<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the quarterly period ended July 1, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________ to ________________
Commission File Number 0-14686
PYRAMID TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-2781589
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3860 N. FIRST STREET, SAN JOSE, CALIFORNIA 95134
(Address of principal executive offices)
Registrant's telephone number, including area code: (408) 428-9000.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes __X__ No _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<S> <C>
Class Shares Outstanding at July 29, 1994
-------------------------------------- -----------------------------------
Common Stock, $0.01 par value 13,418,189
</TABLE>
<PAGE> 2
PYRAMID TECHNOLOGY CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
Consolidated Statement of Operations
Three and nine months ended July 1, 1994 and July 2, 1993 3
Condensed Consolidated Balance Sheet
July 1, 1994 and September 30, 1993 4
Condensed Consolidated Statement of Cash Flows
Nine months ended July 1, 1994 and July 2, 1993 5
Notes to Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
PART II. OTHER INFORMATION
-----------------
Item 1. Legal Proceedings 12
Item 6. Listing of Exhibits and Reports on Form 8-K 12
Signatures 13
Index to Exhibits 14
First Amendment to Revolving Credit Agreement 15-27
Partnership Agreement 28-72
</TABLE>
2
<PAGE> 3
PART 1. FINANCIAL INFORMATION
PYRAMID TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ --------------------
JULY 1 JULY 2 JULY 1 JULY 2
1994 1993 1994 1993
------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Product revenues $37,436 $44,544 $111,609 $129,056
Service revenues 16,376 15,478 48,769 44,093
------- ------- -------- --------
53,812 60,022 160,378 173,149
Cost of sales:
Cost of products sold 22,263 21,183 66,330 64,135
Cost of services 12,711 11,664 37,642 34,297
------- ------- -------- --------
34,974 32,847 103,972 98,432
Gross profit 18,838 27,175 56,406 74,717
Operating expenses:
Research and development 5,790 6,811 19,441 21,618
Sales, marketing, general & administrative 18,787 16,751 55,176 47,396
------- ------- -------- --------
Total operating expenses 24,577 23,562 74,617 69,014
------- ------- -------- --------
Operating income (loss) (5,739) 3,613 (18,211) 5,703
Interest income 103 201 375 563
Interest expense (152) (110) (507) (442)
------- ------- -------- --------
Income (loss) before income taxes (5,788) 3,704 (18,343) 5,824
Provision for income taxes 152 370 2,935 582
------- ------- -------- --------
Net income (loss) $(5,940) $ 3,334 $(21,278) $ 5,242
======= ======= ======== ========
Net income (loss) per common and
common equivalent share $ (0.44) $ 0.25 $ (1.59) $ 0.42
======= ======= ======== ========
Shares used in computing net income (loss)
per common and common equivalent share 13,410 13,428 13,346 12,611
======= ======= ======== ========
</TABLE>
See accompanying notes
3
<PAGE> 4
PYRAMID TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
JULY 1 SEPTEMBER 30
1994 1993
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 20,344 $ 31,358
Accounts receivable, net 51,607 51,392
Inventories 31,395 35,712
Prepaid expenses and deposits 9,816 11,873
-------- ------------
Total current assets 113,162 130,335
Property and equipment, at cost 102,844 95,273
Less accumulated depreciation and amortization 72,407 60,686
-------- ------------
30,437 34,587
Capitalized software development costs 17,321 15,959
Service spare parts and other assets 12,965 10,777
-------- ------------
$173,885 $191,658
======== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 16,207 $ 20,312
Accrued payroll and related liabilities 5,926 7,043
Accrued commissions 2,009 2,419
Defeffed revenue 11,840 7,197
Other accrued liabilities 11,133 8,764
Restructuring accruals 2,792 4,464
Income taxes payable 1,694 1,561
Current portion of long-term debt 1,688 1,795
-------- ------------
Total current liabilities 53,289 53,555
Long-term debt 1,888 487
Shareholders' equity:
Common stock 134 132
Additional paid-in capital 156,829 155,078
Accumulated deficit (36,793) (15,514)
Accumulated translation adjustment (1,462) (2,080)
-------- ------------
Total shareholders' equity 118,708 137,616
-------- ------------
$173,885 $191,658
======== ============
</TABLE>
See accompanying notes
4
<PAGE> 5
PYRAMID TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------
JULY 1 JULY 2
1994 1993
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(21,278) $ 5,242
Adjustments to reconcile net income (loss) to
net cash from operating activities:
Depreciation and amortization 22,767 22,713
Changes in:
Accounts receivable, net (215) (9,301)
Inventories 4,317 (4,382)
Prepaid expenses and deposits and income tax receivable 2,057 1,754
Accounts payable, accrued liabilities, and other 542 (4,045)
-------- --------
Net cash provided by operating activities 8,190 11,981
-------- --------
Cash flows from investing activities:
Investment in property and equipment (9,957) (10,686)
Increase in capitalized software development costs (7,128) (6,113)
(Increase) decrease in other assets (5,152) 2,418
-------- --------
Net cash used for investing activities (22,237) (14,381)
-------- --------
Cash flows from financing activities:
Principal payments on long-term debt (1,930) (1,204)
Borrowings under loan agreement 3,223 --
Issuance of common stock, net of repurchases 1,740 4,548
-------- --------
Net cash provided by financing activities 3,033 3,344
-------- --------
Increase (decrease) in cash and cash equivalents (11,014) 944
Cash and cash equivalents, at the beginning of the period 31,358 26,458
-------- --------
Cash and cash equivalents, at the end of the period $ 20,344 $ 27,402
======== ========
Supplemental disclosures of cash flow information:
Cash paid for interest................................................ $ 507 $ 442
Cash paid for income taxes............................................ $ 612 $ 116
</TABLE>
See accompanying notes
5
<PAGE> 6
PYRAMID TECHNOLOGY CORPORATION
Notes to Consolidated Financial Statements
(unaudited)
Basis of presentation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries after elimination of all significant intercompany
transactions.
While the financial information furnished is unaudited, the statements in this
report reflect all adjustments, consisting of normal recurring accruals, which,
in the opinion of management, are necessary for a fair statement of the results
of operations for the interim periods covered and of the financial condition of
the Company at the dates of the balance sheets. The operating results for the
interim periods presented are not necessarily indicative of the results to be
expected for the entire year.
Certain footnotes normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted.
These financial statements should be read in conjunction with the Company's
audited financial statements and notes thereto for the fiscal year ended
September 30, 1993.
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market and
consist of the following (in thousands):
<TABLE>
<CAPTION>
July 1 September 30
1994 1993
---------- ----------
<S> <C> <C>
Raw materials $17,278 $12,236
Work-in-process 6,797 14,517
Finished goods 7,320 8,959
--------- ---------
$31,395 $35,712
--------- ---------
</TABLE>
Related Party Transactions
During the second quarter of fiscal 1994, a senior executive of a major
customer and vendor of the Company was elected to the Company's board of
directors. The related party accounted for approximately 4% of the Company's
revenue during the first nine months of fiscal 1994. Additionally, the Company
has contracted with the related party to perform consulting services totaling a
minimum of $7,000,000 per year over a nine year period. At July 1, 1994, the
Company had an account receivable balance of $510,000 from the related party
and owed the related party $1,565,000 for consulting services rendered.
Additionally, during the third quarter of fiscal 1994, the Company made
a sale to a customer which accounted for approximately 2% of the Company's third
quarter revenues, and also purchased $900,000 of prepaid software licenses from
the customer. The Company's chairman of the board is on the customer's board of
directors. At July 1, 1994, the Company had an account receivable balance of
$980,000 from the related party and owed the related party $900,000 for the
prepaid software licenses.
6
<PAGE> 7
PYRAMID TECHNOLOGY CORPORATION
Notes to Consolidated Financial Statements
(unaudited)
Line of Credit
In July 1993, the Company obtained a $20,000,000 line of credit. At April 1,
1994, the Company was in violation of certain financial requirements of the
line of credit and obtained a waiver from the bank. The credit facility was
amended at that time to provide the Company the ability to borrow the lesser of
$10,000,000 or an amount computed based on a borrowing base formula. Amounts
borrowed under the line of credit are secured by the Company's accounts
receivable. The line of credit, which expires on October 31, 1994, requires
the maintenance of certain financial ratios and sets limitations on the Company
in regards to other indebtedness, guarantees, encumbrances, mergers,
consolidations, sale and leaseback of assets, equity distributions, annual
capital expenditures and capital software levels. To date, there have been no
borrowings under the line of credit.
7
<PAGE> 8
PYRAMID TECHNOLOGY CORPORATION
Notes to Consolidated Financial Statements
(unaudited)
Net income (loss) per common and common equivalent share
Net income (loss) per common and common equivalent share is computed
using the weighted average number of common and dilutive common equivalent
shares outstanding during the period. Common equivalent shares consist of the
dilutive shares issuable upon the exercise of stock options using the treasury
stock or modified treasury stock method (whichever applies). For the three and
nine month periods ended July 1, 1994, no common equivalent shares were
included in the computation of net loss per share as their effect would be
anti-dilutive. For the three and nine month periods ended July 2, 1993, common
equivalent shares were computed using the modified treasury stock method.
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
July 1 July 2
1994 1993
---------- -----------
<S> <C> <C>
Average shares outstanding 13,410 12,434
Net effect of dilutive stock options -- 994
---------- ----------
Shares used in computing net income (loss) per
common and common equivalent share 13,410 13,428
Net income (loss) $ (5,940) $ 3,334
Net income (loss) per common and common
equivalent share $ (0.44) $ 0.25
Nine Months Ended
--------------------------------
July 1 July 2
1994 1993
---------- ----------
Average shares outstanding 13,346 12,280
Net effect of dilutive stock options -- 331
---------- ----------
Shares used in computing net income (loss) per
common and common equivalent share 13,346 12,611
Net income (loss) $ (21,278) $ 5,242
Net income (loss) per common and common
equivalent share $ (1.59) $ 0.42
</TABLE>
8
<PAGE> 9
PYRAMID TECHNOLOGY CORPORATION
Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion should be read in conjunction with the attached
consolidated financial statements and notes thereto, and with the Company's
audited financial statements and notes thereto for the year ended September 30,
1993.
Results of Operations
Total revenues for the third quarter and first nine months of fiscal 1994
decreased 10% and 7% to $53,812,000 and $160,378,000 from the third quarter and
first nine months of fiscal 1993 levels of $60,022,000 and $173,149,000.
The decrease in product revenues for the third quarter of fiscal 1994 as
compared to the third quarter of fiscal 1993 was primarily attributable to the
decline in business with traditional international OEM partners as well as
decreases in direct product revenues from that of a year ago. The decrease in
product revenues for the first nine months of fiscal 1994 as compared to the
first nine months of fiscal 1993 was primarily attributable to the decline in
business with traditional international OEM partners such as Siemens Nixdorf,
Olivetti, Hyundai, and Sharp. Direct product revenues were $24,683,000 or 66%
of total product revenues for the third quarter of fiscal 1994 compared to
$29,528,000 or 66% in the third quarter of fiscal 1993, and $70,787,000 or 63%
of total product revenues for the first nine months of fiscal 1994 compared to
$73,712,000 or 57% in the first nine months of fiscal 1993.
Total revenues from AT&T were $9,695,000 or 18% of total revenues for the third
quarter of fiscal 1994 compared to $10,285,000 or 17% in the third quarter of
fiscal 1993, and $29,967,000 or 19% of total revenues for the first nine months
of fiscal 1994 compared to $30,454,000 or 18% in the first nine months of
fiscal 1993. A portion of this revenue is a result of the Treasury Multiuser
Acquisition Contract "TMAC", which was awarded to AT&T with Pyramid as the
major subcontractor. Although revenues appear fairly stable when comparing the
aforementioned periods, the Company believes that revenues from AT&T may
flucutate as purchase quantities vary in connection with "TMAC".
International product revenues were $13,756,000 or 37% of total product
revenues for the third quarter of fiscal 1994 compared to $19,794,000 or 44% in
the third quarter of fiscal 1993, and $41,824,000 or 37% of total product
revenues for the first nine months of fiscal 1994 compared to $58,530,000 or
45% in the first nine months of fiscal 1993. The dollar value of international
product revenues decreased 31% from the third quarter of fiscal 1993 to the
third quarter of fiscal 1994, as increases in Australian sales and sales to
Olivetti and ICL were more than offset by sizeable decreases in sales to
Siemens Nixdorf, Hyundai, and Sharp. UK direct product revenues were also down
from that of a year ago. There were no nonrecurring software license fees
included in international revenues in the third quarter of fiscal 1994 and
$4,900,000 in the first nine months of fiscal 1994 compared to $4,132,000 and
$7,388,000 in the third quarter and first nine months of fiscal 1993. During
the quarter, a partnership agreement between Pyramid Technology Australia PTY,
Ltd. and Fujitsu Australia Limited was signed. Pyramid Data Centre Systems,
the new joint venture created by the agreement, began operations on July 2,
1994. The new venture will market Pyramid's Nile(TM) Series of scalable
enterprise servers along with complimentary Fujitsu and ICL hardware and
mainframe connectivity software. Pyramid Data Centre Systems' focus will be
the high-end commercial data center computing market, with emphasis on major
Australian corporations that are downsizing their mainframe operations.
9
<PAGE> 10
PYRAMID TECHNOLOGY CORPORATION
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Service revenues for the third quarter and first nine months of fiscal 1994
continued to benefit from the increasing base of installed Pyramid systems. In
June 1992, the Company announced a North American service agreement with Bull
HN Information Systems, Inc., which has increased the number of support
personnel available for on-site service to Pyramid customers in North America.
In March 1993, the Company entered into a European service agreement with
Siemens Nixdorf, which increased the number of support personnel available for
on-site service to Pyramid customers in Europe. In December 1993, the Company
modified an existing service agreement with Fujitsu Australia, Ltd., which
increased the number of support personnel available for on-site service to
Pyramid customers in all of Australia.
Gross profit as a percentage of revenues in the third quarter and first nine
months of fiscal 1994 was 35% compared to 45% and 43% in the third quarter and
first nine months of fiscal 1993. The decrease in gross profit was due to the
decrease in revenues experienced during the third quarter and first nine months
of fiscal 1994 in relation to fixed costs. In the future, gross profit as a
percentage of revenues may be adversely affected by a decrease in nonrecurring
software license fees, which historically have yielded higher margins,
significant fluctuations in currency exchange rates, and intensified
competitive pressures. The Company believes that gross profit as a percentage
of revenue for the fourth quarter of fiscal 1994 will be lower than the
percentage for the fourth quarter of fiscal 1993, which may affect the
Company's overall operating results.
Research and development expenses as a percentage of revenues were 11% and 12%
in the third quarter and first nine months of fiscal 1994 compared to 11% and
12% in the third quarter and first nine months of fiscal 1993. In absolute
dollars, these expenses decreased $1,021,000 and $2,177,000 from the third
quarter and first nine months of fiscal 1993 to the third quarter and first
nine months of fiscal 1994 due primarily to a reduction in research and
development personnel. In accordance with Statement of Financial Accounting
Standards No. 86, the Company capitalized $1,950,000 and $7,128,000 of software
development costs in the third quarter and first nine months of fiscal 1994
compared to $2,348,000 and $6,112,000 in the third quarter and first nine
months of fiscal 1993. The Company believes the enhancement of existing
products and the development of new products is essential to maintaining a
competitive marketing position. Accordingly, the Company is committed to a
high level of research and development expenditures. However, because of the
inherent uncertainties of product development projects in the Company's
technology-intensive industry, there can be no assurance that research and
development efforts will result in successful product enhancements or
introductions, or, ultimately in increased revenues.
Sales, marketing, and general and administrative expenses as a percentage of
revenues were 35% and 34% in the third quarter and first nine months of fiscal
1994 compared to 28% and 27% in the third quarter and first nine months of
fiscal 1993. In absolute dollars, these expenses increased $2,036,000 and
$7,780,000 from the third quarter and first nine months of fiscal 1993 to the
third quarter and first nine months of fiscal 1994 due primarily to increases
in sales and marketing personnel. The Company expects total sales, marketing,
general and administrative expenses to increase during the fourth quarter of
fiscal 1994 as commission expenses increase with the increase in cumulative
revenue and as the Company increases the number of revenue-producing direct
sales people and marketing personnel to enhance the Company's direct sales
capacity.
10
<PAGE> 11
PYRAMID TECHNOLOGY CORPORATION
Management's Discussion and Analysis of Financial
Condition and Results of Operations
The amount of interest income for the third quarter and first nine months of
fiscal 1994 was $103,000 and $375,000 compared to $201,000 and $563,000 in the
third quarter and first nine months of fiscal 1993. The decrease was primarily
a result of lower average daily cash balances in the third quarter and first
nine months of fiscal 1994 as compared to the year-ago periods. The Company
intends to continue investing its available funds in short-term, highly-liquid
income producing obligations. The amount of interest expense for the third
quarter and first nine months of fiscal 1994 was $152,000 and $507,000 compared
to $110,000 and $442,000 in the third quarter and first nine months of fiscal
1993. The increase was due to a higher level of capital lease and loan
obligations.
The income tax provision for the first nine months of fiscal 1994 includes a
$2,523,000 charge for a write-off of the Company's deferred tax assets. For
the remainder of fiscal 1994, it is anticipated that the Company will be
reporting minimal amounts of income tax liability and the effective tax rate is
expected to be less than 10%. Effective October 1, 1993, the Company adopted
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (FAS 109), which establishes a new method of accounting for income
taxes. The effect of the adoption of FAS 109 on net income in fiscal 1994 was
not material.
The Company's agreements with its OEMs and distributors, including its TMAC
agreement through AT&T, do not require minimum purchase quantities and
therefore there can be no assurance that the Company will receive future
revenues under these agreements. A substantial portion of the Company's
revenues in each quarter generally results from shipments during the last month
of that quarter, and principally for that reason, the Company's revenues are
subject to quarterly fluctuations. In addition, the Company establishes its
expenditure-level targets based on expected revenues. If anticipated orders
and shipments in any quarter do not occur when expected, expenditure levels
could be disproportionately high and the Company's operating results for that
quarter could be adversely affected. The Company's operating results may also
be subject to quarterly fluctuations as a result of a number of factors,
including the timing of orders from and shipments to major customers, product
mix, variations in product costs, the mix of revenues, nonrecurring operating
system and manufacturing license fees, increased competition, the ability to
introduce new products on a timely basis, and general economic conditions.
Liquidity and Capital Resources
The Company has financed its operating expenses and working capital needs
primarily through a combination of internally generated cash and cash balances.
Cash and cash equivalents increased during the quarter from $19,256,000 at
April 1, 1994 to $20,344,000 at July 1, 1994. Net cash provided by operating
activities during the first nine months of fiscal 1994 was $8,190,000 as
compared to $11,981,000 during the same period of fiscal 1993. The Company's
investing activities used $22,237,000 in cash during the first nine months of
fiscal 1994 as compared to $14,381,000 during the same period of fiscal 1993.
Financing activities provided $3,033,000 in cash during the first nine months
of fiscal 1994 as compared to $3,344,000 during the same period of fiscal 1993.
In July 1993, the Company obtained a $20,000,000 line of credit. At April 1,
1994, the Company was in violation of certain financial requirements of the
line of credit and obtained a waiver from the bank. The credit facility was
amended at that time to provide the Company the ability to borrow the lesser of
$10,000,000 or an amount computed based on a borrowing base formula. Amounts
borrowed under the line of credit are secured by the Company's accounts
receivable.
11
<PAGE> 12
PYRAMID TECHNOLOGY CORPORATION
Management's Discussion and Analysis of Financial
Condition and Results of Operations
The line of credit, which expires on October 31, 1994, requires the maintenance
of certain financial ratios and sets limitations on the Company in regards to
other indebtedness, guarantees, encumbrances, mergers, consolidations, sale and
leaseback of assets, equity distributions, annual capital expenditures and
capital software levels. To date, there have been no borrowings under the line
of credit. During October 1993, the Company entered into a borrowing
agreement with a lending company. The agreement provides for up to $10,500,000
of three year eligible capital equipment financing at interest rates based on
three year treasury notes for the week preceding each funding date. All
fundings must occur on or before September 30, 1994. At July 1, 1994,
$3,150,000 of equipment had been financed under this agreement. Failure to
negotiate revisions and/or extensions of these facilities or to obtain new bank
agreements on terms favorable to the Company could have an adverse impact on
its operations and financial results.
Based upon its current operating plan, the Company anticipates that internally
generated funds and cash balances, together with existing financing
arrangements, will be sufficient to satisfy capital requirements through fiscal
1994. However, the Company may raise additional capital through debt or equity
financing to take advantage of market opportunities.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
During the first quarter of fiscal 1994, two shareholder class action
complaints were filed naming as defendants the Company and certain of its
officers and directors, and alleging violations of federal securities laws as
well as a state law fraud claim. The complaints alleged that the Company made
false and misleading statements in press releases and other public statements
and that some of the individual defendants traded the Company's common stock on
inside information. The complaints sought an award of an unspecified amount of
damages. The cases were consolidated by order of the district court on July
14, 1994. After review of initial disclosures made by the Company and
discussions with the Company's attorneys, counsel for the plaintiffs agreed to
dismiss the actions. On July 26, 1994, pursuant to a stipulation of the
parties, the district court entered an order for dismissal without predjudice
of the consolidated actions.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
(10.49) First Amendment to the Revolving Credit Agreement with Limited
Waivers with the Bank of Boston dated May 31, 1994.
(10.50) Partnership Agreement with Fujitsu Data Centre Systems PTY
Limited and Fujitsu Australia Limited dated June 10, 1994.
b. There were no reports on Form 8-K filed during the quarter ended
July 1, 1994.
12
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PYRAMID TECHNOLOGY CORPORATION
Dated: August 12, 1994 By /s/ Kent L. Robertson
____________________________
Kent L. Robertson
Senior Vice President,
Chief Financial Officer
(Principal Financial Officer)
Dated: August 12, 1994 By /s/ James J. Nelson
____________________________
James J. Nelson
Vice President,
Corporate Controller
(Principal Accounting Officer)
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- -----------
<S> <C> <C>
10.49 First Amendment to the Revolving Credit Agreement
with Limited Waivers with the Bank of Boston dated
May 31, 1994 15-27
10.50 Partnership Agreement with Fujitsu Data Centre Systems
PTY Limited and Fujitsu Australia Limited dated
June 10, 1994 28-72
</TABLE>
14
<PAGE> 1
EXHIBIT 10.49
FIRST AMENDMENT TO
REVOLVING CREDIT AGREEMENT
WITH LIMITED WAIVERS
THIS FIRST AMENDMENT ("Amendment") is made and entered into as of May 31,
1994, by and among PYRAMID TECHNOLOGY CORPORATION, a Delaware corporation
("Borrower"), THE FIRST NATIONAL BANK OF BOSTON, a national banking
association ("FNBB"), and each other lender whose name is set forth on
the signature pages to the Credit Agreement (defined below) or which
may hereafter execute and deliver an instrument of assignment with
respect to the Credit Agreement (each, a "Bank", and collectively,
"Banks"), and FNBB, as Agent for Banks.
RECITALS
A. Borrower, Agent and Banks have entered into that certain Revolving
Credit Agreement dated as of July 30, 1993 (the "Credit Agreement"), pursuant
to which Lender made available to Borrower a revolving credit facility in the
aggregate principal amount of up to Twenty Million Dollars ($20,000,000)
outstanding at any time.
B. Borrower, Agent and Banks desire to amend and to make limited waiver of
certain provisions of the Credit Agreement as provided herein.
AGREEMENT
Now, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants herein set forth, and intending to be legally bound, the parties
hereto hereby amend the Credit Agreement as follows:
1. DEFINITIONS. Unless otherwise defined herein, all terms defined in
the Credit Agreement have the same meaning when used herein.
2. Together with the specific changes set forth below, all references to
"Eurodollar Loans" and the conversion of Loans, are hereby deleted from the
Credit Agreement.
3. Section 1. 1 is hereby amended by deleting the definitions for
"Affected Loan", "Eurodollar Loan" and "Interest Period" in their entirety, and
by adding the following definitions in alphabetical order within Section 1.1:
"ACCOUNTS. Any "account," as such term is defined in Section 9106 of
the UCC, now owned or hereafter acquired by Borrower and, in any event,
shall include, without limitation, all accounts receivable, book debts
and other forms of obligations (other than forms of obligations evidenced
by chattel paper, documents or instruments) now owned or hereafter
received or acquired by or belonging or owing to Borrower (including,
1.
<PAGE> 2
without limitation, under any trade name, style or division thereof)
arising out of goods sold or services rendered by Borrower, and all
monies due or to become due to Borrower under all purchase orders and
contracts for the sale of goods or the performance of services or both
by Borrower (whether or not yet earned by performance on the part of
Borrower or in connection with any other transaction), now in existence
or hereafter occurring, including, without limitation, the right to
receive the proceeds of purchase orders and contracts, and all collateral
security and guarantees of any kind given by any person with respect to
any of the foregoing."
"BORROWING BASE. An amount equal to seventy percent (70%) of
Eligible Accounts; or such other percentage as Requisite Lenders shall
determine following completion of a commercial finance exam performed
by FNBB."
"COLLATERAL. The property of Borrower covered by the Security
Agreement, and any other property, now existing or hereafter acquired,
that may at any time be or become subject to a lien granted or created
in favor of Agent, on behalf of Banks, to secure the full and complete
payment and performance of Borrower's Obligations."
"ELIGIBLE ACCOUNTS. At any time, the aggregate of Borrower's
Accounts excluding, however (a) all Accounts in respect of which full
payment has not been received within ninety (90) days of the invoice
date; (b) all Accounts as to which the goods, merchandise or other
personal property or the rendition of services has not been fully and
completely delivered or performed; (c) all Accounts against which the
account debtor or any other person obligated to make payment thereon
asserts any defense, offset, counterclaim or other right to avoid or
reduce the liability represented by such Accounts; (d) all Accounts as
to which the account debtor or other person obligated to make payment
thereon is insolvent, subject to bankruptcy or receivership proceedings
or has made an assignment for the benefit of creditors or whose credit
standing is unacceptable to Agent and Agent has so notified Borrower; (e)
all Accounts in which Borrower or an affiliate of Borrower is the account
debtor; (f) all Accounts for any account debtor who comprises fifteen
percent (15%) or more of Borrower's total Accounts, but only to the
extent such Accounts exceed fifteen percent (15%) of Borrower's total
Accounts; (g) all Accounts of any governmental agency unless Agent, on
behalf of Banks, has received a lien in and to such Accounts which is
perfected; (h) in the event thirty percent (30%) or more of the Accounts
of any account debtor shall be deemed ineligible under clause (a) above,
all accounts of such account debtor; and (i) any Account which Agent in
its reasonable discretion shall deem not to qualify as an Eligible
Account."
"FINANCING STATEMENTS. The UCC-1 financing statement(s) executed by
Borrower, as debtor, in favor of Agent, on behalf of Banks, as secured
party."
"REQUISITE BANKS. Any combination of Banks whose combined pro rata
share of all amounts outstanding hereunder or the Commitment Amount is
greater than sixty-six
2.
<PAGE> 3
and two-thirds percent (66 2/3%) of all such amounts outstanding or the
Commitments, as the case may be."
"SECURITY AGREEMENT. The Security Agreement to be entered into
between Borrower and Agent, on behalf of Banks, substantially in the
form of Exhibit E, and shall refer to such Security Agreement as the
same may be in effect from time to time."
"UCC. The Uniform Commercial Code as the same may, from time to
time, be in effect in the State of California; provided, however, in the
event that, by reason of mandatory provisions of law, any and all of the
attachment, perfection or priority of the lien of Agent, on behalf of
Banks, in and to the Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than the State of California,
the term "UCC" shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating
to such attachment, perfection or priority and for purposes of
definitions related to such provisions."
4. The definition of "COMMITMENT AMOUNT" in Section 1.1 is hereby amended
by replacing the amount of "$20,000,000" with "$10,000,000" in the first line
thereof.
5. The definition of "LOAN DOCUMENTS" in Section 1.1 is hereby
amended by insertng the phrase "the Security Agreement" immediately following
"the Note," in the first line thereof.
6. The definition of "REVOLVING CREDIT TERMINATION DATE" is hereby
deleted in its entirety and replaced with "October 31, 1994".
7. Section 2. 1 (a) is hereby amended by deleting it in its
entirety and replacing it with the following:
"(a) Subject to the terms and conditions hereof, each Bank severally
agrees to make Revolving Loans to the Borrower up to the amount of its
Commitment, from time to time until the close of business on the Revolving
Credit Termination Date, in such sums as Borrower may request, provided
that the aggregate principal amount of all Loans at any one time
outstanding hereunder shall not exceed the lesser of (i) the Borrowing
Base, and (ii) the Commitment Amount less any outstanding amount of
Subsidiary Loans (the "Maximum Availability"). Borrower may borrow,
prepay pursuant to Section 2.11 and reborrow, from the date of this
Agreement until the Revolving Credit Termination Date, the full amount
of the Commitment Amount or any lesser sum that is at least $1,000,000
and an integral multiple of $100,000. Any Revolving Loan not repaid by
the Revolving Credit Termination Date shall be due and payable on the
Revolving Credit Termination Date."
8. Section 2.1(b) is hereby deleted in its entirety.
3.
<PAGE> 4
9. Section 2.2(a) is amended by deleting the section in its entirety and
replacing it with the following:
"(a) Whenever Borrower desires to obtain a Loan hereunder, the
Borrower shall notify the Agent (which notice shall be irrevocable) by
telex, electronic facsimile transmission, telegraph or telephone received
no later than 1:00 p.m. Boston time on the date one Business Day before
the day on which the requested Loan is to be made. Such notice shall
specify the effective date and amount of each Loan or portion thereof to
be continued or converted, subject to the limitations set forth in Section
2.1. Each such notification (a "NOTICE OF BORROWING") shall be immediately
followed by a written confirmation thereof by the Borrower in substantially
the form of Exhibit B hereto, provided that if such written confirmation
differs in any material respect from the action taken by the Agent, the
records of the Agent shall control absent manifest error."
10. Section 2.4 is hereby amended by deleting the section in its entirety
and replacing it with the following:
"COMMITMENT FEE. Borrower shall pay to Agent for the account of each
Bank during the Revolving Credit Period a commitment fee computed at the
rate of one-half of one percent (1/2 of 1%) per annum on the average
daily amount of the unborrowed portion of the Commitment Amount during
each month or portion thereof until such time as Borrower shall receive
an injection of additional equity in an amount equal to not less than
Fifteen Million Dollars ($15,000,000), and at the rate of one-quarter of
one percent (1/4 of 1%) thereafter. Commitment fees shall be payable
monthly in arrears, on the last day of each month beginning May 31, 1994,
and on the last day of the Revolving Credit Period. Letters of Credit
shall be deemed a borrowing to the extent of their undrawn amount for
purposes of this Section 2.4(a)."
11. Sections 2.7, 2.9(a) and 2.14 are hereby deleted in their entirety.
12. Section 2.8 is hereby amended by deleting it in its entirety and
replacing it with the following:
"Each Base Rate Loan shall bear interest on the outstanding principal
amount thereof at a rate per annum equal to the Base Rate plus 150 basis
points. Such interest shall be payable on the last day of each month
commencing August 31, 1993, and when such Loan is due (whether at
maturity, by reason of acceleration or otherwise)."
13. Section 2.16 is hereby amended by adding "and shall be secured by
all of the Collateral" at the end of such Section.
14. Section 4.9 is hereby amended by deleting it in its entirety and
replacing it with the following:
4.
<PAGE> 5
"TAXES. All material federal, state, local and foreign tax returns,
reports and statements required to be filed by Borrower and, to the best
of Borrower's knowledge, after due inquiry, by any of Borrower's
Subsidiaries have been filed with the appropriate governmental agencies
and all charges and other impositions shown thereon to be due and payable
by Borrower or such Subsidiary have been paid prior to the date on which
any fine, penalty, interest or late charge may be added thereto for
nonpayment thereof, or any such fine, penalty, interest, late charge or
loss has been paid, or Borrower or such Subsidiary is contesting its
liability therefore in good faith and has fully reserved all such
amounts in the financial statements provided to Agent pursuant to Section
5.1, or any such fine, penalty, interest or late charge will not have a
Material Adverse Effect upon the business operations or assets of
Borrower. Borrower and, to the best of Borrower's knowledge, after
due inquiry, each of Borrower's Subsidiaries has paid when due and
payable all taxes and other charges upon the books of Borrower or such
Subsidiary. Proper and accurate amounts have been withheld by Borrower
and, to the best of Borrower's knowledge, each of Borrower's Subsidiaries
from its employees for all periods in full and complete compliance with
the tax, social security and unemployment withholding provisions of
applicable federal, state, local and foreign law and such withholdings
have been timely paid to the respective governmental agencies."
15. Section 4.14 is hereby deleted in its entirety and replaced with the
following:
"(a) ERISA. All Pension Plans of Borrower, including terminated
Pension Plans, that are intended to be qualified under Section 401(a)
of the Internal Revenue Code (the "Code") have been determined by the
IRS to be qualified. All Pension Plans existing as of the date hereof
continue to be so qualified. No "reportable event" (as defined in Section
4043 of ERISA) has occurred and is continuing with respect to any Pension
Plan for which the thirty-day notice requirement may not be waived other
than those of which the appropriate Governmental Agency has been notified.
All Employee Benefit Plans of Borrower have been operated in all material
respects in accordance with their terms and applicable law, including
ERISA, and no "prohibited transaction" (as defined in ERISA and the Code)
that would result in any material liability to Borrower or any of
Borrower's Subsidiaries has occurred with respect to any such Employee
Benefit Plan.
(b) LABOR MATTERS. There are no strikes or other labor disputes
against Borrower or any of Borrower's Subsidiaries or, to the best of
Borrower's knowledge, threatened against Borrower or any of Borrower's
Subsidiaries, which would have a Material Adverse Effect. Hours worked
by and payment made to employees of Borrower or, to the best of Borrower's
knowledge, or any of Borrower's Subsidiaries have not been in violation of
the Fair Labor Standards Act or any other applicable law dealing with
such matters which would have a Material Adverse Effect. All payments
due from Borrower on account of employee health and welfare insurance
which would have a Material Adverse Effect if not paid have been paid
or, if not due, accrued as a liability on the books of Borrower.
5.
<PAGE> 6
(c) EMPLOYMENT AND LABOR AGREEMENTS. Except as set forth on Schedule
4.14, there are no employment agreements covering management of Borrower
or any of Borrower's Subsidiaries and there are no collective bargaining
agreements or other labor agreements covering any employees of Borrower
or any such Subsidiary. A true and complete copy of each such agreement
has been furnished to Agent."
16. A new Section 4.16 is hereby added as follows:
"4.16 OTHER AGREEMENTS. Neither Borrower nor any of Borrower's
Subsidiaries is a party to or is bound by any agreement, contract,
lease, license or instrument, or is subject to any restriction under its
respective charter or formation documents, which has, or is likely in the
future to have, a Material Adverse Effect."
17. A new Section 4.17 is hereby added as follows:
"4.17 FULL DISCLOSURE. No information contained in this Agreement,
the other Loan Documents or any other documents or written materials
furnished by or on behalf of Borrower to Agent or any Bank pursuant to
the terms of this Agreement or any of the other Loan Documents contains
any untrue or inaccurate statement of a material fact or omits to state
a material fact necessary to make the statement contained herein or
therein not misleading in light of the circumstances under which made."
18. Section 5.1(b) is hereby amended by deleting it in its entirety
and replacing it with the following:
"(B) as soon as available, but in any event within 30 days after the
end of each month, a consolidated and consolidating balance sheet as of
the end of, and a related consolidated and consolidating statements of
income and cash flow for, the period then ended, certified by the chief
financial officer of Borrower but subject, however, to normal, recurring
year-end adjustments that shall not in the aggregate be material in
amount;"
19. Section 5.1(c) is hereby amended by deleting it in its entirety and
replacing it with the following:
"(C) concurrently with the delivery of each financial statement
pursuant to subsections (a) and (b) of this Section 5.1, a report in
substantially the form of Exhibit C hereto signed on behalf of Borrower
by its chief financial officer, which report shall include an aging of
Borrower's Accounts;"
20. Section 5.7(a) "Quick Ratio", and Section 5.7(c) "Consolidated
Tangible Net Worth", are hereby deleted in their entirety.
6.
<PAGE> 7
21. A new Section 5.9 is added as follows:
"REMITTANCE OF PROCEEDS. Beginning as soon as practicable and in no
event later than July 15, 1994, Borrower shall deliver, on a daily basis
or as often as payments are received, its primary cash balances to its
account with FNBB at FNBB's head office in Boston, Massachusetts. The
balances in such account shall be applied to Borrower's Obligations
hereunder on a daily basis to the extent such Obligations exist."
22. Section 6.4(g) is hereby amended by replacing the amount of
"$2,000,000" in line two thereof with the amount of "$7,000,000".
23. Section 6.10 is deleted in its entirety and replaced with the
following:
"PERMITTED LOSSES. Borrower shall not incur operating losses in
excess of $15,000,000 for the fiscal quarter ending April 2, 1994; in
excess of $6,500,000 for the fiscal quarter ending closest to June 30,
1994; nor in excess of $3,000,000 for the fiscal quarter ending nearest
to September 30, 1994."
24. Section 9.1 is hereby amended by replacing the contact name for
Borrower with "Kent L. Robertson", and for Cooley Godward Castro Huddleson &
Tatum with "Pamela J. Martinson".
25. Section 9.8 is hereby amended by deleting it in its entirety and
replacing it with the following:
"AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to
any departure by Borrower therefrom, shall be effective unless the same
shall be in writing and signed by Requisite Banks and the Borrower, and
then such waiver shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no such
waiver, amendment, or consent shall, unless in writing and signed by all
of the Banks and the Borrower, do any of the following:
(a) increase the Commitment Amount or extend the Revolving Credit
Termination Date or subject any Bank to any additional obligations;
(b) postpone or delay any date fixed for any payment of principal,
interest, fees or other amounts due to the Banks (or any of them)
hereunder or under any Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or of any fees or other amounts payable hereunder
or under any Loan Document;
7.
<PAGE> 8
(d) change the percentage of the Commitment Amount or of the
aggregate unpaid principal amount of the Loans which shall be required
for the Banks or any of them to take any action hereunder; or
(e) amend this Section 9.8."
26. Exhibit C, the Report of Chief Financial Officer, is hereby amended
by adding "Schedule B - Borrowing Base" in the form attached hereto as
Exhibit A.
27. LIMITED WAIVERS. Compliance with the financial covenants contained
in Section 6.10 of the Credit Agreement regarding profitability is waived as,
and only to the limited extent as, to the fiscal quarter ending April 2, 1994;
provided, however, the consents, waivers and amendments set forth in this
Amendment shall be limited precisely as written and shall not be deemed (i) to
be a consent to any other action prohibited by, or a waiver or modification of,
any other term or condition of the Credit Agreement or of any other instrument
or agreement referred to therein or to prejudice any right or remedy which
Agent or any Bank may now have or may have in the future under or in connection
with the Credit Agreement or any instrument or agreement referred to therein;
or (ii) to be a consent to any future amendment or modification to any
instrument or agreement the execution and delivery of which is consented to
hereby, or to any waiver of any of the provisions thereof.
28. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants that
all of its representations and warranties in Section 4 of the Credit Agreement
continue to be true and complete in all material respects as of the date
hereof (except to the extent such specifically relate to another date or as
specifically described on Schedule 1 hereto) and that the execution, delivery
and performance of this Amendment are duly authorized, do not require the
consent or approval of any governmental body or regulatory authority and are
not in contravention of or in conflict with any law or regulation or any
term or provision of any other agreement entered into by Borrower.
29. CONDITIONS PRECEDENT. The legal effectiveness of this Amendment is
subject to the following conditions precedent:
A. CORPORATE DOCUMENTS. Agent shall have received (i) resolutions
of the Board of Directors of Borrower authorizing Borrower to enter into this
Amendment and to grant the security interests in the Collateral, and (ii) a
certificate of incumbency and specimen signature with respect to the authorized
representatives of Borrower executing Loan Documents and requesting Loans or
the issuance of Letters of Credit.
B. SECURITY DOCUMENTS. Agent shall have received the following:
8.
<PAGE> 9
i. the Security Agreement, in form and substance
satisfactory to Agent, duly executed and delivered by Borrower;
ii. certified copies, dated close to the date
hereof, of requests for copies or information (Form UCC-3 or equivalent), or
certificates, dated close to the date hereof, satisfactory to Agent, of a UCC
Reporter Service, listing all effective financing statements which name
Borrower as debtor and which are filed in the appropriate offices in the states
in which are located the chief executive offices or any offices or facilities
of Borrower together with copies of such financing statements, and accompanied
by written evidence (including UCC termination statements) satisfactory to
Agent that the Encumbrances indicated in any such financing statements are
either permitted hereunder or have been terminated or released;
iii. Each Financing Statement, in each instance duly
executed by Borrower, required by law or reasonably requested by Agent to be
filed, registered or recorded in order to create in favor of Agent, on behalf
of Banks, a first priority, fully perfected Encumbrance in and to the
Collateral; and
iv. An opinion of the in-house counsel to
Borrower with respect to (A) the good standing of Borrower in Delaware and its
qualification to do business in California, (B) the due authorization,
execution and delivery by Borrower of the Amendment and Security Agreement, (C)
that the execution, delivery and performance of the Amendment and Security
Agreement and the grant of a security interest pursuant thereto do not conflict
with, or result in a default under, any applicable law, Borrower's Certificate
of Incorporation or Bylaws, or any material agreement to which Borrower is a
party or by which it is bound, (D) that the Amendment and Security Agreement
are the legal, valid and binding obligations of Borrower, enforceable in
accordance with their terms, and (E) that no action, other than the filing of
the Financing Statement with the Secretary of State of California, is
necessary or required for the perfection of Agent's security interest in the
Collateral.
C. BORROWING BASE CERTIFICATE. Agent shall have
received a completed Schedule B (Borrowing Base Certificate) to the Report of
Borrower's Chief Financial Officer, dated as of the month end immediately prior
to the date hereof.
D. NOTICE AND LOCKBOX. Agent shall have received a
letter from Borrower addressed to Bank of America notifying it of Agent's
security interest in Borrower's primary deposit account maintained with Bank of
America (the "Operating Account"). Immediately following the date of the first
Loan after the date hereof and until such time as a lockbox with respect to
Borrower's Accounts is established with Agent, Borrower shall manually wire
excess balances to Agent from the Operating Account on a daily basis.
E. AMENDMENT FEE. Agent shall have received payment of
a fee from Borrower in the amount of $10,000.
9.
<PAGE> 10
30. RELEASE AND WAIVER. BORROWER HEREBY REPRESENTS AND WARRANTS TO
AGENT AND BANKS THAT IT HAS NO KNOWLEDGE OF ANY FACTS THAT WOULD SUPPORT A
CLAIM, COUNTERCLAIM, DEFENSE OR RIGHT OF SET-OFF, AND HEREBY RELEASES
AGENT AND BANKS FROM ALL LIABILITY ARISING UNDER OR WITH RESPECT TO THE CREDIT
AGREEMENT, AND WAIVE ANY AND ALL CLAIMS, COUNTERCLAIMS, DEFENSES AND RIGHTS
OF SET-OFF, AT LAW OR IN EQUITY, THAT ANY BORROWER MAY HAVE AGAINST AGENT OR
ANY BANK EXISTING AS OF THE DATE OF THIS AMENDMENT ARISING UNDER OR RELATED TO
THIS AMENDMENT, THE CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO
THE LOANS CONTEMPLATED HEREBY OR THEREBY OR TO ANY ACT OR OMISSION TO ACT BY
AGENT OR ANY BANK WITH RESPECT HERETO OR THERETO.
31. Except to the extent expressly provided in this Amendment, the
terms and conditions of the Credit Agreement shall remain in full force and
effect. This Amendment and the other Loan Documents constitute and contain the
entire agreement of the parties hereto and supersede any and all prior
agreements, negotiations, correspondence, understandings and communications
between the parties, whether written or oral, respecting the subject matter
hereof. The parties hereto further agree that the Loan Documents comprise the
entire agreement of the parties thereto and supersede any and all prior
agreements, negotiations, correspondence, understandings and other
communications between the parties thereto, whether written or oral respecting
the extension of credit by Banks to Borrower and/or its affiliates.
32. This Amendment may be executed in counterparts, each of which
when so executed shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. This Amendment
shall be deemed effective upon the execution of a counterpart hereof by each of
Borrower and Agent.
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
BORROWER PYRAMID TECHNOLOGY CORPORATION
By: /s/ Kent Robertson
-------------------------------
Name: Kent Robertson
Title: Sr. V.P. & CFO
10.
<PAGE> 11
AGENT THE FIRST NATIONAL BANK OF BOSTON
BY: /s/ George Hibbard
-----------------------------
NAME: George Hibbard
TITLE: Vice President
BANKS THE FIRST NATIONAL BANK OF BOSTON
BY: /s/ George Hibbard
------------------------------
NAME: George Hibbard
TITLE: Vice President
11.
<PAGE> 12
SCHEDULE 1
TO FIRST AMENDMENT
TO CREDIT AGREEMENT
Borrower represents and warrants that its representations and warranties
in Section 4 of the Credit Agreement, except to the extent they specifically
relate to another date, are no longer true and accurate only in the following
respects:
See new Schedule 4.14 attached
1.
<PAGE> 13
EXHIBIT A
<TABLE>
<CAPTION>
SCHEDULE B
TO
EXHIBIT C
BORROWING BASE
Eligible Accounts
- - -----------------
<S> <C>
A. The aggregate amount of Borrower's Accounts (per detailed or
summary aging of accounts receivable attached hereto). $________
B. Ineligible Accounts - list each such Account only once, in the first
category in which it appears. $________
1. Accounts as to which full payment has not been received within ninety (90) days of
the invoice date. $________
2. Accounts as to which goods, merchandise or other personal property or services have
not been fully delivered or performed. $________
3. Accounts subject to defense, offset, counterclaim or other right to avoid or reduce the
liability by the account debtor. $________
4. Accounts as to which the account debtor is insolvent, subject to bankruptcy or
receivership proceedings, has made an assignment for benefit of creditors or whose
credit standing is reasonably unacceptable to Banks and Borrower has been notified of
such. $________
5. Accounts as to which an affiliate of a Borrower or Borrower is the account debtor. $________
6. Accounts for any account debtor who comprises fifteen percent (15%) or more of any
Borrower's total Accounts to the extent such Accounts exceed fifteen percent (15%)
of Borrower's total Accounts. $________
7. Government Accounts in which Agent does not have a perfected security interest. $________
8. Accounts of any account debtor as to which thirty percent (30%) are more than ninety
(90) days past due. $________
9. Other Accounts deemed ineligible by Agent. $________
10. Total ineligible Accounts (An amount equal to the sum of Lines B.1-B.9). $________
C. The aggregate amount of Borrower's Eligible Accounts
(An amount equal to Line A minus Line B.9) $________
D. Borrowing Base (An amount equal to 70% of Eligible Accounts). $________
</TABLE>
2.
<PAGE> 1
EXHIBIT 10.50
PARTNERSHIP AGREEMENT
between
PYRAMID TECHNOLOGY CORPORATION PTY LIMITED
ACN 003 262 566
and
PYRAMID TECHNOLOGY CORPORATION
and
FUJITSU DATA CENTRE SYSTEMS PTY LIMITED
ACN 064 889 505
and
FUJITSU AUSTRALIA LIMITED
ACN 001 011 427
BAKER & McKENZIE
Solicitors
<TABLE>
<S> <C>
AMP Centre Rialto
50 Bridge Street 525 Collins Street
SYDNEY NSW 2000 MELBOURNE VIC 3000
Tel: (02) 225-0200 Tel: (03) 617-4200
Fax: (02) 223-7711 Fax: (03) 614-2103
</TABLE>
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Clause Page
- - ------ ----
<S> <C> <C>
1. Interpretation 1
2. Formation of Partnership 5
3. Management Committee 7
4. Operation of the Partnership 10
5. Business Plans 13
6. Accounting Procedure, Records of Accounts,
Rights of Inspection and Audit 14
7. Operation of Joint Account 15
8. Charges and Credits 17
9. Contributions 20
10. Sourcing of Product and Services 20
11. Profit Distribution 22
12. Insurance 24
13. Term and Termination 24
14. Consequences of Termination 26
15. Dispute Resolution 31
16. Arbitration 32
17. Indemnities 32
18. Confidentiality 33
19. Force Majeure 34
20. Assignment and Encumbrances 35
21. Governing Law, Jurisdiction and Service of Process 35
22. Notices 35
23. Guarantee and Indemnity 36
24. Miscellaneous 40
Execution 42
Schedule A - FPL Contribution 44
Schedule B - PTA Contribution 45
Schedule C - Matters for Unanimous Consent 46
Schedule D - Channel Harmony Agreement 49
</TABLE>
<PAGE> 3
PARTNERSHIP AGREEMENT
THIS AGREEMENT is made on the 10th day of June 1994
BETWEEN
PYRAMID TECHNOLOGY CORPORATION PTY LIMITED ACN 003 262 566 of
173 Pacific Highway, North Sydney, NSW ("PTA")
AND
PYRAMID TECHNOLOGY CORPORATION of 3868 North First Street, San Jose, California
95134-1782, United States of America ("PTC");
AND
FUJITSU DATA CENTRE SYSTEMS PTY LIMITED ACN 064 889 505 of 475 Victoria Avenue,
Chatswood, NSW ("FPL").
AND
FUJITSU AUSTRALIA LIMITED ACN 001 O11 427 of 475 Victoria Avenue, Chatswood,
NSW ("FAL")
RECITALS:
A. PTA and FAL each participate in the market for the supply of computer
systems, systems software and related services.
B. PTA and FPL, a wholly owned subsidiary of FAL, have agreed, at the
request of PTC and FAL, to form a partnership to service the
Australasian market for high end open computer systems on the terms
and conditions set out in this Agreement.
C. In consideration of PTA and FPL entering into this Agreement, PTC and
FAL have agreed to enter into this Agreement for the purpose, inter
alia, of guaranteeing the performance by their respective subsidiaries
of the obligations contained in this Agreement.
OPERATIVE PROVISIONS
1. Interpretation
1.1 The following words have these meanings in this Agreement unless the
contrary intention appears:
"Australian GAAP" means Australian generally accepted accounting
procedures;
"Authority" includes any government, whether federal, state,
territorial or local and any minister, office, delegate,
instrumentality or other organ of government, whether statutory or
otherwise;
"Business Day" means any day on which a bank authorised under the
Banking Act, 1959 (Cth) to carry on banking business in Australia is
open for business in Sydney;
<PAGE> 4
"Business Plan" means a business plan and budget to be
prepared in accordance with the requirements of clause 5, for
submission to and approval or amendment by the Management
Committee in accordance with this Agreement;
"Channel Harmony Agreement" means the document attached as
Schedule D to this Agreement;
"Commencement Date" means July 2, 1994;
"Exempt Contract Revenue" means with respect to any contract
between PTA and a customer forming part of Partnership Assets,
any receivable earned under any such contract by PTA before
the Commencement Date;
"Existing Contracts" means those contracts between PTA and its
customers as further identified in Schedule A (including,
without limitation, the Existing Hardware Maintenance
Contracts);
"Existing Hardware Maintenance Contracts" means the hardware
maintenance contracts between PTA and customers as further
identified in Schedule A. For the purposes of this
definition, any such contract shall be deemed to exist only
for the current term of the contract or until the equipment to
which it relates is upgraded (in which case it will be deemed
to terminate in respect of that equipment);
"Fiscal Year" means April 1 to March 31;
"FPL Capital Account" means the capital account of FPL as re-
flected on the Partnership balance sheet prepared in accordance
with Australian GAAP, representing:
(a) any contribution of capital contributed to the
Partnership by FPL;
(b) plus FPL's allocable share of any profit or minus
FPL's allocable share of any loss of the Partnership;
and
(c) minus any distribution of Partnership assets to FPL.
"FPL Loan" means the loan from FPL to the Partnership pursuant
to clause 7.3;
"Hardware Maintenance Sub-Contract" means the hardware
maintenance contract between FAL and PTA dated
December 31, 1993;
"Interest Rate" means, in relation to a period, the rate
offered by National Australia Bank for that period as its
National Base Rate as published in daily newspapers in Sydney;
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"Joint Account" means a separate bank account maintained by
the Partnership for the deposit of all Partnership monies;
"Management Committee" means the management committee formed
under Clause 3;
"Management" means the Managing Director supported by the
management and staff employed by the Partnership from time to
time and who initially comprise those persons employed
pursuant to clause 4.2;
"Partners" means PTA and FPL and their respective permitted
successors and assigns;
"Partnership" means the partnership between the Partners
formed under this Agreement for the purpose of achieving the
Partnership Objective;
"Partnership Accounts" means the set of accounts
maintained by the Partnership in accordance with
Australian GAAP to record all Partnership:
(a) income;
(b) costs, expenses, assets and liabilities;
(c) loan accounts between the Partners and the
Partnership; and
(d) capital accounts of the Partners.
"Partnership Assets" means all property whether real or
personal which is owned, leased, held, developed, constructed
or acquired for the Partnership by or on behalf of the
Partners including, without limitation, any new contracts with
customers entered into by the Partnership.
"Partnership Objective" means the sale, support and service of
high end open computer systems and related services to the
Australasian data centre market;
"PTA Capital Account" means the capital account between PTA
and the Partnership, representing:
(a) PTA's contribution to the Partnership of those assets
identified in Schedule B;
(b) the Existing Hardware Maintenance Contracts;
(c) any further contribution of capital contributed to
the Partnership by PTA;
(d) plus PTA's allocable share of any profit or minus
PTA's allocable share of loss of the Partnership; and
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(e) minus any distribution of Partnership assets to PTA.
"Representative" means a representative of a Partner on the
Management Committee appointed in accordance with Clause 3;
"Share" means the undivided beneficial interest of a Partner
in the Partnership Assets, which interest is as set forth in
Clause 2.3, but as further subject to the terms and conditions
to this Agreement;
"Surplus" means the revenue of the Partnership less
the expenses of the Partnership as determined
under Australian GAAP.
1.2 In this Agreement unless the contrary intention appears:
(a) words importing the singular include the plural and vice versa;
(b) words importing a gender include every gender;
(c) references to any document (including this Agreement) include
references to that document as amended, consolidated,
supplemented, novated or replaced;
(d) references to an agreement include any undertaking,
representation, deed, agreement or legally enforceable order,
arrangement or understanding whether written or not;
(e) references to this Agreement are references to this Agreement
and any annexures and schedules;
(f) references to paragraphs, clauses, recitals, schedules and
annexures are references to paragraphs and clauses of, and
recitals, schedules and annexures to this Agreement;
(g) headings are for convenience only and must be ignored in
construing this Agreement;
(h) references to any person or any Party include references to
their or its respective successors, permitted assigns or
substitutes, executors and administrators;
(i) references to law include references to any constitutional
provision, treaty, decree, convention, statute, act,
regulation, rule, ordinance, proclamation, subordinate
legislation, by-law, judgment, rule of court, practice
direction, rule of common law, rule of equity, rule of any
applicable stock exchange,
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guideline, code, order, approval and standard
(including Australian Standard published by the
Standards Association of Australia);
(j) references to any law are references to that law as
amended, consolidated, supplemented or replaced and
includes references to regulations and other
instruments under it;
(k) references to a judgment include references to any
order, injunction, decree, determination or award of
any court or tribunal;
(l) references to proceeding include any litigation,
arbitration, injunction, investigation, prosecution
and summons;
(m) references to a person include references to an
individual, company, body corporate, association,
partnership, joint venture, trust and Governmental Agency;
(n) references to deliver include cause to be delivered
and references to sell include procure the sale of;
(o) references to time are references to Sydney time;
(p) a warranty, representation, covenant, liability,
obligation or agreement given or entered into by more
than one person binds them jointly and severally;
(q) if a period of time is specified and dates from,
after or before a given day or the day of an act or
event, it is to be calculated exclusive of that day;
(r) if a payment or other act must (but for this clause)
be made or done on a day which is not a Business Day,
then it must be made or done on the next following
Business Day; and
(s) all references to "dollars" or "$" shall be
references to Australian currency.
2. FORMATION OF PARTNERSHIP
2.1 PTA and FPL agree to associate themselves as a partnership, on and
with effect from the Commencement Date, for the purposes of:
(a) implementing the Partnership Objective; and
(b) carrying out such other activities as are
contemplated by this Agreement or as they may from time
to time agree.
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2.2 The trading name of the Partnership will be:
"PYRAMID DATA CENTRE SYSTEMS"
and it will, whenever and wherever reasonably possible, be
referred to as:
"a joint venture of Fujitsu and Pyramid Technology".
2.3 The Partnership Assets will be owned by the Partners as tenants in
common and, subject to this Agreement, in proportion to their
respective Shares, and each Partner agrees to make available and to
dedicate to the Partnership exclusively for the purposes thereof its
Share of the Partnership Assets.
As at the commencement of the Partnership, the respective Shares of
the Partners are as follows:
FPL - 51%
PTA - 49%
2.4 Each Partner waives its right to bring an action for partition or
division of the Partnership Assets or any of them, and for that
purpose, agrees that it will not seek, or be entitled to, partition or
division of the Partnership Assets or any of them, whether by way of
physical partition, judicial sale or otherwise.
2.5 Without in any way limiting the generality of clause 2.4, in the event
of a deadlock in the Management Committee or any other failure by the
Partners to reach agreement with respect to any matter relevant to the
Partnership or the Partnership Assets, neither party will resort to
any action at law or in equity to terminate this Agreement or to
partition, divide, sell or otherwise deal with the Partnership Assets
or any of them, except in accordance with clauses 13, 14 and 15.
2.6 Each Partner covenants and agrees with the other Partner to act in
good faith towards the other Partner, and each Partner undertakes
without limiting the generality of the foregoing:
(a) to be just and faithful in all activities and dealings with
the other Partner;
(b) to attend diligently to the conduct of all activities in
relation to the Partnership; and
(c) to account forthwith for all moneys, cheques and negotiable
instruments received by it for and on behalf of the other
Partner.
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3. MANAGEMENT COMMITTEE
3.1 The Partners agree to form and operate a Management Committee in
accordance with the requirements of this clause 3.
3.2 Subject to clause 3.3, the Management Committee will consist of a
maximum of 4 Representatives with each Partner entitled to appoint 2
Representatives.
3.3 FPL is entitled to appoint a third representative to the Management
Committee. FPL may exercise such right by notice in writing to PTA
and the Secretary of the Management Committee and such appointment
will take effect upon the giving of such notice. In the event that FPL
exercises such right, the Management Committee will then consist of 5
Representatives.
3.4 Each Partner may appoint to the Management Committee alternates for
each Representative appointed by it. An alternate may exercise all the
powers of the relevant Representative to the extent that such
Representative has not exercised them.
3.5 A Partner may remove any Representative or alternate appointed by it,
and appoint another in his or her place.
3.6 Any appointment or removal of a Representative or alternate under
clause 3.4 or 3.5 will be made by notice by the appointor to the other
Partner and the Secretary of the Management Committee and will take
effect upon the giving of the notice to the other Partner.
3.7 The business and affairs of the Partnership will be under the control
and direction of the Management Committee. Except as otherwise
expressly provided in this Agreement, the Partners expressly
acknowledge and agree that the Management Committee will decide all
matters in relation to the business and affairs of the Partnership in
accordance with this clause 3 including:
(a) the adoption of accounting procedures for the Partnership;
(b) the delegation of matters to the Management;
(c) the giving of directions to, and the setting of spending
limits and other control mechanisms for the Partnership;
(d) the approval and amendment of all Business Plans;
(e) the provision of further cash funding or other financial
support to the Partnership by the Partners.
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All decisions of the Management Committee which are made in
accordance with the terms of this Agreement will be binding on
the Partners.
3.8 Each Representative or alternate appointed by a
Partner may vote at meetings of the Management Committee. The
Representatives or alternates attending a Management Committee
meeting on behalf of a Partner shall be entitled, collectively
if more than one of such Representatives or alternates are in
attendance, to cast on behalf of that Partner that number of
votes which is equal to the number of Representatives
appointed by that Partner.
3.9 Except for decisions in respect of those matters listed in
Schedule C (which must be decided by unanimous vote), all
decisions of the Management Committee will be decided by
majority vote.
3.10 The quorum for a meeting of the Management Committee will be
one Representative or alternate appointed by PTA and one
Representative or alternate appointed by FPL provided that if
at 2 proposed consecutive meetings of the Management Committee
to be held at intervals of not less than 7 days a quorum as
aforesaid is not present, any Partner may, within 7 days after
the passing of the date for the second proposed meeting, by
notice to the other Partner, propose the passing of any
resolution which might, having regard to the business
described in the notice thereof, have been properly proposed
at both proposed meetings. Each of PTA and FPL may within 14
days of the giving of the notice by notice to the Secretary to
the Management Committee and to the other of them, vote for or
against each of the resolutions proposed. If either PTA or
FPL fail to vote in respect of any such resolution, it will be
deemed, on the day immediately following the expiration of
that 14 day period, to have voted in favour thereof. Any
votes given or deemed to have been given by PTA or FPL as
aforesaid will be deemed to be votes of their respective
Representatives and will take effect as a decision taken at a
duly convened meeting of the Management Committee.
3.11 At least 14 days notice in writing of any meeting of the
Management Committee will be given to each Representative and
alternate at his address nominated in writing from time to
time to the Secretary of the Management Committee and to each
Partner provided that notice of any meeting may be dispensed
with if at least one Representative or alternative appointed
by PTA and at least one Representative or alternative
appointed by FPL so agree. Such notice may be given at any
time by a Partner or any Representative or by the Secretary of
the Management Committee at the request of a Partner or a
Representative. Wherever possible each notice of a meeting of
the Management Committee will describe the business to be
conducted at the meeting. Business not described in a notice
of meeting will not be dealt with
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<PAGE> 11
at the meeting unless the business is of a routine or
administrative nature and the Management Committee unanimously
so decides. Failure of a notice to describe any item of
business will not invalidate a meeting and neither such
failure nor any failure of the Management Committee to decide
as aforesaid will invalidate any decisions in regard to any
business unanimously taken at the meeting.
3.12 The Management Committee meetings will be held in Sydney on a
quarterly basis (unless the Partners otherwise agree).
3.13 All expenditure and costs incurred by the Partners in relation
to attendance of the Representatives or alternates appointed
by the Partners at meetings of the Management Committee, will
be reimbursed to the Partners from the Joint Account.
3.14 The Partners acknowledge and agree that the Managing Director
or an alternate nominated by the Managing Director will be
entitled to be present (but not be entitled to vote) at
meetings of the Management Committee unless the Partners or
either of them request that such managing director or his
alternate not be present. Other employees of the Partnership
or other persons may with the consent of both Partners be
asked to attend at Management Committee meetings as invitees,
but shall not be entitled to vote on any resolution.
3.15 The Partners agree to appoint Mr. Nori Karasuda to act as
chairman of meetings of the Management Committee for the first
year of this Agreement. At the commencement of the second and
each subsequent year of this Agreement, a new chairman shall
be elected by the Management Committee and the Partners agree
that they will alternate the election of chairman between PTA
appointees and FPL appointees. The chairman will not, in case
of an equality of votes, have a second or casting vote.
3.16 The Management Committee will appoint a secretary who will
keep minutes of each meeting and records of other resolutions
made by the Partners. The secretary need not be a
Representative or alternate. A copy of the minutes will be
given to each Representative and to each Partner as soon as
practicable but not later than 14 days after each meeting.
3.17 The minutes of the Management Committee will be subject to
approval as follows:
(a) if any Partner does not approve of any matter
contained in the minutes it may within 14 days after
receipt thereof given notice to the other
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Partner stating that the minutes are not approved and
giving full particulars as to the reasons why;
(b) if no notice is given pursuant to clause 3.17(a) or
if the Partners by notice to each other state that
they approve the minutes, the minutes would be deemed
to have been approved and will, subject to clause
3.17(c), be signed by the chairman of the Management
Committee at the next meeting after the expiration of
the said period of 14 days and when so signed will be
conclusive evidence of the proceedings and decisions
of the meeting to which they relate; and
(c) the Management Committee may, whether or not a notice
has been given pursuant to clause 3.17(a), agree upon
any amendment to the minutes prior to the time the
same are signed by the chairman. Any such agreement
will be evidenced by the signatures of at least one
Representative or alternate appointed by each of the
Partners on a copy of the minutes amended as agreed.
3.18. Meetings of the Management Committee may, in addition to
taking place where the Representatives or alternates are physically
present in the same place, take place by telephone link-up or by
other audio or audio-visual telecommunication link- up.
3.19 Resolutions of the Management Committee may also be passed by
written resolution. A resolution in writing signed by all of
the Representatives, or their respective alternate in
substitution, shall be as effectual as if it had been passed
by a meeting of the Management Committee duly convened. Any
such resolution may consist of several documents in the same
form each signed by one or more of the Representatives, or
their respective alternates. The effective date of such
resolution shall be the date upon which the document or any of
its counter-parts was last signed.
4. OPERATION OF THE PARTNERSHIP
4.1 Day to day management of the Partnership is hereby delegated by the
Partners to the Management Committee on behalf of each Partner in
accordance with this Agreement.
4.2 The parties agree to appoint Mr David Hall to act as the initial
"Managing Director" of the Partnership. The Managing Director will,
with the approval of the Management Committee, select persons for the
following senior management roles:
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* Director of Sales
* Director of Finance
* Director of Marketing and System Services
and the persons selected will be employed in those capacities
by the Partnership.
In addition to the above senior management, the Partners agree that
the Partnership will offer employment to the staff of PTA nominated by
PTA and in addition will offer employment to FAL staff, as nominated
by FPL with the approval of the Managing Director. The costs of all
such persons employed by the Partnership will be charged to the Joint
Account in accordance with the provisions of clause 8.2.
4.3 Without restricting the generality of clause 4.1, the Partnership will
through the Management, but subject to the control and direction of
the Management Committee pursuant to the requirements of this
Agreement:
(a) implement the Partnership Objective and the approved Business
Plans and enter into any necessary agreements in relation to
such implementation and the sale of product and services on
behalf of the Partnership;
(b) maintain, operate and protect the Partnership Assets and any
other property and assets of a Partner in the Partnership's
possession;
(c) supervise and control such contractors as it may engage;
(d) prepare and file reports or returns required by law or by any
Authority;
(e) disburse funds from the Joint Account to operate the
Partnership including the payment of taxes (other than income
tax of a Partner) payable in connection with the Partnership
or the Partnership Assets;
(f) obtain, renew and maintain any necessary permits, licences and
approvals in relation to the Partnership;
(g) enter into any other contracts or agreements relating to the
operation of the Partnership as may be required by the
Management Committee;
(h) do all acts, matters or things as may be reasonably required
by the Management Committee;
(i) do all acts, matters or things as may be necessary or
advisable for the efficient and economic operation of the
Partnership.
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4.4 The Partnership, if necessary, but subject to clause 10 and to
approval by the Management Committee, may engage contractors
to perform services for the Partnership.
4.5 Subject to the discretions conferred upon Management by this
Agreement, Management will act at all times in accordance with
the control and direction of the Management Committee.
4.6 The Partnership will not use any letterhead, logo or like
material in the carrying out of its activities and
responsibilities under this Agreement unless the form of such
letterhead, logo or like material is first approved by the
Management Committee.
4.7 The Management Committee will delegate all such decision
making authority to the Managing Director as is sufficient to
allow him to operate the Partnership day-to-day in an
efficient, effective and profitable manner consistent with the
Business Plan and other directives and policies of the
Managing Committee. These delegations shall be made with a
view toward maximum empowerment and flexibility for the
Managing Director to run a competitive and successful business
keeping in mind the interests and objectives of the Partners.
4.8 To assist the Managing Director in accomplishing his business
charter, the Management Committee shall annually nominate one
of its members (the "Delegate") to be a point-of-contact, to
provide a consultative and review function on behalf of the
Management Committee and to carry out such control and
direction functions of the Management Committee as are
determined by the Management Committee between the quarterly
Management Committee meetings. The Partners agree that the
first person to be nominated to fill this Delegate role on
behalf of the Management Committee will be Mr Nori Karasuda of
FAL.
4.9 The Managing Director will refer all issues to the Delegate
which he believes require decision but which exceed his
specific delegated authority. The Managing Director may from
time-to-time, when he requires it, consult with the Delegate
on other issues related to the Partnership's operations or
matters of particular sensitivity. The Managing Director will
also provide a monthly written report to the Partners covering
financial and business performance of the Partnership. This
monthly report will be reviewed in person by the Managing
Director with the Delegate.
4.10 The relationship between the Delegate and the Managing
Director is not intended to foreclose any other communications
the managing Director may wish to initiate with staff,
executives, or Management Committee
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members representing either of the Partners when he deems such
communication necessary or desirable to facilitate the
business of the Partnership. Nothing herein contained is
intended to prevent or restrict the Managing Director from
discussing with the Management Committee (either individually
or as a group) any matter in relation to the Partnership
including any matter already discussed with the Delegate.
4.11 FAL will appoint a senior official to oversee the operation of
the procedures in the Channel Harmony Agreement which have
been adopted by FAL and PTA as part of this Agreement. The
first nominee to perform this role will be Mr Nori Karasuda.
4.12 If, during the twelve month period immediately following the
Commencement Date, PTA believes that the Delegate arrangement
referred to in this clause 4 is not working satisfactorily, it
may request a review of the arrangement at a Management
Committee meeting. FPL will then consider in good faith any
modifications that are proposed by PTA to these arrangements
including the transfer or sharing of some or all of the
Delegate's responsibilities during the twelve month period
between the first and second anniversaries of the Commencement
Date.
5. BUSINESS PLANS
5.1 The Management Committee and Management will consult to establish
budgeting, forecasting, cost control and reporting procedures in
accordance with acceptable practices in the computing industry and any
accounting procedure adopted by the Management Committee. In the
event of any conflicting requirements, the Management Committee will
determine which requirements will prevail. The Management will be
directed to prepare Business Plans in accordance with this clause 5,
which shall include financial targets as well as product and marketing
strategies and objectives. Management shall be instructed to liaise
with PTA and FAL concerning the preparation and content of the draft
Business Plans, prior to their submission to the Management Committee
as a final draft.
5.2 Management will be instructed to furnish to the Management Committee,
within 30 days after the Commencement Date, a recommended Business
Plan to apply for the initial Fiscal Year and thereafter will furnish
a copy of its proposed Business Plan for each Fiscal Year 30 days
prior to the commencement of that Fiscal Year. The Management
Committee will endeavour to reach a decision on a submitted Business
Plan not later than 21 days after its submission.
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5.3 The Management Committee may approve any Business Plan with or
without amendment, in whole or in part and may at any time
after such approval resolve to revise any such Business Plan.
5.4 Management will be instructed to carry out its duties in
accordance with the Business Plans approved by the Management
Committee, as revised from time to time by the Management
Committee.
5.5 Each Business Plan submitted pursuant to this clause 5 will
contain a statement of the work proposed to be undertaken
during the period to which it relates and will contain
sufficient detail regarding marketing plans, strategies and
tactics, to enable the Management Committee to give proper
consideration to it. A Representative or alternate may,
at or prior to a meeting of the Management Committee, direct
Management to provide such additional information as that
Representative or alternate reasonably requires for the
purpose of considering the proposed Business Plan.
5.6 Each Business plan submitted pursuant to this clause 5 will be
divided into months.
5.7 The approval of a Business Plan will constitute sufficient
direction to the Management to undertake the activities and
incur the expenditure contemplated by such Business Plan,
until that direction is revoked by the Management Committee
and notified to the Management.
5.8 If the Management Committee does not approve any Business Plan
prior to the period to which the Business Plan relates, then
during the period to which such Business Plan relates and
until a Business Plan for such a period is approved by the
Management Committee, the Management will be directed to
undertake such activities and incur such expenditures as are
in the bona fide opinion of Management reasonably necessary
for the continued proper operation of the Partnership and
where practicable in accordance with the previously approved
Business Plan.
6. ACCOUNTING PROCEDURE, RECORDS OF ACCOUNTS, RIGHTS OF
INSPECTION AND AUDIT
6.1 Management will be directed to prepare and maintain the
Partnership Accounts on behalf of the Partners. All financial
records and accounts will be prepared and maintained pursuant
to and in accordance with the accounting procedures adopted by
the Management Committee pursuant to clause 3.7(a) and
generally accepted accounting standards applied in the
computing industry in Australia.
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6.2 The Management will keep or cause to be kept in accordance
with the provisions of this Agreement, comprehensive true and
accurate records and accounts of the Partnership.
6.3 The Management will be responsible for any accounting records
required by law to be kept by the Partnership and shall cause
a certified audit to be conducted annually by a qualified
auditor. The Management will prepare and lodge any
partnership tax return required by law to be prepared and
lodged by the Partnership, provided that each Partner will
separately be responsible for its own accounting records
required by law or to support its income tax returns or any
other accounting reports required by an Authority in regard to
its Share. To enable each Partner to record such data in its
own books, the Partnership will provide each Partner with such
accounting data as may be required by it for any regulatory
procedures to which the Partner may be subjected, provided
such data is available from the records and accounts required
to be kept by the Partnership in accordance with the terms of
this Agreement.
6.4 An unaudited statement of the financial results of the
Partnership for the preceding period will be prepared by the
Partnership within 5 Business Days after the end of each
month.
6.5 Each Partner may appoint an independent qualified
representative to, on reasonable notice, inspect and or audit
the accounts and records maintained by the Management in
relation to the Partnership and the Partnership will
co-operate fully in any such inspection or audit.
7. OPERATION OF JOINT ACCOUNT
7.1 Subject to this Agreement, all costs, liabilities and expenses
incurred in relation to the Partnership will be contributed
and borne by the Partners and all income received will be
earned by the Partners in proportion to their respective
Shares at the date the same was incurred or received. The
Partnership will record and account for all such transactions
in the Partnership Accounts in accordance with the provisions
of this Agreement.
7.2 The Management shall procure that the Partnership shall
establish a separate bank account in the name of the
Partnership, to be known as the Joint Account, into which all
contributions to and income of the Partnership shall be paid.
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7.3 FPL agrees that upon the Commencement Date it shall loan to
the Partnership $1,400,000. This loan shall accrue interest
in accordance with paragraph 7.4 and shall be repaid upon
termination of the Partnership, in accordance with the
provisions of clause 14.
7.4 Interest shall accrue at the Interest Rate, per annum, on the
outstanding month end balance of the capital accounts of the
Partners and of the loan accounts between the Partners and the
Partnership, unless otherwise agreed. For the purpose
of calculating the interest, the capital accounts of Partners
shall not include profits accrued but not available for
distribution.
7.5 When the Management Committee determines that a further
contribution to the Partnership is required, the Partners
shall contribute the proportion of the required amount equal
to their respective Share, such contribution to be made in the
manner as shall be designated by the Management Committee.
7.6 The Management Committee will from time to time consult with
the Partners and use its best endeavours to manage the receipt
and disbursement of funds and the distribution of Surplus to
the Partners as directed by the Management Committee, so as to
minimise as far as is possible holding surplus funds at any
time.
7.7 If at any time there is likely to be a deficiency of available
funds in the Joint Account, or through other available
facilities, to finance the operations of the Partnership in
accordance with the then approved Business Plan, Management
shall so notify the Management Committee and will provide to
it:
(a) the estimated amounts of receipts and
expenditure during the then current quarter;
(b) the estimated amounts of expenditure required
to be made by the Partnership during the then
current quarter and the following 2 months.
When preparing such a statement regard will be had to:
(i) the cash flow schedule in the approved
Business Plan; and
(ii) the estimated cash on hand and available
through the Partnership's bank facility at
the beginning of the ensuing month.
7.8 Each Partner will pay to the Partnership the amount required
to be paid at the times for payment as directed by resolution
of the Management Committee pursuant to
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clause 3.7. Each such payment made by a Partner will be
credited to the Joint Account to be held by the Partnership
for and on behalf of such Partner for the purpose of being
expended in accordance with the provisions of this Agreement.
Failure by either party to make a payment when due pursuant to
this clause shall be a material default under this Agreement
for the purposes of clause 13.2(a).
8. CHARGES AND CREDITS
8.1 The Partnership Account will be charged in accordance with
clause 8.2 and the Partnership Account will be credited in
accordance with clause 8.3.
8.2 The Partnership Account will be charged all costs incurred in
relation to the Partnership, including:
(a) Salaries and Wages
salaries and wages of employees of the Partnership;
(b) Holiday, Vacation, Sickness and Disability Benefits
(i) the cost of holiday, vacation, sickness and
disability benefits, holiday pay, annual
leave and loading, long service leave, travel
time, redundancy allowances and other
allowances for the time paid but not worked
applicable to employees whose salaries and
wages are chargeable under section 8.2(a)
above provided that such costs and allowances
do not exceed amounts which are standard for
such items in the computing industry; and
(ii) costs under this section 8.2(b) will be
charged on an accrual basis, or on a
percentage basis on the amount of salaries
and wages chargeable under section 8.2(a). If
the percentage basis is used, the rate will
be adjusted periodically to accord with
amounts actually paid or accrued;
(c) Government Assessments and Obligations
expenditure or contributions made pursuant to
assessments or obligations imposed by a Government
Authority which are applicable to the Partnership's
cost of salaries and wages chargeable under clause
8.2(a) and clause 8.2(b);
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(d) Employee Expenses and Travellina Allowances
reasonable personal expenses and travelling
allowances for the purposes of the Partnership of
employees of the Partnership;
(e) Employees' Benefit Plans
(i) the Partnership's cost of plans for
employees' group life insurance, medical
coverage, superannuation, and other benefit
plans of like nature applicable to the
Partnership's labour costs chargeable under
clause 8.2(a) and clause 8.2(b);
(ii) costs chargeable under this section 8.2(e)
may be charged on an accrual basis or on a
percentage basis on the amount of
salaries and wages chargeable under section
8.2(a). If the percentage basis is
used, the rate will be adjusted
periodically to accord with the
amounts actually paid or accrued;
(f) Personnel on Secondment
any reimbursable expenses paid by the Partnership in
accordance with clause 10.2 or 10.3 for personnel
of PTA or FAL's who are seconded to the Partnership
from time to time to perform specific services for
the Partnership;
(g) Products, Supplies and Equipment
the cost of the products, equipment and supplies
purchased by the Partnership;
(h) Transportation
the cost of transportation of employees and material
necessary for the Partnership;
(i) Services and Facilities
the actual cost to the Partnership of sub-contracting
and consulting services, utility charges and any
expenditures for the use of materials and equipment;
(j) Premises
the accrued cost to the Partnership for the lease
of its premises and any other leases entered into by
the Partnership as authorized by the Management
Committee;
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(k) Legal Expenses
all costs and expenses incurred in obtaining legal
advice or in handling, investigating and settling
litigation or claims or prosecutions arising by
reason of the operation of the Partnership or
necessary to protect or recover the Partnership
Assets, including but not limited to legal fees,
court costs, costs of investigation or procuring
evidence and amounts paid in settlement or
satisfaction of any such litigation or claims or
prosecutions;
(l) Insurance
net premiums paid for any insurance required to be
taken out on behalf of the Partners, including in
respect of any insurance required to be taken out
pursuant to a contractual commitment undertaken for
the benefit of the Partnership, such as the lease of
the premises referred to in 8.2(j). Premiums on
additional insurance required by only one of the
Partners will be separately charged to that Partner;
(m) Taxes, Duties, Rental And Fees
(i) all fees, duties, rentals and taxes of any
kind or nature (except royalties and taxes
relating to the income of a Partner)
assessed, imposed or levied by any Authority
upon, in connection with or in
relation to the Partnership Assets or the
Partnership; and
(ii) all tax payable pursuant to the
Fringe Benefits Tax Assessment Act
1986 (Cth) in respect of benefits
relating to the employment of
employees whose salaries are
chargeable to the Joint Account
either directly or indirectly
pursuant to clause 8.2(a).
(n) Other Expenditures
(i) any expenditure or costs, other than
the expenditures dealt with in the
foregoing provisions of this clause 8.2,
necessarily incurred in connection with
the operation of the Partnership; and
(ii) all expenditure and costs incurred by
Partners in relation to the administration
of the Partnership including costs associated
with the attendance of the Representatives or
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<PAGE> 22
their alternates appointed by the Partners at
the meetings of the Management Committee.
8.3 The Joint Account will be credited with all income received by the
Partnership, including:
(a) all revenues from product sales, software and hardware support
services and professional services and other revenue
generating activities performed by or on behalf of the
Partnership;
(b) proceeds from any insurance claims from insurance the cost of
which has been charged to the Joint Account;
(c) receipts from the use of items of Partnership Assets for any
purpose; and
(d) proceeds from the sale of any item of Partnership Assets.
9. CONTRIBUTIONS
9.1 All costs, liabilities and expenses incurred in relation to
the Partnership will be contributed and borne by the Partners
in proportion to their respective Shares as at the date the
same are incurred, and will be paid in accordance with this
Agreement.
9.2 On the Commencement Date, or as soon as practicable
thereafter, PTA will contribute to the Partnership the assets
identified in Schedule B.
9.3 PTA's obligations under clause 9.2 are subject to obtaining
all such consents, approvals and permits as may be required in
order to transfer the assets identified in Schedule B.
9.4 Notwithstanding clause 9.3, if PTA is prevented, for any
reason, from contributing to the Partnership the assets
identified in Schedule B, it will nevertheless contribute to
the Partnership assets which have an aggregate book value at
least equal to $1,345,000.
10. SOURCING OF PRODUCT AND SERVICES
10.1 Except as provided in clause 10.8, or as otherwise agreed by
the Management Committee, all products and services required
by customers of the Partnership will be provided by the
Partnership. Products will be sourced from PTA and FAL to the
extent possible and the cost of such product will be charged
to the Joint Account in accordance with clause 8.
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<PAGE> 23
10.2 PTA will sell Pyramid Product to the Partnership at a price
calculated in accordance with the same formula used by PTC to
sell that same Pyramid Product at the same time to its other
wholly owned overseas subsidiaries. The terms and conditions
governing the sale of Pyramid Product to the Partnership shall
be agreed between PTA and the Partners before any Pyramid
Product is supplied to the Partnership. For the purpose of
this clause, "Pyramid Product" will mean any product appearing
on PTC's then current US price list which is exported by PTC.
10.3 FAL will sell FAL Product to the Partnership at a price
calculated in accordance with the same formula used by the FAL
Product Group to sell that same product at that same time to
the FAL sales Organisation. This transfer price may be
augmented by an uplift to reflect the cost of sales support
services required by the Partnership for the sale of FAL
Products as provided for in the Channel Harmony Agreement.
The uplift will be removed when the Partnership has developed
the capacity to sell these products directly without sales
support from FAL. The terms and conditions governing the sale
of FAL Product to the Partnership shall be agreed betweeN FAL
and the Partners before any FAL Product is supplied to the
Partnership. For the purpose of this clause, "FAL Product"
will mean all product supplied by the FAL Product Group to the
FAL sales Organisation which FAL is authorised to supply to
third parties, such as the Partnership, for on-supply, and
where such authority has been given to FAL and is subject to
FAL's compliance with specified conditions, then those
products shall only be regarded as FAL Products if the
Partnership agrees to comply with those conditions.
10.4 PTC and the FAL Product Group each reserve the right to modify
at any time their transfer pricing formulae for sale of
product to PTA and the Partnership respectively as product
changes, cost structure changes and marketplace dynamics
warrant. To the extent that the managing Director believes
that any price change affects the Partnership's business
outlook, he will report to the Management Committee so that
the Management Committee may review the potential impact on
the financial plans and expectations for the business
performance of the Partnership.
10.5 The Partnership will pay all invoices submitted by PTA and FAL
for the products referred to in clauses 10.2 and 10.3 within
30 days of the invoice date.
10.6 PTA agrees to use its best endeavours to provide any expert
assistance from PTA or PTC, required by the Partnership,
subject to availability of persons and subject further to
prior agreement with the Management
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<PAGE> 24
Committee on cost reimbursement. Provided however that PTA
shall only be entitled to an agreed cost reimbursement if the
claim for such reimbursement is rendered to the Management
within 60 days of the cost being incurred.
10.7 FPL agrees to use its best endeavours to provide any expert
assistance from FPL, FAL or from Fujitsu Limited, subject to
availability of persons and subject further to prior agreement
with the Management Committee on cost reimbursement. Provided
however that FPL shall only be entitled to an agreed cost
reimbursement if the claim for such reimbursement is rendered
to the Management within 60 days of the cost being incurred.
10.8 All hardware maintenance support services required by
customers of the Partnership will be sub-contracted to FAL,
unless otherwise determined by the Management Committee.
FAL's services shall be provided to the Partnership on the
terms and conditions of the Hardware Maintenance Sub-Contract
and the cost of those services shall be charged to the Joint
Account pursuant to clause 8.2(i).
10.9 Subject to their existing arrangements, PTC and PTA agree
that neither they nor any of their related bodies corporate
will supply Pyramid Product (as defined in clause 10.2) to any
entity based within Australasia other than the Partnership
PROVIDED THAT it is acknowledged by FPL and FAL that PTC has
previously granted, and may in future grant, rights to third
parties based outside Australia which entitle those third
parties to sell Pyramid Products worldwide (including in
Australia and New Zealand). In addition, PTC and PTA agree
that if any third party supplies Pyramid Products in
Australasia, neither PTC, PTA nor any of their related bodies
corporate will provide any sales or support assistance in
Australasia to those third parties or their customers.
10.10 The Partners agree that they, and the Partnership, will act in
accordance with the terms of the Channel Harmony Agreement.
11. PROFIT DISTRIBUTION
11.1 The Partners agree that any Surplus declared in the
Partnership Accounts shall, unless otherwise unanimously
agreed by the Management Committee, be available for
distribution as follows:
(a) In the first twelve months immediately following the
Commencement Date:
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<PAGE> 25
(i) any Surplus up to a cumulative
amount of $2,000,000 will be payable
to PTA, or as it directs;
(ii) any Surplus above the amount of
$2,000,000 but less than $4,000,000
will be payable to FPL, or as it
directs;
(iii) any Surplus above $4,000,000 will be
payable to the Partners in
proportion to their respective
Shares in the relevant twelve month
period.
(b) In the twelve month period between the first and
second anniversaries of the Commencement Date:
(i) any Surplus up to cumulative amount
of $3,000,000 will be payable to
PTA, or as it directs;
(ii) any Surplus above the amount of
$3,000,000 but less than $6,000,000
will be payable to FPL, or as it
directs;
(iii) any Surplus above $6,000,000 will be
payable to the Partners in
proportion to their respective
Shares in the relevant twelve month
period.
(c) As from the second anniversary of the Commencement
Date, all Surplus shall be distributed to the
Partners in proportion to their respective Shares at
the end of the Fiscal Year.
11.2 The Partners acknowledge and agree that the Exempt Contract
Revenue is not revenue to which the Partnership is entitled
and does not form part of the Partnership Assets. The Exempt
Contract Revenue is solely the property of PTA.
11.3 The Partners agree that notwithstanding clause 11.1, all fees
paid by the customers in respect of the Existing Hardware
Maintenance Contracts shall be distributed on the following
basis and in the following order of preference:
(a) reimbursement of expenses incurred by the Partnership
in connection with the Existing Hardware Maintenance
Contracts;
(b) payment to FAL of the fees payable to FAL under the
Hardware Maintenance Sub-Contract;
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<PAGE> 26
(c) payment to PTA of the following:
(i) in the first twelve months
immediately following the
Commencement Date - 100% of the
remaining fees;
(ii) in the twelve month period between
the first and second anniversaries
of the Commencement Date - 80% of
the remaining fees;
(d) all other fees earned in respect of the Existing
Hardware Maintenance Contracts (being 20% of the
remaining fees in the period referred to in clause
11.3(c)(ii) and all of the remaining fees after the
expiration of that period) will be treated as revenue
of the Partnership.
12. INSURANCE
The Management Committee shall effect and maintain on behalf
of the Partnership such insurances as are determined by it to
be appropriate. All insurances effected for the
Partnership will incorporate a provision that an insurer has
no right of subrogation against any Partner and the Partners
will be named to the extent of their respective shares on each
policy of insurance.
13. TERM AND TERMINATION
13.1 Subject to clause 13.4, the Partnership shall have an initial
term of 3 years which will be renewed automatically for
further terms of three years each, unless a Partner gives
notice to the other Partner within 90 days prior to the end of
a term of its desire to terminate this Agreement on the
expiration of the term.
13.2 Notwithstanding clause 13.1, but subject to clauses 13.4 and
15, this Agreement may be terminated upon the occurrence of
any of the following events:
(a) if a Partner fails to remedy a material default under
this Agreement within 30 days after written notice
from the other Partner requiring it to do so, or
fails within that 30 day period to request the other
Partner to attempt to resolve the dispute in
accordance with clause 15, the non-defaulting party
may elect by 90 days written notice to the other
Partner to terminate this Agreement;
(b) if an order is made or a resolution is passed for
winding-up or dissolving without winding up or if
liquidator or administrator or a receiver
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or receiver and manager is appointed to either FPL,
FAL or its parent company, Fujitsu Limited, on the
one hand or PTA or PTC, the other party shall be
entitled to terminate the Partnership by delivering
written notice to the other Partner of its intention
to do so;
(c) there is a failure by the Management Committee to
agree within 60 days on a substantive matter
requiring unanimous approval, either party may elect
by 90 days written notice to the other Partner to
terminate this Agreement;
(d) if the Partnership makes a loss in 4 out of any 6
consecutive quarters, either party may terminate the
Partnership by notice in writing to the other party;
(e) if there is a change in the ownership of, or of a
controlling interest in PTA or PTC, or in FPL, or its
parent corporation, then the other party may
terminate the Partnership by notice in writing to the
other party;
(f) by agreement in writing between the parties.
13.3 In the event that the Partnership realises, in 3 consecutive
financial quarters, financial results which are less than 75%
of those contained in the approved Business Plan Forecast and
PTA believes that such failure has occurred directly or
indirectly as a result of any act or omission by or on behalf
of FPL, FAL or any of its related bodies corporate (including,
without limitation, competitive conduct by FAL or any related
body corporate of FAL), an arbitrator shall be appointed
pursuant to clause 16 to determine within 14 days of the date
of such appointment whether PTA has reasonable grounds for
that belief, and if he rules that it has, then PTA shall be
entitled by written notice to FPL to immediately terminate
this Agreement.
13.4 Any Partner who receives a notice of termination pursuant to
clause 13.1, 13.2(c) or 13.2(d) ("the Recipient") will be
entitled to request an arbitrator (appointed in accordance
with clause 16) to determine if the Partner who issued such
notice ("the Issuer") did so substantially for the purpose of
damaging the interests of the Recipient or any of its related
bodies corporate. The arbitrator will be instructed to make
such determination within 14 days of the date of the
arbitrator's appointment and each party's rights upon
termination will be suspended until such time as the
arbitrator makes such determination. If the Recipient is
unable to demonstrate to the arbitrator's reasonable
satisfaction that the issuer issued its notice of termination
substantially for the purpose of damaging
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<PAGE> 28
the interests of the Recipient or any of its related bodies
corporate, the termination will be treated as a valid
termination of this Agreement and the terms of clause 14.4,
14.5 or 14.6 (as the case may be) will apply. If the
Recipient is able to demonstrate to the reasonable
satisfaction of the arbitrator that the Issuer issued its
notice of termination substantially for the purpose of
damaging the interests of the Recipient or any of its related
bodies corporate, the Issuer's termination will be deemed to
be null and void and the Recipient will be entitled, at any
time within 14 days following the arbitrator's determination,
to treat the Issuer as being in default and to terminate this
Agreement immediately by written notice to the Issuer.
14. CONSEOUENCES OF TERMINATION
14.1 Upon termination of this Agreement, all rights and obligations
conferred or imposed on the Partners by this Agreement will
be cancelled and this Agreement thereafter will have no
further force or effect except as to the following:
(a) the parties shall do all things necessary to procure
the payment of monies owed by the Partnership to
third parties;
(b) the parties shall do all things necessary to procure
determination of final Partnership Accounts, which
accounts shall be prepared in accordance with
Australian GAAP;
(c) the parties shall do all things necessary to procure
the distribution of Partnership Assets pursuant to
this clause 14;
(d) the parties shall obtain the Final Valuation referred
to in clause 14.7; and
(e) the rights and obligations under clause 13, clause 17
and this clause 14.
14.2 Upon termination of this Agreement for any cause, PTA shall be
solely entitled:
(a) to offer employment to the employees of the
Partnership and both FPL and FAL agree that they will
not, except with PTA's consent, offer employment to
or solicit any offer of employment from any employee
of the Partnership;
(b) to apply to the lessor of the premises occupied by
the Partnership to have novated to it the lease of
the premises; and
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(c) to use the name "Pyramid Data Centre Systems'' and all
names reasonably approximating the same.
14.3 If this Agreement terminates because either party
exercises its right under clause 13.1 to not renew this
Agreement or if this Agreement is terminated by either party
pursuant to clauses 13.2 (c), (d), (e) or (f), then the
Partnership Assets shall be distributed not in accordance with
the respective Partners' Shares at the date of termination,
but in accordance with the following priority order of
distribution:
(a) repayment in accordance with clause 14.1(a) of all
monies owed by the Partnership to third parties;
(b) repayment to the Partners (or any of their related
bodies corporate) of all monies loaned to the
Partnership by those Partners or any of their related
bodies corporate (other than the FPL Loan);
(c) distribution or repayment (as the case may be), in
equal priority, of the FPL Loan, FPL's Capital
Account balance and PTA's Capital Account balance
(with both Capital Account balances being calculated
as per the Partnership balance sheet prepared in
accordance with Australian GAAP as at the date of
termination). Such distribution or repayment will be
made to the extent of any remaining Partnership
Assets (if any, after the distributions required by
clause 14.3(a) and (b) but subject to clause 14.3(d))
and per the Partnership balance sheet prepared in
accordance with Australian GAAP as at the date of
termination. To the extent that the remaining
Partnership Assets calculated as per the Partnership
balance sheet prepared in accordance with Australian
GAAP as at the date of termination are less than the
sum of the FPL Loan, the FPL Capital Account balance
and the PTA Capital Account balance, then the
remaining Assets will be distributed to the Partners
in proportion to the respective balances of the FPL
Loan, the FPL Capital Account and the PTA Capital
Account as at the date of termination;
(d) the intangible Partnership Assets (whether or not
recorded in the Partnership balance sheet prepared in
accordance with Australian GAAP) will not be
distributed to either Partner under clause 14.3(a),
(b) or (c). Instead, PTA will be entitled to
purchase, and FPL will be obliged to sell, FPL's
Share of the intangible Partnership Assets
(including, without limitation, Existing Contracts
and customer
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contracts) at such price as may be agreed between the
parties or, failing agreement, at the price
calculated in accordance with clause 14.4.
14.4 If the parties are unable to agree upon the price referred to
in clause 14.3(d) within 14 days of the date of termination of
this Agreement, the parties agree that the price payable by
PTA to FPL will be calculated in accordance with the following
principles:
(a) the value of the intangible Partnership Assets will
be calculated in accordance with the formula
contained in clause 14.7;
(b) FPL's share of the value of the intangible
Partnership Assets will be determined as at the date
of termination on the assumption that its share grows
in a linear fashion from 0% on the Commencement Date
to 51% on the second anniversary of the Commencement
Date; and
(c) the price referred to in clause 14.3(d) will be FPL's
share (as determined in accordance with clause
14.4(b)) of the value of the intangible Partnership
Assets (as determined in accordance with clause
14.4(a)).
14.5 If PTA terminates this Agreement pursuant to clauses 13.2
(a), 13.2 (b), 13.3 or 13.4 the Partnership Assets will be
distributed in accordance with clause 14.3 except that:
(a) an arbitrator will be appointed and instructed to
determine, having regard to the conduct of FPL or any
entities related to FPL, the extent to which the
purchase price for FPL's Share of the intangible
Partnership Assets (determined in accordance with
clause 14.4) should be discounted; and
(b) to assist the arbitrator in making the determination
referred to in sub-paragraph (a) above, the parties
agree that the arbitrator should take the following
factors into account:
(i) it is the intention of the parties
that the arbitrator must determine a
discount on the purchase price and
which will reduce the purchase price
payable by PTA;
(ii) because the Partnership is intended
to replace the operations of PTA and
will eliminate PTA's direct
distribution capacity in Australia,
PTA will be seriously damaged by
FPL's breach;
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(iii) the damage suffered by PTA
because of the failure of the
Partnership to generate
anticipated revenues up to
the date of termination of
this Agreement to the extent
that such failure resulted
from any act or omission by
or on behalf of FPL, FAL or
any of their related bodies
corporate which triggered
termination of this
Agreement;
(iv) PTA's failure to receive
further revenue which it
could reasonably have
expected the Partnership to
generate during the term of
this Agreement;
(v) loss of momentum in the
market;
(vi) loss of the opportunity for
PTA to sell products or
services to the Partnership;
and
(vii) losses, expenses and
inconvenience incurred by PTA
in re-establishing its
operations in Australia.
14.6 If FPL terminates this Agreement pursuant to clauses 13.2(a),
13.2(b) or 13.4, the Partnership Assets will be distributed in
accordance with clause 14.3 except that:
(a) an arbitrator will be appointed and
instructed to determine, having regard to
PTA's conduct, the premium which PTA must pay
to FPL in order to purchase its Share of the
intangible Partnership Assets (as calculated
in accordance with clause 14.4);
(b) to assist the arbitrator in making the
determination referred to in sub-paragraph
above, the parties agree that the arbitrator
should take the following matters into
account:
(i) it is the intention of the
parties that the arbitrator
must determine a premium on
the purchase price which will
increase the purchase price
payable by PTA;
(ii) the damage suffered by FPL
because of the failure of the
Partnership to generate
anticipated revenues up to
the date of termination of
this Agreement to the extent
that such failure resulted
from an act or omission by or
on behalf of PTA, PTC or any
of their related bodies
corporate which triggered
termination of this
Agreement;
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<PAGE> 32
(iii) FPL's failure to receive
further revenue which it
could reasonably have
expected the Partnership to
generate during the term of
this Agreement; and
(iv) loss of the opportunity for
FPL to sell products or
services to the Partnership.
14.7 The Partners agree that the Partnership will obtain, within 30
days of the Commencement Date, an independent valuation of the
Partnership as at the Commencement Date (the "Initial
Valuation"). The Partners also agree that, using the same
valuation criteria as the Initial Valuation, the Partnership
will obtain an independent valuation of the Partnership as
soon as reasonably practicable following termination of this
Agreement (the "Final Valuation"). The valuations referred to
in this clause will be obtained from a valuer mutually
agreeable to both Partners and, failing such agreement, by a
valuer selected by an arbitrator appointed in accordance with
clause 16. The Partners agree that there is no transfer to
the Partnership of any goodwill referable to the Australasian
operations of PTA and that any value in the trading name of
the Partnership inures to the benefit of PTC, the owner of
the Pyramid trade mark. In calculating the value of the
intangible Partnership Assets for the purpose of clause 14.4,
the parties agree that the following formula will apply:
A = (X - Y) + Z
Where:
A = the value of the intangible Partnership
Assets as of the date of termination
X = Final Valuation (and after deducting the
amounts referred to in clause 14.3(c))
Y = either zero or Initial Valuation (and after
deducting the amounts referred to in clause
14.3(c)), whichever is the greater
Z = all profits allocable to PTA as of the second
anniversary of the Commencement Date pursuant
to clauses 11.1(a)(i) and 11.1(b)(i) less all
profits allocable to FPL as of the second
anniversary of the Commencement Date pursuant
to clauses 11.1(a)(ii) and 11.1(b)(ii)
PROVIDED THAT, in applying the formula, addition of the
profits referred to as "Z" above will not be made unless and
until the difference between the Final Valuation and the
Initial Valuation exceeds $5,000,000.
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15. DISPUTE RESOLUTION
15.1 The Partners agree that in the event of:
(a) deadlock of the Management Committee in
respect of any decision required to be taken
by it; or
(b) a dispute as to the existence of a material
breach of the Agreement by a Partner, or the
means of remedying that default, for the
purposes of clause 13.2(a),
the parties will exhaust the mechanisms for resolving such
issues as provided by this clause 15, prior to taking any
steps to terminate this Agreement or to exercise any rights
against the other Partner in any Court.
15.2 Upon either of the occurrences referred to in clause 15.1, the
Partners shall adopt the following procedure:
(a) the Management Committee shall meet and
dedicate their time and efforts to negotiate
in good faith to attempt to resolve the
matter in dispute;
(b) if the Management Committee is unable through
its discussions to reach an acceptable
resolution of the matter in dispute within 15
days of the dispute arising, the
Representatives of each Partner shall prepare
within a further 3 business days:
(i) a written statement of no
longer than 5 pages
summarising their
understanding of the matter
in dispute;
(ii) a written statement of no
longer than 5 pages
summarising their proposal
for resolution of the matter
in dispute,
these statements shall then be submitted to a
single senior executive nominated by Pyramid
Technology Corporation and a single senior
executive nominated by FAL who will be vested
with authority by each party to meet to
discuss and to agree upon terms to resolve
the dispute, and who shall meet together at a
place and time to be agreed between them, but
within 21 days of referral of the dispute to
them, to attempt to resolve the dispute.
(c) failing the resolution of the dispute in
accordance with sub-clause (b), the parties
must endeavour to settle the dispute by
mediation administered by the Australian
Commercial Disputes Centre ("ACDC") in
accordance with its guidelines, subject only
to any modifications or elections agreed
between the Partners.
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16. ARBITRATION
The parties agree that in the event of an arbitrator being
required to resolve any matter referred to in clauses 13.3,
13.4, 14.5, 14.6 or 14.7, the following provisions shall
apply:
(a) an independent chartered accountant of at
least 10 years standing but who has not
previously acted for either Partner or any
related corporation of a Partner, shall be
appointed by agreement of the parties, or
failing agreement within 7 days shall be
appointed by the President for the time being
of the Institute of Chartered Accountants
within 7 days after request being made;
(b) the arbitration shall take place in Sydney;
(c) the parties agree to request the appointed
arbitrator to make his determination as soon
as is practicable;
(d) the parties will use their best endeavours to
do everything necessary to assist the
appointed arbitrator to make his or her
determination;
(e) a decision of the appointed arbitrator shall
be final and binding upon the Partners; and
(f) the cost of arbitration shall be borne
equally between the parties provided that in
the case of arbitration in relation to the
matters referred to in clause 13.4, the
Recipient (as defined in that clause) will
bear the costs of such arbitration if the
Recipient is unable to demonstrate to the
reasonable satisfaction of the arbitrator
that the Issuer (as defined in that clause)
exercised its right to issue a notice of
termination substantially for the purpose of
damaging the interests of the Recipient or
any of its related bodies corporate.
17. INDEMNITIES
17.1 It is acknowledged and agreed by the Partners that, subject to
clause 17.2, all costs, liabilities and expenses incurred in
relation to the Partnership are to be borne by them in
proportion to their respective Shares at the time the same are
incurred, and accordingly each Partner hereby covenants with
the other Partner to indemnify and keep indemnified such other
Partner against all such costs, liabilities and expenses to
the extent that the same are incurred otherwise than in the
said proportion.
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17.2 A Partner will not be obliged to indemnify the other Partner
in respect of any cost, liability or expense incurred by such
other Partner as a result of such other's negligence or wilful
act or omission or any material breach or default of such
other under this Agreement.
18. CONFIDENTIALITY
18.1 The Partners agree that:
(a) the Management is authorised to make routine
public announcements regarding the
Partnership from time to time to the extent
that such announcements are required, in the
ordinary course of business, to implement and
carry out the Partnership Objectives; and
(b) other public announcements may be made by the
Partnership from time to time on the basis of
texts mutually agreed by the Partners.
18.2 All information obtained by each Partner under this Agreement,
or during the negotiations preceding it, is confidential and
may not be disclosed by the Partner to any person except:
(a) to those employees, legal advisors, auditors
and other consultants of the Partner or a
Related Body Corporate of the Partner
requiring the information for the purpose of
this Agreement PROVIDED THAT before
disclosure of the information such persons
(other than legal advisors or auditors) agree
to be bound to and abide by the
confidentiality provisions as set out in this
clause;
(b) if the information is, at the date of this
Agreement is entered into, lawfully in the
possession of the recipient of the
information through sources other than the
party who supplied the information;
(c) if required by law or a stock exchange;
(d) if strictly and necessarily required in
connection with legal Proceedings relating to
this Agreement or the Management Agreement;
(e) if the information is generally and publicly
available other than as a result of breach of
confidence by the person receiving the
information;
(f) to any financiers or prospective financier
(or any adviser thereto) of a Partner
provided such financier or prospective
financier will have agreed previously with
the relevant Partner to keep the information
confidential;
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(g) to any purchaser or potential purchaser of a
whole or any part of a Share of a Partner
provided such purchaser or potential
purchaser or selling agent will have agreed
previously with the relevant Partner to keep
the said information confidential; or
18.3 A Partner requiring or wishing to disclose information in
accordance with clause 15.1(c) will notify the other Partner
of the proposed disclosure as far in advance as is reasonably
possible.
19. FORCE MAJEURE
19.1 Subject to clause 19.3, where a party is unable, wholly or in
part, by reason of force majeure to carry out any of its
obligations under this Agreement and that party:
(a) gives the other party prompt notice of that
force majeure with reasonably full
particulars thereof and, insofar as is known,
the probable extent to which it will be
unable to perform or be delayed in performing
the obligation; and
(b) uses all possible diligence to remove that
force majeure as quickly as possible;
that obligation is suspended so far as it is effective by
force majeure during the continuance thereof.
19.2 If after a period of one (1) month the force majeure has not
ceased, the parties will meet in good faith to discuss the
situation and endeavour to achieve a mutually satisfactory
resolution to the problem.
19.3 An obligation to pay money is never excused by force majeure.
19.4 The requirement that any force majeure is to be removed with
all possible diligence will not require the settlement of
strikes, lock-outs or other labour disputes or claims or
demands by any government on terms contrary to the wishes of
the party affected.
19.5 In this agreement "force majeure' means any act of God,
strike, lock-out or other interference with work, war declared
or undeclared, black-outs, disturbance, lightning, fire,
earthquake, storm, flood, explosion, government or
quasi-governmental restraint, expropriation, prohibition,
intervention, direction or embargo, unavailability or delay in
availability of equipment or transport, inability or delay in
obtaining governmental or quasi-government approvals, consents,
permits, licences, authorities or allocations, or any other
cause whether of the kind specifically enumerated above or not
which is not
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reasonably within the control of the party affected.
20. ASSIGNMENT AND ENCUMBRANCES
20.1 A Partner will not, without the prior written consent of the
other Partner, sell, assign, transfer, mortgage, pledge,
charge, encumber or otherwise dispose of or create or suffer
to exist a lien, charge or encumbrance over or trust in
respect of the whole or any fractional part of its Share,
whether by act or deed or by merger or consolidation or
reconstruction or by operation of the law.
21. GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS
21.1 This agreement and the transactions contemplated by this
agreement are governed by the law in force in the State of New
South Wales, Australia.
21.2 Each party irrevocably and unconditionally submits to the
non-exclusive jurisdiction of the courts of the State of New
South Wales and courts of appeal from them for determining any
dispute concerning this agreement or the transactions
contemplated by this agreement. Each party waives any right
it has to object to any action being brought in those courts
including, but not limited to, claiming that the action has
been brought in an inconvenient forum or that those courts do
not have jurisdiction.
21.3 Without preventing any other mode of service, any document in
an action (including, but not limited to, any writ of summons
or other originating process or any third or other party
notice) may be served on any party by being delivered to or
left for that party at its address for service of notices
under clause 22.
22. NOTICES
22.1 A notice, approval, content or other communication in
connection with this agreement:
(a) must be in writing; and
(b) must be left at the address of the addressee,
or sent by pre-paid ordinary post (air mail
if posted or or from a place outside
Australia) to the address of the addressee or
sent by facsimile to the facsimile number of
the addressee which is specified in this
clause or if the addressee notifies another
address or facsimile number then to that
address or facsimile number.
The address and facsimile number of each
party is:
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PTA:
Attention: Mr David Hall
Address: 173 Pacific Highway
NORTH SYDNEY NSW 2060
Facsimile: 02 925 2091
PTC:
Attention: Mr Richard Lussier
Address: 3860 North First Street
SAN JOSE CA 95134-1702
Facsimile: 408 428 7330
FPL:
Attention: Mr Nori Karasuda
Address: 475 Pacific Highway
CHATSWOOD NSW 2067
Facsimile: 02 413 2871
FAL:
Attention: Mr Nori Karasuda
Address: 475 Pacific Highway
CHATSWOOD NSW 2067
Facsimile: 02 413 2871
22.2 A notice, approval, consent or other communication takes
effect from the time it is received.
22.3 A letter or facsimile is taken to be received:
(a) in the case of a posted letter, on the third (seventh
if posted to or from a place outside Australia) day
after posting; and
(b) in the case of a facsimile, on production of a
transmission report by the machine by which the
facsimile was sent which indicates that the
facsimile was sent in its entirety to the facsimile
number of the recipient.
23. GUARANTEE AND INDEMNITY
23.1 PTC and FAL each agree to be bound by the obligations imposed
upon the "Guarantor" in clauses 23.2 to 23.16 and to otherwise
comply with, and be bound by, the procedures and provisions
contained in those clauses. In the case of the obligations
assumed by PTC as "Guarantor" in clauses 23.2 to 23.16, PTC
agrees that the "Beneficiary" shall mean FPL and the
"Subsidiary" shall mean PTA. In the case of
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<PAGE> 39
the obligations assumed by FAL as "Guarantor" in clauses 23.2
to 23.16, FAL agrees that "Beneficiary" shall mean PTA and
"Subsidiary" shall mean FPL.
23.2 The Guarantor agrees that it has entered into this Agreement
for valuable consideration including, without limitation, the
Beneficiary, at the request of the Guarantor, entering into
this Agreement.
23.3 The Guarantor unconditionally and irrevocably guarantees to
the Beneficiary the due and punctual performance and
observance by the Subsidiary of all the obligations of the
Subsidiary under this Agreement, including without limitation
the payment by the Subsidiary of all monies which may become
payable by the Subsidiary under this Agreement (the "Guaranteed
Obligations").
23.4 If the Subsidiary defaults in the due and punctual
performance, payment or satisfaction of the Guaranteed
obligations, the Guarantor must perform, pay or satisfy the
Guaranteed Obligations immediately upon demand. The
Beneficiary may make such a demand on the Guarantor from time
to time and whether or not demand has been made on the
Subsidiary.
23.5 The Guarantor unconditionally and irrevocably indemnifies the
Beneficiary from and against all actions, suits, claims,
demands, obligations, liabilities, losses, damages, arising
directly or indirectly from, and any costs, charges and
expenses incurred by the Beneficiary if, the whole or any part
of the Guaranteed Obligations:
(a) are irrecoverable or have never been recoverable by
the Beneficiary from the Subsidiary or from the
Guarantor as surety; or
(b) cannot be enforced against the Subsidiary or against
the Guarantor as surety; or
(c) are not paid to the Beneficiary for any other reason
in any case for any reason including, without limitation, by
reason of:
(d) any legal limitation, disability, incapacity, lack of
power or lack of authority of or affecting any person;
(e) any of the transactions relating to the Guaranteed
Obligations being void, voidable or unenforceable
(whether or not any of the relevant matters or facts
have been or ought to have been within the knowledge
of the Beneficiary); or
(f) any other fact, matter or thing.
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23.6 The Guarantor agrees that the indemnity contained in clause
23.5 is a separate and distinct obligation and will not be
restrictively interpreted by reason of the guarantee set out
in clause 23.3. The Guarantor agrees that its liability under
clause 23.3 is that of principal debtor.
23.7 The guarantee and indemnity provided by the Guarantor is a
continuing guarantee and indemnity and will remain in full
force and effect until the whole of the Guaranteed Obligations
have been satisfied or paid in full.
23.8 All moneys payable by the Guarantor under this clause 23 must
be paid in full without set-off or counterclaim and free and
clear of any present or future taxes, deduction or withholding
of any kind.
23.9 The Guarantor's obligations as guarantor and indemnifier under
this clause 23 are absolute and unconditional and will not be
prejudiced, released, discharged or otherwise affected by any
one or more of the following (whether occurring with or
without the consent of or notice to any person):
(a) any release, failure or agreement not to sue,
discharge, relinquishment, waiver, replacement,
amendment, variation, increase, decrease or
compounding of the obligations of the Subsidiary
under this Agreement (or any other agreement);
(b) any delay, laches, acquiescence, mistake, act or
omission on the part of the Beneficiary or any other
person;
(c) any non-compliance by the Beneficiary or any other
person with the provisions of any law or any
non-compliance by the Beneficiary or any other person
with any provisions of any agreement with the
Subsidiary or the Guarantor relating to any
Guaranteed Obligations or any omission or negligence
by the Beneficiary or any other person in relation to
the Subsidiary or the Guarantor;
(d) any law or judgment staying or suspending all or any
of the rights of the Beneficiary against the
Subsidiary, the Guarantor, or any other person (by
operation of law or otherwise);
(e) the death or incapacity of or any change in the legal
capacity of the Subsidiary, the Guarantor or any
other person;
(f) the insolvency, bankruptcy, winding up, receivership,
appointment of an administrator or controller,
reconstruction, reorganisation or amalgamation of the
Subsidiary, the Guarantor or any other person;
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<PAGE> 41
(g) the Subsidiary, the Guarantor or any other person
entering into any scheme of arrangement, composition,
assignment for the benefit of, or other arrangement
with, creditors or the receipt by the Beneficiary of
any moneys under any such scheme, composition,
assignment or other arrangement thereunder or any
reduction of capital in or voluntary administration
of the Subsidiary, the Guarantor or any other person;
(h) any setting aside or avoidance of any payment by the
Subsidiary or the Guarantor for any reason;
(i) any other fact, matter, circumstance or thing which,
but for this provision, might operate to prejudice,
release, discharge or otherwise affect the
Guarantor's obligations under this Agreement.
23.10 The Beneficiary will not be required to proceed against the
Subsidiary or exhaust any remedies it may have against the
Subsidiary, but will be entitled to demand and receive payment
from the Guarantor when any payment is due under this
instrument.
23.11 The Guarantor agrees that it has not executed this Agreement
as a result of, by reason of, or in reliance upon, any
representation or information of any kind made or given by or
on behalf of the Beneficiary.
23.12 The Guarantor waives in favour of the Beneficiary all rights
(whether at law or otherwise) against the Beneficiary, the
Subsidiary and any other person and any property so far as
necessary to give effect to this clause 23.
23.13 The Guarantor must not, whether or not the Guaranteed
Obligations have been performed or paid or satisfied in full,
call on the Beneficiary to sue or take proceedings against the
Subsidiary or raise a defence, set-off or counterclaim of
itself or of the Subsidiary in reduction of its liability
under this clause 23.
23.14 Unless and until the whole of the Guaranteed Obligations have
been performed or paid or satisfied in full, the Guarantor
must not make any claim for any sum paid under this clause 23
or enforce any rights which it may have (whether by way of
defence, indemnity, set-off, counterclaim, contribution,
subrogation or otherwise) against the Subsidiary or its
property.
23.15 Unless and until the whole of the Guaranteed Obligations have
been performed or paid or satisfied in full, upon the winding
up, bankruptcy, receivership or appointment of an
administrator or controller of the Subsidiary (or any other
person) or upon the Subsidiary (or such other person)
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<PAGE> 42
entering into any scheme of arrangement, composition,
assignment or arrangement with its creditors or members:
(a) the Guarantor must not prove or claim in competition
to the Beneficiary so as to diminish any
distribution, dividend or payment which, but for such
proof or claim, the Beneficiary would be entitled to
receive under that claim and the Guarantor must not
claim or receive the benefit of any distribution,
dividend or payment arising out of or relating to it;
and
(b) the Beneficiary may prove or claim for payment or
satisfaction of the Guaranteed Obligations and
payments received by the Beneficiary from the
Guarantor under this clause 23 will not affect the
Beneficiary's right to prove or claim for the full
amount of the Guaranteed Obligations.
23.16 Upon the winding up, bankruptcy, receivership or appointment
of an administrator or controller of the Subsidiary (or any
other person) or upon the Subsidiary (or such other person)
entering into any scheme of arrangement, composition,
assignment or arrangement with its creditors or members, the
Guarantor authorises the Beneficiary (without being obliged to
do so) to do any or all of the following:
(a) prove, in the name of the Guarantor, for all moneys
for which the Subsidiary is liable to the Guarantor,
including any moneys which the Guarantor has paid
under this clause 23;
(b) retain and carry to a separate account and
appropriate at the Beneficiary's discretion any
distribution, dividend or payment received until the
Guaranteed Obligations have been paid or satisfied in
full;
(c) do anything and exercise all rights which the
Guarantor could lawfully do or exercise in such
proceedings and the Guarantor appoints the
Beneficiary to be its attorney for the purposes set
out above.
24. MISCELLANEOUS
24.1 Waiver and Variation
A provision of or a right created under this agreement may not
be:
(a) waived except in writing signed by the party granting
the waiver; or
(b) varied except in writing signed by the parties.
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24.2 Survival of Indemnities
Each indemnity in this agreement is a continuing obligation,
separate and independent from other obligations of the
parties and survives termination of this agreement.
24.3 Enforcement of Indemnities
It is not necessary for a party to incur expense or make
payment before enforcing a right of indemnity conferred by
this agreement.
24.4 Further Assurances
Each party agrees, at its own expense, on the request of the
other parties, to do everything reasonably necessary to give
effect to this agreement and the transactions contemplated by
it, including, but not limited to, the execution of documents.
24.5 Severability
If the whole or any part of a provision of this agreement is
void, unenforceable or illegal in a jurisdiction it is severed
for that jurisdiction. The remainder of this agreement has
full force and effect and the validity and enforceability of
that provision in any other jurisdiction is not affected.
This clause has no effect if the severance alters the basic
nature of this agreement or is contrary to public policy.
24.6 Stamp Duty
Each Party must bear, and is solely responsible for, all stamp
duty which that Party is liable to pay in relation to the
establishment of the Partnership.
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EXECUTED as an agreement.
SIGNED by PYRAMID TECHNOLOGY )
CORPORATION PTY LIMITED )
by )
its duly authorised )
representative in the )
presence of: ) ------------------------------------
Signature of duly authorised
representative
- - ----------------------------
Signature of Witness
- - ----------------------------
Name of Witness
SIGNED by PYRAMID TECHNOLOGY )
CORPORATION )
by )
its duly authorised )
representative in the )
presence of: ) ------------------------------------
Signature of duly authorised
representative
- - ----------------------------
Signature of Witness
- - ----------------------------
Name of Witness
SIGNED by FUJITSU DATA CENTRE )
SYSTEMS PTY LIMITED )
by )
its duly authorised )
representative in the )
presence of: ) ------------------------------------
Signature of duly authorised
representative
- - ----------------------------
Signature of Witness
T.A. RYAN
- - ----------------------------
Name of Witness
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SIGNED by FUJITSU AUSTRALIA )
LIMITED )
by )
its duly authorised )
representative in the )
presence of: ) -----------------------------------------
Signature of duly authorised
representative
- - -------------------------
Signature of Witness
T.A. RYAN
- - -------------------------
Name of Witness
43
