDORSEMENT OF PROMISSORY NOTE
(ALLONGE)
THIS ENDORSEMENT OF PROMISSORY NOTE ("Endorsement") is made as of
__________________, 199__, and is executed and delivered by
[____________________________], a [___________________] ("Additional Maker"), to
the order and for the benefit of SIGNET BANK ("Bank").
WITNESSETH:
WHEREAS, by certain Amended and Restated Note dated ____________________,
1997 (as the same has been and may hereafter be modified, renewed or extended,
and including all endorsements, substitutions and replacements thereof, the
"Note"), THE HUNTER GROUP, INC., a Maryland corporation, THG CONSULTING, INC., a
Canadian corporation, THE HUNTER GROUP, PTE LTD, a Singapore corporation, HUNTER
CONSULTING ASSOC., PTY, LTD, an Australian corporation, HUNTER CONSULTING
ASSOC., LTD, an English corporation, and THE HUNTER GROUP INTERNATIONAL, INC.],
a Delaware corporation, and [(other existing Borrowers)] (collectively,
"Existing Makers"), jointly and severally promised to pay to the order of Bank
the principal sum of Eight Million Dollars ($8,000,000.00), together with
interest on the unpaid principal balance outstanding from time to time at the
rate or rates set forth therein; and
WHEREAS, the Note was given pursuant to the terms of that certain Amended
and Restated Loan and Security Agreement of even date therewith (as the same has
been and hereafter may be amended, modified, extended, renewed or supplemented
from time to time, the "Agreement"), by and among Existing Makers and Bank; and
WHEREAS, by a certain Amendment No. [__] to Loan and Security Agreement of
even date herewith (the "Agreement Amendment"), Additional Maker has joined in
the execution of the Agreement as one of "Borrowers" thereunder; and
WHEREAS, pursuant to the Agreement Amendment, Additional Maker is required
to execute and deliver this Endorsement to Bank for attachment to the Note.
NOW, THEREFORE, in consideration of the premises Additional Maker hereby
joins in the execution of the Note and assumes joint and several liability for
the repayment thereof as a "Maker" thereunder.
<PAGE>
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Agreement.
IN WITNESS WHEREOF, Additional Maker has caused this Endorsement to be duly
executed by its duly authorized officer as of the day and year first above
written.
WITNESS/ATTEST: [_________________________]
By:
- ------------------------ ----------------------- (SEAL)
Name:
------------------
Title:
-----------------
-2-
<PAGE>
AMENDED AND RESTATED NOTE
$8,000,000.00 Baltimore, Maryland
June 20, 1997
FOR VALUE RECEIVED, THE HUNTER GROUP, INC., a Maryland corporation, THG
CONSULTING INC., a corporation incorporated under the laws of Canada, THE HUNTER
GROUP (SINGAPORE) PTE LTD, a corporation incorporated under The Companies Act of
the Republic of Singapore, HUNTER CONSULTING ASSOCIATES, PTY. LIMITED, a
corporation organized under the laws of New South Wales, Australia, HUNTER
CONSULTING ASSOCIATES LIMITED, a corporation organized under the laws of Great
Britain, and THE HUNTER GROUP INTERNATIONAL, INC., a Delaware corporation (each
individually a "Maker" and collectively, "Makers"), jointly and severally
promise to pay to the order of SIGNET BANK, a Virginia banking corporation
("Bank"), the lesser of (i) the principal sum of $8,000,000.00, or (ii) the
aggregate principal amount advanced and outstanding under the "Loan" as defined
in that certain Amended and Restated Loan and Security Agreement of even date
herewith among Makers and Bank (the "Agreement"), together with interest on the
unpaid principal balance outstanding from time to time, all as hereinafter set
forth. Capitalized terms used in this Note which are not defined shall have the
meanings assigned to such terms in the Agreement.
Interest from the date hereof on the principal amount outstanding from time
to time until the occurrence of an Event of Default shall be payable at the
Non-Default Rate of Interest. At Bank's election after the occurrence of an
Event of Default until this Note is paid in full, interest on the principal
amount outstanding from time to time shall be payable at the Default Rate of
Interest; provided, however, that (a) interest shall not be payable at the
Default Rate of Interest until Bank shall have notified Makers of Bank's
election to charge the Default Rate of Interest, and (b) if the Event of Default
on which the charging of the Default Rate of Interest is based shall be cured or
waived or otherwise discontinued, then and thereafter (until the occurrence of a
subsequent Event of Default) interest shall be payable at the Non-Default Rate
of Interest. From the date hereof, interest accrued shall be paid by Makers to
Bank on or before the first (1st) day of each month, commencing July 1, 1997.
Interest shall be calculated on a year of 360 days based upon the actual number
of days elapsed.
Principal shall be repaid from time to time as may be necessary to bring
the principal amount outstanding into conformity with Subsection 2.01 of the
Agreement. The entire amount of the unpaid principal balance, together with all
accrued and unpaid interest thereon, shall be due and payable on the Review
Date.
<PAGE>
Payments of both principal and interest shall be paid in lawful money of
the United States of America in immediately available funds at the principal
office of Bank or at such other place as Bank may from time to time designate.
If any payment of principal and/or interest due hereunder (excluding any
accelerated payments and payments due on the Review Date) is not paid within 15
days after its due date. Makers shall pay to Bank on demand a late charge equal
to 5% of the amount of such payment.
This Note may be prepaid in whole at any time or in part from time to time
without premium or penalty.
If any payment of principal or interest shall be due on a Saturday, Sunday
or any other day on which banking institutions in the State of Maryland are
required or permitted to be closed, such payment shall be made on the next
succeeding business day and such extension of time shall be included in
computing interest hereunder. All payments hereunder may, in Bank's sole
discretion, be applied first to the payment of outstanding late charges (if
any), then to accrued and unpaid interest and the balance to the payment of
principal.
If any payment of principal and/or interest due hereunder is not paid
within five (5) days after its due date then, and at any time thereafter, Bank
may declare the entire unpaid principal balance hereof, together with all
accrued and unpaid interest thereon, to be immediately due and payable. This
Note is given in replacement of that certain Promissory Note dated November 17,
1995, as amended, made by The Hunter Group, Inc. to the order of Bank (the
"Original Note"), and is given pursuant to the terms of the Agreement. The
execution of this Note and the replacement of the Original Note hereby shall not
constitute or act as a novation, satisfaction or extinguishment of the
indebtedness evidenced by the Original Note, and accrued and unpaid interest
under the Original Note shall be due and payable with the first payment of
interest due hereunder. The Agreement contains, among others, provisions for
securing this Note, for accelerating the maturity hereof upon the happening of
certain specified events and for the addition of additional Makers hereof by
endorsement hereof.
Makers jointly and severally agree to pay to Bank and reimburse Bank for
any and all reasonable costs and expenses, including reasonable attorney's fees
and court costs, if any, incurred by Bank in connection with the enforcement or
collection hereof, both before and after the commencement of any action to
enforce or collect this Note, but whether or not any such action is commenced by
Bank. Each Maker waives presentment, protest and demand, notice of protest,
notice of dishonor and nonpayment of this Note and expressly agrees that this
Note or any payment hereunder may be extended from time to time without in any
way affecting the liability of any Maker hereunder.
-2-
<PAGE>
Each Maker acknowledges and warrants that the debt evidenced hereby is a
"commercial loan" within the meaning of Title 12 of the Commercial Law Article
of the Annotated Code of Maryland (1990 ed.). Each Maker warrants that all loan
proceeds will be used solely to carry on a business or commercial enterprise,
and for such purposes as may be permitted under the Agreement.
The rights and remedies of Bank hereunder and under the Agreement shall be
cumulative and concurrent and may be pursued singularly, successively or
together at the sole discretion of Bank, and may be exercised as often as
occasion therefor shall occur, and the failure to exercise any such right or
remedy shall in no event be construed as a waiver or release of the same or any
other right or remedy.
Each Maker hereby authorizes any clerk of court or any attorney-at-law to
appear for such Maker before any court, having jurisdiction, within the United
States or elsewhere, upon and during the continuance of an Event of Default,
and, after one or more complaints filed, confess judgment against such Maker as
of any time after any sum is due hereunder (whether by demand, stated maturity,
acceleration or otherwise) for the unpaid balance of this Note and all sums due
in connection herewith, including principal, interest, fees, court costs, late
charges and expenses, together with attorneys' fees equal to fifteen percent
(15%) of the total amount then due, for collection and release of all errors,
and without stay of execution, and inquisition and extension upon any levy on
real estate is hereby waived and condemnation agreed to, and the exemption of
personal property from levy and sale is also hereby expressly waived, and no
benefit of exemption shall be claimed under any exemption law now in force or
which may be hereafter adopted. The foregoing authorities and powers to confess
judgment shall not be exhausted by one or more exercises of any of them or by
any imperfect exercise of any of them, shall not be extinguished by any judgment
entered because of any of them and may be exercised before, during or after
sale, liquidation or other disposition by Bank any property directly or
indirectly securing this Note or exercise or enforcement by Bank of any other
right or remedy of Bank with respect hereto. Bank and Makers agree that any
agreement of such Maker contained in this Note to pay any costs or expenses,
including attorneys' fees and expenses, paid or incurred by Bank shall not be
merged into, or otherwise impaired by, any such judgment by confession, but Bank
shall not be entitled to recover on account of such costs or expenses any amount
in excess of the greater of (a) such costs or expenses included in any judgments
by confession (without duplication), or (b) such costs or expenses actually paid
or incurred by Bank. Notwithstanding the foregoing, Bank agrees that to the
extent Bank recovers an amount under this paragraph (or under Subsection 10.09
of the Agreement) for application to its attorney's fees which exceeds the
actual and reasonable attorney's fees incurred in connection therewith,
following the satisfaction of all other Obligations such excess amount shall be
refunded to Makers.
-3-
<PAGE>
This Note, having been executed and delivered under seal in the State of
Maryland, is to be governed by, construed under and enforced in all respects
according to the internal laws of the State of Maryland.
ATTEST/WITNESS: THE HUNTER GROUP, INC.
/s/ A. Scott Preston By: /s/ Terry L. Hunter (SEAL)
- ---------------------- ----------------------
Name: Terry L. Hunter
Title: President
THG CONSULTING INC.
/s/ A. Scott Preston By: /s/ Terry L. Hunter (SEAL)
- ---------------------- ----------------------
Name: Terry L. Hunter
Title: President
THE HUNTER GROUP (SINGAPORE)
PTE LTD
/s/ A. Scott Preston By: /s/ Terry L. Hunter (SEAL)
- ---------------------- ----------------------
Name: Terry L. Hunter
Title: President
HUNTER CONSULTING ASSOCIATES
PTY. LIMITED
/s/ A. Scott Preston By: /s/ Terry L. Hunter (SEAL)
- ---------------------- ----------------------
Name: Terry L. Hunter
Title: President
-4-
<PAGE>
HUNTER CONSULTING ASSOCIATES
LIMITED
/s/ A. Scott Preston By: /s/ Terry L. Hunter (SEAL)
- ---------------------- ----------------------
Name: Terry L. Hunter
Title: President
THE HUNTER GROUP
INTERNATIONAL, INC.
/s/ A. Scott Preston By: /s/ Terry L. Hunter (SEAL)
- ---------------------- ----------------------
Name: Terry L. Hunter
Title: President
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this 20th day of June, 1997, before me, the
subscriber, a Notary Public of the State of Maryland, personally appeared Terry
L. Hunter, who acknowledged himself/herself to be the President of The Hunter
Group, Inc., and that he/she, as such President, being authorized so to do,
executed the foregoing instrument for the purposes therein contained, by
signing in my presence the name of the corporation by himself/herself as Terry
L. Hunter.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Lynn C. Moler
----------------------
Notary Public
My Commission expires:
LYNN C. MOLER
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES: AUGUST 1, 1999
-5-
<PAGE>
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this 20th day of June, 1997, before me, the
subscriber, a Notary Public of the State of Maryland, personally appeared Terry
L. Hunter, who acknowledged himself/herself to be the President of THG
Consulting Inc., and that he/she, as such President, being authorized so to do,
executed the foregoing instrument for the purposes therein contained, by signing
in my presence the name of the corporation by himself/herself as Terry Hunter.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Lynn C. Moler
----------------------
Notary Public
My Commission expires:
LYNN C. MOLER
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES: AUGUST 1, 1999
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this 20th day of June, 1997, before me, the
subscriber, a Notary Public of the State of Maryland, personally appeared Terry
L. Hunter, who acknowledged himself/herself to be the President of The Hunter
Group (Singapore) Pte Ltd, and that he/she, as such President, being authorized
so to do, executed the foregoing instrument for the purposes therein contained,
by signing in my presence the name of the corporation by himself/herself as
Terry L. Hunter.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Lynn C. Moler
----------------------
Notary Public
My Commission expires:
LYNN C. MOLER
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES: AUGUST 1, 1999
-6-
<PAGE>
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this 20th day of June, 1997, before me, the
subscriber, a Notary Public of the State of Maryland, personally appeared Terry
L. Hunter, who acknowledged himself/herself to be the President of Hunter
Consulting Associates, PTY., Limited, and that he/she, as such President, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained, by signing in my presence the name of the corporation by
himself/herself as Terry L. Hunter.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Lynn C. Moler
----------------------
Notary Public
My Commission expires:
LYNN C. MOLER
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES: AUGUST 1, 1999
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this 20th day of June, 1997, before me, the
subscriber, a Notary Public of the State of Maryland, personally appeared Terry
L. Hunter, who acknowledged himself/herself to be the President of Hunter
Consulting Associates, Limited, and that he/she, as such President, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained, by signing in my presence the name of the corporation by
himself/herself as Terry Hunter.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Lynn C. Moler
----------------------
Notary Public
My Commission expires:
LYNN C. MOLER
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES: AUGUST 1, 1999
-7-
<PAGE>
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this 20th day of June, 1997, before me, the
subscriber, a Notary Public of the State of Maryland, personally appeared Terry
L. Hunter, who acknowledged himself/herself to be the President of The Hunter
Group International, Inc., and that he/she, as such President, being authorized
so to do, executed the foregoing instrument for the purposes therein contained,
by signing in my presence the name of the corporation by himself/herself as
Terry L. Hunter.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Lynn C. Moler
----------------------
Notary Public
My Commission expires:
LYNN C. MOLER
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES: AUGUST 1, 1999
-8-
<PAGE>
EXHIBIT 10.04(b)
AMENDMENT NO. 1 TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
("Amendment No. 1") is made as of the 30th day of September, 1997, by and
among THE HUNTER GROUP, INC., a Maryland corporation ("THG"), THG CONSULTING
INC., a corporation organized under the laws of Canada ("THG Canada"), THE
HUNTER GROUP (SINGAPORE) PTE LTD, a corporation incorporated under The
Companies Act of the Republic of Singapore ("THG Singapore"), HUNTER
CONSULTING ASSOCIATES, PTY. LIMITED, a corporation organized under the laws
of New South Wales, Australia ("THG Australia"), HUNTER CONSULTING
ASSOCIATES, LIMITED, a corporation organized under the laws of Great Britain
("THG England"), and THE HUNTER GROUP INTERNATIONAL, INC., a Delaware
corporation ("THG International," and THG Canada, THG Singapore, THG
Australia, THG England and THG International collectively, "Affiliate
Borrowers" and each individually an "Affiliate Borrower," and THG and
Affiliate Borrowers collectively, "Borrowers," and each individually a
"Borrower"), and SIGNET BANK, a Virginia banking corporation ("Bank").
RECITALS
Reference is made to that certain Amended and Restated Loan and Security
Agreement made as of June 20, 1997, by and among Borrowers and Bank (the
"Loan Agreement"), pursuant to which Bank extended credit to Borrowers in an
aggregate principal amount not to exceed Eight Million Dollars
($8,000,000.00). In order to amend the Loan Agreement as provided herein, the
parties hereto have entered into this Amendment No. 1.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, and such other consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. All capitalized terms not otherwise defined herein which are defined
in the Loan Agreement shall have the same meanings assigned to them in the
Loan Agreement.
2. All references herein, in the Loan Agreement and in the Note to
"this Loan Agreement", "this Agreement", "the Loan Agreement" and "the
Agreement" shall mean and include the Loan Agreement as amended by this
Amendment No. 1.
<PAGE>
3. The definition of "Maximum Loan Amount" is hereby amended by
amending the final sentence thereof to read in its entirety as follows:
Notwithstanding the foregoing, but subject to the terms of the
Closing Agreement, upon the giving to Bank of not less than ten (10)
days written notice prior to the first day of any calendar month
commencing on or after July 1, 1997, Borrowers may elect to limit the
Maximum Loan Amount during such month to the lesser of (x) the amount
determined under clause (b)(i), or (y) $6,000,000.00 or $7,000,000.00
(as indicated by Borrowers in such notice); provided, however, that
from and after the Initial Public Offering or the Private Equity
Offering (as defined in Subsection 6.17(a) hereof), the Maximum Loan
Amount shall be the lesser of (1) the amount determined under clause
(b)(i), or (2) $8,000,000.00.
4. The following defined term is hereby added to Section 1 of the Loan
Agreement in the alphabetically correct location"
"Initial Public Offering" shall mean the initial public offering
of the common stock of THG.
5. Subsection 6.15 of the Loan Agreement is hereby amended to read in
its entirety as follows:
6.15 Tangible Net Worth. (a) Maintain Consolidated Tangible Net
Worth of not less than (i) $25,000.00 as of September 30, 1997; (ii)
$225,000.00 as of December 31, 1997, and March 31, 1998, (iii)
$400,000.00 as of June 30, 1998, (iv) $2,000,000.00 as of September 30,
1998, and (v) $4,500,000.00 as of December 31, 1998, and at all times
thereafter; provided, however, that from and after the consummation of
the Initial Public Offering, Borrowers shall maintain Consolidated
Tangible Net Worth of not less than $15,000,000.00. Compliance with the
provisions of this Subsection 6.15(a) shall be measured as of the end
of each quarterly accounting period of Borrowers, commencing with the
quarterly accounting period ending September 30, 1997.
-2-
<PAGE>
(b) Maintain a ratio of Consolidated Liabilities to
Consolidated Tangible Net Worth of not greater than 7.0 to 1
commencing December 31, 1998, and at all times thereafter;
provided, however, that from and after the consummation of the
Initial Public Offering, Borrowers shall maintain a ratio of
Consolidated Liabilities to Consolidated Tangible Net Worth of not
greater than 2.0 to 1. Compliance with the provisions of this
Subsection 6.15(b) shall be measured as of the end of each
quarterly accounting period of Borrowers.
6. Subsection 6.16 of the Loan Agreement is hereby amended to read in its
entirety as follows:
6.16 Net Income. Realize positive Consolidated Net Income for each
quarterly accounting period of Borrowers, commencing with the quarterly
accounting period ending December 31, 1997.
7. Subsection 6.17(a) of the Loan Agreement is hereby amended to read in
its entirety as follows:
6.17 Additional Fees. (a) Pay to Bank (i) at Closing a fee (the
"Closing Fee") in the amount of $60,000.00, and (ii) on the first Banking
Day of each calendar month thereafter, a fee (the "Commitment Fee") in
the amount of three-quarters of one percent (0.75%) (the "Commitment Fee
Percentage") of the Maximum Loan Amount on such date (determined with
reference to the applicable fixed dollar amount expressed in the
"Maximum Loan Amount" definition and not the product of Acceptable
Receivables times the Receivables Loan Percentage); provided, however,
that if on or before February 28, 1998, THG has not consummated (A) a
private offering of stock and/or subordinated indebtedness of THG on
terms and conditions satisfactory to Bank resulting in the receipt by
THG of net proceeds after accounting for all costs of issuance of not
less than $10,000,000.00 (the "Private Equity Offering"), or (B) the
Initial Public Offering, the Commitment Fee Percentage shall immediately
be increased from three-quarters of one percent (0.75%) to one and
one-half percent (1.5%). Payment of the Closing Fee and the Commitment
Fees shall be in addition to the payment of all other fees and expenses
payable under this Agreement, including,
-3-
<PAGE>
without limitation, those fees and expenses payable pursuant to
Subsections 2.01(c) and 10.02 hereof. Subject to the provisions of
Subsection 6.17(b) and Subsection 6.17(c) below, the Closing Fee and
Commitment Fees shall be deemed to have been earned by Bank on the date
of payment and shall not be subject to refund or rebate by Bank.
8. Subsection 6.17(c) of the Loan Agreement is hereby
amended to read in its entirety as follows:
(c) Notwithstanding the provisions of Subsection
6.17(a) above, if Borrowers do not elect the Warrant Option
(as defined in Subsection 6.18 below) Borrowers' obligation to
pay certain Commitment Fees shall be suspended under the
circumstances described in this Subsection 6.17(c). If
Borrowers certify to Bank at any time, that Consolidated
Tangible Net Worth is equal to or greater than $10,000,000.00,
Borrowers' obligation to pay additional Commitment Fees shall
be suspended; provided,however, that if the monthly financial
statements of Borrowers delivered to Bank in accordance with
the provisions of Subsection 6.01(a) hereof for the last
month of the quarterly accounting period during which such
certification has been delivered to Bank indicate that as of
the last day of such monthly accounting period (A)
Consolidated Tangible Net Worth was less than $10,000,000.00,
or (B) the ratio of Consolidated Liabilities to Consolidated
Tangible Net Worth was greater than 2.5 to 1.0, Borrowers
shall upon the demand of Bank pay to Bank the Commitment Fees
which would have been payable but for such suspension, and the
obligation of Borrowers to pay future Commitment Fees shall
resume. Further, if the financial statements of Borrowers for
the last month of any quarterly accounting period thereafter
(a "Subsequent Calendar Quarter") indicate that as of the last
day of such monthly accounting period (A) Consolidated
Tangible Net Worth was less than $10,000,000.00, or (B) the
ratio of Consolidated Liabilities to Consolidated Tangible Net
Worth was greater than 2.5 to 1.0, Borrowers shall pay to Bank
upon demand the Commitment Fees which would otherwise have
been payable during such calendar quarter.
-4-
<PAGE>
9. Subsection 7.16 of the Loan Agreement is hereby amended to read
in its entirety as follows:
7.16 Dividends. Directly or indirectly declare or pay any
dividend on, or make any other distribution with respect to
(whether by reduction of capital or otherwise), any shares of its
capital stock; provided, however, that (a) any Affiliate Borrower
shall be permitted to declare and pay dividends to THG, and (b) if
(i) the Initial Public Offering has been consummated, and (ii) no
Default or Event of Default shall have occurred and be continuing,
or would exist after the declaration and payment thereof, THG may
declare and pay dividends on its common stock in any quarterly
accounting period in an aggregate amount which does not exceed
fifty percent (50%) of the net income of THG for the immediately
preceding quarterly accounting period.
10. Borrowers acknowledge and agree that Bank's prior written
consent to the Private Equity Offering shall be required; provided, however,
that such consent shall not unreasonably be withheld if prior to the
consummation thereof Borrowers and Bank shall have amended the Loan
Agreement to incorporate revised financial covenants satisfactory to Bank in
its sole and absolute discretion. Bank acknowledges that it has consented to
the Initial Public Offering in accordance with the provisions of a certain
letter to THG of even date herewith.
11. Borrowers and Bank acknowledge and agree that the Warrant
Option has expired without exercise by Borrowers.
12. Concurrently with the execution hereof, Borrowers shall pay to
Bank in consideration of Bank's execution hereof an Amendment Fee in the
amount of $30,000.00, which shall be in addition to all other fees and
expenses payable by Borrowers under the Loan Agreement. An additional fee in
the amount of $20,000.00 (which shall be in addition to all other fees and
expenses payable by Borrowers under the Loan Agreement) shall be payable by
Borrowers to Bank on or before November 30, 1997; provided, however, that
such additional fee shall not be payable if the Initial Public Offering shall
have been consummated on or before such date and no Default or Event of
Default shall have occurred and be continuing.
13. Except as amended hereby, the Loan Agreement shall remain
unchanged, and the Loan Agreement, as so amended, shall continue in full
force and effect in accordance with its terms.
14. This Amendment No. 1 may be executed in any number of
counterparts and by the different parties hereto on separate counterparts,
each of
-5-
<PAGE>
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument.
15. The recitals hereto and all of the terms of the Loan Agreement
are hereby incorporated into and made a part hereof as though fully set forth
herein.
[SIGNATURES CONTAINED ON THE FOLLOWING PAGE]
-6-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to
Amended and Restated Loan and Security Agreement to be duly executed under
seal by their duly authorized respective officers as of the day and year
first above written.
ATTEST/WITNESS: THE HUNTER GROUP, INC.
/s/ A. SCOTT PRESTON By: /s/ TERRY L. HUNTER (SEAL)
- -------------------- ----------------------
Name:
----------------
Title: President
---------------
THG CONSULTING INC.
/s/ A. SCOTT PRESTON By: /s/ TERRY L. HUNTER (SEAL)
- -------------------- ----------------------
Name:
----------------
Title: President
---------------
THE HUNTER GROUP (SINGAPORE)
PTE LTD
/s/ A. SCOTT PRESTON By: /s/ TERRY LEE HUNTER (SEAL)
- -------------------- ----------------------
Name:
----------------
Title: President
---------------
HUNTER CONSULTING ASSOCIATES,
PTY, LIMITED
/s/ A. SCOTT PRESTON By: /s/ TERRY L. HUNTER (SEAL)
- -------------------- ----------------------
Name:
----------------
Title: President
---------------
-7-
<PAGE>
HUNTER CONSULTING ASSOCIATES,
LIMITED
/s/ A. SCOTT PRESTON By: /s/ TERRY L. HUNTER (SEAL)
- --------------------- ---------------------
Name:
---------------
Title: President
---------------
THE HUNTER GROUP
INTERNATIONAL, INC.
/s/ A. SCOTT PRESTON By: /s/ TERRY L. HUNTER (SEAL)
- --------------------- ----------------------
Name:
----------------
Title: President
----------------
BORROWERS
SIGNET BANK
/s/ A. SCOTT PRESTON By: /s/ WARREN F. BOUSILIER (SEAL)
- --------------------- ------------------------
Warren F. Bousilier
Vice President
BANK
-8-
<PAGE>
Exhibit 10.05(a)
Agreement #: ______________
IMPLEMENTATION PARTNERS AGREEMENT
This agreement ("Agreement") is made as of the Effective Date by and between
PeopleSoft, Inc. ("PeopleSoft") a Delaware corporation having its principal
place of business at 1331 North California Boulevard, Walnut Creek, CA 94596
and The Hunter Group ("Implementor") a Maryland corporation having a place of
business at 11 E. Chase Street, Suite 8E, Baltimore, MD 21202.
The parties agree as follows:
1. Definitions
"Effective Date" means October 1, 1993.
"End Users" means only those end user customers of PeopleSoft who have
licensed the Software directly from PeopleSoft for internal use in the
Territory. End Users do not include entities with reseller or distribution
rights.
"Implementation Tools" shall consist only of software developed by
Implementor using the Software which Implementor utilizes solely in
connection with the provision of Services to End Users. Implementation Tools
do not include any PeopleSoft Software.
"Services" means the services provided by Implementor to assist End Users
with the planning for and implementation of the Software. *
"Software" means the software developed or licensed by PeopleSoft to
Implementor, including but not limited to the PS/HRMS product, PS/Financial
products and PeopleTools. Software is more fully described in Exhibit A-1.
"Term" means the period commencing on the Effective Date and ending * later.
"Territory" means only the United States and Canada.
2. Grant of License/Implementation Services to be provided
PeopleSoft grants Implementor a nonexclusive, nontransferable license,
pursuant to PeopleSoft's standard License Agreement incorporated as Exhibit
B, to use the Software to develop Implementation Tools solely in connection
with Implementor's provision of Services to End Users located in the
Territory. *
3. PeopleSoft's responsibilities
Upon Implementor's payment of the applicable fees specified hereunder,
PeopleSoft shall provide Implementor with the pertinent Software and shall
designate Implementor as a participant in PeopleSoft's Implementation Partner
Program.
Once PeopleSoft receives Implementor's detailed corporate overview document,
PeopleSoft shall prepare a one-page company standard profile containing
Implementor's marketing data. PeopleSoft shall provide this standard profile
to PeopleSoft's End Users and business prospects.
PeopleSoft shall permit Implementor to attend PeopleSoft's annual user
conference and participate in the product fair. Implementor shall be
responsible for its own costs.
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
- -------------------------------------------------------------------------------
Page 1 of 11
<PAGE>
PeopleSoft shall provide Implementor with access to PeopleSoft's Hotline
Technical Support toll-free number and service.
PeopleSoft shall provide Implementor with training for the Software in
accordance with its Implementation Partners Program *
PeopleSoft shall provide Implementor with *
4. Acquisition of Software licenses
Implementor acquires a license to use the Software solely in accordance with
PeopleSoft's standard License Agreement attached hereto as Exhibit B and made
a part hereof. The Software acquired is specified in the configurations and
at the license fees specified in Exhibit A. Implementor may be entitled to
apply license fees previously paid to PeopleSoft towards the license fees due
under this Agreement. The amount of the license fee credit, if any, shall be
listed in Exhibit A.
5. Representations and Disclaimers
*
6. Limitation of Liability
*
7. Independent Contractor Status
Implementor performs this Agreement as an independent contractor, not as an
employee of PeopleSoft. Nothing in this Agreement is intended to construe
the existence of a partnership, joint venture, or agency relationship between
Implementor and PeopleSoft.
8. Protection of Confidential Information
All information received by either party which concerns the parties nonpublic
business strategy, technical data, software designs, specifications, or
configurations shall be considered confidential, as will information which is
clearly marked "confidential." Both parties shall use reasonable commercial
efforts to refrain from disclosing such confidential information to anyone
but personnel working under this Agreement. Neither party shall have a
non-disclosure obligation with respect to information claimed to be
confidential or proprietary to the other in the event such information is
disclosed or released to the public through no fault of the other or which
was rightfully known by the other party prior to disclosure herein.
9. Termination
Either party may terminate this Agreement at any time after the Term by
giving the other party thirty (30) days written notice of termination. In the
event of termination within or on the last day of the Term, PeopleSoft's sole
obligation, provided such termination is not due to a breach by Implementor,
shall be to pay *
After the Term, this Agreement shall renew for additional *
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
- -------------------------------------------------------------------------------
Page 2 of 11
<PAGE>
In the event of a termination after the Term for any reason, PeopleSoft shall
have no obligation to return any portion of license fees previously paid by
Implementor.
10. General
This Agreement shall be governed by the laws of *. All
notices and demands shall be made in writing and delivered to the other party
at the respective address set forth above or as modified from time to time in
writing. If any provision of this Agreement is held to be unenforceable, the
other provisions shall nevertheless remain in full force and effect. This
Agreement is the entire understanding of the parties with respect to the
subject matter hereof and may only be amended or modified by a writing signed
by an authorized representative of each party. In the event of conflict
between the terms of this Agreement and License Agreement in Exhibit B
attached, this Agreement shall take precedence.
This Agreement is effective as of the Effective Date.
Implementor
The Hunter Group PeopleSoft, Inc.
/s/ Mary T. Weaver /s/ William J. Walsh
_________________________________ __________________________________
Authorized signature Authorized signature
/s/ Mary T. Weaver /s/ William J. Walsh
Senior Vice President Vice President of Account Services
_________________________________ __________________________________
Printed name and title Printed name and title
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
- -------------------------------------------------------------------------------
Page 3 of 11
<PAGE>
EXHIBIT A
Implementor's use of PeopleTools
- ---------------------------------
One (1) PeopleTools license will be provided with the Software acquired by
Implementor to enable Implementor to develop Implementation Tools only.
Implementor or its consultants shall not use PeopleTools software to develop
application software other than for use by their individual End Users for
their internal business purposes.
Implementation Partner Price List
---------------------------------
Implementor shall pay PeopleSoft the following license fees in accordance
with the software license attached hereto as Exhibit B, for the specific
Software products acquired by Implementor as set forth below:
*
/s/ Mary T. Weaver
------------------ --------------------
THG: Mary Weaver PS:
Sr. VP
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
- --------------------------------------------------------------------------------
Page 4 of 11
<PAGE>
Exhibit A-1
-----------
"Software" descriptions
------------------------
SQLBase LAN HRMS Product Definition:
- ------------------------------------
- HUMAN RESOURCES ("PS/HR"): Includes General Tables, Personnel
Administration, Recruitment, Position Management, Training and
Development, Health and Safety, Skills Inventory, Career Planning, and
EEO/Affirmative Action Planning. Also provides reference tables to define
benefit programs and plans, individual plan enrollment panels, and
capabilities to perform discrimination testing -- 401(k) and 401(m) -- and
identification of highly compensated employees.
- BENEFITS ADMINISTRATION ("PS/Benefits"): Includes customer-defined
eligibility criteria and enrollment rules, automatic election validation,
open enrollment management, event maintenance, and credit calculations.
- FLEXIBLE SPENDING ACCOUNT ADMINISTRATION ("PS/FSA"): Provides support for
Flexible Spending Account (FSA) administration. Includes capabilities for
FSA claims tracking and processing. Extensive editing is provided to ensure
funds are available and/or pledged and duplicate claims are not processed.
Check preparation for reimbursement is also supported.
- PAYROLL PROCESSING ("PS/Payroll"): Includes Employee Payroll Data, Pay
Process Tables, Paysheets, Paysheet Processing, Payroll Calculation,
Payroll Confirmation, Payroll Reporting, and Tax Reporting.
- EXTERNAL PAYROLL INTERFACE ("PS/Paylink"): Provides capabilities to allow
for the creation of an interface to external payroll systems. Includes
payroll panels and records required to calculate deductions and view
payroll balances. Also includes the Deduction Calculation program to
calculate both benefit and general deductions.
- PeopleTools
- OS/2 version of the SQLBase multi-user database
- One (1) LAN license to use SQR with licensed products on DOS workstations
- Access to the Product by ten (10) user workstations.
SQLBase Single-User HRMS Product Definition:
- --------------------------------------------
- HUMAN RESOURCES ("PS/HR"): Includes General Tables, Personnel
Administration, Recruitment, Position Management, Training and Development,
Health and Safety, Skills Inventory, Career Planning, and EEO/Affirmative
Action Planning. Also provides reference tables to define benefit programs
and plans, individual plan enrollment panels, and capabilities to perform
discrimination testing -- 401(k) and 401)m) -- and identification of
highly compensated employees.
- BENEFITS ADMINISTRATION ("PS/Benefits"): Includes customer-defined
eligibility criteria and enrollment rules, automatic election validation,
open enrollment management, event maintenance, and credit calculations.
- FLEXIBLE SPENDING ACCOUNT ADMINISTRATION ("PS/FSA"): Provides support for
Flexible Spending Account (FSA) administration. Includes capabilities for
FSA claims tracking and processing. Extensive editing is provided to
ensure funds are available and/or pledged and duplicate claims are not
processed. Check preparation for reimbursement is also supported.
- PAYROLL PROCESSING ("PS/Payroll"): Includes Employee Payroll Data, Pay
Process Tables, Paysheets, Paysheet Processing, Payroll Calculation,
Payroll Confirmation, Payroll Reporting, and Tax Reporting.
- EXTERNAL PAYROLL INTERFACE ("PS/Paylink"): Provides capabilities to
allow for the creation of an interface to external payroll systems.
Includes payroll panels and records required to calculate deductions and
view payroll balances. Also includes the Deduction Calculation program to
calculate both benefit and general deductions.
- PeopleTools
- OS/2 version of the SQLBase single-user database
- One(1) single-user license to use SQR with the licensed Product
SQLBase LAN Financials Product Definition:
- ------------------------------------------
- --------------------------------------------------------------------------------
Page 5 of 11
<PAGE>
- General Ledger, Accounts Receivable, Accounts Payable, and Asset
Management application product.
- PeopleTools
- PS/n Vision
- OS/2 version of the SQLBase multi-user database
- One (1) LAN license to use SQR with licensed products on DOS workstations
- Access to the Product by ten (10) user workstations.
SQLBase Single-User Product Definition:
- ---------------------------------------
- General Ledger, Accounts Receivable, Accounts Payable, and Asset
Management application product.
- PeopleTools
- PS/n Vision
- OS/2 version of the SQLBase single-user database
- One (1) single-user license to use SQR with licensed Product
- --------------------------------------------------------------------------------
Page 6 of 11
<PAGE>
EXHIBIT B
LICENSE AGREEMENT
This License Agreement ("License Agreement") is part of the Implementation
Partners Agreement between PeopleSoft, Inc. and THE HUNTER GROUP
("Implementor").
PeopleSoft grants Implementor a non-exclusive, non-transferable license to
use the Product solely for use in connection with Implementor's
responsibilities under the Implementation Partners Agreement between the
parties. Implementor shall pay PeopleSoft the license fees set forth in
Exhibit A to the Implementation Partners Agreement.
A. License
*
B. Term
This License Agreement shall remain in force until the Implementation
Partners Agreement is terminated. Either party has the right to terminate
this Licence Agreement if the other party is in breach of their material
obligations under this License Agreement, which breach is incapable of cure
or which, being capable of cure, has not been cured within *
after receipt of written notice of such breach from the non-breaching party
or within such additional cure period as the non-breaching party may
authorize. Implementor agrees, upon such termination, *
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
- -------------------------------------------------------------------------------
Page 7 of 11
<PAGE>
C. Fees
1. Implementor agrees to pay PeopleSoft *
2. All fees and payments are in U.S. dollars.
D. Limited Warranty; Limitation of Liability
*
E. Infringement Indemnity
*
F. General Indemnity
*
G. Title
1. Title and ownership rights to the Product shall remain with the
respective manufacturers.
2. Implementor agrees the Product is or contains manufacturer's proprietary
information and trade secrets, whether or not any portion thereof may be
copyrighted or patented.
3. Implementor agrees that modification s by Implementor to the HRMS
Products, however extensive, shall not reduce PeopleSoft's title and
ownership rights in that Product.
4. PeopleSoft warrants that it has the right to license and distribute any
of the Products identified in Exhibit A of the Implementation Partners
Agreement.
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
- -------------------------------------------------------------------------------
Page 8 of 11
<PAGE>
H. Nondisclosure
1. Implementor agrees to take all reasonable steps necessary to ensure the
Product, or any portion thereof, in any form, is not made available or
disclosed by Implementor or by any of Implementor's employees to any other
person.
2. Implementor agrees to take appropriate action, whether by instruction,
agreement or otherwise, and whether with Implementor's employees or others,
to ensure the protection, confidentiality and security of, and to satisfy
Implementor's obligations under this License Agreement with respect to the
use, confidentiality and copying of the Product.
I. Taxes
*
J. Product Maintenance
PeopleSoft will provide Implementor with Product Maintenance Service
("Service") described in Schedule I attached to this License Agreement.
This Service is comprise of the changes to the Product which PeopleSoft
undertakes in the course of its general modification and/or enhancement
activities. This Service shall be provided by PeopleSoft *
K. General
If any of the provisions, or portions thereof, of this License Agreement are
invalid under any applicable statute or rule of law, they are to that extent
to be deemed omitted. This License Agreement shall be governed by the laws
of the *. Should litigation arise concerning this License
Agreement, the prevailing party shall be entitled to its attorney's fees and
court costs, in addition to any other relief it may be awarded. The
preprinted terms and conditions of any purchase order or ordering document
issued by Implementor in connection with this License Agreement which are in
addition to or inconsistent with the terms and conditions of t his License
Agreement shall not be binding on PeopleSoft and shall not be deemed to
modify this License Agreement.*
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
- -------------------------------------------------------------------------------
Page 9 of 11
<PAGE>
SCHEDULE 1 TO LICENSE AGREEMENT
PRODUCT MAINTENANCE SERVICE
PeopleSoft will provide Product Maintenance Service (hereafter "Service")
which is comprised of *. Service includes the
following:
*
Significant improvements and corrections will be distributed on a continuous
basis; upgraded versions of the Product, which incorporate the improvements
and corrections as well as enhancements, will be distributed on a scheduled
basis. Documentation revisions and additions will be delivered to reflect the
current versions of the Product.
*
Implementor's changes to the Product which are authorized by the terms of the
License Agreement or otherwise consented to by PeopleSoft do not invalidate
this Service agreement; however, it is Implementor's responsibility to ensure
there are adequate controls on its modifications so as not to preclude or
impede the effectiveness of this Service.
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
- --------------------------------------------------------------------------------
Page 10 of 11
<PAGE>
SCHEDULE 2 TO LICENSE AGREEMENT
Terms and conditions for PeopleSoft PS/Forum ("PS/Forum") as part of Product
Maintenance Service ("Service"):
1. Implementor has the right to access the PS/Forum system as long as
Implementor remains a subscriber to Service and has executed the PS/Forum
License Agreement. PeopleSoft agrees to have PS/Forum available 24 hours
per day, except for scheduled backups and occasional maintenance.
Implementor agrees to provide all equipment or software and to pay any
telephone charges necessary to access PS/Forum. Implementor is provided
with one copy of Lotus Notes-TM- as part of Service. Implementor agrees to
install this software on a single machine. The Lotus Notes program
constitutes copyrighted and proprietary information of Lotus. Implementor
may copy Lotus Notes for backup purposes only. Implementor shall not
alter, modify, or adapt Lotus Notes, including but not limited to
translating, decompiling, disassembling or creating derivative works.
2. PROPRIETARY RIGHTS: PeopleSoft retains all and exclusive rights to all
material entered by PeopleSoft into PS/Forum. In the event that
PeopleSoft issues maintenance releases and program fixes available
through PS/Forum, Implementor shall access only those programs that are
applicable to the Products Implementor has licensed in the License
Agreement. Implementor may only access the information in PS/Forum that is
deemed appropriate at the sole discretion of PeopleSoft. Information that
is retrieved through PS/Forum is considered PeopleSoft proprietary and
confidential and must be treated as such. Implementor agrees not to
reproduce, redistribute, retransmit, publish, or otherwise convey this
information except within Implementor's company and other licensed
PeopleSoft customers.
3. *
4. GRANT OF RIGHTS TO PEOPLESOFT: PeopleSoft shall have the non-exclusive
right to publish and distribute worldwide through PS/Forum, in all
languages, and in association with Implementor's name, any material
(including software programs) entered by Implementor into PS/Forum.
5. *
6. *
7. *
8. This agreement is effective during the Service subscription period for
which Implementor has paid. Upon termination of the Service subscription
period, * By entering into this agreement, Implementor expressly acknowledges
that PS/Forum is provided by PeopleSoft for the convenience of its customers
and that nothing in this agreement obligates PeopleSoft to provide PS/Forum
or to continue its operation for any period of time. This agreement shall be
governed by the laws of the State of California. Implementor may not assign
or transfer this agreement. This agreement constitutes the entire
understanding between Implementor and PeopleSoft regarding PS/Forum. This
agreement may not be amended except in writing signed by both parties.
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
- --------------------------------------------------------------------------------
Page 11 of 11
<PAGE>
Exhibit 10.05(b)
FIRST AMENDMENT TO THE IMPLEMENTATION PARTNERS AGREEMENT
BETWEEN
THE HUNTER GROUP AND PEOPLESOFT, INC.
This amendment ("Amendment") to the Implementation Partners Agreement dated
October 1, 1993 ("Agreement") is entered into by the parties as of the
Amendment Effective Date.
The parties agree as follows:
1. DEFINITIONS
-----------
Unless otherwise defined herein, capitalized terms used in this Amendment
shall have the same meaning as those used in the Agreement.
"First Amendment Effective date" means Oct 1, 1994.
2. ADDITIONAL SINGLE-USER SOFTWARE
-------------------------------
In consideration for Implementor's consulting services to PeopleSoft in the
testing of the PeopleSoft HRMS Release 4.0 testing, PeopleSoft grants
Implementor the following software licenses as follows:
Single-User Software Number of copies License Fees
-------------------- ---------------- ------------
HRMS 1 *
---------------- ------------
Financials
---------------- ------------
TOTAL: *
------------
3. PRODUCT MAINTENANCE FEES
------------------------
After the initial year of the Agreement, Implementor shall pay PeopleSoft a
technical support and maintenance fee for the software licensed under this
amendment as specified in Exhibit A of the Agreement.
4. PRECEDENCE
----------
In the event of conflict, this Amendment shall take precedence over the
Agreement. The Agreement and this Amendment are the entire agreement
concerning the subject matter hereof between the parties and all amendments
to this Amendment must be in writing and signed by the parties' authorized
signatories.
THE HUNTER GROUP PEOPLESOFT, INC.
/s/ Mary T. Weaver /s/ Robert D. Finnell
- ------------------------------------ -----------------------------------
Authorized Signature Authorized Signature
Mary T. Weaver Robert D. Finnell Corp. Counsel
Senior Vice President
- ------------------------------------ -----------------------------------
Printed Name and Title Printed Name and Title
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
[LETTERHEAD]
Exhibit 10.05(c)
August 25, 1994
Ms. Mary Weaver
The Hunter Group
11 E. Chase Street, Suite 8E
Baltimore, MD 21202
Re: Implementation Partners Agreement dated October 1, 1993 (the "Agreement")
Dear Ms. Weaver
On October 1, 1994, the Agreement between our respective companies will
expire. Based on the positive experiences with your company in the past, we
want your firm to continue to be an important part of PeopleSoft's business
strategy.
Please sign the two originals of this letter where noted if your firm wishes
to extend the term of the Agreement for an additional year. The terms and
conditions of the Agreement shall apply to this one year extension.
Any applicable license, documentation or support fees applicable to the
Agreement shall be billed to (and paid by) your firm upon the execution and
return of the document. Please send the executed letters to my attention at
the address set forth below. Your firm's copy of this letter will be returned
to you once we have completed our countersignature process along with an
invoice for applicable fees.
The extension of the Agreement shall commence upon the expiration of the
original term and expire one year thereafter on October 1, 1995.
If PeopleSoft does not receive an executed copy of this Agreement extension
from your firm within thirty (30) days of the initial expiration date of the
Agreement, your firm's name will be removed from PeopleSoft's list of
Implementation Partners and the Agreement is terminated. In the event of such
termination, all PeopleSoft software or documentation in your firm's
possession must be returned to my attention at the PeopleSoft Headquarters in
Walnut Creek, California.
Please feel free to contact me at (510) 274-9763 should you have any
questions or comments.
<TABLE>
Sincerely, Accepted and agreed to by: Accepted by PeopleSoft, Inc.
<S> <C> <C>
/s/ Rodylyn Dacanay /s/ Mary T. Weaver /s/ Robert D. Finnell
- ------------------- -------------------- ---------------------
Rodylyn Dacanay Authorized signature Authorized signature
Contracts Administrator
Mary T. Weaver, Sr. VP Robert D. Finnell
-------------------- ---------------------
Printed name and title Printed name and title
cc: Sebastian Grady 9/9/94 9 Sept 94
Geoff Wolfe -------------------- ---------------------
Date Date
</TABLE>
<PAGE>
Exhibit 10.05(d)
Third Amendment to the Implementation Partners Agreement
between
The Hunter Group and PeopleSoft, Inc.
This Third Amendment ("Amendment") to the Implementation Partners Agreement
dated October 1, 1993 ("Agreement") is made by and between PeopleSoft, Inc.
("PeopleSoft") having a place of business at 1331 North California Boulevard,
Walnut Creek, California 94596 and The Hunter Group, Inc. ("Implementor")
having an office at 100 East Pratt Street, Suite 1600, Baltimore, Maryland
21202.
Whereas the Agreement granted Implementor licenses to use a single user
version of HRMS and the LAN versions of HRMS and Financials;
Whereas, the parties entered into the First Amendment on October 1, 1994
whereby Implementor was granted a license to use a single user version of
HRMS Software;
Whereas, the partied entered into a Second Amendment via letter agreement
dated October 1, 1994 whereby the Agreement was extended an additional one
year term; and
Whereas, the parties wish to enter into this amendment to reflect the
additional support services that Implementor will require to receive
accreditation in Europe.
The parties agree as follows:
1. Definitions
Unless otherwise defined herein, capitalized terms used in this Amendment
shall have the same meaning as those used in the Agreement.
"Amendment Effective Date" means August 31, 1995.
2. Territory
Solely during the period from the Amendment Effective Date until one (1) year
thereafter, PeopleSoft extends the definition of territory to include Europe.
Territory shall mean only the United States, Canada and Europe.
3. European Software License and Support Fees
a. Software License for the UK version of PeopleSoft HRMS
PeopleSoft grants Implementor the following software licenses as follows:
SINGLE-USER UK VERSION OF HRMS SOFTWARE NUMBER OF COPIES LICENSE FEES
HRMS 3 *
Financials None *
TOTAL: *
The UK version of PeopleSoft HRMS includes only the following commercially
available modules: human resources and payroll interface. If and when other
HRMS modules are commercially available, Implementor shall receive such
modules as part of their license, provided Implementor is a subscriber to
Software Support Services.
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 1 of 2
<PAGE>
b. *
4. Support service renewal terms
After the initial year of this Amendment, Implementor shall pay PeopleSoft
Europe, *
5. Precedence
In the event of conflict, this Amendment shall take precedence over the
Agreement. The Agreement and this Amendment are the entire agreement
concerning the subject matter hereof between the parties and all amendments
to this Amendment must be in writing and signed by the parties' authorized
signatories.
THE HUNTER GROUP, INC. PEOPLESOFT, INC.
/s/ Terry L. Hunter /s/ Robert D. Finnell
_____________________________________ _____________________________________
Authorized Signature Authorized Signature
Terry L. Hunter Robert D. Finnell
_____________________________________ _____________________________________
Printed Name and Title Printed Name and Title
President & CEO Vice President-General Counsel
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 2 of 2
<PAGE>
Exhibit 10.05(e)
FOURTH AMENDMENT TO THE IMPLEMENTATION PARTNERS AGREEMENT
BETWEEN
THE HUNTER GROUP AND PEOPLESOFT, INC.
This amendment ("Fourth Amendment") to the Implementation Partners Agreement
dated October 1, 1993 ("Agreement") is entered into by the parties as of the
Amendment Effective Date.
The parties agree as follows:
1. Definitions
Unless otherwise defined herein, capitalized terms used in this Amendment
shall have the same meaning as those used in the Agreement.
"Fourth Amendment Effective Date" means October 13, 1995.
2. Additional Modules
Under the terms and conditions of the Agreement and at no additional license
fee, PeopleSoft grants Implementor a license for the following Software
modules:
Financials version 5.0: Project Costing and Billing
Distribution version 5.0: Purchasing and Inventory
These modules shall be used with the Software currently licensed by
Implementor through the Agreement and any subsequent amendments to the
Agreement as of this Amendment Effective Date. The database version of these
modules shall be the same as the database versions of Software currently
licensed by Implementor.
3. Precedence
In the event of conflict, this Fourth Amendment shall take precedence over
the Agreement. The Agreement and this Fourth Amendment are the entire
agreement concerning the subject matter hereof. All amendments to this Fourth
Amendment must be in writing and signed by the parties' authorized
representatives.
THE HUNTER GROUP PEOPLESOFT, INC.
/s/ Terry Hunter /s/ Robert D. Finnell
- ---------------------------------- -----------------------------------
Authorized Signature Authorized Signature
Terry Hunter, Robert D. Finnell
President and CEO Vice President-General Counsel
- ---------------------------------- -----------------------------------
Printed Name and Title Printed Name and Title
10/17/95
Page 1 of 1
<PAGE>
Exhibit 10.05(f)
Fifth Amendment to the Implementation Partners Agreement
between
The Hunter Group and PeopleSoft, Inc.
This Fifth Amendment ("Fifth Amendment") to the Implementation Partners
Agreement dated October 1, 1993 (Agreement") is made by and between
PeopleSoft, Inc. ("PeopleSoft") having a place of business at 4305 Hacienda
Drive, P.O. Box 9085, Pleasanton, California 94566 and The Hunter Group, Inc.
("Implementor") having an office at 100 East Pratt street, Suite 1600,
Baltimore, Maryland 21202.
The parties agree as follows:
1. Definitions
Unless otherwise defined herein, capitalized terms used in this Amendment
shall have the same meaning as those used in the Agreement.
"Fifth Amendment Effective Date" means May 8, 1996.
2. Territory
Solely during the period from the Fifth Amendment Effective Date until one
(1) year thereafter, PeopleSoft extends the definition of territory to
include Australia. Territory shall mean only the United States, Canada,
Europe and Australia.
3. Australian Software License Fees
PeopleSoft grants Implementor the following Software license as follows:
Single-User Australian version of HRMS Software # copies License Fees
- ----------------------------------------------- -------- ------------
PeopleSoft HRMS-Australian (Single User) version 4.21 4(four) $ *
-------
TOTAL SOFTWARE LICENSE FEES: $ *
-------
The Australian version of PeopleSoft HRMS includes only the following
commercially available application: Human Resources, Payroll, Benefits
Administration, FSA Administration. When other HRMS modules are commercially
available, Implementor shall receive such modules as part of its licensed
Software, provided Implementor is a then-current subscriber to Software
Support Services.
4. *
5. *
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 1 of 2
<PAGE>
4. Precedence
In the event of conflict, this Fifth Amendment shall take precedence over the
Agreement. The Agreement and this Fifth Amendment are the entire agreement
concerning the subject matter hereof between the parties and all amendments
to this Fifth Amendment must be in writing and signed by the parties'
authorized signatories.
THE HUNTER GROUP, INC. PEOPLESOFT, INC.
/s/ Mary T. Weaver /s/ Robert D. Finnell
- -------------------------- -----------------------
Authorized Signature Authorized Signature
Mary T. Weaver Robert D. Finnell
Senior Vice President Vice President-General Counsel
- -------------------------- ------------------------------
Printed Name and Title Printed Name and Title
Page 2 of 2
<PAGE>
Exhibit 10.05(g)
Sixth Amendment to the Implementation Partners Agreement
between
The Hunter Group, Inc. and PeopleSoft, Inc.
This Sixth Amendment ("Sixth Amendment") to the Agreement dated October 1,
1993 ("Agreement") is entered into by the parties as of the Sixth Amendment
Effective Date.
The parties agree as follows:
1. Definitions
Unless otherwise defined herein, capitalized terms used in this Sixth
Amendment shall have the same meaning as those used in the Agreement.
"Sixth Amendment Effective Date" means May 8, 1996.
2. Additional Software
Implementation may acquire additional licenses of the PeopleSoft Software
(defined in Exhibit One), at the per copy license fee(s) specified below. The
Software licenses specified below shall replace the Single User (U.S.) versions
of the same, licensed via previous Amendments to the Agreement.
- -------------------------------------------------------------------------------
SOFTWARE WORKSTATION # COPIES PER COPY LICENSE FEE
ACCESS
- -------------------------------------------------------------------------------
PeopleSoft HRMS LAN Oracle -- 1 *
Unlimited Users
- -------------------------------------------------------------------------------
PeopleSoft LAN Oracle -- 1 *
Financials Unlimited Users
- -------------------------------------------------------------------------------
PeopleSoft LAN Oracle -- 1 *
Distribution Unlimited Users
- --------------------------------------------------------------------------------
TOTAL FEES: *
- --------------------------------------------------------------------------------
3. Payment Terms
Implementor shall pay PeopleSoft the license fees set forth in section 2
entitled, "Additional Software" above.
Said fees are due *.
4. Product Maintenance
As specified in Exhibit A of the Agreement, Implementor shall pay PeopleSoft
a technical support and maintenance fee for the Software licensed under this
Sixth Amendment.
5. Precedence
In the event of conflict, this Sixth Amendment shall take precedence over the
Agreement. The Agreement and this Sixth Amendment are the entire agreement
between the parties concerning the subject matter hereof. All amendments to
this Sixth Amendment must be in writing and signed by both parties'
authorized signatories.
THE HUNTER GROUP, INC. PEOPLESOFT, INC.
/s/ Mary T. Weaver /s/ Jeffrey M. McCarthy
- -------------------------- -----------------------
Authorized signature Authorized signature
Mary T. Weaver, Sr. VP Jeffrey M. McCarthy,
Senior Vice President Corporate Counsel
- -------------------------- -----------------------
Printed name and title Printed name and title
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit One
Software Product Descriptions
PeopleSoft Financials consists of: PeopleSoft HRMS consists of:
- ----------------------------------- -----------------------------
PeopleSoft General Ledger PeopleSoft Human Resources
PeopleSoft Receivables PeopleSoft Benefits Administration
PeopleSoft Payables PeopleSoft FSA Administration
PeopleSoft Asset Management PeopleSoft Payroll
PeopleSoft Projects (formerly
Project Costing PeopleSoft Payroll Interface
PeopleSoft Budgets PeopleSoft Time and Labor
PeopleSoft Billing PeopleSoft Pension Administration
PeopleSoft Expenses Workstation Access (includes base
application access, QueryLink,
Crystal, Workstation SQR)
OS/2 version of the SQLBase One OS/2 version of the SQLBase
single-user database* One single-single user database*
user license to use SQR with
the licensed
Product* PeopleTools
PS/nVision
PeopleTools
PeopleSoft Distribution consists of: PeopleSoft Manufacturing consists of:
- ------------------------------------ -------------------------------------
PeopleSoft Purchase PeopleSoft Engineering
PeopleSoft Inventory PeopleSoft Bills and Routings
PeopleSoft Order Management PeopleSoft Enterprise Planning
PeopleSoft DRP PeopleSoft Production Management
PeopleSoft Product Configurator PeopleSoft Product Costing
One OS/2 version of the SQLBase One OS/2 version of the SQLBase
single-user database* database*
PeopleTools PeopleTools
*
* included only with single user-version of the Software
- -------------------------------------------------------------------------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit 10.05(h)
Seventh Amendment to the Implementation Partner Agreement
between
The Hunter Group, Inc. and PeopleSoft, Inc.
This Seventh Amendment ("Seventh Amendment") to the Implementation Partner
Agreement dated October 1, 1993 ("Agreement") is entered into by the parties
as of the Seventh Amendment Effective Date.
The parties agree as follows:
1. Definitions
Unless otherwise defined herein, capitalized terms used in this Seventh
Amendment shall have the same meaning as those used in the Agreement.
"Seventh Amendment Effective Date" means October 11, 1996.
2. Additional Software
Implementation Partner may acquire additional licenses of the PeopleSoft
Software at the per copy license fee(s) specified below. Exhibit One,
attached hereto, contains more detailed Software descriptions.
<TABLE>
<CAPTION>
SOFTWARE WORKSTATION ACCESS # COPIES PER COPY LICENSE
FEE
<S> <C> <C> <C>
People Soft Financial Single User (SQL Base) 1 *
for Public Sector
v 5.1
TOTAL FEES: *
</TABLE>
<TABLE>
<CAPTION>
SHIPPING INFORMATION BILLING INFORMATION SITE INFORMATION
<S> <C> <C>
Contact: Chris Scott Contact: Chris Scott Contact: Chris Scott
Address: 100 East Pratt Street, Suite 1600 Address: 100 East Pratt Street, Address: 100 East Pratt Street,
Baltimore, MD 21202 Baltimore, MD 21202 Baltimore, MD 21202
Phone: 410.576.1515 Phone: 410.576.1515 Phone: 410.576.1515
Fax: 410.752.2879 Fax: 410.752.2879 Fax: 410.752.2879
</TABLE>
3. Payment Terms
Implementation Partner shall pay PeopleSoft the license fees set forth in
section 2 entitled, "Additional Software" above. Said fees are due *.
4. Product Maintenance
Technical support shall be provided to Implementation Partner solely in
accordance with the terms of the Agreement.
5. Precedence
In the event of conflict, this Seventh Amendment shall take precedence over
the Agreement. The Agreement and, this Seventh Amendement are the entire
agreement between the parties concerning the subject matter hereof. All
amendments to this Seventh Amendment must be in writing and signed by both
parties' authorized signatories.
THE HUNTER GROUP, INC. PEOPLESOFT, INC.
/s/Mary T. Weaver /s/Robert D. Finnell
- -------------------------- ------------------------------
Authorized signature Authorized signature
Mary T. Weaver Robert D. Finnell
- -------------------------- ------------------------------
Printed name and title Printed name and title
Senior Vice President Vice President-General Counsel
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with The Securities and Exchange Commission.
<PAGE>
Exhibit One
Software Product Descriptions
PeopleSoft Financials for Public Sector (version 5.1) consists of:
------------------------------------------------------------------
PeopleSoft General Ledger for Public Sector
PeopleSoft Receivables for Public Sector
PeopleSoft Payables for Public Sector
PeopleSoft Purchasing for Public Sector
PeopleSoft Asset Management for Public Sector
PeopleSoft Projects for Public Sector
PeopleSoft Inventory for Public Sector
PeopleSoft Billing for Public Sector
One single-user license to use SQR with the licensed Product*
PS/n Vision
People Tools
____________________________________________
*included only with the Single-User version
<PAGE>
Exhibit 10.05(i)
Eighth Amendment to the
Implementation Partners Agreement
between
The Hunter Group, Inc. and PeopleSoft, Inc.
This Eighth Amendment to the Implementation Partners Agreement ("Amendment")
is made and entered into on January 8, 1997, ("Amendment Effective Date") by
and between PeopleSoft, Inc. ("PeopleSoft") and The Hunter Group, Inc.
("Licensee").
WITNESSETH:
THAT, for and in consideration of the mutual promises herein contained, and
other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties to this Amendment, intending to be legally bound,
hereby agree that the Implementation Partners Agreement between the parties,
dated October 1, 1993, ("Agreement") is amended to provide as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used in
this shall have the same meaning as those used in the Agreement.
2. Licensed Software.
<TABLE>
<CAPTION>
Software/Service (indicate specific Software modules Manufacturer Per Copy # Extended
or "full suite") Or Supplier License Fee Copies License Fee
<S> <C> <C> <C> <C>
PeopleSoft 6 HRMS Suite (LAN Version) Upgrade PeopleSoft, Inc. * 1 *
PeopleSoft 6 Financials Suite (LAN Version) Upgrade PeopleSoft, Inc. * 1 *
PeopleSoft 6 Distribution Suite (LAN Version) Upgrade PeopleSoft, Inc. * 1 *
PeopleSoft 6 HRMS Suite (Single User Version) Upgrade PeopleSoft, Inc. * 4 *
PeopleSoft 6 Financials for Public Sector Suite (Single PeopleSoft, Inc. * 1 *
User Version) Upgrade
TOTAL FEES $ *
</TABLE>
<TABLE>
<S> <C> <C> <C>
Database Version Operating System Hardware Model Single User(1) or LAN(2) Version
Oracle n/a n/a LAN
SQL Base n/a n/a Single User
</TABLE>
_____________________________
(1) The Single User Version of the Software is SQL Base database version, and
includes one (1) single user version of the SQL Base database. QueryLink,
Crystal and PS/n Vision, Operating System and Hardware Model information
is not required.
(2) The LAN version of the Software includes unlimited access to the Software,
QueryLink, Crystal, PS/n Vision and Workstation SQR.
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 1 of 2
<PAGE>
3. General Information.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
PRIMARY CONTACT BILLING INFORMATION SHIPPING/SITE INFORMATION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Contact: Chris Scott Contact: Same Contact: Barbara Bull
- -----------------------------------------------------------------------------------------------------------------------------------
Address: 100 East Pratt Street, Suite 1600 Address: Address: 100 East Pratt Street, Suite 1600
- -----------------------------------------------------------------------------------------------------------------------------------
Baltimore, MD 21202 , Baltimore, MD 21202
- -----------------------------------------------------------------------------------------------------------------------------------
Phone: (410) 576-1515 Phone: ( ) Phone: (410) 576-1515
- -----------------------------------------------------------------------------------------------------------------------------------
Fax: (410) 752-2879 Fax: ( ) Fax: (410) 752-2879
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4. Conflict. In the event of any conflicts or inconsistencies between the
provisions of this Amendment and the Agreement and/or any addenda thereto,
the provisions of this Amendment shall prevail. The remainder of the
Agreement shall remain in full force and effect, unamended.
ACCEPTED BY: ACCEPTED BY:
The Hunter Group, Inc. PeopleSoft, Inc.
/s/Christopher M. Scott /s/Emalee A. Bottini
- ---------------------------------- ---------------------------------------
Authorized Signature Authorized Signature
Christopher M. Scott, Vice President Emalee A. Bottini, Corporate Counsel
- ---------------------------------- ---------------------------------------
Printed Name and Title Printed Name and Title
Page 2 of 2
<PAGE>
Exhibit 10.05(j)
Ninth Amendment to the
Implementation Partners Agreement
between
The Hunter Group, Inc. and People Soft, Inc.
THIS Ninth Amendment to the Implementation Partners Agreement ("Amendment")
is made and entered into on February 26, 1997 ("Amendment Effective Date") by
and between PeopleSoft, Inc. ("PeopleSoft") and The Hunter Group, Inc.
(Licensee").
WITNESSETH:
THAT, for and in consideration of the mutual promises herein contained, and
other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties to this Amendment, intending to be legally bound,
hereby agree that the Implementation Partners Agreement between the parties,
dated October 1, 1993 ("Agreement") is amended to provide as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used
in this shall have the same meaning as those used in the Agreement.
2. Licensed Software.
<TABLE>
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Software/Service (indicate specific Software Database Per Copy # Total License
modules or "full suite")** Platform License Fee Copies Fee
- -------------------------------------------------------------------------------------------------------------------------
PeopleSoft 6 Financials Suite SQL Base (Single User) * 4 *
- -------------------------------------------------------------------------------------------------------------------------
PeopleSoft 6 Distribution Suite SQL Base (Single User) * 4 *
- -------------------------------------------------------------------------------------------------------------------------
TOTAL FEES: *
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* LAN versions are Unlimited Users.
** Please refer to attached Exhibit, Software Product Descriptions, for
details about software modules contained in each product description.
------------------------------------------------------------
Operating System Hardware Module
------------------------------------------------------------
n/a n/a
------------------------------------------------------------
Page 1 of 3
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
3. General Information
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
PRIMARY CONTACT BILLING INFORMATION SHIPPING/SITE INFORMATION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Contact: Tom Whartenby Contact: Same Contact: Barbara Bull
- -----------------------------------------------------------------------------------------------------------------------------------
Address: 100 East Pratt Street Address: Same Address: Same
- -----------------------------------------------------------------------------------------------------------------------------------
Baltimore, MD 21202 , Baltimore, MD 21202
- -----------------------------------------------------------------------------------------------------------------------------------
Phone: (410) 576-1515 Phone: ( ) Phone: ( )
- -----------------------------------------------------------------------------------------------------------------------------------
Fax: (410) 752-2879 Fax: ( ) Fax: ( )
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4. Conflict. In the event of any conflicts or inconsistencies between
the provisions of this Amendment and the Agreement and/or any addenda
thereto, the provisions of this Amendment shall prevail. The remainder of
the Agreement shall remain in full force and effect, unamended.
ACCEPTED BY: ACCEPTED BY:
The Hunter Group, Inc. PeopleSoft, Inc.
/s/Thomas W. Whartenby /s/Emalee A. Bottini
- ---------------------------------- ---------------------------------------
Authorized Signature Authorized Signature
Thomas W. Whartenby, Sr. Vice Pres. Emalee A. Bottini, Corporate Counsel
- ---------------------------------- ---------------------------------------
Printed Name and Title Printed Name and Title
Page 2 of 3
<PAGE>
Exhibit A
Software Product Description
PeopleSoft 6 Financials consists of:
-------------------------------------
PeopleSoft General Ledger
PeopleSoft Receivables
PeopleSoft Payables
PeopleSoft Asset Management
PeopleSoft Projects
PeopleSoft Budgets
PeopleSoft 6 Distribution consists of:
--------------------------------------
PeopleSoft Purchasing
PeopleSoft Inventory
PeopleSoft Billing
PeopleSoft Order Management
PeopleSoft Enterprise Planning
PeopleTools 6.01
----------------
(restricted development only)
SQLBase single-user database included with Single User Version
Workstation Access: base application access.
Workstation SQR, Crystal, QueryLink, PS/nVision
Page 3 of 3
<PAGE>
Exhibit 10.05(k)
Tenth Amendment to the
Implementation Patner Agreement
between
The Hunter Group, Inc. and PeopleSoft, Inc.
THIS Tenth Amendment to the Implementation Patner Agreement ("Amendment") is
made and entered into on June 20, 1997 ("Amendment Effective Date") by and
between PeopleSoft, Inc. ("PeopleSoft") and The Hunter Group, Inc.
("Licensee").
The parties hereby agree that the Implementation Patner Agreement between the
parties, dated October 1, 1993 ("Agreement") is amended to provide as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used
in this shall have the same meaning as those used in the Agreement.
2. Licensed Software. PeopleSoft grants Licensee a license to use the
following Software, pursuant to the terms and conditions of the Agreement, in
addition to the Software licensed under the Agreement.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Software/Service (indicate specific Software modules Database Per Copy No. Total License
or "full suite*)** Platform License Fee Copies Fee
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Manufacturing 6 suite Oracle (LAN) * 1 *
- -----------------------------------------------------------------------------------------------------------------------------
Manufacturing 6 suite SQLBase (Single User) * 1 *
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LICENSE FEE: *
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*LAN versions are Unlimited Users.
**Please refer to attached Exhibit, Software Product Descriptions, for
details about software modules contained in each product description.
3. Payment Terms. Licensee shall pay PeopleSoft *, if applicable, for the
Software licensed herein, due upon *. All fees are payable in U.S. dollars and
shall be sent to the attention of PeopleSoft's Accounts Receivable Department.
----------------------------------------------------------
Operating System Hardware Model
----------------------------------------------------------
N/A N/A
----------------------------------------------------------
4. General Information. The contact, billing and site information for the
Software is as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
PRIMARY CONTACT BILLING INFORMATION SHIPPING/SITE INFORMATION
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Contact: Steve Kinney Contact: Barbara Bull Contact: Barbara Bull
- ---------------------------------------------------------------------------------------------------------------
Address: 44 Montgomery Street Address: 100 East Pratt Street Address: 100 East Pratt Street
San Fransisco, CA 94104 Suite 1600 Suite 1600
Baltimore, MD 21202 Baltimore, MD 21202
- ---------------------------------------------------------------------------------------------------------------
Phone: 415-989-5333 Phone: 410-576-1515 Phone: 410-576-1515
- ---------------------------------------------------------------------------------------------------------------
Fax: 415-989-0137 Fax: 410-752-2879 Fax: 410-752-2879
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 1 of 3
<PAGE>
4. Conflict. In the event of any conflicts or inconsistencies between the
provisions of this Amendment and the Agreement and/or addenda thereto, the
provisions of this Amendment shall prevail. The remainder of the Agreement
shall remain in full force and effect, unamended.
ACCEPTED BY: ACCEPTED BY:
THE HUNTER GROUP, INC. PEOPLESOFT, INC.
/s/ LDB /s/ Emalee A. Bottini
____________________________________ ____________________________________
Authorized Signature Authorized Signature
Loren D. Burnett Emalee A. Bottini
Chief Financial Officer Sr. V.P. and Chief Financial Officer
- ------------------------------------ ------------------------------------
Printed Name and Title Printed Name and Title
Page 2 of 3
<PAGE>
Exhibit A
Software Product Descriptions(1)
PeopleSoft 6.1 Manufacturing consists of:
-----------------------------------------
Manufacturing
Bills and Routing
Cost Management
Production Planning(2)
Production Management(2)
PeopleTools 6.01
----------------
(restricted development only)
SQLBase single-user database is included with Single User Version
Workstation Access includes: base application access, Workstation SQR,
Crystal, QueryLink, PS/nVision
- -----------------------
(1) Unless specifically stated otherwise, all Software is delivered to
Licensee only if and when generally commercially available.
(2) The license for Production Planning and Production Management includes a
limited use license for Inventory and Manufacturing. Such limited use license
means that the Inventory and Manufacturing Software shall only be used in
order to access the features and functions of Production Planning and
Production Management.
Page 3 of 3
<PAGE>
[LETTERHEAD]
Exhibit 10.05(l)
November 10, 1995
Mary Weaver
The Hunter Group
100 E. Pratt Street
#1600
Baltimore, MD 21202
Re: Temporary Use Single User License
Dear Mary:
Upon execution of this letter as set forth below, this letter shall serve as
an amendment to the existing license agreement dated March 1, 1993 ("License
Agreement") between The Hunter Group ("Licensee") and PeopleSoft, Inc.
("PeopleSoft"). This amendment is effective as of the date of this letter.
The parties further agree as follows:
1. *, PeopleSoft shall provide Licensee with five (5) copies of the current
single-user SQLBase version of PeopleSoft Financials ("Single User Version")
for temporary use by Licensee pursuant to the License Agreement for a period
not to exceed * from the date that version 5 of the Software is
installed at Licensee's Site ("Temporary Use Period").
2. This Single User Version shall consist of the following components:
PeopleSoft 5 Financials
PeopleTools;
SQLBase database; and
SQR Report Writer.
3. *
Please have an authorized representative sign both originals and return the
originals to the Regional Counsel's attention at 1331 North California Blvd,
Suite 400, Walnut Creek, CA 94596. A fully executed original will be
forwarded to you after we complete our signature process.
Please contact me at (510) 295-9464 if you have any questions.
Sincerely, Acknowledged and agreed by the parties:
Anthony Damaschino /s/ Mary T. Weaver /s/ Robert D. Finnell
Manager, Special Projects -------------------------- ---------------------
Licensee Authorized PeopleSoft Authorized
Signature Signature
Robert D. Finnell
Vice President-General
Mary T. Weaver, Sr. VP Counsel
-------------------------- -----------------------
Printed Name and Title Regional Counsel
cc: Regional Counsel
Sebastian Grady APPROVAL STAMPED
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
<PAGE>
Exhibit 10.05(m)
[LETTERHEAD]
September 22, 1995
Mr. Terry Hunter, President
The Hunter Group, Inc.
100 East Pratt Street
Suite 1600
Baltimore, MD 21202
Re: Implementation Partners Agreement dated October 1, 1993 (the "Agreement")
Dear Terry:
On October 1, 1995, the Agreement between our respective companies will
expire. This annual agreement was extended last year for an additional one
year term. Based on the positive experiences with your company in the past we
want your firm to continue to be an important part of PeopleSoft's business
strategy.
Please sign the two originals of this letter where noted if your firm wishes
to extend the term of the Agreement for an additional year. The terms and
conditions of the Agreement shall apply to this one year extension. The
extension of the Agreement shall commence on October 1, 1995 and expire one
year thereafter on October 1, 1996.
Any applicable license, documentation or support fees applicable to the
Agreement shall be billed to (and paid by) your firm upon receipt of the
PeopleSoft invoice. Please send the executed letters to my attention at the
address set forth above. Your firm's copy of this letter will be returned to
you once we have completed our countersignature process.
If PeopleSoft does not receive an executed copy of this Agreement extension
from your firm within thirty (30) days of the initial expiration date of the
Agreement, your firm's name will be removed from PeopleSoft's list of
Implementation Partners and the Agreement is terminated. In the event of such
termination, all PeopleSoft software or documentation in your firm's
possession must be returned to my attention at the PeopleSoft Headquarters in
Walnut Creek, California.
Please feel free to contact me at (510) 274-9763 should you have any
questions or comments.
Sincerely, Accepted and agreed to by The Hunter Group, Inc.:
/s/ Rodylyn Dacanay /s/ Terry L. Hunter
- ------------------------ ---------------------------
Rodylyn Dacanay Authorized Signature
Contracts Administrator
Terry L. Hunter, President & CEO
---------------------------
Printed Name and Title
Oct. 3, 1995
---------------------------
Date
cc: Nancy Welch
Accepted and agreed to by PeopleSoft, Inc.
/s/ Robert D. Finnell
---------------------------
Authorized Signature
Robert D. Finnell
Vice President-General Counsel
---------------------------
Printed Name and Title
<PAGE>
[LETTERHEAD]
Exhibit 10.05(n)
Thomas Whartenby
The Hunter Group, Inc.
100 E. Pratt Street
Baltimore, MD 21202
Re: Implementation Partner Agreement dated October 1, 1993
Dear Tom:
On October 1, 1996, the above-referenced Agreement between our respective
companies expired.
Please sign this letter where noted if your company wishes to extend the term
of the Agreement for an additional nine months. The terms and conditions of
the Agreement shall apply to this eight month extension period.
Your company's copy of this letter will be returned to you once we have
completed our countersignature process.
The extension of the Agreement shall commence upon the expiration of the
original term and expire eight months thereafter on June 1, 1997.
If PeopleSoft does not receive an executed copy of this Agreement extension
from your company within thirty (30) days of the date of this letter, your
company's name will be removed from PeopleSoft's list of the Implementation
Partners and the Agreement is terminated. In the event of such termination,
all PeopleSoft software and documentation in your company's possession must
be returned to my attention at the PeopleSoft Headquarters in Pleasanton,
California.
This extension shall not be effective until authorized signatories of both
companies sign below.
Sincerely, Accepted and agreed to by:
/s/ Thomas W. Whartenby
-------------------------------
Authorized Signature
/s/ Jeff McClure Thomas W. Whartenby, SVP
- ------------------------------- -------------------------------
Jeff McClure Printed Name and Title
Service Partnerships Manager
Professional Services Group April 10, 1997
-------------------------------
Date
Accepted and agreed to by
PeopleSoft, Inc.:
/s/ Emalee A. Bottini
------------------------------
Authorized Signature
Emalee A. Bottini, Corp. Counsel
-------------------------------
Printed Name and Title
4/21/97
-------------------------------
Date
<PAGE>
Exhibit 10.05(o)
September 23, 1997
Steve Kinney
Director, PeopleSoft Alliance
The Hunter Group
44 Montomery Street
Suite 3360
San Francisco, CA 94104
RE: IMPLEMENTATION PARTNERS AGREEMENT DATED OCTOBER 1, 1993.
Dear Steve
On September 4, 1997 the Implementation Partners Agreement dated October 1,
1993 ("Agreement") between our respective companies expired.
Please sign this letter where noted if your firm wishes to extend the term of
the Agreement for an additional two months. The terms and conditions of the
Agreement shall apply to this two month extension.
Your firm's copy of this letter will be returned to you once we have
completed our countersignature process.
The extension of the Agreement shall be effective on September 4, 1997 and
expire two months thereafter on November 4, 1997. This extension shall not be
effective until authorized signatures of both companies sign below.
If PeopleSoft does not receive an executed copy of this Agreement from your
firm within thirty (30) days of the initial expiration date of this letter,
your firm's name will be removed from PeopleSoft's list of the Implementation
Partners and the Agreement is terminated. In the event of such termination,
all PeopleSoft software and documentation in your firm's possession must be
returned to my attention at the PeopleSoft Headquarters in Pleasanton,
California.
Sincerely, Accepted and agreed to by:
/s/ Thomas W. Whartenby
-----------------------------
Authorized Signature
/s/ Kathleen Marks Thomas W. Whartenby, SVP
-----------------------------
Kathleen Marks Printed Name and Title
Service Alliance Manager September 23, 1997
Professional Services Group -----------------------------
Date
Accepted and agreed to by PeopleSoft, Inc.
/s/ Jeff McClure
-----------------------------------
Authorized Signature
Jeff McClure, Dir. Service Manager
-----------------------------------
Printed Name and Title
9/4/97
------------------------------------
Date
<PAGE>
Exhibit 10.05(p)
LAWSON SOFTWARE
NON-EXCLUSIVE ENTERPRISE CONSULTING PARTNER AGREEMENT
This Non-Exclusive Enterprise Consulting Partner Agreement ("Agreement") is
entered into between Lawson Associates, Inc., dba Lawson Software ("Lawson"),
a Minnesota corporation with its principal offices located at 1300 Godward
Street, Minneapolis, Minnesota, 55413 and The Hunter Group, Inc., a Maryland
corporation, with its principal offices located at 100 East Pratt Street,
Suite 1600, Baltimore, MD 21202 ("Hunter"), (collectively, "the Parties").
The "Effective Date" shall mean the date when authorized representatives of
both Lawson and Hunter have signed this Agreement as indicated at the end of
this Agreement in the space marked "Date" below Lawson's signature to this
Agreement.
SECTION 1.0 Intent Of The Agreement.
It is Lawson's and Hunter's desire to increase services and product revenue
by developing a Lawson Software services practice, and to increase the
knowledge and experience base of Hunter's consultants with regard to Lawson's
products. Services included under this Agreement shall include, but not be
limited to, * ("Services").
SECTION 2.0 Conditions Of the Understanding.
2.1 Software License
Upon execution of a Lawson Non-Exclusive License Agreement for Business
Partners ("License"), for a single site, between the parties, Lawson shall
deliver to Hunter the Lawson software programs, the Lawson source or object
code related to those software programs, and the Lawson documentation
applicable to the software programs, necessary to provide the aforementioned
services for Lawson's Customers. The Lawson software programs, documentation,
and maintenance and support thereof shall be *
2.2 Software Support
*
2.3 Standard Education
2.3.1 Hunter shall commit to a minimum number of * consultants who
shall become trained on the Lawson Products within * of the
Effective Date of this Agreement. Training shall be offered at the facility
Lawson may designate and, on a best efforts basis, at a location convenient
to Hunter. Training shall be provided by Lawson to Hunter, at a Lawson site,
*
2.3.2 Should Hunter request training at an Hunter site, such training
shall be provided by Lawson *
2.3.3 If Hunter and Lawson determine that Lawson standard training
curricula are inappropriate for the purposes of Hunter, Lawson agrees to
assist Hunter in the development of curricula specific to Hunter's needs.
Such training shall be provided by Lawson to Hunter, at a Lawson site, *
2.4 Business Referrals
Both parties agree to include the other party, where appropriate and
practical, in opportunities involving each other's potential customers or
customers. Should either Party identify a potential customer for the other
Party's products or services, it is at the identifying Party's sole
discretion whether or not to notify the other Party regarding the potential
customer. Should the other Party be notified, it is at that Party's sole
discretion whether or not to pursue the opportunity.
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 1 of 5
<PAGE>
*
2.5 Prime/Subcontractor Relationship
Each Party normally shall contract for its own products or services directly
with the customer. In selected instances, a Party's customer may insist on
the other Party serving as the prime contractor (Prime). In these
circumstances the Prime shall contract for the products or services directly
with the customer and subcontract the applicable products or services to the
other Party (Subcontractor).
The Prime shall be entitled to an administrative and management fee (Prime
Contractor's Fee) equal to * per cent of the collected fees for the
subcontracted product or services. The Subcontractor's fees shall be paid out
of the proceeds actually received by the Prime and shall be due *
after the end of the month in which the proceeds were actually received
by the Prime. However, the responsibility and risk for payment shall remain
with the Subcontractor.
2.6 Marketing
Both Parties shall jointly approve a joint press release or any separate
press releases upon acceptance of this Agreement. For the purposes of
promoting the relationship between the Parties, Lawson shall develop, with
the assistance of Hunter, joint sales tools and marketing collateral, success
stories, best practices seminars, speaking engagements, etc. The extent of
Lawson's commitment to the marketing effort, financial or otherwise, shall be
based on mutually agreed upon marketing objectives.
Each Party shall participate in the other party's internal training and
promotional events to increase the awareness, knowledge and expertise of the
party's sales and consulting personnel.
2.7 Relationship Management
Each Party shall appoint a relationship manager ("Manager") who shall be
responsible for the coordination of the activities between the Parties. The
Managers shall also be responsible for the development of a joint marketing
plan ("Plan"). Such Plan to be completed and approved by both Parties within
sixty (60) days of the execution of this Agreement. The Managers shall meet
quarterly to discuss the Plan and to review programs previously implemented
as well as to assess new program opportunities with respect to the Plan.
2.8 Project Implementation
*
SECTION 3.0 Relationship Of The Parties.
The Parties shall act as independent contractors in the performance of this
Agreement. This Agreement does not create a legal partnership or joint
venture between the Parties hereto, or the relationship of employer and
employee or of principal and agent, and neither Party shall represent
otherwise to a third Party. Neither Party shall act as agent for or legal
partner of the other Party for any purpose whatsoever, and the employees of
one Party shall not be deemed to be employees of the other Party. Each Party
is solely responsible for establishing the prices for its own products,
services and associated deliverables.
Nothing in this Agreement shall be construed to grant either Lawson or Hunter
the right to make commitments of any kind for or on behalf of the other party
and neither Party shall have any power, right, or authority to bind the other
Party or to assume or to create any obligation or responsibility, whether
express or implied on the behalf of the other Party unless previously
authorized by such other Party in writing.
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 2 of 5
<PAGE>
SECTION 4.0 Indemnification And Liability Limit.
*
SECTION 5.0 Protection of Confidential Information.
The Parties acknowledge, understand and agree that, whether developed by
either Party or others employed by or associated with either Party, all
Confidential Information exchanged between the Parties or which may become
known by the Parties, is the exclusive and confidential property of the
originator of such Confidential Information and shall be at all times
regarded, treated and protected as such in accordance with this Agreement.
Failure to mark any writing confidential shall not affect the confidential
nature of such writing or the information contained therein.
SECTION 6.0 Term And Termination.
The term of this Agreement shall commence as of the Effective Date, and shall
continue uninterrupted unless sooner terminated by either of the Parties, in
writing, at least sixty (60) days prior to the termination date.
SECTION 7.0 Territory.
The territory under this Agreement shall be world-wide unless amended in an
addendum to this Agreement.
SECTION 8.0*
IN WITNESS WHEREOF, the Parties have accepted the terms of this Agreement as
of the Effective Date.
For LAWSON ASSOCIATES, INC. For
/s/ Mike Stringer /s/ Thomas W. Whartenby
- ---------------------------------- --------------------------------
(Authorized Signature) (Authorized Signature)
VP of Channels & Alliances Thomas W. Whartenby
- ---------------------------------- --------------------------------
(Printed Name) (Printed Name)
Mike Stringer Senior Vice President
- ---------------------------------- --------------------------------
(Title) (Title)
4/10/97 April 4, 1997
- ---------------------------------- --------------------------------
(Date) (Date)
Exhibit: Attached
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 3 of 5
<PAGE>
EXHIBIT A
CO-MARKETING CREDITS
1. CO-MARKETING CREDITS
--------------------
Hunter may, in the course of marketing or licensing its respective products
and services, identify a company which is not an existing licensee or
prospect of Lawson, or is not a subsidiary or affiliate of a licensee or
prospect of Lawson ("Candidate"). Hunter may notify Lawson's Strategic
Account Manager in writing of such Candidate, giving particulars as to the
name, title, telephone number and address of the Candidate, as well as the
potential area of interest and other pertinent information required on a
referral form similar to that attached to this Exhibit. Lawson shall have the
unqualified right to accept or reject a Candidate. *
2. PAYMENT
-------
*
THIS EXHIBIT DOES NOT GIVE EITHER PARTY ANY AUTHORITY TO MAKE REPRESENTATIONS
ON BEHALF OF OR BIND THE OTHER PARTY.
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 4 of 5
<PAGE>
REFERRAL FORM
FAX TO: Lawson Software Attn. Marty Frederick @ 612-379-7141
- --------------------------------------------------------------------------------
PROSPECT
-----------------------------------------------------------------
(Company)
- ------------------------------- ----------------------- ------ --------------
(Street) (City (State) (Zip Code)
- -------------------------------------- ----------------------------------------
(Telephone) (Fax)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECT CONTACT(S)
---------------------------- ----------------------------
(Name) (Title)
---------------------------- ----------------------------
(Name) (Title)
---------------------------- ----------------------------
(Name) (Title)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECT DEMOGRAPHICS
--------------- -------------------- -----------------------
(Annual Sales) (Number of Employees) (Industry Description)
Time Frame: 0-3 mos ( ) 3-6 mos ( ) 6-12 mos ( ) 12+mos ( )
Multi-National: Yes( ) No( ) Multi-Site: Yes( ) No( )
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REQUIRED APPLICATION(S)
---------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXISTING HARDWARE
------------------------------ -------------------------------
(Manufacturer) (Model)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPOSED HARDWARE
------------------------------ -------------------------------
(Manufacturer) (Model)
------------------------------ -------------------------------
(Manufacturer) (Model)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPOSED DATABASE(S)
--------------------- ------------------- -------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPETITORS
--------------------- ------------------- -------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMENTS
---------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REFERRED BY: ACCEPTED BY Lawson SOFTWARE INC.
-----------------------
(Company)
- --------------------------------------- ---------------------------------------
(Signature) (Signature)
- --------------------------------------- ---------------------------------------
(Printed Name) (Printed Name)
- --------------------------------------- ---------------------------------------
(Title) (Title)
Ext.
- --------------------- ----------------- ----------------------- ---------------
(Telephone) (Fax) (Telephone) (Fax)
- --------------------------------------- ---------------------------------------
(Date) (Date)
Page 5 of 5
<PAGE>
ADDENDUM
TO
LAWSON ENTERPRISE CONSULTING PARTNER AGREEMENT
This Addendum ("Addendum") modifies the Lawson Software Enterprise Consulting
Partner Agreement ("Agreement") entered into between Lawson Associates, Inc.
dba Lawson Software ("Lawson") and the undersigned, and is effective as of
the date signed by Lawson. All of the capitalized terms not otherwise defined
in this Addendum have the same respective meanings as contained in the
Agreement. The following sections or paragraphs replace or are in addition to
the respective sections or paragraphs contained in the Agreement. The
sections or paragraphs of the Agreement that are not expressly replaced by
this Addendum shall remain in effect pursuant to their terms.
1.0 Section 2.1 Of the Agreement shall be deleted in its entirety and
replaced with the following:
Upon execution of a Lawson Non-Exclusive License Agreement for Business
Partners ("License"), for a single site, between the Parties, Lawson shall
deliver to Hunter the software programs, the source or object code related to
those software programs, and the documentation applicable to the software
programs, for the current release of the products under the License. The
Lawson-owned software programs, documentation, and maintenance and support
thereof shall be *
2.0 The second paragraph of Section 2.4 of the Agreement shall be deleted in
its entirety; its related Exhibit A, and its attachment, shall be removed and
not considered part of the Agreement.
3.0 The second paragraph of Section 2.8 of the Agreement shall be deleted in
its entirety and replaced with the following two (2) paragraphs:
*
For LAWSON ASSOCIATES, INC. For
/s/ Mike Stringer /s/ Thomas W. Whartenby
- ---------------------------------- --------------------------------
(Authorized Signature) (Authorized Signature)
Mike Stringer Thomas W. Whartenby
- ---------------------------------- --------------------------------
(Printed Name) (Printed Name)
VP of Channels & Alliances Senior Vice President
- ---------------------------------- --------------------------------
(Title) (Title)
4/10/97 April 4, 1997
- ---------------------------------- --------------------------------
(Date) (Date)
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 1
<PAGE>
Exhibit 10.05(q)
CONSULTING SERVICE PROVIDER ("CSP")PROGRAM J.D. Edwards World Solutions Company
CSP AGREEMENT 8055 E. Tufts Avenue
Denver, Colorado 80237
CONSULTING FIRM The Hunter Group
_________________
ADDRESS 100 East Pratt Street, Suite 1600 Baltimore, MD 21201
_____________________________________________________
This Consulting Service Provider ("CSP") Program - CSP Agreement
("Agreement"), is made by and between J.D. Edwards World Solutions Company, a
Colorado corporation, ("J.D. Edwards"), and Consulting Firm, a __________/ /
corporation / /________________, in consideration of the mutual promises and
subject to the terms and conditions set forth herein.
WHEREAS, J.D. Edwards is in the business of licensing, servicing and
supporting computer software, and
WHEREAS, during the course of its business, Consulting Firm has occasion to
evaluate, design and install computer software systems to meet the
requirements of its clients and prospective clients, and
WHEREAS, J.D. Edwards and Consulting Firm wish to establish a non-exclusive
business relationship for the purpose of participating in joint marketing of
J.D. Edwards' products and related services and Consulting Firm's services to
targeted prospects and clients, and
WHEREAS, J.D. Edwards and Consulting Firm wish to provide complementary
professional services to J.D. Edwards' customers and to Consulting Firm's
clients and to increase business opportunities for both firms;
NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants and obligations set forth below, the parties make this Agreement.
This Agreement, including the Attachments, Addenda and Amendments, if any,
which are a part hereof, is a complete and exclusive statement of the
agreement between the parties, which supersedes all prior or concurrent
proposals and understandings, whether oral or written, and all other
communications between the parties relating to its subject matter. This
Agreement shall not be effective until executed by Consulting Firm and
accepted by an authorized representative of J.D. Edwards.
Accepted by J.D. Edwards World Solutions By execution, signer certifies
Company as of 24 July, 1997 that signer is authorized to
execute this Agreement on
behalf of Consulting Firm.
J.D. EDWARDS WORLD SOLUTIONS COMPANY CONSULTING FIRM
BY: BY:
/s/ Richard G. Snow, Jr. /s/ Thomas W. Whartenby
________________________________ __________________________
(Authorized Signature) (Authorized Signature)
Richard G. Snow, Jr. Thomas W. Whartenby
________________________________ __________________________
(Print Name) (Print Name)
Vice President, General Counsel Senior Vice President
________________________________ __________________________
(Title) (Title)
1
<PAGE>
CONSULTING SERVICE PROVIDER ("CSP") PROGRAM
CSP AGREEMENT
Terms and Conditions
1. LICENSE AGREEMENT
(A) This Agreement shall be valid only upon execution of the Consulting
Firm Software License Agreement ("License Agreement") between J.D. Edwards
and Consulting Firm.
(B) J.D. Edwards shall provide Consulting Firm with the Licensed
Products, as described in Schedule 1 of the License Agreement, and only for
the purposes set forth in this Agreement and the Software License Agreement.
The Licensed Products are not to be copied or used by Consulting Firm or used
by others without J.D. Edwards written permission except for Consulting
Firm's evaluation, training, backup, archival, and disaster recovery
purposes. The Licensed Products may be used by Consulting Firm for
demonstration purposes to prospects or customers only when a J.D. Edwards
representative is present for such demonstration. The Licensed Products may
be used only by Consulting Firm and entities under common control and
ownership with Consulting Firm but not for business processing for its own
account or for any commercial time sharing or service bureau or other rental
or sharing arrangement.
2. TERRITORY
This Agreement is valid for the Territory as specified in Schedule 1 -
Territory to this Agreement. Consulting Firm and J.D. Edwards agree to review
Schedule 1 - Territory on a quarterly basis from the date of execution of
this Agreement.
3. TERM AND TERMINATION
3.1 This Agreement shall commence upon execution and subject to the terms
and conditions of the License Agreement. This Agreement shall remain in
effect for a period of twenty-four (24) months ending on October 31 unless
terminated earlier as provided by this Agreement and the License Agreement.
The Agreement may be renewed upon the execution of an Addendum to the
Agreement indicating such a renewal with the term to be specified. This
Agreement may be terminated by either party, with or with cause, upon
issuance of sixty (60) days prior written notice to the other party.
3.2 *
4. PARITY
Consulting Firm shall develop and promote the J.D. Edwards relationship
in a manner consistent with that of similar relationships which Consulting
Firm may have with J.D. Edwards' competitors in Territory. Similarly, J.D.
Edwards shall develop and promote the relationship in a manner consistent
with that of other J.D. Edwards Consulting Service Providers in Territory.
5. USER GROUPS
J.D. Edwards shall invite Consulting Firm to participate in J.D.
Edwards' international user group conferences within the areas/countries
specified in Schedule 1. Consulting Firm will be charged the J.D. Edwards
Consulting Partner rate for these activities.
6. SERVICE ENGAGEMENTS
J.D. Edwards and Consulting Firm shall develop an annual business plan
under separate cover to address special cover to address specifics of
engaging each other in service contracts related to J.D. Edwards
implementations including but not limited to: *
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
2
<PAGE>
7. Training and Methodology
It is the intent of both parties to share knowledge of J.D. Edwards'
applications and certification curriculum. J.D. Edwards shall provide
training to Consulting Firm consultants on a space available basis in J.D.
Edwards' scheduled customer training classes * (see schedule 2).
Implementation approaches shall be developed on an engagement-by-engagement
basis.
8. Consultant Certification
To ensure uniform, high quality software-related services are
delivered to Customers, Consulting Firm's employees shall become certified in
J.D. Edwards' products and methodologies. Certification will consist of
successful completion of the Consulting Firm certification curriculum
discussed above (see schedule 3). Until proven competent in J.D. Edwards'
applications, Consulting Firm may be asked to provide consultants at a
reduced rate for a limited period to assist J.D. Edwards' employees on
customer engagements.
9. Fees
Consulting Firm will pay to J.D. Edwards * of any amounts invoiced for
Services related to the Licensed Products referenced in the Consulting Firm
License Agreement when Consulting Firm has been referred to that account by
J.D. Edwards. * For the purposes of this Agreement, Services shall mean
application and technical consulting directly associated with the
implementation of the Licensed Products, which shall exclude services
generally associated with management consulting such as but not limited to
business process improvement through (re) engineering and workflow design,
change management, strategic planning, vision development, vendor product
evaluation/selection and integration of third party vendor products.
10. Audit
*
11. Business Relationship
(A) This Agreement creates no relationship of joint venture,
partnership, or agency between the parties, and the parties acknowledge that
no other facts or relations exist that would create any such relationship.
This Agreement is only an expression of the general terms which form the
basis for a business relationship. Each party is not the agent of the other
party but is an independent contractor while performing its duties hereunder.
Neither party is granted any right or authority to assume or to create any
obligation or responsibility, express or implied, on behalf of or in the mane
of the other party or to bind the other party in any manner or thing
whatsoever.
(B) Neither party nor that party's agents, principals, officers,
directors, or employees are employees of the other party. Personnel supplied
by Consulting Firm whether to J.D. Edwards or J.D. Edwards' Customers will be
employees or contractors of Consulting Firm and will not hold themselves out
as employees of J.D. Edwards.
12. *
13. Arbitration
*
14. Limited Liability
*
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
3
<PAGE>
*
15. General
(A) The waiver of one breach hereunder shall not constitute the waiver
of any other or subsequent breach.
(B) All notices shall be in writing and sent by certified mail,
postage prepaid, return receipt requested to the address written above or
such other address as notified to the other party and such notice shall be
deemed to be made on the fifth day after such mailing.
(C) No amendments, modifications or supplements to this Agreement
shall be binding unless in writing and signed by both parties.
(D) No action, regardless of form arising out of this Agreement may be
brought by either party more than * after the cause of arbitration
or action arose.
(E) If any provision of this Agreement is held to be unenforceable,
such decision shall not affect the validity or enforceability of the
remaining provisions.
(F) This Agreement may be executed in two or more identical copies,
each of which shall be an original.
(G) In the event Consulting Firm issues a purchase order or other
instrument covering the subject matter of this Agreement, it is understood
and agreed that such purchase order is for Consulting Firm's internal use and
shall not affect this Agreement.
(H) Each of the parties shall be responsible for all of its own costs
and expenses associated with its performance of this Agreement, including
without limitation its employees' travel and other expenses.
(I) Neither this Agreement nor the performance by the parties
hereunder shall constitute or be deemed to be an endorsement or
recommendation of the products or services of either party. Neither party
shall make any press release or other public disclosure of this Agreement or
the terms hereof without the express written consent of the other.
(J) Consulting Firm shall not, in whole or in part, assign,
sublicense, or otherwise transfer this Agreement, the Licensed Products,
Licensed Products documentation, any copy of the foregoing, or any right
granted hereunder.
(K) All terms of this Agreement that by their nature may survive this
Agreement shall survive this Agreement.
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
4
<PAGE>
Schedule 1
Consulting Service Provider Agreement
Territory:
This Agreement applies to services activities of Consulting Partner in the
following Territory.
Geographic Area Definition:
United States, United Kingdom, Singapore, Canada
----------------------
- -------------------------------------------------------------------------------
5
<PAGE>
SCHEDULE 2
CONSULTING SERVICE PROVIDER AGREEMENT
(SUBJECT TO CHANGE BY J.D. EDWARDS)
I. CERTIFIED CONSULTANT REQUIREMENTS
Consulting Firm implementation personnel can become certified by meeting the
following requirements:
A. FIRST TIME CERTIFICATION (Suggested Sequence) These guidelines are for
each module that a consultant is attempting to be certified in.
1) Completion of required J.D. Edwards training classes (see Appendix B)
2) Completion of R.E.P. Methodology training class. If attendance at R.E.P.
Methodology training class was not in the past 12 months, candidate must
review the last release of R.E.P. Methodology.
3) Prior certification in any prerequisite products, if any (see appendix B).
4) A passing grade (80%) on level IV certification exam in the requested
certification area. The same certification exams are used for both
instructor and consultant certification. To take the exam, contact the
local training coordinator or training administrator.
5) Participation in two or ore client implementations through "Go Live" phase
as defined by the Senior Client Manager or Director of Client Services
(minimum 240 hours of consulting). The 240 consulting hours must be
obtained in the product area being certified.
6) Client engagements used for certification qualification must be live and
referenceable for the product area being certified. The client must have
rated J.D. Edwards at or above the level specified by the corporate goal,
or given an average rating of 2.2 or above (on a scale of 1 to 3) on the
"Client Project Evaluation Review" from our R.E.P. Methodology. Any
circumstances resulting in a customer satisfaction issue should be
explained by the Senior Client Manager or Director of Client Services.
7) The J.D. Edwards consultant must be recommended for certification by the
Director of Client Services or Director of Customer Support Services.
8) The Consulting Firm consultant must be approved for certification by the
Director of Client Services responsible for the Consulting Firm
relationship.
B. RECERTIFICATION
1) Participation in one or more client implementations in the specific
product area every 12 months. The 12-month time period will be based on
the date consultant certification was obtained for that area.
2) Attendance at new release training.
3) Attendance at new product training classes as currently required for
certification.
4) Continued certification in any prerequisite products.
5) Client engagements used for certification qualification must be live and
referenceable for the product area being certified. The client must have
rated J.D. Edwards at or above the level specified by the corporate goal,
or given an average rating of 2.2 or above (on a scale of 1 to 3) on the
"Client Project Evaluation Review" from our R.E.P. Methodology. Any
circumstances resulting in a customer satisfaction issue should be
explained by the Senior Client Manager or Director of Client Services.
6) The J.D. Edwards consultant must be recommended for certification by the
Director of Client Services or Director of Customer Support Services.
7) The Consulting Firm consultant must be approved for certification by the
Director of Client Services responsible for the Consulting Firm
relationship.
II. CONTINUING EDUCATION
A. A concept of "continuing education" will be utilized in the on-gong
maintenance of certification status. This will include advanced seminars,
training classes, new release software education, testing, etc. and will be
arranged by J.D. Edwards' consulting division.
B. Continuing education schedules will be predicated upon software changes,
industry developments, etc. and will be determined by J.D. Edwards'
Corporate Consulting Division.
III. ADMINISTRATION
A. J.D. Edwards will periodically survey its client base being supported by
the Consulting Firm to determine the constant use of, overall client
satisfaction with, and the success of "The R.E.P. Methodology". If the client
satisfaction of the Consulting Firm's clients fall below the minimum standard
set by J.D. Edwards, installer certification could be revoked. Failure to
meet any of the requirements outlined in this section could also result in
certification revocation.
B. J.D. Edwards will provide to the Consulting Firm a monthly listing of
completed and newly reported SARS. Completed SARS will be included in the
next PTF released by J.D. Edwards.
C. The Consulting Firm will be allowed to obtain all PTF's released by J.D.
Edwards. The Rolling Letter and any other documentation printed by J.D.
Edwards on PTF's or major releases will be provided to the Consulting Firm.
D. J.D. Edwards' Response Line is not a means of training for Consulting
Firms. Calls to the Response Line are tracked and any abusive situations will
be reported to the appropriate J.D. Edwards Consulting Firm representative.
6
<PAGE>
SCHEDULE 3
CONSULTING SERVICE PROVIDER AGREEMENT
(SUBJECT TO CHANGE BY J.D. EDWARDS)
Consulting Firm instructors must be certified by J.D. Edwards to teach a
particular product course. Included in this program is a certification
process that is to be used by Consulting Firms to develop and maintain
qualified instructors.
If the Consulting Firm does not have a certified instructor on staff, then a
certified J.D. Edwards instructor must assist with the Consulting Firm's
customer class where geographically and linguistically feasible. Our Area
Consulting Firm representative will decide if J.D. Edwards assistance is
geographically and linguistically feasible. The Consulting Firm will be
charged the certified instructor's client billing rate plus direct travel and
accommodation costs for customer attended classes.
I. APPROVED TRAINING MATERIALS
All J.D. Edwards training materials can be ordered from J.D. Edwards
Consulting Firm representative. J.D. Edwards is committed to provide the
Consulting Firm with the latest version of course materials. Each Consulting
Firm is entitled to receive "trainer toolkit" which includes an instructor
guide and Power Point presentation on diskette and student's manual ("Combo
Guide") for each product (current version) as authorized by J.D. Edwards
Consulting Firm representative. Consulting Firm must contact their J.D.
Edwards Consulting Firm representative to request a copy of the "trainer
toolkit" and student's manual ("Combo Guide") for each new version of the
software. A master copy manual fee will be charged for each manual plus
shipping. Additional copies may be purchased by Consulting Firm or
reproduced. Also included will be a copy of current version of the training
materials in a magnetic-media format. A program or alternative training
environment will also be provided to each Consulting Firm for training class
student and instructor environments for custom classes conducted at a
customer's site.
Consulting Firms are only authorized to reproduce copyrighted material for
use in standard J.D. Edwards training courses. None of this material should
be sold or given to customers not attending standard courses. Also, J.D.
Edwards approval must be obtained on any customization or changes made to the
training materials. This would include any internationalization or
translations required for conducting the class.
II INSTRUCTOR CERTIFICATION
REQUIREMENTS
Consulting Firm instructors can become certified initially by completing the
following steps
A. FIRST TIME CERTIFICATION
1. The candidate must teach 100% of the training material on the course
outline in a minimum of two classes, or teach 50% of the training
material on the course outline depending on the course (i.e. Employee
and Consulting Firm Training courses).
2. Classroom evaluations used for certification must average 4.0 (based on
5.0) overall in the instructor evaluation section.
3. The candidate must have attended the "Train the Trainer" course prior
to certification.
4. Candidate must have a minimum of 6 months experience with J.D. Edwards.
5. Response line or field experience (of 80 hours or more) in the area
requesting certification.
6. The candidate attends the course as a participant or observer.
7. If a Level IV is required, a passing grade on the Level IV exams must
be achieved in the area requesting certification. The same
certification exams are used for both instructor and consultant
certification. Minimum passing grade for U.S. and Canadian candidates
is 80% and for all others is 75%. To take the exams, contact your local
training coordinator or training administrator. **No exams are
currently required for the following courses: Beginning Microsoft
Excel, Intermediate Microsoft Excel, PC Workshops, Train the Trainer,
Intermediate Microsoft Word, Beginning Microsoft WinWord. (Consulting
Firms are eligible for certification in all of the above except R.E.P.
Methodology)
8. When a candidate is ready to be certified, the candidate must be
observed (one time only-applies to all courses) by a member of the
Training Department or a Certified Instructor. An instructor
Certification Candidate Evaluation form will be completed by observer
stating whether the candidate is ready to be certified. If a candidate
is not ready, the reasons will be stated, along with the additional
steps necessary for certification to be achieved.
9. The J.D. Edwards instructor must be recommended for certification by
the Director of Client Services, or Director of Customer Support
Services, or Director of Training.
10. The Consulting Firm instructor must be approved for certification by the
Director of Client Services responsible for the Consulting Firm
relationship.
B. RECERTIFICATION
1. Certification will be maintained by teaching the class at least once
every 12 months. The 12-month period will be based on the date that
course certification was obtained.
2. Intervals of required certification will be predicated upon significant
changes in the course material or software changes and will be
determined by the Director of Training, or Director of Client Services,
or Director of Customer Support of each vertical. Recertification will
most likely take the form of reviewing new material, product on new
functions and features, new release workshops, product testing, etc.
3. The J.D. Edwards instructor must be recommended for certification by
the Director of Client Services, or Director of Customer Support
Services, or Director of Training.
4. The Consulting Firm instructor must be approved for certification by
the director of Client Services responsible for the Consulting Firm
relationship.
C. CONTINUING EDUCATION
1. Certification will be maintained by teaching the class at least once
every twelve (12) months. The twelve (12) month time period will be based
on the date course certification was obtained.
2. Scheduling of continuing education will be predicated upon software
changes and will be determined by J.D. Edwards Corporate Training
organization. It will most likely take the form of product exams on new
functions and features, new
7
<PAGE>
SCHEDULE 3(CONT.)
CONSULTING SERVICE PROVIDER AGREEMENT
release workshops, product testing, class
attendance in restructured formats of courses, etc.
D. REVOCATION OF INSTRUCTOR CERTIFICATION
1. J.D. Edwards reserves the right to periodically survey the Consulting
Firm's clients. If the client satisfaction of the Consulting Firm's
clients falls below the minimum standards set by J.D. Edwards, then
instructor certification could be revoked. Also, failure to meet any of
the requirements outlined in this section, could result in certification
revocation.
III. TRAINING FEE POLICY
A. J.D. Edwards will absorb the cost of Consulting Firm tuition for
training on J.D. Edwards premises at regularly scheduled classes for the
purposes of this agreement.
B. If the Consulting firm does not show up for a scheduled training class
and has not informed J.D. Edwards of cancellation one week prior to the start
of the class, and J.D. Edwards was unable to fill the slot, then they will be
billed at the standard class rates. If the Consulting Firm cancels attendance
in a J.D. Edwards scheduled class up to one week prior to the start of the
class, they will not be billed.
C. Custom classes for Consulting Firm employees at the Consulting Firm's
site will be paid for by the Consulting Firm at * of the
instructor's client rate plus all direct expenses for travel and
accommodations. The Consulting Firm will also be charged for each training
manual provided to the Consulting Firm employees attending the class.
D. Custom classes for combination of Consulting Firm employees and
Consulting Firm client personnel or for client personnel only - same policy
will be paid for by the Consulting Firm at the instructor's full billing rate
plus all direct expenses for travel and accommodations. The instructor will
bill for preparation time (if applicable) as well as actual class time. The
Consulting Firm will also be charged for each training manual provided to the
students attending the class.
IV. TRAINING COMPENSATION SCHEDULE
A. When providing approved instructors or co-instructing on a
subcontract basis to J.D. Edwards, Consulting Firm will be compensated
according to the following schedule:
Certification Level Percent of Standard
Subcontract Rate per Hour(1)
Uncertified *
Less than 3.9 on
evaluation rating *
Passed Level IV exam and
taught 2 classes *
Less than 3.9 on
evaluation rating *
Certified *
Less than 3.9 on
evaluation rating *
(1) Percent of Standard Rate per Hour to be paid to Consulting Firm is based
on eight (8) hours per standard class day.
(2) Based on an average evaluation score of 3.9 for the individual
instructor. The average evaluation score will be calculated after removing
the highest and lowest ratings.
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
8
<PAGE>
Exhibit 10.05(r)
CONSULTING FIRM SOFTWARE J.D. Edwards World Solutions Company
LICENSE AGREEMENT 8055 East Tufts Avenue
Denver, Colorado 80237
Consulting Firm The Hunter Group
---------------------------------------------------
Address 100 East Pratt Street, Suite 1600
---------------------------------------------------
Baltimore, MD 21201
---------------------------------------------------
This Software License Agreement ("Agreement") is made by and between J.D.
Edwards World Solutions Company, a Colorado Corporation, ("J.D. Edwards"),
and Consulting Firm, a ______________ / / corporation / / _______________, in
consideration of the mutual promises and subject to the terms and conditions
set forth herein.
WHEREAS, J.D. Edwards is in the business of licensing, servicing and
supporting computer software systems, which are licensed from and developed
by J.D. Edwards World Source ("J.D. Edwards Source"), and
WHEREAS, during the course of its business, Consulting Firm has occasion to
evaluate, design and install computer software systems to meet the
requirements of its clients and prospective clients, and
WHEREAS, during the course of its business Consulting Firm has occasion
require the use of the J.D. Edwards' Products, in order to carry out the
Consulting Service Provider Agreement ("CSP Agreement"), and
WHEREAS, J.D. Edwards is willing to permit Consulting Firm, * on the terms and
conditions set forth below, to license J.D. Edwards' software.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and obligations set forth below, that J.D. Edwards licenses to
Consulting Firm and Consulting Firm accepts on the Terms and Conditions
attached the license of the software listed on the Schedule 1.
THIS AGREEMENT, INCLUDING THE ATTACHMENTS AND AMENDMENTS, IF ANY, WHICH ARE A
PART HEREOF, IS A COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN
THE PARTIES, WHICH SUPERSEDES ALL PRIOR OR CONCURRENT PROPOSALS AND
UNDERSTANDINGS, WHETHER ORAL OR WRITTEN, AND ALL OTHER COMMUNICATIONS
BETWEEN THE PARTIES RELATING TO ITS SUBJECT MATTER. THIS AGREEMENT SHALL
NOT BE EFFECTIVE UNTIL EXECUTED BY CONSULTING FIRM AND ACCEPTED BY AN
AUTHORIZED REPRESENTATIVE OF J.D. EDWARDS.
Accepted by J.D. Edwards World Solutions Company and effective as of 24 July,
1997.
J.D. EDWARDS WORLD SOLUTIONS COMPANY
By: /s/ Richard G. Snow, Jr.
-------------------------------
(Authorized Signature)
Richard G. Snow, Jr.
-------------------------------
(Print or Type Name)
Vice President, General Counsel
-------------------------------
(Title)
By execution, signer certifies that signer is authorized to execute this
Agreement on behalf of Consulting Firm.
CONSULTING FIRM
By /s/ Thomas W. Whartenby
-------------------------------
Thomas W. Whartenby
-------------------------------
(Print or Type Name)
Senior Vice President
-------------------------------
(Title)
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 1
<PAGE>
Exhibit 10.05(r)
SOFTWARE LICENSE AGREEMENT
Terms and Conditions
1. LICENSE GRANT.
(A) J.D. Edwards grants to Consulting Firm, and Consulting Firm accepts,
on the terms and conditions set forth below and for the term hereof, the
limited, non-transferable, nonexclusive, royalty-free right to use and
receive support for J.D. Edwards' computer software systems listed in
Schedule 1 ("Licensed Products") * . The list of Licensed Products may be
changed only by modifying Schedule 1 with the written agreement of both
parties.
(B) The Licensed Products are to be used by Consulting Firm on a single
serial-numbered computer processing unit only for the purposes set forth
herein or in the CSP Agreement. The Licensed Products are not to be copied or
used by Consulting Firm or used by others without J.D. Edwards' written
permission except for Consulting Firm's evaluation, demonstration, internal
training, backup, archival, and disaster recovery purposes and other purposes
expressly allowed by this Agreement. The Licensed Products may be used only
by Consulting Firm and entities under common control and ownership with
Consulting Firm but not for business processing for its own account or for
any commercial timesharing or service bureau or other rental or sharing
arrangements.
(C) The Licensed Products may be used only in the country in which they
are first installed and may only be moved to another country with J.D.
Edwards' prior written permission. The Licensed Products shall be installed
and used on the computer equipment and at the Facility Location designated
on the Schedule 1. It is understood that Consulting Firm may change the
equipment model at any time with prior written notice to J.D. Edwards.
Further, Consulting Firm may change the Facility Location at any time to
another location in the same country provided it gives J.D. Edwards prior
written notice of such change. Consulting Firm may also temporarily change
the equipment or the Facility Location to another location in the same
country in the event the identified equipment at the Facility Location is
inoperable for any reason.
(D) J.D. Edwards grants a site license limited to the Facility Location
for access to the Licensed Products on personal computers. Consulting Firm
may use the Licensed Products in a networking environment or on a remote
access basis provided that such use shall be limited to the transmission of
test data input and output in connection with the providing of consulting or
training services for Consulting Firm's customers, or for the training of
Consulting Firm's personnel as permitted by this Agreement. The Licensed
Products source code shall be kept at the designated Facility Location and no
other site of Consulting Firm shall be permitted access to the source code
except as expressly permitted by J.D. Edwards.
(E) J.D. Edwards grants to Consulting Firm and Consulting Firm accepts a
license to perform only the Consulting Firm's duties under the CSP Agreement.
(F) Consulting Firm shall disclose the Licensed Products only to
Prospects who have entered into a License for J.D. Edwards' Products or who
have otherwise entered an agreement of confidentiality acceptable to J.D.
Edwards.
(G) Consulting Firm has the right to modify the Licensed Products to the
extent provided in the CSP Agreement and without the further consent of J.D.
Edwards; however, *
(H) *
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 2
<PAGE>
2. DISCLAIMER OF WARRANTY.
*
3. SUPPORT.
*
4. PROPRIETARY RIGHTS
*
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 3
<PAGE>
5. FURTHER UNDERSTANDING
(A) In consideration of Consulting Firm's access to J.D. Edwards'
Licensed Products, Consulting Firm shall not, through its office, practices,
or employees working on the Licensed Products or under the Agreement and
during the term of this Agreement take or fail to take any action, or allow
any action to occur, or fail to prevent any action from occurring, which
would in any way reduce J.D. Edwards Source's right, title, and interest in
the Licensed Products.
(B) The parties further agree that this Agreement shall not be construed
in any way which shall reduce J.D. Edwards Source's right, title, and
interest in the Licensed Products.
*
(D) Nothing in this Agreement shall limit or restrict either party from
entering into or continuing any agreement or arrangement with any other
party, whether similar to this Agreement in nature or scope, provided that
J.D. Edwards' Proprietary Rights of Section 4(A) hereof are not violated.
(E) Consulting Firm shall remain free to sell and perform its services to
any client or prospective client without restriction so long as the terms of
this Agreement are not otherwise breached, provided that J.D. Edwards'
Proprietary Rights of Section 4(A) hereof are not violated.
(F) *
(G) Consulting Firm acknowledges that often similar requirements of
different clients or circumstances may result in similar solutions being
developed independently by two or more sources; therefore the mere similarity
between J.D. Edwards' software and any Consulting Firm-designed software does
not raise a presumption of infringement by J.D. Edwards.
6. TERM AND TERMINATION
(A) This Agreement shall terminate upon termination of the CSP Agreement.
(B) In the event that either party commits a material breach of this
Agreement and (if such breach is capable of cure) fails to cure such breach
within thirty (30) days following notice thereof from the other party, the
non-breaching party shall have the right (in addition to all other rights and
remedies at law or in equity) to terminate this Agreement without further
notice.
*
7. *
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 4
<PAGE>
*
8. ARBITRATION
*
9. LIMITED LIABILITY
*
10. GENERAL
(A) The waiver of one breach hereunder shall not constitute the waiver of
any other or subsequent breach.
(B) All notices shall be in writing and sent by certified mail, postage
prepaid, return receipt requested to the address written above or such other
address as notified to the other party and such notice shall be deemed to be
made on the fifth day after such mailing.
(C) No amendments, modifications or supplements to this Agreement shall
be binding unless in writing and signed by both parties.
(D) No action, regardless of form arising out of this Agreement may be
brought by either party more than * after the cause of arbitration or action
arose.
(E) Each party is not the agent of the other party but is an independent
contractor while performing its duties hereunder. Neither party is granted
any right or authority to assume or to create any obligation or
responsibility, express or implied, on behalf of or in the name of the other
party or to bind the other party in any manner or thing whatsoever.
(F) If any provision of this Agreement is held to be unenforceable, such
decision shall not affect the validity or enforceability of the remaining
provisions.
(H) This Agreement may be executed in two or more identical copies, each
of which shall be an original.
(I) All monetary amounts are in United States dollars, payable in ready
funds through a United States bank.
(J) In the event Consulting Firm issues a purchase order or other
instrument covering the subject matter of this Agreement, it is understood
and agreed that such purchase order is for Consulting Firm's internal use and
shall not affect this Agreement.
(K) Each of the parties shall be responsible for all of its own costs and
expenses associated with its performance of this Agreement, including without
limitation its employees' travel and other expenses.
(L) Neither this Agreement nor the performance by the parties hereunder
shall constitute or be deemed to be an endorsement or recommendation of the
products or services of either party. Neither party shall make any press
release or other public disclosure of this Agreement or the terms hereof
without the express written consent of the other.
(M) Consulting Firm shall not, in whole or in part, assign, sublicense,
or otherwise transfer this Agreement, the Licensed Products, Licensed
Products documentation, any copy of the foregoing, or any right granted
hereunder.
(N) All terms of this Agreement that by their nature may survive this
Agreement shall survive this Agreement.
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 5
<PAGE>
CONSULTING FIRM SOFTWARE LICENSE AGREEMENT
SCHEDULE 1 - SOFTWARE APPLICATIONS
MARK BOX IF SCHEDULE NOT APPLICABLE (CONSULTING FIRM IS NOT LICENSED FOR
ANY J.D. EDWARDS SOFTWARE)
SOFTWARE SUITES PREREQUISITES
/ / 1 Foundation(2)
/ / 2 Financial 1
/ / 3 Logistics/Distribution 1,2
/ / 4 Manufacturing 1,2,3
/ / _ __________________________ ___________
/ / _ __________________________ ___________
/ / _ __________________________ ___________
<TABLE>
<S> <C> <C>
Install Locations (one or more installations) Designated Processor(9) Licensed Users
Model/Feature/Serial Number for CPU
1. Atlanta details to be provided when available *
____________________________________________ ________________________________________ ____________________
2. ____________________________________________ ________________________________________ ____________________
3. ____________________________________________ ________________________________________ ____________________
4. ____________________________________________ ________________________________________ ____________________
Total
____________________
</TABLE>
Footnotes
(1) THE LICENSED PRODUCTS ARE SUBJECT TO THE MINIMUM TECHNICAL REQUIREMENTS
PROVIDED BY J.D. EDWARDS TO CONSULTING FIRM FOR THE DATABASE SERVER,
SOFTWARE DEPLOYMENT/SOFTWARE DISTRIBUTION SERVER, AND CLIENT PORTIONS OF
THE LICENSED PRODUCTS WHICH MUST BE INDEPENDENTLY ACQUIRED AND PROVIDED BY
CONSULTING FIRM. THESE ARE MINIMUM TECHNICAL REQUIREMENTS ONLY AND MAY
NOT RESULT IN THE ATTAINMENT OF SOME OR ALL OF THE PERFORMANCE OBJECTIVES
OF CONSULTING FIRM. THE TYPE OF NETWORK, THE AMOUNT OF TOTAL NETWORK
TRAFFIC, AND THE TYPE AND PATTERN OF USAGE OF THE LICENSED PRODUCTS OR
OTHER SOFTWARE ON THE NETWORK WILL ALSO IMPACT THE PERFORMANCE OF THE
LICENSED PRODUCTS INSTALLED ON SUCH NETWORK.
(2) *
(3) For each Software Suite selected, each listed prerequisite Software Suite
must also be selected. Because Software Suites contain Software
Applications that are prerequisites for other Software Applications in
that or other Software Suites, Consulting Firm should install each
licensed Software Suite in its entirety. *
(4) The Licensed Products include the selected Software Suites, the media in
which the Software Suites are delivered, and the associated documentation.
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 6
<PAGE>
CONSULTING FIRM SOFTWARE LICENSE AGREEMENT
Footnotes (Cont'd)
(5) The source code for products licensed from third parties and included in
the OneWorld Software Suites may not be released by J.D. Edwards but is
placed in escrow by the third party vendor. If a Release Condition in the
Escrow Provision is invoked with respect to the third party vendor, the
source code will be released to J.D. Edwards. The J.D. Edwards ISO 9001
registration does not include products licensed from third parties.
(6) USER TYPE: Consulting Firm will be allocated * concurrent users per each
Designated Processor. The user types offered to J.D. Edwards' Customers are
as follows: Option 1: A "Concurrent User" shall be defined as a individual
with an assigned "user id" which executes an application contained in a
Licensed Product either through a menu selection, fast path, or hidden
selection. A User will be counted as a Concurrent User until the User signs
off the system, refreshes the library list, or enters Hidden Selection 30
(AS/400). Multiple concurrent sessions on the same Designated Processor
utilizing the same "user id" initiated from the same workstation shall be
counted as one Concurrent User. However, sessions initiated by one "user id"
on more than one workstation, or by more than one "user id" on the same
workstation, shall be counted as multiple Concurrent Users. The total number
of Concurrent Users simultaneously using the Licensed Products at any time
may not exceed the Concurrent Licensed Users. Option 2: A "Named User" is a
User to whom a "user id" has been assigned on the Designated Processor(s)
allowing him/her to access the Licensed Products. A Named User is counted as
a User regardless of whether he/she is accessing the Licensed Products at any
given time. The total number of Named Users authorized to use the Licensed
Products at any time may not exceed the Named Licensed Users. Option 3: An
"Internet User" is a User accessing the Licensed Products via the Internet or
Customer's Intranet for inquiry/information purposes only. An Internet User
is counted as a User regardless of whether he/she is accessing the Licensed
Products at any given time. The total number of Internet Users authorized to
use the Licensed Products at any time may not exceed the Internet Licensed
Users. A "Licensed User" is a User for which a License Fee has been paid.
*
(7) LICENSE OF ADDITIONAL SOFTWARE AND ADDITIONAL USERS: If Consulting Firm
wishes to license additional Users, Consulting Firm shall license those
additional Users in Blocks of *
(8)*
(9) IDENTIFICATION OF DESIGNATED PROCESSOR(S): Consulting Firm must identify
each Designated Processor on which the Licensed Products are installed,
including any deployment servers, and the number of Users (Concurrent or
Named).
(10)*
(11) SOFTWARE PROTECTION PROCEDURES: THE LICENSED PRODUCTS CONTAIN PROCEDURES
WHICH PREVENT THE LICENSED PRODUCTS FROM BEING DEPLOYED FROM THE SERVER TO A
TOTAL OF CLIENT PC PLATFORMS GREATER THAN AN AMOUNT SPECIFIED AT THE TIME THE
SOFTWARE PROTECTION CODE IS ISSUED. FOR THOSE CONSULTING FIRMS LICENSING
UNDER THE NAMED USER OPTION, SUCH AMOUNT SHALL NOT EXCEED THE TOTAL NUMBER OF
LICENSED USERS. FOR THOSE CONSULTING FIRMS LICENSING UNDER THE CONCURRENT
USER OPTION, SUCH AMOUNT SHALL NOT EXCEED THE TOTAL NUMBER OF LICENSED USERS
DIVIDED BY * (EXAMPLE: CONSULTING FIRMS WITH * CONCURRENT LICENSED USERS
WILL BE ABLE TO DEPLOY UP TO * CLIENT PC PLATFORMS UNDER THIS AGREEMENT)
SUBJECT TO THE RESTRICTIONS OF NOTE 6 ABOVE. INTERNET USERS ARE NOT DEPLOYED
AND ARE NOT SUBJECT TO THESE DEPLOYMENT LIMITATIONS.
- --------------
* Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.
Page 7
<PAGE>
Exhibit 10.06
PUTNAM FLEXIBLE 401(K) AND PROFIT SHARING PLAN
PLAN AGREEMENT #001
This is the Plan Agreement for a Putnam nonstandardized prototype 401(k) plan
with optional profit sharing plan provisions. Please consult a tax or legal
advisor and review the entire form before you sign it. If you fail to fill
out this Putnam Plan Agreement properly, the Plan may be disqualified. By
executing this Plan Agreement, the Employer establishes a 401(k) and profit
sharing plan and trust upon the terms and conditions of Putnam Basic Plan
Document #07, as supplemented and modified by the provisions elected by the
Employer in this Plan Agreement. This Plan Agreement must be accepted by
Putnam in order for the Employer to receive future amendments to the Putnam
Flexibile 401(k) and Profit Sharing Plan.
* * * * *
1. Employer Information: The Employer adopting this Plan is:
A. Employer Name: The Hunter Group, Inc.
B. Employer Identification Number: 52-1283112
C. Employer Address: 100 E. Pratt Street
Suite 1600
Baltimore, MD 21202
D. SIC Code: 7392
E. Employer Contact: Name: A. Scott Preston
Title: Director of Finance Phone # 410-576-1515
F. Fiscal Year: 1/1 through 12/31
(month/day) (month/day)
G. Type of Entity (check one):
/x/ Corporation / / Partnership / / Subchapter S Corporation
/ / Sole proprietorship / / Other
H. Plan Name: The Hunter Group, Inc. 401(k) Plan
I. Plan Number: 002(complete)
<PAGE>
2. Plan Information.
A. Plan Year. Check one:
/x/ (1) The Calendar Year
/ / (2) The Plan Year will be the same as the Fiscal Year of the
Employer shown in 1.F. above. If the Fiscal Year of the
Employer changes, the Plan Year will change accordingly.
/ / (3) The Plan Year will be the period of 12 months beginning
on the first day of __________ (month) and ending on
the last day of __________ (month).
/ / (4) A short Plan Year commencing on ________ (month/day/year)
and ending on _________ (month/day/year) and immediately
thereafter the 12-consecutive month period commencing on
__________ (month/day).
The Plan Year will also be your Plan's Limitation Year for purposes
of the contribution limitation rules in Article 6 of the Plan.
B. Effective Date of Adoption of Plan.
(1) Are you adopting this Plan to replace an existing plan?
/x/ (a) Yes / / (b) No
(2) If you answered Yes in 2.B(1) above, the Effective Date of
your adoption of this Replacement Plan will be the first
day of the current Plan Year unless you elect a later date
in (2)(b) below. Please complete the following:
(a) 1/1/86
Original Effective Date of the Plan you are Replacing
(b) 4/1/97
Effective Date of this Replacement Plan
(3) If you answered No in 2B(1) above, the Effective Date of
your adoption of this Plan will be the day you select below
(not before the first day of the current Plan Year, and not
before the day your Business began):
(a) The Effective Date is:
month/day/year
2
<PAGE>
C. Identifying Highly Compensated Employees. Check either (1) or (2).
[x] (1) The Plan will use the regular method under Plan Section 2.58(a)
for identifying Highly Compensated Employees.
If you selected this option and your Plan Year is the calendar
year, do you wish to make the regular method's "calendar year
election" for identifying your Highly Compensated Employees?
[ ] (a) Yes [ ] (b) No
[ ] (2) The Plan will use the simplified method under Plan Section
2.58(b) for identifying Highly Compensated Employees.
3. Eligibility for Plan Participation (Plan Section 3.1). Employees wil be
eligible to participate in the Plan when they complete the requirements
you select in A, B, C and D below.
A. Classes of Eligible Employees. The Plan will cover all empoyees who
have met the age and service requirements with the following exclusions:
[x] (1) No exclusions. All job classifications will be eligible.
[ ] (2) The Plan will exclude employees in a unit of Employees
covered by a collective bargaining agreement with respect to
which retirement benefits were the subject of good faith
bargaining, with the exception of the following collective
bargaining units, which will be included:
----
[ ] (3) The Plan will exclude employees who are non-resident aliens
without U.S. source income.
[ ] (4) Employees of the following Affiliated Employers (specify):
----
----
[ ] (5) Leased Employees
[ ] (6) Employees in the following other classes (specify):
----
----
3
<PAGE>
B. Age Requirement. (check and complete (1) or (2)):
[x] (1) No minimum age required for participation
[ ] (2) Employees must reach age __ (not over 21) to particpate
C. Service Requirements.
(1) Elective Deferrals. To become eligible, an employee must complete
(choose one):
[x] (a) No minimum service required
[ ] (b) One 6-month Eligibility Period
[ ] (c) One __-month Eligibility Period (must be less than 12)
[ ] (d) One 12-month Eligibility Period
(2) Employer Matching Contributions. To become eligible, an employee
must complete (choose one):
[ ] (a) No minimum service required
[ ] (b) One 6-month Eligibility Period
[ ] (c) One __-month Eligibility Period (must be less than 12)\
[x] (d) One 12-month Eligibility Period
[ ] (e) Two 12-month Eligibility Periods (may only be chosen if
you adopt the vesting schedule under item 9.A(3)(a) to
provide 100% full and immediate vesting of Employer
Matching Contributions).
[ ] (f) Not applicable. The Employer will not make Employer
Matching Contributions.
(3) Profit Sharing Contributions. To become eligible, an employee must
complete (choose one):
[ ] (a) No minimum service required
[ ] (b) One 6-month Eligibility Period
[ ] (c) One __-month Eligibility Period (must be less than 12)
[x] (d) One 12-month Eligibility Period
4
<PAGE>
/ / (e) Two 12-month Eligibility Periods (may only be chosen if you
adopt the vesting schedule under item 9.A(3)(a) to provide for
100% full and immediate vesting of Profit Sharing Contributions)
/ / (f) Not applicable. The Employer will not make Profit Sharing
Contributions.
(4) If the Employer acquired a business on or before the Effective Date of
this Plan and the Eligibility Periods selected in (1), (2) and (3) for
former employees of that acquired business will include the former
employees' periods of employment with that business, list the business
below. Any acquired business which had a plan which the Employer now
maintains must be listed below.
(5) If the Employer acquires a business after the Effective Date, the
Eligibility Periods for an employee of the acquired business will be the
periods selected in (1), (2) and (3) beginning on (check (a) or (b)):
/x/ (a) the date the employee began work with the acquired business.
/ / (b) the date of the acquisition (i.e., the date the employee begins
work for the Employer).
(6) Hours of Service for Eligibility Periods.
(a) 6-Month Eligibility Period. To receive credit for a 6-month
Eligibility Period, an employee must complete 6 months of service,
during which he completes at least:
/ / (i) 500 Hours of Service
/ / (ii) _______ Hours of Service (under 500)
(b) 12-Month Eligibility Period. To receive credit for a 12-month
Eligibility Period, an employee must complete 12 months of service,
during which he completes at least:
/x/ (i) 1,000 Hours of Service
/ / (ii) _______ Hours of Service (under 1,000)
5
<PAGE>
(c) Other Eligibility Period. To receive credit for the Eligibility
Period selected in 3.C(1)(c), 3.C(2)(c) and/or 3.C(3)(c) above,
an employee must complete during it at least:
/ / (i) _______ Hours of Service (under 1,000)
(7) Method of Crediting Hours of Service For Eligibility and Vesting. Hours
of Service will be credited to an employee by the following method (check
one):
/x/ (a) Actual Hours for which an employee is paid
/ / (b) Any employee who has one actual paid hour in the following
period will be credited with the number of Hours of Service
indicated (check one):
/ / (i) Day (10 Hours of Service)
/ / (ii) Week (45 Hours of Service)
/ / (iii) Semi-monthly payroll period (95 Hours of Service)
/ / (iv) Month (190 Hours of Service)
(8) Entry Dates. Each employee in an eligible class who completes the age and
service requirements specified above will begin to participate in the Plan
on (check one):
/ / (a) The first day of the month in which he fulfills the requirements.
/x/ (b) The first of the following dates occurring after he fulfills the
requirements (check one):
/x/ (i) The first day of the month following the date he
fulfills the requirements (monthly).
/ / (ii) The first day of the first, fourth, seventh and tenth
months in a Plan Year (quarterly).
/ / (iii) The first day of the first month and the seventh
month in a Plan Year (semiannually).
/ / (c) Other: _______ (May be no later than (i) the first day of the Plan
Year after which he fulfills the requirements, and (ii) the date
six months after the date on which he fulfills the requirements,
whichever occurs first.)
6
<PAGE>
D. (For New Plans Only) Will all eligible Employees as of the Effective
Date be required to meet the age and service requirements for
participation specified in B and C above?
/ / (a) Yes
/ / (b) No. Eligible Employees will be eligible to become Participants as
of the Effective Date even if they have not satisfied (check one or
both):
/ / (i) the age requirement.
/ / (ii) the service requirement.
4. Contributions.
A. Elective Deferrals (Plan Section 5.2). Your Plan will allow employees
to elect pre-tax contributions under Section 401(k) of the Code. You
must complete this part A.
(1) A Participant may make Elective Deferrals for each year in an
amount not to exceed (check one):
/x/ (a) 10% of his Earnings
/ / (b) ____% of his Earnings not to exceed $_____(specify a
dollar amount)
/ / (c) $____ (specify a dollar amount)
(2) Will a Participant be required to make a minimum Elective Deferral
in order to make Elective Deferrals under the Plan? (check one and
complete as applicable)
/x/ (a) No.
/ / (b) Yes. The minimum Elective Deferral will be ___% of the
Participant's Earnings.
(3) A Participant may begin to make Elective Deferrals, or change
the amount of his Elective Deferrals, as of the following dates
(check one):
/ / (a) First business day of each month (monthly).
/x/ (b) First business day of the first, fourth, seventh and
tenth months of the Plan Year (quarterly).
/ / (c) First business day of the first and seventh months of
the Plan Year (semiannually).
/ / (d) First business day of the Plan Year only (annually).
/ / (e) Other:
7
<PAGE>
(4) Will Participants be permitted to make separate Elective
Deferrals of bonuses, even if bonuses have otherwise been
excluded from Compensation for the purpose of Elective Deferrals
under 7.A(1)?
/x/ (a) Yes / / (b) No
B. Employer Matching Contributions. (Plan Section 5.8). Complete
this part B only if you will make Employer Matching Contributions under
the Plan.
(1) The Employer will contribute and will allocate to each Qualified
Participant's Employee Matching Account an Employer Matching
Contribution on the basis set forth below:
/x/ (a) Discretionary matching contributions. (The Employer may select
this option in addition to option (b) if the Employer wishes to
have the option to make discretionary matching contributions
in addition to fixed matching contributions.)
/ / (b) Fixed matching contributions.
/ / (i) based on Elective Deferrals:
/ / (A) __% of Elective Deferrals
/ / (B) __% of Elective Deferrals up to __% of
Earnings.
/ / (C) __% of Elective Deferrals up to __% of
Earnings and __% of Elective Deferrals over that
percentage of Earnings and up to __% of Earnings.
(The third percentage number must be less than the
first percentage number.)
/ / (D) __% of Elective Deferrals up to $ of
Elective Deferrals.
/ / (E) __% of Elective Deferrals up to $ of
Elective Deferrals and ___% of Elective Deferrals
over that dollar amount and up to $___ of Elective
Deferrals. (The last percentage must be less than
the first percentage).
8
<PAGE>
/ / (ii) based on after-tax Participant Contributions:
/ / (A) ___% of Participant Contributions
/ / (B) ___% of Participant Contributions up to
___% of Earnings.
/ / (C) ___% of Participant Contributions up to
___% of Earnings and ___% of Participant
Contributions over that percentage of Earnings and
up to ___% of Participant Contributions. (The
third percentage must be less than the first
percentage)
/ / (D) __% of Participant Contributions up to $_____ of
Participant Contributions.
/ / (E) __% of Participant contributions up to $_____ of
Participant Contributions and __% of Participant
Contributions over that dollar amount and up to
$_____ of Participant Contributions. (The last
percentage must be less than the first percentage).
(2) Qualified Participant. In order to receive an allocation of
Employer Matching Contributions for a Plan Year, an Employee must
be a Qualified Participant for that purpose. Select below either
(a) alone, or any combination of (b), (c) and (d).
/ / (a) To be a Qualified Participant eligible to receive
Employer Matching Contributions for a Plan Year, an
Employee must (check (i) or (ii)):
/ / (i) Either be employed on the last day of the Plan
Year, complete more than 500 Hours of Service in
the Plan Year, or retire, die or become disabled
in the Plan Year.
/ / (ii) Either be employed on the last day of the Plan
Year or complete more than 500 Hours of Service
in the Plan Year.
Stop here if you checked (a). If you did not check (a), check
(b), (c) or (d), or any combination of (b), (c) and (d).
9
<PAGE>
To be Qualified Participant eligible to receive Employer Matching
Contributions for a Plan Year, an Employee must:
/x/ (b) Be credited with 1 (choose 1, 501 or 1,000) Hours of Service
in the Plan Year
/ / (c) Be an Employee on the last day of the Plan Year.
/ / (d) Retire, die or become disabled during the Plan Year.
(3) Will the Employer have the option of making all or any portion of its
Employer Matching Contributions in Employer Stock?
/ / (a) Yes /x/ (b) No
C. Profit Sharing Contributions. (Plan Sections 4.1 and 4.2)
(1) Profit Limitation. Will Profit Sharing Contributions to the Plan be
limited to the current and accumulated profits of your Business? Check
one:
/ / (a) Yes /x/ (b) No
(2) Amount. The Employer will contribute to the Plan for each Plan Year
(check one):
/x / (a) An amount chosen by the Employer from year to year
/ / (b) ___% of the Earnings of all Qualified Participants for the
Plan Year
/ / (c) $____ for each Qualified Participant per ___ (enter time
period, e.g. payroll period, plan year)
(3) Allocations to Participants
(a) Allocation to Participants. Profit Sharing Contributions will be
allocated:
/x / (i) Pro rate (percentage based on compensation)
/ / (ii) Uniform dollar amount
/ / (iii) Integrated With Social Security (complete (b) and (c)
below)
10
<PAGE>
(b) Integration with Social Security. (Complete only if you have
elected in 4.C(3)(a) to integrate your Plan with Social Security.)
Profit Sharing Contributions will be allocated to Qualified
Participants as you check below:
/ / (i) Profit Sharing Contributions will be allocated according
to the Top-Heavy Integration Formula in Plan Section
4.2(c)(1) in every Plan Year, whether or not the Plan is
top-heavy
/ / (ii) Profit Sharing Contributions will be allocated according
to the Top-Heavy Integration Formula in Plan Section
4.2(c)(1) only in Plan Years in which the Plan is top-heavy.
In all other Plan Years, contributions will be allocated
according to the Non-Top-Heavy Integration Formula in Plan
Section 4.2(c)(2).
(c) Integration Level. (Complete only if you have elected in
4.C(3)(a) to integrate your Plan with Social Security.) The
Integration Level will be (check one):
/ / (i) The Social Security Wage Base in effect at the beginning
of the Plan Year.
/ / (ii) ___% (not more than 100%) of the Social Security Wage Base
in effect at the beginning of the Plan Year.
/ / (iii) $___ (not more than the Social Security Wage Base).
Note: The Social Security Wage Base is indexed annually to
reflect increases in the cost of living.
(4) Qualified Participants. In order to receive an allocation of Profit
Sharing Contributions for a Plan Year, an Employee must be a Qualified
Participant for this purpose. Select below either (a) alone, or any
combination of (b), (c) and (d).
/ / (a) To be a Qualified Participant eligible to receive an allocation
of Profit Sharing Contributions for a Plan Year, an Employee
must (check (i) or (ii)):
/ / (i) Either be employed on the last day of the Plan Year,
complete more than 500 Hours of Service in the Plan
Year, or retire, die or become disabled in the Plan
Year.
/ / (ii) Either be employed on the last day of the Plan Year
or complete more than 500 Hours of Service in the
Plan Year.
11
<PAGE>
Stop here if you checked (a). If you did not check (a), check
(b), (c) or (d), or any combination of (b), (c) and (d).
To be a Qualified Participant eligible to receive an allocation
of Profit Sharing Contributions for a Plan Year, an Employee
must:
/X/ (b) Be credited with 1000 (choose 1, 501 or 1,000) Hours
of Service in the Plan Year.
/X/ (c) Be an Employee on the last day of the Plan Year.
/X/ (d) Retire, die or become disabled during the Plan Year.
D. Participant Contributions (Plan Section 4.6). Will your Plan allow
Participants to make after-tax contributions?
/ / (a) Yes /X/ (2) No
E. Qualified Matching Contributions (Plan Section 2.61). Skip this part
E if you will not make Qualified Matching Contributions.
(1) Qualified Marching Contributions will be made with respect to
(check one):
/ / (a) Elective Deferrals made by all Qualified Participants
/X/ (b) Elective Deferrals made only by Qualified Participants
who are not Highly Compensated Participants
(2) The amount of Qualified Matching Contributions made with respect
to a Participant will be:
/X/ (a) discretionary
/ / (b) fixed (check and complete (i), (ii) or (iii))
/ / (i) ___% of Elective Deferrals
/ / (ii) ___% of Elective Deferrals that do not
exceed __% of Earnings
/ / (iii) ___% of Elective Deferrals that do not
exceed $____.
12
<PAGE>
F. Qualified Nonelective Contributions (Plan Section 2.62): Skip this
part F if you will not make Qualified Nonelective Contributions.
(1) Qualified Nonelective Contributions will be made on behalf of
(check one):
/ / (a) All Qualified Participants
/X/ (b) Only Qualified Participants who are not Highly
Compensated Employees
(2) The amount of Qualified Nonelective Contributions for a Plan
Year will be (check one):
/ / (a) ___% (not over 15%) of the Earnings of Participants on
whose behalf Qualified Nonelective Contributions are made
/X/ (b) An amount determined by the Employer from year to
year, to be shared in proportion to their Earnings by
Participants on whose behalf Qualified Nonelective
Contributions are made
G. Forfeitures
(1) Employer Matching Contributions. Forfeitures of Employer
Matching Contributions will be used as follows (check and
complete (a) or (b)):
/ / (a) Applied to reduce the following contributions required
of the Employer (check (i) and/or (ii)):
/ / (i) Employer Matching Contributions
/ / (ii) Profit Sharing Contributions
/ / (b) Reallocated as follows (check (i) or (ii)):
/ / (i) As additional Employer Matching Contributions
/ / (ii) As additional Profit Sharing Contributions
(2) Profit Sharing Contributions. Forfeitures of Profit Sharing
Contributions will be used as follows (check (a) or (b)):
/ / (a) Applied to reduce the following contributions required
of the Employer (check (i) and/or (ii)):
/ / (i) Profit Sharing Contributions
/ / (ii) Employer Matching Contributions
13
<PAGE>
5. Top-Heavy Minimum Contributions (Plan Section 14.3). Skip paragraphs A
and B below if you do not maintain any other qualified plan in addition
to this Plan.
A. For any Plan Year in which the Plan is Top-Heavy, the Top-Heavy
minimum contribution (or benefit) for Non-Key employees participating
both in this Plan and another qualified plan maintained by the
Employer will be provided in (check one):
/ / (1) This Plan / / (2) The other qualified plan
B. If you maintain a defined benefit plan in addition to this Plan, and
to Top-Heavy Ratio (as defined in Plan section 14.2(c)) for the
combined plans is between 60% and 90%, you may elect to provide an
increased minimum allocation or benefit pursuant to plan Section
14.4. Specify your election by completing the statement below:
The Employer will provide an increased (specify contribution or
benefit) ____ in its (specify defined contribution or defined
benefit) ____ plan as permitted under Plan Section 14.4.
6. Other Plans. You must complete this section if you maintain or ever
maintained another qualified plan in which any Participant in this Plan
is (or was) a participant or could become a participant.
The Plan and your other plan(s) combined will meet the contribution
limitation rules in Article 6 of the Plan as you specify below:
A. If a Participant in the Plan is covered under another qualified
defined contribution plan maintained by your Business, other than a
master or prototype plan (check one):
/ / (1) The provisions of Section 6.2 of the Plan will apply as if
the other plan were a master or prototype plan.
/ / (2) The plans will limit total annual additions to the maximum
permissible amount, and will properly reduce any excess
amounts, in the manner you describe below.
B. If a Participant in the Plan is or has ever been a participant in a
defined benefit plan maintained by your Business, the plans will meet
the limits of Article 6 in the manner you describe below.
14
<PAGE>
If your Business has ever maintained a defined benefit plan, state
below the interest rate and mortality table to be used in
establishing the present value of any benefit under the defined
benefit plan for purposes of computing the top-heavy ratio:
Interest rate: %
Mortality Table:
7. Compensation (Plan Section 2.8).
A. Amount.
(1) Elective Deferrals and Employer Matching Contributions.
Compensation for the purposes of determining the amount and
allocation of Elective Deferrals and Employer Matching Contributions
will be determined as follows (choose either (a) or (b), and (c) and/
or (d) as applicable).
/X/ (a) Compensation will include Form W-2 earnings as defined
in Section 2.8 of the Plan.
/ / (b) Compensation will include all compensation included in
the definition of Code Section 415 Compensation in Plan
Section 6.5(b) of the Plan.
/X/ (c) In addition to the amount provided in either (a) or (b)
above, Compensation will also include any amounts
withheld from the employee under a 401(k) plan,
cafeteria plan, SARSEP, tax sheltered 403(b)
arrangement, or Code Section 457 deferred compensation
plan, and contributions described in Code Section
414(h)(2) that are picked up by a governmental employer.
/ / (d) Compensation will also exclude the following amount
(choose each that applies):
/ / (i) overtime pay.
/ / (ii) bonuses.
/ / (iii) commissions.
/ / (iv) other pay (describe):
/ / (v) compensation in excess of $
15
<PAGE>
(2) Profit Sharing Contributions. Compensation for the purposes of
determining the amount and allocation of Profit Sharing Contributions
shall be determined as follows (choose either (a) or (b), and (c)
and/or (d), as applicable).
/X/ (a) Compensation will include Form W-2 earnings as defined
in Section 2.8 of the Plan.
/ / (b) Compensation will include all compensation included in
the definition of Code Section 415 Compensation in
Section 6.5(b) of the Plan.
/X/ (c) In addition to the amount provided in either (a) or (b)
above, compensation will also include any amounts
withheld from the employee under a 401(k) plan,
cafeteria plan, SARSEP, tax sheltered 403(b)
arrangement, or Code Section 457 deferred compensation
plan, and contributions described in Code Section
414(h)(2) that are picked up by a governmental employer.
/ / (d) Compensation will also exclude the following amounts
(choose each that applies):
/ / (i) overtime pay
/ / (ii) bonuses
/ / (iii) commissions
/ / (iv) other pay (describe):
/ / (v) compensation in excess of $
Note: No exclusion under (d) may be selected if Profit
Sharing Contributions will be integrated with Social
Security under 4.C(3)(a)(iii). In addition, no exclusion
under (d) will apply for purposes of determining the top-
heavy minimum contribution if the Plan is top-heavy.
B. Measuring Period. Compensation will be based on the Plan Year. However,
for an Employee's initial year of participation in the Plan, Compensation
will be recognized as of:
/X/ (1) the first day of the Plan Year.
/X/ (2) the date the Participant enters the Plan.
16
<PAGE>
8. Distributions and Withdrawals.
A. Retirement Distributions.
(1) Normal Retirement Age (Plan Section 7.1). Normal retirement age will
be the later of 65 (not over age 65) or-(not more than 5) years of
participation in the Plan.
(2) Early REtirement (Plan Section 7.1). Select one:
/X/ (a) No early retirement will be permitted.
/X/ (b) Early retirement will be permitted at age ___.
/X/ (c) Early retirement will be permitted at age ___ with at
least ___ Years of Service.
(3) Annuities (Plan Section 9.3). Will your Plan permit distributions in
the form of a life annuity? You must check Yes if this Plan replaces
or serves as a transferee plan for an existing Plan that permits
distributions in a life annuity form.
/ / (a) Yes /X/ (b) No
B. Hardship Distributions (Plan Section 12.2). Will your Plan permit
hardship distributions?
/ / (1) No
/X/ (2) Yes. Indicate below from which Accounts hardship
withdrawals will be permitted (check all that apply):
/X/ (a) Elective Deferral Account
/X/ (b) Rollover Account
/X/ (c) Employer Matching Account
/X/ (d) Employer Contribution Account (i.e. Profit
Sharing Contributions)
C. Withdrawals after Age 59-1/2 (Plan Section 12.3). Will your Plan permit
employees over age 59-1/2 to withdraw amounts upon request? You must
check Yes if this Plan replaces an existing Plan that permits withdrawals
after age 59-1/2.
/X/ (1) Yes / / (2) No
17
<PAGE>
D. Withdrawals following Five Years of Participation or Two Years after
Contribution (Plan Section 12.4). Will your Plan permit employees to
withdraw amounts from the vested portion of their Employer Matching
Contribution Accounts and Employer Contribution Accounts (i.e., Profit
Sharing Contributions) if either (i) the Participant has been a
Participant for at least five years, or (ii) the amount withdrawn from
each of these Accounts is limited to the amounts that were credited to
that Account prior to the date two years before the withdrawal? You must
check yes if this Plan replaces a Plan which permits withdrawals in these
circumstances.
/X/ (1) Yes / / (2) No
E. Loans (Plan Section 12.5). Will your Plan permit loans to employees from
the vested portion of their Accounts?
/ / (1) No
/X/ (2) Yes. Indicate below whether loans will be permitted for any
reason or only on account of hardship.
/X/ (a) Any reason.
/ / (b) Hardship only.
F. Automatic Distribution of Small Accounts (Plan Section 9.1). Will your
Plan automatically distribute vested account balances not exceeding
$3,500, within 60 days after the end of the Plan Year in which a
Participant separates from employment?
/X/ (1) Yes / / (2) No
9. Vesting (Plan Article 8).
A. Time of Vesting (select (1) or (2) below and complete vesting schedule).
/X/ (1) Single Vesting Schedule:
The vesting schedule selected below will apply to both Employer
Matching Contributions and Profit Sharing Contributions.
/ / (2) Dual Vesting Schedules:
The vesting schedule marked with an "MC" below will apply to
Employer Matching Contributions and the vesting schedule marked
"PS" below will apply to Profit Sharing Contributions.
18
<PAGE>
(3) Vesting Schedules:
/X/ (a) 100% vesting immediately upon participation in the Plan.
/ / (b) Five-Year Graded Schedule:
Vested Percentage 20% 40% 60% 80% 100%
--- --- --- --- ----
Years of Service 1 2 3 4 5
/ / (c) Seven-Year Graded Schedule:
Vested Percentage 20% 40% 60% 80% 100%
--- --- --- --- ----
Years of Service 3 4 5 6 7
/ / (d) Six-Year Graded Schedule:
Vested Percentage 20% 40% 60% 80% 100%
--- --- --- --- ----
Years of Service 2 3 4 5 6
/ / (e) Three-Year Cliff Schedule:
Vested Percentage 0% 100%
--- ----
Years of Service 0-2 3
/ / (f) Five-Year Cliff Schedule:
Vested Percentage 0% 100%
--- ----
Years of Service 0-4 5
/ / (g) Other Schedule (must be at least as favorable as Seven-Year
Graded Schedule or Five-Year Cliff Schedule):
(i) Vested Percentage __% __% __% __% __%
(ii) Years of Service __ __ __ __
19
<PAGE>
(4) Top Heavy Schedule
(a) If you selected above an "Other Schedule," specify in the
space below the schedule that will apply in Plan Years that
the Plan is top-heavy. The schedule you specify must be at
least as favorable to employees, at all years of service, as
either the Six-Year Graded Schedule or the Three-Year Cliff
Schedule. The top-heavy vesting schedule will be:
/ / (i) the same "Other Schedule" selected above
/ / (ii) the following schedule:
Vested Percentage __% __% __% __% __%
Years of Service __ __ __ __
/ / (iii) Six-Year Graded Schedule
/ / (iv) Three-Year Cliff Schedule
(b) If the Plan becomes top-heavy in a Plan Year, will the
top-heavy vesting schedule apply for all subsequent Plan
Years?
/ / (i) Yes / / (ii) No
B. Service for Vesting (select (1) or (2), and complete (3)).
N/A
/ / (1) All of an employee's service will be used to determine his
Years of Service for purposes of vesting
/ / (2) An employee's Years of Service for vesting will include all
years except (check all that apply):
/ / (a) (New plan) service before the effective date of the plan
/ / (b) (Existing plan) service before the effective date of
the existing plan
/ / (c) Service before the Plan Year in which an employee
reached age 18
(3) Will an employee's service for a business acquired by the
Employer that was performed before the acquisition be included
in determining an employee's Years of Service for vesting?
/ / (a) Yes / / (b) No
20
<PAGE>
List below any business acquired on or before the Effective Date
for which an employee's service will be included in determining
an employee's Years of Service for vesting. Service of an
employee for a predecessor employer (which includes an acquired
business) whose plan the Employer maintains must be included as
service for the Employer under this Plan. Therefore, also list
below any predecessor employer whose plan the Employer maintains:
C. Hours of Service for Vesting. The number of Hours of Service
required for crediting a Year of Service for vesting will be
(check one):
N/A
/ / (1) 1,000 Hours of Service
/ / (2) _____ Hours of Service
(under 1,000)
Hours of Service of vesting will be credited according to the
method selected under 3.C(6)
D. Year of Service Measuring Period for Vesting (Plan Section
2.52). The Periods of 12 months used for measuring Years of
Service will be (check one):
N/A
/ / (1) Plan Years
/ / (2) 12-month Eligibility Periods
Note: If you are adopting this Plan to replace an existing plan,
employees will be credited under this Plan with all service credited
to them under the plan you are replacing.
10. Investments (Plan Sections 13.2 and 13.3)
A. Available Investment Products (Plan Section 13.2). The investment
options available under the Plan are identified in the Service
Agreement or such other written instructions between the Employer
and Putnam, as the case may be. All Investment Products must be
sponsored, underwritten, managed or expressly agreed to in writing
by Putnam. If there is any amount in the Trust Fund for which no
instructions or unclear instructions are delivered, it will be
invested in the default option selected by the Employer in its
Service Agreement with Putnam, or such other written instructions as
the case may be, until instructions are received in good order, and
the Employer will be deemed to have selected the option indicated in
its Service Agreement, or such other written instructions as the case
may be, as an available Investment Product for that purpose.
21
<PAGE>
B. Instructions (Plan Section 13.3). Investment instructions for
amounts held under the Plan generally will be given by each
Participant for his own Accounts and delivered to Putnam as indicated
in the Service Agreement between Putnam and the Employer. Check
below only if the Employer will make investment decisions under the
Plan with respect to the following contributions made to the Plan.
(Check all applicable options.)
/ / (1) The Employer will make all investment decisions with
respect to all employee contributions, including Elective
Deferrals, Participant Contributions, Deductible Employee
Contributions and Rollover Contributions.
/ / (2) The Employer will make all investment decisions with
respect to all Employer contributions, including Profit
Sharing Contributions, Employer Matching Contributions,
Qualified Matching Contributions and Qualified Nonelective
Contributions.
/ / (3) The Employer will make investment decisions with respect
to Employer Matching Contributions and Qualified Matching
Contributions.
/ / (4) The Employer will make investment decisions with respect
to Qualified Nonelective Contributions.
/ / (5) The Employer will make investment decisions with respect
to Profit Sharing Contributions.
/ / (6) Other (Describe. An Employer may elect to make
investment decisions with respect to a specified portion of
a specific type of contribution to the Plan.)
C. Changes. Investment instructions may be changed (check one):
/x/ (1) on any Valuation Date (daily)
/ / (2) on the first day of any month (monthly)
/ / (3) on the first day of the first, fourth, seventh and tenth
months in a Plan Year (quarterly)
22
<PAGE>
D. Employer Stock. (Skip this paragraph if you did not designate
Employer Stock as an investment under the Service Agreement.)
(1) Voting. Employer Stock will be voted as follows:
/ / (a) In accordance with the Employer's instructions.
/ / (b) In accordance with the Participant's instruction.
Participants are hereby appointed named fiduciaries
for the purpose of the voting of Employer Stock in
accordance with Plan Section 13.8.
(2) Tendering. Employer stock will be tendered as follows:
/ / (a) In accordance with the Employer's instructions.
/ / (b) In accordance with the Participant's instructions.
Participants are hereby appointed named fiduciaries
for the purpose of the tendering of Employer Stock
in accordance with Plan Section 13.8.
11. Administration.
A. Plan Administrator (Plan Section 15.1). You may appoint a person
or a committee to serve as Plan Administrator. If you do not appoint
a Plan Administrator, the Plan provides that the Employer will be the
Plan Administrator.
The initial Plan Administrator will be (check one):
/ / This person;
/x/ A committee composed of these people:
A. Scott Preston
Tom Whartenbv
23
<PAGE>
B. Recordkeeper (Plan Section 15.4). Unless Putnam expressly permits
otherwise, you must appoint Putnam as Recordkeeper to perform
certain routine services determined upon execution of a written
Service Agreement between Putnam and the Employer.
The initial Record keeper will be:
Putnam Fiduciary Trust Company
(Name)
Putnam Retail 401(k) B-2-B
859 Willard St.
Quincy, MA 02269-9110
(Address)
12. Determination Letter Required. You may not rely on an opinion letter
issued to Putnam by the National Office of the Internal Revenue Service
as evidence that the Plan is qualified under Section 401 of the Internal
Revenue Code. In order to obtain reliance with respect to qualification
of the Plan, you must receive a determination letter from the
appropriate Key District Office of Internal Revenue. Putnam will prepare
an application for such a letter upon your request at a fee agreed upon
by the parties.
Putnam will inform you of all amendments it makes to the prototype plan.
If Putnam ever discontinues or abandons the prototype plan, Putnam will
inform you. This Plan Agreement #001 may be used only in conjunction
with Putnam's Basic Plan Document #07.
* * * *
If you have any questions regarding this Plan Agreement, contact Putnam
at:
Putnam Defined Contribution Plans
One Putnam Place B2B
859 Willard Street
Quincy, MA 02269
Phone: 1-800-752-5766
/ /
24
<PAGE>
* * * *
EMPLOYER'S ADOPTION OF PUTNAM
FLEXIBLE 401(k) AND PROFIT SHARING PLAN
The Employer named below hereby adopts a PUTNAM FLEXIBLE 401(k) AND PROFIT
SHARING PLAN, and appoints Putnam Fiduciary Trust Company to serve as Trustee
of the Plan. The Employer acknowledges that it has received copies of the
current prospectus for each Investment Product available under the Plan, and
represents that it will deliver copies of the then current prospectus for
each such Investment Product to each Participant before each occasion on
which the Participant makes an investment instruction as to his Account. The
Employer further acknowledges that the Plan will be acknowledged by Putnam as
a Putnam Flexible 401(k) and Profit Sharing Plan only upon Putnam's
acceptance of this Plan Agreement.
Investment Options
The Employer hereby elects the following as the investment options available
under the Plan:
Putnam Money Market Fund Putnam Income Fund
The George Putnam Fund of Boston The Putnam Fund for Growth and Income
Putnam International Growth Fund Putnam New Opportunities
Putnam OTC Emerging Growth Fund Putnam Voyager Fund
The following investment option shall be the default option: Putnam Money
Market Fund (select the default option from among the investment options
listed above).
Employer signature(s) to adopt Plan: Date of signature:
/s/ A. SCOTT PRESTON 2/4/97
- ------------------------------------ ------------------
- ------------------------------------ ------------------
Please print name(s) of authorized person(s) signing above:
A. Scott Preston
- ------------------------------------
- ------------------------------------
A new Plan must be signed by the last day of the Plan Year in which the Plan
is to be effective.
25
<PAGE>
* * * *
ACCEPTANCE OF PUTNAM FIDUCIARY TRUST COMPANY AS TRUSTEE
The Trustee accepts appointment in accordance with the terms and conditions
of the Plan, effective as of the date of execution by the Employer set forth
above.
Putnam Fiduciary Trust Company, Trustee
By: /s/ ILLEGIBLE
-------------------------------------------------------
26
<PAGE>
* * * *
ACCEPTANCE BY PUTNAM
Putnam hereby accepts this Employer's Plan as a prototype under Putnam Basic
Plan Document #07.
Putnam Mutual Funds Corp.
By: /s/ Bonnie Mallin
-------------------------------------------------------
27
<PAGE>
Exhibit 10.07(a)
THE HUNTER GROUP, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective this 1st day of January, 1989,
by and between The Hunter Group, Inc. ("HUNTER"), a Maryland corporation with
offices in Baltimore, Maryland; Boston, Massachusetts; San Francisco,
California; Chicago, Illinois; Los Angeles, California; Toronto, Canada; and
New York, New York; and Terry L. Hunter ("EMPLOYEE"), who resides at 800
Stone Barn Road, Baltimore, Maryland 21204.
WITNESSETH
WHEREAS, HUNTER is engaged in consulting and systems development,
research, design, formulation, manufacture, marketing, distribution,
licensing and sale of a variety of products and services, generally relating
to Human Resources administration, including, but not limited to, employee
benefits, equal employment opportunity, applicant and resume tracking,
succession planning, suggestion awards, compensation, pension, stock options,
employee relations, training, health and safety, and payroll software
systems, and now has and expects to develop confidential information relating
thereto; and
WHEREAS, EMPLOYEE is highly skilled in the technical, functional and
marketing fields in which HUNTER is engaged.
WHEREAS, HUNTER desires to utilize the services of EMPLOYEE as project
manager, systems designer, consultant, etc., and EMPLOYEE desires to offer
his/her services to HUNTER, and as a result of the rendering of such
services, EMPLOYEE may have access to confidential information and may
further contribute thereto;
NOW, THEREFORE, HUNTER and EMPLOYEE hereby agree as follows:
1. Services. EMPLOYEE agrees to perform for HUNTER such duties which are
consistent with EMPLOYEE's background, skills and job responsibilities as
shall be reasonably assigned to him/her from time to time by HUNTER.
2. Compensation. EMPLOYEE shall be entitled to the compensation and
benefits described in the Offer Letter, a copy of which is attached hereto as
"Exhibit A".
3. Use of Name. EMPLOYEE agrees to allow HUNTER to use his/her name, and a
summary of his/her experience and qualifications, in any business plan,
presentation or sales or marketing efforts prepared by HUNTER in the course
of its business during EMPLOYEE's period of employment. Upon EMPLOYEE's
request, HUNTER shall review any summary of EMPLOYEE's experience and
qualifications for form and accuracy prior to HUNTER's use of such summary.
4. EMPLOYEE's Authority to Bind the Corporation. EMPLOYEE shall not at any
time pledge the credit of HUNTER, nor enter into any contract or agreement on
behalf of HUNTER without its prior written consent.
1
<PAGE>
5. Term. EMPLOYEE's employment may be terminated upon not less than two
(2) weeks' written notice by either party; provided, however, that all of the
terms and conditions intended to survive the termination of EMPLOYEE's
employment shall remain in full force and effect.
(a) Introductory Period. Notwithstanding anything to the contrary
contained herein and in addition to the rights set forth in subsection (d),
HUNTER may terminate EMPLOYEE's employment for any reason at any time during
the first three (3) months of EMPLOYEE's employment upon not less than one
(1) week's notice or payment of one (1) week's base salary in lieu thereof.
(b) Termination for Cause. Notwithstanding anything to the contrary
herein, HUNTER shall be entitled to terminate EMPLOYEE's employment without
prior notice for cause, including but not limited to EMPLOYEE's misfeasance,
malfeasance, insubordination, breach of law or fiduciary duty, or any of the
other terms or conditions of his/her employment with HUNTER, including any
expressed or implied representations or warranties made by EMPLOYEE in
connection with his/her employment.
(c) Severance Entitlement. In the event HUNTER terminates this
Agreement after the introductory period defined in subsection (a) for any
reason other than EMPLOYEE's termination for cause as defined in subsection
(b), EMPLOYEE shall be entitled to two (2) weeks of base salary as severance
for each six (6) months of completed service. In no event shall the severance
entitlement exceed four (4) weeks of base salary.
(d) Payments at Termination. HUNTER agrees to pay any severance to
which EMPLOYEE is entitled, along with any accrued payments for incentive
bonuses, commissions, and unused leave entitlements according to HUNTER's
policies then in effect, or expressly agreed with EMPLOYEE, at the later of
the date of termination and the date when all HUNTER property as listed in
paragraph 13 is returned, and all outstanding travel or other expense reports
have been returned, and debts paid by EMPLOYEE.
6. Rights to Work Product. With respect to any work product which is
conceived or produced by EMPLOYEE during the term of his/her employment or
with the use or assistance of HUNTER's facilities, materials, or personnel,
HUNTER shall own all rights, title and interest to such work product, and such
product shall be considered as "work made for hire", unless otherwise agreed
in writing by the parties.
7. Protection of Trade Secrets and Confidential Information. EMPLOYEE
hereby acknowledges that during the term of his/her employment, he/she will
acquire access to confidential information and trade secrets belonging to
HUNTER or HUNTER's clients or third parties. Such confidential information
and trade secrets shall be kept in absolute confidence both during and after
the termination of EMPLOYEE's employment. For the purpose of this paragraph
7, the term "trade secrets and confidential information" shall mean any
information not generally known in the relevant trade or business, which was
obtained from HUNTER or its clients or which was learned, discovered,
conceived, originated or prepared as a result of the performance of any
services on behalf of HUNTER; including but not limited to information
relating to existing or contemplated products, services, technology, designs,
processes or formulae and information relating to business plans, customer
lists, customer requirements or supplier information. EMPLOYEE agrees that
he/she will not, at any time, disclose to others, use for his/her own benefit
or otherwise appropriate or copy any such confidential information or trade
secrets, whether or not developed by EMPLOYEE, except as required in
EMPLOYEE's duties to HUNTER;
2
<PAGE>
provided, however, that the foregoing shall not apply to any information (i)
that is generally available to the public on the date hereof or that
hereafter becomes generally available to the public through no breach of this
paragraph 7 by EMPLOYEE, (ii) obtained by EMPLOYEE from a third party having
the right to disclose such information, (iii) known by EMPLOYEE prior to its
disclosure by HUNTER or (iv) required by law, governmental order or decree to
be disclosed by EMPLOYEE.
8. Procedures for Preserving Confidentiality of Tangible and Intangible Items.
EMPLOYEE agrees to comply with any and all reasonable procedures which HUNTER
may adopt from time to time to preserve the confidentiality of any
confidential information or trade secrets. Certain materials will be affixed
with a legend indicating their confidential nature. However, the absence of
any such legend on any item containing or relating to confidential
information will not give rise to any inference that the information
contained therein or derived therefrom is not confidential information.
9. Covenant Not to Employ. During the period of employment, and for a
period of one (1) year after the period of employment, EMPLOYEE agrees that
he/she will not employ or solicit the employment of any HUNTER employee or
any of HUNTER's consultants, subcontractors or independent contractors.
Nothing herein shall be construed to phohibit EMPLOYEE from soliciting or
employing any HUNTER employee, consultant, subcontractor or independent
contractor who was terminated by HUNTER for economic or budgetary reduction
purposes.
10. Covenant Not to Solicit.
(a) During the period of employment, and for a one (1) year period
thereafter, EMPLOYEE agrees that he/she will not render, directly or
indirectly, any services of an advisory or consulting nature similar in
character to those offered by HUNTER, whether as an employee or otherwise, to
any business which is a client or active prospect of HUNTER. The provisions
of this paragraph 10.(a) shall not apply where EMPLOYEE was terminated by
HUNTER for economic or budgetary reduction purposes.
(b) During the period of employment, and for a one (1) year period
thereafter, EMPLOYEE agrees that he/she will not contact any clients or
active prospects of HUNTER for the purposes of soliciting, selling, or both,
to any of said clients or active prospects any products or services similar
to the products or services of HUNTER; nor will he/she in any way directly or
indirectly, for himself/herself or in behalf of, or in conjunction with any
other person, persons, firm, partnership, corporation, or company, solicit,
divert, or take away any such clients or active prospects of HUNTER.
(c) For purposes of paragraphs 10.(a) and 10.(b), active prospects are
defined as those persons, firms, or corporations with whom HUNTER is, or has
been actively engaged in the solicitation or negotiation of business
opportunities at any time during the one (1) year period preceding the
termination of employment.
11. Noncompetition Agreement.
(a) During the term of his/her employment, and for a period of one (1)
year after the date of its termination, EMPLOYEE agrees that he/she will not
render, directly or indirectly, any services of an advisory or consulting
nature, whether as an employee or otherwise, to any business which is a
competitor of HUNTER.
(b) During the term of this Agreement, and for a period of one (1) year
thereafter, EMPLOYEE agrees that he/she will not, either alone or as a member
of a partnership or joint venture, as a beneficiary or a trust, or as an
officer, director, stockholder or investor
3
<PAGE>
of or in any other corporation or enterprise, or otherwise (except as an
investor in securities publicly held and listed on a national securities
exchange) be engaged in the ownership or management of any business or
activity which is a competitor of HUNTER.
(c) The provisions of this paragraph 11 shall not apply where EMPLOYEE
was terminated by HUNTER for economic or budgetary reduction purposes.
12. Business Opportunities. EMPLOYEE acknowledges that all business
opportunities generated by HUNTER shall belong to HUNTER. In the event of a
breach of this paragraph 12, EMPLOYEE shall be liable to HUNTER for 100% of
the gross revenues of any business obtained as a result of such a breach and
shall not be entitled to any compensation or remuneration in any form from
HUNTER.
13. Duty Upon Termination of Employment.
(a) Upon termination of his/her employment with HUNTER for any reason,
EMPLOYEE agrees to deliver to HUNTER all keys, motor vehicles, computer
hardware, peripherals, software, telephones, writings, designs, documents,
records, data, memoranda, computer source code and object code listings, file
layouts, record layouts, system design information, models, manuals,
documentation, notes, and other materials of any nature which are in his/her
possession or control as a result of his/her employment by HUNTER.
(b) EMPLOYEE further agrees to retain in the strictest confidence any
confidential information or trade secrets he/she learned during his/her term
of association unless and until such information has been made generally
available to the trade other than by breach of this Agreement.
14. Other Agreements. EMPLOYEE represents and warrants that his/her signing
of this Agreement and the performance of his/her services hereunder is not
and will not be knowingly in violation of any other contract, agreement or
understanding to which he/she is a party.
15. Assignment. This Agreement may not be assigned or transferred in whole
or in part without the prior written consent of the parties.
16. Right to Injunctive Relief. EMPLOYEE's strict compliance with the
provisions of paragraphs 6 through 13 hereof is necessary to preserve and
protect the goodwill and proprietary rights of HUNTER as a going concern and
to prevent persons, firms, joint ventures, partnerships, corporations,
institutions, and enterprises engaged in businesses and activities which are
competitive with the businesses and activities conducted or carried on by
HUNTER from obtaining an unfair competitive advantage over HUNTER. Any
failure by EMPLOYEE to comply with the provisions of such paragraphs will
result in irreparable and continuing damage to HUNTER for which there will be
no adequate remedy at law. In the event that EMPLOYEE fails to comply with
the provisions of such paragraphs, HUNTER shall be entitled to injunctive
relief and to such other and further relief as may be necessary or
appropriate to cause EMPLOYEE to comply with his/her duties and obligations
under such paragraphs.
17. Severability. In case it be determined by a court of competent
jurisdiction that any provision herein contained is illegal or unenforceable,
such determination shall solely affect such provision and shall not impair
the remaining provisions of this Agreement.
18. Plurals; Gender. Any word in the text of this Agreement shall be read
as the singular or plural and as the masculine, feminine or neuter gender as
may be appropriate under the circumstances then existing.
4
<PAGE>
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland.
20. Entire Agreement. The parties have read this Agreement and agree to be
bound by its terms, and further agree that it constitutes the complete and
exclusive statement of the Agreement between them which supersedes all
proposals, oral or written, and all other communications between them
relating to the subject matter of this Agreement. This Agreement shall not be
amended except in a writing executed by both parties.
21. Notices. Except as otherwise provided herein, notices, payments, or any
other communication provided for herein shall be deemed to be given when
mailed first class mail, addressed to HUNTER as follows:
The Hunter Group, Inc.
11 East Chase Street
Suite 8E
Baltimore, Maryland 21202
Attn: Mr. Howard I. Zlotowitz
And to EMPLOYEE as follows:
Terry L. Hunter
800 Stone Barn Road
Baltimore, Maryland 21204
Executed under seal this 1st day of January, 1989.
WITNESS: THE HUNTER GROUP, INC.
/s/ Cathy L. Swalon By: /s/ Howard I. Zlotowitz (SEAL)
- ------------------------------------ ------------------------
Howard I. Zlotowitz,
Senior Vice President
Executed under seal this 1st day of January, 1989.
WITNESS: Terry L. Hunter
/s/ C.S. Bleyer /s/ Terry L. Hunter (SEAL)
- ------------------------------------ ------------------------
5
<PAGE>
Exhibit 10.07(b)
THE HUNTER GROUP, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective this 13 day of March, 1995 by and
between The Hunter Group, Inc. ("HUNTER"), a Maryland corporation with
offices throughout the United States; and David P. Andros ("EMPLOYEE"), a
resident of the State of Connecticut.
WHEREAS, HUNTER is engaged in consulting and systems development,
research, design, formulation, manufacture, marketing, distribution,
licensing and sale of a variety of services and products, generally relating
to Financial Accounting and Human Resources Administration, including, but
not limited to, employee benefits, equal employment, applicant and resume
tracking, succession planning, suggestion awards, compensation, pension,
stock options, employee relations, training, health and safety, payroll,
accounts payable, accounts receivable, general ledger, fixed assets, and
related software systems, and now has and expects to develop confidential
information relating thereto; and
WHEREAS, EMPLOYEE is skilled in the fields in which HUNTER is engaged.
WHEREAS, HUNTER desires to utilize the services of EMPLOYEE and EMPLOYEE
desires to offer his/her services to HUNTER, and as a result of the
rendering of such services, EMPLOYEE may have access to confidential
information.
NOW THEREFORE, HUNTER and EMPLOYEE hereby agree as follows:
1. Services. EMPLOYEE agrees to perform for HUNTER such duties which are
consistent with EMPLOYEE's background, skills, and job responsibilities as
shall be reasonably assigned to him/her from time to time by HUNTER.
2. Compensation. EMPLOYEE shall be entitled to the compensation and
benefits described in the Offer Letter, a copy of which is attached hereto as
"Exhibit A".
3. EMPLOYEE's Authority to Bind the Corporation. EMPLOYEE shall not at
any time pledge the credit of HUNTER, nor enter into any contract or
agreement on behalf of HUNTER, without its prior written consent.
4. Term. EMPLOYEE may terminate his/her employment upon not less than
four (4) weeks' written notice provided, however, that all of the terms and
conditions intended to survive the termination of EMPLOYEE's employment
shall remain in full force and effect.
(a) Severance Entitlement. EMPLOYEE's employment with HUNTER is at-will and
can be terminated for any reason, with or without cause, at any time. In the
event HUNTER terminates this Agreement for any reason other than EMPLOYEE's
termination for cause as defined in subsection (b), EMPLOYEE shall be
entitled to advance notice, a severance payment in lieu thereof, or a
combination of notice and severance payment solely determined by HUNTER,
according to Hunter's policies then in effect.
<PAGE>
(b) Termination for Cause. Notwithstanding anything to the contrary herein,
HUNTER shall be entitled to terminate EMPLOYEE's employment without prior
notice for cause, including but not limited to EMPLOYEE's misfeasance,
malfeasance, insubordination, breach of law or fiduciary duty, or any of
the other terms or conditions of his/her employment with HUNTER, including
any expressed or implied representations or warranties made by EMPLOYEE in
connection with his/her employment.
5. Reimbursement for Training Costs. EMPLOYEE acknowledges that HUNTER
may be incurring substantial costs for providing additional training and
professional development to EMPLOYEE during the course of his/her employment.
In the event EMPLOYEE voluntarily terminates his/her employment, EMPLOYEE
agrees to reimburse HUNTER for the costs of tuition, registration,
lodging, travel, meals, and related expenses incurred in connection with such
training and professional development during the three (3) months immediately
preceding the effective date of his/her termination. EMPLOYEE agrees that
HUNTER may deduct such costs from any salary, expense reimbursement or other
sums due to EMPLOYEE. In the event that additional sums are due and owing to
HUNTER, EMPLOYEE shall pay such amount to HUNTER on or before the effective
date of his termination, unless otherwise agreed in writing by both parties.
6. Rights to Work Product. With respect to any work product which is
conceived or produced by EMPLOYEE during the term of his/her employment or
with the use or assistance of HUNTER's facilities, materials, or personnel,
HUNTER shall own all rights, title and interest to such work product, and
such product shall be considered as "work made for hire," unless otherwise
agreed in writing by the parties.
7. Protection of Trade Secrets and Confidential Information. EMPLOYEE
hereby acknowledges that during the term of his/her employment, he/she will
acquire access to confidential information and trade secrets belonging to
HUNTER or HUNTER's clients or third parties. Such confidential information
and trade secrets shall be kept in absolute confidence both during and after
the termination of EMPLOYEE's employment. For the purpose of this paragraph
7, the term "trade secrets and confidential information" shall mean any
information not generally known in the relevant trade or business, which
was obtained from HUNTER or its clients or which was learned, discovered,
conceived, originated or prepared as a result of the performance of any
services on behalf of HUNTER; including but not limited to information
relating to existing or contemplated products, services, technology, designs,
processes or formulae and information relating to business plans and
strategies, customer lists, customer requirements or supplier information.
EMPLOYEE agrees that he/she will not, at any time, disclose to others, use
for his/her own benefit or otherwise appropriate or copy any such confidential
information or trade secrets, whether or not developed by EMPLOYEE, except
as required in EMPLOYEE's duties to HUNTER; provided, however, that the
foregoing shall not apply to any information that is (i) generally available
to the public on the date hereof or becomes generally available to the public
through no breach of this paragraph 7 by EMPLOYEE, (ii) obtained by
EMPLOYEE from a third party having the right to disclose such information,
(iii) known by EMPLOYEE prior to its disclosure by HUNTER or (iv) required by
law, governnmental order or decree to be disclosed by EMPLOYEE.
2
<PAGE>
8. Procedures for Preserving Confidentiality of Tangible and Intangible
Items. EMPLOYEE agrees to comply with any and all reasonable procedures
which HUNTER may adopt from time to time to preserve the confidentiality of
any confidential information or trade secrets. Certain materials will be
affixed with a legend indicating their confidential information. The failure
to affix such legend shall not give rise to any inference that the
information contained therein or derived therefrom is not confidential
information.
9. Convenant Not to Employ. During the period of emmployment, and for a
twelve (12) month period thereafter, EMPLOYEE agrees that he/she will not
employ or solicit the employment of any HUNTER employee or any of HUNTER's
consultants, subcontractors or independent contractors. Nothing herein shall
be construed to prohibit EMPLOYEE from soliciting or employing any HUNTER
employee, consultant, subcontractor or independent contractor who was
terminated by HUNTER for economic or budgetary reduction purposes.
10. Covenant Not to Solicit.
(a) During the period of employment, and for a twelve (12) month period
thereafter, EMPLOYEE agrees that he/she will not render, directly or
indirectly, any services of an advisory or consulting nature similar in
character to those offered by HUNTER, whether as an employee or otherwise,
and whether paid or unpaid, to any business which is a client or active
prospect of HUNTER. The provisions of this paragraph 10. (a) shall not apply
where EMPLOYEE was terminated by HUNTER for economic or budgetary reduction
purposes.
(b) During the period of employment, and for a twelve (12) month period
thereafter, EMPLOYEE agrees that he/she will not contact any clients or
active prospects of HUNTER for the purposes of soliciting, selling, or both,
to any of said clients or active prospects any products or services similar
to the products or services of HUNTER; nor will he/she in any way directly or
indirectly, for himself/herself or in behalf of, or in conjunction with any
other person, persons, firm, partnership, corporation, or company, solicit,
divert, or take away any such clients or active prospects of HUNTER.
(c) For purposes of paragraphs 10(a) and 10(b), the term "active
prospects" is defined as those persons, firms, or corporations with whom
HUNTER is, or has been actively engaged in the solicitation or negotiation of
business opportunities at any time during the six (6) month period preceding
the termination of employment.
11. Noncompetition Agreement.
(a) During the term of his/her employment, and for a six (6) month
period thereafter, EMPLOYEE agrees that he/she will not render, directly or
indirectly, any services of an advisory or consulting nature similar in
character to those offered by HUNTER, whether as an employee or otherwise,
and whether paid or unpaid, to any business which is a competitor of HUNTER.
3
<PAGE>
(b) During the term of his/her employment, and for a six (6) month
period thereafter, EMPLOYEE agrees that he/she will not, either alone or as a
member of a partnership or joint venture, as a beneficiary or a trust, or as
an officer, director, stockholder or investor of or in any other corporation
or enterprise, or otherwise (except as an investor in securities publicly
held and listed on a national securities exchange) be engaged in the
ownership or management of any business or activity which is a competitor of
HUNTER.
(c) For the purposes of this paragraph 11, the term "competitor" is
defined as those persons, firms or corporations which provide consulting,
systems implementation, systems integration, or advisory services in the
areas of Human Resource Administration or Financial Accounting systems.
(d) The provisions of this paragraph 11 shall not apply where EMPLOYEE
was terminated by HUNTER for economic or budgetary reduction purposes.
12. Duties Upon Termination of Employment.
(a) Upon termination of his/her employment with HUNTER for any reason,
EMPLOYEE agrees to deliver to HUNTER all keys, motor vehicles, computers,
telephones, peripheral devices, software, telephone and voicemail
directories, policy and procedure manuals, books, proposals, writings,
designs, documents, records, data, memoranda, computer source code and object
code listings, file layouts, record layouts, system design information,
models, manuals, documentation, notes, and other materials of any nature
which are in his/her possession or control as a result of his/her employment
by HUNTER.
(b) EMPLOYEE agrees and hereby authorizes HUNTER to withhold payments
of any salary, expense reimbursement or other sums due EMPLOYEE until all
such materials have been returned in good working order.
(c) EMPLOYEE further agrees to retain in the strictest confidence any
confidential information or trade secrets he/she learned during his/her term
of association with HUNTER.
13. Other Agreements. EMPLOYEE represents and warrants that his/her
signing of this Agreement and the performance of his/her services hereunder
is not and will not be knowingly in violation of any other contract,
agreement or understanding to which he/she is a party.
14. Assignment. This Agreement may not be assigned or transferred in whole
or in part without the prior written consent of the parties.
15. Right to Injunctive Relief. EMPLOYEE's strict compliance with the
provisions of paragraphs 6 through 13 hereof is necessary to preserve and
protect the goodwill and proprietary rights of HUNTER and to prevent persons,
firms, joint ventures, partnerships, corporations, institutions, and
enterprises engaged in business and activities which are competitive
4
<PAGE>
with the business and activities conducted or carried on by HUNTER from
obtaining an unfair comeptitive advantage over HUNTER. Any failure by
EMPLOYEE to comply with the provisions of such paragraphs will result in
irreparable and continuing damage to HUNTER for which there will be no
adequate remedy at law. In the event that EMPLOYEE fails to comply with the
provisions of such paragraphs, HUNTER shall be entitled to injunctive relief
and to such other further relief as may be necessary or appropriate to cause
EMPLOYEE to comply with his/her duties and obligations under such paragraphs.
16. Severability. In case it is determined by a court of competent
jurisdiction that any provision herein contained is unenforceable, such
determination shall solely affect such provision and shall not impair the
remaining provisions of this Agreement.
17. Plurals; Gender. Any word in the text of this Agreement shall be read
as the singular or plural and as the masculine, feminine or neuter gender as
may be appropriate under the circumstances then existing.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland. All disputes relating to
or arising in connection with this agreement shall be decided by the courts
of the State of Maryland, to the exclusion of any other courts.
19. Waiver of Jury Trial. The parties waive any right either may have to a
trial by jury in any litigation between them.
20. Entire Agreement. The parties have read this Agreement and agree to be
bound by its terms, and further agree that it constitutes the complete and
exclusive statement of the Agreement between them which supersedes all
proposals, oral or written, and all other communications between them
relating to the subject matter of this Agreement. This Agreement shall not be
amended except in a writing executed by both parties.
EMPLOYEE:
3/13/95 /s/ David P. Andros (Seal)
- ------------------------------ -------------------------
Date By: David P. Andros
THE HUNTER GROUP, INC.
4/13/95 /s/ Terry L. Hunter (Seal)
- ------------------------------ ------------------------
Date By: Terry L. Hunter
President & CEO
<PAGE>
EXHIBIT A
March 10, 1995
Mr. David P. Andros
121 Cannon Ridge Drive
Watertown, Connecticut 06795
Dear Dave:
I am excited to extend our offer for you to join The Hunter Group as a Vice
President to lead our Management Consulting practice. In addition to leading
and performing consulting engagements and developing this practice area, you
will be working with me and The Hunter Group's executive team to plan,
develop and manage THG's next stage of growth. You will be based in our
Baltimore headquarters and will be reporting to me.
Your base salary will be $11,500.00 per month paid semi-monthly on the
twenty-second and seventh days of the month for the pay periods ending on the
15th and last day of the month, respectively. As part of Hunter's management
team, you will share the perquisites and rewards commensurate with your role
and performance, including management bonuses and stock option programs as
these become finalized. You will also be eligible for vacation, personal and
sick leave, and holiday pay according to standard Hunter policy. Eligibility
requirements and other highlights of our benefit plans are detailed in the
attached summaries. Please note that some of the benefit plans are optional,
with a contribution required on your part should you elect to participate.
David, you will need to sign an Employment Agreement. As much as we dislike
the formality, it is required to protect your interests and rights, as well
as those of The Hunter Group, its clients and prospects, and the vendors we
work with and support. It is enclosed for your signature and must be signed
on or before the date you commence employment with us. If you have never been
faced with a contract of this type before, it can be somewhat intimidating,
even though we have tried to make it less so. Don't hesitate to ask if you
have any questions or concerns; we will be pleased to discuss any of its
provisions with you.
Over the past few weeks there have been a number of discussions about the
details of our working relationship. Rather than address these here, I've
itemized them in the attached addendum.
<PAGE>
Mr. David P. Andros
March 10, 1995
Page 2
This employment offer is extended to you until March 15, 1995, at which time
it expires if not accepted. Based on our understanding of your current
obligations, we are expecting you to start on or before March 16, 1995. Please
sign one copy of this letter indicating your expected start date and return
it to Lynn Moler in our Baltimore office.
Your employment with The Hunter Group should offer you the challenges and
rewards you seek. We look forward to working with you, and to the success of
our mutual endeavors.
Sincerely,
/s/ Terry L. Hunter/few
Terry L. Hunter
President & CEO
TLH/few
Enclosure: Employment Agreement
Benefits Information
cc: Personnel
The Strategic Resource Group
Accepted:
/s/ David P. Andros Date: 3/13/95
- ------------------- --------------
David P. Andros
Expected start date: 3/16/95
---------
###-##-####
- -----------------------------
Social Security #
<PAGE>
Addendum to offer letter dated March 10, 1995
1. Vacation: standard Hunter policy for officers - 3 weeks initially; 4 weeks
following 3 years service.
2. Parking: standard Hunter policy for officer - paid by company.
3. Professional Memberships: standard Hunter policy for officers - dues paid
by company; meeting expenses reimbursed.
4. Continuing Executive Development: standard Hunter policy for officers -
continuing education and personal growth is supported, although there are no
published guidelines. Related costs are paid/reimbursed by the company,
subject to prior approval.
5. Performance/Pay Review: everyone joining Hunter receives an interim
performance review, and related pay adjustment, if warranted. In practice,
while Hunter's policy requires a formal review annually, more frequent
reviews are the norm, particularly among consultant staff. You will receive
a performance/pay review at your six month anniversary.
6. Bonuses: provided you are an active employee of the company at year end,
you will be entitled to bonus distributions commensurate with your peers.
Typically, bonuses to executives are paid in early December. Provided the
company meets revenue and profit goals, we would expect your bonus for 1995
to be approximately 30% of W-2 earnings.
7. Stock Grant: our offer to your includes a stock option grant valued at
$75,000 on April 1, 1995. The form of that valuation, and the market for
cashing-in those options is not yet finalized, but should be in place by
mid-April, 1995.
The $75,000 grant will become vested as follows:
20% or $15,000 upon completion of 12 months service
+35% or $26,250 upon completion of 24 months service
+45% or $33,750 upon completion of 36 months service
---- -------
100% $75,000
In the event of your death or incapacitating disability, the current
year's portion of the award -- e.g., 1st year 20%; 2nd year 35%, 3rd year
45% -- will be immediately vested; that is, the remaining period of
employment to complete that year's vesting will be waived. Vesting beyond
that year will not continue, however.
Until such time as The Hunter Group's Stock Option Plan is finalized and a
market established for cashing in shares, the grant made to you shall be at
face value; that is, each 1% vested shall be worth $750 and it shall neither
increase nor decrease in value.
<PAGE>
Likewise, in the event of your death or incapacitating disability during
this interim period, Hunter will cash-in vested shares using the following
schedule:
Value up to $15,000 - Payable immediately
Value up to $41,250 - Payable over 12 months
Value up to $75,000 - Payable over 24 months
8. Safety Net: in the event Hunter should merge with or be acquired by
another entity and there be a change in ownership or capitalization structure
and your position is eliminated or otherwise changed in such a manner as to
radically alter your responsibilities, the stock option grant vesting
percentage shall immediately accelerate to 100%.
<PAGE>
Exhibit 10.07(c)
THE HUNTER GROUP, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective this 24th day of February, 1997, between The
Hunter Group, Inc. ("Hunter"), and Loren D. Burnett ("Employee"), a
resident of the State of Maryland. Hunter and Employee agree as follows:
1. Services. Employee agrees to perform for Hunter such duties which are
consistent with Employee's background, skills, and job responsibilities as
shall be reasonably assigned to him/her from time to time by Hunter.
2. Compensation. Subject to this Agreement, Employee shall be entitled to
the compensation and benefits described in the Offer Letter, a copy of which
is attached hereto as "Exhibit A".
3. Employee's Authority to Bind the Corporation. Employee will not pledge the
credit of Hunter, nor enter into any contract or agreement on behalf of
Hunter, without its prior written consent.
4. Rights to Work Product. Hunter shall own all rights, title and interest in
any work product which is conceived or produced by Employee during the term
of his/her employment or with the use or assistance of Hunter's facilities,
materials, or personnel. Such work product shall be considered "work made for
hire" unless otherwise agreed in writing by the parties.
5. Protection of Confidential Information. Employee acknowledges that he/she
will acquire access to Confidential Information belonging to Hunter or
Hunter's clients or third parties. Such Confidential Information shall be
kept in absolute confidence, both during employment and after termination of
employment. "Confidential Information" shall mean any information not
generally known in the relevant trade or business which was obtained from
Hunter or its clients, or was learned, discovered, conceived, originated or
prepared as a result of performing any services for or on behalf of Hunter,
including but not limited to information relating to existing or contemplated
products, services, technology, designs, processes or formulae and
information relating to business plans and strategies, customer lists,
customer requirements or supplier information. "Confidential Information"
shall also include pricing information and billing rates; phone directories,
employee lists and contact information; compensation arrangements and
employment terms; financial data, operational plans and sales strategies.
Employee agrees that he/she will not, at any time, disclose to others, use
for his/her own benefit or otherwise appropriate or copy any such
Confidential Information, whether or not developed by Employee, except as
required in Employee's duties to Hunter. This shall not apply to any
information that is or becomes generally available to the public, is obtained
by Employee from a third party having the right to disclose such information,
or is required by law, governmental order or decree to be disclosed by
Employee.
6. Preserving Confidentiality of Tangible and Intangible Items. Employee
agrees to comply with any and all procedures of Hunter to preserve
Confidential Information.
7. Covenants Regarding Business of Hunter. Employee acknowledges that by the
nature of its business, Hunter has a legitimate and protectable interest in
its clients and employees. Employee agrees that he/she shall not interfere
with, disrupt or attempt to disrupt the relationship between Hunter and any
client, contractor, supplier, consultant or employee of Hunter. This
provision shall survive the termination of this Agreement. Employee further
agrees that during the term of Employee's employment and for a period of
(1)
<PAGE>
twelve (12) months thereafter, he/she will not directly or indirectly, either
as an individual or as an agent, employee, director, shareholder, or
consultant of any other entity, or in any other capacity, take or engage in
any of the following actions specified below without written approval from
Hunter:
a. Solicitation of Employees. Employee shall not employ, solicit, nor
aid or assist any other person or entity in employing or soliciting, the
services of any employee or agent of Hunter.
b. Solicitation of Clients. Employee shall not render, directly or
indirectly, as an employee or otherwise, any services similar to those
provided by Hunter to a client or active prospect of Hunter, including any
entity which has been a client of Hunter within the six months preceding the
Employee's termination. Employee shall not contact any such clients or active
prospects of Hunter for the purposes of soliciting business, nor shall
employee aid or assist any other person or entity in such contact. This
paragraph shall not preclude Employee from working for a client in any
administrative, finance, accounting, or executive management role.
8. Duties Upon Termination of Employment. Upon termination of his/her
employment with Hunter for any reason, Employee agrees to deliver to Hunter
all keys, credit cards, motor vehicles, computers, telephones, peripheral
devices, software, telephone and voice mail directories, policy and procedure
manuals, books, proposals, writings, designs, documents, records, data,
memoranda, computer source code and object code listings, file layouts,
record layouts, system design information, models, manuals, documentation,
notes, and other materials of any nature which are in his/her possession or
control and copies thereof, including all Confidential Information
(collectively, the "Materials"). Employee agrees and hereby authorizes Hunter
to withhold payments of any salary, expense reimbursement or other sums due
Employee until all such Materials have been returned in good working order.
Employee further agrees to retain in the strictest confidence all
Confidential Information.
9. Notice. Employee agrees to provide as much advance notice as possible, but
not less than four (4) weeks written notice, of his/her termination. During
such notice period, Employee agrees to carry out his/her duties in a
professional and conscientious manner.
10. Reimbursement for Training Costs. Employee acknowledges that Hunter may
be incurring substantial costs for providing additional training to Employee
during the course of his/her employment. If Employee voluntarily terminates
within the first two (2) years of his/her employment, Employee agrees to
reimburse Hunter for the costs of tuition, registration, lodging, travel,
meals, and related expenses directly incurred in connection with such
training during the most recent six (6) months prior to the date of his/her
termination. Employee agrees that Hunter may deduct such costs from any
salary, expense reimbursement or other sums due to Employee. If additional
sums are due and owing to Hunter, Employee shall pay such amount to Hunter on
or before the date of termination, unless otherwise agreed in writing by both
parties.
11. Assignment. This Agreement may be assigned by Hunter.
12. Right to Injunctive Relief. Employee's strict compliance with certain
provisions of this Agreement is necessary to preserve and protect the
goodwill and proprietary rights of Hunter, its clients and others, and to
prevent other enterprises engaged in business and activities which are
competitive with the business conducted by Hunter from obtaining an unfair
competitive advantage over Hunter. Any failure by Employee to comply with
these provisions will result in irreparable and continuing damage to Hunter
for which there will be no adequate remedy at law. In the event that Employee
(2)
<PAGE>
does not comply with the provisions of paragraphs 5 through 8 of this
Agreement, Hunter shall be entitled to injunctive relief and to such other
further relief as may be necessary or appropriate.
13. Other Agreements. Employee's execution of this Agreement and the
performance of his/her services for Hunter is not, and will not be, knowingly
in violation of any other contract, agreement or understanding to which
he/she is a party.
14. Severability. If it is determined that any provision herein contained is
unenforceable, such determination shall solely affect such provision and
shall not impair the remaining provisions of this Agreement.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland.
16. Arbitration. Hunter and Employee agree that any dispute arising under
this Agreement will be resolved by binding arbitration in Baltimore,
Maryland, except as provided in paragraph 12 of this Agreement.
17. Guarantees; Term of Employment. Nothing in this Agreement shall be
construed as a guarantee of employment by Hunter and it is specifically
acknowledged that Employee's employment is at will and can be terminated at
any time and for any reason.
18. Entire Agreement. The parties have read this Agreement and agree to be
bound by its terms, and further agree that it constitutes the complete and
exclusive agreement between them which supersedes all agreements, oral or
written, and all other communications between them relating to employment
with The Hunter Group. This Agreement shall not be amended except in a
writing executed by both parties.
Employee:
Date: 2/21/97 /s/ L. D. Burnett
------- ---------------------------------
By: Loren D. Burnett, CPA
THE HUNTER GROUP, INC.
Date: 3/7/97 /s/ Terry L. Hunter
------ ---------------------------------
By: Terry L. Hunter
President and Chief Executive Officer
(3)
<PAGE>
[LETTERHEAD]
Exhibit A
February 20, 1997
Loren D. Burnett, CPA
14429 Sylvan Drive
North Potomac, MD 20878 via fax (301) 424-7437
Dear Loren:
I am pleased to confirm our offer for you to join The Hunter Group as Senior
Vice President and Chief Financial Officer. In this role you will be working
with me and the The Hunter Group's executive team to plan, develop and manage
THG's next stage of growth. You will be based in our Baltimore headquarters
and will be reporting to me.
Your base salary will be $14,000.00 per month paid semi-monthly on the 22nd
and 7th days of the month for the pay periods ending on the 15th and last day
of the month, respectively. As part of Hunter's management team, you will
share in the perquisites and rewards commensurate with your role and
performance including management bonuses and stock option programs. You will
also be eligible for vacation, personal and sick leave, and holiday pay
according to Hunter's Paid Time Off (PTO) policy. Eligibility requirements
and other highlights of our benefit plans are detailed in the attached
summaries. Please note that some of the benefit plans are optional, with a
contribution required on your part should you elect to participate.
Loren, you will need to sign an employment agreement. As much as we dislike
the formality, it is required to protect your interests and rights, as well
as those of The Hunter Group, its clients and prospects, and the vendors we
work with and support. The employment agreement is enclosed for your
signature and must be signed on or before the date you commence employment
with us. Don't hesitate to ask if you have any questions or concerns; we
will be pleased to discuss any of its provisions with you.
Over the past few weeks there have been a number of discussions about the
details of our working relationship. Rather than address these here, I've
itemized them in the attached addendum.
This employment offer is extended to you until February 21, 1997, at which
time it expires if not accepted. Based on our understanding of your current
obligations, we are expecting you to start on or before February 24, 1997. We
have a 2-day management meeting in Palm Springs February 27-28 and would
expect you to participate. Please sign one copy of this letter indicating
your expected start date and return it to me in our Baltimore office.
<PAGE>
Loren D. Burnett, CPA
February 20, 1997
Page 2
Your employment with The Hunter Group should offer you the challenges and
rewards you seek. We look forward to working with you, and to the success of
our mutual endeavors.
Sincerely,
/s/ Terry Hunter
Terry L. Hunter
President and Chief Executive Officer
TLH/lac
Enclosure: Employment Agreement
Benefits Information
cc: Personnel
Accepted:
/s/ L.D. Burnett Dated: 2/21/97
- ------------------------------ -------
Loren D. Burnett, CPA
Expected start date: 2/24/97
-------
###-##-####
- ----------------------------
Social Security #
<PAGE>
Addendum to offer letter dated February 20, 1997
1. Vacation: you have 2 weeks vacation planned for March 17-28; you will be
able to "borrow" time under our PTO policy. (Our policy does not
explicitly say Officers start off with 22 paid days of PTO, but its
understood you will accrue this balance.)
2. Parking: standard Hunter policy for officers - paid by company.
3. Professional Memberships: standard Hunter policy for officers - dues paid
by company; meeting expenses reimbursed. We will look into Center Club
membership to determine availability.
4. Car Phone: the company will reimburse you for monthly cellular phone
expenses. There is no Hunter policy on this subject, but practice has
been to encourage productive use of executives' commute time.
5. Role and responsibilities: in addition to those finance and
accounting-related responsibilities typically a part of a CFO's job, you
will also have responsibility for treasury functions, corporate-office
administration including facilities management and administrative staff,
information technology infrastructure and staff, and corporate-wide
benefits and personnel policy administration until a Human Resource
executive has been hired.
Benefits and personnel policy decisions are generally made by an ad hoc
executive committee, and people management, except for those direct and
indirect reports to the CFO, remain the responsibility of regional and/or
practice managers.
6. Member of Board: upon receiving your written acceptance of this
employment offer, I will take the necessary steps to have you become a
member of the Hunter's Board of Directors.
7. Commuting Allowance: the company will reimburse you for automobile
mileage in excess of 50 miles round-trip, for using your personal
automobile, or at cost for public transportation. Reimbursement for
automobile mileage will be at the IRS-approved rate, currently 31.5 cents
per mile.
8. Performance Bonuses: provided you are an active employee of the company
when payments are made, you will be entitled to bonus distributions
commensurate with you peers. Typically, bonuses to executives are paid in
early December, however, we are looking into semi-annual bonus
distributions. Provided the company meets revenue and profit goals, we
would expect your bonus for 1997 to be approximately 40% of W-2 earnings.
<PAGE>
9. Stock Options: our offer to you includes an option to acquire .70% of
Hunter stock (approximately 2,492 shares) at the current market value on
March 1, 1997, as defined in The Hunter Group's 1997 Employee Stock
Option Plan. The options will mature as follows:
20% of available shares upon completion of 12 months service
+35% of available shares upon completion of 24 months service
+45% of available shares upon completion of 36 months service
----
100%
In the event of an IPO or change-of-control event, the options will fully
vest on the date the transaction is completed.
In the event of your death or incapacitating disability, the current
year's portion of the option--e.g., 1st year 20%; 2nd year 35%; 3rd year
45%--will immediately mature, that is, the remaining period of employment
to complete that year's vesting will be waived. Vesting beyond that year
will not continue, however.
10. Safety Net: in the event Hunter should merge with or be acquired by
another entity and there be a change in ownership and your position is
eliminated or otherwise changed in such a manner as to radically alter
your responsibilities, and you are asked or choose to leave the Company,
you will be provided severance consideration in the form of salary
continuation, for a period of up to nine (9) months from the date of
separation and until you have secured other employment. Alternatively,
you may request severance payment as a lump sum whereby the Company will
pay you the equivalent of six (6) months salary.
11. 401(k) match consideration: Hunter's plan does not allow you to receive
matching contributions until one year of service, thus depriving you of
both the matching amount (1/2 of your contribution) and the pre-tax
nature of the combined contribution.
During the one-year period of no-match, Hunter will pay you an equivalent
amount of the match based on your actual 401(k) contribution. e.g., if
you are contributing 10% of pay to the 401(k) plan, you would get the 50%
match or 5% of pay.
This "match" will occur outside the plan and be made quarterly as an
addition to payroll. It will be taxable compensation and the amount of
the "match" will be subject to the normal maximum contribution tests of
the plan and related tax provisions.
12. In the event your employment is terminated by Hunter for any reason other
than for cause or as a result of an acquisition or merger as described in
paragraph 10 above, you will be provided severance consideration in the
form of salary continuation for six (6) months from the date of
separation and until you have secured other employment; alternately, you
may request severance payment as a lump sum whereby the Company will pay
you the equivalent of three (3) months salary.
<PAGE>
Exhibit 10.07(d)
[Letterhead]
THIS AGREEMENT made this 24th day of January, 1985, by and between Judith
I. Dunnington (DUNNINGTON), and The Hunter Group, Inc.; (HUNTER)
WHEREAS, HUNTER is a consulting firm, and
WHEREAS, DUNNINGTON desires association as an employee of HUNTER;
NOW, THEREFORE, HUNTER agrees to pay DUNNINGTON per annum for
professional services rendered for her work in designing and preparing
technical specifications and other documents and materials in conjunction
with work being done for HUNTER and its clients.
DUNNINGTON understands and accepts that all client and HUNTER materials
given her are proprietary and valuable property of HUNTER and/or its clients,
and that all work prepared by her for HUNTER shall be treated by her as
confidential, and is the property of HUNTER.
It is understood that DUNNINGTON may require and be given access to
HUNTER's confidential business plans, records, and proprietary materials.
DUNNINGTON shall not make reproductions of these materials in any form, or
communicate these plans to any person or organization, where a benefit may
accrue to DUNNINGTON or any party other than HUNTER.
Further, it is agreed DUNNINGTON shall not at any time while an employee
of HUNTER, approach or accept business for herself or any party other than
HUNTER, from any HUNTER client or active prospect, except as may be in the
best interests of both HUNTER and DUNNINGTON and where agreed in writing.
DUNNINGTON agrees not to enter into any competitive situation against
HUNTER for such time as she may be employed by HUNTER, and for a period of
three months thereafter.
AS WITNESS, the hands and seals of the parties the day and year first
above written.
/s/ Judith I. Dunnington
-----------------------------------
Judith I. Dunnington (SEAL)
/s/ Terry L. Hunter
-----------------------------------
Terry L. Hunter, President (SEAL)
The Hunter Group, Inc.
11 East Chase Street Suite 8E Baltimore, Maryland 21202 (301) 576-1515
44 Montgomery Street Fifth Floor
San Francisco, California 94104 (415) 989-5333
Park Avenue Atrium 237 Park Avenue Twenty First Floor
New York, New York, 10017 (212) 551-3584
<PAGE>
Exhibit 10.07(e)
THE HUNTER GROUP, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective this 1st day of July, 1995, by and
between The Hunter Group, Inc. ("HUNTER"), a Maryland corporation with
offices throughout the United States; and Bradford S. Everett ("EMPLOYEE"), a
resident of the State of California.
WHEREAS, HUNTER is engaged in consulting and systems development,
research, design, formulation, manufacture, marketing, distribution,
licensing and sale of a variety of services and products, generally relating
to Financial Accounting and Human Resources Administration, including, but
not limited to, employee benefits, equal employment, applicant and resume
tracking, succession planning, suggestion awards, compensation, pension,
stock options, employee relations, training, health and safety, payroll,
accounts payable, accounts receivable, general ledger, fixed assets, and
related software systems, and now has and expects to develop confidential
information relating thereto; and
WHEREAS, EMPLOYEE is skilled in the fields in which HUNTER is
engaged.
WHEREAS, HUNTER desires to utilize the services of EMPLOYEE and
EMPLOYEE desires to offer his/her services to HUNTER, and as a result of the
rendering of such services, EMPLOYEE may have access to confidential
information.
NOW THEREFORE, HUNTER and EMPLOYEE hereby agree as follows:
1. Services. EMPLOYEE agrees to perform for HUNTER such duties
which are consistant with EMPLOYEE's background, skills, and job
responsibilities as shall be reasonably assigned to him/her from time to time
by HUNTER.
2. Compensation. EMPLOYEE shall be entitled to the compensation and
benefits described in the Offer Letter, a copy of which is attached hereto as
"Exhibit A".
3. EMPLOYEE's Authority to Bind the Corporation. EMPLOYEE shall
not at any time pledge the credit of HUNTER, nor enter into any contract or
agreement on behalf of HUNTER, without its prior written consent.
4. Term. EMPLOYEE may terminate his/her employment upon not less
than four (4) weeks' written notice provided, however, that all of the terms
and conditions intended to survive the termination of EMPLOYEE's employment
shall remain in full force and effect.
(a) Severance Entitlement. EMPLOYEE's employment with HUNTER is at-will
and can be terminated for any reason, with or without cause, at any time. In
the event HUNTER terminates this Agreement for any reason other than
EMPLOYEE's termination for cause as defined in subsection (b), EMPLOYEE shall
be entitled to advance notice, a severance payment in lieu thereof, or a
combination of notice and severance payment solely determined by HUNTER,
according to Hunter's policies then in effect.
<PAGE>
(b) Termination for Cause. Notwithstanding anything to the contrary
herein, HUNTER shall be entitled to terminate EMPLOYEE's employment without
prior notice for cause, including but not limited to EMPLOYEE's misfeasance,
malfeasance, insubordination, breach of law or fiduciary duty, or any of the
other terms or conditions of his/her employment with HUNTER, including any
expressed or implied representations or warranties made by EMPLOYEE in
connection with his/her employment.
5. Reimbursement for Training Costs. EMPLOYEE acknowledges that
HUNTER may be incurring substantial costs for providing additional training
and professional development to EMPLOYEE during the course of his/her
employment. In the event EMPLOYEE voluntarily terminates his/her employment,
EMPLOYEE agrees to reimburse HUNTER for the costs of tuition, registration,
lodging, travel, meals, and related expenses incurred in connection with such
training and professional development during the three (3) months immediately
preceding the effective date of his/her termination. EMPLOYEE agrees that
HUNTER may deduct such costs from any salary, expense reimbursement or other
sums due to EMPLOYEE. In the event that additional sums are due and owing to
HUNTER, EMPLOYEE shall pay such amount to HUNTER on or before the effective
date of his termination, unless otherwise agreed in writing by both parties.
6. Rights to Work Product. With respect to any work product which
is conceived or produced by EMPLOYEE during the term of his/her employment or
with the use or assistance of HUNTER's facilities, materials, or personnel,
HUNTER shall own all rights, title and interest to such work product, and
such product shall be considered as "work made for hire," unless otherwise
agreed in writing by the parties.
7. Protection of Trade Secrets and Confidential Information.
EMPLOYEE hereby acknowledges that during the term of his/her employment,
he/she will acquire access to confidential information and trade secrets
belonging to HUNTER or HUNTER's clients or third parties. Such confidential
information and trade secrets shall be kept in absolute confidence both
during and after the termination of EMPLOYEE's employment. For the purpose
of this paragraph 7, the term "trade secrets and confidential information"
shall mean any information not generally known in the relevant trade or
business, which was obtained from HUNTER or its clients or which was learned,
discovered, conceived, originated or prepared as a result of the performance
of any services on behalf of HUNTER; including but not limited to information
relating to existing or contemplated products, services, technology, designs,
processes or formulae and information relating to business plans and
strategies, customer lists, customer requirements or supplier information.
EMPLOYEE agrees that he/she will not, at any time, disclose to others, use
for his/her own benefit or otherwise appropriate or copy any such
confidential information or trade secrets, whether or not developed by
EMPLOYEE, except as required in EMPLOYEE's duties to HUNTER; provided,
however, that the foregoing shall not apply to any information that is (i)
generally available to the public on the date hereof or becomes generally
available to the public through no breach of this paragraph 7 by EMPLOYEE,
(ii) obtained by EMPLOYEE from a third party having the right to disclose
such information, (iii) known by EMPLOYEE prior to its disclosure by HUNTER
or (iv) required by law, governmental order or decree to be disclosed by
EMPLOYEE.
2
<PAGE>
8. Procedures for Preserving Confidentiality of Tangible and
Intangible Items. EMPLOYEE agrees to comply with any and all reasonable
procedures which HUNTER may adopt from time to time to preserve the
confidentiality of any confidential information or trade secrets. Certain
materials will be affixed with a legend indicating their confidential
information. The failure to affix such legend shall not give rise to any
inference that the information contained therein or derived therefrom is not
confidential information.
9. Covenant Not to Employ. During the period of employment, and
for a three (03) month period thereafter, EMPLOYEE agrees that he/she will
not employ or solicit the employment of any HUNTER employee or any of
HUNTER's consultants, subcontractors or independent contractors. Nothing
herein shall be construed to prohibit EMPLOYEE from soliciting or employing
any HUNTER employee, consultant, subcontractor or independent contractor who
was terminated by HUNTER for economic or budgetary reduction purposes.
10. Convenant Not to Solicit:
(a) During the period of employment, and for a three (3) month period
thereafter, EMPLOYEE agrees that he/she will not render, directly or
indirectly, any services of an advisory or consulting nature similar in
character to those offered by HUNTER, whether as an employee or otherwise,
and whether paid or unpaid, to any business which is a client or active
prospect of HUNTER. THe provisions of this paragraph 10. (a) shall not apply
where EMPLOYEE was terminated by HUNTER for economic or budgetary reduction
purposes.
(b) During the period of employment, and for a twelve (12) month period
thereafter, EMPLOYEE agrees that he/she will not contact any clients or
active prospects of HUNTER for the purposes of soliciting, selling, or both,
to any of said clients or active prospects any products or services similar
to the products or services of HUNTER; nor will he/she in any way directly or
indirectly, for himself/herself or in behalf of, or in conjunction with any
other person, persons, firm, partnership, corporation, or company, solicit,
divert, or take away any such clients or active prospects of HUNTER.
(c) For purposes of paragraphs 10(a) and 10(b), the term "active
prospects" is defined as those persons, firms, or corporations with whom
HUNTER is, or has been actively engaged in the solicitation or negotiation of
business opportunities at any time during the six (6) month period preceding
the termination of employment.
11. Duties Upoon Termination of Employment.
(a) Upon termination of his/her employment with HUNTER for any reason,
EMPLOYEE agrees to deliver to HUNTER all keys, moter vehicles, computers,
telephones, peripheral devices, software, telephone and voicemail
directories, policy and procedure manuals, books, proposals, writings,
designs, documents, records, data, memoranda, computer source code and object
code listings, file layouts, record layouts, system design information,
models, manuals, documentation, notes, and other materials of any nature
which are in his/her possession or control as a result of his/her employment
by HUNTER.
3
<PAGE>
(b) EMPLOYEE agrees and hereby authorizes HUNTER to withhold payments of
any salary, expense reimbursement or other sums due EMPLOYEE until all such
materials have been returned in good working order.
(c) EMPLOYEE further agrees to retain in the strictest confidence any
confidential information or trade secrets he/she learned during his/her term
of association with HUNTER.
12. Other Agreements. EMPLOYEE represents and warrants that his/her
signing of this Agreement and the performance of his/her services hereunder
is not and will not be knowingly in violation of any other contract,
agreement or understanding to which he/she is a party.
13. Assignment. This Agreement may not be assigned or transferred
in whole or in part without the prior written consent of the parties.
14. Right to Injunctive Relief. EMPLOYEE's strict compliance with
the provisions of paragraphs 6 through 13 hereof is necessary to preserve and
protect the goodwill and proprietary rights of HUNTER and to prevent persons,
firms, joint ventures, partnerships, corporations, institutions, and
enterprises engaged in business and activities which are competitive with the
business and activities conducted or carried on by HUNTER from obtaining an
unfair competitive advantage over HUNTER. Any failure by EMPLOYEE to comply
with the provisions of such paragraphs will result in irreparable and
continuing damage to HUNTER for which there will be no adequate remedy at
law. In the event that EMPLOYEE fails to comply with provisions of such
paragraphs, HUNTER shall be entitled to injunctive relief and to such other
further relief as may be necessary or appropriate to cause EMPLOYEE to comply
with his/her duties and obligations under such paragraphs.
15. Severability. In case it is determined by a court of competent
jurisdiction that any provision herein contained is unenforceable, such
determination shall solely affect such provision and shall not impair the
remaining provisions of this Agreement.
16. Plurals; Gender. Any word in the text of this Agreement shall
be read as the singular or plural and as the masculine, feminine or neuter
gender as may be appropriate under the circumstances then existing.
17. Governing law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland. All disputes
relating to or arising in connection with this agreement shall be decided by
the courts of the State of Maryland, to the exclusion of any other courts.
18. Waiver of Jury Trial. The parties waive any right either may
have to a trial by jury in any litigation between them.
4
<PAGE>
19. Entire Agreement. The parties have read this Agreement and
agree to be bound by its terms, and further agree that it constitutes the
complete and exclusive statement of the Agreement between them which
supersedes all proposals, oral or written, and all other communications
between them relating to the subject matter of this Agreement. This
Agreement shall not be amended except in a writing executed by both parties.
EMPLOYEE:
5/10/95 /s/ Bradford S. Everett
- ------------------- -------------------------- (Seal)
Date By: Bradford S. Everett
THE HUNTER GROUP, INC.
July 19, 1995 /s/ Terry L. Hunter
- ------------------ -------------------------- (Seal)
Date By: Terry L. Hunter
President & CEO
5
<PAGE>
Exhibit A
[Letterhead]
April 27,1995
Mr. Bradford S. Everett
1800 Broadway #401
San Francisco, California 94109
Dear Brad:
I am excited to extend our offer for you to join The Hunter Group as a Vice
President to lead our Western Region consulting practice. In addition to
being the senior executive responsible for all Western Region business
activities, you will be working with me and The Hunter Group's executive team
to plan, develop and manage THG's next stage of growth. This includes
expanding into the Asia/Pacific marketplace where we will look to you to
spearhead and guide this effort. You will be based in our San Francisco
office and will be reporting to me for international activities and to Tom
Whartenby for domestic, Western-Region business.
Your base salary will be $12,500.00 per month paid semi-monthly on the
twenty-second and seventh days of the month for the pay periods ending on the
15th and last day of the month, respectively. As part of Hunter's management
team, you will share in the perquisites and rewards commensurate with your
role and performance, including management bonuses and stock option/grant
programs as these become finalized. You will also be eligible for vacation,
personal and sick leave, and holiday pay according to standard Hunter
policy. Eligibility requirements and other highlights of our benefit plans
are detailed in the attached summaries. Please note that some of the benefit
plans are optional, with a contribution required on your part should you
elect to participate.
Brad, you will need to sign an Employment Agreement. As much as we dislike
the formality, it is required to protect your interests and rights, as well
as those of the Hunter Group, its clients and prospects, and the vendors we
work with and support. It is enclosed for your signature and must be signed
on or before the date you commence employment with us. Don't hesitate to ask
if you have any questions or concerns; we will be pleased to discuss any of
its provisions with you.
Over the past few weeks there have been a number of discussions about the
details of our working relationship. Rather than address these here, I've
itemized them in the attached addendum.
<PAGE>
Mr. Bradford S. Everett
April 27, 1995
Page 2
This employment offer is extended to you until May 5, 1995, at which time it
expires if not accepted. Based on our understanding of your current
obligations, we are expecting you to start on or before June 1, 1995. Please
sign one copy of this letter indicating your expected start date and return
it to Lynn Moler in our Baltimore office.
Your employment with the Hunter Group should offer you the challenges and
rewards you seek. We look forward to working with you, and to the success of
our mutual endeavors.
Sincerely,
/s/ Terry Hunter/few
--------------------
Terry L. Hunter
President & CEO
TLH/few
Enclosure: Employment Agreement
Benefits Information
cc: Personnel
Tom Whartenby
Accepted:
/s/ Bradford S. Everett Date: 5/10/95
- ----------------------- --------
Bradford S. Everett
Expected start date: 7/05/95
-------
###-##-####
- -----------
Social Security #
<PAGE>
Addendum to offer letter dated April 27, 1995
1. Vacation: standard Hunter policy for officers-3 weeks initially; 4 weeks
following 3 years service.
2. Parking: standard Hunter policy for officers-paid by company.
3. Professional Memberships: standard Hunter policy for officers-dues paid by
company; meeting expenses reimbursed.
4. Continuing Executive Development: standard Hunter policy for officers-
continuing education and personal growth is supported, although there are no
published guidelines. Related costs are paid/reimbursed by the company,
subject to prior approval.
5. Performance/Pay Review: everyone joining Hunter receives an interim
performance review. You will receive a performance/pay review at your six
month anniversary.
6. Bonuses: provided you are an active employee of the company at year end,
you will be entitled to bonus distributions commensurate with your peers.
Typically, bonuses to executives are paid in early December. Provided the
company meets revenue and profit goals, we would expect your bonus for 1995
to be approximately 30%-40% of W-2 earninigs.
7. Stock Appreciation Rights Grant: our offer to you includes a stock
appreciation rights grant valued at $125,000 on June 1, 1995.
The $125,000 grant will become vested as follows:
20% or $25,000 upon completion of 12 months service
+35% or $43,700 upon completion of 24 months service
+45% or $56,250 upon completion of 36 months service
---- --------
100% $125,000
In the event of your death or incapacitating disability, the current year's
portion of the award-eg. 1st year 20%, 2nd year 35%, 3rd year 45%-will be
immediately vested; that is, the remaining period of employment to complete
that year's vesting will be waived. Vesting beyond that year will not
continue, however.
Until such time as The Hunter Group's Stock Appreciation Rights Plan is
finalized and a market established for cashing in shares, the grant made to
you shall be at face value; that is, each 1% vested shall be worth $1,250.00
and it shall neither increase nor decrease in value.
<PAGE>
Addendum to offer letter dated April 27, 1995
Page 2
Likewise, in the event of your death or incapaciting disability during this
interim period, Hunter will cash-in vested shares using the following
schedule:
Value up to $25,000-Payable immediately
Vaule up tp $68,000-Payable over 12 months
Value up to $125,000-Payable over 24 months
8. Safety Net: in the event Hunter should merge with or be acquired by
another entity and there be a change in ownership or capitalization structure
and your position is eliminated or otherwise changed in such a manner as to
radically alter your responsibilities, the stock option grant vesting
percentage shall immediately accelerate to 100%.
<PAGE>
EXHIBIT 10.07(f)
THE HUNTER GROUP, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective this 14th day of September, 1988, by
and between The Hunter Group, Inc. ("HUNTER"), a Maryland corporation with
offices in Baltimore, Maryland; Boston, Massachusetts; San Francisco,
California; and New York, New York; and Mary T. Weaver ("EMPLOYEE"), who
resides at 4 Anne Brent Garth, Phoenix, Maryland 21131.
W I T N E S S E T H
WHEREAS, HUNTER is engaged in consulting and systems development,
research, design, formulation, manufacture, marketing, distribution,
licensing and sale of a variety of products and services, generally relating
to Human Resources administration, including, but not limited to, employee
benefits, equal employment opportunity, applicant and resume tracking,
succession planning, suggestion awards, compensation, pension, stock options,
employee relations, training, health and safety, and payroll software
systems, and now has and expects to develop confidential information relating
thereto; and
WHEREAS, EMPLOYEE is highly skilled in the technical, functional and
marketing fields in which HUNTER is engaged.
WHEREAS, HUNTER desires to utilize the services of EMMPLOYEE as project
manager, systems designer, consultant, etc., and EMPLOYEE desires to offer
his/her services to HUNTER, and as a result of the rendering of such
services, EMPLOYEE may have access to confidential information and may
further contribute thereto;
NOW, THEREFORE, HUNTER and EMPLOYEE hereby agree as follows:
1. Services. EMPLOYEE agrees to perform for HUNTER such duties which are
consistent with EMPLOYEE's background, skills and job responsibilities as
shall be reasonably assigned to him/her from time to time by HUNTER.
2. Compensation. EMPLOYEE shall be entitled to the compensation and
benefits described in the Offer Letter, a copy of which is attached hereto as
"Exhibit A".
3. Use of Name. EMPLOYEE agrees to allow HUNTER to use his/her name, and a
summary of his/her experience and qualifications, in any business plan,
presentation or sales or marketing efforts prepared by HUNTER in the course
of its business during EMPLOYEE's period of employment. Upon EMPLOYEE's
request, HUNTER shall review any summary of EMPLOYEE's experience and
qualifications for form and accuracy prior to HUNTER's use of such summary.
<PAGE>
4. EMPLOYEE's Authority to Bind the Corporation. EMPLOYEE shall not at any
time pledge the credit of HUNTER, nor enter into any contract or agreement
on behalf of HUNTER without its prior written consent.
5. Term. EMPLOYEE's employment may be terminated upon not less than four
weeks' written notice by either party; provided, however, that all of the
terms and conditions intended to survive the termination of EMPLOYEE's
employment shall remain in full force and effect.
(a) Severance Entitlement. In the event HUNTER terminates this Agreement
for any reason other than EMPLOYEE's termination for cause as defined in
subsection (c), EMPLOYEE shall be entitled to two weeks of base salary as
severance for each three months of completed service. In no event shall the
severance entitlement exceed four weeks of base salary.
(b) Payments at Termination. HUNTER agrees to pay any severance to which
EMPLOYEE is entitled, along with any accrued payments for incentive bonuses,
commissions, and unused leave entitlements according to HUNTER's policies
then in effect, or expressly agreed with EMPLOYEE, at the later of the date
of termination and the date when all HUNTER property as listed in paragraph
13 is returned, and all outstanding travel or other expense reports have
been returned, and debts paid by EMPLOYEE.
(c) Termination for Cause. Notwithstanding anything to the contrary
herein, HUNTER shall be entitled to terminate EMPLOYEE without prior notice
for cause, including but not limited to EMPLOYEE's misfeasance, malfeasance,
insubordination, breach of law, fiduciary duty, or any of the other terms or
conditions of his/her employment with HUNTER.
6. Rights to Work Product. With respect to any work product which is
conceived or produced by EMPLOYEE during the term of his/her employment or
with the use or assistance of HUNTER's facilities, materials, or personnel,
HUNTER shall own all rights, title and interest to such work product, and
such product shall be considered as "work made for hire", unless otherwise
agreed in writing by the parties.
7. Protection of Trade Secrets and Confidential Information. EMPLOYEE
hereby acknowledges that during the term of his/her employment, he/she will
acquire access to confidential information and trade secrets belonging to
HUNTER or HUNTER's clients or third parties. Such confidential information and
trade secrets shall be kept in absolute confidence both during and after the
termination of EMPLOYEE's employment. For the purpose of this paragraph 7, the
term "trade secrets and confidential information" shall mean any information
not generally known in the relevant trade or business, which was obtained
from HUNTER or its clients or which was learned, discovered, conceived,
originated or prepared as a result of the performance of any services on
behalf of HUNTER; including but not limited to information relating to
existing or contemplated
-2-
<PAGE>
products, services, technology, designs, processes or formulae and
information relating to business plans, customer lists, customer requirements
or supplier information. EMPLOYEE agrees that he/she will not, at any time,
disclose to others, use for his/her own benefit or otherwise appropriate or
copy any such confidential information or trade secrets, whether or not
developed by EMPLOYEE, except as required in EMMPLOYEE's duties to HUNTER;
provided, however, that this paragraph shall apply only so long as the
information in question is secret and confidential in the trade or industry.
8. Procedures for Preserving Confidentiality of Tangible and Intangible
Items. EMPLOYEE agrees to comply with any and all reasonable procedures which
HUNTER may adopt from time to time to preserve the confidentiality of any
confidential information or trade secrets. Certain materials will be affixed
with a legend indicating their confidential nature. However, the absence of
any such legend on any item containing or relating to confidential
information will not give rise to any inference that the information
contained therein or derived therefrom is not confidential information.
9. Covenant Not to Employ. During the period of employmment, and for a
period of two (2) years after the period of employment, EMPLOYEE agrees that
he/she will not employ or solicit the employment of any HUNTER employee or
any of HUNTER's consultants, subcontractors or independent contractors.
Nothing herein shall be construed to prohibit EMPLOYEE from soliciting or
employing any HUNTER employee, consultant, subcontractor or independent
contractor who was terminated by HUNTER for economic or budgetary reduction
purposes.
10. Covenant Not to Solicit.
(a) During the period of employment, and for a period of two (2) years
thereafter, EMPLOYEE agrees that he/she will not render, directly or
indirectly, any services of an advisory or consulting nature similar in
character to those offered by HUNTER, whether as an employee or otherwise, to
any business which was, during the term off his/her employment, a client of
HUNTER. The provisions of this paragraph 10.(a) shall not apply where
EMPLOYEE was terminated by HUNTER for economic or budgetary reduction
purposes.
(b) During the period of employment, and for a period of two (2) years
thereafter, EMPLOYEE agrees that he/she will not contact any clients of
HUNTER for the purposes of soliciting, selling, or both, to any of said
clients any products or services similar to the products or services of
HUNTER; nor will he/she in any way directly or indirectly, for
himself/herself or in behalf of, or in conjunction with any other person,
persons, firm, partnership, corporation, or company, solicit, divert, or take
away any such clients of HUNTER.
-3-
<PAGE>
11. Noncompetition Agreement.
(a) During the term of his/her employment, and for a period of six (6)
months after the date of its termination, EMPLOYEE agrees that he/she will
not render, directly or indirectly, any services of an advisory or consulting
nature, whether as an employee or otherwise, to any business which is a
competitor of HUNTER.
(b) During the term of this Agreement, and for a period of one (1) year
thereafter, EMPLOYEE agrees that he/she will not, either alone or as a member
of a partnership or joint venture, as a beneficiary or a trust, or as an
officer, director, stockholder or investor of or in any other corporation or
enterprise, or otherwise (except as an investor in securities publicly held
and listed on a national securities exchange) be engaged in the ownership or
management of any business or activity which is a competitor of HUNTER.
(c) The provisions of this paragraph 11 shall not apply where EMPLOYEE
was terminated by HUNTER for economic or budgetary reduction purposes.
12. Business Opportunities. EMPLOYEE acknowledges that all business
opportunities generated by HUNTER shall belong to HUNTER. In the event of a
breach of this paragraph 12, EMPLOYEE shall be liable to HUNTER for 100% of
the gross revenues of any business obtained as a result of such a breach and
shall not be entitled to any compensation or remuneration in any form from
HUNTER.
13. Duty Upon Termination of Employment.
(a) Upon termination of his/her employment with HUNTER for any reason,
EMPLOYEE agrees to deliver to HUNTER all keys, motor vehicles, computer
hardware, peripherals, software, telephones, writings, designs, documents,
records, data, memoranda, computer source code and object code listings, file
layouts, record layouts, system design information, models, manuals,
documentation, notes, and other materials of any nature which are in his/her
possession or control as a result of his/her employment by HUNTER.
(b) EMPLOYEE further agrees to retain in the strictest confidence any
confidential information or trade secrets he/she learned during his/her term
of association unless and until such information has been made generally
available to the trade other than by breach of this Agreement.
14. Other Agreements. EMPLOYEE represents and warrants that his/her signing
of this Agreement and the performance of his/her services hereunder is not
and will not be knowingly in violation of any other contract, agreement or
understanding to which he/she is a party.
-4-
<PAGE>
15. Assignment. This Agreement may not be assigned or transferred in whole
or in part without the prior written consent of the parties.
16. Right to Injunctive Relief. EMPLOYEE's strict compliance with the
provisions of paragraphs 6 through 13 hereof is necessary to preserve and
protect the goodwill and proprietary rights of HUNTER as a going concern and
to prevent persons, firms, joint ventures, partnerships, corporations,
institutions, and enterprises engaged in businesses and activities which are
competitive with the businesses and activities conducted or carried on by
HUNTER from obtaining an unfair competitive advantage over HUNTER. Any
failure by EMPLOYEE to comply with the provisions of such paragraphs will
result in irreparable and continuing damage to HUNTER for which there will
be no adequate remedy at law. In the event that EMPLOYEE fails to comply with
the provisions of such paragraphs, HUNTER shall be entitled to injunctive
relief and to such other and further relief as may be necessary or
appropriate to cause EMPLOYEE to comply with his/her duties and obligations
under such paragraphs.
17. Severability. In case it be determined by a court of competent
jurisdiction that any provision herein contained is illegal or unenforceable,
such determination shall solely affect such provision and shall not impair
the remaining provisions of this Agreement.
18. Plurals; Gender. Any word in the text of this Agreement shall be read as
the singular or plural and as the masculine, feminine or neuter gender as may
be appropriate under the circumstances then existing.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland.
20. Entire Agreement. The parties have read this Agreement and agree to be
bound by its terms, and further agree that it constitutes the complete and
exclusive statement of the Agreement between them which supersedes all
proposals, oral or written, and all other communications between them
relating to the subject matter of this Agreement. This Agreement shall not
be amended except in a writing executed by both parties.
21. Notices. Except as otherwise provided herein, notices, payments, or any
other communication provided for herein shall be deemed to be given when
mailed first class mail, addressed to HUNTER as follows:
The Hunter Group, Inc.
11 East Chase Street
Suite 8E
Baltimore, Maryland 21202
Attn: Mr. Terry L. Hunter
-5-
<PAGE>
And to EMPLOYEE as follows:
Mary T. Weaver
4 Anne Brent Garth
Phoenix, Maryland 21131
Executed under seal this 14 day of September, 1988.
ATTEST: THE HUNTER GROUP, INC.
/s/ Jennifer Sadtler By: /s/ Howard I. Zlotowitz (SEAL)
- ------------------------------ -------------------------------
Howard I. Zlotowitz,
Sr. Vice President
Executed under seal this 14th day of September, 1988.
WITNESS: MARY T. WEAVER
/s/ Howard I. Zlotowitz /s/ Mary T. Weaver (SEAL)
- ------------------------------ -------------------------------
-6-
<PAGE>
EXHIBIT A
September 9,1988
Mary T. Weaver
4 Anne Brent Garth
Phoenix, Maryland 21131
Dear Mary:
Based on our discussions, we would like you to consider this correspondence
as an offer for you to join The Hunter Group as Controller, with officer
designation of Treasurer. In this role, you would be responsible for general
ledger processing including the preparation of statements and tax returns;
accounts payable and receivable; billing and collections; forecasting of
cash, revenues, and expenses; general financial analysis and reporting;
supervision of bookkeeping and accounting functions; internal auditing; and
other duties appropriate to a corporate Controller. As an officer, you will
have the responsibility and authority to execute contracts, incur reasonable
and necessary business expenses, and generally manage The Hunter Group's
business according to established policies and procedures in effect.
The position will initially require substantial, "hands-on" participation in
day-to-day operations; reduction of that level will depend upon the speed with
which you can build an Accounting Department to meet our growing needs. Over
time, we would expect you to take a broader role in the administrative
operations of the company, according to the needs and organizational
structure then deemed necessary to support the company's growth and standing.
You will be based in our Baltimore office and will be reporting directly to
the Senior Vice President, Administration.
Your total compensation will be determined by several factors. First, there
is a base salary of $5,000 per month paid semi-monthly in arrears on the
sixteenth and first days of the month. You will receive performance and
compensation reviews according to our standard Salary Administration
guidelines after your employment with The Hunter Group commences.
Your personal incentive compensation plan for 1989 is targeted to provide
30% of your based starting salary, for the period from your commencement of
employment through December 31, 1989, contingent upon satisfactory completion
of the objectives attached to this correspondence as Exhibit B. Bonus
payments valued at $14,000.00 would be paid in two equal installments on
April 30,
<PAGE>
Mary T. Weaver
September 9, 1988
Page 2
1989 and December 31, 1989 according to the payment terms now being
documented for our incentive compensation plan. Your individual performance
relative to the stated objectives, and your contributions to enhanced company
performance measured by productivity and profitability increases, will be
reviewed at each milestone; outstanding performance may result in
discretionary bonuses in excess of the guaranteed amounts described above to
achieve the targeted total compensation.
The incentive compensation proposal recommends payment part in cash (50%) and
pat in deferrals (50%), with the deferrals credited in phantom stock shares;
stock appreciation rights accrue to the shareholder. Shares are valued
according to "market value", whereby revenues of the immediate preceding 24
months are double-weighted and revenues of the 12 months prior to that period
are single-weighted before dividing the weighted sum by 36. Any shares you
may obtain due to a guaranteed bonus will be 100% vested immediately;
additions will be vested over a three-year period in equal parts.
Distributions will be valued at the time of cash conversion with payments
subject to a three year payout period.
We will pay you a guaranteed employment bonus valued at $8,500.00; of that
amount, $3,500.00 will be paid in cash on or before January 31, 1989, with
$5,000 per tel discussion 9/14/88, the remainder credited in phantom stock
shares valued on December 31, 1988 according to the rules for deferred
compensation as noted above.
In addition to these forms of cash and deferred compensation, you may elect
to participate in the company's group health insurance plan after a 30 day
waiting period. Employees contribute 25% of the monthly premium cost for
personal coverage. Should you elect to extend coverage for dependents or
others, the additional cost would be your responsibility. You may also elect
to participate in our ShortTerm Disability plan. The cost of that plan is
shared equally by The Hunter Group and its employees.
Survivor benefits -- Group Term Life, AD&D, and Business Travel Accident --
are provided by The Hunter Group at no cost to you. A summary of our benefit
plans along with their costs and coverages is enclosed for your review. Our
benefit plans are always under review, and are therefore subject to change.
For now, you are individually responsible for other types of benefits, al-
<PAGE>
Mary T. Weaver
September 9, 1988
Page 3
though we will assist you to obtain coverage and to minimize premium costs
through any means available to us.
You will be eligible to participate in The Hunter Group's 401(k) Retirement
plan on the first of the month coincident with or following your date of
hire. That plan allows salary reduction contributions up to 10% of earnings.
After one year of employment service, you will be eligible for employer
matching contributions where The Hunter Group will match 50% of the
employee's first 10% of contributions. Matching contributions are fully
vested immediately, upon quarterly deposit in the plan.
You will be entitled to fifteen days of paid annual vacation leave in 1989,
after you have completed six months of employment service. Beginning in the
calendar year after next, you will be entitled to incremental paid annual
vacation according to service steps in our standard vacation schedule.
The Hunter Group will obtain a parking permit for your use, at no cost to
you, or will reimburse you for the equivalent cost if permits are not
immediately available. The location cannot be guaranteed due to waiting lists
for permits at various lots proximal to our offices, nor are parking spaces
reserved.
According to laws enacted in 1986, you must provide proof of employment
eligibility. A passport or equivalent, or a valid state driver's license and
a birth certificate or original Social Security card must be provided within
three business days from the start of your employment. If you cannot provide
that information, you will have 21 days in which to apply for, and present
the required documents.
Mary, you will need to sign an employee agreement. As much as we dislike the
formality, it is required to protect the interests and rights of The Hunter
Group, its clients and prospects. It is enclosed for your signature, and must
be executed on or before the date you commence employment with us.
This offer of employment is extended to you until September 26, 1998, at
which time it expires if not accepted. Based on our understanding of your
current obligations, we are planning your effective date of employment with
The Hunter Group to be as early in October as possible. Please contact me if
any feature of this offer requires clarification.
<PAGE>
Mary T. Weaver
September 9, 1988
Page 4
Your employment with The Hunter Group should offer you the challenges and
rewards you seek. We look forward to working with you, and to the success of
our mutual endeavors.
Sincerely,
/s/Howard I. Zlotowitz
----------------------
Howard I. Zlotowitz
Sr. Vice President
HIZ/rw
Encl.: Employment Agreement, Benefits information
cc: T. Hunter
Personnel
<PAGE>
Exhibit 10.07(g)
THE HUNTER GROUP, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective this 7th day of November, 1990, by and
between The Hunter Group, Inc. ("HUNTER"), a Maryland corporation with
offices in Baltimore, Maryland; Boston, Massachusetts; San Francisco,
California; Chicago, Illinois; Los Angeles, California; Miami, Florida;
Toronto, Ontario, Canada; and New York, New York; and Thomas W. Whartenby
("EMPLOYEE"), who resides at 13807 Princess Anne Way, Phoenix, Maryland 21131.
W I T N E S S E T H
WHEREAS, HUNTER is engaged in consulting and systems development, research,
design, formulation, manufacture, marketing, distribution, licensing and sale
of a variety of products and services, generally relating to Human Resources
administration, including, but not limited to, employee benefits, equal
employment opportunity, applicant and resume tracking, succession planning,
suggestion awards, compensation, pension, stock options, employee relations,
training, health and safety, and payroll software systems, and now has and
expects to develop confidential information relating thereto; and
WHEREAS, EMPLOYEE is highly skilled in the technical, functional and
marketing fields in which HUNTER is engaged.
WHEREAS, HUNTER desires to utilize the services of EMPLOYEE as project
manager, systems designer, consultant, etc., and EMPLOYEE desires to offer
his/her services to HUNTER, and as a result of the rendering of such
services, EMPLOYEE may have access to confidential information and may
further contribute thereto;
NOW, THEREFORE, HUNTER and EMPLOYEE hereby agree as follows:
1. Services. EMPLOYEE agrees to perform for HUNTER such duties which are
consistent with EMPLOYEE's background, skills and job responsibilities as
shall be reasonably assigned to him/her from time to time by HUNTER.
2. Compensation. EMPLOYEE shall be entitled to the compensation and benefits
described in the Offer Letter, a copy of which is attached hereto as "Exhibit
A".
3. Use of Name. EMPLOYEE agrees to allow HUNTER to use his/her name, and a
summary of his/her experience and qualifications, in any business plan,
presentation or sales or marketing efforts prepared by HUNTER in the course
of its business during EMPLOYEE's period of employment. Upon EMPLOYEE's
request, HUNTER shall review any summary of EMPLOYEE's experience and
qualifications for form and accuracy prior to HUNTER's use of such summary.
4. EMPLOYEE'S Authority to Bind the Corporation. EMPLOYEE shall not at any
time pledge the credit of HUNTER, nor enter into any contract or agreement on
behalf of HUNTER without its prior written consent.
<PAGE>
5. Term. EMPLOYEE's employment may be terminated upon not less than two (2)
weeks' written notice by either party; provided, however, that all of the
terms and conditions intended to survive the termination of EMPLOYEE's
employment shall remain in full force and effect.
(a) Introductory Period. Notwithstanding anything to the contrary
contained herein and in addition to the rights set forth in subsection (d),
HUNTER may terminate EMPLOYEE's employment for any reason at any time during
the first three (3) months of EMPLOYEE's employment upon not less than one
(1) week's notice or payment of one (1) week's base salary in lieu thereof.
(b) Termination for Cause. Notwithstanding anything to the contrary
herein, HUNTER shall be entitled to terminate EMPLOYEE's employment without
prior notice for cause, including but not limited to EMPLOYEE's misfeasance,
malfeasance, insubordination, breach of law or fiduciary duty, or any of
other terms or conditions of his/her employment with HUNTER, including any
expressed or implied representations or warranties made by EMPLOYEE in
connection with his/her employment.
(c) Severance Entitlement. In the event HUNTER terminates this Agreement
after the introductory period defined in subsection (a) for any reason other
than EMPLOYEE's termination for cause as defined in subsection (b), EMPLOYEE
shall be entitled to two (2) weeks of base salary as severance for each six
(6) months of completed service. In no event shall the severance entitlement
exceed four (4) weeks of base salary.
(d) Payments at Termination. HUNTER agrees to pay any severance to which
EMPLOYEE is entitled, along with any accrued payments for incentive bonuses,
commissions, and unused leave entitlements according to HUNTER's policies
then in effect, or expressly agreed with EMPLOYEE, at the later of the date
of termination and the date when all HUNTER property as listed in paragraph
13 is returned, and all outstanding travel or other expense reports have been
returned, and debts paid by EMPLOYEE.
6. Rights to Work Product. With respect to any work product which is conceived
or produced by EMPLOYEE during the term of his/her or employment or with the use
or assistance of HUNTER's facilities, materials, or personnel, HUNTER shall
own all rights, title and interest to such work product, and such product
shall be considered as "work made for hire", unless otherwise agreed in
writing by the parties.
7. Protection of Trade Secrets and Confidential Information. EMPLOYEE hereby
acknowledges that during the term of his/her employment, he/she will acquire
access to confidential information and trade secrets belonging to HUNTER or
HUNTER's clients or third parties. Such confidential information and trade
secrets shall be kept in absolute confidence both during and after the
termination of EMPLOYEE's employment. For the purpose of this paragraph 7,
the term "trade secrets and confidential information" shall mean any
information not generally known in the relevant trade or business, which was
obtained from HUNTER or its clients or which was learned, discovered,
conceived, originated or prepared as a result of the performance of any
services on behalf of HUNTER; including but not limited to information
relating to existing or contemplated products, services, technology, designs,
processes or formulae and information relating to business plans, customer
lists, customer requirements and supplier information. EMPLOYEE agrees that
he/she will not, at any time, disclose to others, use for his/her own benefit
or otherwise appropriate or copy any such confidential information or trade
2
<PAGE>
secrets, whether or not developed by EMPLOYEE, except as required in
EMPLOYEE's duties to HUNTER; provided, however, that the foregoing shall not
apply to any information (i) that is generally available to the public on the
date hereof or that hereafter becomes generally available to the public
through no breach of this paragraph 7 by EMPLOYEE, (ii) obtained by EMPLOYEE
from a third party having the right to disclose such information, (iii) known
by EMPLOYEE prior to its disclosure by HUNTER or (iv) required by law,
governmental order or decree to be disclosed by EMPLOYEE.
8. Procedures for Preserving Confidentiality of Tangible and Intangible
Items. EMPLOYEE agrees to comply with any and all reasonable procedures which
HUNTER may adopt from time to time to preserve the confidentiality of any
confidential information or trade secrets. Certain materials will be affixed
with a legend indicating their confidential nature. However, the absence of
any such legend on any item containing or relating to confidential
information will not give rise to any inference that the information
contained therein or derived therefrom is not confidential information.
9. Covenant Not to Employ. During the period of employment and for a period
of one (1) year after the period of employment, EMPLOYEE agrees that he/she
will not employ or solicit the employment of any HUNTER employee or any of
HUNTER's consultants, subcontractors or independent contractors. Nothing
herein shall be construed to prohibit EMPLOYEE from soliciting or employing
any HUNTER employee, consultant, subcontractor or independent contractor who
was terminated by HUNTER for economic or budgetary reduction purposes.
10. Covenant Not to Solicit.
(a) During the period of employment, and for a one (1) year period
thereafter, EMPLOYEE agrees that he/she will not render, directly or
indirectly, any services of an advisory or consulting nature similar in
character to those offered by HUNTER, whether as an employee or otherwise, to
any business which is a client or active prospect of HUNTER. The provisions
of this paragraph 10.(a) shall not apply where EMPLOYEE was terminated by
HUNTER for economic or budgetary reduction purposes.
(b) During the period of employment, and for a one (1) year period
thereafter, EMPLOYEE agrees that he/she will not contact any clients or
active prospects of HUNTER for the purposes of soliciting, selling, or both,
to any of said clients or active prospects any products or services similar
to the products or services of HUNTER; nor will he/she in any way directly or
indirectly, for himself/herself or in behalf of, or in conjunction with any
other person, persons, firm, partnership, corporation, or company, solicit,
divert, or take away any such clients or active prospects of HUNTER.
(c) For purposes of paragraph 10.(a) and 10.(b) active prospects are
defined as those persons, firms, or corporations with whom HUNTER is, or has
been actively engaged in the solicitation or negotiation of business
opportunities at any time during the one (1) year period preceding the
termination of employment.
11. Noncompetition Agreement.
(a) During the term of his/her employment, and for a period of one (1)
year after the date of its termination, EMPLOYEE agrees that he/she will not
render, directly or indirectly, any services of an advisory or consulting
nature, whether as an employee or otherwise, to any business which is a
competitor of HUNTER.
(b) During the term of this Agreement, and for a period of one (1) year
thereafter, EMPLOYEE agrees that he/she will not, either along or as a member
of a partnership or joint venture, as a beneficiary or a trust, or as an
officer, director, stockholder or investor of or in any other corporation or
enterprise, or otherwise (except as an investor in
3
<PAGE>
securities publicly held and listed on a national securities exchange) be
engaged in the ownership or management of any business or activity which is a
competitor of HUNTER.
(c) The provisions of this paragraph 11 shall not apply where EMPLOYEE
was terminated by HUNTER for economic or budgetary reduction purposes.
12. Business Opportunities. EMPLOYEE acknowledges that all business
opportunities generated by HUNTER shall belong to HUNTER. In the event of a
breach of this paragraph 12, EMPLOYEE shall be liable to HUNTER for 100% of
the gross revenues of any business obtained as a result of such a breach and
shall not be entitled to any compensation or remuneration in any form from
HUNTER.
13. Duty Upon Termination of Employment.
(a) Upon termination of his/her employment with HUNTER for any reason,
EMPLOYEE agrees to deliver to HUNTER all keys, motor vehicles, computer
hardware, peripherals, software, telephones, writings, designs, documents,
records, data, memoranda, computer source code and object code listings, file
layouts, record layouts, system design information, models, manuals,
documentation, notes, and other materials of any nature which are in his/her
possession or control as a result of his/her employment by HUNTER.
(b) EMPLOYEE further agrees to retain in the strictest confidence any
confidential information or trade secrets he/she learned during his/her term
of association unless and until such information has been made generally
available to the trade other than by breach of this Agreement.
14. Other Agreements. EMPLOYEE represents and warrants that his/her signing
of this Agreement and the performance of his/her services hereunder is not
and will not be knowingly in violation of any other contract, agreement or
understanding to which he/she is a party.
15. Assignment. This Agreement may not be assigned or transferred in whole
or in part without the prior written consent of the parties.
16. Right to Injunctive Relief. EMPLOYEE's strict compliance with the
provisions of paragraphs 6 through 13 hereof is necessary to preserve and
protect the goodwill and proprietary rights of HUNTER as a going concern and
to prevent persons, firms, joint ventures, partnerships, corporations,
institutions, and enterprises engaged in businesses and activities which are
competitive with the businesses and activities conducted or carried on by
HUNTER from obtaining an unfair competitive advantage over HUNTER. Any
failure by EMPLOYEE to comply with the provisions of such paragraphs will
result in irreparable and continuing damage to HUNTER for which there will be
no adequate remedy at law. In the event that EMPLOYEE fails to comply with
the provisions of such paragraphs, HUNTER shall be entitled to injunctive
relief and to such other and further relief as may be necessary or
appropriate to cause EMPLOYEE to comply with his/her duties and obligations
under such paragraphs.
17. Severability. In case it is determined by a court of competent
jurisdiction that any provision herein contained is illegal or unenforceable,
such determination shall solely affect such provision and shall not impair
the remaining provisions of this Agreement.
4
<PAGE>
18. Plurals; Gender. Any word in the text of this Agreement shall be read as
the singular or plural and as the masculine, feminine or neuter gender as may
be appropriate under the circumstances then existing.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland.
20. Entire Agreement. The parties have read this Agreement and agree to be
bound by its terms, and further agree that it constitutes the complete and
exclusive statement of the Agreement between them which supersedes all
proposals, oral or written, and all other communications between them
relating to the subject matter of this Agreement. This Agreement shall not be
amended except in a writing executed by both parties.
21. Notices. Except as otherwise provided herein, notices, payments, or any
other communication provided for herein shall be deemed to be given when
mailed first class mail, addressed to HUNTER as follows:
The Hunter Group, Inc.
11 East Chase Street
Suite 8E
Baltimore, Maryland 21202
Attn: Mr. Howard I. Zlotowitz
And to EMPLOYEE as follows:
Thomas W. Whartenby
13807 Princess Anne Way
Phoenix, Maryland 21131
Executed under seal this 5th day of November, 1990.
--- -------- --
WITNESS: Thomas W. Whartenby
/s/ [Illegible] /s/ Thomas W. Whartenby (SEAL)
- ---------------------------- ----------------------------
Executed under seal this 7th day of November, 1990.
--- -------- --
WITNESS: THE HUNTER GROUP, INC.
/s/ [Illegible] By: /s/ Howard I. Zlotowitz (SEAL)
- ---------------------------- -------------------------------
Howard I. Zlotowitz,
Senior Vice President
5
<PAGE>
Exhibit A
[cad 157]Letterhead[cad 179]
October 30, 1990
Mr. Thomas W. Whartenby
13807 Princess Anne Way
Phoenix, Maryland 21131
Dear Tom:
I am pleased to confirm our offer for you to join The Hunter Group as a
Director, Business Planning and Development. As the boundaries of your role
are as yet undefined, the initial scope of your activities will be to assist
me in assessing the organizational structure and responsibilities now in
place, and to make recommendations concerning new organizational structures,
reporting lines and staffing. The outcome of this activity will be used to
determine your subsequent roles and responsibilities. You will be located in
our Baltimore office and reporting to me as President.
Your base salary will be $7,100.00 per month paid semi-monthly on the
sixteenth and first days of the month. An incentive compensation program will
be developed for you after your first six weeks of employment. That program
will set forth qualitative and quantitative goals for 1991, with an incentive
target of 30% of base pay. Although incentive compensation is targeted at
30%, this does not mean you would necessarily receive 30% nor anything, if
individual goals are not achieved. You will be eligible for our
Profit-Sharing plan and various incentive compensation programs designed to
further your professional development and to reward you for special
contributions to the company's growth, revenues, and profitability. You will
also be eligible for vacation, personal and sick leave, and holiday pay
according to standard Hunter policy. Eligibility requirements and other
highlights of our compensation and benefit plans are detailed in the attached
summaries. Please note that some of the benefit plans are optional, with a
contribution required on your part should you elect to participate.
Tom, you will need to sign an Employment Agreement. As much as we dislike the
formality, it is required to protect your interests and rights, as well as
those of The Hunter Group, its clients and prospects, and the vendors we work
with and support. It is enclosed for your signature and must be signed on or
before the date you commence employment with us. If you have never been faced
with a contract of this type before, it can be intimidating, even though we
have tried to make it less so. Don't hesitate to ask if you have any
questions or concerns; we will be pleased to discuss any of its provisions
with you.
This employment offer is extended to you until November 2, 1990, at which
time it expires if not accepted. Based on our understanding of your current
obligations, we are expecting you to start on or about November 5, 1990.
Please sign one copy of this letter indicating your expected start date and
return it to me.
<PAGE>
Mr. Thomas W. Whartenby
October 30, 1990
Page 2
Your employment with The Hunter Group should offer you the challenges and
rewards you seek. We look forward to working with you, and to the success of
of our mutual endeavors.
Sincerely,
/s/ Terry L. Hunter
-------------------
Terry L. Hunter
President
TLH:cwb
Enclosure: Employment Agreement
Benefits/Compensation Information
cc: Howard Zlotowitz
Personnel
Accepted:
/s/ Thomas W. Whartenby Date: November 1, 1990
- ----------------------- ----------------
Thomas W. Whartenby
Expected start date: November 5, 1990
----------------
Expected
<PAGE>
Exhibit 10.07(h)
HUNTER CONSULTING ASSOCIATES LIMITED
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective _____ day of ______________, 19__, by
and between Hunter Consulting Associates Limited ("HUNTER"), registered no.
3026415 having its registered office at 46/47 Bloomsbury Square, London WC1A
2RU; and Richard Wheeler ("EMPLOYEE"), of Kent, England.
WHEREAS, The Hunter Group, Inc., of which HUNTER is a member, is engaged
in consulting and systems development, research, design, formulation,
manufacture, marketing, distribution, licensing and sale of a variety of
services and products, generally relating to Financial Accounting and Human
Resources Administration, including, but not limited to, employee benefits,
equal employment, applicant and resume tracking, succession planning,
suggestion awards, compensation, pension, stock options, employee relations,
training, health and safety, payroll, accounts payable, accounts receivable,
general ledger, fixed assets, and related software systems, and now has and
expects to develop confidential information relating thereto; and
WHEREAS, EMPLOYEE is skilled in the fields in which HUNTER is engaged.
WHEREAS, HUNTER desires to employ EMPLOYEE and EMPLOYEE desires to be
employed by HUNTER, and as a result of such employment, EMPLOYEE may have
access to confidential information.
NOW THEREFORE, HUNTER and EMPLOYEE hereby agree as follows:
1. Services. EMPLOYEE agrees to perform for HUNTER such duties described
in the Offer Letter, a copy of which is attached hereto as "Exhibit A," such
duties which are consistent with EMPLOYEE's background, skills, and job
responsibilities as shall be reasonably assigned to him/her from time to time
by HUNTER.
2. Compensation. EMPLOYEE shall be entitled to the compensation and
benefits described in the Offer Letter, a copy of which is attached hereto as
"Exhibit A".
3. EMPLOYEE's Authority to Bind the Corporation. EMPLOYEE shall not at
any time pledge the credit of HUNTER, nor enter into any contract or
agreement on behalf of HUNTER, without its prior written consent.
4. Term. EMPLOYEE may terminate his/her employment upon not less than
three (3) months' written notice provided, however, that all of the terms and
conditions intended to survive the termination of EMPLOYEE's employment
shall remain in full force and effect.
(a) Notice. During EMPLOYEE's first 6 months of employment, EMPLOYEE's
employment with HUNTER will be subject to termination upon not less than
<PAGE>
twenty-four (24) weeks' written notice to EMPLOYEE for any reason and given
at any time. After EMPLOYEE's first 6 months of employment, EMPLOYEE's
employment with HUNTER will be subject to termination upon not less than
twelve (12) weeks' written notice to EMPLOYEE for any reason and given at any
time. HUNTER reserves the right, in its sole discretion, to make payment in
lieu of notice for all or any part or such notice period. HUNTER also
reserves the right, having given notice of termination to EMPLOYEE, to
require EMPLOYEE to serve out such notice period, in whole or in part, at
employee's home or at such other location as HUNTER may reasonably require.
(b) Termination for Cause. Notwithstanding anything to the contrary
herein, HUNTER shall be entitled to terminate EMPLOYEE's employment without
prior notice for cause, including but not limited to EMPLOYEE's misfeasance,
malfeasance, insubordination, breach of law or fiduciary duty, or any of the
other terms or conditions of his/her employment with HUNTER, including any
expressed or implied representations or warranties made by EMPLOYEE in
connection with his/her employment.
5. Reimbursement for Training Costs. EMPLOYEE acknowledges that HUNTER
may be incurring substantial costs for providing additional training and
professional development to EMPLOYEE during the course of his/her
employment. In the event EMPLOYEE voluntarily terminates his/her employment,
EMPLOYEE agrees to reimburse HUNTER for the costs of tuition, registration,
lodging, travel, meals, and related expenses incurred in connection with such
training and professional development during the three (3) months immediately
preceding the effective date of his/her termination. EMPLOYEE agrees that
HUNTER may deduct such costs from any salary, expense reimbursement or other
sums due to EMPLOYEE. In the event that additional sums are due and owing to
HUNTER, EMPLOYEE shall pay such amount to HUNTER on or before the effective
date of his/her termination, unless otherwise agreed in writing by both
parties.
6. Rights to Work Product. With respect to any work product which is
conceived or produced by EMPLOYEE during the term of his/her employment or
with the use or assistance of HUNTER's facilities, materials, or personnel,
HUNTER shall own all rights, title and interest to such work product. The
book on HR systems jointly written by Richard Wheeler, Allan Boroughs and
Coopers & Lybrand, and published by Kogan Page is excluded from this agreement.
7. Protection of Trade Secrets and Confidential Information. EMPLOYEE
hereby acknowledges that during the term of his/her employment, he/she may
acquire access to confidential information and trade secrets belonging to
HUNTER or HUNTER's clients or third parties. Such confidential information
and trade secrets shall be kept in absolute confidence both during and after
the termination of EMPLOYEE's employment. For the purpose of this paragraph
7, the term "trade secrets and confidential information" shall mean any
information not generally known in the relevant trade or business, which was
obtained from HUNTER or its clients or which was learned, discovered,
conceived, originated or prepared as a result of the performance of any
services on behalf of HUNTER; including but not limited to information
relating to existing or contemplated products, services, technology,
designs, processes or formulae or information
2
<PAGE>
relating to business plans and strategies, customer lists, customer
requirements or supplier information. EMPLOYEE agrees that he/she will not,
at any time, disclose to others, use for his/her own benefit or otherwise
appropriate or copy any such confidential information or trade secrets,
whether or not developed by EMPLOYEE, except as required in EMPLOYEE's duties
to HUNTER; provided, however, that the foregoing shall not apply to any
information that is (i) generally available to the public on the date hereof
or becomes generally available to the public through no breach of this
paragraph 7 by EMPLOYEE, (ii) obtained by EMPLOYEE from a third party having
the right to disclose such information, (iii) known by EMPLOYEE prior to its
disclosure by HUNTER or (iv) required by law, governmental order or decree to
be disclosed by EMPLOYEE.
8. Procedures for Preserving Confidentiality of Tangible and
Intangible Items. EMPLOYEE agrees to comply with any and all reasonable
procedures which HUNTER may adopt from time to time to preserve the
confidentiality of any confidential information or trade secrets. Certain
materials will be affixed with a legend indicating their confidential
information. The failure to affix such legend shall not give rise to any
inference that the information contained therein or derived therefrom is not
confidential information.
9. Covenant Not to Employ. During the period of employment, and for
a twelve (12) month period thereafter, EMPLOYEE agrees that he/she will not
actively solicit the employment of any HUNTER employee or any of HUNTER's
consultants, subcontractors or independent contractors, who are such during
the term of EMPLOYEE's employment. Nothing herein shall be construed to
prohibit EMPLOYEE from soliciting or employing any HUNTER employee who was
terminated by HUNTER for economic or budgetary reduction purposes, or any
consultant, subcontractor or independent contractor who is no longer
associated with HUNTER.
10. Covenant Not to Solicit. (a) During the period of employment,
and for a twelve (12) month period thereafter, EMPLOYEE agrees that he/she
will not render, directly or indirectly, any services of an advisory or
consulting nature similar in character to those offered by HUNTER, whether as
an employee or otherwise, and whether paid or unpaid, to any organization
which is a client or active prospect of HUNTER during the period of
EMPLOYEE's employment. The provisions of this paragraph (10(a) shall not
apply where EMPLOYEE was terminated by HUNTER for economic or budgetary
reduction purposes, or where the rendering of services is unrelated to
HUNTER's work with the organization.
(b) During the period of employment, and for a twelve (12) month
period thereafter, EMPLOYEE agrees that he/she will not contact any clients or
active prospects of HUNTER, who are such during the period of EMPLOYEE's
employment, for the purposes of soliciting, selling, or both, to any of said
clients or active prospects any products or services similar to the products
or services of HUNTER; nor will he/she in any way directly or indirectly, for
himself/herself or in behalf of, or in conjunction with any other person,
persons, firm, partnership, corporation, or company, solicit, divert, or take
away any such clients or active prospects of HUNTER.
3
<PAGE>
(c) For purposes of paragraphs 10(a) and 10(b), the term "active
prospects" is defined as those persons, firms, or corporations with whom
HUNTER is, or has been actively engaged in the solicitation or negotiation of
business opportunities at any time during the six (6) month period preceding
the termination of employment, or preceding such solicitation or negotiation
if prior to termination of employment.
11. Duties Upon Termination of Employment. (a) Upon termination of
his/her employment with HUNTER for any reason, EMPLOYEE agrees to deliver to
HUNTER all keys, motor vehicles, computers, telephones, peripheral devices,
software, telephone and voice mail directories, policy and procedure manuals,
books, proposals, writings, designs, documents, records, data, memoranda,
computer source code and object code listings, file layouts, record layouts,
system design information, models, manuals, documentation, notes, and other
materials of any nature which are in his/her possession or control as a
result of his/her employment by HUNTER.
(b) EMPLOYEE agrees and hereby authorizes HUNTER to withhold
payments of any salary, expense reimbursement or other sums due EMPLOYEE
until all such materials have been returned in good working order. EMPLOYEE
agrees and hereby authorizes HUNTER to recover the value of any such items
that are damaged or repaired from any payments of salary, expense
reimbursement or other sums due to EMPLOYEE.
(c) EMPLOYEE further agrees to retain in the strictest
confidence any confidential information or trade secrets he/she learned
during his/her term of association with HUNTER.
12. Other Agreements. EMPLOYEE represents and warrants that his/her
signing of this Agreement and the performance of his/her services hereunder
is not and will not be knowingly in violation of any other contract,
agreement or understanding to which he/she is a party.
13. Assignment. This Agreement may not be assigned or transferred in
whole or in part without the prior written consent of the parties.
14. Right to Injunctive Relief. EMPLOYEE's strict compliance with the
provisions of paragraphs 6 through 12 hereof is necessary to preserve and
protect the goodwill and proprietary rights of HUNTER and to prevent persons,
firms, joint ventures, partnerships, corporations, institutions, and
enterprises engaged in business and activities which are competitive with
the business and activities conducted or carried on by HUNTER from obtaining
an unfair competitive advantage over HUNTER. Any failure by EMPLOYEE to
comply with the provisions of such paragraphs will result in irreparable and
continuing damage to HUNTER for which there will be no adequate remedy at
law. In the event that EMPLOYEE fails to comply with the provisions of such
paragraphs, HUNTER shall be entitled to injunctive relief and to such other
further relief as may be necessary or appropriate to cause EMPLOYEE to comply
with his/her duties and obligations under such paragraphs.
4
<PAGE>
15. Grievances and Discipline. If EMPLOYEE should have a grievance
regarding employment, EMPLOYEE should in the first instance speak to a
Director. If the grievance is not then resolved to EMPLOYEE'S satisfaction,
EMPLOYEE should ask for the matter to be considered by the Board. The
decision of the Board will be final. The disciplinary rules and procedures
applicable to the EMPLOYEE are described in the "Disciplinary Rules and
Procedures."
16. Affiliates. For purposes of paragraphs 7 through 14 of this
Agreement, references to HUNTER shall be deemed to include references to The
Hunter Group, Inc. and any of its subsidiaries or affiliates from time to
time.
17. Severability. In case it is determined by a court of competent
jurisdiction that any provision herein contained is unenforceable, such
determination shall solely affect such provision and shall not impair the
remaining provisions of this Agreement.
18. Plurals; Gender. Any word in the text of this Agreement shall be
read as the singular or plural and as the masculine, feminine or neuter
gender as may be appropriate under the circumstances then existing.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of England.
5
<PAGE>
20. Entire Agreement. The parties have read this Agreement and agree to
be bound by its terms, and further agree that it constitutes the complete
and exclusive statement of the Agreement between them which supersedes all
proposals, oral or written, and all other communications between them
relating to the subject matter of this Agreement. This Agreement shall not be
amended except in a writing executed by both parties.
EMPLOYEE:
3/Aug/95 /s/ R. Wheeler
- ------------------- ------------------------
Date By: Richard Wheeler
HUNTER CONSULTING ASSOCIATES LIMITED
9/30/97 /s/ Loren D. Burnett
- ------------------- ------------------------
Date By: Terry L. Hunter//Loren D. Burnett
Director
6
<PAGE>
[LOGO]
Exhibit A
May 16, 1995
Mr. Richard Wheeler
3 Rosegarth
Istead Rise - Northfleet ***Reissued August 1, 1995***
Kent DA 139HT
England
Dear Richard:
I am pleased to extend our offer for you to join The Hunter Group as a Vice
President. Your role will be as director of European consulting operations.
In this role you will be responsible for setting-up and directing The Hunter
Group's international Human Resources information management consulting
operations, concentrating on building a base in the U.K. and Europe, and
possibly extending this to other regions as well, namely Africa and SE Asia.
You will be responsible and accountable for business planning, marketing, and
selling, and meeting all business objectives, including full accountability
for profit and loss of both the management consulting and implementation
activities directed at Human Resources information management. You will be
based in our London office and will be reporting to Terry Hunter, The Hunter
Group's President & CEO.
Your base salary will be L6,670.00 per month paid semi-monthly on the 22nd
and 7th days of the month for the pay periods ending on the 15th and last day
of the month, respectively. You will receive a 6-month interim performance
review and related pay adjustment, if warranted. Thereafter, performance and
pay reviews occur at least annually.
As part of Hunter's management team, you will share in the perquisites and
rewards commensurate with your role and performance, including management
bonuses and stock options/grants/appreciation rights as these become
finalized. As 1995 is a start-up year, we've developed a provisional
performance bonus plan as follows:
Achieve Break Even - 15%* 1995 base compensation paid
Achieve Profit - Proportionate share of 40% of profit; share
based on ratio of base compensation to total
compensation of professional staff; expenses
shall include actual monies expensed during
1995 towards European operations.
Incentive plans for 1996 and beyond will be more closely aligned with U.S.
executives' bonus plans.
<PAGE>
Mr. Richard Wheeler
May 16, 1995
Page 2
Our offer to you includes a Stock Appreciation Rights grant valued at $50,000
on the date you begin work with Hunter.
The $50,000 grant will become wested as follows:
20% or $10,000 upon completion of 12 months service
+35% or $17,500 upon completion of 24 months service
+45% or $22,500 upon completion of 36 months service
----- -------
100% $50,000
In the event of your death or incapacitating disability, the current year's
portion of the award--e.g., 1st year 20%, 2nd year 35%, 3rd year 45%--will be
immediately vested; that is, the remaining period of employment to complete
that year's vesting will be waived. Vesting beyond that year will not
continue, however.
Until such time as The Hunter Group's Stock Appreciation Rights Plan is
finalized and a market established for cashing in shares, the grant made to
you shall be at face value; that is, each 1% vested shall be worth $500 and
it shall neither increase nor decrease in value.
Likewise, in the event of your death or incapacitating disability during this
interim period, Hunter will cash-in vested shares using the following
schedule:
Value up to $10,000 - Payable immediately
Value up to $25,000 - Payable over 12 months
Value up to $50,000 - Payable over 24 months
You will also be eligible for vacation, personal and sick leave, and holiday
pay according to standard Hunter policy. For you, this means annual paid
leave of 25 days, plus public holidays.
Eligibility requirements and other specifics of our benefit plans are still
being developed. However, we expect to have the following plans in place on
your start date:
Pension: We intend to establish a defined contribution plan whose
contribution/benefit levels would be pitched at a competitive level.
Life Assurance: To be provided at a level between 3-4 times salary.
Participation is subject to any evidence of health requirements of the
insurer.
<PAGE>
Mr. Richard Wheeler
May 16, 1995
Page 3
Personal Accident & Disability Cover: To be provided at a level
consistent with industry practices; e.g., short-term disability and
accidental death.
Private Health Insurance: To be provided at a level consistent with
industry practices.
Additionally, you will be provided a car allowance, organized either as a
contract hire through Hunter, or as a cash allowance, either valued at up to
L6,500.00 per annum. Reimbursement will be made for business mileage and
related expenses. Should you choose a company car, Hunter is required to
inform the Inland Revenue that you are in receipt of the benefits of a
company car. You will be taxed on the provision of a company car for private
use. The value of the taxable benefit increases if you do not complete a
minimum of 2,500 business miles in each tax year. You are therefore advised
to keep records of business mileage for taxation purposes.
Richard, you will need to sign an Employment Agreement. As much as we dislike
the formality, it is required to protect your interests and rights, as well
as those of The Hunter Group, its clients and prospects, and the vendors we
work with and support. It is enclosed for your signature and must be signed
on or before the date you commence employment with us. If you have never been
faced with a contract of this type before, it can be somewhat intimidating,
even though we have tried to make it less so. Don't hesitate to ask if you
have any questions or concerns; we will be pleased to discuss any of its
provisions with you.
This employment offer is extended to you until ____________________________,
1995, at which time it expires if not accepted. Based on our understanding of
your current obligations, we are expecting you to start on or before
_______________________ 1995. Please sign one copy of this letter indicating
your expected start date and return it via fax to Lynn Moler in our Baltimore
office at (410) 752-2879.
Your employment with The Hunter Group should offer you the challenges and
rewards you seek. We look forward to working with you, and to the success of
our mutual endeavors.
Sincerely,
/s/ Terry Hunter
Terry L. Hunter
President & CEO
TLH/few
Enclosure: Employment Agreement
cc: Tom Whartenby, COO
Ed Postal, CFO
Personnel
<PAGE>
Mr. Richard Wheeler
May 16, 1995
Page 4
Accepted:
/s/ R. Wheeler
- ------------------- Date: 3/Aug/95
Richard Wheeler
Expected start date: 2 OCTOBER 1995
------------------
YS 396334D
- --------------------------
Social Insurance #
<PAGE>
Exhibit 10.08
STOCKHOLDERS' AGREEMENT
This STOCKHOLDERS' AGREEMENT dated as of _________________ (this
"Agreement") by and among THE HUNTER GROUP, INC., a Maryland corporation (the
"Company"), and the other parties now or hereafter listed on Exhibit A hereto
(collectively, the "Stockholders").
W I T N E S S E T H:
WHEREAS, each of the Stockholders is an owner of shares of common stock,
without par value, of the Company (the "Common Stock"); and
WHEREAS, the parties hereto wish to enter into appropriate agreements
among themselves to assure continuity in the ownership and management of the
Company and to provide a market for the Shares upon the occurrence of certain
events which otherwise could be disruptive for the Company.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the meanings set forth
below:
(a) "Board" and "Board of Directors" shall mean the Board of
Directors of the Company.
(b) "Change of Control" shall mean (i) the sale of all or
substantially all of the assets of the Company, (ii) the sale of more than
fifty percent (50%) of the outstanding Common Stock in a non-public sale,
(iii) the dissolution or liquidation of the Company, or (iv) any merger or
consolidation of the Company if immediately after such transaction either (A)
persons who were directors of the Company immediately prior to such
transaction do not constitute at least a majority of the directors of the
surviving entity, or (B) persons who hold a majority of the voting stock of
the surviving entity are not persons who held a majority of the Common Stock
of the Company immediately prior to such transaction.
-1-
<PAGE>
(c) "Closing Purchase Price" shall mean the purchase price for
Shares repurchased by the Company, as estimated and calculated for the
closing of such a repurchase transaction in accordance with Section 5.3 below.
(d) "Common Stock" shall have the meaning set forth in the recitals
to this Agreement.
(e) "Control Group" shall mean any Stockholder or group of
Stockholders owning, in the aggregate, more than two-thirds of the issued and
outstanding Shares.
(f) "Estimated EBIT" shall mean the Company's estimated earnings
before interest on long-term obligations and taxes for any fiscal year, as
determined by the Board in its sole and absolute discretion.
(g) "Estimated Fee Income" shall mean the Company's estimated
income from consulting fees for any fiscal year, as determined by the Board
in its sole and absolute discretion.
(h) "Estimated Share Value" shall mean the value of Shares as of
the end of any fiscal year, determined with reference to Estimated EBIT and
Estimated Fee Income, as more fully described in Section 5.3(b) below.
(i) "Final EBIT" shall mean the Company's earnings before interest
on long-term obligations and taxes, consistent with its regularly prepared
financial statement, as adjusted in the Board's sole and absolute discretion
for certain extraordinary or non-recurring events for any fiscal year.
(j) "Final Fee Income" shall mean the Company's income from
consulting fees, consistent with its regularly prepared financial statement
for any fiscal year.
(k) "Final Purchase Price" shall mean the purchase price at which
the Company shall repurchase Shares, calculated in accordance with Article V
below.
(l) "Final Share Value" shall mean the value of Shares as of the
end of any fiscal year, determined with reference to Final EBIT and Final Fee
Income, as more fully described in Section 5.3(c) below.
(m) "Options" shall mean options granted under the Stock Option
Plan, from time to time outstanding, to purchase newly issued Shares from the
Company.
(n) "Permanent Disability" shall mean a mental or physical
condition that, in the opinion of a licensed physician approved by the Board
in its sole and absolute discretion,
-2-
<PAGE>
renders a Stockholder permanently incapable of satisfactorily performing his
or her usual duties for the Company or the duties of such other position as
the Company may make available to him for which he is qualified by reason of
training, education or experience.
(o) "Resignation" shall mean the resignation by a Stockholder of
his or her employment with the Company other than in connection with his or
her Retirement.
(p) "Retirement" shall mean the resignation by a Stockholder of his
or her employment with the Company on or after age 62, or the Stockholder's
retirement, with the Company's consent, prior to age 62.
(q) "Shares" shall mean shares of Common Stock, without par value,
of the Company.
(r) "Stock Option Plan" shall mean the Company's Employee
Non-Qualified Stock Option Plan.
(s) "Termination for Cause" shall mean, (i) with respect to an
employee who is a party to a written employment agreement with the Company
containing a definition of "for cause" or "cause" (or words of like import)
for purposes of termination of employment thereunder by the Company, "for
cause" or "cause" as defined in such agreement, or (ii) with respect to an
employee who is not a party to such a written employment agreement with the
Company, then upon a determination by the Board, in its sole and absolute
discretion, that one or more of the following has occurred: (A) any
intentional or willful failure by an employee to substantially perform his or
her employment duties which shall not have been corrected within thirty (30)
days following written notice thereof, (B) an employee's gross negligence or
willful misconduct which is significantly injurious to the Company or any of
its subsidiaries or affiliates, (C) any material breach by an employee of any
covenant contained in the instrument pursuant to which any Option is granted
to such an employee under the Stock Option Plan, or any material breach under
any other agreement with the Company to which the employee is a party, or (D)
an employee's conviction of or entry of a plea of nolo contendere in respect
of any felony, or of a misdemeanor which results in or is reasonably expected
to result in material economic or reputational injury to the Company or any
of its subsidiaries or affiliates.
(t) "Transfer" means any sale, transfer, gift, pledge, grant of any
security interest, encumbrance, conveyance or other disposition of Shares.
(u) "Triggering Event" means the termination of a Stockholder's
employment with the Company, which termination gives rise to the Company's
repurchase of Shares from such Stockholder hereunder.
-3-
<PAGE>
ARTICLE II
TRANSFERS OF SHARES
2.1 In General. No Stockholder shall engage in any Transfer of his
Shares without the written consent of the holders of two-thirds of the issued
and outstanding Shares, except in accordance with the terms of this
Agreement, and any attempted transfer in violation of this Agreement shall be
null and void and not recognized for any purpose.
2.2 Transfers of Shares to Third Parties. Except as otherwise permitted
by Section 2.1 above or Article III below, if any Stockholder (in this
capacity, a "Selling Stockholder") desires to engage in a Transfer of all or
any portion of his Shares (the "Transferable Shares") by any means
whatsoever, such Selling Stockholder shall first offer such Transferable
Shares for purchase or acquisition by the Company as hereinafter provided:
(a) Notice. The Selling Stockholder shall give written notice (the
"Selling Stockholder's Notice") to the Company, stating the date thereof, the
number of Transferable Shares, the name and address of the proposed
transferee, and the price, if any, per Transferable Share offered by the
proposed transferee and other terms and conditions of the proposed Transfer.
(b) Company Right of Purchase. The Company shall have the right
and option to purchase all or any of the Transferable Shares on the same
terms as the proposed Transfer, subject to Section 2.2(e) below. The
Company's option may be exercised only in writing delivered to the Selling
Stockholder within fifteen (15) days after the date of the Selling
Stockholder's Notice, stating the number of Transferable Shares which the
Company desires to purchase. Any Transfer of Transferable Shares to the
Company under this Section 2.2(b) shall be consummated within ninety (90)
days after the date of the Selling Stockholder's Notice.
(c) Sale to Proposed Transferee. If all of the Transferable Shares
are not purchased by the Company, then the Selling Stockholder may Transfer
such unpurchased Transferable Shares to the proposed transferee on terms not
more favorable to the proposed transferee than those described to the Company
in the Selling Stockholder's Notice, subject to the remaining provisions of
this Agreement; provided, however, that the proposed transferee shall become
a party to this Agreement.
(d) Re-offer on Failure to Sell. If the Selling Stockholder fails
to consummate a sale or transfer to the proposed transferee on the terms and
conditions set forth in the Selling Stockholder's Notice within ninety (90)
days after the date of the Selling Stockholder's Notice, then no sale or
transfer of Transferable Shares may be made thereafter to the proposed
transferee or to any other transferee without again complying with the
provisions of this Section 2.2.
-4-
<PAGE>
(e) Purchase Price. The purchase price for any Share purchased by the
Company under this Section 2.2 shall be equal to the lesser of: (i) the
Final Purchase Price (as described in Section 5 below); and (ii) if the
proposed Transfer is a sale, the per-Share price offered by the proposed
purchaser and identified in the Selling Stockholder's Notice.
2.3 Option Upon Involuntary Transfer. If other than by reason of the
death of any Stockholder, any Shares are transferred by operation of law to
any person other than the Company, or if (a) a Stockholder shall be
adjudicated as bankrupt or make an assignment for the benefit of creditors;
(b) bankruptcy proceedings in which a Stockholder is alleged to be insolvent
or unable to pay his debts as they mature are instituted by or against him,
and he consents thereto or admits in writing the material allegations of the
petitions filed in those proceedings; (c) a Stockholder's Shares are
attached; (d) any judgment is obtained in any legal or equitable proceeding
against a Stockholder and the sale of his Shares is contemplated or
threatened under legal process as a result of that judgment; (e) any
execution process is issued against a Stockholder's Shares; or (f) any other
form of legal proceeding or process is instituted by which a Stockholder's
Shares may be sold or transferred voluntarily or involuntarily and the same
remains undismissed for sixty (60) days, then such transfer or event shall be
deemed to be the giving of a Selling Stockholder's Notice under Section
2.2(a) hereof, whereupon the Company may purchase the Shares upon the same
terms as set forth in Section 2.2.
ARTICLE III
FUNDAMENTAL TRANSACTIONS
3.1 Tag-Along. If at any time any Control Group enters into any
agreement or transaction with a third party for the sale or tender of Shares
of Common Stock, including, without limitation, in connection with a Change
of Control transaction, such Control Group shall not be required to comply
with the provisions of Section 2.2 above, but shall instead (i) give each
other Stockholder notice of the opportunity to sell or tender his Shares
(including an address for Stockholder notices to the Control Group pursuant
to this Section 3.1) at least five (5) days in advance of the sale or the
date that such tender is required, and (ii) require the proposed transferee
to purchase the same proportionate number of Shares owned by the other
Stockholders as the Stockholders in the Control Group propose to sell of the
Shares owned by them, for the same price and upon the same terms and
conditions applicable to the Stockholders in the Control Group in the
transaction. A Stockholder may exercise his right to participate in the sale
by giving written notice to the Control Group within five (5) days after the
date of the notice of the transaction delivered under clause (i) above, at
the address set forth therein. Nothing contained in this Section 3.1 shall
confer upon any Stockholder a right to sell or tender Shares owned by him to
any proposed transferee in connection with any transaction entered into by
the Company for the purpose of raising additional equity.
-5-
<PAGE>
3.2 Drag-Along. If at any time any Control Group enters into any
agreement or transaction with a third party for the sale or tender of Shares
of Common Stock, including, without limitation, in connection with a Change
of Control transaction, such Control Group shall not be required to comply
with the provisions of Section 2.2 above, and the Company and/or such Control
Group may require each other Stockholder to participate in such transaction
by giving such other Stockholders written notice thereof at least five (5)
days in advance of the date of the transaction or the date that tender is
required, as the case may be. Upon receipt of such notice, each Stockholder
shall tender the same proportionate amount of Shares owned by him as the
Stockholders in the Control Group propose to sell or tender of the Shares
owned by them, on the same terms and conditions applicable to the
Stockholders in the Control Group in the transaction.
3.3 Stockholder Approval of Change of Control Transactions.
Notwithstanding anything contained herein to the contrary, if at any time any
Control Group proposes to enter into any Change of Control transaction, such
Control Group may require each other Stockholder to vote in favor of such
transaction, where approval of the Stockholders is required by law or
otherwise sought, by giving all of the Stockholders notice thereof within the
time prescribed by law and the Company's charter and by-laws for giving
notice of a meeting of Stockholders called for the purpose of approving such
transaction. If the Control Group requires such vote, each Stockholder agrees
that he or she will, if requested, deliver his or her proxy to the person
designated by the Control Group to vote his or her Shares in favor of such
Change of Control transaction.
ARTICLE IV
DISPOSITION OF SHARES UPON TERMINATION OF EMPLOYMENT
4.1 Resignation, Termination Without Cause, Death, Disability or
Retirement. Upon and after the Resignation, death, Permanent Disability or
Retirement of any Stockholder, or if the employment of any Stockholder is
terminated by the Company other than by reason of a Termination for Cause,
the Company may, at any time and from time to time prior to the first
anniversary of the termination of such Stockholder's employment, at its
election, repurchase, and such Stockholder (or the personal or legal
representatives, heirs, beneficiaries, legatees or devisees of a Stockholder
who is deceased or Permanently Disabled, as the case may be) shall thereupon
be required to sell to the Company, all or any of such Stockholder's Shares,
for a purchase price equal to the market price or the Final Purchase Price,
as determined in accordance with Article V below.
4.2 Termination for Cause. In the event of the Termination for Cause of
any Stockholder, the Company may, at any time and from time to time prior to
the first anniversary of the termination of such Stockholder's employment,
repurchase, and such Stockholder shall
-6-
<PAGE>
thereupon be required to sell to the Company, any Shares owned by such
Stockholder at a price equal to the lower of (i) the value of the
consideration paid by such Stockholder for the Shares (which, in the case of
Shares acquired pursuant to the exercise of Options shall be equal to the
exercise price of such Options), or (ii) the Final Purchase Price determined
in accordance with Article V below, if there is no public market for the
Common Stock, or (iii) the closing price per Share on the date of the
Termination for Cause, if there is then a public market for the Common Stock.
ARTICLE V
PURCHASE PRICE
5.1 General.
(a) If there is then a public market for the Common Stock, the
purchase price for each Share purchased by the Company pursuant to Section
2.2 (subject to Section 2.2(e) thereof) or Section 4.1 of this Agreement
shall be equal to the closing price per Share on the date of the Triggering
Event.
(b) If there is no public market for the Common Stock on the date
of a Triggering Event, the purchase price for shares purchased by the Company
pursuant to Section 2.2 (subject to Section 2.2(e) thereof) or Section 4.1 of
this Agreement shall be equal to the Final Purchase Price, determined in
accordance with Section 5.3 and 5.4 below.
5.2 Payment.
(a) Payment of the purchase price for any Shares purchased by the
Company under this Agreement shall be made by the Company as follows: (i) an
amount equal to at least twenty percent (20%) of the purchase price (or, if
the purchase price is to be equal to the Final Purchase Price, then twenty
per cent (20%) of the Closing Purchase Price) shall be paid in cash at the
time of the Share repurchase, and (ii) the balance of the purchase price
shall be paid in no more than four (4) equal annual installments in
accordance with the terms of a promissory note in the form attached hereto as
Exhibit B (the "Note") in an original principal amount equal to the balance
of the purchase price (or, if the purchase price is to be equal to the Final
Purchase Price, then the balance of the Closing Purchase Price), with
interest on the outstanding principal balance set at the rate then applicable
to the Company's line of credit less one percent (1%). If the purchase price
is to be equal to the Final Purchase Price, then the principal amount of the
Note and the payments thereunder shall be adjusted upon determination of the
Final Purchase Price in accordance with Section 5.2(b) below.
(b) If the purchase price is to be equal to the Final Purchase
Price, then the Company shall determine the Final Purchase Price within
one-hundred twenty (120) days after
-7-
<PAGE>
the end of the fiscal year in which the Triggering Event takes place. To the
extent that the Final Purchase Price exceeds or is less than the Closing
Purchase Price, the principal amount of the Promissory Note will be deemed to
be increased or decreased, respectively, by the amount of such excess or
shortfall. Any remaining payments of principal under the Promissory Note
shall be ratably adjusted in a like manner, and interest shall be deemed to
have commenced to accrue on the principal amount, as adjusted, as of the
original date of the Note.
5.3 Determination of Closing Purchase Price.
(a) The Closing Purchase Price shall be equal to:
(i) the Final Share Value as of the end of the fiscal year
immediately prior to the fiscal year in which the Triggering Event takes
place, plus or minus, as the case may be,
(ii) (x) the difference between the Estimated Share Value as of
the end of the fiscal year in which the Triggering Event takes place, less
the Final Share Value as of the end of the fiscal year immediately preceding
the fiscal year in which the Triggering Event takes place, times
(y) the number of whole months in the fiscal year in which
the Triggering Event takes place that elapsed prior to the date of the
Triggering Event, divided by twelve.
(iii) The Closing Purchase Price, as determined in
accordance with items (i) and (ii) above, or any of the components thereof,
may be adjusted in any manner deemed appropriate or advisable by the Board of
Directors in its sole discretion.
(b) For purposes of the foregoing, "Estimated Share Value" shall be
equal to the product of:
(i) the sum of: (x) 80% times the product of 1.6 times
Estimated Fee Income, plus (y) 20% times the product of 8 times Estimated
EBIT, times
-8-
<PAGE>
(ii) a fraction, the numerator of which shall be equal to the
number of Shares being repurchased, and the denominator of which shall be
equal to the sum of:
(x) the total number of shares of Common Stock issued and
outstanding on the last day of the month immediately preceding the Triggering
Event, plus
(y) the total number of Shares issuable upon exercise of
all Options issued and outstanding on the last day of the month immediately
preceding the Triggering Event.
(c) For purposes of the foregoing, "Final Share Value" shall be
calculated in the same manner as the Estimated Share Value, except that Final
Fee Income and Final EBIT shall be used in place of Estimated Fee Income and
Estimated EBIT, respectively.
5.4 Determination of Final Purchase Price. The Final Purchase Price
shall be calculated in the same manner as the Closing Purchase Price, except
that Final Share Value, rather than Estimated Share Value, shall be used with
respect to the fiscal year in which the Triggering Event takes place.
5.5. Availability of Funds to Purchase Shares. If, at the time the
Company desires or is obligated hereunder to purchase any Shares, the Company
does not have funds readily available for the purchase of all or a portion of
those Shares, then (a) the Company shall purchase that number of Shares which
it readily may purchase, (b) the Company shall remain obligated to purchase
(and the affected Stockholder shall remain obligated to sell) any remaining
Shares as to which the Company has given any notice required by this
Agreement at such time or times as it has funds legally available for such
purchase. For purposes of this Section 5.5, the Company shall under no
circumstances be deemed to have funds "readily available" if they are not
also legally available under Maryland law, provided that funds shall not
necessarily be deemed to be "readily available" solely because they are
legally available under Maryland law.
ARTICLE VI
RESTRICTIVE COVENANTS
6.1 Covenant Not to Employ. For so long as a Stockholder owns Shares of
the Company, and for a twelve (12) month period thereafter, such Stockholder
agrees that he or she will not employ or solicit the employment of any
Company employee or any of the Company's consultants, subcontractors or
independent contractors. Nothing herein shall be construed to prohibit any
person from soliciting or employing any Company employee, consultant,
subcontractor or independent contractor who was terminated by the Company
primarily for economic or budgetary reduction purposes.
-9-
<PAGE>
6.2 Covenant Not to Solicit.
(a) For so long as a Stockholder owns Shares of the Company, and
for a twelve (12) month period thereafter, such Stockholder agrees that he or
she will not render, directly or indirectly, any services of an advisory or
consulting nature similar in character to those offered by the Company,
whether as an employee or otherwise, and whether paid or unpaid, to any
business which is a client or "active prospect" (defined below) of the
Company. The provisions of this Section 6.2(a) shall not apply where the
Stockholder's employment with the Company was terminated by the Company
primarily for economic or budgetary reduction purposes.
(b) For so long as a Stockholder owns Shares of the Company, and
for a twelve (12) month period thereafter, such Stockholder agrees that he or
she will not contact any clients or "active prospects" (defined below) of the
Company for the purposes of soliciting, selling, or both, to any of said
clients or active prospects any products or services similar to the products
or services of the Company; nor will he or she in any way directly or
indirectly, for himself or herself or on behalf of, or in connection with any
other person, persons, firm, partnership, corporation, or company, solicit,
divert, or take away any such clients or active prospects of the Company.
(c) For purposes of Sections 6.2(a) and 6.2(b), the term "active
prospects" is defined as those persons, firms, or corporations with whom the
Company is, or has been actively engaged in the solicitation or negotiation
of, business opportunities at any time during the six (6) month period
preceding the later of the termination of a Stockholder's employment with the
Company or the sale or other disposition by the Stockholder of all of his or
her Shares.
6.3 Noncompetition Agreement
(a) For so long as a Stockholder owns Shares of the Company, such
Stockholder agrees that he or she will not render, directly or indirectly,
any services of an advisory or consulting nature similar in character to
those offered by the Company, whether as an employee or otherwise, and
whether paid or unpaid, to any business which is a competitor (as defined
below) of the Company.
(b) For so long as a Stockholder owns Shares of the Company, such
Stockholder agrees that he or she will not, either alone or as a member of a
partnership or joint venture, as a beneficiary or a trust, or as an officer,
director, stockholder of or investor in any other corporation or enterprise,
or otherwise (except as an investor in securities publicly held and listed on
a national securities exchange) be engaged in the ownership or management of
any business or activity which is a "competitor" (as defined below) of the
Company.
-10-
<PAGE>
(c) For the purposes of this Section 6.3, the term "competitor" is
defined as those persons, firms or corporations which provide consulting,
systems implementation, systems integration, or advisory services in the
areas of Human Resources or Financial Accounting systems.
(d) The provisions of this Section 6.3 shall not apply where the
Stockholder's employment with the Company was terminated by the Company
primarily for economic or budgetary reduction purposes.
ARTICLE VII
REGISTRATION RIGHTS
7.1 Piggyback Registration. If the Company at any time proposes to
register any of its securities under the Securities Act for sale to the
public, whether for its own account or for the account of other security
holders or both (except with respect to registration statements on Forms S-4,
S-8 or another form not available for registering the Shares for sale to the
public, or any successor thereto), it will give written notice thereof to the
Stockholders not less than 10 days prior to the filing of its registration
statement. Upon the written request of any Stockholder received by the
Company within 5 days after the Company's notice, the Company shall use its
best efforts to cause the Shares as to which registration has been so
requested to be included in the securities covered by its registration
statement.
7.2 Limitations. A Stockholder's right to have his or her Shares
registered under this Article VII shall be on a basis fully subordinated to
the Company such that if any registration shall involve an underwritten
public offering of Common Stock, the total number of Shares owned by
Stockholders that are to be included in such an underwriting may be reduced,
if the managing underwriter believes that such inclusion would adversely
affect the marketing of the securities to be sold by the Company, on a pro
rata basis among all of the Stockholders requesting registration based upon
the number of Shares that each such Stockholder had requested to have
registered. Notwithstanding the foregoing provisions, the Company may
withdraw any registration statement referred to in this Article VII without
incurring any liability to any Stockholder.
-11-
<PAGE>
ARTICLE VIII
MISCELLANEOUS
8.1 Legend on Certificates. Each of the Stockholders and their
respective transferees permitted under this Agreement shall cause the
following legend to be conspicuously noted upon all certificates representing
Shares of the Common Stock of the Company now or hereafter owned by each of
them:
"Transfer of any interest in the securities represented by this
certificate is subject to a Stockholders' Agreement dated _________________
by and among THE HUNTER GROUP, INC., a Maryland corporation, and the other
parties named therein, and no such transfer may be made without compliance
with that Agreement."
"The Securities represented by this certificate have not been registered
under the Federal Securities Act of 1933 or the applicable securities act of
any state but have been issued in reliance upon exemptions from registration
contained in said acts. No sale, offer to sell or other transfer of the
securities represented by this certificate may be made unless a registration
statement under said acts is in effect with respect to the securities, or an
exemption from the registration provisions of such acts is then applicable."
8.2 Notices. Any notice required or permitted to be given hereunder
shall be given in writing and shall be deemed to have been validly given if
delivered by hand or mailed first-class, postage prepaid, (a) if to the
Company, at its then executive office, (b) if to a Stockholder, at his
address as then shown on the Company's records, or at such other address as
he may have designated in writing to the Company, and (c) if to a Selling
Stockholder or Control Group, to the address specified in the Selling
Stockholders' Notice or other notice given by the Control Group under Article
III.
8.3 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Company, the Stockholders, and their respective
transferees, heirs, personal representatives, successors and assigns. None
of the Stockholders may assign this Agreement or any of his rights or
obligations hereunder.
8.4 Entire Agreement; Amendment. This Agreement represents the entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings related to the
subject matter hereof. This Agreement may not be amended or modified except
by a writing executed by all of the parties hereto.
8.5 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be effected or impaired thereby.
-12-
<PAGE>
8.6 Headings. The headings contained in this Agreement are for
reference purposes only and shall not effect the meaning or interpretation of
this Agreement.
8.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
shall constitute but one and the same instrument.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland.
8.9 Arbitration. The parties agree that any dispute arising under or in
connection with this Agreement shall be resolved by final and binding
arbitration conducted in Baltimore, Maryland in accordance with the
Commercial Rules of the American Arbitration Association.
IN WITNESS WHEREOF, each of the parties hereto have executed and
delivered this Agreement as of the date set forth opposite its or his name.
THE HUNTER GROUP, INC.
Date of Execution: By:
------------------------ ----------------------------
Name:
--------------------------
Title:
-------------------------
Date of Execution:
------------------------- -------------------------------
Terry L. Hunter, Stockholder
-13-
<PAGE>
[SIGNATURE PAGE FOR ADDITIONAL SHAREHOLDERS --
MAY BE DUPLICATED FOR ADDITIONAL
SIGNATURES, INCLUDING COUNTERPART
SIGNATURES, AS NECESSARY]
IN WITNESS WHEREOF, the parties have executed and delivered, and have
agreed to become bound by, the provisions of the Stockholders' Agreement by
and among The Hunter Group, Inc. and the other parties listed on Exhibit A
thereto, as the same may be from time to time amended, modified or
supplemented, as of the date indicated below.
Date of Execution:
------------------------ -----------------------------
Print Name:
------------------
-14-
<PAGE>
EXHIBIT A
STOCKHOLDERS
-1-
<PAGE>
EXHIBIT B
PROMISSORY NOTE
$_________________ _____________, 19__
Baltimore, Maryland
For value received, The Hunter Group, Inc., a Maryland corporation
("Hunter"), promises to pay to the order of ___________________
("Stockholder") at _________________________, in lawful money of the United
States, the principal sum of _________________________ DOLLARS
($_____________), with interest thereon at a rate of _____% (which is equal
to the current rate applicable to Hunter's line of credit with
_________________________ [Bank], less one percent (1%)), payable in [FOUR]
equal installments of principal and interest of ________________ DOLLARS
($__________) each, beginning on the first day of ______________, 19___ and
on _______________________ __ in each year thereafter until paid in full on
_______________, 19___. Hunter may prepay this Note in whole or part at any
time without penalty.
If Hunter defaults in the payment when due of all or any part of any
unpaid principal or interest hereunder, and such failure continues without
cure for twenty (20) days after written notice to Hunter (an "Event of
Default"), then the whole and entire balance of unpaid principal shall become
immediately due and payable at the option of Stockholder, without notice or
demand upon Hunter, and Hunter agrees to pay all costs and collection charges
incurred by Stockholder, including court costs and reasonable attorneys'
fees. Hunter hereby waives presentment, demand and protest and notice of
presentment, demand, and protest of this Note.
The principal amount of this Note shall be subject to increase or
decrease, respectively, by the amount of any excess or shortfall determined
in accordance with the terms of Article V of the Stockholders' Agreement
dated ________________ between Hunter and the Stockholder. Any remaining
payments of principal due hereunder shall be ratably adjusted in a like
manner, and interest shall be deemed to have commenced to accrue on the
principal amount, as adjusted, as of the original date of the Note.
Any notice required or permitted to be given hereunder shall be given in
writing and shall be deemed to have been validly given if delivered by hand
or mailed first-class, postage prepaid, (a) if to Hunter, at its then
executive office, and (b) if to a Stockholder, at his address as then shown
on Hunter's records, or at such other address as he may have designated in
writing to Hunter.
-1-
<PAGE>
This Note shall be governed by, and construed in accordance with, the
laws of the State of Maryland.
THE HUNTER GROUP, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
-2-
<PAGE>
Exhibit 10.09
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of September 25, 1997 (this
"AGREEMENT"), by and between The Hunter Group, Inc., a Maryland corporation
(the "COMPANY"), and ______________ ("INDEMNITEE").
W I T N E S S E T H:
WHEREAS, the Company desires to attract and retain the services of able
persons to serve as its officers and directors;
WHEREAS, the Company and Indemnitee recognize the increasing difficulty
in obtaining officers' and directors' liability insurance, the significant
increase in the cost of such insurance and the general reduction in the
coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and
directors to litigation risks at the same time that liability insurance has
been severely limited; and
WHEREAS, neither Indemnitee nor the Company regards statutory
indemnification protection as fully adequate given the present circumstances;
NOW THEREFORE, the Company and Indemnitee hereby agree as follows:
1. (a) THIRD-PARTY PROCEEDINGS. The Company shall indemnify
Indemnitee to the fullest extent of Delaware law, except as otherwise
provided in Section 3 of this Agreement, if Indemnitee is or was a party or
is threatened to be made a party to any threatened, pending or completed
suit, action, proceeding, arbitration or alternative dispute resolution
mechanism, investigation, administrative hearing, whether civil, criminal,
administrative or investigative (any such suit, action, proceeding,
arbitration or alternative dispute resolution mechanism, investigation,
administrative hearing being referred to herein as a "PROCEEDING") (other
than an action by or in the right of the Company) by reason of the fact that
Indemnitee is or was a director, officer, employee or agent of the Company or
any subsidiary or affiliated entity (each, a "Subsidiary") of the Company, by
reason of any action or inaction on the part of Indemnitee while an officer
or director of the Company or any Subsidiary of the Company or by reason of
the fact that Indemnitee is or was serving at the request of the Company as a
director, officer, employee or agent of another Person (as defined in Section
6(d)), against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement (if such settlement is approved in advance by the
Company, which approval shall not be unreasonably withheld) actually and
reasonably incurred by Indemnitee in connection with such action or
proceeding if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company and its stockholders, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
-1-
<PAGE>
(b) PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company shall
indemnify Indemnitee to the fullest extent of Delaware law, except as
otherwise provided in Section 3 of this Agreement, if Indemnitee is or was a
party or is threatened to be made a party to any threatened, pending or
completed Proceeding by or in the right of the Company or any subsidiary of
the Company to procure a judgment in its favor by reason of the fact that
Indemnitee is or was a director, officer, employee or agent of the Company or
any Subsidiary of the Company, by reason of any action or inaction on the
part of Indemnitee while an officer or director of the Company or any
Subsidiary of the Company or by reason of the fact that Indemnitee is or was
serving at the request of the Company as a director, officer, employee or
agent of another Person, against expenses (including attorneys' fees) and, to
the fullest extent permitted by Delaware law, amounts paid in settlement (if
such settlement is approved by the Company, which approval shall not be
unreasonably withheld), in each case to the extent actually and reasonably
incurred by Indemnitee in connection with the defense or settlement of such
Proceeding if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company and its stockholders, except that no indemnification shall be made in
respect of any claim, issue or matter as to which Indemnitee shall have been
adjudged to be liable to the Company and its stockholders in the performance
of Indemnitee's duty to the Company and its stockholders unless and only to
the extent that the Court of Chancery of the State of Delaware, or the court
in which such action or proceeding shall have been brought or is pending,
shall determine that in view of all the circumstances of the case, Indemnitee
is fairly and reasonably entitled to indemnity for expense, and then only to
the extent that the court shall determine.
(c) SELECTION OF COUNSEL. In the event the Company shall be obligated
under Section 1(a) or (b) hereof to pay the expenses of any Proceeding
against Indemnitee, the Company shall be entitled to assume the defense of
such Proceeding, with counsel approved by Indemnitee (who shall not
unreasonably withhold such approval), upon the delivery to Indemnitee of
written notice of its election so to do. After delivery of such notice,
approval of such counsel by Indemnitee and the retention of such counsel by
the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees of counsel subsequently incurred by Indemnitee with
respect to the same Proceeding, PROVIDED, THAT, (i) Indemnitee shall have the
right to employ his counsel in any such proceeding at Indemnitee's expense;
and (ii) if (A) the employment of counsel by Indemnitee has been previously
authorized in writing by the Company, (B) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense and shall have notified the
company in writing thereof, (C) Indemnitee shall have reasonably concluded
that there may be a conflict of interest between Indemnitee and other
indemnitees of the Company being represented by counsel retained by the
Company in the same proceeding and shall have notified the Company in writing
thereof, or (D) the Company shall not, in fact, have employed counsel to
assume the defense of such proceeding, then the fees and expenses of
Indemnitee's counsel shall be at the expense of the Company.
-2-
<PAGE>
2. CONTRIBUTION. If, when Indemnitee has met the applicable standard
of conduct, the indemnification provisions set forth in Section 1 should,
under applicable law, be to any extent unenforceable, then the Company agrees
that it shall be treated as though it is or was a party to the threatened,
pending or completed Proceeding in which Indemnitee is or was involved and
that the Company shall contribute to the amounts paid or payable by
Indemnitee as a result of such expenses (including attorneys' fees),
judgments in third-party Proceedings, fines and amounts paid in settlement
actually and reasonably incurred by Indemnitee in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and
Indemnitee on the other in connection with such action or inaction, or
alleged action or inaction, as well as any other relevant equitable
considerations.
For purposes of this Section 2, the relative benefit to the Company
shall be deemed to be the benefits accruing to it and to all of its
directors, officers, employees and agents (other than Indemnitee), as a group
and treated as one entity, and the relative benefit to Indemnitee shall be
deemed to be an amount not greater than Indemnitee's yearly base salary or
director's compensation as the case may be, from the Company during the first
year in which the action or inaction, or alleged action or inaction, forming
the basis for the threatened, pending or contemplated Proceeding was alleged
to have occurred plus the amount, if any, of monetary benefit and other
consideration received by Indemnitee in the transaction (s) that gave rise to
such Proceeding. The relative fault shall be determined by reference to,
among other things, the fault of the Company and all of its directors,
officers, employees and agents (other than Indemnitee), as a group and
treated as one entity, and such group's relative intent, knowledge, access to
information and opportunity to have altered or prevented the action or
inaction, or alleged action or inaction, forming the basis for the
threatened, pending or contemplated Proceeding, and Indemnitee's relative
fault in light of such factors on the other hand.
3. LIMITATIONS TO RIGHTS OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES. Except as otherwise provided in Sections 9 and 12 of this
Agreement, Indemnitee shall not be entitled to indemnification or advancement
of expenses under this Agreement:
(a) with respect to any Proceeding initiated, brought or made by
Indemnitee (i) against the Company, unless a Change in Control(as defined in
Section 5(b) of this Agreement) shall have occurred, or (ii) against any
person other than the Company, unless approved in advance by the Board of
Directors of the Company (the "Board");
(b) on account of any suit in which it shall be determined by final
judgment by a court having jurisdiction in the matter that Indemnitee
intentionally caused or intentionally contributed to the injury complained of
with the knowledge that such injury would occur;
(c) on account of Indemnitee's conduct which shall be determined by
final judgment by a court having jurisdiction in the mater that Indemnitee
was knowingly fraudulent, deliberately dishonest, engaged in willful
misconduct or that Indemnitee received an improper personal benefit;
-3-
<PAGE>
(d) for any expenses incurred by Indemnitee with respect to any
proceeding instituted by Indemnitee to enforce or interpret this Agreement,
to the extent that a court of competent jurisdiction determines that any of
the material assertions made by Indemnitee in such proceeding was not made in
good faith or was frivolous;
(e) for expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) which have been paid directly to Indemnitee by an
insurance carrier under a policy of officers' and directors' liability
insurance maintained by the Company;
(f) for expenses or the payment of profits arising from the purchase
and sale by Indemnitee of securities in violation of Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or any
similar successor statute; or
(g) if it shall be determined by final judgment by a court having
jurisdiction in the matter that such indemnification is not lawful.
4. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. (a)
To obtain indemnification under this Agreement, Indemnitee shall submit to
the Company a written request, including such documentation and information
as is reasonably available to Indemnitee and is reasonably necessary to
determine whether and to what extent Indemnitee is entitled to
indemnification. The Secretary of the Company shall, promptly upon receipt
of such a request for indemnification, advise the Board in writing that
Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification, a
determination with respect to Indemnitee's entitlement thereto shall be made
in the specific case as follows:
(i) if a Change in Control (as defined in section 5(b) of this
Agreement) shall have occurred, by Independent Counsel (as defined in Section
5(a) of this Agreement) in a written opinion to the Board, a copy of which
shall be delivered to Indemnitee (unless Indemnitee shall request that such
determination be made by the Board or the Stockholders, in which case the
determination shall be made in the manner provided below in clause (ii); or
(ii) if a Change in Control shall not have occurred, (A) by the
Board by a majority vote of a quorum consisting of disinterested directors,
(B) if a quorum of the Board consisting of disinterested directors is not
obtainable or, even if obtainable, such quorum of disinterested directors so
directs, by Independent Counsel in a written opinion to the Board, a copy of
which shall be delivered to Indemnitee or (C) by the stockholders of the
Company.
(c) If it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten (10) days
after such determination. Indemnitee shall cooperate with the person,
persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person, persons
or entity upon reasonable advance request any documentation or information
that is not privileged or
-4-
<PAGE>
otherwise protected from disclosure and that is reasonably available to
Indemnitee and reasonably necessary to such determination. Any costs or
expenses (including attorneys' fees and disbursements) incurred by Indemnitee
in so cooperating shall be borne by the Company (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the
Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(d) If a Change in Control shall not have occurred, the Independent
Counsel shall be selected by the Board, and the Company shall give written
notice to Indemnitee advising him of the identity of the Independent counsel
so selected. If a Change in Control shall have occurred, the Independent
Counsel shall be selected by Indemnitee (unless Indemnitee shall request that
such selection be made by the Board), and Indemnitee shall give written
notice to the Company advising it of the identity of the Independent Counsel
so selected. In either event, Indemnitee or the Company, as the case may be,
a written objection to such selection. Such objection may be asserted only
on the ground that the Independent Counsel so selected may not serve as
Independent Counsel unless and until a court has determined that such
objection is without merit. If, twenty (20) days after submission by
Indemnitee of a written request for indemnification pursuant to Section 4
hereof, no Independent Counsel shall have been selected or if selected, shall
have been objected to, in accordance with this Section 4(d), either the
Company or Indemnitee may petition the Court of Chancery of the State of
Delaware or other court of competent jurisdiction for resolution of any
objection which shall have been made by the Company or Indemnitee to the
other's selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the court or by such other person
as the court shall designate. The person with respect to whom an objection
is favorably resolved or the person so appointed shall act as Independent
Counsel under Section 4 hereof. The Company shall pay any and all reasonable
fees and expenses incident to the procedures of this Section 4, including
reasonable fees and expenses incurred by such Independent Counsel regardless
of the manner in which such Independent Counsel was selected or appointed.
Upon the due commencement of any judicial proceeding or arbitration pursuant
to Section 12 of this Agreement, Independent Counsel shall be discharged and
relieved of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then prevailing).
5. (a) "Independent Counsel" means a law firm or a member of a law
firm that neither at the time in question, nor in the five years immediately
preceding such time has been retained to represent (i) the Company or
Indemnitee in any matter material to either such party or (ii) any other
party to the proceeding giving rise to a claim for indemnification under this
Agreement. Notwithstanding the foregoing, the term "Independent Counsel"
shall not include any person who, under the applicable standards of
professional conduct then prevailing under the law of the State of Delaware,
would be precluded from representing either the Company or Indemnitee in an
action to determine Indemnitee's rights under this Agreement.
(b) "Change in Control" means the occurrence of any of the
following events:
(i) the Company is merged, consolidated or
reorganized into or with another corporation or other
entity, and as a result of such merger, consolidation or
-5-
<PAGE>
reorganization less than a majority of the combined voting
power of the then-outstanding securities of such corporation
or entity immediately after such transaction are held in the
aggregate by the holders of voting stock immediately prior to
such transaction;
(ii) the Company sells or otherwise transfers
all or substantially all of its assets to another corporation
or other entity in which, after giving effect to such sale or
transfer, the holders of voting stock of the Company
immediately prior to such sale or transfer hold in the
aggregate less than a majority of the combined voting power of
the then-outstanding securities of such other corporation;
(iii) there is a report filed on Schedule
13D or Schedule 14D-1 (or any successor schedule, form or
report or item therein), each as promulgated pursuant to the
Exchange Act, disclosing that any person or entity, other than
any shareholder of the Company (and its affiliates) owning 10%
or more of the Company's voting stock on the date hereof, has
become the beneficial owner (as the term "beneficial owner" is
defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing
50% or more of the combined voting power of the Company's
voting stock; or
(iv) if during any period of two consecutive
years individuals who at the beginning of any such period
constitute the Board cease for any reason to constitute at
least a majority thereof; PROVIDED, HOWEVER, that for purposes
of this clause (iv) each director of the Company who is first
elected, or first nominated for election by the Company's
stockholders, by a vote of at least majority of the directors
of the Company (or a committee of the Board) then still in
office who were directors of the Company at the beginning of
any such period shall be deemed to have been a director of the
Company at the beginning of such period.
Notwithstanding the provisions of clause (iii) above, unless otherwise
determined in the specific case by majority vote of the Board, a "Change in
Control" shall not be deemed to have occurred solely because the Company, any
subsidiary or any employee stock ownership plan or any other employee benefit
plan of the Company or any subsidiary either files or becomes obligated to
file a report or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1 or Schedule 14A (or any successor schedule, form or report or
item therein) under the Exchange Act disclosing beneficial ownership by it of
shares of voting stock of the Company, whether in excess of 50% or otherwise,
or because the Company reports that a change in control of the Company has
occurred or will occur in the future by reason of such beneficial ownership.
6. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS. (a) In making a
determination with respect to entitlement to indemnification hereunder, the
person, persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee
has submitted a request for indemnification in accordance with Section 4 of
this Agreement, and the Company shall bear the burden of proof to rebut that
presumption in connection with the making by any person, persons or entity of
any determination contrary to that presumption.
-6-
<PAGE>
(b) The termination of any Proceeding or of any claim, issue or
matter therein by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not (except as otherwise
expressly provided in this Agreement) of itself adversely affect the right of
Indemnitee to indemnification or create a presumption that Indemnitee did not
act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Company, or, with respect to any
criminal action or proceeding, that Indemnitee had reasonable cause to
believe that his conduct was unlawful.
(c) Indemnitee's conduct with respect to an employee benefit plan
for a purpose he reasonably believed to be in the interests of the
participants in and beneficiaries of the plan shall be deemed to be conduct
that Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company.
(d) For purposes of any determination hereunder, Indemnitee shall
be deemed to have acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Company, or, with
respect to any criminal action or proceeding, to have had no reasonable cause
to believe his conduct was unlawful, if his action was based on (i) the
records or books of account of the Company or another Person, including
financial statements, (ii) information supplied to him by the officers of the
Company or another Person in the course of their duties, (iii) the advice of
legal counsel for the Company or another Person, or (iv) information or
records given or reports made to the Company or another Person by an
independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Company or another Person. the term
"another Person" as used in this Agreement shall mean any other corporation
or any partnership, joint venture, trust, employee benefit plan or other
enterprise of which Indemnitee is or was serving at the request of the
Company as an officer, director, partner, trustee, employee or agent. The
provisions of this Section 6(d) shall not be deemed to limit in any way the
other circumstances in which Indemnitee may be deemed to have met the
applicable standard of conduct set forth in Section 1.
7. SUCCESS ON MERITS OR OTHERWISE. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any action, suit or
proceeding described in Section 1 hereof, or in defense of any claim, issue
or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with
the investigation, defense, settlement or appeal thereof. For purposes of
this Section 7, the term "successful on the merits or otherwise" shall
include, but not be limited to, (i) any termination, withdrawal or dismissal
(with or without prejudice) of any Proceeding against Indemnitee without any
express finding of liability or guilt against him, (ii) the expiration of 180
days after the making of any claim or threat of a Proceeding without the
institution of the same and without any promise of payment or payment made to
induce a settlement or (iii) the settlement of any Proceeding under Section
1, pursuant to which Indemnitee pays less than $10,000.
8. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the claims, damages,
-7-
<PAGE>
expenses (including attorneys' fees), judgments, fines or amounts paid in
settlement by Indemnitee in connection with the investigation, defense,
settlement or appeal of any Proceeding specified in Section 1, but not,
however, for the total amount thereof, the Company shall nevertheless
indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.
The party or parties making the determination shall determine the portion
(if less than all) of such claims, damages, expenses (including attorneys'
fees), judgments, fines or amounts paid in settlement for which Indemnitee is
entitled to indemnification under this Agreement.
9. COSTS. All the costs of making the determination required by
Section 4 hereof shall be borne solely by the Company, including, but not
limited to, the costs of legal counsel, proxy solicitations and judicial
determinations. The Company shall also be solely responsible for paying (i)
all reasonable expenses incurred by Indemnitee to enforce this Agreement,
including, but not limited to, the costs incurred by Indemnitee to obtain
court-ordered indemnification pursuant to Section 12, regardless of the
outcome of any such application or proceeding, and (ii) all costs of
defending any Proceedings challenging payments to Indemnitee under this
Agreement.
10. ADVANCE OF EXPENSES. The Company shall advance all expenses
incurred by or on behalf of Indemnitee in connection with any Proceeding
within twenty (20) days after the receipt by the Company of a statement or
statements from Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking
by or on behalf of Indemnitee to repay any expenses advanced if it shall
ultimately be determined that Indemnitee is not entitled to be indemnified
against such expenses, which undertaking shall be accepted by or on behalf of
the Company with reference to the financial ability of Indemnitee to make
repayment, and without the pledging of any security by Indemnitee.
Notwithstanding Indemnitee's above-described rights to advancement of
expenses, no advance of expenses shall be made in the circumstances
proscribed by Section 3(a). Notwithstanding any other provision of this
Agreement, if Indemnitee requests an adjudication or an award in arbitration
pursuant to the provisions of Section 12 below in order to establish an
entitlement to indemnification or advancement of expenses, any determination
made pursuant to Section 4 of this Agreement that Indemnitee is not entitled
to indemnification or to receive advancement of expenses shall not be binding
and Indemnitee shall not be required to reimburse the Company for any expense
advance unless and until a final judicial determination or award in
arbitration is made with respect thereto as to which all rights of appeal
therefrom have been exhausted or lapsed.
11. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Not withstanding any
other provision of this Agreement, to the extent that Indemnitee is, by
reason of any event or occurrence related to the fact that Indemnitee is or
was a director, officer, employee or agent of the Company or any subsidiary
of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another Person, a witness in any
Proceeding, whether instituted by the Company or any other party, and to
which Indemnitee is
-8-
<PAGE>
not a party, he shall be indemnified against all expenses actually and
reasonably incurred by him or on his behalf in connection therewith.
12. ENFORCEMENT. (a) If a claim for indemnification or advancement of
expenses made to the Company pursuant to Section 3 or 10 is not timely paid
in full to Indemnitee by the Company as required by Section 3 or 10,
respectively, Indemnitee shall be entitled to seek judicial enforcement of
the Company's obligations to make such payment in an appropriate court of the
State of Delaware or any other court of competent jurisdiction. In the event
that a determination is made that Indemnitee is not entitled to
indemnification or advancement of expenses hereunder, (i) Indemnitee may seek
a de novo adjudication of Indemnitee's entitlement to such indemnification or
advancement either, at Indemnitee's sole option, or (A) an appropriate court
of the State of Delaware or any other court of competent jurisdiction or (B)
an arbitration to be conducted by a single arbitrator pursuant to the rules
of the American Arbitration Association; (ii) any such judicial proceeding or
arbitration shall not in any way be prejudiced by, and Indemnitee shall not
be prejudiced in any way by such adverse determination; and (iii) in any such
judicial proceeding or arbitration the Company shall have the burden of
proving that Indemnitee is not entitled to indemnification or advancement of
expenses under this Agreement. Indemnitee shall commence a proceeding seeking
an adjudication of Indemnitee's right to indemnification or advancement of
expenses pursuant to the preceding sentence within one year following the
date on which Indemnitee first has the right to commence such proceeding
pursuant to this Section 12(a); PROVIDED, HOWEVER, that the foregoing time
limitation shall not apply in respect of a proceeding brought by Indemnitee
to enforce Indemnitee's rights under Section 7 hereof.
(b) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to the provisions of Section
12(a) that the procedures and presumptions of this Agreement are not valid,
binding and enforceable and shall stipulate in any such court or before any
such arbitrator that the Company is bound by all the provisions of this
Agreement.
(c) In any action brought under this Section 12, it shall be a
defense to a claim for indemnification (other than an action brought to
enforce a claim for advancement of expenses) that Indemnitee has not met the
standards of conduct which make it permissible under Delaware law for the
Company to indemnify Indemnitee for the amount claimed. The burden of
proving such defense shall be on the Company.
(d) It is the intent of the Company that Indemnitee not be
required to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to Indemnitee hereunder. Accordingly, if it should appear to
Indemnitee that the Company has failed to comply with any of its obligations
under this Agreement or in the event that the Company or any other person
takes any action to declare this Agreement void or unenforceable, or
institutes any proceeding designed (or having the effect of being designed)
to deny, or to recover from Indemnitee the benefits intended to be provided
to
-9-
<PAGE>
Indemnitee hereunder the Company irrevocably authorizes Indemnitee from time
tot time to retain counsel of his choice, at the expense of the Company as
hereafter provided, to represent Indemnitee in connection with the initiation
or defense of any litigation or other legal action, whether by or against the
Company or any director, officer, stockholder or other person affiliated with
the Company, in any jurisdiction. Regardless of the outcome thereof, but
subject to Indemnitee having acted in good faith, the Company shall pay and
be solely responsible for any and all costs, charges and expenses, including
attorneys' and others' fees and expenses, incurred by Indemnitee (i) as a
result of the Company's failure to perform this Agreement or any provision
thereof, or (ii) as a result of the Company's or any person's contesting the
validity or enforceability of this Agreement or any provision thereof as
aforesaid.
13. LIABILITY INSURANCE AND FUNDING. To the extent the Company
maintains an insurance policy or policies providing directors' and officers'
liability insurance, Indemnitee shall be covered by such policy or polices,
in accordance with its or their terms, to the maximum extent of the coverage
available for any director or officer of the Company. If, at the time of the
receipt of a notice of a claim pursuant to Section 4 hereof, the Company has
directors' and officers' liability insurance in effect, the Company shall
give prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The
Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of Indemnitee, all amounts payable as a result of
such proceeding in accordance with the terms of such policies. The Company
shall have no obligation to obtain or maintain such insurance.
14. MERGER OR CONSOLIDATION. In the event that the Company shall be a
constituent corporation in a merger, consolidation or other reorganization,
the Company shall require as a condition thereto, (a) if it shall not be the
surviving, resulting or other corporation therein, the surviving, resulting
or acquiring corporation to agree to indemnify Indemnitee to the full extent
provided herein, and (b) whether or not the Company is the surviving,
resulting or acquiring corporation therein, Indemnitee shall also stand in
the same position under this Agreement with respect to the surviving,
resulting or acquiring corporation as Indemnitee would have with respect to
the Company if the Company's separate existence had continued.
15. NONDISCLOSURE OF PAYMENTS. Except as expressly required by federal
securities laws or other applicable laws, Indemnitee shall not disclose any
payments made under this Agreement, whether indemnification or advancement of
expenses, unless prior written approval of the Company is obtained. Any
payments to Indemnitee that must be disclosed shall, unless otherwise
required by law, be described only in the Company proxy or information
statements relating to special and/or annual meetings of the Company's
stockholders, and the Company shall afford Indemnitee the reasonable
opportunity to review all such disclosures and, if requested, to explain in
such statement any mitigating circumstances regarding the events reported.
16. NONEXCLUSIVITY AND SEVERABILITY; SUBROGATION. (a) The right to
indemnification and advancement of expenses provided by this Agreement shall
not be exclusive
-10-
<PAGE>
of any other rights to which Indemnitee may be entitled under the Amended and
Restated Certificate of Incorporation (the "Certificate") or Amended and
Restated Bylaws (the "Bylaws") of the Company, Delaware law, any other
statute, insurance policy, agreement, vote of stockholders of the Company or
of the Board (or otherwise), both as to actions in his official capacity and
as to actions in another capacity while holding such office, and shall
continue after Indemnitee has ceased to be a director or officer of the
Company and shall inure to the benefit of his heirs, executors and
administrators; PROVIDED, HOWEVER, that to the extent Indemnitee otherwise
would have any greater right to indemnification and/or advancement of
expenses under any provision of the Certificate or the Bylaws of the Company,
Indemnitee shall be deemed to have such greater right pursuant to this
Agreement; and, PROVIDED, FURTHER, that to the extent that any change is made
to the Delaware law (whether by legislative action or judicial decision), the
Certificate and/or the Bylaws that permits any greater right to
indemnification and/or advancement of expenses than that provided under this
Agreement as of the date hereof, Indemnitee shall be deemed to have such
greater right pursuant to this Agreement. No amendment, alteration, or
repeal of this Agreement or of any provision hereof shall limit or restrict
any right of Indemnitee under this Agreement in respect of any action taken
or omitted by such Indemnitee prior to such amendment, alteration, or repeal.
(b) If any provision or provisions of this Agreement are held to
be invalid, illegal or unenforceable for any reason whatsoever: (i) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, all portions of any provisions of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby and (ii) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, all portions of any provisions of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, illegal
or unenforceable.
(c) In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
actions necessary to secure such rights, including execution of such
documents as are necessary to enable the Company to bring suit to enforce
such rights.
17. NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i)
if delivered by hand and receipted for by the party addressed, on the date of
such receipt, or (ii) if mailed by domestic certified or registered mail with
postage prepaid, on the third business day after the date postmarked.
Addresses for notice to either party are as shown on the signature page of
this Agreement, or as subsequently modified by written notice.
18. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee acknowledge
that in certain instances federal law or public policy may override
applicable state
-11-
<PAGE>
law and prohibit the Company from indemnifying its directors and officers
under this Agreement or otherwise. For example, the Company and Indemnitee
acknowledge that the Securities and Exchange Commission (the "COMMISSION")
has taken the position that indemnification is not permissible for
liabilities arising under certain federal securities laws, and federal
legislation prohibits indemnification for certain ERISA violations.
INDEMNITEE understands and acknowledges that the Company has undertaken or
may be required in the future to undertake with the Commission to submit the
question of indemnification to a court in certain circumstances for a
determination of the Company's right under public policy to indemnify
Indemnitee.
19. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect
to principles of conflict of laws.
20. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action, suit or proceeding
which arises out of or relates to this Agreement.
21. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same
Agreement. Only one such counterpart signed by the party against whom
enforcement is sought needs to be produced to evidence the existence of this
Agreement.
22. MODIFICATION; SURVIVAL. This Agreement may be modified only by an
instrument in writing signed by both parties hereto. The provisions of this
Agreement shall survive the death, disability or incapacity of Indemnitee or
the termination of Indemnitee's service as a director or officer of the
Company and shall inure to the benefit of Indemnitee's heirs, executors and
administrators.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first above written.
INDEMNITEE: THE HUNTER GROUP, INC.
By:
- --------------------------------- --------------------------------
Title:
-12-
<PAGE>
EXHIBIT 11.01
THE HUNTER GROUP, INC. AND SUBSIDIARIES
Earnings Per Share
For the Three Years Ended December 31, 1996
and the Six Month Periods Ended June 30, 1997 and 1996
-------------
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Six Months Ended
Years Ended December 31, June 30,
------------------------------- -------------------
1994 1995 1996 1996 1997
------- ------- ------- ------- -------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net income (loss)...................................... $ 1,173 $ (399) $ 443 $(1,743) $ (807)
======= ======= ======= ======= =======
Calculation of primary earnings per share:
Average common shares outstanding
for the period.................................... 7,800 7,800 7,800 7,800 7,800
Increase for common stock equivalents:
Stock options under treasury stock method........ 455 -- 1,049 -- --
------- ------- ------- ------- -------
Adjusted average shares outstanding for the period
-- primary period................................. 8,255 7,800 8,849 7,800 7,800
======= ======= ======= ======= =======
Income (loss) per share, primary....................... $ 0.14 $ (0.05) $ 0.05 $ (0.22) $ (0.10)
======= ======= ======= ======= =======
Calculation of fully diluted earnings per share:
Average common shares outstanding for the period.... 7,800 7,800 7,800 7,800 7,800
Increase for common stock equivalents:
Stock options under treasury stock method........ 527 -- 1,124 -- --
------- ------- ------- ------- -------
Adjusted average shares outstanding for the period
-- fully diluted.................................. 8,327 7,800 8,924 7,800 7,800
======= ======= ======= ======= =======
Income (loss) per share, fully diluted................. $ 0.14 $ (0.05) $ 0.05 $ (0.22) $ (0.10)
======= ======= ======= ======= =======
</TABLE>
<PAGE>
Exhibit 21.01
Subsidiaries of the Registrant
The Hunter Group, Inc.
State/Jurisdiction Subsidiary
of Incorporation
- --------------------- ----------
Delaware The Hunter Group International, Inc.
Canada THG Consulting, Inc.
U.K. Hunter Consulting Associates Limited
Australia Hunter Consulting Associates PTY Limited
Singapore The Hunter Group (Singapore) PTE LTD.
<PAGE>
Exhibit 21.02(a)
LEASE
Parties This Lease, made the 18th day of January, 1995, between
100 EAST PRATT STREET LIMITED PARTNERSHIP, a Maryland
limited partnership, hereinafter called the Landlord, and
THE HUNTER GROUP, INC., a Maryland corporation,
hereinafter called the Tenant.
WITNESSETH
Premises That the Landlord hereby leases to the Tenant, and the
Tenant hereby hires and takes from the Landlord the
following described premises (hereinafter called the
"premises") outlined on Exhibit A hereto, in the office
and retail tower (hereinafter called the "building") known
as 100 East Pratt Street, Baltimore, Maryland 21202,
containing an agreed total rentable area of eight thousand
one hundred two (8,102) square feet on the sixteenth
(16th) floor. The building and the adjoining garage and
retail space therein and the land on which the
improvements are located are sometimes hereinafter called
the "project."
Use To be used and occupied by the Tenant as office space for
general office purposes and for no other purpose. Without
limiting the generality of the foregoing, the premises
shall not be used as an office for a medical or dental
practitioner, a political party or political campaign
organization, or any foreign, federal, state or local
governmental entity or agency, or for any unlawful
purpose. Tenant shall not use the premises or any part
thereof for any purpose deemed by the Landlord's insurer
to be extra generality of the foregoing, the premises
shall not be used as an office for a medical or dental
hazardous on account of fire risk or that will increase
the existing rate of insurance on the building or cause a
cancellation of any insurance policy covering the building.
Term For a term to commence (the "Commencement Date") on the
earlier to occur of (a) the date on which Tenant occupies
the premises once the premises have been substantially
completed as provided in Exhibit C., or (b) October 1,
1995, and to end on September 30, 2000, unless sooner
terminated or extended as hereinafter provided. For
purposes of this Lease, the term shall include the initial
term and any renewal term.
The parties hereto do hereby agree and covenant as follows:
<PAGE>
Rent 1. (a) Tenant shall pay the annual rent of Two Hundred
Two Thousand Five Hundred Fifty Dollars ($202,550)
payable in equal monthly installments in advance of
Sixteen Thousand Eight Hundred Seventy-Nine and 17/100
dollars ($16,879.17) each on the first day of every
calendar month during the term hereof, except that the
rent for the first month of the term, and for any period
prior to the first complete calendar month, shall be
payable upon execution of the Lease (the foregoing
rental amount is based on Twenty-Five Dollars ($25) per
rentable square foot of the premises). The last monthly
installment payment shall include rent for the last
calendar month plus rent for the remaining days to the
end of the term. Rent for any period of less than one
month shall equal 1/30 of the monthly rent for each day
of such period.
(b) As long as (i) Tenant is not in default under
this Lease, (ii) Tenant delivers to Landlord complete
Construction Documents (as defined in this Lease) by
no later than February 1, 1995, and (iii) Landlord
promptly approves the Construction Documents as
submitted, then Landlord shall provide Tenant with an
abatement of basic annual rent until September 30,
1995; provided, however, that if the premises are not
substantially completed by May 1, 1995 because of
delays directly attributable to Landlord's action or
inaction, Tenant shall be entitled to an abatement of
basic annual rent for a period of five (5) months
measured from the date on which the premises would
have been substantially completed but for the delay
directly attributable to Landlord.
(c) The Tenant will pay said rent without deduction,
set off or demand to 100 East Pratt Street Limited
Partnership, c/o Building Manager, Colliers Pinkard,
7 E. Redwood Street, Suite 1200, Baltimore, Maryland
21202, or to such other person or at such other place
as the Landlord may designate in writing. Checks for
the payment of rent shall be made payable to 100 East
Pratt Street Limited Partnership or to such other
entity as the Landlord may designate in writing.
(d) All payments or installments of any rent
hereunder, other than annual rent, and all sums
whatsoever due under this Lease (including reasonable
attorneys' fees) shall be
-2-
<PAGE>
deemed additional rent. If any rent or additional rent
is not paid within five (5) days after the same is
due, in consideration of Landlord's additional
expense caused by such failure to pay, such arrearage
shall bear a late charge equal to five percent (5%)
of such arrearage, and such rent or additional rent,
together with the late charge, shall bear interest at
an annual rate of one and one-half percent above the
prime rate of such total amount. Interest shall
accrue on rent or additional rent plus the late
charge from the date such rent or additional rent is
due. Time is of the essence with respect to Tenant's
monetary obligations in this Lease. Any additional
rent, unless otherwise stated, shall be due within
thirty (30) days after Landlord has submitted a
written statement to Tenant showing the amount due,
and such obligation shall survive the expiration or
earlier termination of the term.
Care of
Premises 2. (a) The Tenant will take good care of the premises
and the building fixtures and appurtenances, and all
alterations, additions and improvements to them; will
repair all damage to the same resulting from the acts
of the Tenant, its employees, agents or invitees,
reasonable wear and tear excepted; will suffer no
waste or injury; will execute and comply with all
laws, rules, orders, ordinances and regulations, at
any time issued or enforced by any lawful authority,
applicable to the Tenant's use or occupancy of the
premises; and will repair at or before the end of the
term, all injury done by the installation or removal
of furniture and property. Tenant covenants and
agrees that it will not use or allow the premises to
be used for the storage, use, treatment or disposal
of any "hazardous substance," as defined under either
the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C.
Section 9601 et seq.) or Section 7-201 et seq. of the
Environment Article of the Annotated Code of Maryland
or as hereinafter enacted by any applicable federal,
state, county or governmental authority.
(b) At any time or times, the Landlord, either
voluntarily or pursuant to governmental requirement,
may, at the Landlord's own expense, make repairs,
alterations or improvements in or to the building or
any part thereof, including the premises, and, during
operations, may close entrances, doors, corridors,
elevators or other facilities, all
-3-
<PAGE>
without any liability to the Tenant by reason of
interference, inconvenience or annoyance. In
performing such repairs, alterations, or
improvements, Landlord shall use commercially
reasonable efforts to minimize interference to
Tenant's business. The Landlord shall not be liable
to the Tenant for any expense, injury, loss or damage
resulting from work done in or upon, or the use of,
any adjacent or nearby building, land, street or
alley.
Assignment,
Subletting
and Recapture 3. (a) The Tenant will not sell, assign, mortgage or
transfer this Lease, sublet the premises of any part
thereof, or allow any transfer thereof or any lien
upon the Tenant's interest by operation of law,
without the prior written consent of the Landlord.
The Tenant shall, by notice in writing, advise the
landlord of its intention from, on and after a stated
date, (which shall not be less than sixty (60) days
after the date of the Tenant's notice) to assign or
sublet any part or all of the premises for the balance
or any part of the term, and, in such event, the
Landlord shall have the right, to be exercised by
giving written notice to the Tenant within thirty
(30) days after receipt of the Tenant's notice, to
recapture the space described in the Tenant's notice
and such recapture notice shall, if given, cancel and
terminate the Lease with respect to the space therein
described as of the date stated in the Tenant's
notice. The Tenant's notice shall state the name and
address of the proposed assignee or subtenant and a
true and complete copy of the proposed sublease shall
be delivered to the Landlord with said notice. If the
Tenant's notice shall cover the all of the space
hereby demised, and the Landlord shall give the
aforesaid recapture notice with respect thereto, the
term of this Lease shall expire and end on the date
stated in the Tenant's notice as fully and completely
as if that date had been herein definitely fixed for
the expiration of the term. If, however, this Lease
be cancelled pursuant to the foregoing with respect
to less that the entire premises, the rental and the
escalation percentage herein reserved shall be
adjusted on the basis of the number of square feet
retained by the Tenant in proportion to the rent and
escalation percentage reserved in the Lease, and this
Lease as so amended shall continue thereafter in full
force and effect. If the Landlord, upon receiving the
Tenant's notice with respect to any such space, shall
not exercise its right to cancel as aforesaid, the
-4-
<PAGE>
Landlord will not unreasonably withhold its consent to
the Tenant's assignment or subletting of the space
covered by its notice. The Tenant shall pay to
Landlord promptly upon request the attorneys' fees
incurred by Landlord for each assignment or subletting
request, which fees shall not exceed Five Hundred
Dollars ($500) in each instance.
(b) If the amount of rent to be paid to the Tenant
by an assignee or sublessee is greater than the rent
required to be paid by the Tenant to the Landlord
pursuant to this Lease, the Tenant shall pay to the
Landlord, as additional rent, fifty percent (50%) of
any such excess as is received by the Tenant from such
assignee or sublessee net of the actual, verifiable,
and reasonable expenses incurred by Tenant in
connection with such sublease or assignment. Any
consent by the Landlord to an assignment or subletting
of this Lease shall not constitute a waiver of the
necessity of such consent as to any subsequent
assignment or subletting.
(c) Any levy or sale in execution, or any assignment
or sale in bankruptcy or insolvency, or the appointment
of a receiver or trustee of all or substantially all
of the property of the Tenant by a state or federal
court, shall be deemed an assignment within the
meaning of this Section.
(d) Any subletting or assignment hereunder shall not
release or discharge the Tenant of or from any
liability, whether past, present or future, under this
Lease, and the Tenant shall continue fully liable
hereunder and shall also be liable to the Landlord for
all costs incurred by the Landlord at the request of
and for a subtenant or assignee. The subtenant or
subtenants or assignee or assignees shall agree to
comply with and be bound by all the terms, covenants,
conditions, provisions and agreements of this Lease
to the extent of the space sublet or assigned, and
shall not assign the sublease or sublet the premises
or any part thereof, or allow any transfer thereof, or
any lien upon the subtenant's interest, without the
prior written consent of the Landlord, and the Tenant
shall deliver to the Landlord promptly after execution,
an executed copy of each such sublease or assignment
and an agreement of compliance by each such subtenant
or subtenants or assignee or assignees.
-5-
<PAGE>
(e) Any sale, assignment, mortgage, transfer, or
subletting of this Lease which is not in compliance
with the provisions of this Section shall be of no
effect and void.
(f) The Landlord may assign this Lease and shall not
be liable for obligations thereafter accruing
hereunder; provided that the Landlord's assignee
shall assume the Landlord's obligations hereunder
accruing on or after the date of assumption.
Alterations 4. (a) Tenant shall not make or permit anyone to make
any alterations in or additions or improvements to the
premises or install any equipment of any kind that
will require any alteration or addition to, or the use
of, the water, heating, air conditioning or electrical
or other building systems or equipment, without the
Landlord's advance written consent in each instance.
All alterations or additions shall be made only by
Landlord's contractors or contractors of which Tenant
has received the prior written approval from Landlord.
The Landlord's decision to refuse such consent to
alterations, additions or contractors shall be
conclusive. If the Landlord consents to such
alterations, additions or contractors before
commencement of the work or delivery of any materials
onto the premises or into the building, the Tenant
shall furnish the Landlord with plans and
specifications, copies of contracts, necessary permits,
and indemnification in form and amount satisfactory to
the Landlord against claims, costs, damages,
liabilities and expenses. All additions and alterations
shall be installed in a good, workmanlike manner, and
only new, high grade materials which are in accordance
with the building standards shall be used. Landlord
shall be paid a reasonable supervisory fee with respect
to additions and alterations, which fee shall not
exceed an amount equal to five percent (5%) of the cost
of the additions and alterations; PROVIDED, HOWEVER,
that Landlord shall not be entitled to any supervisory
fee for the Landlord's Work (as defined in Exhibit C).
Tenant hereby agrees to indemnify and hold the Landlord
harmless from and against any and all claims, costs,
damages, liabilities and expenses of every kind and
description which may arise out of or be connected in
any way with said alterations or additions or the
installation thereof; PROVIDED, HOWEVER, that such
indemnification obligation shall not apply in
circumstances where the claim, cost, damage, liability
or expense is
-6-
<PAGE>
directly attributable to Landlord's gross negligence.
Before commencing any work in the premises, the
Tenant shall furnish the Landlord with certificates
of insurance from all contractors performing labor
or furnishing materials insuring the Landlord
against any and all claims, costs, damages,
liabilities and expenses, which may arise out or be
connected in any way with said additions or
alterations or the installation thereof. The Tenant
shall pay the cost of all such alterations and
additions and also the cost of decorating the
premises occasioned by such alterations and
additions. Upon completing any alterations or
additions, the Tenant shall immediately furnish the
Landlord with contractors' affidavits and full and
final waivers of lien and receipted bills covering
all labor and materials expended and used. All
alterations and additions shall comply with all
insurance requirements and with all local ordinances
and regulations, and with the requirements of all
statutes and regulations of the State (or of any
department or agency thereof) in which the building
is located. The Tenant shall permit the Landlord to
supervise construction operations in connection with
these alterations or additions if the Landlord
requests to do so. The privilege herein granted to
the Tenant to make alterations or additions to the
premises is conditioned upon the Tenant's
contractors, workmen and employees working in
harmony and not interfering with the workmen,
employees and contractors of the Landlord or of any
other tenant.
(b) All alterations, additions, hardware, non-trade
fixtures and all improvements, temporary or
permanent, in or upon the premises, whether placed
there by the Landlord or the Tenant, shall, unless
the Landlord requests their removal, become the
Landlord's property and shall remain upon the
premises at the termination of this Lease by lapse
of time or otherwise without compensation or
allowance or credit to the Tenant. If the Landlord
requests removal of work (other than building
standard items as described in the Landlord's
standard form of workletter in use at the time of
execution of this Lease) whether installed by the
Landlord or the Tenant before or after the start of
the term, or if the Landlord requests removal of
additions, alterations, hardware, non-trade
fixtures, or improvements installed or made by the
Tenant, the Tenant shall remove the same prior to
the conclusion of the term and the Tenant shall
repair all damage to the premises caused by such
removal. The
-7-
<PAGE>
Tenant shall not be required to remove pipes and
wires concealed in the floors, walls, or ceilings,
provided that the Tenant properly cuts and caps the
same and seals them of in a safe, lawful, and
workmanlike manner. If, upon the Landlord's request,
the Tenant does not remove said things, the Landlord
may remove the same and repair all damage and the
Tenant shall pay to the Landlord upon demand the
cost of such removal and repair of all damage. The
Tenant shall remove the Tenant's furniture,
machinery, safe or safes, trade fixtures and other
items of personal property of every kind and
description from the premises prior to the end of
the term, however ended. If not so removed, the
Landlord may request their removal, and if the
Tenant does not remove them, the Landlord may do so
and the Tenant shall pay to the Landlord upon demand
the cost of such removal and repair of all damage.
If the Landlord does not request their removal, all
such items shall be conclusively presumed to have
been conveyed by the Tenant to the Landlord under
this Lease as a bill of sale without further payment
or credit by the Landlord to the Tenant.
Signs 5. (a) The Tenant will not permit or suffer any signs,
logos, symbols, advertisements or notices to be
displayed, inscribed upon or affixed on any part of
the outside or inside of the premises, or in the
building or on the street adjacent to the building.
(b) Tenant's name shall be affixed to the directory
board to be provided by the Landlord and on or near
the entrance doors of the premises, but only in such
size, color and style as the Landlord may approve.
At Tenant's request, Landlord shall at no charge to
Tenant place any additional names of Tenant's
partners, associates, and employees in the
electronic directory located below the building's
main directory.
Services and
Utilities 6. (a) The Landlord shall provide the following
services and utilities:
(1) JANITOR SERVICE in and about the premises,
Saturdays, Sundays and holidays recognized by
the Landlord excepted. The Tenant shall not
provide any janitor service in the premises
except through a janitor contractor or employees
-8-
<PAGE>
satisfactory to the Landlord. Exhibit B
attached hereto shall be the cleaning
specifications for the premises.
(2) HEAT AND AIR CONDITIONING Monday through
Friday from 8:00 a.m. to 6:00 p.m., Saturday
from 8:00 a.m. to 1:00 p.m., Sundays and
holidays recognized by the Landlord excepted,
whenever heat or air conditioning shall be
required for the comfortable occupation and use
of the premises. To the extent Tenant shall
give Landlord adequate advance notice, Landlord
shall provide heat and air conditioning in
excess of the foregoing hours at Tenant's
expense, and the cost thereof shall be paid by
Tenant to Landlord upon billing by Landlord as
additional rent. Whenever heat generating
machines or equipment or lighting fixtures other
than building standard lighting fixtures are
used in the premises and affect the temperature
otherwise maintained by the building air
conditioning system, the Landlord may install
supplementary air conditioning units in or for
the benefit of the premises, and the cost of
installation, operation and maintenance thereof
shall be paid by the Tenant to the Landlord upon
billing by the Landlord as additional rent. As
of the date of execution of this Lease, the
current hourly charge for after hours HVAC
service is Thirty-Five Dollars ($35) for air
conditioning and Twenty-Five Dollars ($25) for
heating. The foregoing rates are subject to
change from time to time by Landlord at any time.
(3) WATER from municipal mains for drinking,
lavatory and toilet puroses, drawn through
fixtures installed by the Landlord or by the
Tenant with the Landlord's written consent.
(4) ADEQUATE PASSENGER ELEVATOR SERVICE in
common with other tenants at all times, and
FREIGHT ELEVATOR SERVICE in common with other
tenants daily from 8:00 a.m. to 5:00 p.m.,
Saturdays, Sundays and holidays recognized by
the Landlord excepted ("Building Standard
Hours"), subject to scheduling by the Landlord.
Freight elevator service at other times
-9-
<PAGE>
and elevators with attendants shall be optional
with the Landlord and, if provided, shall be at
the Tenant's expense and never be deemed a
continuing obligation of the Landlord.
(5) TELEPHONE SERVICE to the phone closet on
the floor on which the premises is located.
Upon execution of this Lease, Tenant shall pay
Landlord an amount equal to One Thousand Seven
Hundred Fifty-Eight and 94/100 Dollars
($1,758.94). Such amount, which represents
$.2171 per rentable square foot of the premises,
constitutes Tenant's pro rata share of the cost
of bringing telephone servide from the basement
to such floor.
(6) MAINTENANCE of the roof, exterior and
common areas of the building.
(7) ELECTRICITY for Tenant's uses other than
operating the HVAC ("Tenant Electric"), provided
that the connected electrical load of the
incidental use equipment does not exceed an
average of 2.5 watts per square foot of the
premises for lighting and 4 watts per square
foot of the premise for other uses. The cost of
excess Tenant electric, if any, shall be paid by
Tenant to Landlord within thirty (30) days after
billing by Landlord based upon the average cost
per KWH for the building (unless Tenant is
directly charged for its usage) multiplied by
Tenant's KWH. The Landlord reserves the right to
require the Tenant to procure any excess
requirements at the Tenant's expense by
arrangement with the local utility furnishings
electricity to the building. the Tenant shall
also pay the Landlord for the cost of installing
any additional risers or other facilities that
may be necessary to furnish such excess
electricity to the premise. Landlord, at its
expense, may install a submeter for Tenant's
electric consumption. At Landlord's option,
Tenant shall pay for its own electric
consumption, with base rent being reduced by
$.65 per rentable square feet in the premises
and an adjustment being made to Tenant's Pro
Rata Share of Operating Expenses.
-10-
<PAGE>
(b) Tenant shall have access to the building, the
premises, and the parking garage 24 hours per day, 7
days per week, 52 weeks per year, provided that
access after Building Standard Hours shall be
contracted through a card or other access system at
Landlord's actual cost, which shall be paid by Tenant.
(c) The Landlord does not warrant that any of the
services above mentioned will be free from
interruption caused by war, insurrection, civil
commotion, riots, acts of God or the enemy or
Governmental action, repairs, renewals, improvements,
alterations, strikes, lockouts, picketing, whether
legal or illegal, accidents, inability of the
Landlord to obtain fuel or supplies, or any other
cause or causes beyond the reasonable control of the
Landlord. Any such interruption of service shall
never be deemed an eviction or disturbance of the
Tenant's use and possession of the premises or any
part thereof, or render the Landlord liable to the
Tenant for damages, or relieve the Tenant from
performance of the Tenant's obligations under this
lease.
Notice 7. Any notice, request, communication or demand under
the Lease shall be in writing and shall be considered
properly delivered when addressed as hereinafter
provided, given or served personally or by registered
or certified mail (return receipt requested) and
deposited in the United States general or branch
post office. Any notice, request, communication or
demand by the Landlord to the Tenant shall be
addressed to the Tenant at the premises (or, prior to
the date the Tenant first occupies any portion of the
premises, at the address of the Tenant set forth on
page 1 of this Lease) until otherwise directed in
writing by the Tenant. Any notice, request,
communication or demand by the Tenant to the Landlord
shall be addressed to the Landlord's Building
Manager, Colliers Pinkard, 7 E. Redwood Street, Suite
1200, Baltimore, Maryland 21202, with copies
addressed simultaneously to IBM, Real Estate
Services, Old Orchard Road, Suite 1521, Armonk, New
York 10504, to the attention of the Director, Real
Estate Development and to the attention of Associate
General Counsel, until otherwise directed in writing
by the Landlord. Rejection or other refusal to accept
a notice, request, communication or demand or the
inability to deliver the same because of a changed
address of which no
-11-
<PAGE>
notice was given shall be deemed to be receipt of the
notice, request, communication or demand sent.
Landlord's
Title 8. The Landlord's title is and always shall be paramount
to the title of the Tenant, and nothing herein
contained shall empower the Tenant to do any act
which shall encumber the title of the Landlord.
Certain
Rights
Reserved to
Landlord 9. (a) The Landlord reserves the following rights:
(1) To change the name or street address of the
building without notice or liability of the
Landlord to the Tenant.
(2) To install and maintain a sign or signs on
the exterior of the building.
(3) During the last ninety (90) days of the term,
if during or prior to that time the Tenant
vacates the premises, to decorate, remodel,
repair, alter or otherwise prepare the premises
for reoccupancy.
(4) To constantly have pass keys to the premises.
(5) To exhibit the premises to others with prior
notification.
(6) To take any and all measures, including
inspections, repairs, alterations, additions and
improvements to the premises or to the building,
as may be necessary or desirable for the safety,
protection or preservation of the premises or
the building or the Landlord's interests, or as
may be necessary or desirable in the operation
of the building.
(b) The Landlord may enter upon the premises and may
exercise any or all of the foregoing rights hereby
reserved without being deemed guilty of an eviction
or disturbance of the Tenant's
-12-
<PAGE>
use or possession and without being liable in any
manner to the Tenant.
Tenant
Improvements 10. (a) "Tenant Improvements" shall be completed by
Landlord's contractors on Tenant's behalf in
accordance with Exhibit C.
(b) All Tenant Improvements, whether made at
Landlord's or Tenant's expense or the joint
expense of Landlord or Tenant, upon completion and
acceptance by Landlord, shall become and remain the
property of Landlord. If, notwithstanding the
aforegoing sentence, Tenant at any time during the
term removes elements of Tenant Improvements, Tenant
agrees to repair any damage to the premises and
restore the premises to a condition no less than the
standards set forth in Exhibit C. Any replacement of
Tenant Improvements, whether made at Tenant's expense
or otherwise, shall be and remain the property of
Landlord. The parties agree that Landlord shall have
the right to depreciate the value of Tenant
Improvements to the extent of Landlord's contribution
to the same.
Waiver of
Claims 11. To the extent permitted by law and except as a result
of the gross negligence or willful misconduct of
Landlord, the Tenant releases the Landlord and the
Landlord's agents, servants and employees, and the
Landlord's building manager of the building, and its
agents, servants and employees from, and waives all
claims for, damage to person or property sustained by
the Tenant or any occupant of the building or
premises resulting from the building or premises or
any part of either or any equipment becoming out of
repair, or resulting from any accident in or about
the building, or resulting directly or indirectly
from any act or neglect of any tenant or occupant of
the building or of any other person, including the
Landlord and the Landlord's agents, servants and
employees, and the Landlord's building manager of the
building, and its agents, servants, and employees.
This Section 11 shall apply especially, but not
exclusively, to the flooding of basements or other
subsurface areas, and to damage caused by
refrigerators, sprinkling devices, air conditioning
apparatus, water, snow, frost, steam, excessive heat
or cold, falling plaster, broken glass, sewage, gas,
odors or noise, or the bursting or leaking of pipes
or plumbing fixtures, and shall apply equally whether
any such damage results from the act or neglect of
the Landlord or of other tenants, occupants or
servants in the building or of any other person, and
whether such damage be caused or results from any
thing or circumstance above mentioned or referred to,
or any other thing or circumstance whether of a like
-13-
<PAGE>
nature or of a wholly different nature. If any such
damage, whether to the premises or to the building or
any part thereof, or whether to the Landlord or to
other tenants in the building, results from any act
or neglect of the Tenant, the Landlord may, at the
Landlord's option, repair such damage and the Tenant
shall upon demand by the Landlord, reimburse the
Landlord forthwith for the total cost of such
repairs. The Tenant shall not be liable for any
damages caused by its act or neglect if the Landlord
or a tenant has recovered the full amount of the
damages from insurance, and the insurance company has
waived in writing its rights of subrogation against
the Tenant. All property belonging to the Tenant or
any occupant of the premises that is in the building
or the the premises shall be there at the risk of the
Tenant or other occupant only, and the Landlord shall
not be liable for damages thereto or theft or
misappropriation thereof.
Holding
Over 12. If the Tenant retains possession of the premises or
any part thereof after the termination of the term by
lapse of time or otherwise and Tenant and Landlord
have not previously agreed on the mutually acceptable
rental rate, the Tenant shall pay the Landlord rent
at double the rate of rental specified in this Lease
for the time the Tenant thus remains in possession,
and in addition thereto, shall pay the Landlord all
damages sustained by reason of the Tenant's retention
of possession. The provisions of this Section do not
(a) waive the Landlord's rights of reentry or any
other right hereunder, and (b) obligate Landlord to
negotiate with Tenant regarding the holdover rental
rate or any other condition of a holdover tenancy.
Rules 13. The Tenant shall observe faithfully and comply
strictly with the rules and regulations attached to
this Lease and made a part hereof as Rider A, and
such other rules and regulations, promulgated from
time to time by the Landlord, as in the Landlord's
judgment are necessary for the safety, care and
cleanliness of the building or for the preservation
of good order therein. The Landlord will not be
liable to the Tenant for violation of such rules and
regulations by any other tenant, its servants,
employees, agents, visitors, customers, invitees, or
licensees.
Subordination 14. (a) This Lease shall be subordinate and subject at
all times to all ground or underlying leases and to
any mortgage or deed of trust covering the premises
or which at any time hereafter shall be made, and to
all renewals, modifications, consolidations, or
replacements thereof, and to all advances made, or
hereafter to be
-14-
<PAGE>
made, upon the security of any such mortgage or deed
of trust. Tenant shall execute such further
instruments subordinating this Lease to any such
mortgage or deed of trust as the Landlord shall
request, provided that the holder of such mortgage or
deed of trust executes an attornment and
nondisturbance agreement providing that Tenant's
rights under this Lease will not be disturbed by such
holder so long as Tenant performs its obligations
pursuant to this Lease.
(b) Upon execution of this Lease, Landlord shall use
reasonable and diligent efforts to obtain for and
deliver to Tenant a non-disturbance and attornment
agreement in substantially the form attached hereto as
a part hereof as Exhibit D from each of the existing
mortgagees and/or trustees of the deeds of trust.
Default 15. All rights and remedies of the Landlord herein
enumerated shall be cumulative, and none shall
exclude any other right or remedy allowed by law or
equity.
(a) The occurrence of any one or more of the
following events shall constitute a default by the
Tenant and a breach of this lease: (i) the Tenant
fails to make a payment of rent or any other payment
of money as and when the same shall become due and
payable hereunder and such failure continues for five
(5) days after written notice from Landlord;
provided, however, that if Landlord is required to
send such notice of monetary default two (2) times
during any twelve (12) month period, any further
failure by Tenant to pay rent on the date on which it
is due shall be deemed deliberate and Landlord shall
have no obligation to send a notice of monetary
default to Tenant and Tenant shall have no period of
time within which to cure such monetary default, or
(ii) the Tenant fails to promptly and fully perform
or observe any of the other covenants, agreements,
rules and regulations, terms or conditions in this
Lease to be performed or observed by the Tenant and
such failure shall continue for more than twenty (20)
consecutive days after notice by the Landlord
specifying the nature of such failure, or if the
failure so specified shall be of such a nature that
the same cannot be reasonably cured or remedied
within said twenty (20) day period, the Tenant shall
not in good faith have commenced to cure or remedy
such failure within such twenty (20) day period and
thereafter diligently proceed therewith to
completion, (unless the act or omission of the Tenant
or occurrence involves a hazardous or emergency
condition which shall be cured by the Tenant
forthwith upon the Landlord's demand), or (iii) the
leasehold interest or property of the Tenant be
levied upon under execution
-15-
<PAGE>
or be attached by process of law, or (iv) the Tenant
fails to take possession of the premises within
thirty (30) days after the commencement of the term
hereof, or (v) the Tenant discontinues the conduct of
its business in the premises, or (vi) the Tenant
makes an assignment for the benefit of creditors, or
a receiver be appointed for any property of the
Tenant, or at any time prior to or during the term of
this Lease any voluntary or involuntary petition or
similar pleading under any section or sections of any
bankruptcy law shall be filed by or against the
Tenant, or any voluntary or involuntary proceeding in
any court or tribunal shall be instituted to declare
the Tenant insolvent or unable to pay the Tenant's
debts, and in the case of any involuntary petition or
proceeding, the petition or proceeding is not
dismissed within thirty (30) consecutive days from
the date it filed.
(b) In the event of any default of the Tenant
hereunder, and at any time thereafter, (i) if the
term of this Lease shall not have commenced, the
Landlord may cancel and terminate this Lease by
notice to the Tenant, or (ii) if the term of this
Lease shall have commenced, the Landlord may serve
upon the Tenant a notice that this Lease and the term
hereof will terminate on a date to be specified
therein, and upon the date so specified by the
Landlord in such notice, this Lease and the then
unexpired term hereof shall terminate and come to an
end as fully and completely as if the date specified
in the Landlord's notice was the day herein
definitely fixed for the end and expiration of this
Lease and the term hereof, and the Tenant shall then
quit and surrender the premises to the Landlord, but
the Tenant shall remain liable as hereinafter set
forth; provided, however, that if the Tenant shall
fail to perform a covenant of this Lease two (2) or
more times in any period of six (6) months then,
notwithstanding that each act or omission shall have
been cured within the period after the giving of
notices as herein provided, any further similar act
or omission shall be deemed to be deliberate and the
Landlord thereafter may serve the aforesaid notice of
termination without affording to the Tenant a further
opportunity to cure.
(c) Upon termination of this Lease by the Landlord as
hereinabove provided, or if the premises become
vacated or deserted, the Landlord may, without
notice, terminate all services and re-enter the
premises either by force or otherwise, and by summary
proceedings or otherwise, dispossess the Tenant and
the legal representatives of the Tenant or any other
occupant of the premises, and remove their effects
without being deemed in any
-16-
<PAGE>
manner guilty of trespass, eviction, or forcible
detainer, and hold the premises as if this lease had
not been made.
(d) In the event of default, re-entry, termination
and/or dispossess by summary proceedings or otherwise,
(i) the Landlord shall in addition to any other
rights granted herein or by law, be entitled to
recover all rent, additional rent and other sums due
and payable by the Tenant up to and including the
date of re-entry, in whole or in part, from the
Tenant's obligations to pay the rent hereunder for
the full term or from any other of its obligations
under this Lease or for damages herein described the
Landlord may, at the Landlord's option, occupy the
premises and/or cause the premises to be redecorated,
altered, divided, consolidated with other adjoining
premises, or otherwise changed or prepared for
reletting, and may relet the premises or any part
thereof for the account of the Tenant for a term or
terms to expire prior to, at the same time as, or
subsequent to, the original expiration date of this
Lease, and receive the rent therefor, applying the
same first to the payment of such expenses as the
Landlord may have incurred in connection with the
recovery of possession, redecorating, altering,
dividing, consolidating with other adjoining
premises, or otherwise changing or preparing for
reletting, and the reletting, including brokerage and
reasonable attorneys' fees, and then to the payment
of damages in amounts equal to the rent hereunder and
to the cost and expense of performance of the other
covenants of the Tenant as herein provided. The
Tenant agrees, whether or not the Landlord has relet,
to pay to the Landlord damages equal to the rent and
other sums herein agreed to be paid by the Tenant,
less the net proceeds of the reletting, if any, as
ascertained from time to time, and the same shall be
payable by the Tenant on the several rent days above
specified. In reletting the premises as aforesaid,
the Landlord may grant rent concessions, and the
Tenant shall not be credited therewith. No such
reletting shall constitute a surrender and acceptance
of the premises or be deemed evidence thereof. If the
Landlord elects, pursuant hereto, actually to occupy
and use the premises, or any part thereof, during any
part of the balance of the term, as originally fixed
or since extended, there shall be allowed against the
Tenant's obligation for rent, or damages as herein
defined, during the period of the Landlord's
occupancy, the reasonable value of such occupancy,
not to exceed in any event the rent herein reserved
and such occupancy shall not be construed as a
release of the Tenant's liability hereunder.
-17-
<PAGE>
(e) Any and all property which may be removed from
the premises by the Landlord pursuant to the
authority of this Lease or of law, to which the
Tenant is or may be entitled, may be handled, removed
or stored by the Landlord at the risk, cost and
expense of the Tenant, and the Landlord shall in no
event be responsible for the value, preservation or
safekeeping thereof. The Tenant shall pay to the
Landlord upon demand any and all expenses incurred in
such removal and all storage charges against such
property so long as the same shall be in the
Landlord's possession or under the Landlord's
control. Any such property of the Tenant not removed
from the premises or taken from storage by the Tenant
within thirty (30) days after the end of the term,
however terminated, shall be presumed to have been
conveyed by the Tenant to the Landlord under this
Lease as a bill of sale without further payment or
credit by the Landlord to the Tenant.
(f) The Tenant shall pay upon demand all the
Landlord's costs, charges and expenses, including the
fees of counsel, agents and others retained by the
Landlord, incurred in enforcing or carrying out the
Tenant's obligations hereunder or incurred by the
Landlord in any litigation, negotiations or
transactions in which Tenant causes the Landlord,
without the Landlord's fault, to become involved or
concerned, plus interest from the date of payment at
the annual rate of one and one-half percent above the
prime rate, which amount shall be deemed to be
additional rent due and payable by the Tenant at once
without notice or demand.
(g) Tenant hereby waives all rights of redemption
granted by or under any present or future laws.
(h) Mention in the lease of any particular remedy
shall not preclude the Landlord from pursuing any
other remedy in law or in equity.
(i) The delivery of keys to any agent or employee of
the Landlord shall not be considered as a termination
of this Lease or a surrender of the premises.
(j) The Landlord and the Tenant hereby waive trial
by jury in any action, proceeding or counterclaim
brought by either of them against the other on any
matters arising out of or in any way connected with
this Lease, the relationship of the Landlord and the
Tenant, the Tenant's use or occupancy of the
premises, or any emergency statutory remedy. The
Tenant further agrees that it shall not interpose any
counterclaim or counterclaims in a
-18-
<PAGE>
summary proceeding or in any action based on
nonpayment of rent or any other payment required of
the Tenant herunder, unless (a) the failure to
interpose such a counterclaim results in such
counterclaim being barred by the applicable stature
of limitations, or (b) the interposing of such a
counterclaim is deemed mandatory under the then
applicable procedural rules of the applicable court.
Mechanics'
Liens 16. The Tenant shall not permit any mechanics or
materialmen's liens to be filed against the fee of
the real property on which the building is located
nor against the Tenant's leasehold interest in the
premises. The Landlord shall have the right at all
reasonable times to post and keep posted on the
premises, any notices which it deems necessary for
protection from such liens. If any such liens are so
filed, the Landlord, at its election, may pay and
satisfy the same and in such event the sums so paid
by the Landlord, with interest from the date of
payment at the annual rate of one and one-half
percent above the prime rate, shall be deemed to be
additional rent due and payable by the Tenant at once
without notice or demand.
Eminent
Domain 17. (a) In the event that the whole or any part of the
premises shall be lawfully condemned or taken in any
manner for any public or quasi-public use, at the
Landlord's option, this Lease and the term hereby
granted shall forthwith cease and terminate on the
date of the taking of possession by the condemning
authority and the Landlord shall be entitled to
receive the entire award without any payment to the
Tenant, the Tenant hereby assigning to the Landlord
the Tenant's interest in the award, if any, and the
rent shall be apportioned as of such date.
(b) In the event that a part of the building shall
be so condemned or taken and, if, in the opinion of
the Landlord, the building should be restored in such
a way as to alter the premises materially, or the
building should be demolished, the Landlord may
terminate this Lease and the term and estate hereby
granted without compensation to the Tenant by
notifying the Tenant of such termination within sixty
(60) days following the date of the taking of
possession by the condemning authority, and this
Lease and the term and estate hereby granted shall
expire on the date specified in the notice of
termination not less than sixty (60) days after the
giving of such notice, as fully and completely as if
such date were the date hereinbefore set for the
expiration of the term of this Lease, and the rent
shall be apportioned as of such date.
-19-
<PAGE>
Casualty 18. In the event of damge or destruction of the premises
during the term by fire, the elements, or casualty,
the Landlord shall forthwith repair the same,
provided such repairs can be made, in the Landlord's
opinion, within one hundred twenty (120) days, but
such damage or destruction shall not annul or void
this Lease, except that the Tenant shall be entitled
to a proportionate reduction of rent for the period
between the date of the casualty and the date on
which such repairs are completed, such proportionate
reduction to be based upon the extent that the
premises, or part thereof, may be untenantable. If,
in the Landlord's opinion, such repairs cannot be
made within one hundred twenty (120) days the
Landlord may, at its option to be exercised within
thirty (30) days from the date of such damage or
destruction make the same as soon as possible
thereafter, and this Lease shall continue in full
force and effect and the rent shall be
proportionately reduced as aforesaid. In the event
that the Landlord does not so elect to make such
repairs which cannot be made within said one hundred
twenty (120) day period, this Lease may be terminated
at the option of either party. In the event that the
building be damaged, this Lease shall continue in
full force and effect, but the Landlord shall
forthwith repair such damage; except that if the
building is severely damaged or destroyed, as
determined by the Landlord, the Landlord, at its
option to be exercised within thirty (30) days from
the date of such damage or destruction, may terminate
this Lease. The Tenant shall be entitled to a
proportionate reduction of rent only if the premises
are untenantable as aforesaid and no such rent
reduction shall be allowed by reason of
inconvenience, annoyance or injury to the Tenant's
business because of such damage or destruction, or
the necessity of repairing any portion of the
building, or making of such repairs, and the Landlord
shall not be liable to the Tenant because of such
inconvenience, annoyance or injury.
Waiver of
Subrogation 19. Each party hereto hereby waives all claims for
recovery from the other party for any loss or damage
to any of its property insured under valid and
collectible insurance policies.
Operating
Expenses 20. (a) In additon to the annual rent described in
Section 1 (and in any extension or renewal
provision), Tenant hereby agrees to pay to Landlord,
as additional rent, an amount for each Comparison
Year equal to the Tenant's "Pro Rata Share" of any
increase for such Comparison Year in the amount of
Operating Expenses over the Base Amount thereof.
-20-
<PAGE>
(b) For the purposes of this Section 20:
(1) The term "Base Amount" means the Operating
Expenses for the calendar year 1995. The Base
Amount shall be adjusted proportionately for
Comparison Years that are not a full twelve (12)
months.
(2) The term "Comparison Year" means each
calendar year or portion thereof during the term.
(3) The term "Operating Expenses" means those
expenses incurred during such year in respect of
the operation and maintenance of the building
(after deduction of expenses allocable to the
retail portion of the building) in accordance
with sound management practices and generally
accepted accounting principles as applied to the
operation and maintenance of first class office
buildings, including premiums for insurance,
personal property taxes in connection with
property, utilities used in the maintenance and
operation of the building (excluding, however,
electric power costs for which any tenant
directly contracts with the local power service
company or for which any tenant reimburses
Landlord for the cost thereof), expenses of a
management office in the building for Landlord's
building manager and the net cost of operating
the amenities of the Building, including the net
cost of operating the amenities for office
tenants located on the twelfth floor of the
building. Operating Expenses shall be calculated
on a 95% "gross-up" basis, i.e., on the
assumption that the building is 95% occupied.
The term "gross-up" as used in this Section
shall mean and refer to that method of
calculating variable Operating Expenses which is
designed to most reasonably approximate the
actual cost of providing a variable Operating
Expense service to the space in the building
receiving such service. The "gross-up"
treatment, accordingly, shall be applied only
with respect to variable Operating Expenses
arising from services provided to space in the
building being occupied by Tenant (which
services are being provided to some tenants and
not to others or not to vacant space) in order
to equitably allocate such variable Operating
Expenses to the tenants receiving the benefit
thereof. Expenses that would otherwise be
considered Operating Expenses pursuant to this
Section shall be included as Operating Expenses
even though the same may
-21-
<PAGE>
be paid by Landlord in the form of condominium
dues. If the Landlord shall eliminate the
payment of any wages or other labor costs, costs
of supplies, cost of subcontract services, or
other management costs, as a result of the
installation of labor saving devices, (whether
or not categorized as capital improvements) or
by any other means, or if the Landlord shall,
through installation during the term of energy
saving devices, (whether or not categorized as
capital improvements) effect savings in energy
or other utility costs, then in computing
Operating Expenses the corresponding item or
items of such wages or other costs saved, or the
utility cost saving differential, shall be
deducted from Operating Expenses. The cost of
these devices, plus interest at the lesser of
the annual interest rate of one and one--half
percent (1 1/2%) above the prime rate or the
actual interest rate incurred by Landlord if
Landlord borrows for such improvements, may be
amortized over a reasonable period of time as
determined by the Landlord in accordance with
sound management practices and generally
accepted accounting principles, and included as
an item of Operating Expenses; provided, that
such amortized cost plus interest in any full
rental year shall not exceed in that full rental
year the savings generated by the device.
Operating Expenses shall not include expenses
for repairs or other work occasioned by fire or
other insured casualty; expenses incurred in
leasing or procuring new tenants such as lease
commissions, advertising expenses and expenses
of renovating space for new tenants; interest or
amortization payments on any mortgage or
mortgages; and rental under any ground or
underlying lease.
(4) The term "Pro Rata Share" in reference to
Operating Expenses means the ratio which the
rentable square feet of the premises bears to
579,531 rentable square feet (the BOMA rentable
square footage of the office space in the
Building). The rentable square footage shall be
determined in accordance with the BOMA
definition of the American National Standard
ANSI, 265.1-1980.
(c) Statements of the amount of the Tenant's Pro
Rata Share of increase in Operating Expenses shall be
rendered by the Landlord to the Tenant as soon as
reasonably feasible for each Comparison Year. On or
before the Commencement Date with respect to the
first statement and, thereafter, on the first day for
the payment of
-22-
<PAGE>
monthly rent under this Lease following the
furnishing of a statement for the prior Comparison
Year (1) the Tenant shall pay the Landlord a sum
equal to one-twelfth of the increase in Tenant's
estimated Pro Rata Share of Operating Expenses
multiplied by the number of months then elapsed
during the Comparison Year, and in advance,
one-twelfth of such increase in the estimated share
in respect of the then current month; and (2)
thereafter, until the next Comparison Year statement
shall be rendered, the monthly installments of rent
payable under this Lease shall include an amount
equal to one-twelfth of the Tenant's estimated share
of the increase in Operating Expenses based on the
most recent statement. Any payment, refund, or
credit shall be made without prejudice to any right
of the Tenant to dispute or of the Landlord to
correct any item or items in such statements pursuant
to subparagraph (e) hereof.
(d) Landlord shall deliver to Tenant, after the end
of each Comparison Year, a statement of the increase
in Operating Expenses for such period and Tenant's
Pro Rata Share thereof. Tenant's Pro Rata Share of
such Operating Expenses which are paid or payable for
such year shall be adjusted between Landlord and
Tenant, the parties hereby agreeing that Tenant shall
pay Landlord or Landlord shall credit Tenant's
account (or if such adjustment is at the end of the
Lease term, pay Tenant), as the case may be, within
thirty (30) days of the receipt of such statement,
such amounts as may be necessary to adjust Tenant's
payment of Tenant's Pro Rata Share of the increase in
Operating Expenses for such preceding period.
(e) The Landlord shall have the right, for a period
of eighteen (18) months after the rendering of any
statements to send corrected statements to the
Tenant, and any rent adjustments required thereby
shall be made within thirty (30) days thereafter.
This provision shall survive the expiration or
earlier termination of the term of this Lease. If
Tenant reasonably and in good faith disputes an
Operating Expense item in excess of an amount equal to
Fifty Thousand Dollars ($50,000), such dispute shall
be settled by binding arbitration by the American
Arbitration Association in accord with its then
prevailing rules. The arbitrators shall have no
power to change any term or provision of this Lease.
The arbitration panel shall consist of three (3)
arbitrators, one of whom must be a real estate
attorney actively engaged in the practice of
commercial real estate law in the Baltimore
metropolitan area for at least the last five (5)
years. Both parties shall continue
-23-
<PAGE>
performing their Lease obligations pending the
conclusion of the arbitration proceeding.
(f) The Landlord shall keep and make available to
the Tenant at the business office of the Landlord
where such records are stored, for a period of sixty
(60) days after statements are rendered as provided
in this Section 20, records in reasonable detail of
the payment of Operating Expenses for the period
covered by such statement or statements and shall
permit the Tenant to examine and audit such of its
records as may reasonably be required to verify such
statements, at reasonable times during business hours.
Real Estate
Taxes 21. (a) In addition to the annual rent described in
Section 1 (and in any extension or renewal
provision), Tenant hereby agrees to pay to Landlord,
as additional rent, an amount for each Comparison
Year equal to the Tenant's "Pro Rata Share" of any
increase for such Comparison Year in the amount of
Real Estate Taxes over the Base Amount thereof.
(b) For the purposes of this Section 21:
(1) The term "Base Amount" means the Real
Estate Taxes for the July 1, 1995-June 30, 1996
tax fiscal year. The Base Amount shall be
adjusted proportionately for Comparison Years
that are not a full twelve (12) months.
(2) The term "Comparison Year" means each
fiscal year (July 1 - June 30) or portion
thereof during the term.
(3) The term "Real Estate Taxes" means all
taxes and assessments, special or otherwise,
levied upon or with respect to the building and
the land upon which it is located (with the land
assessment being allocated based upon the
relative value of the project improvements)
imposed by Federal, State or local governments,
(but shall not include income, franchise,
capital stock, estate or inheritance taxes
unless the Landlord equitably determines that
such taxes are in lieu of Real Estate Taxes),
and use or occupancy taxes, and excise and other
taxes (other than general income taxes) on rent
and other income from the building, (computed,
in case of a graduated tax, as if the Landlord's
income from the building were the Landlord's
sole taxable income), and any substitutions for
Real Estate Taxes. In the case of special taxes
and assessments payable in
-24-
<PAGE>
installments only the amount of each installment
due and payable during a fiscal year shall be
included in Real Estate Taxes for that year.
Real Estate Taxes shall not include any
penalties or late payment charges.
(4) The term "Pro Rata Share" in reference to
Real Estate Taxes means the ratio which the
rentable square feet of the premises bears to
600,978 rentable square feet (the BOMA rentable
square footage of the office and retail space in
the building). The rentable square footage shall
be determined in accordance with the BOMA
definition of the American National Standard
ANSI, 265.1-1980.
(c) If by reason of complaint against valuation,
protest of tax rates, or otherwise, Real Estate Taxes
for any year are affected in such a way as would
result in a rent increase or decrease hereunder, the
Real Estate Taxes for the affected year shall be
recalculated accordingly and the resulting increase
or decrease in rent, less the expenses incurred in
effecting any such reduction, shall be paid
simultaneously with or applied as a credit against
the rent next becoming due. Any personal property
taxes or any increase in Real Estate Taxes by reason
of capital improvements, nonstandard or special
installations, alterations or fixtures made to the
premises by or for the benefit of the Tenant shall be
paid for by the Tenant.
(d) Statements of the amount of the Tenant's Pro
Rata Share of increase in Real Estate Taxes shall be
rendered by the Landlord to the Tenant as soon as
reasonably feasible for each Comparison Year. On or
before the Commencement Date with respect to the
first statement and, thereafter, on the first day for
the payment of monthly rent under this Lease
following the furnishing of a statement for the
current Comparison Year (1) the Tenant shall pay the
Landlord a sum equal to one-twelfth of the increase
in Tenant's estimated Pro Rata Share of Real Estate
Taxes multiplied by the number of months then elapsed
during the Comparison Year and, in advance,
one-twelfth of such increase in the estimated share
in respect of the then current month; and (2)
thereafter, until the next Comparison Year statement
shall be rendered, the monthly installments of rent
payable under this Lease shall include an amount
equal to one-twelfth of the Tenant's estimated share
of the increase in Real Estate Taxes based on the
most recent statement.
(e) After Landlord's receipt of tax bills for each
tax year, or such reasonable (in Landlord's
determination) time thereafter, Landlord will certify
to Tenant the amount of the increase in Real
-25-
<PAGE>
Estate Taxes for the tax year in question and the
amount of Tenant's Pro Rata Share thereof. Tenant's
Pro Rata Share of such increase in Real Estate Taxes
which are paid or payable for each tax year shall be
adjusted between Landlord and Tenant, both Landlord
and Tenant hereby agreeing that Tenant shall pay
Landlord or Landlord shall credit to Tenant's account
(or, if such adjustment is at the end of the Lease
term, pay Tenant), as the case may be, within thirty
(30) days of the aforesaid certification to Tenant,
such amount necessary to effect such adjustment. The
failure of Landlord to provide such certification
within the time prescribed above shall not relieve
Tenant of its obligations generally or for the
specific tax year in which any such failure occurs.
(f) The Landlord shall keep and make available to the
Tenant at the business office of the Landlord where
such records are stored, for a period of sixty (60)
days after statements are rendered as provided in
this Section 21, records in reasonable detail of the
payment of Real Estate Taxes for the period covered
by such statement or statements and shall permit the
Tenant to examine and audit such of its records as
may reasonably be required to verify such statements,
at reasonable times during business hours.
(g) Landlord shall use reasonable efforts to pay the
Real Estate Taxes when due and before the imposition
of any penalty or late payment charge.
Condition of
Premises 22. The Tenant's taking possession shall be conclusive
evidence as against the Tenant that the premises were
in good order and satisfactory condition when the
Tenant took possession. No promise of the Landlord to
alter, remodel or improve the premises or the
building and no representations respecting the
condition of the premises or the building have been
made by the Landlord to the Tenant, unless the same
is contained herein, or made a part hereof. At the
termination of this Lease, by lapse of time or
otherwise, the Tenant shall return the premises in as
good condition as when the Tenant took possession,
ordinary wear and loss by fire or other casualty
insured under valid and collectible fire and standard
extended coverage insurance policies excepted,
failing which the Landlord may restore the premises
to such condition and the Tenant shall pay the cost
thereof and this obligation shall survive the
expiration or earlier termination of this Lease.
-26-
<PAGE>
Save
Harmless 23. The Tenant agrees to indemnify and save harmless the
Landlord, the Landlord's building manager and
Landlord's other employees and agents against and
from any and all claims by or on behalf of any person
or persons, firm or firms, corporation or
corporations, arising from the Tenant's use of the
premises or the conduct of its business or from any
activity, work, or thing done, permitted or suffered
by the Tenant, in or about the premises, (or any
parking lot or structure, if applicable) and will
further indemnify and save the Landlord, the
Landlord's building manager and Landlord's other
employees and agents harmless against and from any
and all claims arising from any breach or default on
the Tenant's part in the performance or observance of
any covenant or agreement on the Tenant's part to be
performed or observed pursuant to the terms of this
Lease, or arising from any act or negligence of the
Tenant, or any of its agents, contractors, servants,
employees or licensees, and from and against all
costs, counsel fees, expenses and liabilities
incurred in connection with any such claim or action
or proceeding brought thereon; and in case any action
or proceeding be brought against the Landlord, the
Landlord's building manager or Landlord's other
employees and agents by reason of any such claim, the
Tenant upon notice from the Landlord covenants to
resist or defend at the Tenant's expense such action
or proceeding by counsel reasonably satisfactory to
the Landlord.
Possession 24. In the event of the failure of the Landlord to
deliver possession of the premises at the time of the
commencement of the term of this Lease, neither the
Landlord nor its contractors, subcontractors,
employees, agents or building manager shall be liable
for any damage caused thereby, nor shall this Lease
thereby become void or voidable, nor shall the term
herein specified be in any way extended, but in such
event the term shall begin when the Landlord does
deliver possession of the premises and the Tenant
shall not be liable for any rent until the time that
the Landlord delivers such possession.
Notwithstanding the foregoing, if Tenant delivers
acceptable Construction Documents (as defined in this
Lease) to Landlord by February 1, 1995 but Tenant is
unable to possess the premises by May 1, 1995 because
of delays caused solely and exclusively by Landlord,
then Tenant shall have the right to a full five (5)
month abatement of basic annual rent. Such five (5)
month rental abatement is scheduled to occur during
the period between May 1, 1995 (the projected date of
Tenant's possession of the premises) and September
30, 1995 (the day that shall be deemed the
Commencement Date unless Tenant takes possession of
the premises before such date).* The intent of this
provision is to
-27-
<PAGE>
provide Tenant with a five (5) month rental abatement
period as long as Tenant complies with the terms and
conditions of this provision and the other provisions
of this Lease.
Quiet
Enjoyment 25. The Landlord covenants and agrees that the Tenant on
paying the rent, including additional rent, and
performing and observing the covenants on the
Tenant's part to be performed and observed hereunder,
shall and may peaceably and quietly hold and enjoy
the premises for the term of this Lease without
disturbance from Landlord or anyone claiming
through or under Landlord, subject to the provisions
of this Lease.
Miscellaneous 26. (a) No receipt of money by the Landlord from the
Tenant after the termination of this Lease or after
the service of any notice or after the commencement
of any suit, or after final judgment for possession
of the premises shall renew, reinstate, continue or
extend the term of this Lease or affect any such
notice, demand or suit.
(b) No waiver of any default of the Tenant hereunder
shall be implied from any omission by the Landlord
to take any action on account of such default if such
default persists or be repeated, and no express
waiver shall affect any default other than the
default specified in a written waiver and then only
for the time and to the extent therein stated. The
invalidity or unenforceability of any provision
hereof shall not affect or impair any other provision
and the invalid or unenforceable provision shall be
deemed restated to comply with local law.
(c) The word "Tenant" wherever used in this Lease
shall be construed to mean Tenants in all cases where
there is more than one tenant, and the necessary
grammatical changes required to make the provisions
hereof apply either to corporations or individuals,
men or women, shall in all cases be assumed as though
in each case fully expressed.
(d) Provisions inserted herein or affixed hereto
shall not be valid unless appearing in the duplicate
original hereof held by the Landlord.
(e) Each provision hereof shall extend to and shall,
as the case may require, bind and inure to the
benefit of the Landlord and the Tenant and their
respective heirs, legal representatives, successors,
-28-
<PAGE>
and assigns in the event this Lease and has been
assigned with the written consent of the Landlord.
(f) The headings of sections are for convenience only
and do not limit or construe the contents of the
sections.
(g) Submission of this instrument for examination
does not constitute a reservation of or option for
the premises. The instrument becomes effective as a
lease upon execution and delivery by both the
Landlord and the Tenant.
(h) All amounts (other than annual rent and
escalation payments) owed by the Tenant to the
Landlord hereunder shall be paid within thirty (30)
days from the date the Landlord renders statements of
account therefor and all such amounts, as well as
rent and additional rent, as set forth in Section
1(c), shall bear interest from their respective due
date until paid at the annual rate of one and
one-half percent above the prime rate. All such
amounts other than annual rent shall be deemed
additional rent or rents.
(i) The Tenant may occupy the premises prior to the
commencement of the term of this Lease with the
Landlord's written consent, and in such case all the
provisions of this Lease shall be in full force and
effect as soon as the Tenant occupies the premises.
(j) For purposes of this Lease, the "prime rate"
shall be the prime rate of interest established from
time to time by The First National Bank of Maryland,
provided that, if The First National Bank of Maryland
is no longer in existence or no longer establishes a
prime rate of interest, such rate shall be the
highest rate published by The Wall Street Journal in
its Money Rates section, or a comparable index
selected by Landlord and approved by Tenant, such
approval not to be unreasonably delayed, conditioned
or withheld.
(k) Simultaneously with the termination or expiration
of this Lease, Tenant shall return to Landlord all
keys and access cards relating to the project or the
premises.
(l) Tenant agrees that the terms of this Lease are
confidential and shall not be disclosed by Tenant to
any other party other than its accountant in
connection with the preparation of its financial
statements or tax returns, in any litigation
involving or relating to this Lease, or as otherwise
rquired by law.
-29-
<PAGE>
(m) Tenant shall be responsible for complying with the
Americans With Disabilities Act within the premises,
including its use of the premises.
Security
Deposit 27. Tenant has deposited with the Landlord the sum of
Sixteen Thousand Eight Hundred Seventy-Nine and
17/100 Dollars ($16,879.17) as security for the
faithful performance and observance by the Tenant of
the terms, provisions and conditions of this Lease.
In the event the Tenant defaults in respect of any of
the terms, provisions and conditions of this Lease
including, but not limited to, the payment of rent
and additional rent, the Landlord may use, apply or
retain the whole or any part of the security so
deposited to the extent required for the payment of
any rent and additional rent or any other sum as to
which the Tenant is in default or for any sum which
the Landlord may expend or may be required to expend
by reason of the Tenant's default in respect of any
of the terms, covenants and conditions of this Lease,
including, but not limited to, any damages or
deficiency in the re-letting of the premises, whether
such damages or deficiency accrued before or after
summary proceedings or other re-entry by the
Landlord. In the event that the Tenant shall fully
and faithfully comply with all of the terms,
provisions, covenants and conditions of this Lease,
the security shall be returned to the Tenant after
the date fixed as the end of this Lease and after the
later to occur of (a) delivery of possession of the
entire premises to the Landlord or (b) thirty (30)
days after the termination or earlier expiration of
this Lease. In the event of a sale of the building or
leasing of the building, the Landlord shall have the
right to transfer the secureity to the vendee or
lessee and the Landlord shall thereupon be released
by the Tenant from all liability for the return of
said security; and the Tenant agrees to look solely
to the new landlord for the return of said security;
and it is agreed that the provisions hereof shall
apply to every transfer or assignment made of the
security to a new landlord. The Tenant further
covenants that it will not assign or encumber or
attempt to assign or encumber the monies deposited
herein as security and that neither the Landlord nor
its successors or assigns shall be bound by any such
assignment, encumbrance, attempted assignment or
attempted encumbrance.
Insurance 28. (a) At all times during the term of this Lease, the
Tenant, at its sole cost and expense, shall provide
and keep in full force and effect a policy of public
liability and property damage insurance,
-30-
<PAGE>
naming the Landlord (including its partners) and the
building manager as an additional insured, with
respect to the premises and the business of the
Tenant in, on, within, from or connected with the
premises, pursuant to which the limits of liability
shall be at least $1,000,000 in respect to injuries to
or death of any one person, $1,000,000 in respect to any
one occurrence, and $500,000 in respect to
destruction or damage to property or in such other
reasonable amounts as the Landlord shall require.
Said insurance policy shall contain a clause that the
insurer will not cancel or change the insurance
without first giving the Landlord thirty (30)
days prior written notice. Said insurance policy
shall be carried with an insurance company approved
by the Landlord, and a certificate of insurance shall
be delivered to the Landlord on the Commencement Date
of this Lease and upon renewal of each of said
policies.
(b) The Tenant shall not take out separate insurance
concurrent in form or contributing in the event of
loss other than liability insurance with that
required in this Section unless Landlord and Tenant
are included therein as additional insureds with loss
payable as provided in this Lease.
(c) If at any time the Tenant does not comply with
the covenants in this Section, the Landlord may, at
its option, (without prejudice to any other remedy
it might have) cause insurance as aforesaid to be
issued, and in such event the Tenant shall pay the
premium for such insurance as additional rent
promptly upon the Landlord's demand therefor.
Exculpation 29. It is understood that the Landlord on the date of
execution hereof is a Maryland limited partnership
and that no partner, general or limited, of said
limited partnership, as it may now or hereafter be
constituted, shall have any personal liability to the
Tenant or any person claiming under, by or through
the Tenant upon any action, claim, suit or demand
brought pursuant to the terms and conditions of this
Lease or arising out of the occupancy by the Tenant
of the premises.
Renewal
Option 30. (a) Provided (i) this Lease is then in full force
and effect, (ii) Tenant is not in default respecting
any provision or condition of this Lease, or said
default has been expressly waived in writing by
Landlord, either on the date Tenant elects to renew
or on the date the renewal term commences, and (c) T.
Rowe Price Associates, Inc. or its successor
("Price") does not exercise any rights of
-31-
<PAGE>
expansion under a lease between Landlord and Price,
then Tenant shall have the right as hereinafter
provided to renew this Lease (the "Renewal Option")
for the premises. The foregoing conditions shall
apply to the exercise of the Renewal Option, which
shall be for one (1) renewal term (the "Renewal
Term") of five (5) years immediately following the
expiration of the initial five (5) year term on the
same terms, conditions, and provisions as are set
forth in this Lease, save that:
(i) there shall be no further right of renewal after
the Renewal Term;
(ii) beginning with and as of the first day of the
Renewal Term, the annual rent and each monthly
installment thereof payable during such Renewal Term
shall be adjusted and modified as set forth in
subsection 30(c) below (but not less than the rent
being paid at the expiration of the current term); and
(iii) If Price exercises any rights of expansion it
may have under its lease, Tenant shall nonetheless
have the option to renew the term of this Lease for
the period from the expiration of the initial term of
this Lease through October 31, 2002.
(b) Tenant shall notify Landlord in writing of its
intention to consider exercising the Renewal Option
not less than twelve (12) months before the
expiration date of the initial five (5) year term of
this Lease, time being of the essence. Upon a
determination of the annual rent as herein provided,
Tenant shall give notice of its exercise of the
Renewal Option, in writing, not more than thirty (30)
days after said determination is delivered to Tenant
in writing. Tenant shall be deemed to have waived the
right to exercise the Renewal Option unless Tenant
shall have given notice to Landlord of the exercise
of such Renewal Option within the time periods as
hereinabove provided.
(c) Tenant shall pay to Landlord during the Renewal
Term an annual rent equal to the fair market value
rental rate (the "FMV Rental Rate"). The FMV Rental
Rate for purposes of any Renewal Term shall be the
rate per rentable square foot that Tenant shall pay
Landlord and shall be determined by the mutual
agreement of the parties hereto within thirty (30)
days of an event requiring such determination. If
the parties hereto cannot agree upon a value for the
FMV Rental Rate within the aforesaid thirty (30) day
period, Landlord and Tenant each shall, no later than
fifteen (15) days after the expiration of such thirty
(30) day period,
-32-
<PAGE>
select a Real Estate Broker (as defined below). If
either party shall fail to so appoint a Real Estate
Broker, the one Real Estate Broker so appointed shall
proceed to determine the FMV Rental Rate. If the
Real Estate Brokers selected by Landlord and Tenant
agree as to the FMV Rental Rate, such determination
shall be binding on Landlord and Tenant. If the Real
Estate Brokers selected by Landlord and Tenant cannot
agree as to the FMV Rental Rate within thirty (30)
days, then the Real Estate Brokers shall jointly
select a third Real Estate Broker, provided that if
they cannot agree on the third Real Estate Broker
within fifteen (15) days, then the third Real Estate
Broker shall be selected in accordance with the rules
prescribed by the American Arbitration (or any
successor thereto). The FMV Rental Rate shall then be
determined by the third Real Estate Broker within
thirty (30) days after his or her selection and such
determination shall be binding on Landlord and
Tenant. The term "Real Estate Broker" shall mean a
fit and impartial person having not less than ten
(10) years' experience as a broker of commercial
leasehold estates relating to first class downtown
Baltimore office buildings. The valuation shall be
conducted in accordance with the provisions of this
Section and, to the extent not inconsistent herewith,
in accordance with the then prevailing rules of the
American Arbitration Association in Maryland (or any
successor thereto). The final determination of the
Real Estate Brokers shall be in writing and shall be
binding and conclusive on the parties, each of whom
shall receive counterpart copies thereof. In
rendering such decision the Real Estate Brokers shall
not add to, subtract from, or otherwise modify the
provisions of this Lease. The outside costs and
expenses associated with the determination of the FMV
Rental Rate in accordance with the provisions of this
Section shall be borne equally by the parties. In
determining the FMV Rental Rate, the Real Estate
Brokers shall consider all the items set forth above
for consideration in determining the FMV Rental Rate.
Instructions to such effect shall be given to the
Real Estate Brokers. Tenant shall pay rent hereunder
until such determination is made at the rate
prescribed for rent during the initial term of this
Lease, subject to adjustment on determination of such
FMV Rental Rate whether by valuation by the Real
Estate Brokers as hereinabove provided or by
agreement of Landlord and Tenant. On such
determination, Tenant shall promptly pay to Landlord
any underpayment of rent and, in the event of any
overpayment of rent during such period, Landlord
shall credit the amount of such overpayment of rent
against the payments of rent next coming due until
such time as the overpayment has been fully credited
to Tenant. On the determination of the FMV Rental
Rate, Landlord and Tenant, on the demand of
-33-
<PAGE>
either of them, shall enter into a supplementary
agreement, to set forth such rent.
Relocation 31. The Landlord reserves the right at its option and at
the Landlord's expense to relocate the premises to any
floor of the building in a location of comparable size
and finish to the premises as described herein.
Landlord shall reimburse Tenant for the direct,
reasonable, and verifiable relocation expenses incurred
by Tenant, including Tenant's stationery costs and all
other reasonable business relocation costs.
Brokerage 32. The Tenant warrants and represents to Landlord that
the Tenant has not used the services of any broker,
agent or finder who would be entitled to a commission
on account of this Lease other than Colliers Pinkard
and Miller Corporate Real Estate Services, and agrees
to defend, indemnify and save the Landlord harmless
from any commission or fee which may be payable to any
other broker, agent or finder with whom the Tenant has
dealt in connection with this Lease.
Estoppel
Certificates 33. The Tenant agrees at any time and from time to time
upon not less than ten (10) days prior written notice
by Landlord or the holder of any mortgage or security
interest in all or any part of the building to execute,
acknowledge and deliver to Landlord or such holder, as
the case may be, a statement in writing in such form
as Landlord or the holder of any mortgage or security
interest in all or any part of the building may
require, certifying among other things (i) whether the
Tenant is in possession of the premises and conducting
business with the public thereof from and specifying
the date of the commencement of such possession,
(ii) whether all required contributions by Landlord to
Tenant, or improvements to the premises, have been
made, (iii) the amount of any security deposit paid
by Tenant, (iv) the actual date of commencement and
termination of the term, (v) that this Lease is
unmodified and in full force (or if there have been
modifications, that the same in full force and effect
as modified and stating the modifications), (vi) the
dates to which the rent and other charges have been
paid in advance, if any, and (vii) whether or not to
the best knowledge of the signer of such a certificate
Landlord is in default in performance of any covenant,
agreement or condition contained in this Lease and, if
so, specifying each such default of which the signer
may have knowledge, it being intended that any such
statement delivered hereunder may be relied upon by
third parties not a party to this Lease.
-34-
<PAGE>
Corporate
Tenants 34. In the event Tenant is a corporation, the persons
executing this Lease on behalf of Tenant hereby
covenant and warrant that: Tenant is a duly
constituted corporation qualified to do business in
Maryland; all Tenant's franchises and corporate taxes
have been paid to date; all future forms, reports,
fees and other documents necessary for Tenant to
comply with applicable laws will be filed by Tenant
when due; and such persons are duly authorized by the
board of directors of such corporation to execute and
deliver this Lease on behalf of the corporation.
Parking 35. During the term of this Lease, Tenant shall have the
right to rent, on a monthly basis, one (1) parking
space in the parking garage located adjacent to the
rear of the building for each 1,000 square feet of
rentable area of the premises (if Tenant leases more
than 7,500 rentable square feet of space on the
sixteenth floor of the building, Tenant shall be
entitled to use eight (8) parking spaces) plus three
(3) additional spaces. The additional three (3)
parking spaces shall be subject to recapture by
Landlord on thirty (30) days notice to Tenant. Rental
of parking spaces shall be subject to the payment of
standard fees charged by the parking garage to its
other users and shall be subject to such rules and
regulations which are applicable to the parking
garage. As of the date of this Lease, the monthly
rental rate per parking space is One Hundred
Sixty-Five Dollars ($165).
Governing
Laws 36. This Lease shall be governed by the Laws of the State
of Maryland.
Storage
Space 37. At Tenant's option, Landlord shall provide Tenant
with one square foot of storage space in the building
for every fifty (50) rentable square feet in the
premises, in an area selected by the Landlord and to
be served by an elevator. The annual rent for the
storage space shall be $10 per square foot, which
shall be payable in equal monthly installments in
advance, together with rent. The storage space shall
include unpainted drywall walls, unfinished ceiling,
one lockable door, lighting, and ventilation; however,
such space shall not be air conditioned or heated.
Lender
Approval 38. This Lease shall be subject to the approval of First
National Bank of Maryland. If the Lease is not
approved by First National Bank
-35-
<PAGE>
of Maryland within thirty (30) days of the date of
this Lease, this Lease shall be void and of no further
force and effect. The storage space shall include
unpainted drywall walls, unfinished ceiling, one
lockable door, lighting, and ventilation; however,
such space shall not be air conditioned or heated.
Cancellation 39. Provided Tenant is not in default under this Lease,
Tenant shall have the right to cancel this Lease
effective at the end of the third (3rd) anniversary of
the Commencement Date in accordance with the following
terms and conditions:
(a) If Tenant desires to so cancel this Lease, it
shall provide written notice (the "Cancellation
Notice") thereof to Landlord by no later than the end
of the second (2nd) anniversary of the Commencement
Date, time being of the essence;
(b) From and after the date on which the term of
this Lease is cancelled, Landlord and Tenant shall have
no further liability to the other except for
obligations that have accrued prior to the date of the
cancellation and those obligations that survive such
cancellation; and
(c) In consideration of granting Tenant the privilege
to cancel this Lease before its normally scheduled
expiration date, Tenant shall pay to Landlord a
cancellation fee totaling Two Hundred Forty-Three
Thousand Sixty Dollars ($243,060) (the "Cancellation
Fee"). Tenant shall pay the Cancellation Fee to
Landlord as follows:
(i) Tenant shall pay to Landlord an amount
equal to One Hundred Twenty-One Thousand Five Hundred
Thirty Dollars ($121,530) simultaneously with tendering
the Cancellation Notice to Landlord.
(ii) Tenant shall pay to Landlord an amount
equal to Sixty Thousand Seven Hundred Sixty-Five
Dollars ($60,765) one hundred eighty (180) days after
the date of the Cancellation Notice.
(iii) Tenant shall pay to Landlord an amount
equal to Sixty Thousand Seven Hundred Sixty-Five
Dollars ($60,765) on the first anniversary of the
Cancellation Notice.
Asbestos 40. Landlord represents and warrants to Tenant that, to the
best of Landlord's knowledge, and premises do not
contain any asbestos containing materials.
-36-
<PAGE>
Rider A and Exhibits A-D are attached hereto and made a part thereof.
IN WITNESS WHEREOF, this instrument has been duly executed by
the parties hereto as of the day and year first above written.
WITNESS: 100 EAST PRATT STREET
LIMITED PARTNERSHIP
By: International Business
Machines Corporation,
Managing Partner
/s/ [Illegible]
- ------------------------------ By: /s/ J.R. Mayo (SEAL)
------------------
Name: /s/ J.R. Mayo
-------------------------
Title: Director, Finance, Investments
-------------------------
& Asset Management
IBM Real Estate Services
WITNESS: THE HUNTER GROUP, INC.
/s/ Lisa Sipocz
- ----------------------------- By: /s/ Mary T. Weaver (SEAL)
------------------
Name: /s/ Mary T. Weaver
-------------------------
Title: Senior Vice President
-------------------------
STATE OF NEW YORK )
COUNTY OF Westchester )ss.:
On this 24 day of January, 1995, before me, F.M. Duffy, a Notary
Public in and for the State of New York, duly commissioned and sworn,
personally appeared J. Robb Hays, known to me to the * of Corporate
Real Estate and Construction, International Business Machines Corporation,
the corporation described in and that executed the foregoing instrument, and
also known to me to be the person who executed the foregoing instrument on
behalf of the corporation therein named, and acknowledge to me that such
corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal in the County and State aforesaid, the day and year in this
certificate first above written.
-37-
J. R. Mayo
Director, Finance, Investments
& Asset Management
IBM Real Estate Services
<PAGE>
STATE OF MARYLAND )
COUNTY OF )ss.:
On this 18th day of January, 1995, before me, Lynn Moler, a Notary
Public in and for the State of Maryland duly commissioned and sworn,
personally appeared Mary Weaver, known to me to be the Sr. VP of THE HUNTER
GROUP, INC., a Maryland corporation, the corporation described in and that
executed the foregoing instrument, and also know to me to be the person who
executed the foregoing instrument on behalf of the corporation therein named,
and acknowledged to me that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal in the County and State aforesaid, the day and year in this
certificate first above written.
/s/ Lynn C. Moler
----------------------------
Notary Public
-38-
<PAGE>
RIDER A
Attached to and made part of
Lease dated
made between
100 East-Pratt Street Limited Partnership
and
The Hunter Group, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Rules and Regulations
1. The sidewalks, halls, passages, elevators and stairways shall not be
obstructed by the Tenant or used for any purpose other than for ingress to
and egress from the premises. The halls, passages, entrances, elevators,
stairways, balconies and roof are not for the use of the general public, and
the Landlord shall in all cases retain the right to control and prevent
access thereto of all persons whose presence in the judgment of the Landlord
shall be prejudicial to the safety, character, reputation and interests of
the building and its tenants, provided, that nothing herein contained shall
be construed to prevent such access to persons with whom the tenant normally
deals in the ordinary course of its business unless such persons are engaged
in illegal activities. The Tenant and its employees shall not go upon the
roof of the building without the written consent of the Landlord.
2. The sashes, sash doors, windows, glass lights, and any lights or
skylights that reflect or admit light into the halls or other places of the
building shall not be covered or obstructed. The toilet rooms, water and wash
closets and other water apparatus shall not be used for any purpose other
than that for which they were constructed, and no foreign substance of any
kind whatsoever shall be thrown therein, and the expense of any breakage,
stoppage, or damage, resulting from the violation of this rule, shall be
borne by the Tenant who, or whose clerk, agents, servants, or visitors, shall
have caused it.
3. If the Landlord, by a notice in writing to the Tenant, shall object
to any curtain, blind, shade or screen attached to, or hung in, or used in
connection with any window or door of the premises, such use of such
curtain, blind, shade or screen shall be forthwith discontinued by the
Tenant. No awnings shall be permitted on any part of the premises, and no
building standard blinds shall be removed by the Tenant.
4. No safes or other objects heavier than the lift capacity of the
freight elevators of the building shall be brought into or installed in the
premises. The Tenant shall not place a load upon any floor of the premises
which exceeds the load per square foot which such floor was designed to carry
and which is allowed by law. The moving of safes shall occur only between
such hours as may be designated by, and only upon
-39-
<PAGE>
previous notice to, the manager of the building, and the persons employed to
moves safes in or out of the building must be acceptable to the Landlord. No
freight, furniture or bulky matter of any description shall be received into
the building or carried into the elevators except during hours and in a
manner approved by the Landlord.
5. The Tenant shall not use, keep, or permit to be used or kept in the
premises any foul or noxious substance, or permit or suffer the premises to
be occupied or used in a manner offensive or objectionable to the Landlord or
other occupants of the building by reason of noise, odors, and/or vibrations,
or permit or suffer the premises to be occupied or used in a manner that, in
the sole judgment of the Landlord, diminishes or threatens to diminish the
quality or reputation of the building as a first class office structure or is
not in keeping with the reputation, integrity or standards of the Landlord,
or interfere in any way with other tenants or those having business therein,
nor shall any animals or birds (except Seeing Eye dogs) be kept in or about
the building. The Tenant shall not place or install any antennae or aerials
or similar devices outside of or in the premises.
6. The Tenant shall not use or keep in the building any inflammables
including, but not limited to, kerosene, gasoline, naphtha and benzene,
(except cleaning fluids in small quantities and when in containers approved
by the Board of Underwriters), or explosives or any other articles of
intrinsically dangerous nature, or use any method of heating other than that
supplied by the Landlord.
7. If the Tenant desires telephone or telegraph connections, the
Landlord will direct electricians as to where and how the wires are to be
introduced. No boring or cutting for wires or otherwise shall be made without
specific directions from the Landlord.
8. The Tenant, upon the termination of the tenancy, shall deliver to
the landlord all the keys of offices, rooms and toilet rooms which shall have
been furnished the Tenant or which the Tenant shall have had made, and in the
event of loss of any keys so furnished shall pay the Landlord therefor.
9. The Tenant shall not put down any floor covering in the premises
without the Landlord's prior approval of the manner and method of applying
such floor covering.
10. On Saturdays, Sundays and holidays recognized by the Landlord and on
other days between the hours of 6 p.m. and 8 a.m., access to the building, or
to the halls, corridors, elevators or stairways in the building, or to the
premises may be refused unless the person seeking access is known to the
watchman of the building in charge and has a pass or is properly identified.
The landlord shall in no case be liable for damages for the admission to or
exclusion from the building of any person whom the Landlord has the right to
exclude under Rule I above. In case of invasion, mob, riot, public
excitement, or other commotion, the Landlord reserves the right to prevent
access to the building during
-40-
<PAGE>
the continuance of the same by closing the doors or otherwise, for the
safety of the tenants or the Landlord and protection of property in the
building.
11. The Tenant assumes full responsibility for protecting its space from
theft, robbery and pilferage including, without limitation, keeping doors
locked and windows and other means of entry to the premises closed.
12. The Tenant shall not alter any lock or install a new or additional
lock or any bolt on any door of the premises without prior written consent of
the Landlord. If the Landlord shall give its consent, the Tenant shall in
each case furnish the Landlord with a key for any such lock.
13. Without the Landlord's prior written consent, the Tenant shall not
use the name of the building (whether or not the building is named or
commonly known as "The IBM Building" or the like) in its advertising or other
publicity or on its stationery or other correspondence or otherwise, and
shall not use pictures of the building in advertising or publicity or
otherwise.
14. The Tenant shall not make any room--to--room canvass to solicit
business from other tenants in the building; and shall not exhibit, sell or
offer to sell, use rent or exchange in or from the premises unless
ordinarily embraced within the Tenant's use of the premises specified in the
Lease.
15. The Tenant shall not waste electricity, water or air conditioning
and agrees to cooperate fully with the Landlord to assure the most effective
operation of the building's heating and air conditioning, and shall not allow
the adjustment (except by the Landlord's authorized building personnel) of
any controls other than room thermostats installed for the Tenant's use. The
Tenant shall keep corridor doors closed and shall not open any windows except
that if the air circulation shall not be in operation, windows which are
operable may be opened with the Landlord's consent.
16. The Tenant shall not do any retail cooking in the premises or engage
any retail coffee cart or vending services.
17. Prior to removing furniture or equipment from the building, the
Tenant must submit a written list of such items and obtain approval thereof
from the office of the building manager.
18. The Tenant must comply with the Landlord's designation of building
standard lamps to be installed in all lighting fixtures in the cantilever
portion of the premises.
19. The smoking and the carrying of lighted tobacco products, including
but not limited to cigarettes, cigars and pipes is prohibited in the public
areas of the building (including the fitness center and the conference center
located on the twelfth floor of the
-41-
<PAGE>
building, and the restrooms, lobbies, corridors, stairwells and elevators
within the building. Tenant shall advise its employees of this prohibition
and shall use reasonable efforts to insure that its employees, business
invitees, and guests do not violate this prohibition.
-42-
<PAGE>
EXHIBIT A
[ DIAGRAM ]
16TH FLOOR
8102 RSF
<PAGE>
EXHIBIT B
CLEANING SPECIFICATIONS
Nightly - Monday Through Friday
I. LOBBY
A. Daily
1) Empty all waste receptacles and cigarette urns.
2) Sweep floor.
3) Damp mop floor.
4) Vacuum and/or sweep walk-off mats.
5) Clean entrance door glass.
6) Dust furniture.
7) Vacuum carpet. Remove spots and stains.
8) Spray clean and polish floor.
B. Monthly
1) Machine scrub and coat with floor finish.
II. ELEVATORS
A. Daily
1) Wipe elevator cab walls.
2) Polish brightwork at elevator doors, door frames and call
buttons.
3) Sweep and clean elevator floors.
4) Vacuum and spot clean elevator carpets.
5) Clean elevator door tracks.
-ii-
<PAGE>
III. OFFICE AREAS
A. Daily
1) Empty all waste receptacles.
2) Empty and wipe all ashtrays.
3) Vacuum all carpeted areas.
4) Spot clean all carpeted areas.
5) Thoroughly sweep all tiled floors with chemically treated dust
mops.
6) Damp mop all spillages.
7) Dust all furniture, files and ledges.
8) Damp wipe desk tops and tables as required to remove beverage
and finger marks.
9) Spot clean interior glass partitions to remove finger marks.
10) Sanitize and polish dry all drinking fountains.
B. Weekly
1) Vacuum edges of carpet. Vacuum all carpet under furniture and
areas not reached by upright vacuum cleaners.
2) Remove finger marks, smudges from doors, door frames and walls
around light switches.
3) Whisk or vacuum fabric furniture.
4) Remove cobwebs from high corners.
5) Dust a portion of the venetian blinds so that all are dusted
once a month.
6) Dust window sills.
7) Spray clean tiled floors adding a coat of finish where needed.
-iii-
<PAGE>
C. Monthly
1) Dust vertical surfaces of desks, files and cabinets.
2) Dust horizontal surfaces beyond height of reach.
3) Dust air vents in walls and ceilings.
4) Clean both sides of all interior glass partitions.
IV. COMPUTER ROOM
A. Daily
1) Empty all waste receptacles.
2) Empty and wipe all ashtrays.
3) Vacuum clean carpet.
4) Dust all desks, chairs and ledges.
V. CORRIDORS
A. Daily
1) Empty all waste receptacles.
2) Empty and wipe all ashtrays.
3) Sanitize and polish dry drinking fountains.
4) Dust all doors, ledges and signs.
5) Machine buff tiled floors.
6) Vacuum clean carpet.
B. Weekly
1) Remove finger marks from wall corners, doors and door frames.
2) Vacuum edges of carpet.
3) Vacuum elevator door tracks.
-iv-
<PAGE>
4) Spray clean floors adding a coat of finish as needed.
VI. LAVATORIES
A. Daily
1) Empty all trash, paper towel and sanitary napkin receptacles.
2) Sanitize all commodes, urinals, and wash basins.
3) Polish mirrors, faucets and soap dispenser.
4) Spot clean wall and partitions adjacent to urinals.
5) Spot clean booth partitions.
6) Clean and polish tissue and towel dispensers.
7) Fill soap, tissue and towel dispensers.
8) Wash floor with disinfectant cleaners--special attention to
edges of floor and areas behind commodes and under urinals.
C. Monthly
1) Wash and sanitize tile walls.
2) Wash and sanitize booth partitions.
3) Dust vent grills in doors, walls and ceilings.
VII. STAIRWELLS
A. Daily
1) Sweep steps and landings.
2) Dust handrails and ledges.
VIII. CARPET MAINTENANCE PROGRAM
Janitorial staff is trained in the use of the spin bonnet method of
surface maintenance of carpet. This procedure is a part of the
janitorial service
-v-
<PAGE>
and is designed to prolong the time between necessary deep cleaning
methods as described below.
IX. AT TENANT'S REQUEST
My Cleaning Service, Inc. is currently providing cleaning services in
the building. My Cleaning Service, Inc. special cleaning division has
trained specialists in carpet cleaning using the most modern
equipment available. Carpet cleaning is done upon tenant's request,
currently at the rate of 8.5 cents per square foot. A minimum of 500
square feet is currently required.
X. FURTHER SERVICES AVAILABLE
My Cleaning Service, Inc. special cleaning division is prepared to
provide services in the cleaning of carpet, upholstery, acoustical
ceiling tile, overhead lighting and draperies (in place). A quote for
any of these services will be prepared at tenant's request.
-vi-
<PAGE>
EXHIBIT C
---------
TENANT IMPROVEMENTS WORK LETTER
Construction of the premises shall be supervised by Landlord and shall
be in accordance with the Construction Documents (as defined below). Such
construction shall be referred to as "Landlord's Work." All of the equipment,
fixtures and improvements installed pursuant to Landlord's Work shall be and
remain the property of Landlord. Landlord shall not receive a supervisory fee
for supervising Landlord's Work.
1. Space and Design Plans.
The "Space and Design Plans" shall mean plans for the construction of
Landlord's Work, showing its partitions, doors and plans, and other
illustrations as required to enable the preparation of Construction Documents
and which shall set forth all necessary information regarding, electrical,
telephone and light switch locations, lighting and reflected ceiling plan,
equipment codes, wall finishes, floor finishes, signage location, millwork
built-ins, architectural treatments, window covering and treatments, cabinet
work, paneling, any custom features for the Premises, and the types, color,
size and finish of all such materials Tenant shall submit to Landlord Space
and Design Plans.
2. Construction Documents. By no later than February 1, 1995, Tenant
shall submit to Landlord the architectural, mechanical, electrical and
plumbing construction documents (such documents referred to as the
"Construction Documents") in appropriate biddable form to implement the Space
and Design Plans. If, at any time Landlord determines that the Construction
Documents are not in appropriate biddable form to obtain bids or in
appropriate form to obtain permits from any government authority (including
if such Construction Documents are rejected by any government authority),
Landlord may require that Tenant revise and resubmit such Construction
Documents. Tenant shall revise and resubmit such Construction Documents
within five (5) days of Landlord's request. Approval by Landlord of the
Tenant's Working Drawings and Specification shall be non-technical approval
and shall not be deemed to mean approval of structure, size of ducts or
piping, adequacy of the electrical system, system/equipment capacities and
other technical matters. Tenant is responsible for coordinating the proper
and adequate design and construction of the Tenant's Improvements in
compliance with laws.
-vii-
<PAGE>
3. Contracts and Payment for Space and Design
Plans and Construction Documents.
Tenant shall contract directly with the design, engineering and
architectural firms to draw the Space and Design Plans and the Construction
Documents for Landlord's Work. All such firms shall be subject to Landlord's
prior written approval not be unreasonably withheld or delayed.
4. Selection of Contractor.
Based on the Construction Documents, Landlord shall prepare an
invitation to bid which includes a copy of the proposed form of construction
contract on the basis of a guaranteed maximum price contract. Landlord shall
submit bids to the contractors, in good faith, agreed upon by Landlord and
Tenant (collectively, the "Qualified Contractors"). Landlord and Tenant shall
mutually select the contractor to perform Landlord's Work from the bids
received. If Tenant and Landlord fail to agree on a contractor within four
(4) days thereafter, Landlord shall select the apparent low bidder (the
contractor selected in accordance with the foregoing procedure is herein
called the "Contractor"). The Contractor, with the approval of Landlord,
shall select the subcontractors. The Contractor and subcontractors must be
willing to agree to all requirements imposed by Landlord's construction
and/or permanent lender (including any reasonably requirements relating to
retainages, advances, insurance, bonding requirements, mechanics' lien
waivers or otherwise) and penalties for late delivery of space. After
selection of the Contractor, Landlord shall negotiate and execute a
construction contract with the Contractor. Landlord may make changes to the
form construction contract but the contract guaranteed maximum price shall
remain the same without cost overruns except for Tenant change orders,
Necessary Change Orders, and other change orders approved by Tenant. After
approval of the Construction Documents, selection of the Contractor, and
execution of the construction contract, the Contractor shall proceed with
construction of Landlord's Work under the supervision of Landlord. Tenant
shall evaluate and analyze all construction pricing to ensure current market
pricing and to maximize the use of Landlord's Construction Contribution (as
defined below). To that end, Landlord shall provide Tenant with all scheduled
construction pricing for review and analysis.
5. Change Orders
Landlord shall have the right to initiate any change order if such
change order (a "Necessary Change Order") is necessary: (a) for compliance
with any applicable laws; (b) in order to obtain necessary permits or
certificate of occupancy; or (c) for Landlord's Work to be compatible with or
coordinated with base building structure or systems. Landlord shall notify
Tenant of any Necessary Change Order. Other than Necessary Change Orders,
Landlord shall notify Tenant
-viii-
<PAGE>
and obtain Tenant's consent prior to initiating a material change. Tenant
shall notify Landlord of its approval or denial within two (2) business days
of Landlord's request.
Tenant (acting through Tenant's Authorized Representative) shall have
the right to initiate change orders, subject to Landlord's reasonable
approval. Landlord shall not unreasonably withhold its approval to any such
Tenant-initiated change order proposal. Following receipt of a request for a
change order, Landlord shall promptly (i.e., within 2 days) notify Tenant
whether such request is approved, and if such request is approved Landlord
shall submit to Tenant a written change order which shall include an estimate
of the cost and any anticipated delays that will be incurred as a result of
the change. Upon Tenant's execution of the written change order prepared by
Landlord, the change shall be incorporated into Landlord's Work. Any delays
caused by Tenant's change orders or Necessary Change Orders shall be treated
as a Tenant Delay.
6. Payment of Cost.
Landlord shall provide Tenant a total construction allowance of
Thirty-Seven Dollars ($37) per rentable square foot (the "Landlord's
Construction Contribution") for the construction of the Premises. Of
Landlord's Construction Contribution, Ten Dollars ($10) per rentable square
foot consists of building standard items that have already been purchased by
Landlord, including installation of basic HVAC duct runs and 20 VAV boxes,
ceiling grid, sprinklers systems, mini-blinds, as well as ceiling tile and
light fixtures stacked on the floor.
The balance of Landlord's Construction Contribution, Twenty-Seven Dollars
($27) per rentable square foot, shall be used by Landlord to complete
Tenant's work as per the Construction Documents and, to the extent any funds
remain, such remaining funds may be used by Tenant for moving expenses,
space planning, preparation of the Space and Design Plans and the
Construction Documents or to offset any rental payments due under the Lease.
Tenant shall pay for any overage of Landlord's construction within thirty
(30) days of receipt of written bill. Failure by Tenant to tender payment for
such improvements shall not delay the Commencement date and shall be deemed a
default of this Lease.
7. Performance and Completion of Landlord's Work.
Tenant's Authorized Representative shall be given access to the Premises
during performance of the Landlord's Work, subject to such person's
compliance with all safety rules, and provided he/she does not interfere with
the Landlord's Work.
-ix-
<PAGE>
After the Premises are substantially completed, Landlord and Tenant shall
agree to a punchlist of items which Landlord shall complete as promptly as
reasonably possible, subject to Long-Lead Items. Said punchlist or the
failure of Long-Lead Items to be installed shall have no effect on Tenant's
obligation to pay rent or to accept possession of the Premises and shall not
result in an extension of the Commencement Date. Long-Lead Items will be
completed and installed as soon as commercially reasonable.
"Substantial completion" occurs on the date on which the Premises are
substantially complete and ready for occupancy in accordance with the
Construction Documents except for punch list items, the completion of which
will not materially adversely affect Tenant's ability to occupy the Premises,
and Long-Lead Items, which date Landlord and Tenant shall agree on in good
faith. Landlord will exercise due diligence in completing all punch list
items and Long-Lead Items. Tenant shall be entitled to withhold payment of
sums for uncompleted items identified on the punchlist pending satisfactory
completion of such uncompleted items.
Tenant shall not be charged for use of elevators during the construction
of Landlord Work and during actual move in to the building or at any time
during the term, other than through its Pro Rata Share of Operating Expenses
and Real Estate Taxes.
8. Uniformity of Building.
To ensure the quality, uniformity and continuity of the building,
Landlord and Tenant agree that:
a. Suite Entry Security Systems: The suite entry security system, if
any, shall conform to the suite security systems specified by Landlord as
standard for the entire building.
b. Suite Entry Door. Landlord will prescribe a standard full height
suite entry door (and hardware) on multi-tenanted floors from which Tenant
shall not vary.
c. Exit Door. Landlord will prescribe a standard full height exit door
(and hardware) on multi-tenanted floors from which Tenant shall not vary.
d. Light Fixtures. All fixtures shall be of a recessed nature and flush
with the ceiling. All fixtures shall be subject to Landlord's approval, not
to be unreasonably withheld.
9. Installation of Items by Tenant.
-x-
<PAGE>
As provided in the Lease, upon notice to Landlord, Tenant and its
agents and contractors shall have the right to enter the Premises to install
equipment and fixtures and other work above Landlord's Work to prepare the
Premises for Tenant's occupancy ("Tenant's Work") provided they do not
interfere with the Landlord's Work or violate any safety rules. Such entry
to and installation of work within the Premises shall not, in and of itself
constitute or be deemed to be Tenant's (or any person's claiming by, through
or under Tenant) occupation of the Premises for the purpose of conducting
Tenant's (or such other person's) business. Before entering the Premises to
perform or cause to be performed the Tenant's Work, Tenant shall provide to
Landlord evidence of the insurance coverages that Tenant is required to
obtain and maintain under the terms and conditions of the Lease. Any delays
caused by Tenant's interference shall be treated as Tenant Delays.
Any contractor engaged by Tenant shall be solely responsible for the
transportation, safekeeping, and storage of materials and equipment used in
the performance of the Tenant's Work, for the removal of waste and debris
resulting therefrom, and for any damage caused by them to any installation or
work performed by any other party. The Tenant's Work shall comply with all
applicable insurance requirements and all applicable laws and requirements
and shall be performed in a good and workmanlike manner using only new, high
grade materials.
10. Tenant's Authorized Representative.
Tenant shall designate a representative ("Tenant's Authorized
Representative") as the person authorized to approve in writing all plans,
drawings, specifications, change orders, charges and approvals pursuant to
this Exhibit. No other party is authorized to act for or bind Tenant with
respect to any of the foregoing matters.
11. Disputes.
Any dispute arising out of or in connection with this Work Letter
shall be determined by arbitration in accordance with the rules of the
American Arbitration Association, unless the parties hereto otherwise
mutually agree. The determination of the arbitration shall be conclusive
upon the parties and judgment upon the same may be entered in any court have
jurisdiction over the parties and the subject matter of the dispute.
12. Indemnification and Waiver of Claims.
Landlord and Tenant hereby acknowledge and agree that the terms and
provisions of Sections 2, 4, 5, 11, 13, 16, 19, 23, 28 and 29 of the Original
xi
<PAGE>
Lease shall apply during the period commencing with Landlord's Work, through
and including the Commencement Date (including during the Term).
13. Substantial Completion.
Landlord shall use commercially reasonable efforts to deliver
possession of the premises substantially complete within ninety (90) days
following the last to occur of (a) the issuance of all required building
permits, and (b) the commencement of construction at the premises on a full
time basis, subject to extensions caused by force majeure, and Tenant Delays
(as defined below), extended for one (1) day for each day of delay caused by
force majeure or Tenant Delays. For purposes of this Work Letter, force
majeure shall include delays caused by war, insurrection, civil commotion,
riots, act of God, or the enemy or governmental action, strikes, lockouts,
picketing, accidents, failure of Landlord to obtain fuel or supplies, or any
other causes beyond the reasonable control of Landlord. The May 1, 1995
outside date for the substantial completion of the premises shall be extended
one (1) day for each day of delay caused by Landlord,e.g., unavailability of
elevators other than unavailability caused by Tenant having to work together
with other construction that is going on in the building, delays in
responding to Tenant requests beyond three (3) business days in each
instance, and delays caused solely by Landlord requiring Tenant to use
certain subcontractors. For purposes of the Lease, substantial completion
shall not include "Long-Lead Items", including but not limited to millwork,
any special order material, any special order items, and punchlist items.
14. Schedule.
As used herein the term "Tenant Delay" shall be the sum of (i) each
day beyond those dates specified herein for Tenant to respond to notice from
Landlord or beyond those dates specified herein for Tenant to deliver
documents until Tenant so responds or deliver such documents and (ii) each
day of delay caused by Tenant Change Orders and Necessary Change Orders.
xii
<PAGE>
EXHIBIT D
FORM OF NON-DISTURBANCE, ATTORNMENT, AND
SUBORDINATION AGREEMENT
NON-DISTURBANCE, ATTORNMENT, AND SUBORDINATION AGREEMENT
THIS AGREEMENT is made as of the ___ day of _______________, 19___, by and
among ______________________________________________ (hereinafter refered to as
"Landlord"), ____________________________________________ (hereinafter referred
to as "Tenant"), and THE FIRST NATIONAL BANK OF MARYLAND (hereinafter
referred to as "Mortgagee").
WHEREAS, by Lease dated _________________________ (hereinafter referred
to as the "Lease"), Landlord has leased to Tenant and Tenant has rented from
Landlord the premises known as ___________________________________, Maryland
(hereinafter referred to as the "Premises") for- and original term of _________
years, beginning on the date set forth in the Lease; and
WHEREAS, it was a condition of the execution of the Lease that this
Agreement be executed; and
WHEREAS, Mortgagee is the holder of a mortgage or deed of trust dated
_________________, 19___, and, recorded or intended to be recorded among the
Land Records of _________________________, Maryland, which constitutes an
encumbrance against the Premises (which mortgage or deed of trust, as the
same may be modified, supplemented, extended and/or renewed from time to
time, is hereinafter referred to as the "Mortgage"), and is the holder with
respect to the Lease of an Assignment of Landlord's Interest in Leases also
dated _________________, 19___ (hereinafter referred to as the "Assignment");
and
WHEREAS, Mortgagee desires that Tenant agree to attorn to the purchaser
at foreclosure of the Mortgage in the event of such foreclosure, or to
Mortgagee in the event of collection of the rent by Mortgagee; and Tenant is
willing to agree to so attorn if Mortgagee will recognize Tenant's rights
under the Lease to the extent hereinafter indicated.
NOW, THEREFORE, WITNESSETH for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
-xiii-
<PAGE>
SECTION 1
NON-DISTURBANCE OF TENANT
Morgagee agrees with Tenant that so long as no default exists, nor any
event has occurred, which has continued to exist for such period of time
(after notice, if any, required by the Lease) as would entitle Landlord to
terminate the Lease or would cause, without any further action of Landlord,
the termination of the Lease, or would entitle Landlord to dispossess Tenant,
the Lease shall not be terminated by Mortgagee, nor shall Tenant's use,
possession, or enjoyment of the Premises be interfered with by Mortgagee, nor
shall the leasehold estate granted by the Lease be affected by Mortgagee in
any other manner, in any foreclosure or any action or proceeding instituted
under or in connection with the Mortgage, or in case Mortgagee takes
possession of the Premises pursuant to any provision of the Mortgage.
SECTION 2
TENANT TO ATTORN TO MORTGAGEE
Tenant agrees with Mortgagee that if the interests of Landlord in the
Premises shall be transferred to and owned by Mortgagee by reason of
foreclosure or other proceedings brought by it, or by any other manner,
Tenant shall be bound to Mortgagee under all of the terms, covenants, and
conditions of the Lease for the balance of the term thereof remaining and any
extensions or renewals thereof which may be affected in accordance with any
option therefor in the Lease, with the same force and effect as if Mortgagee
were the Landlord under the Lease, and Tenant does hereby attorn to Mortgagee
as its Landlord, said attornment to be effective and self-operative without
the execution of any further instruments on the part of any of the parties
hereto immediately upon Mortgagee succeeding to the interest of Landlord in
the Premises. Tenant has received a copy of the Assignment and consents
thereto and agrees to be bound thereby and agrees if Mortgagee shall, pursuant
to the Assignment, elect to require Tenant to pay to Mortgagee the rent and
other charges payable by Tenant under the Lease, Tenant shall, until
Mortgagee shall have cancelled such election, be similarly bound to Mortgagee
and shall similarly attorn to Mortgagee as its Landlord. Tenant's obligations
under this Agreement shall not be affected by its surrender of the Premises
or its ouster therefrom in accordance with the provisions of the Lease by
Landlord or any successor in interest to Landlord.
SECTION 3
LIMITATIONS ON LANDLORD FOR BENEFIT OF TENANT
Landlord agrees with Tenant that Landlord's estate in the Premises shall
not be conveyed or encumbered without the written consent of Tenant and of
Mortgagee so long as the Lease is in force and effect; unless, in the case of
a conveyance, such conveyance is made expressly subject to the rights of
Tenant under the Lease for the original term of the Lease and any extensions
or renewals thereof which may be affected in accordance with any option
therefor in the Lease, or the grantee, for itself and its
-xiv-
<PAGE>
personal representatives, successors, and assigns, agrees in writing with
Tenant to assume all of the obligations of Landlord under the Lease and to
recognize the rights of Tenant and its personal representatives, successors
and assigns to remain in possession of the Premises under all of the terms
and provisions of the Lease for the original term and any extensions or
renewals thereof which may be effected in accordance with any option therefor
in the lease so long as no-default by Tenant exists and no event exists that
would permit Landlord to reenter and terminate the Lease; or unless, in the
case of an encumbrance (exclusive of the Mortgage), the instrument creating
the encumbrance is made expressly subject to the Lease.
SECTION 4
LIMITATIONS ON LANDLORD FOR BENEFIT OF MORTGAGEE
Landlord agrees with Mortgagee that Landlord's estate in
the Premises shall not be conveyed, nor shall Landlord further assign
Landlord's interest in the Lease, unless the grantee or assignee shall
acknowledge in writing to Mortgagee that the conveyance or assignment is
accepted subject to the Lease and to the Assignment. Landlord further agrees
that in the event said estate in the premises or said interest in the Lease
passes to any other person, firm, or corporation, by operation of law or by
any other means, such passage of title shall be subject to the Assignment.
SECTION 5
LANDLORD'S INTEREST IN PREMISES SUBJECT TO LEASE
Landlord agrees with Tenant and Mortgagee that in the event
Landlord's estate in the Premises passes to any other person, firm or
corporation, by operation of law or by any other means, such passage of title
shall be subject to the Lease and to the rights of Tenant thereunder.
SECTION 6
TENANT TO ATTORN TO PURCHASER OR OTHER
Tenant agrees with Landlord and Mortgagee that in the
event of a foreclosure sale of the Premises under any future lien against
Landlord's estate in the Premises, or in the event that Landlord's estate in
the Premises passes to any other person, firm, or corporation by operation of
law or any other means, than in any of said events, Tenant shall promptly
attorn to the purchaser at the foreclosure sale, or to the grantee of the
Premises from Landlord, or to such other successor to Landlord's estate,
under all of the terms, covenants, and conditions of the Lease; provided
that such purchaser, grantee, or other success agrees with Tenant in writing
to recognize the right of possession and other rights of Tenant and its
person representatives, successors, and assigns under the Lease for the
original term and extensions or renewals thereof effected pursuant to any
option therefor in the Lease.
-xv-
<PAGE>
SECTION 7
EXECUTION OF ESTOPPEL CERTIFICATE
(a) At any time, and from time to time, upon the written
request of Mortgagee, Tenant (within twenty (20) days of the date of such
written request) agrees to execute and deliver to Mortgagee, without charge
and in a form satisfactory to Mortgagee, a written statement: (i) ratifying
the Lease; (ii) confirming the commencement and expiration dates of the term
of the Lease; (iii) certifying that Tenant is in occupancy of the Premises
and that the Lease is in full force and effect and has not been modified,
assigned, supplemented, or amended except by such writings as shall be
stated; (iv) certifying that all conditions and agreements under the Lease to
be satisfied or performed by Landlord have been satisfied and performed
except as shall be stated; (v) certifying that Landlord is not in default
under the Lease and there are no defenses or offsets against the enforcement
of the Lease by Landlord, or stating the defaults and/or defenses claimed by
Tenant; (vi) reciting the amount of advance rent,: if any, paid by Tenant and
the date to which such rent has been paid; (vii) reciting the amount of
monies deposited with Landlord and purpose thereof, if any; and (viii)
containing any other information which Landlord or Mortgagee shall require.
(b) The failure of Tenant to execute, acknowledge, and
deliver to Mortgagee a statement in accordance with the provisions of this
Section within the period set forth herein shall constitute an acknowledgment
by Tenant which may be relied upon by any person holding or intending to
acquire any interest whatsoever in the Premises, that the Lease has not been
assigned, amended, changed, or modified, is in full force and effect, and
that the annual rent required under the lease and additional rent have been
duly and fully paid not beyond the respective due dates immediately preceding
the date of the request for such statement. Such failure shall also
constitute as to any persons entitled to rely on such statements a waiver of
any defaults by Landlord or defenses or offsets against the enforcement of
the Lease by Landlord which may exist prior to the date of the written
request.
SECTION 8
SUCCESSOR LANDLORD
Tenant agrees with Mortgagee that if Mortgagee shall
succeed to the interest of Landlord under the Lease, Mortgagee shall not be
(a) liable for any action or omission of any prior Landlord under the Lease,
or (b) subject to any offsets or defenses which Tenant might have against any
prior Landlord, or (c) bound by any rent or additional rent which Tenant
might have might have paid for more then the current month to any prior
Landlord, or (d) bound by any assignment, amendment, or modification of the
Lease made without Mortgagee's consent. Tenant further agrees with Mortgagee
that Tenant will not voluntarily subordinate the Lease to any lien or
encumbrance without Mortgagee's consent.
-xvi-
<PAGE>
SECTION 9
LEASE SUBJECT TO MORTGAGE
Except as otherwise provided herein, the Lease is and shall be deemed to
be subject and subordinate to the Mortgage.
SECTION 10
CERTAIN DEFINITIONS
The word "Lease" as used herein shall be deemed to be the Lease as
originally executed by Landlord and Tenant, as amended or modified by written
agreements hereafter made, from time to time, between Landlord and Tenant and
consented to by Mortgagee. The words "foreclosure" and "foreclosure sale" as
used herein shall be deemed to include the acquisition of Landlord's estate in
the Premises by voluntary deed, assignment, or other disposition or transfer
in lieu of foreclosure. The word "Mortgagee" shall include the Mortgagee
herein specifically named and any of its personal representatives, successors
and assigns, including anyone who shall have succeeded to Landlord's interest
in the Premises by, through, or under foreclosure of the Mortgage or by
voluntary deed, assignment, or other disposition, or transfer in lieu of
foreclosure.
SECTION 11
BINDING EFFECT
All of the terms, covenants, and conditions hereof shall run with the land
and shall be binding upon and inure to the benefit of the parties hereto and
their respective personal representatives, successors, and assigns; provided,
however, that the obligations of Landlord and of any grantee or successor or
assign of Landlord pursuant to Sections 3, 4, and 5 hereof shall not
constitute obligations of, or be binding against, Mortgagee (as said term has
been defined in Section 10 hereof).
SECTION 12
APPLICABLE LAW: GRAMMAR
This Agreement shall be construed according to the law of Maryland
(excluding Maryland conflict of laws). The use of the neuter gender in
this Agreement shall be deemed to include any other gender, and words in
the singular number shall be held to include the plural, when the sense
requires.
SECTION 13
TIME OF ESSENCE
Time is of the essence.
-xvii-
<PAGE>
SECTION 14
TABLE OF CONTENTS: CAPTIONS
The Table of Contents and the captions appearing in this Agreement are
inserted only as a matter of convenience and do not define, limit, construe,
or describe the scope or intent of the Sections of this Agreement nor in any
way affect this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
properly executed and sealed as of the day and year first above written.
ATTEST/WITNESS: LANDLORD:
- ------------------------ By-----------------------(SEAL)
ATTEST/WITNESS TENANT:
- ------------------------ By-----------------------(SEAL)
ATTEST/WITNESS: MORTGAGEE
THE FIRST NATIONAL BANK, OF
MARYLAND
- ------------------------ By-----------------------(SEAL)
ATTEST/WITNESS
- ------------------------ ------------------------(SEAL)
TRUSTEE
- ----------------------- ------------------------(SEAL)
TRUSTEE
[ADD ACKNOWLEDGMENTS]
-xviii-
<PAGE>
ACORD. CERTIFICATE OF INSURANCE BKW 01000 ISSUE DATE (MM/DD/YY)
01/31/95
PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION
ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE
HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR
ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.
P S A INSURANCE, INC.
1300 BELLONA AVENUE
LUTHERVILLE MD 21093 COMPANIES AFFORDING COVERAGE
COMPANY
A ITT Hartford
LETTER
INSURED COMPANY
B
LETTER
The Hunter Group, Inc &
Hunter Consulting Assoc COMPANY
Suite 8 E C
11 East Chase Street LETTER
Baltimore, MD 21202
COMPANY
D
LETTER
COMPANY
E
LETTER
- -------------------------------------------------------------------------------
COVERAGES
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN
ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED,
NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER
DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY
PERTAIN. THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT
TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN
MAY HAVE BEEN REDUCED BY PAID CLAIMS.
- -------------------------------------------------------------------------------
<TABLE>
CO POLICY EFFECTIVE POLICY EXPIRATION
TYPE OF INSURANCE POLICY NUMBER LIMITS
LTR DATE (MM/DD/YY) DATE (MM/DD/YY)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
A GENERAL LIABILITY 30SBACQ6558 05/03/94 05/03/95 GENERAL AGGREGATE $2,000,000
/X/ COMMERCIAL GENERAL LIABILITY PRODUCTS--COMP/OP AGG. $
/ / CLAIMS MADE /X/ OCCUR. PERSONAL & ADV. INJURY $1,000,000
OWNER'S & CONTRACTOR'S PROT. EACH OCCURRENCE $1,000,000
/ / --------------------------- FIRE DAMAGE (Any one fire) $ 300,000
MED.EXP. (Any one person) $ 10,000
- ----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABILITY COMBINED SINGLE
/ / ANY AUTO LIMIT $
/ / ALL OWNED AUTOS BODILY INJURY
/ / SCHEDULED AUTOS (Per person) $
/ / HIRED AUTOS BODILY INJURY
/ / NON-OWNED AUTOS (Per accident) $
/ / GARAGE LIABILITY
/ / PROPERTY DAMAGE
$
- ----------------------------------------------------------------------------------------------------------------------------------
A EXCESS LIABILITY 30SBACQ6558 05/03/94 05/03/95 EACH OCCURRENCE $1,000,000
/X/ UMBRELLA FORM AGGREGATE $1,000,000
/ / OTHER THAN UMBRELLA FORM
- ----------------------------------------------------------------------------------------------------------------------------------
STATUTORY LIMITS
WORKER'S COMPENSATION EACH ACCIDENT $
AND DISEASE-POLICY LIMIT $
EMPLOYERS' LIABILITY DISEASE-EACH EMPLOYEE $
- ----------------------------------------------------------------------------------------------------------------------------------
OTHER
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS
Holder is ADDITIONAL INSURED - Landlord and Building Manager regarding 100
East Pratt Street, Baltimore, MD. 21201, to be occupied as of 5/1/95.
- ------------------------------------------------------------------------------
CERTIFICATE HOLDER CANCELLATION
100 E Pratt St Ltd Ptsp SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE
& Colliers Pinkard CANCELLED BEFORE THE EXPIRATION DATE THEREOF,
c/o Colliers Pinkard THE ISSUING COMPANY WILL ENDEAVOR TO MAIL 10
7E Redwood St, Ste 1200 DAYS WRITEN NOTICE TO THE CERTIFICATE HOLDER
Baltimore MD 21202 NAMED TO THE LEFT, BUT FAILURE TO MAIL SUCH
NOTICE SHALL IMPOSE NO OBLIGATION OR LIABILITY
OF ANY KIND UPON THE COMPANY, ITS AGENTS OR
REPRESENTATIVES.
-----------------------------------------------
AUTHORIZED REPRESENTATIVE
/s/_______________________________________
ACORD 25-S (7/90) @ACORD CORPORATION 1990
- ------------------------------------------------------------------------------
<PAGE>
Exhibit 21.02(b)
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE ("this First Amendment") dated as of
September __, 1995, by and between 100 EAST PRATT STREET LIMITED PARTNERSHIP,
a Maryland limited partnership ("Landlord"), and THE HUNTER GROUP, INC., a
Maryland corporation ("Tenant").
EXPLANATORY STATEMENT
A. Landlord and Tenant entered into a Lease dated January 18, 1995 (the
"Lease").
B. Landlord and Tenant desire to amend the Lease pursuant to the terms of
this First Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. Explanatory Statement: Defined Terms. The Explanatory Statement of this
First Amendment forms a part hereof. The use of initially capitalized terms
in this First Amendment shall have the meaning ascribed to them in the Lease
unless the context requires otherwise.
2. Lease of Additional Space. Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, an agreed total rentable area of one thousand
two hundred twenty-nine (1,229) square feet on the sixteenth (16th) floor of
the building (the "Additional Space"), which Additional Space is shown on
Exhibit A attached hereto as a part hereof. Accordingly, effective as of the
Additional Space Commencement Date (as defined below), the first paragraph of
the Lease is amended by deleting the reference to "8,102 square feet" and
inserting in lieu thereof "9,331 square feet."
3. Terms of Additional Space. The term of the Additional Space shall
commence (the "Additional Space Commencement Date") on November 1, 1995.
Unless earlier terminated or extended as provided in this First Amendment,
the term of the Additional Space shall expire on the expiration date of the
Lease, it being the intent and purpose of the parties that the term of the
premises under the Lease and the term of the Additional Space under this
First Amendment be coterminous.
4. Rent. From and after the Additional Space Commencement Date, Tenant
shall pay to Landlord, in addition to the payment of annual and additional rent
contained in the Lease, annual rent for the Additional Space in an amount
equal to Thirty Thousand Seven Hundred Twenty-Five and 04/100 Dollars
($30,725.04) payable in monthly installments in advance of Two Thousand Five
Hundred Sixty and 42/100 Dollars ($2,560.42) each on the first day of every
<PAGE>
calendar month during the term hereof; provided, however, that Tenant shall
not be obligated to pay the initial five (5) monthly installments of annual
rent for the Additional Space as long as Tenant performs and observes all of
its obligations under this First Amendment and the Lease. The rent specified
in this First Amendment shall otherwise be payable on the terms and conditions
contained in the Lease.
5. TENANT IMPROVEMENTS. Landlord shall cause its contractors to complete
the tenant improvements in the Additional Space in accordance with and
subject to EXHIBIT B attached hereto as a part hereof.
6. OPERATING EXPENSES. Section 20 of the Lease is hereby amended to
include the rentable square feet of the Additional Space in the calculation
of the Tenant's Pro Rata Share of Operating Expenses.
7. REAL ESTATE TAXES. Section 21 of the Lease is hereby amended to
include the rentable square feet of the Additional Space in the calculation
of the Tenant's Pro Rata Share of Real Estate Taxes.
8. CANCELLATION FEE. Provided Tenant is not in default under the Lease or
this First Amendment, Tenant shall have the right to cancel both (but not
either) the Lease and this First Amendment on the same terms and conditions
as set forth in Section 39 of the Lease, except that the Cancellation Fee
shall be increased by an amount equal to Twenty-Four Thousand Five Hundred
Eighty Dollars ($24,580)(i.e., the Cancellation Fee shall be increased from
$243,060 to $267,640) and shall be payable as follows:
8.1 Tenant shall pay to Landlord an amount equal to Twelve Thousand
Two Hundred Ninety Dollars ($12,290) simultaneously with tendering the
Cancellation Notice to Landlord (such amount shall be in addition to the
payment of One Hundred Twenty-One Thousand Five Hundred Thirty Dollars
($121,530) as specified in Section 39 of the Lease).
8.2 Tenant shall pay to Landlord an amount equal to Six Thousand One
Hundred Forty-Five Dollars ($6,145) one hundred eighty (180) days after the
date of the Cancellation Notice (such amount shall be in addition to the
payment of Sixty Thousand Seven Hundred Sixty-Five Dollars ($60,765) as
specified in Section 39 of the Lease).
8.3 Tenant shall pay to Landlord an amount equal to Six Thousand One
Hundred Forty-Five Dollars ($6,145) on the first anniversary of the
Cancellation Notice (such amount shall be in addition to the payment of Sixty
Thousand Seven Hundred Sixty-Five Dollars ($60,765) as specified in Section
39 of the Lease).
9. NO OTHER AMENDMENTS. Except as hereby amended, the Lease remains in
full force and effect.
10. BINDING EFFECT. This First Amendment shall be binding on the parties
hereto and their respective successors and assigns.
-2-
<PAGE>
11. GOVERNING LAW. This First Amendment shall be interpreted and construed
in accordance with Maryland law.
12. COUNTERPARTS. This First Amendment may be executed in one or more
counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, this First Amendment has been duly executed by the
parties hereto as of the day and year first above written with the specific
intention of creating a document under seal.
WITNESS: 100 EAST PRATT STREET LIMITED
PARTNERSHIP
By: International Business Machines Corporation, its
managing general partner
/s/ J. R. Mayo By: /s/ J. R. Mayo (SEAL)
- -------------------- ---------------------------
Name: J. R. Mayo
--------------------------------
Title: Director, Finance, Investments
& Asset Management IBM Real
Estate Services
--------------------------------
IBM Real Estate Services
WITNESS: THE HUNTER GROUP, INC.
/s/ A. Scott Preston By: /s/ E. Postal (SEAL)
- -------------------- --------------------------
Edward D. Postal
Senior Vice President and Chief Financial Officer
STATE OF NEW YORK )
COUNTY OF )ss.:
On this ___ day of September, 1995, before me, ________________, a Notary
Public in and for the State of New York, duly commissioned and sworn,
personally appeared _____________________, known to me to be the
_________________ of Corporate Real Estate and Construction, International
Business Machines Corporation, the corporation described in and that executed
the foregoing instrument, and also known to me to be the person who executed
the foregoing instrument on behalf of the corporation therein named, and
acknowledged to me that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed by official
seal in the County and State aforesaid, the day and year in this certificate
first above written.
-3-
<PAGE>
STATE OF MARYLAND )
COUNTY OF BALTIMORE )ss.:###-##-####
On this 6th day of September, 1995, before me, Lynn Moler, a Notary Public
in and for the State of Maryland duly commissioned and sworn, personally
appeared Edward D. Postal, known to me to be the Senior Vice President and
Chief Financial Officer of THE HUNTER GROUP, INC., a Maryland corporation,
the corporation described in and that executed the foregoing instrument, and
also known to me to be the person who executed the foregoing instrument on
behalf of the corporation therein named, and acknowledged to me that such
corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal in the County and State aforesaid, the day and year in this certificate
first above written.
Lynn C. Moler
----------------------
Notary Public
-4-
<PAGE>
EXHIBIT A
PLAT OF PREMISES
[diagram]
16th FLOOR
-5-
<PAGE>
EXHIBIT B
TENANT IMPROVEMENTS WORK LETTER
Construction of the Additional Space shall be supervised by Landlord and
shall be in accordance with the Construction Documents (as defined below).
Such construction shall be referred to as "Landlord's Work." All of the
equipment, fixtures and improvements installed pursuant to Landlord's Work
shall be and remain the property of Landlord. Landlord shall not receive a
supervisory fee for supervising Landlord's Work.
1. Space and Design Plans.
The "Space and Design Plans" shall mean plans for the construction of
Landlord's Work, showing its partitions, doors and plans, and other
illustrations as required to enable the preparation of Construction Documents
and which shall set forth all necessary information regarding, electrical,
telephone and light switch locations, lighting and reflected ceiling plan,
equipment codes, wall finishes, floor finishes, signage location, millwork
built-ins, architectural treatments, window covering and treatments, cabinet
work, paneling, any custom features for the Additional Space, and the types,
color, size and finish of all such materials Tenant shall submit to Landlord
Space and Design Plans.
2. Construction Documents. By no later than September 30, 1995, Tenant
shall submit to Landlord the architectural, mechanical, electrical and
plumbing construction documents (such documents referred to as the
"Construction Documents") in appropriate biddable form to implement the Space
and Design Plans. If, at any time Landlord determines that the Construction
Documents are not in appropriate biddable form to obtain bids or in
appropriate form to obtain permits from any government authority (including
if such Construction Documents are rejected by any government authority),
Landlord may require that tenant revise and resubmit such Construction
Documents. Tenant shall revise and resubmit such Construction Documents
within five (5) days of Landlord's request. Approval by Landlord of the
Tenant's Working Drawings and Specification shall be non-technical approval
and shall not be deemed to mean approval of structure, size of ducts or
piping, adequacy of the electrical system, system/equipment capacities and
other technical matters. Tenant is responsible for coordinating the proper
and adequate design and construction of the Tenant's Improvements in
compliance with laws.
3. Contracts and Payment for Space and Design Plans and Construction
Documents.
Tenant shall contract directly with the design, engineering and
architectural firms to draw the Space and Design Plans and the Construction
Documents for Landlord's Work. All such firms shall be subject to Landlord's
prior written approval not to be unreasonably withheld or delayed.
-6-
<PAGE>
4. SELECTION OF CONTRACTOR
Based on the Construction Documents, Landlord shall prepare an
invitation to bid which includes a copy of the proposed form of construction
contract on the basis of a guaranteed maximum price contract on the basis of
a guaranteed maximum price contract. Landlord shall submit bids to the
contractors, in good faith, agreed upon by Landlord and Tenant (collectively,
the "Qualified Contractors"). Landlord and Tenant shall mutually select the
contractor to perform Landlord's Work from the bids received. If Tenant and
Landlord fail to agree on a contractor within four (4) days thereafter,
Landlord shall select the apparent low bidder (the contractor selected in
accordance with the foregoing procedure is herein called the "Contractor").
The Contyractor, with the approval of Landlord, shall select the
subcontractors. The Contractor and subcontractors must be willing to agree to
all requirements imposed by Landlord's construction and/or permanent lender
(including any reasonable requirements relating to retainages, advances,
insurance, bonding requirements, mechanics' lien waivers or otherwise) and
penalties for late delivery fo space. After selection of the Contractor,
Landlord shall negotiate and execute a construction contract with the
Contractor. Landlord may make changes to the form construction contract but
the contract guaranteed maximum price shall remain the same without cost
overruns except for Tenant change orders, Necessary Change Orders, and other
chaqnge orders approved by Tenant. After approval of the Construction
Documents, selection of the Contractor, and execution of the construction
contract, the Contractor shall proceed with construction of Landlord's Work
under the supervision of Landlord. Tenant shall evaluate and analyze all
construction pricing to ensure current market pricing and to maximize the use
of Landlord's Construction Contribution (as defined below). To that end,
Landlord shall provide Tenant with all scheduled construction pricing for
review and analysis.
5. CHANGE ORDERS
Landlord shall have the right to initiate any change order if such
change order (a "Necessary Change Order") is necessary: (a) for compliance
with any applicable laws; (b) in order to obtain necessary permits or
certificate of occupancy; or (c) for Landlord's Work to be compatible with or
coordinated with base building structure or systems. Landlord shall notify
Tenant of any Necessary Change Order. Other than Necessary Change Orders,
Landlord shall notify Tenant and obtain Tenant's consent prior to initiating
a material change. Tenant shall notify Landlord of its approval or denial
within two (2) business days of Landlord's request.
Tenant (acting through Tenant's Authorized Representative) shall have
the right to initiate change orders, subject to Landlord's reasonable
approval. Landlord shall not unreasonably withhold its approval to any such
Tenant-initiated change order proposal. Following receipt of a request for a
change order, Landlord shall promptly (i.e., within 2 days) notify Tenant
whether such request is approved, and if such request is approved Landlord
shall submit to Tenant a written change order which shall include an estimate
of the cost and any anticipated delays that will be incurred as a result of
the change. Upon Tenant's execution of the written change order prepared by
Landlord, the change shall be incorporated into Landlord's Work. Any delays
caused by Tenant's change orders or Necessary Change Orders shall be treated
as a Tenant Delay.
-7-
<PAGE>
6. Payment of Cost.
Landlord shall provide Tenant a total construction allowance of Thirty
Dollars ($30) per rentable square foot (the "Landlord's Construction
Contribution") for the construction of the Additional Space. Of Landlord's
Construction Contribution, Ten Dollars ($10) per rentable square foot
consists of building standard items that have already been purchased by
Landlord, including installation of basic HVAC duct runs and 20 VAV boxes,
ceiling grid, sprinklers systems, mini-blinds, as well as ceiling tile and
light fixtures stacked on the floor.
The balance of Landlord's Construction Contribution, Twenty Dollars
($20) per rentable square foot, shall be used by Landlord to complete
Tenant's work as per the Construction Documents. Tenant shall pay for any
overage of Landlord's construction within thirty (30) days of receipt of
written bill. Failure by Tenant to tender payment for such improvements shall
not delay the Additional Space Commencement Date and shall be deemed a
default of this Lease.
7. Performance Completion of Landlord's Work.
Tenant's Authorized Representative shall be given access to the
Additional Space during performance of the Landlord's Work, subject to such
person's compliance with all safety rules, and provided he/she does not
interfere with the Landlord's Work.
After the Additional Space is substantially completed, Landlord and
Tenant shall agree to a punchlist of items which Landlord shall complete as
promptly as reasonably possible, subject to Long-Lead Items. Said punchlist
or the failure of Long-Lead Items to be installed shall have no effect on
Tenant's obligation to pay rent or to accept possession of the Additional
Space and shall not result in an extension of the Additional Space
Commencement Date. Long-Lead Items will be completed and installed as soon as
commercially reasonable.
"Substantial completion" occurs on the date on which the Additional
Space is substantially complete and ready for occupancy in accordance with
the Construction Documents except for punch list items, the completion of
which will not materially adversely affect Tenant's ability to occupy the
Additional space, and Long-Lead Items, which date Landlord and Tenant shall
agree on in good faith. Landlord will exercise due diligence in completing
all punch list items and Long-Lead Items. Tenant shall be entitled to
withhold payment of sums for uncompleted items identified on the punchlist
pending satisfactory completion of such uncompleted items.
Tenant shall not be charged for use of elevators during the
construction of Landlord Work and during actual move in to the building or at
any time during the term, other than through its Pro Rata Share of Operating
Expenses and Real Estate Taxes.
-8-
<PAGE>
8. Uniformity of Building.
To ensure the quality, uniformity and continuity of the building,
Landlord and Tenant agree that:
a. Suite Entry Security Systems. The suite entry security system, if
any, shall conform to the suite security system specified by Landlord as
standard for the entire building.
b. Suite Entry Door. Landlord will prescribe a standard full height
suite entry door (and hardware) on multi-tenanted floors from which Tenant
shall not vary.
c. Exit Door. Landlord will prescribe a standard full height exit door
(and hardware) on multi-tenanted floors from which Tenant shall not vary.
d. Light Fixtures. All fixtures shall be of a recessed nature and
flush with the ceiling. All fixtures shall be subject to Landlord's
approval, not to be unreasonably withheld.
9. Installation of Items by Tenant.
As provided in the Lease, upon notice to Landlord, Tenant and its
agents and contractors shall have the right to enter the Additional Space to
install equipment and fixtures and other work above Landlord's Work to
prepare the Additional Space for Tenant's occupancy ("Tenant's Work") provided
they do not interfere with the Landlord's Work or violate any safety rules.
Such entry to and installation of work within the Additional Space shall not,
in and of itself constitute or be deemed to be Tenant's (or any person's
claiming by, through or under Tenant) occupation of the Additional Space for
the purpose of conducting Tenant's (or such other person's) business. Before
entering the Additional Space to perform or cause to be performed the
Tenant's Work, Tenant shall provide to Landlord evidence of the insurance
coverages that Tenant is required to obtain and maintain under the terms and
conditions of the Lease. Any delays caused by Tenant's interference shall be
treated as Tenant Delays.
Any contractor engaged by Tenant shall be solely responsible for the
transportation, safekeeping, and storage of materials and equipment used in
the performance of the Tenant's Work, for the removal of waste and debris
resulting therefrom, and for any damage caused by them to any installation or
work performed by any other party. The Tenant's Work shall comply with all
applicable insurance requirements and all applicable laws and requirements
and shall be performed in a good and workmanlike manner using only new, high
grade materials.
10. Tenant's Authorized Representative.
Tenant shall designate a representative ("Tenant's Authorized
Representative") as the person authorized to approve in writing all plans,
drawings, specifications, change orders, charges and approvals pursuant to
this Exhibit. No other party is authorized to act for or bind Tenant with
respect to any of the foregoing matters.
-9-
<PAGE>
11. Disputes.
Any dispute arising out of or in connection with this Work Letter shall
be determined by arbitration in accordance with the rules of the American
Arbitration Association, unless the parties hereto otherwise mutually agree.
The determination of the arbitration shall be conclusive upon the parties and
judgment upon the same may be entered in any court having jurisdiction over
the parties and the subject matter of the dispute.
12. Indemnification and Waiver of Claims.
Landlord and Tenant hereby acknowledge and agree that the terms and
provisions of Sections 2, 4, 5, 11, 13, 16, 19, 23, 28 and 29 of the Lease
shall apply during the period commencing with Landlord's Work, through and
including the Additional Space Commencement Date (including during the Term).
13. Substantial Completion.
Landlord shall use commercially reasonable efforts to deliver
possession of the Additional Space substantially complete by November 1,
1995, subject to extensions caused by force majeure, and Tenant Delays (as
defined below), extended for one (1) day for each day of delay caused by
force majeure or Tenant Delays. For purposes of this Work Letter, force
majeure shall include delays caused by war, insurrection, civil commotion,
riots, act of God, or the enemy or governmental action, strikes, lockouts,
picketing, accidents, failure of Landlord to obtain fuel or supplies, or any
other causes beyond the reasonable control of Landlord. The November 1, 1995
outside date for the substantial completion of the Additional Space shall be
extended one (1) day for each day of delay caused by Landlord, e.g.,
unavailability of elevators other than unavailability cause by Tenant having
to work together with other construction that is going on in the building,
delays in responding to Tenant requests beyond three (3) business days in
each instance, and delays caused solely by Landlord requiring Tenant to use
certain subcontractors. For purposes of the Lease, substantial completion
shall not include "Long-Lead Items", including but not limited to millwork,
any special order material, any special order items, and punchlist items.
14. Schedule.
As used herein the term "Tenant Delay" shall be the sum of (i) each day
beyond those dates specified herein for Tenant to respond to notice from
Landlord or beyond those dates specified herein for Tenant to deliver
documents until Tenant so responds or deliver such documents and (ii) each
day of delay caused by Tenant Change Orders and Necessary Change Orders.
-10-
<PAGE>
Exhibit 21.02(c)
SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE ("this Second Amendment") dated as of
January __, 1997, by and between 100 EAST PRATT STREET LIMITED PARTNERSHIP, a
Maryland limited partnership ("LANDLORD"), and THE HUNTER GROUP, INC., a
Maryland corporation ("TENANT").
EXPLANATORY STATEMENT
A. Landlord and Tenant entered into a Lease dated January 18, 1995 and a
First Amendment to Lease dated September 8, 1995 (collectively, the "LEASE").
B. Landlord and Tenant desire to amend the Lease pursuant to the terms of
this Second Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. EXPLANATORY STATEMENT: DEFINED TERMS. The Explanatory Statement of
this Second Amendment forms a part hereof. the use of initially capitalized
terms in this Second Amendment shall have the meaning ascribed to them in the
Lease unless the contest requires otherwise.
2. LEASE OF 25TH FLOOR SPACE. Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, an agreed total rentable area of two thousand
two hundred twenty-five (2,225) square feet on the twenty-fifty (25th) floor
of the building (the "25th Floor Space"), which 25th Floor Space is shown on
EXHIBIT A attached hereto as a part hereof. Accordingly, effective as of the
25th Floor Space Commencement Date (as defined below), the first paragraph of
the Lease is amended by deleting that paragraph in its entirety and replacing
it with the following new paragraph:
That the Landlord hereby leases to the Tenant, and the Tenant hereby
hires and takes from the Landlord the following described premises
(hereinafter collectively called the "premises") outlined on Exhibit A
hereto, in the office and retail tower (hereinafter called the
"building")known as 100 East Pratt Street, Baltimore, Maryland 21202,
containing an aggregate agreed total rentable area of 11,556 square feet,
which is located in the building as follows: (a) 9,331 square feet is
located on the sixteenth (16th) floor of the building, and (b) 2,225
square feet is located on the twenty-fifty (25th) floor of the building.
The building and the adjoining garage and retail space therin and the
land on which the improvements are located are sometimes hereinafter
called the "project."
<PAGE>
3. Term of 25th Floor Space. The term of the 25th Floor Space shall
commence (the 25th Floor Space Commencement Date") on April 1, 1997 or such
earlier date as agreed by the parties hereto. Unless earlier terminated or
extended as provided in the Lease or in this Second Amendment, the term of
the 25th Floor Space shall expire on the expiration date of the Lease (i.e.,
September 30, 2000, unless earlier terminated or renewed in accordance with
the terms and conditions of the Lease), it being the intent and purpose of
the parties that the term of the premises under the Lease and the term of the
25th Floor Space under this Second Amendment be coterminous.
4. Rent. Section 1(a) of the Lease is hereby amended by deleting that
provision in its entirety and replacing it with the following new Section
1(a):
(a)(i) Until the 25th Floor Space Commencement Date, Tenant shall pay
the annual rent of Two Hundred Thirty-Three Thousand Two Hundred Seventy-
Five Dollars ($233,275), payable in equal monthly installments in advance
of Nineteen Thousand Four Hundred Thirty-Nine and 58/100 Dollars
($19,439.58) each on the first day of every calendar month during the
term hereof, except that the rent for the first month of the term, and for
any period prior to the first complete calendar month, shall be payable on
execution of this Lease (the foregoing rental amount is based on Twenty-
Five Dollars ($25) per rentable square foot of the premises).
(a)(ii) Between the 25th Floor Space Commencement Date and September 30,
2000, Tenant shall pay the the aggregate annual rent of Two Hundred
Ninety-Three Thousand Three Hundred Fifty Dollars ($293,350) payable in
equal monthly installments in advance of Twenty-Four Thousand Four
Hundred Forty-Five and 83/100 Dollars ($24,445.83) each on the first
day of every calendar month during the term hereof, which amount consists
of the following components: (A) with respect to that portion of the
premises located on the 16th floor of the building, the annual rent shall
be an amount equal to Two Hundred Thirty-Three Thousand Two Hundred
Seventy-Five Dollars ($233,275) payable in equal monthly installments in
advance of Nineteen Thousand Four Hundred Thirty-Nine and 58/100 Dollars
($19,439.58) each on the first day of every calendar month during the
term hereof (the foregoing rental amount is based on Twenty-Five Dollars
($25) per rentable square foot of that portion of the premises located on
the 16th floor), and (B) with respect to that portion of the premises
located on the 25th floor of the building, the annual rent shall be an
amount equal to Sixty Thousand Seventy-Five Dollars ($60,075) payable in
equal monthly installments in advance of Five Thousand Six and 25/100
Dollars ($5,006.25) each on the first day of every calendar month during
the term hereof (the foregoing rental amount is based on Twenty-Seven
Dollars ($27) per rentable square foot of the portion of the premises
located on the 25th floor).
-2-
<PAGE>
5. Tenant Improvements. Landlord shall cause its contractors to complete
the tenant improvements in the 25th Floor Space in accordance with and
subject to Exhibit B attached hereto as a part hereof.
6. Operating Expenses. Landlord and Tenant acknowledge and agree that the
25th Floor Space shall be factored in the calculation of the Tenant's Pro
Rata Share of Operating Expenses. Effective as of 25th Floor Space
Commencement Date, Section 20(b)(1) of the Lease is hereby amended by
deleting that provision in its entirety and replacing it with the new Section
20(b)(1):
(1) Except as provided in this paragraph, the term "Base Amount" means
the Operating Expenses for the calendar year 1995. With respect to the
25th Floor Space, the term "Base Amount" means the Operating Expenses for
the calendar year 1997. The Base Amount shall be adjusted proportionately
for Comparison Years that are not a full twelve (12) months.
7. Real Estate Taxes. Landlord and Tenant acknowledge and agree that the
25th Floor Space shall be factored in the calculation of the Tenant's Pro
Rata Share of Real Estate Taxes. Effective as of 25th Floor Space
Commencement Date, Section 21(b)(1) of the Lease is hereby amended by
deleting that provision in its entirety and replacing it with the new Section
21(b)(1):
(1) Except as provided in this paragraph, the term "Base Amount" means
the Real Estate Taxes for the July 1, 1995-June 30, 1996 tax fiscal year.
With respect to the 25th Floor Space, the term "Base Amount" means the
Real Estate Taxes for the July 1, 1996-June 30, 1997 tax fiscal year. The
Base Amount shall be adjusted proportionately for Comparison Years that
are not a full twelve (12) months.
8. Cancellation Fee. Section 39 of the Lease is hereby amended by deleting
that provision in its entirety and replacing it with following new Section 39:
Provided Tenant is not in default under this Lease, Tenant shall
have the right to cancel this Lease effective at the end of the third
(3rd) anniversary of the Commencement Date in accordance with the
following terms and conditions:
(a) If Tenant desires to so cancel this Lease, it shall provide
written notice (the "Cancellation Notice") thereof to Landlord by no
later than the end of the second (2nd) anniversary of the
Commencement Date, time being of the essence;
(b) From and after the date on which the term of this Lease is
cancelled, Landlord and Tenant shall have no further liability to the
other
-3-
<PAGE>
except for obligations that have accrued prior to the date of the
cancellation and those obligations that survive such cancellation;
and
(c) In consideration of granting Tenant the privilege to cancel
this Lease before its normally scheduled expiration date, Tenant
shall pay to Landlord a cancellation fee totaling Two Hundred
Ninety-Two Thousand Six Hundred Eighteen Dollars ($292,618) the
("Cancellation Fee"). Tenant shall pay the Cancellation Fee to
Landlord as follows:
(i) Tenant shall pay to Landlord an amount equal to One
Hundred Forty-Six Thousand Three Hundred Nine Dollars ($146,309)
simultaneously with tendering the Cancellation Notice to Landlord.
(ii) Tenant shall pay to Landlord an amount equal to
Seventy-Three Thousand One Hundred Fifty-Four and 50/100 Dollars
($73,154.50) one hundred eighty (180) days after the date of the
Cancellation Notice.
(iii) Tenant shall pay to Landlord an amount equal to
Seventy-Three Thousand One Hundred Fifty-Four and 50/100 Dollars
($73,154.50) on the first anniversary of the Cancellation Notice.
9. Conditions Precedent. Tenant acknowledges, understands, and agrees that
Tenant's right to lease the 25th Floor Space as provided in this Second
Amendment is expressly (a) subject and subordinate to the right of first
refusal for the benefit of Tydings and Rosenberg ("Tydings"), a tenant on the
25th floor of the building, to lease all or any of the 25th floor of the
building pursuant to a lease agreement between Landlord and Tydings, and (b)
conditioned on the relocation of Robert Half International, Inc. ("Robert
Half"), the tenant presently occupying the 25th Floor Space, on or before the
25th Floor Space Commencement Date. If Tydings exercises its right of first
refusal, or Robert Half fails to relocate, or both, then this Second
Amendment shall automatically become null and void, and neither party shall
have any liability to the other.
10. No Other Amendments. Except as hereby amended, the Lease remains in
full force and effect.
11. Binding Effect. This Second Amendment shall be binding on the parties
hereto and their respective successors and assigns.
12. Governing Law. This Second Amendment shall be interpreted and construed
in accordance with Maryland law.
13. Counterparts. This Second Amendment may be execured in one or more
counterparts, each of which shall be deemed an original.
-4-
<PAGE>
IN WITNESS WHEREOF, this Second Amendment has been duly executed by the
parties hereto as of the day and year first above written with the specific
intention of creating a document under seal.
WITNESS: 100 EAST PRATT STREET LIMITED
PARTNERSHIP
By: 100 East Pratt Street, Inc., its managing general
partner
/s/ J. R. Mayo
- --------------------- By:/s/ J. R. Mayo (SEAL)
---------------------------
Name: J. R. Mayo
--------------------------------
Title: Director, Finance, Investments
& Asset Management
IBM Real Estate Services
------------------------------
IBM Real Estate Services
WITNESS: THE HUNTER GROUP, INC.
/s/A. Scott Preston
- --------------------- By: /s/ Terry L. Hunter (SEAL)
--------------------
Name: TERRY L. HUNTER
-------------------------------
Title: PRESIDENT & CEO
------------------------------
STATE OF NEW YORK )
COUNTY OF )SS.:
On this __ day of January, 1997, before me, _______________, a Notary
Public in and for the State of New York, duly commissioned and sworn,
personally appeared _______________, known to me to be the _______________
of 100 EAST PRATT STREET, INC., a Maryland corporation, the corporation
described in and that executed the foregoing instrument, and also known to
me to be the person who executed the foregoing instrument on behalf of the
corporation therein named, and acknowledged to me that such corporation
executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal in the County and State aforesaid, the day and year in this certificate
first above written.
STATE OF MARYLAND )
COUNTY OF )ss.:
On this 7 day of January, 1997, before me, Lynn Moler, a Notary Public in
and for the State of Maryland duly commissioned and sworn, personally
appeared Terry L. Hunter, known to me to be the __________ President of THE
HUNTER
-5-
<PAGE>
GROUP, INC., a Maryland corporation, the corporation described in and that
executed the foregoing instrument, and also known to me to be the person who
executed the foregoing instrument on behalf of the corporation therein named,
and acknowledged to me that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal in the County and State aforesaid, the day and year in this certificate
first above written.
/s/ Lynn C. Moler
--------------------
Notary Public
LYNN C. MOLER
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES: AUGUST 1, 1999
-6-
<PAGE>
EXHIBIT A
PLAT OF PREMISES
-7-
<PAGE>
EXHIBIT A
25TH FLOOR
[diagram]
<PAGE>
[diagram]
<PAGE>
EXHIBIT B
TENANT IMPROVEMENTS WORK LETTER
Construction of the 25th Floor Space shall be supervised by Landlord and
shall be in accordance with the Construction Documents (as defined below).
Such construction shall be referred to as "Landlord's Work." All of the
equipment, fixtures and improvements installed pursuant to Landlord's Work
shall be and remain the property of Landlord. Landlord shall not receive a
supervisory fee for supervising Landlord's Work.
1. Space and Design Plans.
The "Space and Design Plans" shall mean plans for the construction of
Landlord's Work, showing its partitions, doors and plans, and other
illustrations as required to enable the preparation of Construction Documents
and which shall set forth all necessary information regarding, electrical,
telephone and light switch locations, lighting and reflected ceiling plan,
equipment codes, wall finishes, floor finishes, signage location, millwork
built-ins, architectural treatments, window covering and treatments, cabinet
work, paneling, any custom features for the 25th Floor Space, and the types,
color, size and finish of all such materials Tenant shall submit to Landlord
Space and Design Plans.
2. Construction Documents. By no later than February 1, 1997, tenant shall
submit to Landlord the architectural, mechanical, electrical and plumbing
construction documents (such documents referred to as the "Construction
Documents") in appropriate biddable form to implement the space and Design
Plans. If, at any time Landlord determines that the Construction Documents
are not in appropriate biddable form to obtain bids or in appropriate form to
obtain permits from any government authority (including if such Construction
Documents are rejected by any government authority), Landlord may require
that Tenant revise and resubmit such Construction Documents. Tenant shall
revise and resubmit such Construction Documents within five (5) days of
Landlord's request. Approval by Landlord of the Tenant's Working Drawings
and Specification shall be non-technical approval and shall not be deemed to
mean approval of structure, size of ducts or piping, adequacy of the
electrical system, system/equipment capacities and other technical matters.
Tenant is responsible for coordinating the proper and adequate design and
construction of the Tenant's Improvements in compliance with laws.
3. Contracts and Payment for Space and Design Plans and Construction
Documents.
Tenant shall contract directly with the design, engineering and
architectural firms to draw the Space and Design Plans and the Construction
Documents for Landlord's Work. All such firms shall be subject to Landlord's
prior written approval not to be unreasonably withheld or delayed.
-8-
<PAGE>
4. Selection of Contractor
Based on the Construction Documents, Landlord shall prepare an
invitation to bid which includes a copy of the proposed form of construction
contract on the basis of a guaranteed maximum price contract on the basis of
a guaranteed maximum price contract. Landlord shall submit bids to the
contractors, in good faith, agreed upon by Landlord and Tenant (collectively,
the "Qualified Contractors"). Landlord and Tenant shall mutually select the
contractor to perform Landlord's Work from the bids received. If Tenant and
Landlord fail to agree on a contractor within four (4) days thereafter,
Landlord shall select the apparent low bidder (the contractor selected in
accordance with the foregoing procedure is herein called the "Contractor").
The Contractor, with the approval of Landlord, shall select the
subcontractors. The Contractor and subcontractors must be willing to agree to
all requirements imposed by Landlord's construction and/or permanent lender
(including any reasonable requirements relating to retainages, advances,
insurance, bonding requirements, mechanics' lien waivers or otherwise) and
penalties for late delivery of space. After selection of the Contractor,
Landlord shall negotiate and execute a construction contract with the
Contractor. Landlord may make changes to the form construction contract but
the contract guaranteed maximum price shall remain the same without cost
overruns except for Tenant change orders, Necessary Change Orders, and other
change orders approved by Tenant. After approval of the Construction
Documents, selection of the Contractor, and execution of the construction
contract, the Contractor shall proceed with construction of Landlord's Work
under the supervision of Landlord. Tenant shall evaluate and analyze all
construction pricing to ensure current market pricing and to maximize the use
of Landlord's Construction Contribution (as defined below). To that end,
Landlord shall provide Tenant with all scheduled construction pricing for
review and analysis.
5. Change Orders
Landlord shall have the right to initiate any change order if such
change order (a "Necessary Change Order") is necessary: (a) for compliance
with any applicable laws; (b) in order to obtain necessary permits or
certificate of occupancy; or (c) for Landlord's Work to be compatible with or
coordinated with base building structure or systems. Landlord shall notify
Tenant of any Necessary Change Order. Other than Necessary Change Orders,
Landlord shall notify Tenant and obtain Tenant's consent prior to initiating
a material change. Tenant shall notify Landlord of its approval or denial
within two (2) business days of Landlord's request.
Tenant (acting through Tenant's Authorized Representative) shall have
the right to initiate change orders, subject to Landlord's reasonable
approval. Landlord shall not unreasonably withhold its approval to any such
Tenant-initiated change order proposal. Following receipt of a request for a
change order, Landlord shall promptly (i.e., within 2 days) notify Tenant
whether such request is approved, and if such request is approved Landlord
shall submit to Tenant a written change order which shall include an estimate
of the cost and any anticipated delays that will be incurred as a result of
the change. Upon Tenant's execution of the written change order prepared by
Landlord, the change shall be incorporated into Landlord's Work. Any delays
caused by Tenant's change orders or Necessary Change Orders shall be treated
as a Tenant Delay.
-9-
<PAGE>
6. Payment of Cost.
Landlord shall provide Tenant a total construction allowance of Seven
Dollars ($7) per rentable square foot (the "Landlord's Construction
Contribution") for the construction of the 25th Floor Space. Landlord's
Construction Contribution shall be used by Landlord to complete Tenant's work
as per the Construction Documents. Tenant shall pay for any overage of
Landlord's construction within thirty (30) days of receipt of written bill.
Failure by Tenant to tender payment for such improvements shall not delay the
25th Floor Space Commencement Date and shall be deemed a default of this
Lease.
7. Performance and Completion of Landlord's Work.
Tenant's Authorized Representative shall be given access to the 25th
Floor Space during performance of the Landlord's Work, subject to such
person's compliance with all safety rules, and provided he/she does not
interfere with the Landlord's Work.
After the 25th Floor Space is substantially completed, Landlord and
Tenant shall agree to a punchlist of items which Landlord shall complete as
promptly as reasonably possible, subject to Long-Lead Items. Said punchlist
or the failure of Long-Lead Items to be installed shall have no effect on
Tenant's obligation to pay rent or to accept possession of the 25th Floor
Space and shall not result in an extension of the 25th Floor Space
Commencement Date. Long-Lead Items will be completed and installed as soon as
commercially reasonable.
"Substantial completion" occurs on the date on which the 25th Floor
Space is substantially complete and ready for occupancy in accordance with
the Construction Documents except for punch list items, the completion of
which will not materially adversely affect Tenant's ability to occupy the
25th Floor Space, and Long-Lead Items, which date Landlord and Tenant shall
agree on in good faith. Landlord will exercise due diligence in completing
all punch list items and Long-Lead Items. Tenant shall be entitled to
withhold payment of sums for uncompleted items identified on the punchlist
pending satisfactory completion of such uncompleted items.
Tenant shall not be charged for use of elevators during the construction
of Landlord Work and during actual move in to the building or at any time
during the term, other than through its Pro Rata Share of Operating Expenses
and Real Estate Taxes.
8. Uniformity of Building.
To ensure the quality, uniformity and continuity of the building,
Landlord and Tenant agree that:
a. Suite Entry Security Systems. The suite entry security system, if
any, shall conform to the suite security system specified by Landlord as
standard for the entire building.
-10-
<PAGE>
b. Suite Entry Door. Landlord will prescribe a standard full height
suite entry door (and hardware) on multi-tenanted floors from which Tenant
shall not vary.
c. Exit Door. Landlord will prescribe a standard full height exit door
(and hardware) on multi-tenanted floors from which Tenant shall not vary.
d. Light Fixtures. All fixtures shall be of a recessed nature and flush
with the ceiling. All fixtures shall be subject to Landlord's approval, not
to be unreasonably withheld.
9. Installation of Items by Tenant.
As provided in the Lease, upon notice to Landlord, Tenant and its
agents and contractors shall have the right to enter the 25th Floor Space to
install equipment and fixtures and other work above Landlord's Work to
prepare the 25th Floor Space for Tenant's occupancy ("Tenant's Work")
provided they do not interfere with the Landlord's Work or violate any safety
rules. Such entry to and installation of work within the 25th Floor Space
shall not, in and of itself constitute or be deemed to be Tenant's (or any
person's claiming by, through or under Tenant) occupation of the 25th Floor
Space for the purpose of conducting Tenant's (or such other person's)
business. Before entering the 25th Floor Space to perform or cause to be
performed the Tenant's Work, Tenant shall provide to Landlord evidence of the
insurance coverages that Tenant is required to obtain and maintain under the
terms and conditions of the Lease. Any delays caused by Tenant's interference
shall be treated as Tenant Delays.
Any contractor engaged by Tenant shall be solely responsible for the
transportation, safekeeping, and storage of materials and equipment used in
the performance of the Tenant's Work, for the removal of waste and debris
resulting therefrom, and for any damage caused by them to any installation or
work performed by any other party. The Tenant's Work shall comply with all
applicable insurance requirements and all applicable laws and requirements
and shall be performed in a good and workmanlike manner using only new, high
grade materials.
10. Tenant's Authorized Representative.
Tenant shall designate a representative ("Tenant's Authorized
Representative") as the person authorized to approve in writing all plans,
drawings, specifications, change orders, charges and approvals pursuant to
this Exhibit. No other party is authorized to act for or bind Tenant with
respect to any of the foregoing matters.
11. Disputes.
Any dispute arising out of or in connection with this Work Letter
shall be determined by arbitration in accordance with the rules of the
American Arbitration Association, unless the parties hereto otherwise mutually
agree. The determination of the arbitration shall be conclusive upon the
parties and judgment upon the same may be entered in any court having
jurisdiction over the parties and the subject matter of the dispute.
-11-
<PAGE>
12. Indemnification and Waiver of Claims.
Landlord and Tenant hereby acknowledge and agree that the terms and
provisions of Sections 2, 4, 5, 11, 13, 16, 19, 23, 28 and 29 of the Lease
shall apply during the period commencing with Landlord's Work, through and
including the 25th Floor Space Commencement Date (including during the Term).
13. Substantial Completion.
Landlord shall use commercially reasonable efforts to deliver
possession of the 25th Floor Space substantially complete by April 1, 1997,
subject to extensions caused by force majeure, and Tenant Delays (as defined
below), extended for one (1) day for each day of delay caused by force
majeure or Tenant Delays. For purposes of this Work Letter, force majeure
shall include delays caused by war, insurrection, civil commotion, riots, act
of God, or the enemy or governmental action, strikes, lockouts, picketing,
accidents, failure of Landlord to obtain fuel or supplies, or any other
causes beyond the reasonable control of Landlord. The April 1, 1997, outside
date for the substantial completion of the 25th Floor Space shall be extended
one (1) day for each day of delay caused by Landlord, e.g., unavailability of
elevators other than unavailability caused by Tenant having to work together
with other construction that is going on in the building, delays in
responding to Tenant requests beyond three (3) business days in each
instance, and delays caused solely by Landlord requiring Tenant to use
certain subcontractors. For purposes of the Lease, substantial completion
shall not include "Long-Lead Items", including but not limited to millwork,
any special order material, any special order items, and punchlist items.
14. Schedule.
As used herein the term "Tenant Delay" shall be the sum of (i) each
day beyond those dates specified herein for Tenant to respond to notice from
Landlord or beyond those dates specified herein for Tenant to deliver
documents until Tenant so responds or deliver such documents and (ii) each
day of delay caused by Tenant Change Orders and Necessary Change Orders.
-12-
<PAGE>
Exhibit 21.02(d)
THIRD AMENDMENT TO LEASE
THIS THIRD AMENDMENT TO LEASE ("this Third Amendment") dated as of Aug. 15,
1997, by and between 100 EAST PRATT STREET LIMITED PARTNERSHIP, a Maryland
limited partnership ("Landlord"), and THE HUNTER GROUP, INC., a Maryland
corporation ("Tenant").
EXPLANATORY STATEMENT
A. Landlord and Tenant entered into a Lease dated January 18, 1995, as
amended by a First Amendment to Lease dated September 8, 1995 and a Second
Amendment to Lease dated January 16, 1997 (collectively, the "Lease").
B. Landlord and Tenant desire to amend the Lease pursuant to the terms of
this Third Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. Explanatory Statement; Defined Terms. The Explanatory Statement of this
Third Amendment forms a part hereof. The use of initially capitalized terms
in this Third Amendment or terms otherwise defined in the Lease shall have
the meaning ascribed to them in the Lease unless the context requires
otherwise.
2. Lease of Expansion Space. Landlord presently leases to Tenant (a) 9,331
square feet located on the sixteenth (16th) floor of the building, and (b)
2,225 square feet located on the twenty-fifth (25th) floor of the building.
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, an
additional agreed total rentable area of five thousand nine hundred fifty-two
(5,952) square feet on the sixteenth (16th) floor of the building (the
"Expansion Space"), to the end and effect that Tenant lease from Landlord the
entire sixteenth (16th) floor of the building. The Expansion Space is shown
on Exhibit A attached hereto as a part hereof. Accordingly, effective as of
the Expansion Space Commencement Date (as defined below), the first paragraph
of the Lease captioned "Premises" is amended by deleting that paragraph in
its entirety and replacing it with the following new paragraph:
That Landlord hereby leases to Tenant, and Tenant hereby hires and
takes from Landlord the following described premises (hereinafter
collectively called the "premises") outlined on Exhibit A hereto, in
the office and retail tower (hereinafter called the "building") known
as 100 East Pratt Street, Baltimore, Maryland 21202, containing an
aggregate agreed total rentable area of 17,508 square feet, which is
located in the building as follows: (a) 15,283 square feet is located
on the sixteenth (16th) floor of the building, and (b) 2,225 square
feet is
<PAGE>
located on the twenty-fifth (25th) floor of the building. The building
and the adjoining garage are retail space therein and the land on which
the improvements are located are sometimes hereinafter called the
"project."
3. Term. Effective as of the Expansion Space Commencement Date, the third
paragraph of the Lease captioned "Term" is amended by deleting the reference
to "September 30, 2000" and inserting in lieu thereof the date "September 30,
2005." It is the intent and purpose of Landlord and Tenant that the term of
the Lease for the entire premises (including, but not limited to, the
Expansion Space) expire, unless earlier terminated or extended as provided in
this Third Amendment, on September 30, 2005.
4. Term of Expansion Space. Subject to the terms and conditions of Exhibit
B attached hereto as a part hereof, the term of the Expansion Space shall
commence (the "Expansion Space Commencement Date") on the date that is five
(5) days after the date Landlord completes the improvements described in
Exhibit B (which date Landlord anticipates will occur, subject to the terms
and conditions of Exhibit B, on or about April 1, 1998). Tenant shall not be
entitled to occupy the Expansion Space before January 1, 1998. If Landlord
has not completed the improvements by October 31, 1998 through no act or
omission of Tenant, then Tenant may terminate this Third Amendment to Lease
as it relates to the Expansion Space on at least thirty (30) days' written
notice to Landlord.
5. Rent (Section 1). Section 1(a) of the Lease is hereby amended by
deleting that provision in its entirety and replacing it with the following
new Section 1(a):
(a)(i) Between the date of the Third Amendment to Lease ("Third
Amendment") and the Expansion Space Commencement Date, Tenant shall pay
the aggregate annual rent of Two Hundred Ninety-Three Thousand Three
Hundred Fifty Dollars ($293,350) payable in equal monthly installments
in advance of Twenty-Four Thousand Four Hundred Forty-Five and 83/100
Dollars ($24,445.83) each on the first day of every calendar month
during the term hereof, which amount consists of the following
components: (A) with respect to that portion of the premises located on
the 16th floor of the building, the annual rent shall be an amount
equal to Two Hundred Thirty-Three Thousand Two Hundred Seventy-Five
Dollars ($223,275) payable in equal monthly installments in advance of
Nineteen Thousand Four Hundred Thirty-Nine and 58/100 Dollars
($19,439.58) each on the first day of every calendar month during the
term hereof (the foregoing rental amount is based on Twenty-Five
Dollars ($25) per rentable square foot of that portion of the premises
located on the 16th floor), and (B) with respect to that portion of the
premises located on the 25th floor of the building, the annual rent
shall be an amount equal to Sixty Thousand Seventy-Five Dollars
($60,075) payable in equal monthly installments in advance of Five
Thousand Six and 25/100 Dollars ($5,006.25) each on the first day of
every calendar month during the term hereof (the foregoing rental
amount is based on Twenty-Seven Dollars ($27) per rentable square foot
of that portion of the premises located on the 25th floor).
-2-
<PAGE>
(a)(ii) Between the Expansion Space Commencement Date and September
30, 2000, Tenant shall pay the aggregate annual rent of Four Hundred
Eighty-Four Thousand Two Hundred Seventy-One and 28/100 Dollars
($484,271.28) payable in equal monthly installments in advance of Forty
Thousand Three Hundred Fifty-Five and 94/100 Dollars ($40,355.94) each
on the first day of every calendar month during the term hereof, which
amount is based on an annual rental rate equal to Twenty-Seven and
66/100 Dollars ($27.66) per rentable square foot of the premises.
(a)(iii) Between October 1, 2000 and September 30, 2005, Tenant shall
pay the aggregate annual rent of Five Hundred Twelve Thousand Nine
Hundred Eighty-Four and 40/100 Dollars ($512,984.40) payable in equal
monthly installments in advance of Forty-Two Thousand Seven Hundred
Forty-Eight and 70/100 Dollars ($42,748.70) each on the first day of
every calendar month during the term hereof, which amount is based on
an annual rental rate equal to Twenty-Nine and 30/100 Dollars ($29.30)
per rentable square foot of the premises.
The following table summarizes the foregoing rental amounts:
Monthly
Date Annual Rent Installment
---- ----------- -----------
Date of Third Amendment to Expansion $293,350.00 $24,445.83
Space Commencement Date
Expansion Space Commencement Date $484,271.28 $40,355.94
to September 30, 2000
October 1, 2000 to September 30, 2005 $512,984.40 $42,748.70
6. TENANT IMPROVEMENTS. Landlord shall cause its contractors to complete
the tenant improvements for the premises (including, but not limited to, the
Expansion Space) in accordance with and subject to Exhibit B attached hereto
as a part hereof.
7. ASSIGNMENT AND SUBLETTING (SECTION 3). Section 3 of the Lease is hereby
amended by adding the following new Section 3(g):
(g) Notwithstanding anything to the contrary contained in Section 3 of
this Lease, Tenant shall have the right, without the consent of
Landlord (but with at least ten (10) days' prior written notice to
Landlord), to assign this Lease or sublet any portion of the premises
to any affiliated entity, or undertake any merger, consolidation, sale
of stock or other interests, or other ownership transaction, and on any
such transfer or transaction Landlord shall not have a right of
recapture; provided, however, that (i) the net assets of the assignee
or subtenant shall not be less than the net assets of Tenant at the
time of the signing of this Lease (evidence of which Tenant shall
provide to Landlord at the time Tenant provides Landlord
-3-
<PAGE>
with the foregoing notice); and (ii) Tenant shall not be released from
any and shall perform all obligations imposed on it hereunder.
8. Operating Expenses (Section 20). Landlord and Tenant acknowledge and
agree that the entire premises (i.e., the premises located on both the 16th
and 25th floors of the building) shall be factored in the calculation of the
Tenant's Pro Rata Share of Operating Expenses. Effective as of Expansion
Space Commencement Date, Section 20(b)(1) of the Lease is hereby amended by
deleting that provision in its entirety and replacing it with the new Section
20(b)(1):
(1) The term "Base Amount" means the Operating Expenses for the calendar
year 1998. The Base Amount shall be adjusted proportionately for
Comparison Years that are not a full twelve (12) months.
9. Real Estate Taxes (Section 21). Landlord and Tenant acknowledge and
agree that the entire premises (i.e., the premises located on both the 16th
and 25th floors of the building) shall be factored in the calculation of the
Tenant's Pro Rata Share of Real Estate Taxes. Effective as of Expansion Space
Commencement Date, Section 21(b)(1) of the Lease is hereby amended by
deleting that provision in its entirety and replacing it with the new
Section 21(b)(1):
(1) The term "Base Amount" means the Real Estate Taxes for the July 1,
1997-June 30, 1998 tax fiscal year. The Base Amount shall be adjusted
proportionately for Comparison Years that are not a full twelve (12)
months.
10. Relocation (Section 31). Effective as of the Expansion Space
Commencement Date, Section 31 of the Lease is hereby amended by deleting that
provision in its entirety and replacing it with following new Section 31:
The Landlord reserves the right at its option and at the Landlord's
expense to relocate the premises to any floor above (and including) the
seventeenth (17th) floor of the building in a single, contiguous space
at a location of comparable size and finish to the premises as
described herein. Landlord shall reimburse Tenant for the direct,
reasonable, and verifiable relocation expenses incurred by Tenant,
including Tenant's stationery costs and all other reasonable business
relocation costs. In the event of any such relocation, Tenant shall
have advance notice of at least sixty (60) days, and the new premises
shall be finished before the relocation. For purposes of this Section,
"single, contiguous space" means that the space that is the subject of
the relocation is relocated to a contiguous area on the floor (or
floors) to which the space that is the subject of the relocation is
being relocated, it being the intent and purpose of Landlord and Tenant
that Tenant have at least a full-floor space comprising the premises.
To illustrate the operation of this Section, assume that the space that
is the subject of the relocation is located on the 16th floor (but not
that portion of the premises located on the 25th floor). Based on this
assumption, the relocated space will be located in a contiguous fashion
on
-4-
<PAGE>
a single floor above (and including) the 17th floor, and that portion
of the premises located on the 25th floor will remain unchanged.
11. PARKING (SECTION 35). Effective as of the Expansion Space Commencement
Date, Section 35 of the Lease is hereby amended by deleting that provision in
its entirety and replacing it with following new Section 35:
During the term of this Lease, Tenant shall have the right to rent, on
a monthly basis, one (1) parking space in the parking garage located
adjacent to the rear of the building for each 1,000 square feet of
rentable area of the premises. Based on a rentable area of the premises
equal to 17,508 rentable square feet, Tenant is entitled to rent
eighteen (18) parking spaces. In addition to these spaces, Tenant shall
have the right to rent, on a monthly basis, eighteen (18) additional
parking spaces (the "Additional Parking Spaces")(i.e., an aggregate of
36 parking spaces). All or any of the Additional Parking Spaces shall
be subject to recapture by Landlord on thirty (30) days notice to Tenant.
Rental of parking spaces shall be subject to the payment of standard fees
charged by the parking garage to its other users and shall be subject to
such rules and regulations which are applicable to the parking garage.
As of the date of execution of this Lease, the monthly parking charge is
an amount equal to One Hundred Seventy Dollars ($170).
12. STORAGE SPACE (SECTION 37). Notwithstanding any contrary agreement
between Landlord and Tenant regarding storage space that Tenant is leasing
from Landlord pursuant to one or more separate agreements, Section 37 of the
Lease is hereby amended by deleting that provision in its entirety and
replacing it with following new Section 37:
37.1 GENERAL. For the period between the date of the Third Amendment
and September 30, 2000, Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, ninety (90) square feet of storage space
in the building in the location shown on Exhibit A attached hereto as a
part hereof (the "Storage Space") at an annual rental of Nine Hundred
Dollars ($900), which amount shall be payable in equal monthly
installments in advance, together with rent.
37.2 ADDITIONAL STORAGE SPACE TERM. For the period between October 1,
2000 and September 30, 2005 (the "Additional Storage Space Term"),
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord,
the Storage Space at an annual rental of One thousand Three Hundred
Eighteen Dollars ($1,318), which amount shall be payable in equal monthly
installments in advance, together with rent. On at least thirty (30)
days' prior written notice to Landlord and provided Tenant is not then in
default under this Lease, tenant shall have the right to cancel its
obligation to lease the Storage Space.
37.3 CONDITION OF STORAGE SPACE. The Storage Space shall include
unpainted drywall walls, unfinished ceiling, one lockable door, lighting,
and ventilation; however, the Storage Space shall not be air conditioned
or heated.
-5-
<PAGE>
13. Cancellation Fee (Section 39). Effective as of the Expansion Space
Commencement Date, Section 39 of the Lease is hereby amended by deleting that
provision in its entirety and replacing it with following new Section 39:
Provided Tenant is not in default under this Lease past applicable
notice and grace periods, Tenant shall have the right to cancel this
Lease effective as of April 1, 2002 in accordance with the following
terms and conditions:
(a) If Tenant desires to so cancel this Lease, it shall provide at
least twelve (12) months' written notice (the "Cancellation Notice")
thereof to Landlord, which Cancellation Notice Landlord shall receive,
if at all, by no later than April 1, 2001, TIME BEING OF THE ESSENCE;
(b) From and after the date on which the term of this Lease is
cancelled, Landlord and Tenant shall have no further liability to the
other except for obligations that have accrued prior to the date of the
cancellation and those obligations that survive such cancellation; and
(c) In consideration of granting Tenant the privilege to cancel this
Lease before its normally scheduled expiration date, Tenant shall pay
to Landlord a cancellation fee totaling Four Hundred Seventy-Five
Thousand Eighty-Seven and 25/100 Dollars ($475,087.25) (the
"Cancellation Fee"). Tenant shall pay the Cancellation Fee to Landlord
as follows:
(i) Tenant shall pay to Landlord an amount equal to Two Hundred
Thirty-Seven Thousand Five Hundred Forty-Three and 63/100 Dollars
($237,543.63) simultaneously with tendering the Cancellation Notice to
Landlord.
(ii) Tenant shall pay to Landlord the balance of the Cancellation
Fee (i.e., Two Hundred Thirty-Seven Thousand Five Hundred Forty-Three
and 63/100 Dollars ($237,543.63)) on April 1, 2002.
14. Right of First Offer to 15th floor and Relocation of 25th Floor Space
to Any Floor. Effective as of the Expansion Space Commencement Date, the
following new Sections 41 and 42 are hereby added to the Lease:
41. Right of First Offer. During the Term of this Lease and subject
to the terms and conditions contained in this Section, Tenant shall
have the right of first offer (the "Right of First Offer") that Becomes
Available (as defined below).
-6-
<PAGE>
41.1 Conditions. At the time Tenant exercises the Right of First
Offer, (a) this Lease shall be in full force and effect; and (b) Tenant
shall not be in default of its obligations under this Lease past
applicable notice and grace periods.
41.2 Landlord and Tenant Obligations. Subject to the other terms of
this Section 41, after any part of the 15th Floor Offer Space has or
will Become Available, Landlord shall not offer on the market or lease
to another tenant that space within the 15th Floor Offer Space that has
or will become available without first offering Tenant the right to
lease that space at the then applicable market rate of rent. Space
shall be deemed to "Become Available" when the lease for the current
occupant of the 15th Floor Offer Space expires or is otherwise
terminated; provided, however, that the 15th Floor Offer Space shall not
be deemed to Become Available if the space is: (a) assigned or subleased
by the current tenant of the space (with the understanding that the
space shall be deemed to have "Become Available" at the expiration of
the original lease that was the subject of the assignment or
subletting); (b) re-leased by the current tenant of the space by
renewal, extension, or renegotiation; and (c) not leased to a tenant as
of the date of the Third Amendment (until that space is leased, and
then subsequently Becomes Available). Notwithstanding any contrary
provision contained in this Lease, the Right of First Offer is subject
and subordinate to any written right of first offer or right of first
refusal provided by Landlord to any other tenant or occupant of the
building before the date of the Third Amendment. It is the intent of
Landlord and Tenant that this Section 41 be interpreted as a right of
first offer, it being specifically agreed and acknowledged that this
Section 41 does not constitute, and is not intended to constitute, a
right of first refusal.
41.3 Landlord Notice. Landlord shall not offer the 15th Floor Offer
Space on the open market until Landlord has first notified Tenant in
writing (the "First Offer Leasing Notice") that Landlord intends to
offer the designated 15th Floor Offer Space to third parties and until
a period of fifteen (15) days has elapsed from the date that Landlord
has delivered to Tenant the First Offer Leasing Notice without Landlord
and Tenant reaching a mutually acceptable agreement on the market rate
of rent and other terms and conditions for the leasing of the 15th
Floor Offer Space. The First Offer Leasing Notice shall: (a) advise
Tenant that Landlord intends to offer on the market the 15th Floor
Offer Space; (b) describe the location of the First 15th Floor Offer
Space that has or will Become Available; and (c) contain the date on
which the 15th Floor Offer Space will be available for leasing by
Tenant.
41.4 Tenant Acceptance. If Landlord and Tenant agree on mutually
acceptable terms and conditions for the lease of the 15th Floor Offer
Space within such fifteen (15) day period, Landlord and Tenant shall
enter into an amendment of this Lease for the inclusion of the 15th
Floor Offer Space on the terms and conditions agreed on by Landlord and
Tenant during such fifteen (15) day period.
-7-
<PAGE>
41.5 Tenant Rejection. If Tenant declines or fails to effectively
exercise the Right of First Offer as provided herein or fails to meet
the conditions set forth in this Section, Landlord shall thereafter be
free to offer the 15th Floor Offer Space on the open market and to
lease the 15th Floor Offer Space at any time without regard to the
restrictions in this Section and on whatever terms Landlord may decide
in its sole and absolute subjective discretion.
42. Relocation of 25th Floor Space to Any Floor. If and when Tenant
leases at least five thousand (5,000) rentable square feet of space on
any floor of the building, Tenant shall have the right to relocate the
25th Floor Space (as defined in the Second Amendment) to the floor of
any building, all on terms and conditions that reflect the rental rate
paid by Tenant for the 25th floor plus a component for amortization of
any improvements to such space desired by Tenant, coterminous with the
terms of this Lease for the remainder of the premises.
15. Brokerage Commission. Tenant warrants and represents to Landlord that
Tenant has not used the services of any broker, agent, or finder who would be
entitled to a commission on account of this Third Amendment other than
Colliers Pinkard and Equis, and agrees to defend, indemnify and save Landlord
harmless from any commission or fee which may be payable to any other broker,
agent, or finder with whom Tenant has dealt in connection with this Third
Amendment. Within thirty (30) days after the full execution and delivery of
this Third Amendment, Landlord shall pay Equis a brokerage fee in the amount
of Nineteen Thousand Four Hundred and 50/100 Dollars ($19,400.50).
16. Miscellaneous. Except as hereby amended, the Lease remains in full
force and effect. This Third Amendment (a) shall be binding on the parties
hereto and their respective successors and assigns, (b) shall be interpreted
and construed in accordance with Maryland law, and (c) may be executed in one
or more counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, this Third Amendment has been duly executed by the
parties hereto as of the day and year first above written with the specific
intention of creating a document under seal.
WITNESS: 100 EAST PRATT STREET LIMITED
PARTNERSHIP
By: 100 East Pratt Street, Inc,. its managing general
partner
/s/ Illegible By: /s/ J. B. Mayo (SEAL)
- -------------------- ----------------------------
Name: J. Robb Mayo
----------------------------
Title: Director of US Real Estate
Operations and Invesmtents
----------------------------
IBM Real Estate Services
-8-
<PAGE>
WITNESS: THE HUNTER GROUP, INC.
/s/ A. Scott Preston By: /s/ Terry L. Hunter (SEAL)
- -------------------- ------------------------------
Terry L. Hunter
President
STATE OF NEW YORK )
COUNTY OF )ss.:
On this 15th day of August, 1997, before me, Thomas Crohan, a Notary Public
in and for the State of New York, duly commissioned and sworn, personally
appeared J.R. Mayo, known to me to be the * of Corporate Real Estate and
Construction, International Business Machines Corporation, the corporation
described in and that executed the foregoing instrument, and also known to me
to be the person who executed the foregoing instrument on behalf of the
corporation therein named, and acknowledged to me that such corporation
executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal in the County and State aforesaid, the day and year in this certificate
first above written.
J. Robb Mayo
* Director of US Real Estate
Operations and Investments
/s/ Thomas P. Crohan
----------------------
Notary Public
STATE OF MARYLAND )
COUNTY OF )ss.:
On this 29th day of July, 1997, before me, Lynn Moler, a Notary Public in
and for the State of Maryland duly commissioned and sworn, personally
appeared Terry L. Hunter, known to me to be the President of THE HUNTER
GROUP, INC., a Maryland corporation, the corporation described in and that
executed the foregoing instrument, and also known to me to be the person who
executed the foregoing instrument on behalf of the corporation therein named,
and acknowledged to me that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal in the County and State aforesaid, the day and year in this certificate
first above written.
/s/ Lynn C. Moler
----------------------
Notary Public
LYNN C. MOLER
NOTARY PUBLIC STATE OF MARYLAND
MY COMMISSION EXPIRES: AUGUST 1, 1999
-9-
<PAGE>
EXHIBIT A
PLAT OF PREMISES
-10-
<PAGE>
16TH FLOOR
HUNTER GROUP
[diagram]
<PAGE>
EXHIBIT A
25TH FLOOR
[diagram]
<PAGE>
EXHIBIT B
TENANT IMPROVEMENTS WORK LETTER
Construction of the Expansion Space and, with respect to the balance of the
space on the sixteenth (16th) floor of the building Tenant presently leases
("Current Space"), the recarpeting or repainting of the Current Space (or
both), or the reconfiguration of the elevator lobby serving the sixteenth
(16th) floor, shall be supervised by Landlord and shall be in accordance with
the Construction Documents (as defined below). Tenant may incorporate its
corporate design into the sixteenth (16th) floor lobby area and change its
entry doors to glass. The construction referred to in this paragraph shall be
referred to collectively as "Landlord's Work." All of the equipment, fixtures
and improvements installed pursuant to Landlord's Work shall be and remain
the property of Landlord. Landlord shall not receive a supervisory fee for
supervising Landlord's Work.
1. Space and Design Plans.
The "Space and Design Plans" shall mean plans for the construction of
Landlord's Work, showing its partitions, doors and plans, and other
illustrations as required to enable the preparation of Construction Documents
and which shall set forth all necessary information regarding, electrical,
telephone and light switch locations, lighting and reflected ceiling plan,
equipment codes, wall finishes, floor finishes, signage location, millwork
built-ins, architectural treatments, window covering and treatments, cabinet
work, paneling, any custom features for the Expansion Space and the Current
Space, and the types, color, size and finish of all such materials Tenant
shall submit to Landlord Space and Design Plans.
2. Construction Documents. By no later than October 1, 1997, Tenant shall
submit to Landlord the architectural, mechanical, electrical and plumbing
construction documents (such documents referred to as the "Construction
Documents") in appropriate biddable form to implement the Space and Design
Plans. If, at any time Landlord determines that the Construction Documents
are not in appropriate biddable form to obtain bids or in appropriate form to
obtain permits from any government authority (including if such Construction
Documents are rejected by any government authority), Landlord may require
that Tenant revise and resubmit such Construction Documents. Tenant shall
revise and resubmit such Construction Documents within ten (10) days of
Landlord's request. Approval by Landlord of the Tenant's Working Drawings and
Specification shall be non-technical approval and shall not be deemed to mean
approval of structure, size of ducts or piping, adequacy of the electrical
system, system/equipment capacities and other technical matters. Tenant is
responsible for coordinating the proper and adequate design and construction
of the Tenant's Improvements in compliance with laws.
3. Contracts and Payment for Space and Design Plans and Construction
Documents.
Tenant shall contract directly with the design, engineering and
architectural firms to draw the Space and Design Plans and the Construction
Documents for Landlord's Work. All
-11-
<PAGE>
such firms shall be subject to Landlord's prior written approval, which
approval shall not be unreasonably withheld or delayed.
4. Selection of Contractor.
Based on the Construction Documents, Landlord shall prepare an
invitation to bid that includes a copy of the proposed form of construction
contract on the basis of a guaranteed maximum price contract on the basis of
a guaranteed maximum price contract. Landlord shall submit bids to the
contractors, in good faith, agreed on by Landlord and Tenant (collectively,
the "Qualified Contractors"). Landlord and Tenant shall mutually select the
contractor to perform Landlord's Work from the bids received. If Tenant and
Landlord fail to agree on a contractor within four (4) days thereafter,
Landlord shall select the apparent low bidder (the contractor selected in
accordance with the foregoing procedure is herein called the "Contractor").
The Contractor, with the approval of Landlord, shall select the
subcontractors. The Contractor and subcontractors must be willing to agree
to all requirements imposed by Landlord's construction and/or permanent
lender (including any reasonable requirements relating to retainages,
advances, insurance, bonding requirements, mechanics'; lien waivers or
otherwise) and penalties for late delivery of space. After selection of the
Contractor, Landlord shall negotiate and execute a construction contract with
the Contractor. Landlord may make changes to the form construction contract
but the contract guaranteed maximum price shall remain the same without cost
overruns except for Tenant change orders, Necessary Change Orders, and other
change orders approved by Tenant. After approval of the Construction
Documents, selection of the Contractor, and execution of the construction
contract, the Contractor shall proceed with construction of Landlord's Work
under the supervision of Landlord. Tenant shall evaluate and analyze all
construction pricing to ensure current market pricing and to maximize the
use of Landlord's Construction Contribution (as defined below). To that end,
Landlord shall provide Tenant with all scheduled construction pricing for
review and analysis.
5. Change Orders
Landlord shall have the right to initiate any change order if such
change order (a "Necessary Change Order") is necessary: (a) for compliance
with any applicable laws; (b) to obtain necessary permits or certificate of
occupancy; or (c) for Landlord's Work to be compatible with or coordinated
with base building structure or systems. Landlord shall notify Tenant of any
Necessary Change Order. Other than Necessary Change Orders, Landlord shall
notify Tenant and obtain Tenant's consent prior to initiating a material
change. Tenant shall notify Landlord of its approval or denial within five
(5) business days of Landlord's request.
Tenant (acting through Tenant's Authorized Representative) shall have
the right to initiate change orders, subject to Landlord's reasonable
approval. Landlord shall not unreasonable withhold its approval to any such
Tenant-initiated change order proposal. Following receipt of a request for a
change order, Landlord shall promptly (i.e., within 2 days) notify Tenant
whether such request is approved, and if such request is approved Landlord
shall submit to Tenant a written change order which shall include an estimate
of the cost and any anticipated delays that will be incurred as a result of
the change. On Tenant's execution of the
-12-
<PAGE>
written change order prepared by Landlord, the change shall be incorporated
into Landlord's Work. Any delays caused by Tenant's change orders or
Necessary Change Orders shall be treated as a Tenant Delay.
6. Payment of Cost. Landlord shall provide Tenant a total construction
allowance of One Hundred Sixty-Five Thousand Six Hundred Fifty-Five Dollars
($165,655) (the "Landlord's Construction Contribution") for the design and
construction of the Expansion Space and the Current Space. Landlord's
Construction Contribution shall be used by Landlord to complete Tenant's work
as per the Construction Documents. Tenant shall pay for any overage of
Landlord's construction within thirty (30) days of receipt of written bill.
Failure by Tenant to tender payment for such improvements shall not delay the
Expansion Space Commencement Date and shall be deemed a default of this
Third Amendment and the Lease. Any unused allowance (i.e., the difference
between the final cost of the Landlord's Work and the aggregate of the
Landlord's Construction Contribution) shall be credited towards the annual
rent payable under the Lease; provided, however, that such credit shall not
exceed an amount equal to Twenty Thousand Dollars ($20,000).
7. Performance and Completion of Landlord's Work.
Tenant's Authorized Representative shall be given access to the
Expansion Space during performance of the Landlord's Work, subject to such
person's compliance with all safety rules, and provided he/she does not
interfere with the Landlord's Work.
After the Expansion Space and Current Space are substantially completed
(i.e., fully completed except for minor punchlist items), Landlord and Tenant
shall agree to a punchlist of items which Landlord shall complete as promptly
as reasonably possible, subject to Long-Lead Items. Said punchlist or the
failure of Long-Lead Items to be installed shall have no effect on Tenant's
obligation to pay rent or to accept possession of the Expansion Space and
shall not result in an extension of the Expansion Space Commencement Date.
Long-Lead Items will be completed and installed as soon as commercially
reasonable.
"Substantial completion" occurs on the date on which the Expansion
Space is substantially complete and ready for occupancy in accordance with the
Construction Documents except for punch list items, the completion of which
will not materially adversely affect Tenant's ability to occupy the Expansion
Space, and Long-Lead Items, which date Landlord and Tenant shall agree on in
good faith. Landlord will exercise due diligence in completing all punch list
items and Long-Lead Items. Tenant shall be entitled to withhold payment of
sums for uncompleted items identified on the punchlist pending satisfactory
completion of such uncompleted items. Landlord shall have a period of thirty
(3) days within which to complete the punch list items, which time period
shall begin to run on the date on which Landlord and Tenant mutually agree on
the punch list items.
Tenant shall not be separately charged for use of elevators during the
construction of Landlord Work and during actual move in to the building or at
any time during the term.
-13-
<PAGE>
8. UNIFORMITY OF BUILDING.
To ensure the quality, uniformity and continuity of the building,
Landlord and Tenant agree that:
a. SUITE ENTRY SECURITY SYSTEMS. The suite entry security system, if
any, shall conform to the suite security system specified by Landlord as
standard for the entire building.
b. SUITE ENTRY DOOR. Landlord will prescribe a standard full height
suite entry door (and hardware) on multi-tenanted floors from which Tenant
shall not vary.
c. EXIT DOOR. Landlord will prescribe a standard full height exit
door (and hardware) on multi-tenanted floors from which Tenant shall not vary.
d. LIGHT FIXTURES. All fixtures shall be of a recessed nature and
flush with the ceiling. All fixtures shall be subject to Landlord's
approval, not to be unreasonably withheld.
9. INSTALLATION OF ITEMS BY TENANT.
As provided in the Lease, on notice to Landlord, Tenant and its agents
and contractors shall have the right to enter the Expansion Space to install
equipment and fixtures and other work above Landlord's Work to prepare the
Expansion Space for Tenant's occupancy ("Tenant's Work") provided they do not
interfere with the Landlord's Work or violate any safety rules. Such entry
to and installation of work within the Expansion Space shall not, in and of
itself constitute or be deemed to be Tenant's (or any person's claiming by,
through or under Tenant) occupation of the Expansion Space for the purpose of
conducting Tenant's (or such other person's) business. Before entering the
Expansion Space to perform or cause to be performed the Tenant's Work, Tenant
shall provide to Landlord evidence of the insurance coverages that Tenant is
required to obtain and maintain under the terms and conditions of the Lease.
Any delays in substantial completion of Landlord's Work caused by Tenant's
interference shall be treated as Tenant Delays.
Any contractor engaged by Tenant shall be solely responsible for the
transportation, safekeeping, and storage of materials and equipment used in
the performance of the Tenant's Work, for the removal of waste and debris
resulting therefrom, and for any damage caused by them to any installation or
work performed by any other party. The Tenant's Work shall comply with all
applicable insurance requirements and all applicable laws and requirements
and shall be performed in a good and workmanlike manner using only new, high
grade materials.
10. TENANT'S AUTHORIZED REPRESENTATIVE.
Tenant shall designate a representative ("Tenant's Authorized
Representative") as the person authorized to approve in writing all plans,
drawings, specifications, change orders,
-14-
<PAGE>
charges and approvals pursuant to this Exhibit. No other party is authorized
to act for or bind Tenant with respect to any of the foregoing matters.
11. Disputes.
Any dispute arising out of or in connection with this Work Letter
shall be determined by arbitration in accordance with the rules of the
American Arbitration Association, unless the parties hereto otherwise
mutually agree. The determination of the arbitration shall be conclusive upon
the parties and judgment upon the same may be entered in any court having
jurisdiction over the parties and the subject matter of the dispute.
12. Indemnification and Waiver of Claims.
Landlord and Tenant hereby acknowledge and agree that the terms and
provisions of Sections 2 (with the exception of Section 2(a), 4, 5, 16, 19,
23, 28 and 29 of the Lease shall apply during the period commencing with
Landlord's Work, through and including the Expansion Space Commencement Date
(including during the Term).
13. Substantial Completion.
Landlord shall use commercially reasonable efforts to deliver
possession of the Expansion Space substantially complete by April 1, 1998,
subject to extensions caused by force majeure, and Tenant Delays (as defined
below), extended for one (1) day for each day of delay caused by force
majeure or Tenant Delays. In no event, however, shall the Expansion Space
Commencement Date occur before January 1, 1998. For purposes of this Work
Letter, force majeure shall include delays caused by war, insurrection, civil
commotion, riots, act of God, or the enemy or governmental action, strikes,
lockouts, picketing, accidents, failure of Landlord to obtain fuel or
supplies, or any other causes beyond the reasonable control of Landlord. The
April 1, 1998, outside date for the substantial completion of the Expansion
Space shall be extended one (1) day for each day of delay caused by Landlord,
e.g., unavailability of elevators other than unavailability caused by Tenant
having to work together with other construction that is going on in the
building, delays in responding to Tenant requests beyond three (3) business
days in each instance, and delays caused solely by Landlord requiring Tenant
to use certain subcontractors. For purposes of the Lease, substantial
completion shall not include "Long-Lead Items", including but not limited to
millwork, any special order material, any special order items, and punchlist
items.
14. Schedule.
As used herein the term "Tenant Delay" shall be the sum of (i) each
day beyond those dates specified herein for Tenant to respond to notice from
Landlord or beyond those dates specified herein for Tenant to deliver
documents until Tenant so responds or deliver such documents and (ii) each
day of delay caused by Tenant Change Orders and Necessary Change Orders.
-15-
<PAGE>
EXHIBIT 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1
of our reports dated February 14, 1997, except for Notes 1 and 3, as to which
the dates are September 26, 1997 and September 30, 1997, respectively, on our
audits of the consolidated financial statements and financial statement
schedule of The Hunter Group, Inc. and Subsidiaries. We also consent to the
reference to our firm under the caption "Experts."
/s/ COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
October 2, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HUNTER
GROUP, INC.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS U.S. DOLLARS
<S> <C> <C>
<PERIOD-START> JAN-01-1996 JAN-01-1997
<EXCHANGE-RATE> 1 1
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-END> DEC-31-1996 JUN-30-1997
<CASH> 331 531
<SECURITIES> 0 0
<RECEIVABLES> 10,434 14,971
<ALLOWANCES> (132) (466)
<INVENTORY> 0 0
<CURRENT-ASSETS> 10,954 15,847
<PP&E> 1,288 1,545
<DEPRECIATION> (377) (386)
<TOTAL-ASSETS> 12,077 17,285
<CURRENT-LIABILITIES> 10,420 16,638
<BONDS> 2,036 4,277
0 0
0 0
<COMMON> 1 1
<OTHER-SE> 202 202
<TOTAL-LIABILITY-AND-EQUITY> 12,077 17,285
<SALES> 0 0
<TOTAL-REVENUES> 39,215 26,927
<CGS> 0 0
<TOTAL-COSTS> 16,637 12,877
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (170) (197)
<INCOME-PRETAX> 1246 (1259)
<INCOME-TAX> 803 (452)
<INCOME-CONTINUING> 443 (807)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 443 (807)
<EPS-PRIMARY> .05 .10
<EPS-DILUTED> 0 0
</TABLE>
