<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SYNON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 7372 77-680236754
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
SYNON CORPORATION
1100 LARKSPUR LANDING CIRCLE
LARKSPUR, CA 94939
(415) 461-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
RICHARD H. GOLDBERG
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SYNON CORPORATION
1100 LARKSPUR LANDING CIRCLE
LARKSPUR, CA 94939
(415) 461-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
MARK A. BERTELSEN, ESQ. ROBERT P. DAVIS, ESQ.
JAMES N. STRAWBRIDGE, ESQ. CLEARY, GOTTLIEB, STEEN & HAMILTON
DON S. WILLIAMS, ESQ. ONE LIBERTY PLAZA
WILSON SONSINI GOODRICH & ROSATI NEW YORK, NY 10006
PROFESSIONAL CORPORATION (212) 225-2000
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(415) 493-9300
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
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<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
TITLE OF EACH PROPOSED MAXIMUM AMOUNT OF
CLASS OF SECURITIES AGGREGATE REGISTRATION
TO BE REGISTERED OFFERING PRICE(1)(2) FEE(1)(2)
- ------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value................................. $46,000,000 $13,940
==================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(a) promulgated under the Securities Act of 1933, as
amended.
(2) Includes aggregate value offered if the Underwriters exercise the option to
purchase to cover over-allotments, if any.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION
1997
PROSPECTUS
SHARES
SYNON CORPORATION LOGO
COMMON STOCK
($.001 PAR VALUE)
Of the shares of Common Stock, $.001 par value ("Common Stock"), offered
hereby (the "Shares"), are being offered by Synon Corporation and
shares are being offered by the Selling Stockholders. The Company will not
receive any of the proceeds from the sale of shares by the Selling Stockholders.
See "Principal and Selling Stockholders."
Prior to this offering (the "Offering"), there has been no public market for the
Common Stock. It is currently estimated that the initial public offering price
per share will be between $ and $ per share. See "Underwriting" for a
discussion of factors to be considered in determining the initial public
offering price. Application has been made to have the Common Stock approved for
quotation on the Nasdaq National Market under the symbol "SYNO."
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROCEEDS
PROCEEDS TO
PRICE TO UNDERWRITING TO SELLING
PUBLIC DISCOUNT COMPANY(1) STOCKHOLDERS
<S> <C> <C> <C> <C>
Per Share............................ $ $ $ $
Total(2)............................. $ $ $ $
</TABLE>
- --------------------------------------------------------------------------------
(1) Before deducting expenses payable by the Company, estimated at $ ,
which includes expenses of the Selling Stockholders that will be reimbursed
by the Company.
(2) Certain Selling Stockholders have granted the Underwriters an option,
exercisable within 30 days from the date hereof, to purchase up to
additional shares of Common Stock on the same terms set forth above, solely
to cover over-allotments, if any. If such option is exercised in full, the
total price to public will be $ , and the proceeds to Selling
Stockholders will be $ . See "Underwriting."
The shares of Common Stock are offered subject to receipt and acceptance by the
Underwriters, subject to prior sale and to the Underwriters' right to reject any
order in whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that delivery of the Shares will be made at the office of
Salomon Brothers Inc, Seven World Trade Center, New York, New York, or through
the facilities of The Depository Trust Company, on or about , 1997.
SALOMON BROTHERS INC VOLPE BROWN WHELAN & COMPANY
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE> 3
[ARTWORK]
------------------------
This Prospectus contains certain statements of a forward-looking nature
relating to future events or the future financial performance of the Company.
Prospective investors are cautioned that such statements are only predictions
and that actual events or results may differ materially. In evaluating such
statements, prospective investors should specifically consider the various
factors identified in this Prospectus, including the matters set forth under the
caption "Risk Factors."
Synon and Obsydian are registered United States trademarks of the Company.
This Prospectus also contains additional trademarks and tradenames of Synon and
of other companies.
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET PRICE, PURCHASES
OF THE COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN THE COMMON STOCK
MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE
"UNDERWRITING."
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information, and the Company's Consolidated Financial Statements and Notes
thereto, appearing elsewhere in this Prospectus.
THE COMPANY
Synon Corporation ("Synon" or the "Company") is a leading provider of
enterprise software application development tools and related professional
services designed to enable organizations to rapidly design and deploy
mission-critical software applications. Over the last 14 years the Company has
established the leading market position for International Business Machines
Corporation ("IBM") AS/400 software development tools, having sold approximately
6,000 licenses to customers located in approximately 80 countries. In late 1994,
the Company introduced Obsydian, a multi-platform software application
development tool designed to expand the Company's presence in the AS/400 market.
In order to capitalize on the growth of the Microsoft Corporation ("Microsoft")
Enterprise Windows NT computing environment, in March 1997, the Company released
the Obsydian for Windows NT Back Office Generator (the "Windows NT generator").
Obsydian is an integrated business-oriented software development tool that
provides customers with the ability to rapidly develop, deploy and enhance
sophisticated software applications across multiple computing platforms.
Obsydian's technology employs a practical model-based approach to software
design that uses large reusable business objects ("patterns") to reduce
application development lead times. The Obsydian product line includes multiple
code generators that allow developers to deploy applications across different
computing environments, including AS/400, Windows NT and UNIX. The Company is
currently developing a generator with Java capability.
The Company currently sells application development tools primarily in two
distinct markets: the IBM AS/400 market and the emerging Windows NT market.
According to research estimates by International Data Corporation, there were
approximately 79,000 new AS/400 systems sold in 1996, representing approximately
13% growth over 1995, bringing the installed base to approximately 372,000
systems at December 31, 1996. Company management estimates that approximately
half of the new AS/400 systems sold in 1996 include language compilers which the
Company considers potential customer sites. Dataquest has estimated that the
Windows NT-based application server computer systems market will grow at a
compound annual growth rate of 42% per year through 2000 and is expected to
reach approximately five million systems by 1999. The Company believes that both
of these markets represent significant opportunities for its software
development products and services. To date, the Company has derived
substantially all of its revenue from application development tools and services
for the AS/400 market, but believes that an increasing percentage of its revenue
will come from tools and services for the Windows NT market.
The Company intends to leverage its expertise and reputation in AS/400
software development tools to establish Obsydian as the leading multi-platform
application development tool for diverse computing environments. The Company's
major strategies are to: (i) capitalize on its significant customer base and
established market position; (ii) repeat its success in the AS/400 market in the
emerging Windows NT market; (iii) capitalize on its established development and
marketing relationships with IBM and Microsoft; (iv) build upon the Company's
existing technological leadership; (v) facilitate customers' adoption and use of
Synon's technology through a range of professional services; and (vi) leverage
its existing worldwide presence.
The Company sells its products and services through its direct sales forces
in North America, the United Kingdom, France, Italy and Australia and through a
network of distributors in Europe, Asia and Latin America.
The Company was organized under the laws of the United Kingdom in 1983 and
reorganized in Delaware in 1990. Unless the context otherwise requires,
references in this Prospectus to "Synon" or the "Company," relate to Synon
Corporation, a Delaware corporation, its predecessor Synon Limited, organized
under the laws of the United Kingdom, and its wholly-owned subsidiaries. The
Company's principal executive offices are located at 1100 Larkspur Landing
Circle, Larkspur, California 94939 and its telephone number at that address is
(415) 461-5000.
3
<PAGE> 5
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company..................... shares
Common Stock offered by certain Selling Stockholders.... shares
-----------------
Total Common Stock offered.............................. shares
Common Stock to be outstanding after the Offering....... shares(1)
Use of proceeds......................................... For working capital and other general
corporate purposes. See "Use of
Proceeds."
Proposed Nasdaq National Market symbol.................. SYNO
</TABLE>
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(1) Based on shares outstanding as of March 31, 1997. Excludes an aggregate of
1,366,730 shares of Common Stock issuable upon exercise of options
outstanding at March 31, 1997 under the Company's 1990 Stock Option Plan and
Executive Share Option Scheme at a weighted average exercise price of $3.16
per share. See "Management -- Stock Plans," "Description of Capital Stock"
and Note 11 of Notes to Consolidated Financial Statements. Also excludes (i)
6,000 shares issuable upon exercise of options granted after March 31, 1997
under the 1990 Stock Option Plan and (ii) an aggregate of shares
reserved as of May , 1997 for future issuance under the 1990 Stock Option
Plan, Executive Share Option Scheme, 1997 Incentive Stock Plan, 1997
Director Option Plan and 1997 Employee Stock Purchase Plan. See Note 11 to
Consolidated Financial Statements.
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------------------------ -----------------
1992 1993 1994 1995 1996 1996 1997
-------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues.............................. $ 51,345 $60,902 $65,380 $70,782 $76,131 $17,016 $18,472
Operating income (loss)..................... (10,987) 1,867 1,801 869 1,728 (718) 303
Net income (loss)........................... (10,682) 1,151 1,314 714 1,139 (559) 61
Net income (loss) per share................. $ (3.00) $ 0.15 $ 0.17 $ 0.09 $ 0.14 $ (0.15) $ 0.01
Weighted average shares outstanding......... 3,563 7,608 7,772 7,862 7,878 3,626 8,226
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------
MARCH 31, 1997
------------------------
ACTUAL AS ADJUSTED(1)
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<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................................... $ 1,080 $ 2,473
Working capital (deficit)......................................... (1,263) (1,504)
Total assets...................................................... 36,909 35,063
Capital lease obligations, net of current portion................. 352 283
Stockholders' equity.............................................. 4,526 4,748
</TABLE>
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(1) Adjusted to give effect to the estimated net proceeds of this Offering based
on an assumed initial public offering price of $ per share and the
application of the estimated net proceeds therefrom. See "Use of Proceeds."
------------------------
Unless otherwise indicated, all information in this Prospectus (i) assumes
that the Underwriters have not exercised the over-allotment option, (ii) has
been adjusted to give effect to a one-for-two reverse stock split of the
Company's Common Stock currently expected to be effected in June 1997, and (iii)
reflects the issuance of shares of Common Stock upon the conversion of
all of the outstanding shares of the Company's Preferred Stock upon the closing
of the Offering. See "Description of Capital Stock," "Underwriting," and Notes 2
and 17 of Notes to Consolidated Financial Statements.
Certain technical terms used throughout this Prospectus are defined in the
Glossary appearing immediately prior to the Company's Consolidated Financial
Statements at the end of this Prospectus.
4
<PAGE> 6
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following factors should be carefully considered in evaluating the Company and
its business before purchasing the Common Stock offered hereby. All statements,
trend analyses and other information contained in this Prospectus relative to
markets for the Company's products and trends in revenue, gross margin and
anticipated expense levels, as well as other statements including such words as
"anticipate," "believe," "plan," "estimate," "expect," and "intend" and other
similar expressions constitute forward-looking statements. These forward-looking
statements are subject to business and economic risks, and the Company's actual
results of operations may differ materially from those contained in the
forward-looking statements as a result of certain factors, including those set
forth under "Risk Factors" and elsewhere in this Prospectus.
BRIEF HISTORY OF PROFITABILITY; ACCUMULATED DEFICIT
The Company has been profitable on an annual basis since 1993. However, the
Company incurred annual losses of $8.5 million, $6.3 million and $10.7 million
in 1990, 1991 and 1992, respectively, and as of March 31, 1997 on a pro forma
basis had an accumulated deficit of approximately $33.0 million, of which
approximately $20.9 million resulted from operating losses. As a result of these
losses, the Company has experienced constraints in the availability of working
capital. Moreover, the Company has reported working capital deficits at December
31, 1996 and in each of the years in the five year period ended December 31,
1996 and at March 31, 1997. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources." Moreover, even in the profitable years, the Company has experienced
frequent quarterly operating losses, and in each of the last four years
substantially all of the operating income has been based on profits achieved in
the fourth quarter. There can be no assurance that the Company will be
profitable in any future period, and recent operating results are not
necessarily indicative of future financial performance.
FLUCTUATIONS IN QUARTERLY RESULTS; SEASONALITY
The Company's quarterly revenue and operating results have fluctuated
significantly in the past due to seasonal trends, cost overruns associated with
certain fixed price services projects, sales staff turnover and timing of new
product deliveries. The Company's quarterly revenue and operating results are
likely to vary significantly in the future as a result of these and a number of
other factors including the demand for the Company's software; the size, timing
and contractual terms of significant orders; the timing and significance of
software product enhancements and new software product announcements by the
Company or its competitors; the productivity of the Company's sales channels;
changes in pricing policies by the Company or its competitors; changes in the
Company's or its competitors' business strategies; budgeting cycles of its
potential customers; changes in the mix of software products and services the
Company sells; changes in the mix of revenue attributable to domestic and
international sales; software defects and other product quality problems; the
ability of the Company to recruit and retain qualified personnel; investments to
develop sales distribution channels; changes in the level of operating expenses;
and general domestic and international economic and political trends.
The Company's license revenue has experienced and is expected to continue
to experience a high degree of seasonality, in part due to customer buying
patterns. In recent years, the Company has generally had stronger sales of its
software products during the quarter ending in December and weaker sales in the
following quarter. In addition, sales of the Company's software products tend to
be flat in the third quarter compared to the second quarter, due to reduced
sales activity in the summer months, especially in Europe. Moreover, the Company
has experienced frequent quarterly operating losses, and in each of the last
four years substantially all of its operating income has been based on profits
achieved in the fourth quarter. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
In addition, the timing of revenue recognition can diverge from
expectations as a result of a variety of factors, including the timing of
contract execution and delivery, and customer acceptance, if applicable.
5
<PAGE> 7
When an undeliverable product affects the usability of other products in a
customer order, recognition of that customer order's revenue may be delayed
until all products constituting part of that customer order can be delivered.
Specifically, quarterly results in 1995 were affected as revenue recognition of
Obsydian sales which included the AS/400 Non-Programmable Terminal ("NPT")
generator was delayed until the generator was delivered in December 1995. These
and other factors affecting the timing of revenue recognition can contribute to
fluctuations in quarterly results.
Software revenue is also difficult to forecast because the market for
high-end client/server software products is rapidly evolving, especially for the
emerging Windows NT market, and because the Company's sales cycle, from initial
contact to purchase and implementation, varies substantially from customer to
customer. In the event of any downturn in potential customers' businesses or the
economy in general, or a lack of market acceptance of the Windows NT computing
platform in general or the Company's Obsydian for Windows NT product in
particular, planned purchases of the Company's products may be deferred or
canceled, which could have a material adverse effect on the Company's business,
operating results and financial condition. In addition, the Company's North
American sales operation historically has not achieved levels of productivity
realized elsewhere in the business. The Company has recently implemented a
change in the structure and leadership of the North American sales operation,
but there can be no assurance that the operation's performance will improve. See
"-- Continued Importance of Synon/2E; Dependence on Obsydian; Dependence on
Market for High-End Client/Server Applications," "-- Limited Customer Use of
Obsydian for Windows NT; Market Acceptance of Windows NT Platform" and "-- Sales
and Marketing Productivity."
The Company typically ships product orders shortly after receipt, and
consequently, order backlog at the beginning of any quarter has in the past
represented an inconsequential portion of that quarter's revenue. As a result,
to achieve its quarterly revenue objectives, the Company is dependent upon
obtaining orders in any given quarter for shipment in that quarter. Furthermore,
the Company has often recognized a substantial portion of its revenue in the
last month, or even weeks or days, of a quarter and therefore quarterly revenue
is difficult to predict with any significant degree of accuracy. The Company's
expense levels are based, in significant part, on the Company's expectations as
to future revenue and are, therefore, relatively fixed in the short term. If
revenue levels fall below expectations, net income would likely be
disproportionately adversely affected because a proportionately smaller amount
of the Company's expenses varies with its revenue. There can be no assurance
that the Company will be able to achieve or maintain profitability on a
quarterly or annual basis in the future. Due to all of the foregoing factors, it
is likely that in some future quarter the Company's operating results will be
below the expectations of public market analysts and investors. In such event,
the price of the Company's Common Stock would likely be materially adversely
affected.
CONTINUED IMPORTANCE OF SYNON/2E; DEPENDENCE ON OBSYDIAN; DEPENDENCE ON MARKET
FOR HIGH-END CLIENT/SERVER APPLICATION DEVELOPMENT TOOLS
In the last three years, revenue attributable to the Synon/2E product
family has declined as a percentage of the Company's total revenue, but
continues to be important to the Company. The Company derived approximately 87%,
60% and 45% of its license revenue in 1994, 1995 and 1996, respectively, from
the Company's Synon/2E product family and approximately 100%, 95% and 88% of its
maintenance revenue in 1994, 1995, and 1996, respectively, from the Company's
Synon/2E product family. Moreover, the license revenue attributable to the
Synon/2E product family has declined significantly in absolute dollars in each
of the last three years. Although the Company continues to invest in
enhancements to its Synon/2E product family and plans to continue product
updates and introduction of new releases for such products, the Company expects
further declines in Synon/2Eproduct family license revenue and declines in
Synon/2E product family maintenance and professional services revenue, both in
absolute dollars and as a percentage of total revenue, as customers migrate away
from the Synon/2E product. In the event that the decline in revenue from the
Synon/2E product family is not more than offset by growth in revenue
attributable to the Obsydian product family, the Company's results of operations
will be materially adversely affected.
6
<PAGE> 8
Beginning in 1995, a substantial portion of the Company's license revenue
has been attributable to sales of the Obsydian product family, which accounted
for approximately 13%, 40% and 55% of the Company's license revenue in 1994,
1995 and 1996, respectively. The Company expects the Obsydian product family to
account for an increasingly significant portion of the Company's revenue for the
foreseeable future. However, total license revenue declined in each of 1994,
1995 and 1996 as the growth in Obsydian product family license revenue was more
than offset by declines in Synon/2E product family license revenue. Growing
Obsydian product family revenue will be required not only to counteract the
effect of declining Synon/2E product family revenue, but also to generate in
large part any future Company revenue growth. As a result, factors adversely
affecting the pricing of or demand for the Obsydian product family, such as
competition or technological change, would have a material adverse effect on the
Company's business, operating results and financial condition. Moreover, the
Company's future financial performance will depend, in significant part, on the
successful development, introduction and customer acceptance of new and enhanced
versions of the Company's Obsydian product and other software products that keep
pace with continuing changes in software application development technology,
evolving industry standards and changing customer preferences. In particular,
customer acceptance of the recently released Obsydian for the Enterprise Windows
NT computing platform, which the Company expects will account for an
increasingly significant portion of Obsydian revenue in the future, is important
to the Company's future success. There can be no assurance that the Company will
continue to be successful in marketing, or that customers will accept, the
Obsydian product family or any new or enhanced software products, including
Obsydian for the Windows NT computing platform. See "--Limited Customer Use of
Obsydian for Windows NT, Market Acceptance of Windows NT Platform."
Although the Company has recently experienced growth in sales of Obsydian,
continued growth is in part dependent on ongoing demand for high-end
client/server applications, and there can be no assurance that such market will
continue to grow. The market for software used in the development, deployment
and management of high-end client/server applications is relatively new and is
characterized by ongoing technological developments, frequent new product
announcements and introductions, evolving industry standards and changing
customer requirements. The Company's future financial performance will depend in
large part on continued growth in the number of organizations adopting high-end
client/server applications and computing environments and the number of
applications developed for use in those environments. If the high-end
client/server market fails to grow or grows more slowly than the Company
currently anticipates, the Company's business, operating results and financial
condition would be materially and adversely affected. Moreover, there can be no
assurance that the Company's customers will expand usage of the Company's
software on an enterprise-wide basis or implement new software products
introduced by the Company. The failure of the Company's software to perform
according to customer expectations or otherwise to be deployed on an
enterprise-wide basis would have a material adverse effect on the ability of the
Company to increase revenue from new as well as existing customers. See
"Business -- Industry Background," "-- Strategy," "-- Technology and Products"
and "-- Competition."
LIMITED CUSTOMER USE AND MARKET ACCEPTANCE OF OBSYDIAN FOR WINDOWS NT; MARKET
ACCEPTANCE OF WINDOWS NT PLATFORM
The Company expects to generate a substantial portion of its future revenue
from sales of Obsydian for the Windows NT computing platform. Consequently,
customer acceptance of such product is important to the Company. See
"--Continued Importance of Synon/2E; Dependence on Obsydian; Dependence on
Market for High-End Client Server Applications." The Company first shipped
Obsydian for the Windows NT computing platform in March 1997. To date, only a
limited number of the Company's customers have completed the development of
software applications for the Windows NT computing platform using Obsydian. As
with all complex software products, a substantial investment of time and
resources is required for users to become educated and fluid with the Obsydian
product family, and to date only a relatively small group of users is qualified
to use such products or manage the Windows NT operating environment more
generally. If any of the Company's customers are not able to successfully
develop and deploy applications for the Windows NT computing platform using
Obsydian, the Company's
7
<PAGE> 9
reputation could be damaged and future sales of Obsydian for the Windows NT
computing platform could suffer. In addition, even if customers are successful
developing and deploying applications for the Windows NT computing platform
using Obsydian, limited market acceptance of the Windows NT platform would
adversely affect sales of Obsydian for the Windows NT computing platform. There
can be no assurance that existing customers will be successful developing or
deploying applications for the Windows NT computing platform using Obsydian,
that the Obsydian for Windows NT product will achieve significant market
acceptance or that the Windows NT platform will become widely adopted. The
failure of any of these to occur would have a material adverse effect on the
Company's business, financial condition and results of operations.
COMPETITION
The software development market is highly fragmented and serviced by many
firms. The market for advanced software used in the development, deployment and
management of high-end client/server application software systems is intensely
competitive and characterized by rapidly changing technology, evolving industry
standards, frequent new product introductions and rapidly changing customer
requirements. The Company's development tools are targeted primarily at
developers of large business applications running on the AS/400 and the Windows
NT operating platform. In the market for high-end client/server application
development software tools, the Company expects to compete primarily with Forte
Software, Inc. and Texas Instruments Incorporated with respect to users of the
Windows NT operating platform, and currently competes primarily with Progress
Software Corporation and several small software companies with respect to users
of the AS/400. In the market for less complex client/server application
development software tools, the Company competes primarily with Powersoft
Corporation, IBM's Visual Age product line and Microsoft's Visual Basic with
respect to users of the Windows NT operating platform and with IBM's Visual Age
product line with respect to users of the AS/400.
Software that can be developed and deployed using the Company's Obsydian
environment can also be implemented using a combination of first generation
application development tools and more powerful server programming techniques
such as stored procedures in relational databases, C or C++ programming, and
networking and database middleware to connect the various components.
Consequently, the Company experiences competition from potential customers'
decisions to pursue this approach as opposed to utilizing an application
environment such as Obsydian. Similarly, the Company's products compete against
the alternative of conventional software development in the AS/400's native RPG
language. As a result, the Company must continuously educate existing and
prospective customers as to the advantages of the Company's products. There can
be no assurance that these customers or potential customers will perceive
sufficient value in the Company's products to justify purchasing them.
The Company also competes indirectly with database vendors such as Oracle
Corporation ("Oracle"), Informix Corporation ("Informix") and others that offer
their own development tools for use with their databases. The Company may in the
future face additional direct or indirect competition from IBM or Microsoft in
the event that such companies continue to develop their own application
development tools for the AS/400, Windows NT or other computing platforms or
enter into strategic relationships with any of the Company's competitors. In
addition, since the software industry has relatively low barriers to entry, the
Company may in the future face additional competition from start-up or other
companies in the software application development tool industry.
Most of the Company's current competitors have, and future competitors may
have, significantly greater financial, technical, marketing and other resources
than the Company. The Company's competitors may be able to respond more quickly
to new or emerging technologies and changes in customer requirements or devote
greater resources to the development, promotion and sale of their products than
the Company. Also, most current and potential competitors have greater name
recognition and more extensive customer bases that could be leveraged, thereby
gaining market share to the Company's detriment. The Company expects to face
additional competition as other established and emerging companies enter the
application development tools market and new products and technologies are
8
<PAGE> 10
introduced. Increased competition could result in price reductions, reduced
purchases of licenses, professional services and maintenance, lower gross
margins or loss of market share, any of which would materially adversely affect
the Company's business, operating results and financial condition.
In addition, current and potential competitors have established or may
establish cooperative relationships among themselves or with third parties or
make strategic acquisitions to increase the ability of their products to address
the needs of the Company's prospective customers. Accordingly, it is possible
that new competitors or alliances among current and new competitors may emerge
and rapidly acquire significant market share. There can be no assurance that the
Company will be able to compete successfully against current and future
competitors or that competitive pressures faced by the Company will not
materially adversely affect its business, operating results and financial
condition. Further, there can be no assurance that products or technologies
developed by others will not render the Company's products non-competitive or
obsolete. In addition, regardless of the Company's success in the marketplace, a
negative perception of the Company generated by industry analysts or the public
more generally could detract from the Company's competitiveness. The Company's
market is still evolving and there can be no assurance that the Company will be
able to compete successfully against current and future competitors, and the
failure to do so successfully will have a material adverse effect upon the
Company's business, operating results and financial condition. See
"Business -- Competition."
SALES AND MARKETING PRODUCTIVITY
An important element of the Company's strategy is to increase the
productivity and effectiveness of its sales and marketing organizations. In
particular, the Company intends to improve the productivity of its North
American sales operation, which has not achieved levels of productivity realized
elsewhere in the business. See "-- Fluctuations in Quarterly Results;
Seasonality." As one step toward achieving such improvement, the Company has
instituted a change in leadership of the North American sales operation. The
Company believes that its ability to improve sales and marketing productivity,
as well as its future success more generally, will depend in large part upon its
ability to identify, attract, train and retain highly skilled sales, marketing
and management personnel. Competition for such personnel in the computer
software industry is intense. There can be no assurance the Company will be
successful in identifying, attracting, training and retaining such personnel, or
retaining existing key personnel, each of whom presently has an at-will
employment relationship with the Company. The failure to do any of the foregoing
could have a material adverse effect on the Company's business, operating
results or financial condition.
DEPENDENCE ON RELATIONSHIPS WITH IBM AND MICROSOFT
The Company's development, marketing and distribution activities are in
part dependent on the Company's relationships with IBM's AS/400 division and
Microsoft. Although certain aspects of the Company's relationships with each of
IBM's AS/400 division and Microsoft are contractual in nature, many important
aspects of each relationship depend on the continued cooperation of IBM and
Microsoft, respectively, and there can be no assurance that the Company will be
able to work successfully with either IBM or Microsoft for an extended period of
time. Specific risks to each relationship include the fact that the Company and
IBM and Microsoft also compete in the area of development tools for one or all
of the AS/400, Windows NT and other computing platforms, as well as the risks of
divergence in strategy between Synon and either company, a change in focus by
either company or establishment of strategic relationships between either
company and a competitor or competitors of Synon, any of which events would
materially adversely impact Synon's ability to develop, market, sell or support
its products. See "-- Competition."
POTENTIAL FINANCIAL EXPOSURE FROM FIXED-PRICE CONTRACTS
The Company has in the past entered into agreements with customers
involving application development projects, including multi-million dollar
projects, in which the Company has committed to achieve a specific result for a
fixed price. The Company's operating margins for 1995 and 1996 were negatively
impacted by cost overruns, and in certain cases losses, incurred in completing
certain fixed-
9
<PAGE> 11
price projects. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations." The Company has implemented new practices intended
to enable it to more effectively evaluate its ability to achieve the result
required by a fixed-price contract before entering into any such contract in the
future. However, there can be no assurance that the cost of fulfilling the
Company's obligations under any such contract will not exceed the Company's
estimate of such costs or the fixed price payable to the Company under such
contract, in which event the Company's operating results would likely be
materially adversely affected.
RISKS ASSOCIATED WITH DISTRIBUTION CHANNELS
To date, the Company has sold its products primarily through its direct
sales force and distributors. Revenue from distributors accounted for
approximately 26%, 21% and 30% of the Company's software license revenue for
1994, 1995 and 1996, respectively. In addition, the Company relies on its
foreign distributors to provide first level customer support. The success of the
Company is therefore dependent in significant part upon the performance of its
distributors, which is primarily outside the Company's control. The Company's
ability to achieve significant revenue growth in the future will depend in large
part on its success in maintaining and establishing additional relationships
with distributors worldwide. The loss of any of the Company's major
distributors, or their promotion of competitive products, or the failure of
these distributors to take the actions necessary to support Obsydian, especially
Obsydian for the Windows NT computing platform, or the failure of the Company to
attract new distributors, could have a material adverse effect on the Company's
business, operating results and financial condition. See "Business -- Strategy"
and "-- Sales and Marketing."
LENGTHY SALES CYCLE
The evaluation of, and purchase decision with respect to, the Company's
software products generally involves a significant commitment of management
attention and resources by prospective customers. Accordingly, the Company's
sales process is often subject to delays associated with the long approval
process that generally accompanies significant initiatives or capital
expenditures. For these and other reasons, the sales cycle associated with the
license of the Company's products is often lengthy (typically three to nine
months) and subject to a number of significant delays over which the Company has
little or no control. It is likely that the Company will continue to experience
a lengthy sales cycle in the future, which could contribute to variability in
quarterly operating results. See "-- Potential Fluctuations in Quarterly
Results; Seasonality" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
Revenue from foreign operations accounted for approximately 47%, 48% and
46% of the Company's total revenue in 1994, 1995 and 1996, respectively.
Although the Company has had international operations for a number of years,
there can be no assurance that the Company will be able to successfully market,
sell and deliver its products in international markets in the future. In
addition, the Company believes that in order to increase sales opportunities and
profitability, as well as to meet growing market needs, it may be required to
expand its international operations, including hiring additional personnel and
recruiting additional distributors. To the extent that the Company is unable to
do so in a timely manner, the Company's growth, if any, in international sales
may be limited, and the Company's business, operating results and financial
condition could be materially adversely affected.
The Company's international operations are exposed to risks from
fluctuations in foreign currency exchange rates with respect to a number of
currencies, including fluctuations among and between the United States dollar,
British pound, German deutschemark, Japanese yen, French franc and Italian lira.
The Company does not currently engage in foreign currency management activities
or hedging transactions. Additional risks inherent in the Company's
international business activities generally include the impact of possible
recessionary environments in economies outside the United States, unexpected
changes in government policies and regulatory requirements, tariffs, export
controls and other trade
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<PAGE> 12
barriers, costs of localizing products for foreign markets, lack of acceptance
of localized products in foreign countries, longer accounts receivable payment
cycles, difficulties and costs of staffing and managing international
operations, potentially adverse tax consequences, restrictions on the
repatriation of earnings, the burdens of complying with a wide variety of
foreign laws, political instability and transportation delays. There can be no
assurance that the Company or its distributors will be able to sustain or
increase international revenue from licenses or from maintenance or professional
services, or that the foregoing factors will not have a material adverse effect
on the Company's results associated with its international operations, and,
consequently, on the Company's overall business, operating results and financial
condition. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Overview" and "Business -- Sales and Marketing."
DEPENDENCE ON PROPRIETARY RIGHTS AND TECHNOLOGY; RISKS OF INFRINGEMENT
The Company's success is heavily dependent upon proprietary technology. The
Company also believes that factors such as the technological and creative skills
of its personnel, new product developments, frequent product enhancements, name
recognition and reliable product maintenance are essential to establishing and
maintaining a technology leadership position. The Company relies primarily on a
combination of copyright and trademark laws, trade secrets, confidentiality
procedures and contractual provisions to protect its proprietary rights. The
Company seeks to protect its software, documentation and other written materials
under trade secret and copyright laws, which afford only limited protection. The
Company currently has no patents or patent applications pending. Despite
precautions taken by the Company, it may be possible for unauthorized third
parties to copy aspects of its products or future products or to obtain and use
information that the Company regards as proprietary. In particular, for the
Synon Model Applications ("SMA") financial product and class libraries, the
Company provides its licensees with access to its data model and other
proprietary information underlying its licensed applications. There can be no
assurance that the Company's means of protecting its proprietary rights now or
in the future will be adequate or that the Company's competitors will not
independently develop similar or superior technology. Litigation may be
necessary in the future to enforce the Company's intellectual property rights,
to protect the Company's trade secrets or to determine the validity and scope of
the proprietary rights of others. Such litigation could result in substantial
costs and diversion of resources and could have a material adverse effect on the
Company's business, operating results and financial condition.
The Company, Dysys Limited, a United Kingdom company ("Dysys"), and Simon
Williams and Melinda Horton, founders and major stockholders of the Company, are
parties to an agreement dated September 15, 1992 (the "Dysys Agreement") in
connection with which the Company acquired certain intellectual property from
Dysys which was included in the Company's Obsydian product. In connection with
the Dysys Agreement, the Company currently incurs a liability to pay Mr.
Williams and Ms. Horton a 1.0% and 0.5% royalty, respectively, on Obsydian
license and maintenance revenue for all transactions entered into through June
30, 1999. Pursuant to the Dysys Agreement, Mr. Williams and Ms. Horton also
retain certain rights with respect to the intellectual property, including the
non-exclusive right to use and exploit it under certain circumstances, including
the Company's failure to pay required royalty amounts required in connection
with the Dysys Agreement. See "Certain Transactions -- Dysys Agreement."
Policing unauthorized use of the Company's software is difficult, and,
while the Company does not believe software piracy is a significant problem to
the Company at present, there can be no assurance that it will not become a
problem in the future. In addition, the laws of some foreign countries do not
protect the Company's proprietary rights to the same extent as do the laws of
the United States. The Company is not aware that any of its software product
offerings infringe the proprietary rights of third parties, but there can be no
assurance that third parties will not claim infringement by the Company with
respect to current or future products. The Company expects that software
developers will increasingly be subject to infringement claims as the number of
products and competitors in the Company's industry segment grows and the
functionality of products in different industry segments overlaps. Any such
claims, with or without merit, could be time-consuming, result in costly
litigation, cause product shipment
11
<PAGE> 13
delays or require the Company to enter into royalty or licensing agreements.
Such royalty or licensing agreements, if required, may not be available on terms
acceptable to the Company or at all, which could have a material adverse effect
on the Company's business, operating results and financial condition. Any such
delays or reductions in product shipments could materially and adversely affect
the Company's business, operating results and financial condition. See
"Business -- Intellectual Property and Other Proprietary Rights."
RAPID TECHNOLOGICAL CHANGE; PRODUCT DEVELOPMENT RISKS
The market for the Company's products is subject to rapid technological
change, changing customer needs and evolving industry standards that may render
existing products and services obsolete. As a result, the Company's position in
its existing markets or other markets that it may enter could be eroded rapidly
by product advances. The Company's vulnerability to rapid technological change
and changing customer needs is heightened by the focus of its product
development efforts on the Obsydian product line and Obsydian for the Windows NT
computing platform.
The Company's product development efforts are expected to require, from
time to time, substantial investments by the Company, but there can be no
assurance that the Company will have sufficient resources to make the necessary
investments. In addition, the Company has in the past experienced
development delays, and there can be no assurance that the Company will not
experience such delays in the future, which could delay or prevent the
successful development, introduction or marketing of new or enhanced products
such as the Java generator. Such products, even if developed successfully on a
timely basis, may not meet the requirements of the marketplace or achieve market
acceptance. If the Company is unable, for technological or other reasons, to
develop and introduce new and enhanced products in a timely manner, the
Company's business, results of operations and financial condition could be
materially adversely affected.
Software products as complex as those offered by the Company may contain
errors that may be detected at any point in the products' life cycles. There can
be no assurance that, despite testing by the Company and by current and
potential customers, errors will not be found, resulting in loss of, or delay
in, market acceptance and sales, diversion of development resources, injury to
the Company's reputation, or increased service and warranty costs, any of which
could have a material adverse effect on the Company's business, results of
operations and financial condition. See "Business -- Technology and Products"
and "-- Product Development."
DEPENDENCE ON KEY PERSONNEL; NEW SYSTEMS AS PUBLIC COMPANY
Synon's success depends on the continued contributions of certain senior
corporate managers and key employees, each of whom has an at-will employment
relationship with the Company. The loss of services of any of such personnel
could have a material adverse effect on the Company. The Company also depends on
its continued ability to attract and retain other highly skilled and qualified
personnel, and there can be no assurance that the Company will be successful in
attracting and retaining such personnel. See "Management -- Executive Officers,
Directors and Key Employees."
Moreover, in order to compete effectively and manage its obligations as a
public company, the Company must continue to implement and improve information
systems, procedures and controls and expand, train and manage its work force.
FINANCIAL EXPOSURE FROM EXCESS FACILITIES
As a result of the restructuring of its European operations, the Company
currently has excess facilities under long term leases in the United Kingdom.
While these facilities are currently sublet, there can be no assurance that the
Company will not incur liabilities in connection with these excess facilities in
the future, which could have a material adverse effect on the Company's
business, operating results and financial condition. See "Management's
Discussion and Analysis of Financial Condition and Results of
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<PAGE> 14
Operations -- Liquidity and Capital Resources" and Note 12 of Notes to
Consolidated Financial Statements.
PRODUCT LIABILITY
The Company's license agreements with its customers typically contain
provisions designed to limit the Company's exposure to potential product
liability claims. It is possible, however, that the limitation of liability
provisions contained in the Company's license agreements may not be effective
under existing or future laws of certain jurisdictions. Although the Company has
not experienced any material product liability claims to date, the sale and
support of products by the Company may entail the risk of such claims, and there
can be no assurance that the Company will not be subject to such claims in the
future. A successful product liability claim brought against the Company could
have a material adverse effect on the Company's business, operating results and
financial condition.
EFFECT OF CERTAIN CHARTER PROVISIONS; LIMITATION OF LIABILITY OF DIRECTORS;
ANTITAKEOVER EFFECTS OF DELAWARE LAW
Effective upon the closing of this Offering, the Company will be authorized
to issue up to 5,000,000 shares of undesignated Preferred Stock. The Board of
Directors has the authority to issue the Preferred Stock in one or more series
and to fix the price, rights, preferences, privileges and restrictions thereof,
including dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption, liquidation preferences and the number of shares
constituting a series or the designation of such series, without any further
vote or action by the Company's stockholders. The issuance of any such Preferred
Stock, while providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of delaying,
deferring or preventing a change in control of the Company without further
action by the stockholders and may adversely affect the market price of the
Common Stock and the voting and other rights of the holders of Common Stock. The
issuance of Preferred Stock with voting and conversion rights may adversely
affect the voting power of the holders of Common Stock, and may under certain
circumstances involve the loss of voting control to others. The Company has no
current plans to issue any shares of Preferred Stock.
Certain provisions of the Company's Amended and Restated Certificate of
Incorporation and Bylaws eliminate the right of stockholders to act by written
consent without a meeting and specify certain procedures for nominating
directors and submitting proposals for consideration at stockholder meetings.
Such provisions are intended to enhance the likelihood of continuity and
stability in the composition of the Board of Directors and in the policies
formulated by the Board of Directors and to discourage certain types of
transactions which may involve an actual or threatened change of control of the
Company. Such provisions are designed to reduce the vulnerability of the Company
to an unsolicited acquisition proposal and, accordingly, could discourage
potential acquisition proposals and could delay or prevent a change in control
of the Company. Such provisions are also intended to discourage certain tactics
that may be used in proxy fights but could also have the effect of discouraging
others from making offers for the Company's shares and, consequently, may
inhibit fluctuations in the market price of the Company's Common Stock that
could result from actual or rumored takeover attempts. These provisions may also
have the effect of reducing or preventing changes in the management of the
Company.
The Company is subject to Section 203 of the Delaware General Corporation
Law (the "Antitakeover Law"), which regulates corporate acquisitions. The
Antitakeover Law prevents certain Delaware corporations, including those having
securities listed for trading on the Nasdaq National Market, from engaging,
under certain circumstances, in a "business combination" with any "interested
stockholder" for three years following the date that such stockholder became an
interested stockholder. For purposes of the Antitakeover Law, a "business
combination" includes, among other things, a merger or consolidation involving
the Company and the interested stockholder, as well as the sale of more than ten
percent (10%) of the Company's assets. In general, the Antitakeover Law defines
an "interested stockholder" as any entity or person beneficially owning 15% or
more of the outstanding voting stock of the Company and any entity or person
affiliated with or controlling or controlled by such entity or person. A
Delaware
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<PAGE> 15
corporation may "opt out" of the Antitakeover Law with an express provision in
its original certificate of incorporation or an express provision in its
certificate of incorporation or bylaws resulting from amendments approved by the
holders of at least a majority of the Company's outstanding voting shares. The
Company has not "opted out" of the provisions of the Antitakeover Law. See
"Description of Capital Stock."
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Common Stock in the public
market following this Offering could adversely affect the market price for the
Company's Common Stock. See "Description of Capital Stock" and "Shares Eligible
for Future Sale."
IMMEDIATE DILUTION
The Offering price is substantially higher than the book value per share of
the Company's Common Stock. Investors purchasing Common Stock in this Offering
will, therefore, incur immediate dilution of $ in the pro forma net
tangible book value per share of Common Stock (based upon the Offering price of
$ per share and after deducting estimated underwriting discounts and
commissions and Offering expenses payable by the Company) from the Offering
price and will incur additional dilution upon the exercise of outstanding stock
options. See "Dilution."
CONTROL BY PRINCIPAL STOCKHOLDERS, OFFICERS AND DIRECTORS
Upon completion of this Offering, the Company's executive officers,
directors and principal stockholders and their affiliates will beneficially own
approximately % of the outstanding shares of Common Stock ( % if the
Underwriters' over-allotment option is exercised in full). As a result, these
stockholders, if acting in concert, will be able to control most matters
requiring stockholder approval, including the election of directors, and the
approval of mergers, consolidations and sales of all or substantially all of the
assets of the Company. This may prevent or discourage tender offers for the
Company's Common Stock unless the terms are approved by such stockholders. See
"Principal and Selling Stockholders."
NO PRIOR MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to this Offering there has been no public market for the Common Stock
of the Company. The Offering price will be determined by negotiations among the
Company, the Selling Stockholders and the representatives of the Underwriters.
See "Underwriting" for a discussion of the factors to be considered in
determining the Offering price. There can be no assurance that an active public
market will develop or be sustained after this Offering or that the market price
of the Common Stock will not decline below the Offering price. The market price
of the Company's Common Stock is likely to be highly volatile and may be
significantly affected by future announcements concerning the Company or its
competitors, quarterly or annual variations in results of operations,
announcements of technological innovations, the introduction of new products or
changes in pricing policies by the Company or its competitors, proprietary
rights or other litigation, changes in earnings estimates by analysts, the
Company's failure to meet analysts' estimates or other factors. In addition,
stock prices for many technology companies fluctuate widely for reasons which
may be unrelated to results of operations. These fluctuations, as well as
general economic, market and political conditions such as recessions or military
conflicts, may materially and adversely affect the market price of the Company's
Common Stock.
DISCRETION AS TO USE OF PROCEEDS
The primary purposes of this Offering are to create a public market for the
Company's Common Stock, to facilitate future access to public markets and to
obtain additional working capital. As of the date of this Prospectus, the
Company has no specific plans to use the net proceeds from this Offering other
than for working capital and general corporate purposes. Accordingly, the
Company's management will
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<PAGE> 16
retain broad discretion as to the allocation of the net proceeds from this
Offering. Pending any such uses, the Company plans to invest the net proceeds in
investment grade, interest-bearing securities. See "Use of Proceeds."
ABSENCE OF DIVIDENDS
The Company has not in the past declared or paid dividends on its Common
Stock, and does not anticipate paying cash dividends on its Common Stock in the
foreseeable future. In addition, the Company's bank line of credit agreement
contains a restrictive covenant that prohibits the Company from paying cash
dividends without the prior written consent of the lender.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of
Common Stock offered by the Company hereby are estimated to be approximately
$ (approximately $ if the Underwriters' over-allotment option
is exercised in full), assuming an Offering price of $ per share and
after deducting the estimated underwriting discounts and estimated Offering
expenses.
The primary purposes of this Offering are to create a public market for the
Company's Common Stock, to facilitate future access to public markets and to
obtain additional working capital. The Company expects to use the net proceeds
of this Offering for working capital and other general corporate purposes. A
portion of the net proceeds may also be used for the acquisition of businesses,
products and technologies that are complementary to those of the Company,
although the Company has no current plans, agreements or commitments and is not
currently engaged in any negotiations with respect to any such transactions.
Pending such uses, the net proceeds of this Offering will be invested in
investment grade, interest-bearing securities.
The Company will not receive any proceeds from the sale of the shares of
Common Stock offered by the Selling Stockholders hereby.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its Common Stock.
The Company currently expects to retain future earnings, if any, for use in the
operation and expansion of its business and does not anticipate paying any cash
dividends in the foreseeable future. In addition, the Company's bank line of
credit agreement contains a restrictive covenant that prohibits the Company from
paying dividends without the prior written consent of the lender.
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<PAGE> 17
CAPITALIZATION
The following table sets forth (i) the actual capitalization of the Company
derived from its financial statements as of March 31, 1997, (ii) pro forma
capitalization of the Company, giving effect to (a) the amendment and
restatement of the Company's Certificate of Incorporation to provide for
authorized capital stock of 50,000,000 shares of Common Stock and 5,000,000
shares of undesignated Preferred Stock, (b) the conversion of all outstanding
shares of Preferred Stock into shares of Common Stock immediately
prior to the closing of the Offering, and (c) except as otherwise indicated, a
one-for-two reverse stock split of the Company's Common Stock effected in June
1997, and (iii) the pro forma as adjusted capitalization of the Company to
reflect the sale by the Company of shares of Common Stock pursuant to
the Offering at an assumed Offering price of $ per share and the
receipt by the Company of the estimated net proceeds therefrom, after deducting
estimated underwriting discounts and estimated Offering expenses. The
capitalization information set forth in the table below is qualified by the more
detailed Consolidated Financial Statements and Notes thereto included elsewhere
in this Prospectus and should be read in conjunction with such Consolidated
Financial Statements and Notes.
<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------------------
PRO
FORMA
PRO AS
ACTUAL FORMA ADJUSTED
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Capital lease obligations, net of current portion.................. $ 283 $ 283 $ 283
Series E mandatorily redeemable preferred stock, $.001 par value;
1,666,667 shares authorized, 1,666,667 shares issued and
outstanding(1)................................................... 5,000 -- --
Stockholders' equity:
Convertible preferred stock, $.001 par value; 7,306,019 shares
authorized, 6,306,019 shares issued and outstanding, actual;
5,000,000 shares authorized, no shares issued and outstanding,
pro forma and pro forma as adjusted(1)........................ 7 -- --
Common Stock, $.001 par value; 25,000,000 shares authorized,
3,466,291 shares issued and 3,453,419 shares outstanding,
actual; 50,000,000 shares authorized, shares issued
and shares outstanding, pro forma; 50,000,000 shares
authorized, shares issued and shares and
outstanding, pro forma as adjusted(2)(3)...................... 3 8
Treasury Stock................................................... (47) (47) (47)
Additional paid-in capital(3).................................... 25,907 43,030
Deferred Compensation............................................ (208) (208) (208)
Accumulated deficit.............................................. (20,907) (33,028) (33,028)
Cumulative foreign currency translation adjustment............... (7) (7) (7)
-------- -------- --------
Total stockholders' equity.................................... 4,748 9,748
-------- -------- --------
Total capitalization.......................................... $ 10,031 $ 10,031 $
======== ======== ========
</TABLE>
- ---------------
(1) Preferred stock numbers do not give effect to a one-for-two reverse stock
split approved by the Board of Directors on , 1997 and effected
in June 1997.
(2) Excludes an aggregate of 1,366,730 shares of Common Stock issuable upon
exercise of options outstanding at March 31, 1997 under the Company's 1990
Stock Option Plan and Executive Share Option Scheme at a weighted exercise
price of $3.16 per share. Also excludes (i) 6,000 shares issuable upon
exercise of options granted after March 31, 1997 under the 1990 Stock Option
Plan and the Executive Share Option Scheme and (ii) an aggregate of
shares reserved as of May , 1997 for future issuance under
the 1990 Stock Option Plan, Executive Share Option Scheme, 1997 Incentive
Stock Plan, 1997 Director Option Plan and 1997 Employee Stock Purchase Plan.
See "Management -- Stock Plans" and Note 11 of Notes to Consolidated
Financial Statements.
(3) Pro forma common stock outstanding and additional paid-in capital do not
reflect the eventual reclassification from paid-in capital to par value
relating to shares issuable as additional conversion consideration to
holders of Series D Preferred Stock. See "Certain Transactions -- Preferred
Stock Sales" and Consolidated Statements of Stockholders' Equity.
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DILUTION
The pro forma net tangible book value of the Company as of March 31, 1997
was $ million or $ per share of Common Stock. Pro forma net
tangible book value per share represents the Company's total tangible assets
less total liabilities, divided by the number of outstanding shares of the
Company's Common Stock on a pro forma basis after giving effect to the
conversion of all outstanding shares of Preferred Stock into shares of
Common Stock immediately prior to closing of the Offering. After giving effect
to the sale of shares of Common Stock offered hereby at an assumed
Offering price of $ per share and the receipt by the Company of the
estimated net proceeds therefrom, after deducting the estimated underwriting
discounts and commissions and Offering expenses payable by the Company, the
Company's pro forma net tangible book value at March 31, 1997 would have been
$ or $ per share of Common Stock. This represents an immediate
increase in pro forma net tangible book value of $ per share to
existing stockholders and an immediate dilution in pro forma net tangible book
value of $ per share to new investors. The following table illustrates
this per share dilution:
<TABLE>
<S> <C> <C>
Assumed Offering price per share........................................ $
Pro forma net tangible book value per share before the Offering....... $
Increase in pro forma net tangible book value per share attributable
to new investors...................................................
-------
Pro forma net tangible book value per share after the Offering..........
-------
Dilution per share to new public investors.............................. $
=======
</TABLE>
The following table summarizes, on a pro forma basis as of March 31, 1997,
the number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price per share paid by the existing
stockholders and by new investors purchasing shares in this Offering (at an
assumed Offering price of $ per share and before deducting underwriting
discounts and commissions and estimated Offering expenses payable by the
Company).
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------- -------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
-------- ------- -------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)............. % $ % $
New investors(1).....................
------- ----- -------- -----
Total...................... 100.0% $ 100.0%
======= ===== ======== =====
</TABLE>
- ---------------
(1) Sales by certain Selling Stockholders in this Offering will reduce the
number of shares of Common Stock held by existing stockholders to
or approximately % ( shares, or approximately %, if the
underwriters' over-allotment option is exercised in full) and will increase
the number of shares held by new investors to or approximately
% ( shares, or approximately %, if the Underwriters
over-allotment option is exercised in full) of the total number of shares of
Common Stock outstanding after this Offering. See "Principal and Selling
Stockholders."
Excludes an aggregate of 1,366,730 shares of Common Stock issuable on
exercise of options outstanding at March 31, 1997 under the Company's 1990 Stock
Option Plan and Executive Share Option Scheme at a weighted average price of
$3.16 per share. Also excludes (i) 6,000 shares issuable upon exercise of
options granted after March 31, 1997 under the 1990 Stock Option Plan and the
Executive Share Option Scheme and (ii) an aggregate of shares
reserved as of May , 1997 for future issuance under the 1990 Stock Option
Plan, Executive Share Option Scheme, 1997 Stock Option Plan, 1997 Director
Option Plan and 1997 Employee Stock Purchase Plan. To the extent that any shares
are issued upon exercise of options, warrants or rights that are presently
outstanding or granted in the future, or reserved for future issuance under the
Company's stock plans, there will be further dilution to new investors. See
"Management -- Stock Plans," "Description of Capital Stock" and Note 11 of Notes
to Consolidated Financial Statements.
17
<PAGE> 19
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below for and as of the
end of each of the years in the five-year period ended December 31, 1996, are
derived from the consolidated financial statements of Synon Corporation and its
subsidiaries, which financial statements have been audited by Arthur Andersen
LLP, independent public accountants. The consolidated balance sheets as of
December 31, 1995 and 1996, and the consolidated statements of operations for
each of the years in the three-year period ended December 31, 1996, and the
report thereon, are included elsewhere in this Prospectus. The statements of
operations data for the years ended December 31, 1992, December 31, 1993 and the
balance sheet data at December 31, 1992, December 31, 1993 and December 31, 1994
are derived from audited financial statements not included herein. The
statements of operations data for the three-month periods ended March 31, 1996
and 1997 and the balance sheet data at March 31, 1997 are derived from unaudited
consolidated financial statements. In the opinion of management, the unaudited
consolidated financial statements have been prepared on the same basis as the
audited consolidated financial statements and contain all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the Company's results of operations for such periods and
financial condition at such dates. The results of operations for the three
months ended March 31, 1997 are not necessarily indicative of the results to be
expected for the full year or future periods. The selected consolidated
financial data set forth below is qualified in its entirety by, and should be
read in conjunction with, the Consolidated Financial Statements and Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------- ---------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues:
License................................... $ 20,639 $ 23,735 $ 23,313 $ 21,989 $ 21,801 $ 3,471 $ 4,476
Maintenance............................... 14,000 15,798 18,848 21,053 21,321 5,384 5,352
Services.................................. 16,706 21,369 23,219 27,740 33,009 8,161 8,644
-------- ------- ------- ------- ------- ------- -------
Total revenues............................ 51,345 60,902 65,380 70,782 76,131 17,016 18,472
Costs of revenues:
License................................... 3,625 4,897 4,366 4,093 3,133 688 774
Maintenance............................... 2,627 3,241 4,251 5,188 5,984 1,481 1,530
Services.................................. 11,127 13,706 17,351 21,635 26,885 6,774 6,634
-------- ------- ------- ------- ------- ------- -------
Total cost of revenues.................... 17,379 21,844 25,968 30,916 36,002 8,943 8,938
Gross profit................................ 33,966 39,058 39,412 39,866 40,129 8,073 9,534
Operating expenses:
Sales and marketing....................... 22,391 25,155 25,741 25,919 25,034 5,391 5,614
Research and development.................. 3,693 4,528 4,104 4,942 5,922 1,569 1,485
General and administrative................ 8,042 7,383 7,641 8,011 7,320 1,800 2,101
Amortization of goodwill (1).............. 8,779 125 125 125 125 31 31
Restructuring reserve (2)................. 2,048 -- -- -- -- -- --
-------- ------- ------- ------- ------- ------- -------
Total operating expenses.................. 44,953 37,191 37,611 38,997 38,401 8,791 9,231
Operating income (loss)..................... (10,987) 1,867 1,801 869 1,728 (718) 303
Interest income (expense), net.............. (800) (466) (282) (185) (47) (9) 4
Other income (expense), net................. 540 144 232 267 (162) (18) (225)
-------- ------- ------- ------- ------- ------- -------
Income (loss) before income taxes........... (11,247) 1,545 1,751 951 1,519 (745) 82
Provision (benefit) for income taxes........ (565) 394 437 237 380 (186) 21
-------- ------- ------- ------- ------- ------- -------
Net income (loss)........................... $(10,682) $ 1,151 $ 1,314 $ 714 $ 1,139 $ (559) $ 61
======== ======= ======= ======= ======= ======= =======
Net income (loss) per share................. $ (3.00) $ 0.15 $ 0.17 $ 0.09 $ 0.14 $ (0.15) $ 0.01
======== ======= ======= ======= ======= ======= =======
Weighted average shares outstanding......... 3,563 7,608 7,772 7,862 7,878 3,626 8,226
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------------- MARCH 31,
1992 1993 1994 1995 1996 1997
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................... $ 2,775 $ 3,929 $ 3,419 $ 2,458 $ 1,080 $ 2,473
Working capital (deficit)................... (1,951) (1,667) (2,402) (1,695) (1,263) (1,504)
Total assets................................ 30,970 33,220 35,307 35,867 36,909 35,063
Notes payable and capital lease obligations,
net of current portion.................... 3,010 1,792 1,168 396 352 283
Accumulated deficit......................... (25,285) (24,135) (22,820) (22,107) (20,968) (20,907)
Stockholders' equity........................ 122 1,371 2,557 3,141 4,526 4,748
</TABLE>
- ---------------
(1) 1992 amount includes a write-down of approximately $6.8 million of goodwill
relating to the acquisitions of an Australian subsidiary and certain North
American subsidiaries.
(2) Represents additional accruals for excess facilities costs in the United
Kingdom resulting from the restructuring of European operations.
18
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements relating to future
events or the future financial performance of the Company. All statements, trend
analyses and other information contained herein relative to markets for the
Company's products and trends in revenue, gross margin and anticipated expense
levels, as well as other statements including such words as "anticipate,"
"believe," "plan," "estimate," "expect," and "intend" and other similar
expressions constitute forward-looking statements. These forward-looking
statements are subject to business and economic risks, and the Company's actual
results of operations may differ materially from those contained in the
forward-looking statements as a result of certain factors, including those set
forth under "Risk Factors" and elsewhere in this Prospectus.
OVERVIEW
History
Building on its years of experience selling application development tools
for the IBM System 3X environment, the Company in 1988 introduced its first
integrated application development toolset, Synon/2E, in concert with IBM's
introduction of the AS/400 computer system. Aided by its marketing and
development relationships with IBM, the Company captured a leading position in
the AS/400 application development tools market and grew rapidly and profitably
in 1988 and 1989.
Due to a variety of factors, including increased competition, slowed growth
in the AS/400 market, the relocation of corporate and certain development
functions to the U.S. in 1990, reserves for excess facilities costs in the U.K.
in 1990 through 1992, and the write down of the value of an acquired distributor
business in 1992, the Company sustained net losses of $8.5 million, $6.3 million
and $10.7 million in 1990, 1991 and 1992, respectively. These net losses
generated substantial accumulated deficits of which $20.9 million remained as of
March 31, 1997. During this time, the Company raised approximately $15 million
of additional capital from existing venture capital investors and from IBM to
fund its operations. Additionally, the Company grew its professional services
business, primarily in North America, to provide necessary technology transfer
and customer implementation support for its products. The business returned to
modest profitability in 1993 on the strength of increased license revenue, third
party product offerings, services business expansion, growing maintenance
revenue from the Company's existing customer base and cost controls.
Recognizing the need to enhance its product line, the Company in 1992 began
developing its next generation, multi-platform product, Obsydian, which it
introduced in late 1994. Anticipating an emerging opportunity in the Windows NT
market, in January 1996 the Company entered into a sponsored development
agreement with Microsoft to accelerate the development of Obsydian's Windows NT
generator and enhance the marketing and promotion of the product. See
"Business -- Third Party Relationships." The Windows NT generator was released
in March 1997.
Revenue
Prior to the introduction of Obsydian in late 1994, all of the Company's
license revenue was generated from the Synon/2E product family. License revenue
from the Obsydian product family has grown rapidly in each of the three years
since the introduction of Obsydian, both in absolute dollars and as a percentage
of total revenue, while license revenue from the Synon/2E product family has
decreased, both in absolute dollars and as a percentage of total revenue. The
Company expects that license revenue from the Obsydian product family will
continue to account for an increasing percentage of total license revenue.
Moreover, notwithstanding an increase in license revenue from the Synon/2E
product family in the first quarter of 1997 as compared to the first quarter in
1996, the Company expects that such revenue will continue to decline both in
absolute dollars and as a percentage of total license revenue. In the event that
the decline in revenue from the Synon/2E product family is not more than offset
by growth in revenue attributable to the Obsydian product family, the Company's
results of operations will be
19
<PAGE> 21
materially adversely affected. See "Risk Factors -- Continued Importance of
Synon/2E; Dependence on Obsydian; Dependence on Market for High-End
Client/Server Application Development Tools."
Maintenance revenue, which has reflected the cumulative effect of increases
or decreases in license revenue over time, has not varied significantly in
absolute dollars or as a percentage of total revenue over the last nine
quarters. Through 1996, over 90% of total maintenance revenue was related to
licenses of the Synon/2E product family. The Company expects that maintenance
revenue related to the Synon/2E product family will begin to decline in future
periods, both in absolute dollars and as a percentage of total maintenance
revenue, as existing users of the Synon/2E product family migrate to the
Obsydian product family or otherwise cease to use the Synon/2E products, and
expects maintenance revenue related to the Obsydian product family to increase
as a percentage of total maintenance revenue.
Services revenue is comprised principally of professional services, which
constituted a significant portion of the Company's total revenue in each of
1994, 1995 and 1996. The Company views professional services, which consist of
application development, education, and consulting, as important to customers'
successful implementation of the Company's software products. The Company has
developed an extensive professional services practice in North America in order
to address the market opportunity there and derives a substantial majority of
its total services revenue from service projects in North America. Services
revenue in the remainder of the world is a smaller portion of total services
revenue because much of the services are provided by the Company's distributors.
The Company has historically derived a significant portion of its total
revenue from international operations. International revenue, which is defined
by the Company as revenue generated outside of North America, constituted 47%,
48%, 46% and 44% of total revenue in 1994, 1995, 1996 and the first quarter of
1997, respectively. The Company expects international revenue to continue to
account for a significant portion of total revenue for the foreseeable future.
The Company has not historically managed its foreign currency exchange risks by
entering into foreign currency management programs or hedging transactions. As a
result, the Company is exposed to currency exchange fluctuation risks, as well
as certain other financial risks associated with international operations. See
"Risk Factors -- Risks Associated with International Operations."
Channel Mix
The Company markets its software primarily through its direct sales force
in North America, the United Kingdom, France, Italy and Australia, and through
distributors in the remainder of Europe, Latin America and Asia. Most of the
Company's foreign distributors (other than those in Japan) have the principal
relationship with the customers and perform first-level customer support and
maintenance services. License revenue from the Company's distributors accounted
for approximately 26%, 21%, 30% and 23% of the Company's total license revenue
in 1994, 1995, 1996 and the first quarter of 1997, respectively. The Company's
ability to achieve significant revenue growth in the future will depend in part
on its success in maintaining existing relationships with its distributors and
in developing new relationships with distributors, independent software vendors
and systems integrators. See "Risk Factors -- Risks Associated with Distribution
Channels."
Revenue Recognition
The Company recognizes software license revenue when the end user customer
executes a non-cancelable license agreement either with the Company or one of
its distributors and the product has been shipped to the customer, provided that
no significant contractual obligations remain and collection of the related
receivable is considered probable by management. Maintenance revenue from
customer maintenance, support and upgrade service agreements is recognized
ratably over the maintenance period, which is typically twelve months. The
Company provides most of its services under time and materials arrangements and
recognizes revenue for these engagements as services are performed. In addition,
the Company has in the past undertaken several fixed-price application
development projects. Approximately 19%, 15%, 12% and 15% of the Company's
services revenue in 1994, 1995, 1996 and the quarter
20
<PAGE> 22
ended March 31, 1997, respectively, was generated from fixed-price contracts.
The Company recognizes revenue for these projects on a percentage of completion
basis. To the extent the Company's estimates of project completion prove to be
inaccurate, the Company's operating results in future periods will be affected
by adjustments as the estimates are revised. In addition, management is required
to make estimates and assumptions in connection with determining the
technological feasibility of software under development, related research and
development cost capitalization and product life amortization periods for
capitalized software costs. See Note 1 of Notes to Consolidated Financial
Statements.
RESULTS OF OPERATIONS
The following table sets forth the consolidated statement of operations
data of the Company expressed (except where otherwise indicated) as a percentage
of total revenue for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER QUARTER ENDED
31, MARCH 31,
---------------------- -------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues:
License............................................... 36% 31% 29% 20% 24%
Maintenance........................................... 29 30 28 32 29
Services.............................................. 35 39 43 48 47
--- --- --- --- ---
Total revenues................................ 100 100 100 100 100
Cost of revenues:
License(1)............................................ 19 19 14 20 17
Maintenance(2)........................................ 23 25 28 28 29
Services(3)........................................... 75 78 81 83 77
--- --- --- --- ---
Total cost of revenues........................ 40 44 47 53 48
Gross profit.......................................... 60 56 53 47 52
Operating expenses:
Sales and marketing................................ 39 37 33 32 31
Research and development........................... 6 7 8 9 8
General and administrative......................... 12 11 10 10 11
Amortization of goodwill........................... 0 0 0 0 0
--- --- --- --- ---
Total operating expenses...................... 57 55 51 51 50
Operating income (loss)................................. 3 1 2 (4) 2
Interest income (expense), net.......................... 0 0 0 0 0
Other income (expense), net............................. 0 0 0 0 (1)
--- --- --- --- ---
Income (loss) before income taxes....................... 3 1 2 (4) 1
Provision (benefit) for income taxes.................... 1 0 1 (1) 0
--- --- --- --- ---
Net income (loss)....................................... 2 % 1 % 1 % (3)% 1 %
=== === === === ===
</TABLE>
- ---------------
(1) Shown as a percentage of license revenue.
(2) Shown as a percentage of maintenance revenue.
(3) Shown as a percentage of services revenue.
Quarters Ended March 31, 1996 and 1997
License Revenue. License revenue consists of fees from the licensing of the
Company's products. License revenue increased 29% from $3.5 million in the first
quarter of 1996 to $4.5 million in the first quarter of 1997 and comprised 20%
and 24%, respectively, of total revenue in those quarters. The
21
<PAGE> 23
increase reflected continued growth in Obsydian product family sales and strong
sales of Synon/2E - related products, especially in North America. License
revenue from the Obsydian product family increased from $1.7 million in the
first quarter of 1996 to $2.1 million in the same quarter of 1997 and comprised
49% and 47%, respectively, of total license revenue in these quarters. License
revenue from the Synon/2E product family increased from $1.8 million in the
first quarter of 1996 to $2.4 million in the same quarter of 1997 and comprised
51% and 53%, respectively, of total license revenue in these quarters.
Maintenance Revenue. Maintenance revenue consists of fees received under
maintenance, support and upgrade agreements, which typically have a term of
twelve months. Maintenance agreements for the Synon/2E product family are
typically priced at a percentage of the list price of the license annually.
Maintenance agreements for the Obsydian product family consist of separate
customer support and upgrade agreements. See "Technology and Products."
Maintenance revenue in the first quarter of 1997 declined 1% from the first
quarter of 1996, continuing the trend of maintenance revenue remaining
essentially flat compared to the prior year, and comprised 32% and 29%,
respectively, of total revenue in those quarters.
Services Revenue. Services revenue consists of fees for education,
consulting and application development services designed to assist effective
customer use of Synon's technology. Services revenue increased 6% from $8.2
million in the first quarter of 1996 to $8.6 million in the first quarter of
1997 and comprised 48% and 47%, respectively, of total revenue in those
quarters. Services revenue in the first quarter of 1996 was negatively affected
by two fixed-price projects. The Company recognized reduced revenue per hour on
these contracts in accordance with the percentage of completion revenue
recognition method. See "--Overview--Revenue Recognition" above.
Cost of License Revenue. Cost of license revenue includes costs directly
associated with software products sold, including tangible product costs of
media and documentation, royalties associated with the sale of Obsydian and
third party products and amortization of capitalized software development costs.
Cost of license revenue, excluding amortization of capitalized software
development costs, increased 118% from $144,000 in the first quarter of 1996 to
$314,000 in the first quarter of 1997 and increased from 4% to 7%, respectively,
of license revenue in those quarters. The absolute dollar increase was primarily
due to a $75,000 increase in tangible product costs related primarily to license
volume increases in the first quarter of 1997. Amortization of software
development costs, which is included in reported cost of revenue, totaled
$544,000 and $460,000 in the first quarter of 1996 and 1997, respectively,
reflecting a change in mix of remaining capitalized assets and their related
useful lives. The Company expects cost of license revenue to increase in future
periods due in part to increased royalties associated with Obsydian and third
party technology incorporated into the Company's products and to increased
tangible product cost.
Cost of Maintenance Revenue. Cost of maintenance revenue consists primarily
of compensation and other costs for customer support personnel, facilities and
equipment costs, third party royalties related to maintenance revenue and the
tangible costs of media, documentation and shipping relating to product updates
and new releases provided to customers. Cost of maintenance revenue, after
rounding, increased 3% from $1.5 million in the first quarter of 1996 to $1.5
million in the first quarter of 1997 and increased from 28% to 29%,
respectively, of maintenance revenue in those quarters. The increases were
attributable primarily to staffing increases in 1996 necessary to support the
increase in number of Obsydian customers. This growth was partially offset by a
reduction in tangible product costs in the first quarter of 1997 because the
Company shipped fewer copies of new releases of the Obsydian product to existing
customers in that quarter than in the same quarter of 1996. The Company expects
that cost of maintenance revenue will increase in future periods due in part to
increases in personnel required to support a larger number of customers.
Cost of Services Revenue. Cost of services revenue consists primarily of
compensation and other costs for personnel providing education, consulting and
application development services to Synon's customers, as well as facilities and
equipment costs and travel costs relating to services engagements.
22
<PAGE> 24
Cost of services revenue decreased 2% from $6.8 million in the first quarter of
1996 to $6.6 million in the first quarter of 1997 and decreased from 83% to 77%,
respectively, of services revenue in those quarters. The decreases were
primarily due to higher costs incurred in the first quarter of 1996 in
connection with two fixed priced service projects and to higher overall staff
utilization in the first quarter of 1997. The Company has made a significant
investment in the internal training of its services personnel in order to
provide quality education, consulting and application development services to
its customers for the Obsydian product. The Company expects cost of services
revenue to increase in future periods.
Sales and Marketing. Sales and marketing expenses consist primarily of
compensation for sales and marketing personnel and costs of travel,
entertainment, facilities and equipment, marketing collateral, advertising,
trade shows and other marketing programs. Sales and marketing expenses increased
4% from $5.4 million in the first quarter of 1996 to $5.6 million in the first
quarter of 1997 and decreased from 32% to 30%, respectively, of total revenue in
those quarters. The dollar increase was due primarily to staffing increases and
associated costs incurred during the second half of 1996 and to fewer staff
vacancies in the first quarter of 1997 than in the first quarter of 1996. The
Company expects increased sales and marketing costs in 1997 as a result of costs
associated with the introduction and promotion of the Obsydian Windows NT
generator and the development of alternative sales channels.
Research and Development. Research and development expenses consist
primarily of compensation and other personnel related expenses and costs for
computers, software, facilities and other equipment associated with the
development of new products and the enhancement of existing products. The
Company capitalizes the cost of research and development after technological
feasibility has been established according to the requirements of Financial
Accounting Standards ("FAS") No. 86. Research and development expenses, before
capitalization of software development costs, remained essentially flat at $2.2
million in the first quarter of 1996 and the first quarter of 1997 and decreased
from 13% to 12%, respectively, of total revenue in those quarters. Capitalized
software development costs increased by approximately $54,000 in the first
quarter of 1997 compared to the first quarter of 1996 due primarily to the costs
associated with developing and deploying the Windows NT generator and a major
release of the Obsydian product. Research and development costs, including
capitalization of software development costs, remained relatively flat from
quarter to quarter. The Company expects research and development expenses to
increase in future periods.
General and Administrative. General and administrative expenses consist
primarily of personnel costs for finance, human resources, internal systems and
general management functions as well as related facility and equipment costs,
professional fees and bad debt expenses. General and administrative costs
increased 17% from $1.8 million in the first quarter of 1996 to $2.1 million in
the first quarter of 1997 and increased from 10% to 11%, respectively, of total
revenue in these quarters. These increases were due primarily to increases in
information systems staff and increased costs associated with internal system
development. The Company expects that general and administrative costs will
continue to increase as the Company invests in internal systems and incurs costs
associated with operating as a public company.
Interest Income (Expense), Net. Interest income (expense) includes interest
expense from capital lease obligations and an IBM development loan offset by
interest earned on cash balances. The Company reported net interest expense of
$9,000 during the first quarter of 1996 compared with net interest income of
$4,000 in the first quarter of 1997. The change was due primarily to the
repayment in full of the remaining balance of the IBM development loan in
December 1996 and a reduction of capital lease obligations in 1996.
Other Income (Expense), Net. Other income (expense) consists primarily of
foreign currency gains and losses. Other expense increased from $18,000 in the
first quarter of 1996 to $225,000 in the first quarter of 1997 and was comprised
almost entirely of foreign currency losses.
Income Taxes. The Company's estimated effective income tax rate of 25% for
1997 applied to the first quarter remained essentially unchanged from the 1996
rate due to continued utilization of tax benefit
23
<PAGE> 25
carryovers. The Company expects its effective income tax rate to increase as it
utilizes its tax benefit carryovers. See Note 9 of Notes to Consolidated
Financial Statements.
Years Ended December 31, 1994, 1995 and 1996
License Revenue. License revenue decreased 6% from $23.3 million in 1994 to
$22.0 million in 1995 and decreased 1% to $21.8 million in 1996. License revenue
represented 36%, 31% and 29% of total revenue in 1994, 1995 and 1996,
respectively. The decreases in absolute dollars and as a percentage of total
revenue in both 1995 and 1996 reflects a decline in the number of Synon/2E
product family licenses, which was only partially offset in both years by growth
in the number of licenses of the new Obsydian product family following its
introduction late in 1994. License revenue from the Obsydian product family has
grown rapidly, from $3.1 million in 1994 to $8.9 million in 1995 and to $12.0
million in 1996 and comprised 13%, 40% and 55%, respectively, of total license
revenue in those years. License revenue from the Synon/2E product family has
declined since the introduction of the Obsydian product, from $20.2 million in
1994 to $13.1 million in 1995 and to $9.8 million in 1996 and comprised 87%, 60%
and 45%, respectively, of total license revenue in those years. The decline in
Synon/2E product family sales reflects reduced demand for the Synon/2E product
family and a change in sales focus by direct sales channels from Synon/2E to
Obsydian. The decline in Synon/2E product family sales was expected after the
introduction of the Obsydian product and the change in sales focus by the
Company's direct sales channel.
Initially, the Company sold Obsydian licenses primarily to existing
Synon/2E customers, primarily through its direct sales channels. These existing
Synon/2E customers accounted for 91% and 72% of Obsydian license revenue in 1994
and 1995, respectively. In 1996 the Company derived an increasing percentage of
its Obsydian license revenue from new customers, which the Company believes was
due to Obsydian's improved functionality and a greater number of customer
references for Obsydian. These new customers accounted for 9%, 28% and 40% of
Obsydian product family license revenue in 1994, 1995 and 1996, respectively. In
late 1995 and in 1996, Obsydian sales were increasingly generated by
international distributors, especially those in Europe and Latin America, as
they focused sales resources on Obsydian.
Maintenance Revenue. Maintenance revenue increased 12% from $18.8 million
in 1994 to $21.1 million in 1995 and increased 1% to $21.3 million in 1996.
Maintenance revenue represented 29%, 30% and 28% of total revenues in 1994, 1995
and 1996, respectively. Maintenance revenue increased in absolute dollars in
1995 and 1996 due to the provision of maintenance, customer support and upgrades
to a larger installed customer base in each of those years, but the rate of
growth decreased from 1995 to 1996. Synon/2E maintenance revenue declined on an
annual basis from 1995 to 1996 by approximately 7%, reflecting lower Synon/2E
license sales and typical attrition of Synon/2E maintenance customers. The
Synon/2E maintenance revenue decline from 1995 to 1996 was offset by a 152%
increase in Obsydian maintenance revenue. Although there was no Obsydian
maintenance revenue in 1994 because the product was introduced late in that
year, Obsydian maintenance revenue comprised 5% and 12% of total maintenance
revenue in 1995 and 1996, respectively.
Services Revenue. Services revenue increased 19% from $23.2 million in 1994
to $27.7 million in 1995 and increased 19% to $33.0 million in 1996. Services
revenue represented 35%, 39% and 43% of total revenues in 1994, 1995 and 1996,
respectively. Synon/2E projects accounted for the majority of services revenue
in each of 1994, 1995 and 1996, reflecting continued strong use of the Synon/2E
technology in the market and the mix of the Company's project work. Services
revenue in each year was derived primarily from projects in North America, where
the Company generated approximately 71%, 71% and 73% of its total services
revenue in 1994, 1995 and 1996, respectively.
The Company's services revenue, as well as the related gross margins, for
1995 and 1996 was negatively impacted by reduced revenue per hour recognized in
connection with the completion of certain fixed-price projects in those years.
The Company has implemented new practices intended to enable the Company to more
effectively evaluate its ability to achieve the result required by a fixed-price
24
<PAGE> 26
engagement at the agreed-upon price. For example, before it accepts any large
fixed-price engagement, the Company now undertakes a design phase engagement for
each project to more accurately define that project's scope and risks. As of
December 31, 1996, the Company had completed all significant fixed price
engagements undertaken prior to the implementation of these policies. The
Company continues to accept work under fixed-price contracts and faces risks
inherent to such contracts. See "Risk Factors -- Potential Financial Exposure
from Fixed-Price Contracts."
Cost of License Revenue. Cost of license revenue, excluding amortization of
capitalized software development costs, decreased 32% from $2.3 million in 1994
to $1.6 million in 1995 and further decreased 27% to $1.1 million in 1996. Cost
of license revenue, excluding amortization of capitalized software development
costs, was 10%, 7% and 3% of license revenue in 1994, 1995 and 1996,
respectively. In each year, the largest contributing factor to the decrease was
a decline in third party royalty costs, which decreased from $1.7 million in
1994 to $745,000 in 1995 and to $322,000 in 1996, due to the reduction in sales
of third party products related to Synon/2E. The decreases in third party
royalty costs were partially offset by increased royalties of $257,000 and
$319,000 in 1995 and 1996, respectively, relating to increased sales of
Obsydian. The royalties due in connection with Obsydian license sales will be
approximately 1.7% of such sales in 1997 and are payable only with respect to
license agreements entered into prior to June 30, 1999. See "Certain
Transactions." Amortization of capitalized software development costs, which is
included in reported cost of license revenue, totaled $2.1 million, $2.5 million
and $2.0 million in 1994, 1995 and 1996, respectively. The amortized amount of
capitalized software development costs decreased in 1996 because most of such
costs related to the Synon/2E product family had been fully amortized by the end
of 1995 and the capitalized costs of Obsydian and the Windows NT generator were
early in their amortization lives.
Cost of Maintenance Revenue. Cost of maintenance revenue increased 22% from
$4.3 million in 1994 to $5.2 million in 1995 and increased 15% to $6.0 million
in 1996 and represented 23%, 25% and 28%, respectively, of maintenance revenue
in those years. The increases in each year were primarily due to increases in
the number of customer support personnel necessary to maintain and support the
Obsydian product family.
Cost of Services Revenue. Cost of services revenue increased 25% from $17.4
million in 1994 to $21.6 million in 1995 and increased 24% to $26.9 million in
1996 and represented 75%, 78% and 81%, respectively, of services revenue in
those years. The increases in each year were principally the result of higher
internal Obsydian training costs for consultants and excess labor costs on
certain fixed-price projects, particularly in the first quarter of 1996. The
projects caused lower gross margins on services revenue until their completion
in 1996. See "-- Services Revenue" and "-- Overview -- Revenue Recognition."
Sales and Marketing. Sales and marketing expenses increased 1% from $25.7
million in 1994 to $25.9 million in 1995 but decreased by 3% to $25.0 million in
1996. Sales and marketing expenses were 39%, 37% and 33% of total revenue in
1994, 1995 and 1996, respectively. The decrease in sales and marketing expenses
in 1996 was due primarily to a reduction in the sales force in North America,
Asia and Japan in 1996, and the conversion of Germany, Holland and South Africa
from direct sales territories to territories served by distributors. The
decrease in 1996 was partially offset by approximately $659,000 of severance and
other costs associated with the closing of direct sales operations in those
territories.
Research and Development. Research and development expenses, before
capitalization of software development costs, increased 6% from $6.7 million in
1994 to $7.2 million in 1995 and increased 20% to $8.6 million in 1996. Research
and development expenses, before capitalization of software development costs,
represented 10%, 10% and 11% of total revenue in 1994, 1995 and 1996,
respectively. The Company capitalized $2.6 million, $2.2 million and $2.6
million of software development costs in 1994, 1995 and 1996, respectively. The
decrease in capitalized software costs from 1994 to 1995 was due to higher
capitalized costs in 1994 associated with the completion and first release of
the Obsydian product. The increase in capitalized software costs from 1995 to
1996 was due to significant enhancements made
25
<PAGE> 27
to the Obsydian product and the completion of development of the first release
of the Windows NT generator in 1996. See "-- Cost of License Revenue."
General and Administrative. General and administrative expenses increased
5% from $7.6 million in 1994 to $8.0 million in 1995 and decreased 9% to $7.3
million in 1996. General and administrative expenses were 12%, 11% and 10% of
total revenue in 1994, 1995 and 1996, respectively. The increase in 1995
reflected higher bad debt expense during the year. Other than the increased bad
debt expense in 1995, general and administrative expenses in both absolute
dollars and as a percentage of total revenue decreased during 1995 and 1996 due
primarily to staff reductions.
Interest Income (Expense), Net. Net interest expense decreased 34% from
$282,000 in 1994 to $185,000 in 1995 and further decreased 75% to $47,000 in
1996. The decreases in each year were the result of reductions in the Company's
capital lease and loan obligations.
Other Income (Expense), Net. Net other income was $232,000 in 1994 and
$267,000 in 1995 due primarily to foreign exchange gains of $216,000 in 1994 and
$227,000 in 1995. Net other expense of $162,000 in 1996 was due primarily to a
$167,000 foreign exchange loss in that year.
Income Taxes. The Company has significant net operating loss, foreign tax
credit and other tax credit carryovers remaining from losses incurred in prior
years. The Company's effective income tax rate was 25% for each of 1994, 1995
and 1996. See Note 9 of Notes to Consolidated Financial Statements. The Company
expects its effective income tax rate to increase after it utilizes its tax
benefit carryovers.
26
<PAGE> 28
QUARTERLY RESULTS
The following table sets forth consolidated statements of operations data
for each of the nine quarters in the period ended March 31, 1997, and the
percentage of the Company's total revenue represented by each item of the
respective quarter. This information has been derived from unaudited
consolidated financial statements that, in the opinion of management, reflect
all adjustments (consisting only of normal recurring accruals) necessary to
fairly present this information when read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Prospectus.
The results of operations for any quarter are not necessarily indicative of the
results for a full year or results to be expected for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------------------------------
JUNE JUNE
MARCH 31, 30, SEPT. 30, DEC. 31, MARCH 31, 30, SEPT. 30, DEC. 31, MARCH 31,
1995 1995 1995 1995 1996 1996 1996 1996 1997
--------- ------- --------- -------- --------- ------- --------- -------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
License................... $ 4,303 $ 4,562 $ 4,631 $ 8,493 $ 3,471 $ 5,097 $ 5,187 $ 8,046 $ 4,476
Maintenance............... 5,160 5,278 5,266 5,349 5,384 5,117 5,340 5,480 5,352
Services.................. 6,964 6,912 6,772 7,092 8,161 8,380 7,519 8,949 8,644
------- ------- ------- ------- ------- ------- ------- ------- -------
Total revenues.......... 16,427 16,752 16,669 20,934 17,016 18,594 18,046 22,475 18,472
Cost of revenues:
License................... 1,038 984 931 1,140 688 843 766 836 774
Maintenance............... 1,375 1,273 1,233 1,307 1,481 1,473 1,515 1,515 1,530
Services.................. 5,428 5,326 5,083 5,798 6,774 6,988 6,487 6,636 6,634
------- ------- ------- ------- ------- ------- ------- ------- -------
Total cost of
revenues.............. 7,841 7,583 7,247 8,245 8,943 9,304 8,768 8,987 8,938
Gross profit................ 8,586 9,169 9,422 12,689 8,073 9,290 9,278 13,488 9,534
Operating expenses:
Sales and marketing....... 6,558 6,844 6,045 6,472 5,391 5,952 5,873 7,818 5,614
Research and
development............. 1,273 1,268 1,211 1,190 1,569 1,356 1,396 1,601 1,485
General and
administrative.......... 1,955 1,942 1,960 2,154 1,800 1,943 1,724 1,853 2,101
Amortization of
goodwill................ 31 32 32 30 31 31 32 31 31
------- ------- ------- ------- ------- ------- ------- ------- -------
Total operating
expense............... 9,817 10,086 9,248 9,846 8,791 9,282 9,025 11,303 9,231
Operating income (loss)..... (1,231) (917) 174 2,843 (718) 8 253 2,185 303
Interest income (expense),
net....................... (59) (47) (36) (43) (9) (8) (10) (20) 4
Other income (expense),
net....................... 344 77 (26) (128) (18) (113) (31) -- (225)
------- ------- ------- ------- ------- ------- ------- ------- -------
Income (loss) before income
taxes..................... (946) (887) 112 2,672 (745) (113) 212 2,165 82
Provision (benefit) for
income taxes.............. (237) (222) 28 668 (186) (28) 53 541 21
------- ------- ------- ------- ------- ------- ------- ------- -------
Net income (loss)........... $ (709) $ (665) $ 84 $ 2,004 $ (559) $ (85) $ 159 1,624 61
======= ======= ======= ======= ======= ======= ======= ======= =======
Net income (loss) per common
share..................... $ (0.20) $ (0.18) $ 0.01 $ 0.26 $ (0.15) $ (0.02) $ 0.02 $ 0.20 $ 0.01
======= ======= ======= ======= ======= ======= ======= ======= =======
Weighted average shares
outstanding............... 3,636 3,637 7,844 7,842 3,626 3,651 7,865 7,939 8,226
</TABLE>
<TABLE>
<CAPTION>
AS A PERCENTAGE OF TOTAL REVENUE, UNLESS OTHERWISE INDICATED
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
License................... 26% 27% 28% 41% 20% 27% 28% 36% 24%
Maintenance............... 32 32 31 25 32 28 30 24 29
Services.................. 42 41 41 34 48 45 42 40 47
--- --- --- --- --- --- --- --- ---
Total revenues.......... 100 100 100 100 100 100 100 100 100
Cost of revenues:
License(1)................ 24 22 20 13 20 17 15 10 17
Maintenance(2)............ 27 24 23 24 28 29 28 28 29
Services(3)............... 78 77 75 82 83 83 86 74 77
--- --- --- --- --- --- --- --- ---
Total cost of
revenues.............. 48 45 43 39 53 50 49 40 48
Gross profit................ 52 55 57 61 47 50 51 60 52
Operating expenses:
Sales and marketing....... 40 40 37 31 32 33 33 35 31
Research and
development............. 8 8 7 6 9 7 8 7 8
General and
administrative.......... 12 12 12 10 10 10 9 8 11
Amortization of
goodwill................ 0 0 0 0 0 0 0 0 0
--- --- --- --- --- --- --- --- ---
Total operating
expense............... 60 60 56 47 51 50 50 50 50
Operating income(loss)...... (7) (5) 1 14 (4) 0 1 10 2
Interest income (expense),
net....................... 0 0 0 0 0 0 0 0 0
Other income (expense),
net....................... 2 0 0 (1) 0 (1) 0 0 (1)
--- --- --- --- --- --- --- --- ---
Income(loss) before income
taxes..................... (5) (5) 1 13 (4) (1) 1 10 1
Provision(benefit) for
income taxes.............. (1) (1) 0 3 (1) 0 0 2 0
--- --- --- --- --- --- --- --- ---
Net income(loss) (4)% (4)% 1% 10% (3)% (1)% 1% 8% 1%
=== === === === === === === === ===
</TABLE>
- ---------------
(1) Shown as a percentage of license revenue.
(2) Shown as a percentage of maintenance revenue.
(3) Shown as a percentage of services revenue.
27
<PAGE> 29
VARIABILITY OF QUARTERLY RESULTS
The Company's business has experienced and is expected to continue to
experience significant seasonality, in part due to customer buying patterns and
lower demand in the summer months, particularly in Europe. In recent years, the
Company has generally had stronger sales of its software products in the quarter
ending in December and weaker sales in the following quarter. License revenue in
the fourth quarter of 1994, 1995 and 1996 represented 36%, 39% and 37%,
respectively, of full year license revenue. The fourth quarter revenue pattern
reflects the Company's end of year sales quotas and sales incentives, customer
purchasing and capital budgeting patterns and general software industry trends.
The Company expects this quarterly pattern to continue in the future. Due
primarily to IT department purchasing patterns and certain sales staff turnover
between quota years, the Company's first quarter license revenue has typically
been weaker than in other quarters. In addition, license revenue in the third
quarter has historically been relatively flat compared to the second quarter as
a result of generally reduced economic activity in the summer months,
particularly in Europe. The Company believes that these trends are likely to
continue.
The Company recorded higher than normal license revenue in the fourth
quarter of 1995 due to the recognition of approximately $587,000 of Obsydian
license revenue attributable to products sold in prior quarters, which license
revenue was deferred and not recognized until the related AS/400 NPT generator
was delivered in December 1995. In addition, many customers delayed making
purchases of the Obsydian product until the AS/400 NPT generator was available,
contributing to an increased level of revenue in the fourth quarter 1995.
The Company's primary annual user group conference was held in the third
quarter of 1994, the first quarter of 1995, and the second quarter of 1996. Fees
collected from those user group conferences contributed $614,000, $426,000 and
$428,000, respectively, to service revenues in those quarters. The Company's
user group conferences in general approximately break even, and accordingly the
expenses associated with these conferences increased cost of services revenue by
an amount similar to related revenue in each of these quarters. The Company's
European operations hold a user conference in the fourth quarter of each year,
having a similar but smaller effect on services revenue and cost of services
revenue.
Sales and marketing expenses decreased in the first three quarters of 1996
compared to each quarter of 1995, due primarily to sales staff reductions and
reduced costs associated with marketing programs. In 1996, additional expense
reductions were realized in the third quarter because the savings from the
conversion of the Germany, Holland and South Africa direct sales territories to
distributor territories were no longer offset by severance and other closure
costs as they had been in the first two quarters of 1996. The increase in sales
and marketing expenses in the fourth quarter of each year reflects typical
increased compensation associated with higher license revenue.
The Company typically ships product orders shortly after receipt, and
consequently, order backlog at the beginning of any quarter has in the past
represented an inconsequential portion of that quarter's revenue. As a result,
to achieve its quarterly revenue objectives, the Company is dependent upon
obtaining orders in any given quarter for shipment in that quarter. Furthermore,
the Company has often recognized a substantial portion of its revenue in the
last month, or even weeks or days, of a quarter and therefore quarterly revenue
is difficult to predict with any significant degree of accuracy. The Company's
expense levels are based, in significant part, on the Company's expectations as
to future revenue and are therefore relatively fixed in the short term. If
revenue levels fall below expectations, net income is likely to be
disproportionately adversely affected because a proportionately smaller amount
of the Company's expenses varies with its revenue. There can be no assurance
that the Company will be able to achieve or maintain profitability on a
quarterly or annual basis in the future. Due to all of the foregoing factors, it
is likely that in some future quarter the Company's operating results will be
below the expectations of public market analysts and investors. In such event,
the price of the Company's Common Stock would likely be materially adversely
affected. See "Risk Factors -- No Prior Market; Possible Volatility of Stock
Price."
28
<PAGE> 30
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations since 1991 primarily by cash
generated from operations and through private sales of preferred equity
securities. For the three months ended March 31, 1997, approximately $2.7
million of cash was provided by operations due to the collection in cash of
significant fourth quarter 1996 license revenue. During 1994, 1995 and 1996,
approximately $4.8 million, $3.6 million and $3.5 million, respectively, of cash
was generated by operations, primarily as a result of net income and
depreciation and amortization, somewhat offset by growth in accounts receivable.
Cash generated by operations was further reduced by approximately $2.6 million,
$2.2 million and $2.6 million in 1994, 1995 and 1996, respectively, for research
and development costs incurred by the Company which were capitalized according
to FAS No. 86.
The Company used cash for the acquisition of property and equipment, of
approximately $2.0 million, $1.0 million, $1.8 million and $609,000 in 1994,
1995, 1996 and the first quarter of 1997, respectively. These investing
activities were partially offset in 1994 by cash received from the repayment of
certain loans made to former officers of the Company.
During 1994, 1995 and 1996 and the quarter ended March 31, 1997, the
Company did not incur any additional debt. The Company used cash generated by
operations to repay IBM approximately $325,000, $500,000, and $675,000 of its
development loan during 1994, 1995 and 1996, respectively, and to pay down
capital lease obligations by approximately $1.3 million, $877,000 and $517,000,
in 1994, 1995 and 1996, respectively. The IBM loan was paid in full by December
31, 1996.
As of March 31, 1997, the Company had approximately $2.5 million of cash
and cash equivalents and a working capital deficit of $1.5 million. The Company
had a working capital deficit in each of the last three years. The Company had
available a working capital line of credit agreement with Silicon Valley Bank
(the "Bank") that expires on July 14, 1997, secured by substantially all of the
Company's assets. The line of credit bears interest at 1.25% above the Bank's
prime rate (8.5% as of April 30, 1997) and drawings are available up to 70% of
eligible receivables. Under the line of credit, the Bank is committed to lend up
to a maximum of $4.0 million, of which $3.6 million was available as of March
31, 1997 based on eligible receivables. The Company's line of credit contains
certain affirmative and restrictive covenants that are typical of commercial
lending arrangements. From time to time the Company has not been in compliance
with such covenants, although to date the Company has obtained waivers from the
Bank with respect to such noncompliance. There can be no assurance that the
Company will comply with these restrictions and covenants in the future or be
able to obtain waivers from the Bank in the event of noncompliance. There were
no borrowings under the line of credit at December 31, 1996 or March 31, 1997.
The Company has approximately 34,406 square feet in excess facilities in
the United Kingdom under long term lease agreements which expire December 1999
through December 2014. These facilities are currently subleased to third parties
at rates which are in some cases below that which the Company is obligated to
pay and for periods less than the lease term for which the Company is obligated.
The maximum undiscounted obligation for this excess space, net of sublease
income as of December 31, 1996, assuming all break clauses in existing leases
are exercised and the Company is unable to sublet the facilities, is
approximately $16.6 million. The Company has accrued approximately $500,000 for
such excess space as of December 31, 1996, in part due to improvement in the
United Kingdom rental market and recent successes in subletting space. However,
there can be no assurance that such rental market will not be negatively
impacted in the future. See Note 12 of Notes to Consolidated Financial
Statements.
The Company has had limited cash on hand to purchase equipment and internal
systems and expects to use certain proceeds from the Offering to invest in these
areas. See "Use of Proceeds."
The Company believes that the net proceeds from this Offering, together
with available funds, its existing line of credit and the cash flows expected to
be generated by operations, will be sufficient to meet its anticipated cash
needs for working capital and capital expenditures for at least the next twelve
months. Thereafter, if cash generated by operations is insufficient to satisfy
the Company's liquidity requirements, the Company may, subject to adequate
market conditions, sell additional equity or debt securities or obtain
additional credit facilities. Any sale of additional securities may result in
additional dilution to the Company's stockholders.
29
<PAGE> 31
BUSINESS
The following Business section contains forward-looking statements relating
to future events or the future financial performance of the Company, which
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth under "Risk Factors" and
elsewhere in this Prospectus.
THE COMPANY
Synon is a leading provider of enterprise software application development
tools and professional services. The Company's products and services are
designed to enable its customers to develop business information software
applications through a practical model-based approach to software design.
Synon's integrated business-oriented technology provides customers the ability
to rapidly develop, deploy and enhance advanced software applications across
multiple computing platforms.
Since it was founded in 1983, Synon has sold approximately 6,000 licenses
of its products to customers located in approximately 80 countries. Synon has
established development and marketing relationships with IBM's AS/400 division
for the AS/400 market and with Microsoft for the Enterprise Windows NT market.
Synon markets its products and services primarily through the Company's direct
sales force in North America, the United Kingdom, France, Italy and Australia
and through a network of distributors in Europe, Asia and Latin America.
INDUSTRY BACKGROUND
Many organizations are responding to today's increasingly competitive
business environment by attempting to improve the efficiency and effectiveness
of information technology ("IT") processes, which has resulted in increased
demand for new business software applications. Despite large budgets and high
level management focus in many cases, IT departments often experience difficulty
rapidly deploying business critical applications, which can lead to IT backlogs.
Traditional software development and deployment methods have at times been
inadequate in meeting complex business needs in a timely manner. Third party
software can provide immediate solutions to certain business problems, but often
lacks the flexibility to meet many of the increasing complexities of today's
business and computing environments. Conversely, conventional in-house
application development can provide customized solutions, but generally requires
long development lead times and may be more prone to error.
In addition, organizations seek to retain value in their software
investments by selecting software solutions that are readily adaptable to
business changes or technological advances and are portable to different
computing environments. Common examples include software changes required to
support a new product line or newly-acquired business, or enhancements of
existing systems such as those required to address the year 2000 century date
conversion problem. Traditional software solutions often fall short of
addressing the post-deployment need to enhance and maintain existing
applications.
Software development tools have been designed to address the problems with
traditional software development and deployment solutions. However, certain
development tools which have allowed organizations to rapidly develop software
solutions have fallen short of addressing the complex needs of dynamic
businesses. Tools that have accelerated the development of specific departmental
applications have often lacked the power to scale to large computing
environments. Tools designed to build applications that are scalable and operate
over a wide range of environments generate applications that may not be capable
of fully utilizing the native strengths and attributes of different computing
environments. Object Oriented development technologies promise productivity
gains through the use and reuse of application building blocks, but to date
reusable objects have often lacked the size and scope necessary to provide
substantial improvements in software development.
30
<PAGE> 32
THE SYNON SOLUTION
Synon's software development products and services are designed to enable
customers to rapidly develop high-end, scalable business applications that may
be readily customized and easily maintained. Building upon a decade of
application development tools experience, the Company in late 1994 created its
Obsydian product family for the design of business critical client/server
applications for multiple computing environments. The Company believes that the
Obsydian product family offers a highly effective combination of development
speed, flexibility and quality due to the following key features:
- Model-based Development: By using an application "design model" to create
and maintain software applications, the Company's techniques enable
software developers and end-users to more effectively define and capture,
in an application design model, all relevant business processes,
structures and forms at the fundamental business rule-level. Changes made
from time to time to the application design model in response to business
process changes will automatically ripple through the entire model to
each relevant component.
- Large-Scale Reusable Business Objects: The Company has drawn upon its
application development experience to develop libraries of large-scale
business objects which reflect common "patterns" found in commercial
applications. These large, reusable business objects enable customers to
take advantage of the efficiency of object-oriented software design
without sacrificing the ability to adjust the software to a customer's
specific needs.
- Automated Code Generation: After the application design model is
completed, the Company's products can automatically generate computer
code for a variety of network environments, computing platforms and
national languages. Synon generators produce quality code that addresses
deployment complexity and minimizes traditional testing requirements,
leaving the developer free to focus on the business aspects of the
application.
The combination of these technologies enables organizations to make
significant modifications to applications in rapid response to technological
advances and changes in their business environment without incurring the time
and expense required to rewrite the application. The Company's reusable business
objects are easily modified as a customer's business needs change. As a result,
the Company believes its products protect the investment in, and extend the
value of, the customers' developed applications.
The Company complements the technological advantages of its software with
service offerings, including technology transfer, methodology and product
implementation, which are intended to enhance the customer's success and reduce
the customer's risk in building high-end, scalable business applications.
MARKET OPPORTUNITY
The Company currently sells application development tools primarily in two
distinct markets: the IBM AS/400 market and the Windows NT market. According to
research estimates by International Data Corporation, there were approximately
79,000 new AS/400 systems sold in 1996, representing approximately 13% growth
over 1995, bringing the installed base to approximately 372,000 systems at
December 31, 1996. Company management estimates that approximately half of the
new AS/400 systems sold in 1996 include language compilers which the Company
considers potential customer sites. Dataquest estimates in its report dated
September 2, 1996 that the Windows NT-based application server computer systems
market will grow at a compound annual growth rate of 42% per year through 2000
and is expected to reach approximately five million systems by 1999. The Company
believes that both of these markets represent significant opportunities for its
software development products and services. To date, the Company has derived
substantially all of its revenue from application development tools and services
for the AS/400 market but believes that an increasing percentage of its sales
will come from tools and services for the Windows NT market.
31
<PAGE> 33
STRATEGY
The Company's objectives are to establish Synon as the leader in high-end
application development tools and to establish Obsydian as the leading
development framework for assembly and management of Synon- and third-party
developed large-scale business objects. Major strategies of the Company include:
Capitalize on Large Customer Base and Established Market Position
Synon has sold more than 6,000 licenses for its AS/400 development product,
Synon/2E, and has a large installed base of customers. Approximately 64% of
these sites are active with Synon/2E and are supported under current maintenance
agreements. When the Company introduced its next generation multi-platform
product, Obsydian, in late 1994, it first offered the AS/400 client/server
environmental generator to access the market of its large installed customer
base and to gain customer feedback and experience with the new technology.
Approximately 21% of Synon/2E customers have purchased the Obsydian product
since its introduction in late 1994. Synon intends to continue to enhance the
Synon/2E product line, while continuing to actively market Obsydian to its
Synon/2E customers.
As the market leader in application development tools for the AS/400
market, the Company has been successful in acquiring approximately 300 Obsydian
customers that are new to the Company. The Company believes that there are
significant growth opportunities in the AS/400 market and plans to continue to
leverage its reputation, market position and relationship with IBM's AS/400
division to increase its penetration and market share. See "--Third Party
Relationships." Additionally, the Company intends to build, acquire or license
for resale software tools that are complementary to the Obsydian product family
such as report writers and testing tools, that will be designed to provide
increased functionality to its customers.
Repeat AS/400 Success in the Emerging Windows NT Market
The Company is targeting the growing market opportunity for application
development solutions in the emerging Windows NT operating environment. Synon
has developed an Obsydian Enterprise NT environmental generator which provides
the same application development value in the NT environment as in the AS/400
environment. The generator, which became generally available in March 1997,
automatically generates applications which are compliant with Microsoft's NT
Back Office application standards. Existing Synon customers who have already
developed applications using the Obsydian product can automatically regenerate
those applications to operate natively on platforms supported by Windows NT.
Synon plans to aggressively market the product to existing customers, especially
ISVs desiring rapid access to the Windows NT marketplace with existing
Obsydian-based products, and to large companies adopting the Windows NT
operating environment. The Company believes that its experience and success in
the AS/400 market and its relationship with Microsoft make it well positioned to
become a leading provider of application development solutions in this rapidly
expanding market. See "-- Third Party Relationships."
Capitalize on IBM and Microsoft Relationships
Synon has established development, marketing and distribution relationships
with IBM's AS/400 division and Microsoft. The Company has had a long-standing
relationship with IBM's AS/400 division and currently participates in several of
IBM's AS/400 division marketing programs worldwide and maintains close ties with
its AS/400 product development organizations. Additionally, CGI Informatik GmbH,
an IBM subsidiary, acts as the primary distributor of the Company's products in
Germany. In 1996, IBM's AS/400 division sponsored a joint development lab to
encourage the building of large Obsydian-enabled business objects by IBM, Synon
and their customers in order to accelerate the availability of a wider range of
reusable business objects. In January 1997, IBM and Synon jointly announced the
availability of the first products developed in this lab, business objects that
enable integration with Lotus Domino applications. See "Risk Factors--Dependence
on Relationships with IBM and Microsoft," "--Third Party Relationships" and
"Certain Transactions--Agreements with IBM."
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Synon has established a strong working relationship with Microsoft that
Synon believes is important to its future success in the Windows NT market. A
number of agreements with Microsoft have served as the basis for this
relationship. In 1996, Microsoft and the Company entered into an agreement to
facilitate the development of the Windows NT generator. Microsoft and Synon are
also currently parties to a Co-Sponsorship Agreement pursuant to which, in
exchange for payment of a fee, Synon was Co-Sponsor of Microsoft Tech Ed 1997,
with certain joint advertising exposure opportunities and related benefits.
Synon also co-sponsored Microsoft's annual Professional Developers' Conference
in November 1996. In addition, Synon and Microsoft are parties to a Memorandum
of Understanding pursuant to which Synon has agreed, among other things, to
train and certify product specialists on Windows NT and SQL Server, to train
representatives and channel partners on BackOffice product marketing and to
provide Microsoft's ChannelBase mailing information for joint selling
opportunities. Synon also participates in certain Microsoft promotional programs
and jointly prepares related marketing and promotional materials. Synon intends
to continue to work with Microsoft in the future on these and related projects.
See "Risk Factors--Dependence on Relationships with IBM and Microsoft" and
"--Third Party Relationships."
Build Upon Technological Leadership
The Company has developed a number of advanced technologies designed to
create enterprise-scale business critical client/server applications. As an
industry leader in model-based application development tools, the Company has
continued to extend its technology leadership in object-oriented patterns and
high performance, optimized application generators. The Company plans to extend
Obsydian and its repository to become a development vehicle for combining and
delivering large-scale business objects from multiple vendors into fully
functioning applications. The Company plans to leverage these technologies to
make it easier and faster to create large-scale applications that are flexible
and easy to customize. The Company intends to commit substantial resources to
maintain and extend its technological leadership.
Facilitate Technology Adoption and Use
The Company's enterprise application development software tools are
sophisticated, high-end products. As with all complex software products,
substantial investment of time and resources is required for users to become
educated and fluid with these products. Synon's in-house professional services
organization assists customers in technology transfer and application
development and deployment. The Company encourages independent consulting firms
to promote the growth of its Obsydian product. The Company has recently
developed the Flyte series of consulting services offerings which it markets to
its customers. Synon plans to continue to offer a range of professional services
to facilitate the successful implementation of applications developed using
Synon products. See "--Third Party Relationships."
Reusable business objects are central to the development power of Obsydian.
The Company plans to continue building libraries of reusable business objects
for resale and provide a channel for the resale of objects developed by third
parties. The Company intends to focus its efforts, in concert with those of
certain of its customers, on the development of a range of vertical industry
object libraries. The Company believes that a market is emerging for the
development and sale of libraries of reusable business objects which may provide
additional advantages to Synon customers.
Leverage Worldwide Presence
Synon has an established direct sales force and a network of distributors
in major markets of the world. Each sales channel has customer support and
professional service capabilities, which the Company believes represents a
competitive advantage in marketing its products and provides a platform for
expansion as market opportunities arise.
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TECHNOLOGY AND PRODUCTS
Synon's development products are designed to produce large, scalable,
business applications. They incorporate the knowledge gained from over a decade
of application development tools experience. The keys to successful development
of large applications are the speed with which they can be developed, and the
ease of customization after they are complete. Synon's technology represents a
highly productive combination of speed and flexibility.
OBSYDIAN TECHNOLOGIES
Integrated Repository. All Obsydian development facilities, such as the
Diagram Model Editor and the Class Libraries, are directly linked to a central
integrated repository. Changes made while using any tool component, at any point
in the development cycle instantly update all related elements of the model and
are clearly visible from any other facility or point of view.
The repository tracks all design information in three deployment dimensions
with a full audit trail: version, platform, and national language. As new design
information is added to an application, it is stored separately from the
existing design. This means it is possible to view and create the application as
it exists in different releases of the software, as it appears in different
national languages, or as implemented on to different platforms. Software
vendors can create versions of their application that vary according to
customization done for specific customers or countries, and retain knowledge at
the lowest level of detail on how the customizations differ from their base
product.
The Obsydian repository is a distributed repository. Accordingly, objects
in one repository can inherit traits from objects in a different repository.
This enables Synon to build and maintain class libraries of objects which can be
sold and distributed for use and extension by others.
The greatest advantage of a repository based system is the preservation of
the application design in the face of continual technological change. An
existing design can be deployed on new platforms as generators become available.
For example, a software vendor that has created an application with a Windows
client and AS/400 server instantly gains access to the Windows NT server market
with the availability of the Company's Windows NT generator. Windows NT Back
Office programming is complex. It demands knowledge of Windows NT processes, the
Registries, security architecture, integration with Microsoft System Management
Services and Microsoft Mail, and database optimization for SQL Server. The task
of learning a new platform and porting an application could take months or
years. However, because the Synon generator shields the developer from needing
to understand the new technology, the task can be accomplished in days of
generator availability.
Patterns. Reusable business objects ("patterns") reflect common business
structures and behaviors which are found in many commercial applications. Synon
technology resolves the inherent conflict between the desire to use large
reusable development objects for efficiency and the difficulty of modifying them
to address a specific customer's needs. Abstract or generic pattern definitions
are merged with the application context or specific characteristics of the
business to create the final application. Patterns describing the
interrelationships of many software components -- such as screens, events,
reports, methods, tables, views, messages and even help text -- can be described
in detail and may represent over one hundred programs of quality pretested code.
The size of patterns which can be created with Synon technology extends all the
way to fully functioning vertical applications. If a pattern achieves only 90%
of the desired behavior, the developer can "replace" the undesired 10% with
alternative behavior.
As an example, a common pattern may be used to create apparently unrelated
application business objects such as a purchase order, an insurance policy, or a
utility bill. Because each of these objects is composed of detail line items and
headers (structure) and share standard processing logic (behavior), a common
pattern (abstraction) can be defined. The abstract definitions can be extensive:
database tables and views describing the header/footer relationship, totaling
algorithms, printing routines, screens
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for viewing the objects and screens for managing transactions. Even the simplest
pattern results in the creation of dozens of executable objects.
[Picture of utility bill, insurance policy and purchase order]
Synon's pattern technology merges the specific characteristics of objects
such as orders, policies or utility bills into the generic pattern. The result
is the complete creation of a subsystem at a fraction of the effort to build
these application business objects by traditional methods. Further, if either
the pattern or the specific added elements change, the application is
automatically re-implemented to behave with the new rules.
Synon's pattern technology can incorporate components from the growing
third party component market. Components today are often graphic controls such
as "sliders" and "fuel gauges". Some are sophisticated controls with which
business data can be viewed in a variety of charts and graphs. These components
can be inserted into patterns created with Synon technology, allowing Obsydian
users broader access to third party generated patterns.
In addition to the patterns provided with Obsydian, developers using Synon
technology can build their own reusable patterns. These patterns range from
patterns for automatically integrating third-party technologies, such as the
pattern for the Lotus Domino groupware application, to general purpose or
specific vertical industry patterns.
Environmental Generators. When a design is complete, program generators
take relevant information from the repository and automatically create the
application's programs. The Company's products currently support the following
platforms: C++ applications on Windows, Windows NT and UNIX platforms, and RPG
on the AS/400. The programs are generated in the native language of the platform
on which the application will be executing to exploit the unique advantages and
features of each platform. This provides applications optimized for each
environment. The Company is currently developing a Java generator to add greater
flexibility in deployment options.
[Picture of repository, generator and 3GL application.]
The separation of design from implementation provides many advantages.
First, a single design can be generated to execute in different environments.
Simply regenerating will create the same application on AS/400, Windows NT or
UNIX. This saves the time and complexity of having to port a completed
application from one environment to another.
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Another benefit of the environmental generators is that they can shield the
developer from the technical intricacies of each target platform, leaving the
developer free to focus on the business view of the application. For example,
the techniques required to successfully build a client/server application are
complex. Communications programming, record buffering for optimization,
character type translation and code page translation all need to be considered.
Each of these considerations can vary by platform. However, the Synon generators
automatically generate code that deals with deployment complexity.
Application Partitioning. The flexibility of deployment extends to network
topology as well as platform. The screen handling code can run on the client
machine, database operations on the database server and business processing on
any number of other servers. Synon generators allow a single application to be
partitioned and deployed to any number of different platforms. The partitioning
of logic between clients and servers can occur at design time, at deployment
time, or dynamically at runtime. Runtime deployment means that an application
can load-balance by redirecting program calls from one server to another as the
traffic on the network changes. It also means that applications designed to run
in a client/server mode can also run detached from the network. For example, an
application can run entirely on a laptop, but when connected to the network
cease to invoke programs on the laptop and instead call programs on a server.
OBSYDIAN PRODUCT FAMILY
Obsydian Design Module: Workgroup development environment for the design of
large scale enterprise applications through modeling of the data and
business processes of the enterprise and the application of reusable
business objects to create an application design model.
Environmental Generators: Code generators which convert the application
design model into structured, pre-tested native program code to run the
application on a variety of popular platforms and environments including:
- AS/400 client server (RPG for server, C++ for Windows clients)
- AS/400 NPT (RPG)
- HP Unix client server with Windows client (C++)
- Windows "Fat Client" using ODBC database support (C++)
- Windows NT Server with Windows Client (C++)
National Language Support: Translates developed applications into 20
languages and local numeric, financial and data formats.
Business Object Class Libraries: Reusable design objects used in the
Obsydian design environment to create a Design Model:
- Base Class Library -- robust set of business design objects
- Framework Class Library -- security, batch processing and calendar
functions
- Lotus Domino enabling Class Library
- AS/400 FAX enabling Class Library
Obsydian Import Facilities: Migration facilities to aid customers in the
migration of existing applications into Obsydian including DB2/400 Data
Migration, Synon/2E Data Migration, Synon/2E Function Migration (currently
in beta test with several customers).
The Company's Obsydian family products are priced on a per seat basis.
Single license list price for the design module including one generator is
approximately $10,000. Additional environmental generators are approximately
$5,000 per seat. A $3,000 premium is charged per seat for the Windows NT
generator, whether purchased with Obsydian or as a stand alone generator. Base
class libraries of business objects are included with the design module, with
the prices of additional class libraries
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currently ranging from $2,000 to $4,000. Volume discounts are applied to these
list prices and are approximately 30% for a ten seat purchase. Annual customer
support and upgrade fees are priced separately at approximately $6,000 per site
and 10% of the per seat product list price, respectively.
SYNON/2E TECHNOLOGIES
Synon/2E is a robust development environment for creating AS/400 server
centric applications. Many of the technology features provided in Obsydian have
their roots in Synon/2E. Synon/2E applications are stored in a fully integrated
repository. As a result, Synon/2E customers can with relatively limited effort
solve year 2000 problems in their existing applications that were developed
using Synon/2E. Because the repository knows where all dates are used, changing
a date definition in a single location and regenerating the application will
automatically update all dates (including those used in screens, reports,
program logic, etc.) to recognize the century. Through impact analysis, the
customer can easily verify all the logic relating to the changed date fields. A
problem that could take months or years to solve becomes simply a deployment
exercise.
The Synon/2E generators create RPG or COBOL programs for optimal
performance on the AS/400. As new AS/400 technologies emerge, Synon/2E customers
will be able to reimplement their existing applications. For example, a new
generator will create Internet applications through Java, so legacy "dumb
terminal" AS/400 applications can be regenerated to become accessible as GUI
applications through the Internet.
The precursor to Obsydian's pattern technology are the program templates
available in Synon/2E. These templates are program skeletons that reflect
well-tested programming practices for creating AS/400 screen, report, and batch
programs. By allowing developers to place their business logic into the
templates, Synon produces consistent, high quality programs much faster than
would be possible through traditional methods.
SYNON/2E PRODUCT FAMILY
Synon/2E Development Environment: Using data modeling techniques to express
relationships and business rules, along with high-level action diagrams to
describe process logic for complex interactive, batch, and reporting
processes, Synon/2E speeds implementation of the design model with
COBOL/RPG code generation for the AS/400.
Synon/PE: Analyzes design models to maximize performance.
Synon/RPM: An adaptation of the rapid application development methodology.
Synon Model Applications (SMA) -- Financial: An integrated financial
accounting system designed by Synon using Synon/2E.
Third Party Products: Graphical modeling facility, change management and
report writing.
Each Synon/2E family product is priced per customer central processing unit
("CPU") on which such product operates, with higher prices for CPU's with
relatively greater computing capacity. Synon/2E prices range from approximately
$48,000 to $104,000 depending on the CPU, with additional generators ranging
from $12,000 to $26,000 depending on the CPU. The SMA Financial application is
priced from approximately $50,000 to $360,000. Maintenance agreements for the
Synon/2E product family are typically priced at 15% of the list price of the
license annually.
PROFESSIONAL SERVICES AND CUSTOMER SUPPORT
Synon provides a broad range of customized and packaged professional
services to assist customers in the successful implementation of their
application development software. These offerings include not only the
traditional product education, mentoring and application design, but also
application construction, testing and conversion services. At a higher level,
Synon consultants also provide project management, requirements definition and
quality assurance support.
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In addition to the Company's team of over 180 full time engineers, leading
industry consulting companies such as Whitman-Hart, Inc., Ernst & Young LLP and
Cap Gemini UK PLC also offer a broad spectrum of services to support customers
in their deployment and use of Synon's products and technologies. Synon has
created special offerings to expand the skills and capabilities of third party
service providers and seeks to create a large network of professionals trained
in Synon technology.
Recently the Company has developed a new set of services offerings under
the Flyte series family name. These offerings are designed to decrease the
customer's risk of technology adoption and facilitate cost effective
implementations.
Major offerings in the Flyte series include:
Co-Pilot: Process management methods and techniques to implement best
practices. Licensed from MCI/SHL Systemhouse, Co-Pilot gives Synon's
customers access to state of the art tools integrated with advanced
Enterprise Windows NT extensions from Microsoft and Synon.
RADAR: Project quality assurance processes. Jointly developed with Tandem
Computers, Microsoft and Synon, RADAR allows early detection of project
risks and helps prevent problems throughout the project life cycle.
Pre-Flyte: Technology assessment of customer development and deployment
environment which minimizes implementation errors that may get introduced
early in the technology adoption cycle.
Practice Flyte, First Flyte, Full Flyte: A wide range of technology
transfer, mentoring and pilot project services designed to enable customer
success with the Company's advanced technologies. These offerings are
designed to be comprehensive and flexible to match the specific needs of an
individual customer.
Synon's customer support services are an essential complement to the
Company's professional services offerings in ensuring customer success with
Synon technology. The Company offers customer support services for Synon/2E
family products under annual maintenance agreements and for the Obsydian family
products under annual support and upgrade agreements. The maintenance and
support agreements provide customers with access to technical support services
through the telephone, the Internet, e-mail and facsimile. Support staff members
typically have several years of experience in application development, software
engineering or software testing. The Company develops new releases of its
software products including periodic enhancements which it provides to its
customers according to the terms of the maintenance and upgrade agreements.
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CUSTOMER CASE STUDIES
The following customer case studies illustrate the selection, use and
implementation of Synon software products by certain of the Company's largest
customers. Not every customer achieves the same level of implementation success.
- --------------------------------------------------------------------------------
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AMWAY CORPORATION ("AMWAY")
Large multinational manufacturer of home care, personal care and fitness
products
<TABLE>
<S> <C>
REQUIREMENT.......... Amway needed to build and deploy major new inventory, order
management and custom remittance applications to be used in
approximately 30 countries to support its worldwide growth
strategy while concurrently standardizing the processes and
systems among its affiliates.
SYNON'S SOLUTION..... Using Synon/2E, Amway headquarters IT staff developed core sets of
application models which were distributed to local country IT
staffs for customization and implementation.
BENEFITS............. The core models were designed to be easily modified by local IT
staffs to accommodate country variances and ongoing needs. In
addition, the staff in each country is able to use the
headquarters' model, incorporate headquarters' updates and
automatically create the same application in the local national
language. Utilizing the Synon/2E product, Amway's IT function
achieved significant development productivity and gained both on-
going corporate standardization and responsive local
customization.
</TABLE>
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- --------------------------------------------------------------------------------
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ZURICH REINSURANCE UK ("ZURICH RE")
A leading multinational reinsurance underwriter and subsidiary of
Switzerland-based Zurich Insurance.
<TABLE>
<S> <C>
REQUIREMENT.......... Zurich Re needed to identify a strategic tool to rewrite its core
underwriting support systems. This was part of a business process
review, demanded by changing business needs and the requirement to
improve customer service. The first key module of this scalable
enterprise application was a Contact Management System.
SYNON'S SOLUTION..... Using Obsydian's model-based environment with the AS/400 and Win-
dows/NT generators, Zurich Re was able to rapidly build a complex
application that exploited the latest system vendor technologies.
BENEFITS............. Zurich Re was able to complete the core functionality of this
system in 3.5 months. Using a third generation language
programming approach, this project would have taken considerably
longer. The combination of Obsydian technology and the Company's
consulting guidance helped Zurich Re rapidly build a sophisticated
and comprehensive front-line Contact Management System, an
integral part of their underwriting business and strategic plans.
</TABLE>
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DATALINK CHORUS SOFTWARE, LTD. ("CHORUS")
A U.K. company that offers a suite of financial accounting and business
management applications, historically for IBM mid-range computers.
<TABLE>
<S> <C>
REQUIREMENT.......... Chorus was already well established in the AS/400 market, but
wanted to provide products for the growing Microsoft Windows NT
market.
SYNON'S SOLUTION..... Chorus utilized Obsydian's AS/400 and Windows NT Server
capabilities to build high performance scalable applications with
multi-platform capability.
BENEFITS............. Using Obsydian NT BackOffice generator, Chorus rapidly qualified
for and received from Microsoft the "Designed for Microsoft
BackOffice" logo. The AS/400 client/server application represented
5 person-years of development and was regenerated to a BackOffice
compliant NT application in 2 days.
</TABLE>
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POLICY MANAGEMENT SYSTEMS CORPORATION ("PMSC")
One of the largest providers of software and services for the insurance
industry.
<TABLE>
<S> <C>
REQUIREMENT.......... Create a new release of its client/server, multi-platform
application for midsize companies.
SYNON'S SOLUTION..... PMSC used Obsydian technology to build its POINT Open application,
a Property and Casualty Insurance solution. The POINT system
consists of fully integrated components which include Policy
Administration, Rating, Claims, Billing and Collection, Payables,
and Reinsurance.
BENEFITS............. With Obsydian, PMSC has realized benefits through Object Oriented
software design and reusability. Rating and Policy Processing, the
first business function of POINT Open developed with Obsydian, is
a comprehensive 4 million plus lines of code component. The effort
to develop the second component, Claims, took advantage of many of
the pre-built classes. Although the Claims component was 16% the
size of the Rating and Policy Processing, it took only 8.5% of the
effort.
</TABLE>
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CUSTOMERS
As of December 31, 1996, the Company had licensed its Synon/2E family of
products to approximately 5,800 customer sites and Obsydian to approximately
3,200 development users. The Company's target Obsydian customers include large
organizations that utilize large comprehensive enterprise critical information
systems which are deployed over a range of heterogeneous operating environments
and across international boundaries. The Company's target Synon/2E customers
include medium to large organizations that use enterprise critical information
systems running on the IBM AS/400 midrange computer system. The Company also
targets as customers Independent Software Vendors ("ISVs") which develop large
commercial application software for resale across a range of operating
environments and/or international boundaries. No single customer accounted for
10% or more of the Company's revenue for the year ended December 31, 1996 or for
the three months ended March 31, 1997.
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The Company believes that the following list of some of the Company's
largest customers is representative of its customers as of December 31, 1996.
<TABLE>
<S> <C>
MANUFACTURING INDUSTRIES
Barnes & Noble Distribution Playtex Europe (France)
Bridgestone Corp. Samsung Electronics, Panama, S.A. (Panama)
Burben-Ubbens Papier (Netherlands) Samsung Electronics Ltd. (United Kingdom)
Cargill, Inc. Solarglass (United Kingdom)
The Goodyear Tire & Rubber Co. Yacimientos Petroliferos Fiscales, S.F.
Kraft Foods, Inc. (Argentina)
ELECTRONICS, COMPUTERS AND COMPUTER SERVICES
AdWare Systems, Inc. Ernst & Young LLP
American Software USA, Inc. Nova Systems (Italy)
Cantoc Business Systems Inc. Pacific Systems International PLC (United
Cincinnati Bell Information Systems, Inc. Kingdom)
DAC Data Aktieselskab (Denmark) Policy Management Systems Corporation
ELECTROLUX AB (UK, Ireland, Sweden) UNILOG Multisystems (France)
SERVICES, DISTRIBUTION AND COMMUNICATIONS
Amway Corporation Forward Trust Group Ltd. (United Kingdom)
Anglia Components Ltd. (United Kingdom) Hydro Texaco AS (Norway)
Cellway NV (Netherlands) MCI Communications Corp.
Christian Salvesen Distribution (United New Century Communications Inc.
Kingdom) Nissan Italia SpA (Italy)
Electronic Data Systems Corporation
Enterprise Rent-A-Car
FINANCIAL SERVICES
American Express Co. La Suisse Assurance (Switzerland)
ANZ Banking Group (Australia) North American Mortgage Company
Australia and New Zealand Banking Group San Paolo Fondi SpA (Italy)
Limited The Toronto-Dominion Bank
Banco General S.A. (Panama) Vererband der Vereine Creditreform e.v.
Diners Club International (Germany)
Hermes Kreditversicherungs AG (Germany) Zurich Re-Insurance (United Kingdom)
GOVERNMENTS, AGENCIES AND SOCIAL SERVICES
ACG Informatique (France) New Mexico State Personnel Office
Board of Pensions, Evangelical Lutheran North Lincolnshire Council (United Kingdom)
Church in America NV Databank Kramers van Koophande en
Michigan Supreme Court Fabrieken (Netherlands)
State of Missouri -- Dept. of Mental Health
</TABLE>
THIRD PARTY RELATIONSHIPS
IBM Corporation
Synon has had a long-standing relationship with IBM which solidified with
the introduction of the AS/400 in 1988. The Company currently participates in
several of IBM's AS/400 division marketing programs worldwide and maintains
close ties with its AS/400 division product development organizations.
Additionally, CGI Informatik GmbH, a subsidiary of IBM, acts as a primary
distributor of the Company's products in Germany.
The Company and IBM's AS/400 division have engaged in several joint
development or sponsored development projects in the past aimed at accelerating
availability of Synon products compatible with IBM's AS/400 division offerings.
In 1996, IBM's AS/400 division sponsored a joint development lab to encourage
the building of large Obsydian-enabled business objects by IBM, Synon and their
customers in order to accelerate the availability of a wider range of reusable
business objects. Currently, IBM's AS/400 division and Synon are jointly
participating in the development of large business object class libraries
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which can be assembled and deployed through Obsydian. The first libraries
produced by the joint work are the Lotus Notes Class Library and the AS/400 FAX
Class Library. See "--Technology and Products." Both companies are encouraging
third parties to participate in the development lab to build industry vertical
and other reusable class libraries.
In 1992, IBM purchased 1,666,667 (pre-conversion) shares of the Company's
Series E Preferred Stock for $5 million. The Series E Preferred Stock will be
converted to 833,333 shares of Common Stock upon closing of the Offering. See
"Certain Transactions -- Preferred Stock Sales," "Principal and Selling
Stockholders" and Note 2 of Notes to Consolidated Financial Statements.
Microsoft Corporation
Synon has established a strong working relationship with Microsoft that
Synon believes is important to its future success in the Windows NT market. A
number of agreements with Microsoft have served as the basis for this
relationship. In 1996, Microsoft and the Company entered into an agreement to
facilitate the development of the Windows NT generator. Microsoft and Synon are
also currently parties to a Co-Sponsorship Agreement pursuant to which, in
exchange for payment of a fee, Synon was Co-Sponsor of Microsoft Tech Ed 1997,
with certain joint advertising exposure opportunities and related benefits.
Synon also co-sponsored Microsoft's annual Professional Developers' Conference
in November 1996. In addition, Synon and Microsoft are parties to a Memorandum
of Understanding pursuant to which Synon has agreed, among other things, to
train and certify product specialists on Windows NT and SQL Server, to train
representatives and channel partners on BackOffice product marketing and to
provide Microsoft's ChannelBase mailing information for joint selling
opportunities. Synon also participates in certain Microsoft promotional programs
and jointly prepares related marketing and promotional materials. Synon intends
to continue to work with Microsoft in the future on these and related projects.
See "Risk Factors-- Dependence on Relationships with IBM and Microsoft."
SALES AND MARKETING
The Company markets and sells its products and services through its direct
sales force in the U.S., Canada, United Kingdom, France, Italy and Australia and
through a network of distributors in the rest of Europe, Asia and Latin America.
The Company distributes its products in Asia and Italy through joint venture
arrangements pursuant to which Synon owns 51% of the distributor located in
Japan, 65% of the distributor located in Italy and 75% of the distributor
located in Hong Kong. In addition, CGI Informatik GmbH, a subsidiary of IBM, is
the Company's primary distributor in Germany. Through both the direct sales and
distributor channels, the Company employs an integrated solution approach to
selling which combines its product offerings with professional services. In
addition, the Company is developing its indirect channels to complement direct
sales in its major markets.
Synon's marketing functions provide a comprehensive range of programs and
activities intended to broaden the worldwide market appeal for its products and
services and to support the direct sales channels employed by the Company. Each
of the Company's distributors provides a range of marketing programs to support
their selling efforts which often utilize marketing materials prepared by the
Company. Marketing activities include participation in major trade shows and
industry forums, public relations campaigns, advertising, product seminars,
telemarketing, newsletters, direct mailings, and preparation of a variety of
sales collateral materials. The Company also participates with IBM and Microsoft
in joint marketing programs and intends to seek continued opportunities to work
with both companies. See "--Third Party Relationships."
The Company has entered into agreements with ISVs to help promote and sell
the Company's products. The agreements fall into three general categories, OEM,
Reseller and Cooperative Marketing. The Company has one OEM agreement with the
Marcam Corporation under which Marcam sells a customized version of the
SMA/Financials product to its end user customers and has rights to sell Synon/2E
to those same customers. The Company has entered into reseller agreements with
Policy Management Corporation and American Software USA, Inc. under which the
companies have the right to
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sell special versions of the Company's products to customize, enhance or
maintain the software products which were developed by these resellers using
Synon products. Additionally, the Company has entered into cooperative marketing
agreements with many of its ISV customers under which the companies are paid a
finder's fee for their assistance in providing sales leads and helping in
product sales process.
PRODUCT DEVELOPMENT
The Company is currently focusing development efforts on various
enhancements to Obsydian, including a 32 bit tool, ActiveX capabilities,
external class definition capabilities, open repository capabilities and change
management capabilities. Pursuant to an agreement with IBM's AS/400 division,
the Company is also developing a Java language code generator. See "Certain
Transactions."
Synon has made substantial investments in new technologies and product
development. The Company believes that its future success will depend in large
part on its ability to enhance existing products, introduce new technologies and
develop new products which meet the needs of a rapidly changing application
development marketplace. As of March 31, 1997, the Company's research and
development staff consisted of 85 employees located principally at its
headquarters in Larkspur, California with a smaller development team in London,
England. Synon's research and development expenses (after capitalization of
software development costs) were approximately $4.1 million, $4.9 million, and
$5.9 million for 1994, 1995 and 1996, respectively.
The Company's product development organization is responsible for product
architecture, core technology and functionality, product testing, user interface
development and expansion of the ability of Obsydian to operate with leading
hardware platforms, operating systems, relational database management systems
and networking and communication protocols. This organization is also
responsible for new product development. Central to the Company's development
approach is concurrent engineering by small product teams. Each group is focused
on development of independent software components within a disciplined set of
protocols so that, when assembled, the components interact and communicate
properly. This approach enables the Company to manage the overall development
process in incremental elements and to track performance, identify problem areas
and add additional resources where necessary. The Company also maintains
detailed release planning procedures to ensure integration, testing and version
control among different groups developing a single release.
The market for the Company's products is subject to rapid technological
change, changing customer needs, frequent new product introductions and evolving
industry standards that may render existing products and services obsolete. As a
result, the Company's position in its existing markets or other markets that it
may enter could be eroded rapidly by product advances. Synon's vulnerability to
rapid technological change and changing customer needs is heightened by the
focus of its product development efforts on the Obsydian product line and
Obsydian for the Windows NT computing platform. See "Risk Factors--Rapid
Technological Change; Product Development Risks."
COMPETITION
The software development market is highly fragmented and serviced by many
firms. The market for advanced software used in the development, deployment and
management of high-end client/server application software systems is intensely
competitive and characterized by rapidly changing technology, evolving industry
standards, frequent new product introductions and rapidly changing customer
requirements. The Company's development tools are targeted primarily at
developers of large business applications running on the Windows NT operating
platform and the AS/400. In the market for high-end client/server application
development software tools, the Company expects to compete primarily with Forte
Software, Inc. and Texas Instruments Incorporated with respect to users of the
Windows NT operating platform, and currently competes primarily with Progress
Software Corporation and several small software companies with respect to users
of the AS/400. In the market for less complex client/server application
development software tools, the Company competes primarily with Powersoft
Corporation, IBM's Visual Age product line and Microsoft's Visual Basic with
respect to users of the
43
<PAGE> 45
Windows NT operating platform and with IBM's Visual Age product line with
respect to users of the AS/400.
Software that can be developed and deployed using the Company's Obsydian
environment can also be implemented using a combination of first generation
application development tools and more powerful server programming techniques
such as stored procedures in relational databases, C or C++ programming, and
networking and database middleware to connect the various components.
Consequently, the Company experiences competition from potential customers'
decisions to pursue this approach as opposed to utilizing an application
environment such as Obsydian. Similarly, the Company's products compete against
the alternative of conventional software development in the AS/400's native RPG
language. As a result, the Company must continuously educate existing and
prospective customers as to the advantages of the Company's products. There can
be no assurance that these customers or potential customers will perceive
sufficient value in the Company's products to justify purchasing them.
The Company also competes with database vendors such as Oracle, Informix
and others that offer their own development tools for use with their databases.
The Company may in the future face additional direct or indirect competition
from IBM or Microsoft in the event that such companies continue to develop their
own application development tools for the AS/400, Windows NT or other computing
platforms or enter into strategic relationships with any of the Company's
competitors. In addition, since the software industry has relatively low
barriers to entry, the Company may in the future face additional competition
from start-up companies or others in the software application development tool
industry.
Most of the Company's current competitors have, and future competitors may
have, significantly greater financial, technical, marketing and other resources
than the Company. The Company's competitors may be able to respond more quickly
to new or emerging technologies and changes in customer requirements or devote
greater resources to the development, promotion and sale of their products than
the Company. Also, most current and potential competitors have greater name
recognition and more extensive customer bases that could be leveraged, thereby
gaining market share to the Company's detriment. The Company expects to face
additional competition as other established and emerging companies enter the
application development tools market and new products and technologies are
introduced. Increased competition could result in price reductions, reduced
purchases of licenses, professional services and maintenance, lower gross
margins or loss of market share, any of which would materially adversely affect
the Company's business, operating results and financial condition.
In addition, current and potential competitors have established or may
establish cooperative relationships among themselves or with third parties or
make strategic acquisitions to increase the ability of their products to address
the needs of the Company's prospective customers. Accordingly, it is possible
that new competitors or alliances among current and new competitors may emerge
and rapidly acquire significant market share. There can be no assurance that the
Company will be able to compete successfully against current and future
competitors or that competitive pressures faced by the Company will not
materially adversely affect its business, operating results and financial
condition. Further, there can be no assurance that products or technologies
developed by others will not render the Company's products noncompetitive or
obsolete. In addition, regardless of the Company's success in the marketplace, a
negative perception of the Company generated by industry analysts or the public
more generally could detract from the Company's competitiveness. See "Risk
Factors -- Competition."
The principal competitive factors affecting the market for the Obsydian and
Synon/2E product families are ease of application development, functionality and
features, product architecture, product performance, reliability and
scaleability, product quality, price and customer support. The Company believes
it presently competes favorably with respect to each of these factors. However,
the Company's market is still evolving and there can be no assurance that the
Company will be able to compete successfully against current and future
competitors and the failure to do so successfully will have a material adverse
effect upon the Company's business, operating results and financial condition.
44
<PAGE> 46
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
The Company's success is heavily dependent upon proprietary technology. The
Company also believes that factors such as the technological and creative skills
of its personnel, new product developments, frequent product enhancements, name
recognition and reliable product maintenance are essential to establishing and
maintaining a technology leadership position. The Company relies primarily on a
combination of copyright and trademark laws, trade secrets, confidentiality
procedures and contractual provisions to protect its proprietary rights. The
Company seeks to protect its software, documentation and other written materials
under trade secret and copyright laws, which afford only limited protection. The
Company presently has no patents or patent applications pending. Despite
precautions taken by the Company, it may be possible for unauthorized third
parties to copy aspects of its products or future products or to obtain and use
information that the Company regards as proprietary. In particular, for the SMA
financial product and class libraries, the Company provides its licensees with
access to its data model and other proprietary information underlying its
licensed applications. There can be no assurance that the Company's means of
protecting its proprietary rights now or in the future will be adequate or that
the Company's competitors will not independently develop similar or superior
technology. Litigation may be necessary in the future to enforce the Company's
intellectual property rights, to protect the Company's trade secrets or to
determine the validity and scope of the proprietary rights of others. Such
litigation could result in substantial costs and diversion of resources and
could have a material adverse effect on the Company's business, operating
results and financial condition.
The Company, Dysys, and Simon Williams and Melinda Horton, founders and
major stockholders of the Company, are parties to the Dysys Agreement in
connection with which the Company acquired from Dysys certain intellectual
property which was included in the Company's Obsydian product. In connection
with the Dysys Agreement, the Company currently incurs a liability to pay Mr.
Williams and Ms. Horton a 1% and 0.5% royalty, respectively, on Obsydian license
and maintenance revenue on transactions entered into through June 30, 1999.
Pursuant to the Dysys Agreement, Mr. Williams and Ms. Horton also retain certain
rights with respect to the intellectual property, including the non-exclusive
right to use and exploit it under certain circumstances, including the Company's
failure to pay required royalty amounts in connection with the Dysys Agreement
and of certain other occurrences. See "Certain Transactions -- Dysys Agreement."
Policing unauthorized use of the Company's software is difficult, and,
while the Company does not believe software piracy is a significant problem to
the Company at present, there can be no assurance that it will not become a
problem in the future. In addition, the laws of some foreign countries do not
protect the Company's proprietary rights to the same extent as do the laws of
the United States. The Company is not aware that any of its software product
offerings infringe the proprietary rights of third parties, but there can be no
assurance that third parties will not claim infringement by the Company with
respect to current or future products. The Company expects that software
developers will increasingly be subject to infringement claims as the number of
products and competitors in the Company's industry segment grows and the
functionality of products in different industry segments overlaps. Any such
claims, with or without merit, could be time-consuming, result in costly
litigation, cause product shipment delays or require the Company to enter into
royalty or licensing agreements. Such royalty or licensing agreements, if
required, may not be available on terms acceptable to the Company or at all,
which could have a material adverse effect on the Company's business, operating
results and financial condition. Any such delays or reductions in product
shipments could materially and adversely affect the Company's business,
operating results and financial condition. See "Risk Factors -- Dependence on
Proprietary Rights and Technology; Risk of Infringement."
EMPLOYEES
As of March 31, 1997, the Company had a total of 488 employees, including
85 in product development, 48 in customer support, 104 in sales and marketing,
181 in professional services, and 70 in finance and administration. Of these
employees 324 were located in the United States and Canada, 132 located in
Europe and 30 in Australia and Japan. None of the Company's employees is
represented by a
45
<PAGE> 47
collective bargaining agreement and the Company has never experienced a work
stoppage. The Company considers its relations with its employees to be good.
The Company believes its future success depends in large part on its
ability to attract and retain qualified employees, especially highly skilled
product developers, customer support professionals and professional services
consultants and capable direct sales and pre-sales support representatives.
There can be no assurance that the Company will be successful in retaining,
recruiting or training key personnel. Failure to attract and retain key
personnel could have a material adverse effect on the Company's business,
operating results and financial condition.
FACILITIES
Synon's headquarters are located in Larkspur, California in a 42,675 square
foot facility under leases which expire December 1999 through May 2001. The
Larkspur facility houses the primary product development, customer support,
marketing, finance and administration and executive management of the Company.
The Company also occupies 19,789 square feet of facilities in London under
various lease agreements expiring January 1998 to December 2014. Additionally,
the Company leases space for sales and support facilities in a variety of
international and domestic locations including White Plains, New York and the
metropolitan areas of Chicago, Dallas, Atlanta, Los Angeles, Seattle, Paris,
Milan, Sydney, Melbourne, and Tokyo. The Company believes that its existing
facilities and offices will be adequate at least through the end of the year and
that sufficient additional space will be available as needed thereafter.
The Company has approximately 34,000 square feet in excess facilities in
the United Kingdom under long term lease agreements expiring December 1999
through December 2014. These facilities are currently subleased to third parties
at rates which are in some cases below that which the Company is obligated to
pay and for periods less than the lease term for which the Company is obligated.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and Note 12 of Notes to the
Consolidated Financial Statements.
46
<PAGE> 48
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
The following table sets forth certain information concerning the
directors, executive officers and certain other key employees of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------- --- ---------------------------------------------
<S> <C> <C>
Richard H. Goldberg 52 President, Chief Executive Officer and
Chairman of the Board
Paul K. Wilde 46 Vice President, Finance and Administration,
Chief Financial Officer and Secretary
William R. Yeack 39 Vice President, Professional Services and
Product Marketing
Keith E. Jaeger 40 Vice President, Development
Nick S. Discombe 34 President, Synon Europe Limited
Kevin Kilroy 43 Vice President, North American Sales and
Marketing
William O. Grabe 59 Director
David C. Hodgson 40 Director
John F. Rockart 65 Director
William M. Stuek 52 Director
</TABLE>
- ---------------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
Richard H. Goldberg has served as President and Chief Executive Officer of
the Company since October 1992 and as Chairman of the Board since May 1997. From
June 1967 to July 1992, Mr. Goldberg served as Assistant General Manager of
Software Marketing for IBM. Mr. Goldberg holds an M.S. from Carnegie Mellon
University and a B.S. from Rensselaer Polytechnic Institute.
Paul K. Wilde has served as Vice President, Finance and Administration,
Chief Financial Officer and Secretary since joining the Company in April 1991.
From October 1988 until April 1991, Mr. Wilde served as Chief Financial Officer
of Viasoft, Inc. From October 1984 until October 1988, Mr. Wilde was Chief
Financial Officer and Vice President, International Operations of Candle
Corporation. Prior to October 1984, Mr. Wilde served as Chief Financial Officer
for Informatics General Corporation. Mr. Wilde holds a B.S. from Brigham Young
University.
William R. Yeack has served as Vice President, Professional Services and
Product Marketing since January 1996. Prior to joining the Company, Mr. Yeack
served as President of Tandem Computers' Tandem Services Company from November
1993 to December 1995. From June 1991 to November 1993, Mr. Yeack served as Vice
President of Sales and Marketing for Mozart Systems. Mr. Yeack holds an M.B.A.
and a B.S. from Ohio State University.
Keith E. Jaeger has served as the Company's Vice President, Development
since January 1, 1997. From July 1994 through December 1996, he was
Director -- Product Development and from June 1990 through June 1994, he was
Manager, Development with the Company. Mr. Jaeger holds an M.A. from the
National College of Education and a B.A. from Ripon College.
Nick S. Discombe has served as President, European Operations since January
1997. From August 1994 though December 1996, he was Managing Director -- U.K.
and Northern Europe; from January 1993 through July 1994, he was U.K. Sales
Director, and from January 1991 through December 1992, Mr. Discombe was an
Account Executive with the Company. Mr. Discombe holds a B.A. in Economics from
Portsmouth University.
Kevin Kilroy has served as Vice President, North American Sales and
Marketing since June 1997. From March 1996 to May 1997, Mr. Kilroy served as
Vice President, Business Development and Channels
47
<PAGE> 49
for Seer Technologies, Inc. From March 1993 to March 1996, Mr. Kilroy served as
President of Systems and Solutions, Inc. Prior to March 1993, Mr. Kilroy served
as Vice President, General Manager of the Information Business Unit of Samsung
America. Mr. Kilroy holds a B.S. from North Carolina Wesleyan College.
William O. Grabe has served as a director of the Company since March 1992
and served as Chairman of the Board from September 1992 until May 1997. Mr.
Grabe is a managing member of General Atlantic Partners, LLC ("GAP LLC") and has
been affiliated with GAP LLC or its predecessor since April 1992. From 1984
until March 1992, Mr. Grabe was Vice President, US Marketing and Services, of
IBM. Mr. Grabe is also a director of Baan Company N.V., Compuware Corporation,
Marcam Corporation, Centura Software Corporation and Gartner Group. Mr. Grabe
holds an M.B.A. from the University of California, Los Angeles and a B.S. from
New York University.
David C. Hodgson has served as a director of the Company since April 1993.
Mr. Hodgson is a managing member of GAP LLC and has been affiliated with GAP LLC
or its predecessor since 1982. Before joining GAP LLC, Mr. Hodgson was President
of New England Software. Mr. Hodgson is also a director of Baan Company N. V.
and Walker Interactive Systems, Inc. Mr. Hodgson holds an M.B.A. from the
Stanford Graduate School of Business and an A.B. from Dartmouth College.
John F. Rockart has served as a Director of the Company since April 1993.
Mr. Rockart is Director of the Center for Information Systems Research and a
Senior Lecturer at the Massachusetts Institute of Technology's Sloan School. Mr.
Rockart is also a Director of Keane, Inc. and Comshare Inc. Mr. Rockart holds a
Ph.D. from the Massachusetts Institute of Technology, an M.B.A. from Harvard
University and an A.B. from Princeton University.
William M. Stuek has served as a Director of the Company since January
1996, and was previously a Director of the Company from October 1993 to June of
1994. Since September of 1996, Mr. Stuek has served as the General Manager of
North American Operations for IBM. From January 1996 to September 1996, Mr.
Stuek served as General Manager of North American Product Marketing for IBM, and
from September 1993 to January 1996 as Director General of IBM Europe, Middle
East & Africa. Mr. Stuek holds a B.A. from Colgate University. Mr. Stuek serves
on the Company's Board of Directors, but does so in his personal capacity at the
request of GAP II, a Company stockholder, and is not serving at the request of
IBM and does not represent IBM in this capacity.
DIRECTOR COMPENSATION
The Company reimburses each member of the Company's Board of Directors for
out-of-pocket expenses incurred in connection with attending Board meetings. In
addition, John F. Rockart receives an annual consulting fee in the amount of
$15,000 for his services as a member of the Board of Directors. Other than Mr.
Rockart, no member of the Company's Board of Directors currently receives any
cash compensation for services as a director.
On April 28, 1993, the Company granted director John F. Rockart an option
to purchase 10,000 shares of Common Stock at an exercise price of $2.86 per
share under the Company's 1990 Stock Option Plan. Twenty percent of the shares
subject to Mr. Rockart's option vest after one year, with the remaining shares
vesting in equal monthly installments over the next four years. On January 30,
1995, the Company granted director William M. Stuek an option to purchase 12,500
shares of Common Stock at an exercise price of $3.60 per share under the 1990
Stock Option Plan. Fifty percent of the shares subject to Mr. Stuek's option
vest after one year, with the remaining shares vesting in equal monthly
installments over the next year. On April 24, 1992, the Company granted director
William O. Grabe options to purchase a total of 180,000 shares of Common Stock
at a per share exercise price of $2.86 under the 1990 Stock Option Plan. Twenty
percent of the shares subject to Mr. Grabe's options vest after one year, with
the remaining shares vesting in equal monthly installments over the next four
years. See "Certain Transactions -- Agreements with Officers and Directors."
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<PAGE> 50
The Company's 1997 Director Option Plan (the "Director Plan") provides that
options will be granted to non-employee directors ("Outside Directors"),
pursuant to an automatic nondiscretionary grant mechanism. The Director Plan
provides for an initial grant of options to purchase shares of Common
Stock to each Outside Director upon the later of the effective date of the
Director Plan or the date on which such individual first becomes an Outside
Director. In addition, each Outside Director will subsequently be granted an
option to purchase 5,000 shares of Common Stock at the first meeting of the
Board of Directors following the annual meeting of stockholders in each year
beginning with the 1997 Annual Meeting of Stockholders if on such date, such
Outside Director has served on the Board of Directors for at least six months.
Each option under the Director Plan will be granted at the fair market value of
the Common Stock on the date of grant and will become exercisable over four
years, with 25% of the shares vesting after one year and the remaining shares
vesting in equal monthly installments thereafter. See "Stock Plans -- 1997
Director Option Plan."
BOARD COMMITTEES
The Board of Directors has a Compensation Committee that makes
recommendations to the Board concerning salaries and incentive compensation for
officers and employees of the Company. The Board of Directors also has an Audit
Committee that reviews the results and scope of the annual audit and other
accounting related services.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No interlocking relationship exists between any member of the Company's
Compensation Committee and any member of any other company's board of directors
or compensation committee.
EXECUTIVE COMPENSATION
The following table sets forth in summary form information concerning the
compensation received for services rendered to the Company and its subsidiaries
during the year ended December 31, 1996 by the Company's Chief Executive Officer
and the Company's four most highly compensated executive officers (other than
the Chief Executive Officer) whose salary and bonus for such year exceeded
$100,000 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
SHARES
ANNUAL COMPENSATION UNDERLYING
-------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITIONS SALARY($) BONUS($) GRANTED(#) COMPENSATION
- ------------------------------------------ --------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Richard H. Goldberg....................... $ 245,000 $130,000 -- $ --
President, Chief Executive Officer
and Chairman of the Board
William R. Yeack.......................... 200,000 75,000 100,000 --
Vice President, Professional Services
and Product Marketing
Paul K. Wilde............................. 185,000 68,000 -- 11,803(1)
Vice President, Finance and
Administration, Chief Financial
Officer and Secretary
Duncan Moore(2)........................... 174,000 111,500 -- 39,900(3)
President, Synon Europe Limited
Simon Williams(4)......................... 187,500 263,573(5) -- --
Vice President, Development and Chief
Technology Officer
</TABLE>
49
<PAGE> 51
- ---------------
(1) Represents amounts forgiven under a loan made by the Company to Mr. Wilde
for the purchase of Mr. Wilde's residence. See "Certain
Transactions -- Agreements with Officers and Directors."
(2) Mr. Moore resigned from his position of President of Synon Europe Limited
effective December 31, 1996.
(3) Consists of a $22,500 automobile allowance and $17,400 contributed by the
Company to Mr. Moore's pension fund.
(4) Mr. Williams resigned from his position of Vice President, Development and
Chief Technology Officer of the Company effective December 31, 1996 and
resigned as a director of the Company in May 1997.
(5) Represents a commission of two percent of all license and maintenance
revenue with respect to the Obsydian product in 1996. See "Certain
Transactions -- Dysys Agreement."
OPTION GRANTS IN FISCAL 1996
The following table sets forth certain information relating to stock
options awarded to each of the Named Executive Officers during the year ended
December 31, 1996. All such options were awarded under the Company's 1990 Stock
Option Plan. No stock appreciation rights were granted to any of the Named
Executive Officers during 1996. See "-- Stock Plans -- 1990 Stock Option Plan."
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
--------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(5)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -------------------
NAME GRANTED FISCAL 1996(1) SHARE($)(2)(3) DATE(4) 5%($) 10%($)
- ---------------------- ---------- -------------- -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Richard H. Goldberg... -- -- -- -- -- --
William R. Yeack...... 100,000 27% $ 3.60 01/24/06 $226,402 $573,747
Paul K. Wilde......... -- -- -- -- -- --
Duncan Moore.......... -- -- -- -- -- --
Simon Williams........ -- -- -- -- -- --
</TABLE>
- ---------------
(1) Based on an aggregate 371,250 shares subject to options granted to employees
of the Company and its subsidiaries during 1996.
(2) Options were granted at an exercise price equal to the fair market value of
the Company's Common Stock on the date of grant, as determined by the Board
of Directors.
(3) Exercise price may be paid in cash, by check, or at the discretion of the
Board, by promissory note or such other consideration and method of payment
permitted by applicable law.
(4) The term of each option granted under the 1990 Stock Option Plan is
generally ten years from the date of grant. Options may terminate prior to
their expiration dates, however, if the optionee's continuous status as an
employee is terminated or upon the optionee's death or disability. Options
granted under the 1990 Stock Option Plan generally must be exercised within
ninety (90) days of the termination of the optionee's status as an employee,
or within twelve (12) months after such optionee's death or disability.
(5) Potential realizable value is based on the assumption that the Common Stock
of the Company appreciates at the annual rate shown (compounded annually)
from the date of grant until the expiration of the ten year option term.
These numbers are calculated based on the regulations promulgated by the
Securities and Exchange Commission and do not reflect the Company's estimate
of future stock price growth.
50
<PAGE> 52
AGGREGATE OPTION EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
No Named Executive Officer exercised any stock option during fiscal year
1996. The following table sets forth certain information regarding stock options
held as of December 31, 1996 by the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1996(#) DECEMBER 31, 1996($)(1)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Richard H. Goldberg...................... 208,333 41,667
William R. Yeack......................... -- 100,000 --
Paul K. Wilde............................ 110,000 -- --
Duncan Moore............................. 110,000 -- --
Simon Williams(2)........................ -- -- -- --
</TABLE>
- ---------------
(1) Based upon an initial public offering price of $ per share minus
the exercise price.
(2) Mr. Williams resigned from his position of Vice President, Development and
Chief Technology Officer of the Company effective December 31, 1996 and
resigned as a director of the Company in May 1997.
STOCK PLANS
1990 Stock Option Plan. The Company's 1990 Stock Option Plan (the "1990
Plan") provides for the grant of incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
the nonstatutory stock options to employees of the Company. As of March 31,
1997, options to purchase an aggregate of 1,347,930 shares of Common Stock were
outstanding under the 1990 Plan, with a weighted average exercise price of
$3.16. Subsequent to March 31, 1997, the Board of Directors granted options to
purchase 6,000 shares of Common Stock under the 1990 Plan. The Board of
Directors has determined that no further options will be granted under the 1990
Plan after this Offering. The 1990 Plan provides that in the event of a merger
of the Company with or into another corporation, each outstanding option will be
assumed or substituted for by the successor corporation. In the event the
successor corporation refuses to assume or substitute for the option, the
optionee shall have the right to exercise all shares subject to the option,
including shares as to which it would not otherwise be exercisable.
Executive Share Option Scheme. The Company's Executive Share Option Scheme
(the "Executive Scheme") provides for the grant of nonstatutory stock options to
full-time employees and directors of the Company or any of its subsidiaries. As
of March 31, 1997, options to purchase an aggregate of 18,800 shares of Common
Stock were outstanding under the Executive Scheme with a weighted average
exercise price of $3.34. Since March 31, 1997, the Board of Directors has not
granted any further options to purchase shares of Common Stock under the
Executive Scheme. The Board of Directors has determined that no further options
will be granted under the Executive Scheme after this Offering.
1997 Incentive Stock Option Plan. The Company's 1997 Incentive Stock Option
Plan (the "1997 Plan") provides for the grant to employees of incentive stock
options within the meaning of Section 422 of the Code, and for the grant to
employees, directors and consultants of nonstatutory stock options and stock
purchase rights. The 1997 Plan was adopted by the Board of Directors in May 1997
and approved by the Company's stockholders in 1997. The 1997 Plan
replaces the 1990 Plan and the Executive Scheme. However, options previously
issued under the 1990 Plan and the Executive Scheme shall continue to be
exercisable according to their terms. Unless terminated sooner, the 1997 Plan
will terminate automatically in May 2007. A total of 1,500,000 shares of Common
Stock, plus annual increases equal to the lowest of (i) 400,000 shares of Common
Stock, (ii) 3% of the outstanding shares
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<PAGE> 53
of Common Stock or (iii) a lesser amount determined by the Board of Directors
has been reserved for issuance under the 1997 Plan.
The 1997 Plan may be administered by the Board of Directors or by a
committee of the Board (the "Committee"), which Committee shall, in the case of
options intended to qualify as "performance-based compensation" within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), consist of two or more "outside directors" within the meaning of
Section 162(m) of the Code. The Committee has the power to determine the terms
of options granted, including the exercise price, number of shares subject to
the option, the exercisability thereof, and the form of consideration payable
upon such exercise. In addition, the Committee has the authority to amend,
suspend or terminate the 1997 Plan, provided that no such action may affect any
share of Common Stock previously issued and sold or any option previously
granted under the 1997 Plan.
Options and stock purchase rights granted under the 1997 Plan are not
generally transferable by the optionee, and each option and stock purchase right
is generally exercisable during the lifetime of the optionee only by such
optionee. Options granted under the 1997 Plan must generally be exercised within
three months following termination of an optionee's status as an employee,
director or consultant of the Company, within twelve months after an optionee's
termination by disability, and within twelve months after an optionee's
termination by death, but in no event later than the expiration of the option.
In the case of stock purchase rights, unless the administrator determines
otherwise, a restricted stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
disability). The purchase price for shares repurchased pursuant to a restricted
stock purchase agreement shall be the original price paid by the purchaser and
may be paid by cancellation of any indebtedness of the purchaser to the Company.
The repurchase option shall lapse at a rate determined by the administrator. The
exercise price of all incentive stock options granted under the 1997 Plan must
be at least equal to the fair market value of the shares on the date of grant.
The exercise price of nonstatutory stock options granted under the 1997 Plan is
determined by the Committee, but with respect to nonstatutory stock options
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Code, the exercise price must be at least equal to the
fair market value of the Common Stock on the date of grant. With respect to any
employee who owns stock possessing more than ten percent of the voting power of
all classes of the Company's outstanding capital stock, the exercise price of
any incentive stock option granted to such person must equal at least 110% of
the fair market value of the Common Stock on the date of grant and the term of
such incentive stock option must not exceed five years. The term of all other
options granted under the 1997 Plan may not exceed ten years.
The 1997 Plan provides that in the event of a merger of the Company with or
into another corporation, or a sale of substantially all of the Company's
assets, each outstanding option and stock purchase right will be assumed or
substituted for by the successor corporation. In the event the successor
corporation refuses to assume or substitute for the option or stock purchase
right, the optionee shall have the right to exercise all of the optioned stock,
including shares as to which it would not otherwise be exercisable.
1997 Employee Stock Purchase Plan. The Company's 1997 Employee Stock
Purchase Plan (the "Purchase Plan") was adopted by the Board of Directors in May
1997 and approved by the stockholders in , 1997. A total of 400,000
shares of Common Stock, plus annual increases equal to the lowest of (i) 150,000
shares, (ii) 1% of the outstanding shares or (iii) a lesser amount determined by
the Board of Directors has been reserved for issuance under the Purchase Plan.
The Purchase Plan, which is intended to qualify under Section 423 of the Code,
is administered by the Board of Directors or by a committee appointed by the
Board. Employees (including officers and employee directors of the Company but
excluding 5% or greater stockholders or persons whose right to purchase Common
Stock accrues at a rate greater than $25,000 worth of Common Stock per year) are
eligible to participate if they are customarily employed for at least 20 hours
per week and for more than five months in any calendar year. The Purchase Plan
permits eligible employees to purchase Common Stock through payroll
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<PAGE> 54
deductions, which may not exceed 10% of an employee's compensation. The Purchase
Plan will be implemented by consecutive overlapping twelve (12) month offering
periods. The initial offering period under the Purchase Plan will begin on the
effective date of this Offering and subsequent offering periods will begin on
the first trading day on or after May 1 and November 1 of each year. Each
participant will be granted an option on the first day of the offering period,
and shares of Common Stock will be automatically purchased on the last date of
each purchase period within the offering period. If the fair market value of the
Common Stock on any purchase date (other than the final purchase date of the
offering period) is lower than such fair market value on the start date of that
offering period, then all participants in that offering period will be
automatically withdrawn from such offering period and re-enrolled in the
immediately following offering period. The purchase price of the Common Stock
under the Purchase Plan will be equal to 85% of the lesser of the fair market
value per share of Common Stock on the start date of the offering period or on
the purchase date. Employees may end their participation in an offering period
at any time, and participation ends automatically on termination of employment
with the Company. In the event of a proposed dissolution or liquidation of the
Company, the offering periods then in progress will be shortened by setting a
new exercise date that is before the dissolution or liquidation, and will
terminate immediately prior to the consummation of the proposed action, unless
otherwise provided by the Board. In the event of a proposed sale of all or
substantially all of the Company's assets or the merger of the Company with or
into another corporation, each outstanding option will be assumed or substituted
for by the successor corporation. In the event the successor corporation refuses
to assume or substitute for the options, the offering periods then in progress
will be shortened by setting a new exercise date that is before the sale or
merger and the offering periods then in progress will end on the new exercise
date. Each participant will be notified at least ten business days prior to the
new exercise date, and unless such participant ends his or her participation,
the option will be exercised automatically on the new exercise date. The
Purchase Plan will terminate in May 2007, unless sooner terminated by the Board
of Directors.
1997 Director Option Plan. The Company's 1997 Director Option Plan (the
"Director Plan") was adopted by the Board of Directors in May 1997 and approved
by the Company's stockholders in 1997. A total of 175,000 shares of
Common Stock, plus annual increases equal to the lesser of (i) the optioned
stock underlying options granted in the immediately preceding year, or (ii) a
lesser amount determined by the Board of Directors has been reserved for
issuance under the Director Plan. The option grants under the Director Plan are
automatic and non-discretionary, and the exercise price of the options is 100%
of the fair market value of the Common Stock on the grant date. The Director
Plan provides for an initial grant of options to purchase shares of
Common Stock to each new non-employee director of the Company (an "Outside
Director") upon the later of the effective date of the Director Plan or the date
which such individual first becomes an Outside Director. In addition, each
Outside Director will automatically be granted subsequent options to purchase
5,000 shares of Common Stock at the first meeting of the Board of Directors
following the annual meeting of stockholders in each year beginning with the
1997 Annual Meeting of Stockholders if on such date, such Outside Director has
served on the Board of Directors for at least six months. The term of each such
option is ten years. Each option granted to an Outside Director vests as to 25%
of the optioned stock on the first anniversary of the date of grant and as to
1/48th of the optioned stock each month thereafter. In the event of the sale of
all or substantially all the Company's assets or the merger of the Company with
or into another corporation, all outstanding options under the Director Plan may
either be assumed or an equivalent option may be substituted by the surviving
entity. Following such assumption or substitution, if the director is terminated
other than upon a voluntary resignation, such option will vest and become
exercisable in full. If no assumption or substitution occurs, each such option
will vest and become exercisable in full. The Director Plan will terminate in
May 2007 unless sooner terminated by the Board of Directors.
401(K) PLAN
The Company participates in a tax-qualified employee savings and retirement
plan (the "401(k) Plan") which covers all of the Company's full-time employees
who are at least 21 years of age. Pursuant to the 401(k) Plan, employees may
elect to reduce their current compensation by up to the lower of 15%
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<PAGE> 55
or the statutorily prescribed annual limit and have the amount of such reduction
contributed to the 401(k) Plan. The 401(k) Plan permits additional discretionary
matching contributions by the Company on behalf of all participants in the
401(k) Plan in such a percentage amount as may be determined annually by the
Board of Directors. To date, the Company has made no such matching
contributions. The 401(k) Plan is intended to qualify under Section 401 of the
Code, so that contributions by employees or by the Company to the 401(k) Plan,
and income earned on plan contributions, are not taxable to employees until
withdrawn from the 401(k) Plan, and so that contributions by the Company, if
any, will be deductible by the Company when made. The trustee under the 401(k)
Plan, at the direction of each participant, invests the assets of the 401(k)
Plan in any of a number of investment options.
EMPLOYMENT, SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS
The Company and Richard H. Goldberg are parties to an agreement dated
September 17, 1992 and amended on December 7, 1992. Pursuant to the agreement,
Mr. Goldberg is entitled to an annual salary of $225,000 (reviewed annually), an
annual performance-based bonus and a nonstatutory stock option to purchase
250,000 shares of Common Stock with vesting over a period of five years (subject
to acceleration upon certain events). Under the agreement, in the event Mr.
Goldberg is involuntarily or constructively terminated without cause, he will be
entitled to receive a severance payment equal to his full year's salary plus the
targeted annual bonus. Upon a change in control of the Company, 50% of the
unvested portion of Mr. Goldberg's option will vest automatically. If Mr.
Goldberg is involuntarily or constructively terminated within twelve months of a
change in control, his option will accelerate and become immediately exercisable
as to all shares subject to the option. In addition, 20% of the unvested portion
of Mr. Goldberg's option will vest automatically upon the closing of this
Offering.
The Company and Paul K. Wilde are parties to an agreement dated March 27,
1991, and amended on March 29, 1991, December 10, 1992 and January 14, 1993.
Pursuant to the agreement, Mr. Wilde is entitled to an annual salary of $150,000
(reviewed annually) and an annual performance-based bonus. Under the agreement,
in the event Mr. Wilde is involuntarily or constructively terminated without
cause within six months of a change in control of the Company, Mr. Wilde will be
entitled to receive a severance payment equal to his then current annual salary.
The agreement also provides for a loan of $200,000 from the Company to finance
the purchase of Mr. Wilde's home in California. See "Certain Transactions --
Agreements with Officers and Directors." Mr. Wilde has also been granted an
option to purchase 110,000 shares of Common Stock with vesting over a period of
five years from April 15, 1991, Mr. Wilde's employment start date. Under the
employment agreement, Mr. Wilde's option will accelerate and become immediately
exercisable as to all 110,000 shares subject to the option if Mr. Wilde is
involuntarily or constructively terminated within six months of a change in
control of the Company.
The Company and William R. Yeack are parties to an agreement dated January
2, 1996. Pursuant to the agreement, Mr. Yeack is entitled to an annual salary of
$200,000 (reviewed annually), a performance-based bonus and a nonstatutory stock
option to purchase 100,000 shares of Common Stock with vesting over a period of
four years. Upon the closing of this Offering, up to 25,000 shares subject to
Mr. Yeack's option will automatically vest. Upon his involuntary or constructive
termination without cause, Mr. Yeack will be entitled to a severance payment as
follows: (i) if such termination occurs prior to a change in control of the
Company, the severance payment will be equal to six months' salary; or (ii) if
such termination occurs within one year following a change in control, the
severance payment will be equal to a full year's salary and Mr. Yeack's option
will accelerate to become exercisable for one-half of the total number of the
unvested shares subject to the option.
The Company and Kevin Kilroy are parties to an agreement dated May 15,
1997. Pursuant to the agreement, Mr. Kilroy is entitled to an annual salary of
$200,000 (reviewed annually), a performance-based bonus and, subject to board of
directors' approval, a nonstatutory stock option to purchase 100,000 shares of
Common Stock at an exercise price equal to the fair market value of the Common
Stock on the date of grant. Mr. Kilroy's option will vest over four years. The
agreement also provides that upon his involuntary or constructive termination
without cause, Mr. Kilroy will be entitled to a severance payment equal to his
annual salary, provided such termination occurs either prior to, or within one
year
54
<PAGE> 56
following, a change in control of the Company. In addition, upon a change in
control of the Company, 25,000 shares subject to Mr. Kilroy's option will vest
immediately. Moreover, if Mr. Kilroy is involuntarily or constructively
terminated within one year of such change in control, 50% of the then-unvested
shares subject to Mr. Kilroy's option will vest immediately. The Company has
also agreed to reimburse Mr. Kilroy for up to $63,000 in relocation expenses.
The Company and Duncan Moore are parties to an agreement dated January 28,
1997 governing Mr. Moore's resignation as an executive officer of the Company.
Mr. Moore resigned as President of Synon Europe Limited, effective December 31,
1996. Pursuant to the agreement and in connection with Mr. Moore's resignation,
Mr. Moore was paid a total of UK L138,000, which amount included a severance
payment of UK L116,000 (equal to one year's base salary), a discretionary bonus
and accrued holiday pay. As additional severance consideration, and in exchange
for Mr. Moore's agreement not to compete with or solicit employees from the
Company, the Company agreed to extend through November 30, 1997 the
exercisability of vested options held by Mr. Moore to acquire 110,000 shares of
the Company's Common Stock.
The Company and Simon Williams, the Company's former Vice President,
Development and Chief Technology Officer, are parties to an agreement dated July
28, 1994 (the "Williams Agreement"), pursuant to which Mr. Williams is entitled
to a base salary of UK L125,000 per year and a commission equal to 2% of all
license and maintenance revenue received by the Company with respect to the
Obsydian product (1% following Mr. Williams' leaving the Company). The Williams
Agreement was entered into in connection with the Company's acquisition of Dysys
Limited. Mr. Williams resigned his positions effective December 31, 1996 and
thus no longer receives a salary from the Company. However, Mr. Williams will
continue to receive a 1% Obsydian commission until June 30, 1999, and after such
time will receive a 1% commission with respect to any Obsydian-related contracts
entered into prior June 30, 1999. See "Certain Transactions -- Dysys Agreement."
The Company's 1990 Plan provides for the accelerated vesting of shares of
Common Stock subject to outstanding options held by Company employees, including
the Named Executive Officers, in connection with certain changes in control of
the Company. See "-- Stock Plans -- 1990 Stock Plan."
LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS
The Company has adopted provisions in its Certificate of Incorporation that
eliminate to the fullest extent permissible under Delaware law the liability of
its directors to the Company for monetary damages. Such limitation of liability
does not affect the availability of equitable remedies such as injunctive relief
or rescission. The Company's Bylaws provide that the Company shall indemnify its
directors and officers, and may indemnify its other employees and agents, to the
fullest extent permitted by Delaware law, including in circumstances in which
indemnification is otherwise discretionary under Delaware law. The Company has
entered into indemnification agreements with its officers and directors
containing provisions which may require the Company, among other things, to
indemnify the officers and directors against certain liabilities that may arise
by reason of their status or service as directors or officers (other than
liabilities arising from willful misconduct of a culpable nature), and to
advance their expenses incurred as a result of any proceeding against them as to
which they could be indemnified.
There is no currently pending litigation or proceeding involving a
director, officer, employee or other agent of the Company in which
indemnification would be required or permitted. The Company is not aware of any
threatened litigation or proceeding which may result in a claim for such
indemnification.
55
<PAGE> 57
CERTAIN TRANSACTIONS
AGREEMENTS WITH OFFICERS AND DIRECTORS
Synon has employment agreements with certain of its Named Executive
Officers. See "Management -- Employment, Severance and Change in Control
Arrangements."
On March 27, 1991, Synon entered into an agreement with Paul K. Wilde, the
Company's Vice President, Finance and Administration, Chief Financial Officer
and Secretary, whereby Synon agreed to lend $200,000 to Mr. Wilde for the
purchase of a new principal residence pursuant to a five-year recourse
promissory note that bears interest at 8% per annum. The note, which was
executed in September 1992 and amended on January 14, 1992, was secured by a
junior security interest in the residence. Synon agreed to forgive the amount of
principal due on the note over the course of five years beginning on April 15,
1991 (Mr. Wilde's employment start date) at the rate of 1/60th of the principal
balance per month. Synon agreed to forgive the amount of interest due on the
note in the form of annual bonus payments equal to the amount of interest due.
The final remaining principal balance was forgiven on April 15, 1996.
Pursuant to an offer letter from the Company dated April 14, 1993, John F.
Rockart, a director of the Company, is entitled to receive consulting fees at an
annual rate of $15,000, payable monthly, in exchange for his services as a
member of the Board of Directors. In addition, the Company granted Mr. Rockart
an option to purchase 10,000 shares of its Common Stock at an exercise price of
$2.86 per share. See "Management -- Director Compensation."
DYSYS AGREEMENT
Pursuant to the Dysys Agreement, the Company purchased from Simon Williams
and Melinda Horton, founders and major stockholders of the Company, all of the
issued share capital of Dysys for UK L147,542, of which UK L73,771 was paid to
Mr. Williams. In addition, the Company repaid UK L95,871 in loans made by Mr.
Williams and Ms. Horton to Dysys. Of this amount, UK L58,951 was repaid to Mr.
Williams. In connection with this transaction, the Company acquired from Dysys
certain intellectual property which was included in the Company's Obsydian
product. The Company also entered into employment agreements with each of Mr.
Williams and Ms. Horton, pursuant to which the Company currently incurs a
liability to pay Mr. Williams and Ms. Horton a 1.0% and 0.5% commission,
respectively, on Obsydian license and maintenance revenue for all transactions
entered into by the Company during the five year period from July 1, 1994 until
June 30, 1999. The commissions due to Mr. Williams and Ms. Horton originally
were 2.0% and 1.0%, respectively. However, their employment agreements each
provided that, upon voluntary termination of their employment, the commissions
would be reduced by half. Mr. Williams and Ms. Horton resigned their positions
with the Company in December 1996. Commissions earned by Mr. Williams under his
employment agreement during 1994, 1995 and 1996 were $66,000, $205,000 and
$301,000, respectively. Under the Dysys Agreement, Mr. Williams and Ms. Horton
also retain certain rights with respect to the intellectual property, including
the non-exclusive right to use and exploit it in the event of certain defaults
by the Company, including failure to pay commissions required in connection with
the Dysys Agreement.
PREFERRED STOCK SALES
In September 1991, General Atlantic Partners II, L.P. ("GAP II"), a major
stockholder of the Company, purchased 2,776,120 (pre-conversion) shares of the
Company's Series D Preferred Stock at a purchase price of $3.35 per share as
part of a financing with other investors. In connection with such financing, GAP
II also exchanged previously held shares of the Company's capital stock for an
aggregate of 827,098 (pre-conversion) additional shares of Preferred Stock and
received certain registration rights with respect to the Company's Common Stock
owned by it. The Company's Certificate of Incorporation provides that, upon
conversion, holders of Series D Preferred Stock are entitled to receive
additional conversion consideration in the amount of $3.35 per share, payable
either in cash or in equity securities of
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<PAGE> 58
the Company. Currently, the Company has 3,618,269 shares of Series D Preferred
Stock issued and outstanding, of which 3,260,060 shares are held by GAP II.
Thus, upon the closing of this Offering and the conversion of all outstanding
shares of Preferred Stock, the holders of Series D Preferred Stock will receive
shares of Common Stock worth approximately $12,121,201, of which amount
approximately $10,921,201 will be issuable to GAP II. Directors Grabe and
Hodgson are managing members of General Atlantic Partners, LLC, the general
partner of GAP II. See "Management -- Executive Officers, Directors and Key
Employees" and "Description of Capital Stock -- Registration Rights."
On August 28, 1992, IBM purchased 1,666,667 (pre-conversion) shares of the
Company's Series E Preferred Stock at a price of $3.00 per share pursuant to a
stock purchase agreement (the "Stock Purchase Agreement"). As originally
executed, the Stock Purchase Agreement, among other things, granted IBM a right
of first refusal with respect to change in control transactions, a right to
require the Company to repurchase its shares of Series E Preferred Stock in
certain circumstances and the right to nominate an individual to the Company's
Board of Directors (collectively, the "IBM Rights"). IBM has never exercised its
right to nominate a director. Mr. William M. Stuek, General Manager of
Operations for IBM North America, serves on the Company's Board of Directors,
but does so in his personal capacity at the request of GAP II, and is not
serving at the request of IBM and does not represent IBM in this capacity. On
May 28, 1997, the Company and IBM entered into an amendment to the Stock
Purchase Agreement pursuant to which IBM agreed to the automatic termination of
the IBM Rights effective and contingent upon the closing of this Offering.
STOCKHOLDERS AGREEMENT
The Company, IBM, GAP II, Simon Williams, director William O. Grabe, and
several other significant stockholders (collectively, the "Stockholder Parties")
are parties to a Third Amended and Restated Stockholders Agreement (the
"Stockholders Agreement") dated June , 1997, pursuant to which the Stockholder
Parties were granted a right of first refusal to purchase any future voting
securities offered by the Company (excluding shares issued in a firm commitment
underwritten public offering). Certain Stockholder Parties were also granted the
right to elect one or more persons to the Company's Board of Directors. These
stockholder rights will automatically terminate upon the closing of this
Offering. The Stockholders Agreement also entitles the Stockholder Parties to
certain registration rights with respect to the Company's Common Stock owned by
them. See "Description of Capital Stock -- Registration Rights."
AGREEMENTS WITH IBM
The Company and IBM's AS/400 division are parties to an agreement dated
December 20, 1996, pursuant to which the Company agreed to develop and IBM's
AS/400 division agreed to partially fund a Synon/2E and Obsydian
internet/intranet enablement using a Java generator on the IBM AS/400. The
agreement provides for IBM's AS/400 division to pay the Company up to $200,000,
subject to the Company's attainment of certain development milestones. As of
March 31, 1997, the Company had accrued $140,000 under this agreement.
On September 27, 1990, the Company and IBM's AS/400 division entered into a
Development Incentive Agreement (the "Development Agreement") pursuant to which
IBM's AS/400 division loaned the Company $1.5 million to assist in the
development of an application generator tool for the IBM AS/400. The loan
initially was interest-free. However, in connection with IBM's purchase of
shares of the Company's Series E Preferred Stock in August 1992, the Company and
IBM agreed that, beginning January 1, 1994, the loan would accrue interest at 8%
per annum. The Company and IBM also agreed to extend the loan repayment schedule
and to provide for repayment of the loan in twelve increasing quarterly
installments beginning in March 1994. In December 1996, the Company made its
final loan payment to IBM under the Development Agreement.
The Company and CGI, a subsidiary of IBM, are parties to a distributorship
agreement dated January 8, 1996 pursuant to which CGI is designated as a
non-exclusive distributor in Germany for the
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<PAGE> 59
Company's products. Under the agreement, CGI licenses products from the Company,
grants sublicenses to such products to end-user customers and provides
maintenance and first-level technical support to such end-users. CGI has the
right to appoint sub-distributors, subject to the prior written approval of the
Company. The distributorship agreement also provides that CGI shall pay to the
Company a commission on all license and maintenance agreements. The agreement is
due to expire on January 8, 2001, however either party may terminate with 90
days' written notice upon the third, fourth or fifth anniversary of the date of
the agreement, and the Company may unilaterally terminate earlier for CGI's
breach, failure to meet the sales quota for two consecutive quarters,
insolvency, bankruptcy, change of control or an unauthorized assignment.
The Company and IBM are parties to a Software Vendor Marketing Programs
Agreement dated March 7, 1997. Under this agreement, IBM has agreed to market
Obsydian as an application development solution. In exchange, the Company has
agreed to pay IBM a fee based on a percentage of the total license revenue
received by the Company on certain transactions under user agreements entered
into as a result of IBM's marketing efforts.
The Company and IBM's AS/400 division are parties to a sponsored
development agreement dated April 1, 1997 (the "JumpStart Agreement"), pursuant
to which IBM's AS/400 division has agreed to assist the Company in the
development of four business object Class Libraries which can be assembled and
deployed through Obsydian. IBM's AS/400 division has agreed to provide the
necessary equipment, facilities and funding to support the joint project. In
exchange, the Company has agreed to pay IBM a royalty based on a percentage of
the Company's published sales price for each copy of Class Library licensed,
supported or sold for a period of two years after the general availability of
each Class Library. In connection with the JumpStart Agreement, the Company
contracted with CGI Systems Inc., a subsidiary of IBM, to provide two
application consultants to work on the joint development project with IBM in its
JumpStart Lab in Rochester, Minnesota. The estimated total value of this
engagement is $300,000.
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<PAGE> 60
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding to the
beneficial ownership of the Company's Common Stock as of March 31, 1997 and as
adjusted to reflect the sale of the shares of Common Stock offered hereby
( shares, assuming the full exercise of the Underwriters over-allotment
option) by (i) each person or entity who is known by the Company to own
beneficially 5% or more of the Company's outstanding Common Stock; (ii) each
director of the Company; (iii) each of the Named Executive Officers; (iv) all
directors and executive officers of the Company as a group; and (v) the other
Selling Stockholders.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
OFFERED MAXIMUM
(EXCLUDING NUMBER OF
SHARES SHARES
OFFERED OFFERED
PURSUANT PURSUANT
TO TO
BENEFICIAL OWNERSHIP UNDERWRITERS' UNDERWRITERS' BENEFICIAL OWNERSHIP
PRIOR TO OFFERING(2) OVER- OVER- AFTER OFFERING(2)
-------------------- ALLOTMENT ALLOTMENT ------------------------
NAME AND ADDRESS(1) NUMBER PERCENT OPTION) OPTION NUMBER PERCENT
- ---------------------- ---------- ------- --------- ---------- -------------- -------
<S> <C> <C> <C> <C> <C> <C>
PRINCIPAL
STOCKHOLDERS:
General Atlantic 3,688,280 49.6
Partners II,
L.P.(3).............
3 Pickwick Plaza
Greenwich, CT 06830
Simon Williams........ 995,158 13.4
3 Butlers Wharf Road
West
40 Shad Thames
London SE1 2YA
United Kingdom
International Business 833,333 11.2
Machines
Corporation.........
1133 Westchester
Avenue
White Plains, NY
10604
Nicholas Knowles(4)... 442,875 6.0
45 Thornhill Road
London N1 IJ5
United Kingdom
Simon Haigh........... 390,258 5.2
Asset Cornerstone
Technologies
77 West 200 Street,
Suite 500
Salt Lake City, UT
84101
</TABLE>
59
<PAGE> 61
<TABLE>
<CAPTION>
NUMBER OF
SHARES
OFFERED MAXIMUM
(EXCLUDING NUMBER OF
SHARES SHARES
OFFERED OFFERED
PURSUANT PURSUANT
TO TO
BENEFICIAL OWNERSHIP UNDERWRITERS' UNDERWRITERS' BENEFICIAL OWNERSHIP
PRIOR TO OFFERING(2) OVER- OVER- AFTER OFFERING(2)
-------------------- ALLOTMENT ALLOTMENT ------------------------
NAME AND ADDRESS(1) NUMBER PERCENT OPTION) OPTION NUMBER PERCENT
- ---------------------- ---------- ------- --------- ---------- -------------- -------
<S> <C> <C> <C> <C> <C> <C>
OFFICERS AND
DIRECTORS:
Richard H. 249,167 3.3
Goldberg(5).........
William R. Yeack(6)... 26,667 *
Paul K. Wilde(7)...... 115,000 1.5
Duncan Moore(8)....... 115,000 1.5
Kevin Kilroy.......... 0 *
William O. Grabe(9)... 3,898,280 52.4
David C. Hodgson(10).. 3,688,280 49.6
John F. Rockart(11)... 9,709 *
William M. 25,000 *
Stuek(12)...........
All executive officers 4,375,614 60.4
and directors as a
group (10
persons)(13)........
OTHER SELLING STOCKHOLDERS:
</TABLE>
- ---------------
* Less than 1%.
(1) Unless otherwise indicated, the address for each listed stockholder is c/o
Synon Corporation, 1100 Larkspur Landing Circle, Larkspur, California,
94939. Except as otherwise indicated, and subject to applicable community
property laws, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock held by them.
(2) Applicable percentage ownership is based on 7,439,745 shares of Common
Stock outstanding as of March 31, 1997 and shares immediately
following the closing of this Offering (assuming the exercise in full of
the Underwriters' over-allotment option), together with applicable options
for such shareholder. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission and generally includes
voting or investment power with respect to securities, subject to community
property laws, where applicable. Shares of Common Stock subject to options
that are presently exercisable or exercisable within 60 days of March 31,
1997 are deemed to be beneficially owned by the person holding such options
for the purpose of computing the percentage of ownership of such person but
are not treated as outstanding for the purpose of computing the percentage
of any other person. To the extent that any shares are issued upon exercise
of options, warrants or other rights to acquire the Company's capital stock
that are presently outstanding or granted in the future or reserved for
future issuance under the Company's stock plans, there will be further
dilution to new public investors.
(3) Includes 3,522,900 shares of Common Stock owned directly by General
Atlantic Partners II, L.P. ("GAP II"). Also includes 140,135 shares of
Common Stock owned by GAP-Synon Partners, L.P.
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<PAGE> 62
("GAP-Synon") and 25,245 shares of Common Stock owned by GAP Coinvestment
Partners, L.P. ("GAPCO"). The foregoing persons are a group within the
meaning of Rule 13d-5 of the Exchange Act and each of GAP II, GAP-Synon and
GAPCO may be deemed to be the beneficial owner of shares of Common Stock
held by the other. The general partner of GAP II is General Atlantic
Partners, LLC ("GAP LLC"). The managing members of GAP LLC, including
directors Hodgson and Grabe, are also the general partners of GAPCO. In
addition, Stephen P. Reynolds, a managing member of GAP LLC, is the general
partner of GAP-Synon. In addition to the 3,688,280 shares beneficially
owned by GAP II and its affiliates prior to the Offering, GAP II and its
affiliates will be entitled to receive upon the closing of the Offering a
number of shares of Common Stock worth approximately $10,921,201 as
additional conversion consideration for the shares of Series D Preferred
Stock held by them. See "Certain Transactions -- Preferred Stock Sales."
(4) Includes 12,500 shares owned by Catherine Alison Jane Knowles as to which
Mr. Knowles disclaims beneficial ownership.
(5) Includes 20,000 shares of Common Stock owned by the Goldberg Family Trust
UTD 2/21/96, of which Mr. Goldberg is co-trustee and 229,167 shares of
Common Stock issuable upon exercise of outstanding stock options which are
presently exercisable or will become exercisable within 60 days of March
31, 1997.
(6) Includes 26,667 shares of Common Stock issuable upon exercise of
outstanding stock options which are presently exercisable or will become
exercisable within 60 days of March 31, 1997.
(7) Includes 110,000 shares of Common Stock issuable upon exercise of
outstanding stock options which are presently exercisable or will become
exercisable within 60 days of March 31, 1997.
(8) Includes 110,000 shares of Common Stock issuable upon exercise of
outstanding stock options which are presently exercisable or will become
exercisable within 60 days of March 31, 1997.
(9) Includes 180,000 shares of Common Stock issuable upon exercise of
outstanding stock options which are presently exercisable or will become
exercisable within 60 days of March 31, 1997. Also includes 5,000 shares
owned by Mr. Grabe's wife, Joan Grabe, and 2,500 shares each owned by Lisa
Grabe and Laura Grabe, Mr. Grabe's minor children. Mr. Grabe disclaims
beneficial ownership as to the shares held of record by his wife and minor
children. Beneficial ownership totals for Mr. Grabe also include: (i)
3,522,900 shares of Common Stock owned by GAP II, (ii) 140,135 shares of
Common Stock owned by GAP-Synon, (iii) 25,245 shares of Common Stock owned
by GAPCO, and (iv) upon the closing of the Offering, an additional number
of shares of Common Stock worth approximately $10,921,201 issuable to GAP
II and its affiliates as additional conversion consideration for the Shares
of Series D Preferred Stock held by them (see note 3). Mr. Grabe disclaims
beneficial ownership of all shares held of record by GAP II, GAPCO and
GAP-Synon.
(10) Includes the following amounts: (i) 3,522,900 shares of Common Stock owned
by GAP II, (ii) 140,135 shares of Common Stock owned by GAP-Synon, (iii)
25,245 shares of Common Stock owned by GAPCO, and (iv) upon the closing of
the Offering, an additional number of shares of Common Stock worth
approximately $10,921,201 issuable to GAP II and its affiliates as
additional conversion consideration for the Shares of Series D Preferred
Stock held by them (see note 3). Mr. Hodgson disclaims beneficial ownership
of all shares held of record by GAP II, GAPCO and GAP-Synon.
(11) Includes 9,709 shares of Common Stock issuable upon exercise of outstanding
stock options which are presently exercisable or will become exercisable
within 60 days of March 31, 1997.
(12) Includes 12,500 shares of Common Stock issuable upon exercise of
outstanding stock options which are presently exercisable or will become
exercisable within 60 days of March 31, 1997.
(13) Includes 619,835 shares of Common Stock issuable upon exercise of
outstanding stock options which are presently exercisable or will become
exercisable within 60 days of March 31, 1997. Also includes the following
shares as to which beneficial ownership may be attributed to directors
Grabe and Hodgson: (i) 3,522,900 shares of Common Stock owned by GAP II,
(ii) 140,135 shares of Common Stock owned by GAP-Synon, (iii) 25,245 shares
of Common Stock owned by GAPCO, and (iv) upon the closing of the Offering,
an additional number of shares of Common Stock worth approximately
$10,921,201 issuable to GAP II and its affiliates as additional conversion
consideration for the Shares of Series D Preferred Stock held by them (see
note 3). Directors Grabe and Hodgson disclaim beneficial ownership of all
shares held of record by GAP II, GAPCO and GAP-Synon.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
Upon the closing of this Offering, the Company will be authorized to issue
50,000,000 shares of Common Stock, $0.001 par value, and 5,000,000 shares of
undesignated Preferred Stock, $0.001 par value. Based upon shares outstanding as
of March 31, 1997 and assuming no exercise of the Underwriters' over-allotment
option, the Company estimates that immediately after the closing of this
Offering there will be an aggregate of shares of Common Stock
outstanding, shares of Common Stock will be issuable upon exercise of
outstanding options and no shares of Preferred Stock will be issued and
outstanding.
The following description of the Company's capital stock does not purport
to be complete and is subject to and qualified in its entirety by the Company's
Amended and Restated Certificate of Incorporation and Bylaws, which are included
as exhibits to the Registration Statement of which this Prospectus forms a part,
and by the provisions of applicable Delaware law.
The Amended and Restated Certificate of Incorporation and Bylaws contain
certain provisions that are intended to enhance the likelihood of continuity and
stability in the composition of the Board of Directors and which may have the
effect of delaying, deferring, or preventing a future takeover or change in
control of the Company unless such takeover or change in control is approved by
the Board of Directors.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on all matters
to be voted upon by the stockholders. Holders of Common Stock do not have
cumulative voting rights, and, therefore, holders of a majority of the shares
voting for the election of directors can elect all of the directors. In such
event, the holders of the remaining shares will not be able to elect any
directors.
Holders of the Common Stock are entitled to receive such dividends as may
be declared from time to time by the Board of Directors out of funds legally
available therefor, subject to the terms of any existing or future agreements
between the Company and its debtholders. The Company has never declared or paid
cash dividends on its capital stock, expects to retain future earnings, if any,
for use in the operation and expansion of its business, and does not anticipate
paying any cash dividends in the foreseeable future. In addition, the Company's
bank line of credit agreement contains a restrictive covenant that limits the
Company's ability to pay cash dividends or make certain stock repurchases
without the prior written consent of the lender. See "Dividend Policy." In the
event of the liquidation, dissolution or winding up of the Company, the holders
of Common Stock are entitled to share ratably in all assets legally available
for distribution after payment of all debts and other liabilities and subject to
the prior rights of any holders of Preferred Stock then outstanding.
PREFERRED STOCK
Effective upon the closing of this Offering, the Company will be authorized
to issue 5,000,000 shares of undesignated Preferred Stock. The Board of
Directors has the authority to issue the Preferred Stock in one or more series
and to fix the price, rights, preferences, privileges and restrictions thereof,
including dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption, redemption prices, liquidation preferences and the number
of shares constituting a series or the designation of such series, without any
further vote or action by the Company's stockholders. The issuance of Preferred
Stock, while providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of delaying,
deferring or preventing a change in control of the Company without further
action by the stockholders and may adversely affect the market price of, and the
voting and other rights of, the holders of Common Stock. The issuance of
Preferred Stock with voting and conversion rights may adversely affect the
voting power of the holders of Common Stock, including the loss of voting
control to others. The Company has no current plans to issue any shares of
Preferred Stock.
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ANTITAKEOVER EFFECTS OF PROVISIONS OF CERTIFICATE OF INCORPORATION AND BYLAWS
The Company's Amended and Restated Certificate of Incorporation provides
that all stockholder actions must be effected at a duly called annual or special
meeting and may not be effected by written consent. The Company's Bylaws provide
that, except as otherwise required by law, special meetings of the stockholders
can only be called pursuant to a resolution adopted by a majority of the Board
of Directors, by the Chairman of the Board of Directors, by the Chief Executive
Officer of the Company or by stockholders holding shares in the aggregate
entitled to cast not less than 20% of the votes at such meeting. In addition,
the Company's Bylaws establish an advance notice procedure for stockholder
proposals to be brought before an annual meeting of stockholders, including
proposed nominations of persons for election to the Board. Stockholders at an
annual meeting may only consider proposals or nominations specified in the
notice of meeting or brought before the meeting by or at the direction of the
Board of Directors or by a stockholder who was a stockholder of record on the
record date for the meeting, who is entitled to vote at the meeting and who has
delivered timely written notice in proper form to the Company's Secretary of the
stockholder's intention to bring such business before the meeting.
The foregoing provisions of the Company's Amended and Restated Certificate
of Incorporation and Bylaws are intended to enhance the likelihood of continuity
and stability in the composition of the Board of Directors and in the policies
formulated by the Board of Directors and to discourage certain types of
transactions which may involve an actual or threatened change of control of the
Company. Such provisions are designed to reduce the vulnerability of the Company
to an unsolicited acquisition proposal and, accordingly, could discourage
potential acquisition proposals and could delay or prevent a change in control
of the Company. Such provisions are also intended to discourage certain tactics
that may be used in proxy fights but could, however, have the effect of
discouraging others from making offers for the Company's shares and,
consequently, may also inhibit fluctuations in the market price of the Company's
shares that could result from actual or rumored takeover attempts. These
provisions may also have the effect of preventing changes in the management of
the Company. See "Risk Factors -- Effect of Certain Charter Provisions;
Antitakeover Effects of Certificate of Incorporation, Bylaws and Delaware Law."
EFFECT OF DELAWARE ANTITAKEOVER STATUTE
The Company is subject to Section 203 of the Delaware General Corporation
Law (the "Antitakeover Law"), which regulates corporate acquisitions. The
Antitakeover Law prevents certain Delaware corporations, including those whose
securities are listed for trading on the Nasdaq National Market, from engaging,
under certain circumstances in a "business combination" with any "interested
stockholder" for three years following the date that such stockholder became an
interested stockholder. For purposes of the Antitakeover Law, a "business
combination" includes, among other things, a merger or consolidation involving
the Company and the interested shareholder and the sale of more than ten percent
(10%) of the Company's assets. In general, the Antitakeover Law defines an
"interested stockholder" as any entity or person beneficially owning 15% or more
the outstanding voting stock of the Company and any entity or person affiliated
with or controlling or controlled by such entity or person. A Delaware
corporation may "opt out" of the Antitakeover Law with an express provision in
its original certificate of incorporation or an express provision in its
certificate of incorporation or bylaws resulting from amendments approved by the
holders of at least a majority of the Company's outstanding voting shares. The
Company has not "opted out" of the provisions of the Antitakeover Law. See "Risk
Factors -- Effect of Certain Charter Provisions; Antitakeover Effects of
Certificate of Incorporation, Bylaws and Delaware Law."
REGISTRATION RIGHTS
After the closing of this Offering and upon expiration of lock-up
agreements with the Underwriters, the holders of shares of Common
Stock will be entitled to certain rights with respect to the registration of
such shares under the Securities Act. Under the terms of the Stockholders
Agreement, if the Company proposes to register any of its securities under the
Securities Act, either for its own account or for the account of other
securities holders exercising registration rights, such holders are entitled to
notice of such registration and are entitled to include certain of their shares
of Common Stock therein.
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Holders of registration rights may also require the Company to file a
registration statement under the Securities Act at the Company's expense with
respect to their shares of Common Stock, and the Company is required to use its
best efforts to effect such registration. Further, holders may require the
Company to file registration statements on Form S-3 at the Company's expense
when such form becomes available for use to the Company. All such registration
rights are subject to certain conditions and limitations, including the right of
the underwriters of an offering to limit the number of shares to be included in
such registration.
TRANSFER AGENT
The Transfer Agent and Registrar for the Common Stock is ChaseMellon
Shareholder Services LLC, 50 California Street, 10th Floor, San Francisco,
California 94111, telephone (415)956-9512.
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<PAGE> 66
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this Offering, there has been no market for the Common Stock and
there is no assurance that a significant public market for the Common Stock will
develop or be sustained after this Offering. Sales of substantial amounts of
Common Stock in the public market could adversely affect the market price of the
Common Stock and could impair the Company's future ability to raise capital
through the sale of its equity securities.
Upon the closing of this Offering, the Company will have outstanding
shares of Common Stock based upon shares outstanding as of March 31,
1997. In addition to the shares of Common Stock offered hereby
( if the Underwriters' over-allotment option is exercised in full), as
of the effective date of the Registration Statement (the "Effective Date"),
there will be shares of Common Stock outstanding (excluding 1,366,730
shares issuable upon the exercise of outstanding options), all of which are
"restricted" shares (the "Restricted Shares") under the Securities Act of 1933,
as amended (the "Securities Act"). Such Restricted Shares may be sold only if
registered under the Securities Act or sold in accordance with an available
exemption from such registration. Approximately of the Restricted
Shares will be freely tradeable without restriction immediately following the
Effective Date pursuant to Rule 144(k) of the Securities Act by persons who are
not "affiliates" of the Company as the term is defined in Rule 144.
Effective April 29, 1997, under Rule 144, a person (or persons whose shares
are aggregated in accordance with the Rule) who has beneficially owned his or
her shares for at least one year, including persons who are affiliates of the
Company, would be entitled to sell, within any three month period a number of
shares of Common Stock that does not exceed the greater of (i) one percent of
the then outstanding number of shares of Common Stock (up to shares of
Common Stock immediately after the consummation of the Offering) or (ii) the
average weekly trading volume of the shares during the four calendar weeks
preceding each such sale. In addition, sales under Rule 144 are also subject to
certain manner of sale provisions and notice requirements and to the
availability of current public information about the Company. After shares are
held for two years, a person who is not an affiliate of the Company is entitled
to sell such shares under Rule 144 without regard to such volume limitations, or
manner of sale, notice or public information requirements under Rule 144. Sales
of shares by affiliates will continue to be subject to such volume limitations,
and manner of sale, notice and public information requirements. Under Rule 701,
shares issued under certain compensatory stock-based plans, such as the 1990
Plan and the Executive Scheme, may be resold under Rule 144 by nonaffiliates
subject only to the manner of sale requirements, and by affiliates without
regard to the two-year holding period requirements, commencing 90 days after the
date of this Offering.
The Company, its officers and directors and certain holders of Common Stock
and options to purchase Common Stock have each agreed with the Underwriters not
to offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, or announce the offering of, or file or cause to be filed, any
registration statements (other than, in the Company's case, a registration
statement on Form S-8) under the Securities Act, with respect to any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock, except in certain cases as to shares acquired after the
Offering, or enter into any swap or other agreement that transfers, in whole or
in part, the economic consequences of ownership of the Common Stock for a period
of 180 days after the date of the Underwriting Agreement without the prior
written consent of Salomon Brothers Inc. Certain other holders of Common Stock
and options to purchase Common Stock have agreed pursuant to existing agreements
with the Company not to sell or otherwise transfer or dispose of any Common
Stock for a period of 180 days after the effective date of this Offering.
Beginning 180 days after the Effective Date, approximately
additional Restricted Shares of Common Stock subject to the lock-up agreements
will become eligible for sale in the public market (unless the Representatives
elect, in their sole discretion, the earlier release of such shares from the
lock-up agreement) pursuant to Rule 144.
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After the Offering pursuant to this Prospectus, the holders of
shares of Common Stock, or their transferees, will be entitled to certain rights
with respect to the registration of such shares under the Securities Act. See
"Description of Capital Stock -- Registration Rights." Registration of such
shares under the Securities Act would result in such shares becoming freely
tradeable without restriction under the Securities Act (except for shares
purchased by affiliates under Rule 144) immediately upon the effectiveness of
such registration.
The Company intends to file registration statements on Form S-8 shortly
after this Offering to cover shares of Common Stock which have been reserved for
issuance under the 1990 Plan, Executive Scheme, 1997 Incentive Stock Plan,
Purchase Plan and 1997 Director Option Plan. Shares so registered will be
eligible for sale by non-affiliates in the public market without limitation and
by affiliates subject to the provisions of Rule 144, except for the holding
period limitation. Shares of Common Stock issued upon exercise of options after
the effective date of the Form S-8 will be available for sale in the public
market, subject to Rule 144 limitations and lock-up agreements. Beginning 180
days after the Effective Date, shares issuable upon the exercise of
vested options will be eligible for sale.
Rule 144A under the Securities Act would permit the immediate sale of
Restricted Shares to qualified institutional buyers, subject to compliance with
conditions of the Rule.
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UNDERWRITING
Upon the terms and subject to the conditions set forth in the Underwriting
Agreement, the Company and the Selling Stockholders have agreed to sell to each
of the Underwriters named below (the "Underwriters"), for whom Salomon Brothers
Inc and Volpe, Brown, Whelan & Company, LLC are acting as representatives (the
"Representatives"), and each of such Underwriters has severally agreed to
purchase from the Company and the Selling Stockholders the respective number of
shares of Common Stock set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
----------------------------------------------------------------- ---------
<S> <C>
Salomon Brothers Inc.............................................
Volpe Brown Whelan & Company, LLC................................
---------
Total..................................................
=========
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all the
Shares offered hereby (other than those subject to the over-allotment option
described below) if any such Shares are purchased. In the event of a default by
an Underwriter, the Underwriting Agreement provides that, in certain
circumstances, the purchase commitments of the non-defaulting Underwriters may
be increased or the Underwriting Agreement may be terminated.
The Representatives have advised the Company and the Selling Stockholders
that the several Underwriters propose initially to offer the Shares to the
public at the price to public set forth on the cover page of this Prospectus and
to certain dealers at such price less a concession not in excess of $
per share. The Underwriters may allow and such dealers may reallow a concession
not in excess of $ per share to other dealers. After the initial public
Offering, the price to public and such concessions may be changed.
Certain Selling Stockholders have granted the Underwriters an option,
exercisable within 30 days of the date of this Prospectus, to purchase up to
additional shares of Common Stock at the same price per share as the
initial shares of Common Stock to be purchased by the Underwriters.
The Underwriters may exercise such option only to cover over-allotments, if any,
incurred in connection with the Offering. To the extent the Underwriters
exercise such option, each Underwriter will have a firm commitment, subject to
certain conditions, to purchase the same proportion of such additional shares of
Common Stock as the number of shares of Common Stock to be purchased and offered
by such Underwriter in the table above bears to the total number of shares of
Common Stock initially offered by the Underwriters hereby.
The Underwriting Agreement provides that the Company and the Selling
Stockholders, jointly and severally, will indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act, or
contribute to payments the Underwriters may be required to make in respect
thereof.
In connection with this Offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M, pursuant to which such persons may bid for or
purchase Common Stock for the purpose of stabilizing its market price. The
Underwriters also may create a short position for the account of the
Underwriters by selling more Common Stock in connection with the Offering than
they are committed to purchase from the Company and the Selling Stockholders,
and in such case may purchase Common Stock in the open market following
completion of the Offering to cover all or a portion of such
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short position. The Underwriters may also cover all or a portion of such short
position, up to shares of Common Stock, by exercising the
Underwriters' over-allotment option referred to above. In addition, Salomon
Brothers Inc, on behalf of the Underwriters, may impose "penalty bids" under
contractual arrangements with the Underwriters whereby it may reclaim from an
Underwriter (or dealer participating in the Offering) for the account of the
other Underwriters, the selling concession with respect to Common Stock that is
distributed in the Offering but subsequently purchased for the account of the
Underwriters in the open market. Any of the transactions described in this
paragraph may result in the maintenance of the price of the Common Stock at a
level above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if they are
undertaken, they may be discontinued at any time.
The Company, its officers and directors and certain holders of Common Stock
and options to purchase Common Stock have each agreed with the Underwriters not
to offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, or announce the offering of, or file or, cause to be filed, any
registration statement (other than, in the Company's case, a registration
statement on Form S-8) under the Securities Act, with respect to any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock, except in certain cases as to shares acquired after the
Offering, or enter into any swap or other agreement that transfers, in whole or
in part, the economic consequences of ownership of the Common Stock for a period
of 180 days after date of the Underwriting Agreement without the prior written
consent of Salomon Brothers Inc. Certain other holders of Common Stock and
options to purchase Common Stock have agreed pursuant to existing agreements
with the Company not to sell or otherwise transfer or dispose of any Common
Stock for a period of 180 days after the effective date of this Offering.
The Underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority.
Prior to this Offering, there has been no public market for the Common
Stock. Accordingly, the initial public offering price for the Common Stock was
determined by negotiation among the Company, the Selling Stockholders and the
Representatives. Among the factors considered in determining the initial public
offering price were the Company's record of operations, its current financial
condition, its future prospects, the market for its services, the experience of
management, the economic conditions of the Company's industry in general, the
general condition of the equity securities market and the demand for similar
securities of companies considered comparable to the Company and other relevant
factors. There can be no assurance, however, that the prices at which the Common
Stock will sell in the public market after this Offering will not be lower than
the price at which the Shares are sold by the Underwriters.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California. Cleary, Gottlieb, Steen & Hamilton, New York, New York, is
acting as counsel for the Underwriters in connection with certain legal matters
relating to the shares of Common Stock offered hereby.
EXPERTS
The financial statements and schedules included in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report.
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ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act with respect to the securities offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the Common Stock, reference is made
to the Registration Statement and the exhibits and schedules filed as a part
thereof. Statements contained in this Prospectus as to the contents of any
contract or any other document referred to are not necessarily complete. In each
instance, reference is made to the copy of such contract or document filed as an
exhibit to the Registration Statement, and each such statement is qualified in
all respects by such reference. The Registration Statement, including exhibits
and schedules thereto, may be inspected without charge at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the Commission located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Northwestern Atrium
Center, 500 Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such materials may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates,
and through the National Association of Securities Dealers, Inc. located at 1735
K Street, N.W., Washington, D.C. 20006. The Commission maintains a World Wide
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of the Commission's Web site is http://www.sec.gov.
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GLOSSARY
AS/400 -- IBM's midrange server which has an established reputation for low
cost of ownership and high availability of package applications.
Client-server -- A specialized distributed computing architecture,
consisting of client applications and related server applications in which the
client applications request and receive information and computing services from
the server applications.
DB2/400 -- IBM's relational database operating on the AS/400.
Distributed computing -- The process by which data and applications are
distributed to minicomputers, workstations and personal computers within a
network rather than maintained on a centralized mainframe computer.
Graphical user interface (GUI) -- A means of communicating with a computer
by manipulating icons and windows rather than using character-oriented displays.
Java -- A recently introduced programming language from Sun Microsystems
derived from C++ that executes across hardware environments and can be
downloaded automatically to an Internet browser.
Lotus Domino -- The server component of the workflow product commonly known
as Lotus Notes.
Model-based -- An application development methodology which separates the
application's design from its programming implementation to provide better
design linkage with the end-user and greater flexibility in implementation
alternatives.
Object -- A piece of code that encapsulates both data and logic associated
with some function or service, such as formatting the current date.
Object Oriented -- An application development methodology which promotes
reuse of developed application objects through encapsulation and inheritance.
ODBC -- Open Database Communications Protocol -- a standard access protocol
for interfacing to a variety of databases.
Protocol -- A formal description of message formats and the rules two or
more machines must follow in order to exchange such messages.
Repository -- A storage mechanism for holding and managing an application
design.
Reuse -- The reuse of software code principally through the use of objects
and object frameworks.
RPG -- The prevalent 3rd generation programming language used in AS/400
applications.
Windows NT -- The scaleable 32 bit operating system from Microsoft for both
high performance workstations and application servers designed to run large or
small critical applications for an enterprise.
Wintel -- The shorthand description for the operating environment which
uses Intel chips and Microsoft operating systems.
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SYNON CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Public Accountants.............................................. F-3
Consolidated Balance Sheets -- December 31, 1995 and 1996 and March 31, 1997
(unaudited)......................................................................... F-4
Consolidated Statements of Operations -- Years ended December 31, 1994, 1995 and 1996
and three months ended March 31, 1996 and 1997 (unaudited).......................... F-6
Consolidated Statements of Stockholders' Equity -- Years ended December 31, 1994, 1995
and 1996 and three months ended March 31, 1997 (unaudited).......................... F-7
Consolidated Statements of Cash Flows -- Years ended December 31, 1994, 1995 and 1996
and three months ended March 31, 1996 and 1997 (unaudited).......................... F-8
Notes to Consolidated Financial Statements............................................ F-9
</TABLE>
F-1
<PAGE> 73
(This page intentionally left blank)
F-2
<PAGE> 74
After the transactions discussed in Note 17 to Synon
Corporation's consolidated financial statements are effected,
we expect to be in a position to render the following audit
report.
/s/ Arthur Andersen
LLP
May 15, 1997
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
Synon Corporation:
We have audited the accompanying consolidated balance sheets of Synon
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1995
and 1996, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Synon
Corporation and subsidiaries as of December 31, 1995 and 1996, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles.
San Francisco, California,
F-3
<PAGE> 75
SYNON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- MARCH 31,
1995 1996 1997
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............................... $ 2,458 $ 1,080 $ 2,473
Trade accounts receivable, less allowance for doubtful
accounts of $1,706, $1,794, and $1,853,
respectively......................................... 20,198 22,777 18,735
Other receivables....................................... 307 220 612
Prepaid expenses and other current assets............... 2,432 1,345 1,375
------- ------- -------
Total current assets............................ 25,395 25,422 23,195
PROPERTY AND EQUIPMENT, net............................... 3,296 3,493 3,525
GOODWILL, net............................................. 501 376 344
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, net............... 5,574 6,233 6,446
DEFERRED TAXES............................................ 728 1,048 1,149
DEPOSITS AND OTHER ASSETS................................. 373 337 404
------- ------- -------
Total assets.................................... $35,867 $36,909 $35,063
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE> 76
SYNON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, MARCH PRO FORMA,
------------------- 31, MARCH 31
1995 1996 1997 1997
-------- -------- -------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT LIABILITIES:
Trade accounts payable........................................ $ 3,103 $ 2,990 $ 2,723
Accrued expenses related to restructuring European operations,
current portion............................................ 338 154 137
Other accrued expenses........................................ 8,859 9,281 7,908
Notes payable................................................. 675 380 297
Capital lease obligations, current portion.................... 489 396 324
Deferred maintenance and other revenue........................ 13,318 13,102 12,975
Income taxes payable.......................................... 308 382 335
-------- -------- --------
Total current liabilities............................. 27,090 26,685 24,699
CAPITAL LEASE OBLIGATIONS, net of current portion............... 396 352 283
ACCRUED EXPENSES RELATED TO RESTRUCTURING EUROPEAN OPERATIONS,
net of current portion........................................ 240 346 333
-------- -------- --------
Total liabilities..................................... 27,726 27,383 25,315
COMMITMENTS AND CONTINGENCIES
SERIES E MANDATORILY REDEEMABLE PREFERRED STOCK --
par value $0.001 per share
Authorized -- 1,666,667 shares
Issued and outstanding -- 1,666,667 shares
Preference in liquidation -- $5,000........................ 5,000 5,000 5,000
-------- -------- --------
STOCKHOLDERS' EQUITY:
Convertible preferred stock:
Series A -- par value $0.001 per share:
Authorized -- 3,687,750 shares
Issued and outstanding -- 2,687,750 shares
Preference in liquidation -- $22,846..................... 3 3 3
Series D -- par value $0.001 per share:
Authorized -- 3,618,269 shares
Issued and outstanding -- 3,618,269 shares
Preference in liquidation -- $24,242..................... 4 4 4
Undesignated series -- par value $0.001 per share:
Authorized -- 5,000,000 shares pro forma
Issued and outstanding -- no shares
Common stock -- par value $0.001 per share:
Authorized -- 25,000,000 shares (50,000,000 shares pro
forma)
Issued -- 3,434,325, 3,466,091 and 3,466,291 shares at
December 31, 1995 and 1996 and March 31, 1997,
respectively ( shares pro forma)
Outstanding -- 3,421,453, 3,453,219 and 3,453,419 shares
at December 31, 1995 and 1996 and March 31, 1997,
respectively ( shares pro forma)................ 3 3 3 8
Less: Treasury stock at cost -- 12,872 shares................. (47) (47) (47) (47)
Additional paid-in capital.................................... 25,593 25,906 25,907 43,030
Deferred compensation......................................... -- (219) (208) (208)
Accumulated deficit........................................... (22,107) (20,968) (20,907) (33,028)
Cumulative foreign currency translation adjustment............ (308) (156) (7) (7)
-------- -------- -------- --------
Total stockholders' equity............................ 3,141 4,526 4,748 9,748
-------- -------- -------- --------
Total liabilities and stockholders' equity............ $ 35,867 $ 36,909 $ 35,063
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE> 77
SYNON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------------ ------------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
License..................... $ 23,313 $ 21,989 $ 21,801 $ 3,471 $ 4,476
Maintenance................. 18,848 21,053 21,321 5,384 5,352
Services.................... 23,219 27,740 33,009 8,161 8,644
---------- ---------- ---------- ---------- ----------
65,380 70,782 76,131 17,016 18,472
---------- ---------- ---------- ---------- ----------
COST OF REVENUES:
License..................... 4,366 4,093 3,133 688 774
Maintenance................. 4,251 5,188 5,984 1,481 1,530
Services.................... 17,351 21,635 26,885 6,774 6,634
---------- ---------- ---------- ---------- ----------
25,968 30,916 36,002 8,943 8,938
---------- ---------- ---------- ---------- ----------
Gross Profit............. 39,412 39,866 40,129 8,073 9,534
OPERATING EXPENSES:
Sales and marketing......... 25,741 25,919 25,034 5,391 5,614
Research and development.... 4,104 4,942 5,922 1,569 1,485
General and
administrative........... 7,641 8,011 7,320 1,800 2,101
Amortization of goodwill.... 125 125 125 31 31
---------- ---------- ---------- ---------- ----------
37,611 38,997 38,401 8,791 9,231
---------- ---------- ---------- ---------- ----------
Operating income
(loss)................. 1,801 869 1,728 (718) 303
OTHER INCOME (EXPENSE):
Interest income (expense),
net...................... (282) (185) (47) (9) 4
Other income (expense),
net...................... 232 267 (162) (18) (225)
---------- ---------- ---------- ---------- ----------
(50) 82 (209) (27) (221)
---------- ---------- ---------- ---------- ----------
Income (loss) before
income taxes........... 1,751 951 1,519 (745) 82
PROVISION (BENEFIT) FOR INCOME
TAXES....................... 437 237 380 (186) 21
---------- ---------- ---------- ---------- ----------
Net income (loss)........ $ 1,314 $ 714 $ 1,139 $ (559) $ 61
========== ========== ========== ========== ==========
Net income (loss) per
common and common
equivalent share....... $ 0.17 $ 0.09 $ 0.14 $ (0.15) $ 0.01
========== ========== ========== ========== ==========
Weighted average common
and common equivalent
shares outstanding..... 7,772,348 7,861,819 7,877,888 3,626,223 8,226,233
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE> 78
SYNON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
SERIES A AND D
-------------------
CONVERTIBLE FOREIGN
PREFERRED STOCK COMMON STOCK ADDITIONAL TREASURY STOCK CURRENCY
------------------- ------------------- PAID-IN ---------------- DEFERRED ACCUMULATED TRANSLATION
SHARES AMOUNT SHARES AMOUNT CAPITAL SHARES AMOUNT COMPENSATION DEFICIT ADJUSTMENT
---------- ------ ---------- ------ ---------- ------- ------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT
DECEMBER 31,
1993........... 6,306,019 $ 7 3,366,919 $ 3 $ 25,505 $ $ $ (24,135) $ (7)
Exercise of
stock
options for
cash........ 64,697 -- 81
Foreign
currency
translation
adjustment... (210)
Net income.... 1,314
--------- ------ --------- ------ ------- --- ------ ------- -------- -------
BALANCE AT
DECEMBER 31,
1994.......... 6,306,019 $ 7 3,431,616 3 25,586 (22,821) (217)
Exercise of
stock
options for
cash........ 2,708 -- 7
Foreign
currency
translation
adjustment... (91)
Purchase of
treasury
stock....... (12,872) (47)
Net income.... 714
--------- ------ --------- ------ ------- --- ------ ------- -------- -------
BALANCE AT
DECEMBER 31,
1995.......... 6,306,019 $ 7 3,434,324 3 25,593 (12,872) (47) (22,107) (308)
Exercise of
stock
options for
cash........ 31,767 -- 93
Foreign
currency
translation
adjustment... 152
Deferred
compensation... 220 (220)
Amortization
of deferred
compensation... 1
Net income.... 1,139
--------- ------ --------- ------ ------- --- ------ ------- -------- -------
BALANCE AT
DECEMBER 31,
1996.......... 6,306,019 $ 7 3,466,091 3 25,906 (12,872) (47) (219) (20,968) (156)
Exercise of
stock
options for
cash........ 200 -- 1
Foreign
currency
translation
adjustment... 149
Amortization
of deferred
compensation... 11
Net income.... 61
--------- ------ --------- ------ ------- --- ------ ------- -------- -------
BALANCE AT MARCH
31, 1997
(unaudited)... 6,306,019 $ 7 3,466,291 $ 3 $ 25,907 (12,872) (47) $ (208) $ (20,907) $ (7)
========= ====== ========= ====== ======= === ====== ======= ======== =======
Conversion of
preferred
series A to
common
shares...... (2,687,750) (3) 1,343,875 2 1
Conversion of
preferred
series D to
common
shares...... (3,618,269) (4) 1,809,134 2 2
Accretion of
conversion
consideration -- preferred
Series D
shares...... 12,121 (12,121)
Conversion of
preferred
Series E
mandatorily
redeemable
preferred
shares to
common
shares...... 833,334 1 4,999
--------- ------ --------- ------ ------- --- ------ ------- -------- -------
PRO FORMA
BALANCE AT
MARCH 31, 1997
(unaudited)... $ 8 $ 43,030 (12,872) $ (47) $ (208) $ (33,028) $ (7)
====== ======= === ====== ======= ======== =======
</TABLE>
- ---------------
(1) Pro forma common stock outstanding and additional paid-in capital do not
reflect the eventual reclassification from paid-in capital to par value
relating to shares issuable as additional conversion consideration to
holders of Preferred Stock. See Note 2.
The accompanying notes are an integral part of these statements.
F-7
<PAGE> 79
SYNON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- -------------------
1994 1995 1996 1996 1997
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................ $ 1,314 $ 714 $ 1,139 $ (559) $ 61
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization................. 4,794 5,038 3,939 1,024 996
Deferred income taxes......................... (187) (322) (319) (141) (101)
(Gain) loss on sale of property and
equipment................................... 50 90 38 (9) (11)
Change in operating assets and liabilities:
Trade accounts receivable..................... (1,498) (2,255) (2,181) 1,851 3,461
Other receivables, prepaid expenses and
current assets.............................. (112) (413) 1,176 171 (459)
Trade accounts payable and accrued expenses... (1,454) 817 (204) (974) (1,357)
Deferred maintenance and other revenue........ 1,909 (313) (146) 367 238
Income taxes receivable and payable........... 11 118 52 (178) (32)
Deposits and other assets..................... (63) 122 28 (159) (67)
------ ------ ------ ------ ------
Net cash provided by operating
activities............................. 4,764 3,596 3,522 1,393 2,716
------ ------ ------ ------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment............... (2,043) (1,000) (1,761) (356) (609)
Proceeds from sale of property and equipment..... 79 88 162 33 16
Capitalization of software development costs..... (2,639) (2,219) (2,645) (619) (674)
Loans to officers and stockholder, net........... 923 52 15 10 --
------ ------ ------ ------ ------
Net cash used for investing activities... (3,680) (3,079) (4,229) (932) (1,267)
------ ------ ------ ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable.......... -- -- 380 250 --
Principal payments/proceeds on notes payable..... (325) (500) (675) (83)
Principal payments on capital lease
obligations................................... (1,285) (877) (517) (138) (119)
Proceeds from sale of common stock and exercise
of common stock options....................... 81 7 93 5 1
------ ------ ------ ------ ------
Net cash provided by (used for) financing
activities............................. (1,529) (1,370) (719) 117 (201)
------ ------ ------ ------ ------
EFFECT OF EXCHANGE RATE CHANGES ON CASH....... (65) (108) 48 101 132
------ ------ ------ ------ ------
NET INCREASE (DECREASE) IN CASH.................... (510) (961) (1,378) 679 1,393
CASH AT BEGINNING OF PERIOD........................ 3,929 3,419 2,458 2,458 1,080
------ ------ ------ ------ ------
CASH AT END OF PERIOD.............................. $ 3,419 $ 2,458 $ 1,080 $ 3,137 $ 2,473
====== ====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
F-8
<PAGE> 80
SYNON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
UNAUDITED.)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:
NATURE OF BUSINESS
Synon Corporation and its subsidiaries (the "Company") is a leading
provider of enterprise software application development tools and professional
services.
The Company operates through wholly owned (except as noted) subsidiaries:
in North America through its U.S. subsidiary, Synon, Inc., and its Canadian
subsidiary, Synon Canada Ltd.; in the United Kingdom through its U.K.
subsidiaries, Synon Europe Ltd. and Synon Research Ltd.; in France through its
French subsidiary, Synon France SARL; in Germany through its German subsidiary,
Synon Germany GmBH; in Italy through its 65 percent-owned Italian joint venture,
Synon Italy SRL; in Japan through its 51 percent-owned Japanese joint venture,
Synon Japan Ltd.; in the Far East (other than Japan) through its 75
percent-owned Hong Kong joint venture, Synon Asia Ltd.; and in Australia through
its Australian subsidiary, Synon Pty Ltd.
CONCENTRATION OF BUSINESS RISKS
The market for the Company's products and services is characterized by
intense competition, rapid technological developments, frequent new product
introductions and evolving industry standards. Accordingly, the Company is
required to continually improve the performance, features and reliability of its
products and develop and maintain strategic relationships with larger companies.
Historically, most of the Company's license revenues have been attributable
to the Synon 2E product family. Beginning in 1995, a significant portion of the
Company's license revenue has been attributable to the Obsydian product family.
The Company expects the Obsydian product family to account for an increasingly
significant portion of the Company's revenues for the foreseeable future.
The Company operates in foreign countries located in Asia, Australia,
Europe, North America and South America and is impacted by the economic and
political stability of nations in these regions.
In addition, as discussed in Note 12, the Company has excess space under
long-term leases. While the space is currently subleased, the Company's ability
to continue to sublease the space under economically satisfactory terms is
subject to the impact of changing market conditions.
CONCENTRATION OF CREDIT RISK
Financial instruments that may potentially subject the Company to
concentrations of credit risk consist principally of cash and cash equivalents
and accounts receivable. Concentration of credit risk related to accounts
receivable is limited due to the varied customers comprising the Company's
customer base and their dispersion across geographies. All cash and cash
equivalents are with financial institutions with strong credit ratings, which
minimizes the risk of loss due to nonpayment. The Company has not experienced
any losses due to credit impairment related to its financial instruments.
SIGNIFICANT ACCOUNTING POLICIES
Unaudited Pro Forma Information -- The accompanying interim balance sheet
at March 31 1997, and the statements of operations and cash flows for the three
months ended March 31, 1996 and 1997, together with the related notes, are
unaudited but include all adjustments, consisting of only normal recurring
adjustments, which the Company considers necessary to present fairly, in all
material respects, the financial condition of the Company at March 31, 1997, and
the Company's results of operations and cash flows for the three months ended
March 31, 1996 and 1997. Results for the three months ended March 31, 1997 are
not necessarily indicative of results for the entire fiscal year.
F-9
<PAGE> 81
SYNON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
UNAUDITED.)
In conjunction with its proposed initial public offering (Note 17), all of
the Company's outstanding convertible preferred stock will be converted into
shares of common stock. The pro forma effect of these conversions, which is
unaudited, has been reflected in the accompanying pro forma consolidated balance
sheet assuming the conversion had occurred on March 31, 1997.
Principles of Consolidation -- The consolidated financial statements
include the accounts of Synon Corporation and all of its subsidiaries and joint
ventures.
Revenue Recognition -- The Company generates revenues from licensing the
rights to use its software products directly to end users and indirectly through
value-added resellers (VARs). The Company also generates revenues from sales of
post-contract support, consulting and training services performed for customers
who license the Company's products.
The Company recognizes revenues and records estimated warranty reserves
from software license agreements with end users and VARs upon shipment of the
software if there are no significant post-delivery obligations and if collection
is probable. If a software license agreement provides for acceptance criteria
that extend beyond the published specifications of the applicable product, then
revenues are recognized upon the earlier of customer acceptance or the
expiration of the acceptance period.
Customers who purchase post-contract support services under maintenance
agreements have the right to receive unspecified product updates, upgrades and
enhancements. Customers that do not purchase post-contract support must purchase
product updates, upgrades and enhancements under separate agreements that are
subject to the criteria of the Company's revenue recognition policy.
Revenues from post-contract support services are recognized ratably over
the term of the support period. If post-contract support services are included
free or at a discount in a license agreement, such amounts are allocated out of
the license fee at their fair market value based on the value established by
independent sale of such post-contract support services to customers. Consulting
revenues are primarily related to implementation services performed on a time
and materials basis and fixed-price contracts under separate service
arrangements related to the installation of the Company's software products and
software development using the Company's software products. Revenues from
consulting and training services are recognized as services are performed except
for fixed-price contracts. Revenues from fixed-price contracts are recognized on
the percentage-of-completion method, measured by the cost incurred to date, to
estimated total costs for each contract. If a transaction includes both license
and service elements, license fee revenue is recognized upon shipment of the
software, provided services do not include significant customization or
modification of the base product and the payment terms for licenses are not
subject to acceptance criteria. In cases where license fee payments are
contingent upon the acceptance of services, revenues from both the license and
the service elements are deferred until the acceptance criteria are met. In
situations where there are undelivered elements that are critical to
functionality of the software product, the entire license fee is deferred.
Deferred revenues include software license fees and services that have been
invoiced to the customer for which the revenue earnings process has not been
completed.
Use of Estimates -- The preparation of the consolidated financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the dates of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates.
Significant estimates made by management include revenue recognition under
fixed-price contracts, determination of technological feasibility of software
under development and related research and
F-10
<PAGE> 82
SYNON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
UNAUDITED.)
development cost capitalization, as well as product life amortization periods
for capitalized software costs.
Supplemental Cash Flow Information -- During the years ended December 31,
1994, 1995 and 1996, and during the three months ended March 31, 1996 and 1997,
the Company paid interest of approximately $412,000, $258,000, $125,000, $38,000
and $18,000, respectively, and income taxes of approximately $533,000, $177,000,
$719,000, $188,000 and $186,000, respectively.
During the years ended December 31, 1994, 1995 and 1996, and during the
three months ended March 31, 1996 and 1997, capital lease obligations of
approximately $676,000, $542,000, $333,000, $47,000 and $0, respectively, were
incurred relating to the acquisition of property and equipment.
Cash -- Cash and cash equivalents are stated at cost, which approximates
market, and consist of short-term, highly liquid investments with original
maturities of less than three months.
Property and Equipment -- Property and equipment are stated at cost and are
depreciated using the straight-line method over estimated useful lives, or
related lease terms, if shorter, as follows:
<TABLE>
<CAPTION>
ESTIMATED
CLASSIFICATION USEFUL LIFE
------------------------------------------------------ --------------
<S> <C>
Computer hardware..................................... 3 to 6 years
Computer software..................................... 3 to 5 years
Leasehold improvements................................ 1 to 8 years
Furniture and fixtures................................ 5 to 11 years
Automobiles........................................... 4 to 5 years
</TABLE>
Capitalized Software Development Costs -- The Company capitalizes software
development costs in accordance with Statement of Financial Accounting Standards
(SFAS) No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased
or Otherwise Marketed." The costs of software development are capitalized from
the date at which the technological feasibility of a product is established.
Capitalization of development costs ceases and amortization begins when a
product is available for general release to customers. Amortization is computed
separately for each product using the straight-line method over an estimated
useful life of up to five years (see Note 4).
Goodwill -- Goodwill relates to the acquisition of Synon Consulting, Inc.
in 1990 and is being amortized on a straight-line basis over its estimated
useful life of 10 years. Periodically, goodwill is evaluated for indications of
impairment in its value. If impairment exists, a write-down to the net
realizable value is recorded. No such write-down occurred during the years ended
December 31, 1994, 1995 or 1996, or in the three months ended March 31, 1997.
Accumulated amortization at December 31, 1995 and 1996 and at March 31, 1997 was
approximately $9,849,000, $9,974,000 and $10,005,000, respectively.
Stock Split -- In June 1997, the Company will effect a 1-for-2 reverse
stock split of its common stock (Note 17). All common stock and option data in
the accompanying consolidated financial statements for all periods presented
have been retroactively adjusted to reflect the stock split.
Cost of License Revenue -- Cost of license revenue includes royalties on
third-party products, materials costs, and amortization of capitalized software
development costs.
Cost of Maintenance Revenue -- Cost of maintenance revenue consists
primarily of compensation and other costs for customer support personnel,
related facilities and equipment costs, third party royalties related to
maintenance revenue, and materials costs of product updates and new releases
provided to customers.
F-11
<PAGE> 83
SYNON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
UNAUDITED.)
Cost of Services Revenue -- Cost of services revenue consists primarily of
compensation and other costs for personnel providing education, consulting and
application development services, related facilities and equipment costs and
travel costs related to services engagements.
Income Taxes -- The Company provides for income taxes under Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under
SFAS 109, deferred income taxes are recorded to reflect the tax consequences on
future years of differences between the tax basis of assets and liabilities and
their financial reporting amounts at each period-end. Income tax benefits have
been recorded for net operating loss carryforwards, tax credit carryforwards and
net deferred tax assets except as disclosed in Note 9. A valuation allowance is
placed on the deferred tax assets to reduce them to their net realizable value.
Foreign Currency Translation -- The financial statements of subsidiaries
outside the United States are generally measured using the local currency as the
functional currency. Assets and liabilities of these subsidiaries are translated
at the rates of exchange at the balance sheet date. The resultant translation
adjustments are included in equity as a cumulative foreign currency translation
adjustment, a separate component of stockholders' equity. Income and expense
items are translated at average monthly rates of exchange. Gains and losses from
foreign currency transactions of these subsidiaries are included in net
earnings. Foreign exchange transaction gains and losses of $216,000, $227,000,
$(167,000), $(18,000) and $(225,000) are included in the consolidated statements
of operations for the years ended December 31, 1994, 1995 and 1996 and for the
three months ended March 31, 1996 and March 31, 1997, respectively.
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 common equivalent shares outstanding (using the
treasury stock method). Common equivalent shares from preferred stock and stock
options are excluded from the computation if their effect is antidilutive.
Pursuant to the Securities and Exchange Commission (SEC) Staff Accounting
Bulletins, stock options and warrants issued during the 12-month period prior to
the proposed initial public offering at prices below the assumed public offering
price have been included in the calculation as if they were outstanding for all
periods presented (using the treasury stock method).
Adoption of Accounting Pronouncements -- For the year ended December 31,
1997, the Company will report its Earnings per Share (EPS) based upon the
recently issued Statement of Financial Accounting Standards No. 128 (SFAS No.
128), "Earnings per Share". The pro forma effect of this accounting change on
the quarter ended March 31, 1997 is:
<TABLE>
<S> <C>
Primary EPS as reported.............................. $ .01
Pro forma effect of SFAS No. 128..................... $ .01
Basic EPS pro forma.................................. $ .02
Fully diluted EPS as reported........................ $ .01
Pro forma effect of SFAS No. 128..................... $ .00
Diluted EPS pro forma................................ $ .01
</TABLE>
The Company adopted SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for the Long-Lived Assets to be Disposed of" beginning
January 1, 1996. The Company also adopted SFAS No. 123, "Accounting for
Stock-Based Compensation," beginning January 1, 1996. The adoption of these
pronouncements did not have a material impact on the consolidated financial
statements of the Company taken as a whole.
Reclassifications -- Certain reclassifications have been made to prior
years' consolidated financial statements in order to conform to the current year
presentation.
F-12
<PAGE> 84
SYNON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
UNAUDITED.)
2. PREFERENCES AND RESTRICTIONS RELATED TO STOCKHOLDERS' EQUITY:
Preferred stockholders are entitled to dividends only when and if declared
by the Board of Directors.
Preferred stock is subject to certain preferences upon liquidation of the
Company, or upon merger or acquisition of the Company if not exempted by a
two-thirds vote of the Board of Directors.
Each preferred and common share is entitled to one vote, except with
respect to certain corporate events.
Each share of Series A and Series E preferred stock is convertible into
common stock on a share-for-share basis. Each share of Series D preferred stock
is convertible into one share of common stock plus $3.35 in cash (or at the
option of the Company, equity securities of the Company with an agreed-upon or
appraised market value of $3.35 per share). It is management's intention to
satisfy the conversion premium by issuing common stock. The pro forma
consolidated balance sheet as of March 31, 1997 reflects accretion of
$12,121,000 related to the conversion of Series D preferred stock, as well as
issuance of conversion premium shares at an assumed initial public
offering price of per share. The holders of Series D preferred stock may
convert their shares into shares of common stock upon the sale, merger or
liquidation of the Company or upon the consummation of an initial public
offering as described below. Conversion of Series A, D and E preferred stock is
automatic in the event of a public sale of common stock at not less than $10.00
per share and not less than $10 million in gross proceeds.
Certain of the Company's stockholders have the right of first refusal to
purchase any new stock issued by the Company (with certain exceptions, such as
stock issued under the Company's stock option plans). This right will terminate
on the closing of the proposed Offering. (Note 16)
In August 1992, IBM purchased 1,666,667 shares of Series E Preferred stock
at $3.00 per share. Under the stock purchase agreement, IBM has a right of first
refusal with respect to change in control transactions. In addition, under
certain circumstances, including a change in the Company's business, IBM may put
its 1,666,667 shares to the Company at the greater of a price of $3.00 per share
or the then-fair-market value of the shares. Notwithstanding the above, IBM may
require redemption of one-third of its shares on each of August 31, 1997, 1998
and 1999 at the then-fair-market value of the shares. On May , 1997, the
Company and IBM entered into an amendment pursuant to which IBM agreed to the
automatic termination of these rights effective and contingent upon the closing
of the Offering.
The Company and certain of the Company's stockholders also have the right
of first refusal to purchase any stock offered for sale by stockholders to any
person who, upon purchase of the shares, would own more than 10 percent of the
voting power of the Company. This right is expected to terminate upon the
closing of the Offering.
Certain of the Company's common stockholders have demand registration
rights and piggyback registration rights.
F-13
<PAGE> 85
SYNON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
UNAUDITED.)
3. PROPERTY AND EQUIPMENT:
The components of property and equipment are (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, MARCH
------------------- 31,
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Computer hardware and software.............. $ 7,012 $ 8,118 $ 8,295
Leasehold improvements...................... 1,688 1,062 1,162
Furniture and fixtures...................... 2,441 2,809 2,713
Automobiles................................. 1,333 1,302 1,208
------ ------ ------
12,474 13,291 13,378
Less -- Accumulated depreciation and
amortization.............................. (9,178) (9,798) (9,853)
------ ------ ------
$ 3,296 $ 3,493 $ 3,525
====== ====== ======
</TABLE>
4. CAPITALIZED SOFTWARE DEVELOPMENT COSTS:
Capitalized software development expenditures, net of write-offs, were
approximately $2,639,000, $2,219,000 and $2,645,000 for the years ended December
31, 1994, 1995, and 1996, respectively, and $619,000 and $674,000 for the three
months ended March 31, 1996 and March 31, 1997, respectively. Accumulated
amortization was approximately $7,999,000, $10,106,000 and $10,513,000 at
December 31, 1995 and 1996 and at March 31, 1997, respectively. Amortization
expense for the years ended December 31, 1994, 1995 and 1996 and for the three
months ended March 31, 1996 and 1997 was approximately $2,070,000, $2,527,000,
$1,986,000, $544,000 and $460,000, respectively.
5. OTHER ACCRUED EXPENSES:
Other accrued expenses consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER, 31
----------------- MARCH 31,
1995 1996 1997
------ ------ ---------
<S> <C> <C> <C>
Third-party royalties and fees................ $ 822 $ 621 $ 509
Commissions and bonuses....................... 2,277 2,655 1,605
Taxes other than income....................... 1,461 1,284 1,184
Accrued vacation pay.......................... 947 1,000 1,045
Accrued consultants fees...................... 1,286 1,487 1,465
Accrued distributor and finders fees.......... 639 709 459
Other accrued expenses........................ 1,427 1,525 1,641
------ ------ ------
$8,859 $9,281 $ 7,908
====== ====== ======
</TABLE>
6. LINE OF CREDIT:
In 1996, the Company renewed a line of credit agreement (the 1996
Agreement) originally signed in 1994 (the 1994 Agreement) with a bank that
permits the Company to borrow up to $4,000,000 but not to exceed 70 percent of
eligible accounts receivable. Balances outstanding under the line accrue
interest at a rate of 1.25 percent above the bank's prime rate (8.25 percent at
December 31, 1996). The line of credit is secured by substantially all of the
Company's assets, and expires July 14, 1997. The Company is subject to certain
financial and non-financial covenants under the agreement, including the
maintenance of quick ratio, additional quick ratio, debt-to-equity ratio and
profitability requirements. As of December 31, 1996 and March 31, 1997, the
Company was not in compliance with certain of these covenants. Waivers were
obtained from the bank for these violations. No borrowings were made under the
agreement in 1995 or 1996.
F-14
<PAGE> 86
SYNON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
UNAUDITED.)
7. NOTES PAYABLE:
The Company entered into a development incentive agreement with IBM, a
related party, in September 1990, whereby IBM agreed to lend the Company up to
$1,500,000 for qualified research and development expenditures. This loan was
interest free and repayable in quarterly installments between March 31, 1992,
and December 31, 1994. In connection with IBM's purchase of the Company's Series
E preferred stock, IBM deferred the payment dates on this note to begin on March
31, 1994. These payment requirements were quarterly, with increasing principal
from $65,000 due on March 31, 1994, to $185,000 due on December 31, 1996.
Interest accrued from January 1, 1994 at 8 percent and was due quarterly. The
remaining unpaid principal balance on the note at December 31, 1995, was
$675,000. The note was paid in full by December 31, 1996.
At December 31, 1996 notes payable in the accompanying consolidated balance
sheet consisted of equipment financing and development funding advances.
8. LEASES:
The Company is obligated under leases for certain facilities and equipment
with remaining terms ranging from 1 to 18 years.
Rental expense (under operating leases) was approximately $3,634,000,
$3,671,000 and $3,676,000 for the years ended December 31, 1994, 1995 and 1996
respectively, and $864,000 and $912,000 for the three months ended March 31,
1996 and 1997, respectively. In connection with these leases, the Company pays
all insurance, maintenance and repairs on the related properties.
At December 31, 1995 and 1996 and at March 31, 1997, total assets under
capital lease obligations were approximately $1,981,000, $2,108,000 and
$2,004,000, respectively. Accumulated amortization of assets under capital lease
obligations was $961,000, $1,214,000 and $1,205,000 as of December 31, 1995 and
1996 and at March 31, 1997, respectively.
Future minimum payments under leases with initial noncancelable lease terms
in excess of one year at December 31, 1996, are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING CAPITAL OPERATING
DECEMBER 31 LEASES LEASES
------------------------------------------------ ------- ---------
<S> <C> <C>
1997......................................... $ 454 $ 3,220
1998......................................... 369 2,835
1999......................................... 33 2,321
2000......................................... 0 1,742
2001......................................... 0 1,003
Thereafter................................... 0 4,564
----- -------
Total future minimum lease payments... 856 $15,685
===== =======
Less:
Amounts representing executory costs.......... (2)
Amounts representing interest (at an average
rate of 13 percent)........................ (106)
-----
Present value of future minimum lease
payments................................. 748
Current portion................................. (396)
-----
Long-term portion............................... $ 352
=====
</TABLE>
F-15
<PAGE> 87
SYNON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
UNAUDITED.)
Excluded from operating lease commitments above are commitments related to
excess space in three offices located in the United Kingdom (see Note 12).
9. INCOME TAXES:
The provision for income taxes consists of the following (in thousands) :
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ------
<S> <C> <C> <C>
Domestic:
Current......................................... $264 $415 $ 402
Deferred........................................ (187) (322) (319)
---- ---- ----
Total domestic.......................... 77 93 83
---- ---- ----
International:
Current......................................... 360 501 1,036
Deferred........................................ -- -- --
Benefit of loss carryforwards................... -- (357) (739)
---- ---- ----
Total international..................... 360 144 297
---- ---- ----
Provision for income taxes.............. $437 $237 $ 380
==== ==== ====
</TABLE>
Deferred tax assets (liabilities) consist of the following as of December
31 (in thousands):
<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Foreign tax and general business credits............... $ 1,316 $ 1,148
Net operating loss carryforwards....................... 3,028 2,131
Deferred tax assets -- timing differences.............. 1,825 2,022
Deferred tax liabilities -- timing differences......... (1,484) (1,537)
Valuation allowance.................................... (3,957) (2,716)
------- -------
Net deferred tax assets...................... $ 728 $ 1,048
======= =======
</TABLE>
The valuation allowance relates to net operating loss carryforwards and tax
credit carryforwards, the realization of which is uncertain.
The difference between the provision for income taxes and income taxes
computed using the U.S. federal income tax rate was as follows:
<TABLE>
<CAPTION>
1994 1995 1996
------------------ ------------------ ------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------ -------
(IN THOUSANDS EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C>
Tax expected at U.S. statutory tax
rate................................... $595 34% $324 34% $517 34%
Foreign losses not benefitable........... 231 13 108 11 564 37
Goodwill amortization.................... 43 2 40 4 40 3
Utilization of net operating loss
carryforward........................... (345) (20) (357) (38) (739) (48)
Benefit of foreign tax credit............ (350) (20) (315) (33) (485) (32)
Foreign withholding taxes................ 105 7 208 22 280 18
Difference between foreign and federal
income tax rates....................... 81 5 210 22 140 9
State taxes.............................. 77 4 28 3 51 3
Other.................................... 0 0 (9) 0 12 1
---- --- ---- --- ---- ---
Total tax provision.................. $437 25% $237 25% $380 25%
==== === ==== === ==== ===
</TABLE>
F-16
<PAGE> 88
SYNON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
UNAUDITED.)
The Company has approximately $6,267,000 of tax net operating loss
carryforwards at December 31, 1996 which expire as follows:
<TABLE>
<CAPTION>
COUNTRY EXPIRING THROUGH AMOUNT
- ------------- --------------------------------------- ----------
<S> <C> <C>
Australia Indefinite............................. $2,150,000
Canada 2000................................... 42,000
Germany Indefinite............................. 986,000
Japan 2001................................... 1,016,000
France 2001................................... 1,106,000
Hong Kong Indefinite............................. 967,000
----------
$6,267,000
==========
</TABLE>
At December 31, 1996, the Company had U.S. alternative minimum tax credit
carryforwards, U.S. general business credit carryforwards, and foreign tax
credit carryforwards of approximately $283,000, $560,000 and $305,000,
respectively. The general business credit begins to expire in 2004. The foreign
tax credits expire in 1997 and 1998.
These net operating loss carryforwards and credit carryforwards are
available only to offset future taxable income of the related subsidiary, if
any. Special limitations exist under the tax law that may restrict the
utilization of these net operating loss carryforwards and credits carryforwards
including completion of the initial public offering discussed in Note 17.
The Company expects its effective tax rate to increase after it utilizes
its tax benefit carryovers.
10. SEGMENT INFORMATION:
The Company operates in one industry segment: developing, marketing and
supporting software application development tools used to develop, deploy and
maintain high-end software applications. The distribution of revenues, operating
income (loss) and identifiable assets by major geographic area for the years
ended December 31, 1994, 1995 and 1996 is as follows (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Revenues:
North America.............................. $40,747 $43,917 $48,736
Europe..................................... 23,346 26,770 27,601
Rest of World.............................. 8,090 7,724 7,741
Eliminations............................... (6,803) (7,629) (7,947)
------- ------- -------
Total Revenues..................... $65,380 $70,782 $76,131
Operating Income (Loss):
North America.............................. $ 2,124 $ 1,601 $ 1,831
Europe..................................... (504) (400) (259)
Rest of World.............................. 181 (332) 156
------- ------- -------
Total Operating Income (Loss)...... $ 1,801 $ 869 $ 1,728
Identifiable Assets:
North America.............................. $19,769 $19,425 $20,775
Europe..................................... 12,187 14,017 13,879
Rest of World.............................. 3,351 2,425 2,255
------- ------- -------
Total Identifiable Assets.......... $35,307 $35,867 $36,909
</TABLE>
F-17
<PAGE> 89
SYNON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
UNAUDITED.)
North America operating profits include certain marketing, product
management and general and administrative expenses which may be attributable to
worldwide operations but which are not reasonably allocable. Revenues and
operating income include intercompany royalties paid by the Company's operating
subsidiaries for rights to technology developed by the parent company in North
America or other subsidiaries. The majority of the Company's research and
development is performed in its North America segment which includes the
Company's corporate functions. Accordingly, approximately $5.7 million, $7.5
million and $8.0 million in net royalties were paid to the North America segment
during 1994, 1995 and 1996, respectively, by the other operating segments.
Capitalized research and development costs net of accumulated amortization are
included in identifiable assets for North America.
11. EMPLOYEE STOCK OPTION PLANS:
OPTION PLANS
1990 Stock Option Plan -- The Company's 1990 Stock Option Plan (the "1990
Plan") provides for the grant of incentive stock options and nonstatutory stock
options to employees of the Company. As of December 31, 1996 and March 31, 1997,
options to purchase an aggregate of 1,367,993 and 1,347,930 shares of common
stock, respectively, were outstanding under the 1990 Plan. Vesting under the
1990 Plan ranges from twenty-four to sixty months.
Executive Share Option Scheme -- The Company's Executive Share Option
Scheme provides for the grant of nonstatutory stock options to full-time
employees and directors of the Company or any of its subsidiaries. As of
December 31, 1996 and March 31, 1997, options to purchase an aggregate of 17,300
and 18,800 shares of common stock, respectively, were outstanding under the
Executive Share Option Scheme. Vesting under the Executive Share Option Scheme
occurs over a three year period.
STOCK BASED COMPENSATION
The Company accounts for these plans under APB Opinion No. 25, under which
$220,000 was charged to deferred compensation during the year ended December 31,
1996 because certain options were granted at below the then fair market value of
the common stock. This deferred compensation is being amortized over the vesting
period of the related options. No other compensation cost has been recognized
under APB Opinion No. 25 as options have been granted at an option exercise
price equal to the market value of common stock as determined by the Board of
Directors on the date of grant.
Had compensation cost for the plans been determined consistent with SFAS
No. 123, the Company's net income (loss) would have been changed to the
following pro forma amounts:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
----------------- -----------------
1995 1996 1996 1997
------ ------- ------ ------
<S> <C> <C> <C> <C>
Net Income (Loss)
As Reported....................... $ 714 $ 1,139 $ (559) $ 61
Pro Forma......................... $ 648 $ 965 $ (596) $ (2)
Earnings (Loss) Per common and
common equivalent share
As Reported....................... $ 0.09 $ 0.14 $(0.15) $ 0.01
Pro Forma......................... $ 0.08 $ 0.12 $(0.16) $(0.00)
</TABLE>
Because the SFAS No. 123 method of accounting has not been applied to
options granted prior to January 1, 1995, the resulting pro forma compensation
cost may not be representative of that to be expected in future years.
F-18
<PAGE> 90
SYNON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
UNAUDITED.)
A summary of the status of the Company stock option plans at December 31,
1994, 1995, 1996 and at March 31, 1997 and changes during the periods then ended
is presented in the table and narrative below:
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE FAIR
AVERAGE EXERCISABLE VALUE OF
OPTION EXERCISE AT END OF OPTIONS
SHARES PRICE PERIOD GRANTED
--------- ------- ----------- ------------
<S> <C> <C> <C> <C>
Outstanding at December 31, 1994............. 1,316,780 $2.88 706,564
Granted.................................... 116,750 3.60 $ 2.06
Exercised.................................. (2,708) 2.86
Canceled................................... (184,645) 2.96
--------- -----
Outstanding at December 31, 1995............. 1,246,177 2.94 925,477
Granted.................................... 421,250 3.60 $ 2.46
Exercised.................................. (31,767) 2.90
Canceled................................... (250,367) 3.32
--------- -----
Outstanding at December 31, 1996............. 1,385,293 3.06 873,100
Granted.................................... 70,500 5.40 $ 3.06
Exercised.................................. (200) 3.60
Canceled................................... (88,863) 3.28
--------- -----
Outstanding at March 31, 1997................ 1,366,730 3.16 910,763
========= =====
</TABLE>
Options outstanding at December 31, 1996 and March 31, 1997 are comprised
of the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 MARCH 31, 1997
- ----------------------------------------------------------------- -----------------------------------------------
REMAINING REMAINING
EXERCISE WEIGHTED AVERAGE EXERCISE WEIGHTED AVERAGE
OPTION SHARES PRICE CONTRACTUAL LIFE VESTED SHARES OPTION SHARES PRICE CONTRACTUAL LIFE
- ------------- -------- ---------------- ------------- ------------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
51,168 0.90 47 months 51,168 51,168 0.90 44 months
828,488 2.86 73 months 750,969 791,925 2.86 71 months
505,637 3.60 106 months 70,963 453,137 3.60 103 months
70,500 5.40 118 months
--------
1,385,293 873,100 1,366,730
========
<CAPTION>
- -------------
OPTION SHARES VESTED SHARES
- ------------- -------------
<S> <C>
51,168 51,168
828,488 741,124
505,637 118,471
--
1,385,293 910,763
</TABLE>
There are 114,904 options available for grant under the plans at December
31, 1996.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1995 and 1996, respectively: risk-free weighted
average interest rates of 6.5 and 6.2 percent; expected dividend yield of zero
percent; expected life of 5 years from the grant date; expected volatility of 58
percent.
12. EXPENSES RELATED TO RESTRUCTURING EUROPEAN OPERATIONS:
In 1990, the Company began reorganizing its activities in Europe in order
to reduce overhead costs. Two offices were closed and certain space in other
offices was vacated, resulting in excess space under lease agreements which
expire December 1999 through December 2014. These facilities are currently
subleased to third parties for periods less than the lease term for which the
Company is obligated. The maximum undiscounted and discounted obligations for
this excess space, net of sublease income as of December 31, 1996, assuming all
contractual sublease break clauses are exercised, are approximately $16.6
million and $7.7 million, respectively, at December 31, 1996. The net maximum
undiscounted and discounted obligations for excess space, assuming that no
sublease break clauses are exercised, are $5.3 million and $2.5 million,
respectively, at December 31, 1996. As of December 31, 1996, the accrual
F-19
<PAGE> 91
SYNON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
UNAUDITED.)
for excess space related to the reorganization was approximately $500,000. Given
the improvement in the U.K. rental market and recent successes in subletting
space, management believes that the accrual at December 31, 1996 is sufficient.
However, there can be no assurance that the rental market will not be negatively
impacted in the future.
13. RELATED-PARTY TRANSACTIONS:
The Company and IBM, a related party, have entered into several marketing
agreements. For the years ended December 31, 1994, 1995 and 1996 and the
quarters ended March 31, 1996 and 1997, the Company incurred marketing expenses
under these agreements of $237,000, $188,000, $32,000, $(68,000) and $25,000,
respectively. Fees payable to IBM as of December 31, 1995 and 1996 and the
quarter ended March 31, 1997 were $378,000, $47,000, and $63,000, respectively,
and are included in other accrued expenses in the accompanying consolidated
balance sheets.
In 1993 and 1996, the Company and IBM entered into development agreements.
Under the 1993 agreement, IBM advanced the Company $200,000 toward the
development of a software product. As of December 31, 1996, the Company had
recognized all revenue under this agreement. Under the 1996 agreement, IBM has
agreed to advance the Company up to $200,000 for the joint development of a
software product. As of December 31, 1996, the Company had received $140,000,
all of which is included in deferred revenue in the accompanying consolidated
balance sheet.
The Company has entered into an agreement to pay a stockholder and a
developer of the Obsydian technology a collective commission of 3 percent
through December 31, 1996 and of 1.5 percent after December 31, 1996 on Obsydian
license and maintenance revenue. Royalties earned by these individuals in the
years ended December 31, 1994, 1995 and 1996 and for the three months ended
March 31, 1996 and 1997 were approximately $66,000, $205,000, $301,000, $47,000
and $42,000, respectively. Royalties accrued at December 31, 1995 and 1996 and
March 31, 1997 were $146,000, $184,000, and $114,000, respectively.
14. COMMITMENTS AND CONTINGENCIES:
The Company has entered into employment agreements with three key employees
providing for the payment of up to one year's salary and certain bonus amounts
in the event of termination or a change in control of the Company.
15. RETIREMENT PLAN:
The Company participates in an employee savings and retirement 401(k) plan
which covers all full-time employees who are at least 21 years of age. Employees
may elect to contribute up to 15% of their compensation (subject to statutory
limitations) to the Plan. The Company, at its discretion, may provide a matching
contribution in an amount as determined by the Board of Directors. To date the
Company has made no matching contributions.
16. LITIGATION:
The Company is involved in various litigation matters arising during the
normal course of its business. The Company intends to defend these matters, and
it is management's opinion that the ultimate outcome of these matters will not
have a material adverse effect on the Company's operations or financial
position.
F-20
<PAGE> 92
SYNON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997 IS
UNAUDITED.)
17. SUBSEQUENT EVENTS:
PROPOSED OFFERING
In May, 1997, the Board of Directors authorized the Company to file a
registration statement with the Securities and Exchange Commission offering its
common stock to the public. In conjunction with the Registration, the Board of
Directors authorized, subject to stockholder approval in June 1997, a one-for-
two reverse stock split of the Company's common stock.
OPTION AND PURCHASE PLANS
In May, 1997, the Board of Directors authorized, subject to stockholder
approval in June 1997, the 1997 Incentive Stock Option Plan, the 1997 Employee
Stock Purchase Plan and the 1997 Director Stock Option Plan. A total of
1,500,000 shares, 400,000 shares, and 175,000 shares have been reserved for
issuance under these Plans, respectively. Each of these Plans provides for an
annual increase in the number of shares reserved for issuance.
F-21
<PAGE> 93
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY OF THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH THE INFORMATION IS GIVEN IN
THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 5
Use of Proceeds....................... 15
Dividend Policy....................... 15
Capitalization........................ 16
Dilution.............................. 17
Selected Consolidated Financial
Data................................ 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 19
Business.............................. 30
Management............................ 47
Certain Transactions.................. 56
Principal and Selling Stockholders.... 59
Description of Capital Stock.......... 62
Shares Eligible for Future Sale....... 65
Underwriting.......................... 67
Legal Matters......................... 68
Experts............................... 68
Additional Information................ 69
Index to Financial Statements......... F-1
</TABLE>
------------------------
UNTIL , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE
OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
======================================================
======================================================
SHARES
SYNON
CORPORATION
COMMON STOCK
($.001 PAR VALUE)
LOGO
SALOMON BROTHERS INC
VOLPE BROWN WHELAN &
COMPANY
PROSPECTUS
DATED , 1997
======================================================
<PAGE> 94
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts, commissions and certain accountable expenses, payable by
the Company in connection with the sale of Common Stock being registered. All
amounts are estimates except the SEC registration fee and the NASD filing fee.
<TABLE>
<S> <C>
SEC Registration Fee...................................................... $13,940
NASD Filing Fee........................................................... 5,100
Nasdaq National Market Listing Fee........................................ 5,000
Printing Fees and Expenses................................................ *
Legal Fees and Expenses................................................... *
Accounting Fees and Expenses.............................................. *
Blue Sky Fees and Expenses................................................ *
Transfer Agent and Registrar Fees......................................... 10,000
Miscellaneous............................................................. *
------
Total........................................................... $*
======
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
The Registrant's Amended and Restated Certificate of Incorporation provides
for the indemnification of directors to the fullest extent permissible under
Delaware law.
The Registrant's Bylaws provide for the indemnification of officers,
directors and third parties acting on behalf of the Registrant if such person
acted in good faith and in a manner reasonably believed to be in and not opposed
to the best interest of the Registrant, and, with respect to any criminal action
or proceeding, the indemnified party had no reason to believe his conduct was
unlawful.
The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for in
the Registrant's Bylaws, and intends to enter into indemnification agreements
with any new directors and executive officers in the future.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since May 22, 1994, the Registrant has issued and sold 156,338 shares of
its Common Stock to employees for an aggregate amount of $159,648.08 pursuant to
the exercise of options under its 1990 Stock Option Plan and Executive Share
Option Scheme.
The share amounts set forth above take into account the one-for-two reverse
stock split that will be effective prior to the closing of the offering
contemplated by this Registration Statement.
The sales of such securities were deemed to be exempt from registration
under the Securities Act in reliance on Rule 701 promulgated under Section 3(b)
of the Securities Act as transactions pursuant to compensatory benefit plans and
contracts relating to compensation as provided under such Rule 701.
The recipients of securities in each such transaction represented their
intention to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof
II-1
<PAGE> 95
and appropriate legends were affixed to the share certificates issued in such
transactions. All recipients had adequate access, through their relationships
with the Company, to information about the Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<C> <S>
*1.1 Form of Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation filed with the Secretary
of State of Delaware on July 16, 1991, as amended by a Certificate of
Amendment filed on August 30, 1991 and a Certificate of Amendment filed on
August 28, 1992.
3.2 Form of Certificate of Amendment of Certificate of Incorporation to be filed
with the Secretary of State of Delaware.
3.3 Form of Amended and Restated Certificate of Incorporation to be filed after
the closing of this Offering made under this Registration Statement.
3.4 Amended and Restated Bylaws.
*4.1 Specimen Common Stock Certificate.
*4.2 Third Amended and Restated Stockholders' Agreement dated as of June ,
1994.
4.3 Stock Purchase Agreement dated as of August 28, 1992 between the Registrant
and International Business Machines Corporation, as amended on May 28, 1997.
*5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, as to
the legality of the securities being registered.
9.1 See Exhibit 4.2.
9.2 See Exhibit 4.3.
10.1 Form of Indemnification Agreement for directors and officers.
10.2 1990 Stock Option Plan and form of agreement thereunder.
10.3 Rules of the Executive Share Option Scheme and forms of offer and acceptance
letters thereunder.
10.4 1997 Incentive Stock Plan and form of agreement thereunder.
10.5 1997 Employee Stock Purchase Plan and forms of participation agreement
thereunder.
10.6 1997 Director Option Plan and form of agreement thereunder.
10.7 See Exhibit 4.2.
10.8 See Exhibit 4.3.
10.9 Series D Preferred Stock Purchase Agreement dated as of July 16, 1991.
10.10 Employment Agreement between the Registrant and Richard H. Goldberg dated
September 17, 1992, as amended on December 7, 1992.
10.11 Termination Agreement between the Registrant and Duncan Moore dated January
28, 1997.
10.12 Employment Agreement between the Registrant and Paul K. Wilde dated as of
March 27, 1991, as amended on March 29, 1991, December 10, 1992 and January
14, 1993.
10.13 Employment Agreement between the Registrant and William R. Yeack dated
January 2, 1996.
10.14 Employment Agreement between the Registrant and Simon Williams dated July
28, 1994.
10.15 Employment Agreement between the Registrant and Melinda Horton dated July
28, 1994.
10.16 Offer Letter from the Registrant to John F. Rockart dated April 14, 1993.
</TABLE>
II-2
<PAGE> 96
<TABLE>
<C> <S>
10.17 Security Agreement between the Registrant and Paul K. Wilde dated as of
September 24, 1992.
10.18 Full Recourse Promissory Note from Paul K. Wilde to the Registrant dated
September 24, 1992.
10.19 Employment Agreement between the Registrant and Kevin Kilroy dated May 15,
1997.
10.20 Agreement Related to the Sale and Purchase of the Entire Issued Share
Capital of Dysys Limited, dated as of September 15, 1992.
10.21 Development Incentive Agreement dated as of September 27, 1990 between
Synon, Inc. and International Business Machines Corporation.
+10.22 IBM Developer Agreement and Statement of Work dated as of December 20, 1996
between the Registrant and International Business Machines Corporation.
+10.23 Software Vendor Marketing Programs Agreement dated as of March 7, 1997
between the Registrant and International Business Machines Corporation.
+10.24 Non Exclusive International Distributorship Agreement dated January 8, 1996
between Synon Deutschland GmbH and CGI Informatik GmbH.
+10.25 Agreement dated April 1, 1997 between the Registrant and International
Business Machines Corporation relating to the joint development of class
libraries.
10.26 Form of Synon/2E Software License Agreement.
10.27 Form of Obsydian Software License Agreement.
10.28 Lease Agreements as amended, between Synon, Inc. and Lincoln Property
Company N.C., Inc. for the Registrant's headquarters in Larkspur,
California.
10.29 Lease Agreements dated October 16, 1989, May 20, 1988, September 15, 1989
for the headquarters of Synon Europe Limited in London, United Kingdom.
+10.30 CGI Systems Contractor Agreement dated August 30, 1996 between CGI Systems
Inc. and Synon, Inc.
10.31 Loan and Security Agreement dated as of March 17, 1994, as amended on June
5, 1995 and July 15, 1996, by and among the Registrant, Synon, Inc. and
Silicon Valley Bank.
10.32 Intellectual Property Security Agreement dated as of March 17, 1994 by and
among the Registrant, Synon, Inc. and Silicon Valley Bank.
10.33 Notice of Stock Option Grant from the Registrant to Richard H. Goldberg.
10.34 Notice of Stock Option Grant from the Registrant to Paul K. Wilde.
10.35 Notice of Stock Option Grant from the Registrant to William R. Yeack.
10.36 Notices of Stock Option Grant from the Registrant to William O. Grabe.
10.37 Notice of Stock Option Grant from the Registrant to John F. Rockart.
10.38 Notice of Stock Option Grant from the Registrant to Duncan Moore.
10.39 Notice of Stock Option Grant from the Registrant to William R. Stuek.
11.1 Calculation of earnings per share.
21.1 List of Subsidiaries of the Registrant.
23.1 Consent of Independent Auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-4).
</TABLE>
- ---------------
* To be filed by amendment.
+ Confidential treatment has been requested with respect to certain portions
of this exhibit pursuant to a request for confidential treatment filed with
the Securities and Exchange Commission. Omitted portions have been filed
separately with the Commission.
II-3
<PAGE> 97
(b) Financial Statement Schedules
<TABLE>
<S> <C> <C>
[Schedule I -- Marketable Securities-Other Investments
Schedule VIII -- Valuation and Qualifying Accounts
Schedule IX -- Short-term Borrowings
Schedule X -- Supplementary Income Statement Information]
</TABLE>
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes to provide the Underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 14 above, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933, and will be governed by the final adjudication of such
issue.
The undersigned Registrant undertakes that: (1) for purposes of determining
any liability under the Securities Act of 1933, the information omitted from the
form of prospectus as filed as part of the registration statement in reliance
upon Rule 430A and contained in the form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was declared
effective, and (2) for the purpose of determining any liability under the
Securities Act of 1933, each posteffective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 98
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Larkspur, State of California, on the 28th day of May, 1997.
SYNON CORPORATION
By /s/ RICHARD H. GOLDBERG
------------------------------------
Richard H. Goldberg, President, CEO
and Chairman
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Richard H. Goldberg and Paul K.
Wilde and each one of them, acting individually and without the other, as his or
her attorney-in-fact, each with full power of substitution, for him and her in
any and all capacities, to sign any and all amendments to this Registration
Statement (including post-effective amendments), and to sign any registration
statement for the same Offering covered by this Registration Statement that is
to be effective upon filing pursuant to Rule 462(b) promulgated under the
Securities Act of 1933, and all post-effective amendments thereto, and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his substitute or substitutes may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------------- ---------------------------- --------------
<S> <C> <C>
/s/ RICHARD H. GOLDBERG President, Chief Executive May 28, 1997
- ----------------------------------------------- Officer and Chairman of the
Richard H. Goldberg Board
/s/ PAUL K. WILDE Vice President, Chief May 28, 1997
- ----------------------------------------------- Financial and Accounting
Paul K. Wilde Officer and Secretary
/s/ WILLIAM O. GRABE Director May 28, 1997
- -----------------------------------------------
William O. Grabe
/s/ DAVID C. HODGSON Director May 28, 1997
- -----------------------------------------------
David C. Hodgson
/s/ JOHN F. ROCKART Director May 28, 1997
- -----------------------------------------------
John F. Rockart
/s/ WILLIAM M. STUEK Director May 28, 1997
- -----------------------------------------------
William M. Stuek
</TABLE>
II-5
<PAGE> 99
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT DESCRIPTION PAGE
-------- ---------------------------------------------------------------- ------------
<C> <S> <C>
*1.1 Form of Underwriting Agreement
3.1 Amended and Restated Certificate of Incorporation filed with the
Secretary of State of Delaware on July 16, 1991, as amended by a
Certificate of Amendment filed on August 30, 1991 and a
Certificate of Amendment filed on August 28, 1992
3.2 Form of Certificate of Amendment of Certificate of Incorporation
to be filed with the Secretary of State of Delaware
3.3 Form of Amended and Restated Certificate of Incorporation to be
filed after the closing of this Offering made under this
Registration Statement
3.4 Amended and Restated Bylaws
*4.1 Specimen Common Stock Certificate
*4.2 Third Amended and Restated Stockholders' Agreement dated as of
June , 1994
4.3 Stock Purchase Agreement dated as of August 28, 1992 between the
Registrant and International Business Machines Corporation, as
amended on May 28, 1997
*5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, as to the legality of the securities being
registered
9.1 See Exhibit 4.2
9.2 See Exhibit 4.3
10.1 Form of Indemnification Agreement for directors and officers
10.2 1990 Stock Option Plan and form of agreement thereunder
10.3 Rules of the Executive Share Option Scheme and forms of offer
and acceptance letters thereunder
10.4 1997 Incentive Stock Plan and form of agreement thereunder
10.5 1997 Employee Stock Purchase Plan and forms of participation
agreement thereunder
10.6 1997 Director Option Plan and form of agreement thereunder
10.7 See Exhibit 4.2
10.8 See Exhibit 4.3
10.9 Series D Preferred Stock Purchase Agreement dated as of July 16,
1991
10.10 Employment Agreement between the Registrant and Richard H.
Goldberg dated September 17, 1992, as amended on December 7,
1992
10.11 Termination Agreement between the Registrant and Duncan Moore
dated January 28, 1997
10.12 Employment Agreement between the Registrant and Paul K. Wilde
dated as of March 27, 1991, as amended on March 29, 1991,
December 10, 1992 and January 14, 1993
10.13 Employment Agreement between the Registrant and William R. Yeack
dated January 2, 1996
10.14 Employment Agreement between the Registrant and Simon Williams
dated July 28, 1994
</TABLE>
<PAGE> 100
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT DESCRIPTION PAGE
-------- ---------------------------------------------------------------- ------------
<C> <S> <C>
10.15 Employment Agreement between the Registrant and Melinda Horton
dated July 28, 1994
10.16 Offer Letter from the Registrant to John F. Rockart dated April
14, 1993
10.17 Security Agreement between the Registrant and Paul K. Wilde
dated as of September 24, 1992
10.18 Full Recourse Promissory Note from Paul K. Wilde to the
Registrant dated September 24, 1992
10.19 Employment Agreement between the Registrant and Kevin Kilroy
dated May 15, 1997
10.20 Agreement Related to the Sale and Purchase of the Entire Issued
Share Capital of Dysys Limited, dated as of September 15, 1992
10.21 Development Incentive Agreement dated as of September 27, 1990
between Synon, Inc. and International Business Machines
Corporation
+10.22 IBM Developer Agreement and Statement of Work dated as of
December 20, 1996 between the Registrant and International
Business Machines Corporation
+10.23 Software Vendor Marketing Programs Agreement dated as of March
7, 1997 between the Registrant and International Business
Machines Corporation
+10.24 Non Exclusive International Distributorship Agreement dated
January 8, 1996 between Synon Deutschland GmbH and CGI
Informatik GmbH
+10.25 Agreement dated April 1, 1997 between the Registrant and
International Business Machines Corporation relating to the
joint development of class libraries
10.26 Form of Synon/2E Software License Agreement
10.27 Form of Obsydian Software License Agreement
10.28 Lease Agreements as amended, between Synon, Inc. and Lincoln
Property Company N.C., Inc. for the Registrant's headquarters in
Larkspur, California
10.29 Lease Agreements dated October 16, 1989, May 20, 1988, September
15, 1989 for the headquarters of Synon Europe Limited in London,
United Kingdom
+10.30 CGI Systems Contractor Agreement dated August 30, 1996 between
CGI Systems Inc. and Synon, Inc.
10.31 Loan and Security Agreement dated as of March 17, 1994, as
amended on June 5, 1995 and July 15, 1996, by and among the
Registrant, Synon, Inc. and Silicon Valley Bank
10.32 Intellectual Property Security Agreement dated as of March 17,
1994 by and among the Registrant, Synon, Inc. and Silicon Valley
Bank
10.33 Notice of Stock Option Grant from the Registrant to Richard H.
Goldberg.
10.34 Notice of Stock Option Grant from the Registrant to Paul K.
Wilde
10.35 Notice of Stock Option Grant from the Registrant to William R.
Yeack
10.36 Notices of Stock Option Grant from the Registrant to William O.
Grabe
10.37 Notice of Stock Option Grant from the Registrant to John F.
Rockart
10.38 Notice of Stock Option Grant from the Registrant to Duncan Moore
</TABLE>
<PAGE> 101
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT DESCRIPTION PAGE
-------- ---------------------------------------------------------------- ------------
<C> <S> <C>
10.39 Notice of Stock Option Grant from the Registrant to William R.
Stuek
11.1 Calculation of earnings per share
21.1 List of Subsidiaries of the Registrant
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-4)
</TABLE>
- ---------------
* To be filed by amendment.
+ Confidential treatment has been requested with respect to certain portions
of this exhibit pursuant to a request for confidential treatment filed with
the Securities and Exchange Commission. Omitted portions have been filed
separately with the Commission.
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SYNON CORPORATION
(Pursuant to Section 245 of the Delaware General Corporation Law)
Paul Wilde and Mark A. Bertelsen hereby certify that:
1. They are the Vice President and Assistant Secretary of Synon
Corporation, a Delaware Corporation.
2. The Certificate of Incorporation of this corporation,
originally filed with the Secretary of State of Delaware on May 11, 1990, is
hereby amended and restated in its entirety to read as follows:
"FIRST: The name of the Corporation is Synon Corporation (the
"Corporation").
SECOND: The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange
Street, in the City of Wilmington, County of New Castle, Zip
Code 19801. The name of its registered agent at such address
is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the
General Corporation Law of Delaware.
FOURTH: This Corporation is authorized to issue two classes of shares
to be designated, respectively, Common Stock and Preferred
Stock. The total number of shares of Common Stock this
Corporation shall have authority to issue is 25,000,000 and
the total number of shares of Preferred Stock this Corporation
shall have authority to issue is 10,000,000. The par value of
the Common Stock and the Preferred Stock shall be $0.001. Upon
the filing of this Amended and Restated Certificate of
Incorporation, each share of Series B Preferred Stock
outstanding immediately prior to the filing of this Amended
and Restated Certificate of Incorporation shall be
reconstituted as and converted into 0.48394 shares of Series D
Preferred Stock with the rights, preferences, privileges and
restrictions set forth herein, and each share of Series C
Preferred Stock outstanding immediately prior to the filing of
this Amended and Restated Certificate of Incorporation shall
be reconstituted as and converted into 0.1906433 shares of
Series A Preferred Stock with the rights, preferences,
privileges and restrictions set forth herein. No fractional
shares shall be issued upon such reconstitution and conversion
of the Series B and Series C Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be
entitled, the corporation shall pay cash equal to such
fraction multiplied by the conversion price applicable to the
shares being reconstituted and converted immediately prior to
the filing of this Amended and Restated Certificate of
Incorporation.
The Preferred Stock may be issued from time to time in one or
more series. A portion of the Preferred Stock shall initially
be designated as two series, namely, Series A Preferred Stock
(the "Series A Preferred"), consisting of 2,554,620 shares,
and Series D Preferred Stock (the "Series D Preferred"),
<PAGE> 2
consisting of 3,618,269 shares. The Board of Directors is
hereby authorized to fix or alter the dividend rights,
dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions),
redemption price or prices, and liquidation preferences of any
wholly unissued series of Preferred Stock, and the number of
shares constituting any such series and the designation
thereof, or any of them.
The Board of Directors is further authorized to increase or
decrease (but not below the number of shares thereof then
outstanding) the number of shares of any series, the number of
which was fixed by it, subsequent to the issue of shares of
such series then outstanding, subject to the limitations and
restrictions stated in the Certificate of Incorporation or the
resolution of the Board of Directors originally fixing the
number of shares of such series. If the number of shares of
any series is so decreased, then the shares constituting such
decrease shall resume the status which they had prior to the
adoption of the resolution originally fixing the number of
shares of such series.
The Corporation shall from time to time in accordance with the
laws of the State of Delaware increase the authorized amount
of its Common Stock if at any time the number of shares of
Common Stock remaining unissued and available for issuance
shall not be sufficient to permit conversion of the Series A
Preferred and Series D Preferred.
The relative rights, preferences, privileges and restrictions granted
to or imposed on the respective classes of the shares of capital stock or the
holders thereof are as follows:
1. Dividends. The holders of Series A Preferred, Series D
Preferred and Common Stock shall be entitled to receive dividends on a pari
passu basis when and as declared by the Board of Directors, out of funds
legally available therefor. Such dividends shall not be cumulative and no
right to such dividends shall accrue to holders of the Preferred Stock and
Common Stock except as declared by the Board of Directors.
2. Liquidation Preference. In the event of any liquidation,
dissolution, or winding up of the Corporation, either voluntary or involuntary,
distributions to the stockholders of the Corporation shall be made in the
following manner:
(a) First, holders of Series D Preferred shall be
entitled to receive, prior and in preference to any distribution of any of the
assets or surplus funds of the Corporation to the holders of the Corporation's
other stock, the amount of $3.35 per share and, in addition, an amount equal to
any declared but unpaid dividends on the Series D Preferred shares then held by
them. If the assets and funds thus distributed among the holders of the Series
D Preferred shall be insufficient to permit the payment to such holders of the
full aforesaid preferential amount, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed ratably
among the holders of the Series D Preferred based on the number of shares of
Series D Preferred held.
(b) Second, holders of Series A Preferred shall be
entitled to receive, prior and in preference to any distribution of any of the
assets or surplus funds of the Corporation to the holders of the Corporation's
Common Stock, the amount of $8.503194 per share and, in addition, an amount
equal to any declared but unpaid dividends on the Series A Preferred shares
then held by them. If, after payment has been made to the holders of Series D
Preferred of the full amounts to which they shall be entitled as aforesaid, the
assets and funds thus distributed among the holders of the Series A Preferred
shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amount, then the remaining assets and funds of the
corporation legally available for
<PAGE> 3
distribution shall be distributed ratably among the holders of the Series A
Preferred based on the number of shares of Series A Preferred held.
(c) Third, holders of Series D Preferred and Common Stock
shall be entitled to receive the amount of $8.503194 per share and, in
addition, an amount equal to any declared but unpaid dividends on the Series D
Preferred or Common Stock shares then held by them. If, after payment has been
made to the holders of Series D Preferred and Series A Preferred of the full
amounts to which they shall be entitled pursuant to subsections (a)-(b) above,
the assets and funds thus distributed among the holders of the Series D
Preferred and Common Stock pursuant to this subsection (c) shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amount, then the remaining assets and funds of the Corporation
legally available for distribution shall be distributed ratably among the
holders of the Series D Preferred and Common Stock based on the number of
shares of Common Stock held, assuming conversion of the Series D Preferred into
Common Stock.
(d) After payment has been made to the holders of
Preferred Stock and Common Stock as discussed above in subsections (a)-(c),
the holders of Series A Preferred, Series D Preferred and Common Stock shall be
entitled to share ratably in the remaining assets and funds of the Corporation
based on the number of shares of Common Stock held, assuming conversion of the
Series A Preferred and Series D Preferred into Common Stock.
(e) For purposes of this Section 2, a merger or
consolidation of the Corporation with or into any other corporation or
corporations, or a sale of all or substantially all of the assets of the
Corporation, shall be treated as a liquidation, dissolution or winding up of
the Corporation, unless the stockholders of the Corporation hold at least 50%
of the outstanding voting equity securities of the surviving corporation in
such merger, consolidation or sale of assets reorganization.
(f) Each holder of an outstanding share of Preferred
Stock shall be deemed to have consented, for all purposes, to distributions
made by the Corporation in connection with the repurchase of shares of Common
Stock issued to or held by employees or consultants upon termination of their
employment or services pursuant to agreements providing for the right of said
repurchase between the Corporation and such persons.
3. Voting Rights.
(a) General Voting. Except as otherwise required by law,
the holder of each share of Common Stock shall be entitled to one vote and the
holder of each share of Preferred Stock shall be entitled to the number of
votes equal to the number of shares of Common Stock into which the Preferred
Stock could be converted at the record date for determination of the
stockholders entitled to vote on such matters, or, if no such record date is
established, at the date such vote is taken or any written consent of
stockholders is solicited, and, except as otherwise expressly provided herein
or required by law, such votes to be counted together with all other shares of
stock of the Corporation having general voting power and not separately as a
class.
(b) Notice; Fractional Shares. Holders of Common Stock
and Preferred Stock shall be entitled to notice of any stockholders' meeting in
accordance with the Bylaws of the Corporation. Fractional votes by the holders
of Preferred Stock shall not, however, be permitted and any fractional voting
rights resulting hereunder (after aggregating all shares into which shares of
Preferred Stock held by each holder could be converted) shall be rounded to the
nearest whole number.
4. Conversion. The holders of the Preferred Stock have
conversion rights as follows:
(a) Right to Convert.
<PAGE> 4
(i) Series A Preferred. Each share of Series A
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share, into one fully paid and
nonassessable share of Common Stock.
(ii) Series D Preferred. Each share of Series D
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share, into one fully paid and
nonassessable share of Common Stock and, in addition, the amount of $3.35 in
cash or, at the election of the Corporation, equity securities of the
Corporation with an agreed-upon or appraised market value of $3.35 (such cash
or securities equivalent to $3.35 referred to herein as the "Series D
Conversion Consideration"). In the event the Corporation elects to issue
securities with an appraised market value of $3.35, such appraisal shall be
made by the Corporation's independent auditors, by a party selected by the
Corporation's independent auditors or by a party otherwise acceptable to the
Corporation and to the holder converting such shares of Series D Preferred
Stock.
(b) Automatic Conversion. Each share of Series A
Preferred Stock shall automatically be converted into one share of Common Stock
and each share of Series D Preferred Stock shall automatically be converted
into one share of Common Stock and, in addition, the Series D Conversion
Consideration upon the occurrence of any of the following events: (A) the
closing of a firm commitment, underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
covering the offer and sale of Common Stock of the Corporation to the public at
a minimum price per share (prior to underwriting commissions and offering
expenses) of $10.00 per share (appropriately adjusted for any stock split,
stock dividend, combination, recapitalization or similar event) and an
aggregate gross offering price of not less than $10,000,000; or (B) the
approval of such conversion by the vote of holders of more than 50% of the
aggregate number of outstanding shares of Preferred Stock. In the event of the
automatic conversion of the Preferred Stock upon a public offering as
aforesaid, the person(s) entitled to receive the Common Stock and, in the case
of holders of Series D Preferred Stock, the Series D Conversion Consideration
issuable upon such conversion of Preferred Stock shall not be deemed to have
converted such Preferred Stock until immediately prior to the closing of such
sale of securities.
(iii) Mechanics of Conversion. No fractional
shares of Common Stock shall be issued upon conversion of the Preferred Stock.
In lieu of any fractional shares to which the holder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction multiplied by
the fair market value of the Common Stock as determined by the Board of
Directors. Before any holder of Preferred Stock shall be entitled to convert
the same into full shares of Common Stock, to receive certificates therefor
and, in the case of holders of Series D Preferred Stock, to receive the Series
D Conversion Consideration, he or she shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of
any transfer agent for the Preferred Stock, and shall give written notice to
the Corporation at such office that he or she elects to convert the same;
provided, however, that in the event of an automatic conversion pursuant to
Section 4(a)(ii)), the outstanding shares of Preferred Stock shall be converted
automatically without any further action by the holders of such shares and
whether or not the certificates representing such shares are surrendered to the
Corporation or its transfer agent and provided further that the Corporation
shall not be obligated to issue certificates evidencing conversion and, in the
case of Series D Preferred Stock, to issue the Series D Conversion
Consideration unless the certificates evidencing such shares of Preferred Stock
are either delivered to the Corporation or its transfer agent as provided
above, or the holder notifies the Corporation or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection with such certificates. The Corporation shall, as
soon as practicable after such delivery, issue and deliver at such office to
such holder of Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which such holder shall be entitled as aforesaid, a
check payable to the holder in the amount of any cash amounts payable as the
result of a conversion into fractional shares of Common Stock and, in the
<PAGE> 5
case of holders of Series D Preferred Stock, the Series D Conversion
Consideration. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the shares of
Preferred Stock to be converted, or in the case of automatic conversion on the
date of closing of the public offering or on the date agreed upon by the
stockholders approving a conversion, and the person or persons entitled to
receive the shares of Common Stock and, in the case of Series D Preferred
Stock, the Series D Conversion Consideration issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such
shares of Common Stock and, in the case of holders of Series D Preferred Stock,
such Series D Conversion Consideration on such date.
5. Preemptive Rights.
(a) All shares of capital stock, including securities
convertible into capital stock, which the Corporation proposes to issue (other
than issuances in accordance with subsection (b) below) shall first be offered
to the Corporation's stockholders pro rata based on their share ownership of
Common Stock and Preferred Stock. The offer shall be made by notice specifying
the number of shares offered, and limiting a period (not less than fourteen
days) within which the offer, if not accepted, will be deemed to be declined.
After the expiration of such period, those shares deemed to be declined shall
be offered pro rata to the persons who have, within the said period, accepted
all the shares offered to them; such further offer shall be made on the same
terms and in the same manner as the original offer. Any shares not accepted
pursuant to such offer or further offer as aforesaid shall be under the control
of the Corporation who may allot, grant options over or otherwise dispose of
the same to such persons, on such terms, and in such manner as it thinks fit,
provided however that such shares shall not be disposed of on terms which are
more favorable to the subscribers therefor than the terms on which they were
offered to the stockholders of the Corporation.
(b) The preemptive rights contained in Section 5(a) above
shall not apply to or in respect of the issuance of or grant of options over
shares in the Corporation as follows:
(i) pursuant to any stock benefit plan or stock
option agreement approved by the Board of Directors;
(ii) pursuant to an acquisition of shares in the
Corporation's subsidiaries in exchange for shares in the Corporation;
(iii) any shares of Common Stock issued upon the
conversion of shares of Preferred Stock pursuant to Section 4 of this Article;
(iv) any shares of Series D Preferred Stock;
(v) pursuant to a public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended;
(vi) pursuant to any sales, technology license or
distribution agreements or other strategic relationships approved by the Board
of Directors; or
(vii) pursuant to any acquisition approved by the
Board of Directors in exchange for shares in the Corporation, provided that the
number of shares to be exchanged does not exceed 15% of the total number of
shares of Series A Preferred, Series D Preferred and Common Stock of the
Corporation outstanding at the time of such acquisition.
(c) The provisions of this Section 5 may be amended only
by the approval of the holders of seventy-five percent (75%) of the Common
Stock and Preferred Stock voting together.
<PAGE> 6
(d) Notwithstanding the foregoing, the preemptive rights
granted pursuant to this Section 5 shall terminate upon the earlier to occur of
the closing of a firm commitment underwritten public offering registered under
the Securities Act of 1933, as amended, or such time as the corporation is
required to file reports pursuant to Sections 13 or 15(d) of the Securities
Exchange Act of 1934, as amended.
6. Covenants. In addition to any other rights provided by law,
the following covenants apply with regard to the holders of the Corporation's
securities:
(a) so long as any Series A Preferred or Series D
Preferred shall be outstanding, this Corporation shall not, without first
obtaining the affirmative vote of the holders of a majority of such outstanding
shares of Series A and Series D Preferred voting together:
(i) effect a split or reverse-split on the Common
Stock,
(ii) amend or repeal any provision of, or add any
provision to, this Corporation's Certificate of Incorporation if such action
would alter or change the rights, preferences, privileges and restrictions of
the Series A or Series D Preferred, or increase or decrease the number of
shares of Series A or Series D Preferred authorized hereby,
(iii) authorize or issue shares of any class or
series of stock having any preference or priority as to dividends or assets
superior to or on a parity with any such preference or priority of the Series A
or Series D Preferred, or authorize or issue any bonds, debentures, notes or
other obligations convertible into or exchangeable for, or having option rights
to purchase, any shares of stock of this Corporation other than Common Stock,
(iv) reclassify any shares of Common Stock and any
other shares of this Corporation other than the Series A or Series D Preferred
into shares having any preference or priority as to dividends or assets
superior to or on a parity with any such preference or priority of the Series A
or Series D Preferred, or
(v) authorize or approve any merger or
consolidation with or into any other corporation or any sale of all or
substantially all of the assets of the Corporation or any reorganization of the
Corporation;
(b) except as required by law, no person shall be
recognized by the Corporation as holding any shares upon any trust, and the
Corporation shall not be bound by or recognize any equitable, contingent,
future or partial interest in any shares or any interest in any fractional part
of a share, or (except only as by this Certificate otherwise expressly provided
or as by statute required or under an order of a court) any other right in
respect of any share, except an absolute right to the entirety thereof in the
registered holder.
7. Residual Rights. All rights accruing to the outstanding
shares of this Corporation not expressly provided for to the contrary herein
shall be vested in the Common Stock and the Series A Preferred.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: Elections of directors need not be by written ballot unless a
stockholder demands election by written ballot at the meeting
and before voting begins or unless the Bylaws of the
Corporation shall so provide.
SEVENTH: The number of directors which constitute the whole Board of
Directors of the Corporation shall be designated in the Bylaws
of the Corporation.
<PAGE> 7
EIGHTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to
make, alter, amend or repeal the Bylaws of the Corporation;
provided, however, that prior to the earlier to occur of the
closing of a firm commitment underwritten public offering
registered under the Securities Act of 1933, as amended, or
such time as the Corporation is required to file reports
pursuant to Sections 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, Sections 9.3 through 9.12 of the
Corporation's Bylaws may only be amended by the approval of
the holders of seventy-five percent (75%) of the stock
entitled to vote.
NINTH: To the fullest extent permitted by the Delaware General
Corporation Law as the same exists or as may hereafter be
amended, no director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director.
Neither any amendment nor repeal of this Article, nor the
adoption of any provision of this Certificate of Incorporation
inconsistent with this Article, shall eliminate or reduce the
effect of this Article in respect of any matter occurring, or
any cause of action, suit or claim that, but for this Article,
would accrue or arise, prior to such amendment, repeal or
adoption of an inconsistent provision.
TENTH: Meetings of stockholders may be held within or without the
State of Delaware, as the Bylaws may provide. The books of
the Corporation may be kept (subject to any provision
contained in the statutes) outside of the State of Delaware at
such place or places as may be designated from time to time by
the Board of Directors or in the Bylaws of the Corporation.
ELEVENTH: Upon the earlier to occur of the closing of a firm commitment
underwritten public offering registered under the Securities
Act of 1933, as amended, or such time as the Corporation is
required to file reports pursuant to Sections 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, no action
shall be taken by the stockholders of the Corporation except
at an annual or special meeting of stockholders called in
accordance with the Bylaws and no action shall be taken by the
stockholders by written consent.
TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are
granted subject to this reservation."
3. The foregoing Amended and Restated Certificate of
Incorporation has been duly approved by the Board of Directors in accordance
with Sections 245 and 242 of the Delaware General Corporation Law (the "DGCL").
4. The foregoing Amended and Restated Certificate of
Incorporation has been duly approved by the written consent of a majority of
the stockholders in accordance with Sections 228, 245 and 242 of the DGCL, and
notice has been given to all those stockholders who have not consented in
writing in accordance with Section 228(d) of the DGCL. The total number of
outstanding shares of Common Stock and Preferred Stock of the Corporation
entitled to act by written consent upon the Amended and Restated Certificate of
Incorporation were 6,519,684, and 5,011,462, respectively. The Preferred Stock
consists
<PAGE> 8
of 2,211,462 shares of Series A Preferred Stock, 1,000,000 shares of Series B
Preferred Stock and 1,800,000 shares of Series C Preferred Stock. The number
of shares consenting to the Amended and Restated Certificate of Incorporation
equaled or exceeded consent required. The percentage consent required was more
than 75% of the outstanding Common Stock, Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock consenting as separate classes.
We hereby further declare and certify under penalty of perjury under
the laws of the State of Delaware that the facts set forth in the foregoing
certificate are true and correct of our own knowledge and that this certificate
is our act and deed.
Executed at Larkspur, California, this 11th day of July 1991.
/s/ Paul Wilde /s/ Mark A. Bertelsen
- ------------------------ --------------------------
Paul Wilde, Mark A. Bertelsen,
Vice President Assistant Secretary
<PAGE> 9
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SYNON CORPORATION
(Pursuant to Section 242 of the Delaware General Corporation Law)
Paul Wilde and Mark A. Bertelsen hereby certify that:
1. They are the Vice President and Assistant Secretary of Synon
Corporation, a Delaware corporation.
2. The Amended and Restated Certificate of Incorporation filed
with the Secretary of State of Delaware on July 16, 1991 is hereby amended as
follows:
I. The second paragraph of the Fourth Article is hereby
amended in its entirety to read as follows:
"The Preferred Stock may be issued from time to time
in one or more series. A portion of the Preferred
Stock shall initially be designated as two series,
namely, Series A Preferred Stock (the "Series A
Preferred"), consisting of 2,687,750 shares, and
Series D Preferred Stock (the "Series D Preferred"),
consisting of 3,618,269 shares. The Board of
Directors is hereby authorized to fix or alter the
dividend rights, dividend rate, conversion rights,
voting rights, rights and terms of redemption
(including sinking fund provisions), redemption price
or prices, and liquidation preferences of any wholly
unissued series of Preferred Stock, and the number of
shares constituting any such series and the
designation thereof, or any of them."
(Changes underlined.)
II. Clause 5(b)(iv) of the Fourth Article is hereby
amended in its entirety to read as follows:
"(iv) any shares of Series D Preferred Stock or
133,130 shares of Series A Preferred Stock to be
issued to the related entities of TA Associates
("TA") in exchange for a like number of shares of
Common Stock held by TA;
(Changes underlined.)
3. The foregoing Certificate of Amendment of Amended and Restated
Certificate of Incorporation (the "Amendment") has been duly approved by the
Board of Directors in accordance with Section 242 of the Delaware General
Corporation Law (the "DGCL").
<PAGE> 10
4. The foregoing Amendment has been duly approved by the written
consent of a majority of the stockholders in accordance with Sections 228 and
242 of the DGCL, and notice has been given to all those stockholders who have
not consented in writing in accordance with Section 228(d) of the DGCL. The
total number of outstanding shares of Common Stock and Preferred Stock of the
Corporation entitled to act by written consent upon the Amendment were
6,519,684, and 5,814,680, respectively. The Preferred Stock consists of
2,554,620 shares of Series A Preferred Stock and 3,260,060 shares of Series D
Preferred Stock. The number of shares consenting to the Amendment equaled or
exceeded consent required. The percentage consent required was more than 75%
of the outstanding Common Stock, Series A Preferred Stock and Series D
Preferred Stock consenting as separate classes.
We hereby further declare and certify under penalty of perjury under
the laws of the State of Delaware that the facts set forth in the foregoing
certificate are true and correct of our own knowledge and that this Certificate
is our act and deed.
Executed at Larkspur, California, this 29th day of August 1991
/s/ Paul Wilde /s/ Mark A. Bertelsen
- ------------------------ --------------------------
Paul Wilde, Mark A. Bertelsen,
Vice President Assistant Secretary
<PAGE> 11
CERTIFICATE OF AMENDMENT
to the
CERTIFICATE OF INCORPORATION
of
SYNON CORPORATION
SYNON CORPORATION, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify:
FIRST: That the Board of Directors of the corporation, by the
unanimous written consent of its members, filed with the minutes of the board,
duly adopted resolutions setting forth a proposed amendment to the Certificate
of Incorporation of said Corporation, declaring said amendment to be advisable
and calling for the consideration of said amendment by the stockholders of said
Corporation. The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this Corporation be
amended by changing Article FOURTH thereof so that, as amended, said Article
shall be and read in its entirety an follows:
The Corporation is authorized to issue two classes of capital stock:
Preferred Stock, $0.001 par value per share ("Preferred Stock"), and Common
Stock, $0.001 par value per share ("Common Stock"). The total number of shares
of Preferred Stock which the Corporation shall have the authority to issue is
8,972,686 of which 3,687,750 shall be designated Series A Preferred Stock
("Series A Preferred"), 3,618,269 shall be designated series D Preferred Stock
("Series D Preferred") and 1,666,667 shall be designated Series E Preferred
Stock ("Series E Preferred"). The total number of shares or Common Stock which
the Corporation shall have the authority to issue is 25,000,000.
The Board of Directors is hereby authorized to fix or alter the
dividend rights, dividend rate, conversion rights, voting rights and
liquidation preferences of any wholly unissued series of Preferred Stock (to
the extent such terms of the series do not impair any term accorded to any
outstanding series of Preferred Stock), and the number of shares constituting
any such series and the designation thereof, or any of them to the extent such
terms are otherwise consistent with the other provisions hereof. No such
series or
<PAGE> 12
alteration may be authorized which (i) impairs any right, privilege, preference
or term accorded any existing series of Preferred Stock, (ii) grants any
liquidation preference on parity with or superior to the Series E Preferred
stock, (iii) initially authorizes any series with voting rights or dividend
preferences greater than that accorded one share of Common Stock or otherwise
provides for disproportionate voting privileges, (iv) authorizes the redemption
of such series or is entered into with any contract requiring the repurchase of
such series (or part thereof) or (v) is initially convertible into more than
one share of Common Stock or otherwise provides for disproportionate conversion
privileges.
The Board of Directors is further authorized to increase or decrease
(but not below the number of shares thereof then outstanding) the number of
shares of any series (other than any existing series), the number of which was
fixed by it, subsequent to the issuance of shares at such series then
outstanding, subject to the limitations and restrictions stated in the
Certificate of Incorporation or the resolution of the Board of Directors
originally fixing the number of shares of such series. If the number of shares
of any series is so decreased, then the shares constituting such decrease shall
resume the status which they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
The Corporation shall from time to time in accordance with the laws of
the State of Delaware increase the authorized amount of its Common Stock if at
any time the number of shares of Common Stock remaining unissued and available
for issuance shall not be sufficient to permit conversion or the Series A
Preferred, Series D Preferred and Series E Preferred.
The relative rights, preferences, privileges and restrictions granted
to or imposed upon the respective classes of shares of capital stock or holders
thereof are as set forth below.
Section 1. Banking. Except as otherwise expressly provided in this
Article Fourth the Series A Preferred, the Series D Preferred and the Series E
Preferred shall rank pari passu with the Preferred Stock of each other such
series and shall rank prior to the Common Stock and, subject to the rights of
any other series of Preferred Stock which may
<PAGE> 13
from time to time come into existence in accordance with the terms hereof, to
any other equity securities of the Corporation.
Section 2. Dividends. The holders of Series A Preferred, Series D
Preferred, Series E Preferred and Common Stock shall be entitled to receive
dividends on a pari passu basis when and an declared by the Board of Directors,
out of funds legally available therefore. Such dividends shall not be
cumulative and no right to such dividends shall accrue to holders of the
Preferred Stock and Common Stock except as declared by the Board of Directors.
Section 3. Liquidation. Upon the liquidation, dissolution or
winding-up of the Corporation, (i) the shares of Series E Preferred shall rank
prior to the shares of Common Stock and of any other series of Preferred Stock
or other class or series of capital stock of the Corporation, (ii) the series
D Preferred shall rank junior to the Series E Preferred, but prior to any other
such class or series and (iii) the Series A Preferred shall rank junior to the
Series D Preferred and Series E Preferred but prior to any other such class or
series so that in the event of any liquidation, dissolution or winding-up of
the Corporation (a "Liquidation Transaction"), whether voluntary or
involuntary:
(a) The holders of shares of Series E Preferred shall be
entitled to receive out of the assets of the Corporation available for
distribution to its stockholders, whether from capital, surplus or earnings,
before any distribution is made to holders of shares of Common Stock or any
other series of Preferred Stock or other class or series of capital stock, an
amount per share equal to $3.00 per share for each outstanding share of Series
E Preferred (the "Original Series E Issue Price"), plus an amount equal to all
declared and unpaid dividends (such sum being referred to as the "Liquidation
Preference" for the Series E Preferred). In the event the assets of the
Corporation are insufficient to pay such Liquidation Preference in full, the
assets shall be distributed pro rata among the holders of the Series E
Preferred based on the number of shares of stock owned by each holder.
(b) After payment of the full amount of the Liquidation
Preference for the Series E Preferred has been made to the holders of such
shares, the holders of shares of Series D Preferred shall be entitled to
receive out of the assets of the Corporation
<PAGE> 14
available for distribution to its stockholders, whether from capital, surplus
or earnings, before any distribution is made to holders of Common Stock or any
other series of Preferred Stock or other class or series of capital stock, an
amount per share of Series D Preferred equal to $3.35 for each outstanding
share of Series D Preferred (the "Original Series E Issue Price") plus an
amount equal to all declared and unpaid dividends (such sum being referred to
as the "Liquidation Preference" for the Series D Preferred). In the event the
assets of the Corporation are insufficient to pay such Liquidation Preference
in full, the assets shall be distributed pro rata among the holders of the
Series D Preferred based on the number of shares of stock owned by each holder.
(c) After payment of the full amount of their respective
Liquidation Preferences has been made to the holders of the Series D Preferred
and Series E Preferred, the holders of shares of Series A Preferred shall be
entitled to receive out of the assets of the Corporation legally available for
distribution to stockholders, before any distribution is made to holders of
shares of Common Stock or other class or series of capital stock, an amount per
share equal to $8.503194 for each outstanding share of Series A Preferred (the
"Original Series A Issue Price") plus an amount equal to all declared and
unpaid dividends an such shares (such sum being referred to as the "Liquidation
Preference" for the Series A Preferred). In the event the assets of the
Corporation are insufficient to pay such Liquidation Preference in full, the
assets shall be distributed pro rata among the holders of the Series A
Preferred based on the number of shares of stock owned by each holder.
(d) After payment of the full amount of the Liquidation
Preference for the Series A Preferred, the holders of the Series D Preferred
and the Common Stock shall each be entitled to receive an amount per share
equal to the Original Series E Issue Price plus, in the case of the Common
Stock, an amount equal to all declared and unpaid dividends on such shares. In
the event that assets are not available to distribute the full amounts per
share to be distributed pursuant to this Section 3(d), available assets shall
be distributed with respect to the Series D Preferred and the Common Stock pro
rata, based upon the number of shares of Common Stock into which the Series D
Preferred would then be convertible.
<PAGE> 15
(e) After payment of the full amount to be distributed
pursuant to Section 3(d), the holders of the Series D Preferred, Series E
Preferred and the Common Stock shall each be entitled to receive an amount per
share equal to $5.50 for each outstanding share. In the event that assets are
not available to distribute the full amounts per share to be distributed
pursuant to this Section 3(e), available assets shall be distributed with
respect to the Series D Preferred, Series E Preferred and the Common Stock pro
rata, based upon the number of shares of Common Stock into which the Series D
Preferred and the Series E Preferred would then be convertible.
(f) After payment of the full amount to be distributed
pursuant to Section 3(e), the remaining assets of the Corporation legally
available for distribution to stockholders shall be distributed to holders of
Series A Preferred, Series D Preferred, Series E Preferred and Common Stock pro
rata, based upon the number of shares of Common Stock into which the Preferred
Stock of the applicable Series would then be convertible.
(g) Each holder of an outstanding share of Preferred
Stock shall be deemed to have consented, for all purposes, to distributions
made by the Corporation in connection with the repurchase of shares of Common
Stock issued to or hold by employees or consultants upon termination or their
employment or services in an amount not in excess of the consideration paid for
such shares of Common Stock pursuant to agreements providing for the right of
said repurchase between the Corporation and such persons.
Section 4. Voting. (a) The holders of shares of Series A Preferred,
Series D Preferred and Series E Preferred shall have the right to vote,
together with the holders of all the outstanding shares of Common Stock and not
by classes (except as otherwise provided in this Section 4 or by applicable
law), for the election of directors of the Corporation and an all other matters
on which holders of shares of Common Stock have the right to vote. Each holder
of shares of Series A Preferred, Series D Preferred and Series E Preferred
shall have the right, for the shares of Series A Preferred, Series D Preferred
and Series E Preferred held by such holder an the applicable record date, to
cast that number of votes on each such matter equal to the number of shares of
Common Stock into which such shares of Preferred Stock of any and all series
owned of record by such holder might be converted as of such record date, with
any fractions rounded down to the next
<PAGE> 16
full vote, multiplied by the number of votes per share which the holders at
shares of Common Stock then have with respect to such matter.
(b) Notwithstanding anything to the contrary contained in
the Certificate of Incorporation (as amended) or By-laws of the Corporation,
the consent of holders of at least a majority of the outstanding shares of
Series E Preferred shall be required before the Corporation shall take action
an any matter which would require a vote of such Series to the full extent
required or permitted under Delaware law, including without limitation any
alteration of the powers, preferences, par value, special rights or any
increase in the number of shares of such Series.
Section 5. Conversion. (a) General. (i) On the terms and subject to
the conditions of this Section 5, the holder of a share of Series A Preferred,
Series D Preferred or Series E Preferred shall have the right, at its option,
at any time to convert such share into that number of shares of fully paid and
nonassessable Common Stock (calculated as to each conversion to the nearest
1/100th of a share) obtained by dividing the Original Series A Issue Price,
Original Series D Issue Price or Original Series E Issue Price, as the case may
be, by the Conversion Price for such series (as defined in Section 5(d)) and by
surrender of such share pursuant to Section 5(b) (the shares of Common Stock
issuable upon such conversion together with the shares of Common Stock issuable
upon a conversion of shares of Series D Preferred pursuant to Section 5(a) (ii)
and the shares of Common Stock issuable upon automatic conversion of shares of
Series A Preferred, Series D Preferred and Series E Preferred pursuant to the
provisions of Sections 5(a)(iii) and 5(a)(iv) being called "Conversion
Shares").
(ii) On the terms and subject to the conditions of
this Section 5, the holder of a share of Series D Preferred shall have the
right, at its option, only upon the sale, merger or liquidation of the
Corporation, or upon the consummation of an Initial Public Offering (defined
below) of the Corporation's Common Stock, to convert such share into (A) that
number of shares of fully paid and nonassessable Common Stock (calculated as to
each conversion to the nearest 1/100th of a share) obtained by dividing $3.35
by the Series D Conversion Price plus (B) the amount at $3.35 in cash out of
assets of the Corporation legally available for payment to shareholders or at
the election of the
<PAGE> 17
Corporation equity securities of the Corporation with an agreed-upon or
appraised market value of $3.35 (such cash or securities equivalent to $3.35
referred to herein as the "Series D Conversion Consideration"). In the event
the Corporation elects to issue securities with an appraised market value of
$3.35, such appraisal shall be made by an independent, nationally recognized
investment banking firm selected by the Corporation and the holders of a
plurality of the shares of Series D Preferred being converted; provided that if
such parties cannot agree on the selection of an investment banker, the
Corporation and the holders of a plurality of the shares of Series D Preferred
being converted shall each select one nationally recognized investment banking
firm, and the firms thus selected shall jointly select a third nationally
recognized investment banking firm which shall determine such fair market
value.
(iii) Each share of Series A Preferred shall
automatically be converted into Common Stock and each share of Series D
Preferred shall automatically be converted into Common Stock, using the
applicable Conversion Price, upon the closing of a public offering on an
underwritten firm commitment basis pursuant to a registration statement filed
and declared effective by the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Securities Act"), covering the
offer and sale by the Company of Common Stock at a per share price (as adjusted
for recapitalizations, stock splits, stock dividends and the like) of at least
$5 per share, which public offering results in gross cash proceeds to the
Company of at least $10 million dollars (the "Initial Public Offering"). In the
event of the automatic conversion of the Series A Preferred and the Series D
Preferred upon an Initial Public Offering as aforesaid, the person(s) entitled
to receive the Common Stock and, in the case of holders of Series D Preferred,
the Series D Conversion Consideration issuable upon such conversion of
Preferred Stock, shall not be deemed to have converted such Preferred Stock
until immediately prior to the closing of such sale of securities.
(iv) Each share of Series E Preferred shall
automatically be converted into Common Stock, using the Series E Conversion
Price, upon the Company's Initial Public Offering. In the event of the
automatic conversion of the Series E Preferred upon an Initial Public Offering
as aforesaid, the person(s) entitled to receive the Common Stock
<PAGE> 18
shall not be deemed to have converted such Preferred Stock until immediately
prior to the closing of such sale of securities.
(b) Conversion Procedures. in order to exercise the
conversion privilege under Sections 5(a)(i) and (ii), the holder of any shares
of Preferred Stock of any series to be converted shall surrender the
certificate representing such shares at the principal office of the
Corporation, with a written notice stating that such holder elects to convert
all or a specified whole number of such shares pursuant to this Section 5 and
specifying the name or names in which such holder wishes the certificate or
certificates for Conversion Shares, and, in the case of Series D Preferred
Stock, certificates representing the Series D Conversion Consideration, to be
issued. Unless the conversion Shares (and, if applicable, securities
representing the Series D Conversion Consideration) are to be issued in the
same name as the name in which such shares if Preferred Stock are registered,
the certificate representing the shares surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or its duly authorized attorney. In
the event or an automatic conversion pursuant to Section 5(a)(iii) or 5(a)(iv),
the outstanding shares of Series A Preferred, Series D Preferred and Series E
Preferred shall be converted automatically without any further action by the
holders of such shares and whether or not the certificates representing such
shares are surrendered to the Corporation or its transfer agent, provided that
the Corporation shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such automatic conversion unless the
certificates evidencing such shares of Preferred Stock are either delivered to
the Corporation or its transfer agent, or the holder notifies the Corporation
or its transfer agent that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in connection with such
certificates. As promptly as practicable after such surrender of a certificate
for shares of Preferred Stock of any series to be converted, and in any event
within five business days (as defined below) thereafter, the Corporation shall
issue and deliver at such office to such holder, or on such holder's written
order, (i) a certificate or certificates for the applicable number of full
Conversion Shares, (ii) if
<PAGE> 19
less than the full number of shares of Preferred Stock evidenced by the
surrendered certificate is being converted, a new certificate, of like tenor,
for the number of shares of Preferred Stock of the applicable series evidenced
by such surrendered certificate less the number of shares being converted and
(iii) the cash payment in settlement of any fractional Conversion Share
provided for in Section 5(c). Upon conversion of any shares of Preferred Stock,
the holder thereof shall be entitled to receive an amount equal to all declared
and unpaid dividends an such shares. A "business day" is a day other than a
Saturday, Sunday or legal holiday in the State or New York or the State of
California, on which banks are open for business in New York, New York and San
Francisco, California.
In the case of (x) the exercise of the conversion privilege under
5(a)(i) and 5(a)(ii), each conversion shall be deemed to have been effected
(subject, in the case of the Series D Preferred, to Section 5(a)(ii)) as of the
close of business on the date on which the certificate for shares of Preferred
Stock to be converted is surrendered and such notice is received by the
Corporation as aforesaid and (y) automatic conversion pursuant to Sections
5(a)(ii) or 5(a)(iv) the Conversion shall be deemed to have been effected as of
immediately prior to the closing of the Initial Public Offering, and the person
or persons in whose name or names any certificate or certificates for
Conversion Shares (and, if applicable, securities representing Series D
Conversion Consideration) are issuable shall be deemed to have become the
holder or holders of record of such Conversion Shares (and, if applicable,
securities representing Series D Conversion Consideration) at such time on such
date and, in the case of the Series A Preferred and Series E Preferred, such
conversion shall be at the applicable Conversion Price in effect at such time
on such date, unless the stock transfer books of the Corporation are closed an
that date, in which event such person or persons shall be deemed to have become
such holder or holders of record at the close of business an the next day on
which such stock transfer books are open (provided that if such books shall
remain closed for five days, such fifth day shall be the date any such person
shall become such a holder), but such conversion shall be at the Conversion
Price in effect on the date on which such certificate was surrendered and such
notice was received. Upon delivery, all Conversion Shares shall be duly
authorized,
<PAGE> 20
validly issued, fully paid, nonassessable, free of all liens and charges and
not subject to any preemptive or subscription rights.
(c) Settlement of Fractional Conversion Shares. No
fractional Conversion Shares or scrip representing fractions of Conversion
Shares shall be issued upon conversion of shares of Preferred Stock of any
series. Instead of any fractional Conversion Share otherwise deliverable, the
Corporation shall pay to the holder of the converted shares an amount in cash
equal to the current market price (as defined below) at such fractional
Conversion Share on the date of conversion. If more than one share in
surrendered for conversion at one time by the same holder, the number of full
Conversion Shares shall be computed an the basis of the aggregate number of
shares so surrendered. The "current market price" per share of Common Stock on
any day is the average of the daily market prices for the 30 consecutive
trading days immediately prior to the day in question. The "daily market
price" of a share of Common Stock is the price of a share of Common Stock on
the relevant day, determined on the basis of the last reported sale price,
regular way, of the Common Stock as reported on the composite tape, or similar
reporting system, for issues listed or admitted to trading on the New York
Stock Exchange (or if the Common Stock is not then listed or admitted to
trading on the New York Stock Exchange, on the principal national securities
exchange on which the Common Stock is then listed or admitted to trading) or on
the National Association of Securities Dealers Automated Quotation System
National Market System or, if there is no such reported sale on the day in
question, on the basis of the average of the closing bid and asked quotations
as so reported or, it the Common Stock is not then listed or admitted to
trading on any national securities exchange or on the National Association of
Securities Dealers Automated Quotation System National Market System, on the
basis of the average of the high bid and low asked quotations on the day in
question in the over-the-counter market as reported by the National Association
of Securities Dealers Automated Quotation System, or, if not so quoted, as
reported by National Quotation Bureau, Incorporated, or a similar organization.
If the current market price is not determinable as aforesaid, it shall be
determined in good faith by the Board and evidence of such determination shall
be filed with the minutes of the Corporation. A "trading day" is a day on
which the principal national securities
<PAGE> 21
exchange on which the Common Stock is listed or admitted to trading is open for
the transaction of business or, if the Common Stock is not then listed or
admitted to trading on any national securities exchange, any day other than
Saturday, Sunday or a federal holiday.
(d) The "Series A Conversion Price" shall mean $8.503194,
the "Series D Conversion Price" shall mean $3.35 and the "Series E Conversion
Price" shall mean $3.00, in each case as adjusted pursuant to this Section
5(d). "Conversion Price" shall generally mean the Series A Conversion Price,
the Series D Conversion Price or the Series E Conversion Price, as applicable.
The Series A Conversion Price, the Series D Conversion Price and the Series E
Conversion Price (and the kind and amount of consideration receivable by
holders of shares of Series A Preferred, Series D Preferred or Series E
Preferred upon conversion) shall be adjusted from time to time as follows:
(i) If after the date of issuance of the Series E
Preferred the Corporation (A) pays a dividend or makes a distribution on the
Common Stock in shares of Common Stock, (B) subdivides or combines its
outstanding shares of Common Stock into a greater or smaller number of shares
or (C) issues by reclassification of the Common Stock any shares of capital
stock of the Corporation, each Conversion Price in effect immediately prior to
such action shall be adjusted so that the holder of any share of Series A
Preferred, Series D Preferred or Series E Preferred thereafter surrendered for
conversion shall be entitled to receive, at the time of such conversion, the
number of shares of Common Stock or other capital stock of the Corporation that
it would have owned or been entitled to receive immediately following such
action had such share been converted immediately prior to such action or the
record date therefor, whichever is earlier. Such adjustment shall become
effective immediately after the record date, in the case of a dividend or
distribution, or immediately after the effective date, in the case of a
subdivision, combination or reclassification.
(ii) If the corporation issues any Additional
Shares (as defined below) for a consideration per share less than the Series E
Conversion Price in effect immediately prior to such issuance, then (A) if the
date of issuance of such Additional Shares is before 18 months after the date
of issuance of the Series E Preferred, the
<PAGE> 22
Series E Conversion Price shall be adjusted to equal the consideration per
share for which such Additional Shares are issued, and (B) if the date of
issuance of such Additional Shares is on or after 18 months after the date of
issuance of the Series E Preferred, the Series E Conversion Price shall be
adjusted by multiplying the Series E Conversion Price in effect immediately
prior to such issuance by a fraction (I) the numerator of which shall be the
number of shares of Common Stock and Share Equivalents outstanding immediately
prior to the issuance of such Additional Shares plus the number of shares of
Common Stock that the aggregate consideration for such Additional Shares would
purchase at a consideration per share equal to such Conversion Price and (II)
the denominator of which shall be the number of shares of Common Stock and
Share Equivalents outstanding immediately prior to the issuance of such
Additional Shares plus the number of Additional Shares so issued. Such
adjustment for the Series E Preferred shall become effective immediately after
the issuance of such Additional Shares but prior to any adjustment for such
Additional Shares to the Series D Conversion Price. For the purpose of this
Section 5 the reissuance or resale of any Additional Shares or other Rights (as
defined below) or Convertible Securities (as defined below) shall also result
in an adjustment to the Series E Conversion Price to the extent an appropriate
adjustment under Section 5(d)(vii) has been made.
"Additional Shares" shall mean any shares of Common Stock of the
Corporation issued by the Corporation after the date of issuance of the Series
E Preferred excluding Permitted Issuances. "Share Equivalents" shall mean the
Common Stock deliverable upon conversion or exercise of all outstanding
Preferred Stock, convertible securities, optional warrants and rights of the
Corporation as of the date such computation is made and as of the time such
computation is effective as specified herein.
"Permitted Issuances" shall mean (i) any employee stock options which
have been granted and remain unexercised as of the date of issuance of the
Series E Preferred, (ii) employee stock options granted and shares issued to
employees and consultants after the issuance at the Series E Preferred in the
aggregate amount of 585,750 shares of Common Stock pursuant to the Corporation's
stock plans, (iii) additional employee options granted and shares issued in an
amount equal to options granted and shares issued pursuant to the
<PAGE> 23
foregoing clauses (i) and (ii) to the extent such shares are returned to the
Corporation's stock plans upon the lapse of unexercised stock options or the
repurchase (at original purchase price) of unvested shares (iv) any shares
issued upon exercise of options granted pursuant to the foregoing clauses
(i)-(iii), provided that the total of all such options outstanding, shares
issued upon exercise of such options and shares sold pursuant to clauses (i)
through (iv) shall never exceed 2,920,763, (v) any shares issued upon
conversion of the Series A Preferred, Series D Preferred and Series E Preferred
(including adjustments to the conversion ratio) and (vi) any other stock
options granted and shares issued upon the exercise thereof approved by the
holders of a majority or the Series E Preferred, which approval shall not be
unreasonably withheld, and any shares issued to the holders of the Series E
Preferred in connection with any contractual rights, related to such approved
shares or options.
(iii) If after the date of issuance of the Series E
Preferred the Corporation issues any warrants, options or other rights
entitling the holders thereof to subscribe for or purchase either any
Additional Shares or evidences of debts, shares of capital stock or other
securities that are convertible into or exchangeable for, with or without
payment of additional consideration, Additional Shares (such warrants, options
or other rights being called "Rights" and such convertible or exchangeable
evidences of debt shares of capital stock or other securities being called
"Convertible Securities"), and the consideration per share for which Additional
Shares may at any time thereafter be issuable pursuant to such Rights or
Convertible Securities (when added to the consideration per share of Common
Stock, if any, received for such Rights) is less than the Series E Conversion
Price, the Series E Conversion Price shall be adjusted as provided in Section
5(d)(ii) on the basis that (A) the maximum number of Additional Shares issuable
pursuant to all such Rights or necessary to effect the conversion or exchange
of all such Convertible Securities shall be deemed to have been issued and (B)
the aggregate consideration (plus the consideration, if any, received for such
Rights) for such maximum number of Additional Shares shall be deemed to be the
consideration received and receivable by the Corporation for the issuance of
such Additional Shares pursuant to such Rights or Convertible Securities.
<PAGE> 24
(iv) If after the date of issuance of the Series E
Preferred the Corporation issues Convertible Securities and the consideration
per share for which Additional Shares may at any time thereafter be issuable
pursuant to such Convertible Securities is less than the Series E Conversion
Price, the Series E Conversion Price shall be adjusted as provided in Section
5(d)(ii) on the basis that (A) the maximum number of Additional Shares
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and (B) the aggregate
consideration for such maximum number of Additional Shares shall be deemed to
be the consideration received and receivable by the Corporation for the
issuance of such Additional Shares pursuant to such Convertible Securities. No
adjustment of the Series E Conversion Price shall be made under this Section
5(d)(iv) upon the issuance or any Convertible Securities issued pursuant to the
exercise of any Rights, to the extent that such adjustment was previously made
upon the issuance of such Rights pursuant to Section 5(d)(iii).
(v) For purposes of Sections 5(d)(iii) and
5(d)(iv), the relevant Series E Conversion Price shall be the Series E
Conversion Price in effect immediately prior to the earlier of (A) the record
date for the holders of Common Stock entitled to receive the Rights or
Convertible Securities and (B) the initial issuance of the Rights or
Convertible Securities, and the adjustment provided for in either such Section
shall become effective immediately after the earlier of the times specified in
clauses (A) and B).
(vi) No adjustment of the Series E Conversion
Price shall be made under Section 5(d)(ii) upon the issuance of any Additional
Shares pursuant to the exercise of any Rights or of any conversion or exchange
rights pursuant to any Convertible Securities, if such adjustment was
previously made in connection with the issuance of such Rights or Convertible
Securities (or in connection with the issuance of any Riqhts therefor) pursuant
to Section 5(d)(iii) or 5(d)(iv).
(vii) If any Rights (or any portions thereof) that
gave rise to an adjustment pursuant to Section 5(d)(iii) or any conversion or
exchange rights pursuant to any Convertible Securities that gave rise to an
adjustment pursuant to Section 5(d)(iii) or 5(d)(iv) expire or terminate
without the exercise thereof and/or if by reason of the
<PAGE> 25
provisions of such Rights or Convertible Securities there has been any
increase, with the passage of time or otherwise, in the consideration payable
upon the exercise thereof, the Series E Conversion Price shall be readjusted
(but to no greater extent than originally adjusted) on the basis of (A)
eliminating from the computation Additional Shares corresponding to such
expired or terminated Rights or conversion or exchange rights, (B) treating the
Additional Shares, if any actually issued or issuable pursuant to the previous
exercise of such Rights or conversion or exchange rights as having been issued
for the consideration actually received and receivable therefor and (C)
treating any such Rights or conversion or exchange rights that remain
outstanding as being subject to exercise on the basis of the consideration
payable upon the exercise or conversion thereof as is in effect at such time;
provided, however, that any consideration actually received by the Corporation
in connection with the issuance of such Rights shall form part of the
readjustment computation even though such Rights expired without being
exercised. The Series E Conversion Price shall be adjusted as provided in
Section 5(d)(ii) and any applicable provisions of Section 5(d)(iii) or 5(d)(iv)
as a result of any increase in the number of Additional Shares issuable, or any
decrease in the consideration payable upon any issuance of Additional Shares,
pursuant to any antidilution provisions of any Rights or Convertible
Securities.
(viii) If after the date of Issuance of the Series E
Preferred, the Corporation issues any Additional Shares for a consideration per
share less than the Series D Conversion Price in effect immediately prior to
such issuance, then (A) if the date of issuance of such Additional Shares is
before 18 months after the date of issuance of the Series E Preferred, the
Series D Conversion Price shall be adjusted to equal the consideration per
share for which such Additional Shares are issued, and (B) if the date of
issuance of such Additional Shares is on or after 18 months after the date of
issuance of the Series E Preferred, the Series D Conversion Price shall be
adjusted by multiplying the Series D Conversion Price in effect immediately
prior to such issuance by a fraction (I) the numerator at which shall be the
number of shares of Common Stock and Share Equivalents outstanding immediately
prior to the issuance of such Additional Shares plus the number of shares of
Common Stock that the aggregate consideration for such Additional
<PAGE> 26
Shares would purchase at a consideration per share equal to such Conversion
Price and (II) the denominator of which shall be the number of shares of Common
Stock and Share Equivalents outstanding immediately prior to the issuance of
such Additional Shares plus the number of Additional Shares so issued. Such
adjustment for the Series D Preferred shall become effective immediately after
the issuance of such Additional Shares and the adjustment to the Series E
Conversion Price for such Additional Shares. No adjustment to the Series D
Conversion Price shall be made for the issuance of the Series E Preferred. The
reissuance or resale of any Additional Shares or other Rights or Convertible
Securities shall also result in an adjustment to the Series D Conversion Price
to the extent an appropriate adjustment under Section 5(d)(xiii) has been made.
(ix) It after the data of issuance of the Series E
Preferred the Corporation issues any Rights or Convertible Securities, and the
consideration per share for which Additional Shares may at any time thereafter
be issuable pursuant to such Rights or Convertible Securities (when added to
the consideration per share of Common Stock, if any, received for such Rights)
is less than the Series D Conversion Price, the Series D Conversion Price shall
be adjusted as provided in Section 5(d)(viii) an the basis that (A) the maximum
number of Additional Shares issuable pursuant to all such Rights or necessary
to effect the conversion or exchange of all such Convertible Securities shall
be deemed to have been issued and (B) the aggregate consideration (plus the
consideration, if any, received for such Rights) for such maximum number of
Additional Shares shall be deemed to be the consideration received and
receivable by the Corporation for the issuance of such Additional Shares
pursuant to such Rights or Convertible Securities.
(x) If after the date of issuance of the Series E Preferred the
Corporation issues Convertible Securities and the consideration per share for
which Additional Shares may at any time thereafter be issuable pursuant to such
Convertible Securities is less than the Series D Conversion Price, the Series D
Conversion Price shall be adjusted as provided in Section 5(d)(viii) on the
basis that (A) the maximum number of Additional Shares necessary to effect the
conversion or exchange of all such Convertible Securities shall be deemed to
have been issued and (B) the aggregate consideration for such maximum number of
Additional Shares shall be deemed to be the consideration received and
receivable by the Corporation
<PAGE> 27
for the issuance of such Additional Shares pursuant to such Convertible
Securities. No adjustment of the Series D Conversion Price shall be made under
this Section 5(d)(x) upon the issuance of any Convertible Securities issued
pursuant to the exercise of any Rights, to the extent that such adjustment was
previously made upon the issuance of such rights pursuant to Section 5(d)(ix).
(xi) For purposes of Sections 5(d)(ix) and
5(d)(x), the relevant Series D Conversion Price shall be the Series D
Conversion Price in effect immediately prior to the earlier of (A) the record
date for the holders of Common Stock entitled to receive the Rights or
Convertible Securities and (B) the initial issuance of the Rights or
Convertible Securities and the adjustment provided for in either such section
shall became effective immediately after the earlier of the times specified in
clauses (A) and (B).
(xii) No adjustment of the Series D Conversion
Price shall be made under Section 5(d)(viii) upon the issuance of any
Additional Shares pursuant to the exercise of any Rights or of any conversion
or exchange rights pursuant to any Convertible Securities, it such adjustment
was previously made in connection with the Issuance of such Rights or
Convertible securities (or in connection with the issuance of any Rights
therefor) pursuant to Section 5(d)(ix) or 5(d)(x).
(xiii) If any Rights (or any portions, thereof) that
gave rise to an adjustment pursuant to Section 5(d)(ix) or any conversion or
exchange rights pursuant to any Convertible Securities that gave rise to an
adjustment pursuant to Section 5(d)(ix) or 5(d)(x) expire or terminate without
the exercise thereof and/or if by reason of the provisions or such Rights or
Convertible Securities there has been any increase, with the passage of time or
otherwise, in the consideration payable upon the exercise thereof, the Series D
Conversion Price shall be readjusted (but to no greater extent than originally
adjusted) on the basis of (A) eliminating from the computation Additional
Shares corresponding to such expired or terminated Rights or conversion or
exchange rights, (B) treating the Additional Shares, if any, actually issued or
issuable pursuant to the previous exercise of such Rights or conversion or
exchange rights as having been issued for the consideration actually received
and receivable therefor and (C) treating any such Rights or conversion or
exchange rights that remain outstanding as being subject to
<PAGE> 28
exercise on the basis of the consideration payable upon the exercise or
conversion thereof as is in effect at such time; provided, however, that any
consideration actually received by the Corporation in connection with the
issuance of such Rights shall form part of the readjustment computation even
though such Rights expired without being exercised. The Series D Conversion
Price shall be adjusted as provided in Section 5(d)(viii) and any applicable
provisions of Section 5(d)(ix) or 5(d)(x) as a result of any increase in the
number of Additional Shares issuable, or any decrease in the consideration
payable upon any issuance of Additional Shares, pursuant to any antidilution
provisions of any Rights or Convertible Securities.
(xiv) (A) If any Additional Shares,
Convertible Securities or Rights are issued for cash, the consideration
received therefor shall be deemed to be the amount of cash received.
(B) If any Additional Shares,
Convertible Securities or Rights are offered by the Corporation for
subscription, the consideration received therefor shall be deemed to be the
subscription price.
(C) If any Additional Shares,
Convertible Securities or Rights are sold to underwriters or dealers for public
offering without a subscription offering, the consideration received therefor
shall be deemed to be the public offering price.
(D) In any case covered by Section
5(d)(xiv) (A), (B) or (C), in determining the amount of any consideration
received by the Corporation in whole or in part other than in cash, the amount
of such consideration shall be deemed to be the fair market value of such
consideration as determined in good faith by the Board, and evidence of such
determination shall be filed with the minutes of the Corporation. If Additional
Shares are issued as part of a unit with Rights, the consideration received for
the Rights shall be deemed to be the portion of the consideration received for
such unit determined in good faith at the time of issuance by the Board, and
evidence of such determination shall be filed with the minutes of the
Corporation. If the Board does not make any such determination, the
consideration received for the Rights shall be deemed to be zero. In either
event, the consideration received for the Additional Shares shall be deemed to
be
<PAGE> 29
the consideration received for such unit less the consideration deemed to have
been received for the Rights.
(E) In any case covered by Section
5(d)(xiv) (A), (B), (C) or (D), in determining the amount of consideration
received by the Corporation, (I) any amounts received or receivable for accrued
interest or accrued dividends shall be excluded and (II) any compensation,
underwriting commissions or concessions or expenses paid or incurred in
connection therewith shall not be deducted.
(F) In any case covered by section
5(d)(xiv) (A),(B), (C) or (D), there shall be added to the consideration
received by the Corporation at the time of issuance or sale (I) the minimum
aggregate amount of additional consideration payable to the Corporation upon
the exercise of Rights that relate to Convertible Securities and (II) the
minimum aggregate amount of consideration payable upon the conversion or
exchange thereof.
(G) If any Additional Shares,
Convertible Securities or Rights are issued in connection with any merger,
consolidation or other reorganization in which the Corporation is the surviving
corporation, the amount of consideration received therefor shall be deemed to
be the fair market value, as determined in good faith by the Board, of such
portion of the assets and business of the non-surviving person or persons as
the Board determines in good faith to be attributable to such Additional
Shares, Convertible Securities or Rights, and evidence of such determination
shall be filed with the minutes of the Corporation.
(xv) If the Corporation effects any merger,
consolidation or other reorganization to which the Corporation is a party
(other than a merger or consolidation in which the Corporation is the surviving
corporation), any sale or conveyance to another person of all or substantially
all the assets of the Corporation or any statutory exchange of securities with
another person (including any exchange affected in connection with a merger of
a third person into the Corporation), the holder of each share of Series A
Preferred, Series D Preferred or Series E Preferred then outstanding shall have
the right thereafter to convert such share into the kind and amount of
consideration receivable pursuant to such transaction by a holder of the number
of shares of Common Stock into
<PAGE> 30
which such share of Series A Preferred, Series D Preferred or Series E
Preferred might have been converted immediately prior to such transaction,
assuming such holder of Common Stock failed to exercise its rights of
elections, if any, as to the kind or amount of consideration receivable upon
such transaction (provided that if the kind or amount of consideration
receivable pursuant to such transaction is not the same for each share of
Common Stock in respect of which such rights of election shall not have been
exercised ("non-electing share') then, for purposes of this Section 5(d)(xv),
the kind and amount of consideration receivable pursuant to such transaction
for each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). Thereafter,
the holders or shares of Series A Preferred, Series D Preferred and Series E
Preferred shall be entitled to appropriate adjustments with respect to their
conversion rights to the end that the provisions set forth in this Section 5
shall correspondingly be made applicable, as nearly as may reasonably be, to
any consideration thereafter deliverable on conversion of shares of Series A
Preferred, Series D Preferred and Series E Preferred. Notwithstanding the
foregoing, this Section 5(d)(xv) shall not apply with regard to the Series E
Preferred to an event which is treated as a liquidation, dissolution or
winding-up of the Corporation with respect to such series pursuant to Section
3.
(xvi) If a purchase, tender or exchange offer is
made to the holders of outstanding shares of Common Stock and, upon the
consummation of such offer, the person having made such offer (together with
its affiliates) beneficially owns 50% or more of the outstanding shares of
Common Stock, the Corporation shall not effect any merger, consolidation or
other reorganization with or sale, lease or other disposition of material
assets or issuance of securities to the person having made such offer or any
affiliate of such person, unless prior to the consummation thereof each holder
of shares of Series A Preferred, Series D Preferred and Series E Preferred
shall have been given a reasonable opportunity to elect to receive upon
conversion of the shares of Series A Preferred, Series D Preferred and Series E
Preferred then held by such holder (in lieu of the kind and amount of
consideration otherwise receivable upon conversion pursuant to the provisions
of this Section 5(d)), the consideration that would have been received pursuant
<PAGE> 31
to such offer by a holder of that number of shares of the Common Stock into
which one share of Series A Preferred, Series D Preferred or Series E Preferred
(as applicable) might then be converted if all such shares had been tendered
and accepted pursuant to such offer.
(xvii) If the Corporation distributes generally to
holders of its outstanding shares of Common Stock or any other securities
entitled generally to participate in the earnings or assets of the Corporation
("Common Equity"), evidences of its debts, securities or other assets
(excluding any cash dividends and excluding any dividends or distributions
payable in Rights or Convertible Securities for which adjustment is otherwise
made pursuant to this Section 5(d)), the Series E Conversion Price shall be
adjusted by multiplying such Conversion Price in effect immediately prior to
the record date for such dividend or distribution by a fraction of which (X)
the numerator shall be the current market price per share of the Common Equity
(determined, if the Common Equity is not Common Stock, in the same way that the
current market price for Common Stock is determined) on such record date less
the then fair market value, as determined in good faith by the Board, of the
portion of the evidences of debt, securities or other assets so distributed or
applicable to the holder of one share of Common Equity and (Y) the denominator
shall be such current market price per share of the Common Equity, and evidence
of such determination shall be filed with the minutes of the Corporation. Such
adjustment shall become effective immediately after the record date for such
dividend or distribution but prior to any adjustment for such event to the
Series D Conversion Price pursuant to 5(d)(xviii).
(xviii) If the Corporation distributes generally to
holders of its outstanding shares of Common Stock or any other Common Equity,
evidences of its debt, securities or other assets (excluding any cash dividends
and excluding any dividends or distributions payable in Rights or Convertible
Securities for which adjustment is otherwise made pursuant to this Section
5(d)), the Series D Conversion Price shall be adjusted by multiplying such
Conversion Price in effect immediately prior to the record date for such
dividend or distribution by a fraction of which (X) the numerator shall be the
current market price per share of the Common Equity (determined, if the Common
Equity
<PAGE> 32
is not Common Stock, in the same way that the current market price for Common
Stock is determined) on such record date less the then fair market value, as
determined in good faith by the Board, of the portion at the evidences or debt,
securities or other assets so distributed or applicable to the holder of one
share of Common Equity and (Y) the denominator shall be such current market
price per share of the Common Equity, and evidence or such determination shall
be filed with the minutes of the Corporation. Such adjustment shall became
effective immediately after the record date for such dividend or distribution
and immediately after the adjustment in Section 5(d)(xvii) has been made.
(xix) If a state of facts not specifically
controlled by the provisions of this Section 5(d) occurs or is proposed that
would result in the conversion provisions of the Series A Preferred, Series D
Preferred and Series E Preferred not being fairly protected in accordance with
the essential intent and principles of such provisions, the Board shall make an
adjustment in the application of such provisions, in accordance with such
essential intent and principles so as to protect such conversion provisions,
and evidence of the Board's determination of such adjustment shall be filed
with the minutes of the Corporation.
(xx) No adjustment in any Conversion Price shall
be required to be made unless it would require an increase or decrease of at
least one cent, but any adjustments not made because of this Section 5(d)(xx)
shall be carried forward and taken into account in any subsequent adjustment
otherwise required. All calculations under this Section 5(d) shall be made to
the nearest cent or to the nearest 1/100th of a share, as the case may be. All
adjustments with respect to a transaction or event shall apply to subsequent
such transactions and events. Anything in this Section 5(d) to the contrary
notwithstanding, the Board shall be entitled (but shall not be obligated) to
make such irrevocable reduction in the Conversion Price, in addition to the
adjustments required by this Section 5(d), as in its discretion it shall
determine to be advisable in order to avoid or diminish any income deemed to be
received for Federal income tax purposes by any holder of shares of Common
Stock, Series A Preferred, Series D Preferred or Series E Preferred resulting
from any event or occurrence giving rise to an adjustment pursuant to this
<PAGE> 33
Section 5(d) or from any similar event or occurrence and evidence of the
Board's determination of such adjustment shall be filed with the minutes of the
Corporation.
(xxi) Whenever any Conversion Price is adjusted
pursuant to this Section 5(d), (A) the Corporation shall promptly file with the
minutes of the Corporation a certificate of a firm of nationally recognized
independent public accountants or of the Corporation's chief accounting officer
setting forth such Conversion Price (and any change in the kind or amount of
consideration to be received by holders of shares of Series A Preferred, Series
D Preferred or Series E Preferred, as applicable, upon conversion) after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment and the manner of computing the same and (B) a notice stating that
such Conversion Price has been adjusted, stating the effective date of such
adjustment and enclosing such certificate shall forthwith be mailed by the
Corporation to the holders of shares of Series A Preferred, Series D Preferred
or Series E Preferred, as applicable, at their addresses as shown on the stock
books of the Corporation.
(xxii) If as a result of any adjustment pursuant to
this section 5(d), the holder of any share of Series A Preferred, Series D
Preferred or Series E Preferred surrendered for conversion becomes entitled to
receive any consideration other than Common Stock, (A) the Conversion Price
with respect to such other consideration shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to Common Stock contained in this Section 5(d) and
(B) in the case such consideration shall consist of shares at Common Stock and
some other kind of consideration or of two or more kinds of consideration, the
Board shall determine in good faith the fair allocation of the adjusted
Conversion Price between or among such types of consideration, and evidence of
such determination shall be filed with the minutes of the Corporation.
(e) Specified Events. For purposes of this Section 5(e),
a "Specified Event" shall occur if (i) the Corporation takes any action that
would require any adjustment in the Conversion Price pursuant to Section
5(d)(xvii) or 5(d)(xviii), (ii) the Corporation authorizes the granting to the
holders of the Common Stock of any Rights or of any other rights, (iii) there
is any capital stock reorganization or reclassification of
<PAGE> 34
the Common Stock (other than a subdivision or combination of the outstanding
Common Stock and other than a change in the par value of the Common Stock), or
any merger, consolidation or other reorganization to which the Corporation is a
party, or any statutory exchange of securities with another person and for
which approval of any stockholders of the Corporation is required, or any sale
or transfer of all or substantially all the assets of the Corporation or (iv)
there is a voluntary liquidation, dissolution or winding up of the Corporation.
If a Specified Event occurs, the Corporation shall cause to be filed with the
minutes of the Corporation, and shall cause to be mailed to the holders of
shares of the Series A Preferred, Series D Preferred and Series E Preferred at
their addresses as shown on the stock books of the Corporation, at least 10
days prior to the applicable data specified below, a notice stating (A) the
date on which a record is to be taken for the purpose of any distribution or
Rights relating to such Specified Event or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled to such
distribution or Rights are to be determined, or (B) the date on which the
reorganization, reclassification, consolidation, merger, statutory exchange,
sale, transfer, dissolution, liquidation or winding-up relating to such
Specified Event is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares at Common Stock for securities or other property deliverable upon
such Specified Event.
(f) Reservation of Common Stock. The Corporation shall at all
times reserve and keep available, free from preemptive and subscription rights,
out of its authorized but unissued shares of Common Stock, for the purpose of
effecting conversions of the Series A Preferred, Series D Preferred and Series
E Preferred, the full number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Series A Preferred, Series D Preferred
and Series E Preferred not theretofore converted. For this purpose, the number
of shares of Common Stock deliverable upon the conversion of all outstanding
shares of Series A Preferred, Series D Preferred and Series E Preferred shall
be computed as if at the time of computation all such outstanding shares were
held by a single holder.
(g) Listing. With respect to any securities required to
be delivered upon conversion of the Series A Preferred, Series D Preferred and
Series E Preferred, the
<PAGE> 35
Corporation shall use its best efforts to list such securities prior to such
delivery upon each securities exchange, it any, on which any securities of such
class are already listed.
(h) Taxes. The Corporation shall pay all documentary
stamp or similar issue or transfer taxes payable in respect of the issue or
delivery of securities on conversion of the Series A Preferred, Series D
Preferred and Series E Preferred; provided, however, that
(i) the Corporation shall not be required to pay
any tax payable in respect of any transfer involved in the issue or delivery of
securities in a name other than that of the holder of the shares of Series A
Preferred, Series D Preferred and Series E Preferred to be converted and (ii)
no such issue or delivery shall be made unless and until such holder has paid
to the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid or provided for.
Section 6. Status of Shares. Upon any conversion or any redemption,
repurchase or other acquisition by the Corporation of shares of Series A
Preferred, Series D Preferred or Series E Preferred, the shares of Series A
Preferred, Series D Preferred or Series E Preferred so converted, redeemed,
repurchased or acquired shall be retired and cancelled and shall not be
available for reissuance.
Section 7. Definitions and Construction. As used in this Article
Fourth, (a) "herein", "hereof", "hereunder" and other like words mean or refer
to this Article Fourth; (b) "outstanding", when used with reference to shares
of stock, means issued shares, excluding shares held by the Corporation or a
subsidiary; (c) "person" means any corporation, partnership, trust,
organization, association or other entity or individual, (d) "affiliate" of any
person means any other person controlling, controlled by or under common
control with such person; (e) headings are for convenience of reference only
and shall not define, limit or affect any of the provisions hereof, and (f)
references to Sections are to Sections of this Article Fourth.
<PAGE> 36
Section 8. Residual Rights. All rights accruing to the outstanding
shares of the Corporation not expressly provided for or to the contrary herein
shall be vested in the Common Stock.
FURTHER RESOLVED, that a new Article shall be added to the
Corporation's Certificate of Incorporation, as follows:
THIRTEENTH: In anticipation that International Business Machines
Corporation ("IBM") will be a substantial stockholder of the Corporation, and
in anticipation that the Corporation and such stockholder may engage in the
same or similar activities or lines of business and have an interest in the
same area of corporate opportunities, and in recognition of the benefits to be
derived by the Corporation through its continued contractual, corporate and
business relations with such stockholder, the provisions of this Article
Thirteenth are set forth to regulate and define the conduct of certain affairs
of the Corporation as they may involve such stockholder and its officers and
employees, and the powers, rights, duties and liabilities of the Corporation
and its officers, directors and stockholders in connection therewith.
SECTION 1. Freedom of Action. (a) IBM shall not have any obligation
to the Corporation not to (i) engage in the same or similar activities or lines
of business as the Corporation or develop or market any products or services
that compete, directly or indirectly with those of the Corporation, (ii) invest
or own any interest publicly or privately in, or develop a business
relationship with, any corporation, partnership or other entity engaged in the
same or similar activities or lines of business as, or otherwise in competition
with, the Corporation or (iii) do business with any client or customer of the
Corporation. Neither IBM nor any of its officers, directors, employees or
former employees shall have any obligation, or be liable, to the Corporation
for or arising out of the conduct described in (i), (ii) or (iii) above, for
exercising or failing to exercise its rights under any agreement with the
Corporation, for exercising, or failing to exercise its rights as a stockholder
of the Corporation or for breach of any fiduciary or other duty to the
Corporation by reason of such conduct or such officers',
<PAGE> 37
directors', employee's or former employees' participation therein or actions as
directors of the Corporation.
SECTION 2. Corporate Opportunities. In the event that IBM or any
officer, director, employee or former employee of IBM acquires knowledge of a
potential transaction or matter which may be a corporate opportunity for both
IBM and the Corporation, neither IBM nor its officers, directors, employees or
former employees shall have any duty to communicate or offer such corporate
opportunity to the Corporation and neither IBM nor its officers directors,
employees or former employees shall be liable to the Corporation or its
stockholders for breach of any fiduciary or other duty, as a stockholder or
otherwise, by reason of the fact that IBM pursues or acquires such corporate
opportunity for itself, directs such corporate opportunity to another person or
entity, or does not communicate such corporate opportunity or information
regarding such corporate opportunity to the Corporation.
SECTION 3. Scope of Article. The provisions of this Article Thirteenth
shall be effective to the maximum extent permitted by law.
SECTION 4. Definitions. As used in this article THIRTEENTH, IBM shall
mean IBM and its affiliates (but not including the Corporation as an affiliate
of IBM).
As used in this Article, "affiliate" shall have the same meaning as
defined in Section 7 of Article FOURTH of the Certificate of Incorporation, as
amended.
FURTHER RESOLVED, that a new Article shall be added to the
Corporation's Certificate of Incorporation, as follows:
FOURTEENTH: The following matters, which relate to actions that
can only be taken by the Corporation with the approval of the Board of
Directors, shall be authorized only as follows:
SECTION 1. Matters Requiring Board Approval by Simple Majority
Director Vote. The following matters shall require a Simple Majority Director
Vote:
(a) the incurring by the Corporation or any subsidiary of
any form of debt or other borrowing, which is payable not earlier than nine
months from the date such debt or other borrowing was incurred by the
Corporation or any such subsidiary, with an aggregate principal amount in
excess of $1,621,000;
<PAGE> 38
(b) the issuance by the Corporation or any subsidiary of
any shares of the capital stock of the Corporation or any such subsidiary or
the grant of any options by the Corporation or any subsidiary of any shares at
the capital stock of the Corporation or any such subsidiary;
(c) the declaration of any dividend by the Corporation;
and
(d) decisions with respect to the selection, termination,
and employment terms (including the grant of any stock options) of the Chief
Executive Officer and all senior executives of the Corporation who report
directly to the Chief Executive Officer (or until the appointment of a Chief
Executive Officer, the President).
SECTION 2. Matters Requiring Board Approval by Supermajority Director
Vote. The following matters shall require a Supermajority Director Vote.
(a) appointment or removal of the Chief Executive Officer
of the Corporation:
(b) decisions with respect to new lines of business and
acquisitions involving the Corporation or any subsidiary;
(c) the sale, lease or other disposition of assets of the
Corporation or any subsidiary outside the ordinary course of business;
(d) a corporate reorganization, or the merger or
consolidation of the Corporation with or into any other corporation or
corporations, which would result in the holders of Voting Securities
immediately prior thereto beneficially owning less than 80% of the Total Voting
Power of the resulting or surviving corporation immediately thereafter (a
"Significant Merger"), or any liquidation or dissolution of the Corporation;
(e) changes in accounting methods or policies and any
change in the Corporation's auditors; or
(f) any amendment to the Certificate of Incorporation or
By-laws of the Corporation.
SECTION 3. Certain Matters Requiring Shareholder Vote. Without the
affirmative approval of each of the holders at a majority of the shares of each
of the (i) Common Stock, (ii) Series A Preferred and Series D Preferred voting
together as a group, and (iii) Series E Preferred, the Corporation will not (i)
consummate a Significant Merger or
<PAGE> 39
(ii) sell all or substantially all of the Corporation's assets. Unless
pursuant to a vote by each of the holders of a majority of the shares of each
of the (i) Common Stock, (ii) Series A Preferred and the Series D Preferred
voting together as a group and (iii) the Series E Preferred, a Significant
Merger or sale of all or substantially all of the assets of the Corporation
shall not be treated as a Liquidation Transaction (as such term is defined in
Article IV, Section 3).
SECTION 4. Definitions.
(a) "Simple Majority Director Vote" means the affirmative
vote of a majority of the members of the entire Board of Directors.
(b) "Supermajority Director Vote" means the affirmative
vote of 2/3rds of the members of the entire Board of Directors.
(c) "Total Voting Power of the Corporation" means the
total number of votes that may be cast in the election of directors of the
Corporation at any meeting of shareholders of the Corporation if all Voting
Securities (assuming full conversion, exchange or exercise of all securities,
including rights, warrants and options convertible into, exchangeable for or
exercisable for any securities of the Corporation) entitled to vote generally
in the election of directors of the Corporation were present and voted at such
meeting, other than votes that may be cast only by one class or series of
shares (other than Common Stock) or upon the happening of a contingency. For
the purpose of the application of this definition, any prohibition or
restriction on voting any shares of stock as a result of any shareholders
agreement shall not be given effect.
(d) "Voting Securities" means the shares of Common Stock
and any other securities of the Corporation entitled to vote generally in the
election of directors of the Corporation, and any other securities (including
rights, warrants and options) convertible into, exchangeable for or exercisable
for any Common Stock or other securities referred to above (whether or not
presently convertible, exchangeable or exercisable). For the purposes of the
application of this definition, any prohibition or restriction on voting any
shares of stock as a result of any shareholders agreement shall not be given
affect.
<PAGE> 40
SECOND: That thereafter the stockholders of said corporation holding
not less than the minimum number of shares required of each class and series of
the Corporation's outstanding capital stock approved the amendment by written
consent in accordance with Section 228 of the Delaware General Corporation Law.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware in all other respects.
IN WITNESS WHEREOF, Synon Corporation, has caused this certificate to
be signed by Christopher Herron, its President, and attested by Paul Wilde, its
Secretary, this 28th day of August 1992.
SYNON CORPORATION
By: /s/ Christopher Herron
------------------------------
Christopher Herron
President
BY: /s/ Paul Wilde
-----------------------------
Paul Wilde
Secretary
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
SYNON CORPORATION
Richard H. Goldberg and Paul K. Wilde each hereby certifies that:
(1) They are the President and Secretary, respectively, of Synon
Corporation, a Delaware corporation (the "Corporation").
(2) The first three paragraphs of Article FOURTH of the Certificate of
Incorporation of this Corporation are hereby amended to read in their entirety
as follows:
"The Corporation is authorized to issue two classes of capital
stock to be designated respectively "Common Stock" and "Preferred
Stock." The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is 62,972,686 shares.
The total number of shares of Common Stock that the Corporation shall
have authority to issue is 50,000,000 shares, $0.001 par value per
share. The total number of shares of Preferred Stock that the
Corporation shall have authority to issue is 12,972,686 shares,
$0.001 par value per share, of which: (i) 2,687,750 shall be designated
Series A Preferred Stock ("Series A Preferred"), (ii) 3,618,269 shall
be designated Series D Preferred Stock ("Series D Preferred"), (iii)
l,666,667 shall be designated Series E Preferred Stock ("Series E
Preferred"), and (iv) 5,000,000 of which shall be undesignated as to
series. Upon the filing of this Certificate of Amendment, each two (2)
issued and outstanding shares of Common Stock of this corporation shall
be exchanged for and converted into one (1) share of Common Stock,
including proportionate adjustments to the conversion prices of the
outstanding Preferred Stock.
The Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is hereby authorized, subject to
limitations prescribed by law, to fix by resolution or resolutions the
designations, powers, preferences and rights, and the qualifications,
limitations or restrictions thereof, of any wholly unissued series of
Preferred Stock, including without limitation authority to fix by
resolution or resolutions the dividend rights, dividend rate,
conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), redemption price or prices, and
liquidation preferences of any such series, and the number of shares
constituting any such series and the designation
-1-
<PAGE> 2
thereof, or any of the foregoing. Prior to the Company's Initial Public
Offering (as defined below), no such series or alteration may be
authorized which (i) impairs any right, privilege, preference or term
accorded any existing series of Preferred Stock, (ii) grants any
liquidation preference on parity with or superior to the Series E
Preferred Stock, (iii) initially authorizes any series with voting
rights or dividend preferences greater than that accorded one share of
Common Stock or otherwise provides for disproportionate voting
privileges, (iv) authorizes the redemption of such series or is entered
into with any contract requiring the repurchase of such series (or part
thereof) or (v) is initially convertible into more than one share of
Common Stock or otherwise provides for disproportionate conversion
privileges.
The Board of Directors is further authorized to increase (but
not above the total number of authorized shares of the class) or
decrease (but not below the number of shares of any such series then
outstanding) the number of shares of any series, the number of which
was fixed by it, subsequent to the issuance of shares of such series
then outstanding, subject to the powers, preferences and rights, and
the qualifications, limitations and restrictions thereof stated in the
Certificate of Incorporation or the resolution of the Board of
Directors originally fixing the number of shares of such series. If the
number of shares of any series is so decreased, then the shares
constituting such decrease shall resume the status which they had prior
to the adoption of the resolution originally fixing the number of
shares of such series."
(2) Section 3(b) of Article FOURTH of the Certificate of Incorporation
of this Corporation is hereby amended to read in its entirety as follows:
"(b) After payment of the full amount of the Liquidation
Preference for the Series E Preferred has been made to the holders of
such shares, the holders of shares of Series D Preferred shall be
entitled to receive out of the assets of the Corporation available for
distribution to its stockholders, whether from capital, surplus or
earnings, before any distribution is made to holders of Common Stock or
any other series of Preferred Stock or other class or series of capital
stock, an amount per share of Series D Preferred equal to $3.35 for
each outstanding share of Series D Preferred (the "Original Series D
Issue Price") plus an amount equal to all declared and unpaid dividends
(such sum being referred to as the "Liquidation Preference" for the
Series D Preferred). In the event the assets of the Corporation are
insufficient to pay such Liquidation Preference in full, the assets
shall be distributed pro rata among the holders of the Series D
Preferred based on the number of shares of stock owned by each holder."
(3) Section 6 of Article FOURTH of the Certificate of Incorporation of
this Corporation is hereby amended to read in its entirety as follows:
-2-
<PAGE> 3
"Section 6. Status of Shares. Upon any conversion or any
redemption, repurchase or other acquisition by the Corporation of
shares of Series A Preferred, Series D Preferred or Series E Preferred,
the shares of Series A Preferred, Series D Preferred or Series E
Preferred so converted, redeemed, repurchased or acquired shall be
retired and canceled and shall not be available for reissuance, and the
Certificate of Incorporation of the Corporation shall be appropriately
amended to effect the corresponding reduction in the Corporation's
authorized capital stock."
(4) Section 3 of Article THIRTEENTH of the Certificate of Incorporation
of this Corporation is hereby amended to read in its entirety as follows:
"Section 3. Scope of Article. The provisions of this Article
THIRTEENTH shall be effective to the maximum extent permitted by law,
but shall terminate and no longer be effective upon the closing of the
Corporation's Initial Public Offering (as defined in Article FOURTH)."
(5) Article FOURTEENTH of the Certificate of Incorporation of this
Corporation is hereby amended by adding the following new Section 5:
"Section 5: Scope of Article. The provisions of this Article
FOURTEENTH shall terminate and no longer be effective upon the closing
of the Corporation's Initial Public Offering (as defined in Article
FOURTH)."
(6) The Certificate of Incorporation of this Corporation is hereby
amended by adding the following new Article FIFTEENTH:
"FIFTEENTH. Following the closing of the Corporation's Initial
Public Offering (as defined in Article FOURTH), in the election of
directors of the Corporation, each holder of stock of any class or
series shall be entitled to one vote for each share held. No
stockholder will be permitted to cumulate votes at any election of
directors."
(7) This Certificate of Amendment of Certificate of Incorporation has
been duly adopted by the Board of Directors of this Corporation in accordance
with Section 242 of the General Corporation Law of the State of Delaware.
-3-
<PAGE> 4
(8) This Certificate of Amendment of Certificate of Incorporation has
been duly approved, in accordance with Section 242 of the General Corporation
Law of the State of Delaware, by the written consent of the holders of a
majority of the outstanding stock entitled to vote thereon, and a majority of
the outstanding stock of each class entitled to vote thereon as a class, and
written notice of such action has been given to the holders of such shares who
did not so consent, in each case in accordance with Section 228 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Synon Corporation, has caused this Certificate to
be signed by Richard H. Goldberg, its President and Chief Executive Officer, and
attested by Paul K. Wilde, its Secretary, this ____ day of __________, 1997.
SYNON CORPORATION
By:
------------------------------------------
Richard H. Goldberg
President and Chief Executive Officer
Attest:
By:
-------------------------------------
Paul Wilde
Secretary
-4-
<PAGE> 1
EXHIBIT 3.3
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SYNON CORPORATION
PURSUANT TO SECTION 245 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
Richard H. Goldberg and Paul K. Wilde each hereby certifies that:
(1) They are the President and Secretary, respectively, of Synon
Corporation, a Delaware corporation.
(2) The Certificate of Incorporation of this Corporation, originally
filed with the Secretary of State of the State of Delaware on May 11, 1990, is
hereby amended and restated in its entirety to read as follows:
"FIRST. The name of the corporation is Synon Corporation (the
"Corporation").
SECOND. The address of the Corporation's registered office in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, Delaware 19901. The name of its registered
agent at such address is the Corporation Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH. The Corporation is authorized to issue two classes of capital
stock to be designated respectively "Common Stock" and "Preferred Stock." The
total number of shares of all classes of stock which the Corporation shall have
the authority to issue is Fifty-Five Million (55,000,000) shares. The total
number of shares of Common Stock that the Corporation shall have authority to
issue is Fifty Million (50,000,000) shares, $0.001 par value per share. The
total number of shares of Preferred Stock that the Corporation shall have
authority to issue is Five Million (5,000,000) shares, $0.001 par value per
share.
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, subject to limitations
prescribed by law, to fix by resolution or resolutions the designations, powers,
preferences and rights, and the qualifications, limitations or restrictions
thereof, of any wholly unissued series of Preferred Stock, including without
limitation authority to fix by resolution or resolutions the dividend rights,
dividend rate, conversion rights,
<PAGE> 2
voting rights, rights and terms of redemption (including sinking fund
provisions), redemption price or prices, and liquidation preferences of any such
series, and the number of shares constituting any such series and the
designation thereof, or any of the foregoing.
The Board of Directors is further authorized to increase (but not above
the total number of authorized shares of the class) or decrease (but not below
the number of shares of any such series then outstanding) the number of shares
of any series, the number of which was fixed by it, subsequent to the issuance
of shares of such series then outstanding, subject to the powers, preferences
and rights, and the qualifications, limitations and restrictions thereof stated
in the Certificate of Incorporation or the resolution of the Board of Directors
originally fixing the number of shares of such series. If the number of shares
of any series is so decreased, then the shares constituting such decrease shall
resume the status which they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
FIFTH. The Corporation is to have perpetual existence.
SIXTH. Elections of directors need not be by written ballot unless a
stockholder demands election by written ballot at the meeting and before voting
begins or unless the Bylaws of the Corporation shall so provide.
SEVENTH. The number of directors which constitute the whole Board of
Directors of the Corporation shall be designated in the Bylaws of the
Corporation.
EIGHTH. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation is expressly authorized to
make, alter, amend or repeal the Bylaws of the Corporation.
NINTH. To the fullest extent permitted by the Delaware General
Corporation Law as the same exists or may hereafter be amended, no director of
the Corporation shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Neither any amendment nor repeal of this Article, nor the adoption of
any provision of this Certificate of Incorporation inconsistent with this
Article, shall eliminate or reduce the effect of this Article in respect of any
matter occurring, or any cause of action, suit or claim that, but for this
Article, would accrue or arise, prior to such amendment, repeal or adoption of
an inconsistent provision.
TENTH. Meetings of stockholders may be held within or without the State
of Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
<PAGE> 3
ELEVENTH. No action shall be taken by the stockholders of the
Corporation except at an annual or special meeting of the stockholders called in
accordance with the Bylaws and no action shall be taken by the stockholders by
written consent.
TWELFTH. At the election of directors of the Corporation, each holder
of stock of any class or series shall be entitled to one vote for each share
held. No stockholder will be permitted to cumulate votes at any election of
directors.
THIRTEENTH. The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation."
(3) The foregoing Amended and Restated Certificate of Incorporation has
been duly adopted by the Board of Directors of this Corporation in accordance
with Section 245 of the General Corporation Law of the State of Delaware.
(4) The foregoing Amended and Restated Certificate of Incorporation
only restates and integrates and does not further amend the provisions of this
Corporation's Certificate of Incorporation as heretofore amended or
supplemented, and there is no discrepancy between the provisions of this
Corporation's Certificate of Amendment as heretofore amended or supplemented and
the provisions of the foregoing Amended and Restated Certificate of
Incorporation.
<PAGE> 4
IN WITNESS WHEREOF, Synon Corporation, has caused this Amended and
Restated Certificate of Incorporation to be signed by Richard H. Goldberg, its
President, and attested by Paul K. Wilde, its Secretary, this ____ day of
__________, 1997.
SYNON CORPORATION
By:
------------------------------------------
Richard H. Goldberg
President and Chief Executive Officer
Attest:
By:
------------------------------
Paul K. Wilde
Secretary
<PAGE> 1
EXHIBIT 3.4
AMENDED AND RESTATED
BYLAWS
OF
SYNON CORPORATION
(a Delaware corporation)
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AMENDED AND RESTATED
BYLAWS OF
SYNON CORPORATION
(a Delaware corporation)
TABLE OF CONTENTS
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ARTICLE I
CORPORATE OFFICES...........................................................................................1
1.1 REGISTERED OFFICE...............................................................................1
1.2 OTHER OFFICES...................................................................................1
ARTICLE II
MEETINGS OF STOCKHOLDERS....................................................................................1
2.1 PLACE OF MEETINGS...............................................................................1
2.2 ANNUAL MEETING..................................................................................1
2.3 SPECIAL MEETING.................................................................................2
2.4 NOTICE OF STOCKHOLDERS' MEETINGS................................................................2
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND
STOCKHOLDER BUSINESS............................................................................2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE....................................................3
2.7 QUORUM..........................................................................................4
2.8 ADJOURNED MEETING; NOTICE.......................................................................4
2.9 VOTING..........................................................................................4
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A
MEETING.........................................................................................5
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING......................................................5
2.12 PROXIES.........................................................................................6
2.13 ORGANIZATION....................................................................................6
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE...........................................................6
ARTICLE III
DIRECTORS...................................................................................................7
3.1 POWERS..........................................................................................7
3.2 NUMBER OF DIRECTORS.............................................................................7
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3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS........................................................7
3.4 RESIGNATION AND VACANCIES.......................................................................7
3.5 REMOVAL OF DIRECTORS............................................................................8
3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE........................................................8
3.7 FIRST MEETINGS..................................................................................9
3.8 REGULAR MEETINGS................................................................................9
3.9 SPECIAL MEETINGS; NOTICE........................................................................9
3.10 QUORUM..........................................................................................9
3.11 WAIVER OF NOTICE...............................................................................10
3.12 ADJOURNMENT....................................................................................11
3.13 NOTICE OF ADJOURNMENT..........................................................................11
3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING..............................................11
3.15 FEES AND COMPENSATION OF DIRECTORS.............................................................11
3.16 APPROVAL OF LOANS TO OFFICERS..................................................................11
ARTICLE IV
COMMITTEES.................................................................................................12
4.1 COMMITTEES OF DIRECTORS........................................................................12
4.2 MEETINGS AND ACTION OF COMMITTEES..............................................................12
4.3 COMMITTEE MINUTES..............................................................................13
ARTICLE V
OFFICERS...................................................................................................13
5.1 OFFICERS.......................................................................................13
5.2 ELECTION OF OFFICERS...........................................................................13
5.3 SUBORDINATE OFFICERS...........................................................................13
5.4 REMOVAL AND RESIGNATION OF OFFICERS............................................................14
5.5 VACANCIES IN OFFICES...........................................................................14
5.6 CHAIRMAN OF THE BOARD..........................................................................14
5.7 PRESIDENT......................................................................................14
5.8 VICE PRESIDENTS................................................................................15
5.9 SECRETARY......................................................................................15
5.10 CHIEF FINANCIAL OFFICER........................................................................15
5.11 ASSISTANT SECRETARY............................................................................16
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5.12 ADMINISTRATIVE OFFICERS........................................................................16
5.13 AUTHORITY AND DUTIES OF OFFICERS...............................................................16
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS...........................................................................................17
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS......................................................17
6.2 INDEMNIFICATION OF OTHERS......................................................................18
6.3 INSURANCE......................................................................................18
ARTICLE VII
RECORDS AND REPORTS........................................................................................18
7.1 MAINTENANCE AND INSPECTION OF RECORDS..........................................................18
7.2 INSPECTION BY DIRECTORS........................................................................19
7.3 ANNUAL STATEMENT TO STOCKHOLDERS...............................................................19
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.................................................19
7.5 CERTIFICATION AND INSPECTION OF BYLAWS.........................................................19
ARTICLE VIII
GENERAL MATTERS............................................................................................20
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING..........................................20
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS......................................................20
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED.............................................20
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES...............................................20
8.5 SPECIAL DESIGNATION ON CERTIFICATES............................................................21
8.6 LOST CERTIFICATES..............................................................................22
8.7 TRANSFER AGENTS AND REGISTRARS.................................................................22
8.8 CONSTRUCTION; DEFINITIONS......................................................................22
ARTICLE IX
AMENDMENTS.................................................................................................22
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AMENDED AND RESTATED
BYLAWS
OF
SYNON CORPORATION
(A DELAWARE CORPORATION)
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be fixed in the
certificate of incorporation of the corporation.
1.2 OTHER OFFICES
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place within or outside
the State of Delaware designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the principal
executive office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date
and at a time designated by the board of directors. In the absence of such
designation, the annual meeting of stockholders shall be held on the second
Thursday in May in each year at 3:00 p.m. However, if such day falls on a legal
holiday, then the meeting shall be held at the same time and place on the
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next succeeding full business day. At the meeting, directors shall be elected,
and any other proper business may be transacted.
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, or by the chief executive
officer, or by one or more stockholders holding shares in the aggregate entitled
to cast not less than twenty percent (20%) of the votes of all shares of stock
owned by stockholders entitled to vote at that meeting.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings of stockholders shall be sent or otherwise
given in accordance with Section 2.5 of these bylaws not less than ten (10) nor
more than sixty (60) days before the date of the meeting. The notice shall
specify the place, date and hour of the meeting and (i) in the case of a special
meeting, the purpose or purposes for which the meeting is called (no business
other than that specified in the notice may be transacted) or (ii) in the case
of the annual meeting, those matters which the board of directors, at the time
of giving the notice, intends to present for action by the stockholders (but any
proper matter may be presented at the meeting for such action). The notice of
any meeting at which directors are to be elected shall include the name of any
nominee or nominees who, at the time of the notice, the board intends to present
for election.
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER
BUSINESS
To be properly brought before an annual meeting or special meeting,
nominations for the election of director or other business must be (a) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the board of directors or other person so authorized pursuant to
Section 2.3 of these bylaws, (b) otherwise properly brought before the meeting
by or at the direction of the board of directors or (c) otherwise properly
brought before the meeting by a stockholder. For such nominations or other
business to be considered properly brought before the meeting by a stockholder,
such stockholder must have given timely notice and in proper form of his intent
to bring such business before such meeting. To be timely, such stockholder's
notice must be delivered to or mailed and received by the secretary of the
Corporation not less than 90 days prior to the meeting; provided, however, that
in the case of a meeting called by or on behalf of the Board of Directors of the
Corporation where prior notice, or public disclosure, of the meeting has not
been given or made at least 100 days prior to such meeting, notice by the
stockholder to be timely must be so received not later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. To be in proper form,
a stockholder's notice to the secretary shall set forth:
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(i) the name and address of the stockholder who intends to make
the nominations, propose the business, and, as the case may be,
the name and address of the person or persons to be nominated or
the nature of the business to be proposed;
(ii) a representation that the stockholder is a holder of record
of stock of the Corporation entitled to vote at such meeting and,
if applicable, intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice
or introduce the business specified in the notice;
(iii) if applicable, a description of all arrangements or
understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant
to which the nomination or nominations are to be made by the
stockholder;
(iv) such other information regarding each nominee or each matter
of business to be proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission had the
nominee been nominated, or intended to be nominated, or the
matter been proposed, or intended to be proposed by the board of
directors' and
(v) if applicable, the consent of each nominee to serve as
director of the Corporation if so elected.
The chairman of the meeting may refuse to acknowledge the nomination of
any person or the proposal of any business not made in compliance with the
foregoing procedure.
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders shall be given either
personally or by first-class mail or by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the stockholder at the address of that stockholder
appearing on the books of the corporation or given by the stockholder to the
corporation for the purpose of notice. Notice shall be deemed to have been given
at the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication.
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An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.7 QUORUM
The holders of a majority in voting power of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum is not present or
represented at any meeting of the stockholders, then either (i) the chairman of
the meeting or (ii) the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting in accordance
with Section 2.7 of these bylaws.
When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the laws of the State of Delaware or
of the certificate of incorporation or these bylaws, a different vote is
required, in which case such express provision shall govern and control the
decision of the question.
If a quorum be initially present, the stockholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders initially constituting the quorum.
2.8 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time and place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.9 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint
owners, and to voting trusts and other voting agreements).
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Except as may be otherwise provided in the certificate of incorporation
or these bylaws, each stockholder shall be entitled to one vote for each share
of capital stock held by such stockholder.
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2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the certificate of incorporation, any
action required by this chapter to be taken at any annual or special meeting of
stockholders of a corporation, or any action that may be taken at any annual or
special meeting of such stockholders, may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted.
Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the General
Corporation Law of Delaware if such action had been voted on by stockholders at
a meeting thereof, then the certificate filed under such section shall state, in
lieu of any statement required by such section concerning any vote of
stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.
Notwithstanding the foregoing, no such action by written consent may be
taken following the earlier to occur of the closing of a firm commitment
underwritten public offering registered under the Securities Act of 1933, as
amended, or such time as the corporation is required to file reports pursuant to
Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING
For purposes of determining the stockholders entitled to notice of any
meeting or to vote thereat, the board of directors may fix, in advance, a record
date, which shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors and which shall not be more
than sixty (60) days nor less than ten (10) days before the date of any such
meeting, and in such event only stockholders of record on the date so fixed are
entitled to notice and to vote, notwithstanding any transfer of any shares on
the books of the corporation after the record date.
If the board of directors does not so fix a record date, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the business day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.
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A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting
unless the board of directors fixes a new record date for the adjourned meeting,
but the board of directors shall fix a new record date if the meeting is
adjourned for more than thirty (30) days from the date set for the original
meeting.
The record date for any other purpose shall be as provided in Section
8.1 of these bylaws.
2.12 PROXIES
Every person entitled to vote for directors, or on any other matter,
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation, but no such proxy shall be voted or acted upon after three
(3) years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if the stockholder's name is placed on the proxy (whether
by manual signature, typewriting, telegraphic transmission, telefacsimile or
otherwise) by the stockholder or the stockholder's attorney-in-fact. The
revocability of a proxy that states on its face that it is irrevocable shall be
governed by the provisions of Section 212(e) of the General Corporation Law of
Delaware.
2.13 ORGANIZATION
The president, or in the absence of the president, the chairman of the
board, shall call the meeting of the stockholders to order, and shall act as
chairman of the meeting. In the absence of the president, the chairman of the
board, and all of the vice presidents, the stockholders shall appoint a chairman
for such meeting. The chairman of any meeting of stockholders shall determine
the order of business and the procedures at the meeting, including such matters
as the regulation of the manner of voting and the conduct of business. The
secretary of the corporation shall act as secretary of all meetings of the
stockholders, but in the absence of the secretary at any meeting of the
stockholders, the chairman of the meeting may appoint any person to act as
secretary of the meeting.
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall
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also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware
and to any limitations in the certificate of incorporation or these bylaws
relating to action required to be approved by the stockholders or by the
outstanding shares, the business and affairs of the corporation shall be managed
and all corporate powers shall be exercised by or under the direction of the
board of directors.
3.2 NUMBER OF DIRECTORS
The board of directors shall consist of six (6) members. The number
of directors may be changed by an amendment to this bylaw, duly adopted by the
board of directors or by the stockholders, or by a duly adopted amendment to the
certificate of incorporation.
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Each director, including a director elected or appointed to fill
a vacancy, shall hold office until the expiration of the term for which elected
and until a successor has been elected and qualified.
3.4 RESIGNATION AND VACANCIES
Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, the
board of directors may elect a successor to take office when the resignation
becomes effective.
Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote of
the stockholders or by court order may be filled only by the affirmative vote of
a majority of the shares represented and voting at a duly held meeting at which
a quorum is present (which shares voting affirmatively also constitute a
majority of the required
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quorum). Each director so elected shall hold office until the next annual
meeting of the stockholders and until a successor has been elected and
qualified.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from
any increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the provisions of
the certificate of incorporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors.
3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
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Regular meetings of the board of directors may be held at any place
within or outside the State of Delaware that has been designated from time to
time by resolution of the board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the corporation.
Special meetings of the board may be held at any place within or outside the
State of Delaware that has been designated in the notice of the meeting or, if
not stated in the notice or if there is no notice, at the principal executive
office of the corporation.
Any meeting of the board, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another; and all such participating
directors shall be deemed to be present in person at the meeting.
3.7 FIRST MEETINGS
The first meeting of each newly elected board of directors shall be
held at such time and place as shall be fixed by the vote of the stockholders at
the annual meeting. In the event of the failure of the stockholders to fix the
time or place of such first meeting of the newly elected board of directors, or
in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.
3.8 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice
at such time as shall from time to time be determined by the board of directors.
If any regular meeting day shall fall on a legal holiday, then the meeting shall
be held at the same time and place on the next succeeding full business day.
3.9 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail,
telecopy or telegram, charges prepaid, addressed to each director at that
director's address as it is shown on the records of the corporation. If the
notice is mailed, it shall be deposited in the United States mail at least four
(4) days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone, telecopy or telegram, it shall be
delivered personally or by telephone or to the telegraph company at least
forty-eight (48) hours before the time of the holding of the meeting.
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Any oral notice given personally or by telephone may be communicated either to
the director or to a person at the office of the director who the person giving
the notice has reason to believe will promptly communicate it to the director.
The notice need not specify the purpose or the place of the meeting, if the
meeting is to be held at the principal executive office of the corporation.
3.10 QUORUM
A majority of the authorized number of directors shall constitute a quorum for
the transaction of business, except to adjourn as provided in Section 3.12 of
these bylaws. Every act or decision done or made by a majority of the directors
present at a duly held meeting at which a quorum is present shall be regarded as
the act of the board of directors, subject to the provisions of the certificate
of incorporation and applicable law.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the quorum for that meeting.
3.11 WAIVER OF NOTICE
Notice of a meeting need not be given to any director (i) who signs a
waiver of notice, whether before or after the meeting, or (ii) who attends the
meeting other than for the express purposed of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. All such waivers shall be filed with the corporate records
or made part of the minutes of the meeting. A waiver of notice need not specify
the purpose of any regular or special meeting of the board of directors.
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3.12 ADJOURNMENT
A majority of the directors present, whether or not constituting a
quorum, may adjourn any meeting of the board to another time and place.
3.13 NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting of the
board need not be given unless the meeting is adjourned for more than
twenty-four (24) hours. If the meeting is adjourned for more than twenty-four
(24) hours, then notice of the time and place of the adjourned meeting shall be
given before the adjourned meeting takes place, in the manner specified in
Section 3.9 of these bylaws, to the directors who were not present at the time
of the adjournment.
3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken by the board of directors
may be taken without a meeting, provided that all members of the board
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
board of directors. Such written consent and any counterparts thereof shall be
filed with the minutes of the proceedings of the board of directors.
3.15 FEES AND COMPENSATION OF DIRECTORS
Directors and members of committees may receive such compensation, if
any, for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.15 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.
3.16 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or any of its
subsidiaries, including any officer or employee who is a director of the
corporation or any of its subsidiaries, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
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ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one (1) or more committees, each
consisting of one (1) or more directors, to serve at the pleasure of the board.
The board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The appointment of members or alternate members of a committee
requires the vote of a majority of the authorized number of directors. Any
committee, to the extent provided in the resolution of the board, shall have and
may exercise all the powers and authority of the board, but no such committee
shall have the power or authority to (i) amend the certificate of incorporation
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the board
of directors as provided in Section 151(a) of the General Corporation Law of
Delaware, fix the designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, (iv)
recommend to the stockholders a dissolution of the corporation or a revocation
of a dissolution or (v) amend the bylaws of the corporation; and, unless the
board resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.
4.2 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the following provisions of Article III of these
bylaws: Section 3.6 (place of meetings; meetings by telephone), Section 3.8
(regular meetings), Section 3.9 (special meetings; notice), Section 3.10
(quorum), Section 3.11 (waiver of notice), Section 3.12 (adjournment), Section
3.13 (notice of adjournment) and Section 3.14 (board action by written consent
without meeting), with such changes in the context of those bylaws as are
necessary to substitute the committee and its members for the board of directors
and its members; provided, however, that the time of regular meetings of
committees may be determined either by resolution of the board of directors or
by resolution of the committee, that special meetings of committees may also be
called
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by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these bylaws.
4.3 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report
the same to the board of directors when required.
ARTICLE V
OFFICERS
5.1 OFFICERS
The Corporate Officers of the corporation shall be a president, a
secretary and a chief financial officer. The corporation may also have, at the
discretion of the board of directors, a chairman of the board, one or more vice
presidents (however denominated), one or more assistant secretaries, one or more
assistant treasurers, and such other officers as may be appointed in accordance
with the provi sions of Section 5.3 of these bylaws. Any number of offices may
be held by the same person.
In addition to the Corporate Officers of the Company described above,
there may also be such Administrative Officers of the corporation as may be
designated and appointed from time to time by the president of the corporation
in accordance with the provisions of Section 5.12 of these bylaws.
5.2 ELECTION OF OFFICERS
The Corporate Officers of the corporation, except such officers as may
be appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these bylaws, shall be chosen by the board of directors, subject to the rights,
if any, of an officer under any contract of employment, and shall hold their
respective offices for such terms as the board of directors may from time to
time determine.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or may empower the president to
appoint, such other Corporate Officers as the business of the corporation may
require, each of whom shall hold office
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for such period, have such power and authority, and perform such duties as are
provided in these bylaws or as the board of directors may from time to time
determine.
The president may from time to time designate and appoint
Administrative Officers of the corporation in accordance with the provisions of
Section 5.12 of these bylaws.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of a Corporate Officer under any
contract of employment, any Corporate Officer may be removed, either with or
without cause, by the board of directors at any regular or special meeting of
the board or, except in case of a Corporate Officer chosen by the board of
directors, by any Corporate Officer upon whom such power of removal may be
conferred by the board of directors.
Any Corporate Officer may resign at any time by giving written notice
to the corporation. Any resignation shall take effect at the date of the receipt
of that notice or at any later time specified in that notice; and, unless
otherwise specified in that notice, the acceptance of the resignation shall not
be necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the Corporate
Officer is a party.
Any Administrative Officer designated and appointed by the president
may be removed, either with or without cause, at any time by the president. Any
Administrative Officer may resign at any time by giving written notice to the
president or to the secretary of the corporation.
5.5 VACANCIES IN OFFICES
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise such other
powers and perform such other duties as may from time to time be assigned to him
by the board of directors or as may be prescribed by these bylaws. If there is
no president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
5.7 PRESIDENT
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<PAGE> 20
Subject to such supervisory powers, if any, as may be given by the board of
directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction and control of the business and the officers of the corporation. He or
she shall preside at all meetings of the stockholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He or she shall have the general powers and duties of management
usually vested in the office of president of a corporation, and shall have such
other powers and perform such other duties as may be prescribed by the board of
directors or these bylaws.
5.8 VICE PRESIDENTS
In the absence or disability of the president, and if there is no
chairman of the board, the vice presidents, if any, in order of their rank as
fixed by the board of directors or, if not ranked, a vice president designated
by the board of directors, shall perform all the duties of the president and
when so acting shall have all the powers of, and be subject to all the
restrictions upon, the president. The vice presidents shall have such other
powers and perform such other duties as from time to time may be prescribed for
them respectively by the board of directors, these bylaws, the president or the
chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of the board
of directors, committees of directors and stockholders. The minutes shall show
the time and place of each meeting, whether regular or special (and, if special,
how authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolu tion of the board of
directors, a share register or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these bylaws. He or she shall keep the seal of the corporation, if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or by these bylaws.
16
<PAGE> 21
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable times
be open to inspection by any director for a purpose reasonably related to his
position as a director.
The chief financial officer shall deposit all money and other valuables
in the name and to the credit of the corporation with such depositaries as may
be designated by the board of directors. He or she shall disburse the funds of
the corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his or
her transactions as chief financial officer and of the financial condition of
the corporation, and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or these bylaws.
5.11 ASSISTANT SECRETARY
The assistant secretary, if any, or, if there is more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
5.12 ADMINISTRATIVE OFFICERS
In addition to the Corporate Officers of the corporation as provided in
Section 5.1 of these bylaws and such subordinate Corporate Officers as may be
appointed in accordance with Section 5.3 of these bylaws, there may also be such
Administrative Officers of the corporation as may be designated and appointed
from time to time by the president of the corporation. Administrative Officers
shall perform such duties and have such powers as from time to time may be
determined by the president or the board of directors in order to assist the
Corporate Officers in the furtherance of their duties. In the performance of
such duties and the exercise of such powers, however, such Administrative
Officers shall have limited authority to act on behalf of the corporation as the
board of directors shall establish, including but not limited to limitations on
the dollar amount and on the scope of agreements or commitments that may be made
by such Administrative Officers on behalf of the corporation, which limitations
may not be exceeded by such individuals or altered by the president without
further approval by the board of directors.
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5.13 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing powers, authority and duties, all officers
of the corporation shall respectively have such authority and powers and perform
such duties in the management of the business of the corporation as may be
designated from time to time by the board of directors.
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ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner
permitted by the General Corporation Law of Delaware as the same now exists or
may hereafter be amended, indemnify any person against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred in connection with any threatened, pending or completed
action, suit, or proceeding in which such person was or is a party or is
threatened to be made a party by reason of the fact that such person is or was a
director or officer of the corporation. For purposes of this Section 6.1, a
"director" or "officer" of the corporation shall mean any person (i) who is or
was a director or officer of the corporation, (ii) who is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was a
director or officer of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
The corporation shall be required to indemnify a director or officer in
connection with an action, suit, or proceeding (or part thereof) initiated by
such director or officer only if the initiation of such action, suit, or
proceeding (or part thereof) by the director or officer was authorized by the
Board of Directors of the corporation.
The corporation shall pay the expenses (including attorney's fees)
incurred by a director or officer of the corporation entitled to indemnification
hereunder in defending any action, suit or proceeding referred to in this
Section 6.1 in advance of its final disposition; provided, however, that payment
of expenses incurred by a director or officer of the corporation in advance of
the final disposition of such action, suit or proceeding shall be made only upon
receipt of an undertaking by the director or officer to repay all amounts
advanced if it should ultimately be determined that the director or officer is
not entitled to be indemnified under this Section 6.1 or otherwise.
The rights conferred on any person by this Article shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the corporation's Certificate of Incorporation,
these bylaws, agreement, vote of the stockholders or disinterested directors or
otherwise.
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Any repeal or modification of the foregoing provisions of this Article
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the maximum extent and in the
manner permitted by the General Corporation Law of Delaware as the same now
exists or may hereafter be amended, to indemnify any person (other than
directors and officers) against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred in
connection with any threatened, pending or completed action, suit, or
proceeding, in which such person was or is a party or is threatened to be made a
party by reason of the fact that such person is or was an employee or agent of
the corporation. For purposes of this Section 6.2, an "employee" or "agent" of
the corporation (other than a director or officer) shall mean any person (i) who
is or was an employee or agent of the corporation, (ii) who is or was serving at
the request of the corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was an
employee or agent of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
6.3 INSURANCE
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the provisions of the General Corporation Law of
Delaware.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books and other records of its business and properties.
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Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders and its other books and records for a purpose
reasonably related to his or her position as a director.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, if any, the president, any vice president,
the chief financial officer, the secretary or any assistant secretary of this
corporation, or any other person authorized by the board of directors or the
president or a vice president, is authorized to vote, represent and exercise on
behalf of this corporation all rights incident to any and all shares of the
stock of any other corporation or corporations standing in the name of this
corporation. The authority herein granted may be exercised either by such person
directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
7.5 CERTIFICATION AND INSPECTION OF BYLAWS
The original or a copy of these bylaws, as amended or otherwise altered
to date, certified by the secretary, shall be kept at the corporation's
principal executive office and shall be open to inspection by the stockholders
of the corporation, at all reasonable times during office hours.
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ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING
For purposes of determining the stockholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the board of directors may fix, in advance, a record date, which shall not
precede the date upon which the resolution fixing the record date is adopted and
which shall not be more than sixty (60) days before any such action. In that
case, only stockholders of record at the close of business on the date so fixed
are entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided by law.
If the board of directors does not so fix a record date, then the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board of directors adopts the
applicable resolution.
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED
The board of directors, except as otherwise provided in these bylaws,
may authorize and empower any officer or officers, or agent or agents, to enter
into any contract or execute any instrument in the name of and on behalf of the
corporation; such power and authority may be general or confined to specific
instances. Unless so authorized or ratified by the board of directors or within
the agency power of an officer, no officer, agent or employee shall have any
power or authority to bind the corporation by any contract or engagement or to
pledge its credit or to render it liable for any purpose or for any amount.
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES
The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or
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all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the corporation. Notwithstanding the adoption of
such a resolution by the board of directors, every holder of stock represented
by certificates and, upon request, every holder of uncertificated shares, shall
be entitled to have a certificate signed by, or in the name of the corporation
by, the chairman or vice-chairman of the board of directors, or the president or
vice-president, and by the treasurer or an assistant treasurer, or the secretary
or an assistant secretary of such corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate has
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he or
she were such officer, transfer agent or registrar at the date of issue.
Certificates for shares shall be of such form and device as the board
of directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a summary statement or reference to the powers,
designations, preferences or other special rights of such stock and the
qualifications, limitations or restrictions of such preferences and/or rights,
if any; a statement or summary of liens, if any; a conspicuous notice of
restrictions upon transfer or registration of transfer, if any; a statement as
to any applicable voting trust agreement; if the shares be assessable, or, if
assessments are collectible by personal action, a plain statement of such facts.
Upon surrender to the secretary or transfer agent of the corporation of
a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, or upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.5 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences and the relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full
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or summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.6 LOST CERTIFICATES
Except as provided in this Section 8.6, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.7 TRANSFER AGENTS AND REGISTRARS
The board of directors may appoint one or more transfer agents or
transfer clerks, and one or more registrars, each of which shall be an
incorporated bank or trust company -- either domestic or foreign, who shall be
appointed at such times and places as the requirements of the corporation may
necessitate and the board of directors may designate.
8.8 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the General Corporation Law of Delaware shall
govern the construction of these bylaws. Without limiting the generality of this
provision, as used in these bylaws, the singular number includes the plural, the
plural number includes the singular, and the term "person" includes both an
entity and a natural person.
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ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended
or repealed by the stockholders entitled to vote; provided, however, that the
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeal bylaws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal bylaws.
Whenever an amendment or new bylaw is adopted, it shall be copied in
the book of bylaws with the original bylaws, in the appropriate place. If any
bylaw is repealed, the fact of repeal with the date of the meeting at which the
repeal was enacted or the filing of the operative written consent(s) shall be
stated in said book.
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EXHIBIT 4.3
FINAL EXECUTION COPY
================================================================================
STOCK PURCHASE AGREEMENT
Dated as of August 28, 1992
between
SYNON CORPORATION
and
INTERNATIONAL BUSINESS MACHINES CORPORATION
================================================================================
[CS&M Reference No. 2281-011]
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
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Section 1.01. Certain Definitions ...................................... 1
Section 1.02. Additional Definitions ................................... 12
Section 1.03. Terms Generally .......................................... 12
ARTICLE II
Purchase and Sale of the IBM Shares
SECTION 2.01. Purchase and Sale of the IBM Shares ...................... 13
SECTION 2.02. Closing .................................................. 13
SECTION 2.03. Legends for the Shares ................................... 13
ARTICLE III
Representations and Warranties of the Company
SECTION 3.01. Organization and Standing of the
Company ................................................ 14
SECTION 3.02. Authority ................................................ 14
SECTION 3.03. Capital Stock of the Company ............................. 15
SECTION 3.04. Equity Interests ......................................... 17
SECTION 3.05. Financial Statements ..................................... 17
SECTION 3.06. Undisclosed Liabilities .................................. 18
SECTION 3.07. Taxes .................................................... 18
SECTION 3.08. Assets other than Real Property .......................... 19
SECTION 3.09. Title to Real Property ................................... 19
SECTION 3.10. Proprietary Rights ....................................... 19
SECTION 3.11. Contracts ................................................ 21
SECTION 3.12 Litigation; Decrees ...................................... 23
SECTION 3.13 Absence of Changes or Events ............................. 23
SECTION 3.14. Compliance with Applicable Laws .......................... 23
SECTION 3.15. Certain Employee Matters ................................. 24
SECTION 3.16. Insurance ................................................ 25
SECTION 3.17. Benefit Plans ............................................ 26
SECTION 3.18. Effect of Transaction .................................... 26
SECTION 3.19. Disclosure ............................................... 27
SECTION 3.20. Key Person Insurance ..................................... 27
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Contents, p. 2
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ARTICLE IV
Representations and Warranties of IBM
SECTION 4.01. Organization and Authority .............................. 27
SECTION 4.02. Securities Act .......................................... 28
SECTION 4.03. Accredited Investor ..................................... 28
ARTICLE V
Conditions of IBM's Obligations
SECTION 5.01. Representations and Warranties .......................... 28
SECTION 5.02. Consents and Approvals .................................. 28
SECTION 5.03. Operative Agreements .................................... 29
SECTION 5.04. Due Diligence ........................................... 29
SECTION 5.05. Injunctions, etc ........................................ 29
SECTION 5.06. Certificate of Incorporation ............................ 29
SECTION 5.07. By-laws ................................................. 30
SECTION 5.08. Executive Officers ...................................... 30
SECTION 5.09. Development and Marketing ............................... 30
SECTION 5.10. Closing Documents ....................................... 30
SECTION 5.11. Opinion of Counsel ...................................... 31
SECTION 5.12. Proceedings ............................................. 31
SECTION 5.13. Business Plan ........................................... 31
SECTION 5.14. Statement of Work ....................................... 31
ARTICLE VI
Conditions of Company's Obligations
SECTION 6.01. Representations and Warranties .......................... 32
SECTION 6.02. Injunctions, etc ........................................ 32
SECTION 6.03. Closing Documents ....................................... 32
SECTION 6.04. Operative Agreements .................................... 32
SECTION 6.05. Consents and Approvals .................................. 32
ARTICLE VII
Affirmative Covenants of the Company
SECTION 7.01. Accounting System ....................................... 33
SECTION 7.02. Periodic Reports; Budgets ............................... 33
SECTION 7.03. Certificates of Compliance .............................. 36
SECTION 7.04. Other Reports and Inspection ............................ 36
SECTION 7.05. Insurance ............................................... 37
SECTION 7.06. Licenses; Other Property ................................ 37
</TABLE>
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Contents, p. 3
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SECTION 7.07. Material Changes and Other Notices ...................... 37
SECTION 7.08. Compliance with Applicable Laws ......................... 37
SECTION 7.09. Agreements with Employees ............................... 38
SECTION 7.10. Board of Directors ...................................... 39
SECTION 7.11. Use of Proceeds ......................................... 40
SECTION 7.12. Obligations ............................................. 40
SECTION 7.13. Management Changes ...................................... 40
SECTION 7.l4. Agreements with Stockholders ............................ 40
SECTION 7.15. IBM Purchase Rights for Excess
Options ................................................. 40
SECTION 7.16. Repurchase of Shares .................................... 41
SECTION 7.17. Payments ................................................ 43
SECTION 7.18. Exchange, Transfer and Replacement
of IBM Share Certificates ............................. 44
SECTION 7.19. Reservation of Shares ................................... 44
SECTION 7.20. Key-Person Insurance .................................... 44
SECTION 7.21. Audited Financial Statements ............................ 45
SECTION 7.22. EEOC Filings ............................................ 45
SECTION 7.23. Business Qualification .................................. 45
ARTICLE VIII
Negative Covenants of the Company
SECTION 8.01. Mergers, Consolidation, Sales
of Assets ............................................. 46
SECTION 8.02. No Restrictions Relating to this
Agreement ............................................. 49
SECTION 8.03. Stock Options ........................................... 49
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices ................................................. 49
SECTION 9.02. Survival of Agreement; Termination ...................... 51
SECTION 9.03. Assignment .............................................. 51
SECTION 9.04. No Third-Party Beneficiaries ............................ 51
SECTION 9.05. Expenses ................................................ 51
SECTION 9.06. Applicable Law .......................................... 52
SECTION 9.07. Waivers; Amendment ...................................... 52
SECTION 9.08. Entire Agreement ........................................ 53
SECTION 9.09. Waiver of Jury Trial .................................... 53
SECTION 9.10. Severability ............................................ 53
SECTION 9.11. Counterparts ............................................ 53
SECTION 9.12. Headings ................................................ 54
SECTION 9.13. Jurisdiction; Consent to Service
</TABLE>
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Contents, p. 4
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of Process; Remedies .................................... 54
SECTION 9.14. Publicity ............................................... 54
SECTION 9.15. Further Assurances ...................................... 55
SECTION 9.l6. Freedom of Action ....................................... 55
SECTION 9.17. Construction ............................................ 57
</TABLE>
EXHIBITS
Exhibit A Stockholders Agreement
Exhibit B Amendment to Restated
Certificate of Incorporation
Exhibit C Development Agreement
Amendment
Exhibit D Trust Agreement
Exhibit E Initial Business Plan
Exhibit F Closing Legal Opinion
Exhibit G Information and Exceptions
SCHEDULES
Schedule 1.01 Control Transaction
(Intellectual Property)
Schedule 5.03 Necessary Stockholders
Schedule 7.11 Use of Proceeds; Business
Strategy
<PAGE> 6
STOCK PURCHASE AGREEMENT (this
"Agreement") dated as of August 28, 1992,
between SYNON CORPORATION,, a Delaware
corporation (the "Company"), and
INTERNATIONAL BUSINESS MACHINES
CORPORATION, a New York corporation
("IBM").
Subject to the terms and conditions set forth herein, IBM
desires to purchase from the Company, and the Company desires to issue and sell
to IBM, 1,666,667 shares of Series E Convertible Preferred Stock, $.001 par
value, of the Company for a total purchase price of $5,000,001.
Accordingly, for good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
Definitions
SECTION 1.01. Certain Definitions. As used in this Agreement,
the following terms shall have the meanings specified below:
"Actual Voting Power of the Company" shall mean the total
number of votes that may be cast in the election of directors of the Company at
any meeting of stockholders of the Company assuming all shares of Common Stock
and other securities of the Company entitled to vote generally in the election
of directors of the Company were present and voted at such meeting, other than
votes that may be cast only by one class or series of shares (other than shares
of Common Stock) or upon the happening of a contingency. Any Voting Securities
not outstanding which are subject to issuance upon the exercise of any rights of
conversion beneficially owned by any Person and any options, warrants or rights
beneficially owned by any Person shall be deemed to be outstanding for the
purpose of computing the percentage of the Actual Voting Power of the Company
represented by Voting securities beneficially owned by such Person, but shall
not be deemed to be outstanding for the purpose of computing the percentage of
the Actual Voting Power of the Company represented by Voting Securities
beneficially owned by any other Person. For the purpose of the application of
this definition, any prohibition on voting any shares of stock as a result of
any agreement shall not be given effect.
<PAGE> 7
2
Stock Purchase Agreement
"Affiliate" shall mean, when used with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
Person specified.
A Person shall be deemed the "beneficial owner" of, and shall
be deemed to "beneficially own" any securities (a) which such Person or any of
its Affiliates is deemed to "beneficially own" within the meaning of Rule 13d-3
under the Exchange Act or (b) which such Person or any of its Affiliates has the
right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding or
upon the exercise of any right of conversion or exchange, warrant, option or
otherwise.
"Board of Directors" shall mean the Company's Board of
Directors.
"Burdensome Governmental Condition" to a transaction means any
action taken, or credibly threatened, by a Governmental Authority to investigate
or challenge the legality of such transaction or any part thereof under any
Federal, state or local law, or that would otherwise deprive any party of a
material benefit of such transaction, which action may include (i) an order by a
Governmental Authority preventing or seeking to prevent consummation of such
transaction or placing any material conditions or limitations (including
ordering any material change to the terms) upon such consummation or (ii) the
issuance of any subpoena, civil investigative demand or other request for
documents and information that is unreasonably burdensome or expensive in such
party's reasonable judgment.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York or California) on
which banks are open for business in New York, New York, and San Francisco,
California.
"Capital Lease Obligations" of any Person shall mean the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
generally accepted accounting principles.
<PAGE> 8
3
Stock Purchase Agreement
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Common Stock" shall mean the shares of Common Stock, $.001
par value, of the Company or any other capital shares of the Company into which
such shares shall be reclassified or changed.
As used in this Agreement, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Control Transaction" shall mean (i) a merger, consolidation
or other reorganization of the Company with any other Person, excluding any
merger, reincorporation, recapitalization or similar transaction which would
result in the holders of Voting Securities immediately prior thereto continuing
to beneficially own more than 80% of the Total Voting Power of the surviving or
combined corporation immediately thereafter, (ii) a sale, license, lease,
exchange or other disposition (whether in one transaction or a series of
transactions) of more than 10% of the Company's assets (except in the ordinary
course of business or the factoring of accounts receivable, consistent with the
Company's past practice or the pledge of assets in connection with bona fide
loans), (iii) any disposition of any of the Company's intellectual property
listed on Schedule 1.01 (including by the grant of exclusive licenses), (iv) the
acquisition by any Person or group (within the meaning of Rule 13d-5 under the
Exchange Act as in effect on the date hereof) other than the Company, IBM or a
Subsidiary of the Company or IBM, directly or indirectly, beneficially or of
record, of Voting Securities representing 25% (or if such acquisition is by a
Designated Transferee, 10%) or more of the Actual Voting Power of the Company,
excluding an acquisition pursuant to a sale of Voting Securities in an
underwritten, bona fide public offering or through a broker pursuant to Rule 144
under the Securities Act or (v) any share exchange, extraordinary dividend,
acquisition, disposition or recapitalization (or series of related transactions
of such nature) (other than a merger or consolidation), pursuant to which the
holders of Voting Securities of the Company immediately prior thereto continue
to own beneficially Voting Securities representing less than 50% of
<PAGE> 9
4
Stock Purchase Agreement
the Actual Voting Power of the Company (or any successor entity) immediately
thereafter.
"Designated Transferee" shall mean any Person which is, or
which has any Affiliate, (a) engaged in the business of developing,
manufacturing, producing, licensing, selling or otherwise distributing or
marketing computer hardware and having consolidated annual revenues, together
with its Affiliates, for the most recently completed fiscal year in excess of $1
billion or (b) engaged in the business of developing, producing, licensing,
selling or otherwise distributing or marketing software or computer-related
services and having consolidated annual revenues, together with its Affiliates,
for the most recently completed fiscal year in excess of $100,000,000; provided
that if the Company provides evidence reasonably satisfactory to IBM that such
Person, together with all its Affiliates, does not have the applicable amount of
revenues attributable to the businesses referred to in clauses (a) or (b), then
such Person shall not be a Designated Transferee.
"Development Agreement Amendment" shall mean Amendment No. 1
to the Development Incentive Agreement dated September 27, 1990, between the
Company and IBM in the form attached hereto as Exhibit C.
"Dollars" or "$" shall mean lawful money of the United States
of America.
"Exchange Act" shall mean the Securities Exchange Act of 1934
and the rules and regulations thereunder.
"Governmental Authority" shall mean any government, court,
regulatory or administrative agency or commission or other governmental
authority, agency or instru mentality, domestic or foreign, of competent
jurisdiction.
"Guarantee" of or by any Person shall mean any obligation,
contingent or otherwise, of such Person guaranteeing any Indebtedness of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (a)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness, (b) to purchase property,
securities or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness or (c) to maintain working
capital, equity
<PAGE> 10
5
Stock Purchase Agreement
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness; provided,
however, that the term Guarantee shall not include endorsements for collection
or deposit, in either case in the ordinary course of business.
"IBM Investment Shares" shall mean (i) the IBM Shares, (ii)
any shares of Common Stock issuable to IBM upon conversion of the IBM shares,
(iii) any shares of capital stock acquired by IBM pursuant to Section 7.15 or
8.01 of this Agreement or Sections 3 and 4 of the Stockholders Agreement and
(iv) any shares acquired by IBM with respect to the shares referred to in the
foregoing clauses (i), (ii) and (iii) as a result of stock dividends, stock
splits, stock combinations, recapitalizations, mergers, consolidations,
reorganizations and any antidilution protection in any document or agreement.
"IBM Minimum Equity" shall mean an equity interest in the
Company equal to 40% of the IBM Shares including shares of Common Stock issued
upon conversion of the IBM Shares.
"IBM Shares" shall mean the 1,666,667 shares of Series E
Convertible Preferred Stock, par value $.001 per share, to be issued and sold to
IBM pursuant to Section 2.01.
"Incentive Stock Option Plan" shall mean the Company's U.S.
1990 Stock Option Plan and U.K. Executive Share Option Scheme under which
options to purchase the Company's Common Stock may be granted to employees of
the Company and its Subsidiaries.
"Indebtedness" of any Person shall mean, without duplication,
(a) all obligations of such Person for borrowed money or with respect to
deposits or advances of any kind, (b) all obligations of such Person evidenced
by bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid, (d) all obligations of
such Person under conditional sale or other title retention agreements relating
to property or assets purchased by such Person, (e) all obligations of such
Person issued or assumed as the deferred purchase price of property or services,
(f) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the
obligations secured thereby
<PAGE> 11
6
Stock Purchase Agreement
have been assumed, (g) all Guarantees by such Person, (h) all Capital Lease
Obligations of such Person, (i) all obligations of such Person in respect of
interest rate protection agreements, foreign currency exchange agreements or
other interest or exchange rate hedging arrangements and (j) all obligations of
such Person as an account party in respect of letters of credit and bankers'
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any partnership in which such Person is a general partner.
"Initial Business Plan" shall mean the business plan, attached
hereto as Exhibit E.
"Initial Public Offering" shall mean a sale by the Company of
Common Stock at a per share price (as adjusted for recapitalizations, stock
splits, stock dividends and the like) of at least $5 per share in a bona fide
public offering on an underwritten firm commitment basis pursuant to a
registration statement filed and declared effective by the SEC pursuant to the
Securities Act, which public offering results in aggregate cash proceeds to the
Company of at least $10 million dollars.
"ISMA Agreement" shall mean the International Software
Marketing Agreement dated February 20, 1992, between the Company and IBM, as
amended to date.
"Lien" shall mean, with respect to any asset, (a) any
mortgage, deed of trust, lien, pledge, charge, security interest, easement,
covenant, right of way, re striction, equity or encumbrance of any nature
whatsoever in or on such asset, (b) the interest of a vendor or a lessor under
any conditional sale agreement, capital lease or title retention agreement
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
Any reference to any event, change or effect being "material"
with respect to the Company or other entity shall mean an event, change or
effect which is or, insofar as reasonably can be foreseen, in the future will
be, material to its condition (financial or otherwise), properties, assets,
liabilities, earnings, capitalization, stockholders' equity, licenses or
franchises, businesses, operations or prospects.
"NASDAQ" shall mean the National Association of Securities
Dealers Automated Quotations System.
<PAGE> 12
7
Stock Purchase Agreement
"Offer Price" for any shares of capital stock to be
repurchased pursuant to Section 8.01(b) shall mean:
(a) in the case of a Control Transaction involving (x) the
sale to an Acquiror of securities of the Company or (y) a merger,
consolidation or other transaction in which securities of the Company
are surrendered or exchanged for cash or other consideration,
(i) if such security to be repurchased is Common Stock,
the weighted average price paid in the relevant Control
Transaction by the Acquiror for all of the following: (A) any
share of Common Stock; (B) any security or securities of the
Company equivalent in value to one share of Common Stock; and
(C) any portion of any security or securities of the Company
equivalent in value to one share of Common Stock;
(ii) if such security to be repurchased is convertible
into Common Stock, such weighted average price specified in
clause (i) above multiplied by the number of shares of Common
Stock into which such share is convertible; and
(iii) if such security to be repurchased is not Common
Stock or convertible into Common Stock, the weighted average
price paid in the relevant Control Transaction by the
Acquiror for all units of such security; or
(b) in the case of a Control Transaction involving a
disposition of assets of the Company or any other Control Transaction
not covered by clause (a), an amount for the securities to be
repurchased equal to (i) if the Common Stock is publicly traded, the
product of (A) the aggregate number of shares of all Common Stock
beneficially owned by IBM plus the aggregate number of shares of
Common Stock issuable upon the conversion of all other capital stock
beneficially owned by IBM times (B) the closing price for a share of
Common Stock on the trading day last preceding the date of
determination of the Offer Price, as reported on the New York Stock
Exchange Composite Tape, or if not reported thereon, on the principal
national securities exchange on which the Common Stock is listed, or
if the Common Stock is not listed on any national securities exchange,
as reported on the NASDAQ National Market System or, if such security
is not included for
<PAGE> 13
8
Stock Purchase Agreement
quotation on the NASDAQ National Market System, the average of the
closing bid and asked prices for a share of such security on such
trading day as reported on NASDAQ or, if such closing prices shall not
be reported on NASDAQ, the average of the closing bid and asked prices
of a share of such security on such trading day as the same shall be
reported by the National Quotation Bureau Incorporated, or (ii) if the
Common Stock is not publicly traded, the fair market value of the
shares of capital stock to be repurchased, as determined by an
independent, nationally recognized investment banking firm selected by
the Company and IBM; provided however if IBM and the Company cannot
agree on the selection of an investment banking firm, each shall
select one nationally recognized investment banking firm, and the
firms thus selected shall jointly select a third nationally recognized
investment banking firm which shall determine such fair market value.
For the purpose of determining the Offer Price and any
weighted average price upon which the Offer Price may be based, if any
consideration paid or received in exchange for the Company's securities in the
Control Transaction shall be other than cash, the Offer Price or weighted
average price shall be determined in cash, with a cash amount of equal value
being substituted for such noncash consideration, such value to be determined by
an independent, nationally recognized investment banking firm selected by the
Company and IBM, subject to the proviso to clause (ii) of the preceding
paragraph (b).
As used in this Agreement, "ordinary course of business" shall
mean any event incident to the day-to-day conduct of routine business of the
Company and its Subsidi aries, as currently conducted or as currently proposed
to be conducted, including: (i) the sale or license of software products, (ii)
the introduction of new software products and related lines of business, (iii)
the discontinuation and/or disposition of obsolete software products, related
property and related lines of business, (iv) the provision of consulting
services, (v) the provision of customer sponsored software development and (vi)
entering into license agreements for the acquisition of new software or other
Intellectual Property for use by the Company in the development of or inclusion
in the Company's Products.
"Operative Agreements" shall mean this Agreement, the
Stockholders Agreement, the Trust Agreement and the Development Agreement
Amendment.
<PAGE> 14
9
Stock Purchase Agreement
"Permitted Issuances" shall mean (i) any employee stock
options which have been granted and remain unexercised as of the date hereof,
(ii) employee stock options which may be granted and shares which may be sold to
employees and consultants in the future for 585,750 shares, (iii) any employee
stock options which may be granted and shares which may be sold related to the
foregoing clauses (i) and (ii) which may be returned to the plan upon the lapse
of unexercised stock options or the repurchase (at original purchase price) of
unvested shares, and (iv) any shares issuable upon the exercise of options
granted pursuant to the foregoing clauses (i)-(iii), provided that the total of
all such options outstanding, shares issued upon exercise of such options and
shares issued shall never exceed 2,920,763.
"Permitted Liens" shall mean mechanics' carriers', workmen's,
repairmen's or other like liens arising from or incurred in the ordinary course
of business and securing obligations which are not due or which are being
contested in good faith by the Company, liens for Taxes which are not due and
payable or which may thereafter be paid without penalty or which are being
contested in good faith by the Company (provided that the Company has set up
adequate reserves for the payment of such Taxes) and other imperfections of
title or encumbrances, if any, which imperfections of title or other
encumbrances do not materially impair the use of the assets to which they relate
in the business of the Company as presently conducted and as proposed to be
conducted.
"Person" shall mean any individual, firm,, corporation,
partnership, trust, joint venture, Governmental Authority or other entity, and
shall include any successor (by merger or otherwise) of such entity.
"Preferred Stock" shall mean the Series A Preferred Stock, the
Series D Preferred Stock and the Series E Preferred Stock,
"Proprietary Rights" shall mean patents, patent applications,
patent rights, trademarks, trademark registrations, trademark applications,
licenses, brand names, trade names, service marks, all other names or slogans
embodying business or product goodwill, copyrights, mask works, copyright
registrations, computer programs, software (including all source code and object
code, development documentation, programming tools, specifications, data,
designs, trade secrets, technology, inventions, discoveries and improvements),
know-how, proprietary rights, processes,
<PAGE> 15
10
Stock Purchase Agreement
confidential and proprietary information, and other intellectual property
rights, whether or not subject to statutory registration or protection.
"Restated Certificate of Incorporation" shall mean the
Restated Certificate of Incorporation of the Company as filed with the Secretary
of State of the State of Delaware on July 16, 1991, and as amended by the
Amendment thereto in the form of Exhibit B.
"SEC" shall mean the Securities and Exchange Commission or any
successor commission or agency having similar powers.
"Securities Act" shall mean the Securities Act of 1933 and the
rules and regulations thereunder.
"Series A Preferred Stock", "Series D Preferred Stock" and
"Series E Preferred Stock" shall mean the shares of capital stock of the Company
designated Series A Preferred Stock, $.001 par value, Series D Preferred Stock,
$.001 par value, and Series E Preferred Stock, $.001 par value, each having the
respective terms set forth in the Restated Certificate of Incorporation.
"Significant Stockholder" shall mean any Person, other than
IBM and its Subsidiaries, which beneficially owns Voting Securities representing
4.5% or more of the Actual Voting Power of the Company.
"Stockholders Agreement" shall mean the First Amended and
Restated Stockholders Agreement among the Company, IBM and certain of the
Company's stockholders, in the form of Exhibit A.
"Subsidiary" of any Person shall mean a corporation, company
or other entity (i) more than 50% of whose outstanding shares or securities
(representing the right to vote for the election of directors or other managing
authority) are, or (ii) which does not have outstanding shares or securities (as
may be the case in a partnership, joint venture or unincorporated association),
but more than 50% of whose ownership interest representing the right to make
decisions for such other entity now or hereafter is, owned or controlled,
directly or indirectly, by such Person, but such corporation, company or other
entity shall be deemed to be a Subsidiary only so long as such ownership or
control exists.
<PAGE> 16
11
Stock Purchase Agreement
"Tax" or "Taxes" shall mean all Federal, state, local and
foreign taxes, assessments and other governmental charges, including, without
limitation, (i) taxes based upon or measured by gross receipts, income, profits,
sales, use or occupation, and (ii) value added, ad valorem, transfer, franchise,
withholding, payroll, employment, excise, or property taxes, together with (iii)
all interest, penalties and additions imposed with respect to such amounts and
(iv) any obligations under any agreements or arrangements with any other Person
with respect to such amounts.
"Total Voting Power of the Company" shall mean the total
number of votes that may be cast in the election of directors of the Company at
any meeting of shareholders of the Company if all Voting Securities (assuming
full conversion, exchange or exercise of all securities, including rights,
warrants and options convertible into, exchangeable for or exercisable for any
securities of the Company) entitled to vote generally in the election of
directors of the Company were present and voted at such meeting, other than
votes that may be cast only by one class or series of shares (other than Common
Stock) or upon the happening of a contingency. For the purpose of the
application of this defini tion, any prohibition or restriction on voting any
shares of stock as a result of any shareholders agreement shall not be given
effect.
"Trust Agreement" shall mean the Source Code Transfer and
Custody Agreement among the Company, IBM and First Citizen's Bank and Trust
Company in the form attached hereto as Exhibit D.
"Voting Securities" shall mean the shares of Common Stock and
any other securities of the Company entitled to vote generally in the election
of directors of the Company, and any other securities (including rights,
warrants and options) convertible into, exchangeable for or exercisable for any
Common Stock or other securities referred to above (whether or not presently
convertible, exchangeable or exercisable), including the Preferred Stock. For
the purpose of the application of this definition, any prohibition or
restriction on voting any shares of stock as a result of any shareholders
agreement shall not be given effect.
<PAGE> 17
12
Stock Purchase Agreement
SECTION 1.02. Additional Definitions.
<TABLE>
<CAPTION>
Defined Term Section Defined in
------------ ------------------
<S> <C>
"Acquirors" 8.01(a)
"Affiliated Group" 3.07
"Agreement" Parties
"Balance Sheet" 3.05
"Benefit Plans" 3.17
"Business Plan" 7.02(e)
"Business Strategy" 7.16(a)
"By-laws" 5.07
"Closing" 2.02
"Closing Date" 2.02
"Company" Parties
"Contracts" 3.11
"ERISA" 3.17
"Excess Options" 7.15
"Financial Statements" 3.05
"First Refusal Notice" 8.01(a)
"First Refusal Terms" 8.01(a)
"IBM" Parties
"IBM's Equivalent Terms" 8.01(a)
"Purchase Price" 2.01
"Right of First Refusal" 8.01(a)
"Significant Change Date" 7.16
</TABLE>
SECTION 1.03. Terms Generally. The definitions in Sections
1.01 and 1.02 shall apply equally to both the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". All references herein to Articles, Sections, paragraphs, Exhibits
and Schedules shall be deemed references to Articles, paragraphs and Sections
of, and Exhibits and Schedules to, this Agreement unless the context shall
otherwise require. Except as otherwise expressly provided herein, all terms of
an accounting or financial nature shall be construed in accordance with
generally accepted accounting principles, as in effect from time to time. The
terms and conditions of this Agreement shall be deemed to apply to any
Subsidiary of the Company as though such entity were the Company, except where
such application would be manifestly inappropriate.
<PAGE> 18
13
Stock Purchase Agreement
ARTICLE II
Purchase and Sale of the IBM Shares
SECTION 2.01. Purchase and Sale of the IBM Shares. Upon the
terms and subject to the conditions of this Agreement, the Company agrees to
issue and sell to IBM and IBM agrees to purchase from the Company,, on the
Closing Date, 1,666,667 shares of Series E Preferred Stock for an aggregate
purchase price of $5,000,001 (the "Purchase Price).
SECTION 2.02. Closing. The closing (the "Closing") with
respect to the purchase and sale of the IBM Shares shall be held at the offices
of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, N.Y.
10019, at 10:00 a.m. on August 31, 1992, or at such other time or on such other
date as may be agreed to by IBM and the Company. The date on which the Closing
shall occur is herein referred to as the "Closing Date". On the Closing Date,
(a) IBM shall deliver to the Company, by wire transfer of funds to the Company's
account, the Purchase Price, (b) IBM and the Company shall each deliver to the
other executed copies of the other Operative Agreements to which each is a party
and (c) the Company shall issue and deliver to IBM a certificate representing
the IBM Shares, registered in the name of IBM, or any nominee of IBM designated
by IBM at least two Business Days before the Closing Date, and bearing the
legends set forth in Section 2.03. The Company shall pay any documentary stamp
or similar issue or transfer taxes due as a result of the issuance and sale of
the IBM Shares.
SECTION 2.03. Legends for the Shares. The certificate
evidencing the IBM Shares (and any IBM Investment Shares subsequently acquired)
will bear a legend reading substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH THAT ACT.
THE CORPORATION WILL FURNISH THE HOLDER OF THIS
CERTIFICATE INFORMATION CONCERNING THE DESIGNATIONS, RELATIVE
RIGHTS, PREFERENCES AND LIMITATIONS APPLICABLE TO EACH CLASS
OF CAPITAL STOCK OF THE CORPORATION, INCLUDING THE LIQUIDATION
AND DIVIDEND PREFERENCES AND THE VOTING AND
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CONVERSION RIGHTS OF THE SHARES REPRESENTED BY THIS
CERTIFICATE, ON REQUEST IN WRITING, AND WITHOUT CHARGE.
ARTICLE III
Representations and Warranties of the Company
Except as set forth on Exhibit G, which exceptions and all
other information on Exhibit G or attached to Exhibit G shall be deemed
representations and warranties hereunder, the Company represents and warrants to
IBM that:
SECTION 3.01. Organization and Standing of the Company. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and each of the Company's Subsidiaries
is duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Each of the Company and its Subsidiaries has all
requisite power and authority and possesses all franchises, licenses, permits,
authorizations and approvals from Governmental Authorities necessary to enable
it to use its corporate name and to own, lease or otherwise hold its properties
and assets and to carry on its business as presently conducted and proposed to
be conducted. Each of the Company and its Subsidiaries is duly qualified to do
business as a foreign corporation in each jurisdiction in which the nature of
its business or the ownership, leasing or holding of its properties or assets
requires qualification and where failure to do so would have a material adverse
effect on the Company. The Company has delivered to IBM true and complete copies
of the Certificate of Incorporation, as amended to date, and the By-laws, as in
effect on the date hereof, of the Company. The share certificate and transfer
books and the minute books of the Company (which have been made available for
inspection by IBM and its representatives) are true and complete.
SECTION 3.02. Authority. The Company has all requisite power
and authority to enter into the Operative Agreements to which it is a party, to
issue and sell the IBM Shares and to consummate the other transactions
contemplated thereby. The execution and delivery by the Company of the Operative
Agreements to which it is a party and the consum mation by the Company of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of the Company and its stockholders. This Agreement
has been duly executed and delivered by the
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Stock Purchase Agreement
Company and constitutes, and the other Operative Agreements to which the Company
is a party, when duly executed by the Company and delivered to IBM will
constitute, the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and by general equitable
principles. The execution and delivery of this Agreement does not, and the
execution and delivery of the other Operative Agreements and the consummation of
the transactions contemplated hereby and thereby and compliance with the terms
hereof and thereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time or both) under, or give rise to
a right of termination, cancelation or acceleration of any obligation or to the
loss of any benefit under, or result in the creation or imposition of any Lien
of any nature whatso ever upon any of the properties or assets of the Company or
any of its Subsidiaries under, (a) any material loan or credit agreement or
note, bond, mortgage, indenture, deed of trust, license, lease, contract,
commitment, agreement, understanding or arrangement to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective properties or assets is bound, (b) any
provision of the Restated Certificate of Incorporation or By-laws or (c) any
judgment, order, decree, statute or material law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or any of their respective
properties or assets. No consent, approval, order, license, permit or
authorization of, or registration, declaration, notice to or filing with, any
Governmental Authority or any other Person is required to be obtained or made by
or with respect to the Company or any of its Affiliates in connection with the
execution and delivery of any of the Operative Agreements, the issuance and sale
of the IBM Shares or the consummation of the transactions contemplated hereby.
SECTION 3.03. Capital Stock of the Company. (a) The authorized
capital stock of the Company consists of (i) 8,972,686 shares of Preferred
Stock, consisting of 2,687,750 shares of Series A Preferred Stock, all of which
are issued and outstanding, 3,618,269 shares of Series D Preferred Stock, all of
which are issued and outstanding, and 1,666,667 shares of Series E Preferred
Stock, all of which will be issued to IBM at the Closing and (ii) 25,000,000
shares of Common Stock, of which 6,714,439 are issued and outstanding, 7,972,686
are reserved for
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Stock Purchase Agreement
issuance upon the conversion of the Preferred Stock, 2,335,013 shares are
reserved for issuance pursuant to the exercise of outstanding employee stock
options under the Incentive Stock Option Plan and 2,650,869 shares are available
for future grants pursuant to the Incentive Stock Option Plan. The outstanding
shares of Common Stock, Series A Preferred Stock and Series D Preferred Stock
are duly authorized, validly issued, fully paid and non-assessable and are not
subject to any preemptive, first refusal or other subscription rights. The
issuance of all the IBM Shares and Common Stock issuable upon conversion thereof
has been duly and validly authorized. All the IBM Shares and Common Stock
issuable upon conversion thereof, when issued in compliance with this Agreement
and the Restated Certificate of Incorporation, will be validly issued, fully
paid and nonassessable and will not have been issued in violation of, and will
not be subject to, any preemptive, first refusal or other subscription rights
and will not result in the antidilution provisions of any security of the
Company becoming applicable. The IBM Shares will represent 11.3% of the Total
Voting Power of the Company as of the Closing Date.
(b) Attached to Exhibit G is a true and complete list of the
record holders of all Voting Securities. To the best knowledge of the Company,
each such holder owns all the securities shown to be owned by such holder on
Exhibit G beneficially, free and clear of all Liens. Except as set forth in
Sections 3, 4 and 7.01 through 7.16 of the Stockholders Agreement and as
provided in Sections 7.15 and 8.01(a) hereof, there are no outstanding warrants,
options, rights, securities, agreements, subscriptions, anti-dilution rights,
exchange rights, first refusal rights or other commitments pursuant to which the
Company is or may become obligated to issue, deliver or sell any additional
shares of capital stock of the Company or to issue, grant, extend or enter into
any such warrant, option, right, security, agreement, subscription or other
commitment. Other than as set forth in Section 3 of the Stockholders Agreement
and as provided in Sections 7.16 and 8.01 hereof and the conversion rights of
the Preferred Stock, there are no outstanding options, rights, securities,
agreements or other commitments pursuant to which the Company is or may become
obligated to redeem, repurchase, exchange or otherwise acquire or retire any
shares of capital stock of the Company which are presently outstanding or may be
issued in the future.
(c) Other than the rights granted to IBM and certain of the
Company's other stockholders pursuant to the Stockholders Agreement, there are
no outstanding rights
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Stock Purchase Agreement
which permit the holder thereof to cause the Company to file a registration
statement under the Securities Act or which permit the holder thereof to include
securities of the Company in a registration statement filed by the Company under
the Securities Act, and there are no outstanding agreements or other commitments
which otherwise relate to the registration of any securities of the Company
under the Securities Act.
(d) All securities of the Company heretofore issued and sold
by the Company were issued and sold in compliance with all applicable Federal
and state securities laws. There are no agreements, options, rights or
subscriptions of any kind which governed the prior issuance of voting Securities
of the Company that are still in effect. Assuming that the representations and
warranties of IBM set forth in Sections 4.02 and 4.03 are true and correct, the
offering, issuance and delivery of all the IBM Shares and Common Stock issuable
upon conversion thereof in compliance with this Agreement and the Restated
Certificate of Incorporation will be exempt from the registration and prospectus
delivery requirements of the Securities Act.
SECTION 3.04. Equity Interests. The Company's Subsidiaries are
listed on Exhibit G. The Company beneficially owns all the capital stock or
other equity interests in each of the Subsidiaries listed on such schedule and
does not directly or indirectly own any capital stock of or other equity
interests in any other corporation, partnership or other entity, and the Company
is not a member of or participant in any partnership, joint venture or similar
entity.
SECTION 3.05. Financial Statements. The Company has delivered
to IBM (i) the unaudited consolidated balance sheet of the Company and its
Subsidiaries as of July 31, 1992 (the "Balance Sheet"), and the related
unaudited consolidated statements of operations and stockholders' equity of the
Company and its Subsidiaries for the seven-month period ended at the date of the
Balance Sheet, all certified by the chief financial officer of the Company, and
(ii) drafts of the audited consolidated balance sheet of the Company as of
December 31, 1991, and the related audited consolidated statements of
operations, stockholders' equity and cash flows for the year then ended,
accompanied by a draft of the report thereon of Arthur Andersen & Co.,
independent certified public accountants for the Company (the financial
statements described in (i) and (ii) are collectively referred to as the
"Financial Statements"). The Financial Statements are in accordance with the
books
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Stock Purchase Agreement
and records of the Company, have been prepared in conformity with generally
accepted accounting principles consistently applied (except to the extent
consistency may be affected by the adoption of Statement of Position 91-1) and
fairly present the financial condition of the Company as of the dates thereof
and the results of its operations for the periods then ended. Adoption of
Statement of Position 91-1 will affect net income by not more than $350,000 for
the year ended December 31, 1991.
SECTION 3.06. Undisclosed Liabilities. Neither the Company nor
any of its subsidiaries has any material liabilities or obligations of any
nature (whether accrued, absolute, contingent, unasserted or otherwise) except
(i) as set forth or reflected on the Balance Sheet (or described in the notes
thereto) and (ii) for liabilities and obligations incurred in the ordinary
course of business consistent with past practice since the date of the Balance
Sheet and not in violation of this Agreement. Neither the Company nor any
Subsidiary of the Company is obligated to repurchase, or has agreed to
repurchase, any product previously sold by the Company or such Subsidiary, or
has made any other warranty commitments which are not customary in the industry.
SECTION 3.07. Taxes. The Company, and all members of any
affiliated group within the meaning of Section 1504 of the Code (an "Affiliated
Group") of which the Company is or has been a member, has filed or caused to be
filed in a timely manner (within any applicable extension periods) all returns,
reports and forms required to be filed under the Code or under applicable state,
local or foreign laws relating to Taxes (except where any failure would not have
a material adverse effect on the Company and its Subsidiaries taken as a whole)
and has paid or set up adequate reserves for payment of all Taxes required to be
paid with respect to the periods covered by such returns, reports and forms. No
Liens have been filed and no material claims are being asserted in the United
States or, to the best knowledge of the Company after due inquiry, outside the
United States or, to the best knowledge of the Company, might be asserted, with
respect to any Taxes. Neither the Company nor any member of any Affiliated Group
of which the Company is a member is delinquent in the payment of any Taxes or
other governmental charges. No restrictions on assessment or collection of Taxes
have been waived with respect to the Company or any member of any Affiliated
Group of which the Company is a member and neither the Company nor any other
Person has consented to the extension of any statute of limitations with respect
to the Company or any
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Stock Purchase Agreement
member of any Affiliated Group of which the Company is a member relating to
Taxes. The Company has received no notice of assessment or proposed assessment
of any Taxes claimed to be owed by it or any other Person or entity on its
behalf. No returns, reports or forms filed by or on behalf of the Company with
respect to Taxes are currently being audited or examined, nor has notice been
received by the Company of any audit or examination.
SECTION 3.08. Assets Other than Real Property. The Company and
its Subsidiaries have good and marketable title to all assets reflected on the
Balance Sheet or acquired after the date thereof, except those since sold or
otherwise disposed of for fair value in the ordinary course of business
consistent with past practice, in each case free and clear of all Liens except
Permitted Liens. All the tangible personal property owned by the Company and its
Subsidiaries is in all material respects in good operating condition and repair,
ordinary wear and tear excepted, and all personal property leased by the Company
and its Subsidiaries is in all material respects in the condition required of
such property by the terms of the lease applicable thereto during the term of
such lease and upon the expiration thereof. This Section 3.08 does not relate to
real property or interests in real property; such items are covered under
Section 3.09.
SECTION 3.09. Title to Real Property. Exhibit G sets forth a
complete list of all real property and interests in real property owned in fee
or leased by the Company and its Subsidiaries. Either the Company or a
subsidiary of the Company has (i) good and marketable fee title to all real
property and interests in real property shown on Exhibit G to be owned by it and
(ii) a good and valid leasehold interest in all real property and interests in
real property shown on Exhibit G to be leased by it, in each case free and clear
of all Liens except Permitted Liens.
SECTION 3.10. Proprietary Rights. (a)(i) Exhibit G sets forth
a true and, to the best knowledge of the Company, complete list of all patents,
patent applications, registered copyrights and registered trademarks wholly or
partially owned by or licensed to the Company or any of its Subsidiaries.
(ii) The Company owns or has, or by the Closing the Company
will own or have, the right to use, execute, reproduce, display, perform,
modify, enhance, distribute, prepare derivative works of, and license and
sublicense
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Stock Purchase Agreement
without payment to any other Person, all Proprietary Rights with respect to
Synon/2E and, to the best knowledge of the Company, all other Proprietary
Rights, used in its business as presently conducted and to be used in its
business as presently proposed to be conducted, free and clear of all Liens.
(iii) All patents, copyrights and trademarks of the Company
and its Subsidiaries indicated on Exhibit G have been duly registered and filed
in or issued by each appropriate Governmental Authority in the jurisdictions
indicated, all necessary affidavits of continuing use have been filed, and all
necessary maintenance fees have been paid to continue all such rights in effect.
(b) The conduct of the Company's business and, to the best
knowledge of the Company, after due inquiry of its foreign Subsidiaries, the
business of its Subsidiaries as presently conducted and as presently proposed to
be conducted, including, without limitation, the use of the Company's name and
any trade names, does not and will not infringe, violate or conflict with any
U.S. or foreign patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information or other Proprietary Rights or processes of
any other Person. Neither the Company nor any of its Subsidiaries has received
any communications alleging that the Company or any such Subsidiary has
violated, or that by conducting its business as proposed would violate, any of
the patents, trademarks, service marks, trade names, copyrights, trade secrets
or other Proprietary Rights or processes of any other Person.
(c) Neither the Company nor any subsidiary of the Company has
granted or entered into any options, licenses or agreements of any kind relating
to its Proprietary Rights other than in the ordinary course of business. Neither
the Company nor any Subsidiary of the Company is bound by or a party to any
options, licenses or agreements of any kind with respect to the use of
Proprietary Rights of any other Person.
(d) The products currently sold or otherwise marketed, and
those products currently under development, by the Company, the products which
the Company presently proposes to sell or otherwise market and the distribution
thereof and, to the best knowledge of the Company after due inquiry of its
foreign Subsidiaries, the products currently under development, and the products
proposed to be sold or otherwise marketed and distributed by its Subsidiaries,
do
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Stock Purchase Agreement
not and will not infringe, violate or conflict with any U.S. or foreign patent,
copyright, trade secret or other intellectual property rights of any other
Person. No claim of such infringement has been threatened or asserted, and no
such claim is pending against the Company or any of its subsidiaries.
(e) All the employees of the Company and its Subsidiaries who
have contributed to or participated in the conception and development of
products currently sold or otherwise marketed and those products currently under
development by the Company and its Subsidiaries and, with respect to any foreign
Subsidiaries, to the best knowledge of the Company after due inquiry of such
foreign Subsidiaries, the products which the Company and its Subsidiaries
presently propose to sell or otherwise market have acted within the scope of
their employment in so contributing or participating.
SECTION 3.11. Contracts. Neither the Company nor any
Subsidiary of the Company is a party to or bound by, nor are any of their
respective properties or assets or business bound by or subject to, any written
or oral:
(a) material agreement or contract not made in the ordinary
course of business;
(b) employment agreement or employment contract that by its
terms is not terminable at will by the Company or its Subsidiaries;
(c)(i) employee collective bargaining agreement or other
contract with any labor union, (ii) plan, program, arrangement or
agreement that provides for the payment of severance, termination or
similar type of compensation or benefits upon the termination or
resignation of any employee of the Company or its Subsidiaries or
(iii) plan, program, arrangement or agreement that provides for
medical or life insurance benefits for former employees of the Company
or its Subsidiaries or for current employees of the Company or its
Subsidiaries upon their retirement from, or termination of employment
with, the Company or its Subsidiaries;
(d) covenant not to compete;
(e) agreement, contract or other arrangement (other than the
Stockholders Agreement and the other
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Stock Purchase Agreement
Operative Agreements) with (i) any stockholder of the Company,
(ii) any Affiliate of the Company or any Affiliate of any stockholder
of the Company or (iii) any officer, director or employee of the
Company, or of any stockholder of the Company or of any Affiliate of
the Company (other than employment agreements covered by clause (b)
above);
(f) license or other agreement relating in whole or in part to
Proprietary Rights (including, but not limited to, any license or
other agreement under which the Company or any of its Subsidiaries has
the right to use any Proprietary Rights owned or held by any other
Person) other than those entered into in the ordinary course of
business or as listed on Exhibit G;
(g) agreement or contract under which the Company or any of
its Subsidiaries has (i) incurred any Indebtedness or (ii) given any
Guarantee other than as listed in Exhibit G;
(h) mortgage, pledge, security agreement, deed of trust or
other document granting a Lien or security interest (including, but
not limited to, Liens upon properties acquired under conditional
sales, capital leases or other title retention or security devices)
other than as listed in Exhibit G; or
(i) other agreement, contract, lease, license, commitment or
instrument not made in the ordinary course of business which (x) has
an aggregate future liability in excess of $100,000 and is not
terminable by the Company or a Subsidiary of the Company for a cost of
less than $100,000 or (y) is otherwise material to the business of the
Company and its Subsidiaries as presently conducted or as proposed to
be conducted other than as listed in Exhibit G.
Each agreement, contract, lease, license, commitment or instrument of the
Company set forth on Exhibit G (collectively, the "Contracts") is in full force
and effect and is a legal, valid and binding agreement of the Company or the
applicable Subsidiary of the Company and, to the best knowledge of the Company,
of each other party thereto, enforceable in accordance with its terms, except as
enforceability may be limited by general equitable principles and by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally. The Company or the applicable
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Stock Purchase Agreement
Subsidiary has performed or is performing in all material respects all material
obligations required to be performed by it under each Contract and is not (with
or without notice or lapse of time or both) in breach or default in any material
respect thereunder and, to the best knowledge of the Company, no other party to
any Contract is (with or without notice or lapse of time or both) in breach or
default in any material respect thereunder.
SECTION 3.12. Litigation; Decrees. There are no lawsuits,
claims, arbitrations or other proceedings or investigations (a) pending or, to
the best knowledge of the Company, threatened by or against or affecting the
Company or any Subsidiary of the Company or any of their respective properties
or assets, which would have a material adverse effect on the Company and its
Subsidiaries taken as a whole or (b) to the best knowledge of the Company,
pending or threatened by or against any of the officers or employees of the
Company or any Subsidiary of the Company which relate to or involve the
termination of such person's employment with any of such person's former
employers. To the best knowledge of the Company, there is no basis for any such
lawsuit, claim, arbitration or other proceeding or investigation. There is no
outstanding judgment, order or decree of any Governmental Authority or
arbitrator applicable to the Company or any Subsidiary of the Company or, to the
best knowledge of the Company after due inquiry, any of their respective
properties, assets or businesses having, or which, insofar as can be reasonably
foreseen, in the future may have, a material adverse effect on the Company or
its Subsidiaries or their respective businesses as presently conducted or as
presently proposed to be conducted.
SECTION 3.13. Absence of Changes or Events. (a) Since the date
of the Balance Sheet, the business of the Company and its Subsidiaries has been
conducted in the ordinary course consistent with past practice and there has not
been any material adverse change with respect to the Company and its
Subsidiaries.
(b) Since the date of the Balance Sheet, the Company has not
declared or paid or made, or agreed to declare or pay or make, any dividends or
other distributions in cash or property to the stockholders of the Company.
SECTION 3.14. Compliance with Applicable Laws. The Company and
its Subsidiaries and their respective properties, assets, operations and
businesses are in compliance (except where the Company reasonably believes that
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Stock Purchase Agreement
instances of noncompliance, individually and in the aggregate, will not have a
material adverse effect on the Company and its Subsidiaries taken as a whole)
with all applicable statutes, laws, ordinances, rules and regulations of any
Governmental Authority and any filing requirements relating thereto, including
laws and regulations relating to environ mental requirements (including
requirements relating to air, water and noise pollution).
SECTION 3.15. Certain Employee Matters. (a) All current and
former members of management and key personnel (including all employees involved
in the development of software) of and consultants to the Company and its
Subsidiaries have executed and delivered to the Company or the applicable
Subsidiary a confidential information agreement restricting such person's right
to disclose confidential information of the Company or the applicable
Subsidiary. To the best knowledge of the Company, no officer, director or other
employee of the Company or any of its Subsidiaries is a party to or bound by any
contract (including licenses, covenants or agreements of any nature) or other
commitment or obligation, or subject to any judgment, decree or order of any
Governmental Authority, that may interfere with the use of such directors,
officer's or other employee's best efforts to promote the interests of the
Company, conflict with the business of the Company (as now conducted or as
proposed to be conducted) or the transactions contemplated by the operative
Agreements or have a material adverse effect on the Company. To the best
knowledge of the Company, no activity of any employee of the Company or any of
its Subsidiaries as or while an employee of the Company or such Subsidiary has
caused a material violation of any employment contract, confidentiality
agreement, patent disclosure agreement or other contract or agreement. Neither
the execution and delivery of the Operative Agreements, nor the conduct of the
business of the Company as presently conducted, or as proposed to be conducted,
will conflict with or result in a breach of the terms, conditions or provisions
of, or constitute a default under, any contract, covenant or instrument known to
the Company under which any such employees are now obligated.
(b) No employee, agent, consultant or contractor associated
with any of the members of management or key personnel of the Company or its
Subsidiaries who has con tributed to or participated in the conception and
development of Proprietary Rights, including software, of the Company or its
Subsidiaries has asserted or threatened any claim against the Company or the
applicable Subsidiary in
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Stock Purchase Agreement
connection with such person's involvement in the conception and development of
the software or other proprietary rights of the Company and its Subsidiaries
and, to the best knowledge of the Company after due inquiry, no such person has
a reasonable basis for any such claim.
(c) Neither the Company nor any of the Company's Subsidiaries
nor, to the Company's best knowledge, any of their respective officers or
employees have any patents issued or applications pending for any device,
process, design or invention of any kind now used or needed by the Company or
its Subsidiaries in the furtherance of their business operations as presently
conducted or as proposed to be conducted, which patents or applications have not
been assigned to the Company or its Subsidiaries with such assignment duly
recorded in the United States Patent Office.
(d) Since the date of its incorporation, the Company has not
experienced any labor disputes, union organization attempts or work stoppages
due to labor disagreements. The Company and its United States Subsidiaries and,
to the best knowledge of the Company after due inquiry of its Subsidiaries, its
foreign Subsidiaries are in compliance in all material respects with all
applicable laws respecting employment and employment practices, occupational
safety and health standards, terms and conditions of employment and wages and
hours, and are not engaged in any unfair labor practice. There is no unfair
labor practice charge or complaint against the Company or any Subsidiary pending
or threatened before the National Labor Relations Board or any comparable state
agency or authority. There is no labor strike, dispute, request for
representation, slowdown or stoppage actually pending or threatened against or
affecting the Company or any Subsidiary. No question concerning representation
has been raised or is threatened respecting the employees of the Company or any
Subsidiary and no union organizing activities are taking place. No grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is pending or threatened against the Company or any Subsidiary. There
is no existing collective bargaining agreement or other contract with a labor
union to which the Company or any Subsidiary is a party.
SECTION 3.16. Insurance. The Company maintains valid policies
of fire, liability, product liability, workmen's compensation, health and other
forms of insurance with respect to the Company's business. All such policies are
valid, outstanding and enforceable policies and provide insurance coverage for
the properties, assets and operations
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Stock Purchase Agreement
of the Company, of the kinds, in the amounts and against the risks required to
comply with all applicable laws and as are reasonable for the business and
assets of the Company. The Company has not been refused any insurance with
respect to any aspect of the operations of its business nor has its coverage
been limited by any insurance carrier to which it has applied for insurance or
with which it has carried insurance. No notice of cancellation or termination
has been received with respect to any such policy. The activities and operations
of the Company have been conducted in a manner so as to conform in all material
respects to all applicable provisions of such insurance policies.
SECTION 3.17. Benefit Plans. (a) Exhibit G sets forth a list
and brief description of all "employee pension benefit plans" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), and "employee welfare benefit plans" (as defined in Section 3(l) of
ERISA), maintained, or contributed to, by the Company for the benefit of any
officers or employees of the Company, whether of a legally binding nature or in
the nature of informal understandings. The Company has made available to IBM
true, complete and correct copies of (i) the above mentioned plans and all
bonus, deferred compensation plans or arrangements, and other employee fringe
benefit plans (all the foregoing being herein called "Benefit Plans")
maintained, or contributed to by the Company for the benefit of any officers or
employees of the Company, whether of a legally binding nature or in the nature
of informal understandings, (ii) the most recent annual report on Form 5500
filed with the Internal Revenue Service with respect to any Benefit Plan (if any
such report was required) and (iii) each trust agreement and group annuity
contract relating to any Benefit Plan.
(b) The Company is in compliance in all material respects with
the provisions of ERISA and the regulations and published interpretations
thereunder. Neither the Company nor any of its Affiliates maintains any Benefit
Plan which is subject to the provisions of title IV of ERISA. No "reportable
event" (as defined in Section 4043 of ERISA and the regulations thereunder) has
occurred with respect to any Benefit Plan which is subject to the provisions of
Title IV of ERISA and which is maintained for employees of the Company or any of
its Affiliates. There are no unfunded vested liabilities under any such Benefit
Plan.
SECTION 3.18. Effect of Transaction. No creditor, supplier,
employee, client or other customer or other
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Stock Purchase Agreement
Person having a material business relationship with the Company or any
Subsidiary of the Company has informed the Company or such Subsidiary that such
Person intends to change the relationship because of the transactions
contemplated by this Agreement and the other Operative Agreements.
SECTION 3.19. Disclosure. The Company has not knowingly failed
to disclose to IBM any facts material to the Company and its Subsidiaries, taken
as a whole. No representation or warranty of the Company contained in this
Agreement, and no statement contained in any document, certificate or Schedule
furnished or to be furnished by or on behalf of the Company to IBM or any of its
representatives pursuant to any of the Operative Agreements, including the
Initial Business Plan (to the extent it makes representations of a factual
nature, but not any projection of future operating results contained therein),
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was or will be made, in order to make the statements herein or
therein not misleading or necessary in order to fully and fairly provide the
information purported to be provided in any such document, certificate or
Schedule. There is no fact which the Company has not disclosed to IBM in writing
which materially adversely affects, or (insofar as reasonably can be foreseen)
in the future will materially adversely affect, the Company and its
Subsidiaries, taken as a whole, or the ability of the Company to perform its
obligations under the Operative Agreements or its obligations in respect of any
of the IBM Investment Shares.
SECTION 3.20. Key-Person Insurance. After due inquiry, the
Company does not have any reason to believe it cannot obtain the key-person
insurance referred to in Section 7.20.
ARTICLE IV
Representations and Warranties of IBM
SECTION 4.01. Organization and Authority. IBM represents and
warrants to the Company that IBM is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York. IBM has
all requisite corporate power and authority to enter into the Operative
Agreements to which it is or is to be a party and to consummate the transactions
contemplated thereby. The
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execution and delivery by IBM of the Operative Agreements to which it is or is
to be a party and the consummation by IBM of the transactions contemplated
thereby have been duly authorized by all necessary corporate action on the part
of IBM. Such Operative Agreements, when duly executed and delivered by IBM, will
constitute valid and binding obligations of IBM, enforceable against IBM in
accordance with their terms except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and by general equitable principles.
SECTION 4.02. Securities Act. IBM represents and warrants to
the Company that IBM is acquiring the IBM Shares for investment only and not
with a view to any public distribution of all or any portion thereof, and IBM
will not offer to sell or otherwise dispose of all or any portion of the IBM
Shares in violation of any of the registration requirements of the Securities
Act.
SECTION 4.03. Accredited Investor. IBM represents and warrants
to the Company that IBM is an "accredited investor" as such term is defined in
Regulation D under the Securities Act.
ARTICLE V
Conditions of IBM's Obligations
The obligation of IBM to purchase the IBM Shares is subject to
the satisfaction (or waiver by IBM) as of the closing Date of the following
conditions:
SECTION 5.01. Representations and Warranties. The
representations and warranties of the Company made in this Agreement shall be
true and correct in all respects as of the date of this Agreement and as of the
Closing Date with the same effect as if made at and as of the Closing Date,
except to the extent such representations and warran ties expressly relate to an
earlier time or expressly relate to the Closing, as the case may be. The Company
shall have performed in all respects the covenants and agreements of the Company
contained in the Operative Agreements required to be performed at or prior to
the Closing.
SECTION 5.02. Consents and Approvals. The Company shall have
obtained or made all waivers, consents, approvals, orders, licenses, permits and
authorizations of,
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and registrations, declarations, notices to and filings with, any Governmental
Authority or any other Person required to be obtained or made by or with respect
to the Company in connection with the execution and delivery of the Operative
Agreements or the consummation of the transactions contemplated thereby. The
Company shall have obtained all consents and waivers, as necessary, from
stockholders of the Company, and shall have provided all necessary notices to
its stockholders.
SECTION 5.03. Operative Agreements. The Company and IBM shall
have entered into each of the Operative Agreements, each Operative Agreement
shall be in form and substance satisfactory to IBM and each Operative Agreement
shall be in full force and effect. The Company's stockholders listed on Schedule
5.03 shall have entered into the Stockholders Agreement and, together with all
holders of the Company's Series D Preferred Stock, shall have waived all rights
necessary for the issuance of the IBM Shares and the effectiveness of the
Stockholders Agreement. The Company shall provide evidence satisfactory to IBM
that the previous stockholders agreement has been amended and restated in
accordance with its terms and is binding against all of its parties.
SECTION 5.04. Due Diligence. Prior to the Closing Date, IBM
shall have completed its due diligence and business review of the Company and
the results of such review shall be satisfactory to IBM in its sole discretion.
SECTION 5.05. Injunctions, etc. No injunction or order of any
Governmental Authority shall be in effect as of the Closing, and no lawsuit,
claim, proceeding or investigation shall be pending or threatened by or before
any Governmental Authority as of the Closing, which would restrain or prohibit
the issuance and sale of the IBM Shares or the consummation of any of the other
transactions contemplated by the Operative Agreements or invalidate or suspend
any provision of the Operative Agreements or the Restated Certificate of
Incorporation of the Company and no Governmental Authority shall have imposed a
Burdensome Governmental Condition upon any transaction contemplated by this
Agreement or any other Operative Agreement.
SECTION 5.06. Certificate of Incorporation. The restated
certificate of incorporation of the Company shall have been amended by the
filing of the amendment thereto in the form of Exhibit B, and shall not have
been further
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amended in any respect except as consented to by IBM in writing.
SECTION 5.07. By-Laws. The by-laws of the Company (the
"By-laws") shall contain provisions to effectuate the arrangements contemplated
in Sections 7.10 and 7.13 and such other provisions as IBM or its counsel may
reasonably request relating to the transactions contemplated hereby and shall
otherwise be in form and substance satisfactory to IBM.
SECTION 5.08. Executive Officers. Christopher Herron,
Madeline Selig and Paul Wilde shall each continue to be employed by the Company
in their respective capacities as President, Director of Research and
Development and Chief Financial Officer.
SECTION 5.09. Development and Marketing. Each of the
Development Incentive Agreement dated September 27, 1990, as amended by
Amendment No. 1 thereto, and the Marketing Agreement for Cooperative Software
Marketing Programs, Agreement Number CS-S-004, dated March 15, 1991, shall
continue to be in full force and effect and there shall not have occurred any
default by the Company under either such agreement.
SECTION 5.10. Closing Documents. The Company shall have
delivered to IBM the following:
(a) a certificate of the Chief Financial Officer of the
Company, dated the Closing Date, to the effect that the conditions
specified in Sections 5.01, 5.02, 5.05, 5.08 and 5.09 have been
satisfied;
(b) incumbency certificates dated the Closing Date for the
officers of the Company executing any of the Operative Agreements and
any documents delivered in connection with the Operative Agreements and
the Closing;
(c) a certificate of the Secretary or an Assistant Secretary
of the Company, dated the Closing Date, certifying the attached copies
of the By-laws and the resolutions adopted by the Board of Directors of
the Company authorizing the execution and delivery by the Company of
the Operative Agreements and the consumma tion by the Company of the
transactions contemplated thereby, including the amendment to the
Restated
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Certificate of Incorporation referred to in Section 5.06 and the
issuance and sale of the IBM Shares;
(d) a copy of the certificate of Amendment to the Restated
Certificate of Incorporation in the form of Exhibit B hereto as filed
with the State Corporation Division of the Office of the Secretary of
State of the State of Delaware, certified by the Secretary of State of
the State of Delaware;
(e) a certificate of the Corporation Division of the Office of
the Secretary of State of the State of Delaware, dated a recent date,
certifying that the Company is in good standing in the State of
Delaware and that all annual reports, if any, have been filed as
required and that all fees have been paid in connection therewith; and
(f) such other certificates or documents as IBM or its counsel
may reasonably request relating to the transactions contemplated
hereby.
SECTION 5.11. Opinion of Counsel. IBM shall have received an
opinion dated the Closing Date of Wilson, Sonsini, Goodrich & Rosati, counsel to
the Company, in the form of Exhibit F.
SECTION 5.12. Proceedings. All corporate and legal proceedings
taken by the Company in connection with the transactions contemplated by the
Operative Agreements and all documents and papers relating to such transactions
shall be reasonably satisfactory in form and substance to IBM and its counsel,
and IBM shall have received all such certified or other copies of all such
documents as it shall have reasonably requested.
SECTION 5.13. Business Plan. There shall not have occurred any
change in the Company's strategic direction and the current operation of the
Company conducted in accordance with the Initial Business Plan shall continue to
be satisfactory to IBM in its sole discretion.
SECTION 5.14. Statement of Work. The Company and IBM shall
have entered into a statement of work under the Software Development Assistance
Agreement No. CA-8-047-HPF, satisfactory to the Company and IBM.
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Stock Purchase Agreement
ARTICLE VI
Conditions of Company's Obligations
The obligation of the Company to issue and sell the IBM Shares
to IBM is subject to the satisfaction (or waiver by the Company) as of the
Closing Date of the following conditions:
SECTION 6.01. Representations and Warranties. The
representations and warranties of IBM in Sections 4.01, 4.02 and 4.03 shall be
true and correct in all respects as of the date of this Agreement and as of the
Closing with the same effect as if made at and as of the Closing, except to the
extent such representations and warranties expressly relate to an earlier time.
SECTION 6.02. Injunctions, etc. No injunction or order of any
Governmental Authority shall be in effect as of the Closing, and no lawsuit,
claim, proceeding or investigation shall be pending or threatened by or before
any Governmental Authority as of the Closing, which would restrain or prohibit
the issuance and sale to IBM of the IBM Shares or the consummation of any of the
other transactions contemplated by the Operative Agreements or invalidate or
suspend any provision of the Operative Agreements or the Restated Certificate of
Incorporation of the Company.
SECTION 6.03. Closing Documents. IBM shall have delivered to
the Company a certificate of an officer or other person duly authorized to sign
contracts on behalf of IBM to the effect that the conditions specified in
Sections 6.01 and 6.05 have been satisfied.
SECTION 6.04. Operative Agreements. Each of the Operative
Agreements to which the Company is a party shall be in form and substance
satisfactory to the Company and each Operative Agreement shall be in full force
and effect.
SECTION 6.05. Consents and Approvals. IBM shall have obtained
or made all consents, approvals, orders licenses, permits and authorizations of,
and registrations, declarations, notices to and filings with, any Governmental
Authority or any other Person required to be obtained or made by or with respect
to IBM in connection with the execution and delivery of the Operative Agreements
or the consummation of the transactions contemplated thereby.
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Stock Purchase Agreement
ARTICLE VII
Affirmative Covenants of the Company
The Company covenants and agrees with IBM, unless IBM shall
otherwise consent in writing, as follows:
SECTION 7.01. Accounting System. The Company shall and shall
cause its Subsidiaries to maintain all their financial records in accordance
with generally accepted accounting principles consistently applied. The Company
shall and shall cause its Subsidiaries to maintain sufficient internal controls
which (i) are at least comparable to those maintained by similarly situated
companies and (ii) in any event are sufficient to allow an audit of the Company
and its Subsidiaries in accordance with generally accepted auditing standards.
SECTION 7.02. Periodic Reports; Budgets.
(a) The Company shall furnish to IBM, within 90 days after the end of each
fiscal year of the Company, an audited consolidated balance sheet of the Company
as of the end of such fiscal year and the related audited consolidated
statements of operations, stockholders' equity and cash flows of the Company for
such fiscal year (or similar statements if the foregoing statements change as
the result of changes in generally accepted accounting principles), setting
forth in each case in comparative form the corresponding figures for the
preceding fiscal year and for the budget for the fiscal year just completed
(provided, however, that information as to the budgeted figures need not be
audited), all of which shall fairly present the financial condition of the
Company as of the dates shown and the results of its operations for the periods
then ended. Such financial statements shall be accompanied by the report thereon
of Arthur Andersen & Co., independent certified public accountants for the
Company (or another nationally recognized certified public accounting firm that
may be engaged as the Company's independent public accountant), to the effect
that such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a basis consistent with prior years
(except as otherwise specified in such report). The Company shall conduct its
business so that such report of the independent public accountants shall not
contain any qualifications as to the scope of the audit or with respect to the
Company's compliance with generally accepted accounting principles consistently
applied, except for changes in methods of accounting in which such accountants
concur. The Company
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Stock Purchase Agreement
shall also furnish IBM with a copy, when available, of the annual memorandum on
internal accounting controls, as furnished by the independent public
accountants. The Company shall also include with such financial statements a
calculation of primary and fully diluted earnings per share (using methods
generally accepted for non-public companies).
(b) The Company shall furnish to IBM, within 45 days after the
end of each fiscal year of the Company, an unaudited consolidated balance sheet
as of the end of such fiscal year and the related unaudited statements of
operations, stockholders' equity and cash flows for such fiscal year (or similar
statements if the foregoing statements change as the result of changes in
generally accepted accounting principles), setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year and for
the budget for the fiscal year just completed, all of which shall fairly present
the financial condition of the Company as of the dates shown and the results of
its operations for the periods then ended. The Company shall also include with
such financial statements a schedule showing the exercise prices of any options
or warrants of the Company and a schedule of sales and repurchases of securities
by the Company showing the amount and type of, and the price received or paid
for, such security and the seller or purchaser, as applicable.
(c) The Company shall furnish to IBM, within 30 days after the
end of each fiscal quarter, an unaudited consolidated balance sheet of the
Company as of the end of such quarter and the related unaudited consolidated
statements of operations, stockholders' equity and cash flows of the Company for
such quarter and for the fiscal year to date, setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year and for
the budget for the current fiscal year. All such statements shall be certified
by the chief financial officer of the Company that such statements fairly
present the financial condition of the Company as of the dates shown and the
results of its operations for the periods then ended and that such statements
have been prepared in conformity with generally accepted accounting principles
consistently applied except for normal, recurring, year-end audit adjustments
and the absence of footnotes. No such certification shall impose personal
liability on any person who makes such certification, unless such person
recklessly or with gross negligence makes such certification (the applicable
standard of care being reasonably prudent practices followed by other similarly
situated companies in the same industry).
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Stock Purchase Agreement
(d) The Company shall furnish to IBM, as soon as practicable
and in any event within 30 days after the end of each calendar month, an
unaudited consolidated balance sheet of the Company as of the end of such month
and the related unaudited consolidated statements of operations and cash flows
of the Company for such month and for the fiscal year to date, setting forth in
each case in comparative form the corresponding figures for the budget for the
current fiscal year. All such statements shall be certified by the chief
financial officer of the Company that such statements fairly present the
financial condition of the Company as of the dates shown and the results of its
operations for the periods then ended and that such statements have been
prepared in conformity with generally accepted accounting principles
consistently applied except for normal, recurring, year-end audit adjustments
and the absence of footnotes. No such certification shall impose personal
liability on any person who makes such certification, unless such person
recklessly or with gross negligence makes such certification (the applicable
standard of care being reasonably prudent practices followed by other similarly
situated companies in the same industry).
(e) The Company shall furnish to IBM, as soon as practicable
and in any event not less than 30 days prior to the end of each fiscal year of
the Company, (i) an annual operating budget for the Company, approved by the
Board of Directors, for the succeeding fiscal year, containing projections of
profit and loss, cash flow and ending balance sheets for each month of such
fiscal year and (ii) a business plan for the Company relating to the succeeding
fiscal year approved by the Board of Directors (the "Business Plan" for such
year). Promptly upon preparation thereof, the Company shall furnish to IBM any
other operating budgets or business plans that the Company may prepare and any
revi sions of such previously furnished budgets or business plans.
(f) The annual statements and quarterly statements furnished
pursuant to Sections 7.02(b) and (c) shall include a narrative discussion
(consistent with the Company's past practices) prepared by the Company
describing the business operations of the Company during the period covered by
such statements. The monthly statements furnished pursuant to Section 7.02(d)
shall be accompanied by a statement describing any material events, transactions
or deviations from the Company's Business Plan and containing an explanation of
the causes and circumstances thereof.
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Stock Purchase Agreement
(g) This Section 7.02 shall not apply after an Initial Public
Offering.
SECTION 7.03. Certificates of Compliance. Concurrently with
the furnishing of the statements pursuant to Sections 7.02(b) and (c), the
Company shall furnish to IBM a certificate of the chief executive officer (or
acting chief executive officer) and the chief financial officer of the Company
stating that to each such officer's best knowledge the Company is not in default
(with or without notice or lapse of time or both) under, and has not breached,
the economic and product delivery terms (including milestones) of either the
Development Incentive Agreement dated September 27, 1990 between the Company and
IBM (as amended to date), or the ISMA Agreement, or if any such default or
breach exists, specifying in detail the nature and period of existence thereof
and what actions the Company has taken and proposes to take with respect
thereto. The Company covenants that promptly after the occurrence of any default
(with or without notice or lapse of time or both) under, or breach of, the
economic and product delivery terms (including milestones) under either the
Development Incentive Agreement dated September 27, 1990 (as amended to date),
or the ISMA Agreement and related agreements, it shall deliver to IBM a
certificate of an officer of the Company specifying in detail the nature and
period of existence thereof and what actions the Company has taken and proposes
to take with respect thereto.
SECTION 7.04. Other Reports and Inspection. The Company shall
furnish promptly to IBM copies of any financial statements or financial or other
reports prepared by the Company for or otherwise furnished to or filed with its
stockholders. The Company shall furnish promptly to IBM access at the Company's
Premises to such other documents, reports, financial data and other information
as IBM may reasonably request. The Company shall, upon reasonable prior notice
and during normal business hours, make available to IBM or its representatives
or designees for inspection at the Company's premises all properties, assets,
books of accounts, corporate records and contracts of the Company, and any other
material reasonably requested by IBM, for inspection and shall use its best
efforts to make available to IBM the directors, officers, employees, customers,
independent accountants and vendors of the Company for interviews to verify all
information furnished and otherwise to become familiar with the Company and its
business, operations, properties and assets. The Company will use its
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best efforts in all other respects to assist IBM in becoming familiar with the
Company and its business.
SECTION 7.05. Insurance. The Company and its Subsidiaries
shall maintain valid policies of workers' compensation, fire and casualty,
liability and other forms of insurance (to the extent it is commercially
reasonable to carry such other insurance) with financially sound and reputable
insurers in such amounts, with such deductibles and against such risks and
losses as are reasonable for the business and assets of the Company and its
Subsidiaries, and the Company and its Subsidiaries shall maintain such other
insurance as may be required by law. The activities and operations of the
Company and its Subsidiaries shall be conducted in a manner so as to conform in
all material respects to all applicable provisions of such insurance policies.
SECTION 7.06. Licenses; Other Property. The Company shall and
shall cause its Subsidiaries to obtain, preserve, renew and keep in full force
and effect all rights, licenses, permits, patents, copyrights, trademarks,
service marks, trade names and other authorizations, from Governmental
Authorities or any other Person, utilized by the Company and its Subsidiaries,
which shall be necessary in any material respect to the conduct of their
business. The Company shall and shall cause its Subsidiaries to maintain and
preserve all property material to the conduct of their business and keep such
property in good repair, working order and condition and from time to time make,
and cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times.
SECTION 7.07. Material Changes and Other Notices. The Company
shall use its best efforts to promptly notify IBM when it becomes aware of (a)
any material adverse change with respect to the Company and (b) any lawsuit,
claim, proceeding or investigation pending or, to the knowledge of the Company,
threatened, or any judgment, order or decree involving the Company or any
Subsidiary which would have a material adverse effect on the Company.
SECTION 7.08. Compliance with Applicable Laws. The Company
shall and shall cause its Subsidiaries to comply with all applicable statutes
laws, ordinances, rules and regulations of any Governmental Authority (whether
now in effect or hereinafter enacted) and any filing requirements
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Stock Purchase Agreement
relating thereto. Such obligation shall include complying in all material
respects with the applicable provisions of ERISA and filing in a timely manner
(within any applicable extension periods) all returns, reports and forms
required to be filed under the Code or under applicable state, local or foreign
laws relating to Taxes and timely paying in full all Taxes required to be paid
in respect of the periods covered by such returns, reports and forms, except to
the extent such statutes, laws, ordinances, rules, regulations, filing
requirements or Taxes are being contested diligently and in good faith by the
Company (and, in the case of Taxes, adequate reserves for payment thereof are
made). The Company shall and shall cause its Subsidiaries to do all things
necessary to preserve, renew and keep in full force and effect and in good
standing its corporate existence and authority necessary to continue its
business.
SECTION 7.09. Agreements with Employees. By October 1, 1992,
and continually thereafter, the Company shall and shall cause its Subsidiaries
to cause all members of management and all professional employees of and
consultants to the Company and its Subsidiaries, including all employees and
consultants involved in the development of Proprietary Rights, including
software, to enter into agreements, in form and substance satisfactory to IBM,
relating to (i) Proprietary Rights and pursuant to which either (x) in
accordance with applicable foreign, Federal and state law, the Company or the
applicable Subsidiary will be accorded full, effective, exclusive and original
ownership of all tangible and intangible property thereby arising or (y) there
is conveyed to the Company or the applicable Subsidiary by appropriately
executed instruments of assignment full, effective and exclusive ownership of
all tangible and intangible property thereby arising, (ii) a prohibition on
improper use of proprietary information or trade secrets of former or concurrent
employers and a prohibition on the dissemination of documents and property of
such former and concurrent employers in connection with such person's employment
with the Company or the applicable Subsidiary, (iii) nondisclosure of
confidential information, (iv) assignment of patents, trademarks, copyrights and
Proprietary Rights to the Company and (v) disclosure to the Company of
inventions. The Company will not, and will not permit any Subsidiary of the
Company to, enter into any amendment to or waiver of any material provisions of
any of the foregoing agreements without IBM's written consent, which consent
will not be unreasonably withheld. Any compensation programs for the Company's
employees shall be subject to the prior approval of the Board of Directors or
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the compensation committee thereof. The Company shall provide IBM with a
certificate that this covenant has been met by October 5, 1992.
SECTION 7.10. Board of Directors. (a) So long as IBM
beneficially owns Voting Securities representing not less than the IBM Minimum
Equity, IBM shall be entitled to propose one person for nomination as a director
of the Company. The Company agrees to nominate such person for election to the
Board of Directors and to use its best efforts to cause such person to be
elected.
(b) At any time that IBM shall not have exercised its right to
propose a person to be nominated by the Company for election as a director, IBM
shall be entitled to designate a nonvoting observer who shall be entitled to
attend all meetings of the Board of Directors and any of its committees and who
shall be provided (i) notice of all meetings of the Board of Directors and any
of its committees (concurrent with the delivery of such notice to directors),
(ii) notice of any action that the Board of Directors or any of its committees
may take by written consent (concurrent with the delivery of such notice to
directors), (iii) promptly delivered copies of all minutes and other records of
action by, and all written information furnished to, the Board of Directors or
any of its committees and (iv) any other information requested by such observer
which a member of the Board of Directors would be entitled to request to
discharge his duties. Such IBM observer shall be entitled to the same rights to
reimbursement for the expense of attendance at meetings as any outside director.
(c) After the Closing, the Company covenants that at all times
its By-laws will provide for, and that the Company will maintain, a compensation
committee and an audit committee of the Board of Directors. All the members of
the audit committee and a majority of the members of the compensation committee
shall consist of directors who are independent of and unrelated to, and who are
not members of or employed by, the management of the Company. The compensation
committee shall make recommendations to the Board of Directors regarding
important matters of compensation, including stock options, for officers and
employees of the Company.
(d) The obligations of the Company under Sections 7.10(a) and
(b) shall terminate after the Company's Initial Public Offering if IBM no longer
beneficially owns at least 5% of the Actual Voting Power of the Corporation.
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(e) Notwithstanding the foregoing, to the extent permitted by
law, the Company may withhold any information from a board observer or director
which would result in a conflict between the interests of the Company and the
interests of IBM. The Company shall use its best efforts to promptly bring to
the attention of such board observer or director any agenda item that, in the
good faith judgment of the Chairman of the Board of the Company, would result in
such a conflict of interest and the Chairman of the Board may exclude such board
observer or director (or, alternatively, the board observer or director shall be
entitled to exclude himself or herself) from any deliberation or discussion of
the Board of Directors concerning such conflict of interest matter and from the
dissemination of any such information.
SECTION 7.11. Use of Proceeds. The Company shall use the
proceeds from the sale of the IBM Shares for the purposes set forth in Schedule
7.11 (including the payment of marketing fees due from the Company to IBM).
SECTION 7.12. Obligations. The Company shall and shall cause
each of its Subsidiaries to pay its Indebtedness and other obligations in
accordance with prudent business practice as well as all lawful claims for
labor, materials and supplies or otherwise which, if unpaid, might give rise to
a Lien, other than Permitted Liens, upon its income or profits or in respect of
its property or any part thereof. The Company and its Subsidiaries need not pay
any Indebtedness or obligation which they have a bona fide right to contest and
for which they are diligently pursuing a solution.
SECTION 7.13. Management Changes. The Company shall use all
reasonable efforts to select and, subject to IBM's approval, employ a new chief
executive officer as promptly as reasonably practicable.
SECTION 7.14. Agreements with Stockholders. The Company shall
use its best efforts to cause all Persons that are or become Significant
Stockholders to become parties to the Stockholders Agreement except for those
stockholders who acquire Voting Securities in a transaction where the
Stockholders Agreement does not require a transferee to enter into the
Stockholders Agreement.
SECTION 7.15. IBM Purchase Rights for Excess Options. (a)
Within 30 days after the end of each calendar quarter, the Company shall give
IBM written notice of the
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number of Voting Securities issued, delivered or sold during such calendar
quarter pursuant to the Company's Incentive Stock Option Plan or any other
employee stock plan that may be adopted by the Company, other than Permitted
Issuances (the "Excess Options"), and shall offer to sell to IBM and, if such
offer is accepted in writing by IBM within 60 days of receipt, shall sell to
IBM, at a purchase price per share equal to the weighted average exercise price
for the Voting Securities issued or granted during such calendar quarter, up to
and including that amount of such Voting Securities which, if purchased by IBM,
would result in IBM retaining its percentage interest in the Total Voting Power
of the Company that it would have had if the Excess Options issued or granted
during such calendar quarter had not been so issued or granted.
(b) The closing of any purchase and sale of Voting Securities
pursuant to this Section 7.15 shall take place on such date, within 30 days
after acceptance by IBM of an offer by the Company, as shall be specified by IBM
in such acceptance.
(c) This Section 7.15 shall terminate after the Company's
Initial Public Offering.
SECTION 7.16. Repurchase of Shares. (a) It is understood that
IBM has based its decision to purchase the IBM Shares on, among other things,
the Company's business strategy described in Schedule 7.16 (the Company's
"Business Strategy"). Accordingly, if in the reasonable determination of IBM,
the business of the Company is being conducted in a manner that represents a
substantive change from the conduct or the foreseen conduct of the Company's
business as set forth in the Business Strategy (other than differences
specifically consented to in writing by IBM; the date of such determination, the
"Significant Change Date"), then IBM may make an election, by delivery of
written notice to the Company, which notice must be delivered within 90 days of
the Significant Change Date, to require the Company to purchase all (but not
less than all) the Voting Securities of the Company then beneficially owned by
IBM at a purchase price equal to the Repurchase Price as of the date of the
notice for such shares. IBM shall promptly notify the Company in writing of the
Significant Change Date. If the Company duly submits to IBM a written notice of
an intended change in the conduct of the Company's business from that
contemplated by the Business Strategy, which written notice recites that it is
being delivered pursuant to this Section and asks for a response, IBM shall
respond within 60 days of
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receipt of such notice indicating whether it consents to such change in business
conduct and, if not, whether it intends to exercise its right to require the
Company to repurchase the capital stock owned by IBM pursuant to this Section if
such change in the conduct of the Company's business is implemented. This
Section 7.16(a) shall terminate on the later to occur of (x) two years from the
Closing and (y) 120 days (or such longer period that IBM is subject to an
agreement not to sell or transfer its shares entered into at the request of an
underwriter) after the Company's Initial Public offering.
(b) On the fifth anniversary of the Closing Date and on any
subsequent anniversary thereof, IBM may elect, by delivery of written notice to
the Company not less than 30 days prior to such anniversary, to require the
Company to repurchase on each such date up to one-third of the IBM Investment
Shares beneficially owned by IBM on such fifth anniversary at a purchase price
equal to the Repurchase Price as of the date each relevant notice is given. This
Section 7.16(b) shall terminate 120 days (or such longer period that IBM is
subject to an agreement not to sell or transfer its shares entered into at the
request of an underwriter) after the Company's Initial Public Offering.
(c) The Repurchase Price for any shares of capital stock to be
repurchased pursuant to Section 7.16(a) or (b) shall be the greater of: (i) (A)
if the Common Stock is publicly traded, the product of (1) the aggregate number
of shares of Common Stock that IBM elects to require the Company to repurchase
plus the aggregate number of shares of common Stock issuable upon the conversion
of other Voting Securities beneficially owned by IBM that IBM elects to require
the Company to repurchase times (2) the closing price for a share of Common
Stock on the trading day last preceding the date of determination of the
Repurchase Price, as reported on the New York Stock Exchange Composite Tape, or
if not reported thereon, on the principal national securities exchange on which
the Common Stock is listed, or if the Common Stock is not listed on any national
securities exchange, as reported on the NASDAQ National Market System or, if
such security is not included for quotation on the NASDAQ National Market
System, the average of the high and low closing bid and asked prices for a share
of such security on such trading day as reported on NASDAQ or, if such closing
prices shall not be reported on NASDAQ, the average of the closing bid and asked
prices of a share of such security on such trading day as the same shall be
reported by the National Quotation Bureau Incorporated, or (B) if the
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Stock Purchase Agreement
Common Stock is not publicly traded, the fair market value of the shares of
capital stock to be repurchased, as determined by an independent, nationally
recognized investment banking firm selected by the Company and IBM (provided
that if IBM and the Company cannot agree on the selection of an investment
banking firm, each shall select one nationally recognized investment banking
firm and the firms thus selected shall jointly select a third nationally
recognized investment banking firm which shall determine such fair market value)
and (ii) the aggregate original purchase price paid by IBM for the shares being
repurchased, plus any declared and unpaid dividends.
(d) In the event that IBM delivers a notice of its election
pursuant to Section 7.16(a) or (b) then, on the 45th day after the delivery of
such notice or on such other day as may be mutually agreed to by IBM and the
Company, the Company shall repurchase the shares of capital stock beneficially
owned by IBM specified in such notice. On the date fixed for any such purchase,
IBM shall surrender the certificates representing such shares of capital stock
at the principal office of the Company, against payment of the full amount of
the purchase price therefor in cash or by delivery of a promissory note
described below. If the Company may not legally repurchase part or all of the
capital stock to be repurchased on such date in accordance with applicable
corporate law, it will repurchase whatever shares of capital stock it may
lawfully acquire pursuant to such provisions of corporate law and IBM's right to
require the Company to repurchase any other shares of capital stock shall
survive and may be exercised by IBM on such later date as the Company may be
legally empowered to repurchase such shares. IBM shall continue to be the legal
and beneficial owner of such shares of capital stock until they are repurchased
or otherwise transferred by IBM. At the Company's option, the purchase price to
be paid for the repurchase of shares which may be legally repurchased on any
given date pursuant to Section 7.16(a) may be paid by delivery of a promissory
note of the Company. Such note will be in form and substance satisfactory to
IBM, will bear interest at a fixed rate equal to the prime rate of Chemical Bank
in effect on the day before closing plus 2% per annum, will be secured by assets
reasonably satisfactory to IBM, and the outstanding amount will be payable over
three years.
SECTION 7.l7. Payments. Except as otherwise provided herein,
the Company shall make all payments (other than dividends) on the IBM Shares or
other Voting Securities held by IBM by crediting such payment (by wire transfer
of
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Stock Purchase Agreement
immediately available funds) to such account as IBM may designate in writing at
least two days prior to the date of such payment without any requirement for the
presentation or surrender of the certificates for the IBM Shares or other Voting
Securities held by IBM. Dividend payments shall be made by certified check, bank
check or cashier's check.
SECTION 7.18. Exchange, Transfer and Replacement of IBM Share
Certificates. Upon surrender of any certificate representing IBM Shares for
exchange or transfer at the offices of the Company and, in the case of a
proposed transfer, upon receipt of evidence reasonably satisfactory to the
Company that such transfer is in compliance with the Securities Act, the Company
shall, at its expense, issue in exchange therefor new certificates in such
denomination or denominations as may be requested for the same aggregate number
of shares represented by the certificate so surrendered and registered as may be
requested. Upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of any certificate representing IBM
Shares and, in the case of any such loss, theft or destruction, upon delivery of
an agreement of indemnity reasonably satisfactory to the Company, or, in the
case of any such mutilation, upon surrender and cancelation thereof, the Company
shall, at the expense of IBM, issue a new certificate for the same aggregate
number of shares represented by such lost, stolen, destroyed or mutilated
certificate, as the case may be.
SECTION 7.19. Reservation of Shares. The Company shall reserve
and keep available out of its authorized but unissued shares of Common Stock a
sufficient number of such shares to comply with its obligations to issue such
shares to IBM under the terms of this Agreement and the Series E Preferred
Stock.
SECTION 7.20. Key-Person Insurance. The Company shall obtain
by October 1, 1992, and thereafter maintain in effect, at the expense of the
Company, key-person life
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Stock Purchase Agreement
insurance and disability policies with respect to the following individuals in
the respective amounts indicated:
<TABLE>
<CAPTION>
Employee Amount
-------- ------
(for life and disability)
<S> <C>
Chief Executive Officer* $5 million
Christopher Herron $3 million
Madeline Selig $2 million
Paul Wilde $1 million
</TABLE>
No such policies need be purchased for the Chief Executive officer, nor shall
any policy for the other executives be continued, if two-thirds of the entire
Board of Directors determines it would be commercially unreasonable to purchase
or maintain such policies. Such insurance policies shall be in addition to any
policies maintained prior to obtaining such policies. The proceeds of the
insurance under such policies shall be held in escrow for the benefit of IBM,
under escrow arrangements satisfactory in form and substance to IBM, for
repurchase of the Company's capital stock beneficially owned by IBM pursuant to
Section 7.16 or 8.01 or to pay indebtedness owed to IBM, at IBM's option, and
otherwise shall be payable to the Company. The Company shall provide IBM with a
certificate from the Company that this covenant has been met by October 5, 1992.
SECTION 7.21. Audited Financial Statements. The Company shall
deliver to IBM (i) audited financial statements for the year ended December 31,
1991, which agree to the draft previously delivered to IBM (except with respect
to any footnote disclosing IBM's investment) and (ii) an unqualified report on
such financial statements by the Company's independent certified public
accountants, not later than fourteen days after the Closing.
SECTION 7.22. EEOC Filings. The Company shall promptly make
all required Equal Employment Opportunity commission filings.
SECTION 7.23. Business Qualification. The Company shall
promptly qualify to do business in all jurisdictions where the failure to be so
qualified would have a material adverse effect on the Company.
- -----------------
* (once hired)
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Stock Purchase Agreement
ARTICLE VIII
Negative Covenants of the Company
The Company covenants and agrees with IBM that unless IBM
shall otherwise consent in writing:
SECTION 8.01. Mergers, Consolidation, Sales of Assets. (a) So
long as IBM beneficially owns Voting Securities representing not less than the
IBM Minimum Equity, the Company shall not enter into any transaction or series
of related transactions that would constitute a Control Transaction (or act
pursuant to an agreement, arrangement or understanding with the Company's
stockholders to the same effect) with any Person unless it complies with the
procedure set forth in this Section 8.01. The Company shall give notice to IBM
(the "First Refusal Notice") at least 30 days prior to agreeing to enter into
any Control Transaction and shall give IBM the first opportunity to enter into
such Control Transaction with the Company (the "Right of First Refusal") in the
manner specified in this Section 8.01.
(i) The First Refusal Notice shall specify the identity of the
potential acquirors (the "Acquirors"), and shall specify the assets of
the Company proposed to be sold, licensed, leased, exchanged or
otherwise disposed of and the proposed price to be paid therefor (in
the case of a sale, license, lease, exchange or other disposition of
assets), the proposed consideration (in the case of a merger,
consolidation or other reorganization), the proposed price to be paid
for the Company's securities (in the case of an issuance by the Company
of its securities), the proposed terms of payment and the time within
which the Company proposes to enter into an agreement to consummate
such Control Transaction, and all other material terms and conditions
upon which the Company proposes to enter into the Control Transaction
(the "First Refusal Terms"). Such notice shall include a representation
of the Company to the effect that the material provisions of such
transaction have been approved by a majority of the disinterested
members of the Company's Board of Directors and that the Company
believes that (if an Acquiror is an Affiliate of the Company) the terms
and conditions described in the First Refusal Terms are not less
favorable to the Company than could be obtained on an arm's-length
basis from unrelated third parties, that to the best knowledge of the
Company each Acquiror is
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Stock Purchase Agreement
prepared to consummate the proposed Control Transaction and has
sufficient financing to consummate the proposed Control Transaction
on the First Refusal Terms and that the Company has a good faith
intention to enter into the Control Transaction on the First Refusal
Terms.
(ii) The First Refusal Notice shall constitute an irrevocable
offer to IBM to enter into such Control Transaction with the Company on
the First Refusal Terms or terms specified by IBM which include cash to
the same extent as the First Refusal Terms and in other respects are
economically equivalent to the First Refusal Terms ("IBM's Equivalent
Terms"). The Right of First Refusal shall be exercisable by notice from
IBM to the Company within 30 days after receipt by IBM of the First
Refusal Notice. Such notice from IBM shall specify IBM's Equivalent
Terms, if any.
(iii) If IBM exercises the Right of First Refusal, then the
Company shall enter into such Control Transaction with IBM on the First
Refusal Terms or, if such terms are specified by IBM, on IBM's
Equivalent Terms. The Company shall use its best efforts to cause any
required approval of its stockholders for such Control Transaction with
IBM to be obtained as soon as practicable, and in that connection the
Board of Directors shall recommend that such stockholders vote in favor
of such approval and the Company shall use its best efforts to direct
the voting of all shares for which the Company's management or Board of
Directors holds proxies or is otherwise entitled to vote in favor of
such approval. The closing of such Control Transaction shall take place
on the second Business Day after IBM and the Company shall have
obtained or made all consents, approvals, orders, licenses, permits and
authorizations of, and registrations, declarations and filings with,
any Governmental Authority or any other Person required to be obtained
or made in connection with the consummation of such Control
Transaction, but not earlier than 30 days following the date IBM gives
notice exercising its Right of First Refusal, or on such other date as
shall be mutually acceptable to IBM and the Company.
(iv) If IBM does not exercise the Right of First Refusal with
respect to any Control Transaction, the Company shall be entitled,
within three months following the expiration of the period for exercise
of the Right of First Refusal, to consummate such Control
<PAGE> 53
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Stock Purchase Agreement
Transaction with any of the designated Acquirors upon terms and
conditions in the aggregate not more favorable to the Acquiror than
the First Refusal Terms.
(b) IBM shall have the right to require the Company to
repurchase all (but not less than all) of the shares of capital stock of the
Company beneficially owned by IBM upon the occurrence of a Control Transaction
if IBM does not exercise its Right of First Refusal set forth in Section
8.01(a), and such transaction is consummated with a Designated Transferee as the
Acquiror. If a Control Transaction with a Designated Transferee is scheduled to
occur, the Company shall give IBM notice as soon as possible of (and in no event
less than 30 days prior to) the scheduled date of consummation of such
transaction (and shall promptly update such notice, if such scheduled date shall
change). Within 30 days after receipt of such notice from the Company (or if the
Company has failed to give IBM notice of such Control Transaction, within six
months following IBM's discovery of the occurrence of the Control Transaction),
IBM may elect, by notice to the Company, to require the Company to repurchase
all (but not less than all) of the shares of capital stock of the Company then
beneficially owned by IBM, and the Company shall repurchase such shares of
capital stock, at a price equal to the greater of (i) the Offer Price for such
shares of capital stock and (ii) the original purchase price paid by IBM for
such shares of capital stock plus declared and unpaid dividends, if any. If the
Company may not legally repurchase all of the capital stock to be repurchased on
such date in accordance with applicable corporate law, it will repurchase
whatever shares of capital stock it may lawfully acquire pursuant to such
provisions of corporate law and IBM's right to require the Company to repurchase
any other shares of capital stock shall survive and may be exercised by IBM on
such later date as the Company or its successor may be legally empowered to
repurchase such shares. IBM shall continue to be the legal and beneficial owner
of such shares of capital stock until they are repurchased or otherwise
transferred by IBM. Any repurchase pursuant to the provisions of this Section
8.01(b) shall be made on a date to be agreed to by IBM and the Company not later
than 20 days following the consummation by the Company of the Control
Transaction. At the closing of any such repurchase, payment of the purchase
price shall be made by the Company to IBM by crediting such payment (by wire
transfer of immediately available funds) to such account as IBM may designate in
writing at least two Business Days prior to the date of such payment.
<PAGE> 54
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Stock Purchase Agreement
(c) If the Company inquires of IBM about a party to a
potential Control Transaction that may be a Designated Transferee, IBM shall
promptly indicate in writing to the Company whether it deems such party to be a
Designated Transferee and such determination shall be binding upon IBM for
purposes of the potential Control Transaction.
(d) This Section shall not apply to Any Control Transaction
with any Person who is not a Designated Transferee that occurs more than 120
days (or such longer period that IBM is subject to an agreement not to sell or
transfer its shares entered into at the request of an underwriter) after the
Company's Initial Public offering.
SECTION 8.02. No Restrictions Relating to this Agreement.
Other than customary financial covenants in bank loan or other financing
documents, the Company shall not become a party to or bound by any contract,
indenture, agreement, instrument, charter provision or authorizing resolution
for any series of preferred shares or any note, bond or other security or
evidence of Indebtedness under the terms of which or pursuant to which (i) the
Company's ability to declare or pay dividends on, to make any other
distributions with respect to, or to redeem or repurchase any of, the IBM
Investment Shares will be subject to any restriction that is more restrictive
than the provisions of the Restated Certificate of Incorporation or (ii) the
Company's ability to perform any of its obligations under this Agreement or any
of the other Operative Agreements including its obligations relating to
registration rights and redemption and repurchase of shares of capital stock
beneficially owned by IBM will be restricted.
SECTION 8.03. Stock Options. The Company shall not grant any
options or other rights to acquire capital stock of the Company, other than
Permitted Issuances.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Notices and other communications
provided for herein shall be in writing and shall
<PAGE> 55
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Stock Purchase Agreement
be delivered by hand or overnight courier service or sent by registered or
certified mail, as follows:
(a) if to IBM,
International Business Machines Corporation
2000 Purchase Street
Purchase, New York 10577
Telephone: 914-697-7600
Telecopier: 914-697-6014
Attention of Mr. M. W. Szeto
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, N.Y. 10019
Telephone: 212-474-1000
Telecopier: 212-474-3700
Attention of Martin L. Senzel, Esq.
(b) if to the Company,
Synon Corporation
1100 Larkspur Landing Circle
Larkspur, California 94939
Telephone: 415-493-9300
Telecopier: 415-461-8948
Attention of the Chief Executive Officer
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
2 Palo Alto Square
Palo Alto, California 94304
Telephone: 415-461-5000
Telecopier: 415-493-6811
Attention of Richard Char, Esq.
All notices and other communications given to either party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service, or on the
date five Business Days after dispatch by certified or registered mail if
mailed, in each case delivered or mailed (properly addressed) to such party as
provided in this Section 9.01 or in accordance with the latest unrevised
direction from such party given in accordance with this
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Stock Purchase Agreement
Section 9.01. Any address or addressee specified above may be changed by notice
to the other parties in accordance with this Section.
SECTION 9.02. Survival of Agreement; Termination. All
covenants, agreements, representations and warranties made by the Company herein
and in the certificates or other documents prepared or delivered in connection
with the Closing shall be considered to have been relied upon by IBM and shall
survive the execution and delivery of this Agreement or such certificate or
other document, the sale and purchase of the IBM Shares and any disposition
thereof, regardless of any investigation made by IBM or on its behalf. This
Agreement shall terminate in its entirety except for the provisions of Sections
9.05, 9.09, 9.13 and 9.14 when IBM (including its Affiliates and assignees under
Section 9.03) no longer beneficially owns any Voting Securities of the Company.
SECTION 9.03. Assignment. This Agreement and the rights
hereunder shall not be assignable or transferable by either party (except by
operation of law in connection with a merger, consolidation or sale of
substantially all the assets of such party) without the prior written consent of
the other party hereto; provided that IBM may assign, in its sole discretion,
any or all of its rights, interests and obligations under this Agreement to any
of its Affiliates or to any transferee of IBM Shares, other than a transferee
who shall acquire such IBM Shares in a public offering pursuant to a
registration statement declared effective under the Securities Act or pursuant
to Rule 144 thereunder. Subject to the preceding sentence, this Agreement shall
be binding upon, inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns.
SECTION 9.04. No Third-Party Beneficiaries. This Agreement is
for the sole benefit of the parties hereto and their permitted assigns and
nothing herein expressed or implied shall give or be construed to give to any
Person, other than the parties hereto and such assigns, any legal or equitable
rights hereunder.
SECTION 9.05. Expenses. (a) Whether or not the transactions
contemplated hereby are consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs or expenses, except as otherwise provided
in this Agreement. In the event the transactions contemplated hereby are
consummated, the Company agrees to
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Stock Purchase Agreement
pay stamp and other transfer taxes which may be payable in respect of the
execution and delivery of this Agreement or the issuance of the IBM Shares or
any Common Shares issuable upon conversion thereof.
(b) The provisions of this Section 9.05 shall remain operative
and in full force and effect regardless of the expiration of the term of this
Agreement or the consum mation of the transactions contemplated hereby, the
invalidity or unenforceability of any term or provision of this Agreement or the
other Operative Agreements or any investigation made by or on behalf of IBM. All
amounts due under this Section 9.05 shall be payable on written demand therefor.
SECTION 9.06. Applicable Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
SECTION 9.07. Waivers; Amendment. (a) No failure or delay of
IBM in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of IBM hereunder are cumulative and are
not exclusive of any rights or remedies which IBM would otherwise have. No
waiver of any provision of this Agreement or consent to any departure by the
Company therefrom shall in any event be effective unless the same shall be
permitted by Section 9.07(b), and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing, expressly identified as a waiver, amendment or modification hereof,
entered into by authorized signatories of the Company and IBM. To be effective,
any consent, approval, notice, waiver or demand required or permitted under this
Agreement must refer specifically to this Agreement and the provisions to which
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Stock Purchase Agreement
it relates, describe with particularity any right or obligation consented to,
approved, waived or purported to be violated, demonstrate knowledge of the
consequences of the action so taken and be signed by an authorized signatory of
the party making or giving such consent, approval, notice, waiver or demand.
SECTION 9.08. Entire Agreement. This Agreement (including the
Exhibits hereto) and the other Operative Agreements constitute the entire
agreement between the parties relative to the subject matter hereof. Any
previous agreement, including any discussion outline, between the parties with
respect to the subject matter hereof, is superseded by this Agreement and the
other Operative Agreements.
SECTION 9.09. Waiver of Jury Trial. Each party hereto hereby
waives, to the fullest extent permitted by applicable law, any right it may have
to a trial by jury in respect of any litigation directly or indirectly arising
out of, under or in connection with any of the Operative Agreements. Each party
hereto (a) certifies that no representa tive, agent or attorney of the other
party has represented, expressly or otherwise, that the other party would not,
in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it and the other party hereto have been induced to enter into
this Agreement by, among other things, the mutual waivers and certifications in
this Section 9.09.
SECTION 9.10. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.11. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract, and shall become
effective when one or more such counterparts have been signed by each of the
parties and delivered to the other party.
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Stock Purchase Agreement
SECTION 9.12. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and are not to affect the construction of, or to be taken
into consideration in interpreting, this Agreement.
SECTION 9.13. Jurisdiction; Consent to Service of Process;
Remedies. (a) The Company hereby irrevocably and unconditionally submits, for
itself and its property, to the jurisdiction of any New York State court sitting
in the County of New York or Westchester or any Federal court of the United
States of America sitting in the Southern District of New York, and any
appellate court from any such court, in any suit, action or proceeding arising
out of or relating to the Operative Agreements, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such suit, action
or proceeding may be heard and determined in such New York State court or, to
the extent permitted by law, by removal or otherwise, in such Federal court.
Each party agrees that a final judgment in any such suit, action or proceeding
shall be conclusive and may be enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by law.
(b) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
(c) In no event will IBM or the Company be liable to the other
for incidental damages, lost profits, income tax consequences, lost savings or
any other consequential damages, even if such party has been advised of the
possibility of such damages, or for punitive damages, resulting from the breach
of any obligation under this Agreement, as part of a claim for indemnification
or otherwise.
SECTION 9.14. Publicity. Except as may otherwise be agreed to
by the parties and as contemplated by the Operative Agreements, no publicity
regarding the purchase of shares and the other transactions contemplated hereby
is contemplated by the parties hereto. The Company and IBM agree that (a) no
public release, announcement or other form of publicity concerning the purchase
of shares and the other transactions contemplated hereby shall be issued by
either party without the prior consent of the other party, except as such
release or announcement may be required by law or
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Stock Purchase Agreement
the rules or regulations of any securities exchange or except as would be
disclosed in proxy materials prepared in conformance with Regulation 14A under
the Exchange Act, in which case the party required to make the release or
announcement shall allow the other party reasonable time to comment on such
release or announcement in advance of such issuance and (b) without the prior
consent of IBM, the Company shall not issue any public release or announcement
or issue or distribute any document to be used in connection with the private or
public sale of debt or equity securities of the Company if such release,
announcement or document refers to IBM's investment in or contracts or other
arrangements with the Company, except as may be required by law or the rules or
regulations of any securities exchange or by any Governmental Authority, in
which case the Company shall allow IBM reasonable time to comment on the
relevant portions of such release, announcement or document.
SECTION 9.15. Further Assurances. The Company shall use its
best efforts to obtain and to assist IBM in obtaining promptly all necessary
waivers, consents and approvals from any Governmental Authority or any other
Person (including the approval of the stockholders of the Company, if necessary)
for any exercise by IBM of its rights under any of the Operative Agreements and
to take such other actions as may reasonably be requested by IBM to effect the
purpose of this Agreement. The period of time provided for any closing of any
transactions pursuant to such rights may, at the option of IBM, be extended as
necessary in order to obtain any such waivers, consents and approvals.
SECTION 9.16. Freedom of Action. (a) IBM shall not have any
obligation to the Company not to (i) engage in the same or similar activities or
lines of business as the Company or develop or market any products or services
that compete, directly or indirectly, with those of the Company, (ii) invest or
own any interest publicly or privately in, or develop a business relationship
with, any corporation, partnership or other entity engaged in the same or
similar activities or lines of business as, or otherwise in competition with,
the Company or (iii) do business with any client or customer of the Company.
Neither IBM nor any of its officers, directors, employees or former employees
shall have any obligation, or be liable, to the Company for or arising out of
the conduct described in (i), (ii) or (iii) above, for exercising or failing to
exercise its rights under any Operative Agreement to which IBM is or will be a
party, for exercising or failing to exercise its rights as a stockholder of the
Company or for breach of any fiduciary or
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Stock Purchase Agreement
other duty to the Company by reason of such conduct or such officers',
directors', employees' or former employees' participation therein or actions as
directors of the Company. In the event that IBM or any officer, director,
[signature blocks on next page]
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Stock Purchase Agreement
employee or former employee of IBM acquires knowledge of a potential
transaction, agreement, arrangement or other matter which may be a corporate
opportunity for both IBM and the Company, neither IBM nor such officers,
directors, employees or former employees shall have any duty to communicate or
offer such corporate opportunity to the Company and neither IBM nor such
officers, directors, employees or former employees shall be liable to the
Company for breach of any fiduciary or other duty, as a stockholder or
otherwise, by reason of the fact that IBM or such officers, directors, employees
or former employees pursue or acquire such corporate opportunity for IBM, direct
such corporate opportunity to another Person or fail to communicate such
corporate opportunity or information regarding such corporate opportunity to the
Company. As used in this Section 9.16, IBM shall mean IBM and its Affiliates
(but not including the Company as an Affiliate of IBM).
(b) The provisions of this Section shall be effective to the
maximum extent permitted by law.
SECTION 9.17. Construction. This Agreement has been negotiated
by the parties and their respective counsel and will be fairly interpreted in
accordance with its terms and without any strict construction in favor of or
against either party.
IN WITNESS WHEREOF, the Company and IBM have duly executed
this Stock Purchase Agreement as of the day and year first above written.
INTERNATIONAL BUSINESS MACHINES
CORPORATION,
by /s/ STEVEN A. MILLS
-----------------------------------
Name: Steven A. Mills
Title: Assistant General Manager
Finance & Planning
Programming Systems
SYNON CORPORATION,
by /s/ PAUL WILDE
------------------------------------
Name: Paul Wilde
Title: Chief Financial Officer
<PAGE> 63
AMENDMENT TO STOCK PURCHASE AGREEMENT
This Amendment to Stock Purchase Agreement, dated as of May 28, 1997
(the "Amendment"), is entered into by and between Synon Corporation, a Delaware
corporation (the "Company"), and International Business Machines Corporation, a
New York corporation ("IBM"). Capitalized terms used but not defined herein have
the meanings ascribed to them in the Agreement (as defined below).
RECITALS
WHEREAS, the Company and IBM have entered into a Stock Purchase Agreement
dated August 28, 1992 (the "Agreement"), which sets forth the terms and
conditions of IBM's purchase of 1,666,667 shares of the Company's Series E
Preferred Stock; and
WHEREAS, the parties now desire to amend the Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. TERMINATION OF IBM BOARD RIGHT AFTER INITIAL PUBLIC OFFERING. Section
7.10(d) of the Agreement shall be amended and restated to provide as follows:
"(d) The obligations of the Company under Sections 7.10(a) and (b) shall
terminate upon the closing of the Company's Initial Public Offering."
2. DELETION OF CERTAIN COVENANTS AFTER INITIAL PUBLIC OFFERING. Effective
and contingent upon the closing of the Company's Initial Public Offering:
2.1. Section 7.16 of the Agreement, "Repurchase of Shares," shall be
deleted in its entirety and the remaining Sections in Article VII of the
Agreement shall be renumbered accordingly;
2.2. Section 8.01 of the Agreement, "Mergers, Consolidation, Sales of
Assets," shall be deleted in its entirety and the remaining Sections in Article
VIII of the Agreement shall be renumbered accordingly.
3. GENERAL
3.1. All other terms and conditions of the Agreement shall remain in
full force and effect without further amendment or modification.
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3.3. This Amendment may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which, when taken together,
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers as of the date first above
written.
SYNON CORPORATION
BY: /s/ Paul K. Wilde
___________________________________
TITLE: Chief Financial Officer
INTERNATIONAL BUSINESS MACHINES
CORPORATION
BY: /s/ Suzanne C. Lewis
___________________________________
TITLE: Business Development Consultant
<PAGE> 1
EXHIBIT 10.1
SYNON CORPORATION
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("Agreement") is made as of this ____
day of _________, 1997 by and between SYNON CORPORATION, a Delaware corporation
(the "Company"), and ________________________________________("Indemnitee").
RECITALS
A. The Company and Indemnitee recognize the continued difficulty
in obtaining liability insurance for its directors, officers, employees, agents
and fiduciaries, the significant increases in the cost of such insurance and
the general reductions in the coverage of such insurance.
B. The Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same
time as the availability and coverage of liability insurance has been severely
limited.
C. Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee and other directors,
officers, employees, agents and fiduciaries of the Company may not be willing
to continue to serve in such capacities without additional protection.
D. The Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve the Company and, in
part, in order to induce Indemnitee to continue to provide services to the
Company, wishes to provide for the indemnification and advancing of expenses to
Indemnitee to the maximum extent permitted by law.
E. In view of the considerations set forth above, the Company
desires that Indemnitee be indemnified by the Company as set forth herein.
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
(a) Indemnification of Expenses. The Company shall
indemnify Indemnitee to the fullest extent permitted by law if Indemnitee was
or is or becomes a party to or witness or
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other participant in, or is threatened to be made a party to or witness or other
participant in, any threatened, pending or completed action, suit, proceeding
or alternative dispute resolution mechanism, or any hearing, inquiry or
investigation that Indemnitee in good faith believes might lead to the
institution of any such action, suit, proceeding or alternative dispute
resolution mechanism, whether civil, criminal, administrative, investigative or
other (hereinafter a "CLAIM") by reason of (or arising in part out of) any
event or occurrence related to the fact that Indemnitee is or was a director,
officer, employee, agent or fiduciary of the Company, or any subsidiary of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary of another corporation, partnership,
joint venture, trust or other enterprise, or by reason of any action or
inaction on the part of Indemnitee while serving in such capacity (hereinafter
an "INDEMNIFIABLE EVENT") against any and all expenses (including attorneys'
fees and all other costs, expenses and obligations incurred in connection with
investigating, defending, being a witness in or participating in (including on
appeal), or preparing to defend, be a witness in or participate in, any such
action, suit, proceeding, alternative dispute resolution mechanism, hearing,
inquiry or investigation), judgments, fines, penalties and amounts paid in
settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) of such Claim and any federal,
state, local or foreign taxes imposed on Indemnitee as a result of the actual
or deemed receipt of any payments under this Agreement (collectively,
hereinafter "EXPENSES"), including all interest, assessments and other charges
paid or payable in connection with or in respect of such Expenses. Such
payment of Expenses shall be made by the Company as soon as practicable but in
any event no later than five days after written demand by Indemnitee therefor
is presented to the Company.
(b) Reviewing Party. Notwithstanding the foregoing, (i)
the obligations of the Company under Section 1(a) shall be subject to the
condition that the Reviewing Party (as described in Section 10(e) hereof) shall
not have determined (in a written opinion, in any case in which the Independent
Legal Counsel referred to in Section 1(c) hereof is involved) that Indemnitee
would not be permitted to be indemnified under applicable law, and (ii) the
obligation of the Company to make an advance payment of Expenses to Indemnitee
pursuant to Section 2(a) (an "EXPENSE ADVANCE") shall be subject to the
condition that, if, when and to the extent that the Reviewing Party determines
that Indemnitee would not be permitted to be so indemnified under applicable
law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby
agrees to reimburse the Company) for all such amounts theretofore paid;
provided, however, that if Indemnitee has commenced or thereafter commences
legal proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or lapsed).
Indemnitees' obligation to reimburse the Company for any Expense Advance shall
be unsecured and no interest shall be charged thereon. If there has not been a
Change in Control (as defined in
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<PAGE> 3
Section 10(c) hereof), the Reviewing Party shall be selected by the Board of
Directors, and if there has been such a Change in Control (other than a Change
in Control which has been approved by a majority of the Company's Board of
Directors who were directors immediately prior to such Change in Control), the
Reviewing Party shall be the Independent Legal Counsel referred to in Section
1(c) hereof. If there has been no determination by the Reviewing Party or if
the Reviewing Party determines that Indemnitee substantively would not be
permitted to be indemnified in whole or in part under applicable law,
Indemnitee shall have the right to commence litigation seeking an initial
determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and the Company hereby consents to service of process and to appear
in any such proceeding. Any determination by the Reviewing Party otherwise
shall be conclusive and binding on the Company and Indemnitee.
(c) Change in Control. The Company agrees that if there
is a Change in Control of the Company (other than a Change in Control which has
been approved by a majority of the Company's Board of Directors who were
directors immediately prior to such Change in Control) then, with respect to
all matters thereafter arising concerning the rights of Indemnitees to payments
of Expenses and Expense Advances under this Agreement or any other agreement or
under the Company's Certificate of Incorporation or Bylaws as now or hereafter
in effect, Independent Legal Counsel (as defined in Section 10(d) hereof) shall
be selected by Indemnitee and approved by the Company (which approval shall not
be unreasonably withheld). Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law and the
Company agrees to abide by such opinion. The Company agrees to pay the
reasonable fees of the Independent Legal Counsel referred to above and to fully
indemnify such counsel against any and all expenses (including attorneys'
fees), claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
(d) Mandatory Payment of Expenses. Notwithstanding any
other provision of this Agreement other than Section 9 hereof, to the extent
that Indemnitee has been successful on the merits or otherwise, including,
without limitation, the dismissal of an action without prejudice, in defense of
any action, suit, proceeding, inquiry or investigation referred to in Section
(1)(a) hereof or in the defense of any claim, issue or matter therein,
Indemnitee shall be indemnified against all Expenses incurred by Indemnitee in
connection therewith.
2. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. The Company shall advance
all Expenses incurred by Indemnitee. The advances to be made hereunder shall
be paid by the Company to Indemnitee as soon as practicable but in any event no
later than five days after written demand by Indemnitee therefor to the
Company.
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<PAGE> 4
(b) Notice/Cooperation by Indemnitee. Indemnitee shall,
as a condition precedent to Indemnitees' right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
Claim made against Indemnitee for which indemnification will or could be sought
under this Agreement. Notice to the Company shall be directed to the Chief
Executive Officer of the Company at the address shown on the signature page of
this Agreement (or such other address as the Company shall designate in writing
to Indemnitee). In addition, Indemnitee shall give the Company such
information and cooperation as it may reasonably require and as shall be within
Indemnitees' power.
(c) No Presumptions; Burden of Proof. For purposes of
this Agreement, the termination of any Claim by judgment, order, settlement
(whether with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief
or that a court has determined that indemnification is not permitted by
applicable law. In addition, neither the failure of the Reviewing Party to
have made a determination as to whether Indemnitee has met any particular
standard of conduct or had any particular belief, nor an actual determination
by the Reviewing Party that Indemnitee has not met such standard of conduct or
did not have such belief, prior to the commencement of legal proceedings by
Indemnitee to secure a judicial determination that Indemnitee should be
indemnified under applicable law, shall be a defense to Indemnitee's claim or
create a presumption that Indemnitee has not met any particular standard of
conduct or did not have any particular belief. In connection with any
determination by the Reviewing Party or otherwise as to whether Indemnitee is
entitled to be indemnified hereunder, the burden of proof shall be on the
Company to establish that Indemnitee is not so entitled.
(d) Notice to Insurers. If, at the time of the receipt
by the Company of a notice of a Claim pursuant to Section 2(b) hereof, the
Company has liability insurance in effect which may cover such Claim, the
Company shall give prompt notice of the commencement of such Claim to the
insurers in accordance with the procedures set forth in the respective
policies. The Company shall thereafter take all necessary or desirable action
to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as
a result of such action, suit, proceeding, inquiry or investigation in
accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall
be obligated hereunder to pay the Expenses of any Claim, the Company shall be
entitled to assume the defense of such Claim with counsel approved by
Indemnitee, which approval shall not be unreasonably withheld, upon the
delivery to Indemnitee of written notice of its election so to do. After
delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred
by Indemnitee with respect to the same Claim; provided that, (i) Indemnitee
shall have the right to employ Indemnitees' counsel in any such Claim at
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<PAGE> 5
Indemnitee expense and (ii) if (A) the employment of counsel by Indemnitee has
been previously authorized by the Company, (B) Indemnitee shall have reasonably
concluded that there is a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or (C) the Company shall not
continue to retain such counsel to defend such Claim, then the fees and
expenses of Indemnitee counsel shall be at the expense of the Company. The
Company shall have the right to conduct such defense as it sees fit in its sole
discretion, including the right to settle any claim against Indemnitee without
the consent of the Indemnitee.
3. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. The Company hereby agrees to indemnify
Indemnitee to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or
by statute. In the event of any change after the date of this Agreement in any
applicable law, statute or rule which expands the right of a Delaware
corporation to indemnify a member of its Board of Directors or an officer,
employee, agent or fiduciary, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change. In the event of any change in any applicable law, statute or rule
which narrows the right of a Delaware corporation to indemnify a member of its
Board of Directors or an officer, employee, agent or fiduciary, such change, to
the extent not otherwise required by such law, statute or rule to be applied to
this Agreement, shall have no effect on this Agreement or the parties' rights
and obligations hereunder except as set forth in Section 8(a) hereof.
(b) Nonexclusivity. The indemnification provided by this
Agreement shall be in addition to any rights to which Indemnitee may be
entitled under the Company's Certificate of Incorporation, its Bylaws, any
agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise. The indemnification
provided under this Agreement shall continue as to Indemnitee for any action
Indemnitee took or did not take while serving in an indemnified capacity even
though Indemnitee may have ceased to serve in such capacity.
4. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any Claim made
against Indemnitee to the extent Indemnitee has otherwise actually received
payment (under any insurance policy, Certificate of Incorporation, Bylaw or
otherwise) of the amounts otherwise indemnifiable hereunder.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however,
for all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee are entitled.
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<PAGE> 6
6. Mutual Acknowledgement. Both the Company and Indemnitee
acknowledge that in certain instances, Federal law or applicable public policy
may prohibit the Company from indemnifying its directors, officers, employees,
agents or fiduciaries under this Agreement or otherwise. Indemnitee
understands and acknowledges that the Company has undertaken or may be required
in the future to undertake with the Securities and Exchange Commission to
submit the question of indemnification to a court in certain circumstances for
a determination of the Company's right under public policy to indemnify
Indemnitee.
7. Liability Insurance. To the extent the Company maintains
liability insurance applicable to directors, officers, employees, agents or
fiduciaries, Indemnitee shall be covered by such policies in such a manner as
to provide Indemnitee the same rights and benefits as are accorded to the most
favorably insured of the Company's directors, if Indemnitee is a director; or
of the Company's officers, if Indemnitee is not a director of the Company but
is an officer; or of the Company's key employees, agents or fiduciaries, if
Indemnitee is not an officer or director but is a key employee, agent or
fiduciary.
8. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Excluded Action or Omissions. To indemnify
Indemnitee for Indemnitee's acts, omissions or transactions from which
Indemnitee or the Indemnitee may not be relieved of liability under applicable
law;
(b) Claims Initiated by Indemnitee. To indemnify or
advance expenses to Indemnitee with respect to Claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except (i) with respect to
actions or proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other agreement or insurance policy
or under the Company's Certificate of Incorporation or Bylaws now or hereafter
in effect relating to Claims for Indemnifiable Events, (ii) in specific cases
if the Board of Directors has approved the initiation or bringing of such
Claim, or (iii) as otherwise required under Section 145 of the Delaware General
Corporation Law, regardless of whether Indemnitee ultimately is determined to
be entitled to such indemnification, advance expense payment or insurance
recovery, as the case may be;
(c) Lack of Good Faith. To indemnify Indemnitee for any
expenses incurred by Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by Indemnitee
in such proceeding was not made in good faith or was frivolous; or
(d) Claims Under Section 16(b). To indemnify Indemnitee
for expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of
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Section 16(b) of the Securities Exchange Act of 1934, as amended, or any
similar successor statute.
9. Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a
legal action within such two-year period; provided, however, that if any
shorter period of limitations is otherwise applicable to any such cause of
action, such shorter period shall govern.
10. Construction of Certain Phrases.
(a) For purposes of this Agreement, references to the
"Company" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed
in a consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
employees, agents or fiduciaries, so that if Indemnitee is or was a director,
officer, employee, agent or fiduciary of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee, agent or fiduciary of another corporation, partnership,
joint venture, employee benefit plan, trust or other enterprise, Indemnitee
shall stand in the same position under the provisions of this Agreement with
respect to the resulting or surviving corporation as Indemnitee would have with
respect to such constituent corporation if its separate existence had
continued.
(b) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as a director, officer, employee, agent or fiduciary of the
Company which imposes duties on, or involves services by, such director,
officer, employee, agent or fiduciary with respect to an employee benefit plan,
its participants or its beneficiaries; and if Indemnitee acted in good faith
and in a manner Indemnitee reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan, Indemnitee shall be
deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to in this Agreement.
(c) For purposes of this Agreement a "Change in Control"
shall be deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended),
other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned directly or indirectly by
the stockholders of the Company in substantially the same proportions as their
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ownership of stock of the Company, (A) who is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 10% or more
of the combined voting power of the Company's then outstanding Voting
Securities, increases his beneficial ownership of such securities by 5% or more
over the percentage so owned by such person, or (B) becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing more than 20% of the total voting power
represented by the Company's then outstanding Voting Securities, (ii) during
any period of two consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Company and any new director
whose election by the Board of Directors or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof, or (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 80% of the
total voting power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
the stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of (in one
transaction or a series of transactions) all or substantially all of the
Company's assets.
(d) For purposes of this Agreement, "Independent Legal
Counsel" shall mean an attorney or firm of attorneys, selected in accordance
with the provisions of Section 1(c) hereof, who shall not have otherwise
performed services for the Company or Indemnitee within the last three years
(other than with respect to matters concerning the rights of Indemnitee under
this Agreement, or of other indemnitees under similar indemnity agreements).
(e) For purposes of this Agreement, a "Reviewing Party"
shall mean any appropriate person or body consisting of a member or members of
the Company's Board of Directors or any other person or body appointed by the
Board of Directors who is not a party to the particular Claim for which
Indemnitee are seeking indemnification, or Independent Legal Counsel.
(f) For purposes of this Agreement, "Voting Securities"
shall mean any securities of the Company that vote generally in the election of
directors.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
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12. Binding Effect; Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, spouses, heirs,
and personal and legal representatives. The Company shall require and cause
any successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all, substantially all, or a substantial part, of the business
and/or assets of the Company, by written agreement in form and substance
satisfactory to Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. This Agreement
shall continue in effect with respect to Claims relating to Indemnifiable
Events regardless of whether Indemnitee continues to serve as a director,
officer, employee, agent or fiduciary of the Company or of any other enterprise
at the Company's request.
13. Attorneys' Fees. In the event that any action is instituted
by Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses with respect to such action, unless, as a part of such action, a
court of competent jurisdiction over such action determines that each of the
material assertions made by Indemnitee as a basis for such action was not made
in good faith or was frivolous. In the event of an action instituted by or in
the name of the Company under this Agreement to enforce or interpret any of the
terms of this Agreement, Indemnitee shall be entitled to be paid all Expenses
incurred by Indemnitee in defense of such action (including costs and expenses
incurred with respect to Indemnitee counterclaims and cross-claims made in such
action), and shall be entitled to the advancement of Expenses with respect to
such action, unless, as a part of such action, a court having jurisdiction over
such action determines that each of Indemnitee material defenses to such action
was made in bad faith or was frivolous.
14. Notice. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given (a) five (5) days after deposit with
the U.S. Postal Service or other applicable postal service, if delivered by
first class mail, postage prepaid, (b) upon delivery, if delivered by hand, (c)
one business day after the business day of deposit with Federal Express or
similar overnight courier, freight prepaid, or (d) one day after the business
day of delivery by facsimile transmission, if delivered by facsimile
transmission, with copy by first class mail, postage prepaid, and shall be
addressed if to Indemnitee, at the Indemnitee address as set forth beneath
Indemnitee signatures to this Agreement and if to the Company at the address of
its principal corporate offices (attention: Secretary) or at such other
address as such party may designate by ten days' advance written notice to the
other party hereto.
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15. Consent to Jurisdiction. The Company and Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement and agree that any action instituted
under this Agreement shall be commenced, prosecuted and continued only in the
Court of Chancery of the State of Delaware in and for New Castle County, which
shall be the exclusive and only proper forum for adjudicating such a claim.
16. Severability. The provisions of this Agreement shall be
severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) are held by a court
of competent jurisdiction to be invalid, void or otherwise unenforceable, and
the remaining provisions shall remain enforceable to the fullest extent
permitted by law. Furthermore, to the fullest extent possible, the provisions
of this Agreement (including, without limitations, each portion of this
Agreement containing any provision held to be invalid, void or otherwise
unenforceable, that is not itself invalid, void or unenforceable) shall be
construed so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable.
17. Choice of Law. This Agreement shall be governed by and its
provisions construed and enforced in accordance with the laws of the State of
Delaware, as applied to contracts between Delaware residents, entered into and
to be performed entirely within the State of Delaware, without regard to the
conflict of laws principles thereof.
18. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable the
Company effectively to bring suit to enforce such rights.
19. Amendment and Termination. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless it is
in writing signed by both the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
20. Integration and Entire Agreement. This Agreement sets forth
the entire understanding between the parties hereto and supersedes and merges
all previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.
21. No Construction as Employment Agreement. Nothing contained in
this Agreement shall be construed as giving Indemnitee any right to be retained
in the employ of the Company or any of its subsidiaries.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SYNON CORPORATION
By: _________________________________
Title: ______________________________
Address: 1100 Larkspur Landing Circle
Larkspur, California 94939
AGREED TO AND ACCEPTED:
INDEMNITEE:
Name: ______________________________
Address: ___________________________
___________________________
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EXHIBIT 10.2
SYNON CORPORATION
1990 STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Stock Option Plan
are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees of the
Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422A of the Code) or non-statutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422A of the Code, as amended, and the
regulations promulgated thereunder.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Administrator" means the Board or any of its
Committees appointed pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the Committee appointed by the
Board of Directors in accordance with paragraph (a) of Section 4 of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
(f) "Company" means Synon Corporation, a Delaware
corporation.
(g) "Continuous Status as an Employee" means the absence
of any interruption or termination of the employment relationship by the Company
or any Subsidiary. Continuous Status as an Employee shall not be considered
interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other
leave of absence approved by the Board, provided that such leave is for a period
of not more than ninety (90) days, unless reemployment upon the expiration of
such leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (iv) in the case of
transfers between locations of the Company or between the Company, its
Subsidiaries or its successor.
(h) "Employee" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(i) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
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(j) "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any
established stock exchange or a national market system including without
limitation the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair Market Value shall
be the closing sales price for such stock (or the closing bid, if no sales were
reported, as quoted on such system or exchange for the last market trading day
prior to the time of determination) as reported in the Wall Street Journal or
such other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high and low asked prices for the
Common Stock or;
(iii) In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Administrator.
(k) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422A of the
Code.
(l) "Nonstatutory Stock Option" means an Option not
intended to qualify as an Incentive Stock Option.
(m) "Option" means a stock option granted pursuant to the
Plan.
(n) "Optioned Stock" means the Common Stock subject to
an Option.
(o) "Optionee" means an Employee who receives an Option.
(p) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 425(e) of the Code.
(q) "Plan" means this 1990 Stock Option Plan.
(r) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 11 of the Plan.
(s) "Subsidiary" means a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 425(f) of the Code.
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3. Stock Subject to the Plan.
(a) Subject to the provisions of Section 11 of the Plan,
the maximum aggregate number of shares which may be optioned and sold under the
Plan is 5,000,000 shares of Common Stock. The shares may be authorized, but
unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable
for any reason without having been exercised in full, the unpurchased Shares
which were subject thereto shall, unless the Plan shall have been terminated,
become available for future grant under the Plan.
(b) Notwithstanding the foregoing Section 3(a), the total
number of shares of Common Stock over which options may be granted under the
Plan at any time, when aggregated with the total number of shares of Common
Stock over which options have been granted within the last ten years pursuant to
the Plan, the Company's U.K. Executive Share Option Scheme and any other stock
option plan established for any directors or employees of the Company or any
Subsidiary (except to the extent to which such options have lapsed or been
renounced or released), may not exceed twenty percent (20%) of the aggregate of
the issued and outstanding shares of Common Stock and Series A Preferred Stock
and shares of Common Stock issuable upon conversion of outstanding and
unexercised options.
4. Administration of the Plan.
(a) Procedure.
(i) Administration With Respect to Directors and
Officers. With respect to grants of options to Employees who are also officers
or directors of the Company, the Plan shall be administered by (A) the Board if
the Board may administer the Plan in compliance with Rule 16b-3 promulgated
under the Exchange Act or any successor thereto ("Rule 16b-3") with respect to a
plan intended to qualify thereunder as a discretionary plan, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted in such a manner as to permit the Plan to comply with Rule 16b-3
with respect to a plan intended to qualify thereunder as a discretionary plan.
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members of the
Committee and thereafter directly administer the Plan.
(ii) Multiple Administrative Bodies. If
permitted by Rule 16b-3, the Plan may be administered by different bodies with
respect to directors, non-director officers and Employees who are neither
directors nor officers.
(iii) Administration With Respect to Consultants
and other Employees. With respect to grants of Options to Employees who are
neither directors nor officers of the
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Company, the Plan shall be administered by (A) the Board or (B) a Committee
designated by the Board, which Committee shall be constituted in such a manner
as to satisfy the legal requirements relating to the administration of incentive
stock option plans, if any, of applicable state corporate and securities laws
and of the Code (the "Applicable Laws"). Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused,
and remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the Applicable Laws.
(b) Powers of the Administrator. Subject to the
provisions of the Plan and in the case of a Committee, the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value of the
Common Stock, in accordance with Section 2(j) of the Plan;
(ii) to select the officers and Employees to whom
Options may from time to time be granted hereunder;
(iii) to determine whether and to what extent
Options are granted hereunder;
(iv) to determine the number of shares of Common
Stock to be covered by each such award granted hereunder;
(v) to approve forms of agreement for use under
the Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder
(including, but not limited to, the share price and any restriction or
limitation, or any vesting acceleration or waiver of forfeiture restrictions
regarding any Option and/or the shares of Common Stock relating thereto, based
in each case on such factors as the Administrator shall determine, in its sole
discretion);
(vii) to determine whether and under what
circumstances an Option may be settled in cash under subsection 9(f) instead of
Common Stock;
(viii) to reduce the exercise price of any Option
to the then current Fair Market Value if the Fair Market Value of the Common
Stock covered by such Option shall have declined since the date the Option was
granted; and
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(c) Effect of Committee's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all optionees and any other holders of any options.
5. Eligibility.
(a) Options may be granted only to Employees. An
Employee who has been granted an Option may, if he is otherwise eligible, be
granted an additional Option or Options.
(b) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Incentive Stock Options
shall be taken into account in the order in which they were granted, and the
Fair Market Value of the Shares shall be determined as of the time the Option
with respect to such Shares is granted.
(d) The Plan shall not confer upon any Optionee any right
with respect to continuation of employment with the Company, nor shall it
interfere in any way with his right or the Company's right to terminate his
employment at any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company as described in Section 17 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 13 of the Plan.
7. Term of Option. The term of each Option shall be the term
stated in the Option Agreement; provided, however, that in the case of an
Incentive Stock Option, the term shall be no more than ten (10) years from the
date of grant thereof or such shorter term as may be provided in the Option
Agreement. However, in the case of an Option granted to an Optionee who, at the
time the Option is granted, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the Option Agreement.
8. Option Exercise Price and Consideration.
(a) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall be subject to the following:
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(i) In the case of an Incentive Stock Option
(A) granted to an Employee who,
at the time of the grant of such Incentive Stock Option, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee,
the per share exercise price shall be no less than 100% of the Fair Market Value
per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at
the time of the grant of such Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of the grant.
(B) granted to any person, the
per Share exercise price shall be no less than 85% of the Fair Market Value per
Share on the date of grant.
(b) The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant) and may consist entirely of cash,
check, or at the discretion of the Committee, by promissory note or such other
consideration and method of payment for the issuance of Shares to the extent
permitted under Applicable Laws.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Board, including performance criteria with
respect to the Company and/or the Optionee, and as shall be permissible under
the terms of the Plan.
An Option may not be exercised for a fraction of a
Share.
An Option shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Board, consist
of any consideration and method of payment allowable under Section 8(b) of the
Plan. Until the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
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notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(b) Termination of Employment. In the event of
termination of an Optionee's Continuous Status as an Employee with the Company,
such Optionee may, but only within ninety (90) days (or such other period of
time as is determined by the Board, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option and not
exceeding ninety (90) days) after the date of such termination (but in no event
later than the expiration date of the term of such option as set forth in the
Option Agreement), exercise his Option to the extent that Optionee was entitled
to exercise it at the date of such termination. The preceding sentence shall not
apply to Options that are substituted for options to acquire ordinary shares of
Synon Limited granted under the Synon Limited Employee Incentive Share Option
Plan ("Substituted Options"). Instead, an Optionee's Substituted Option shall,
subject to Sections 7, 9(c) and 9(d) herein, expire upon the termination of the
Optionee's Continuous Status as an Employee of the Company; provided, however,
that the Administrator may, in its sole discretion, by written notice given to
an ex-Employee, permit the ex-Employee to exercise Substituted Options during a
period following his or her termination of employment, which period shall not
extend beyond the expiration date contained in the Stock Option Agreement
evidencing such Substituted Option. To the extent that Optionee was not entitled
to exercise the Option (including a Substituted Option, as the case may be) at
the date of such termination, or if Optionee does not exercise such Option to
the extent so entitled within the time specified herein, the Option shall
terminate.
(c) Disability of Optionee. Notwithstanding the
provisions of Section 9(b) above, in the event of termination of an Optionee's
Continuous Status as an Employee as a result of his total and permanent
disability (as defined in Section 22(e)(3) of the Code), Optionee may, but only
within twelve (12) months from the date of such termination (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of termination, or if Optionee does
not exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate.
(d) Death of Optionee. In the event of the death of an
Optionee, the Option may be exercised, at any time within twelve (12) months
following the date of death (but in no event later than the expiration date of
the term of such Option as set forth in the Option Agreement), by the Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent the Optionee was entitled to exercise the
Option at the date of death. To the extent that Optionee was not entitled to
exercise the Option at the date of termination,
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or if Optionee does not exercise such Option to the extent so entitled within
the time specified herein, the Option shall terminate.
(e) Rule 16-3. Options granted to persons subject to
Section 16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain
such additional conditions or restrictions as may be required thereunder to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
(f) Buyout Provisions. The Administrator may at any time
offer to buy out for a payment in cash or Shares, an Option previously granted,
based on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
10. Non-Transferability of Options. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
11. Adjustments Upon Changes in Capitalization or Merger. Subject
to any required action by the stockholders of the Company, the number of shares
of Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, the Board shall notify the Optionee at least thirty (30) days prior to
such proposed action. To the extent it has not been previously exercised, the
Option will terminate immediately prior to the consummation of such proposed
action. In the event of a merger of the Company with or into another
corporation, the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation. In the event that such successor corporation does not
agree to assume the Option or to substitute an equivalent option, the Board
shall, in lieu of such assumption or substitution, provide for the Optionee to
have the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable. If the Board
makes an Option fully exercisable in lieu of assumption or substitution in
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the event of a merger, the Board shall notify the Optionee that the Option shall
be fully exercisable for a period of thirty (30) days from the date of such
notice, and the Option will terminate upon the expiration of such period.
12. Time of Granting Options. The date of grant of an Option shall,
for all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall be given to each Employee to whom an Option is so
granted within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made which would impair the rights of any
Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act or with Section 422A of the Code (or any other applicable law
or regulation, including the requirements of the NASD or an established stock
exchange), the Company shall obtain stockholder approval of any Plan amendment
in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such
amendment or termination of the Plan shall not affect Options already granted
and such Options shall remain in full force and effect as if this Plan had not
been amended or terminated, unless mutually agreed otherwise between the
Optionee and the Board, which agreement must be in writing and signed by the
Optionee and the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
15. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
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The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
16. Agreements. Options shall be evidenced by written agreements
in such form as the Board shall approve from time to time.
17. Stockholder Approval. Continuance of the Plan shall be
subject to approval by the stockholders of the Company within twelve (12) months
before or after the date the Plan is adopted. Such stockholder approval shall be
obtained in the degree and manner required under applicable state and federal
law.
18. Information to Optionees. The Company shall provide to each
Optionee, during the period for which such Optionee has one or more Options
outstanding, copies of all annual reports and other information which are
provided to all stockholders of the Company. The Company shall not be required
to provide such information if the issuance of Options under the Plan is limited
to key employees whose duties in connection with the Company assure their access
to equivalent information.
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SYNON CORPORATION
STOCK OPTION AGREEMENT
1. Grant of Option. Synon Corporation, a Delaware corporation (the
"Company"), hereby grants to the Optionee named in the Notice of Grant (the
"Optionee"), an option (the "Option") to purchase a total number of shares of
Common Stock (the "Shares") set forth in the Notice of Grant, at the exercise
price per share set forth in the Notice of Grant (the "Exercise Price") subject
to the terms, definitions and provisions of the Synon Corporation 1990 Stock
Option Plan (the "Plan") adopted by the Company, which is incorporated herein by
reference. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option.
If designated an Incentive Stock Option, this Option is
intended to qualify as an Incentive Stock Option as defined in Section 422A of
the Code.
2. Exercise of Option. This Option shall be exercisable during
its term in accordance with the Exercise Schedule set out in the Notice of Grant
and with the provisions of Section 9 of the Plan as follows:
(a) Right to Exercise.
(i) This Option may not be exercised for a
fraction of a share.
(ii) In the event of Optionee's death, disability
or other termination of employment, the exercisability of the Option is governed
by Sections 6, 7 and 8 below, subject to the limitation contained in subsection
2(i)(c).
(iii) In no event may this Option be exercised
after the date of expiration of the term of this Option as set forth in the
Notice of Grant.
(b) Method of Exercise. This Option shall be exercisable
by written notice (in the form attached as Exhibit A) which shall state the
election to exercise the Option, the number of Shares in respect of which the
Option is being exercised, and such other representations and agreements as to
the holder's investment intent with respect to such shares of Common Stock as
may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by the optionee and shall be delivered in person
or by certified mail to the Secretary of the Company. The written notice shall
be accompanied by payment of the Exercise Price. This Option shall be deemed to
be exercised upon receipt by the Company of Such written notice accompanied by
the Exercise Price.
No Shares will be issued pursuant to the exercise of an Option
unless such issuance and such exercise shall comply with all relevant provisions
of law and the requirements of any stock exchange upon which the Shares may then
be listed. Assuming such compliance, for income tax
<PAGE> 12
purposes the Shares shall be considered transferred to the Optionee on the date
on which the Option is exercised with respect to such Shares.
3. Optionee's Representations. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his Investment
Representation Statement in the form attached hereto as Exhibit B, and shall
read the applicable rules of the Commissioner of Corporations attached to such
Investment Representation Statement.
4. Method of Payment. Payment of the Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
i. cash; or
ii. check; or
iii. in the discretion of the Company, by delivery of a
promissory note (the "Note") of Optionee in the amount of the Exercise Price
together with the execution and delivery by the Optionee of the Security
Agreement attached hereto as Exhibit C. The Note shall be in the form attached
hereto as Exhibit D, shall contain the terms and be payable as set forth herein,
shall bear interest at a rate no less than the "applicable federal rate"
prescribed under the Code and its regulations at time of purchase, and shall be
secured by a pledge of the Shares purchased by the Note pursuant to the Security
Agreement.
5. Restrictions on Exercise. This Option may not be exercised
until such time as the Plan has been approved by the shareholders of the
Company, or if the issuance of such Shares upon such exercise or the method of
payment of consideration for such shares would constitute a violation of any
applicable federal or state securities or other law or regulation, including any
rule under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation
G") as promulgated by the Federal Reserve Board. As a condition to the exercise
of this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
6. Termination of Employment. In the event of termination of
Optionee's Continuous Status as an Employee, Optionee may, to the extent
otherwise so entitled at the date of such termination (the "Termination Date"),
exercise this Option during the Termination Period set out in the Notice of
Grant. To the extent that Optionee was not entitled to exercise this Option at
the date of such termination, or if Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.
7. Disability of Optionee. Notwithstanding the provisions of
Section 6 above, in the event of termination of Optionee's Continuous Status as
an Employee as a result of total and
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permanent disability (as defined in Section 22 (e)(3) of the Code), Optionee
may, but only within twelve (12) months from the date of termination of
employment (but in no event later than the date of expiration of the term of
this Option as set forth in Section 10 below), exercise the Option to the extent
otherwise so entitled at the date of such termination. To the extent that
Optionee was not entitled to exercise the Option at the date of termination, or
if Optionee does not exercise such option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate.
8. Death of Optionee. In the event of the death of Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the date of expiration of the term of this
Option as set forth in Section 10 below), by Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent the Optionee could exercise the Option at the date of death.
9. Non-Transferability of Option. This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by him.
The terms of this Option shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
10. Term of Option. This Option may be exercised only within the
term set out in the Notice of Grant, and may be exercised during such term only
in accordance with the Plan and the terms of this Option. The limitations set
out in Section 7 of the Plan regarding Options designated as Incentive Stock
Options and Options granted to more than ten percent (10%) shareholders shall
apply to this Option.
11. Tax Consequences. Set forth below is a brief summary as of
the date of this Option of some of the federal tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
(a) Exercise of ISO. If this Option qualifies as an ISO,
there will be no regular federal income tax liability upon the exercise of the
Option, although the excess, if any, of the fair market value of the Shares on
the date of exercise over the Exercise Price will be treated as an adjustment to
the alternative minimum tax for federal tax purposes and may subject the
Optionee to the alternative minimum tax in the year of exercise.
(b) Exercise of Nonqualified Stock Option. If this Option
does not qualify as an ISO, there may be a regular federal income tax liability
upon the exercise of the Option. The Optionee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the fair market value of the Shares on the date of exercise over the
Exercise Price. The Company will be required to withhold from Optionees
compensation or collect from Optionee and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income at the
time of exercise.
-3-
<PAGE> 14
(c) Disposition of Shares. In the case of an NSO, if
Shares are held for at least one year, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal income tax
purposes. In the case of an ISO, if Shares transferred pursuant to the Option
are held for at least one year after exercise and are disposed of at least two
years after the Date of Grant, any gain realized on disposition of the Shares
will also be treated as capital gain for federal income tax purposes. If Shares
purchased under an ISO are disposed of within such one-year period or within two
years after the Date of Grant, any gain realized on such disposition will be
treated as compensation income (taxable at ordinary income rates) to the extent
of the excess, if any, of the f air market value of the Shares on the date of
exercise (or, if lower, the amount realized on such disposition) over the
Exercise Price.
(d) Notice of Disqualifying Disposition of ISO Shares. If
the Option granted to Optionee herein is an ISO, and if Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to the ISO on or
before the later of (1) the date two years after the Date of Grant, or (2) the
date one year after transfer of such Shares to the Optionee upon exercise of the
ISO, the Optionee shall immediately notify the Company in writing of such
disposition. Optionee agrees that Optionee may be subject to income tax
withholding by the Company on the compensation income recognized
-4-
<PAGE> 15
by the Optionee from the early disposition by payment in cash or out of the
current earnings paid to the Optionee.
SYNON CORPORATION
a Delaware corporation
By: _________________________________
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE OPTION HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT AT THE WILL OF THE
COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS AGREEMENT NOR IN THE COMPANY'S STOCK OPTION PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF EMPLOYMENT BY THE COMPANY, NOR SHALL IT INTERFERE IN
ANY WAY WITH HIS RIGHT OR THE COMPANY'S RIGHT TO TERMINATE HIS EMPLOYMENT AT ANY
TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and certain
information related thereto and represents that he is familiar with the terms
and provisions thereof, and hereby accepts this Option subject to all of the
terms and provisions thereof. Optionee has reviewed the Plan and this Option in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option and fully understands all provisions of the Option.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board upon any questions arising under the Plan.
Dated: ______________ _____________________________________
Optionee
-5-
<PAGE> 1
EXHIBIT 10.3
SYNON CORPORATION
EXHIBITS
4.2 Rules of the Executive Share Option Scheme
<PAGE> 2
RULES OF
THE EXECUTIVE SHARE OPTION SCHEME
OF
SYNON CORPORATION
BAILEYS SHAW & GILLETT
17 QUEENS SQUARE
LONDON
WCIN 3RH
Tel No: 071 837 5455
<PAGE> 3
SYNON CORPORATION
Definitions
In these Rules, unless the context otherwise requires, the following
words and expressions shall have the following meanings:-
(a) "Act": the Income and Corporation Taxes Act 1988
(b) "Auditors": the Auditors of the Corporation for the time being
and from time to time.
(c) "Corporation": SYNON CORPORATION (otherwise than as provided
in Rule 6(J).
(d) "Date of Commencement": the date on which the scheme is
approved by the Corporation in general meeting.
(e) "Directors": the Board of Directors of the Corporation for the
time being and from time to time or a duly authorised committee thereof.
(f) "Executive": a full-time director of any member of the Group
who is required under the terms of his contract of employment to work for such
member or members of the Group for the whole or substantially the whole of his
working time and in any event for at least 25 hours per week in aggregate
(excluding meal breaks) or an employee of any member of the Group (other than
an employee who is a director of any member of the Group) who is required under
the terms of his contract of employment to work for a member or members of the
Group for the whole or substantially the whole of his working time and in any
event for at least 20 hours per week in aggregate (excluding meal breaks)
Provided that such director or employee is not at the date of offer of an
Option within two years of his normal retirement date or of such other date of
<PAGE> 4
retirement as may have been already determined and excluding any director or
employee who is precluded from participation by paragraph 8 of Schedule 9 to
the Act or who owns Ordinary Shares comprising more than ten per cent of the
total combined voting power of all classes of stock of the Corporation or any
corporation in the Group
(g) "Group": the Corporation and any corporation or corporations
for the time being under the control of the Corporation ("control" having the
meaning given to the expression in Section 840 of the Act).
(h) "Option": a right to subscribe for or acquire Ordinary Shares
pursuant to the Scheme.
(i) "Option Holder": an Executive to whom an Option has been
granted in accordance with the Scheme and in whom rights under the Scheme are
still vested or (where the context so requires) the legal personal
representatives of such a person.
(j) "Option Price": the price at which an Option Holder may
subscribe for or acquire an Ordinary Share as determined pursuant to Clause 4
hereof.
(k) "Ordinary Shares": shares of common stock of $0.001 par value
in the capital of the Corporation which satisfy the conditions of paragraphs 10
to 14 of Schedule 9 to the Act. "Ordinary Shareholder" shall be construed
accordingly.
(l) "Relevant Emoluments": such of the Executive's emoluments in
respect of his office or employment with the Group as are liable to be paid
under deduction of tax pursuant to Section 203 of the Act after deducting from
them amounts included by virtue of Chapter II Part V of the Act.
(m) "Relevant Limit": the Relevant Emoluments for the
<PAGE> 5
current or preceding Year of Assessment (whichever shall be the greater) or
where there were no Relevant Emoluments for the preceding Year of Assessment
the amount of the Relevant Emoluments for the period of twelve months beginning
with the first day during the current Year of Assessment in respect of which
there are Relevant Emoluments.
(n) "Redundancy": dismissal for redundancy within the meaning of
the Employment Protection (Consolidation) Act 1978.
(o) "Rules": the rules for the administration of the Scheme
contained herein or which are laid down by the Directors and which may be
amended by them in accordance with the provisions of Clause 9 hereof.
(p) "Scheme": the Executive Share Option Scheme set out herein.
(q) "Year of Assessment": the meaning ascribed to it by Section
832 of the Act.
(r) "Subsisting Option": an Option that has not lapsed, been
renounced or exercised.
Any reference to a statutory provision shall be deemed to include that
provision as the same may from time to time be amended or re-enacted, any
reference to a Corporation share option scheme includes that scheme as the same
may be varied from time to time in accordance with its terms, and wherever the
context so admits or requires the singular shall include the plural and vice
versa and the masculine shall include the feminine.
2. Commencement
The Scheme shall commence on the Date of Commencement.
3. Offer and Grant of Options
<PAGE> 6
(A) The Directors may, subject to the Rules, in their absolute
discretion offer Options to Executives.
(B) Options may be granted hereunder at any time following the
date that the Board of Inland Revenue approve the Scheme.
(C) Subject to the limitations hereinafter set out, Options may be
granted to such Executives in such amounts as the Directors shall in their
absolute discretion from time to time determine. No person shall be entitled
as of right to participate in the Scheme.
(D) If the Directors determine to offer participation in the
Scheme to an Executive they shall give him notice in writing of such offer
specifying the number of Ordinary Shares over which he may take up an Option
and the Option Price thereof. Any such offer shall be personal to the
Executive to whom it is made and shall remain open for acceptance for a period
of 25 days from the date it is made. An offer not accepted within such 25 day
period shall be deemed to have been declined and shall thereupon lapse. If
accepted within the due period the Option shall be granted on the last day of
such period.
(E) Acceptance of an offer of an Option by an Executive shall be
in such manner as the Directors may require and upon and by such acceptance the
Executive shall be bound by the Rules. An offer may be accepted in part. The
consideration payable by an Executive for the grant of an Option to him shall
be the sum of $1 payable upon acceptance (regardless of the number of Ordinary
Shares subject thereto) unless the option is granted under seal or as a Deed.
(F) An Option shall be personal to the Option Holder
<PAGE> 7
and accordingly, save in the specific situations described in the Rules where
the Option may be exercised by personal representatives, shall not be capable of
being transferred, assigned, charged or otherwise encumbered by the Option
Holder. Any breach of this provision shall entitle the Directors to cancel the
Option.
4. The Option Price
The Option Price shall be determined by the Directors but shall in no
event be less than the greater of:-
(a) the nominal value of an Ordinary Share; or
(b) a price equal to the market value (as the same is
defined in Section 187 of the Act) of an Ordinary
Share on the day prior to the day on which the offer
is made as determined by agreement between the
Corporation and the Shares Valuation Division of the
Board of Inland Revenue on or before that day
PROVIDED THAT if the Ordinary Shares have been
admitted to the Official List of The Stock Exchange
the price falling to be determined within this
paragraph (b) shall be a price equal to the average
of the middle market quotations for an Ordinary Share
on The Stock Exchange on the three dealing days
immediately prior to the day on which the offer is
made as derived from The Stock Exchange Daily
Official List and if the Ordinary Shares have been
admitted to the New York Stock Exchange the price
falling to be determined within this paragraph (b)
shall be the closing sales price of such Ordinary
Share (or the closing bid, if no sales were reported,
as quoted on such exchange) as
<PAGE> 8
reported in the Wall Street Journal on the day prior
to the date such Option is granted. The Option Price
shall be subject to variation pursuant to Rule 8.
5. Limitations of the Scheme
(A) No Executive shall obtain rights under the Scheme which will,
at the time they are obtained, cause the aggregate market value of the Ordinary
Shares which he may acquire in pursuance of rights obtained under the Scheme or
under any other share option or share incentive scheme approved under Schedule
9 to the Act (as amended from time to time), and any other executive share
option scheme established for any directors or employees of members of the
Group or any associated corporation of the Corporation (as the same is defined
in Section 416 of the Act) and whether exercised or not, to exceed four times
the Executive's Relevant Limit or Pound 100,000 which ever is the greater.
Provided that no account shall be taken of subscription or acquisition moneys
for shares comprised in such options granted more than ten years prior to the
date of the proposed grant of such Option, whether exercised or not.
(B) Subject to paragraph 5(C) below the total number of Ordinary
Shares over which Options may be granted at any date under the Scheme shall not
exceed five million (except to the extent that such options have lapsed or been
renounced).
(C) The total number of Ordinary Shares over which Options may be
granted under the Scheme at any date, when aggregated with the total number of
Ordinary Shares in respect of which rights of subscription have been granted in
the previous ten years under the Scheme and any other share
<PAGE> 9
option or share incentive scheme established for any directors or employees of
members of the Group (except to the extent to which they have lapsed or been
renounced or released), shall not exceed twenty per cent of the aggregate of
the issued Ordinary Shares and "A" Preferred Stock and Ordinary Shares already
put under option (and which have not lapsed or been renounced or been
exercised) from time to time.
(D) No Option may be granted under the Scheme more than ten years
after the Date of Commencement.
6. Exercise, Lapse and Renunciation of Options
(A) Subject to the following provisions of Rule 6(A) a subsisting
Option may only be exercised in whole or in part by an Option Holder during the
seven years following the expiration of a period of three years from the grant
thereof. Notwithstanding the foregoing but subject to Rule 6(B) below a
subsisting Option may nevertheless be exercised within such three year period
if:-
(i) the Option Holder ceases to be in the full time
employment of a member of the Group by reason of his injury,
disability, retirement, dismissal by reason of redundancy or
because the corporation employing him ceases to be a member of
the Group (unless the Option Holder is immediately employed by
another member of the Group), in any of which events the
Option Holder shall have the right to exercise the Option
during the period of three months from the date of such
cessation; or
(ii) the Option Holder dies whilst in the full time
employment of a member of the Group in which event his legal
personal representatives shall have the right to exercise the
Option during the period of six months from
<PAGE> 10
the date of his death; or
(iii) the Option Holder dies within three months of ceasing
to be in the full time employment of a member of the Group for
one of the reasons described in (A)(i) above, in which event
his legal personal representatives shall have the right to
exercise the Option during the period of six months from the
date of such cessation; or
(iv) a general offer is made to all the holders of
Ordinary Shares (or all such holders other than the offeror
and/or any person controlled by the offeror and/or any person
acting in association or concert with the offeror) and such
offer becomes or is declared unconditional in which event the
Option Holder may at any time within three months after the
date on which such offer is made exercise without restriction
all or any part of his Option; or
(v) notice of a meeting to consider a resolution for the
voluntary winding up of the Corporation is given, in which
event the Option Holder shall have the right to exercise the
Option at any time before the resolution is duly passed or
defeated or the meeting concluded or adjourned sine die.
(B) Notwithstanding the terms of Rule 6(A) above an
Option shall lapse automatically insofar as it is capable of exercise if it has
not been exercised by the earlier of:-
(i) the expiration of ten years from the date of grant
thereof;
(ii) the expiration of three months from the date on which
an Option Holder ceases to be in the full-time
<PAGE> 11
employment of a member of the Group for the reasons described
in (A)(i) or above;
(iii) the expiration of six months from the date of the
death of the Option Holder whilst in the full-time employment
of a member of the Group;
(iv) where the Option Holder dies within three months of
ceasing to be in the full-time employment of a member of the
Group for the reasons described in 6(A)(i) above, the
expiration of six months from the date of such cessation;
(v) the date on which an Option Holder is dismissed or
leaves the employment of a member of the Group for any reason
other than for those reasons or in the circumstances described
in 6(A)(i) or 6(A)(ii) above;
(vi) providing that a subsisting Option is not released
for a new Option pursuant to Rule 6 (F), three months after
the date of any offer in writing given to the holders of
Ordinary Shares pursuant to Rule 6A(iv);
(vii) the date of commencement of a winding up of the
Corporation;
(ix) the date the Option Holder is adjudicated bankrupt;
(x) upon cancellation of the Option by the Directors
pursuant to Clause 3(F) hereof.
(C) It shall be a condition of the Scheme that in the event of the
termination of an Option Holder's full time employment with a member of the
Group (for whatever reason) he shall not be entitled to any compensation
whatsoever by reason of any alteration or determination thereon of his rights
or expectations under the Scheme.
(D) An Option Holder may at any time renounce his
<PAGE> 12
Option by serving notice in writing on the Corporation of his intention to so
renounce. The renunciation shall be effective from the date of receipt of such
notice by the Corporation, upon which date the Option Holder's Option shall be
deemed to have lapsed.
(E) No Option may be exercised by an Option Holder at any time
when he is precluded by paragraph 8 of Schedule 9 to the Act from participating
in the Scheme.
(F) If any corporation (in this Rule 6(F) referred to as the
acquiring corporation) obtains control of the Corporation as a result of the
event specified in Rule 6(A)(iv) the Directors shall seek the agreement of the
acquiring corporation for Option Holders to release subsisting Options to the
acquiring Corporation in consideration of the acquiring Corporation granting
new Options which relate to shares in the acquiring Corporation or any other
corporation falling within Paragraph 10 of Schedule 9 to the Act. If such
agreement is obtained every Option Holder shall be entitled to release every
subsisting Option held by him in consideration of the grant of new Option which
satisfies the following conditions and providing that such transfer is within
the appropriate period a set out in Rule 6 (G):-
(i) is over shares in the acquiring corporation or a corporation
controlling the acquiring corporation which satisfy the
conditions specified in paragraphs 10 to 14 inclusive of
Schedule 9 to the Act (and the term "Ordinary Shares" in these
Rules shall thereafter be construed accordingly)
(ii) is a right to acquire such number of such common stock as has
on acquisition of the new Option an
<PAGE> 13
aggregate market value equal to the aggregate market value of
the Ordinary Shares subject to the old Option on its disposal
(iii) has an Option Price per Ordinary Share such that the aggregate
price payable on complete exercise of the Option equals the
aggregate price that would have been payable on complete
exercise of the old Option; and
(iv) is otherwise identical in terms to the old Option.
The new Option shall, for all other purposes of these Rules, be treated as
having been acquired at the same time as the old Option for which it is
released.
(G) The "appropriate period" referred to in Rule 6(F) above means
the period of three months beginning when the offeror has obtained control of
the Corporation and any conditions subject to which the offer is made are
satisfied.
(H) Rules 6(F) and 6(G) above apply to all Options granted on or
after the Date of Commencement.
(I) The exercise of an Option pursuant to the preceding provisions
of this Rule 6 shall be subject to the provisions of Rule 7 below.
(J) Following the release of subsisting Options and the grant of
new Options the term "Corporation shall for the purposes only of Rules 6(A)(v),
(vi), 6(B)(i) (vi) (vii) (viii), 6(D), 6(E), 6(F), 6(G), 7, 8, 9, 10, 11, and
13 mean in relation to the new Options, the corporation the share capital of
which includes shares over which new Options have been granted and for the
purposes of Rules 6(D) and 9(D) shall mean Synon Corporation and the acquiring
corporation and the term "Directors" in Rules 6, 7, 8, 9 (E), 10 and 11
<PAGE> 14
shall mean in relation to the new Options the Directors of such corporation.
(K) Where in accordance with Rule 6(F) subsisting Options are
released and new Options granted the new Options shall not be exercisable in
accordance with Rule 6(A) (iv) by virtue of the event on which new Options were
granted.
7. Manner of Exercise of Options
(A) An Option may be exercised in whole or part by the Option
Holder giving notice in writing to the Corporation stating that the Option is
thereby exercised and the number of Ordinary Shares in respect of which it is
exercised. With such notice the Option Holder shall forward to the Corporation
in a form acceptable to the Directors the consideration for the Ordinary Shares
in respect of which the Option is exercised calculated by reference to the
Option Price. An Option (or part thereof) shall be deemed to have been
exercised when the said notice together with the said consideration is received
by the Corporation. If the consideration is paid other than in cash, such
consideration shall be deemed to have been received by the Corporation upon the
bank of the Corporation confirming that such cash consideration has been
credited to the bank account of the Corporation or to such other account as the
Corporation shall direct. As soon as practicable and in any event within 30
days of receipt of the said notice and consideration the Corporation will send
or cause to be sent to the Option Holder or his legal personal representatives
(as the case may be) a definitive share certificate for the Ordinary Shares in
respect of which the Option is exercised.
(B) Any Ordinary Shares allotted on the exercise of an
<PAGE> 15
Option shall rank pari passu in all respects with the Ordinary Shares in issue
at the date of exercise of such Option and shall participate in all dividends
or other distributions which may be declared, made or paid by reference to a
record date after such date.
(C) Any partial exercise of an Option (other than such partial
exercise as completes the exercise of the said Option) shall be in respect of
ten Ordinary Shares or an integral multiple thereof.
8. Issue or Reorganisation
In the event of any capitalisation issue or rights issue or any
subdivision or consolidation of the Ordinary Shares or any reduction of the
Ordinary Share capital of the Corporation then the number of Ordinary Shares
comprised in any Option, the number of Ordinary Shares which may be issued or
made available pursuant to rights granted under the Scheme and the Option Price
thereof may be adjusted by the Directors (subject to obtaining prior Board of
Inland Revenue approval to such adjustment) in such manner and with effect from
such date as they may in their absolute discretion determine to be appropriate
Provided that the Auditors shall have confirmed in writing that in their
opinion such adjustments are fair and reasonable. Any such adjustments shall
be made on the basis that the total moneys originally payable by an Option
Holder on full exercise of his Option rights shall remain unchanged.
9. Administration and Amendment
(A) The Scheme shall in all respects be administered by the
Directors who may at any time and from time to time by resolution (and without
other formality) amend or augment the
<PAGE> 16
Scheme in any respect Provided that:-
(i) no amendment shall operate to affect adversely any rights
already acquired by an Option Holder under the Scheme;
(ii) no amendment may be made except by the Corporation in general
meeting to nullify or override any of the provisions of Clauses 1(f),
1(k), 1(1) 1(m) 3(A), 3(B), 3(D), 3(E), 3(F), 4, 5, 6, 7(B), 8 and
this Clause.
Notwithstanding anything to the contrary contained herein the
Directors may at any time amend the Scheme in any way to the extent necessary
either to secure the approval of the Scheme by the Board of Inland Revenue or
to ensure that such approval is not withdrawn pursuant to any statutory
modifications to the Act.
(B) No amendment or alteration to the Scheme made after it has
been approved under the provisions of Schedule 9 to the Act shall have effect
unless such amendment or alteration has been approved by the Board of Inland
Revenue.
(C) The Corporation shall bear the costs of setting up and
administering the Scheme.
(D) The Corporation shall maintain all necessary books of account
and records relating to the Scheme.
(E) The Directors shall be entitled to authorise any person to
execute on behalf of an Option Holder, at the request of the Option Holder, any
document relating to the Scheme insofar as such document is required to be
executed pursuant hereto.
10. Availability of Shares
Subject to the provisions of this Clause the Corporation shall have
available at all times sufficient authorised but
<PAGE> 17
unissued Ordinary Shares necessary to satisfy Options which have been granted
but not exercised.
On the exercise of an Option the Directors may satisfy the requirement
for Ordinary Shares by allotment of Ordinary Shares, by purchasing Ordinary
Shares or by such other means as they may determine.
11. Admission to the Official List
If at any time prior to exercise of a Subsisting Option the Ordinary
Share capital of the Corporation shall be admitted to the Official List of The
Stock Exchange or if such shares shall be listed for trading on the New York
Stock Exchange the Corporation shall within one month after the date of
exercise of an Option apply to the Council of either above referenced Stock
Exchanges for permission for the Ordinary Shares the subject of such exercise
to be admitted to the Official List or to the New York market as the case may
be.
12. Termination
The Directors may at any time resolve not to grant further Options
under the Scheme but the subsisting rights of Option Holders under the Scheme
shall remain in force.
13. Notices
(A) Option Holders shall be entitled while they have subsisting
rights under the Scheme to receive copies of all notices and other documents
sent by the Corporation to its Ordinary Shareholders.
(B) Any notice or other communication between the Corporation and
an Option Holder shall be given by sending the same by post or by personal
delivery to, in the case of the Corporation, its principal place of business in
the
<PAGE> 18
United Kingdom and in the case of the Option Holder, his address as notified to
the Corporation from time to time.
<PAGE> 19
Date _________________________
To:
SYNON CORPORATION ("the Corporation")
EXECUTIVE SHARE OPTION SCHEME
LETTER OF OFFER
The Directors of the Corporation hereby offer you an option ("the Option") to
subscribe for or a acquire up to { } shares of common stock in the Corporation
at a price of ${ } per share on the terms and conditions set out in the Rules
of the Synon Corporation Executive Share Option Scheme. This offer is personal
to you and may not be transferred, assigned or pledged to any other person. If
you wish to accept this offer of an Option you must send the Form of Acceptance
attached to this letter, duly signed and completed to:
The Company Secretary
Synon Corporation
{ADDRESS}
on behalf of the Corporation to reach him not later than the twenty fifth day
following the date of this letter. Subject to your completing and returning a
valid Form of
<PAGE> 20
Acceptance within the time specified above, you will, in due course, be sent an
Option certificate evidencing the principal terms of the Option (including the
Date of Grant of the Option).
The detailed terms governing the Option are set out in the Rules of the Scheme,
a copy of which is attached. The Rules are legally binding and are deemed to
be incorporated in this letter of offer.
If you leave the employment, or give notice of your intention to leave the
employment of the Corporation within the 25 day period mentioned above, this
offer will automatically lapse.
For and on behalf of
Synon Corporation
- -------------------------
Secretary
-2-
<PAGE> 21
SYNON CORPORATION
EXECUTIVE SHARE OPTION SCHEME
FORM OF ACCEPTANCE
TO: Synon Corporation ("the Corporation")
(address)
1. Pursuant to the letter of Offer from the Corporation to which this
Form of Acceptance is attached I hereby accept the offer of an Option
to subscribe for or acquire the number of shares of common stock in
the Corporation stated at A below at the subscription price per share
stated at B below.
2. I hereby acknowledge that an Option granted to me pursuant to the
Letter of Offer and this Form of Acceptance will be governed by the
Rules of the Scheme and I agree to be bound thereby.
3. I hereby declare that I am applying for an Option on my own behalf and
not as trustee or nominee for any other person(s).
<PAGE> 22
A Number of shares of common stock in the Corporation comprised in the
Option: { }
B Subscription price per share: ${ }
IN WITNESS whereof I have hereto executed this document as a deed this day
of 19{ }
SIGNED AS A DEED and DELIVERED by
the said { } in
the presence of
Witness
signature:
Witness
name:
Witness
address:
Witness
occupation:
-2-
<PAGE> 1
EXHIBIT 10.4
SYNON CORPORATION
1997 INCENTIVE STOCK PLAN
1. Purposes of the Plan. The purposes of this Plan are:
o to attract and retain the best available personnel for
positions of substantial responsibility,
o to provide additional incentive to Employees, Directors
and Consultants, and
o to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Synon Corporation, a Delaware corporation.
(h) "Consultant" means any person, including an advisor, engaged
by the Company or a Parent or Subsidiary to render services to such entity.
<PAGE> 2
(i) "Director" means a member of the Board.
(j) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
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<PAGE> 3
(o) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(p) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option or Stock
Purchase Right grant. The Notice of Grant is part of the Option Agreement.
(q) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(r) "Option" means a stock option granted pursuant to the Plan.
(s) "Option Agreement" means an agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(t) "Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.
(u) "Optioned Stock" means the Common Stock subject to an Option
or Stock Purchase Right.
(v) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(w) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(x) "Plan" means this 1997 Incentive Stock Plan.
(y) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan.
(z) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.
(aa) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(bb) "Section 16(b)" means Section 16(b) of the Exchange Act.
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<PAGE> 4
(cc) "Service Provider" means an Employee, Director or
Consultant.
(dd) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(ee) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "Subsidiary" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 1,500,000 Shares, plus an annual increase to be added on each
anniversary date of the adoption of the Plan equal to the lesser of (i) 400,000
Shares, (ii) 3% of the outstanding Shares on such date or (iii) a lesser
amount determined by the Board. The Shares may be authorized, but unissued, or
reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated); provided, however, that Shares that have actually been issued
under the Plan, whether upon exercise of an Option or Right, shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by the
Company at their original purchase price, such Shares shall become available for
future grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be
administered by different Committees with respect to different groups of Service
Providers.
(ii) Section 162(m). To the extent that the
Administrator determines it to be desirable to qualify Options granted hereunder
as "performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
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(iv) Other Administration. Other than as provided above, the Plan
shall be administered by (A) the Board or (B) a Committee, which committee shall
be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions
of the Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options
and Stock Purchase Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock
to be covered by each Option and Stock Purchase Right granted hereunder;
(iv) to approve forms of agreement for use under the
Plan;
(v) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Option or Stock Purchase Right
granted hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Options or Stock Purchase Rights may
be exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or Stock Purchase Right of the shares of Common
Stock relating thereto, based in each case on such factors as the Administrator,
in its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option or
Stock Purchase Right to the then current Fair Market Value if the Fair Market
Value of the Common Stock covered by such Option or Stock Purchase Right shall
have declined since the date the Option or Stock Purchase Right was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
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<PAGE> 6
(x) to modify or amend each Option or Stock Purchase
Right (subject to Section 15(c) of the Plan), including the discretionary
authority to extend the post-termination exercisability period of Options longer
than is otherwise provided for in the Plan;
(xi) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined. All elections by an
Optionee to have Shares withheld for this purpose shall be made in such form and
under such conditions as the Administrator may deem necessary or advisable;
(xii) to authorize any person to execute on behalf of
the Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;
(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase
Rights may be granted to Service Providers. Incentive Stock Options may be
granted only to Employees.
6. Limitations.
(a) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.
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<PAGE> 7
(c) The following limitations shall apply to grants of
Options:
(i) No Service Provider shall be granted, in any
fiscal year of the Company, Options to purchase more than 500,000 Shares.
(ii) In connection with his or her initial service, a
Service Provider may be granted Options to purchase up to an additional
500,000 Shares which shall not count against the limit set forth in subsection
(i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 13.
(iv) If an Option is cancelled in the same fiscal year
of the Company in which it was granted (other than in connection with a
transaction described in Section 13), the cancelled Option will be counted
against the limits set forth in subsections (i) and (ii) above. For this
purpose, if the exercise price of an Option is reduced, the transaction will be
treated as a cancellation of the Option and the grant of a new Option.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall
become effective upon its adoption by the Board. It shall continue in effect for
a term of ten (10) years unless terminated earlier under Section 15 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
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<PAGE> 8
(B) granted to any Employee other than an
Employee described in paragraph (A) immediately above, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option, the
per Share exercise price shall be determined by the Administrator. In the case
of a Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price of less than 100% of the Fair Market
Value per Share on the date of grant pursuant to a merger or other corporate
transaction.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;
(v) consideration received by the Company under a
cashless exercise program implemented by the Company in connection with the
Plan;
(vi) a reduction in the amount of any Company liability
to the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of
payment; or
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<PAGE> 9
(viii) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
(b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
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<PAGE> 10
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of
death. In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option
shall immediately revert to the Plan. The Option may be exercised by the
executor or administrator of the Optionee's estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee's will or the laws of descent
or distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically, by means of a Notice of Grant,
of the terms, conditions and restrictions related to the offer, including the
number of Shares that the offeree shall be entitled to purchase, the price to be
paid, and the time within which the offeree must accept such offer. The offer
shall be accepted by execution of a Restricted Stock Purchase Agreement in the
form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason
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<PAGE> 11
(including death or Disability). The purchase price for Shares repurchased
pursuant to the Restricted Stock Purchase Agreement shall be the original price
paid by the purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option shall lapse at a rate determined
by the Administrator.
(c) Other Provisions. The Restricted Stock Purchase
Agreement shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Administrator in its sole
discretion.
(d) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.
12. Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. Adjustments Upon Changes in Capitalization, Dissolution, Merger
or Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.
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<PAGE> 12
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse
as to all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not been
previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the Option or
Stock Purchase Right, the Optionee shall fully vest in and have the right to
exercise the Option or Stock Purchase Right as to all of the Optioned Stock,
including Shares as to which it would not otherwise be vested or exercisable. If
an Option or Stock Purchase Right becomes fully vested and exercisable in lieu
of assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option or Stock Purchase Right shall be fully vested and exercisable for a
period of thirty (30) days from the date of such notice, and the Option or Stock
Purchase Right shall terminate upon the expiration of such period. For the
purposes of this paragraph, the Option or Stock Purchase Right shall be
considered assumed if, following the merger or sale of assets, the option or
right confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.
14. Date of Grant. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the
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<PAGE> 13
determination shall be provided to each Optionee within a reasonable time after
the date of such grant.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
16. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of
an Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.
17. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
18. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
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19. Stockholder Approval. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted. Such stockholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
14
<PAGE> 15
1997 INCENTIVE STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number _____________________________
Date of Grant _____________________________
Vesting Commencement Date _____________________________
Exercise Price per Share $____________________________
Total Number of Shares Granted _____________________________
Total Exercise Price $____________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _________________________
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with
the following schedule:
[INSERT VESTING SCHEDULE]
<PAGE> 16
Termination Period:
This Option may be exercised for 90 days after Optionee ceases to be a
Service Provider. Upon the death or Disability of the Optionee, this Option may
be exercised for Twelve Months after Optionee ceases to be a Service Provider.
In no event shall this Option be exercised later than the Term/Expiration Date
as provided above.
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 15(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of
an exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to the [SECRETARY] of the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.
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<PAGE> 17
3. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash;
(b) check[;
(c) CONSIDERATION RECEIVED BY THE COMPANY UNDER A CASHLESS
EXERCISE PROGRAM IMPLEMENTED BY THE COMPANY IN CONNECTION WITH THE PLAN][; OR
(d) SURRENDER OF OTHER SHARES WHICH (I) IN THE CASE OF SHARES
ACQUIRED UPON EXERCISE OF AN OPTION, HAVE BEEN OWNED BY THE OPTIONEE FOR MORE
THAN SIX (6) MONTHS ON THE DATE OF SURRENDER, AND (II) HAVE A FAIR MARKET VALUE
ON THE DATE OF SURRENDER EQUAL TO THE AGGREGATE EXERCISE PRICE OF THE EXERCISED
SHARES][; OR
(e) WITH THE ADMINISTRATOR'S CONSENT, DELIVERY OF OPTIONEE'S
PROMISSORY NOTE (THE "NOTE") IN THE FORM ATTACHED HERETO AS EXHIBIT C, IN THE
AMOUNT OF THE AGGREGATE EXERCISE PRICE OF THE EXERCISED SHARES TOGETHER WITH THE
EXECUTION AND DELIVERY BY THE OPTIONEE OF THE SECURITY AGREEMENT ATTACHED HERETO
AS EXHIBIT B. THE NOTE SHALL BEAR INTEREST AT THE "APPLICABLE FEDERAL RATE"
PRESCRIBED UNDER THE CODE AND ITS REGULATIONS AT TIME OF PURCHASE, AND SHALL BE
SECURED BY A PLEDGE OF THE SHARES PURCHASED BY THE NOTE PURSUANT TO THE SECURITY
AGREEMENT].
4. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. Tax Consequences. Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) Exercising the Option.
(i) Nonstatutory Stock Option. The Optionee may incur
regular federal income tax liability upon exercise of a NSO. The Optionee will
be treated as having received
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<PAGE> 18
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the Exercised Shares on the date of exercise
over their aggregate Exercise Price. If the Optionee is an Employee or a former
Employee, the Company will be required to withhold from his or her compensation
or collect from Optionee and pay to the applicable taxing authorities an amount
in cash equal to a percentage of this compensation income at the time of
exercise, and may refuse to honor the exercise and refuse to deliver Shares if
such withholding amounts are not delivered at the time of exercise.
(ii) Incentive Stock Option. If this Option qualifies as
an ISO, the Optionee will have no regular federal income tax liability upon its
exercise, although the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price will be
treated as an adjustment to alternative minimum taxable income for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of
exercise. In the event that the Optionee ceases to be an Employee but remains a
Service Provider, any Incentive Stock Option of the Optionee that remains
unexercised shall cease to qualify as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at least
one year, any gain
realized on disposition of the Shares will be treated as long-term capital gain
for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least
one year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price. Any additional gain will be taxed
as capital gain, short-term or long-term depending on the period that the ISO
Shares were held.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
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<PAGE> 19
7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws, but not
the choice of law rules, of California.
8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: SYNON CORPORATION
- ----------------------------------- -------------------------------
Signature By
- ----------------------------------- --------------------------------
Print Name Title
- -----------------------------------
Residence Address
- -----------------------------------
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<PAGE> 20
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of the Plan and this Option Agreement. In consideration of
the Company's granting his or her spouse the right to purchase Shares as set
forth in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
---------------------------------------
Spouse of Optionee
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<PAGE> 21
EXHIBIT A
1997 INCENTIVE STOCK PLAN
EXERCISE NOTICE
Synon Corporation
[Address]
Attention: [SECRETARY]
1. Exercise of Option. Effective as of today, ________________, 199__,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Synon Corporation (the "Company") under
and pursuant to the 1997 Incentive Stock Plan (the "Plan") and the Stock Option
Agreement dated , 19___ (the "Option Agreement"). The purchase price for the
Shares shall be $ , as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Stockholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing
<PAGE> 22
signed by the Company and Purchaser. This agreement is governed by the internal
substantive laws, but not the choice of law rules, of California.
Submitted by: Accepted by:
PURCHASER: SYNON CORPORATION
- ---------------------------------- --------------------------------
Signature By
- ---------------------------------- --------------------------------
Print Name Its
Address: Address:
- ----------------------------------
- ----------------------------------
--------------------------------
Date Received
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<PAGE> 1
EXHIBIT 10.5
SYNON CORPORATION
1997 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1997 Employee Stock
Purchase Plan of Synon Corporation.
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Synon Corporation and any Designated
Subsidiary of the Company.
(e) "Compensation" shall mean all base straight time gross
earnings, but exclusive of payments for commission, overtime, shift premium,
incentive compensation, incentive payments, bonuses and other compensation.
(f) "Designated Subsidiary" shall mean any Subsidiary which
has been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of
the Company for tax purposes whose customary employment with the Company is at
least twenty (20) hours per week and more than five (5) months in any calendar
year. For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.
(h) "Enrollment Date" shall mean the first day of each
Offering Period.
<PAGE> 2
(i) "Exercise Date" shall mean the last day of each Purchase
Period.
(j) "Fair Market Value" shall mean, as of any date, the value
of Common Stock determined as follows:
(1) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the date of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable, or;
(2) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the last market trading day prior to the date of determination,
as reported in The Wall Street Journal or such other source as the Board deems
reliable, or;
(3) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board, or;
(4) For purposes of the Enrollment Date of the first
Offering Period under the Plan, the Fair Market Value shall be the initial price
to the public as set forth in the final prospectus included within the
registration statement in Form S-1 filed with the Securities and Exchange
Commission for the initial public offering of the Company's Common Stock (the
"Registration Statement").
(k) "Offering Periods" shall mean the periods of approximately
twelve (12) months during which an option granted pursuant to the Plan may be
exercised, commencing on the first Trading Day on or after May 1 and November 1
of each year and terminating on the last Trading Day in the periods ending
twelve (12) months later; provided, however, that the first Offering Period
under the Plan shall commence with the first Trading Day on or after the date
on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and ending on the last Trading Day on or
before October 31, 1997. The duration and timing of Offering Periods may be
changed pursuant to Section 4 of this Plan.
(l) "Plan" shall mean this 1997 Employee Stock Purchase Plan.
(m) "Purchase Price" shall mean an amount equal to 85% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
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<PAGE> 3
(n) "Purchase Period" shall mean the approximately six month
period commencing after one Exercise Date and ending with the next Exercise
Date, except that the first Purchase Period of any Offering Period shall
commence on the Enrollment Date and end with the next Exercise Date.
(o) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(p) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock
exchanges and the Nasdaq System are open for trading.
3. Eligibility.
(a) Any Employee who shall be employed by the Company on a
given Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) to
the extent that, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own capital stock of the Company and/or hold outstanding options
to purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) to the extent that his or her rights to
purchase stock under all employee stock purchase plans of the Company and its
subsidiaries accrues at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the fair market value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after May 1 and November 1 of each year, or on such other date
as the Board shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and ending on the last Trading Day on or before
October 31, 1997. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without stockholder approval if such change is announced at
least five (5) days prior to the scheduled beginning of the first Offering
Period to be affected thereafter.
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<PAGE> 4
5. Participation.
(a) An eligible Employee may become a participant in the Plan
by completing a subscription agreement authorizing payroll deductions in the
form of Exhibit A to this Plan and filing it with the Company's payroll office
prior to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding 10% of the Compensation
which he or she receives on each pay day during the Offering Period.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant may discontinue his or her participation in
the Plan as provided in Section 10 hereof, or may increase or decrease the rate
of his or her payroll deductions during the Offering Period by completing or
filing with the Company a new subscription agreement authorizing a change in
payroll deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to zero percent (0%) at any
time during a Purchase Period. Payroll deductions shall recommence at the rate
provided in such participant's subscription agreement at the beginning of the
first Purchase Period which is scheduled to end in the following calendar year,
unless terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part,
or at the time some or all of the Company's Common Stock issued under the Plan
is disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company
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<PAGE> 5
may, but shall not be obligated to, withhold from the participant's compensation
the amount necessary for the Company to meet applicable withholding obligations,
including any withholding required to make available to the Company any tax
deductions or benefits attributable to sale or early disposition of Common Stock
by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period,
each eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than
3,000 shares of the Company's Common Stock (subject to any adjustment pursuant
to Section 19) on the Enrollment Date, and provided further that such purchase
shall be subject to the limitations set forth in Sections 3(b) and 12 hereof.
Exercise of the option shall occur as provided in Section 8 hereof, unless the
participant has withdrawn pursuant to Section 10 hereof. The option shall expire
on the last day of the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares
shall be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.
10. Withdrawal.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's payroll
deductions credited to his or her account shall be paid to such participant
promptly after receipt of notice of withdrawal and such participant's option for
the Offering Period shall be automatically terminated, and no further payroll
deductions for the purchase of shares shall be made for such Offering Period. If
a participant withdraws from an Offering Period, payroll deductions shall not
resume at the
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<PAGE> 6
beginning of the succeeding Offering Period unless the participant delivers to
the Company a new subscription agreement.
(b) A participant's withdrawal from an Offering Period shall
not have any effect upon his or her eligibility to participate in any similar
plan which may hereafter be adopted by the Company or in succeeding Offering
Periods which commence after the termination of the Offering Period from which
the participant withdraws.
11. Termination of Employment.
Upon a participant's ceasing to be an Employee, for any
reason, he or she shall be deemed to have elected to withdraw from the Plan and
the payroll deductions credited to such participant's account during the
Offering Period but not yet used to exercise the option shall be returned to
such participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 15 hereof, and such participant's option shall be
automatically terminated. The preceding sentence notwithstanding, a participant
who receives payment in lieu of notice of termination of employment shall be
treated as continuing to be an Employee for the participant's customary number
of hours per week of employment during the period in which the participant is
subject to such payment in lieu of notice.
12. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
13. Stock.
(a) Subject to Section 19, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be 400,000 shares, plus an annual increase to be added on each
anniversary date of the adoption of the Plan equal to the lesser of (i) 150,000
shares, (ii) 1% of the outstanding shares on such date or (iii) a lesser
amount determined by the Board. If, on a given Exercise Date, the number of
shares with respect to which options are to be exercised exceeds the number of
shares then available under the Plan, the Company shall make a pro rata
allocation of the shares remaining available for purchase in as uniform a manner
as shall be practicable and as it shall determine to be equitable.
(b) The participant shall have no interest or voting right in
shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan
shall be registered in the name of the participant or in the name of the
participant and his or her spouse.
14. Administration. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made
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<PAGE> 7
by the Board or its committee shall, to the full extent permitted by law, be
final and binding upon all part ies.
15. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a participant
may file a written designation of a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
16. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
17. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
18. Reports. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
19. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.
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<PAGE> 8
(a) Changes in Capitalization. Subject to any required action
by the stockholders of the Company, the Reserves, the maximum number of shares
each participant may purchase each Purchase Period (pursuant to Section 7), as
well as the price per share and the number of shares of Common Stock covered by
each option under the Plan which has not yet been exercised shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration". Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the Exercise Date for
the participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.
(c) Merger or Asset Sale. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, each outstanding option shall be
assumed or an equivalent option substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the option, any
Purchase Periods then in progress shall be shortened by setting a new Exercise
Date (the "New Exercise Date") and any Offering Periods then in progress shall
end on the New Exercise Date. The New Exercise Date shall be before the date of
the Company's proposed sale or merger. The Board shall notify each participant
in writing, at least ten (10) business days prior to the New Exercise Date, that
the Exercise Date for the participant's option has been changed to the New
Exercise Date and that the participant's option shall be exercised automatically
on the New Exercise Date, unless prior to such date the participant has
withdrawn from the Offering Period as provided in Section 10 hereof.
20. Amendment or Termination.
(a) The Board of Directors of the Company may at any time and
for any reason terminate or amend the Plan. Except as provided in Section 19
hereof, no such termination can affect
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<PAGE> 9
options previously granted, provided that an Offering Period may be terminated
by the Board of Directors on any Exercise Date if the Board determines that the
termination of the Plan is in the best interests of the Company and its
stockholders. Except as provided in Section 19 hereof, no amendment may make any
change in any option theretofore granted which adversely affects the rights of
any participant. To the extent necessary to comply with Section 423 of the Code
(or any successor rule or provision or any other applicable law, regulation or
stock exchange rule), the Company shall obtain stockholder approval in such a
manner and to such a degree as required.
(b) Without stockholder consent and without regard to whether
any participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
21. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
23. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 20 hereof.
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<PAGE> 10
24. Automatic Transfer to Low Price Offering Period. To the extent
permitted by any applicable laws, regulations, or stock exchange rules if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period as of the first day thereof.
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<PAGE> 11
EXHIBIT A
SYNON CORPORATION
1997 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. ________________ hereby elects to participate in the Synon Corporation
1997 Employee Stock Purchase Plan (the "Employee Stock Purchase Plan")
and subscribes to purchase shares of the Company's Common Stock in
accordance with this Subscription Agreement and the Employee Stock
Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my Compensation on each payday (from 0 to 10%) during the
Offering Period in accordance with the Employee Stock Purchase Plan.
(Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my par ticipation in the Employee Stock Purchase Plan
is in all respects subject to the terms of the Plan. I understand that
my ability to exercise the option under this Subscription Agreement is
subject to stockholder approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and Spouse only):
_________________________________________________.
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after
the Exercise Date, I will be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares at
the time such shares were purchased by me over the price which I paid
for the shares. I hereby agree to notify the Company in writing within
30 days after
<PAGE> 12
the date of any disposition of my shares and I will make other tax
withholding obligations, if any, which arise upon the disposition of
the Common Stock. The Company may, but will not be obligated to,
withhold from my compensation the amount necessary to meet any
applicable withholding obligation including any withholding necessary
to make available to the Company any tax deductions or benefits
attributable to sale or early disposition of Common Stock by me. If I
dispose of such shares at any time after the expiration of the 2-year
and 1-year holding periods, I understand that I will be treated for
federal income tax purposes as having received income only at the time
of such disposition, and that such income will be taxed as ordinary
income only to the extent of an amount equal to the lesser of (1) the
excess of the fair market value of the shares at the time of such
disposition over the purchase price which I paid for the shares, or (2)
15% of the fair market value of the shares on the first day of the
Offering Period. The remainder of the gain, if any, recognized on such
disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print)___________________________________________________________
(First) (Middle) (Last)
_________________________________ _________________________________
Relationship
_________________________________
(Address)
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<PAGE> 13
Employee's Social
Security Number: _________________________________________
Employee's Address: _________________________________________
_________________________________________
_________________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:_________________________ ________________________________________
Signature of Employee
________________________________________
Spouse's Signature (If beneficiary other
than spouse)
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<PAGE> 14
EXHIBIT B
SYNON CORPORATION
1997 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Synon
Corporation 1997 Employee Stock Purchase Plan which began on ____________,
19____ (the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
Name and Address of Participant:
_________________________________
_________________________________
_________________________________
Signature:
_________________________________
Date:__________________________
<PAGE> 1
EXHIBIT 10.6
SYNON CORPORATION
1997 DIRECTOR OPTION PLAN
1. Purposes of the Plan. The purposes of this 1997 Director Option Plan
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.
All options granted hereunder shall be nonstatutory stock
options.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" means the common stock of the Company.
(d) "Company" means Synon Corporation, a Delaware corporation.
(e) "Director" means a member of the Board.
(f) "Employee" means any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a Director's fee by the Company shall not be sufficient in and of
itself to constitute "employment" by the Company.
(g) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(h) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the date of
<PAGE> 2
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable; or
(iii) In the absence of an established market for the
Common Stock, the Fair
Market Value thereof shall be determined in good faith by the Board.
(i) "Inside Director" means a Director who is an Employee.
(j) "Option" means a stock option granted pursuant to the
Plan.
(k) "Optioned Stock" means Shares subject to an Option.
(l) "Optionee" means a Director who holds an Option.
(m) "Outside Director" means a Director who is not an
Employee.
(n) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(o) "Plan" means this 1997 Director Option Plan.
(p) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(q) "Subsidiary" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Internal Revenue Code
of 1986.
3. Stock Subject to the Plan. Subject to the provisions of Section 10
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 175,000 Shares, plus an annual increase to be added on
each anniversary date of adoption of the Plan equal to (i) the Optioned Stock
underlying Options granted in the immediately preceding year, or (ii) a lesser
amount determined by the Board (collectively, the "Pool"). The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having
been exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.
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<PAGE> 3
4. Administration and Grants of Options under the Plan.
(a) Procedure for Grants. All grants of Options to Outside
Directors under this Plan shall be automatic and nondiscretionary and shall be
made strictly in accordance with the following provisions:
(i) No person shall have any discretion to select
which Outside Directors shall be granted Options or to determine the number of
Shares to be covered by Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically
granted an Option to purchase [_____] Shares (the "First Option") on the date on
which the later of the following events occurs: (A) the effective date of this
Plan, as determined in accordance with Section 6 hereof, or (B) the date on
which such person first becomes an Outside Director, whether through election by
the stockholders of the Company or appointment by the Board to fill a vacancy;
provided, however, that an Inside Director who ceases to be an Inside Director
but who remains a Director shall not receive a First Option.
(iii) Each Outside Director shall be automatically
granted an Option to Purchase 5,000 shares (a "Subsequent Option") at the first
meeting of the Board of Directors following the annual meeting of stockholders
in each year beginning with the 1997 Annual Meeting of Stockholders, provided he
or she is then an outside director and if as of such date, he or she shall have
served on the Board for at least the preceding six (6) months.
(iv) Notwithstanding the provisions of subsections
(ii) and (iii) hereof, any exercise of an Option granted before the Company
has obtained stockholder approval of the Plan in accordance with Section 16
hereof shall be conditioned upon obtaining such stockholder approval of the Plan
in accordance with Section 16 hereof.
(v) The terms of a First Option granted hereunder
shall be as follows:
(A) the term of the First Option shall be
ten (10) years.
(B) the First Option shall be exercisable
only while the Outside Director remains a Director of the Company, except as set
forth in Sections 8 and 10 hereof.
(C) the exercise price per Share shall be
100% of the Fair Market Value per Share on the date of grant of the First
Option. In the event that the date of grant of the First Option is not a trading
day, the exercise price per Share shall be the Fair Market Value on the next
trading day immediately following the date of grant of the First Option.
(D) Subject to Section 10 hereof, the first
option shall become exercisable as to 25% percent of the shares subject to the
first option on the first anniversary
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<PAGE> 4
of its date of grant, and 1/48th of the shares subject to option shall vest each
month thereafter, provided that the optionee continues to serve as a director
on such dates.
(vi) The terms of a subsequent option granted
hereunder shall be as follows:
(A) The term of the subsequent option shall
be ten (10) years.
(B) The subsequent option shall be
exercisable only while the outside director remains a director of the Company,
except as set forth in Sections 8 and 10 hereof.
(C) The exercise price per share shall be
100% of the fair market value per share on the date of grant of the subsequent
option. in the event that the date of grant of the subsequent option is not a
trading day, the exercise price per share shall be the fair market value on the
next trading day immediately following the date of grant of the subsequent
option.
(D) Subject to Section 10 hereof, the
subsequent option shall become exercisable as to 25 percent of the shares
subject to the subsequent option on the first anniversary of its date of grant,
and 1/48th of the shares subject to option shall vest each month thereafter,
provided that the optionee continues to serve as a director on such dates.
(vii) In the event that any Option granted under the
Plan would cause the number of Shares subject to outstanding Options plus the
number of Shares previously purchased under Options to exceed the Pool, then the
remaining Shares available for Option grant shall be granted under Options to
the Outside Directors on a pro rata basis. No further grants shall be made until
such time, if any, as additional Shares become available for grant under the
Plan through action of the Board or the stockholders to increase the number of
Shares which may be issued under the Plan or through cancellation or expiration
of Options previously granted hereunder.
5. Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.
The Plan shall not confer upon any Optionee any right with respect
to continuation of service as a Director or nomination to serve as a Director,
nor shall it interfere in any way with any rights which the Director or the
Company may have to terminate the Director's relationship with the Company at
any time.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company as described in Section 16
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<PAGE> 5
of the Plan. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 11 of the Plan.
7. Form of Consideration. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (iv) consideration received
by the Company under a cashless exercise program implemented by the Company in
connection with the Plan, or (v) any combination of the foregoing methods of
payment.
8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any
Option granted hereunder shall be exercisable at such times as are set forth in
Section 4 hereof; provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 10 of
the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Continuous Status as a Director. Subject to
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or total and permanent disability (as
defined in Section 22(e)(3) of the Code)), the Optionee may exercise his or her
Option, but only within three (3) months following the date of such termination,
and only to the extent that the Optionee was entitled to exercise it on the date
of such termination
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<PAGE> 6
(but in no event later than the expiration of its ten (10) year term). To the
extent that the Optionee was not entitled to exercise an Option on the date of
such termination, and to the extent that the Optionee does not exercise such
Option (to the extent otherwise so entitled) within the time specified herein,
the Option shall terminate.
(c) Disability of Optionee. In the event Optionee's status as
a Director terminates as a result of total and permanent disability (as defined
in Section 22(e)(3) of the Code), the Optionee may exercise his or her Option,
but only within twelve (12) months following the date of such ter mination, and
only to the extent that the Optionee was entitled to exercise it on the date of
such termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on
the date of termination, or if he or she does not exercise such Option (to the
extent otherwise so entitled) within the time specified herein, the Option shall
terminate.
(d) Death of Optionee. In the event of an Optionee's death,
the Optionee's estate or a person who acquired the right to exercise the Option
by bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.
9. Non-Transferability of Options. Unless determined otherwise by the
Board, an Option may not be sold, pledged, assigned, hypothecated, transferred,
or disposed of in any manner other than by will or by the laws of descent or
distribution and may be exercised, during the lifetime of the Optionee, only by
the Optionee. If the Board makes an Option transferable, such Option shall
contain additional terms and conditions as the Board deems appropriate.
10. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the stockholders of the Company, the number of Shares covered by each
outstanding Option, the number of Shares which have been authorized for issuance
under the Plan but as to which no Options have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option, as well
as the price per Share covered by each such outstanding Option, and the number
of Shares issuable pursuant to the automatic grant provisions of Section 4
hereof shall be proportionately adjusted for any increase or decrease in the
number of issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into
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<PAGE> 7
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of Shares subject to an
Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation or the sale of substantially all of the
assets of the Company, outstanding Options may be assumed or equivalent options
may be substituted by the successor corporation or a Parent or Subsidiary
thereof (the "Successor Corporation"). If an Option is assumed or substituted
for, the Option or equivalent option shall continue to be exercisable as
provided in Section 4 hereof for so long as the Optionee serves as a Director or
a director of the Successor Corporation. Following such assumption or
substitution, if the Optionee's status as a Director or director of the
Successor Corporation, as applicable, is terminated other than upon a voluntary
resignation by the Optionee, the Option or option shall become fully
exercisable, including as to Shares for which it would not otherwise be
exercisable. Thereafter, the Option or option shall remain exercisable in
accordance with Sections 8(b) through (d) above.
If the Successor Corporation does not assume an outstanding Option or
substitute for it an equivalent option, the Option shall become fully vested and
exercisable, including as to Shares for which it would not otherwise be
exercisable. In such event the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice, and upon the expiration of such period the Option shall terminate.
For the purposes of this Section 10(c), an Option shall be considered
assumed if, following the merger or sale of assets, the Option confers the right
to purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares).
If such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without
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<PAGE> 8
his or her consent. In addition, to the extent necessary and desirable to comply
with any applicable law, regulation or stock exchange rule, the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4 hereof.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated there
under, state securities laws, and the requirements of any stock exchange upon
which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
14. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
16. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company at or prior to the first annual
meeting of stockholders held subsequent to the granting of an Option hereunder.
Such stockholder approval shall be obtained in the degree and manner required
under applicable state and federal law and any stock exchange rules.
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EXHIBIT 10.9
SYNON CORPORATION
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
JULY 16, 1991
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TABLE OF CONTENTS
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SECTION 1 Authorization, Sale and Conversion of Preferred Stock 1
1.1 Authorization 1
1.2 Sale of Series D Preferred Stock 1
1.3 Conversion of Preferred Stock 1
1.4 Waiver of Interest 1
SECTION 2 Closing Date; Delivery 2
2.1 Closing Date 2
2.2 Subsequent Closings 2
2.3 Delivery 2
SECTION 3 Representations and Warranties of the Company 2
3.1 Organization and Standing; Certificate of Incorporation and
Bylaws; Minutes 2
3.2 Corporate Power 3
3.3 Subsidiaries . 3
3.4 Authorization . 4
3.5 Governmental Consent, etc 4
3.6 Capitalization 5
3.7 Registration Rights 6
3.8 Stockholder Agreements 6
3.9 Financial Statements 6
3.10 No Material Liabilities 7
3.11 Absence of Changes 7
3.12 Title to Properties and Assets; Liens, etc 8
3.13 Material Contracts and Commitments 8
3.14 Insurance 9
3.15 Patents, Trademarks, etc 9
3.16 Compliance with Other Instruments, None Burdensom, etc 10
3.17 Litigation, etc. 10
3.18 Employees 11
3.19 Employee Agreements 11
3.20 Employee Compensation Plans 11
3.21 Certain Transactions 11
3.22 Tax Returns, Payments and Elections 12
3.23 FIRPTA 12
3.4 Offering 12
3.25 Brokers or Finders; Other Offers 12
</TABLE>
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TABLE OF CONTENTS
(continued)
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SECTION 4 Representations and Warranties of the Investors 13
4.1 Investment Representations and Covenants of the
Investors 13
4.2 No Public Market 14
4.3 Receipt of Information 14
4.4 Authorization 15
4.5 Brokers or Finders 15
4.6 Tax Advisors 15
SECTION 5 Conditions to Closing of the Investors 15
5.1 Representations and Warranties Correct 15
5.2 Covenants 15
5.3 Compliance Certificate 16
5.4 Legal Opinion 16
5.5 Blue Sky 16
5.6 Amended and Restated Certificate of Incorporation . 16
5.7 Legal Matters 16
5.8 Amendment No. 1 to Stockholders' Agreement 16
SECTION 6 Conditions to Closing of Company 16
6.1 Representations 16
6.2 Blue Sky 16
6.3 Amended and Restated Certificate of Incorporation 17
6.4 Legal Matters 17
6.5 Board and Stockholder Approval 17
6.6 Amendment No. 1 to Stockholders' Agreement 17
SECTION 7 Affirmative Covenants of the Company and the Investors 17
7.1 Financial Information 17
7.2 Assignment of Rights to Financial Information 18
7.3 Confidentiality of Information 18
7.4 Right to Exchange 18
7.5 Termination of Covenants 19
SECTION 8 Miscellaneous 19
8.1 Governing Law 19
8.2 Survival 19
8.3 Successors and Assigns 19
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TABLE OF CONTENTS
(continued)
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8.4 Entire Agreement; Amendment 19
8.5 Notices, etc 20
8.6 Delays or Omissions 20
8.7 California Corporate Securities Law 21
8.8 Expenses 21
8.9 Counterparts 21
8.10 Severability 21
EXHIBITS
A. Schedule of Investors
B. Amended and Restated Certificate of Incorporation
C. Amendment No. 1 to Stockholders' Agreement
D. Schedule of Exceptions
E. Compliance Certificate
F. Legal Opinion
</TABLE>
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<PAGE> 5
SYNON CORPORATION
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of July 16, 1991 by and among Synon
Corporation, a Delaware corporation (the "Company"), with its principal office
at 1100 Larkspur Landing Circle, Larkspur California 94939, and each of the
persons listed on the Schedule of Investors attached hereto as Exhibit A (the
"Investors").
SECTION 1
AUTHORIZATION, SALE AND CONVERSION OF PREFERRED STOCK
l.l AUTHORIZATION. The Company has authorized the issuance of up to
3,618,269 shares of its Series D Preferred Stock (the "Series D Preferred"),
having the rights, privileges and preferences as set forth in the Amended and
Restated Certificate of Incorporation (the "Certificate") in substantially the
form attached to this Agreement as Exhibit B.
1.2 SALE OF SERIES D PREFERRED STOCK. Subject to the terms and
conditions hereof, the Company will severally issue and sell to the Investors up
to 3,134,329 shares of Series D Preferred (the "Sale Shares") and the Investors
will severally purchase from the Company, at the Closing (as defined below), the
respective number of shares of Series D Preferred indicated on the Schedule of
Investors at a purchase price of $3.35 per share, for the aggregate purchase
price for each Investor as indicated thereon.
1.3 CONVERSION OF PREFERRED STOCK. In connection with the sale of the
Series D Preferred, the Company will also convert 1,000,000 shares of Series B
Preferred Stock currently held by General Atlantic Partners II, L.P. ("GA"), one
of the Investors, into 483,940 shares of the Company's Series D Preferred Stock
and 1,800,000 shares of Series C Preferred Stock currently held by GA into
343,158 shares of the Company's Series A Preferred Stock (the "Conversion").
(The shares of Series D Preferred Stock and Series A Preferred Stock to be
issued pursuant to the Conversion are referred to herein as the "Conversion
Shares"). The Conversion will be effected pursuant to and effective upon the
filing of the Certificate with the Delaware Secretary of State.
1.4 WAIVER OF INTEREST.
By execution of this Agreement, GA hereby agrees to forgive any and all
accrued but unpaid dividends and interest on the Series B Preferred Stock held
by GA.
<PAGE> 6
<PAGE> 7
SECTION 2
CLOSING DATE; DELIVERY
2.l CLOSING DATE. The initial closing of the sale and purchase of Sale
Shares hereunder shall be held at the principal office of the Company at 2:00
p.m., local time, on July 16, 1991 (the "First Closing") or at such other time
and place upon which the Company and the Investors shall agree. (The date of the
First Closing is hereinafter referred to as the "First Closing Date".)
2.2 SUBSEQUENT CLOSINGS.
The closing of the sale and purchase of additional Sale Shares
hereunder may take place at one or more additional closings subsequent to the
First Closing (the "Subsequent Closing") which shall be held at such time(s) and
place(s) as the Company may specify, except that no Subsequent closing may occur
after September 30, 1991. At each Subsequent Closing, the Schedule of Investors
attached hereto as Exhibit A shall be amended to list the Investors purchasing
Sale Shares at such Subsequent Closing. The number of Sale Shares issued at the
First Closing and at all Subsequent Closings shall not exceed in the aggregate
3,134,329 shares of Series D Preferred Stock. The First Closing and any
Subsequent Closings shall be referred to herein as the "Closings." The First
Closing Date and the date of any Subsequent Closings shall be referred to herein
as "Closing Dates."
2.3 DELIVERY.
At the Closing, the Company will deliver to each Investor an executed
counterpart of this Agreement, together with a certificate, registered in such
Investor's name, representing the number of Sale Shares to be issued on the
Closing Date as set forth beside such Investor's name on the Schedule of
Investors, against delivery of an executed counterpart of this Agreement,
together with payment of the purchase price for the Sale Shares by check payable
to the Company or wire transfer per the Company's instructions.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on Exhibit D attached hereto, which exceptions
shall be deemed representations and warranties hereunder, the Company hereby
represents and warrants to the Investors as follows:
3.l ORGANIZATION AND STANDING; CERTIFICATE OF INCORPORATION AND
BYLAWS; MINUTES.
<PAGE> 8
(a) The Company is a corporation duly organized and existing
under, and by virtue of, the laws of the State of Delaware and is in good
standing under such laws. The Company has requisite corporate power and
authority to own and operate its properties and assets, and to carry on its
business as presently conducted. The Company is duly qualified to do business as
a foreign corporation in each jurisdiction in which the ownership or leasing of
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified would not have a material adverse effect on
the Company's business as now conducted.
(b) The Company has furnished Paul, Weiss, Rifkind, Wharton &
Garrison, special counsel to the Investors ("Special Counsel"), with copies of
its Certificate of Incorporation and Bylaws, as amended. Said copies are true,
correct and complete and contain all amendments through the First Closing Date.
(c) The minute books of the Company relating to all
proceedings of its stockholders and the Board of Directors made available to the
Special Counsel are true, correct and complete copies of the minute books of the
Company. The minute books of the Company provided to Special Counsel contain
minutes and actions by written consent of all meetings and actions of directors
and stockholders since the Company's incorporation and the minutes and actions
by written consent reflect all transactions referred to accurately in all
material respects.
3.2 CORPORATE POWER.
The Company will have at the Closing Date all requisite legal and
corporate power and authority to execute and deliver this Agreement, to amend
the Stockholders Agreement dated December 5, 1990 among the Company, the
Investors and certain other parties (the "Stockholders' Agreement") by Amendment
No. 1 to Stockholders' Agreement ("Amendment No. 1") in substantially the form
attached hereto as Exhibit C, to effect the Conversion, to sell and issue the
Sale Shares hereunder, to issue the Conversion Shares (the Sale Shares and the
Conversion Shares collectively referred to herein as the "Shares"), to issue the
Common Stock issuable upon conversion of the Shares and to carry out and perform
its obligations under the terms of this Agreement.
3.3 SUBSIDIARIES.
The Company has the following subsidiaries: Synon Europe, Ltd., a
Delaware corporation, Synon Limited, a corporation incorporated under the laws
of the United Kingdom, Synon, Inc., an Illinois corporation, Synon Consulting,
Inc., an Illinois corporation, Synon Pty Ltd., an Australian corporation, Synon
Canada Ltd., a Canadian corporation, and Synon France S.A.R.L., a French
corporation. The Company's subsidiaries are duly organized and existing under,
and by virtue of, the laws of their respective places of incorporation or
organization and
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<PAGE> 9
each is in good standing under the laws of its place of incorporation or
organization. Each of the Company's subsidiaries has the requisite corporate
power and authority to own and operate its properties and assets, and to carry
on its business as presently conducted. The Company has no other subsidiaries or
affiliated companies and does not otherwise own or control, directly or
indirectly, any equity interest in any corporation, association or business
entity.
3.4 AUTHORIZATION.
All corporate action on the part of the Company, its directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Agreement and Amendment No. 1 by the Company, the
authorization and effectuation of the Conversion, the authorization, sale (in
the case of the Sale Shares), exchange (in the case of the Conversion Shares),
issuance and delivery of the Shares (and the Common Stock issuable upon
conversion of the Shares), and the performance of all of the Company's
obligations hereunder has been taken or will be taken prior to the Closing. This
Agreement, when executed and delivered by the Company, shall constitute a valid
and binding obligation of the Company, enforceable in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies. The Sale Shares, when issued in
compliance with the provisions of this Agreement, will be validly issued, fully
paid and nonassessable, and will have the rights, preferences and privileges
described in the Certificate. The Conversion Shares have been duly and validly
reserved and, when issued pursuant to the filing of the Certificate with the
Delaware Secretary of State, will be validly issued, fully paid and
nonassessable, The Common Stock issuable upon conversion of the Shares has been
duly and validly reserved and, when issued in compliance with the provisions of
this Agreement and the Certificate, will be validly issued, fully paid and
nonassessable; and, the Shares and the Common Stock issuable upon the conversion
of the Shares will be free of any liens or encumbrances, other than any liens or
encumbrances created by or imposed upon the holders through no action of the
Company; provided, however, that the Shares (and the Common Stock issuable upon
conversion thereof) may be subject to restrictions on transfer under state
and/or federal securities laws as set forth herein. Except as set forth herein
or in the Certificate or Bylaws, the Shares are not subject to any preemptive
rights or rights of first refusal.
3.5 GOVERNMENTAL CONSENT, ETC.
No consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of the Company is required in
connection with the valid execution and delivery of this Agreement, the
effectuation of the Conversion, the offer, sale (in the case of
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<PAGE> 10
the Sale Shares), exchange (in the case of the Conversion Shares) or issuance of
the Shares (and the Common Stock issuable upon conversion of the Shares) or the
consummation of any other transaction contemplated hereby, except (a) the filing
of the Certificate with the Delaware Secretary of State and (b) qualification
(or taking such action as may be necessary to secure an exemption from
qualification, if available) of the offer and sale (in the case of the Sale
Shares) and exchange (in the case of the Conversion Shares) of the Shares (and
the Common Stock issuable upon conversion of the Shares) under applicable Blue
Sky laws, which filings and qualifications, if required, will be accomplished in
a timely manner.
3.6 CAPITALIZATION
(a) The authorized capital stock of the Company consists or,
upon the filing of the Certificate, will consist of 25,000,000 shares of Common
Stock, par value $.001 per share, 6,519,684 of which are issued and outstanding
as of the First Closing Date, and 10,000,000 shares of Preferred Stock with par
value, $.001 per share (the "Preferred"), 2,554,620 of which are designated
Series A Preferred Stock (the "Series A Preferred") and 3,618,269 of which are
designated Series D Preferred Stock (the, "Series D Preferred"). Of the
2,554,620 authorized shares of Series A Preferred, 343,158 shares were issued
upon the filing of the Certificate with the Delaware Secretary of State in
exchange for the cancellation of 1,800,000 shares of Series C Preferred Stock of
the Company, and all of the shares are issued and outstanding as of the First
Closing Date. Of the 3,618,269 authorized shares of Series D Preferred, 483,940
shares were issued upon the filing of the Certificate with the Delaware
Secretary of State in exchange for the cancellation of 1,000,000 shares of
Series B Preferred Stock, and 483,940 shares are issued and outstanding As of
the First Closing Date. No other series of Preferred Stock has been designated.
(b) The outstanding shares have been duly authorized and
validly issued, and are fully paid and nonassessable.
(c) The Company has reserved (i) 3,134,329 shares of Series D
Preferred for issuance hereunder, (ii) 2,554,620 shares of Common Stock for
issuance upon conversion of the Series A Preferred, (iii) 3,618,269 shares of
Common Stock for issuance upon conversion of the Series D Preferred, (iv)
5,000,000 shares of Common Stock for issuance to officers, directors and
employees of the Company upon exercise of options granted under the Company's
1990 Stock Option Plan (the "US Option Shares") (of which stock options to
purchase 811,420 have been granted and are currently outstanding, and an
additional 4,188,580 remain available for future grant),(v) 5,000,000 shares of
Common Stock for issuance to
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<PAGE> 11
officers, directors and employees of the Company upon exercise of options
granted under the Company's Executive Shares Option Scheme (the "UK Option
Shares") (of which stock options to purchase 103,100 have been granted and are
currently outstanding, and an additional 4,896,900 remain available for future
grant), and (vi) 325,215 shares of Common Stock for issuance to Simon Haigh
pursuant to an outstanding nonstatutory stock option.
(d) The Series D Preferred shall have the rights, preferences,
privileges and restrictions set forth in the Certificate.
(e) Except as contemplated herein or in the Certificate or
Bylaws, there are no options, warrants, conversion privileges, preemptive rights
or rights of first refusal or other rights presently outstanding to purchase or
otherwise acquire any authorized but unissued shares of the capital stock or
other securities of the Company, nor any agreements or understandings with
respect thereto.
3.7 REGISTRATION RIGHTS.
Except as provided in the Stockholders' Agreement as amended on even
date herewith by Amendment No. 1, the Company is not obligated to register under
the Securities Act of 1933, as amended (the "Securities Act"), any of its
presently outstanding securities or any of its securities that may subsequently
be issued.
3.8 STOCKHOLDER AGREEMENTS.
There are no agreements or arrangements between the Company and any of
the Company's stockholders, or to the knowledge of the Company, among any of the
Company's stockholders, which grant registration, voting or other special rights
with respect to any shares of the Company's capital stock, except as
contemplated herein and in the Stockholders' Agreement, as amended on even date
herewith by Amendment No. 1.
3.9 FINANCIAL STATEMENTS.
The Company has delivered to each Investor the Company's audited
financial statements, including a balance sheet as of December 31, 1990 and an
income statement for the period ended December 31, 1990 (the "December Financial
Statements") which are complete and correct in all material respects and were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis for the period indicated.
The Company has delivered to each Investor the Company's unaudited
financial statements, including a balance sheet as of March 31, 1991 and an
income statement for the period ended March 31, 1991 (together with the December
Financial Statements, the "Financial Statements") which are complete and correct
in all material respects and were prepared in accordance with generally
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<PAGE> 12
accepted accounting principles applied on a consistent basis for the period
indicated, subject to year-end adjustments and the omission of footnotes.
The Financial Statements accurately set out and describe the financial
condition and operating results of the Company as of the respective dates and
for the respective periods indicated. The Company maintains and will continue to
maintain a standard system of accounting established and administered in
accordance with generally accepted accounting principles.
3.10 NO MATERIAL LIABILITIES.
The Company has no material liabilities or obligations, other than: (a)
liabilities and obligations disclosed in the Financial Statements; (b)
liabilities incurred in the ordinary course of business; (c) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in the
financial statements; (d) leases for operating headquarters and branches of the
Company; and (e) any other obligations which are not in any case material to the
financial condition or operating results of the Company.
3.11 ABSENCE OF CHANGES.
Since December 31, 1990:
(a) there has not been any change in the assets, liabilities,
financial condition or operations of the Company from that reflected in the
December Financial Statements, except changes in the ordinary course of business
which have not been, either in any case or in the aggregate, materially adverse.
(b) the Company has not entered into any transaction which is
not in the ordinary course of business;
(c) there has been no material adverse change in the condition
(financial or otherwise), property, assets or liabilities of the Company other
than changes in the ordinary course of business, none of which, individually or
in the aggregate, has been materially adverse;
(d) there has been no damage to, destruction of or loss of
physical property (whether or not covered by insurance) materially adversely
affecting the business or operations of the Company;
(e) there has not been any waiver by the Company of a valuable
right or of a material debt owed to it;
(f) the Company has not declared or paid any dividend or made
any distribution on its stock, or redeemed, purchased or
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<PAGE> 13
otherwise acquired any of its stock other than repurchases of employee stock in
connection with termination of employment;
(g) the Company has not increased the compensation of any of
its officers, or the rate of pay of its employees as a group, except as part of
regular compensation increases in the ordinary course of business;
(h) there has been no resignation or termination of employment
of any officer or key employee of the Company;
(i) there has been no labor dispute involving the Company or
its employees and none is pending or, to the best of the Company's knowledge,
threatened, which would have a material adverse effect on the Company;
(j) there has not been any change, except in the ordinary
course of business, in the contingent obligations of the Company, by way of
guaranty, endorsement, indemnity, warranty or otherwise; and
(k) other than as disclosed herein, there has not been any
change or amendment to a material contract by which the Company or any of its
assets or properties is bound or subject, which would have a material adverse
effect on the Company.
3.12 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC.
The Company has good and marketable title to all its properties and
assets, and has good title to all its leasehold interests, in each case subject
to no mortgage, pledge, lien, lease, encumbrance or charge, other than (i) the
lien of current taxes not yet due and payable, (ii) possible minor liens and
encumbrances which do not in any case materially detract from the value of the
property subject thereto or materially impair the operations of the Company, and
which have not arisen otherwise than in the ordinary course of business, and
(iii) liens created in the ordinary course of business in connection with the
granting of purchase money security interests for the acquisition of capital
equipment. With respect to property and assets leased by the Company, the
Company is in compliance with all related lease agreements and has valid lease
hold interests in such property, free and clear of any liens, claims or
encumbrances.
3.13 MATERIAL CONTRACTS AND COMMITMENTS.
All of the contracts, mortgages, indentures, agreements, instruments
and transactions to which the Company is a party or by which it is bound which
involve:
a. the granting to any third party of exclusive
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<PAGE> 14
development, manufacturing or distribution rights in or to the Company's
products or services;
b. original equipment manufacturing agreements;
c. the license of any patent, copyright, source code, trade
secret or other proprietary right to or from the Company (except (i) end-user
licenses from the Company, (ii) object code licenses granted to distributors and
end-users in the ordinary course of the Company's business, and (iii)
commercially available, noncustomized software obtained by the Company for its
internal use);
d. the joint development or joint ownership of technology;
e. indemnification by the Company with respect to
infringements of proprietary rights;
f. all agreements between the Company and its officers and
directors;
g. forms of agreements between the Company and its employees
andconsultants which involve obligations of, or payments to, the employee or
consultant in excess of One Hundred Thousand Dollars ($100,000) per annum.; and
h. obligations of, or payments to, the company in excess of
Five Hundred Thousand Dollars ($500,000)
(collectively, the "Material Contracts") are valid, binding and in full force
and effect in all material respects and are enforceable by the Company in
accordance with their respective terms in all material respects, subject to the
effect of applicable bankruptcy, insolvency, reorganization, moratorium or other
laws of general application relating to or affecting enforcement of creditors'
rights and rules or laws concerning equitable remedies. The Company is not in
material default under any Material Contract. To the best of the Company's
knowledge, no other party to any Material Contract is in material default
thereunder.
3.14 INSURANCE.
The Company has in full force and effect fire and casualty insurance
policies, with extended coverage, sufficient in amount (subject to reasonable
deductibles) to allow it to replace any of its properties that might be damaged
or destroyed.
3.15 PATENTS, TRADEMARKS, ETC.
The Company owns and possesses or is licensed under all patents, patent
applications, licenses, trademarks, trade names, brand names, inventions and
copyrights employed in or necessary to the operation of its
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<PAGE> 15
business as now conducted and as proposed to be conducted (collectively, the
"Intellectual Property"), with no infringement of or conflict with the rights of
others respecting any of the same. The Company is not obligated to make any
payments by way of royalties, fees or otherwise to any owner or licensor of any
patent, trademark, trade name, copyright or other intangible asset, with respect
to the use thereof or in connection with the conduct of its business, or
otherwise. The Company has not granted to any third party any option, license or
other right of any kind to its Intellectual Property. The Company does not
license any technology from any third party other than for internal use. The
Company has not received any communications alleging that it has violated or, by
conducting its business as proposed, would violate any patents, trademarks,
service marks, trade names, copyrights or trade secrets or other proprietary
rights of any other person or entity, nor is the Company aware of any basis for
the foregoing. The Company is not aware of any violation or infringement by a
third party of any of its Intellectual Property.
3.16 COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC.
The Company is not in violation of any term of its Certificate of
Incorporation or Bylaws as amended to date, or in any material respect of any
term or provision of any material mortgage, indenture, contract, agreement,
instrument, judgment, order or decree, and is not in violation in any material
respect of any statute, rule or regulation applicable to the Company. The
execution, delivery and performance of and compliance with this Agreement and
Amendment No. 1, the effectuation of the Conversion and the issuance of the
Shares (and the Common Stock issuable upon conversion of the Shares) have not
resulted and will not result in any violation of, or conflict with, or
constitute a default under any of the foregoing, or result in the creation of
any mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company; and there is no such violation or default which
materially and adversely affects the business of the Company as conducted or any
of its properties or assets.
3.7 LITIGATION, ETC.
There are no actions, suits, proceedings or investigations pending or,
to the Company's knowledge, threatened, against the Company or its properties
before any court or governmental agency, nor is the Company subject to any writ,
injunction or order of any court or government agency (nor, to the Company's
knowledge, is there any basis therefor or threat thereof), which, either in any
case or in the aggregate, might result in any material adverse change in the
business, prospects, financial condition or equity ownership of the Company or
any of its properties or assets, or in any material impairment of the right or
ability of the Company to carry on its business as now conducted, or in any
material liability on the part of the Company, and none which questions the
validity of this Agreement or any action taken
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or to be taken in connection herewith, The foregoing includes, without
limitation, employee related claims or actions, claims relating to the prior
employment of any employee or any claims relating to obligations of any such
employee under any agreement.
3.18 EMPLOYEES.
To the Company's knowledge, no employee of the Company is or will be in
violation of any judgment, decree or order, or any term of any employment
contract, patent disclosure agreement or any other contract or agreement
relating to the relationship of any such employee with any other party because
of the nature of the business conducted by the Company or to the utilization by
the employee of his best efforts with respect to such business, The Company does
not have any collective bargaining agreements covering any of its employees. The
Company does not believe it will utilize any inventions of any of its employees,
or people it currently intends to hire, made prior to their employment by the
Company. All of the Company's employees are terminable at Will.
3.19 EMPLOYEE AGREEMENTS.
Certain current employees of the Company have executed forms of
confidentiality and/or proprietary rights agreements. To the Company's
knowledge, neither the execution nor delivery of such agreements, nor the
carrying on of the Company's business as employees by such persons, nor the
conduct of the Company's business as currently conducted, will conflict with or
result in a breach of the terms, conditions or provisions of or constitute a
default under any contract, covenant or instrument under which any of such
persons is now obligated.
3.20 EMPLOYEE COMPENSATION PLANS.
Other than as set forth on Exhibit D hereto, the Company is not a party
to or bound by any currently effective employment contract, deferred
compensation agreement, bonus plan, incentive plan, profit sharing plan,
retirement agreement or other employee compensation agreement.
3.21 CERTAIN TRANSACTIONS.
Other than loans to employees made in connection with relocations and
stock purchases, the company is not indebted, either directly or indirectly, to
any of its officers, directors or holders of Common Stock or to their respective
spouses or children, in any amount in excess of $50,000, other than for payment
of reasonable expenses; none of such officers or directors or, to the knowledge
of the Company, holders of capital stock or any members of their immediate
families, are indebted to the Company in an amount in excess of $50,000 or have
any direct or indirect ownership interest in any firm or corporation with which
the Company is affiliated or with which the Company has a business relationship
which is material to the company, or any firm or corporation which competes with
the Company. To the Company's knowledge, no officer, director or holder of any
of its capital stock or any member of their immediate
-11-
<PAGE> 17
families, is, directly or indirectly, interested in any contract with the
Company which is material to the Company. The Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.
3.22 TAX RETURNS, PAYMENTS AND ELECTIONS.
The Company has filed all tax returns and reports as required by law.
These returns and reports are true and correct in all material respects. The
Company has paid all taxes and other assessments due. The provision for taxes of
the Company as shown in the Financial Statements is adequate for taxes due or
accrued as of the date thereof. The Company has not elected pursuant to the
Internal Revenue Code of 1986 ("Code") to be treated as a Subchapters
Corporation or a collapsible corporation pursuant to Section 341(f) or Section
1362(a) of the Code, nor has it made any other election pursuant to the Code
(other than elections which relate solely to methods of accounting, depreciation
or amortization) which would have a material effect on the Company, its business
or any of its properties or material.
3.23 FIRPTA.
The Company is not a "foreign person" within the meaning of Section
1445 of the Code.
3.24 OFFERING.
Subject to the accuracy of the Investors' representations in Section 4
hereof and in written responses to the Company's inquiries (if any), the offer,
sale (in the case of the Sale Shares), conversion (in the case of the Conversion
Shares) and issuance of the Shares to be issued in conformity with the terms of
this Agreement and the Certificate constitute transactions exempt from i) the
registration requirements of Section 5 of the Securities Act, and (ii) the
qualification requirements of Section 25110 of the California Corporations Code
or similar state securities laws; and the issuance of the Common Stock to be
issued upon conversion of the Shares will constitute transactions exempt from
(i) the registration requirements of Section 5 of the Securities Act, and (ii)
the qualification requirements of Section 25110 of the California Corporations
Code or similar state securities laws provided there is no change in such laws
from the date of this Agreement.
3.25 BROKERS OR FINDERS; OTHER OFFERS.
The Company has not incurred, and will not incur, directly or
indirectly, as a result of any action taken by the Company, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement.
-12-
<PAGE> 18
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor hereby represents and warrants to the Company with
respect to its purchase of the Shares as follows:
4.l INVESTMENT REPRESENTATIONS AND COVENANTS OF THE INVESTORS.
(a) This Agreement is made by the Company with each Investor
in reliance upon such Investor's representations and covenants made in this
Section 4, which by its execution of this Agreement the Investor hereby
confirms. Each Investor represents that the Shares to be received will be
acquired for investment for its own account, not as a nominee or agent, and not
with a view to the sale or distribution of any part thereof, and that it has no
present intention of selling, granting any participation in or otherwise
distributing the same. Each Investor further represents that it does not have
any contract, undertaking, agreement or arrangement with any person (other than
certain partners and employees of Investor and its affiliates) to sell, transfer
or grant participations to such person or to any third person, with respect to
any of the Shares or any Common Stock acquired on conversion thereof.
(b) Each Investor understands and acknowledges that the
offering of the Shares pursuant to this Agreement will not, and any issuance of
Common Stock on conversion thereof may not, be registered under the Securities
Act on the ground that the sale provided for in this Agreement and the issuance
of securities hereunder is exempt pursuant to section 4(2) of the Securities
Act, and that the Company's reliance on such exemption is predicated on the
Investors' representations set forth herein.
(c) Each Investor covenants that in no event will it make any
disposition of any of the Shares, or any Common Stock acquired upon the
conversion thereof, except in accordance with the Stockholders' Agreement as
amended by Amendment No. 1 and the Company's Bylaws. Each Investor further
covenants that it will not make any sale, transfer or other disposition of the
Shares or the Common Stock issuable upon conversion thereof in violation of the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the rules of the Securities and Exchange Commission (the "Commission")
promulgated thereunder.
(d) Each Investor represents that it is capable of evaluating
the merits and risks of its prospective investment in the Company, and has the
ability to bear the economic risks of the investment.
-13-
<PAGE> 19
(e) Each Investor acknowledges and understands that the
Shares, and any Common Stock acquired upon the conversion thereof, must be held
indefinitely unless it is subsequently registered under the Securities Act or an
exemption from such registration is available, and that, except as otherwise
provided in the Stockholders' Agreement, the Company is under no obligation to
register either the Shares or Common Stock.
(f) Each Investor acknowledges that it has reviewed a copy of
Rule 144 promulgated under the Securities Act, which permits limited public
resales of securities acquired in a non public offering, subject to the
satisfaction of certain conditions. Each Investor understands that before the
Shares, or any Common Stock issued upon conversion thereof, may be sold under
Rule 144, the following conditions must be fulfilled: (i) certain public
information about the Company must be available, (ii) the sale must occur at
least two years after the Investor purchased and paid for the Shares, (iii) the
sale must be made in a broker's transaction and (iv) the number of Shares sold
must not exceed certain volume limitations. Each Investor understands that the
current information referred to above is not now available and there can be no
assurances that the Company will make such information available in the future.
(g) Each Investor acknowledges that in the event the
applicable requirements of Rule 144 are not met, registration under the
Securities Act, compliance with the Commission's Regulation A or another
exemption from registration will be required for any disposition of its stock.
Each Investor understands that although Rule 144 is not exclusive, the
Commission has expressed its opinion that persons proposing to sell restricted
securities received in a private offering other than in a registered offering or
pursuant to Rule 144 will have a substantial burden of proof in establishing
that an exemption from registration is available for such offers or sales and
that such persons and the brokers who participate in the transactions do so at
their own risk.
(h) Each Investor represents that such Investor is an
"accredited investor" as defined in Rule 501 of Regulation D promulgated under
the Securities Act.
4.2 NO PUBLIC MARKET.
Investor understands that no public market now exists for any of the
securities issued by the Company and that there can be no assurance that a
public market will ever exist for the Shares.
4.3 RECEIPT OF INFORMATION.
Investor has received and reviewed this Agreement and all exhibits
hereto. Investor and its counsel have had access to and an opportunity to review
all docu-
-14-
<PAGE> 20
ments and other materials requested of the Company; Investor and its counsel
have been given an opportunity to ask any and all questions of, and receive
answers from, the Company concerning the terms and conditions of the offering
and to obtain all information it or they believe necessary or appropriate to
evaluate the suitability of an investment in the Company.
4.4 AUTHORIZATION.
This Agreement, when executed and delivered by the Investor, will
constitute a valid and legally binding obligation of the Investor, enforceable
in accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies.
4.5 BROKERS OR FINDERS.
The Company has not, and will not, incur, directly or indirectly, as a
result of any action taken by any Investor any liability for brokerage or
finders' fees or agents commissions or any similar charges in connection with
this Agreement.
4.6 TAX ADVISORS.
Each Investor has reviewed with its own tax advisors the federal,
state, local and foreign tax consequences of this investment, where applicable,
and the transactions contemplated by this Agreement. Each Investor is relying
solely on such advisors and not on any statements or representations of the
Company or any of its agents with respect to such tax consequences and
understands that it (and not the Company) shall be responsible for the
Investor's own tax liability that may arise as a result of this investment or
the transactions contemplated by this Agreement.
SECTION 5
CONDITIONS TO CLOSING OF THE INVESTORS
The Investors' obligations to purchase the Shares at the Closing are,
at the option of the Investors, subject to the fulfillment of the following
conditions:
5.l REPRESENTATIONS AND WARRANTIES CORRECT.
The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects as of the Closing
Date.
5.2 COVENANTS.
All covenants, agreements and conditions contained in this Agreement to
be performed or complied with by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects.
-15-
<PAGE> 21
5.3 COMPLIANCE CERTIFICATE.
The Company shall have delivered to the Investors a certificate of the
Company in the form of Exhibit E hereto, executed by the Secretary of the
Company, dated the Closing Date, and certifying, among other things, to the
fulfillment of the conditions specified in Sections 5.1 and 5.2 of this
Agreement.
5.4 LEGAL OPINION.
The Investors shall have received from Wilson, Sonsini, Goodrich &
Rosati, P.C., counsel to the Company, an opinion addressed to the Investors,
dated the Closing Date, in substantially the form attached as Exhibit F.
5.5 BLUE SKY.
The Company shall have obtained all necessary Blue Sky law permits and
qualifications, or have the availability of exemptions therefrom, required by
any state for the offer, sale (in the case of Sale Shares) and exchange (in the
case of Conversion Shares) of the Shares and the Common Stock issuable upon
conversion of the Shares.
5.6 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.
The Certificate shall have been filed with the Delaware Secretary of
State.
5.7 LEGAL MATTERS.
All material matters of a legal nature which pertain to this Agreement
and the transactions contemplated hereby shall have been reasonably approved by
special counsel to the Investors.
5.8 AMENDMENT NO. 1 TO STOCKHOLDERS' AGREEMENT.
The Company and persons listed on the signature pages to Amendment No.
1 shall have entered into Amendment No. 1.
SECTION 6
CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to sell and issue the Shares pursuant to
Section 1.2 hereof is, at the option of the Company, subject to the fulfillment
as of the Closing Date of the following conditions:
6.1 REPRESENTATIONS.
The representations made by the Investors in Section 4 hereof shall be
true and correct when made, and shall be true and correct on the Closing Date.
6.2 BLUE SKY.
The Company shall have obtained all necessary Blue Sky law permits and
qualifications, or have the availability of exemptions therefrom, required by
any state for the offer, sale (in the case of Sale Shares), exchange (in the
case of Conversion
-16-
<PAGE> 22
Shares) of the Shares and the Common Stock issuable upon conversion of the
Shares.
6.3 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.
The Certificate shall have been filed with the Delaware Secretary of
State.
6.4 LEGAL MATTERS.
All material matters of a legal nature which pertain to this Agreement
and the transactions contemplated hereby shall have been reasonably approved by
counsel to the Company. At the time of the Closing, the purchase of the Shares
shall be legally permitted by all laws and regulations to which each Investor
and the Company are subject.
6.5 BOARD AND STOCKHOLDER APPROVAL.
All approvals of the Company's Board of Directors and stockholders
necessary for performance of the transactions contemplated by this Agreement
shall have been obtained.
6.6 AMENDMENT TO STOCKHOLDERS' AGREEMENT.
The Company and each person listed on the signature pages to Amendment
No.1 shall have entered into Amendment No. 1.
SECTION 7
AFFIRMATIVE COVENANTS OF THE COMPANY AND THE INVESTORS
The Company hereby covenants and agrees as follows:
7.l FINANCIAL INFORMATION.
The Company will furnish the following reports to each Investor for so
long as such Investor holds 175,000 shares of Series D Preferred or Common Stock
issued upon conversion thereof, as appropriately adjusted for recapitalization,
stock splits, stock dividends and the like:
(a) As soon as practicable after the end of each fiscal year,
and in any event within 120 days thereafter, consolidated balance sheets of the
Company and its subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of income and consolidated statements of changes in
financial position of the Company and its subsidiaries, if any, for such year,
prepared in accordance with generally accepted accounting principles and setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail and certified by independent public accountants of
reputable standing selected by the Company.
(b) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year
-17-
<PAGE> 23
of the Company and in any event within 60 days thereafter, unaudited
consolidated statements of income and consolidated statements of changes in
financial condition of the Company and its subsidiaries for such period and for
the current fiscal year to date, prepared in accordance with generally accepted
accounting principles, with the exception of footnotes, all in reasonable detail
and signed, subject to changes resulting from year-end audit adjustments, by the
principal financial or accounting officer of the Company.
(c) With reasonable promptness, such other information and
data with respect to the Company and its subsidiaries as any such holder may
from time to time reasonably request; provided, however, that the Company shall
not be obligated pursuant to this Section 7.1(c) to disclose or provide any
information that it reasonably considers to be a trade secret or to contain
confidential proprietary information.
7.2 ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION.
The rights granted pursuant to Section 7.1 may not be assigned or
otherwise conveyed by an Investor or by any subsequent transferee of any such
rights without the prior written consent of the Company; provided, however, that
an Investor may assign such rights to any transferee, other than a competitor or
potential competitor (as reasonably determined by the Company's Board of
Directors) of the Company, and after giving notice to the Company, who acquires
at least 175,000 shares (subject to appropriate adjustment for stock splits,
dividends, subdivisions, combinations, recapitalizations and the like) of the
Series D Preferred and/or Common Stock issued upon conversion thereof.
7.3 CONFIDENTIALITY OF INFORMATION.
Each Investor (including for purposes of this Section 7.3 each
transferee pursuant to Section 7.2) agrees that any information obtained by such
Investor pursuant to Section 7.1 which is, or would reasonably be perceived to
be, proprietary to the company (in that such information is not generally made
available to third parties without restrictions to ensure confidentiality) will
not be disclosed without the prior written consent of the Company. This Section
7.3 shall not apply to any information obtained by an Investor as a result of
such Investor's membership on the Board of Directors of the Company; provided,
however, that the foregoing is not intended to diminish or abrogate such Board
member's fiduciary obligations to the Company.
7.4 RIGHT TO EXCHANGE.
In the event that on or after the First Closing the Company issues
additional equity securities or debt securities which are convertible into
equity securities (other than equity securities issued (i) pursuant to any stock
benefit plan or stock option agreement, (ii) pursuant to an acquisition of
-18-
<PAGE> 24
shares in the Company's subsidiaries in exchange for shares in the company,
(iii) upon conversion of shares of Preferred Stock of the Company pursuant to
Section 4 of the Certificate, as amended, (iv) pursuant to a public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, (v) pursuant to any sales, technology license or distribution
agreements or other strategic relationships approved by the Board of Directors,
or (vi) pursuant to any acquisition approved by the Board of Directors in
exchange for shares in the Company), the Investors shall have the right to
exchange their shares of Series D Preferred Stock for shares of such new
security, up to the total number of new securities to be issued. The rate of
exchange shall be one share of Series D Preferred for that number of shares of
the new security which is obtained by dividing $3.35 by the per share purchase
price of the new security.
7.5 TERMINATION OF COVENANTS.
The covenants set forth in Sections 7.1, 7.2 and 7.4 shall terminate
and be of no further force or effect upon the earlier to occur of the closing of
a firm commitment underwritten public offering registered under the Securities
Act or such time as the Company is required to file reports pursuant to Section
13 or 15(d) of the Exchange Act.
SECTION 8
MISCELLANEOUS
8.1 GOVERNING LAW.
This Agreement shall be governed in all respects by the laws of the
State of California.
8.2 SURVIVAL.
The representations, warranties, covenants and agreements made herein
shall survive any investigation made by the Investor and the closing of the
transactions contemplated hereby.
8.3 SUCCESSORS AND ASSIGNS.
Except as otherwise provided herein, the provisions hereof shall inure
to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and adminstrators of the parties hereto, provided, however, that the
rights of an Investor to purchase the Shares shall not be assignable without the
consent of the Company,
8.4 ENTIRE AGREEMENT; AMENDMENT.
This Agreement and the other documents delivered pursuant hereto at the
Closing constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof, and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.
Except as expressly provided herein,
-19-
<PAGE> 25
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that any provisions hereof may be amended, waived, discharged
or terminated, on behalf of all holders, upon the written consent of the Company
and the holders of a majority of the Common Stock issued or issuable upon the
conversion of the Series D Preferred and provided, however, that the Company may
from time to time amend this Agreement without the consent of the Investors to
add as parties to this Agreement any Investors in any Subsequent Closing
pursuant to Section 2 hereof.
8.5 NOTICES, ETC.
All notices and other communications required or permitted hereunder
shall be in writing and shall be mailed by registered or certified mail, postage
prepaid, or otherwise delivered by hand or by messenger, addressed (a) if to an
Investor, to such Investor's address set forth on the Schedule of Investors, or
at such other address as the Investor shall have furnished to the Company in
writing, or (b) if to any other holder of any Shares, at such address as such
holder shall have furnished the Company in writing, or, until any such holder so
furnishes an address to the Company, then to and at the address of the last
holder of such Shares who has so furnished an address to the Company, or (c) if
to the Company, one copy should be sent to its address set forth at the
beginning of this Agreement and addressed to the attention of the President of
the Company, or at such other address as the Company shall have furnished to the
Investors, with a copy to Wilson, Sonsini, Goodrich & Rosati, Two Palo Alto
Square, Palo Alto, California 94306, Attn: Mark A. Bertelsen.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid.
8.6 DELAYS OR OMISSIONS.
Except as expressly provided herein, no delay or omission to exercise
any right, power or remedy accruing to any holder of any Shares, upon any breach
or default of the Company under this Agreement, shall impair any such right,
power or remedy of such holder nor shall it be construed to be a waiver of any
such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any holder of any
-20-
<PAGE> 26
provisions or conditions of this agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
8.7 CALIFORNIA CORPORATE SECURITIES LAW.
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY
PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL,
UNLESS AN EXEMPTION FROM SUCH QUALIFICATION IS AVAILABLE. THE RIGHTS OF ALL
PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION
BEING OBTAINED, OR SUCH EXEMPTION BEING AVAILABLE.
8.8 EXPENSES.
The Company and the Investors shall bear their own expenses and legal
fees incurred with respect to this Agreement and the transactions contemplated
hereby except that the Company shall pay up to a maximum aggregate of $25,000 in
legal fees and expenses incurred by the Investors.
8.9 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be enforceable against the party actually executing such
counterpart, and all of which together shall constitute one instrument.
8.10 SEVERABILITY.
In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
-21-
<PAGE> 27
The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY"
SYNON CORPORATION
By:/S/ SIGNATURE UNREADABLE
Title: VICE PRESIDENT
"INVESTORS"
GENERAL ATLANTIC PARTNERS II, L.P.
By: General Atlantic Partners
General Partner
By:/S/ SIGNATURE UNREADABLE
Title: GENERAL PARTNER
-22-
<PAGE> 28
The foregoing Series A Stock Purchase Agreement is hereby executed as
of the date first above written.
"COMPANY"
SYNON CORPORATION
By:____________________________________
Title:_________________________________
"INVESTORS"
GENERAL ATLANTIC PARTNERS II, L.P,
By: General Atlantic Partners
General Partner
By:____________________________________
Title:_________________________________
THE TA ENTITIES
ADVENT VI L.P.
By: TA Associates VI L.P.
General Partner
By: /S/ Brian J. Conway
Brian J. Conway
Partner
-22-
<PAGE> 29
ADVENT ATLANTIC AND PACIFIC
LIMITED PARTNERSHIP
By: TA Associates AAP Limited
Partnership
General Partner
By: TA Associates AAP Venture
Limited Partnership
General Partner
By: /s/ Brian J. Conway
Brian J. Conway
Partner
CHESTNUT III LIMITED PARTNERSHIP
By: TA Associates VI L.P.
Its Attorney-in-Fact
By: /s/ Brian J. Conway
Brian J. Conway
Partner
ADVENT INDUSTRIAL II L.P.
By: TA Associates VI L.P.
General Partner
By: /s/ Biran J. Conway
Brian J. Conway
Partner
-23-
<PAGE> 30
DESIFTA LIMITED
By: TA Associates V Limited
Partnership
Its Attorney-in Fact
By: /s/ Brian J. Conway
Brian J. Conway
Authorized Signator
TA VENTURE INVESTORS LIMITED
PARTNERSHIP
By: /s/ Brian J. Conway
Brian J. Conway
Partner
TA ASSOCIATES PARTNERS PROFIT
SHARING TRUST F/B/O
MICHAEL R. COLLINS
By: /s/ Katherine S. Cromwell
Name: Katherine S. Cromwell
Title: Plan Administrator
-24-
<PAGE> 31
Exhibit A
---------
SCHEDULE OF INVESTORS
<TABLE>
<CAPTION>
No. of Shares Aggregate
Name and Address Purchased Purchase Price
- ---------------- --------- --------------
<S> <C> <C>
First Closing: July 16, 1991
General Atlantic Partners II, L.P. 2,776,120 $ 9,300,002.00
125 East 56th Street
New York, NY 10022
Attn: David Hodgson
Second Closing: September 5. 1991
THE TA ENTITIES
Advent VI L.P, 238,797 $ 799,969.05
Advent Atlantic and 51,796 173,516.60
Pacific L.P.
Chestnut III L.P. 26,907 90,138.45
Advent Industrial II L.P. 25,561 85,629.35
Desifta Limited 11,112 37,225.20
TA Venture Investors L.P. 3,749 12,559.15
TA Associates Partners Profit 287 961.45
Sharing Trust f/b/o Michael
R. Collins
All TA Entities c/o:
TA Associates
45 Milk Street
Boston, MA 02109
Attn: Brian Conway
</TABLE>
-25-
<PAGE> 32
EXHIBIT D
---------
SCHEDULE OF EXCEPTIONS
----------------------
This Schedule of Exceptions is deemed confidential by the Company and
may not be furnished to any third party without the prior written consent of the
Company.
The following are the exceptions to the representations and warranties
of Synon Corporation (the "Company") set forth in Section 3 of the Series D
Preferred Stock Purchase Agreement dated as of July 16, 1991 (the "Agreement")
to which this is an exhibit. The section numbers below correspond to the section
numbers in the Agreement. Each exception applies to each section of the
Agreement to which it pertains, whether or not the specific section numbers are
indicated below, All capitalized terms used and not otherwise defined herein
shall have the meanings given them in the Agreement.
Section 3.1 -- Organization and Standing; Certificate of Incorporation and
Bylaws;
Minutes.
The Company is not qualified to do business in Massachusetts because
another company was using the name "Synon" in the state prior to the time the
Company started conducting business there. The Company's registration of the
name "Synon" predates the other company's filing, The Company has a single
employee in the state and is appropriately withholding state payroll taxes, is
collecting and remitting sales tax and will file a state franchise/income tax
return for this year,
Section 3.2 -- Corporate Power.
None.
Section 3.3 -- Subsidiaries.
l. Synon Ltd. has two subsidiaries incorporated under the laws of
England, Synon U.K. Limited and Synon International Limited, which subsidiaries
are currently inactive.
2. Strategic Information Systems Pty, an Australian company, is
affiliated with Synon Pty Ltd.
Section 3.4 -- Authorization.
All shares of capital stock issued by Synon Corporation are subject to
the rights of first refusal currently set forth in the Company's Bylaws.
<PAGE> 33
Section 3.5 -- Governmental Consent, etc.
None.
Section 3.6 -- Capitalization.
None.
Section 3.7 -- Registration Rights.
None.
Section 3.8 -- Shareholder Agreements.
None.
Section 3.9 -- Financial Statements.
None.
Section 3.10 -- No Material Liabilities.
Provision has been made for Leases and Agreements to Lease for
properties closed down as a consequence of redundant facilities acquired in the
U.K.
Section 3.11 -- Absence of Changes.
(h) Michael Sheridan resigned as an officer and director of the Company
effective July 2, 1991. Pursuant to a Settlement Agreement dated July 2,. 1991
between Synon Limited, Synon Corporation and Mr. Sheridan, Mr. Sheridan shall
receive certain compensation payments and his options to purchase shares of
Common Stock of the Company have been terminated.
Section 3.12 -- Title to Properties and Assets; Liens, etc.
1. Security Agreement dated October 16, 1990, among Synon, Inc., Synon
Consulting Inc. (the "Borrowers") and Midland Bank Plc -- Bank has first
priority security interest in accounts receivable of the Borrowers in return for
establishing $3,500,000 letter of credit facility for Borrowers. Facility also
guaranteed by Synon Ltd
2. Various loan and security agreements among Synon Ltd., Synon U.K.
Limited, Synon International Limited and Midland Bank Plc. (the "Bank") provide
that the Bank has a first priority security interest in the assets, accounts
receivable and goodwill of those companies, Each company guarantees the
obligations of the other companies under such agreements.
-2-
<PAGE> 34
3. The Company leases all of the real property it uses. Rents for the
properties leased in the United Kingdom are guaranteed by Midland Bank Plc. The
Company also leases cars and certain computer and other office equipment
pursuant to written lease agreements which contain terms standard to such
agreements,
4. IBM Development Incentive Agreement dated October 5, 1990, with
Synon, Inc. grants lien and security interest to IBM for source code in the
event Synon Inc., is liquidated.
Section 3.13 -- Material Contracts and Commitments.
1. It is currently the intention of the Company that Synon Ltd. be
liquidated and its assets transferred to a dual resident corporation (the
"DRC"). Many of the contracts entered into by Synon Ltd. and governed by the
laws of England are not assignable and/or terminate upon liquidation of Synon
Ltd. Therefore Synon Ltd. will need to obtain the consent of the other parties
to those contracts to the liquidation of Synon Ltd. and/or the assignment of the
contracts to the DRC. See the letter written to the Synon Ltd. Board of
Directors by Kim Nicholson of Baileys Shaw and Gillett dated November 30, 1990.
The liquidation of Synon Ltd. would also result in the release of the source
code of two of Synon's principal products (Synon 1 and Synon 2) to several U.K.
distributors pursuant to source code agreements entered into between Synon Ltd.
and such distributors. (The release of the source code to the distributors would
be for maintenance and enhancement of the source code only and all intellectual
property rights would remain with Synon Ltd.) Therefore, the consent of such
distributors and the source code escrow agent would also be required in the
event Synon Ltd. is liquidated.
2. Many of the lease agreements entered into by Synon Ltd. require the
consent of the other party thereto for a change in control. The change in
control provisions may have been triggered by the share exchange effected in
December 1990, and no consents to such share exchange were obtained. See the
letter to Michael Sheridan from Tom Shaw of Baileys, Shaw and Gillett dated
November 30, 1990.
3. The Company has a multi-currency overdraft facility (the "Facility")
with Midland Bank Plc. The Company has defaulted in certain respects under the
Facility. Midland Bank Plc has agreed to renew the Facility up to 3,000,000
pending completion of the Series D Preferred Stock financing.
-3-
<PAGE> 35
Section 3.14 -- Insurance.
None.
Section 3.15 -- Patents, Trademarks, etc.
1. The Company has entered into the following agreements regarding the
use of technology owned by third parties in Synon products:
a. Sublicense Agreement dated June 15, 1990, between Synon, Inc. and
Interactive Images, Inc. -- granting Synon right to market Easel Runtime System
(DOS and OS/2 versions) for use on Synon/2 and Synon/2E in return for license
fee.
b. Agreement dated October 19, 1990, between Synon, Inc. and Easel
Corporation (formerly Interactive Images, Inc.) -- granting Synon right to use
the EASEL Communications Licensed Program to develop new program, which new
program Synon will own, and granting Easel Corporation a perpetual,
non-exclusive, worldwide royalty-free, transferable license to use, copy, modify
and grant sublicenses with respect to the new program.
c. License Agreement dated Jun 21, 1990, between Synon Ltd.
and International Business Machines Corporation -- granting Synon right to
incorporate Extended Source Format into an undefined add-on software product
that attaches to its application generator software product in return for
royalties to IBM equal to 25% of revenues received from the add-on product plus
5% of revenues received from all application generator products when licensed or
sold after the add-on product has been licensed or sold to that enterprise.
2. The Company and its subsidiaries have in the ordinary course of
business granted licenses to its products to end-users to use and copy the
products and to distributors to distribute, sublicense and support the products.
3. The Company has licensed the source code to Synon 2 to Toppan Moore
to translate Synon 2 into Japanese (i.e. create a Kanji version). The title to
the Kanji version of Synon 2 is to remain with the Company. Perfection of title
to the Kanji version in the company awaits copyright registration of the Kanji
version in Japan.
4. The Company has in the past contracted with technical authors who
have created much of the architecture for the Synon products. Except as noted
below, all such contracts provided that all intellectual property developed
pursuant to such contracts belonged to the Company, Peter Wilson, one of the
principal
-4-
<PAGE> 36
technical architects, was not subject to an intellectual property agreement from
August 1, 1987 until March 1, 1989, during which time he was only a consultant
to Limited and not doing any development work.
5. The Company has granted powers of attorney with respect to its
intellectual property to attorneys in Japan and Taiwan for the purposes of
taking the procedures necessary in such countries to protect such intellectual
property.
6. Trademark Registration Issues:
a. Japan, Sweden and Argentina - The "Synon" trademark is
opposed by Japanese company Chinon Kabushiki Kaisha who believes that the
"Synon" trademark may be confused with their trademark "Chinon."
b. Germany - The "Synon" trademark is opposed by Seicon
Limited.
c. Spain - The "Synon" trademark is opposed by Syntex
Pharm AG.
d. Sweden - Objections raised by owners of registered
trademarks Simon, Syntron, Symons, Sunion and Chinon.
Section 3.16 -- Compliance with Other Instruments, None Burdensome, etc.
None.
Section 3.17 -- Litigation, etc.
1. The following claims for development and delay costs related to the
non-delivery of the SMA Financials package have been made against the Company:
a. By letter dated 25th September 1990 Balfour Beatty claimed
total costs (including costs anticipated up to September 1991) of 159,479. Synon
replied denying liability, which reply has been followed by an inconclusive
exchange of correspondence with a view to seeking an amicable resolution of the
dispute.
b. By letter dated 18th October 1990, Pioneer submitted a
claim for 74,093. Synon has rejected in writing any liability for the costs
claimed. There has since been an inconclusive exchange of correspondence with a
view to seeking an amicable resolution of the dispute.
-5-
<PAGE> 37
2. The Company and its subsidiaries terminated a number of employees
during the past year. The Company is not aware of any material outstanding claim
against the Company or its subsidiaries or any member of the group in this
respect.
Section 3.18 -- Employees.
Some employees in the United Kingdom are terminable upon three months
notice.
Section 3.19 -- Employee Agreements.
None.
Section 3.20 -- Employee Compensation Plans.
1. The Company and its subsidiaries have the following forms of
employment agreements:
a. Form of Employment Agreement entered into by all employees
of the Canadian branch of Synon, Inc. in connection with the transfer of Synon,
Inc.'s Canadian operations to Synon Canada Ltd.
b. Form of Employment Agreement - Synon Canada Ltd.
c. Form of Employment Agreement for Application Consultant -
Synon, Inc. (Dallas).
d. Form of Employment Agreement for Application Consultant
Synon Advanced Applications, Inc.
e. Form of Employment Agreement for Application Consultant -
Synon Consulting Inc. (New York)
f. Form of Employment Agreement for Marketing Representative -
Synon, Inc. (Washington, D.C.)
2. Employment Agreement between Synon, Inc. and John de Wit, dated May
10, 1989.
3. Employment Agreement between Synon, Inc. and Jim Smith, dated June
1, 1989.
4. All employees of Synon Ltd. and Synon Pty. have employment
contracts, Some employees in the UK are terminable on three months notice.
5. Synon Ltd. makes contributions to the personal pension funds of
United Kingdom employees pursuant to their employment
-6-
<PAGE> 38
contracts. There is one pension plan for regular employees and one for senior
management.
6. Superannuation (pension) fund for Synon Pty. employees is funded by
employee contributions.
7. Employment letter between Synon Corporation and Paul Wilde dated
March 27, 1991.
8. The Company has made an offer of employment to Ronald W. Braniff
pursuant to an offer letter dated June 24, 1991.
9. Stock Option Plans.
a. Synon corporation 1990 Stock Option Plan (for employees
residing in the U.S., Canada or Australia).
b. Synon Corporation Executive Share Option Scheme (for
employees residing in the United Kingdom).
Section 3.21 -- Certain Transactions.
1. The Company and John de Wit entered into a Loan Agreement, dated
April 15, 1991, whereby the Company agreed to establish a term loan facility in
the principal amount of $100,000 for Mr. de Wit (the "de Wit Loan"). Interest
accrues at the rate of 1% per annum above the floating base rate established by
Midland Bank Plc (i.e. the same rate that is applicable to borrowings under
Synon Inc.'s line of credit facility). Accrued interest and principal are due on
April 15, 1992. Various provisions provide for acceleration of the maturity date
in the event Mr. de Wit ceases to be employed by the Company or declares
insolvency, and for the receipt of certain financial and tax information of Mr.
de Wit by the Company. The de Wit Loan is secured by those shares of the
Company's Common Stock now held or later acquired by Mr. de Wit (currently
22,247 shares with options to purchase an additional 88,988 shares), pursuant to
the terms of a Pledge Agreement executed as of the same date.
2. The Company and Christopher Herron entered into a Loan Agreement,
dated May 31, 1991 (the "Herron Loan"), on substantially similar terms as the de
Wit Loan. The principal amount of the term credit is $250,000. Interest accrues
at the same rate as on the de Wit Loan and accrued interest and principal are
due on May 31, 1992. The Herron Loan contains the same acceleration provisions
and information requirements as the de Wit loan. The Herron Loan is secured by
250,000 shares of Common Stock of the Company currently held by Mr. Herron,
pursuant to the terms of a Pledge Agreement executed as of the same date.
-7-
<PAGE> 39
3. Employment Agreements - see Section 3.20.
4. Guarantees:
a. See Section 3.12 for guarantees among the Company's
subsidiaries with regard to the Midland Bank letter of credit.
b. Synon Ltd. is a guarantor to Midland Bank Plc for a letter
of credit issued by Midland to ANZ Bank, Melbourne, Australia to cover debts due
to ANZ Bank from Strategic Information Systems Pty Ltd. for the sum of AUS
D605,000 as of April 30, 1991. Neither Synon Ltd. nor its subsidiary, Synon Pty
Ltd., owns a majority interest in Strategic.
c. The Company has in the ordinary course of business
guaranteed the repayment of debt of its other direct and indirect subsidiaries.
Section 3.22 - Tax Returns, Payments and Elections.
Synon Ltd. has not paid the Advance Corporation Tax of 1,133,333 due on
April 14, 1990. It has been fully provided for in the consolidated financial
statements.
Section 3.23 -- FIRPTA.
None.
Section 3.24 -- Offering.
None.
Section 3.25 -- Brokers or Finders; Other Offers.
None.
-8 -
<PAGE> 1
EXHIBIT 10.10
SYNON CORPORATION
1100 Larkspur Landing Circle
Larkspur, California 94939
September 17, 1992
Mr. Richard H. Goldberg
100 Pheasant Run
Wilton, CT 06897
Dear Rich:
I am pleased to confirm my verbal offer for you to join Synon
Corporation ("Synon") as Chief Executive Officer and President. This letter
will review the terms of your employment offer with Synon as follows:
1. You will serve in the position of Chief Executive Officer and
President of Synon, reporting to the Board of Directors, and
assuming and discharging such responsibilities as are
commensurate with such office and position. You shall comply
with and be bound by Synon's operating policies, procedures
and practices. It is anticipated that the effective date of
your employment will be on or about October 1, 1992.
2. During the term of your employment with Synon, you shall
devote your full time, skill and attention to your duties and
responsibilities, and shall perform them faithfully,
diligently and competently, and you shall use your best
efforts to further the business of Synon and its affiliates.
Your employment with Synon is for an unspecified duration that
constitutes at-will employment and either Synon or you can
terminate this relationship at any time.
3. In consideration of your services, you will be paid a salary
of $18,750 per month (annualized rate of $225,000), payable
semi-monthly in accordance with Synon's standard payroll
practices. As with other officers of Synon, this base
compensation will be reviewed annually by the Board of
Directors.
<PAGE> 2
Mr. Richard H. Goldberg
September 17, 1992
Page -2-
4. In addition to your base compensation, the Board of Directors
shall adopt an executive bonus program under which you shall
be entitled to earn incentive compensation based upon the
satisfaction of certain performance goals. It is contemplated
that these performance objectives will be determined by the
Board of Directors in consultation with you, and will concern
such matters as pre-tax profitability and return on
shareholders' equity of Synon. The bonus will be targeted at
$100,000 annually and guaranteed for the first nine months of
employment at Synon. It is further anticipated that
additional incentive compensation will be provided for
overachievement as determined by the Board of Directors in
consultation with you.
5. You will be entitled to receive Synon's fringe benefits made
available to other employees and officers to the full extent
of your eligibility therefor. You shall be entitled to four
weeks of paid vacation per year (which shall be consistent
with Synon's vacation policy and which shall not accrue in
excess of four weeks per year). During your employment, you
shall be permitted, to the extent eligible, to participate in
any group life, hospitalization or disability insurance plan,
health program, or similar benefit plan of Synon that may be
available to other comparable employees generally on the same
terms as such other employees. Participation in any such plan
shall be consistent with your rate of compensation to the
extent that compensation is a determinative factor with
respect to coverage under any such plan. Business expenses
incurred by you will be reimbursed according to Synon's
expense reimbursement policy. In addition, you will be
reimbursed for expenses associated with your relocation to the
San Francisco Bay area; such as, temporary apartment rental,
closing costs for buying and selling a home, and moving your
household goods.
6. Upon your acceptance of employment, you will be granted a
non-statutory option to purchase 500,000 shares of Synon
common Stock under Synon's 1990 Stock Option Plan. The option
price shall be $1.43 and the option shall have a term of ten
years. The Option Agreement will provide that your right to
exercise the option will vest cumulatively over a period of
five years, vesting at 20% on the first anniversary of the
effective date of your employment and thereafter on a monthly
basis (1.6667% per month).
<PAGE> 3
Mr. Richard H. Goldberg
September 17, 1992
Page -3-
In addition, (i) upon any Change of Control of Synon
Corporation (as defined herein), 50% of the shares remaining
unvested will vest automatically and any of the then remaining
unvested options will vest monthly in equal increments over
the balance of the five year vesting period and (ii) if your
employment is involuntarily terminated or Constructively
Terminated (as defined herein) within twelve (12) months after
a Change of Control (it being the intention that you will
agree to remain employed for at least one year following a
"Change of Control"), then your option shall be accelerated to
become immediately exercisable for 100% of the total number of
unvested shares subject thereto.
In addition, upon initial public offering by Synon, 20% of the
shares remaining unvested will vest automatically and any of
the then remaining unvested options will vest monthly in equal
increments over the balance of the five year vesting period.
7. In addition, if your employment is involuntarily terminated
other than for "cause" (as defined herein), then you shall
receive one year's base salary plus annual targeted bonus
incentive as severance.
For purposes of the foregoing, termination "for cause" shall
mean (i) the willful failure by you substantially to perform
your material duties after a written demand for substantial
performance is delivered to you by the Board of Directors
which specifically identifies the manner in which the Board of
Directors believes that you have not substantially performed
your duties, (ii) the failure (in a material respect) by you
to follow a written, lawful order or directive from the Board
of Directors of Synon, (iii) the conviction of you of any
crime involving the property or business of Synon or its
affiliates or (iv) any act of moral turpitude in connection
with the performance of your duties hereunder.
<PAGE> 4
Mr. Richard H. Goldberg
September 17, 1992
Page -4-
8. For purposes of the foregoing, a "Change of Control of Synon"
shall be deemed to have occurred if (i) Synon sells or
otherwise disposes of all or substantially all of its assets;
(ii) there is a merger or consolidation of Synon with any
other corporation or corporations, provided that the
shareholders or Synon, as a group, do not hold, immediately
after such event, at least 50% of the voting power of the
surviving or successor corporation; (iii) any person or
entity, including any "person" as such term is used in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), becomes the "beneficial owner" (as
defined in the Exchange Act) of Common Stock of Synon
representing 50% or more of the combined voting power of the
voting securities of Synon (exclusive of persons who are now
officers or directors of Synon).
For purposes of the foregoing, your employment with Synon
shall be deemed to have been "Constructively Terminated" if
there shall occur (i) a material reduction in salary or
benefit (taken as a whole), (ii) a material change in
responsibility, or (iii) a requirement to relocate, except for
office relocations that would not increase your one-way
commute distance by more than 5O miles.
9. Upon acceptance of this offer, you will be required to sign
Synon's standard employee proprietary information agreement.
<PAGE> 5
Mr. Richard H. Goldberg
September 17, 1992
Page -5-
Rich, we are excited about having you as a part of the Synon team.
Please acknowledge acceptance of this offer by signing and returning the
enclosed copy of this letter. Synon and you shall undertake to promptly
prepare and execute all of the documents and agreements as are reasonably
necessary to carry out the intentions expressed herein.
Very truly yours,
SYNON CORPORATION
/s/ William O. Grabe
-----------------------------------
William O. Grabe, Chairman
Accepted By:
/s/ Richard H. Goldberg
- ------------------------------
Richard H. Goldberg
Dated: 9/18/92
-----------------------
<PAGE> 6
December 7, 1992
Richard Goldberg
100 Pheasant Run
Wilton, CT 06897
Dear Richard:
Reference is made to that certain employment offer letter agreement
dated as of September 17, 1992 between Synon, Inc. (the "Company") and you (the
"Employment Letter"). The parties, desiring to amend the Employment Letter,
hereby agree to add the following:
During the course of your employment, you may create, develop or
improve processes, designs, techniques, original works of authorship,
concepts, trade secrets or other intellectual property, including
without limitation, computer software such as application development
and other software products, application software, templates and data
models (together "Inventions"). You acknowledge that any Inventions
you develop or have developed in connection with your employment by
the Company are works for hire and are owned by the Company or clients
of the Company, and you agree not to assert any individual ownership
rights with respect to those Inventions. Upon request by the Company
and at the Company's consent, you will sign such further agreements
and assignments as may be necessary to transfer to the Company or
clients of the Company any rights you may have in those Inventions and
to register those rights in the name of the Company or client of the
Company, and you appoint the Company as your attorney-in-fact to sign
those documents on your behalf. Your obligations under this paragraph
do not apply to any Invention for which no equipment, supplies,
facility or trade secret of the Company or a client of the Company was
used and which was developed entirely on your own time, unless (a) the
Invention relates (i) to the business of the Company or (ii) to the
Company's actual or demonstratable anticipated research or development
or (b) the Invention results from any work performed by you for the
Company.
Attached hereto, as Exhibit A, is a list describing all inventions,
original works of authorship, developments, improvements, and trade
secrets (collectively "Prior Inventions"), that belong to you, that
relate to the Company's business, products or research and
development, and that are not assigned to the Company hereunder; or,
if no such list is attached, you represent that there are no such
Prior Inventions. If in the course of your employment with the
Company, you incorporate into a Company product, process or
<PAGE> 7
machine a Prior Invention owned by you or in which you have an
interest, the Company is hereby granted and will have a nonexclusive,
royalty-free, irrevocable, perpetual, worldwide license, with the
right to grant sublicenses, to make, have made, modify, use and sell
such Prior Invention as part of or in connection with such product,
process or machine.
Agreed and Accepted:
Synon, Inc.
By: /s/ Paul K. Wilde By: /s/ Richard Goldberg
------------------------- ------------------------------
Paul K. Wilde Richard Goldberg
Date: 12/7/92 Date: 12/15/92
------------------------ -----------------------------
<PAGE> 1
EXHIBIT 10.11
January 28, 1997
SYNON
Mr. Duncan Moore
Downsmount
53 Yew Tree
Bottom Road
Epsom Downs
Surrey KT17 3NQ
Dear Duncan:
While we recognize your long service to Synon, we determined a change in the
management of Synon's European operations was necessary. As we discussed, your
employment with Synon therefore terminated effective December 31, 1997.
STATUTORY SEVERANCE CONSIDERATION: You have or will receive, as soon as
practical following acceptance of this separation letter agreement, all
statutory payments owed to you including the following:
The sum of pounds 15,960.23 representing 5.82 weeks pay in lieu of
notice based on current salary plus pension benefits and
automobile allowance.
The sum of pounds 2,742.31 representing 5 days of 1996 holiday accrued
but unused consistent with Synon Europe Ltd. unused holiday
carryover policy.
The sum of pounds 1,842.83 representing 3.36 days of 1997 holiday
accrued through the notice period.
The sum of pounds 116,000.00 representing salary for one year
consistent with the terms of your employment letter agreement
with Synon Corp. dated February 7, 1992.
The sum of pounds 13,337.96 representing a bonus based on 1996 Synon
Corp. financial performance and an additional discretionary
bonus.
Less the sum of pounds 11,883.33 which has already been paid to you
through payroll continuation in January 1997.
Synon agrees to pay you any portion of these amounts ex gratia to the extent
allowable under British law.
Outstanding expenses will be reimbursed to you as soon as approved and
processed. You will turn over to Synon all company property including keys,
credit cards, hardware, software and any confidential material such as lists of
employees, clients, etc. In addition, you agree to execute whatever documents
are necessary to effect your resignation as officer or director of any of the
group companies and to make the relevant filings at local companies registries.
We have directed Mr. Victor Bhalla to prepare customary officer and director
indemnification agreements to indemnify you on behalf of Synon and it
associated companies against actions potentially taken against you by virtue of
your office while employed by Synon. Please contact Mr. Bhalla to arrange
appropriate resignations of your officer and director positions and to complete
the indemnification agreements.
ADDITIONAL SEVERANCE CONSIDERATION: Your Stock Option vesting and exercise
periods ceased at the end of your notice period of 5.82 weeks following
December 31, 1996. As of
SYNON CORPORATION 1100 LARKSPUR LANDING CIRCLE LARKSPUR, CA 94939
415-461-5000 FAX 415-461-8948
<PAGE> 2
Duncan Moore
February 6, 1997
Page 2
that date, you have 220,000 shares of options vested and exercisable. However,
without any obligation to do so, but in consideration of your prior service, to
accomplish the smooth transition desirable to all parties and in consideration
of the Restrictive Covenants and the Release below, Synon offers to extend your
Stock Option exercise period through November 30, 1997, for those options
vested. After that date, your options will expire.
RESTRICTIVE COVENANTS: Your continued right to exercise vested stock options
through the extension period mentioned above are contingent, of course, on
cooperative and professional behavior including the following restrictive
covenants.
1. You undertake that you will not, whether directly or
indirectly, make, publish or otherwise communicate to any third party
any disparaging or derogatory statements concerning Synon or its
management which, in Synon management's view acting reasonably, would
have a material adverse affect on Synon's business or reputation.
Synon, likewise undertakes that it will not, whether directly or
indirectly, make, publish or otherwise communicate to any third party
any disparaging or derogatory statements about you that, in your view
acting reasonably, would have a material adverse affect on you or your
reputation. This undertaking for Synon will extend to it officers,
directors and employees.
2. You will not, during the period ending November 30, 1997,
either for your own account or for any person, firm or company
directly or indirectly employ, solicit, or endeavor to solicit any
person who was an employee of Synon or any of its associated companies
as of your effective termination date, and with whom you had dealings
while you were employed by Synon, without the written permission of
Synon management acting reasonably.
3. You will not, during the period ending November 30, 1997, be
engaged or involved either directly or indirectly, with any business
which, in the opinion of Synon management acting reasonably, competes
directly with the business of Synon and its associated companies
without the written permission from Synon.
If you violate covenant 1 above, 25% of your vested stock options will be
canceled and no longer available for exercise by you.
If you violate covenants 2 or 3 above, Synon management will provide you
written notice of its knowledge of the violation. You have up to 30 days to
cure the violation, as determined by Synon management acting reasonably,
without penalty. If you fail to cure the violation of within 30 days of
receiving notice, 50% of your vested stock options will be canceled and no
longer available for exercise by you.
RELEASE: You agree to accept the foregoing Statutory Severance Consideration
and Additional Severance Consideration as full settlement of the termination of
your employment with Synon and agree to release Synon from any further
liability regarding your employment. You understand these provisions are
strictly confidential and pertain solely to your separation with Synon and do
not set a precedent for other Synon terminations that may occur in the future.
You further understand your continuing obligations to Synon not to use or
disclose any
<PAGE> 3
Duncan Moore
February 6, 1997
Page 3
Synon Confidential Information obtained while an employee of Synon consistent
with your employment agreements.
In addition, for the purpose of section 203(3) of the Employment Rights Act
1996 ("Act"), you hereby acknowledge, represent and warrant that:
By entering into this agreement you agree to refrain from presenting a
complaint to an Industrial Tribunal and that this agreement is
intended to relate to any such complaint;
You have received independent legal advice from a qualified lawyer of
your choosing as to the terms and effect of this agreement, and in
particular its effect upon your ability to pursue your rights before
an Industrial Tribunal; and
You have been advised by the qualified lawyer of your choice that
there is in force and was at the time you received the advice referred
to above, cover under the Solicitor's Indemnity Fund for the risk of a
claim by you in respect of loss arising in consequence of that advice.
For the purposes of Section 203(3) of the said Act, both Synon and you agree
that the conditions regulating compromise agreements under the said Act are
satisfied.
Please acknowledge your acceptance of the terms of this separation agreement by
your signature below.
Duncan, we all appreciate and respect the professionalism you have displayed
over the years and wish you and your family the best of success in the future.
Yours truly,
/s/ Paul K. Wilde
- ------------------------------
Paul K. Wilde
Vice President & CFO
Agreed and accepted:
/s/ Duncan Moore 3/21/97
- ------------------------------ ----------------
Duncan Moore Date
<PAGE> 1
EXHIBIT 10.12
SYNON
CORPORATION
March 27, 1991
Paul K. Wilde
3418 E. Encanto Street
Mesa, AZ 85213
Dear Mr. Wilde:
This letter will confirm your terms of employment with Synon
Corporation ("Synon"), a Delaware corporation, as follows:
1. You will serve in the position of Vice President and Chief
Financial Officer of Synon, reporting to the Chief Executive Officer, and
assuming and discharging such responsibilities as are commensurate with such
office and position. It is anticipated that the effective date of your
employment will be on or about April 15, 1991.
2. In consideration of your services, you will be paid a salary
of $12,500 per month (annualized rate of $150,000), payable semi- monthly in
accordance with Synon's standard payroll practices. As with other officers of
Synon, this base compensation will be reviewed annually by the Board of
Directors.
3. In addition to your base compensation, the Board of Directors
shall adopt an executive bonus program under which you shall be entitled to
receive an annual bonus of $50,000, based upon the satisfaction of certain
performance goals. It is contemplated that these performance objectives will
be determined by the Board of Directors in consultation with you, and will
concern such matters as pre-tax profitability or return on shareholders' equity
of Synon. This bonus shall be $31,250 for the year ending December 31, 1991.
4. You intend to sell your residence located in Arizona. Synon
will make you a loan of up to $200,000, at such time as you request during your
employment, for the purpose of assisting your purchase of a new home near your
place of employment with Synon. The loan will have a term of five years and
will be interest-free. However, the loan may be prepaid at any time without
penalty. The loan shall be forgiven over five years at a rate of $40,000 per
year from your start date. You will be responsible for all taxes owed as a
result of the forgiveness of the loan and any imputed interest thereon. The
balance of this loan will be due upon any voluntary termination; upon
Constructive Termination (defined herein) the balance of this loan shall be
payable and due within 12 months of such termination.
<PAGE> 2
-2-
When you relocate your residency to the San Francisco area, Synon will
reimburse you for all reasonable moving expenses, not to exceed $50,000. Synon
will be responsible for all taxes owed as a result of this reimbursement.
5. You will be entitled to receive Synon's fringe benefits made
available to other employees and officers to the full extent of your
eligibility therefor. Business expenses incurred by you will be reimbursed
according to Synon's expense reimbursement policy.
6. In the event that your employment with Synon is (i)
involuntarily terminated during the first 36 months after commencement of
employment, or (ii) involuntarily terminated or Constructively Terminated
within six (6) months following a Change in Control (as defined herein), you
shall be entitled to a severance payment of $150,000, payable in 12 equal
monthly installments, plus group health, disability, life and other insurance
coverage for one year (or comparable compensation therefor).
7. Upon your acceptance of employment, you will be granted an
option to purchase 150,000 shares of Synon Common Stock under Synon's Employee
Stock Option Plan subject to approval of the Board of Directors. (It being
understood that the number of shares has been calculated based upon the
Company's anticipated capitalization following the Series D Preferred
financing.) Under the plan, the option price shall be equal to the fair market
value of the Common Stock on the date of grant (as determined by the Board of
Directors) and shall have a term of ten years. The Option Agreement will
provide that you shall have the right to exercise the option over a period of
five years, vesting at 20% on each anniversary of the effective date of your
employment.
In addition, in the event your employment is involuntarily terminated
or Constructively Terminated within six (6) months after a Change of Control
(as defined herein); the option shall become immediately exercisable for the
full number of shares subject thereto.
8. For purposes of the foregoing, a "Change of Control of Synon"
shall be deemed to have occurred if (i) Synon sells or otherwise disposes of
all or substantially all of its assets; (ii) there is a merger or consolidation
of Synon with any other corporation or corporations, provided that the
shareholders of Synon, as a group, do not hold, immediately after such event,
at least 50% of the voting power of the surviving or successor
<PAGE> 3
-3-
corporation; (iii) any person or entity, including any "person" as such term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), becomes the "beneficial owner" (as defined in the
Exchange Act), of Common Stock of Synon representing 50% or more of the
combined voting power of the voting securities of Synon (exclusive of persons
who are now officers or directors of Synon).
9. For purposes of the foregoing, your employment with Synon
shall be deemed to have been "Constructively Terminated" if there shall occur
(i) a material reduction in salary or benefit (taken as a whole), (ii) a
material change in responsibility, or (iii) a requirement to relocate, except
for office relocations that would not increase your one-way commute distance by
more than fifty (50) miles.
10. This agreement shall be governed by the laws of the State of
California.
Please execute the enclosed copy of this letter, whereupon it shall
become a binding agreement. Synon and you shall undertake to promptly prepare
and execute all of the documents and agreements as are reasonably necessary to
carry out the intentions expressed herein, including the standard Synon
employment agreement. This agreement shall inure to the benefit of and shall
be binding upon the parties hereto and their respective heirs, personal
representatives, successors and assigns, if any.
Very truly yours,
SYNON CORPORATION
/s/ Christopher Herron
------------------------------
Christopher Herron
President & CEO
Accepted as of the date
written above.
/s/ Paul K. Wilde
- ------------------------------
Paul K. Wilde
<PAGE> 4
SYNON
CORPORATION
March 29, 1991
Paul K. Wilde
3418 E. Encanto Street
Mesa, AZ 85213
Dear Paul:
I am pleased to offer you employment with Synon Corporation. Your
initial position will be Chief Financial officer in our Larkspur office.
Your base compensation will be at the rate of $12,500.00 per month,
payable semi-monthly. You will accrue vacation at the rate of 1.5 days per
calendar month employed. You will receive the fringe benefits in effect from
time to time for all full time Synon employees. The fringe benefits now in
effect are described on the attached pages. Synon may change these benefits
from time to time, each change to be effective when notice of the change is
given to you.
By accepting employment with Synon and signing and returning to Synon
a copy of this letter, you represent that you are not subject to any
restrictions or agreements, including agreements with former employers, which
might prohibit your employment by Synon or limit your activities on behalf of
Synon. You also agree to hold Synon harmless from liabilities, cost and
expenses which may result from any such restriction or agreement.
In addition you agree to the following terms and conditions of
employment.
a. Your employment will be at-will and may be terminated at any
time for any reason, with or without cause and with or without notice. You may
not rely on any practice, conduct or verbal representation to the contrary.
b. While employed by Synon, you will be loyal to Synon. You will
not work for or assist, directly or indirectly, any competitor of Synon.
<PAGE> 5
-2-
c. You will keep confidential, during and after your employment,
Synon's confidential information, including its customer files, financial
information, marketing plans, technical information related to its products,
and other such information as Synon treats as confidential. You will not
disclose Synon's confidential information or use it except in connection with
your employment with Synon.
d. You will not accept employment with, or perform any services
for, a licensee of Synon's products within 3 months after termination of
employment with Synon.
e. You agree that breach of your promises in this letter would
irreparably damage Synon, and you agree that injunctive relief would be an
appropriate remedy in the event of breach or threatened breach of these
promises.
f. This letter will be binding on and inure to the benefit of
Synon and its successors, including any successors by merger. Synon may assign
its rights under this letter to any entity which acquires all or substantially
all of the assets of Synon.
Please indicate your acceptance of this offer and your agreement to
the terms contained in this letter by signing and returning a copy of this
letter.
I look forward to a successful and enjoyable association.
Sincerely yours,
Synon, Inc.
/s/ Christopher Herron
- ------------------------------
Christopher Herron
President
Acceptance and Agreement
I accept the offer of employment and agree to the terms and conditions of
employment stated in the preceding letter,
Name /s/ Paul K. Wilde
-------------------------
Date 4/1/91
-------------------------
<PAGE> 6
December 10, 1992
Paul Wilde
19 Royal Oaks Court
Alamo, CA 94507
Dear Paul:
Reference is made to that certain employment offer letter agreement
dated as of March 27, 1991 between Synon, Inc. (the "Company") and you (the
"Employment Letter"). The parties, desiring to amend the Employment Letter,
hereby agree to add the following:
During the course of your employment, you may create, develop or
improve processes, designs, techniques, original works of authorship,
concepts, trade secrets or other intellectual property, including
without limitation, computer software such as application development
and other software products, application software, templates and data
models (together "Inventions"). You acknowledge that any Inventions
you develop or have developed in connection with your employment by
the Company are works for hire and are owned by the Company or clients
of the Company, and you agree not to assert any individual ownership
rights with respect to those Inventions. Upon request by the Company
and at the Company's consent, you will sign such further agreements
and assignments as may be necessary to transfer to the Company or
clients of the Company any rights you may have in those Inventions and
to register those rights in the name of the Company or client of the
Company, and you appoint the Company as your attorney-in-fact to sign
those documents on your behalf. Your obligations under this paragraph
do not apply to any Invention for which no equipment, supplies,
facility or trade secret of the Company or a client of the Company was
used and which was developed entirely on your own time, unless (a) the
Invention relates (i) to the business of the Company or (ii) to the
Company's actual or demonstratable anticipated research or development
or (b) the Invention results from any work performed by you for the
Company.
Attached hereto, as Exhibit A, is a list describing all inventions,
original works of authorship, developments, improvements, and trade
secrets (collectively "Prior Inventions"), that belong to you, that
relate to the Company's business, products or research and
development, and that are not assigned to the Company hereunder; or,
if no such list is attached, you represent that there are no such
Prior Inventions. If in the course of your employment with the
Company, you incorporate into a Company product, process or
<PAGE> 7
machine a Prior Invention owned by you or in which you have an
interest, the Company is hereby granted and will have a nonexclusive,
royalty-free, irrevocable, perpetual, worldwide license, with the
right to grant sublicenses, to make, have made, modify, use and sell
such Prior Invention as part of or in connection with such product,
process or machine.
Agreed and Accepted:
Synon, Inc.
By: /s/ Richard Goldberg By: /s/ Paul Wilde
-------------------------- ------------------------------
Richard Goldberg Paul Wilde
Date: 12/9/92 Date: 12/9/92
------------------------ ------------------------
<PAGE> 8
January 14, 1993
Paul K. Wilde
19 Royal Oaks Court
Alamo, CA 94507
RE: AMENDMENT TO EMPLOYMENT LETTER
Dear Mr. Wilde:
This letter is to amend the terms of your employment with Synon
Corporation ("Synon") as set forth in your employment letter dated March 27,
1991 (the "Employment Letter"). This amendment shall conform the terms of the
Employment Letter to the agreement between Synon and you and to the terms of
the Promissory Note and Security Agreement, each dated September 24, 1992,
between Synon and you. The Employment Letter shall be amended as follows:
1. The first paragraph of Section 4 is amended to read in its
entirety as follows (changes underlined):
"You intend to sell your residence located in Arizona. Synon
will make you a loan of $200,000, at such time as you request
during your employment, for the purpose of assisting your
purchase of a new home near your place of employment with
Synon. The loan will have a term of five years and will bear
interest at 8% per annum, payable at least annually, subject
to your continuing status as an employee or consultant of the
Company. $3,333.33 of indebtedness (1/60 of the principal)
shall be forgiven at the end of each one-month period
following April 15, 1991 (your employment start date)
resulting in total forgiveness of the loan at the end of five
(5) years from your employment start date. You will be
responsible for all taxes owed as a result of the forgiveness
of the loan and any imputed interest thereon. The balance of
this loan will be due upon any voluntary termination; if you
are involuntarily terminated without cause or Constructively
Terminated (as defined herein) the balance of this loan shall
be payable and due within 12 months of such termination.
Notwithstanding the foregoing, if you voluntarily terminate
your employment with Synon during calendar year 1993, other
than due to your being Constructively Terminated, the loan
will be forgiven to the extent of (i) $40,000, if such
termination is prior to April 15, 1993, or (ii) $80,000, if
such termination is between April 15, 1993 and December 31,
1993. In
<PAGE> 9
the event you are involuntarily terminated without cause or
Constructively Terminated at any time while the loan remains
outstanding, the loan will be forgiven to the extent of the
ratable portion described above plus an additional $40,000."
2. A new paragraph shall be added to Section 4 as follows:
"For each year in which you are required to pay to Synon
interest on the loan discussed above, Synon will pay to you an
additional annual bonus equal to such interest payment."
3. Section 6 is amended in its entirety to read as follows
(changes underlined):
"In the event that your employment with Synon is (i)
involuntarily terminated during the first 36 months after
commencement of employment, or (ii) involuntarily terminated
or Constructively Terminated within six (6) months following a
Change in Control (as defined herein), you shall be entitled
to a severance payment equal to one year of your then current
salary, payable in 12 equal monthly installments, plus group
health, disability, life and other insurance coverage for one
year (or comparable compensation therefor)."
Except as otherwise provided herein, the terms of your employment
shall continue to be governed by the terms contained in the Employment Letter,
Please execute the enclosed copy of this letter whereupon it shall
become a binding amendment to the Employment Letter. Synon and you shall
undertake to promptly prepare and execute all of the documents and agreements
as are reasonably necessary to carry out the intentions expressed herein. This
amendment shall inure to the benefit of and shall be binding upon the parties
hereto and their respective heirs, personal representatives, successors and
assigns, if any.
Very truly yours,
SYNON CORPORATION
/s/ Richard Goldberg
------------------------------
Richard Goldberg
President and CEO
ACCEPTED AS OF THE DATE
WRITTEN ABOVE:
/s/ Paul K. Wilde
- ------------------------------
Paul K. Wilde
<PAGE> 1
EXHIBIT 10.13
SYNON
January 2, 1996
Mr. Bill Yeack
429 Fernwood
Morgan, CA. 94556
Dear Bill:
I am pleased to confirm my verbal offer for you to join Synon Corporation as
Vice President, Professional Services. This letter sets forth the terms of
your employment offer with Synon as follows:
1. You will serve in the position of Vice President, Professional Services,
reporting to the Chief Executive Officer and assume and discharge such
responsibilities as are commensurate with this position. You shall
comply with and be bound by Synon's operating policies, procedures, and
practices. It is anticipated that the effective date of your employment
will be on or about January 15, 1996.
2. During the term of your employment with Synon you shall devote your full
time, skill and attention to your duties and responsibilities, and shall
perform them faithfully, diligently and competently, and you shall use
your best efforts to further the business of Synon. Your employment
with Synon is for an unspecified duration that constitutes at-will
employment and either Synon or you can terminate this relationship at
any time.
3. In consideration of your services, you will paid a salary of $16,667 per
month (annualized rate of $200,000) payable semi-monthly in accordance
with Synon's standard payroll in practices. As with other officers of
Synon, this base compensation will be reviewed annually by the Board of
Directors.
4. In addition to your base compensation, the Board of Directors shall
adopt an executive bonus program under which you shall be entitled to
earn incentive compensation based upon the satisfaction of certain
performance goals. It is contemplated that these performance objectives
will be determined by the Chief Executive Officer in consultation with
you, and will concern such matters as Professional Services
profitability and business growth. The bonus will be targeted at
$75,000 annually. It is further anticipated that additional incentive
compensation will be provided for overachievement of corporate
objectives. This additional compensation is at the sole discretion of
the Board of Directors.
SYNON CORPORATION 1100 LARKSPUR LANDING CIRCLE LARKSPUR, CA 94939
415-461-5000 Fax 415-461-8948
<PAGE> 2
5. You will be entitled to receive Synon's fringe benefits made available
to other employees and officers to the full extent of your eligibility
therefore. You shall be entitled to three weeks of paid vacation per
year (which shall not accrue in excess of three weeks per year).
During your employment, you shall be permitted, to the extent
eligible, to participate in any group life, hospitalization or
disability insurance plan, health program, or similar benefit plan of
Synon that may be available to other comparable employees generally on
the same terms as such other employees. Participation in any such
plan shall be consistent with your rate of compensation to the extent
that compensation is a determinative factor with respect to coverage
under any such plan. Business expenses, incurred by you will be
reimbursed according to Synon's expense reimbursement policy.
6. Upon your acceptance of employment, you will be granted a
non-statutory option to purchase 200,000 shares of Synon Common Stock
under Synon's 1990 Stock Option Plan subject to approval of the Board
of Directors. The option price shall be $1.80 and the option shall
have a term of ten years. The Option Agreement will provide that your
right to exercise the option will vest cumulatively over a period of
four years, vesting at 25% on the first anniversary of the effective
date of your employment and thereafter on a monthly basis (2.0833% per
month).
In addition, (i) upon any Change of Control of Synon Corporation (as
defined herein) or initial public offering by Synon Corporation,
whichever occurs first, any of the 200,000 shares remaining unvested,
up to a maximum of 50,000 shares, will vest automatically and any of
the then remaining unvested options will vest monthly in equal
increments over the balance of the original vesting period and (ii) if
your employment is involuntarily terminated or Constructively
Terminated (as defined herein) within twelve (12) months after a
Change of Control (it being the intention that you will agree to
remain employed for at least one year following a "Change of
Control"), then your option shall be accelerated to become immediately
exercisable for 50% of the total number of unvested shares subject
thereto.
7. In addition, if your employment is involuntarily terminated other than
for "cause" (as defined herein) then (i) if such termination occurs
prior to Change of Control (as defined herein) you shall receive six
months salary as severance, or, (ii) if termination occurs
involuntarily or "constructively" (as defined herein), other than for
cause, within one year following Change of Control then you shall
receive 1 year's salary as severance.
8. For purposes of the foregoing, termination "for cause" shall mean (i)
the willful failure by you substantially to perform your material
duties after a written demand for substantial performance is delivered
to you by the Chief Executive which specifically identifies the manner
in which he believes that you have not substantially performed your
duties; (ii) the failure (in a material respect) by you to follow a
written, lawful order or directive from the Chief Executive; (iii) the
conviction of you of any crime involving the property or business of
Synon or its affiliates; or (iv) any act of moral
2
<PAGE> 3
turpitude in connection with the performance of your duties hereunder
9. For purposes of the foregoing, a "Change of Control of Synon" shall be
deemed to have occurred if (i) Synon sells or otherwise disposes of
all or substantially all of its assets; (ii) there is a merger or
consolidation of Synon with any other corporation or corporations,
provided that the shareholders of Synon, as a group, do not hold,
immediately after such event, at least 50% of the voting power of the
surviving or successor corporation; (iii) any person or entity,
including any "person" as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
becomes the "beneficial owner" (as defined in the Exchange Act) of
Common Stock of Synon representing 50% or more of the combined voting
power of the voting securities of Synon (exclusive of persons who are
now officers of directors of Synon).
10. For purposes of the foregoing, your employment with Synon shall be
deemed to have been "Constructively Terminated" if there shall occur
(i) a material reduction in salary or benefit (taken as a whole); or
(ii) a material change in responsibility, or (iii) a requirement to
relocate, except for office relocations that would not increase your
one-way commute by more than 50 miles.
11. Upon acceptance of this offer, you will be required to sign Synon's
standard employee proprietary information agreement.
Bill, we are excited about having you as a part of the Synon Executive Team.
Please acknowledge acceptance of this offer by signing and returning the
enclosed copy of this letter. Synon and you shall undertake to promptly
prepare and execute all of the documents and agreements as are reasonably
necessary to carry out the intentions expressed herein.
Very truly yours,
/s/ Richard H. Goldberg
Richard H. Goldberg
President and CEO
Accepted by:
/s/ W.R. Yeack
Bill Yeack
Date: 1/10/96
<PAGE> 1
EXHIBIT 10.14
SYNON
-----
Simon Williams
19 Highfields Grove
Fitzroy Park
London N6 6HN
28th July 1994
Dear Simon,
This Employment Agreement records your employment with Synon Research Limited
("the Company") and Synon Corporation, a Delaware corporation having a
principal place of business at 1100 Larkspur Landing Circle, Larkspur, CA
94939, USA. It supersedes your prior Employment Agreement dated 15th September
1992.
1. Duties and place of work
1.1 The Company shall employ you as Chief Technology Officer or in any
other capacity as the Company may agree with you from time to time.
You will be a Director of the Company. You will be required to work
at 91 St Pauls Road, London N1 2YU, or in the event of the Company or
any of its subsidiary or associated companies no longer occupying that
address at such other address within a three mile radius of that
address that the Company may agree with you from time to time. You
may be required to travel on the business of the Company or any of its
subsidiary or associated companies anywhere in be world (as the same
are defined in Section 736 of the Companies Act 1985 and Section 416
of the Income and Corporation Taxes Act 1988, respectively). You are
to report to the Chief Executive Officer of Synon Corporation.
1.2 You shall devote the whole of your time and attention during working
hours to the interests and welfare of the Company and its subsidiary
and associated companies and faithfully and diligently perform your
duties to the best of your ability. You may be required in pursuance
of your duties to perform services not only for the Company but also
for any subsidiary or associated company.
1.3 You will not during the term of your employment hereunder be directly
or indirectly concerned, engaged or interested in any business
competing with that of the Company except with the written consent of
the Board of Directors of the Company, or as the holder (directly or
through nominees) of investments listed on any recognised stock
exchange where the holding does not exceed five per cent of the issued
shares or stock of any class of any one company.
1.4 You will have the title and perform the duties of Chief Technology
Officer of Synon Corporation.
1.5 You are authorised by the Company to employ and direct on its behalf a
Development Team located at your place of work. The said Development
Team may comprise, at your sole discretion, up to seventeen (17)
people of appropriate skills and experience, employed at salaries and
under terms and conditions commensurate with those that prevail in
similar software research and development organisations within the
London area. The Development Team will be engaged upon such software
product research and development projects as Synon Corporation shall
determine from time to time,
1.6 The provisions of clause 1.5 shall cease to apply upon the occurrence of
both of the following:
<PAGE> 2
i. Synon Corporation and its affiliates receiving the aggregate
of One Hundred Million US Dollars (US$ 100,000,000) in
Receipts (as defined in clause 12 below); and
ii. all commission and other sums due to you under this Agreement
have been paid in full when due.
2. Remuneration and benefits
2.1 The Company will pay you a basic salary at the rate of Pound 125,000
per annum, or such higher rate as may from time to time be agreed.
Salary shall be payable by equal monthly payments in arrears not later
than the 28th day of each month. You are not entitled to any
additional remuneration in respect of your duties as Chief Technology
Officer of Synon Corporation.
2.2 In addition to the basic salary specified in sub-clause 2.1 the
Company shall pay to you a Commission ("the Commission") which
(subject to the provisions of sub-clause 2.5 below) shall be such sum
as equals two percent (2.0%) of all income revenue and other payments
or consideration of any kind received by or on behalf of the Company
or any subsidiary or associated company of the Company including Synon
Corporation and its subsidiaries and associated companies during the
period of 5 years (as specified in sub-clause 2.4 below) in respect of
each sale or rental by way of licence or maintenance or other
exploitation of the Product (herein meaning the Product specified in
sub-clause 2.3 below) or any part of the Product in any language
anywhere in the world by Synon Corporation, the Company, their
subsidiary and associated companies and any third parties
("Receipts").
2.3 References to the Product herein mean the next generation workstation
based CASE product currently being developed by the Company and all
improvements, enhancements, modifications and new versions of that
Product and all user documentation for that Product as it exists from
time to time.
2.4 The Commission shall be calculated on Receipts in respect of the
Product received:
i. during the period of five (5) years commencing on 1st July
1994;
ii. after the aforesaid five year period in respect of contracts
entered by the Company or Synon Corporation and their
subsidiary and associated companies during the said five year
period.
The Commission shall be paid monthly in arrears within thirty
(30) days of the end of each calendar month in which the said
Receipts of Product fees are received by or on behalf of the
Company and its associated and subsidiary companies and Synon
Corporation, and its associated and subsidiary companies.
2.5. The Commission due hereunder shall be due and payable to you:
i. during the continuance of your employment hereunder and
ii. after the termination of your employment hereunder. If you
voluntarily terminate your employment hereunder prior to the
expiration of the period of 5 years referred to in subclause
2.4 above the rate of Commission referred to in sub-clause 2.2
shall be reduced to one percent (1.0%) from the date of such
termination UNLESS prior to the date of such termination:
a. Synon Corporation has consummated a Significant
Merger (as defined in the current version of Section
2(d) of the Fourteenth Article of Synon Corporation's
Certificate of Incorporation) or sold all or
substantially all of its assets, or
b. any of Synon Corporation's Preferred Stock has been
converted to Common Stock by using a calculation, for
each respective series of Preferred Stock, other than
as
- Page 2 of 6 -
<PAGE> 3
specified in the current version of Section 5 of the
Fourth Article of Synon Corporation's Certificate of
Incorporation or by using a Conversion Price for each
respective series of Preferred Stock other than as
set out in the current version of Section 5(d) of the
said Fourth Article for each such series of Preferred
Stock, or
c. the Company or Synon Corporation is in material
breach of this Employment Agreement;
then the said rate of Commission shall not be so reduced. The
references to "Preferred Stock", "Common Stock" and
"Conversion Price" in this clause 2.5ii shall have the
meanings given to them in the current version of Section 5 of
the Fourth Article of Synon Corporation's Certificate of
Incorporation.
2.6 All payments to be made to you hereunder shall be paid in British
pounds sterling and in respect of the Commission any fees received by
Synon Corporation or the Company and its subsidiaries and associated
companies on which the same is payable shall be converted to sterling
by reference to the spot rate on the London Foreign Exchange Market at
about 11am on the first day of the calendar mouth in which the payment
is made.
2.7 The Company shall maintain and shall procure that its subsidiary and
associated companies maintain complete and accurate records of such
information as may be reasonably necessary to accurately calculate all
payments due to you as Commission and shall on reasonable notice make
the same available to you for inspection (and if requested copying) by
you or your representative no more frequently than once in any six (6)
month period.
2.8 If any Commission payable to you hereunder is not paid by the due date
for payment then such sum shall bear interest at the rate of two per
cent (2%) above the base lending rate from time to time of Barclays
Bank plc from the date such sum falls due for payment until the date
of actual payment compound twice yearly at six (6) month intervals.
2.9 In the event of any dispute arising between us as to the amount of any
Commission payable or paid hereunder the matter shall be referred to
an independent third party at your request for it to certify the
amount properly due and payable pursuant to the terms of this
Agreement. Such independent third party shall be such person or
entity as you and the Company shall agree and failing agreement shall
be appointed by the President of the Institute of Chartered
Accountants at your request. Such independent third party shall act
as expert and not as arbitrator hereunder and his decision shall be
final and binding on the parties hereto save in the case of fraud or
manifest error. The costs of such expert shall be borne as to fifty
percent (50%) by the Company and 50% by you unless such expert shall
decide that one party has acted unreasonably in which case he shall
have discretion as to costs.
2.10 The Company will promptly refund to you all reasonable travelling,
hotel and other expenses properly incurred by you in performance of
your duties under this Agreement. When travelling by air during the
performance of your duties under this Agreement you are entitled to
purchase a business class ticket or its equivalent, and the Company
will refund to you the cost of such ticket.
2.11 You are not entitled to any pension from the Company. A contracting
out certificate under the Social Security Act 1975 is not in force in
respect of the employment to which this letter refers.
3. Salary during illness.
If you are absent through illness or accident for more than a total of
six months in any consecutive period of twelve months your basic
salary may be reduced during any period in excess of the six month
period to one half of that to which you would otherwise be entitled.
Included within such salary shall be any amount to which you are
entitled as Statutory Sick Pay. The Company will deduct from your
salary any income benefit which you are entitled to claim in
consequence of any sickness or accident under the National Insurance
scheme in force at the time
Page 3 of 6
<PAGE> 4
including Statutory Sick Pay and social security sickness benefit.
For the purpose of calculating your entitlement to statutory Sick Pay
"qualifying days" are Monday to Friday.
4. Hours of work
4.1 You will conform to such hours of work as may from time to time be
reasonably required of you and you will not be entitled to receive any
additional remuneration for work outside your normal hours.
4.2 At the time of writing, the Company operates flexible working hours,
whereby you are required to work 37.5 hours during each working week
(less 7.5 hours for each usual public and statutory holiday) and are
required to be at work between the hours of 10.00am and 4.00pm on each
working day.
5. Holidays
5.1 You will be entitled to the usual public and statutory holidays, and
in addition to twenty-two working days holiday in each full calendar
year of employment, to be taken at times as may be approved by the
Company.
5.2 During the years in which your employment commences and terminates,
you will be entitled to holiday in direct proportion to your length of
service during that year, calculated as:
No of days service / 365 X 22, rounded to the nearest whole day
5.3 On termination of your employment with the Company for any reason your
final basic salary payment shall be increased or decreased by:
(Holiday entitlement - Holiday days taken) X Annual salary / 260
5.4 If during any calendar year you do not take all the holiday to which
you are entitled, you shall not carry forward any holiday entitlement,
and you shall not be entitled to any additional remuneration in
respect of the unused entitlement.
6. Term and termination.
6.1 Your employment with the Company commenced on 1st January 1992, and no
previous employment counts as part of your continuous period of
employment with the Company.
6.2 Unless previously terminated under other provisions of this clause
your employment with the Company will continue until terminated by
either party giving one month's written notice to the other.
6.4 In the event of your performance proving unsatisfactory, the Company
may give you written notification of this, detailing the specific
reasons. The Company may then subsequently terminate your employment
if in its opinion there has been insufficient improvement in your
performance. Notice of termination will be given to you not sooner
than one month nor later that three months after the date of the
original notification. The period for such notice shall be one month.
6.5 Your employment with the Company shall in any event (unless otherwise
agreed in writing) terminate on the date of your sixtieth birthday.
6.6 The Company may terminate your employment with the Company by notice
in writing immediately:
a. If you act so as to bring yourself or the Company into
disrepute, or if you are guilty of gross misconduct, or are
substantially in breach of this Agreement, or
Page 4 of 6 -
<PAGE> 5
b. if you are absent and unable to fulfil your duties through
accident or illness for a total of 180 days or more in any
period of twelve months.
7. Secrecy
7.1 You shall not disclose (except in the proper course of your duties) to
any person, firm or company, or seek to exploit at any time either
during or after the termination of your employment with the Company
any trade secret or confidential information relating to the business,
plant, machinery, processes or formulae of the Company or any
subsidiary or associated company or any customer of the Company or of
any subsidiary or associated company. This restriction shall cease to
apply to information or knowledge which has come into the public
domain other than by breach of this clause, or which is trivial or
obvious.
7.2 Upon the termination of your employment with the Company you will
return to the Company all property of the Company, and all records of
any nature or description which you may have in any way relating
directly or indirectly to the business of the Company or any customer
of the Company.
8. Inventions
8.1 Any procedures, processes, designs, formulae, equipment, techniques,
specifications, methods of production or inventions, or other
industrial property ("the said procedures or inventions") which you
may evolve, discover, invent or improve at any time during the course
of or arising out of your employment with the Company, including any
of the said procedures or inventions which result from disclosures to
you by any customer of his own procedures, inventions or machinery
shall be disclosed to the Company and shall (subject to Sections 39 to
42 of the Patents Act 1977) be the exclusive property of the Company
or the customer as the case may be.
8.2 At the request of the Company, and at the expense of the Company or
the customer as the case may be, you will make or join in such
applications, execute such deeds and do all such other acts as are
necessary to secure and where appropriate to register in the name of
the Company or the customer as the case may be any letters patent,
copyrights and/or trade marks in the United Kingdom and elsewhere in
respect of the said procedures and inventions.
8.3 For the avoidance of doubt, it is specifically understood that the
provisions of this Clause apply to any invention, discovery or
improvement made by you during the course of or arising out of your
employment with the Company, whether inside or outside normal working
hours, and whether made with the use of the Company's premises,
machinery or equipment or not.
8.4 For the purposes of this Clause you irrevocably appoint the Company as
your attorney in your name to execute all documents and do all things
which are required in order to give effect to the provisions of this
Clause, and the Company is hereby empowered to appoint and remove at
pleasure any person as agent and substitute for and on behalf of the
Company in respect of all or any of the matters aforesaid.
9. Restrictions after termination
9.1 There will be a restricted period of six months after the termination
of your employment (however it may end). The restricted period will
run from the date on which you or the Company gives notice to the
other, or in the absence of notice the date of actual termination of
your employment.
9.2 During the restricted period you shall not:
a. seek or accept employment with, or perform any services not
authorised by the Company for, any customer of the Company for
whom you have rendered any services on behalf of
- Page 5 of 6 -
<PAGE> 6
the Company during the six months immediately preceding the
beginning of the restricted period.
b. for yourself or for any other person, firm or company solicit
or entice away from the Company or any subsidiary or
associated company (or attempt to do so) any consultant or
employee or servant of the Company or any subsidiary or
associated company.
c. for yourself or for any other person, firm or company solicit
or entice away from the Company or any subsidiary or
associated company (or attempt to do so) any person, firm or
company who was at any time during the six months immediately
preceding the beginning of the restricted period a customer of
or otherwise in the habit of dealing with the Company or any
subsidiary or associated company.
d. for yourself or other any other person, firm or company carry
on or be engaged (in a similar capacity to that which you are
engaged by the Company hereunder) in any business which
competes with the Product.
10. General.
10.1 There are not in force any formal disciplinary rules applicable to
your employment but you are expected to conform to accepted standards
of behavior. If you are dissatisfied with any disciplinary decision
in respect of your employment or wish to obtain redress of any
grievance relating to your employment you should notify a director of
the Company in writing immediately.
10.2 This Agreement and all matters arising in connection with it shall be
governed by English Law and shall be subject to the jurisdiction of
the English courts.
Signed by SIMON WILLIAMS /s/ Simon Williams
---------------------------------------
in the presence of:
Witness signature /s/ Andrew Newton
---------------------------------------
Witness Name Andrew Newton
Witness address Flat 2, 70 Milton Park, London N6
Witness occupation Accountant
Signed by PAUL WILDE /s/ Paul Wilde
---------------------------------------
for and on behalf of SYNON RESEARCH LTD
in the presence of:
Witness signature /s/ Andrew Newton
---------------------------------------
Witness name Andrew Newton
Witness address Flat 2, 70 Milton Park, London N6
Witness occupation Accountant
Signed by PAUL WILDE /s/ Paul Wilde
---------------------------------------
for and on behalf of SYNON CORPORATION
in the presence of:
Witness signature /s/ Andrew Newton
---------------------------------------
Witness name Andrew Newton
Witness address Flat 2, 70 Milton Park, London N6
Witness occupation Accountant
<PAGE> 1
EXHIBIT 10.15
SYNON
-----
Melinda Horton
Penkelly House
Calstock
Cornwall PL18 9RG
28th July 1994
Dear Melinda,
This Employment Agreement records your employment with Synon Research Limited
("the Company"). It supersedes your prior Employment Agreement dated 15th
September 1992.
1. Duties and place of work
1.1 The Company shall employ you as Director of Development or in any
other capacity as the Company may agree with you from time to time.
You will be a Director of the Company. You will be required to work
at 91 St Pauls Road, London N1 2YU, or in the event of the Company or
any of its subsidiary or associated companies no longer occupying that
address at such other address within a three mile radius of that
address that the Company may agree with you from time to time. You
may be required to travel on the business of the Company or any of its
subsidiary or associated companies anywhere in the world (as the same
are defined in Section 736 of the Companies Act 1985 and Section 416
of the Income and Corporation Taxes Act 1988, respectively). You are
to report to the Chief Technology Officer of Synon Corporation.
1.2 You shall devote the whole of your time and attention during working
hours to the interests and welfare of the Company and its subsidiary
and associated companies and faithfully and diligently perform your
duties to de best of your ability. You may be required in pursuance
of your duties to perform services not only for the Company but also
for any subsidiary or associated company.
1.3 You will not during the term of your employment hereunder be directly
or indirectly concerned, engaged or interested in any business
competing with that of the Company except with the written consent of
the Board of Directors of the Company, or as the holder (directly or
through nominees) of investments listed on any recognised stock
exchange where the holding does not exceed five per cent of the issued
shares or stock of any class of any one company.
1.4 Under an Employment Agreement of even date between the Company and
Simon Williams, the Company has authorised Simon Williams to employ
and direct on its behalf a Development Team located at your place of
work, which you shall manage. The said Development Team may comprise,
at Simon Williams' sole discretion, up to seventeen (17) people
(including yourself) of appropriate skills and experience, employed at
salaries and under terms and conditions commensurate with those that
prevail in similar software research and development organisations
within the London area. The Development Team will be engaged upon
such software product research and development projects as Synon
Corporation shall determine from time to time. It is a condition of
your employment that Simon Williams is Chief Technology Officer of
Synon Corporation and that the Company shall continue to authorise
Simon Williams to employ the Development Team on its behalf under the
terms and conditions set out in this clause 1.4.
1.5 The provisions of clause 1.4 shall cease to apply upon the occurrence
of both of the following:
<PAGE> 2
i. Synon Corporation and its affiliates receiving the
aggregate of One Hundred Million US Dollars
(US$100,000,000) in Receipts (as defined in clause
2.2 below); and
ii. all commission and other sums due to you under this
Agreement have been paid in full when due.
2. Remuneration and benefits
2.1 The Company will pay you a basic salary at the rate of Pound 85,000
per annum, or such higher rate as may from time to time be agreed.
Salary shall be payable by equal monthly payments in arrears not later
than the 28th day of each month.
2.2 In addition to the basic salary specified in sub-clause 2.1 the
Company shall pay to you a Commission ("the Commission") which
(subject to the provisions of sub-clause 2.5 below) shall be such sum
as equals one percent (1.0%) of all income revenue and other payments
or consideration of any kind received by or on behalf of the Company
or any subsidiary or associated company of the Company including Synon
Corporation and its subsidiaries and associated companies during the
period of 5 years (as specified in sub-clause 2.4 below) in respect of
each sale or rental by way of licence or maintenance or other
exploitation of the Product (herein meaning the Product specified in
sub-clause 2.3 below) or any part of the Product in any language
anywhere in the world by Synon Corporation, the Company, their
subsidiary and associated companies and any third parties
("Receipts").
2.3 References to the Product herein mean the next generation workstation
based CASE product currently being developed by the Company and all
improvements, enhancements, modifications and new versions of that
Product and all user documentation for that Product as it exists from
time to time.
2.4 The Commission shall be calculated on Receipts in respect of the
Product received:
i. during the period of five (5) years commencing on 1st
July 1994;
ii. after the aforesaid five year period in respect of
contracts entered by the Company or Synon Corporation
and their subsidiary and associated companies during
the said five year period.
The Commission shall be paid monthly in arrears within thirty (30)
days of the end of each calendar month in which the said Receipts of
Product fees are received by or on behalf of the Company and its
associated and subsidiary companies and Synon Corporation, and its
associated and subsidiary companies.
2.5 The Commission due hereunder shall be due and payable to you:
i. during the continuance of your employment hereunder and
ii. after the termination of your employment hereunder. If you
voluntarily terminate your employment hereunder prior to the
expiration of the period of 5 years referred to in sub-clause
2.4 above the rate of Commission referred to in sub-clause 2.2
shall be reduced to one half of one percent (0.5%) from the
date of such termination UNLESS prior to the date of such
termination:
a. Synon Corporation has consummated a Significant
Merger (as defined in the current version of Section
2(d) of the Fourteenth Article of Synon Corporation's
Certificate of Incorporation) or sold all or
substantially all of its assets, or
b. any of Synon Corporation's Preferred Stock has been
converted to Common Stock by using a calculation, for
each respective series of Preferred Stock, other than
as specified in the current version of Section 5 of
the Fourth Article of Synon
Page 2 of 6
<PAGE> 3
Corporation's Certificate of Incorporation or by
using a Conversion Price for each respective series
of Preferred Stock other than as set out in the
current version of Section 5(d) of the said Fourth
Article for each such series of Preferred Stock, or
c. the Company or Synon Corporation is in material
breach of this Employment Agreement;
then the said rate of Commission shall not be so reduced. The
references to "Preferred Stock", "Common Stock" and
"Conversion Price" in this clause 2.5.ii shall have the
meanings given to them in the current version of Section 5 of
the Fourth Article of Synon Corporation's Certificate of
Incorporation.
2.6 All payments to be made to you hereunder shall be paid in British
pounds sterling and in respect of the Commission any fees received by
Synon Corporation or the Company and its subsidiaries and associated
companies on which the same is payable shall be converted to sterling
by reference to the spot rate on the London Foreign Exchange Market at
about 11 am on the first day of the calendar month in which the
payment is made.
2.7 The Company shall maintain and shall procure that its subsidiary and
associated companies maintain complete and accurate records of such
information as may be reasonably necessary to accurately calculate all
payments due to you as Commission and shall on reasonable notice make
the same available to you for inspection (and if requested copying) by
you or your representative no more frequently than once in any six (6)
month period.
2.8 If any Commission payable to you hereunder is not paid by the due date
for payment then such sum shall bear interest at the rate of two per
cent (2%) above the base lending rate from time to time of Barclays
Bank plc from the date such sum falls due for payment until the date
of actual payment compound twice yearly at six (6) month intervals.
2.9 In the event of any dispute arising between us as to the amount of any
Commission payable or paid hereunder the matter shall be referred to
an independent third party at your request for it to certify the
amount properly due and payable pursuant to the terms of this
Agreement. Such independent third party shall be such person or
entity, as you and the Company shall agree and failing agreement shall
be appointed by the President of the Institute of Chartered
Accountants at your request. Such independent third party shall act
as expert and not as arbitrator hereunder and his decision shall be
final and binding on the parties hereto save in the case of fraud or
manifest error. The costs ofsuch expert shall be borne asto fifty
percent (50%) by the Companyand 50% by you unless such expertshall
decide that one party has acted unreasonably in which case he shall
have discretion as to costs.
2.10 The Company will refund to you all reasonable traveling, hotel and
other expenses properly incurred by you on the Company's business.
2.11 You are not entitled to any pension from the Company. A contracting
out certificate under the Social Security Act 1975 is not in force in
respect of the employment to which this letter refers.
3. Salary during illness.
If you are absent through illness or accident for more than a total of
six months in any consecutive period of twelve months your basic
salary may be reduced during any period in excess of the six month
period to one half of that to which you would otherwise be entitled.
Included within such salary shall be any amount to which you are
entitled as Statutory Sick Pay. The Company will deduct from your
salary any income benefit which you are entitled to claim in
consequence of any sickness or accident under the National Insurance
scheme in force at the time including Statutory Sick Pay and social
security sickness benefit. For the purpose of calculating your
entitlement to statutory Sick Pay "qualifying days" are Monday to
Friday.
4. Hours of work.
Page 3 of 6
<PAGE> 4
4.1 You will conform to such hours of work as may from time to time be
reasonably required of you and you will not be entitled to receive any
additional remuneration for work outside your normal hours.
4.2 At the time of writing, the Company operates flexible working hours,
whereby you are required to work 37.5 hours during each working week
(less 7.5 hours for each usual public and statutory holiday) and are
required to be at work between the hours of 10.00am and 4.00pm on each
working day.
5. Holidays
5.1 You will be entitled to the usual public and statutory holidays, and
in addition to twenty-two working days holiday in each full calendar
year of employment, to be taken at times as may be approved by be
Company.
5.2 During the years in which your employment commences and terminates,
you will be entitled to holiday in direct proportion to your length of
service during that year, calculated as:
No of days service / 365 X 22, rounded to the nearest whole day
5.3 On termination of your employment with the Company for any reason your
final basic salary payment shall be increased or decreased by:
(Holiday entitlement - Holiday days taken) X Annual salary / 260
5.4 If during any calendar year you do not take all the holiday to which
you are entitled, you shall not carry forward any holiday entitlement,
and you shall not be entitled to any additional remuneration in
respect of the unused entitlement.
6. Term and termination.
6.1 Your employment with the Company commenced on 1st January 1992, and no
previous employment counts as part of your continuous period of
employment with the Company.
6.2 Unless previously terminated under other provisions of this clause
your employment with the Company will continue until terminated by
either party giving one month's written notice to the other.
6.4 In the event of your performance proving unsatisfactory, the Company
may give you written notification of this, detailing the specific
reasons. The Company may then subsequently terminate your employment
if in its opinion there has been insufficient improvement in your
performance. Notice of termination will be given to you not sooner
than one month nor later that three months after the date of the
original notification. The period for such notice shall be one month.
6.5 Your employment with the Company shall in any event (unless otherwise
agreed in writing) terminate on the date of your sixtieth birthday.
6.6 The Company may terminate your employment with the Company by notice
in writing immediately:
a. If you act so as to bring yourself or the Company into
disrepute, or if you are guilty of gross misconduct, or are
substantially in breach of this Agreement, or
b. if you are absent and unable to fulfil your duties through
accident or illness for a total of 180 days or more in any
period of twelve months.
Page 4 of 6
<PAGE> 5
7. Secrecy.
7.1 You shall not disclose (except in the proper course of your duties) to
any person, firm or company, or seek to exploit at any time either
during or after the termination of your employment with the Company
any trade secret or confidential information relating to the business,
plant, machinery, processes or formulae of the Company or any
subsidiary or associated company or any customer of the Company or of
any subsidiary or associated company. This restriction shall cease to
apply to information or knowledge which has come into the public
domain other than by breach of this clause, or which is trivial or
obvious.
7.2 Upon the termination of your employment with the Company you will
return to the Company all property of the Company, and all records of
any nature or description which you may have in any way relating
directly or indirectly to the business of the Company or any customer
of the Company.
8. Inventions
8.1 Any procedures, processes, designs, formulae, equipment, techniques,
specifications, methods of production or inventions, or other
industrial property ("the said procedures or inventions") which you
may evolve, discover, invent or improve at any time during the course
of or arising out of your employment with the Company, including any
of the said procedures or inventions which result from disclosures to
you by any customer of his own procedures, inventions or machinery
shall be disclosed to the Company and shall (subject to Sections 39 to
42 of the Patents Act 1977) be the exclusive property of the Company
or the customer as the case may be.
8.2 At the request of the Company, and at the expense of the Company or
the customer as the case may be, you will make or join in such
applications, execute such deeds and do all such other acts as are
necessary to secure and where appropriate to register in the name of
the Company or the customer as the case may be any letters patent,
copyrights and/or trade marks in the United Kingdom and elsewhere in
respect of the said procedures and inventions.
8.3 For the avoidance of doubt, it is specifically understood that the
provisions of this Clause apply to any invention, discovery or
improvement made by you during the course of or arising out of your
employment with the Company, whether inside or outside normal working
hours, and whether made with the use of the Company's premises,
machinery or equipment or not.
8.4 For the purposes of this Clause you irrevocably appoint the Company as
your attorney in your name to execute all documents and do all things
which are required in order to give effect to the provisions of this
Clause, and the Company is hereby empowered to appoint and remove at
pleasure any person as agent and substitute for and on behalf of the
Company in respect of all or any of the matters aforesaid.
9. Restrictions after termination
9.1 There will be a restricted period of six months after the termination
of your employment (however it may end). The restricted period will
run from the date on which you or the Company gives notice to the
other, or in the absence of notice the date of actual termination of
your employment.
9.2 During the restricted period you shall not:
a. seek or accept employment with, or perform any services not
authorised by the Company for, any customer of the Company for
whom you have rendered any services on behalf of the Company
during the six months immediately preceding the beginning of
the restricted period.
Page 5 of 6 -
<PAGE> 6
b. for yourself or for any other person, firm or company solicit
or entice away from the Company or any subsidiary or
associated company (or attempt to do so) any consultant or
employee or servant of the Company or any subsidiary or
associated company.
c. for yourself or for any other person, firm or company solicit
or entice away from the Company or any subsidiary or
associated company (or attempt to do so) any person, firm or
company who was at any time during the six months immediately
preceding the beginning of the restricted period a customer of
or otherwise in the habit of dealing with the Company or any
subsidiary or associated company.
d. for yourself or for any other person, firm or company carry on
or be engaged (in a similar capacity to that which you are
engaged by the Company hereunder) in any business which
competes with the Product.
10. General.
10.1 There are not in force any formal disciplinary rules applicable to
your employment but you are expected to conform to accepted standards
of behaviour. If you are dissatisfied with any disciplinary decision
in respect of your employment or wish to obtain redress of any
grievance relating to your employment you should notify a director of
the Company in writing immediately.
10.2 This Agreement and all matters arising in connection with it shall be
governed by English Law and shall be subject to the jurisdiction of
the English courts.
Signed by MELINDA HORTON /s/ Melinda Horton
------------------------------------
in the presence of:
Witness signature /s/ Andrew Newton
------------------------------------
Witness name Andrew Newton
Witness address Flat 2, 70 Milton Park, London N6
Witness occupation Accountant
Signed by PAUL WILDE /s/ Paul Wilde
------------------------------------
for and on behalf of SYNON RESEARCH LTD
in the presence of:
Witness signature /s/ Andrew Newton
------------------------------------
Witness name Andrew Newton
Witness address Flat 2, 70 Milton Park, London N6
Witness occupation Accountant
Signed by PAUL WILDE /s/ Paul Wilde
------------------------------------
for and on behalf of SYNON CORPORATION
in the presence of:
Witness signature /s/ Andrew Newton
------------------------------------
Witness name Andrew Newton
Witness address Flat 2, 70 Milton Park, London N6
Witness occupation Accountant
Page 6 of 6
<PAGE> 1
EXHIBIT 10.16
[SYNON LETTERHEAD]
April 14, 1993
Mr. John F. Rockart
Director
Center for Information Systems Research
Massachusetts Institute of Technology
77 Massachusetts Avenue, Room E40-187
Cambridge, MA 02139
Dear Jack,
Based on our recent conversation, I would like to extend you an offer to join
the Board of Directors of the Synon Corporation effective 5/1/93. have made a
slight adjustment to the financial agreement which reflects your desire for
some additional monetary compensation. I hope this is satisfactory. The
specifics of your compensation are as follows:
(1) Consulting fees at an annual rate of $15,000, payable monthly.
(2) Travel expense reimbursement for Board meeting attendance.
(3) An option to purchase 20,000 shares of Synon stock at a price
of $1.43.
I anticipate the Board will have 4 or 5 one day meetings during the year. In
addition I would expect you and I to have normal phone call discussions.
I very much enjoyed our first meeting and know that we share many common views
on changing the way applications are developed and delivered. I look forward
to working with you and will let you know the Board meeting schedule for the
remainder of the year. Please confirm your acceptance so I can notify the
other Board members.
Thanks.
/s/ Richard H. Goldberg
Richard H. Goldberg
President and CEO
cc: W.O. Grabe - Chairman
<PAGE> 1
EXHIBIT 10.17
SECURITY AGREEMENT
This Security Agreement is made as of September 24, 1992 between Synon
Corporation, a Delaware corporation ("Pledgee" or the "Company"), and Paul K.
Wilde ("Pledgor").
RECITALS
For value received, Pledgor has delivered to Pledgee a Note dated
September 24, 1992 (the "Note") pursuant to which Pledgor promises to pay
Pledgee the principal amount of $200,000 together with interest thereon.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. For due
consideration, receipt of which is hereby acknowledged, Pledgor, hereby grants
a junior security interest in that certain residence located at 19 Royal Oaks
Court, Alamo, California 94507 (the "Residence") as security for the repayment
of the Note. Such security interest shall be junior to any security interest
granted to any bank, savings and loan or other financial institution holding a
mortgage in the Residence. Pledgor agrees to make such filings or execute such
documents as Pledgee reasonably requests to perfect Pledgee's security interest
in the Residence. The Residence is sometimes referred to herein as the
"Collateral".
2. Pledgor's Representations and Covenants. To induce Pledgee to
enter into this Security Agreement, Pledgor represents and covenants to
Pledgee, its successors and assigns, that Pledgor will pay the principal sum of
the Note secured hereby, together with interest thereon, at the time and in the
manner provided in the Note.
3. Default. Pledgor shall be deemed to be in default of the Note
and of this Security Agreement in the event:
(a) Payment of principal or interest on the Note shall be
delinquent for a period of fifteen (15) days or more; or
(b) Pledgor fails to perform any of the obligations
contained in this Security Agreement for a period of fifteen (15) days after
written notice thereof from Pledgee.
In the case of an event of default, as set forth above, Pledgee shall
have the right to accelerate payment of the Note upon notice to Pledgor, and
Pledgee shall thereafter be entitled to pursue its remedies under the
California commercial code.
<PAGE> 2
4. Withdrawal or Substitution of Collateral. Pledgor may sell
the Residence, provided that proceeds therefrom (net of selling expenses) shall
be applied immediately to the payment of the Note; such proceeds to be first
applied to accrued interest and then to principal. Except as provided in this
Section 4, Pledgor shall not sell or otherwise transfer or dispose of any
interest in the Collateral without the prior written consent of Pledgee.
5. Term. The within pledge of Collateral shall continue until the
payment of all indebtedness secured hereby, at which time Pledgee's security
interest in the Collateral shall terminate. Pledgee shall make such filings or
execute such documents as Pledgor reasonably requests to release Pledgee's
security interest in the Residence.
6. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against him, or if a receiver is appointed for
the property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due
and payable, and Pledgee may proceed as provided in the case of default.
7. Invalidity of Particular Provisions. Pledgor and Pledgee
agree that the enforceability or invalidity of any provision or provisions of
this Security Agreement shall not render any other provision or provisions
herein contained unenforceable or invalid.
8. Successors or Assigns. Pledgor and Pledgee agree that all of
the terms of this Security Agreement shall be binding on their respective
successors and assigns, and that the term "Pledgor" and the term "Pledgee" as
used herein shall be deemed to include, for all purposes, the respective
designees, successors, assigns, heirs, executors and administrators.
9. Governing Law. This Security Agreement shall be interpreted
and governed under the laws of the State of California.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PLEDGOR" /s/ Paul K. Wilde
------------------------------------
Paul K. Wilde
Address:
19 Royal Oaks Court
Alamo, CA 94507
"PLEDGEE" SYNON CORPORATION
By: /s/ Richard H. Goldberg
------------------------------------
Title: CEO
------------------------------
<PAGE> 1
EXHIBIT 10.18
SYNON CORPORATION
FULL RECOURSE PROMISSORY NOTE
$200,000 September 24, 1992
For value received, the undersigned promises to pay to Synon
Corporation, a Delaware corporation (the "Company"), or its registered assigns,
at its principal office the principal sum of $200,000, together with interest
on the unpaid principal thereof from the date hereof at the rate of 8% per
annum. Interest shall be paid on September 24 of each year on the outstanding
principal of this Note. Principal and any accrued but unpaid interest shall be
due in full on or before September 24, 1997 unless accelerated or forgiven as
herein set forth.
Principal and interest are payable in lawful money of the United
States of America. All payments due hereunder shall be applied first to the
payment of interest and then to the payment of principal. THE PRIVILEGE IS
RESERVED TO PREPAY ALL OR ANY PORTION OF THE NOTE AT ANY TIME WITHOUT PENALTY.
This Note is issued by the undersigned in connection with the purchase
of the Residence (as defined in the Security Agreement of even date herewith
between the undersigned and the Company, hereinafter, the "Security Agreement")
as contemplated by the employment letter dated March 27, 1991 from the Company
to the undersigned (the "Employment Agreement"). Payment of this Note shall be
secured by the Residence pursuant to the terms of the Security Agreement. This
Note shall be subject to all terms and conditions of the Security Agreement and
the Employment Agreement.
The holder of this Note shall have full recourse against the maker,
and shall not be required to proceed against the Residence in the event of
default.
If the undersigned voluntarily terminates his employment with the
Company, other than due to being Constructively Terminated (as defined in the
Employment Agreement), this Note shall be immediately due and payable. If the
undersigned is involuntarily terminated without cause or Constructively
Terminated, this Note shall be due and payable within twelve months of such
termination.
Subject to the undersigned's continuing status as an employee or
consultant of the Company, $3,333.33 of indebtedness (1/60 of the principal)
shall be forgiven at the end of each one-month
<PAGE> 2
period following April 15, 1991 (the undersigned's employment start date)
resulting in total forgiveness of the loan at the end of five (5) years from
the undersigned's employment start date. If the undersigned voluntarily
terminates his employment with the Company during the calendar year 1993, other
than due to his being Constructively Terminated, the loan will be forgiven to
the extent of (i) $40,000, if such termination is prior to April 15, 1993, or
(ii) $80,O00, if such termination is between April 15, 1993 and December 31,
1993. In the event the undersigned is involuntarily terminated without cause
or Constructively Terminated at any time while the loan remains outstanding,
the loan will be forgiven to the extent of the ratable portion described above
plus an additional $40,000.
This Note shall be construed in accordance with, and governed by, the
laws of the State of California. Should suit be commenced to collect this Note
or any portion thereof, such sum as the Court may deem reasonable shall be
added hereto as attorneys' fees. The maker waives presentment for payment,
protest, notice of protest, and notice of nonpayment of this Note.
This Note shall inure to the benefit of and be binding upon the
parties hereto and their respective successors, assigns, heirs and
beneficiaries.
/s/ Paul K. Wilde
-----------------------------------
Paul K. Wilde
<PAGE> 1
EXHIBIT 10.19
[SYNON LETTERHEAD]
May 15, 1997
This letter encompasses the original letter dated
4/17/97 and the Addendum dated 5/2/97.
Mr. Kevin Kilroy
37 Springbrook Lane
New Arch, DE 97711
Dear Kevin:
I am pleased to confirm my verbal offer for you to join Synon Corporation as
Vice President, North America Sales & Marketing. This letter sets forth the
terms of your employment offer with Synon as follows:
1. You will serve in the position of Vice President, North America
Sales & Marketing, reporting to the Chief Executive Officer and
assume and discharge such responsibilities as are commensurate with
this position. You shall comply with and be bound by Synon's
operating policies, procedures, and practices. It is anticipated
that the effective date of your employment will be on or about June
3, 1997.
2. During the term of your employment with Synon you shall devote your
full time, skill and attention to your duties and responsibilities,
and shall perform them faithfully, diligently and competently, and
you shall use your best efforts to further the business of Synon.
Your employment with Synon is for an unspecified duration that
constitutes at-will employment and either Synon or you can terminate
this relationship at any time.
3. In consideration of your services, you will be paid a salary of
$16,667 per month (annualized rate of $200,000), payable
semi-monthly in accordance with Synon's standard payroll in
practices. As with other officers of Synon, this base compensation
will be reviewed annually by the Board of Directors.
4. In addition to your base compensation, the Board of Directors shall
adopt an executive bonus program under which you shall be entitled
to earn incentive compensation based upon the satisfaction of
certain performance goals. It is contemplated that these performance
objectives will be determined by the Chief Executive Officer in
consultation with you, and will concern such matters as North
America revenue and profitability and Corporate objectives. The
bonus will be targeted at $75,000 annually plus additional
overachievement milestones and will be paid according to the Payout
Schedule, Attachment A-2. Further incentive compensation may, at the
sole discretion
<PAGE> 2
of the Board of Directors, be provided for overachievement of
corporate objectives.
5. Your 1997 Bonus Target will be prorated for a partial year. Assuming
a June 3 start date, the '97 target is $44K. Per our agreement, you
will be guaranteed a minimum payout of 80%.
6. You will be given a non-recoverable draw of $3,000 per month for the
first five months of employment.
7. You will be entitled to receive Synon's fringe benefits made
available to other employees and officers to the full extent of your
eligibility therefor. You shall be entitled to three weeks of paid
vacation per year (which shall not accrue in excess of three weeks
per year). During your employment, you shall be permitted, to the
extent eligible, to participate in any group life, hospitalization
or disability insurance plan, health program, or similar benefit
plan of Synon that may be available to other comparable employees
generally on the same terms as such other employees. Participation
in any such plan shall be consistent with your rate of compensation
to the extent that compensation is a determinative factor with
respect to coverage under any such plan. Business expenses, incurred
by you will be reimbursed according to Synon's expense reimbursement
policy.
8. As long as you were covered under your prior plan and have not had
more than a 90 day break in coverage, you will be covered without
waiver of pre-existing conditions.
9. Upon your acceptance of employment you will be granted a
non-statutory option to purchase 200,000 shares of Synon Common
Stock under Synon's 1990 Stock Option Plan subject to approval of
the Board of Directors. The option price shall be at the per share
fair market value as of the date of your acceptance. The option
shall have a term of ten years. The Option Agreement will provide
that your right to exercise the option will vest cumulatively over a
period of four years, vesting at 25% on the first anniversary of the
effective date of your employment and thereafter on a monthly basis
(2.0833% per month).
In addition, (i) upon any Change of Control of Synon Corporation (as
defined herein), then 25,000 shares of your unvested option shares
shall vest and become exercisable and any of the then remaining
unvested options will vest monthly in equal increments over the
balance of the original vesting period and (ii) if your employment
is involuntarily terminated or Constructively Terminated (as defined
herein) within twelve (12) months after a Change of Control (it
being the intention that you will agree to remain employed for at
least one year following a "Change of Control"), then your options
shall be accelerated to become immediately exercisable for 50% of
the total number of unvested shares subject thereto.
10. In addition, if your employment is involuntarily terminated other
than for "cause" (as defined herein) with Synon (i) prior to a
Change of Control (as defined herein), you shall receive twelve
months base salary as severance, or, (ii) is involuntarily
<PAGE> 3
terminated or Constructively Terminated (as defined herein), other than
for cause, within one year following a Change of Control then you shall
receive 1 year's base salary as severance.
11. For purposes of the foregoing, termination "for cause" shall mean (i)
the willful failure by you substantially to perform your material
duties after a written demand for substantial performance is delivered
to you by the Chief Executive which specifically identifies the manner
in which he believes that you have not substantially performed your
duties; (ii) the failure (in a material respect) by you to follow a
written, lawful order or directive from the Chief Executive; (iii) the
conviction of you of any crime involving the property or business of
Synon or its affiliates; or (iv) any act of moral turpitude in
connection with the performance of your duties hereunder.
12. For purposes of the foregoing, a "Change of Control of Synon" shall be
deemed to have occurred if (i) Synon sells or otherwise disposes of all
or substantially all of its assets; (ii) there is a merger or
consolidation of Synon with any other corporation or corporations,
provided that the shareholders of Synon, as a group, do not hold,
immediately after such event, at least 50% of the voting power of the
surviving or successor corporation; (iii) any person or entity,
including any "person" as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
becomes the "beneficial owner" (as defined in Rule 13d-3 of the Exchange
Act) of Common Stock of Synon representing 50% or more of the total
voting power of the outstanding voting securities of Synon (exclusive of
persons who are now officers or directors of Synon).
13. For purposes of the foregoing, your employment with Synon shall be
deemed to have been "Constructively Terminated" if there shall occur (i)
a material reduction in salary or benefits (taken as a whole); or (ii) a
material change in your responsibilities as Vice President of North
American Sales & Marketing, or (iii) a requirement to relocate, except
for office relocations that would not increase your one-way commute by
more than 50 miles.
14. Synon agrees to reimburse you for up to $63,000 in documented relocation
expenses such as house hunting trips to the Bay Area, the cost of moving
your household goods and personal property, temporary accommodations and
the reimbursement of income taxes assessed on your taxable relocation
expenses. You agree to reimburse Synon for reimbursed relocation
expenses should you voluntarily leave Synon within eighteen months of
your hire date. Synon will waive its rights to 1/18th of these
relocation expenses for every month of continued employment.
15. The position of Vice President, North America Sales & Marketing, is
located at company HQ, in Larkspur, California. Relocation of your
family to California should happen as soon as possible. Understanding
the need to sell your house, I will be flexible in the transaction and
would expect this to be completed within twelve months.
<PAGE> 4
16. Since you will be spending considerable time in the field, your
interim personal living expenses in California will be covered
under T & E.
17. Upon acceptance of this offer, you will be required to sign
Synon's standard employee proprietary information agreement.
I am delighted to have you as a part of the Synon Executive Team. Your
leadership will help us achieve new records. Please acknowledge acceptance of
this offer by signing and returning the enclosed copy of this letter. Synon and
you shall undertake to promptly prepare and execute all of the documents and
agreements as are reasonably necessary to carry out the intentions expressed
herein.
Very truly yours,
/s/ RICHARD H. GOLDBERG
- -------------------------
Richard H. Goldberg
President and CEO
Attachments
Accepted by:
/s/ KEVIN KILROY
- -------------------------
Kevin Kilroy
Dated: May 23, 1997
<PAGE> 5
Attachment A-2
PAYOUT SCHEDULE
REVENUE PROFIT
Quota Attained Bonus Earned Quota Attained Bonus Earned
- -------------- ------------ -------------- ------------
0-69 0 65 0
70 20 70 10
80 40 80 50
90 70 90 80
100 100 100 100
110 125 110 115
120 150 120 145
130 180
<PAGE> 1
EXHIBIT 10.20
DATED 15th SEPTEMBER 1992
SIMON WILLIAMS (1)
MELINDA HORTON
and
SYNON CORPORATION (2)
and
DYSYS LIMITED (3)
-----------------------------------------------
AGREEMENT
relating to the sale and purchase of the
entire issued share capital of
Dysys Limited
-----------------------------------------------
BAILEYS SHAW & GILLETT
17 Queen Square, London WC1N 3RH
<PAGE> 2
INDEX
Clause
- ------
1. Definitions and Interpretation
2. Agreement to sell the Shares
3. Consideration
4. Vendors' Loans
5. Completion
6. Warranties and Undertakings
7. Post Completion Matters
8. Announcements
9. Notices
10. Costs and Guarantee
11. Transmission and Assignment
12. Headings
13. Continuing Effect
14. Applicable Law
15. Entire Agreement
Schedule
- --------
I The Vendors and their Loans
II The Directors
The Secretary
III The Warranties
IV The Property
V The Employees
Annexures
- ---------
1. Budget
2. Product Specification
Agreed Documents
- ----------------
1. Service Contracts - Initialed by Synon and Simon Williams
<PAGE> 3
THIS AGREEMENT is made the 15th day of September 1992
BETWEEN:
(1) The persons whose names and addresses are set out in Schedule I ("the
Vendors")
(2) SYNON CORPORATION a company incorporated in Delaware having its
principle place of business at 1100 Larkspur Landing Circle, Suite 340
Larkspur, California 94939 USA ("Synon") and
(3) DYSYS LIMITED whose registered office is at 136 Kentish Town Road,
London NW1 9QB, United Kingdom ("Dysys")
WHEREAS:
A. Dysys is a private company incorporated in England under the Companies
Act 1985, as amended, under registered number 2670900 with limited
liability and has an authorised share capital of 1,000 ordinary shares
of Pound 1 each two of which are and will at Completion be issued and
fully paid or credited as fully paid.
B. The Vendors are and will at Completion be the beneficial owners of all
the Shares (as hereinafter defined) and have the right to sell the
Shares free from all liens charges and encumbrances.
C. The vendors have caused to be delivered to the Purchaser true copies
(having attached thereto copies of such resolutions and agreements as
are referred to in Section 380 of the Companies Act 1985) of the
Memorandum and Articles of Association of Dysys.
D. Dysys has no subsidiary companies.
E. The Directors (as hereinafter defined) are the only directors of
Dysys.
F. Particulars of the Secretary of Dysys are set out in Part II of
Schedule II hereto.
- 1 -
<PAGE> 4
IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement and the Schedules hereto unless the context
otherwise requires the following words and expressions shall have the
following meanings:
"Affiliate" any person company partnership or other
entity directly or indirectly controlled by
controlling or under common control with that
party
"Budget" the budget for developing the Product in the
form set out in annexure 1 as varied from
time to time
"the Completion Date" the date of actual Completion
"Completion" completion of the sale and purchase of the
Shares pursuant to Clause 5.1 hereof
"the Directors" the persons whose names and addresses are set
out in Part I of Schedule II hereto
"the Disclosure Letter" the letter of even date herewith signed by
the Vendors and sent to Synon in connection
with the Warranties
"Consideration" the consideration for the Shares specified in
sub-clause 3.1
"the Launch Date" the date of the first to occur of the launch
of the Product by Synon or any of its
Affiliates or the first sale or rental by way
of licence of the Product
"Product" the next generation work-station-based CASE
product currently being developed by Dysys
all improvements enhancements modifications
and new versions of that product and all user
documentation for that product as that
documentation exists from time to time
"the Property" the property of Dysys short
- 2 -
<PAGE> 5
particulars of which are set out in
Schedule IV hereto
"Service Contracts" contracts of employment to be entered by
Dysys and each of the persons listed in
Schedule V in the form agreed between the
parties hereto and initialed by Synon and
Simon Williams for identification
"the Shares" the issued and allotted two ordinary shares
of Pound l each in the capital of Dysys
"subsidiary" the meaning given to it by Section 736 of the
Companies Act 1985
"Synon/2E" Synon's software product currently marketed
as Synon/2E all improvements enhancements
modifications and new versions of that
product all successor products of Synon which
perform substantially the same function as
that product and all user documentation for
that product as that documentation exists
from time to time
"Vendors' Loans" the loans by the Vendors to Dysys as
specified in Schedule I
"the Warranties" the warranties and undertakings set out in
Schedule III hereto
"the IP Warranty" the warranty and undertaking set out in
clause 14 of Schedule III hereto
"the Non-IP Warranties" the warranties and undertakings set out in
Schedule III hereto other than those set out
in clause 14 of that Schedule
1.2 Expressions in the singular shall include the plural and in the
masculine shall include the feminine and vice versa and references to
persons shall include corporations and vice versa.
- 3 -
<PAGE> 6
2. AGREEMENT TO SELL THE SHARES
2.1 The Vendors shall sell as beneficial owners and Synon shall purchase
the Shares fully paid or credited as fully paid and free from all
liens charges and encumbrances and with all rights now or hereafter
attaching thereto and Synon shall purchase the Shares with effect from
the date hereof.
2.2 The vendors hereby waive all rights of pre-emption over the shares
conferred on or held by them either by virtue of the Articles of
Association of Dysys or in any other way.
3. CONSIDERATION
3.1 The total Consideration for the Shares shall be the sum of Seventy
Three Thousand Seven Hundred and Seventy One British Pounds Sterling
(Pound 73,771) per Share to be paid by Synon to the Vendors at
Completion in cleared funds.
4. VENDORS' LOANS
4.1 Synon shall procure that the Vendors' Loans shall be repaid by Dysys
in full at Completion.
4.2 The Vendors hereby confirm that the Vendors' Loans do not and shall
not carry interest.
5. COMPLETION
5.1 Completion shall take place at 17 Queen Square, London WC1N 3RH on the
date hereof or at such other place or on such other date as shall be
agreed between Synon and the Vendors when the transactions set out in
the following sub-clauses shall take place:
5.1.1 The Vendors shall deliver to the Purchaser duly completed and
executed transfers of the Shares in favour of Synon
accompanied by the relative share certificates in respect of
the Shares.
5.1.2 Synon shall deliver to such bank accounts as the Vendors shall
specify the Consideration and shall procure repayment to the
Vendors of the
- 4 -
<PAGE> 7
Vendors' Loans by way of telegraphic transfer or bankers draft
drawn on a London branch of a UK clearing bank.
5.1.3 The Vendors shall procure that a Board Meeting of Dysys shall
be held at which:
(a) the secretary of Dysys shall tender her resignation from that
office and such persons as Synon may nominate shall be
appointed as directors and Andrew Newton shall be appointed
secretary
(b) the transfers referred to above shall be approved for
registration (subject only to stamping)
(c) Dysys shall resolve to revoke all existing mandates in
relation to the operation of its bank account and to issue new
mandates giving authority to such persons as Synon may
nominate to operate such account
(d) Dysys' registered office shall be changed to 91 St Paul's
Road, London N1 2YU
(e) the Service Contracts will be duly completed
(f) Paul Wilde' shall be appointed a Director of Dysys.
5.1.4 The Vendors shall procure that the seals statutory books
certificates of incorporation Memorandum and Articles of
Association and all books title deeds (including the licence
to the Property) and documents of record of Dysys a copy of
any insurance policies of Dysys and the cheque book and other
papers and documents belonging to Dysys shall be handed over
or made available to Synon.
5.1.5 The Vendors shall enter into their Service Contracts and shall
procure that all other Service Contracts are entered by the
named employees so far as they are able.
5.2 If in any respect the preceding provisions of this clause 5 are not
complied with on the Completion Date
- 5 -
<PAGE> 8
the party not in default may:
5.2.1 defer Completion to a date not more than 10 days after the
Completion Date (and so that the provisions of this clause 5.2
(apart from this paragraph 5.2.1) shall apply to Completion as
so deferred) or
5.2.2 proceed to Completion as far as practicable (without prejudice
to its rights hereunder) or
5.2.3 rescind this Agreement.
6. WARRANTIES AND UNDERTAKINGS
6.1 The Vendors hereby severally represent warrant and undertake to Synon
in relation to Dysys in the terms of the Warranties and so that for
the purposes of this clause and giving effect thereto:
6.1.1 the Warranties shall be separate and independent and save as
expressly otherwise provided shall not be limited by reference
to any other paragraphs of Schedule III or by anything in this
Agreement;
6.1.2 the Vendors acknowledge that Synon has entered into this
Agreement in reliance (inter alia) upon the Warranties.
6.2 Synon shall not and shall not be entitled to institute proceedings for
damages for breach of:
(a) any of the Non-IP Warranties after expiration of the period of
twelve months from the date of this Agreement unless notice
containing full details of such breach including the nature of
the breach and an estimate of the amount claimed is given to
each of the Vendors on or before the expiration of the said
twelve month period and thereafter any such notified claim is
brought and proceedings issued within eighteen months from the
date of this Agreement; and
(b) the IP Warranty after expiration of the period of sixty months
from the Launch Date unless notice containing full details of
such breach
- 6 -
<PAGE> 9
including the nature of the breach and an estimate of the
amount claimed is given to each of the Vendors on or before
the expiration of the said sixty month period and any such
notified claim is brought and proceedings issued within that
sixty month period.
6.3 Synon shall not institute proceedings for damages for breach of any of
the Warranties if such proceedings shall be in respect of a claim or
claims aggregating less than fifty thousand British pounds sterling
(Pound 50,000).
6.4 The total maximum liability of the Vendors for breach of any of the
Warranties shall not exceed in aggregate the sum of Pound 243,413
British Pounds Sterling (when each Vendor shall have a maximum
aggregate liability equal to Pound 73,771 British Pounds Sterling plus
the amount of the Vendor's Loan repaid to him or her at Completion)
unless the liability is in respect of breach(es) of the IP Warranty
when the following provisions of sub-clause 6.5 shall apply.
6.5 If the liability of the Vendors under this clause 6 for breach of the
IP Warranty would, but for the limitation contained in sub-clause 6.4,
take the total liability of the Vendors to in excess of the sum of
Pound 243,413 (when adding the liability of the Vendors for breach of
the IP Warranty to previous liability incurred by the Vendors under
this clause 6), then in respect of any liability arising under the IP
Warranty only the limitation in sub-clause 6.4 shall be extended so
that:
6.5.1 the maximum aggregate liability of the Vendors shall be such
sum as equal Pound 243,413 plus a sum equal to fifty percent
(50%) of the net commission paid to each of the Vendors by
Synon or any subsidiary or Affiliate of Synon under the
Service Contracts or any other contract of employment with the
Vendors relating to the
- 7 -
<PAGE> 10
Product, as at the date that any such claim is made by Synon
against either or both of the vendors for breach of the IP
Warranty; and
6.5.2 the maximum aggregate liability of the Vendors in respect of
the IP Warranty shall only exceed Pound 243,413 as aforesaid
if Synon incurs actual liability to a third party in respect
of any breach of the IP Warranty, and then only to the extent
of fifty percent (50%) of such liability, the balance of fifty
percent (50%) to be met by Synon; and
6.5.3 the maximum aggregate liability of each of the Vendors in
respect of their total liability exceeding Pound 243,413 as
aforesaid shall be divided between them as to two thirds of
the excess calculated in accordance with sub-clauses 6.5.1 and
6.5.2 to Simon Williams and one third to Melinda Horton and
such liability of the Vendors shall be several.
6.6 Neither of the Vendors shall have any liability in respect of any
claim pursuant to the Warranties:
6.6.1 to the extent that recovery is made by Synon or Dysys under
any policy of insurance;
6.6.2 if the facts matter or circumstances are accurately referred
to in the Disclosure Letter or any document disclosed
thereunder; and
6.6.3 to the extent that such matter giving rise to the claim
properly falls to be done in implementing the terms of this
Agreement.
6.7 If the Vendors satisfy a claim in respect of any of the Warranties and
Synon having claimed for breach of Warranty has a right of
reimbursement against any other person other than Dysys in respect of
or relating to that claim then Synon shall (subject to it being
indemnified and kept indemnified to its reasonable satisfaction by the
Vendors against all reasonable costs and expenses in connection with
such steps or
- 8 -
<PAGE> 11
proceedings) if requested by the Vendors take all reasonable steps or
proceedings to enforce such right. If Synon subsequently recovers
from a third party other than Dysys an amount which represents
additional compensation in respect of any claim under the Warranties
then Synon shall forthwith repay to each of the Vendors such sum as
he/she paid to Synon by way of damages for breach of that Warranty up
to a maximum of the amount he/she paid to Synon in respect of such
breach.
6.8 If any claim is made by Synon under this Agreement notice of the claim
shall be given or procured to be given by Synon to each of the Vendors
forthwith upon Synon becoming aware of the breach and if the claim in
question is as a result of or in connection with a liability to or
from or a dispute with any third party Synon shall (subject to Dysys
Synon and their relevant subsidiaries being indemnified against all
liabilities costs damages and expenses which they may reasonably
incur) take and shall procure Dysys to take such actions as the
vendors (or either of them) may reasonably request by notice to Synon
(including the defence of any third party action) Provided that the
said Vendors make such request within a reasonable time of receipt by
the Vendors of Synon's notice in connection with such liability or
dispute so as to recover or minimise or resolve such liability or
dispute. Synon shall give and shall procure that Dysys shall give to
the Vendors full facilities to investigate the claim and the extent of
possible liability under the Warranties and at the request of the
Vendors shall (subject to Dysys Synon and their relevant subsidiaries
being indemnified against all liabilities costs damages and expenses
which they may reasonably incur) allow the Vendors at their own
expense to participate in or have the conduct of (as they may elect)
all proceedings of whatsoever nature against the relevant third party
arising out of or in connection with such liability or dispute in the
name of
- 9 -
<PAGE> 12
Dysys or Synon as they may consider necessary or desirable in order to
mitigate any claim arising under this Agreement. Neither Synon nor
Dysys shall accept or pay or compromise any such liability or claim
with any such third party without the Vendors prior written consent.
7. POST COMPLETION MATTERS
7.1 Without limitation to the provisions of sub-clause 7.3 and 7.4, from
the date of this Agreement to the expiration of the period of five
years commencing on the first to occur of:
7.1.1 the date of the first sale or rental by way of licence of the
Product or
7.1.2 1st July 1994; Provided That the date of lst July 1994
aforesaid shall be extended if the Budget is reduced pursuant
to any provision of sub-clause 7.3.1 in which event the said
date of lst July 1994 shall be such later date as Synon and
Simon Williams shall agree in writing (both acting reasonably)
and failing agreement being reached shall be the date of first
sale or rental of the Product as aforesaid:
(a) Synon shall not sell transfer assign or otherwise
part with possession of the Shares or any of them
(other than to a subsidiary of Synon) unless it has
prior to such transaction, as aforesaid, transferred
ownership of the unencumbered Product in its entirety
and all intellectual property rights therein and the
Service Contracts, to a subsidiary of Synon that
simultaneously contracts with the Vendors to be bound
by all of the provisions of this Agreement and the
Service Contracts that bind Dysys, without the prior
written consent of each of the Vendors;
(b) Synon and Dysys and its transferees shall not sell
transfer assign or otherwise part
- 10 -
<PAGE> 13
with possession of or allow Dysys or such transferee
to part with possession of any part of the business
of Dysys or any of the intellectual property rights
in the Product (other than to a subsidiary of Synon
that simultaneously contracts with the Vendors to be
bound by all of the provisions of this Agreement and
the Service Contracts that bind Dysys (unless the
Vendors waive such obligation of the transferee to be
so bound)) without the prior written consent of each
of the Vendors.
7.2 On Completion Synon shall make available and implement a bonus system
for the benefit of employees employed under the Service Contracts
(other than Simon Williams and Melinda Horton) and such other
employees as the Synon group shall employ to work on the development
and maintenance of the Product (and Synon hereby undertakes only to
employ and to procure that Synon group only employs such persons with
the prior approval of Simon Williams). Such bonus system shall make
available for distribution to the said employees every six months from
the date of this Agreement (or such other date as Simon Williams and
Synon shall agree) a bonus fund ("the Fund") comprising in each six
months such sum as equals one per cent (1%) of all income revenue and
other payments or consideration of any kind received by or on behalf
of Synon and its Affiliates (from time to time) during the previous
six months in respect of each sale or rental by way of licence or
maintenance or other exploitation of any kind of the Product or any
part of the Product in any language anywhere in the world. The fund
shall be distributed to such employees and to the extent that Simon
Williams shall specify to Synon (acting reasonably). In addition on
the occurrence of an Event of Default (as defined below) Synon shall
forthwith pay to each of the employees terminated under sub-clause
7.5.4 (other than Simon Williams and Melinda
- 11 -
<PAGE> 14
Horton) a sum equal to three (3) months gross salary as such salary is
specified in the Service Contracts or such increased sum as is payable
thereunder prior to termination (whichever is the greater).
7.3 Synon shall commit an Event of Default on the occurrence of any of the
following when the provisions of sub-clause 7.5 and 7.6 shall then
apply:
7.3.1 prior to Synon launching the Product on the market:
(a) the Budget for developing the Product and funds made available
by Synon pursuant to the Budget in respect of any calendar
month are reduced by a greater percentage than any reduction
in the development budget of Synon and its Affiliates
(excluding the Budget) for that same period or is reduced for
a period when the said Synon development budget (other than
the Budget) for that same period is not reduced; or
(b) the Budget is reduced to an extent that it delays the
development of the Product by six (6) months or more in the
opinion of Simon Williams acting reasonably; or
7.3.2 the Product Specification contained in Annexure 2 is changed
at any time prior to Synon launching the Product on the market
without the prior written consent of Simon Williams acting
reasonably; or
7.3.3 the location of the team developing the Product (as currently
employed by Dysys and as enlarged from time to time) or the
location of the development or maintenance of the Product is
moved in whole or part from the Property (other than to
Synon's business address at 91 St Paul's Road, London N1 2YU
or in the event of Synon or any subsidiary company of it no
longer occupying that address to such other address within a
three (3) mile radius of 91 St Paul's Road aforesaid) without
the prior written consent of
- 12 -
<PAGE> 15
Simon Williams; or
7.3.4 Simon Williams or Melinda Horton are dismissed by their
employing company under their Service Contracts or any other
employment contract with Synon or any of its Affiliates (other
than for gross misconduct) or the salary of either of them is
reduced or Simon Williams is requested to report to anyone
other than the Chief Executive Officer of Synon in the
performance of his duties as an employee and/or Director of
Dysys and its assigns; or
7.3.5 the entry by a court having jurisdiction in the premises of
(i) a decree or order for relief in respect of Synon (or any
other company in the Synon group to which any of the business
of Dysys, the intellectual property rights in the Product or
the shares in Dysys have been assigned or transferred to
(unless in the case of a transfer of the shares, prior to the
transfer of such shares the ownership of the Product, all the
intellectual property rights therein and the Service Contracts
have been transferred to a subsidiary of Synon) ("Synon
Transferee")) in an involuntary case or proceeding under any
applicable Federal or State bankruptcy insolvency
reorganisation or other similar law or (ii) a decree or order
adjudging Synon or any Synon Transferee bankrupt or insolvent
or approving as properly filed a petition seeking
reorganisation arrangement adjustment or composition of or in
respect of Synon or any Synon Transferee under any applicable
Federal or State law or appointing a custodian receiver
liquidator assignee trustee sequestrator or other similar
official of Synon or any Synon Transferee or of any part of
its property or ordering the winding up or liquidation of its
affairs and the continuance of any such decree or order for
relief or any
- 13 -
<PAGE> 16
such other decree or order unstayed and in effect for a period
of 45 consecutive days; or
7.3.6 the commencement by Synon or any Synon Transferee of a
voluntary case or proceeding under any applicable Federal or
State bankruptcy insolvency reorganisation or other similar
law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent or the consent by it to the entry of a
decree or order for relief in respect of Synon or any Synon
Transferee in an involuntary case or proceeding under any
applicable Federal or State bankruptcy insolvency
reorganisation or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it or
the filing by it of a petition or answer or consent seeking
reorganisation or relief under any applicable Federal or State
law or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian
receiver liquidator assignee trustee sequestrator or other
similar official of Synon or any Synon Transferee or of any
part of its property or the making by it of an assignment for
the benefit of creditors or the admission by it in writing of
its inability to pay its debts generally as they become due or
the taking of corporate action by Synon or any Synon
Transferee in furtherance of any such action; or
7.3.7 subject to sub-clause 7.4 below if, from the date that the
Product complies in all material respects with the Product
specification set out in annexure 2 (as amended from time to
time with the written agreement of Synon and Simon Williams)
Synon shall fail to either distribute the Product actively
through a direct distribution channel as a lead product
similar to Synon/2E worldwide (other than during the period of
twelve months from the date of the
- 14 -
<PAGE> 17
Product launch when the area shall be North America and
Europe) or to market and promote the Product as a successor to
Synon/2E; or
7.3.8 subject to sub-clause 7.4 below if Synon shall fail to use
best endeavours to distribute/license the Product to all
Synon/2E customers; or
7.3.9 subject to sub-clause 7.4 below if Synon shall fail to provide
comprehensive support for and maintenance of the Product at
least to the extent that it is now provided for Synon/2E; or
7.3.10 subject to sub-clause 7.4 below if Synon shall fail to
maintain and procure that its Affiliates maintain, reasonably
detailed records concerning distribution/licensing maintenance
and support of the Product and make such records available to
the Vendors for inspection by them or their representatives on
the written request of either to satisfy themselves that Synon
and its Affiliates are complying with the terms of all
agreements entered by Synon or any of its Affiliates with each
of the Vendors including the Service Contracts; or
7.3.11 if Synon shall fail to finance Dysys (for so long as the
Product or the intellectual property rights therein are owned
by Dysys or the Service Contracts bind Dysys) and such other
Synon company to which Dysys transfers any part of its
business or any part of the Product or the intellectual
property rights in the Product or the Service Contracts at
least to the extent necessary to enable it to meet its
liabilities as and when they fall due; or
7.3.12 subject to sub-clause 7.4 if Synon shall fail to launch and
thereafter actively market the Product as soon as it is
completed which completion date Simon Williams shall notify to
Synon acting reasonably; or
7.3.13 if Synon or any of its Affiliates shall acquire
- 15 -
<PAGE> 18
develop distribute license or exploit any product which
performs substantially the same function as the Product other
than Synon/2E and the Product; or
7.3.14 if Synon or Dysys or any of their Affiliates from time to time
shall have underpaid either or both of the Vendors any
commission due to them under either of their Service Contracts
on three occasions (as determined by an expert pursuant to
clause 2.9 or its equivalent provision in the Vendors' Service
Contracts); or
7.3.15 if Synon or Dysys or any of their Affiliates from time to time
is significantly late in paying to the Vendors (or either of
them) any commission or other sum due to them under any of the
Service Contracts and such company is not delaying in paying
the majority of its other creditors to the same extent; or
7.3.16 if Synon is in breach of sub-clause 7.1 above; or
7.3.17 if any employee of Dysys or any employee of Synon or its
Affiliates working on the development of the Product is
dismissed without the prior written agreement of Simon
Williams (acting reasonably); or
7.3.18 if Synon transfers, assigns or otherwise parts with possession
of all or any of the intellectual property rights in the
Product or any part of the Product to any company that is not
a subsidiary of Synon; or
7.3.19 if Dysys or any Synon Transferee incorporated in Europe shall
have a receiver or an administrative receiver appointed to its
undertaking or any of its assets or shall become subject to an
administration order or shall enter into liquidation whether
compulsory or voluntary or pass a resolution for its
winding-up (other than for the purpose of a bona fide scheme
of solvent amalgamation or reconstruction where the resulting
entity
16
<PAGE> 19
assumes all of the obligations of it) or shall be the subject
of any equivalent or similar or analogous provision or
arrangement or appointment or any analogous step is taken in
connection with such company's insolvency, bankruptcy or
dissolution, applicable to the laws and regulations in the
country in which such company is incorporated or established
or carries on business.
7.4 An Event of Default under sub-clauses 7.3.7, 7.3.8, 7.3.9, 7.3.10 and
7.3.12 shall not occur in the event of Synon failing to perform any of
its obligations thereunder unless it fails to cure such non compliance
within thirty (30) days of being sent a written notice by the Vendors
(or either of them) of such non compliance, provided that if the non
compliance cannot be cured by Synon within such thirty (30) day period
acting reasonably but (a) the non compliance is capable of cure within
a reasonable time frame and (b) Synon promptly commences to effect a
cure within such thirty (30) day period and (c) Synon diligently and
actively pursues such cure to its successful conclusion, then Synon
shall have such time as is reasonable in the circumstances to cure
such non compliance. Any breach of the provisions of paragraph (a) ,
(b) or (c) hereof shall itself be an Event of Default.
7.5 Subject to sub-clause 7.7 below, Synon shall and shall procure that
its Affiliates shall give written notice to each of the Vendors
forthwith on it or any of its Affiliates (as the case may be) becoming
aware of an Event of Default and within ten (10) days of any Event of
Default occurring Synon shall:
7.5.1 pay or procure the payment to each of Simon Williams and to
Melinda Horton damages of such sum as equals their respective
annual gross basic salary payable by the Synon group at the
date of this Agreement or the date of any Event
- 17 -
<PAGE> 20
of Default (whichever is the greater) and which the parties
hereby acknowledge is a predetermined estimate of the loss
that will accrue to Simon Williams and Melinda Horton on the
occurrence of an Event of Default after taking account of the
other provisions of this sub-clause 7.5; and
7.5.2 grant or procure that there is granted to each of the Vendors
at no cost to the Vendors a non-exclusive non-terminable
licence to exploit the technology and all intellectual
property rights relating to the Product in any way whatsoever
including without limitation sub-licensing the Product and
providing maintenance and modifications thereto and appointing
distributors to do the same; and
7.5.3 supply or procure that there is supplied to each of the
Vendors one copy of the up to date source code of the Product
and such other information relating to the Product as the
Vendors shall reasonably require to enable them to exploit the
Product pursuant to the licence granted to them in sub-clause
7.5.2 in such form as they shall reasonably require and which
the Vendors shall retain under customary provisions for
security and confidentiality; and
7.5.4 at the request of the vendors or either of them waive or
procure the waiver of the requirement for them to give notice
to terminate their Service Contract or any other contract of
employment that they have entered with Synon or any of its
subsidiary companies or Affiliates.
7.6 Subject to sub-clause 7.7 below, on the occurrence of an Event of
Default Synon shall forthwith procure that (and Dysys confirms that)
the Vendors shall thereupon be irrevocably and unconditionally
released from all restraints and obligations contained in:
7.6.1 clause 9; and
- 18 -
<PAGE> 21
7.6.2 to the extent reasonably necessary to enable each of the
Vendors to exploit the licence granted to them in accordance
with sub-clause 7.5.2 above and to use the source code of the
Product for that purpose, clause 7 of their Service Contracts
(as varied from time to time).
7.7 The provisions of sub-clause 7.5 and 7.6 above shall cease to apply
and bind the parties hereto upon the occurrence of both of the
following:
7.7.1 Synon and its Affiliates receiving the aggregate of One
Hundred Million us Dollars (US $100,000,000) income revenue
and other payments or consideration, against which commission
is payable to the Vendors pursuant to the terms of their
Service Contracts; and
7.7.2 all commission and other sums due to the Vendors under their
Service Contracts has been paid in full when due.
7.8 Each of Synon and Dysys shall:
7.8.1 only market and disclose the Product and shall procure that
its and their Affiliates only market and disclose the Product
on terms that the company developing the Product retains all
intellectual property rights in the Product;
7.8.2 procure that all the aforesaid intellectual property rights
are properly protected; and
7.8.3 comply and procure that its Affiliates comply with all
customary standards relating to software security and
confidentiality in relation to the Product.
8. ANNOUNCEMENTS
8.1 None of the parties hereto shall divulge to any third
party (except to their respective professional advisers) any
information regarding the existence or subject matter of this
Agreement without the prior agreement of the other parties
(such agreement not to be
- 19 -
<PAGE> 22
unreasonably withheld).
9. NOTICES
9.1 Any notice required or authorised to be given under this Agreement
shall be in writing in the English language and may be served by
sending the same by pre-paid letter sent by rapid means of delivery or
by telex or telecopy addressed to the party in question at the address
given in this Agreement or to such other address (to the exclusion of
the before-mentioned address) as may be notified by either party to
the other in accordance with the provisions of this clause. Any
notice so given by letter shall be deemed to have been served 72 hours
after it shall have been posted by rapid means of delivery and any
notice so given by telex or telecopy shall be deemed to have been
served at the time of despatch and in proving the serving of the same
it shall be sufficient to prove in the case of a letter that such
letter was properly addressed and placed in the custody of a rapid
delivery firm and in the case of a telex or telecopy that such telex
or telecopy was duly despatched to a current telex or telecopy number
of the addressee.
10. COSTS AND GUARANTEE
10.1 Each party to this Agreement shall pay his or its own costs of and
incidental to this Agreement and the sale and purchase hereby agreed
to be made.
10.2 In consideration of each of the vendors entering into the Service
Contracts Synon hereby irrevocably and unconditionally guarantees:
10.2.1 payment on demand of all sums due to each of the Vendors under
the terms of their Service Contracts by way of basic salary
commission or otherwise whatsoever (and regardless of which
company is the employing company under the Service Contracts);
and
10.2.2 performance by Dysys (and any other employing company of the
Vendors) of all of its
- 20 -
<PAGE> 23
obligations contained in clause 2 of the Vendors' Service
Contracts in accordance with those provisions.
11. TRANSMISSION AND ASSIGNMENT
11.1 This Agreement shall be binding upon and enure for the
benefit of the successors of the parties. Neither the Vendors
nor Synon shall be entitled to assign their respective rights
or obligations under this Agreement without the prior written
consent of the other.
12. HEADINGS
12.1 The headings to clauses of this Agreement are for convenience
only and shall not affect the interpretation hereof.
13. CONTINUING EFFECT
13.1 This Agreement shall as to any of its provisions remaining to
be performed or capable of having or taking effect following
Completion remain in full force and effect notwithstanding
Completion.
14. APPLICABLE LAW
14.1 This Agreement shall be construed in accordance with and in
all respects governed by the laws of England and Synon hereby
submits to the exclusive jurisdiction of the English courts.
15. ENTIRE AGREEMENT
15.1 This Agreement (together with any documents referred to herein)
constitutes the entire agreement between the parties hereto with
respect to the subject matter of this Agreement.
IN WITNESS whereof this Agreement has been duly entered into by the parties
hereto the day and year first above written
- 21 -
<PAGE> 24
SCHEDULE I
The Vendors
and their Loans to Dysys
<TABLE>
<CAPTION>
No of Amount of Loan
Ordinary to Dysys as at
Name Address Shares held Completion
- ---- ------- ----------- ----------
<S> <C> <C> <C>
Simon Williams 19 Highfields Grove One Pound 58,951
Fitzroy Park
London N6 6HN
Melinda Horton "Mispickle" One Pound 36,920
Danescoombe Valley
Calstock
Cornwall PL18 9RZ
</TABLE>
- 22 -
<PAGE> 25
SCHEDULE II
PART I
The Directors
Name Address
- ---- -------
Simon Williams As in Schedule I
Melinda Horton As in Schedule I
PART II
The Secretary
Name Address
- ---- -------
Melinda Horton As in Schedule I
- 23 -
<PAGE> 26
SCHEDULE III
THE WARRANTIES
The warranties and undertakings set out below are given subject to matters
disclosed in the Disclosure Letter
1. INFORMATION
1.1 The information contained in the Recitals and Schedules to this
Agreement and all information contained in the Disclosure Letter is
true complete and accurate in all material respects and all other
information which has been given or authorised to be given in writing
by the Vendors or any of the professional advisers of Dysys to Synon
or to any of its directors officials agents or professional advisers
in the course of the negotiations leading to this Agreement was when
given accurate in all material respects and the Vendors are not aware
of any other fact or matter which renders or might upon its disclosure
render any such information misleading.
1.2 The Shares constitute the whole of the issued and allotted share
capital of Dysys and there is no option right to acquire or convert
mortgage charge pledge lien or other form of security or encumbrance
on over or affecting the issued or unissued shares or any of the
capital of Dysys and there is no agreement or commitment to give or
create any of the foregoing and no claim has been made by any person
to be entitled to any of the foregoing.
1.3 Dysys is not nor has it been the holder or beneficial owner of nor has
it agreed to acquire any share or other security of any other
corporation (whether incorporated in the United Kingdom or elsewhere).
2. MANAGEMENT ACCOUNTS ETC
2.1 The copy of the management accounts to 31st August 1992 of Dysys
delivered to Synon with the Disclosure Letter
- 24 -
<PAGE> 27
is true and accurate in all material respects so far as the Vendors
are aware.
2.2 Dysys has not declared made or paid any dividend or distribution or
made any payment which could be deemed a distribution within the
meaning of the Income and Corporation Taxes Act 1988.
3. PROPERTY AND ASSETS
Property
3.1 The Property comprises all the land and premises owned used or
occupied by Dysys.
3.2 Dysys has paid the licence fee and observed and performed the
covenants on the part of the licensee and the conditions contained in
any licence (including underleases) under which the Property is held.
3.3 Dysys has not created or agreed to create any option right to acquire
debenture mortgage charge lien lease underlease tenancy restrictive
covenant or other form of security or encumbrance or equity of
whatsoever nature on over or affecting any of its assets real or
personal which is still outstanding nor is there any person in
unlawful possession or occupation of or who has or claims any rights
or easements of any kind in respect of the Property or any part
thereof adversely to the estate interest right or title of Dysys
therein.
Assets and Liabilities
3.4 Dysys' plant and machinery including fixed plant and machinery and all
equipment furniture and vehicles are in good repair and condition
(fair wear and tear excepted) and in satisfactory working order.
3.5 The estimates of all major costs for the development of the Product
made in the Budget were made and remain made or held in good faith and
on the basis of realistic assumptions; none of such estimates nor the
assumptions
- 25 -
<PAGE> 28
on which they were based have been disproved to the knowledge of the
Vendors or so far as the Vendors are aware ought to have been reviewed
in the light of any events or circumstances which have arisen
subsequent to their preparation.
3.6 So far as the Vendors are aware the assets of Dysys set out in the
asset register attached to the Disclosure Letter comprise all material
assets of Dysys and the liabilities of Dysys set out in the management
accounts dated 31st August 1992 comprise all material liabilities of
Dysys including contingent liabilities.
4. LITIGATION AND CLAIMS
4.1 Neither Dysys nor any person for whose acts or defaults Dysys may be
vicariously liable is engaged in any proceedings litigation
arbitration or prosecution (whether as plaintiff or defendant or
otherwise) and that except as aforesaid and as far as the Vendors are
aware no legal or other proceedings are pending threatened or
anticipated by or against Dysys and that except as aforesaid and so
far as the Vendors are aware there are no circumstances likely to give
rise thereto.
5. TAXATION
5.1 So far as the Vendors are aware all necessary information notices
computations and returns which ought to have been made by Dysys have
been properly and duly submitted by Dysys to the Inland Revenue to HM
Customs and Excise and to any other relevant taxation or excise
authorities and such information notices computations and returns are
true complete and accurate in all material respects and are not the
subject of any material dispute.
6. VAT
6.1 Dysys is a registered and taxable person for the purposes of the VAT
legislation (as hereinafter defined)
- 26 -
<PAGE> 29
and so far as the Vendors are aware Dysys:
6.1.1 has complied in all material respects with the VAT
legislation; and
6.1.2 has given obtained made and maintained correct and up to date
invoices records and other documents appropriate or requisite
for the purposes of the VAT legislation; and
6.1.3 is not in arrears with any payment or returns thereunder or
liable to any abnormal or non-routine payment or repayment or
any forfeiture or penalty or to the operation of any penal
provision and where payment is not yet due or receivable has
provided for such payment; and
6.1.4 has not been required by the Commissioners of Customs and
Excise to give security.
7. PAYE
7.1 Dysys has properly operated the PAYE system and has deducted tax as
required by law from all payments made or treated as made to its
employees or former employees and has accounted to the Inland Revenue
for all tax so deducted and to all tax chargeable on benefits provided
for its employees or former employees.
8. CAPITAL COMMITMENTS UNUSUAL CONTRACTS LEASING AGREEMENT GUARANTEES ETC
8.1 Dysys:
8.1.1 has no capital commitment in excess of Pound [15,000];
8.1.2 is not a party to any contract or arrangement with the Vendors
or either of them or any company or business in which either
of them is interested or any contract or arrangement entered
into otherwise than in the ordinary and usual course of
business and on an arm's length basis ;
8.1.3 has not delegated any powers under a power of attorney which
remains in effect;
8.1.4 is not a party to any agreement which will be
- 27 -
<PAGE> 30
breached by or is or may become terminable or entitles or may
entitle the other party to exercise any option or be relieved
of any of his obligations thereunder as a result of the entry
into or completion of this Agreement;
8.1.5 is not currently the lessee under any lease of plant or
machinery;
8.1.6 has not entered into nor is bound by any guarantee suretyship
warranty or indemnity;
8.1.7 has not at any time assigned or otherwise disposed of any
leasehold property in such a way that it retains any residual
liability in respect thereof;
8.1.8 so far as the vendors are aware carries on no activities and
has no contracts which are ultra vires unauthorised invalid or
unenforceable;
8.1.9 is not a party to any joint venture consortium partnership or
profit sharing agreement or arrangement; and
8.1.10 is not party to any other agreement or arrangement which to
the best knowledge of the Vendors has or is likely to have a
material effect on the financial or trading position or
prospects of Dysys.
9. LOANS TO DYSYS
9.1 The total amount borrowed by Dysys does not exceed the aggregate
amount disclosed in the Disclosure Letter and Dysys has not otherwise
borrowed and not repaid in full any amount from any other person.
10. LOANS BY DYSYS
10.1 Dysys has not lent any money which has not been repaid to it nor does
it own the benefit of any debt (whether present or future) other than
debts accrued to it in the ordinary course of its business.
11. INSURANCE
11.1 Details of the insurance policies of Dysys have been
- 28 -
<PAGE> 31
disclosed to Synon in the Disclosure Letter and all such policies are
currently in full force and effect and provide full cover against
normal risks of Dysys' business. Nothing so far as the Vendors are
aware has been done or omitted to be done which would make any such
policy of insurance void or voidable or which would lead to an
increase in the premiums payable thereunder.
12. COMPLIANCE WITH STATUTES
12.1 So far as the Vendors are aware Dysys has not committed or omitted to
do any act or thing the commission or omission of which is or could be
in contravention of any United Kingdom government or local authority
law regulation order or instrument save of an immaterial nature
13. BOOKS AND RECORDS
13.1 The records statutory books and books of account of Dysys are duly
entered up and maintained in accordance with all legal requirements
applicable thereto and contain true and accurate records of all
matters required to be dealt with therein and all such books and all
records and documents (including documents of title) which are its
property are in its possession or under its control and all accounts
documents and returns required to be delivered or made to the
Registrar of Companies have been duly and correctly delivered or made.
14. INTELLECTUAL PROPERTY
14.1 Dysys:
14.1.1 has unencumbered title to all intellectual property in those
items of the Product developed by or on behalf of Dysys at the
date of this Agreement which Product is for identification
purposes annexed to the Disclosure Letter as annexure 12; and
14.1.2 the conduct of Dysys' business does not infringe the rights of
intellectual property of any third party.
- 29 -
<PAGE> 32
15. CURRENT EMPLOYEES
15.1 All the employees currently employed by Dysys (none of whom has given
or has received notice) are set out in the Disclosure Letter.
15.2 Dysys does not have any pension scheme for the benefit of its
employees.
- 30 -
<PAGE> 33
SCHEDULE IV
The Property
<TABLE>
<CAPTION>
Description Freehold/ Particulars of Annual
of Property Leasehold Licence Licence Fee
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
offices at the rear of Under Licence Dated 25.3.92 Pound 9,800 p.a.
the 2nd floor of Licence expires (exclusive of
136 Kentish Town Road 24.3.93 rates)
London NW1 9QB payable quarterly
in advance
</TABLE>
- 31 -
<PAGE> 34
SCHEDULE V
The Employees
1. Simon Williams
2. Melinda Horton
3. Richard Thompson
4. Paul Vereycken
5. Anthony Suhin
- 32 -
<PAGE> 35
SIGNED by SIMON WILLIAMS ) /s/ Simon Williams
in the presence of: )
Witness
Signature: signature unreadable
Witness
Name: as above
Witness
Address: unreadable
Witness
Occupation: unreadable
SIGNED by MELINDA HORTON ) /s/ Melinda Horton
in the presence of )
Witness
Signature: signature unreadable
Witness
Name: as above
Witness
Address:
Witness
Occupation:
SIGNED by SIMON WILLIAMS ) /s/ Simon Williams
for and on behalf of )
DYSYS LIMITED in the )
presence of: )
Witness
Signature: signature unreadable
Witness
Name: as above
Witness
Address:
Witness
Occupation:
- 33 -
<PAGE> 36
SIGNED by PAUL WILDE ) /s/ Paul Wilde
for and on behalf of )
SYNON CORPORATION in )
the presence of: )
Witness
signature: signature unreadable
Witness
Name: as above
Witness
Address: as above
Witness
Occupation:
- 34 -
<PAGE> 37
ANNEXURE 1
<TABLE>
<CAPTION>
==================================================================================================================================
KT project budget
==================================================================================================================================
==================================================================================================================================
Outgoings 1992 1993 1994
(Pounds Item Annual ---------------------------------------------------------------------------------------------
Sterling)000 basis Sept Q4 Total Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Payroll Williams 125.0 10.4 31.3 41.7 31.3 31.3 31.3 31.3 125.2 31.3 31.3 31.3 31.3 125.2
Horton 85.0 7.1 21.3 28.4 21.3 21.3 21.3 21.3 85.2 21.3 21.3 21.3 21.3 85.2
Thompson 32.0 2.7 8.0 10.7 8.0 8.0 8.0 8.0 32.0 8.0 8.0 8.0 8.0 32.0
Suhin 19.0 1.6 4.8 6.4 4.8 4.8 4.8 4.8 19.2 4.8 4.8 4.8 4.8 19.2
Vereycken 35.0 2.9 8.8 11.7 8.8 8.8 8.8 8.8 35.2 8.8 8.8 8.8 8.8 35.2
Developer 26.5 6.6 6.6 6.6 6.6 6.6 6.6 26.4 6.6 6.6 6.6 6.6 26.4
QA 25.0 6.3 6.3 6.3 6.3 25.2 6.3 6.3 6.3 6.3 25.2
Documentor 30.0 7.5 7.5 7.5 7.5 30.0 7.5 7.5 7.5 7.5 30.0
NHI 10.6% 2.6 8.6 11.2 10.0 10.0 10.0 10.0 40.0 10.0 10.0 10.0 10.0 40.0
--------------------------------------------------------------------------------------------------------------------
Total 27.3 89.4 116.7 104.6 104.6 104.6 104.6 418.4 104.6 104.6 104.6 104.6 418.4
--------------------------------------------------------------------------------------------------------------------
Headcount 5 6 8 8 8 8 8 8 8 8
- ----------------------------------------------------------------------------------------------------------------------------------
Fixed Rent 0.8 2.5 3.3 2.5 2.5 2.5 2.5 10.0 2.5 2.5 2.5 2.5 10.0
Rates 0.2 0.6 0.8 0.6 0.6 0.6 0.6 2.4 0.6 0.6 0.6 0.6 2.4
--------------------------------------------------------------------------------------------------------------------
Total 1.0 3.1 4.1 3.1 3.1 3.1 3.1 12.4 3.1 3.1 3.1 3.1 12.4
- ----------------------------------------------------------------------------------------------------------------------------------
Variable Computer sundries 0.1 0.3 0.4 0.3 0.3 0.3 0.3 1.2 0.3 0.3 0.3 0.3 1.2
Insurance 0.5 0.5 0.5 0.5
Maintenance 1.0 1.0 2.9 0.8 1.5 0.3 5.5 2.9 0.8 1.5 0.3 5.5
Office sundries 0.2 0.6 0.8 1.0 1.0 1.0 1.0 4.0 1.0 1.0 1.0 1.0 4.0
Power 0.2 0.5 0.7 0.5 0.5 0.5 0.5 2.0 0.5 0.5 0.7 0.7 2.4
PP&S 0.2 0.6 0.8 0.6 0.6 0.6 0.6 2.4 0.6 0.6 1.0 1.0 3.2
Publications 0.1 0.2 0.3 0.2 0.2 0.2 0.2 0.8 0.2 0.2 0.2 0.2 0.8
Recruitment 1.5 1.5 10.0 10.0
Staff welfare 0.1 0.2 0.3 0.3 0.3 0.3 0.3 1.2 0.3 0.2 0.2 1.0 1.7
Telecoms 0.1 0.2 0.3 0.2 0.2 0.4 0.4 1.2 0.6 0.6 0.8 0.8 2.8
Training 1.0 1.0 2.0 2.0
Travel 0.7 2.0 2.7 2.0 2.0 4.0 6.0 14.0 6.0 6.0 6.0 6.0 24.0
--------------------------------------------------------------------------------------------------------------------
Total 3.2 6.6 9.8 18.5 5.9 8.8 9.6 42.8 12.9 10.2 13.7 11.3 48.1
==================================================================================================================================
Total expenses 31.5 99.1 130.6 126.2 113.6 116.5 117.3 473.6 120.6 117.9 121.4 119.0 478.9
==================================================================================================================================
Capital PC hardware 10.0 10.0 6.0 6.0
Items PC software 1.5 1.0
ASNA Diploma/C 2.0
IBM CODE/400 2.0
IBM RS/6000 14.0
Telephone system 3.0 3.0
--------------------------------------------------------------------------------------------------------------------
Total 18.5 13.0 21.0 6.0
==================================================================================================================================
Total outgoings 50.0 99.1 143.6 147.2 113.6 116.5 117.3 479.6 120.6 117.9 121.4 119.0 478.9
==================================================================================================================================
Cumulative outgoings 50.0 149.1 296.3 409.9 526.4 643.7 764.3 882.2 1,004 1,123
==================================================================================================================================
Relocation Expense 8.0 4.0 4.0 16.0 4.0 4.5 4.0 4.0 16.5
contintency F&F 20.0 20.0
--------------------------------------------------------------------------------------------------------------------
Total 28.0 4.0 4.0 36.0 4.0 4.5 4.0 4.0 16.5
==================================================================================================================================
</TABLE>
<PAGE> 38
ANNEXURE 2
SPECIFICATION
1. Functionality
The Product will be an integrated CASE tool whose functions are:
* to support its users in designing applications;
* to store the application designs which its users create; and
* to generate from the stored application designs all source
code necessary to implement applications on the IBM AS/400
computer in both NPT and PWS operational modes.
2. Design support
The Product will provide facilities for users to:
* Describe business objects (entities and functions);
* Describe the decomposition of business objects into data
objects, programs and subroutines at a level capable of
implementation as an applicacion;
* Describe class hierarchies through which objects may inherit
the properties of other objects;
* Describe the attributes of data objects and their
relationships to other data objects;
* Describe the logic of functions and their relationships to
each other via an interactive action diagram editor;
* Describe the layout of PWS panels, NPT panels and printed
reports via an interactive device design editor;
* Describe implementation objects (physical and logical files,
programs and subroutines) in sufficient detail to support the
automatic generation of source code for implementation;
* Create, score and print network diagrams showing:
* Class hierarchies
* Object decomposition
* Entity relationships
* Function relationships
* Describe new versions of an application by specifying
incremental change.
<PAGE> 39
3. Generation
The Product will provide facilities to generate source code and help
text to implement interactive, batch and report programs in both NPT
and PWS environments, including:
* Server and NPT process code in RPG, C or COBOL, with database
access code in RPG, C, COBOL or SQL at the user's option;
* Client process code in C or COBOL;
* OS/400 database definition code in DDS or SQL;
* NPT panels in DDS or UIM, and print files in DDS;
* PWS panels via appropriate resource files.
High level languages options will be decided in consultation with
Synon subject to an analysis of the market requirement.
Users will be able to nominate a specified version of an application
during generation.
The Product will include facilities to build a list of objects whose
designs are likely to need change as a consequence of a change to the
design of one object.
4. Operating environment
The Product will operate in PWS mode using an IBM AS/400 server.
Client processors will be personal computers running DOS and Microsoft
Windows Version 3.1 or higher, or OS/2 Version 2 or higher using the
WIN-OS/2 environment.
The Product will be designed to perform adequately on a personal
computer using an Intel 486SX processor or equivalent with 8 megabytes
of memory and 120 megabytes of disk storage.
The Product will maintain its repository on the AS/400.
5. Target environment
The Product will generate applications for the IBM AS/400, using its
native RDBMS facilities. Interactive applications may be generated in
both NPT and PWS mode. PWS application clients will be personal
computers running DOS and Microsoft Windows Version 3.1 or higher, or
OS/2 Version 2 or higher using the WIN-OS/2 environment.
Applications generate by the Product will be designed to perform
adequately on a personal computer using an Intel 386SX processor or
equivalent with 4 megabytes of memory and 60 megabytes of disk
storage.
<PAGE> 40
6. Authorisation
The Product will include facilities to:
* Restrict the number of concurrent users to a limit specified
by an encrypted authorisation code;
* Prevent the operation of the Product on a designated AS/400
processor beyond a date specified by an encrypted
authorisation code.
Dysys will create a program to generate encrypted authorisation codes.
7. Class libraries and design import
The Product will include a class library of objects from which
user-created objects may inherit properties such that such
user-created objects make optimal use of the Product to generate
applications for NPT and PWS environments.
The Product will include facilities to import as much as reasonably
possible of the design of an application created using Synon/2E.
The Product will include a well-defined interface via which designs
may be imported from other CASE tools, and via which designs created
within the Product may be exported to other generators.
8. Documentation
The Product will include:
* A user manual providing the information which users need to
load the Product and to begin to use it in a limited manner;
* A user manual providing the information which users need to
enable them to use all of the Product's facilities;
<PAGE> 41
AGREED DOCUMENTS
Mr Paul Vereycken
7 Heathdene Road
London SW16 3NZ
15th September 1992
Dear Paul,
This letter records your employment with Dysys Limited ("the Company"). It
also gives you the information required by law, and the terms and conditions to
which you are subject. To confirm your agreement with the terms and conditions
you should sign the duplicate of this letter and return it to me. This will
then replace and supersede any other agreements or employment terms relating to
your employment with the Company.
1. Duties.
The Company shall employ you as Software Engineer or in any other
capacity as the Company may agree with you from time to time. You
will be required to perform duties and undertake assignments in any
part of the United Kingdom to the best of your ability, and to devote
the whole of your time and attention during working hours to the
interests and welfare of the Company.
You will not be directly or indirectly concerned, engaged or
interested in any business competing with that of the Company except
with the written consent of the Board of Directors of the Company, or
as the holder (directly or through nominees) of investments listed on
any recognised stock exchange where the holding does not exceed five
per cent of the issued shares or stock of any class of any one
company.
2. Remuneration and benefits.
2.1 The Company will pay you a salary at the rate of Pound 33,000 per
annum, or such higher rate as may from time to time be agreed. Salary
shall be payable by equal monthly payments in arrear not later than
the 28th day of each month.
2.2 The Company will refund to you all reasonable travelling, hotel and
other expenses properly incurred by you on the Company's business.
2.3 You are not entitled to any pension from the Company. A contracting
out certificate under the Social Security Act 1975 is not in force in
respect of the employment to which this letter refers.
3. Salary during illness.
If you are absent through illness or accident for more than a total of
three months in any consecutive period of twelve months your salary
may be reduced during any period in excess of the three month period
to one half of that to which you would otherwise be entitled.
Included within such
1 of 5
<PAGE> 42
salary shall be any amount to which you are entitled as Statutory Sick
Pay. The Company will deduct from your salary any income benefit
which you are entitled to claim in consequence of any sickness or
accident under the National Insurance scheme in force at the time.
4. Hours of work.
4.1 You will conform to such hours of work as may from time be reasonably
required of you and you will not be entitled to receive any additional
remuneration for work outside your normal hours.
4.2 At the time of writing, the Company operates flexible working hours,
whereby you are required to work 37.5 hours during each working week
(less 7.5 hours for each usual public and statutory holiday) and are
required to be at work between the hours of 10.00am and 4.00pm on each
working day.
5. Holidays.
5.1 You will be entitled to the usual public and statutory holidays, and
in addition to twenty-five working days holiday in each full calendar
year of employment, to be taken at times as may be approved by the
Company.
5.2 During the years in which your employment commences and terminates,
you will be entitled to holiday in direct proportion to your length of
service during that year, calculated as:
No of days service / 365 X 25, rounded to the nearest whole day
5.3 On termination of your employment with the Company for any reason your
final salary payment shall be increased or decreased by:
(Holiday entitlement - Holiday days taken) X Annual salary / 260
5.4 If during any calendar year you do not take all the holiday to which
you are entitled, you shall not carry forward any holiday entitlement,
and you shall not be entitled to any additional remuneration in
respect of the unused entitlement.
6. Term and termination.
6.1 Your employment with the Company commenced on 1st July 1992, and no
previous employment counts as part of your continuous period of
employment with the Company.
6.2 The first three months of your employment with the Company will be a
probatory period during which you are entitled to receive and are
obliged to give one week's notice to terminate your employment,
6.3 Unless previously terminated under other provisions of this clause
your employment with the Company will continue until the expiry of
written notice for not less that the appropriate period given either
by you or by the Company to the other. Initially the appropriate
period will be one month, but in the light of your performance and
progress it may be increased from time to time to a period of not more
than three months by the Company giving you written notice to that
effect.
- 2 of 5 -
<PAGE> 43
6.4 In the event of your performance proving unsatisfactory, the Company
may give you written notification of this, detailing the specific
reasons. The Company may then subsequently terminate your employment
if in its opinion there has been insufficient improvement in your
performance. Notice of termination will be given to you not sooner
than one month nor later that three months after the date of the
original notification. The period for such notice shall be one month.
6.5 Your employment with the Company shall in any event (unless otherwise
agreed in writing) terminate on the date of your sixtieth birthday.
6.6 The Company may terminate your employment with the Company by notice
in writing immediately:
a. If you act so as to bring yourself or the Company into
disrepute, or if you are guilty of gross misconduct, or are
substantially in breach of this Agreement, or
b. if you are absent and unable to fulfil your duties through
accident or illness for a total of 90 days or more in any
period of twelve months.
7. Secrecy.
7.1 You shall not disclose to any person, firm or company, or seek to
exploit at any time either during or after the termination of your
employment with the Company any trade secret or confidential
information relating to the business, plant, machinery, processes or
formulae of the Company or any customer of the Company.
7.2 Upon the termination of your employment with the Company you will
return to the Company any property of the Company, and all records of
any nature or description which you may have in any way relating
directly or indirectly to the business of the Company or any customer
of the Company.
8. Inventions
8.1 Any procedures, processes, designs, formulae, equipment, techniques,
specifications, methods of production or inventions, or other
industrial property ("the said procedures or inventions") which you
may evolve, discover, invent or improve at any time during the course
of or arising out of your employment with the Company, including any
of the said procedures or inventions which result from disclosures to
you by any customer of his own procedures, inventions or machinery
shall be disclosed to the Company and shall (subject to Sections 39 to
42 of the Patents Act 1977) be the exclusive property of the Company
or the customer as the case may be.
8.2 At the request of the Company, and at the expense of the Company or
the customer as the case may be, you will make or join in such
applications, execute such deeds and do all such other acts as are
necessary to secure and where appropriate to register in the name of
the Company or the customer as the case may be any letters patent,
copyrights and/or trade marks in the United Kingdom and elsewhere in
respect of the said procedures and inventions.
- 3 of 5 -
<PAGE> 44
8.3 For the avoidance of doubt, it is specifically understood that the
provisions of this Clause apply to any invention, discovery or
improvement made by you during the course of or arising out of your
employment with the Company, whether inside or outside normal working
hours, and whether made with the use of the Company's premises,
machinery or equipment or not.
8.4 For the purposes of this Clause you irrevocably appoint the Company as
your attorney in your name to execute and do all documents and things
which are required in order to give effect to the provisions of this
Clause, and the Company is hereby empowered to appoint and remove at
pleasure any person as agent and substitute for and on behalf of the
Company in respect of all or any of the matters aforesaid.
9. Restrictions after termination
9.1 There will be a restricted period after the termination of your
employment (however it may end). The restricted period, which will be
three months or twice the appropriate period in Clause 7 (whichever is
the greater) subject to a maximum of six months, will run from the
date on which you or the Company gives notice to the other, or in the
absence of notice the date of actual termination of your employment.
9.2 During the restricted period you shall not:
a. seek or accept employment with, or perform any services not
authorised by the Company for, any customer of the Company for
whom you have rendered any services on behalf of the Company
during the twelve months immediately preceding the beginning
of the restricted period.
b. for yourself or for any other person, firm or company solicit
or entice away from the Company (or attempt to do so) any
consultant or employee or servant of the Company.
c. for yourself or for any other person, firm or company solicit
or entice away from the Company (or attempt to do so) any
person, firm or company who was at any time during the twelve
months immediately preceding the beginning of the restricted
period a customer of or otherwise in the habit of dealing with
the Company.
d. for yourself or for any other person, firm or company carry on
or be engaged in any business which competes with any aspect
of the business of the Company.
10. General.
10.1 If you are dissatisfied with any disciplinary decision in respect of
your employment or wish to obtain redress of any grievance relating to
your employment you should notify a director of the Company in writing
immediately.
10.2 This Agreement and all matters arising in connection with it shall be
governed by English Law and shall be subject to the jurisdiction of
the English courts.
4 of 5
<PAGE> 45
Signed___________________________________________________
A Director duly appointed on behalf of Dysys Limited
I hereby confirm my agreement to and accept the above.
Signed___________________________________________________
Dated____________________________________________________
- 5 of 5 -
<PAGE> 46
Paul Vereycken
7 Heathdene Road
London SW16 3NZ
15th September 1992
Dear Paul,
I am writing to you to tell you about the bonus system that Dysys is proposing
to operate for its key employees, which I hope will benefit you.
Dysys intends that the system will operate as follows:
* All employees of Dysys (except Melinda and myself) who make a
qualifying level of contribution to KT will be eligible to participate
in the bonus system.
* Bonus will be payable in respect of six month bonus periods, the first
of which will begin on the first of the month during which the first
commercial sale of KT occurs. At the end of each bonus period:
* We will create a bonus pool of one percent of the revenue
received by the Synon group in respect of worldwide sales and
maintenance of KT during the prior six months.
* We will tell you the percentage of the bonus pool which you
will receive (your "bonus percent"), and what your actual
bonus will be. Your bonus will be paid together with your
monthly salary for the month after the end of the bonus
period.
* In determining your bonus percent, we will take into account both your
cumulative contribution to KT since you joined Dysys, and your
contribution to KT during the relevant bonus period, with greater
emphasis on the former.
* If we decrease your bonus percent from one period to another, we will
discuss with you the reasons why, and what you need to do to restore
it to its former level.
* Bonuses are paid at Dysys' discretion, and are not a contractual
right. No-one's bonus percent will exceed 25% of the bonus pool in
any bonus period.
* If you leave the company during a bonus period, you may still be
eligible for a bonus, provided that you finish any important tasks
which you have in progress, and hand over your work to someone else in
an orderly way.
/2
<PAGE> 47
/2
Our present intention is that, based on your current performance, if KT is
ready for launch by lst January 1994, your initial bonus percent will be 15%.
It will decrease by 1% for every additional month which we take to complete the
product.
I hope you find this concept an exciting opportunity. It is intended to give
you an immediate real benefit which doesn't carry the risk and uncertainty
associated with share options, which can go down in value as well as up, and
which do not vest for three years. The bonus scheme will, therefore, replace
the idea of share options being available to employees.
Yours sincerely,
Simon Williams
<PAGE> 48
Mr Richard Thompson
33 Cambridge Gardens
Christchurch
Dorset BH23 2TL
15th September 1992
Dear Richard,
This letter records your employment with Dysys Limited ("the Company"). It
also gives you the information required by law, and the terms and conditions to
which you are subject. To confirm your agreement with the terms and conditions
you should sign the duplicate of this letter and return it to me. This will
then replace and supersede any other agreements or employment terms relating to
your employment with the Company.
1. Duties.
The Company shall employ you as Software Engineer or in any other
capacity as the Company may agree with you from time to time. You
will be required to perform duties and undertake assignments in any
part of the United Kingdom to the best of your ability, and to devote
the whole of your time and attention during working hours to the
interests and welfare of the Company.
You will not be directly or indirectly concerned, engaged or
interested in any business competing with that of the Company except
with the written consent of the Board of Directors of the Company, or
as the holder (directly or through nominees) of investments listed on
any recognised stock exchange where the holding does not exceed five
per cent of the issued shares or stock of any class of any one
company.
2. Remuneration and benefits.
2.1 The Company will pay you a salary at the rate of Pound 30,000 per
annum, or such higher rate as may from time to time be agreed. Salary
shall be payable by equal monthly payments in arrear not later than
the 28th day of each month.
2.2 The Company will refund to you all reasonable travelling, hotel and
other expenses properly incurred by you on the Company's business.
2.3 You are not entitled to any pension from the Company. A contracting
out certificate under the Social Security Act 1975 is not in force in
respect of the employment to which this letter refers.
2.4 At the commencement of your employment, the Company will loan you each
quarter, interest free, a sum equal to one quarter of the cost of a
2nd class annual British Rail season ticket between Christchurch and
London. These sums will be repaid by deduction from your salary in
equal monthly instalments. Any such sum owed by you to the Company
upon termination of your employment will be immediately repayable.
1 of 5
<PAGE> 49
3. Salary during illness.
If you are absent through illness or accident for more than a total of
three months in any consecutive period of twelve months your salary
may be reduced during any period in excess of the three month period
to one half of that to which you would otherwise be entitled.
Included within such salary shall be any amount to which you are
entitled as Statutory Sick Pay. The Company will deduct from your
salary any income benefit which you are entitled to claim in
consequence of any sickness or accident under the National Insurance
scheme in force at the time.
4. Hours of work.
4.1 You will conform to such hours of work as may from time be reasonably
required of you and you will not be entitled to receive any additional
remuneration for work outside your normal hours.
4.2 At the time of writing, the Company operates flexible working hours,
whereby you are required to work 37.5 hours during each working week
(less 7.5hours for each usual public and statutory holiday) and are
required to be at work between the hours of 10.00am and 4.00pm on each
working day.
5. Holidays.
5.1 You will be entitled to the usual public and statutory holidays, and
in addition to twenty working days holiday in each full calendar year
of employment, to be taken at times as may be approved by the Company.
5.2 During the years in which your employment commences and terminates,
you will be entitled to holiday in direct proportion to your length of
service during that year, calculated as:
No of days service / 365 X 20, rounded to the nearest whole day
5.3 On termination of your employment with the Company for any reason your
final salary payment shall be increased or decreased by:
(Holiday entitlement - Holiday days taken) X Annual salary / 260
5.4 If during any calendar year you do not take all the holiday to which
you are entitled, you shall not carry forward any holiday entitlement,
and you shall not be entitled to any additional remuneration in
respect of the unused entitlement.
6. Term and termination.
6.1 Your employment with the Company commenced on 10th February 1992, and
no previous employment counts as part of your continuous period of
employment with the Company.
6.2 The first three months of your employment with the Company will be a
probatory period during which you are entitled to receive and are
obliged to give one day's notice to terminate your employment.
6.3 Unless previously terminated under other provisions of this clause
your employment with the Company will continue until the expiry of
written notice for not less that the appropriate period given either
by you or by the Company to the other. Initially the appropriate
period will be one month, but in the light of your performance and
progress it may be
- 2 of 5 -
<PAGE> 50
increased from time to time to a period of not more than three months
by the Company giving you written notice to that effect.
6.4 In the event of your performance proving unsatisfactory, the Company
may give you written notification of this, detailing the specific
reasons. The Company may then subsequently terminate your employment
if in its opinion there has been insufficient improvement in your
performance. Notice of termination will be given to you not sooner
than one month nor later that three months after the date of the
original notification. The period for such notice shall be one month.
6.5 Your employment with the Company shall in any event (unless otherwise
agreed in writing) terminate on the date of your sixtieth birthday.
6.6 The Company may terminate your employment with the Company by notice
in writing immediately:
a. If you act so as to bring yourself or the Company into
disrepute, or if you are guilty of gross misconduct, or are
substantially in breach of this Agreement, or
b. if you are absent and unable to fulfil your duties through
accident or illness for a total of 90 days or more in any
period of twelve months.
7. Secrecy.
7.1 You shall not disclose to any person, firm or company, or seek to
exploit at any time either during or after the termination of your
employment with the Company any trade secret or confidential
information relating to the business, plant, machinery, processes or
formulae of the Company or any customer of the Company.
7.2 Upon the termination of your employment with the Company you will
return to the Company any property of the Company, and all records of
any nature or description which you may have in any way relating
directly or indirectly to the business of the Company or any customer
of the Company.
8. Inventions
8.1 Any procedures, processes, designs, formulae, equipment, techniques,
specifications, methods of production or inventions, or other
industrial property (''the said procedures or inventions'') which you
may evolve, discover, invent or improve at any time during the course
of or arising out of your employment with the Company, including any
of the said procedures or inventions which result from disclosures to
you by any customer of his own procedures, inventions or machinery
shall be disclosed to the Company and shall (subject to Sections 39 to
42 of the Patents Act 1977) be the exclusive property of the Company
or the customer as the case may be.
8.2 At the request of the Company, and at the expense of the Company or
the customer as the case may be, you will make or join in such
applications, execute such deeds and do all such other acts as are
necessary to secure and where appropriate to register in the name of
the Company or the customer as the case may be any letters patent,
copyrights and/or trade marks in the United Kingdom and elsewhere in
respect of the said procedures and inventions.
3 of 5
<PAGE> 51
8.3 For the avoidance of doubt, it is specifically understood that the
provisions of this Clause apply to any invention, discovery or
improvement made by you during the course of or arising out of your
employment with the Company, whether inside or outside normal working
hours, and whether made with the use of the Company's premises,
machinery or equipment or not.
8.4 For the purposes of this Clause you irrevocably appoint the Company as
your attorney in your name to execute and do all documents and things
which are required in order to give effect to the provisions of this
Clause, and the Company is hereby empowered to appoint and remove at
pleasure any person as agent and substitute for and on behalf of the
Company in respect of all or any of the matters aforesaid.
9. Restrictions after termination
9.1 There will be a restricted period after the termination of your
employment (however it may end). The restricted period, which will be
three months or twice the appropriate period in Clause 7 (whichever is
the greater) subject to a maximum of six months, will run from the
date on which you or the Company gives notice to the other, or in the
absence of notice the date of actual termination of your employment.
9.2 During the restricted period you shall not:
a. seek or accept employment with, or perform any services not
authorised by the Company for, any customer of the Company for
whom you have rendered any services on behalf of the Company
during the twelve months immediately preceding the beginning
of the restricted period.
b. for yourself or for any other person, firm or company solicit
or entice away from the Company (or attempt to do so) any
consultant or employee or servant of the Company.
c. for yourself or for any other person, firm or company solicit
or entice away from the Company (or attempt to do so) any
person, firm or company who was at any time during the twelve
months immediately preceding the beginning of the restricted
period a customer of or otherwise in the habit of dealing with
the Company.
d. for yourself or for any other person, firm or company carry on
or be engaged in any business which competes with any aspect
of the business of the Company.
10. General.
10.1 If you are dissatisfied with any disciplinary decision in respect of
your employment or wish to obtain redress of any grievance relating to
your employment you should notify a director of the Company in writing
immediately.
10.2 This Agreement and all matters arising in connection with it shall be
governed by English Law and shall be subject to the jurisdiction of
the English courts.
4 of 5
<PAGE> 52
Signed________________________________________________
A Director duly appointed on behalf of Dysys Limited
I hereby confirm my agreement to and accept the above.
Signed________________________________________________
Dated_________________________________________________
- 5 of 5 -
<PAGE> 53
Richard Thompson
33 Cambridge Gardens
Christchurch
Dorset BH23 2TL
15th September 1992
Dear Richard,
I am writing to you to tell you about the bonus system that Dysys is proposing
to operate for its key employees, which I hope will benefit you.
Dysys intends that the system will operate as follows:
* All employees of Dysys (except Melinda and myself) who make a
qualifying level of contribution to KT will be eligible to participate
in the bonus system.
* Bonus will be payable in respect of six month bonus periods, the first
of which will begin on the first of the month during which the first
commercial sale of KT occurs. At the end of each bonus period:
* We will create a bonus pool of one percent of the revenue
received by the Synon group in respect of worldwide sales and
maintenance of KT during the prior six months.
* We will tell you the percentage of the bonus pool which you
will receive (your "bonus percent"), and what your actual
bonus will be. Your bonus will be paid together with your
monthly salary for the month after the end of the bonus
period.
* In determining your bonus percent, we will take into account both your
cumulative contribution to KT since you joined Dysys, and your
contribution to KT during the relevant bonus period, with greater
emphasis on the former.
* If we decrease your bonus percent from one period to another, we will
discuss with you the reasons why, and what you need to do to restore
it to its former level.
* Bonuses are paid at Dysys' discretion, and are not a contractual
right. No-one's bonus percent will exceed 25% of the bonus pool in
any bonus period.
* If you leave the company during a bonus period, you may still be
eligible for a bonus, provided that you finish any important tasks
which you have in progress, and hand over your work to someone else in
an orderly way.
/2
<PAGE> 54
/2
Our present intention is that, based on your current performance, if KT is
ready for launch by lst January 1994, your initial bonus percent will be 20%.
It will decrease by 1% for every additional month which we take to complete the
product.
I hope you find this concept an exciting opportunity. It is intended to give
you an immediate real benefit which doesn't carry the risk and uncertainty
associated with share options, which can go down in value as well as up, and
which do not vest for three years. The bonus scheme will, therefore, replace
the idea of share options being available to employees.
Yours sincerely,
Simon Williams
<PAGE> 55
DYSYS LETTERHEAD
Simon Williams
19 Highfields Grove
Fitzroy Park
London N6 6HN
15th September 1992
Dear Simon,
This letter records your employment with Dysys Limited ("the Company"). It
also gives you the information required by law, and the terms and conditions to
which you are subject. To confirm your agreement with the terms and conditions
you should sign the duplicate of this letter and return it to me. This will
then replace and supersede any other agreements or employment terms relating to
your employment with the Company and all benefits received in connection with
that employment.
1. Duties and place or work.
1.1 The Company shall employ you as Software Engineer or in any other
capacity as the Company may agree with you from time to time. You
will be required to work at 136 Kentish Town Road, London NWI 9QB.
You may be required to travel on the business of the Company or any of
its subsidiary or associated companies anywhere in the world (as the
same are defined in Section 736 of the Companies Act 1985 and Section
416 of the Income and Corporation Taxes Act 1985, respectively). You
are to report to the Chief Executive Officer of Synon Corporation.
1.2 You shall devote the whole of your time and attention during working
hours to the interests and welfare of the Company and faithfully and
diligently perform your duties to the best of your ability. You may
be required in pursuance of your duties to perform services not only
for the Company but also for any subsidiary or associated company.
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<PAGE> 56
1.3 You will not be directly or indirectly concerned, engaged or
interested in any business competing with that of the Company except
with the written consent of the Board of Directors of the Company, or
as the holder (directly or through nominees) of investments listed on
any recognised stock exchange where the holding does not exceed five
per cent of the issued shares or stock of any class of any one
company.
2. Remuneration and benefits.
2.1 The Company will pay you a basic salary at the rate of Pound 125,000
per annum, or such higher rate as may from time to time be agreed.
Salary shall be payable by equal monthly payments in arrear not later
than the 28th day of each month.
2.2 In addition to the basic salary specified in sub-clause 2.1 the
Company shall pay to you a Commission ("the Commission") which
(subject to the provisions of sub-clause 2.5 below) shall be such sum
as equals two percent (2.0%) of all income revenue and other payments
or consideration of any kind received by or on behalf of the Company
or any subsidiary or associated company of the Company including Synon
Corporation and its subsidiaries and associated companies during the
period of 5 years (as specified in sub-clause 2.4 below) in respect of
each sale or rental by way of licence or maintenance or other
exploitation of the Product (herein meaning the Product specified in
sub-clause 2.3 below) or any part of the Product in any language
anywhere in the world by Synon Corporation, the Company, their
subsidiary and associated companies and any third parties
("Receipts").
2.3 References to the Product herein means the next generation workstation
based CASE product currently being developed by the Company and all
improvements, enhancements, modifications and new versions of that
Product and all user documentation for that Product as it exists from
time to time.
2.4 The Commission shall be calculated on Receipts in respect of the
Product received:
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<PAGE> 57
i. during the period of five (5) years commencing on _____ and
ii. after the aforesaid five year period in respect of contracts
entered by the Company or Synon Corporation and their
subsidiary and associated companies during the said five year
period.
The Commission shall be paid monthly in arrears within thirty (30)
days of the end of each calendar month in which the said Receipts of
Product fees are received by or on behalf of the Company and its
associated and subsidiary companies and Synon Corporation, and its
associated and subsidiary companies.
2.5 The Commission due hereunder shall be due and payable to you:
i. during the continuance of your employment and
ii. after the termination of your employment PROVIDING THAT you
develop the Product, or procure that the Product is developed,
to the extent that it complies in all material respects with
the Product specification, as amended from time to time with
your agreement (a copy of the current version of the
specification having been initialled by the parties for
identification) UNLESS the Company shall terminate your
employment (other than for gross misconduct) when the said
Commission shall continue to be due and payable after such
termination and the above proviso shall not apply. If you
voluntarily terminate your employment hereunder after
developing the Product to the extent that it complies with the
said specification in all material respects, but prior to the
expiration of the period of 5 years referred to in sub- clause
2.4 above the rate of Commission referred to in sub-clause 2.2
shall be reduced to one percent (1.0%) from the date of such
termination.
2.6 All payments to be made to you hereunder shall be paid in British
pounds sterling and in respect of the Commission any fees received by
Synon Corporation or the Company and its subsidiaries and associated
companies on which the same is payable shall be converted to sterling
by reference to the spot rate on the London Foreign Exchange Market at
about 11am on the first day of the calendar month in which the payment
is made.
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<PAGE> 58
Rider to Page 3 of a Service Agreement
dated 15th September 1992
....the first to occur of:
(a) the date of the first sale or rental by way of licence of the Product
or
(b) 1st July 1994; Provided That the date of 1st July 1994 aforesaid shall
be extended if the Budget as defined in a Share Purchase Agreement of
event date between Simon Williams, Melinda Horton, Synon Corporation
and Dysys Limited is reduced pursuant to any provision of sub-clause
7.3.1 of it in which event the said date of lst July 1994 shall be
such later date as Synon Corporation and Simon Williams shall agree in
writing (both acting reasonably) and failing agreement being reached
shall be the date of first sale or rental of the Product as aforesaid;
<PAGE> 59
2.7 The Company shall maintain and shall procure that its subsidiary and
associated companies maintain complete and accurate records of such
information as may be reasonably necessary to accurately calculate all
payments due to you as Commission and shall on reasonable notice make
the same available to you for inspection (and if requested copying) by
you or your representative no more frequently than once in any six (6)
month period.
2.8 If any Commission payable to you hereunder is not paid by the due date
for payment then such sum shall bear interest at the rate of two per
cent (2%) above the base lending rate from time to time of Barclays
Bank plc from the date such sum falls due for payment until the date
of actual payment compound twice yearly at six (6) month intervals.
2.9 In the event of any dispute arising between us as to the amount of any
Commission payable or paid hereunder the matter shall be referred to
an independent third party at your request for it to certify the
amount properly due and payable pursuant to the terms of this
Agreement. Such independent third party shall be such person or
entity as you and the Company shall agree and failing agreement shall
be appointed by the President of the Institute of Chartered
Accountants at your request. Such independent third party shall act
as expert and not as arbitrator hereunder and his decision shall be
final and binding on the parties hereto save in the case of fraud or
manifest error. The costs of such expert shall be borne as to fifty
percent (50%) by the Company and 50% by you unless such expert shall
decide that one party has acted unreasonably in which case he shall
have discretion as to costs.
2.10 The Company will refund to you all reasonable travelling, hotel and
other expenses properly incurred by you on the Company's business.
2.11 You are not entitled to any pension from the Company. A contracting
out certificate under the Social Security Act 1975 is not in force in
respect of the employment to which this letter refers.
- 4 of 9 -
<PAGE> 60
3. Salary during illness.
If you are absent through illness or accident for more than a total of
six months in any consecutive period of twelve months your basic
salary may be reduced during any period in excess of the six month
period to one half of that to which you would otherwise be entitled.
Included within such salary shall be any amount to which you are
entitled as Statutory Sick Pay. The Company will deduct from your
salary any income benefit which you are entitled to claim in
consequence of any sickness or accident under the National Insurance
scheme in force at the time including Statutory Sick Pay and social
security sickness benefit. For the purpose of calculating your
entitlement to statutory Sick Pay "qualifying days" are Monday to
Friday.
4. Hours of work.
4.1 You will conform to such hours of work as may from time to time be
reasonably required of you and you will not be entitled to receive any
additional remuneration for work outside your normal hours.
4.2 At the time of writing, the Company operates flexible working hours,
whereby you are required to work 37.5 hours during each working week
(less 7.5 hours for each usual public and statutory holiday) and are
required to be at work between the hours of 10.00am and 4.00pm on each
working day.
5. Holidays.
5.1 You will be entitled to the usual public and statutory holidays, and
in addition to twenty working days holiday in each full calendar year
of employment, to be taken at times as may be approved by the Company.
5.2 During the years in which your employment commences and terminates,
you will be entitled to holiday in direct proportion to your length of
service during that year, calculated as:
No of days service / 365 X 20, rounded to the nearest whole day
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<PAGE> 61
5.3 On termination of your employment with the Company for any reason your
final basic salary payment shall be increased or decreased by:
(Holiday entitlement - Holiday days taken) X Annual salary / 260
5.4 If during any calendar year you do not take all the holiday to which
you are entitled, you shall not carry forward any holiday entitlement,
and you shall not be entitled to any additional remuneration in
respect of the unused entitlement.
6. Term and termination.
6.1 Your employment with the Company commenced on lst January 1992, and no
previous employment counts as part of your continuous period of
employment with the Company.
6.2 Unless previously terminated under other provisions of this clause
your employment with the Company will continue until terminated by
either party giving one month's written notice to the other.
6.4 In the event of your performance proving unsatisfactory, the Company
may give you written notification of this, detailing the specific
reasons. The Company may then subsequently terminate your employment
if in its opinion there has been insufficient improvement in your
performance. Notice of termination will be given to you not sooner
than one month nor later that three months after the date of the
original notification. The period for such notice shall be one month.
6.5 Your employment with the Company shall in any event (unless otherwise
agreed in writing) terminate on the date of your sixtieth birthday.
6.6 The Company may terminate your employment with the Company by notice
in writing immediately:
a. If you act so as to bring yourself or the Company into
disrepute, or if you are guilty of gross misconduct, or are
substantially in breach of this Agreement, or
b. if you are absent and unable to fulfil your duties through
accident or illness for a total of 180 days or more in any
period of twelve months.
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<PAGE> 62
7. Secrecy.
7.1 You shall not disclose (except in the proper course of your duties) to
any person, firm or company, or seek to exploit at any time either
during or after the termination of your employment with the Company
any trade secret or confidential information relating to the business,
plant, machinery, processes or formulae of the Company or any
subsidiary or associated company or any customer of the Company or of
any subsidiary or associated company. This restriction shall cease to
apply to information or knowledge which has come into the public
domain other than by breach of this clause, or which is trivial or
obvious.
7.2 Upon the termination of your employment with the Company you will
return to the Company all property of the Company, and all records of
any nature or description which you may have in any way relating
directly or indirectly to the business of the Company or any customer
of the Company.
8. Inventions
8.1 Any procedures, processes, designs, formulae, equipment, techniques,
specifications, methods of production or inventions, or other
industrial property ("the said procedures or inventions") which you
may evolve, discover, invent or improve at any time during the course
of or arising out of your employment with the Company, including any
of the said procedures or inventions which result from disclosures to
you by any customer of his own procedures, inventions or machinery
shall be disclosed to the Company and shall (subject to Sections 39 to
42 of the Patents Act 1977) be the exclusive property of the Company
or the customer as the case may be.
8.2 At the request of the Company, and at the expense of the Company or
the customer as the case may be, you will make or join in such
applications, execute such deeds and do all such other acts as are
necessary to secure and where appropriate to register in the name of
the Company or the customer as the case may be any letters patent,
copyrights and/or trade marks in the United Kingdom and elsewhere in
respect of the said procedures and inventions
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<PAGE> 63
8.3 For the avoidance of doubt, it is specifically understood that the
provisions of this Clause apply to any invention, discovery or
improvement made by you during the course of or arising out of your
employment with the Company, whether inside or outside normal working
hours, and whether made with the use of the Company's premises,
machinery or equipment or not.
8.4 For the purposes of this Clause you irrevocably appoint the Company as
your attorney in your name to execute all documents and do all things
which are required in order to give effect to the provisions of this
Clause, and the Company is hereby empowered to appoint and remove at
pleasure any person as agent and substitute for and on behalf of the
Company in respect of all or any of the matters aforesaid.
9. Restrictions after termination
9.1 There will be a restricted period of six months after the termination
of your employment (however it may end). The restricted period will
run from the date on which you or the Company gives notice to the
other, or in the absence of notice the date of actual termination of
your employment.
9.2 During the restricted period you shall not:
a. seek or accept employment with, or perform any services not
authorised by the Company for, any customer of the Company for
whom you have rendered any services on behalf of the Company
during the six months immediately preceding the beginning of
the restricted period.
b. for yourself or for any other person, firm or company solicit
or entice away from the Company or any subsidiary or
associated company (or attempt to do so) any consultant or
employee or servant of the Company or any subsidiary or
associated company.
c. for yourself or for any other person, firm or company solicit
or entice away from the Company or any subsidiary or
associated company (or attempt to do so) any person, firm or
company who was at any time during the six months immediately
preceding the beginning of the restricted period a customer of
or otherwise in the habit of dealing with the Company or any
subsidiary or associated company.
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<PAGE> 64
d. for yourself or for any other person, firm or company carry on
or be engaged (in a similar capacity to that which you are
engaged by the Company hereunder) in any business which
competes with the Product.
10. General.
10.1 There are not in force any formal disciplinary rules applicable to
your employment but you are expected to conform to accepted standards
of behaviour. If you are dissatisfied with any disciplinary decision
in respect of your employment or wish to obtain redress of any
grievance relating to your employment you should notify a director of
the Company in writing immediately.
10.2 This Agreement and all matters arising in connection with it shall be
governed by English Law and shall be subject to the jurisdiction of
the English courts.
Signed_____________________________________________
A Director duly authorised on behalf of Dysys Limited
Signed as a deed and delivered by the employee on the date specified below:
Signed_____________________________________________Dated________________________
_____
Witness signature _____________________________________
Witness name _____________________________________
Witness address ______________________________________
Witness occupation_____________________________________
9 of 9
<PAGE> 65
EXHIBIT A - SPECIFICATION
1. Functionality
The Product will be an integrated CASE tool whose functions are:
* to support its users in designing applications;
* to store the application designs which its users create; and
* to generate from the stored application designs all source
code necessary to implement applications on the IBM AS/400
computer in both NPT and PWS operational modes.
2. Design support
The Product will provide facilities for users to:
* Describe business objects (entities and functions);
* Describe the decomposition of business objects into data
objects, programs and subroutines at a level capable of
implementation as an application;
* Describe class hierarchies through which objects may inherit
the properties of ocher objects;
* Describe the attributes of data objects and their
relationships to other data objects;
* Describe the logic of functions and their relationships to
each other via an interactive action diagram editor;
* Describe the layout of PWS panels, NPT panels and printed reports via
an interactive device design editor;
* Describe implementation objects (physical and logical files, programs
and subroutines) in sufficient detail to support the automatic
generation of source code for implementation;
* Create, score and print network diagrams showing:
* Class hierarchies
* Object decomposition
* Entity relationships
* Function relationships
* Describe new versions of an application by specifying incremental
change.
<PAGE> 66
3. Generation
The Product will provide facilities to generate source code and help
text to implement interactive, batch and report programs in both NPT
and PWS environments, including:
* Server and NPT process code in RPG, C or COBOL, with database
access code in RPG, C, COBOL or SQL at the user's option;
* Client process code in C or COBOL;
* OS/400 database definition code in DDS or SQL;
* NPT panels in DDS or UIM, and print files in DDS;
* PWS panels via appropriate resource files.
High level languages options will be decided in consultation with
Synon subject to an analysis of the market requirement.
Users will be able to nominate a specified version of an application
during generation.
The Product will include facilities to build a list of objects whose
designs are likely to need change as a consequence of a change to the
design of one object.
4. Operating environment
The Product will operate in PWS mode using an IBM AS/400 server.
Client processors will be personal computers running DOS and Microsoft
Windows Version 3.1 or higher, or OS/2 Version 2 or higher using the
WIN-OS/2 environment.
The Product will be designed to perform adequately on a personal
computer using an Intel 486SX processor or equivalent with 8 megabytes
of memory and 120 megabytes of disk storage.
The Product will maintain its repository on the AS/400.
5. Target environment
The Product will generate applications for the IBM AS/400, using its
native RDBMS facilities. Interactive applications may be generated in
both NPT and PWS mode. PWS application clients will be personal
computers running DOS and Microsoft Windows Version 3.1 or higher, or
OS/2 Version 2 or higher using the WIN-OS/2 environment.
Applications generate by the Product will be designed to perform
adequately on a personal computer using an Intel 386SX processor or
equivalent with 4 megabytes of memory and 60 megabytes of disk
storage.
<PAGE> 67
6. Authorisation
The Product will include facilities to:
* Restrict the number of concurrent users to a limit specified
by an encrypted authorisation code;
* Prevent the operation of the Product on a designated AS/400
processor beyond a date specified by an encrypted
authorisation code.
Dysys will create a program to generate encrypted authorisation codes.
7. Class libraries and design import
The Product will include a class library of objects from which
user-created objects may inherit properties such that such
user-created objects make optimal use of the Product to generate
applications for NPT and PWS environments.
The Product will include facilities to import as much as reasonably
possible of the design of an application created using Synon/2E.
The Product will include a well-defined interface via which designs
may be imported from other CASE tools, and via which designs created
within the Product may be exported to other generators.
8. Documentation
The Product will include:
* A user manual providing the information which users need to
load the Product and to begin to use it in a limited manner;
* A user manual providing the information which users need to
enable them to use all of the Product's facilities;
<PAGE> 68
[DYSYS LETTERHEAD]
Ms Melinda Horton
Mispickel
Danescoombe Valley
Calstock
Cornwall
15th September 1992
Dear Melinda,
This letter records your employment with Dysys Limited ("the Company"). It
also gives you the information required by law, and the terms and conditions to
which you are subject. To confirm your agreement with the terms and conditions
you should sign the duplicate of this letter and return it to me. This will
then replace and supersede any other agreements or employment terms relating to
your employment with the Company and all benefits received in connection with
that employment.
1. Duties and place or work.
1.1 The Company shall employ you as Software Engineer or in any other
capacity as the Company may agree with you from time to time. You
will be required to work at 136 Kentish Town Road, London NW1 9QB.
You may be required to travel on the business of the Company or any of
its subsidiary or associated companies anywhere in the world (as the
same are defined in Section 736 of the Companies Act 1985 and Section
416 of the Income and Corporation Taxes Act 1988, respectively).
1.2 You shall devote the whole of your time and attention during working
hours to the interests and welfare of the Company and faithfully and
diligently perform your duties to the best of your ability. You may
be required in pursuance of your duties to perform services not only
for the Company but also for any subsidiary or associated company.
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<PAGE> 69
1.3 You will not be directly or indirectly concerned, engaged or
interested in any business competing with that of the Company except
with the written consent of the Board of Directors of the Company, or
as the holder (directly or through nominees) of investments listed on
any recognised stock exchange where the holding does not exceed five
per cent of the issued shares or stock of any class of any one
company.
2. Remuneration and benefits.
2.1 The Company will pay you a basic salary at the rate of Pound 85,000
per annum, or such higher rate as may from time to time be agreed.
Salary shall be payable by equal monthly payments in arrear not later
than the 28th day of each month.
2.2 In addition to the basic salary specified in sub-clause 2.1 the
Company shall pay to you a Commission ("the Commission") which
(subject to the provisions of sub-clause 2.5 below) shall be such sum
as equals one (1.0%) of all income revenue and other payments or
consideration of any kind received by or on behalf of the Company or
any subsidiary or associated company of the Company including Synon
Corporation and its subsidiaries and associated companies during the
period of 5 years (as specified in sub-clause 2.4 below) in respect of
each sale or rental by way of licence or maintenance or other
exploitation of the Product (herein meaning the Product specified in
sub-clause 2.3 below) or any part of the Product in any language
anywhere in the world by Synon Corporation, the Company, their
subsidiary and associated companies and any third parties
("Receipts").
2.3 References to the Product herein means the next generation workstation
based CASE product currently being developed by the Company and all
improvements, enhancements, modifications and new versions of that
Product and all user documentation for that Product as it exists from
time to time.
2.4 The Commission shall be calculated on Receipts in respect of the
Product received:
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<PAGE> 70
i. during the period of five (5) years commencing on ______ and
ii. after the aforesaid five year period in respect of contracts
entered by the Company or Synon Corporation and their
subsidiary and associated companies during the said five year
period.
The Commission shall be paid monthly in arrears within thirty (30)
days of the end of each calendar month in which the said Receipts of
Product fees are received by or on behalf of the Company and its
associated and subsidiary companies and Synon Corporation, and its
associated and subsidiary companies.
2.5 The Commission due hereunder shall be due and payable to you:
i. during the continuance of your employment and
ii. after the termination of your employment PROVIDING THAT you
develop the Product, or procure that the Product is developed,
to the extent that it complies in all material respects with
the Product specification, as amended from time to time with
your agreement (a copy of the current version of the
specification having been initialled by the parties for
identification) UNLESS the Company shall terminate your
employment (other than for gross misconduct) when the said
Commission shall continue to be due and payable after such
termination and the above proviso shall not apply. If you
voluntarily terminate your employment hereunder after
developing the Product to the extent that it complies with the
said specification in all material respects, but prior to the
expiration of the period of 5 years referred to in sub-clause
2.4 above the rate of Commission referred to in sub-clause 2.2
shall be reduced to one half of one percent (0.5%) from the
date of such termination.
2.6 All payments to be made to you hereunder shall be paid in British
pounds sterling and in respect of the Commission any fees received by
Synon Corporation or the Company and its subsidiaries and associated
companies on which the same is payable shall be converted to sterling
by reference to the spot rate on the London Foreign Exchange Market at
about 11am on the first day of the calendar month in which the payment
is made.
3 of 9
<PAGE> 71
Rider to Page 3 of a Service Agreement
dated 15th September 1992
.... the first to occur of:
(a) the date of the first sale or rental by way licence of the Product or
(b) 1st July 1994; Provided That the date of 1st July 1994 aforesaid shall
be extended if the Budget as defined in a Share Purchase Agreement of
event date between Simon Williams, Melinda Horton, Synon Corporation
and Dysys Limited is reduced pursuant to any provision of sub-clause
7.3.1 of it in which event the said date of 1st July 1994 shall be
such later date as Synon Corporation and Simon Williams shall agree in
writing (both acting reasonably) and failing agreement being reached
shall be the date of first sale or rental of the Product as aforesaid;
<PAGE> 72
2.7 The Company shall maintain and shall procure that its subsidiary and
associated companies maintain complete and accurate records of such
information as may be reasonably necessary to accurately calculate all
payments due to you as Commission and shall on reasonable notice make
the same available to you for inspection (and if requested copying) by
you or your representative no more frequently than once in any six (6)
month period.
2.8 If any Commission payable to you hereunder is not paid by the due date
for payment then such sum shall bear interest at the rate of two per
cent (2%) above the base lending rate from time to time of Barclays
Bank plc from the date such sum falls due for payment until the date
of actual payment compound twice yearly at six (6) month intervals.
2.9 In the event of any dispute arising between us as to the amount of any
Commission payable or paid hereunder the matter shall be referred to
an independent third party at your request for it to certify the
amount properly due and payable pursuant to the terms of this
Agreement. Such independent third party shall be such person or
entity as you and the Company shall agree and failing agreement shall
be appointed by the President of the Institute of Chartered
Accountants at your request. Such independent third party shall act
as expert and not as arbitrator hereunder and his decision shall be
final and binding on the parties hereto save in the case of fraud or
manifest error. The costs of such expert shall be borne as to fifty
percent (50%) by the Company and 50% by you unless such expert shall
decide chat one party has acted unreasonably in which case he shall
have discretion as to costs.
2.10 The Company will refund to you all reasonable travelling, hotel and
other expenses properly incurred by you on the Company's business.
2.11 You are not entitled to any pension from the Company. A contracting
out certificate under the Social Security Act 1975 is not in force in
respect of the employment to which this letter refers.
4 of 9
<PAGE> 73
3. Salary during illness
If you are absent through illness or accident for more than a total of
six months in any consecutive period of twelve months your basic
salary may be reduced during any period in excess of the six month
period to one half of that to which you would otherwise be entitled.
Included within such salary shall be any amount to which you are
entitled as Statutory Sick Pay. The Company will deduct from your
salary any income benefit which you are entitled to claim in
consequence of any sickness or accident under the National Insurance
scheme in force at the time including Statutory Sick Pay and social
security sickness benefit. For the purpose of calculating your
entitlement to statutory Sick Pay "qualifying days" are Monday to
Friday.
4. Hours of work.
4.1 You will conform to such hours of work as may from time to time be
reasonably required of you and you will not be entitled to receive any
additional remuneration for work outside your normal hours.
4.2 At the time of writing, the Company operates flexible working hours,
whereby you are required to work 37.5 hours during each working week
(less 7.5 hours for each usual public and statutory holiday) and are
required to be at work between the hours of 10.00am and 4.00pm on each
working day.
5. Holidays.
5.1 You will be entitled to the usual public and statutory holidays, and
in addition to twenty working days holiday in each full calendar year
of employment, to be taken at times as may be approved by the Company.
5.2 During the years in which your employment commences and terminates,
you will be entitled to holiday in direct proportion to your length of
service during that year, calculated as:
No of days service / 365 X 20, rounded to the nearest whole day
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5.3 On termination of your employment with the Company for any reason your
final basic salary payment shall be increased or decreased by:
(Holiday entitlement - Holiday days taken) X Annual salary / 260
5.4 If during any calendar year you do not take all the holiday to which
you are entitled, you shall not carry forward any holiday entitlement,
and you shall not be entitled to any additional remuneration in
respect of the unused entitlement.
6. Term and termination.
6.1 Your employment with the Company commenced on 1st January 1992, and no
previous employment counts as part of your continuous period of
employment with the Company.
6.2 Unless previously terminated under other provisions of this clause
your employment with the Company will continue until terminated by
either party giving one month's written notice to the other.
6.4 In the event of your performance proving unsatisfactory, the Company
may give you written notification of this, detailing the specific
reasons. The Company may then subsequently terminate your employment
if in its opinion there has been insufficient improvement in your
performance. Notice of termination will be given to you not sooner
than one month nor later that three months after the date of the
original notification. The period for such notice shall be one month.
6.5 Your employment with the Company shall in any event (unless otherwise
agreed in writing) terminate on the date of your sixtieth birthday.
6.6 The Company may terminate your employment with the Company by notice
in writing immediately:
a. If you act so as to bring yourself or the Company into
disrepute, or if you are guilty of gross misconduct, or are
substantially in breach of this Agreement, or
b. if you are absent and unable to fulfil your duties through
accident or illness for a total of 180 days or more in any
period of twelve months.
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<PAGE> 75
7. Secrecy.
7.1 You shall not disclose (except in the proper course of your duties) to
any person, firm or company, or seek to exploit at any time either
during or after the termination of your employment with the Company
any trade secret or confidential information relating to the business,
plant, machinery, processes or formulae of the Company or any
subsidiary or associated company or any customer of the Company or of
any subsidiary or associated company. This restriction shall cease to
apply to information or knowledge which has come into the public
domain other than by breach of this clause, or which is trivial or
obvious.
7.2 Upon the termination of your employment with the Company you will
return to the Company all property of the Company, and all records of
any nature or description which you may have in any way relating
directly or indirectly to the business of the Company or any customer
of the Company.
8. Inventions
8.1 Any procedures, processes, designs, formulae, equipment, techniques,
specifications, methods of production or inventions, or other
industrial property ("the said procedures or inventions") which you
may evolve, discover, invent or improve at any time during the course
of or arising out of your employment with the Company, including any
of the said procedures or inventions which result from disclosures to
you by any customer of his own procedures, inventions or machinery
shall be disclosed to the Company and shall (subject to Sections 39 to
42 of the Patents Act 1977) be the exclusive property of the Company
or the customer as the case may be.
8.2 At the request of the Company, and at the expense of the Company or
the customer as the case may be, you will make or join in such
applications, execute such deeds and do all such ocher acts as are
necessary to secure and where appropriate to register in the name of
the Company or the customer as the case may be any letters patent,
copyrights and/or trade marks in the United Kingdom and elsewhere in
respect of the said procedures and inventions.
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<PAGE> 76
8.3 For the avoidance of doubt, it is specifically understood that the
provisions of this Clause apply to any invention, discovery or
improvement made by you during the course of or arising out of your
employment with the Company, whether inside or outside normal working
hours, and whether made with the use of the Company's premises,
machinery or equipment or not.
8.4 For the purposes of this Clause you irrevocably appoint the Company as
your attorney in your name to execute all documents and do all things
which are required in order to give effect to the provisions of this
Clause, and the Company is hereby empowered to appoint and remove at
pleasure any person as agent and substitute for and on behalf of the
Company in respect of all or any of the matters aforesaid.
9. Restrictions after termination
9.1 There will be a restricted period of six months after the termination
of your employment (however it may end). The restricted period will
run from the date on which you or the Company gives notice to the
other, or in the absence of notice the date of actual termination of
your employment.
9.2 During the restricted period you shall not:
a. seek or accept employment with, or perform any services
not authorised by the Company for, any customer of the Company
for whom you have rendered any services on behalf of the Company
during the six months immediately preceding the beginning of the
restricted period.
b. for yourself or for any other person, firm or company solicit or
entice away from the Company or any subsidiary or associated
company (or attempt to do so) any consultant or employee or
servant of the Company or any subsidiary or associated company.
c. for yourself or for any other person, firm or company solicit or
entice away from the Company or any subsidiary or associated
company (or attempt to do so) any person, firm or company who
was at any time during the six months immediately preceding the
beginning of the restricted period a customer of or otherwise in
the habit of dealing with the Company or any subsidiary or
associated company.
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<PAGE> 77
d. for yourself or for any other person, firm or company carry on or be
engaged (in a similar capacity to that which you are engaged by the
Company hereunder) in any business which competes with the Product.
10. General.
10.1 There are not in force any formal disciplinary rules applicable to
your employment but you are expected to conform to accepted standards
of behaviour. If you are dissatisfied with any disciplinary decision
in respect of your employment or wish to obtain redress of any
grievance relating to your employment you should notify a director of
the Company in writing immediately.
10.2 This Agreement and all matters arising in connection with it shall be
governed by English Law and shall be subject to the jurisdiction of
the English courts.
Signed______________________________________________
A Director duly authorised on behalf of Dysys Limited
Signed as a deed and delivered by the employee on the date specified below:
Signed_______________________________________Dated_______________________
Witness signature _____________________________
Witness name ______________________________
Witness address _______________________________
Witness occupation______________________________
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EXHIBIT A - SPECIFICATION
1. Functionality
The Product will be an integrated CASE tool whose functions are:
* to support its users in designing applications;
* to store the application designs which its users create; and
* to generate from the stored application designs all source
code necessary to implement applications on the IBM AS/400
computer in both NPT and PWS operational modes.
2. Design support
The Product will provide facilities for users to:
* Describe business objects (entities and functions);
* Describe the decomposition of business objects into data
objects, programs and subroutines at a level capable of
implementation as an application;
* Describe class hierarchies through which objects may inherit
the properties of other objects;
* Describe the attributes of data objects and their
relationships to other data objects;
* Describe the logic of functions and their relationships to
each other via an interactive action diagram editor;
* Describe the layout of PWS panels, NPT panels and printed
reports via an interactive device design editor;
* Describe implementation objects (physical and logical files,
programs and subroutines) in sufficient detail to support the
automatic generation of source code for implementation;
* Create, score and print network diagrams showing:
* Class hierarchies
* Object decomposition
* Entity relationships
* Function relationships
* Describe new versions of an application by specifying
incremental change.
<PAGE> 79
3. Generation
The Product will provide facilities to generate source code and help
text to implement interactive, batch and report programs in both NPT
and PWS environments, including:
* Server and NPT process code in RPG, C or COBOL, with database
access code in RPG, C, COBOL or SQL at the user's option;
* Client process code in C or COBOL;
* OS/400 database definition code in DDS or SQL;
* NPT panels in DDS or UIM, and print files in DDS;
* PWS panels via appropriate resource files.
High level languages options will be decided in consultation with
Synon subject to an analysis of the market requirement.
Users will be able to nominate a specified version of an application
during generation.
The Product will include facilities to build a list of objects whose
designs are likely to need change as a consequence of a change to the
design of one object.
4. Operating environment
The Product will operate in PWS mode using an IBM AS/400 server.
Client processors will be personal computers running DOS and Microsoft
Windows Version 3.1 or higher, or OS/2 Version 2 or higher using the
WIN-OS/2 environment.
The Product will be designed to perform adequately on a personal
computer using an Intel 486SX processor or equivalent with 8 megabytes
of memory and 120 megabytes of disk storage.
The Product will maintain its repository on the AS/400.
5. Target environment
The Product will generate applications for the IBM AS/400, using its
native RDBMS facilities. Interactive applications may be generated in
both NPT and PWS mode. PWS application clients will be personal
computers running DOS and Microsoft Windows Version 3.1 or higher, or
OS/2 Version 2 or higher using the WIN-OS/2 environment.
Applications generate by the Product will be designed to perform
adequately on a personal computer using an Intel 386SX processor or
equivalent with 4 megabytes of memory and 60 megabytes of disk
storage.
<PAGE> 80
6. Authorisation
The Product will include facilities to:
* Restrict the number of concurrent users to a limit specified
by an encrypted authorisation code;
* Prevent the operation of the Product on a designated AS/400
processor beyond a date specified by an encrypted
authorisation code.
Dysys will create a program to generate encrypted authorisation codes.
7. Class libraries and design import
The Product will include a class library of objects from which
user-created objects may inherit properties such that such
user-created objects make optimal use of the Product to generate
applications for NPT and PWS environments.
The Product will include facilities to import as much as reasonably
possible of the design of an application created using Synon/2E.
The Product will include a well-defined interface via which designs
may be imported from other CASE tools, and via which designs created
within the Product may be exported to other generators.
8. Documentation
The Product will include:
* A user manual providing the information which users need to
load the Product and to begin to use it in a limited manner;
* A user manual providing the information which users need to
enable them to use all of the Product's facilities;
<PAGE> 1
EXHIBIT 10.21
================================================================================
DEVELOPMENT INCENTIVE AGREEMENT
between
Synon, Inc.
Larkspur, California
and
International Business Machines Corporation
Purchase, New York
IBM
PR6539
================================================================================
<PAGE> 2
Development Incentive Agreement
This is a development incentive loan agreement (hereinafter referred to as
"Agreement") made on September 27, 1990 by and between International Business
Machines Corporation, a corporation organized and existing under the laws of
New York, having a place of business at 2000 Purchase Street, Purchase, New
York 10577 (hereinafter referred to as "IBM") and Synon, Inc., a corporation
organized and existing under the laws of Illinois, having a place of business
at 1100 Larkspur Landing Circle, Larkspur, California 94939 (hereinafter
referred to as "Synon").
WHEREAS, IBM desires to encourage Synon to develop and make generally available
to the marketplace, an AS/400 application generator capable of exporting the
external source format representation of IBM's Systems Application Architecture
(SAA) Application Generator Common Programming Interface (CPI), as a strategic
software tool that fits into IBM's AD/Cycle for mid range computers; AND
WHEREAS, to this extent, IBM is willing to loan funds to Synon: AND
WHEREAS, Synon is desirous of developing said software tool;
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
contained herein, IBM and Synon agree as follows:
1.0 DEFINITIONS
1. "AUTHORIZED SIGNING OFFICER" shall mean a person authorized to bind
his or her company by signing this Agreement and any amendment
thereto.
2. "CUSTOMER" shall mean any person, corporation or other entity to which
IBM, Synon or their respective licensees, license or sell products
primarily for such entity's end use. Customers shall not mean other
IBM locations or IBM Subsidiaries, nor shall it include other Synon
locations or Synon Affiliates.
3. "DERIVATIVE WORKS" shall mean a work which is based upon the New
Product, such as a revision, enhancement, modification, translation,
abridgement, condensation, expansion, or any other form in which such
preexisting works may be recast, transformed, or adapted, and which,
if prepared without authorization by the owner of the copyright in
such Preexisting Works, would constitute a copyright infringement.
For purposes hereof, Derivative Works shall also include any
compilation that incorporates such a Preexisting Work.
4. "ENHANCEMENTS" shall mean changes, additions, or modifications to the
New Product and Related Documentation that:
a. correct Errors;
b. support new releases of operating systems with which the New
Product is designed to operate;
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c. provide support for new input/output devices;
d. provide other incidental updates to the New Product and
Related Documentation; or
e. improve functions, add new functions, or improve performance
by changes in system design or coding. Enhancements further
include, in the alternative, additions to the New Product and
Related Documentation that:
1) provide substantial additional value and utility;
2) as a practical matter, may be priced and offered
separately as optional additions to the New Product
and Related Documentation and which;
3) are not made available to Synon's Customers generally
without separate charge.
5. "ERRORS" shall mean any error, problem, or defect resulting from:
a. an incorrect functioning of the New Product; or
b. an incorrect or incomplete statement or diagram in the New
Product or Related Documentation, if such error, problem, or
defect renders the New Product inoperable, causes the New
Product to fail to meet the specifications thereof, causes the
Related Documentation to be inaccurate or incomplete in any
material respect, causes incorrect results, or causes
incorrect functions to occur.
6. "IBM or SYNON CONFIDENTIAL INFORMATION" shall mean all information
identified as "IBM confidential" or "Synon Confidential" at the time
of disclosure by IBM or Synon which relates to the parties' past,
present or future research, development or business activities.
7. "NEW PRODUCT" shall mean a new software product, developed by Synon as
a result of this Agreement, to be known as "Cross System
Product/External Source Format Synon/2E Generation" which is more
fully defined in Appendix A.
8. "OBJECT CODE" shall mean computer programming code in binary machine
readable form.
9. "RELATED DOCUMENTATION" shall mean end-user manuals and other written
end-user materials that relate to the New Product.
10. "SOURCE CODE" shall mean computer programming code written in source
language, comprising the New Product, in which Synon owns, or if Synon
does not own, has a license to intellectual property rights, all to
the extent that Synon has the right to provide such subject matter to
IBM and subject to any licenses Synon has from third parties with
respect to such subject matter. Subject to the foregoing, Source
Code includes: related programmer's notes, comments and procedural
code such as control language and design documentation necessary to
use and understand such Source Code.
11. "SUBSIDIARY" as to IBM, shall mean a corporation, company or other
entity:
a. more than fifty percent (50%) of whose outstanding shares or
securities (representing the right to vote for the election of
directors or other managing authority) are; or
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b. which does not have outstanding shares or securities, as may
be the case in partnership, joint venture or unincorporated
association, but more than fifty percent (50%) of whose
ownership interest (representing the right to make decisions
for such corporation, company or other entity) is:
now or hereafter, owned or controlled directly or indirectly, by
International Business Machines Corporation, but such corporation,
company or other entity shall be deemed to be a Subsidiary only so
long as such ownership or control exists.
12. "SYNON AFFILIATES" shall mean any direct or in direct subsidiary or
parent corporation of Synon and any direct or indirect subsidiary of a
direct or indirect parent of Synon.
2.0 SCOPE OF WORK
Synon shall use diligent efforts to develop, and make generally
available to the marketplace, the New Product and Related
Documentation in accordance with the Development Plan and Project
Schedule set forth in Appendix A.
Synon shall also use diligent efforts to prepare and furnish IBM with
documentation defined as "Deliverables" in Appendix A on the dates
specified therein.
3.0 PAYMENT OF LOANED FUNDS
In consideration of Synon's dedication of resources to the work to be
performed under this Agreement, IBM shall lend certain funds to Synon
in accordance with the terms and conditions set forth in Appendix B.
Such funds shall be applied exclusively to the work to be performed
under this Agreement.
4.0 REPAYMENT OF LOANED FUNDS
Synon shall repay to IBM all funds lent to Synon under this Agreement
in accordance with the repayment schedule set forth in Appendix C, plus
interest. Simple interest shall start to accrue on January 1, 1994 and
shall be compounded monthly at ____% (the prime reference rate plus 2
(two) percentage points, as announced by Chemical Bank, New York, NY on
the date this amendment has been signed by both parties.) Repayment
shall be due regardless of the fact that Synon may or may not realize
revenues from the sale of the New Product.
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5.0 SOURCE CODE DEPOSIT
Agreement Number C92172, Source Code Transfer and Custody Agreement
between IBM and Synon, is hereby incorporated by reference into this
Agreement and made a part hereof as Appendix D, Source Code Escrow.
6.0 MANAGING COORDINATORS
1. IBM and Synon shall each designate a Managing Coordinator and an
Alternative Managing Coordinator for this Agreement. Each Managing
Coordinator shall be authorized to:
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<PAGE> 6
a. represent the respective parties in all matters relating to
this Agreement.
b. perform periodic performance reviews, and monitor schedules
and progress of the work to be performed hereunder.
c. submit and accept Deliverable Items required to be furnished
under this Agreement.
d. schedule and coordinate meetings and consultations between the
parties and visits by its employees to the place of business
of the other party as may be deemed necessary for the
successful accomplishment of work under this Agreement.
e. supervise the exchange of information including confidential
and/or proprietary information.
2. Within 15 days of the effective date of this Agreement each party
shall advise the other in writing of the names of these designees. A
party may change its Managing Coordinator upon 15 days written notice
to the other party.
7.0 INFORMATION EXCHANGE
1. General
It is the intention of IBM and Synon to exchange information from time
to time as may be essential for the accomplishment of the work to be
performed under this Agreement.
2. Disclosure and handling of IBM and Synon Confidential Information
The disclosure and handling of IBM and Synon Confidential Information
shall be in accordance with the terms and conditions set forth in the
Bilateral Confidential Disclosure Agreement, dated February 26, 1990
between Synon Limited and IBM and bearing CDA Number CA-B01- 90-RJL
(the "CDA"). The terms and provisions of the CDA are incorporated by
reference as if Synon, Inc., and IBM were the parties thereto, subject
to the following conditions:
a. The Managing Coordinators named pursuant to Section 6.0 of
this Agreement or their designees shall be the Technical
Coordinators for the purposes of the CDA as it applies to this
Agreement.
b. The CDA as it applies to this Agreement shall not expire and
may not be terminated by either Synon Limited or IBM until
completion of development of the New Product or termination of
this Agreement.
c. The five year limitation on duties with respect to
Confidential Information provided in the CDA shall not apply
to Source Code.
3. Source Code Protection:
IBM shall treat the Source Code provided under Section 5.0 with at
least the same degree of care as IBM uses for its own confidential
source code, and shall maintain a written record of all IBM employees
accessing such Source Code. In no event shall IBM provide any Source
Code to a third party without Synon's written consent. Such consent
shall not be unreasonably withheld.
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<PAGE> 7
Upon Synon's written request, IBM shall notify Synon of all IBM
employees who have accessed the Source Code. Synon retains all of its
right, title and interest in the Source Code, except as expressly
provided herein.
8.0 RIGHTS IN DATA
The New Product and Related Documentation developed pursuant to this
Agreement shall be owned by Synon and IBM agrees to execute and
deliver such additional documents as may be reasonable required to
confirm ownership by Synon of the New Product.
9.0 USE OF NEW PRODUCT AND RELATED DOCUMENTATION
No license or right is granted hereunder to IBM whether expressly or
by implication, estoppel, or otherwise, to use, execute, reproduce,
display, perform, distribute internally or externally, sell or license
copies of or prepare Derivative Works based upon, the New Product
received hereunder, except that IBM is licensed to use, execute,
reproduce, display, perform, and distribute internally the Object Code
and Related Documentation for the New Product, including prerelease
and prototype software received hereunder solely for the purpose of
evaluating the New Product. Such license shall include the right of
IBM to sublicense its Subsidiaries to do any, some, or all of the
foregoing for the same purpose. Upon termination or expiration of
this Agreement, at Synon's request, IBM shall provide written
certification that the New Product received by IBM from Synon for
evaluation purposes together with all backup copies made thereof have
been destroyed, except that one copy of the New Product may be
retained by IBM for archival purposes.
10.0 WARRANTIES
1. Synon represents and warrants that it has the right to grant the
rights and licenses granted in this Agreement, and that it is under no
obligation or restriction, nor shall it assume any obligation or
restrictions, which would conflict with Synon's obligations under this
Agreement.
2. Synon further represents and warrants that to the best of its
knowledge at the time it furnishes the New Product and Related
Documentation to IBM, Synon shall either have full and complete right,
title, and interest, or full and complete right to grant the licenses
provided herein for the New Product and Related Documentation. Synon
further represents and warrants that neither the New Product or
Related Documentation, nor the worldwide use or distribution of
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the New Product or Related Documentation, shall infringe any trade
secret, copyright, patent or other intellectual property right, or
privacy or similar right, of a third party. If requested by IBM,
Synon shall defend IBM and its Subsidiaries against any claim that
IBM's exercise of its rights and licenses granted in the Section,
entitled "Use of New Product and Related Documentation" infringes a
third party's trade secret, copyright, patent, or other intellectual
property right or privacy right, provided that IBM promptly notifies
Synon in writing of the claim, and provides Synon with the sole
control of the defense and settlement thereof.
3. If the New Product or Related Documentation, or any part thereof, are,
or in the opinion of Synon may become, the subject of any claim, suite
or proceeding for such an infringement, then Synon may, at its option
and expense:
a. replace the New Product and Related Documentation, or part
thereof, with another non-infringing New Product and Related
Documentation or parts that are substantially equivalent in
functionality and performance; or
b. similarly modify the New Product and Related Documentation, or
part thereof to render them non-infringing; or
c. obtain a valid license under reasonable terms and cost for IBM
to use the New Product and Related Documentation; or
d. failing a. b. or c. above, terminate this Agreement and
promptly repay to IBM all funds lent to Synon under this
Agreement.
Notwithstanding the foregoing, Synon assumes no liability for (i) any
infringement claims with respect to any product in or with which the
New Product and Related Documentation may be used but not covering the
New Product and Related Documentation standing alone; (ii) any
trademark infringements involving any marking or branding applied at
the request of IBM; or (iii) the modification of the New Product and
Related Documentation, or any part thereof, unless such modification
was made by Synon.
THIS SECTION 10.0 STATES THE ENTIRE LIABILITY AND OBLIGATION OF SYNON
AND THE EXCLUSIVE REMEDY OF IBM, WITH RESPECT TO ANY ALLEGED
INFRINGEMENT OF PATENTS, COPYRIGHTS. TRADEMARKS OR OTHER INTELLECTUAL
PROPERTY RIGHTS BY THE NEW PRODUCTS OR ANY PART THEREOF, AND WITH
RESPECT TO ANY BREACH OF THE WARRANTIES IN THIS SECTION 10.0.
4. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 10.0, SYNON MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
NEW PRODUCTS OR ANY OTHER MATERIALS OR SERVICES PROVIDED HEREUNDER.
SYNON EXPRESSLY DISCLAIMS ANY WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE WARRANTY OF MERCHANTABILITY AND ALL OTHER STATUTORY
WARRANTIES.
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11.0 MAINTENANCE SUPPORT
Synon shall provide Customer maintenance support for the New Product and
Related Documentation at a level equivalent to the level of support Synon
provides for its current "Synon/2E" software product offering and its related
documentation.
For the purpose of this Section 11.0, maintenance support shall include
updating the New Product and Related Documentation to be compatible with future
releases of IBM products on which the New Product depends on or with which it
interfaces.
If Synon materially breaches its obligations to provide maintenance support to
its Customers for the New Product and Related Documentation, IBM will have the
right to use the Source Code held in deposit at a single central technical
support location, solely for the purpose of providing maintenance support to
such Customers.
Synon's failure to correct all or any particular Errors or to enhance the New
Product and Related Documentation shall not constitute a breach.
12.0 IBM'S RIGHT TO SELL NEW PRODUCT
IBM reserves the right to nominate the New Product and Related Documentation
for which development is completed under this Agreement as a candidate for sale
by IBM through its Cooperative Software Supplier Program (CSSP) marketing
channel. If IBM exercises this right, the parties agree to negotiate in good
faith at that time to enter into an IBM CSSP agreement".
IBM may exercise its right under this Section 12.0 with respect to the New
Product and Related Documentation by giving written notice to Synon of its
intention and entering into a mutually acceptable IBM CSSP agreement concerning
the New Product and Related Documentation within 6 months after the date such
New Product and Related Documentation are made generally available for sale by
Synon.
13.0 AGREEMENT WITH SYNON EMPLOYEES
Synon agrees that it shall have and maintain for so long as this Agreement is
in effect, written agreements with all of its employees, subcontractors or
agents engaged by Synon to assist with or contribute to Synon's duties,
obligations or performance under this Agreement. Such written agreements shall
contain provisions sufficient to establish the rights and benefits contemplated
by, and to assure compliance with the Sections, entitled "Information Exchange"
and "Rights In Data".
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14.0 TERM AND TERMINATION
1. Stated Term
The effective date of this Agreement is the date Synon and IBM
Authorized Signing Officers sign this Agreement and shall expire upon
Synon's complete repayment to IBM of all funds lent to Synon under
this Agreement.
2. Termination without Cause
Either party may, at its sole option and discretion, terminate this
Agreement, in whole or in part, with or without reason by giving the
other party 30 days prior written notice.
If this Agreement is terminated by IBM for convenience, IBM shall
continue to loan those funds which would have been loaned to Synon had
this Agreement not been terminated for 3 months following the date of
termination. The balance of loaned funds outstanding at the end of
this 3 month period shall be repaid on a prorated basis in accordance
with the original repayment schedule, without interest.
If this Agreement is terminated by Synon for convenience, IBM's
obligation to continue loaning funds shall terminate on the date such
notice is given, and the balance of loaned funds outstanding on the
date of such termination shall be repaid within 12 months following
the date of such termination, with interest from the date of
termination.
3. Termination for Cause:
This Agreement may be terminated by either party in the event of a
material breach by the other party of its obligations hereunder and
after written notice to the other party has been given which
specifically identifies the breach for which termination is
threatened. If the breaching party does not (i) reach agreement with
the non-breaching party within 30 days of such notice on a plan to
cure such breach, or (ii) present a plan to the non-breaching party
within 30 days of such notice that provides for a cure within 90 days
of the notice of breach, and actually cures the breach within such 90
day period, then in either case the non-breaching party may terminate
this Agreement effective upon a further written notice of termination
given to the breaching party. Termination shall not occur if the
above conditions are met.
If this Agreement is terminated by IBM due to a material breach by
Synon, the balance of loaned funds outstanding at the date of
termination shall be repaid with interest from the date of termination
within 12 months after the date of termination.
If this Agreement is terminated by Synon due to a material breach by
IBM, IBM shall continue to loan those funds that would have been
loaned to Synon, had this Agreement not been terminated for 3 months
following the date of termination. The balance of loaned funds
outstanding at the end of this 3 month period shall be repaid on a
prorated basis in accordance with the original repayment schedule,
without interest.
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4. Survival
In the event of any termination or expiration of this Agreement, the
following listed Sections shall survive and continue to have affect
and shall inure to the benefit of and be binding upon the parties and
their legal representatives, heirs, successors and assigns:
a. Source Code Deposit; (if the deposit is made prior to
termination or expiration)
b. Rights in Data;
c. Information Exchange;
d. Warranties; (if the New Product is completed prior to
expiration or termination)
e. Term and Termination;
f. Trademark and Trade Names Usage; and
g. General.
5. Limited Effect
In addition, in the event of termination or expiration of this
Agreement, both parties shall have all rights which they would have
had if they had never entered into this Agreement and which the public
has at the time of such termination.
15.0 FREEDOM OF ACTION/OTHER VENDORS
This Agreement shall not prevent either party from entering into
similar agreements with other parties or from independently developing
or acquiring materials, products, or services irrespective of their
functional similarity to materials, products, or services which may
result from this Agreement.
16.0 TRADEMARK AND TRADE NAMES USAGE
Nothing in this Agreement confers upon either party any right to use
the other party's name, trademark(s) or trade name(s) or similar
matters in connection with any product, service, promotion, or
publication, except that Synon may represent that the New Product
developed under this Agreement is strategic to IBM and is System
Application Architecture compliant and fits in AD Cycle for IBM's mid
range computers, if such is the case, and if Synon's reference to IBM
is not misleading.
Page 10
<PAGE> 12
17.0 GENERAL
1. Limitation of Liability:
TERMINATION OF THIS AGREEMENT UNDER SUBSECTION 3 OF SECTION 14.0 SHALL
BE THE EXCLUSIVE REMEDY OF EITHER PARTY UPON A BREACH OF ANY
OBLIGATION, REPRESENTATION OR WARRANTY HEREUNDER BY THE OTHER PARTY,
OTHER THAN SECTION 7.0 WHICH MAY BE SPECIALLY ENFORCED AND SUBSECTION
2 OF SECTION 10.0. NEITHER PARTY SHALL BE LIABLE FOR ANY LOST PROFITS
OR OTHER CONSEQUENTIAL, DAMAGES UNDER ANY PART OF THIS AGREEMENT EVEN
IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
2. Entire Agreement:
This Agreement including Appendix "A" "B" and "C" attached hereto,
shall constitute the entire agreement between the parties and
supersedes all prior agreements, oral or written, and all other
communications relating to the subject matter of this Agreement. Any
terms and conditions contained in invoices, acknowledgments, shipping
instructions, or other forms that are inconsistent with or different
from the terms and conditions of this Agreement shall be void and of
no effect.
3. Governing Law:
The validity, construction, and performance of this Agreement shall be
governed by the substantive law of the State of New York.
4. Severability:
If any provision of this Agreement is held by a court of competent
jurisdiction to be contrary to law, the remaining provisions of this
Agreement shall remain in full force and effect.
5. Notices:
Any notice required or permitted to be made or given by either party
hereto pursuant to this Agreement such as but not necessarily limited
to "termination" or "assignment of this Agreement" shall be
sufficiently made or given on the date of issuance if sent by such
party to the other party by mail, telecopy, commercial courier,
personal delivery, or a similar reliable delivery method, addressed as
set forth below or to such other address as a party shall designate by
written notice given to the other party:
a.In the case of IBM's Managing Coordinator:
IBM Canada Ltd.
895 Don Mills Road.
North York, ON
Canada M3C 1W3
Page 11
<PAGE> 13
With a carbon copy in the case of a. above to:
International Business Machines Corporation
Programming Systems Division
2000 Purchase Street
Purchase, NY 10577
Attention: Mr. S. Mills, Director of Planning and Operations
b. In the case of Synon's managing Coordinator
Synon, Inc.
1100 Larkspur Landing Circle
Larkspur, CA 94939
With a carbon copy in the case of b. above to:
Synon, Inc.
1100 Larkspur Landing Circle
Larkspur, CA 94939
Attention: Mr. C. Herron, President
c. All deliveries from Synon to IBM shall be addressed as
follows:
IBM Corporation
Bldg 671,
11000 Regency Pkwy.
Gary, NJ 27511
Attention: Roger Vollrath
d. All deliveries from IBM to Synon shall be addressed as
follows:
Synon, Inc.
1100 Larkspur Landing Circle
Larkspur, CA 94939
Attention: Madeline Selig
e. Source Code deliveries for escrow by IBM's designated counsel
shall be delivered as follows:
IBM Canada Ltd.
1150 Eglinton Avenue East
North York, ON
Canada M3C 1V7
Page 12
<PAGE> 14
f. All invoices from Synon to IBM shall be addressed as follows:
International Business Machines Corporation
150 Kettle Town Road
Southbury, CT
06488-4001
Attention: Mr. Nick Milton,
Manager Vendor Accounting Cross Support Function
With a carbon copy in the case of f. above to:
IBM Canada Ltd. Laboratory
Dept. 81-838
895 Don Mills Road,
North York, Ontario
Canada M3C 1W3
Attention: Application Enabling Products, Financial Analyst.
g. All repayment checks from Synon to IBM shall be addressed as
follows:
International Business Machines Corporation
2000 Purchase Street
Purchase, NY 10577
Attention: Mr. S. Mills, PRGS Director of Planning and
Operations
6. Amendment/Waiver:
No waiver of any provision of this Agreement shall be effective unless
it is set forth in a writing which refers to the provisions so waived
and the instrument in which such provision is contained and is
executed by an Authorized Signing Officer of the party waiving its
rights. No failure or delay by either party in exercising any right,
power or remedy shall operate as a waiver of any such right, power or
remedy.
7. Independent Software Vendor:
a. Synon is and shall remain a software vendor independent of IBM
with respect to all performance rendered pursuant to this
Agreement. Neither Synon nor any employee of Synon shall be
considered an employee or agent of IBM for any purpose. Synon
and its employees shall have no authority to bind or make
commitments on behalf of IBM for any purpose and shall not
hold itself or themselves out as having such authority.
Page 13
<PAGE> 15
b. As between IBM and Synon, Synon assumes full responsibility
for its actions and the actions of its employees in rendering
performance pursuant to the Agreement, and Synon shall have
sole responsibility for the supervision, daily direction and
control, payment of salaries including withholding of income
taxes and social security, worker's compensation, disability
benefits and the like of its employees. As between IBM and
Synon, Synon also assumes full responsibility for the acts of
all its subcontractors.
8. Taxes:
Each party shall assume its own responsibility for the payment of
taxes imposed by all government entities, as they pertain to the
duties, obligations and performance undertaken by them under this
Agreement. Each party shall pay sales taxes on items purchased by
such party under this Agreement.
9. Force Majeure:
Neither party shall be held liable for failure to fulfill its
obligations under this Agreement, if such failure is caused by flood,
extreme weather, fire, or other natural calamity, acts of governmental
agency, or similar causes beyond the control of such party.
10. Advertising:
Both parties agree not to disclose by way of advertisement,
publication, or otherwise to any person other than their respective
employees who have a need to know for purposes of performing this
Agreement, the financial terms of this Agreement or of the
relationship between the parties hereto without the prior written
approval of the other party. However, either party may disclose the
existence, nature, substance and provisions of this Agreement on a
confidential need to know basis to its accountants, attorneys or
financial institutions, or (i) to the extent required by generally
accepted accounting standards in such party's financial statements,
(ii) to the extent required by law, or (iii) to investors in
connection with a proposed financing transaction.
11. Assignment:
Neither party shall sell, transfer, assign or subcontract any right or
obligation hereunder without the prior written consent of the other
party. Such consent shall not be unreasonably withheld. Consent
shall not be required where an entity requires via acquisition, merger
or otherwise, all or substantially all of the assets of a party and
such entity agrees in writing to be bound by the provisions of this
Agreement. Any attempted act in derogation of the foregoing shall be
null and void.
Page 14
<PAGE> 16
12. Headings of Sections:
The headings of sections are inserted for convenience of reference
only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Authorized Signing Officers.
ACCEPTED AND AGREED TO BY:
International Business Machines Synon, Inc.
Corporation
By /s/ Steven A. Mills /s/ Christopher Herron
--------------------------- ---------------------------------
Signature Signature
Steven A. Mills Christopher Herron
--------------------------- ---------------------------------
Name Name
PRGS Director of Planning
and Operations President
- ------------------------------ ---------------------------------
Title Title
Oct 17, 1990 Oct 5, 1990
- ------------------------------ ---------------------------------
Date Date
Page 15
<PAGE> 17
Appendix A - Development Plan for New Product
ATTACHED
Page 1
<PAGE> 18
CROSS SYSTEM PRODUCT/EXTERNAL SOURCE FORMAT
SYNON/2E GENERATION
DEVELOPMENT PLAN
I. BUSINESS REQUIREMENTS
The AD/Cycle partnership requires bi-directional support for Cross System
Product to support communications between AD/Cycle tools. Import of external
source format is handled through Synon's AD/Interface Product. Export of
external source format will be a separate generator option for Synon/2E.
This product will allow the developer to use Synon/2E design specifications to
generate external source format specifications. This generator will
're-export' imported ESF as functionally equivalent or identical ESF as
appropriate. The exported ESF will be transferred to other platforms for use
with Cross System Product or PS/2-based analysis and design tools.
II. FUNCTIONAL REQUIREMENTS
A. The generator must be able to generate ESF for any appropriate target
environment. The user must be able to specify the target environment.
B. The generator must map all Synon/2E elements to appropriate ESF
elements.
C. The import history stored when importing ESF to Synon/2E through
AD/Interface must be used during ESF export.
III. ANCILLARY REQUIREMENTS
A. Function options and definition of ESF export files and source members
must be included by Synon/2E Release 3.0.
B. Documentation of the ESF generator must be included in Synon/2E
product documentation.
C. An ESF export manual explaining the target environments and the
Synon/2E - ESF mapping must be developed.
D. A facility for transferring the exported ESF to the PS/2 must be
included with the ESF generator.
IV. DEVELOPMENT PHASES
The following outline contains each development phase, its tasks, and the
expected deliverables from this stage. Target completion dates will be
reviewed at the end of each phase and subsequent dates will be adjusted if
necessary. The Synon Development Manager and the IBM liaison will be
responsible for reviewing the schedules and determining the completion of
deliverables.
A. PLANNING
Tasks:
Define business requirements
Recruit and train personnel
Deliverables:
Business Requirements
Target Completion:
November 1, 1990
<PAGE> 19
B. FUNCTIONAL DESIGN
Tasks:
Map Synon/2E to ESF
Define target environments
Define impact to existing generator programs
Define Synon/2E enablement
Outline documentation requirements
Deliverables:
External Design Document
Documentation Outline
Completion Criteria:
External design reviews will be conducted. External design is
complete when there are no more than 10 low impact outstanding issues.
Target Completion:
February 1, 1990
C. INTERNAL DESIGN
Tasks:
Define program specifications
Development first draft documentation
Deliverables:
Internal Design Document
Documentation - Draft 1
Completion Criteria:
Internal design reviews will be conducted. Internal design is
complete when there are no more than 10 low impact outstanding issues.
Target Completion:
May 1, 1991
D. PROGRAM DEVELOPMENT
Tasks:
Develop program
Perform development testing
Define Q/A test plan
Define profile of beta sites
and locate candidates
Define beta test plan
Develop second draft documentation
Deliverables:
Documentation - Draft 2
Q/A test plan
Beta test plan
Alpha product
Completion Criteria:
Development test plan completed with no more than 40 outstanding
severity 3 errors. Product and source code are delivered to Quality
Assurance.
Target Completion:
September 1, 1991
<PAGE> 20
E. QUALITY ASSURANCE
Tasks:
Perform Q/A testing
Sign up beta sites
Develop final documentation
Deliverables:
Beta product
Q/A results
Completion Criteria:
Product may not be released to beta with more than 40 outstanding
severity 3 errors. No severity 1 or 2 errors are permitted.
Target Completion:
October 1, 1991
F. BETA TEST
Tasks:
Ship product and final draft manuals to beta sites
Conduct weekly surveys of beta sites
Ship program fixes for reported errors to beta sites.
Make final changes to documentation
Deliverables:
Weekly beta reports
Documentation
Final product
Completion Criteria:
Product may not be released with more than 20 outstanding severity 3
errors. No severity 1 or 2 errors are permitted.
Target Completion:
December 1, 1991
G. PRODUCT RELEASE
Tasks:
Complete production procedures
Ship demonstration copies
Target Completion:
December 8, 1991
<PAGE> 21
V. IBM ASSISTANCE & DEPENDENCIES
A. EXTERNAL DESIGN PHASE
During this phase, a detailed knowledge of CSP target environments will be
required. The assignment of a knowledgeable IBM employee to this phase would
ensure the proper mapping of Synon/2E elements of ESF. Estimated project time
is four months.
B. QUALITY ASSURANCE
Generated external source format will need to be tested in a number of
environments. Synon does not own or have access to the appropriate hardware
facilities. As well, a large number of test cases have already been designed
for ESF and CSP. Assistance will be required from IBM to assist Synon in the
design of test cases and in the actual testing. This assistance will need to
be in the form of both hardware facilities and personnel.
C. BETA TEST
Synon will need assistance in identifying and contracting with beta test sites.
<PAGE> 22
Appendix B
Checkpoint Payment Criteria
IBM will review each deliverable identified in each of the following phases of
the development, verify the satisfactory completion of each development phase,
and IBM's Managing Coordinator shall advise Synon's Managing Coordinator of
IBM's acceptance decision within five (5) working days from the date the
deliverable was actually received by IBM:
1. Planning phase
Completion date: November 1, 1990
Deliverable:
Business Requirements Document
This document will include the functional
requirements for the export of Synon application
definitions in external source format, hereafter
referred to as "the product". It will specify a
level of support that includes, but is not limited
to, the SAA Application Generator CPI.
This document will include the quality requirements
for function, documentation, usability, performance,
reliability, and service. The goal will be
zero-defects with specification of the expected level
of attainment.
2. Functional Design Phase
Completion date: February 1, 1991
Deliverables:
External Design Document
This document will include the external design for
the product. The design will provide for the
functional requirements as specified in the Business
Requirements document. It will include the user
interface, input and output descriptions, error
recording, and error recovery designs.
Documentation Outline
This document will outline the functions and features
of the product. It will include the installation,
directions for use, and user interface.
3. Internal Design Phase
Completion date: May 1, 1991
Deliverables:
Internal Design Document
This document will include the detail designs for the
implementation of the function of the product. It
will include, but not be limited to, the
architecture, data areas definitions, and interface
definitions for the product.
Page 1
<PAGE> 23
Development Test Plan
This document will include the test plans for
complete functional verification of the requirements
for the product. This will include meeting the
product design, verifying the user interface,
verifying correct and complete output, verifying the
user interface, verifying correct and complete
output, verify appropriate error handling,
performance, and adequate and usable documentation.
This documentation will provide the descriptions of
the product function, installation instructions,
descriptions of the user interface and its use, error
messages and error recovery procedures. The
documentation will be written to the appropriate user
level, be technically accurate and complete, be
consistent with grammatical standards, and have a
logical flow of information presentation for the
intended user.
4. Program Development Phase
Completion date: September 1, 1991
Deliverables:
Documentation Draft 2
The documentation will incorporate the corrections
and additions that result from the review of draft 1
with the air of completing the requirements as
specified for draft 1.
Development Test Report
The document will record the results of the execution
of the Development Test Plan. The results recorded
will show attainment of the quality level as
specified in the Business Requirements document.
Quality/Assurance Test plan
This document will provide the test plan to assure
the quality requirements for the product are
satisfied. The quality areas tested will include,
but not be limited to, documentation, usability,
reliability, and serviceability.
Beta Test plan
5. Quality Assurance Phase
Completion date: October 1, 1991
Deliverable:
Quality Assurance Test Report
The document will record the results of the execution
of the Quality Assurance Test Plan. The results
recorded will show attainment of the quality level as
specified in the Business Requirements document.
6. Beta Test Phase
Completion date: December 1, 1991
Deliverables:
Documentation Final
Page 2
<PAGE> 24
The documentation will incorporate the corrections
and additions that result from the review of draft 2,
the development test, the Quality/Assurance test, and
Beta test.
Final Beta Test Report
The document will record the results of the execution
of the Beta Test Plan. The results recorded will
show attainment of the quality level as specified in
the Business Requirements document.
Loaned Funds Payment Schedule
<TABLE>
<CAPTION>
Loan
Payment Number Amount Checkpoint Payment Criteria
-------------- ------ ---------------------------
<S> <C> <C>
1st $300,000.00 Execution of this Agreement by both parties.
2nd $300,000.00 Completion of the "Functional Design Phase" and
IBM's acceptance of the "External Design Document".
3rd $450,000.00 Completion of the "Internal Design Phase" and
IBM's acceptance of the "Internal Design Document".
4th $450,000.00 Completion of the "Program Development Phase" and the
commencement of the "Quality/Assurance Phase".
</TABLE>
This payment schedule assumes that Synon will make the New Product and Related
Documentation generally available for sale to the marketplace no later than
December 31, 1991.
Invoicing and Terms of Payment
Upon receipt of IBM's acceptance decision, for which a loan payment is tied to,
Synon shall submit an invoice to IBM and IBM shall make payment to Synon on
terms net 30 days, from the date of actual receipt of the invoice by IBM.
Payment shall be deemed to be in the hands of Synon at time of mailing.
Each invoice shall reference this Agreement's number as well as list Mr. Sean
Welch and Mr. Steve Mills as the IBM approvers. A photo copy of each invoice
shall also be sent to the IBM Canada Laboratory.
Page 3
<PAGE> 25
Appendix C
Loaned Funds Repayment Schedule
Synon shall repay the loaned funds to IBM in accordance with the following
repayment schedule:
<TABLE>
<CAPTION>
Amount Due Date Amount Due Date
mm/dd/yy mm/dd/yy
<S> <C> <C> <C> <C> <C>
1. $ 65,000.00 03/31/94 7. $130,000.00 09/30/95
2. $ 75,000.00 06/30/94 8. $140,000.00 12/31/95
3. $ 85,000.00 09/30/94 9. $150,000.00 03/31/96
4. $100,000.00 12/31/94 10. $165,000.00 06/30/96
5. $110,000.00 03/31/95 11. $175,000.00 09/30/96
6. $120,000.00 06/30/95 12. $185,000.00 12/31/96
</TABLE>
Accrued interest, in accordance with Section 4.0 of this Agreement, must be
added to each of the above amounts at the time payment is made. Payment shall
be deemed to be received by IBM at the time of mailing.
Payment shall be deemed to be in the hands of IBM at time of mailing.
Page 1
<PAGE> 26
CDA Number CA-B01-90-RJL
- --------------------------------------------------------------------------------
CDA Date: February 26, 1990
BILATERAL CONFIDENTIAL DISCLOSURE AGREEMENT
BETWEEN
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND
SYNON, LTD.
- --------------------------------------------------------------------------------
-i-
<PAGE> 27
CDA Number CA-B01-90-RJL
- --------------------------------------------------------------------------------
CDA Date: February 26, 1990
Contents
<TABLE>
<S> <C> <C>
1.0 Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.0 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3.0 Handling of Disclosures . . . . . . . . . . . . . . . . . . . . . . . 2
4.0 Term and Termination . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.0 Coordinators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6.0 General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.0 Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ATTACHMENT A. ANNEX I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
</TABLE>
- --------------------------------------------------------------------------------
-ii-
<PAGE> 28
CDA Number CA-B01-90-RJL
- --------------------------------------------------------------------------------
CDA Date: February 26, 1990
1.0 RECITALS
1.1 International Business Machines Corporation (hereinafter called IBM)
with an address for the purpose of this Agreement at 11000 Regency Park, P.O.
Box 60000, Cary, NC 27512, USA, and Synon, Ltd. (hereinafter called Synon) with
an address for the purpose of this Agreement at 91 St. Pauls Road, London N1
2YU, England, UK, enter into this Agreement to permit Synon and IBM each to
disclose to the other, for a limited period of time, information, some of which
may be considered confidential, in order to develop enhancements to IBM's
application development products and Synon's application generator products for
the IBM AS/400 and IBM's workstation products for the mutual benefit of both
companies.
1.2 This Agreement sets forth the terms and conditions under which such
information, including that information considered to be confidential, will be
disclosed. This Agreement does not obligate either party to make any
disclosures.
1.3 Synon/IBM Confidential Disclosure Agreement CA-056-89-HPF dated April
10, 1989 shall continue to govern disclosures expressly made under that
Agreement.
1.4 IBM and Synon may enter into discussions regarding possible technology
licenses, development efforts, or other business relationships. Entering these
discussions does not obligate either party to sign additional Agreements.
Neither party will disclose the fact that these discussions are/will be taking
place unless approved in writing by the other party.
1.5 This Agreement shall limit the use of IBM Information to Synon's
application generator products that operate with the IBM AS/400 and to Synon's
products that operate with IBM's workstation products for the purpose of
supporting Synon's application generator products for the IBM AS/400. The use
of IBM Information regarding other platforms and/or related subjects shall not
occur without the written consent of IBM.
2.0 DEFINITIONS
1. "IBM Information" shall mean information related to Cross
System Product, AD Cycle Interfaces, OS/2, SAA Languages such as C and RPG, and
related materials.
2. "Synon Information" shall mean that information related to Synon's
Application Generator Products and relevant tools, interfaces, environments and
other related materials.
3. "Information" shall mean Synon or IBM Information, as the case may be.
- --------------------------------------------------------------------------------
-1-
<PAGE> 29
CDA Number CA-B01-90-RJL
- --------------------------------------------------------------------------------
CDA Date: February 26, 1990
4. "Confidential Information" shall mean Information designated
as Confidential according to the terms of this Agreement, and which is owned by
either IBM or Synon as the case may be.
5. "Residuals" shall mean that Confidential Information retained
in non-tangible form in the minds of those employees of the receiving party who
have had access to the Confidential Information of the disclosing party during
the term of this Agreement.
6. For purposes of this Agreement the terms "receiving party" and
"disclosing party" shall be construed to mean not only IBM and Synon but also
their respective Subsidiaries, as that term is defined in this Agreement.
7. "Subsidiary" shall mean a corporation, company, or other entity:
a. more than fifty percent (50%) of whose outstanding shares or
securities (representing the right to vote for the election of
directors or other managing authority) are now or hereafter,
owned or controlled, directly or indirectly, by a party hereto,
but such corporation, company, or other entity shall be deemed to
be a Subsidiary only so long as such ownership or control exists;
or
b. which does not have outstanding shares or securities, as may be
the case in a partnership, joint venture or unincorporated
association, but more than fifty percent (50%) of whose ownership
interest representing the right to make the decisions for such
corporation, company or entity is;
now or hereafter, owned or controlled, directly or indirectly, by a
party hereto, but such corporation, company, or other entity shall
be deemed to be a Subsidiary only so long as such ownership or
control exists.
3.0 HANDLING OF DISCLOSURES
3.1 All disclosures of information by one party to the other party pursuant to
this Agreement shall be made by or under the supervision of a Technical
Coordinator of the disclosing party to a Technical Coordinator of the receiving
party or his designee. Such Technical Coordinators are designated in Section 5.
All disclosures of Information will be deemed to be nonconfidential unless
specifically designated at the time of disclosure (as provided in Section 3.2
below) as including the Confidential Information of Synon or IBM, as the case
may be. With respect to all such Information disclosed by one party to the other
party, except such Information as is so designated as the Confidential
Information of the disclosing party, and subject to any patents or statutory
copyrights existing in published materials at the time of the disclosure, the
disclosing party grants to the receiving party, to the extent, if any, of its
interest therein, a nonexclusive, royalty free, irrevocable, unrestricted, and
worldwide license to use, have used, disclose to others, make copies in the case
of documents, and dispose of, all without limitation, such nonconfidential
Information in any manner it
- --------------------------------------------------------------------------------
-2-
<PAGE> 30
CDA Number CA-B01-90-RJL
- --------------------------------------------------------------------------------
CDA Date: February 26, 1990
determines, including the use of such nonconfidential Information in the
development, manufacture, marketing, and maintenance of products and services
incorporating such nonconfidential Information.
3.2 Prior to disclosing any Confidential Information, the disclosing party shall
provide the receiving party's Technical Coordinator with a nonconfidential
general description of the Confidential Information. The receiving party's
Technical Coordinator shall give his written agreement that the receiving party
understands the nature of the Confidential Information and will accept it or not
accept it. With respect to all Confidential Information, when such is disclosed
in writing and accepted, such writing will state the date of disclosure, that
the information contained therein is Confidential and that it is being disclosed
pursuant to this Agreement, and will contain the legend "IBM Confidential" or
"Synon Confidential" Information as the case may be. If such disclosure is
orally and/or visually made, the disclosure shall be clearly identified at the
time of disclosure as being Confidential and confirmed in a written resume
within twenty days following such disclosure. The resume will specifically
recite that information which is Confidential.
3.3 Subject to the provisions of Sections 3.4 and 3.5, for a period of five (5)
years from the date of disclosure, the receiving party agrees to use the same
care and discretion to avoid disclosure, publication, or dissemination outside
of the receiving party of received "Synon Confidential" Information or "IBM
Confidential" Information as the case may be, as the receiving party employs
with similar information of its own which it does not desire to publish,
disclose, or disseminate. Annex I attached hereto shall define minimum standards
of care.
3.3.1 During such period, the receiving party agrees to limit the dissemination
of the Confidential Information of the other party to those of its employees
having a need to know such Confidential Information. It is understood that
receipt of Confidential Information under this Agreement shall not create any
obligation in any way limiting or restricting the assignment and/or reassignment
of IBM employees within IBM and Synon employees within Synon.
3.3.2 The receiving party may not copy the other party's Confidential
Information. If additional copies are required by the receiving party, they will
be provided or authorized in writing by the disclosing party upon receipt of a
written request from the receiving party.
3.3.3 Within two months following the expiration or termination of this
Agreement as provided in Section 5, the receiving party will return to the
disclosing party, or destroy at the disclosing party's option, all writings and
resumes received from the disclosing party and copies thereof, containing such
Confidential Information (except for one copy thereof which shall be retained by
the receiving party for archival pur-
- --------------------------------------------------------------------------------
-3-
<PAGE> 31
CDA Number CA-B01-90-RJL
- --------------------------------------------------------------------------------
CDA Date: February 26, 1990
poses). The receiving party will not be obligated to transfer to the
disclosing party any reports and/or other written documentation prepared by the
receiving party.
3.3.4 The receiving party shall be free to use the Residuals from any such
Confidential Information, the reports and written documentation referred to in
the preceding paragraph, and any ideas, concepts and/or techniques contained
therein for any purpose including the use of such Confidential Information in
the development, manufacture, marketing and maintenance of its products and
services, subject only to the obligation not to disclose, publish or disseminate
such Confidential Information during such foregoing specified period of
confidentiality and subject to statutory copyrights, if any.
3.3.5 Following the period of confidentiality, no obligation of any kind is
assumed by, or is to be implied against the receiving party, with respect to any
Confidential Information, and the receiving party shall be free, subject to any
statutory copyright, to disclose, publish and disseminate such Confidential
Information to others without limitation and shall have all the rights relative
to such Information as are set forth in Section 3.1 as if it had been
transferred as nonconfidential Information under such Section.
3.4 Disclosure of Confidential Information shall not be precluded if such
disclosure is:
1. in response to a valid order of a court or other governmental body of
the United States or any State or any political subdivision thereof;
provided, however, that the party responding to the order shall first
have given notice to the other party and made a reasonable effort to
obtain a protective order requiring that the Confidential Information
and/or documents so disclosed be used only for the purposes for which
the order was issued; or
2. otherwise required by law, or
3. necessary to establish rights under this Agreement.
3.5 Notwithstanding any other provisions of this Agreement, the obligations
specified in Section 3.3 above will not apply to any information that:
1. is already in the possession of the receiving party without obligation
of confidence;
2. is independently developed by the receiving party or any of its
Subsidiaries;
3. is or becomes publicly available without breach of this Agreement;
4. is rightfully received by the receiving party from a third party;
5. is released for disclosure by the disclosing party with its written
consent;
- --------------------------------------------------------------------------------
-4-
<PAGE> 32
CDA Number CA-B01-90-RJL
- --------------------------------------------------------------------------------
CDA Date: February 26, 1990
6. is inherently disclosed in product(s) or normal supporting or user
documentation for product(s) of either party, or in the use, lease,
sale or other distribution of such product(s).
4.0 TERM AND TERMINATION
4.1 The term of this Agreement shall be from the date of this Agreement through
March 30, 1992. Either party may terminate this Agreement prior to that time
with or without cause upon ten days' written notice.
5.0 COORDINATORS
5.1 The Technical Coordinators for the parties are:
For IBM: Roger Vollrath
IBM Corporation
11000 Regency Park, P.O. Box 60000
Cary, NC 27512, USA
For Synon: To be designated by Synon
5.2 Each party may change its Technical Coordinator at any time and from time to
time during the term of this Agreement by notifying the Technical Coordinator
for the other party in writing at the designated address.
6.0 GENERAL PROVISIONS
6.1 IBM and Synon agree that they will not disclose the terms and conditions,
and subject matter of this Agreement without the written consent of the other,
or except as provided in Section 3.4.
6.2 No license or immunity is granted by this Agreement by either party to the
other, either directly or by implication, estoppel, or otherwise, under any
patents. None of the information which may be disclosed shall constitute any
representation, warranty, assurance or guarantee by either party to the other
with respect to the infringement of patents or other rights of others.
6.3 The rights and obligations of Sections 3.1, 3.3, 3.4, 3.5, 6.1, 6.3, 6.4,
and 6.5 of this Agreement shall survive and continue after any expiration or
termination of this Agreement and shall bind the parties and their legal
representatives, successors and assigns.
- --------------------------------------------------------------------------------
-5-
<PAGE> 33
CDA Number CA-B01-90-RJL
- --------------------------------------------------------------------------------
CDA Date: February 26, 1990
6.4 Each party agrees to comply, and do all things necessary for the other party
to comply, with all applicable Federal, State and local laws, regulations and
ordinances, including but not limited to the Regulations of the United States
Department of Commerce relating to the Export of Technical Data, insofar as they
relate to the activities to be performed under this Agreement. Each party agrees
to obtain the required government documents and approvals prior to export of any
technical data disclosed to it or the direct product related thereto.
Furthermore, each party agrees not to ship, directly or indirectly, any
technical data provided by IBM nor the direct product of such data to any of the
following countries: Afghanistan, Albania, Bulgaria, Cambodia, Cuba,
Czechoslovakia, Estonia, German Democratic Republic (including East Berlin),
Hungary, Laos, Latvia, Libya, Lithuania, Mongolian People's Republic, North
Korea, People's Republic of China, Poland, Romania, Union of Soviet Socialist
Republics, and Vietnam. This list of countries is subject to change in
accordance with U. S. export control laws (15 United States Code of Federal
Regulations 379.4(f)(1)).
6.5 Nothing contained in this Agreement shall be construed as conferring any
rights to use in advertising, publicity or other marketing activities any name,
trade name, trademark, or other designation of either party hereto, including
any contraction, abbreviation, or simulation of any of the foregoing.
6.6 This Agreement shall be construed in accordance with the law of the State of
New York and of the United States of America. The courts of the United States of
America shall have exclusive jurisdiction over any dispute arising out of this
Agreement.
6.7 Any amendment or modification of this Agreement shall be in writing and
shall be signed by an authorized representative of each party.
7.0 ACCEPTANCE
If the above terms and conditions are acceptable to Synon, kindly have the
enclosed three copies of this Agreement signed on behalf of Synon by an
authorized person and return two copies to Software Acquisition, Department
T49/B671, IBM Corporation, P.O. Box 60000, Cary, North Carolina 27512, USA.
Please retain one copy for your records.
- --------------------------------------------------------------------------------
-6-
<PAGE> 34
CDA Number CA-B01-90-RJL
- --------------------------------------------------------------------------------
CDA Date: February 26, 1990
ACCEPTED AND AGREED TO:
INTERNATIONAL BUSINESS SYNON, LTD.
MACHINES CORPORATION
BY: /S/ ALEX VASILOS BY: /S/ CHRIS HERRON
- --------------------------------- ---------------------------------
ALEX VASILOS CHRIS HERRON
- --------------------------------- ---------------------------------
PRINT NAME PRINT NAME
SOFTWARE ACQ. MGR. DIRECTOR
- --------------------------------- ---------------------------------
TITLE TITLE
3/16/90 3/20/90
- --------------------------------- ---------------------------------
DATE DATE
- --------------------------------------------------------------------------------
-7-
<PAGE> 35
CDA Number CA-B01-90-RJL
- --------------------------------------------------------------------------------
CDA Date: February 26, 1990
ATTACHMENT A. ANNEX I
1. Maintain listings of the writings, resumes or other items that contain
IBM/Synon Confidential Information.
2. Secure all writings, resumes or other items, including work in
progress, which contain IBM/Synon Confidential Information, in a safe,
file, desk, cabinet or other suitable container with locking device,
or in a locked room with restricted access, when such writings,
resumes or other items are not in use.
3. Provide limited access to those areas of its facilities where work is
being performed under the Agreement only to those employees with the
need to know.
4. Establish a plan for the recovery and/or reconstruction of lost or
missing writings, resumes or other items which contain IBM/ Synon
Confidential Information and promptly report the loss of the same to
the other party within 24 hours.
- --------------------------------------------------------------------------------
-1-
<PAGE> 36
[IBM LETTERHEAD]
April 4, 1989
Christopher Herron
Synon Inc.
1110 Larkspur Landing Circle, Suite 340
Larkspur CA 94939
Dear Mr. Herron:
IBM is planning to release to you IBM Confidential information for
several enabling activities relating to OS/2, CSP ESF Interface, etc. Prior to
releasing this information, we must have a Confidential Disclosure Agreement
(CDA) signed. Attached for signature are three (3) copies of CDA Number
CA-056-89-HFP. Please have all three copies signed, return two (2) signed
copies to J. W. Krier at the address shown on page 8 of the Agreement, and
retain the third copy for your files.
A security audit must also be done at your location. Someone from IBM
will be calling you to schedule this audit in the very near future.
Sincerely,
/s/ HENRY P. FUHRMANN
Henry P. Fuhrmann
Contracts Administrator
Dept. T49-4AA
(919) 469-6658
<PAGE> 37
- --------------------------------------------------------------------------------
IBM CORPORATION
11000 REGENCY PARKWAY
POST OFFICE BOX 60000
CARY, NORTH CAROLINA 27511
April 4, 1989
Christopher Herron
Synon Inc.
1110 Larkspur Landing Circle, Suite 340
Larkspur, CA 94939
Subject: IBM/Synon Inc. Confidential Disclosure Agreement
CA-056-89-HFP
International Business Machines Corporation (IBM), Cary, NC and Synon Inc.
(Vendor) wish to enter into an Agreement which will permit IBM to disclose to
Vendor, for a limited period of time, information, some of which may be
considered IBM Confidential, in order to allow Vendor to respond to IBM's
request for information relating to IBM's software activities.
This Agreement sets forth the terms and conditions under which such information,
including that information considered to be IBM Confidential, will be disclosed.
1. "IBM Confidential" Information shall mean any information or
materials:
a. developed by or collected by or utilized in the operations of IBM
or its subsidiaries that relates to past, present or future
business plans or research and development of IBM or its
subsidiaries;
b. designated IBM Internal Use Only, IBM Confidential, or IBM
Confidential Restricted;
c. inadvertent disclosures to the Vendor unrelated to the subject
matter of this disclosure; or
d. all interim information and reports generated by Vendor pursuant
to this Agreement and all collateral agreements incorporating
this Agreement by reference.
2. For the purposes of this Confidential Disclosure Agreement, IBM may
provide IBM Proprietary Programs and/or substitute proprietary
programs and all related Program Documentation (hereinafter
collectively referred to as "Proprietary Pro-
- --------------------------------------------------------------------------------
-1-
<PAGE> 38
- -------------------------------------------------------------------------------
grams") which shall be deemed to be IBM Confidential as defined in this
Confidential Disclosure Agreement. Such Proprietary Programs will be provided
without charge for the period deemed necessary by IBM to accomplish the
objectives of, but not to exceed expiration or termination whichever first
occurs of, this Agreement. Such Proprietary Programs shall be made available
to Vendor subject to the following additional conditions:
a. Proprietary Programs are not to be copied by Vendor without receiving
IBM's prior written approval.
b. Vendor shall take the necessary steps to ensure that the Proprietary
Programs shall be used solely for the purposes of this Agreement and
for the benefit of IBM.
c. IBM may correct errors in the Proprietary Programs and issue corrected
copies. IBM does not represent or warrant that any or all errors will
be corrected.
d. IBM personnel shall have access to the Proprietary Programs during
Vendor's normal business hours for programming maintenance services
and observation during the period of their utilization.
e. IBM may, at its option, at any time during the term of this Agreement,
substitute IBM Proprietary Programs needed to carry out any activity
under this Agreement.
f. Vendor agrees not to provide or make available any Proprietary Program
or portions thereof without written consent of IBM, to any person
other than Vendor employees who have a need to know.
g. Within one week after expiration or termination of this Agreement,
Vendor will, at IBM's sole option, either certify to IBM in writing
that all Proprietary Programs and authorized copies have been
destroyed or have become licensed for use under the terms and
conditions of IBM's then applicable Program License Agreement at IBM's
then applicable charges.
3. Vendor understands that IBM does not wish to receive from Vendor any
information which may be considered confidential and/or proprietary to
Vendor and/or to any third party. Vendor represents and warrants that any
information disclosed by Vendor to IBM is not confidential and/or
proprietary to Vendor and/or to any third party. Accordingly, except with
respect to Vendor's rights under valid patents and statutory copyrights, no
obligation of any kind is assumed by or to be implied against IBM by virtue
of IBM's discussions and/or correspondence with Vendor or with respect to
any information received (in whatever form or whenever received) from
Vendor relating to the subject matter hereof, and IBM will be free to
reproduce and to use and disclose to others such information without
limita-
- -------------------------------------------------------------------------------
-2-
<PAGE> 39
- -------------------------------------------------------------------------------
tion. Vendor understands that IBM may now market or have under development
products which are competitive with products or services now offered or
which may be offered by Vendor. Moreover, discussions and/or communications
between the parties will not serve to impair the right of either party to
develop, make, use, procure, and/or market products or services now or in
the future which may be competitive with those offered by the other, nor
require either party to disclose any planning or other information to the
other.
4. All disclosures of information by IBM to Vendor pursuant to this Agreement
shall be made by or under the supervision of a Technical Coordinator of IBM
to a Technical Coordinator of Vendor or its designee. All disclosures of
information will be deemed to be non- confidential unless specifically
designated at the time of disclosure (as provided in Section 5 below) as
including the Confidential Information of IBM. With respect to all such
information disclosed by IBM to Vendor, except such Information as is so
designated as the Confidential Information of IBM or is protected by
statutory copyright, IBM grants to Vendor, to the extent, if any, of its
interest therein, a nonexclusive, royalty free, irrevocable, unrestricted,
and worldwide license to use, have used, disclose to others, make copies in
the case of documents, and dispose of, all without limitation, such
non-confidential information in any manner it determines, including the use
of such non-confidential information in the development, manufacture,
marketing, and maintenance of products and services incorporating such
non-confidential information.
5. With respect to the Confidential Information of IBM, when such is disclosed
in writing, such writing will state the date of disclosure, that the
information contained therein is confidential and that it is being
disclosed pursuant to this Agreement, and will contain an appropriate
legend, such as "IBM Confidential." If such disclosure is orally and/or
visually made then it shall be confirmed in a written resume within twenty
(20) days following such disclosure. The resume will specifically recite
that information which is confidential. Such resume will have such
information which is confidential identified as "IBM Confidential." IBM
Confidential Information is not to be copied by Vendor without receiving
prior written approval from IBM to copy a specific document.
IBM Confidential Information is to be used by Vendor solely for the benefit
of IBM.
When Vendor generates a work product using IBM Confidential Information,
all tangible forms of that work product, including but not limited to,
texts, drawings, computer print-outs, etc., will have each page labeled
"IBM Confidential/Prepared by Vendor." This work product will be handled in
the same manner as the original IBM Confidential Information transmitted to
Vendor.
6. Subject to the provisions of Sections 7 and 8, for a period of five (5)
years from the date of receipt of IBM Confidential Information, as measured
from the date of first receipt under this Agreement, Vendor agrees not to
disclose received IBM
- --------------------------------------------------------------------------------
-3-
<PAGE> 40
- --------------------------------------------------------------------------------
Confidential Information outside of Vendor's designated location and/or to
any person other than those persons within Vendor's organization who have a
need to know such IBM Confidential Information. Vendor also agrees not to
disclose received IBM Confidential Information to IBM employees not
directly having a need to know such IBM Confidential Information without
prior written approval of the IBM Contracts Administrator identified in
this Agreement. IBM and Vendor agree that the items set forth in Annex I
are illustrative, but not all inclusive, of steps that should be taken by
Vendor with respect to the Confidential Information of IBM to meet the
standard of care recited in the foregoing sentence.
During such period, Vendor agrees to limit the dissemination of IBM
Confidential Information to those of its employees having a need to receive
such information. It is understood that receipt of IBM Confidential
Information under this Agreement shall not create any obligation in any way
limiting or restricting the assignment and/or reassignment of Vendor's
employees.
Vendor shall have written agreements with its employees and subcontractors,
sufficient to enable Vendor to comply with all the terms of this Agreement.
Vendor's written agreement with its employees and subcontractors should
provide for coverage of the following items:
a. IBM Confidential Information is to be defined based on the definition
set forth in Section 1 of this Agreement,
b. IBM Confidential Information unrelated to the subject of this
Agreement which is inadvertently disclosed to Vendor employees is not
to be disclosed to any third party or other Vendor or subcontractor
employees,
c. Information which is confidential to others and known to Vendor
employees will not be disclosed to IBM, and
d. Any IBM Confidential Information or materials to which Vendor
employees have access to or have been entrusted with will not be
removed from IBM premises without prior written approval from IBM and
shall return all IBM Confidential Information and materials to the
responsible IBM Manager before leaving IBM premises.
e. Vendor employees will comply and do all things necessary for IBM and
its subsidiaries to comply with the laws and regulations of all
governments under which IBM and its subsidiaries do business, and with
provisions of contracts between any such government and its
contractors and IBM and its subsidiaries that relate to intellectual
property or to the safeguarding of information.
IBM's written approval is required prior to the disclosure of Confidential
Information to a subcontractor.
- -------------------------------------------------------------------------------
-4-
<PAGE> 41
Upon written request from IBM or within fifteen days following the
expiration of this Agreement as provided in Section 10, Vendor will return
to IBM all writings and resumes received from IBM and copies thereof
containing such IBM Confidential Information. IBM will not be obligated to
transfer to Vendor any reports and/or other written documentation prepared
by Vendor for IBM as a part of, or in conjunction with, this subject
matter.
Following the specified period of Confidentiality no obligation of any
kind, subject to the statutory copyrights and patent rights of IBM, is
assumed by, or is to be implied against, Vendor, with respect to any
Confidential Information, and Vendor shall be free to disclose, publish and
disseminate such Confidential Information to others without limitation and
shall have all the rights relative to such Information as are set forth in
Section 4 as if it had been transferred as non-confidential information
under such section subject to any related Agreements that are executed
between the parties.
7. Disclosure of IBM Confidential Information shall not be precluded if such
disclosure is:
a. in response to a valid order of a court or other governmental body of
the United States or any political subdivision thereof; provided,
however, that Vendor shall first have given notice to IBM and made a
reasonable effort to obtain a protective order requiring that the IBM
Confidential Information and/or documents so disclosed be used only
for the purposes for which the order was issued; or
b. otherwise required by law; or
c. necessary to establish rights under this Agreement.
8. Notwithstanding any other provisions of this Agreement, the obligations
specified in Section 6 above will not apply to any information that:
a. is already in the possession of Vendor or any of its Subsidiaries
without obligation of confidence;
b. is independently developed by Vendor or any of its Subsidiaries;
c. is or becomes publicly available without breach of this Agreement;
d. is rightfully received by Vendor from a third party, without
obligation of Confidentiality;
e. is released for disclosure by IBM with its written consent; or
f. is inherently disclosed in the use, lease, sale or other distribution
of, or publicly available supporting documentation for, any present or
future product or service by or for IBM or any of its Subsidiaries.
- -------------------------------------------------------------------------------
-5-
<PAGE> 42
- -------------------------------------------------------------------------------
9. "Subsidiary" shall mean a corporation, company, or other entity:
a. more than fifty percent (50%) of whose outstanding shares or
securities (representing the right to vote for the election of
directors or other managing authority) are; or
b. which does not have outstanding shares or securities, as may be the
case in a partnership, joint venture or unincorporated association,
but more than fifty percent (50%) of the ownership interest
representing the right to make the decisions for such corporation,
company or other entity is:
now or hereafter, owned or controlled, directly or indirectly, by a party
hereto, but such corporation, company or other entity shall be deemed to be
a Subsidiary only so long as such ownership or control exists.
10. The term of this Agreement shall be effective from the date of execution of
all parties and shall extend through April 1, 1991, with the option of
further extension at the sole discretion of IBM.
11. IBM and Vendor also agree that each will not disclose the terms,
conditions, or subject matter of this Agreement without the written consent
of the other, or, except as provided in Section 8.
12. No license or immunity is granted by this Agreement by either party to the
other, either directly or by implication, estoppel, or otherwise, under any
patents. None of the information which may be disclosed shall constitute
any representation, warranty, assurance or guarantee by either party to the
other with respect to the infringement of patents or other rights of
others.
13. The rights and obligations of Sections 6 and 11 of this Agreement shall
survive and continue after any expiration or termination of this Agreement
and shall bind the parties and their legal representatives, successors and
assigns.
14. Each party agrees to comply with, and do all things necessary for the other
party to comply with, all applicable Federal, State and local laws,
regulations and ordinances, including but not limited to the Regulations of
the United States Department of Commerce relating to the Export of
Technical Data, insofar as they relate to the activities to be performed
under this Agreement. Vendor agrees to obtain the required government
documents and approvals prior to export of any technical data disclosed to
it or the direct product related thereto.
15. This Agreement shall be construed in accordance with the law of the State
of New York.
16. This Agreement may be executed in one or more counterparts, all of which
will be considered one and the same Agreement. Any amendment or
modification of this Agreement shall be in writing and shall be signed by
the parties.
- -------------------------------------------------------------------------------
-6-
<PAGE> 43
17. IBM shall have the right to visit periodically, during normal business
hours with prior scheduling, Vendor's premises and conduct a review of the
compliance with the above Agreement terms.
If the above terms and conditions are acceptable to Vendor, please have the
enclosed three (3) copies of this Agreement signed on behalf of Vendor by an
authorized person and return within ten (10) days, two (2) copies to:
J. W. Krier
IBM Corporation
Department T49-4AA
Post Office Box 60000
11000 Regency Parkway
Cary, NC 27511
Please retain one copy for your records.
ACCEPTED AND AGREED TO:
INTERNATIONAL BUSINESS SYNON INC.
MACHINES CORPORATION
BY: /S/ J.W. KRIER BY: /S/ CHRIS HERRON
---------------------------- ----------------------------
NAME: J. W. KRIER NAME: CHRIS HERRON
--------------------------
PRINT NAME
TITLE: CONTRACTS ADMINISTRATION TITLE: PRESIDENT
-------------------------
DATE: DATE: 4/10/89
---------------------------- ----------------------------
- --------------------------------------------------------------------------------
-7-
<PAGE> 44
- --------------------------------------------------------------------------------
ANNEX I
1. Maintain listings of the writings, resumes or other items that contain IBM
Confidential Information.
2. Secure all writings, resumes or other items, including work in progress
which contain IBM Confidential Information, in a safe, file, desk, cabinet
or other suitable container with locking device, or in a locked room with
restricted access, when such writings, resumes or other items are not in
use.
3. Provide limited access to those areas of its facilities where work is being
performed under the Agreement only to those employees with the need to
know.
4. Establish a plan for the recovery and/or reconstruction of lost or missing
writings, resumes or other items containing IBM Confidential Information
and promptly report the loss of the same to IBM within twenty-four (24)
hours.
- --------------------------------------------------------------------------------
-8-
<PAGE> 45
[IBM LETTERHEAD]
June 4, 1990
Christopher Herron AMENDMENT NUMBER One
Synon, Inc. TO CDA NUMBER CA-056-89-HPF
1110 Larkspur Landing Circle, Suite 340
Larkspur, CA 94939
SUBJECT: Amendment One
REFERENCE: IBM/Synon Confidential Disclosure Agreement
CA-056-89-HPF dated April 4, 1989
Dear Mr. Herron,
The purpose of this letter is to amend the referenced Agreement as follows:
1. Add the following to the end of the first paragraph: "...including, but not
limited to, development feedback on IBM's AD/Cycle software strategy, and
to allow VENDOR to enable its CASE products to operate with the planned IBM
AD Platform."
2. In Section 1, subsection b, please add the following to the end of this
subsection: "...whether prepared by IBM or a vendor to IBM,"
3. In Section 6, first paragraph, delete the words "...for a period of five
(5) years..." and substitute "...for a period of seven (7) years...".
4. All other terms and conditions of the Agreement remain in full force and
effect.
If you are in agreement with this Amendment, please sign and return two (2)
copies of this letter to:
Henry P. Fuhrmann
IBM Corporation
Dept T49-4AA
P. 0. Box 60000
Cary, NC 27512-9968
-1-
<PAGE> 46
CDA Number CA-056-89-HPF
- --------------------------------------------------------------------------------
CDA Date: April 4, 1989
Please retain one (1) copy for your records.
VERY TRULY YOURS, ACCEPTED AND AGREED TO:
INTERNATIONAL BUSINESS SYNON, INC.
MACHINES CORPORATION
BY: /S/ K.A. COOK BY: /S/ CHRIS HERRON
---------------------------- ----------------------------
K.A. COOK K.A. COOK
- ------------------------------- ----------------------------
PRINT NAME PRINT NAME
BUYER PRESIDENT
- ------------------------------- ----------------------------
TITLE TITLE
6/4/90 6/5/90
- ------------------------------- ----------------------------
DATE DATE
- --------------------------------------------------------------------------------
-2-
<PAGE> 47
INTERNATIONAL BUSINESS MACHINES CANADA LIMITED MARKHAM, ONTARIO
AGREEMENT FOR RECEIPT OF IBM CONFIDENTIAL INFORMATION
Name and Address of Customer: Reference Agreement No.: 615-001
Ms. M. Selig
Synon, Inc.
1100 Larkspur Landing Circle
Larkspur, California
USA 94939
The Customer (you) and International Business Machines Canada (IBM) agree that
these terms and conditions apply when IBM discloses its confidential
information (IBM Confidential Information) to you. Specific IBM Confidential
Information is described in a Supplement to Agreement for Receipt of IBM
Confidential Information (Supplement). Such information becomes subject to
this Agreement on the Effective Date listed in a Supplement which the parties
sign before or promptly after such disclosure. The Supplement may also contain
additional terms and conditions.
1. DISCLOSURE
IBM will identify IBM Confidential Information at the time of
disclosure and promptly send you a written confirmation.
2. DELIVERY AND USE
You will identify in the Supplement your Point of Contact for receipt
of IBM Confidential Information. IBM and your Point of Contact will
coordinate and control the delivery of IBM Confidential Information.
You will use the same care and discretion to avoid disclosure,
publication or dissemination of IBM Confidential Information as you
employ with similar information of your own which you do not desire to
disclose, publish or disseminate. You may disclose IBM Confidential
Information to your employees or to employees of any of your
Subsidiaries who have a need to know such information. Prior to
disclosure, you will have an appropriate written agreement with any
such employee or Subsidiary. You may disclose IBM Confidential
Information to others provided, prior to disclosure, you have an
appropriate written agreement with the other party and IBM approves
such disclosure in writing.
Except for your obligation to avoid disclosure, publication or
dissemination, you shall be free to use IBM Confidential Information
for any purpose.
2
<PAGE> 48
You may market products or services, including any supporting
documentation, which inherently disclose IBM Confidential Information.
You may disclose IBM Confidential Information in response to a valid
order of a court or other governmental body. However, you must give
IBM notice of the order. In addition, you will make a reasonable
effort to obtain a protective order. The order will require that the
information be used only for the purposes for which the order was
issued.
3. CONFIDENTIALITY PERIOD
This Agreement applies to IBM Confidential Information on the
Effective Date listed in the Supplement which is the earlier of the
date of the initial disclosure of IBM Confidential Information or the
date of the parties sign a Supplement. Unless IBM specifies otherwise
in the Supplement, this Agreement will apply to applicable IBM
Confidential Information for a period of two years following its
Effective Date.
4. EXCEPTIONS
This Agreement will not apply to any IBM Confidential Information
that:
a. you or any of your Subsidiaries already possess without
obligation of confidence;
b. you or any of your Subsidiaries develop independently;
c. is or becomes publicly available without breach of this
Agreement;
d. you rightfully receive without obligation of confidence from a
third party; or
e. is released for disclosure with IBM's written consent.
5. DISCLAIMERS
Neither this Agreement nor any disclosure of IBM Confidential
Information grants you any license under any patents or copyrights.
IBM PROVIDES IBM CONFIDENTIAL INFORMATION TO YOU ON AN "AS IS" BASIS
WITHOUT WARRANTY OF ANY KIND, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Further, IBM does not represent or warrant that the rights of others
will not be infringed by your use of such IBM Confidential
Information.
In addition, IBM will not be liable to you for lost profits, lost
savings, incidental damages, or other consequential damages arising
out of your use of IBM Confidential Information, even if IBM has been
advised of the possibility of such damages.
IBM may choose not to use or announce any products using the data
disclosed under this agreement.
6. GENERAL
The term "Subsidiary" means a corporation, company or other entity:
a. more than 50% of whose outstanding shares or securities
(representing the right to vote for the election of directors or
other managing authority) are; or
b. which does not have outstanding shares or securities, as may be
the case in a partnership, joint venture or unincorporated
association, but more than 50% of whose ownership interest
representing the right to make the decisions for such
corporation, company or entity is, now or hereafter, owned or
controlled, directly or indirectly, by you, but such corporation,
company or other entity shall be deemed to be a Subsidiary only
so long as such ownership or control exists.
3
<PAGE> 49
This Agreement does not require IBM to disclose or you to receive IBM
Confidential Information.
IBM may, upon written notice to you, modify the terms and conditions
of this Agreement. Any such modification will apply to IBM
Confidential Information disclosed on or after the date of
notification of the modification.
If there is a conflict between this Agreement and a Supplement, the
terms and conditions of the Supplement shall prevail. The laws of the
State of New York govern this Agreement.
The parties acknowledge that they have read this Agreement, understand it, and
agree to be bound by its terms and conditions. Further, they agree that the
complete and exclusive statement of the Agreement between the parties relating
to this subject shall consist of this Agreement and any Supplements. This
statement of the Agreement supersedes all proposals or other prior agreements,
oral or written, and all other communications between the parties relating to
this subject.
Accepted By:
International Business Machines Canada Ltd. Synon, Inc.
----------------------------
Customer
By: /s/ R. L. Bradley By: /s/ M. C. Selig
---------------------------- ----------------------------
Authorized Signature Authorized Signature
R. L. Bradley M. C. Selig 9/7/89
---------------------------- ----------------------------
Name (Type or Print) Date Name (Type or Print) Date
4
<PAGE> 50
INTERNATIONAL BUSINESS MACHINES CANADA LIMITED MARKHAM, ONTARIO
SUPPLEMENT TO AGREEMENT FOR
RECEIPT OF IBM CONFIDENTIAL INFORMATION
Name and Address of Customer: Reference Agreement No.: 715-001
Ms. M. Selig Customer No.:
Synon, Inc.
1100 Larkspur Landing Circle IBM Branch Office No:
Larkspur California
USA 94939 Effective Date: 09/07/89
Name and Address of Point of Contact:
J. H. Vanos
IBM Canada Limited
1150 Eglinton Avenue East
North York, Ontario
M3C lH7
Customer Confidential Information
(Nonconfidential Description)
Information pertaining to Workstation Platform, Edit/Compile/Debug tool (ECD)
and DDS Definition Utility (DDU) for the AS/400.
THE CUSTOMER AGREES THAT THE REFERENCED AGREEMENT, AND THIS SUPPLEMENT ARE THE
COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES,
SUPERSEDING ALL PROPOSALS OR PRIOR AGREEMENT, ORAL OR WRITTEN, AND ALL OTHER
COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF.
Accepted By:
International Business Machines Canada Ltd. Synon, Inc.
----------------------------
Customer
By: /s/ R. L. Bradley By: /s/ M. C. Selig
---------------------------- ----------------------------
Authorized Signature Authorized Signature
R. L. Bradley M. C. Selig 9/7/89
---------------------------- ----------------------------
Name (Type or Print) Date Name (Type or Print) Date
1
<PAGE> 51
[IBM LETTERHEAD]
September 21, 1990
Keith Jaeger
Synon, Incorporated
1100 Larkspur Landing Circle
Larkspur, CA 94939
Dear Mr. Jaeger,
CONFIDENTIAL DISCLOSURE AGREEMENT
International Business Machines Corporation (IBM) proposes to give Synon,
Incorporated (Synon) access to information which is confidential to IBM (IBM
Confidential Information). The IBM Confidential Information pertains to
AS/400* development activities conducted at IBM's facility in Rochester, MN.
Synon and IBM agree the terms and conditions of this Confidential Disclosure
Agreement (Agreement) apply as follows:
* 400 is a registered trademark of the IBM Corporation.
1. Synon Information
IBM does not want to receive from Synon, and Synon agrees not to disclose
to IBM, any information that is of a confidential or proprietary nature to
Synon or a third party.
All information and materials which IBM obtains from Synon in connection
with this Agreement shall be deemed nonconfidential, and, except with
respect to Synon's rights under valid patents and Federal statutory
copyrights, IBM shall be free to use in any manner, for any purpose, and to
disclose to others, any ideas, concepts, know-how and techniques received
from Synon under this Agreement.
2. IBM Confidential Information
"IBM Confidential" information means information or materials that IBM
identifies as confidential and discloses to Synon under this Agreement. It
does not include information that rightly becomes public, or that Synon
otherwise knows or receives without obligation of confidence. For two (2)
years from the date of this Agreement, Synon shall hold all IBM
Confidential information in trust and confidence for IBM and shall not
Agreement Number 985-0377
<PAGE> 52
Keith Jaeger
September 21, 1990
Page 2
use any IBM Confidential information except as explicitly approved by IBM.
If any materials containing any IBM Confidential information are lost,
Synon shall promptly notify IBM. Upon termination of this Agreement, Synon
shall deliver to IBM all materials containing any IBM Confidential
information.
3. Scope of IBM Disclosure
IBM will not be obligated to disclose any particular information to Synon.
4. Manner of Disclosure
IBM Confidential information may be disclosed to Synon visually, orally, or
in writing (including graphic material). When disclosed in writing, the
information will be labeled "IBM CONFIDENTIAL." When disclosed visually or
orally, the information will be identified as IBM Confidential at the time
of disclosure. Synon agrees to clearly label as "IBM CONFIDENTIAL" all
information reduced to writing or graphics as a result of IBM's visual or
oral disclosures.
5. Dissemination
Synon will limit dissemination of IBM Confidential information to those of
its employees with a need to know. Synon will not copy any IBM Confidential
information without prior written approval from IBM.
Synon will have an appropriate written agreement with each of its employees
or other persons whose services Synon may require, sufficient to enable
Synon to comply with all of the provisions of this Agreement.
6. Accountability of IBM Materials
All IBM materials are and will remain the property of IBM. Synon agrees to
maintain a one hundred (100%) percent accountability of all IBM
Confidential materials at all times and will be prepared to locate and
produce all such materials at any time.
IBM, at its option, reserves the right to retrieve Product related IBM
Confidential materials prior to termination of this Agreement, if the
Product becomes generally available.
7. Protection of IBM Assets
Agreement Number 985-0377
<PAGE> 53
Keith Jaeger
September 21, 1990
Page 3
Synon shall maintain security procedures adequate to prevent loss of any
IBM Confidential materials. If such a loss occurs, Synon shall notify IBM
immediately.
When not in use, IBM Confidential information will be secured or locked in
a safe, file, desk, cabinet, or other suitable container or furniture, or
in a locked room with restricted access. Items of work in process or work
products that embody IBM Confidential information and which are impractical
to secure or lock as required above will be completely covered from view.
In instances where complete cover is impractical, IBM must concur in
advance to the security measures taken. Synon agrees to segregate IBM
Confidential information from the confidential information of others.
8. Confidentiality of the Agreement
Synon agrees not to disclose by way of advertisement, publication, or
otherwise to any person other than employees of Synon, who have a need to
know for purposes of performing this Agreement, the existence, nature,
substance, or terms and conditions of this Agreement or of the relationship
between the parties hereto without the prior written approval of IBM.
However, Synon may disclose this entire Agreement on a confidential,
need-to-know basis, to its accountants, attorneys, or financial
institutions.
9. Disclaimers
Neither this Agreement nor any disclosure of IBM Confidential information
grants you any license under any patents or copyrights.
IBM PROVIDES IBM CONFIDENTIAL INFORMATION TO Synon ON AN "AS IS" BASIS
WITHOUT WARRANTY OF ANY KIND, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
Neither party shall be liable for any lost revenue, lost profits or other
consequential damages under any part of this Agreement even if advised of
the possibility of such damages. Furthermore, IBM shall not be liable for
any delays, losses or any other damages which may result from the
furnishing of any equipment, documentation, programs or services under this
Agreement, even if advised of the possibility of such damages.
Agreement Number 985-0377
<PAGE> 54
Keith Jaeger
September 21, 1990
Page 4
IBM does not represent or warrant that the rights of others will not be
infringed by Synon's use of such IBM Confidential information.
10. Trademark - Trade Name
Notwithstanding any other provisions of this Agreement, neither party shall
have the right to use the other party's name, trademark or trade name or
other designation (including any contraction, abbreviation, or simulation
of any of the forgoing), or to refer to this Agreement or the services
performed hereunder directly or indirectly, in connection with any product,
service, promotion or publication without the prior written approval of the
other party.
11. Term and Termination
This Agreement is effective from the date on which it accepted by both
parties, and shall expire 24 months from that date.
Either party may terminate this Agreement with or without cause at any time
by written notice to the other party.
12. Compliance with Laws and Regulations
Synon agrees to comply with all applicable Federal, State, and local laws,
regulations and ordinances, including but not limited to the Regulations of
the United States Department of Commerce relating to the Export of
Technical Data, in so far as they relate to this Agreement. Synon agrees to
use its best efforts to obtain any required government documents and
approvals prior to exporting any technical data disclosed to Synon or any
product to which such data relate.
13. Waiver of Breach/Severability
No waiver of any breach of any provision of this Agreement shall constitute
a waiver of any prior, concurrent or subsequent breach of the same or any
other provisions hereof, and no waiver shall be effective unless made in
writing and signed by an authorized representative of the waiving party. In
the event that any provision of this Agreement shall be found illegal or
otherwise unenforceable, such provision shall be severed, the entire
Agreement shall not fail on account thereof, and the balance of the
Agreement shall continue in full force and effect.
Agreement Number 985-0377
<PAGE> 55
Keith Jaeger
September 21, 1990
Page 5
14. Assignment and Delegation
Except in connection with the sale or other transfer of substantially all
of Synon's business, no right or interest in this Agreement shall be
assigned by Synon without the, prior written approval of IBM, and no
delegation of the services or other obligations owed by Synon to IBM shall
be made or effective without IBM's prior written approval. Any attempt by
Synon to assign any right or interest created by this Agreement shall be
void. In the event of a sale or other transfer of substantially all of
Synon's business, IBM has the right to terminate this Agreement.
15. Sole Agreement
This Agreement shall supersede all prior Agreements and understandings
between the parties respecting the subject matter hereof and shall
constitute the complete and exclusive agreement between the parties
respecting this subject matter.
16. Applicable Law
This Agreement shall be construed and the legal relations created herein
between the parties shall be determined in accordance with the substantive
laws of the State of New York which pertain to agreements executed in, and
fully performed within, the State of New York. Any proceeding to enforce,
or to resolve disputes arising under or related to, this Agreement shall be
brought before a court of competent jurisdiction in the State of New York,
including a Federal District Court sitting within such State. The parties
hereby expressly waive any right to a jury trial and agree that any
proceeding hereunder shall be tried by a judge without a jury.
17. Continuing Obligations
The rights, activities, and obligations of the Sections of this Agreement
which by their nature create obligations that survive the expiration or
termination of this Agreement shall survive and continue after any
expiration or termination of this Agreement and shall bind the parties and
their legal representatives, successors, heirs, and assigns. This includes:
Section 1 - "Synon Information"
Section 2 - "IBM Confidential Information"
Agreement Number 985-0377
<PAGE> 56
Keith Jaeger
September 21, 1990
Page 6
Section 5 - "Dissemination"
Section 8 - "Confidentiality of the Agreement"
Section 9 - "Disclaimers"
Section 10 - "Trademark - Trade Name"
Section 12 - "Compliance with Laws and Regulations"
Please return an executed copy of this Agreement to Patrick Griffin, IBM Corp.,
985/658-C at the address on this letterhead.
Accepted: Accepted:
INTERNATIONAL BUSINESS SYNON, INCORPORATED
MACHINES CORPORATION
By /s/ David A. Andersen By /s/ Chris Herron
---------------------------- ----------------------------
David A Andersen, Manager Authorized Representative
Business Partner Programs
Name Chris Herron
--------------------------
(Print or Type)
Title President
-------------------------
Date September 21, 1990 Date September 27, 1990
--------------------------- --------------------------
Agreement Number 985-0377
<PAGE> 57
May 3, 1990
Ms Madeline Selig
SYNON Inc.
Larkspur, CA.
Subject: Confidential Disclosure Agreement
To enable you to determine whether you wish to explore the possibility of
developing future function for IBM Rochester, IBM proposes to give you access
to IBM Confidential information pertaining to products currently under
development.
This confidential and proprietary information will be identified as IBM
Confidential and will be disclosed to you in a meeting at the IBM Rochester,
Minnesota facility May 3, 1990.
Upon receipt of such confidential information, you agree to hold all such
confidential information in trust and confidence for IBM for a period of two
(2) years from the date of disclosure or until such time as the information is
publicly disclosed by IBM whichever occurs first. During this prescribed
period, you agree to treat this information in the same manner as you treat
your own confidential and proprietary information you do not want disclosed to
others.
IBM does not want to receive and SYNON Inc. agrees not to disclose to IBM any
information that is of a Confidential or proprietary nature to SYNON Inc. or a
third party.
All information and materials which IBM obtains from SYNON Inc. in connection
with this Agreement shall be deemed non-confidential, and, except with respect
to SYNON Inc. rights under valid patents and Federal statutory copyrights, IBM
shall be free to use in any manner, for any purpose, and to disclose to others,
any ideas, concepts, know-how and techniques received from SYNON Inc. under
this Agreement.
<PAGE> 1
EXHIBIT 10.22
IBM DEVELOPER AGREEMENT
STATEMENT OF WORK
- --------------------------------------------------------------------------------
This Statement of Work ("SOW") is a Transaction Document issued under the IBM
Developer Agreement ("IDA") for you to provide a proof of concept for Obsydian
and Synon/2E inter/intranet enablement using a Java generator on the AS/400.
By signing below, each of us agrees that the complete agreement between us
regarding this transaction consists of this SOW Transaction Document and:
a) the IBM Developer Base Agreement (identified below);
b) Exhibit: Travel Expense Reimbursement ("TER"): and
c) Exhibit: Certificate of Originality ("COO").
The following are related agreements between you and IBM:
d) the Agreement for Exchange of Confidential Information ("AECI")
No. 92-0016; and
e) the IBM Purchase Order that references this SOW.
Agreed To: Agreed To:
Synon, Inc. International Business Machines
Corporation ("IBM")
By: /s/ PAUL K. WILDE By: /s/ C L ARNDT
--------------------------- ---------------------------
Authorized Signature Authorized Signature
Name: Paul K. Wilde Name: C L Arndt
-------------------------- -------------------------
Date: 12/20/96 Date: 12/20/96
-------------------------- -------------------------
IDA Base Agreement #: RAL-960509
SOW Transaction. Document #:RAL960509-
ROC01
Developer Address: IBM Office Address:
Synon Inc. IBM Corporation
1100 Larkspur Landing Circle 3605 Highway 52 North
Larkspur CA 94939 Rochester MN 55901-7829
After signing, please return a copy of this SOW to the local "IBM Office
Address" shown above.
Page 1 of 5
SOW00A dated September 30, 1994 IDA Base Agreement # RAL-960509
Dated December 13, 1996
<PAGE> 2
IBM DEVELOPER AGREEMENT
STATEMENT OF WORK
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE 0F CONTENTS
- ----------------------------------------------------------------------------------------------------------
PART TITLE PAGE PART TITLE PAGE
- ------------------------------------------------------- -----------------------------------------------
<S> <C> <C> <C> <C> <C>
1 DEFINITIONS 2 6 SCHEDULE 4
2 IBM'S RESPONSIBILITIES 2 7 INTELLECTUAL PROPERTY 4
3 YOUR RESPONSIBILITIES 2 8 PAYMENT 4
4 DELIVERABLES 3 9 COORDINATORS 5
5 ACCEPTANCE 4
- ----------------------------------------------------------------------------------------------------------
</TABLE>
PART 1 DEFINITIONS
1.1 JAVA means an object-oriented language designed to support cross-
platform application development.
PART 2 IBM'S RESPONSIBILITIES
2.1 IBM will:
a) review for approval the White Paper and Development Plan for
functional content;
b) participate in scheduled checkpoints as per the agreed upon
Development Plan; and
c) provide AS/400 technical assistance to you, where agreed upon
by the Technical Coordinators.
PART 3 YOUR RESPONSIBILITIES
3.1 You will not begin work under this SOW until IBM Contract Coordinator
has issued you a purchase order.
3.2 You will prepare or provide the Deliverables identified in the Part
entitled Deliverables.
3.3 You will:
a) provide an early proof of concept for Obsydian and Synon/2E
inter/intranet enablement using a Java generator on the
AS/400. This proof of concept will include:
1) a White Paper (Deliverable No. 1) which will document
the Obsydian and Synon/2E inter/intranet and Java
directions and high-level functionality on the AS/400.
You agree that the IBM contract coordinator must
approve any public release or dissemination of the
White Paper or any Derivative Works so as to avoid any
release of any IBM Confidential Information otherwise
protected under AECI #92-0016.;
2) a Development Plan (Deliverable No. 2) which will
include the necessary staffing, schedules and
checkpoints for implementing the functions described in
the White Paper;
3) a functional alpha-level demonstration (Deliverable
Nos. 3, 4, 5, and 6);
4) a Final Report (Deliverable No. 7) supplying IBM
feedback to understand implementation of Java
technology and where IBM can provide additional
features and functions to improve the implementation of
Java technology, and prioritizing prerequisite system
functions and features, such as: AS/400 Java execution
environment, AS/400 web-serving requirements, and
AS/400 development tool requirements. You agree that
all such feedback shall be owned by IBM and shall be
considered and treated as IBM Confidential Information
pursuant to AECT #92-0016.
[ ]*
Page 2 of 5
SOW00A dated September 30, 1994 IDA Base Agreement # RAL-960509
Dated December 13, 1996
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions have been filed separately with the Commission.
<PAGE> 3
c) conduct a minimum of alpha-level demonstrations at
times and events mutually agreed upon by the Technical
Coordinators.
d) attend checkpoint meetings as per the agreed upon
Development Plan either in person or via
teleconference.
e) deliver and install the final documented alpha-level
code to IBM.
IBM will reimburse your travel expenses incurred while
performing these activities according to the Exhibit: Travel
Expense Reimbursement.
PART 4 DELIVERABLES
[ ]*
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission.
Page 3 of 5
SOW00A dated September 30, 1994 IDA Base Agreement # RAL-960509
Dated December 13, 1996
<PAGE> 4
[ ]*
PART 5 ACCEPTANCE
In order to qualify for acceptance, you must provide each Deliverable according
to the criteria defined below and other requirements of the SOW.
5.1 IBM will accept or reject each Deliverable within 10 business days from
IBM's receipt of the Deliverable. If IBM does not accept or reject a
Deliverable in writing within 10 business days of receipt, that
Deliverable will be considered rejected by IBM.
5.2 Final acceptance criteria for Deliverable Nos. 3, 4, 5, 6 and 7 will be
based on your demonstration to IBM of how each Deliverable functions
relative to the mutually agreed upon Development Plan (Deliverable No.
2).
PART 6 SCHEDULE
[ ]*
PART 7 INTELLECTUAL PROPERTY
7.1 For Licensed Work Deliverable No. 1 you grant IBM a nonexclusive,
paid-up, irrevocable, worldwide copyright license to use, execute,
display, and perform the Licensed Work and its Derivative Works. This
license also applies to associated audio and visual works.
7.2 For Licensed Works Deliverable No. 4, 5, and 6 you grant IBM a
nonexclusive, paid-up, irrevocable, worldwide copyright license to use,
execute, display, and perform for internal evaluation and internal and
external demonstration purposes the Licensed Work and its Derivative
Works. This license also applies to associated audio and visual works.
PART 8 PAYMENT
8.1 For the Deliverables identified above, IBM will pay the fixed price
amounts listed below. You may invoice for the milestone when IBM
accepts the Deliverables.
[ ]*
8.2 For travel that has previously been authorized by IBM in writing, you
will be reimbursed for reasonable and actual costs according to the
Exhibit: Travel Expense Reimbursement.
8.3 You will submit your invoices to the following address:
International Business Machines Corporation
PO Box 9005
Endicott NY 13761-9006
Page 4 of 5
SOW00A dated September 30, 1994 IDA Base Agreement # RAL-960509
Dated December 13, 1996
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission.
<PAGE> 5
Your invoices will include the following information:
a) IBM Developer Agreement Number;
b) this SOW Transaction Document Number;
c) name of your company and "remit to" address;
d) short description of the performance for which payment is due;
and
e) IBM's purchase order number, your invoice number and its date.
PART 9 COORDINATORS
9.1 The Contract Coordinators responsible to receive all notices and
administer this SOW are:
<TABLE>
<CAPTION>
FOR IBM: For you:
<S> <C> <C> <C>
Name: C L Arndt Name: Keith Jaeger
Title/Dept: Contracts Administrator Title/Dept: VP Development
Address: IBM Corporation Address: Synon, Inc
3605 Hwy 52 N 1100 Larkspur Landing Circle
Rochester MN 55901-7829 Larkspur, CA 94939
Phone: (507) 253-8776 Phone: (415) 461-5006
Facsimile: (507) 253-4825 Facsimile: (415) 461-2171
</TABLE>
9.2 The Technical Coordinators responsible to accept all Deliverables,
coordinate all exchanges of confidential information and to administer
and coordinate the technical matters associated with this SOW are:
<TABLE>
<CAPTION>
FOR IBM For you:
<S> <C> <C> <C>
Name: Paul Nordlund Name: Alan Zwiren
Address: IBM Corporation Address: Synon, Inc
3605 Hwy 52 N 1100 Larkspur Landing Circle
Rochester MN 55901-7829 Larkspur CA 94939
Phone: (507) 253-5730 Phone: (415)461-5006
Facsimile: (507) 253-2768 Facsimile: (415)461-2171
</TABLE>
Technical Coordinators may propose, accept (by signature or initials) and
implement technical changes to this SOW that do not change dollar amounts or
materially change Deliverables or the schedules of this SOW.
9.3 Notices are effective when received by the appropriate coordinator as
demand by reliable written confirmation (for example, certified mail
receipt, courier receipt or facsimile receipt confirmation sheet.)
Page 5 of 5
SOW00A dated September 30, 1994 IDA Base Agreement # RAL-960509
Dated December 13, 1996
<PAGE> 6
IBM DEVELOPER AGREEMENT
BASE AGREEMENT
- --------------------------------------------------------------------------------
The IBM Developer Agreement ("IDA") consists of this Base Agreement and its
Transaction Documents. The IDA covers various transactions in which IBM may
involve you for:
a) providing Services;
b) developing IBM Materials; and
c) licensing other Deliverables.
A specific transaction will be defined by its own Transaction Document. Each
Transaction Document together with this Base Agreement forms a separate
agreement. The IDA is our complete agreement and replaces all prior oral, or
written communications between us regarding the transactions described in the
Transaction Documents.
By signing below for our companies, each of us agrees to the terms of this Base
Agreement. Once signed, 1) both parties agree any reproduction of the IDA made
by reliable means (for example, photocopy or facsimile) is an original unless
prohibited by local law and 2) all Deliverables and Services you provide are
subject to it.
Agreed To: Agreed To:
Synon, Inc. International Business Machines
Corporation ("IBM")
BY:/s/ PAUL K. WILDE By: /s/ C L ARNDT
-------------------------- -------------------------------
Authorized Signature Authorized Signature
Name: Paul K. Wilde Name: C L Arndt
------------------------ -----------------------------
Date:12/20/96 Date:12/20/96
-------- --------
IBM Developer Agreement #RAL-960509
Developer Address: IBM Office Address:
Synon Inc IBM Corporation
1100 Larkspur Landing Circle 3605 Highway 52 North
Larkspur CA 94939 Rochester MN 55901-7829
U.S.A. U.S.A.
After signing, please return a copy of this Base Agreement to the local "IBM
Office Address" shown above.
Page 1 of 8
IDA00A dated September 30, 1994 IBM Developer Agreement # RAL-960509
Dated December 13, 1996
<PAGE> 7
IBM DEVELOPER AGREEMENT
BASE AGREEMENT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
- ----------------------------------------------------------------------------------------------------------------
PART TITLE PAGE PART TITLE PAGE
- ------------------------------------------------------- ------------------------------------------------------
<S> <C> <C> <C> <C>
1 DEFINITIONS 2 6 INDEMNIFICATION AND LIABILITY 5
2 AGREEMENT STRUCTURE 3 7 TERM AND TERMINATION 6
3 OUR RELATIONSHIP 3 8 INSURANCE 7
4 INTELLECTUAL PROPERTY 4 9 PAYMENT 7
5 WARRANTY 5 10 GENERAL 7
</TABLE>
PART 1. DEFINITIONS
Capitalized terms in the IDA have the following meanings. A Transaction Document
may define additional terms. However, those terms apply only to that Transaction
Document.
1.l APPEARANCE DESIGN is the appearance presented by an object, formed in
hardware or by software, that creates a visual impression on an
observer. Appearance Design refers to ornamental and not the functional
aspects of the object.
1.2 BACKGROUND MATERIALS are items 1) in which the copyrights are owned by
a third party or 2) that you prepared or had prepared outside the scope
of the IDA. Background Materials are contained within a Deliverable.
For purposes of this Agreement # RAL-960509 and Statement of Work
#RAL-960509-ROC01, the Background Materials are Obsyidian and Synon/2E,
which you own.
1.3 DELIVERABLE is any item other than Tools, that you prepare or provide
under a Transaction Document.
1.4 DERIVATIVE WORK is a work that is based on an underlying work and that
would be a copyright infringement if prepared without the authorization
of the copyright owners of the underlying work. Derivative Works are
subject to the ownership rights and licenses of others in the
underlying work.
1.5 DISTRIBUTORS are those authorized by IBM and its Subsidiaries to
license and
distribute products.
1.6 IBM MATERIALS are Deliverables that IBM owns. The term "IBM Materials"
does not include Background Materials, Licensed Work, equipment or
items specifically excluded in a Transaction Document.
1.7 INVENTION is an idea know-how, technique, invention, discovery or
improvement embodied in the Deliverables or methods developed under the
Transaction Document. An Invention must be conceived or reduced to
practice by you or your Personnel in performance of work required under
the Transaction Document. An Invention made by you or your Personnel
with IBM's Personnel is a "Joint Invention."
1.8 LICENSED WORKS are Deliverables that you own and license to IBM. Each
Licensed Work is identified in a Transaction Document. Licensed Works
include Basic Enhancements and Maintenance Modifications to them that
you create or authorize others to create during the period defined in
the Transaction Document.
1.9 MORAL RIGHTS are personal rights associated with authorship of a work
under applicable law. They include the rights to approve modifications
and to require authorship identification.
1.10 PERSONNEL are either party's employees or subcontractors working under
the IDA.
1.11 SERVICES are work you and your Personnel perform to complete the tasks
described in a Transaction Document. Deliverables may result from such
work.
1.12 SUBSIDIARY is an entity during the time that more than 50% of its
voting stock or, if no voting stock, decision-making power is owned or
controlled, directly or indirectly, by another entity.
1.13 TOOLS include devices, compilers, programming documentation, media or
other items required for the development, maintenance or implementation
of a Deliverable.
Page 2 of 8
IDA00A dated September 30, 1994 IBM Developer Agreement # RAL-960509
Dated December 13, 1996
<PAGE> 8
PART 2. AGREEMENT STRUCTURE
2.1 The IDA consists of:
a) this BASE AGREEMENT that defines the basic terms and
conditions of our relationship; and
b) TRANSACTION DOCUMENTS that specify the details of a
transaction and may include additional terms and conditions.
Transaction Documents include Statements of Work, Descriptions
of Licensed Work and Descriptions of Exclusive Marketing
Rights. Both parties accept the terms of the Transaction
Document and the identified exhibits, appendices and schedules
by signing the Transaction Document.
2.2 If there is a conflict among the terms of the documents, Transaction
Document terms prevail over Base Agreement terms. Terms in IBM's
purchase orders and your invoices are void unless identified otherwise
in the IDA.
PART 3. OUR RELATIONSHIP
3.1 Each party is an independent contractor. Neither party is, nor will
claim to be, a legal representative, partner, franchisee, agent or
employee of the other except as specifically stated in the IDA. Neither
party will assume or create obligations for the other. Each party is
responsible for the direction and compensation of its employees.
3.2 Each party may have similar agreements with others. Each party may
design, develop, manufacture, acquire or market competitive products
and services and conduct its business in whatever way it chooses
provided there is no conflict with the IDA. IBM is not obligated to
announce or market any products or services. IBM does not guarantee the
success of its marketing efforts. IBM will independently establish
prices for its products and services.
3.3 Both parties will maintain relevant records to support invoices issued
or payments made to the other. The records will be retained and made
available for three years from the date of the related payment or
invoice. If one party requests, the other will make these records
available to an independent auditor chosen and compensated by the
requesting party. Each party's requests will be in writing and will not
occur more than once each year. The auditor will sign a confidentiality
agreement and will only disclose to the requesting party any amounts
due and payable for the period examined.
3.4 The Transaction Document will identify coordinators that represent each
party and where to send all notices which must be in writing, payments
and deliveries. A party will provide notice to the other when
coordinators change.
3.5 No Deliverable or Tool will contain your or any third party's
confidential or proprietary information. Where confidential information
must be exchanged, it will be done under a signed confidentiality
agreement. Except for your preexisting, commercially available
Deliverables, you will not disclose Deliverables to others without
IBM's written approval.
3.6 You will not disclose the terms of the IDA to a third party except a)
to your accountants, lawyers or other professional advisors under a
confidentiality agreement or b) as required by law provided you get any
confidential treatment for them which is available.
3.7 Neither party relies on any promises, inducements, representations made
by the other or expectations of more business dealings except as
expressly provided in the IDA. The IDA accurately states our business
agreement.
3.8 IBM may lend you items for use in a transaction. If so, IBM will do so
under a signed equipment and program loan agreement. You will not
disclose the items to others without IBM's written approval.
3.9 IBM may evaluate each Deliverable before accepting it to verify that it
meets the requirements of the IDA. IBM will advise you if it accepts
(in whole or in part) or rejects each Deliverable. IBM will identify
errors or deficiencies that it finds. You will either promptly correct
the errors and deficiencies or obtain IBM's agreement on a plan to
correct them within 10 working days after receiving notification. All
corrections will be made at no charge to IBM. If you do not make the
corrections, IBM may withhold payments due or require you to refund
payments made to you.
3.10 You will:
a) perform Services and provide all Deliverables according to the
Transaction Document. You will have a process-driven approach
to your work efforts that is repeatable and measurable. On
request, you will review the approach with IBM;
b) deliver alpha object code in the form specified in the
Transaction Document for Deliverables that contain code;
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IDA00A dated September 30, 1994 IBM Developer Agreement #RAL-960509
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<PAGE> 9
c) maintain records to verify authorship of all Deliverables for
four years after the termination or expiration of the
Transaction Document. On request, you will deliver or
otherwise make available this information in a form specified
by IBM (for example, the Exhibit: Certificate of Originality);
d) provide IBM with relevant financial information about your
business on request;
e) implement a process designed to prevent contamination by
harmful code. You will provide IBM notice if you suspect
contamination;
f) participate in progress reviews to demonstrate your
performance of your obligations. You will do so as specified
in a Transaction Document or as otherwise requested by IBM;
g) adequately train your employees to perform all work;
h) comply with the Exhibit. Activity on IBM's Premises when you
or your Personnel are on IBM's premises;
i) have agreements with your Personnel and third parties to
perform obligations and to grant or assign rights to IBM as
required by the IDA. On request, you will provide IBM copies
of these agreements. The Exhibit. Sample Employee Agreement,
its equivalent, may be used with your Personnel; and
j) inform IBM if you plan to perform IBM work using a former IBM
or IBM Subsidiary employee, IBM reserves the right to deny
such assignment.
3.11 You will not, without IBM's prior written approval:
a) issue press releases or other publicity regarding the IDA or
our relationship under it; or
b) assign or transfer the IDA or your rights under it or delegate
or subcontract your obligations.
3.12 To the extent applicable, each party will comply with Executive Order
11246 of the President of the United States on Equal Employment
Opportunity and the Occupational Safety and Health Act of 1970.
PART 4. INTELLECTUAL PROPERTY
4.1 IBM Materials you create under the IDA are works made for hire under
applicable law. If IBM Materials are not considered works made for hire
owned by IBM by operation of law, you assign the ownership of
copyrights in them to IBM, You will assist IBM to perfect these rights.
You or your Personnel may use copies, intermediate versions, drafts and
partial copies of IBM Materials only for purposes of the IDA. At the
end of the transaction, you will destroy these items unless IBM states
otherwise.
4.2 You will list in the Transaction Document all Background Materials and
their owners. You will not include any Background Materials in a
Deliverable that are not listed.
For Deliverables 4, 5, and 6 identified in the Transaction Document you
grant IBM an irrevocable, nonexclusive, worldwide, paid-up copyright
license to execute, reproduce, display, perform, and use for the
internal evaluation and internal and external demonstration purposes
the Background Materials and their Derivative Works. You grant IBM the
right to authorize others to do any of the above. This license also
applies to associated audio and visual works.
For the remaining Deliverables identified in the Transaction Document
you grant IBM an irrevocable, nonexclusive, worldwide, paid-up
copyright license to us, execute, reproduce, display, perform, and to
prepare Derivative Works of, Background Materials and their Derivative
Works. You grant IBM the right to authorize others to do any of the
above. This House also applies to associated audio and visual works.
4.3 Except for tools IBM provides you, you will list all Tools for each
Deliverable in the Transaction Document. You will deliver the listed
Tools that are not commercially available. You will provide an updated
written list to IBM for all changes and promptly deliver those updated
tools that are not commercially available.
For Deliverables 4, 5, and 6 identified in the Transaction Document you
grant IBM an irrevocable, nonexclusive, worldwide, paid-up copyright
license to execute, reproduce, display and perform, and use for
internal evaluation and internal and external demonstration purposes
all delivered Tools and their Derivative Works. You grant IBM the right
to authorize others to do any of the above. This license also applies
to associated audio and visual works.
For the remaining Deliverables identified in a Transaction Document you
grant IBM an irrevocable, nonexclusive, worldwide, paid-up copyright
license to execute, reproduce, display and perform, and use all
delivered Tools and their
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IDA00A dated September 30, 1994 IBM Developer Agreement #RAL-960509
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<PAGE> 10
Derivative Works. You grant IBM the right to authorize others to do any
of the above. This license also applies to associated audio and visual
works.
4.4 You grant IBM an irrevocable, nonexclusive, worldwide, paid-up license
under any inventions, patents and patent applications that are 1) owned
or licensable by you now or in the future and 2) (i) required to make,
have made, use and have used Deliverables and Tools or (ii) required to
license or transfer a Deliverable or its Derivative Works. This license
applies to Deliverables or their Derivative Works operating alone or in
combination with equipment or software.
4.5 Inventions made by your Personnel are your property except for Joint
Inventions and Inventions relating to an Appearance Design. You will
promptly disclose each Invention to IBM in writing. Your disclosure
will specify the features or concepts that you believe to be new or
different. You will identify all countries in which you will seek
patent protection for each Invention. You authorize IBM to act as your
agent in obtaining patent protection for the Invention in countries
where you do not seek patent protection. You grant IBM an irrevocable,
nonexclusive, worldwide, paid-up license under these Inventions and
patents issuing on and patent applications filed on these Inventions.
The license scope is to make, have made, use, have used, sell, license
or transfer items and to practice and have practiced methods.
4.6 Both parties will jointly own all Joint Inventions and resulting
patents. Either party may license others under Joint Inventions and
patent applications filed on, or patents issuing from, them without
accounting to or consent from the other.
When both parties equally share the costs associated with seeking
patent protection, IBM will prepare the patent application, unless
agreed to otherwise. IBM will advise you of the status of the
application and will consider your proposed comments and suggestions
about it If either party decides not to equally share the costs of
seeking or maintaining patent protection in a Joint Invention, the
other party may do so at its own expense. The paying party will control
the obtaining of, and maintenance of such patents. The non-paying party
will provide reasonable assistance and have required documents signed
at the request and expense of the paying party.
4.7 You assign to IBM all Inventions, and patents issuing on them, relating
to an Appearance Design. You will, at IBM's expense, assist in the
filing of patent applications on these Inventions and have required
documents signed.
4.8 Except as specifically granted, the IDA does not grant either party any
rights in any patents or patent applications.
4.9 You recognize that any goodwill attaching to IBM's trademarks, services
marks ("marks") or tradename belongs to IBM and this Base Agreement
does not grant you any right to use them. IBM may state that you have
provided a Deliverable.
PART 5. WARRANTY
You make the following on-going representations and warranties:
a) you are not under and will not assume any contractual
obligation that conflicts with your obligations or the right
granted in the IDA;
b) there are no claims pending or threatened against you or, to
the best of your knowledge, anyone else that relate to the
Deliverables or Tools;
c) none of the Deliverables or Tools directly or indirectly
infringe any publicity, privacy or intellectual property
rights of a third party including, to the best of your
knowledge, any patents or patent applications;
d) you will perform all work in a skillful, competent and
workmanlike manner;
e) the Deliverables and Tools are not contaminated by harmful
code;
f) the fully commented object code that you provide corresponds
to the current release or version of the Deliverable;
g) all authors have waived their Moral Rights in all Deliverables
to the extent permitted by law; and all software code and/or
hardware microcode licensed to or developed for IBM, are able
to correctly create, process. calculate, manipulate, sort,
store and delete date-related data without resulting in or
causing logical or mathematical inconsistencies.
You will immediately provide IBM notice of any change that may affect your
representations and warranties.
PART 6. INDEMNIFICATION AND LIABILITY
6.1 You will indemnify IBM and its Subsidiaries if a third party makes a
claim against IBM or its Subsidiaries based on an actual or alleged:
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IDA00A dated September 30, 1994 IBM Developer Agreement #RAL-960509
Dated December 13, 1996
<PAGE> 11
a) failure by you, not caused by IBM, to perform your obligations
under the IDA;
b) improper preparation or design of a Deliverable;
c) breach of your warranties and representations;
d) negligent or willful arts or omissions committed by you;
e) failure by you to comply with governmental laws and
regulations; or infringement by you or the Deliverables of
patents, copyrights, trademarks, trade secrets and other
intellectual property rights.
6.2 If such a claim appears likely or is made, you will promptly provide
IBM notice. You will:
a) obtain the necessary rights for IBM, its Subsidiaries,
Distributors and their respective customers to continue to use
the Deliverables on an uninterrupted basis and exercise all
rights granted in the Deliverables; or
b) modify the Deliverables at your expense to resolve the claim.
If you are not able to do either within a reasonable period of time,
IBM may terminate the related Transaction Document for your breach.
6.3 You will pay any settlement amounts you authorize and all costs,
damages and attorneys' fees that a court finally awards if IBM:
a) promptly provides you notice of the claim; and
b) allows you to control and cooperates with you in the defense
of the claim and settlement negotiations.
IBM may participate in the proceedings at its option and expense.
6.4 Regardless of the type of claim, neither party is liable to the other
for economic consequential damages (including lost profits or savings)
or incidental damages, even if informed that they may occur. This
limitation does not apply to your liabilities for indemnity above to
the extent that such damages are included in settlements and court
awards. IBM's total liability for a transaction is limited to payments
due to you for that transaction.
6.5 You are not liable for indemnification for infringements that result
solely from complying with IBM's detailed instructions or
specifications.
PART 7. TERM AND TERMINATION
7.1 A Transaction Document specifies the effective date of a particular
transaction. The Transaction Document continues until terminated or
completed.
7.2 Either party may terminate a Transaction Document for the other's
breach by providing a 30 day notice that describes the breach. The
termination will not be effective if the breach is cured within the
notice period. A breach of a Transaction Document for a Deliverable is
considered a breach of all Transaction Documents involving that
Deliverable.
If IBM terminates a Transaction Document for your breach, you are
liable for any costs incurred by IBM and other damages. In addition,
IBM may require:
a) you to return advance payments and deliver work in progress to
IBM. IBM may complete the work and offset payments due by
IBM's completion costs and other damages. You will provide
reasonable training to IBM or its designees to enable
completion; or
b) you to reimburse IBM for all payments made to date plus any
reprocurement costs if IBM determines that it will not
complete the work.
7.3 Either party may, for its convenience, terminate this Base Agreement on
30 days' notice. However, the Base Agreement will continue for
Transaction Documents already in place until the Transaction Documents
are terminated or completed.
7.4 IBM may, for its convenience, terminate a Transaction Document on 30
days' notice to you. If IBM does so; you will stop work in an orderly
manner. You will provide IBM with all Deliverables including work in
progress (such as notes, drafts and sketches). IBM will pay you, on a
prorated basis, for Services and Deliverables that IBM accepts.
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Dated December 13, 1996
<PAGE> 12
7.5 Termination or expiration of the IDA or any Transaction Document does
not mean previously granted paid-up rights and licenses to IBM or
product users. Any terms of the IDA that by their nature extend beyond
termination or expiration (for example, Intellectual Property,
INDEMNIFICATION and LIABILITY and Term and TERMINATION) will survive.
These terms will apply to either party's successors and assigns.
PART 8. INSURANCE
8.1 You will maintain the following minimal insurance coverage at your own
expense:
a) Worker's Compensation, including Employees Liability, for the
statutory required amounts;
b) Commercial General Liability for two years following
expiration or termination of the IDA in the amount of
$1,000,000 per event including coverage for
1) "Premises Operations;"
2) "Contractual Liability" you are responsible for under
the IDA; and
3) "Products and Completed Operations."
c) Comprehensive Automobile Liability for vehicles used in
performance of work under the IDA in the amount of $250,000
per person / $500,000 per event for personal injury and
$200,000 per event for property damage.
You remain liable for any damages above the stated minimums.
8.2 The insurance will provide that the insurer notify IBM at least 30 days
before any non-renewal, cancellation or other material change in your
coverage, You will name IBM as an additional insured under b) and c)
above. You will provide IBM with a certificate of insurance as proof of
this minimal coverage on request.
PART 9. PAYMENT
9.1 IBM will pay you for a transaction according to the IDA. All payments
will be made in U.S. dollars. Your applicable taxes, expenses and
payments to third parties are included in the compensation, unless
identified otherwise in a Transaction Document.
9.2 You will invoice IBM for amounts due unless the Transaction Document
states otherwise. You will submit invoices within 30 days after
completion of work specified in a Transaction Document. IBM will pay
you within 30 days of receiving your acceptable invoice. The
Transaction Document will define the information required for your
invoice.
9.3 If you offer another party lower rates, prices or royalties or
equivalent Services or Deliverables during the term of the IDA, you
will promptly offer the same to IBM.
PART 10. GENERAL
10.1 Each party will comply with all applicable laws and regulations at its
expense. This includes all export and import laws and regulations.
10.2 IBM may transfer or license any of its rights under the IDA to its
Subsidiaries, who may transfer or license their Subsidiaries,
successors or assigns. IBM may delegate its obligations to its
Subsidiaries.
10.3 If any provision of the IDA is unenforceable at law, the rest of the
provisions remain in effect. The headings in the IDA are for reference
only. They wi11 not affect the meaning or interpretation of the IDA,
10.4 Neither party will bring a legal action against the other more than two
years after the cause of action arose. This does not apply to actions
brought to enforce Indemnification and Liability or intellectual
property rights. Both parties will act in good faith to resolve
disputes. Each party waives its rights to a jury trial in any resulting
litigation. Litigation will only be commenced in the State of New York.
10.5 For a change to the IDA to be valid, both parties must sign it. No
approval, consent or waiver will be enforceable unless signed by be
granting party. Failure to insist on strict performance or to exercise
a right when entitled does not prevent a party from doing so later for
that breach or a future one.
10.6 You will submit to personal jurisdiction in any forum where IBM is sued
for claims related to the IDA.
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Dated December 13, 1996
<PAGE> 13
10.7 The substantive laws of the State of New York govern the IDA. The
United Nations' Convention on International Sale of Goods does not
apply.
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IDA00A dated September 30, 1994 IBM Developer Agreement #RAL-960509
Dated December 13, 1996
<PAGE> 14
IBM DEVELOPER AGREEMENT
EXHIBIT: TRAVEL EXPENSE REIMBURSEMENT
- --------------------------------------------------------------------------------
The terms of the IBM Developer Agreement (or any equivalent agreement signed by
both of us) ("IDA") apply. The following terms apply when IBM authorizes and
reimburses your travel expenses associated with the IDA. You accept them by
signing the IDA Transaction Document that references this Exhibit.
IBM will reimburse you for reasonable and actual travel and living expenses
incurred while performing Services under the IDA according to this Exhibit
provided you have obtained IBM's prior written approval and submitted acceptable
invoices to IBM with supporting documentation.
PART 1. REIMBURSABLE EXPENSES
1.1 IBM will reimburse you for:
a) tolls, parking fees, taxis, buses or auto rentals. For auto
rentals, you will obtain prior instructions from IBM regarding
the rental company and rates to be used. If you use your
personal automobile or travel, IBM will reimburse you under
the applicable automobile allowance plan for the most direct,
practical route. IBM will not reimburse expenses of normal
commutation;
b) air transportation at the economy, tourist or coach class rate
for the most direct route of a scheduled airline;
c) lodging charges commensurate with the average rates charged or
in immediate area. You will obtain prior instructions from IBM
regarding its negotiated rates that may extend to your travel;
d) reasonable and actual meal expenses up to $25.00 per day;
e) necessary business calls made on IBM's behalf;
f) reasonable tipping; and
g) reasonable valet and laundry charges if a trip extends beyond
four days.
1.2 IBM will not reimburse you for personal expenses such as hotel shop
purchases, alcoholic beverages and sundry items. IBM will not reimburse
you for charges associated with any personal side trips. If such
expenses appear on receipts, you will deduct them from your invoice.
PART 2. REQUIRED DOCUMENTATION
2.1 The following information must be included with all invoices:
a) IBM Developer Agreement number;
b) Transaction Document number;
c) expenses incurred;
d) receipts for lodging costs, airline travel, rental cars and
all other expenditures of $25 or more;
e) name of your company and "remit to" address;
f) the name of the IBM representative who authorized the expense;
and
g) IBM's purchase order number (if applicable), your invoice
number and its date.
2.2 You will address all invoices for expenses to the IBM Corporation as
identified in the Transaction Document. You will send a copy of your
invoice to the IBM representative that authorized the expense. IBM will
pay you 30 days after IBM receives an acceptable invoice.
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<PAGE> 15
DEVELOPER AGREEMENT
EXHIBIT: CERTIFICATE OF ORIGINALITY
- --------------------------------------------------------------------------------
The term of the IBM Developer Agreement (or any equivalent agreement signed by
both of us) ("IDA") apply. This Certificate of Originality is a deliverable
under the IDA. You agree to provide it as a deliverable by signing the IDA
Transaction Document that references this Exhibit.
If you provide IBM any program product, offering, related documentation,
microcode or other software material, (collectively, "Software Material") you
must complete this questionnaire and send it to IBM's Contract Coordinator for
this transaction. You will provide IBM with any additional information needed
for copyright registration or enforcement of legal rights relating to the
Software Material.
One questionnaire can cover one complete product even if that product includes
multiple modules. A separate questionnaire must be completed for code and
another for its related documentation. Significant changes to the Software
Material will require completion of a new questionnaire.
Please do not leave any questions blank. Write "not applicable" or "N/A" if a
question is not relevant to the Software Material. If you need additional space
to complete any question, please attach a separate sheet of paper that
identifies the question number.
PART 1. QUESTIONNAIRE
0.1 Identify the IDA under which you provide Software Material to IBM:
a) IDA Number ____________________________________________________
Date: __________________________________
b) Transaction Document Number: __________________________________
Date: ___________________________________
0.2 Name of the Software Material (provide complete identification
including version, release and modification numbers for programs and
documentation):
0.3 Was the Software Material or any portion of it:
a) written by any third parties other than you or your employees
working within their job assignments?
YES_____NO_____(If YES, answer the following. If NO, skip
to 1.4)
1) How did you acquire title to the Software Material or
the right to grant licenses to IBM?
2) Did the third parties write ALL or PART of the
Software Material?
ALL_____PART_____
If PART, state the percentage written by the third
parties _____%
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<PAGE> 16
b) Were the third parties that provided the Software Material to
you COMPANIES, INDIVIDUALS or both?
COMPANIES_____(complete c) below) INDIVIDUALS_______ (complete
d) below) BOTH_______ (complete c) and d) below)
c) For each COMPANY, provide the following information:
1) Name:
2) Address:
3) How did the COMPANY acquire title to the Software
Material? (For example, the Software Material was
written by the COMPANY'S employees as part of their
job assignment):
4) Did the COMPANY have each non-US contributor to the
Software Material sign a waiver of their moral
rights?
YES_____NO_____
d)
For each INDIVIDUAL, provide the following information:
1)
Name:
2)
Citizenship:
3)
Address:
4)
Did the INDIVIDUALS create the Software Material
while employed by, or under a contractual
relationship with another Party?
YES_____NO_____ (If YES, provide name and address of
the other party below)
i) Name:
ii) Address:
5)
Did the INDIVIDUALS create or first publish the
Software Material in a country other than the US?
YES_____NO_____
i) If YES, did the INDIVIDUALS sign a waiver of
moral rights?
YES___NO___(If YES, please attach a copy)
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<PAGE> 17
0.4 Was any part of the Software material registered at any copyright
office?
YES_____NO____ (If YES, provide the following registration information)
a)
Claimant Name:
b)
Registration Number:
Date of Registration:
c) Title of Work:
0.5 Was any part of the Software Material published?
YES_____NO_____ (If YES, answer the following)
a)
When and where was it published?
b)
Was there a copyright notice on the published materials?
YES_____NO_____ (If YES, provide the copyright notice below)
0.6
Was any part of the Software Material distributed for you to any
outside person or company other than IBM?
YES_____NO_____(If YES, answer the following)
a)
When and where was the Software Material distributed?
b)
To whom was the Software Material distributed?
c)
Why was the Software Material distributed?
d)
Under what conditions was the Software Material distributed
(for example, under a contract)?
0.7 Was any part of the Software Material derived from preexisting
materials?
YES___NO___ (If YES, provide the information in a)-f) below for each of
the preexisting materials)
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<PAGE> 18
If the Software Materials contain any object-oriented software, are any
objects derived from or inherited from other objects or classes
("parent classes")?
YES___NO___ (If YES, provide the information in a) - f) below for each
of the parent classes)
a) Name of the preexisting material or parent class:
b) Author (if known):
c) Owner (if known):
d) Copyright notice appearing on the preexisting material or
parent class (if any):
e) Was any new function added to the preexisting material or
parent class?
YES_____NO_____(If YES, answer the following)
Briefly describe the new functions below:
_____% of preexisting material or parent class used
_____% of preexisting material or parent class modified
_____% of new material consisting of or deriving from
preexisting materials or parent classes
f) Briefly describe how the preexisting materials or parent
classes have been used:
0.8 Were any part of the display screens data formats, instruction or
command formats, operator messages, interfaces etc. (collectively
called "External Characteristics") of the Software Material copied or
derived from the External Characteristics of another program or product
of yours or a third party?
YES___NO___(If YES, provide the following information)
a) Name of your or third party's program or product:
b) Author (if known):
c) Owner (if known):
d) Copyright notice relating to the preexisting External
Characteristics (if any):
e) Have the preexisting External Characteristics been modified?
YES___NO___(If YES, describe how they have been modified below)
0.9
Identify below any other circumstances that may affect IBM's ability to
reproduce and market the Software Material
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<PAGE> 19
including:
a) confidentiality or trade secrecy of preexisting materials:
b) known or expected royalty obligations to others:
c) preexisting materials developed for another party or customer
(including government) where you may not have retained full
rights to the materials:
d) materials acquired from a person or company possibly having no
title to them:
e) agreements under which you grant rights to others under all or
some of the Software Materials or documentation:
0.10 EMPLOYEE IDENTIFICATION. You recognize that, for purposes of copyright
registration or enforcement of legal rights relating to the Software
Material, IBM may need to know the names addresses and citizenship's of
all persons who wrote or contributed to the writing of the Software
Materials. You agree to keep accurate records of all such information
according to the IDA and to provide them to IBM on its request.
0.11 ICON. An "ICON" is generally defined as a symbol on a display screen
that a user can point to with a device such as a mouse in order to
select a particular operation or software application. Except for ICONs
that have been used in other IBM products, you will have the creator of
each ICON contained in the Software Materials complete an ICON
IDENTIFICATION FORM and submit them as appendices to this Certificate
of Originality.
PART 2. CERTIFICATION
By signing below, you certify that except for those portions of the Software
Materials identified in Part 1.3 of this Certificate of Originality, the
Software Materials are original and you are the author of them. You further
certify that all information contained in this Certificate of Originality,
including any attachments or appendices to it, are accurate and complete.
--------------------------------------------------
(Developer Name)
By:
--------------------------------------------------
(Authorized Signature)
Name:
-------------------------------------------------
Title:
------------------------------------------------
Date:
------------------------------------------------
Address:
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
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<PAGE> 20
APPENDIX: CERTIFICATE OF ORIGINALITY
ICON IDENTIFICATION FORM
- --------------------------------------------------------------------------------
A. ICON REPRESENTATION
Words, function or thing represented by the ICON:
B. CREATOR OF ICON
1) Name:
2) Job Title:
3) Business Address:
Business Telephone:
4) Citizenship:
C. ICON DEVELOPMENT
1) Date the ICON was created in tangible form:
2) Was the attached ICON created as an assigned work task?
YES_____NO_____
3) Was the attached ICON created without reference to any
preexisting ICONs or other works authored or owned by another?
YES_____NO_____ (If NO, identify the preexisting ICONs or
other works that were referenced and attach copies)
4) If the ICON was created for inclusion in a specific product,
identify the product in which it will be (or was) used and
provide the planned availability date and country of first
publication:
5) Identify or describe any known preexisting ICONs that
represent the same word or function or that are similar in
appearance to the ICON (attach copies):
6) Attach a copy of the ICON and, for identification purposes,
include on the drawing the information you provided irk
response to B above.
Signature:
-------------------------------------------------
-------------------------------------------------
(Creator Name)
Date:
------------------------------------------------------
Page 6 of 6 IDA Transaction Document #RAL-960509-ROC01 dated 12/13/96
<PAGE> 1
EXHIBIT 10.23
IBM SOFTWARE VENDOR MARKETING PROGRAMS
Software Vendor Marketing Programs Agreement
SOFTWARE VENDOR MARKETING PROGRAMS AGREEMENT
Agreement Number: VMP-505
Date of Agreement: March 7, 1997
This is an Agreement between IBM Corporation ("IBM") and You:
Your Name and Address:
Synon Corporation
1100 Larkspur Landing Circle
Larkspur, CA 94939
You and IBM hereby agree as follows:
1.0 PURPOSE
This Agreement sets forth the terms and conditions under which IBM, for a fee,
will assist You in the marketing of Your Product(s) and shall supersede and
replace Software Solutions Program Agreement number SSP-LJ-047 dated May 1, 1995
upon the IBM announcement to the Marketing Force of Product(s) listed on
Attachment A.
2.0 DEFINITIONS
When used in this Agreement, the capitalized terms listed below will have the
following meanings:
2.1 FEDERAL PROSPECT means a Prospect that is a) an agency or other unit of
the Federal government, b) that You know or should know Is a prospective federal
prime or subcontractor, or c) a Prospect which You otherwise know or have reason
to believe will acquire Product(s) for use in connection with a federal
acquisition or project.
2.2 HARMFUL CODE means any computer CODE or programming instructions that
are constructed with the ability to damage, interfere with or otherwise
adversely affect computer programs, data files or hardware without the consent
or intent of the computer user. This definition includes, but is not limited to,
self-replicating and self-propagating programming instructions commonly called
"viruses" and "worms."
2.3 MARKETING ACTIVITIES means the activities undertaken by the Marketing
Force in identifying Prospects where at a minimum the Marketing Force:
2.3.1 establishes contact with the Prospect;
2.3.2 PROVIDES information regarding the
Product(s) to the Prospect.
2.4 MARKETING FORCE means:
2.4.1 IBM; and
<PAGE> 2
2.4.2 any IBM Business Partners and IBM Subsidiaries that IBM utilizes in
marketing the Product(s).
2.5 MARKETING PACKAGE means materials provided by You to the Marketing
Force. The Marketing Package shall Include the following:
2.5.1 Software Vendor Marketing Programs Notice means an IBM supplied
description of IBM's responsibilities to Prospects with respect to the
Product(s).
2.5.2 Marketing Materials means Product brochures, technical specification
sheets, demonstration presentations, Product descriptions utilized in
electronic online services, and other marketing sales literature provided by You
to IBM, or prepared by IBM and approved by You, for use by IBM In marketing Your
Products to Prospects. IBM's use of the marketing materials and demonstration
materials may include transmission of them on electronic, online services.
2.5.3 Order Form means an IBM supplied form on which orders for the
Product(s) may be taken by the Marketing Force for You.
2.5.4 Price Schedule means a written statement supplied by You of Your retail
prices for the Product(s), including discounts offered, if any.
2.5.5 User Agreement means the agreement supplied and used by You to sell,
lease and/or license the Product(s) to Prospects.
2.6 PRODUCTS(S) means Your software and documentation and any related
materials, that are listed and described in the Attachment A "Product(s) List."
2.7 Prospect means a potential or actual customer of the Product(s) that is
subject to Marketing Activities.
3.0 APPOINTMENT
Subject to the terms and conditions hereof, You hereby designate and appoint the
Marketing Force as a nonexclusive representative for the marketing of the
Product(s) in the United States and Puerto Rico.
4.0 YOUR RESPONSIBILITIES
1
<PAGE> 3
IBM SOFTWARE VENDOR MARKETING PROGRAMS
Software Vendor marketing Programs Agreement
4.1 PRICING Notwithstanding anything contained herein, You shall retain
full and absolute freedom and flexibility in pricing Your Product(s), and in
establishing the terms and conditions under which they may be offered to
Prospects.
4.2 MARKETING PACKAGE
4.2.1 You shall provide to IBM a copy of the items in the Marketing Package
provided by You prior to sending the initial Marketing Package to the Marketing
Force. You shall give IBM forty-five (45) days prior written notice should You
elect to change any materials supplied by You In the Marketing Package and shall
provide IBM with a complete copy of the revised Marketing Package at least
thirty days prior to the effective date of the changes. IBM shall have the right
to review all changes to the Marketing Package and to request reasonable
modifications.
4.2.2 You shall at all times during the term of this Agreement ensure that
the Marketing Package completely and accurately represents the Product(s) and
shall provide reasonable quantities of the most current Marketing Package to the
Marketing Force upon request.
4.3 MARKETING SUPPORT You shall cooperate with the Marketing Force in the
marketing of the Product(s). Such cooperation shall include the reasonable
provision of technical support services and training to the Marketing Force
(including, but not limited to, telephone support) and reasonable participation
and assistance with the Marketing Force in trade shows and conferences. In
addition, You shall, in a manner reasonably consistent with industry practice,
promote the Product(s) through national and local advertising.
4.4 PROSPECT QUALIFICATION You shall promptly review the qualifications of
each Prospect that has signed an User Agreement. If You determine that You are
unwilling to accept an User Agreement, You shall so notify IBM in writing prior
to notifying the Prospect. Your notice to IBM shall identify the reason for such
rejection.
4.5 PRODUCT(S) In order to ensure that the Product(s) marketed by the
Marketing Force under this Agreement are the most current release or version
offered by You to Your customers, You shall make available for marketing by the
Marketing Force under this Agreement all maintenance modifications, engineering
changes, upgrades, enhancements, or new versions (including any future
adaptations of the Product(s) to current or future IBM operating systems,
systems, and platforms) of the Product(s) that You offer to Your customers.
4.6 YOUR MISCELLANEOUS RESPONSIBILITIES
4.6.1 You shall perform all of Your obligations under accepted an User
Agreements.
<PAGE> 4
4.6.2 You shall ship or deliver the Product(s) no later than the requested
shipment date contained in the order confirmation notice, as described in
Section 4.9 of this Agreement, or within 7 days of receipt said notice, unless a
different date is specified on an User Agreement. If such shipment date is not
reasonably possible, You shall promptly notify the Prospect and IBM of Your
projected shipment date and shall ship, deliver or provide the Product(s) at the
earliest possible date.
4.6.3 You shall invoice and use reasonable efforts to collect all amounts
payable under each User Agreement accepted by You.
4.6.4 You shall pay to IBM the compensation set forth in Section 6.0,
"PAYMENT," and shall provide IBM with documentation and maintain records as
provided therein.
4.6.5 You shall timely notify IBM when a Prospect's signature on an User
Agreement is independently obtained by You and payment is due IBM under Section
6.0, "PAYMENT."
4.6.6 Throughout the term of this Agreement, You shall amend in writing the
information provided to IBM on the business and product overview forms (provided
to You by IBM and incorporated herein by reference) to ensure that such
information remains accurate and complete.
4.6.7 You shall 1) promptly disclose to all Federal Prospects the existence
of this Agreement, including the existence of the contingent fee payment
arrangement in effect with IBM that would apply to the Federal Prospect's
acquisition of the Product(s), 2) promptly, completely, and accurately execute
any certifications, representations, and disclosure documents that may be
required by any Federal Prospect to comply with federal regulations requiring
certification and disclosure of contingent fee arrangements applicable to the
acquisition of the Product(s).
4.6.8 In order for IBM to market Your Product(s) via an online service, You
must presently have or must obtain a userid (at Your expense) and monitor a
support forum on each service for the purposes of interactive exchange with
Prospects who seek Information relative to Your Product(s) and/or their use.
While IBM may also participate in such an interactive area and respond to
inquires regarding ordering, and sales information, IBM may direct inquires
regarding Your Product(s) specifications, pricing, User Agreement terms and
conditions and other such inquires to You. You will respond to such inquires
from Prospects with best efforts within two (2) business days of receipt.
4.6.9 You will approve in a timely manner all Marketing Materials and
demonstration materials provided by IBM for IBM's use in marketing Your Products
to Prospects. You shall provide written
YOUR RESPONSIBILITIES 2
<PAGE> 5
IBM SOFTWARE VENDOR MARKETING PROGRAMS
Software Vendor Marketing Programs Agreement
approval to IBM for all information included in such Marketing Materials,
including but not limited to, content, descriptions, pricing, technical
information and usage of trademarks, trade names and copyrighted materials.
4.7 LICENSE You hereby grant IBM a worldwide, royalty-free, non-exclusive
license to use, execute, perform, display, copy and distribute in tangible or
electronic form all, or any portion of the Product(s) and any copyrighted
material, including but not limited to graphics, pictures, drawings, screen
layouts, text, icons, and any other related items owned by You for use by IBM in
marketing Your Product(s) to Prospects and to authorize others to do any of the
foregoing. Upon request by IBM, You shall deliver to IBM one complete copy of
the Product(s) within 15 days of said request.
4.8 PROSPECT REGISTRATION The Marketing Force will provide You with
Prospect registrations for sales leads identifying, at a minimum, the Prospect's
name and location. You shall, upon receipt of the registration, promptly review
and reply to IBM in ten (10) business days or less from date of receipt whether
You will accept or reject the registration. If You accept the registration, You
will respond to the electronic registration notice and contact the Marketing
Force representative to provide information on your plans to contact the
Prospect. If You reject said Prospect registration, You will provide in writing
to IBM the reason(s) for rejection.
4.9 ORDER CONFIRMATION IBM may provide You with order confirmation notices
identifying Product(s) licensed by Prospects. You shall confirm in writing
within ten (10) working days from date of receipt, the Product(s) licensed by a
Prospect, the dollar value of the related User Agreement(s) and the estimated
date You will pay to IBM the associated fees as described in Section
6.1 of this Agreement.
5.0 IBM'S RESPONSIBILITIES
5.1 MARKETING SUPPORT ACTIVITIES IBM will, at its sole cost, undertake the
following market support activities for the Product(s):
5.1. provide to You the IBM Business Partner Program emblem as described in
Section 11.3 "Advertising and Trademark Usage" of this Agreement; and
5.12 issue an availability notice to the Marketing Force that describes the
Products) and announces that the Marketing Force may solicit and obtain orders
for the Product(s) on Your behalf; and
5.1.3 make available to You a registration process whereby You may accept or
reject a Prospect; and
5.1.4 include Your Product(s) (identified as Software Vendor Marketing
Programs offerings) in IBM National Solution Center database.
5.2 IBM may solicit and obtain orders from Prospects on the Order Form,
obtain the Prospect's signature on an User Agreement, and forward or facilitate
the forwarding of the same to You.
5.3 IBM may participate in joint sales calls with You.
5.4 IBM will, in its Marketing Activities, rely on the information supplied
by You and contained in the Marketing Package, training, and instruction
received from You, and information otherwise provided by You regarding the
Product(s).
<PAGE> 6
5.5 IBM may, in a manner and amount that it deems appropriate, compensate
the Marketing Force based upon fees received by IBM from You under this
Agreement.
5.6 Notwithstanding anything contained herein, IBM shall have full freedom
and flexibility in its marketing effort for the Product(s), including whether to
market or discontinue marketing. IBM makes no guarantee or commitment that the
Product(s) will be marketed nor does IBM guarantee the financial or other
success of any marketing effort engaged in.
6.0 PAYMENT
6.1 FEE In consideration for the Marketing Activities (as defined in
Section 2.3) and Market Support Activities (as described in Section 5.1), You
shall owe IBM a fee equal to the applicable percentage (as listed In the
Attachment A - "Product(s) List") of the total revenue received by You for
Product(s) under
6.1.1 User Agreements with Prospects obtained as a result of Marketing
Activities (with or without an order confirmation notice as described in Section
19; and
6.1.2 User Agreements with Prospects rejected by You under Section 4.4,
"Prospect Qualification," provided You subsequently accept a User Agreement(s)
for the Product(s) from such Prospects during the term of this Agreement and for
six (6) months after IBM's withdrawal of the Products from marketing by the
Marketing Force ; and
6.1.3 Additional User Agreements for Product(s) issued to Prospects by You
within one (1) year of the initial installation of the Product(s) during the
term of this Agreement and six (6) months after IBM's withdrawal of the Products
from marketing by the Marketing Force which are a direct or follow-on result of
Marketing Activities; and
YOUR RESPONSIBILITIES 3
<PAGE> 7
IBM SOFTWARE VENDOR MARKETING PROGRAMS
Software Vendor Marketing Programs Agreement
6.1.4 User Agreements with Prospects obtained as a result of Marketing
Activities initiated before the IBM's withdrawal of the Product(s) from
marketing by the Marketing Force and three (3) months following said withdrawal.
6.2 PAYMENT OBLIGATION Your payment to IBM shall accrue when the
Prospect's fee for the Product(s) becomes payable to You.
6.3 REMITTANCE Payment shall be made to IBM within thirty (30) days after
the conclusion of each calendar month for the amounts received by You in such
calendar month. Payment shall be accompanied by an activity report summarizing
the basis for the payment to IBM. For months in which no payment is due IBM, You
will send an activity report so stating.
6.3.1 For Products, the report should include the names of each of the
Prospects, the identification, quantity, and unit price of each Product(s), the
order confirmation control number, the IBM feature and/or program number, the
total due You from Prospect, the total payments received from Prospect, total
due IBM, total fees paid to IBM to date under each User Agreement and the amount
of fee to IBM included in this payment.
6.3.2 Rejection or Refund In addition, in the event You reject an User
Agreement, a Prospect cancels prior to making payment to You, or You grant a
refund to a Prospect, the activity report shall contain detailed information
identifying the reasons for and amounts of any resulting adjustment in payment
due IBM.
6.4 AUDIT You shall maintain records in accordance with generally accepted
methods of accounting of all transactions which are the subject of this
Agreement for three years from the date revenue from the Product(s) accrues to
You. If IBM deems it necessary, IBM (or an accounting organization retained by
IBM) shall have access to such records, upon reasonable notice, for the purposes
of audit during normal business hours, for so long as such records are required
to be maintained.
6.5 FEE DISPUTE In the event IBM determines that additional payment is due,
IBM will issue an invoice for such additional amount with supporting
documentation. Except for disputed fees, You agree to pay such invoice within 30
days of receipt. In the event a dispute arises over fees due to IBM, IBM and You
agree to work in good faith toward a mutually agreeable resolution of the
dispute.
7.0 WARRANTY
You represent and warrant, as a present and ongoing affirmation of the facts,
that:
7.1 You have all intellectual property rights to the Product(s) that are
necessary to perform Your obligations under this Agreement and all agreements
entered into with Prospect(s); and
7.2 The Product(s) and all related materials (including Marketing Materials
and demonstration materials) do not infringe any intellectual property right
(including but not limited to patents, copyrights, trademarks and trade secrets)
of any third party; and
7.3 The Product(s) conform to the statements and representations made by
You in the Marketing Package or otherwise provided by You to Prospects and the
Marketing Force; and
7.4 Your performance of Your obligations hereunder do not conflict with
any agreement between You, the Prospects or any third party; and
<PAGE> 8
7.5 You, in entering into this Agreement, have not relied on any promises,
inducements, or representations by IBM except those expressly stated in this
Agreement; and
7.6 The Product(s) comply with all applicable governmental regulations,
rules and guidelines.
7.7 The Product(s) and all related materials do not contain any Harmful
CODE.
8.0 INDEMNIFICATION
8.1 You hereby agree to defend, indemnify, and hold harmless IBM against
any and all claims, losses, and expenses, including reasonable attorney fees and
other costs of litigation, based on or arising out of any claim related to Your
Product(s) including but not limited to claims that:
8.1.1 the Product(s) infringe any third party's intellectual property rights;
8.1.2 You negligently performed, or failed to perform, Your obligations under
an User Agreement or this Agreement;
8.1.3 You breached Your representations or warranties under any agreement
with Prospects or this Agreement
8.2 The foregoing indemnities are conditioned on the following:
8.2.1 prompt written notice to You of the claim or proceeding subject to
indemnification; and
8.2.2 cooperation by IBM at Your expense in the defense and agreement of any
such claim; and
8.2.3 IBM's obtaining Your prior consent to settlement or resolution of any such
claim, which consent shall not unreasonably be withheld.
PAYMENT 4
<PAGE> 9
IBM SOFTWARE VENDOR MARKETING PROGRAMS
Software Vendor Marketing Programs Agreement
8.3 IBM hereby agrees to defend, indemnify, and hold harmless You against
any and all claims, losses, and expenses, including reasonable attorney fees and
other costs of litigation, to the extent that such claims, losses and expenses
arise out of the intentional misrepresentation of the Product(s) by IBM;
provided, however, that any such misrepresentation is not caused by Your acts or
omissions.
8.3.1 The foregoing indemnities are conditioned on the following:
8.3.1.1. Prompt written notice to IBM of any claims of proceeding subject to
indemnity: and
8.3.1.2. cooperation by You In the defense and settlement of such claim at the
expense of IBM: and
8.3.1.3 prior written approval by IBM of any settlement, which approval shall
not be unreasonably withheld.
9.0 TERM AND TERMINATION
9.1 This Agreement shall be effective for a period of two years from the
date IBM issues the first availability notice for the Product(s) and shall be
automatically renewed on a yearly basis thereafter unless terminated under this
Section.
9.2 Either party may elect to terminate this Agreement with or without
cause by written notification to the other party. Termination will be effective
ninety (90) days after such notice.
9.3 In the event of any termination or expiration of this Agreement in
whole or in part:
9.3.1 the provisions of Sections 2.0, "DEFINITIONS," 7.0, "WARRANTY," 8.0,
"INDEMNIFICATION," 10.0, "INFORMATION," and 11.0, "GENERAL" shall survive and
continue until they expire in accordance with their terms; and
9.3.2 any obligation under Section 6.O, "PAYMENT" shall survive and continue
until satisfied.
10.0 INFORMATION
10.1 Unless otherwise agreed to in writing by the authiorized representative
of both parties, neither party shall provide the other party with information
that is confidential to itself or any third party Accordingly, In the absence of
such a writing, no obligation of confidentiality of any kind is assumed by, or
shall be implied against, either party by virtue of its discussions and/or
correspondence with the other party or with respect to any information received
(in whatever form and whenever received) from the other party under this
Agreement or in activities related hereto notwithstanding any legend or
statement to the contrary.
10.2 Notwithstanding the foregoing, You agree to use the methods and
procedures You use to protect Your own information that You do not wish to
disclose, to avoid disclosure of the provisions of the terms and conditions of
this Agreement and its amendments. You may not disclose the terms and conditions
of this Agreement and its amendments to any third party without the prior
written consent of IBM. Such consent shall not be unreasonably withheld. You may
refer to this Agreement solely by stating IBM has been granted the right to
market and take orders for the Product(s).
11.0 GENERAL
<PAGE> 10
11.1 FREEDOM OF ACTION Nothing in this Agreement shall be construed as
prohibiting or restricting either party from independently developing,
acquiring, and marketing products, services, and other materials which are
competitive in any form with the Product(s).
11.1.2 EXPENSES Each party shall bear its own expenses.
11.3 ADVERTISING AND TRADEMARK USAGE
11.3.1 IBM hereby grants You the use of the IBM Business Partner Program
emblem ("Emblem") in Your advertising and promotional materials In the United
States and Puerto Rico for the Product(s) ("Advertising Materials"). You shall
not use the Emblem prior to IBM's initial announcement of the availability of
the Product(s) to the Marketing Force. Any use must comply with the instructions
set forth in guidelines Issued by IBM from time to time entitled "IBM
Advertising and Promotion Guidelines"("Guidelines").
A copy of the Guidelines shall be provided to You and is incorporated herein by
reference. You may not use the IBM logotype other than as part of the Emblem.
Except for Your press releases and as otherwise specified in the Guidelines, You
do not need to provide to IBM for IBM's prior review and approval Your
Advertising Materials incorporating trademarks or trade names of IBM or that
which refers to You as a participant in the IBM Software Vendor Marketing
Program if such use complies with the Guidelines. You must provide to IBM for
IBM's prior review and approval Your press releases if such release makes any
reference to the IBM Software Vendor Marketing Program. You shall make no
reference to IBM, IBM equipment and IBM products that may be misleading. You
agree to change, at Your expense, any Advertising Materials which IBM, In Its
sole judgment, determines to be inaccurate, objectionable, misleading, or a
misuse of IBM trademarks or trade names. You, on written demand by IBM, shall
immediately cease the use of any materials that IBM deems to be in violation of
this Section.
INDEMNIFICATION 5
<PAGE> 11
IBM SOFTWARE VENDOR MARKETING PROGRAMS
Software Vendor Marketing Programs Agreement
11.3.2 The authorization granted in this Section 11.3, "Advertising and
Trademark Usage" shall terminate immediately upon the termination or expiration
of this Agreement. IBM reserves the right to modify or revoke the authorization
granted to You hereunder effective upon thirty (30) days written notice. Such
revocation shall be effective immediately upon written notice in the event of
any violation by You of the Guidelines or breach of this Agreement. Upon
revocation of the rights granted in this Section 11.3, "Advertising and
Trademark Usage" on page 5, or upon termination or expiration of this Agreement,
You shall cease using the Emblem, and shall destroy any and all Advertising
Materials.
13.3.3 Except as expressly provided herein, this Agreement grants You no right
to use IBM's trademarks or trade names in connection with any product,
promotion, or publication without the prior written consent of IBM.
11.3.4 You hereby authorize IBM to use Your trademarks, trade names and
copyrighted materials for the Product(s) solely in performing Marketing
Activities.
11.4 ASSIGNMENT AND DELEGATION You shall not sell, transfer, assign, or
subcontract any right or obligation hereunder without the prior written conset
of IBM. Any act in derogation of the foregoing shall be null and void. In no
event may You use the services of an IBM dealer or an IBM remarketer for the
performance of any obligation hereunder.
11.5 LIMITATIONS Except, for claims arising under the Sections entitled 7.0,
"WARRANTY" and 8.0, "INDEMNIFICATION. neither party shall be entitled to
indirect, incidental or consequential damages, including lost profits, based on
any breach or default under this Agreement.
11.6 NATURE OF THE RELATIONSHIP IBM is acting under this Agreement solely as
Your marketing representative. Nothing herein shall be deemed to create any
other relationship, including that of partnership. Neither You nor any employee
of Yours shall be considered an employee or agent of IBM for any purpose.
11.7 Notice Any notice required or permitted under this Agreement shall be
sent to:
In the case of IBM:
IBM Corporation
Vendor Marketing Programs
Department BAR (WG09A)
3200 Wndy Hill Road
Atlanta, GA 30339
In the case of You:
Synon Corporation
1100 Larkspur Landing Circle
Larkspur, CA 94939
11.8 PAYMENT
11.8.1 Any payment to IBM under this Agreement shall be sent to:
IBM Corporation
Vendor Marketing Programs Control Desk
Department BAR (WG09A)
<PAGE> 12
3200 Windy Hill Road
Atlanta, GA 30339
11.9 GOVERNING LAW The validity, construction, and performance of this
Agreement will be governed by the substantive law of the State of New York.
11.10 AMENDMENTS IN WRITING No amendment, modification or waiver of any
provision of this Agreement shall be effective unless it is set forth in a
writing which refers to the provisions so affected and is executed by an
authorized representative of both parties. No failure or delay by IBM in
exercising any right, power or remedy will operate as a waiver of any such
right, power, or remedy.
11.11 ENTIRE AGREEMENT The provisions of this Agreement constitute the entire
agreement between the parties and supersede all prior agreements, oral or
written, relating to the subject matter of this Agreement. Any payments due IBM
under this Agreement shall be separate from, and in addition to, any due IBM
under any other agreement between the parties.
GENERAL 6
<PAGE> 13
IBM SOFTWARE VENDOR MARKETING PROGRAMS
Software Vendor Marketing Programs Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective Authorized Representatives.
International Business Machines Corporation Synon Corporation
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
By:/s/ Jeff Mason By:/s/ Richard Goldberg
------------------- ----------------------
Jeff Mason Richard Goldberg
------------------- ----------------------
Print Name Print Name
GM, Solution Provider Programs CEO
------------------------------ ----------------------
Title Title
4/7/97 3/11/97
------------------- ----------------------
Date Date
GENERAL 7
<PAGE> 14
IBM SOFTWARE VENDOR MARKETING PROGRAMS
Software Vendor Marketing Programs Agreement
ATTACHMENT A - PRODUCT(S) LIST
List in the table below or attach separately in table form the Products and
applicable percentage due IBM. A more detailed description of the product(s) may
follow below the table or attached separately.
1.0 PRODUCTS AND APPLICABLE PERCENTAGE:
PRODUCT(S) PERCENTAGE
Obsydian [ ]*
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions have been filed separately with the Commission.
8
<PAGE> 1
ITEM 4
EXHIBIT 10.24
================================================================================
DATED 8 JANUARY 1996
--------------------------------------------------
SYNON DEUTSCHLAND GmbH (1)
- and -
CGI INFORMATIK GmbH (2)
--------------------------------------------------
NON EXCLUSIVE
INTERNATIONAL DISTRIBUTORSHIP AGREEMENT
--------------------------------------------------
================================================================================
<PAGE> 2
INDEX
<TABLE>
<S> <C>
1. DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. APPOINTMENT OF DISTRIBUTOR: RELATIONSHIP BETWEEN THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . 4
3. UNDERTAKINGS OF SYNON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. UNDERTAKINGS OF THE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. PRODUCT ORDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6. PRODUCT LICENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7. PRICE, PAYMENT AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8. TRADE SECRETS AND PROPRIETARY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9. USE OF TRADE NAMES AND TRADEMARKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10. TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
11. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
12. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Part I - The Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Part II - Price Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
APPENDIX C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Sales Quota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
APPENDIX D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Form of Current Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
APPENDIX E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
The Maintenance Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
APPENDIX F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Form of License and Maintenance Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
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THIS DISTRIBUTION AGREEMENT is made the 8th January 1996 BETWEEN:
(1) SYNON DEUTSCHLAND GmbH a company registered with the Amtsgericht
Darnstadt as number 6265 with a place of business in Germany at Im
Leuschbnerpark 3, 64347 Griesheim ("Synon"); and
(2) CGI INFORMATIK GmbH a company organised and existing under the laws of
Germany having its principal place of business located at Hardt9-11,
40764 Langenfeld ("the Distributor")
RECITALS:
(A) Synon develops, markets, installs, licenses and supports certain
proprietary computer software products (consisting of programs and
related documentation).
(B) The Distributor markets and supports computer Software products in the
Territory (as defined herein) and is knowledgeable of the market for
the Products (as defined herein) in the Territory.
(C) Synon and the Distributor desire to enter into this Agreement
authorising the Distributor to promote, market and support the Products
to End Users (as defined herein) in the Territory upon the terms and
provisions stated herein.
The parties intending to be legally bound,
HEREBY AGREE as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement except where there is a specific provision to the
contrary or where the context otherwise requires, each of the expressions set
out below shall bear the meaning ascribed to it below:
"Affiliate" - in relation to either party means
any person, company, partnership or
other entity controlled by,
controlling, or under common control
with that party
"Change of Control" - of the Distributor shall be deemed
to have occurred if any third party
acquires de facto control of, or
more than 50% of, the voting shares
then issued of the Distributor
"Confidential Information - any information developed, owned or
controlled by Synon which Synon
treats or maintains as confidential,
proprietary, restricted or disclosed
generally (including without
prejudice to the generality of the
foregoing information and knowledge
that pertains to the Products).
Confidential Information, however,
shall not include: (i) information
in the public domain at the time of
disclosure, (ii) information
published after disclosure (unless
such publication is breach of this
Agreement), (iii) information shown
to have already been in the
Distributor's possession prior to
disclosure by Synon, and (iv)
information disclosed by a third
party, as a matter of right, without
restrictions on disclosure and use
"Documentation" - information recorded or otherwise
stored in any type of media, in
whatever form or notation, which
documents the design or details of
software, explains the capabilities
of it, provides operating
instructions, problem descriptions,
and similar material that aids in
understanding, completion, or
application of it, provides general
or special education or instructions
with respect to it, or documents
different or various configurations
of it
"End User" - a person or entity which has
indicated to the Distributor an
interest in licensing one or more of
the Products within the Territory
"Licensee" - any End User which is grated a
sub-license by the Distributor to use
one or more of the Products
"Licence Agreement or
Maintenance Agreement" - a sub-licence agreement between the
Distributor and each licensee or any
maintenance agreement between the
distributor and the user of any
product within the territory both in
a form attached to this Agreement as
Appendix F (as revised or amended
from time to time by the parties in
accordance with sub-Clauses 6.1 and
6.2 of this Agreement respectively)
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"Products" - authorised copies of those computer
software programs listed in Appendix
A (as revised or amended from time
to time by the parties in accordance
with sub-Clause 5.6) as such
products are varied from time to
time by Synon, and related
Documentation (as defined above)
"Territory" - the country or countries or
geographic areas stated in Appendix B
to this Agreement
"Trademarks" - the name "SYNON" and any trademark,
service mark or other commercial
designation, whether or not
registered, used to represent or
describe the products or services of
Synon, including the Products, and
shall include those trade names,
trademarks, service marks, trademark
or service mark registrations, and
pending applications for such
registrations, registered or filed
in any part of the world which are
or may hereafter be owned by Synon
1.2 Additional terms are defined elsewhere in this Agreement and shall
have the respective meanings so ascribed thereto throughout this
Agreement.
1.3 In this Agreement except where there is a specific provision to the
contrary or where the context otherwise requires any reference to:
(a) a "person" shall be construed as a reference to any person,
firm, company, corporation, government, state or agency of a
state or any association or partnership (whether or not having
separate legal personality) of two or more of the foregoing
(b) a Clause, sub-Clause or Schedule or Appendix shall be
construed as a Clause or sub-Clause of or a Schedule or
Appendix to this Agreement and the Schedule and Appendices
form a part of and are deemed incorporated into this
Agreement.
1.4 Clause headings are for ease of reference only.
2. APPOINTMENT OF DISTRIBUTOR: RELATIONSHIP BETWEEN THE PARTIES
2.1 GRANT OF DISTRIBUTION RIGHTS
(a) Synon hereby grants to the Distributor the non-exclusive right
to purchase (by way of licence) Products from Synon for sub-
licensing to End Users in the Territory, and the Distributor
agrees to so purchase the Products exclusively from Synon and
to support the Products, for the term set out in Clause 10 and
subject to and in accordance with the provisions of this
Agreement.
(b) The Distributor may appoint sales agents for the purpose of
obtaining orders of the Products on behalf of the Distributor
after receiving Synon's prior written consent thereto in
accordance with sub-Clause 13.1 hereof.
(c) The Distributor shall promptly inform Synon in writing, of
changes in its underlying ownership and structure at every
level and in particular of any proposed Change of Control.
2.2 EQUIVALENT PRODUCTS
The Distributor warrants that neither it nor any of its Affiliates
produces goods that are identical or equivalent to the Products. The
Distributor agrees that should it or any of its Affiliates undertake
such production during the term of this Agreement or any renewal
thereof, either through a start up venture or as a result of an
acquisition or merger anywhere in the world, the Distributor shall
promptly notify Synon of such undertaking and Synon shall have the
right to immediately terminate this Agreement upon giving written
notice to the Distributor.
2.3 PARALLEL IMPORTS
The parties hereby acknowledge that nothing contained herein shall
oblige Synon to take any actions to impede parallel imports of the
Products into the Territory. Neither party shall make it difficult for
wholesalers or other customers in the Territory to obtain the Products
from other suppliers within the European Community (the "EC") or,
insofar as no alternative source of supply is available from within
the EC, from outside the EC.
2.4 RELATIONSHIP BETWEEN THE PARTIES
The relationship between Synon and the Distributor under this
Agreement is that of licensor and licensee. Neither the Distributor
nor its officers, employees or agents are or will be deemed to be the
agents or representatives, legal or otherwise of Synon for any purpose
whatsoever. Neither the Distributor nor its officers, employees or
agents, are granted by this Agreement, or otherwise, any express or
implied right or authority (neither shall the Distributor nor its
officers, employees or agents take any action which would have the
effect of creating the appearance of such authority) to assume or
create any obligation or responsibility on behalf of or in the name of
Synon or to bind Synon in any manner whatsoever. The Distributor, its
officers, employees and
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agents shall not act or purport to act as agents or representatives of
Synon when (a) endeavouring to make sales of Products under the terms
of this Agreement, (b) supporting Products, (c) executing Licence
Agreements with customers (d) dealing with employees or third parties
(e) executing Maintenance Agreements or (f) undertaking any other
activity, related or unrelated to this Agreement. The Distributor
agrees to adopt such descriptive titles in the Territory as are
acceptable to Synon to convey to the public the limited rights
conferred upon the Distributor by this Agreement.
2.5 CAPACITY
The Distributor warrants that it is legally qualified and authorised
in the Territory to market, license and support the Products as
contemplated by this Agreement.
3. UNDERTAKINGS OF SYNON
3.1 DUTIES OF SYNON
Synon agrees to provide to the Distributor, from Synon's executive
offices the following materials and technical support services, which
shall be provided in the English Language (unless the parties agree to
different language) and in accordance with Synon's standard operating
procedures
(a) the number of Products ordered by the Distributor pursuant to
this Agreement;
(b) a sufficient number of Product fixes, Product enhancements and
Product releases authorised for distribution to Licensees as
required by Licence Agreements, or customers as required by
Maintenance Agreements, entered into with respect to the
Territory or one copy thereof for copying by the Distributor
solely for distribution to Licensees and customers in
accordance with the terms of Licence Agreements and
Maintenance Agreements, as aforesaid;
(c) copies of all relevant promotional materials that Synon
develops from time to time to assist the Distributor in
promoting the Products in the Territory;
(d) the training of the Distributor's employees who will be
responsible for training the Distributor's sales and technical
support personnel; and
(e) reasonable "second level" technical consultation and advice to
the Distributor's technical employees concerning the
installation and operation of the Products, including, but not
limited to, identification and resolution of Product "bugs".
3.2 STANDARD OF PERFORMANCE
Synon agrees to use its reasonable endeavours to provide the
Distributor with the materials and technical support services
described in sub-Clause 3.1.
3.3 PRODUCT WARRANTY AND LIABILITY
(a) Synon warrants to the Distributor that, at the time of
delivery to the Distributor and for ninety days thereafter,
each Product, Product fix, Product enhancement and new Product
release shall be free from defects in workmanship and
materials and shall perform substantially in accordance with
applicable product specifications. The Distributor's remedy
with respect to any breach of this Product warranty shall be
limited to the prompt repair or replacement of such item at
Synon's expense. The repair or replacement of any such
Product is conditional on the Distributor giving prompt notice
to Synon of any such fault, together with full information and
fully documented examples thereof and the fault not being
attributable to a malfunction of equipment or software other
than the Products. The foregoing product warranty is in lieu
of all other warranties, written or oral, express or implied
(which are hereby excluded), including, but without limitation
of the generality of the foregoing, the implied warranties of
merchantability and fitness for a particular purpose, whether
imposed by contract, statute, course of dealing, custom or
usage or otherwise. The remedies under this warranty are
exclusive and Synon neither assumes nor authorises anyone to
assume for it any other obligation.
(b) Except as specified in this sub-Clause 3.3 Synon shall not be
liable to the Distributor (or to any Licensee or End User) in
contract, tort, negligence or otherwise for any loss or damage
that may arise in connection with the delivery, installation,
use or performance of the Products, in excess of the amount
paid therefore by the Distributor.
(c) In no event shall Synon suffer any liability in contract,
tort, negligence or otherwise arising out of or in connection
with this Agreement, for any indirect, special, incidental,
economic or consequential loss or damage, including, without
limitation to the generality of the foregoing loss of profits,
business, contracts or anticipated savings even if Synon has
been advised of the possibility thereof.
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(d) The above warranty shall constitute the sole remedy of the
Distributor and the sole liability of Synon whatsoever, and
the Distributor hereby waives all other remedies, warranties,
guarantees, causes of action or claims, express or implied,
arising by law or otherwise against Synon. Nothing in this
Agreement seeks to or does exclude or limit the liability of
Synon for death or personal injury arising from its
negligence.
(e) Synon shall in no event be responsible or liable for
modifications made to the Products, or any of them, by the
Distributor or others, or for damage caused thereto by
negligence, accident or improper use or installation by the
Distributor or others.
(f) Each paragraph and provision of this sub-Clause 3.3 excluding
or limiting liability shall be construed separately,
continuing and surviving even if for any reason one or other
of those paragraphs or provisions is held inapplicable or
unenforceable in any circumstances and shall remain in force
notwithstanding the termination or expiration of this
Agreement.
3.4 INFRINGEMENT INDEMNITY
Synon agrees to indemnify and hold the Distributor harmless from any
final award of costs and damages against a Licensee for any action
based on infringement of any patent right or copyright as a result of
the use of the Products under the terms and conditions specified in
the Licence Agreement and under normal use; Provided that Synon is
promptly notified in writing of any such suit or claim against the
Distributor (to which the Distributor shall not make any admission)
and Further Provided that the Distributor permits Synon to defend,
compromise or settle the same and gives Synon all available
information, assistance and authority to enable Synon to do so. The
foregoing states the entire liability of Synon with respect to
infringements of any copyrights or patents by the Products or any part
thereof.
4. UNDERTAKINGS OF THE DISTRIBUTOR
4.1 DUTIES OF THE DISTRIBUTOR
In addition to its other duties specified herein, the Distributor
agrees to use its best endeavours to promote, distribute and support
the Products within the Territory as follows:
(a) to advertise the Products in appropriate commercial
advertising media to identify and contact End Users in person
and by telephone and direct mailings, and to advise End Users
on the specifications, selection, use, functionality and
price/performance characteristics of the Products;
(b) to provide a telephone helpline service for all Licensees
during normal business hours in the Territory (Public and Bank
Holidays excepted) and to provide technical support concerning
the installation and operation of the Products and the
identification and resolution of Product "bugs" to Licensees
and to End Users evaluating the Products, and in that regard,
to maintain an adequate number of experienced personnel who
are properly trained to provide such support and maintenance
services in the products;
(c) to distribute the Products, Product fixes, Product
enhancements and new Product releases to licensees in a timely
fashion;
(d) to maintain reasonably detailed records, including prospect
records, concerning End Users, Licensees, Product licensing,
financial data and such other information as Synon may
reasonably request (including details of what hardware the
Products are used on/with by Licensees) concerning the
Distributor's performance of its duties hereunder and
forthwith on having a Licence Agreement or a Maintenance
Agreement signed by a customer to provide details of that
Agreement to Synon in such a format as Synon shall request and
such other information relating to that Agreement as Synon
shall request. The provisions of this paragraph (d) shall
continue for 12 months following termination or expiration of
this Agreement;
(e) to notify Synon promptly of any Product "bugs" or other
unresolved technical problems arising in connection with the
installation or use of the Products;
(f) to maintain properly equipped and located premises with
suitable fixtures and a competent marketing personnel
dedicated to the promotion of the Products;
(g) effectively to develop and promote the marketing the Products
in the Territory and in that regard prior to the date of this
Agreement in respect of the balance of that year and
thereafter prior to the commencement of each calendar year in
respect of the immediately following year the distributor
shall submit to Synon for Synon's approval a proposed
marketing plan including a forecast of sales for the
immediately following calendar year.
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(h) to acquire one networked computer system on which the Products
will operate and at least one copy of each of the Products for
use in training personnel, conducting demonstrations of the
Products and internal use by the Distributor, at the prices
specified in sub-Clause 7.1(a) below. The Distributor having
purchased the aforesaid one copy will be issued with up to
three temporary authorisation codes to use the Products solely
for the purposes of training and demonstration as aforesaid.
On termination or expiration of this Agreement for whatever
reason the distributor will be granted one permanent
authorisation code to use the product in accordance with the
standard Synon Licence Agreement (Appendix F);
(i) to offer and provide those maintenance services set out in
Appendix E in the Territory in respect of the Products, by
Synon trained personnel;
(j) to notify Synon as soon as a Maintenance Agreement is
terminated or if sooner as soon as it receives notice of such
termination;
(k) The Distributor shall upon Synon's instructions and in
accordance with a reasonable timescale perform National
language translations for new releases of existing products
and any new products to be added to Appendix A. Ownership of
all translations rests with Synon in accordance with Clause 8
and the Distributor hereby assigns Synon by way of future
assignment all copyright and other intellectual property
rights that exist in or relate to the said translation of the
software.
4.2 In connection with the foregoing the Distributor hereby specifically
agrees as follows:
(a) Exclusive Purchasing Obligation
The Distributor shall not, for the entire term of this
Agreement and any extension thereof, and without the express
written consent of Synon, obtain the Products for distribution
and sale in the Territory from anyone other than Synon.
(b) Competing Products
Neither the Distributor nor any of its Affiliates shall,
during the entire term of this Agreement and any extension
thereof, without the express prior written consent of Synon,
either for its own account (including as a manufacturer,
distributor, representative, agent or consultant) or as a
partner, joint venture or shareholder (other than as a
beneficial holder of not more than 5% of the voting shares or
stock of a publicly traded company) in another entity, engage
in the manufacture, sale, lease, marketing or distribution in
the Territory of products that compete with the Products.
(c) Obligation to Sell
Distributor shall not without an objectively justified reason
refuse to supply potential customers located within the
Territory who cannot otherwise obtain the Products on suitable
terms.
(d) Personnel
The Distributor represents that it will continue to have at
all times throughout the term of this Agreement, an adequate
number of properly trained and competent sales, installation
and service personnel. Synon may, at its discretion, provide
sales, installation and/or service training courses to assist
employees of the Distributor in their sale and/or service
Products. If Synon provides such training courses, the
Distributor shall require its personnel performing functions
covered by any training course to attend the said courses.
All costs or expenses incurred by the Distributor in attending
or participating in such training courses shall be for the
account of the Distributor. Synon shall not be liable to
reimburse the Distributor or its employees for transportation
or any other expenses incurred in attending such training
courses.
(e) Stock of Products
Distributor shall maintain during the term of this Agreement
an adequate stock of Products for sub-licensing within the
Territory as agreed between the Distributor and Synon.
(f) Sales Quotas
The Distributor confirms that during the term of this
Agreement, it will use its best endeavours to ensure that the
sales quota set out in Appendix C is varied from time to time
in accordance with Appendix C, shall be met.
(g) Sales Meetings
The Distributor shall arrange for the attendance (at its cost)
of a specified number of delegates who are responsible for the
performance of this Agreement at all distributor sales
meetings held by Synon of which it is notified. The
Distributor shall not be obliged to send a delegate to such
sales meetings more than once a quarter.
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which it is notified. The Distributor shall not be obliged to
send a delegate to such sales meetings more than once a
quarter.
(h) Promotional Material
The Distributor shall produce education, advertising and sales
literature and brochures promoting the Products in the
Territory. All such promotional material shall be disclosed
to Synon for its approval prior to publication. The
Distributor shall make such amendments, inclusions, deletions
and variations thereto as Synon shall reasonably request and
shall only publish the same with Synon's prior written
approval.
4.3 STANDARD OF PERFORMANCE
Without prejudice to the provisions of sub-Clause 4.2 the Distributor
agrees to use its best endeavours to perform each of the duties
described in sub-Clause 4.1 in a manner that preserves and protects
Synon's business reputation and its proprietary rights in the
Products.
5. PRODUCT ORDERS
5.1 LIMITATION OF LIABILITY ETC.
(a) The parties hereby agree that Synon shall not have any
liability to Distributor or to any third party for any
compensation, damages, penalties or otherwise in the event
that the Distributor shall fail to submit a quotation,
proposal or tender to an End User, or after submission thereof
withdraws such quotation, proposal or tender, or shall refuse
an order from an End User for a Product, or shall fail to
deliver a Product in accordance with an End User's order and a
Licence Agreement.
(b) The Distributor agrees not to make the Products available to
any End User unless and until such End User shall have
executed and delivered to the Distributor a signed Licence
Agreement and details thereof have been given to Synon.
(c) The Distributor agrees not to provide or procure the provision
of any maintenance services (including the provision of
updates of the Products) in respect of any of the Products
unless and until such party to whom such services are to be
provided shall have executed and delivered to the Distributor
a Maintenance Agreement and details thereof have been give to
Synon.
(d) The Distributor agrees not to enter a Maintenance Agreement
with a term of over twelve (12) months duration in aggregate
without obtaining the prior written consent of Synon.
5.2 DELIVERY
Synon agrees to pay all direct costs of transporting one copy of each
of the Products and copies of user manuals to the Distributor's place
of business in accordance with Synon's standard operating procedures.
Synon shall not bear any liability resulting from any delay in the
delivery of a Product or any user manuals to the Distributor or to any
End User or Licensee. Risk of loss or of damage to the Products shall
pass to the Distributor when such Products are delivered to the
Distributor's place of business or to such other address in the
Territory as the Distributor shall request delivery to. The
Distributor shall then pack the Products for despatch and arrange for
such despatch (at the Distributor's cost) to Licensees. The
Distributor shall insure the Products and the user manuals whilst
under its control including transit to the Licensee.
5.3 TAXES AND OTHER CHARGES
The Distributor agrees to pay, collect and remit all value-added,
sales, use, withholding, and other taxes and charges, including,
without limitation to the generality of the foregoing, import duties,
border taxes, brokerage fees, and other import charges or expenses,
imposed in the Territory in respect of the Products (other than income
taxes imposed directly on Synon in the Territory). The Distributor
further agrees to indemnify and hold Synon harmless against any such
liabilities. In addition the Distributor shall provide to Synon all
relevant withholding tax certificates within thirty (30) days of
either payment of any sum due to Synon hereunder or the Distributor's
receipt of such certificate from the appropriate revenue authority (if
later). The provisions of this sub-Clause 5.3 and sub-Clause 5.5
shall survive termination or expiration of this Agreement.
5.4 CUSTOMS AND OTHER CLEARANCES
The Distributor agrees to obtain at its expense all necessary customs,
import and other governmental authorisations and approvals in the
Territory relating to this Agreement (including, without limitation to
the generality of the foregoing, foreign exchange, foreign investment
and transfer of technology approvals and notifications). Synon's
obligations under this Agreement shall be specifically subject to the
grant and effectiveness of all necessary authorisations and approvals.
5.5 EXPORT REQUIREMENTS
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Agreement the Distributor agrees not to export or otherwise make
available the Products to any third party for use outside the
Territory, or to make the Products available to any third party within
the Territory, if the Distributor knows, or has reasonable grounds to
suspect, that such third party is planning to use or otherwise
transfer the Products outside of the Territory in violation of such
export laws, regulations or orders or in violation of any Licence
Agreement.
5.6 NO WARRANTY OF CONTINUED AVAILABILITY
Synon does not represent or guarantee to the Distributor the continued
availability for sale of any of the Products and assumes no liability
in connection with any loss or damage to the Distributor, arising out
of Synon's failure to accept or fill orders of the Products due to
their unavailability. Synon at its sole discretion, may at any time,
change any Product or withdraw any Product from its current list of
Products or limit available quantities of any product, or Products, or
remove or add to the list of Products which the Distributor is
authorised hereunder to distribute and support. If Synon removes from
the list of Products set out in Appendix A, it shall give ninety (90)
days written notice thereof to the Distributor.
6. PRODUCT LICENSES
6.1 USE OF LICENCE AGREEMENTS
The Distributor agrees to license the Products to End Users in the
Territory only in accordance with the terms and provisions of the
Licence Agreements, and to obtain Synon's prior written approval of
any proposed amendment of any Licence Agreement.
6.2 USE OF MAINTENANCE AGREEMENTS
The Distributor agrees to maintain and supply the Products in the
Territory only in accordance with the terms and provisions of the
Maintenance Agreements, and to obtain Synon's prior written approval
of any proposed amendment of any Maintenance Agreement.
6.3 TRANSLATION OF THE LICENSE AND MAINTENANCE AGREEMENTS
(a) Subject to the Distributor's compliance with the provisions of
this Sub-Clause 6.3 the Distributor may at its expense and
subject to Synon's prior written approval, translate the
Licence Agreement and/or the Maintenance Agreement into such
languages as may be necessary or desirable for its use in the
Territory and to make such modifications as may be necessary
or desirable to conform such agreement to customary commercial
practices in the Territory (as reflected in licence agreements
or maintenance agreements (as the case may be) commonly used
in the Territory for similar computer software products).
(b) No such translation or modification shall (i) diminish or
limit any of Synon's rights (proprietary or otherwise) in the
Products, (ii) diminish or limit the enforceability of such
rights, (iii) convey any rights of ownership in the Products,
(iv) permit the use or copying of the Products except for the
limited purposes permitted under the Licence Agreement, (v)
permit disclosure of any proprietary information regarding the
Products or (vi) permit reverse-engineering, disassembly or
decompilation of the Products.
(c) The Distributor agrees (i) to provide to Synon upon Synon's
request, for review by Synon and its legal advisers copies of
any such translated or modified version of the Licence
Agreement and the Maintenance Agreement and copies of the
literal English translations thereof and (ii) to obtain
Synon's written approval thereof prior to providing copies
thereof to any End User or Licensee.
(d) In the event that any legislation or judicial or
administrative action in the Territory renders any provision
of a Licence Agreement or a Maintenance Agreement invalid or
unenforceable, the Distributor agrees to so notify Synon in
writing, and to assist Synon in appropriately modifying such
agreement. The provisions of this paragraph shall survive
termination or expiration of this Agreement.
6.4 ENFORCEMENT OF LICENCE AND MAINTENANCE AGREEMENTS
The Distributor agrees to use its best endeavours to enforce each
Licence Agreement and each Maintenance Agreement to the full extent of
applicable law and to safeguard all rights (proprietary or otherwise)
and interests of Synon in the Products. The Distributor agrees to
notify Synon in a timely manner of any legal notices serviced on, or
legal actions brought against, the Distributor concerning the Products
or the Distributor's performance of its duties hereunder. The
Distributor agrees not to institute any legal action or other
proceedings with respect to a Licence Agreement or a Maintenance
Agreement or the Products (or to enter into any compromise in respect
thereof) without the prior written consent of Synon. The provisions
of this sub-Clause 6.4 shall survive termination or expiration of this
Agreement.
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7. PRICE, PAYMENT AND REPORTS
7.1 PRICE AND PAYMENT
(a) Synon agrees to supply a demonstration and training version of
each of the Products to the Distributor (in accordance with
sub-Clause 4.1(h)) at no charge to supply all other copies of
the Products to the Distributor at the prices specified in
Appendix A Part II paragraph (a) (as varied from time to
time).
(b) The Distributor shall pay to Synon commission of all Licence
Agreements and Maintenance Agreements calculated in accordance
with Part II, of Appendix A.
(c) The prices and commission (including the percentage
calculation) specified in Appendix A may be changed by Synon
from time to time upon giving not less than ninety (90) days
prior written notice to the Distributor. All prices are
exclusive of customers charges, fees and applicable taxes
which shall be paid in addition.
(d) The Distributor shall pay to Synon all amounts due under this
Clause 7 not later than the twenty eighth (28th) day of the
second calendar month following the calendar month in which
the Distributor is invoiced for payment whether or not the
Distributor has received payment from Licensees. Payment
shall be deemed to be made pursuant to this Clause 7 on actual
receipt of the monies due into Synon's bank account and not
before. For example, a sale with an invoice date 31 December
will be due for payment on 28 February.
(e) All amounts payable by the Distributor pursuant to this Clause
7 shall be paid to Synon directly to such bank account as
Synon may designate and shall be paid in sterling (or in such
other currency as Synon may specify in writing from time to
time). Any sum due to Synon hereunder and not paid on the due
date for payment shall bear interest at the rate of five per
cent above the base lending rate of Midland Bank plc (or such
other UK Clearing bank as Synon may specify) from time to
time, or the maximum rate otherwise permitted by applicable
law, which ever shall be the lower, from the date such sum
falls due for payment until the date payment is received by
Synon, and shall be compounded at half yearly intervals.
(f) In the event that the central bank or similar governing body
in the Territory shall impose any restrictions preventing
payment of funds due to Synon in accordance with this Clause
7, and the Distributor shall not otherwise remit such amounts
to Synon, Synon may, in its discretion, terminate this
Agreement pursuant to sub-Clause 10.2(f) and may instruct the
Distributor to deposit such funds in a specified account of
Synon in a banking institution located in the Territory.
(g) Notwithstanding any provision of this Agreement, in the event
that the Distributor shall fail to pay all amounts due to
Synon hereunder within the time specified in sub-Clause 7.1(d)
on two consecutive occasions, Synon shall have the right to
terminate this Agreement in accordance with sub-Clause 10.2(h)
as a material breach. The parties hereby agree that such
action of non- payment by the Distributor would be a material
breach of this Agreement.
(h) Synon reserves the right to off-set any outstanding amounts
due to the Distributor hereunder against any amounts due from
the Distributor hereunder or arising from any breach by the
Distributor of its duties and obligation hereunder. The
provisions of this sub-Clause 7.1 shall survive termination or
expiration of this Agreement.
7.2 MONTHLY REPORTS
On the first working day of each calendar month the Distributor agrees
to transmit Synon by telefax a properly completed sales report in a
form supplied by Synon from time to time setting forth such
information concerning the licensing of the Products and names of
Licensees as Synon may request and including a six monthly sales
forecast. Such sales reports shall set out what the Distributor
believes to be the number of Licence Agreements and Maintenance
Agreements to be signed up during that six month period. The type of
information required by Synon for completion by the distributor is set
out at Appendix D, and is subject to variation and change by Synon
from time to time. The Distributor shall use its best endeavours to
ensure the accuracy of the information given to Synon in each of these
reports.
7.3 ACCOUNTS
The Distributor shall provide to Synon each year a copy of its audited
annual accounts within one month of the audit report being signed by
its auditors. If the Distributor does not have audited accounts it
shall in each 12 month period from the date of this Agreement supply
to Synon a copy of the management accounts it does have for the
previous 12 month period, and the Distributor shall ensure that such
accounts shall represent a true and fair view of the Distributor's
business.
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7.4 REFERENCES
The Distributor hereby authorises Synon to apply to any of its banks,
(as Synon shall decide from time to time), to obtain references in
respect of the financial standing of the Distributor. The Distributor
shall give written notice to Synon as soon as it changes any bank with
whom it does business.
7.5 REVIEW OF RECORDS
Synon shall have the right at any time during the term of this
Agreement, directly or through an independent third party, upon thirty
(30) days' prior written notice to the Distributor, to conduct a
review at the Distributor's principal business offices of the
Distributor's books and records relating hereto and to make copies
thereof at Synon's expense. If the results of such a review shall
disclose a deficiency in amounts payable by the Distributor to Synon
in excess of five percent (5%) of the amounts actually paid or
reported as being payable to Synon hereunder for any period which is
so reviewed, then the Distributor shall promptly reimburse Synon for
the entire cost of such review, including, but not limited to,
professional fees and travel and lodging expenses. The provisions of
this sub-Clause 7.5 shall survive for the period of twelve (12) months
following termination or expiration of this Agreement.
7.6 LETTER OF CREDIT
Synon reserves the right, at any time during the term of this
Agreement, to request that the Distributor provide an open letter of
credit to Synon in respect of maximum estimated sums due to Synon
hereunder during the immediately following twelve (12) month period
and thereafter for each consecutive twelve (12) month period of this
Agreement (or part thereof). The Distributor shall, within ten (10)
days of receiving such request in writing procure, at its cost, the
provision of such letter of credit from such bank as Synon shall
specify (acting reasonably) and for such sum as Synon shall specify,
(acting reasonably), to be a predetermined estimate of maximum sums
due to it hereunder during that immediately following twelve (12)
month term (or part thereof as the case may be).
8. TRADE SECRETS AND PROPRIETARY INFORMATION
8.1 PROPRIETARY NAME OF PRODUCTS
(a) The Distributor acknowledges that the Products are proprietary
in nature, that Synon owns all trade secret, copyright,
trademark and patent rights granted by law therein, and that
Synon neither grants nor otherwise transfers any rights of
ownership therein to the Distributor. The Distributor agrees
not to duplicate or otherwise reproduce any Product or any
Documentation in whole or in part save as authorised in
writing by Synon for distribution pursuant to Licence
Agreements or Maintenance Agreements. The Distributor further
agrees to take all reasonable steps to ensure that no
unauthorised persons shall have access to any of the Products
and that all authorised personal having access to the Products
shall refrain from any such disclosure, duplication or
reproduction except to the extent reasonably required in the
performance of the Distributor duties under this Agreement.
All officers, employees and agents of the Distributor having
access to any of the Products must be subject to nondisclosure
or similar agreements consistent with the Distributor's
obligations hereunder, which the Distributor agrees to enforce
to the full extent of applicable law. If, pursuant to this
Agreement, the Distributor does copy the Products or the
Documentation it shall ensure that all proprietary notices of
Synon are shown on such copies.
(b) The Distributor shall not, directly or indirectly, register,
apply for registration or attempt to acquire any legal
protection for the Products or any proprietary rights therein
in its own name or take any other action which may adversely
affect Synon's right, title or interest in or to the Products.
(c) The Distributor shall promptly notify Synon as soon as it
becomes aware of any breach by any third party of any of
Synon's intellectual property rights in any of the Products or
the Documentation or any unauthorised use of any of the
Products.
(d) In the event of a breach by the Distributor or any of its
officers, employees or agents of its or their obligations
under this Clause 8 or if the Distributor at any time
challenges, directly or indirectly, the right, title or
interest of Synon in and to any of the Products or the
validity or enforceability of Synon's claimed rights therein
under applicable law Synon may immediately terminate this
Agreement without liability to the Distributor by giving
written notice to the Distributor. In addition Synon may
bring an appropriate legal action in respect of any such
breach or challenge (as the case maybe), and shall be entitled
to recover from the Distributor its legal fees and costs in
addition to other appropriate relief.
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8.2 NO PRODUCT MODIFICATIONS
The Distributor shall not have the right under this Agreement or
otherwise to receive the source code to any of the Products. The
Distributor agrees not to modify or alter, or attempt to modify or
alter, any of the Products or the Documentation without the prior
written authorisation of Synon. In the event that the Distributor
makes any modification or alteration, the Distributor shall promptly
deliver and assign the same to Synon and the Product or Documentation
as modified or altered shall be and shall remain the sole and
exclusive property of Synon but Synon shall thereupon grant a
non-exclusive licence to the Distributor for it to use the
modification or alteration for the purposes of its business.
8.3 CONFIDENTIAL INFORMATION
The parties agree that all information furnished by Synon to the
Distributor hereunder, in whatever form, except promotional and
advertising material, is Confidential Information. The Distributor
agrees that it will use all Confidential Information disclosed to it
by Synon only in furtherance of its performance hereunder, and for no
other purpose. Except as provided above, the Distributor agrees that
it will not disclose Confidential Information to any other person or
entity without the express prior written consent of Synon. The
Distributor agrees that it will protect the confidentiality of
Confidential Information with the same degree of care with which it
protects its own Confidential Information.
8.4 OWNERSHIP OF CONFIDENTIAL INFORMATION
All Confidential Information furnished to the Distributor hereunder
(including all copies thereof) is and shall remain the property of
Synon and shall be returned to or otherwise disposed of as instructed
by Synon promptly upon demand or upon the termination or expiration of
this Agreement.
8.5 The provisions of this Clause 8 shall survive termination or
expiration of this Agreement.
9. USE OF TRADE NAMES AND TRADEMARKS
9.1 SCOPE OF USE
(a) The Distributor hereby acknowledges the validity and Synon's
ownership of Synon's Trademarks throughout the world, whether
or not registered. The Distributor further acknowledges that,
except as provided herein or as otherwise expressly provided
in writing, (i) it has no rights or interest of any kind in or
to Synon's Trademarks, including, without limitation to the
generality of the foregoing, the name "SYNON/2", (ii) it shall
acquire no rights or interest therein by virtue of this
Agreement or the performance by the Distributor of its duties
and obligations hereunder, and (iii) it will not assert any
rights or interests therein by virtue of the rights granted to
the Distributor hereunder. The provisions of this paragraph
shall survive termination or expiration of this Agreement.
(b) Synon hereby grants to the Distributor during the term of this
Agreement the non-exclusive, limited right to use the
proprietary Product names and marks in marketing the Products
in the Territory pursuant to this Agreement. All rights
arising from such use by the Distributor shall inure to Synon.
Notwithstanding the foregoing, the Distributor shall be
prohibited from using the name "SYNON", any of the Product
names or marks, or any confusingly similar name or symbol, in
whole or in part with any products other than the Products.
Synon makes no warranty, express or implied, as to the use or
validity of such marks.
(c) The Distributor shall identify Synon as the owner of the
Trademarks in all Documentation and Product advertising and it
shall specify (in such form as Synon shall approve). Products
are licensed products of Synon. Synon reserves the right to
approve all advertising and marketing materials of the
Distributor, inter alia, to ensure the proper use of the
Trademarks. The Distributor's rights hereunder shall continue
only during the term of this Agreement and, upon termination
or expiration of this Agreement, the Distributor shall cease
to use such Product names or any marks or variants sounding
like or appearing to be similar thereto.
(d) The Distributor shall not remove, alter or obliterate, or
cause to be removed, altered or obliterated, any trademarks,
trade names, copyright or other symbols placed upon Products
or Documentation delivered to the Distributor, provided,
however, that the Distributor may apply its own name and
address to the packaging of the Products.
9.2 PROTECTION AGAINST INFRINGEMENT
(a) The Distributor agrees to inform Synon promptly of all legal
requirements for protecting the proprietary rights of Synon in
and to the Products in the Territory, and agrees to cooperate
fully with Synon in protecting the Products from infringement.
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(b) The Distributor agrees to report to Synon any known uses by
third parties in the Territory of marks or trade or product
names similar to the marks and trade and product names of
Synon. The Distributor agrees to assist Synon in enforcing or
obtaining protection of such items in the Territory and
acknowledges that Synon shall have the sole right to bring a
legal action or suit for infringement thereof.
(c) The provisions of this sub-Clause 9.2 shall survive
termination or expiration of this Agreement.
9.3 REGISTRATION OF TRADEMARKS
Unless prior registration of any Trademark is required by the laws of
the Territory as a prerequisite for importation of the Products, Synon
reserves the right to decide where and when to apply for the
registration of the Trademarks in the Territory. Any trademark
registration shall be in the name and for the benefit and the account
of Synon.
10. TERM AND TERMINATION
10.1 TERM OF AGREEMENT
The term of this Agreement shall commence on the date hereof and shall
continue for the period of five (5) years terminating at 12 noon
London local time on the fifth anniversary hereof unless prior to that
date it is terminated by either party giving to the other not less
that ninety (90) days notice in writing of termination of such notice
to expire on the third, fourth or fifth anniversary date of the date
of this Agreement.
10.2 TERMINATION BY SYNON
Notwithstanding the provisions of sub-Clause 10.1 Synon may terminate
this Agreement, in while or in part as provided below, at any time
after the occurrence of any of the following events upon not less than
ten (10) days' prior written notice thereof to the Distributor (or
such other period of notice specified below):
(a) The Distributor fails in any two consecutive quarters to meet
the sales quota for those quarters notified to the Distributor
in accordance with Appendix C. In the vent that Synon chooses
to exercise its right to terminate the Distributor's rights in
respect of one or more but not all of the Products or in
respect of one or more parts of the Territory, written notice
must be given to the Distributor at least one hundred and
eighty (180) days before the effective date of any such
partial termination of Product distribution rights;
(b) forthwith on notice to the Distributor if it becomes or is
declared insolvent or otherwise unable to pay its debts as
they become due;
(c) forthwith on notice to the Distributor if it enters into or
proposes a voluntary arrangement or composition with its
creditors or shall cease or threaten to cease to carry on its
business or substantially the whole of its business;
(d) forthwith on notice to the Distributor if it shall have a
receiver or an administrative receiver appointed to its
undertaking or any of its assets or shall become subject to an
administration order or shall enter into liquidation whether
compulsory or voluntary or pass a resolution for its
winding-up (other than for the purpose of a bona fide scheme
of solvent amalgamation or reconstruction where the resulting
entity assumes all of the obligations of the Distributor), or
shall, if an individual be made or declared bankrupt or commit
any act of bankruptcy (of if a partnership any one of the
partners shall commit such an act) or shall be the subject of
any equivalent or similar or analogous provision or
arrangement or appointment or any analogous step is taken in
connection with the Distributor's insolvency, bankruptcy or
dissolution, applicable to the laws and regulations in the
Territory, or the country in which the Distributor is
incorporated or established or carries on business;
(e) there is a Change of Control of the Distributor;
(f) the central bank or similar governing body in the Territory
imposes a restriction preventing the Distributor from making
payment of funds payable to Synon hereunder for a period in
excess of three (3) months;
(g) forthwith on notice to the Distributor if it assigns or
transfers the Agreement, or any of its rights or obligations
hereunder or purports or attempts to do so without Synon's
prior written consent;
(h) forthwith on notice to the Distributor if it breaches any
provision of this Agreement that Synon considers to be
material (acting reasonably in all the circumstances);
(i) in accordance with sub-Clauses 8.1(d) and 2.2
10.3 ACTIONS FOLLOWING TERMINATION
(a) In the event of the termination of this Agreement, whether by
the expiration of the original or any extended term hereof or
otherwise, the Distributor agrees promptly (i) to provide
Synon with all
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outstanding reports and payments due to Synon pursuant to
Clause 7 or otherwise pursuant to this Agreement, (ii) cease
holding itself out as having any connection with Synon or the
Products (other than as provided in paragraph (b) below);
(iii) in the event of termination pursuant to sub-Clause
10.2(b), (c) or (d) to assign, and do all that is necessary to
procure the assignment, to Synon or as it may direct all
Licence Agreements and Maintenance Agreements and (iv) to
report to Synon in reasonable detail the status of all
discussions and negotiations with End Users and all services
which the Distributor is obliged to provide to such End Users
and Licensees with respect to the Products.
(b) Subject to paragraph a) above in respect to Maintenance
Agreements already entered at the date of termination or
expiration of this Agreement the Distributor shall continue to
provide maintenance services in accordance with this Agreement
until the expiration of the then existing term of the
Maintenance Agreement. At the end of each such Maintenance
Agreement the provisions of this sub-Clause 10.3 shall apply
in respect of the Products the subject of the Maintenance
Agreement.
(c) In the event of expiration or termination hereof, all of the
Distributor's rights hereunder to promote, distribute and
support the Products, and to use the Product names and
identifying marks, shall automatically terminate and the
Distributor shall cease any use thereof (save as may be agreed
in writing with Synon for the purpose of the Distributor
complying with paragraph (b) hereof). The Distributor agrees
to return to Synon all Products, marketing materials and other
information of Synon in any form (proprietary or otherwise) in
the Distributor's possession or under its control or, with the
prior written consent of Synon, to destroy the same, and in
either case to certify in writing to Synon that such actions
have been taken.
(d) Following the effective date of termination or expiration of
this Agreement the Distributor shall remit forthwith Synon all
sums due to it herein. In the vent that the Distributor shall
fail to assign to Synon or as it may direct all Licence
Agreements immediately following such termination date (in the
even of termination being pursuant to sub-Clauses 10.2(b), (c)
or (d), Synon shall (directly or through its authorised
representatives), (i) be entitled to deal with such End Users
and Licensees, and (ii) be subrogated to the Distributor under
all Licence Agreements.
(e) In connection with any termination of this Agreement, the
parties agree to cooperate fully and to provide promptly all
information necessary or useful relating hereto. At any time
for twelve (12) months following the termination or expiration
of this Agreement Synon shall have the right, directly or
through an authorised representative, to review the books and
records of the Distributor (including prospect records)
relating to this Agreement and to make copies thereof at
Synon's expense. If the results of such review shall disclose
a deficiency in amounts payable by the Distributor to Synon in
excess of five per cent (5%) of the amounts actually paid or
reported as being payable to Synon hereunder for any period so
reviewed then the Distributor shall promptly reimburse Synon
for the entire cost of such review in accordance with
sub-Clause 7.5.
(f) The provisions of this sub-Clause 10.3 and the sub-Clause 10.5
shall survive termination or expiration of this Agreement.
10.4 CONTINUING OBLIGATIONS
Expiration of the original or any extended or renewed term hereof or
any other termination of this Agreement shall be without prejudice to
any rights or obligations of the parties hereto which have accrued
prior to such expiry or termination and shall not affect any provision
of this Agreement which is expressly or by implication provided to
come into effect on or to continue after such expiry or termination.
10.5 LIABILITY ON TERMINATION
Synon shall not be liable to the Distributor, as a result of any
termination of this Agreement, with or without cause, and shall not
otherwise have any obligation (statutory or otherwise) to compensate
or reimburse the Distributor for any claims or damages whatsoever
(including, but not limited to, termination indemnities, lost revenues
or profits, the Distributor's expenditures, investments, leasehold or
employment obligations or other continuing commitments of the
Distributor). The Distributor specifically (i) waives all
compensation and damages, whether direct, consequential or otherwise,
to which it may otherwise have a right under applicable law in the
Territory; (ii) agrees to indemnify and hold Synon harmless from and
against all claims of the employees and agents of the Distributor for
compensation or severance, disability, social security or similar
payments; and (iii) agrees not to register as the agent or distributor
of Synon in any jurisdiction within the Territory without the prior
written consent of Synon.
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10.6 GOODWILL
The Distributor acknowledges and agrees that any and all goodwill
associated with the promotion, distribution and support of the
Products in the Territory shall accrue directly to the benefit of
Synon and shall be the sole and exclusive property of Synon.
11. INDEMNIFICATION
The Distributor shall indemnify and hold Synon and its Affiliates
harmless from and against any and all claims, liability, costs and
expenses (including legal fees) arising out of (a) the improper
installation, support or maintenance of the Products by the
Distributor or its employees, (b) any misrepresentations by the
Distributor or its employees in respect of the Products, (c) any
breach by the Distributor of any of the provisions of this Agreement
or (d) any negligent, wrongful or intentional acts or omissions on the
part of Distributor or its employees. The provisions of this Clause
11 shall survive termination or expiration of this Agreement.
12. FORCE MAJEURE
12.1 Neither Synon nor the Distributor shall be liable for failure to
perform any obligation under this Agreement if the failure is caused
by war, insurrection, riot, fire, explosion, flood, strike, lock-out,
injunction, inability to obtain fuel, power, raw materials, labour,
containers or transportation, accident, malfunction of machinery or
apparatus, national defence requirements, acts or regulations or
national or local governments, denial of export or import licenses, or
act of God, or any other cause beyond the control of the party.
12. Notwithstanding the foregoing, the occurrence of a force majeure event
or condition described in sub-Clause amounts then due and owing to
Synon pursuant to the terms of this Agreement.
12.3 The Party claiming relief pursuant to sub-Clause 12.1 shall promptly
notify the other Party in writing of the facts indicating the
existence of any force majeure event or condition and the relief
claimed. The Parties agree to use all reasonable endeavours to
overcome such conditions. Sub-Clause 12.1 shall not relieve any Party
of its obligation to perform its part of this Agreement at such time
and to such extent as may be possible subsequent to the occurrence of
the events or conditions described in sub-Clause 12.1 and within
reasonable time thereafter. Should such event or conditions continue
unabated despite the parties' reasonable endeavours to overcome them
for three (3) months from the date of notice given pursuant hereto,
then the party receiving such notice shall have the option to
terminate this Agreement without liability to the other party for the
consequences of such termination by giving written notice.
13. GENERAL PROVISIONS
13.1 ASSIGNABILITY
(a) Subject as provided in sub-Clause 13.1(b) the Distributor
shall not sell, assign, transfer convey, delegate or encumber
its duties and obligations hereunder, or any rights or
interests hereunder, and the Distributor shall not suffer or
permit any voluntary assignment or transfer or encumbrance
thereof, by operation of law or otherwise, without the prior
written consent of Synon.
(b) The Distributor shall not without the prior written consent of
Synon or as provided in this Agreement employ sub contractors;
if with such consent or as provided in this Agreement it does
so, every act or omission of the sub contractor shall for the
purposes of this Agreement be deemed to be the act of omission
of the Distributor.
(c) Synon reserves the right to assign or transfer this Agreement
or any of its duties, obligations, rights or interests
hereunder, to any direct or indirect subsidiary or Affiliate
of Synon or a subsidiary of such Affiliate of Synon.
13.2 NOTICES
All notices, requests, reports, submissions and other communications
permitted or required to be given under this Agreement shall be in the
English language, and shall be deemed to have been duly given if such
notice or communication shall be in writing and sent by personal
delivery or by airmail, telex, facsimile transmission (in both cases,
if a hard copy is also sent by airmail) or other commercial means of
rapid delivery, postage or costs of transmission and delivery prepaid,
to the parties at the following addresses until such times as either
party hereto shall give the other party hereto not less than ten (10)
days' prior written notice of a change of address in accordance with
the provisions hereof:
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If to Synon: Mr Victor Bhalla
Synon Europe Ltd.
91 St Paul's Road
London N1 2YU
Tel: 0171 226 5164
Fax: 0171 226 1259
If to the Distributor: Mr Klaus Maerz
CGI Informatik GmbH
Hardt 9-11
40764 Langenfeld
Tel: 02173 9080
Fax: 02173 908 122
13.3 NO IMPLIED WAIVERS
The failure of either party to exercise any right or option it is
granted herein, or to require their performance by the other party
hereto of any provision of this Agreement, shall not prevent a
subsequent exercise or enforcement of such provisions or be deemed a
waiver of any subsequent breach of the same or any other provision of
this Agreement.
13.4 MODIFICATION OR AMENDMENT
Except to the extent and in the manner specified in this Agreement,
any modification or amendment of any provision of this Agreement must
be in writing and bear the signature of the duly authorised
representatives of both parties.
13.5 LANGUAGE
The language of this Agreement is expressly stipulated to be the
English language. In the event that this Agreement shall be
translated into one or more other languages, the English language
version of this Agreement shall be the governing version for purposes
of interpreting and enforcing this Agreement. All Products,
Documentation and technical assistance to be provided hereunder by
Synon shall be in the English language unless otherwise agreed between
the parties. In the event that the applicable law of the Territory
shall require this Agreement to be governed by such law or shall
require any of the foregoing items to be in a language other than
English language, the Distributor shall promptly notify Synon and,
subject to the provisions of this Agreement, shall undertake to comply
therewith in a manner satisfactory to Synon.
13.6 CONFORMITY WITH LOCAL LAWS
The rights and obligations of the parties hereunder are subject to all
applicable laws, orders, regulations, directions and restrictions of
the various governmental authorities having jurisdiction over the
parties. In the event that any of the foregoing (excluding a law,
order, regulation, direction or restriction of the European
Commission) shall result in a modification or alteration of this
Agreement, either party hereto may request that this Agreement be
modified with respect thereto, to the reasonable satisfaction of the
parties hereto, and the parties shall so amend this agreement. If
such modification amounts to a material amendment or variation to this
agreement either party hereto may, in its sole discretion, terminate
this Agreement on ten (10) days prior written notice.
13.7 PRIOR AUTHORISATION
If any notification or approval of any governmental or other authority
in the Territory is required prior to, or following, the execution of
this Agreement (or any Licence Agreement or Maintenance Agreement) the
Distributor agrees to notify Synon promptly of such requirements and
to comply fully therewith. In the event that (a) any such authority
shall require the parties to amend this Agreement as a condition
precedent to such approval or (b) any such approval shall not be
received within one hundred twenty (120) days following submission of
a written request for such approval, either party may terminate this
Agreement without liability except with respect to any prior breach to
the other party upon thirty (30) days' prior written notice to such
party. All monies due to Synon shall be paid in accordance with
Clause 10.3(a) and all other actions following termination shall
apply.
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13.8 DEEMED AMENDMENT
If any term or provision or any part thereof (in this sub-Clause 13.8
called the offending provision) contained in this Agreement shall be
declared or become unenforceable, invalid or illegal for any reason
whatsoever including but without derogating from the generality of the
foregoing a decision by any competent domestic or European Economic
Court, the European Commission, domestic or European Community law,
the other terms and provisions of this Agreement shall remain in full
force and effect as if this Agreement had been executed without the
offending provision appearing herein and with any required amendment
and any offending provision shall thereupon cease to have effect. At
the request of Synon the Distributor shall assist Synon and provide
all necessary information and support to Synon for the purpose of
making an application to the European Commission for negative
clearance of this Agreement pursuant to Article 2 of Council
Regulation No. 17 or for notification of this Agreement with a view to
obtaining exception under Article 85(3) of the Treaty of Rome.
Furthermore the distributor agrees to Synon making such amendments to
this agreement as it considers necessary to obtain such negative
clearance or exemption or any comfort letter in relation thereto and
shall thereby be bound by any such amendments.
13.9 PUBLICITY
The Distributor shall not publicise or disclose to any third party by
other means any of the terms or provisions of this Agreement, or the
discussions relating thereto, without the prior written consent of a
duly authorised officer of Synon, except as required by law.
13.10 SEVERABILITY
If any provision of this Agreement is determined by a court of
competent jurisdiction to be in violation of any applicable law or
otherwise invalid or unenforceable, such provision shall to such
extent as it shall be determined to be illegal, invalid or
unenforceable under such law be deemed null and void, but this
Agreement shall otherwise remain in full force and effect.
13.11 ENTIRE AGREEMENT
This Agreement sets forth the entire agreement between the parties
hereto with respect to the subject matter hereof and merges all
discussions between them and supersedes and replaces any and every
other agreement which may have existed between Synon and the
Distributor to the extent that any such agreement relates or related
to the establishment of any arrangement for the distribution,
marketing, sale or support of any of the Products. Each of the
parties acknowledges that, in entering into this Agreement, it does
not do so on the basis of and does not rely on, any representation,
warranty or other provision except as expressly provided herein, and
all conditions, warranties or other terms implied by statute or common
law are hereby excluded to the fullest extent permitted by law.
13.12 PROPER LAW AND JURISDICTION
The validity of this Agreement and the rights, obligations and
relations of the parties hereunder shall be construed and determined
under and in accordance with the laws of England and each party hereby
agrees to submit to the jurisdiction of the English Courts.
13.13 COUNTERPARTS
The Agreement may be executed in any number of separate counterparts,
each of which shall be deemed to be an original but which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
by their duly authorised representatives the day and year first above written.
SIGNED BY: /s/ D. MOORE for and on behalf of SYNON
---------------------
Print Name: D. Moore
---------------------
in the presence of:
[SIG]
----------------------------
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Witness Name:
Witness Signature:
Witness Address:
Witness Occupation:
SIGNED BY /s/ [SIG] for and on behalf of the DISTRIBUTOR
-------------------------
Print Name: [ILLEGIBLE]
-----------------------
in the presence of:
Witness Name: [SIG]
-------------------------------
Witness Signature: [SIG]
-------------------------------
Witness Address: [ILLEGIBLE]
-------------------------------
Witness Occupation: Sales Mgr.
-------------------------------
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APPENDIX A
PART I - THE PRODUCTS
LICENCE SALES: Trials, Rental, Sales and Upgrades
<TABLE>
<S> <C> <C>
Synon/1E - AS/400 Based CASE Tool Utilities
Synon/2E - AS/400 Based CASE Tool
Synon/CSG and CSD - Client Server Generator and Driver for both Microsoft Windows and IBM OS/2
Synon/Gateway - Bi-directional Import/Export Bridge for Synon/2E
Synon/1M - Change Management
Synon/CM - Change Management and Version Control with full Synon/2E Integration
Synon/RW - AS/400 Based Report Writer
Synon/Open - Synon/2E UNIX Generators for Hewlett Packard HP9000 and IBM RS/6000
SILVERRUN - Upper/CASE Tool for Microsoft Windows, IBM OS/2, and Apple MacIntosh
Synon/PE - Synon/2E Performance Expert Product
Synon/Translator - Translation Product
Obsydian - Object Engineering Microsoft Windows 3.1 Based CASE Tool
Obsydian Generators - For IBM AS/400, Hewlett Packard HP9000, IBM RS/6000 and Microsoft NT
</TABLE>
In each case including supporting documentation but excluding source code.
MAINTENANCE
The distributor shall offer related maintenance services for all the products
listed above.
Synon reserves the right to add to or delete from the list of products which
are the subject of this distribution agreement in accordance with sub-Clause
5.6
19
<PAGE> 20
PART II - PRICE SCHEDULE
(a) The current licence fees and maintenance fees on which all commission
payable to Synon shall be calculated are as enclosed. All prices are
expressed in Deutschmarks and these prices may be changed by Synon in
accordance with Clause 7.1(c).
Such fees are subject to variation from time to time at the sole
discretion of Synon and any such increases shall be notified to the
Distributor by Synon in writing in accordance with sub-Clause 7.1.
(b) The commission payable to Synon by the Distributor (or vice versa)
under this Agreement shall be calculated as follows, except in years
one and two where the Document of Understanding will rule:
i) If the Distributor shall enter a Licence Agreement and install
the software pursuant thereto - [ ]* of Synon's then current
licence fee.
ii) The Distributor shall pay to Synon [ ]* of Synon's then current
annual maintenance fee for each Maintenance Agreement it shall
enter, and [ ]* of Synon's then current maintenance fee on each
renewal of such maintenance agreement, provided Synon has not
received prior written notice of termination of any such
agreement.
(c) The Distributor is not in any way restricted or limited to licence the
Products at the fees listed in paragraph (a) above. Those are the
fees (as amended from time to time) on which Synon's commission shall
be calculated in accordance with this Appendix.
(d) If there is an MAI agreement with IBM in force in the territory or if
Synon pays a royalty to any third party for distribution rights of any
product [ ]*. If the distributor is to make the payment then it
warrants that it will pay IBM or any third party in accordance with its
terms and Synon will invoice the distributor at the appropriate share
of the price schedule, less Synon's share of the MAI or other third
party royalty. This shall only apply to products covered by MAI or
third party royalty agreements. [ ]*
If Synon is to make the payment then Synon will invoice the
distributor at the appropriate share of the price schedule plus the
distributors share of a MAI or other third party royalty agreement.
This shall apply to products covered by the MAI or other third party
royalty agreements. [ ]*
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission.
20
<PAGE> 21
APPENDIX B
THE TERRITORY GERMANY
21
<PAGE> 22
APPENDIX C
SALES QUOTA
(a) Synon shall, prior to each calendar year consult with the Distributor
to try and agree the sales quota for each 3 month period of the
immediately following 12 month period. If agreement cannot be reached
between the parties prior to the commencement of each calendar year
Synon shall specify the sales quota, for the twelve month period
aforesaid, and give written notice thereof to the Distributor, and
such specified quota will be the sales quota for the purposes of this
Agreement for that next following calendar year.
(b) The sales quota for the remainder of the first calendar year or
remainder thereof shall be:
SYNON SHARE OF
INVOICES LICENCE
FEES
----------------
UK Pound
January - March
April - June
July - September
October - December
-----
Total for the Calendar Year [ ]*
=====
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission.
22
<PAGE> 23
APPENDIX D
FORM OF CURRENT REPORTS
The following information should be provided on a monthly basis in accordance
with Clause 7.2: -
- Six month forecast on a month by month basis of licence sales
and maintenance (split by new and renewal)
- Six month prospect list
- Proposed marketing activity
- Maintenance cancellations
Any substantial variances between the forecast and the sales quota (Appendix C)
should be explained.
23
<PAGE> 24
APPENDIX E
THE MAINTENANCE SERVICES
Firstline telephone support during normal business hours (excluding
public holidays)
Delivery of new releases and bug fixes of the software and associated
documentation to end users provided they have a current maintenance
contract.
Liaison with Synon over the correct of program faults which have been
reported by an end user.
Synon may vary the Maintenance Services to be provided by the
Distributor in accordance with sub-Clause 4.1(i) by giving ten (10)
days written notice to the Distributor.
24
<PAGE> 25
APPENDIX F
FORM OF LICENCE AND MAINTENANCE AGREEMENTS
As supplied by Synon Europe Ltd.
25
<PAGE> 26
DOCUMENT OF UNDERSTANDING (DoU)
Version 2
PREAMBLE
Synon Deutschland GmbH will appoint CGI INFORMATIK GMBH to be their Distributor
in Germany for a minimum period of three years from the date of signature of
this agreement.
A Non-Exclusive International Distributor Agreement will be signed between
Synon Deutschland GmbH and CGI INFORMATIK GMBH. This Document of Understanding
will be additional to that Agreement and will affect the first two years of its
operation only.
CGI INFORMATIK COMMITMENTS
To recognise that Synon Deutschland GmbH is transferring the valuable asset of
a going concern with a substantial customer base and an assured revenue stream,
CGI INFORMATIK will commit: -
1.0 PEOPLE FOR YEAR END 1996
1.1 SALES
Three sales executives, dedicated to Synon software sales,
will be trained and in territory by the end of 1996. One
software engineer will be assigned full-time to each sales
executive.
1.2 NOTE
To achieve 1996 goals, see Appendix 1, a minimum of two sales
executives and two software engineers should be trained and in
territory by the end of March 1996.
1.3 POST-SALES
Three staff will be assigned to first level support on the
helpdesk. Two teachers/trainers will be assigned for training
customers on all Synon products released for the German
market.
1.4 MARKETING
Sufficient funds will be committed to execute marketing
programs to achieve revenue objective.
SYNON/CGI CONFIDENTIAL
Page 1 of 6
<PAGE> 27
2.0 GUARANTEE OF 1996/97 ROYALTIES FOR SYNON EUROPE LTD
2.1 CGI INFORMATIK will guarantee Synon Deutschland GmbH a minimum
royalty in 1996 of [ ]*. This is calculated from the 1996
projected figures in Appendix 1. [ ]*
This can be achieved in several ways:
[ ]*
[ ]*
[ ]*
This can be achieved:
[ ]*
[ ]*
3.0 PERFORMANCE INCENTIVES
1996 and 1997
[ ]*
[ ]*
[ ]*
SYNON/CGI CONFIDENTIAL
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission.
Page 2 of 6
<PAGE> 28
4.0 MARKET SEGMENTS
AS/400 and RS/6000
CGI INFORMATIK will market, sell and support Synon products in the
AS/400 and RS/6000 markets in Germany. Neither Synon Europe nor Synon
Deutschland have plans to appoint another distributor in this market
sector but reserves the right to deal direct with any organisation in
the sector, especially software and services companies, which decide
not to licence Synon software from CGI. In these cases all sales and
support will be from Synon Europe. We expect these situations to be
few in number and will work with CGI to avoid the need for any such
action.
HP/UX and NT
CGI will be entitled to market, sell and support all the Synon
products made available to the German market. However, Synon
Deutschland GmbH will have the right to appoint other distributors or
agents for the HP/UX and Microsoft NT environments.
For the duration of this agreement CGI shall not offer Complementary
Marketing Agreements to any of the following companies for the AS/400
market; Progress, Lansa, JBA, Powersoft, Gupta.
If such an agreement is made by CGI with the above companies, Synon
reserves the right to appoint other distributors for the German AS/400
and RS 6000 markets.
5.0 CONTRACT TERM
The term of the contract will be a minimum of three years from the
date of signature, after which it will be renewable as stated in
clause 10.1 of the International Distribution Agreement.
6.0 TRANSFER STRATEGY
All Synon Deutschland employees and those of Synon Europe working in
Germany will get an offer from CGI for suitable employment under CGI
INFORMATIK terms and conditions from the date of this contract. CGI
will make the payments for all the costs caused by their transfer to
CGI and for the costs of terminating those who are unwilling to be
transferred. This costs are calculated in the one-time costs of 375 K
Pound and all payments will be seen as payments to SYNON and quoted
at 100%.
The same procedure is planned for all fixed assets and leasing or
renting agreements which are also calculated in the one-time cost (see
attached list).
7.0 SOFTWARE AND SERVICE COMPANY CONFLICT
We do not expect there to be any problems with the above companies,
but if a conflict should arise and if the company concerned asks to
deal direct with Synon Europe Ltd, then it shall be able to do so.
SYNON/CGI CONFIDENTIAL
Page 3 of 6
<PAGE> 29
8.0 ANNOUNCEMENT PLAN
INTERNAL
- 2nd week of January 1996 (assuming this agreement is signed by
12.01.96).
- Distributor Kick-Off for Synon Europe Ltd in mid-January 1996.
EXTERNAL
- Common letter to Users in January 1996
- Kick-Off User meeting in 1st Quarter 1996.
- Press Releases.
- Road Shows in IBM Branch offices.
9.0 SYNON MAINTENANCE AGREEMENTS
Maintenance agreements that are transferred to CGI under the terms of
this agreement and all those agreements signed by CGI as Synon's
distributor shall revert to Synon at the end of this agreement unless
extended or whenever the terms of this agreement are breached.
10.0 INITIAL INVESTMENT FOR CGI INFORMATIK'S SERVICES & APPLICATIONS
DEVELOPMENT BUSINESS
CGI INFORMATIK will licence the date of this contract for use in its
professional services and application development business but not for
resale a 15 pack of Obsydian with three generators per seat (one AS/400
client server, one 5250 and one ODBC), plus one NT Generator, plus one
HP/UX generator, plus Import Facility plus DB2/400 import plus
Application Framework Class Library. The price list for such software
is [ ]* which after CGI's discount would reduce to [ ]*. It is further
agreed to reduce the price by the [ ]* giving the final price of [ ]*.
Upgrades for these seats will be charged at [ ]*. Additional copies for
sales demonstrations and customer support will be provided at no
charge.
11.0 Exceeding the estimated existing maintenance
[ ]*
12.0 Collecting receivables
SYNON Deutschland will be responsible for collecting all receivables
due as of the date of the agreement between us.
13.0 Licence or service backlog
[ ]*
SYNON/CGI CONFIDENTIAL
Page 4 of 6
* Confidential treatment has been requested from the
Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
<PAGE> 30
[ ]*
SYNON/CGI CONFIDENTIAL
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions have been filed separately with the Commission.
Page 5 of 6
<PAGE> 31
Pound 375 K one-time costs
Space Pound 50 K
Fixed assets Pound 70 K
Leases Pound 25 K
Professional fees Pound 15 K
-----------
Pound 160 K
Staff costs Pound 215 K
-----------
Pound 375 K
CIG INFORMATIK GMBH SYNON EUROPE Ltd.
[SIG] 26/1/96 /s/ DUNCAN MOORE
- -------------------------------- -----------------------------------
Date Date Duncan Moore
Page 6 of 6
<PAGE> 1
EXHIBIT 10.25
Agreement 350-132
This is an agreement between International Business Machines Corporation (IBM),
a New York Corporation, and Synon Corporation (Synon), located at 1100 Larkspur
Landing Circle, Larkspur, CA 94939. Pursuant to this Agreement, IBM and Synon
will cooperatively develop object-based class libraries (Class Libraries) as
set forth below.
l. PURPOSE
IBM and Synon hereby establish the terms for the Synon IBM Class
Library Endeavor (SIRCLE), whereby they will develop Class Libraries
for use by IBM and Synon's customers and business partners. The Class
Libraries will be developed in IBM's "Jumpstart" laboratory (Jumpstart
Lab) in Rochester, Minnesota, and marketed to Independent Software
Vendors (ISVs) and customers.
2. TERM
The term of this Agreement will begin when this Agreement is executed
by both parties, and end December 31, 1997, subject to earlier
termination as permitted by this Agreement.
3. TERMINATION
A. Termination of Agreement
Either party may terminate this Agreement at any time for
cause, upon written notice, as provided herein. Either party
may also terminate this Agreement at any time without cause
upon ninety (90) days' prior written notice, in either case,
with no obligations, or liability to each other for damages of
any kind, other than as provided herein.
B. Termination for Cause
Either party may terminate this Agreement for cause upon the
material breach by the other party of in obligations under
this Agreement. For purposes of this Section, material breach
shall include, but not be limited to, the following:
1) The commencement of any proceeding, voluntary or
involuntary, in bankruptcy, insolvency, dissolution
or liquidation by or against the other party.
2) Other than the assignment of assets for purposes of
securing financing in the ordinary course of
business, any assignment of assets for the benefit of
creditors.
Page 1 of 7
<PAGE> 2
3) Any assignment of this Agreement, or any obligation
or right under it to an entity other than a parent or
subsidiary company, to include without limitation, a
transfer of a majority interest in either company,
the sale, acquisition or merger or either company
with a third party who is not a parent or subsidiary
company, without the other party's prior written
consent as provided herein.
4) Either party is subject to property attachment or
court injunction or court order which affects its
ability to perform under this Agreement.
5) The failure of either party to substantially conform
with its obligations under this Agreement and any of
its attachments.
Termination of this Agreement or exercise of rights and
remedies provided under this Agreement shall not be exclusive
and shall not in any way limit any actions at law or otherwise
that a party hereto may be entitled.
4. RESPONSIBILITIES
A. General Responsibilities
IBM and Synon hereby agree that the SIRCLE project outline,
attached to this Agreement as Exhibit A, is the general
statement of milestones and deliverables required by IBM and
Synon under this Agreement. IBM and Synon agree that from
time to time during this Agreement, said milestones and
deliverables may need to be modified or revised. IBM and
Synon agree that before any modifications are nude to Exhibit
A, each party's technical coordinator must provide his or her
written approval.
B. Overview of IBM Responsibilities
In addition to those responsibilities set forth in Exhibit A,
IBM shall:
1) Work with Synon to determine which Class Libraries
Synon will create under this Agreement;
2) Review and provide feedback to Synon regarding the
Class Libraries designed and developed by Synon under
this Agreement;
3) Provide funding to support SIRCLE, including funding
for two developers with demonstrated Obsydian
proficiency and one IBM project manager who will
oversee the management of SIRCLE on behalf of IBM;
Page 2 of 7
<PAGE> 3
4) Make available for Synon's use the necessary office
space at IBM's Rochester facility in which Synon
shall conduct its object technology development
efforts; and
5) IBM will provide for Synon's use on IBM's premises
one (1) AS/400 model # 40S and any personal computer
equipment that Synon needs to work on its class
libraries while at IBM's Rochester facility.
C. Overview of Synon Responsibilities
In addition to those responsibilities set forth in Exhibit A,
Synon shall:
1) Prepare for, and take to market (i.e. creation of
Class Library demonstration), completed Class
Libraries;
2) Demonstrate for IBM's review and acceptance each
Class Library and ISV prototype application; and
3) Provide staffing to support SIRCLE, including one
senior application designer with demonstrated
Obsydian proficiency and at least two ISV interns
with demonstrated expertise with the Obsydian tool.
D. Overview of Joint IBM and Synon Responsibilities
IBM and Synon agree that in addition to the above-identified
responsibilities, as well as those set forth in Exhibit A,
both parties jointly shall:
1) Oversee overall management responsibility for
activities conducted in and by the Jumpstart Lab;
2) Use the Obsydian tool to develop class libraries that
utilize AS/400 advanced functions, including
Facsimile Support/400; and
3) Work cooperatively to determine whether additional
Class Libraries should be developed.
5. DELIVERABLES
Under this Agreement, Synon shall deliver the following:
[ ]*
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission.
Page 3 of 7
<PAGE> 4
6. TECHNICAL COORDINATORS
As set forth below, each party shall have a technical coordinator
assigned to the SIRCLE project. It shall be the responsibility of
each technical coordinator to review and approve the creation of Class
Libraries that shall be developed using the Obsydian tool.
Technical Coordinators:
IBM: Sally Krusing
IBM Corporation
3605 Highway 52 North
Rochester, MN 55901
Telephone:(507) 253- 5506
Facsimile:(507) 253- 4884
e-mail:[email protected]
Synon: Alan Zwiren
Synon Corporation
1100 Larkspur Landing Circle
Larkspur, CA 94939
Telephone:(415) 461-5000
Facsimile:(415) 461-2171
e-mail:[email protected].
7. COMPENSATION
Except as otherwise set forth in this Agreement, it is understood that
neither party will compensate the other for the services and
Deliverables furnished in accordance with the provisions of this
Agreement and Exhibit A. Synon is responsible for the payment of all
taxes associated with the provision of its services and Deliverables
to IBM under this Agreement. There are no express or implied rights
by Synon to receive commissions, royalties, finder's fees or other
consideration from IBM.
Synon is solely liable for payment to all third parties with whom it
deals in carrying out the terms of this Agreement. Synon agrees to
incorporate in order forms and contracts with such third parties a
statement that the third party shall look solely to Synon for payment
and to no other party.
8. ROYALTY PAYMENTS TO IBM
[ ]*
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission.
Page 4 of 7
<PAGE> 5
[ ]*
Payments: Any royalty payments owing to IBM will be due within
30 days after the close of each calendar quarter and
will be made payable to IBM Corporation at the
following address:
IBM Corporation
Attn: Accounts Receivable
P.O. Box 75082
Charlotte NC 28275-0082
Audit: Synon will maintain complete and accurate records for two (2)
years following the termination or expiration of this Agreement, which
an accounting organization selected by IBM will have access to, upon
reasonable notice
9. RIGHTS IN DATA
A. This Agreement does not grant IBM a license to any of Synon's
copyrights in the Class Libraries. This Agreement does not grant
Synon a license to any of IBM's copyrights, patents or other
intellectual property rights in any materials provided to Synon by IBM
hereunder.
B. Synon hereby grants to IBM (1) a worldwide, non-exclusive,
irrevocable, and royalty-free license to use, execute, reproduce,
distribute copies of, display and combine the Class Libraries with any
equipment for testing and demonstration purposes within IBM and
demonstration purposes outside of IBM, and (2) the right to authorize
its majority owned subsidiaries to do any of the foregoing.
C. Synon hereby grants to IBM a worldwide, non-exclusive,
irrevocable and royalty-free license to use, in any manner it deems
appropriate and without accounting to Synon, any patentable invention
or process which is conceived or reduced to practice by Synon during
the course of this Agreement and as a result of activities hereunder.
IBM may license its subsidiaries to do any of the foregoing.
10. INDEMNIFICATION
Synon agrees to fully indemnify, defend, and hold ]IBM harmless
against any claim that the Class Libraries, or any preexisting work
from which the Class Libraries are prepared, infringe any intellectual
property right of any third party or any other claims arising from the
Class Libraries.
11. WARRANTY
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission.
Page 5 of 7
<PAGE> 6
Neither party makes any warranty in connection wit this Agreement.
IBM does not represent or commit that any future IBM announcements or
products related to this effort, including interface data related to a
product, will be made available. Any planned or existing IBM products
or announcements are subject to change without notice. All
information, materials, and services furnished by either party under
this Agreement will be on an "AS IS" basis. THE PARTIES EXPRESSLY
DISCLAIM THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
12. GENERAL
Notices: Any notice required or permitted under this Agreement should
be sent to the applicable technical coordinator. Notices are
effective when received by the appropriate coordinator as demonstrated
by reliable written confirmation (i.e., certified mail receipt,
courier receipt or facsimile confirmation sheet).
Limitations: IBM's entire liability and Synon's exclusive remedy for
actual damages from any cause whatsoever relating to the subject
matter of this Agreement will be limited to $25,000 or the value of
this Agreement, whichever is less. This limitation will apply, except
as otherwise stated in this section, regardless of form of action,
whether in contract or in tort, including negligence. This limitation
will not apply to claims by Synon for bodily injury or damage to real
property or tangible personal property for which IBM is legally
liable.
IN NO EVENT WILL IBM OR ITS SUBSIDIARIES BE LIABLE FOR ANY LOST
REVENUE, LOST PROFITS OR CONSEQUENTIAL, INCIDENTAL OR PUNITIVE
DAMAGES, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Freedom of Action: This Agreement will not restrict either party from
developing, acquiring, and marketing products, services, and materials
that are competitive with the Class Libraries or other products,
irrespective of any similarities that may exist.
Trademarks: This Agreement (does not grant Synon any right to use
IBM's trademarks, trade names or service marks in connection with any
of your products, services, or publications, however, Synon may
represent that the Class Libraries operate with certain IBM systems so
long as the reference is accurate and not misleading.
Assignment: This Agreement is not assignable without the prior
written consent of the other party, except that IBM may at its option
assign this Agreement to IBM subsidiaries.
Governing Law: New York law shall govern the terms of this Agreement.
Entire Agreement: This Agreement and any of its attachments are the
complete and
Page 6 of 7
<PAGE> 7
exclusive agreement between the parties relating to the subject
matter. In the event of a conflict, the terms of Exhibit A shall
govern.
By signing below for our companies, each of us agrees to the terms of this
Agreement. Once signed, 1) both parties agree any reproduction of it made by
reliable means (for example, photocopy or facsimile) is an original unless
prohibited by local law and 2) activities are subject to it.
Agreed To: Agree To:
Synon Corporation International
Business
Machines Corporation
By: /s/ Paul K. Wilde By: /s/ David E. Penn
----------------------------- -------------------------------
Name: Paul K. Wilde Name: David E. Penn
--------------------------- -----------------------------
Date: 3-24-97 Date: 4/1/97
--------------------------- -----------------------------
Address: Synon Corporation Address: IBM Corporation
1100 Larkspur Landing Circle 3605 Highway 52 North
Larkspur, CA 94939 Rochester, MN 55901
Page 7 of 7
<PAGE> 8
SYNON IBM
EXHIBIT A to Agreement 350-132
SIRCLE Project outline.
MILESTONES AND DELIVERABLES.
[ ]*
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission.
Page 1 of 2
<PAGE> 9
[ ]*
DEFINITIONS:
SYNON = Synon marketing/project coordinator
IBM = IBM lab coordinator
TEAM = Lab team staff
GROUP = Lab team staff and Class Library development staff
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions have been filed separately with the
Commission.
Page 2 of 2
<PAGE> 10
IBM Agreement for Exchange of Confidential Information
Supplement for Disclosure
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Agreement number: 92-0016
Supplement number: RST-08
Discloser: NAME AND ADDRESS OF RECIPIENT'S POINT OF CONTACT:
IBM X Alan Zwiren Dave Truxal
----- Synon, Inc IBM Corporation
You X 1100 Larkspur Landing Circle 3605 Highway 52 North
----- Larkspur CA 94939 Rochester, MN 55901-7829
United States United States
Initial Disclosure Date: January 14, 1997 Final Disclosure Date: January 14, 2000
---------------- ----------------
Use the actual date of disclosure or the date on which Use the date on which the disclosure is to be
access to Information, such as may be contained in a completed or the date on which access to information
data base, is to be initiated. Information becomes will be terminated. The confidentiality period for
subject to this Supplement and the referenced Information extends from this date.
Agreement on this date.
</TABLE>
NOTE: Both dates must be provided, even it they are the same.
Reminder: The Discloser must provide the Recipient a written summary promptly
after a disclosure that 1) is an oral presentation, 2) consists of the delivery
of items that are not marked with a restrictive legend of the Discloser or 3)
consists of access to Information that is not marked with a restrictive legend
of the Discloser.
Confidential Information:
The following is a nonconfidential description of Information the Discloser
wishes to disclose.
IBM may disclose to Synon, Inc confidential information regarding San Francisco
including:
- - on-line documentation and class libraries for object APIs
- - early release code
- - early drivers
Synon, Inc may disclose to IBM confidential information including:
- - product early design technical information
- - product early design documentation
- - product specifications
- - feedback on product design
Page 1 of 2
<PAGE> 11
ADDITIONAL TERMS AND CONDITIONS, IF ANY:
1. Synon agrees that the terms and conditions of the attached
International License Agreement for Early Release of Programs and
Materials shall apply to this Supplement and disclosures made
thereunder.
2. This Supplement will serve as written confirmation for any oral and/or
visual disclosure made under this Agreement consistent with the above
nonconfidential description.
3. Disclosed information continues to be subject to the referenced
Agreement for five (5) years following the date of disclosure.
4. The loading, if any, of Synon's programs, data or source code which
may be considered confidential by Synon, into any AS/400 System at IBM
will not be considered disclosure of confidential information from
Synon to IBM, except to the extent that such programs, data or source
code are actually reviewed by IBM employees. IBM shall review
such programs, data or source code only to the extent that Synon's
employees approve, and only to the extent necessary to allow IBM
to provide Synon the most appropriate technical assistance. Synon's
programs, data or source code will be subject to System security
functions and will be removed from the System at the conclusion of the
technical assistance.
IBM neither makes nor implies any guarantee with respect to System
availability, function, performance, or quality of the final result of
activities performed under this Agreement.
________________________________________________________________________________
Both of us agree that this Supplement and the IBM Agreement for Exchange of
Confidential Information are the complete and exclusive agreement regarding
this disclosure and replace any prior oral or written communications between
us. Any reproduction of this Supplement made by reliable means (for example,
photocopy or facsimile) is considered an original.
THE ONLY TIME BOTH OF US ARE REQUIRED TO SIGN THIS SUPPLEMENT IS WHEN IT
CONTAINS ADDITIONAL TERMS.
<TABLE>
<S> <C>
Agreed to: Agreed to.
SYNON, INC INTERNATIONAL BUSINESS MACHINES CORPORATION
By By
------------------------------- -------------------------------
Authorized signature Authorized signature
Name (type or print): Name (type or print): M. EILEEN TUNE
Date: Date: JANUARY 10, 1997
Identification number: 8722774 Agreement number: 92-0016
Address: 1100 LARKSPUR LANDING CIRCLE IBM Office address: 3605 HIGHWAY 52 NORTH
LARKSPUR CA 94939 ROCHESTER, MN 55901-7829
UNITED STATES
</TABLE>
After signing, please return a copy of this Agreement to the local "IBM Office
address" shown above.
Page 2 of 2
<PAGE> 12
IBM Agreement for Exchange of Confidential Information
Security Requirements
________________________________________________________________________________
Agreement Number: 92-0016
Supplement Number: RST-08
You and IBM agree that the following additional terms and conditions apply to
Confidential Information (Information) that is disclosed under the provisions
of the Agreement for Exchange of Confidential Information and is described in
the referenced Supplement.
These terms and conditions prevail over those of the referenced Agreement, but
do not prevail over those of the referenced Supplement. Any changes or
exceptions must be approved in writing by the Discloser. Subject to such
approval, the Recipient will implement security measures comparable to the
minimum requirements set forth below. The Recipient will conduct periodic
audits to ensure compliance with Security Requirements.
1. GENERAL SECURITY REQUIREMENTS
The Recipient will protect Information by:
a. providing secure, lockable work facilities where all work using
Information will be performed and where all copies of Information
will be kept. The Recipient will restrict access to such
facilities to authorized persons and will store all copies of
Information in secure, locked storage facilities. Copying of
Information will be authorized by the Discloser;
b. marking storage media, printed material, machine readable files
and other similar materials that are copies of extracts of
Information with the restrictive legend provided by the Discloser;
c. using a written receipt and acknowledgment system for transmittal
of Information between the Discloser and the Recipient;
d. upon request, returning to the Discloser for disposition or
destroying all copies of Information;
e. recording and investigating all unauthorized attempts to gain
access to Information. The Recipient will promptly notify the
Discloser of any loss, theft or unauthorized disclosure of
Information;
f. maintaining current and historical records, indicating as
applicable, 1) each person authorized to access Information and
the relevant date(s), 2) each copy of Information and to whom
distributed, 3) each encryption key and password and to whom
disclosed, and 4) each physical storage media containing
Information and its disposition, and 5) each audit conducted and
its results. The Recipient will make such records available to the
Discloser upon request; and
g. using appropriate security precautions when traveling with
Information such as not putting Information in baggage that will
be checked and not leaving Information unsecured.
2. SYSTEMS SECURITY REQUIREMENTS
If Information is delivered to the Recipient in softcopy form or is
stored electronically in the Recipient's Information processing
system(s), the Recipient will also implement the following requirements
for such Information:
a. each multiple-user information processing system will have
password-controlled access. Each user will have a unique user ID
and associated password. Datasets will be protected and passwords
will be controlled by IBM Resource Access Control Facility (RACF)
or a security program providing equivalent protection. Otherwise,
each dataset containing Information will be password protected
and, if practical, each password will be unique. Local Area
Network environments will have controls similar to the
requirements set forth above. Access to Information on standalone
workstations will be controlled. When such systems are not in use,
Information will be secured.
b. each password will be randomly selected, non- obvious and
non-trivial. Log on passwords will be changed at least every 60
days. Dataset passwords will be changed at least every six months;
c. dial-up facilities will be protected by a secure call-back system
or other secure method;
d. if required by the Discloser, Information will be encrypted when
it is electronically transmitted outside the Recipient's
facilities or when public communications facilities are used;
e. sharing of passwords and disclosure of passwords and encryption
keys will be limited to authorized persons;
f. displaying and printing of passwords will be either inhibited or
masked; and
g. before any physical storage media containing Information is
released for reuse, it will be degaussed or completely
overwritten.
Page 1 of 1
<PAGE> 13
IBM INTERNATIONAL LICENSE AGREEMENT FOR EARLY RELEASE OF PROGRAMS AND
MATERIALS
PART 1 - GENERAL TERMS
________________________________________________________________________________
PLEASE READ THIS AGREEMENT CAREFULLY BEFORE USING THE PROGRAM OR MATERIAL. IBM
WILL ONLY LICENSE THE PROGRAM OR MATERIAL TO YOU IF YOU FIRST ACCEPT THE TERMS
OF THIS AGREEMENT. REGARDLESS OF HOW YOU ACQUIRE THE PROGRAM OR MATERIAL
(ELECTRONICALLY, PRELOADED, ON MEDIA OR OTHERWISE), BY USING THE PROGRAM OR
MATERIAL YOU AGREE TO THESE TERMS.
The Program or Material is owned by the International Business Machines
Corporation or its subsidiaries (IBM) or IBM's Suppliers, and is copyrighted
and licensed, not sold. The "Program" means the original program and all whole
or partial copies of it, including portions merged into other Programs. A
Program consists of machine-readable instructions and audio/visual content
(such as images, text, recordings, or pictures). A "Material" consists of
Program documentation and programming tools.
The term "Early Release" means that the Program or Material is not formally
released or generally available. The term does not imply that formal release
or general availability will take place. IBM does not guarantee that a Program
or Material made generally available will be similar to, or compatible with,
Early Release versions.
IBM grants you a nonexclusive, nontransferable license under the terms stated
below to the Program or Material in the country in which you acquire it.
This Agreement is the complete and exclusive agreement regarding a Program or
Material and replaces any prior oral or written communications between you and
IBM. For a change to be valid, both you and IBM must sign it. THIS AGREEMENT
INCLUDES PART I - GENERAL TERMS AND PART 2 - COUNTRY UNIQUE TERMS. THE TERMS
OF PART 2 MAY REPLACE OR MODIFY THOSE OF PART 1.
1. LICENSE:
Under this license, you may use the Program or Material (and any copies of it)
only for internal evaluation. You may make a reasonable number of copies of
the Program or Material in support of such evaluation unless IBM identifies a
specific number of copies in the documentation accompanying the Program or
Material. The terms of this license apply to each copy you make. You must
reproduce the copyright notice and any other legend of ownership on each copy,
or partial copy, of the Program or Material.
You may not: 1) use or copy the Program or Material except as provided in this
Agreement; 2) modify or merge the Program or Material; 3) reverse assemble,
reverse compile or otherwise translate the Program or Material; 4) sublicense
or assign the license for the Program or Material; or 5) distribute the Program
or Material to any third party.
This license will begin with your first use of the Program or Material and end
June 30, 1997. Unless we specify that you may retain the Program or Material
in the documentation accompanying the Program or Material (in which case, an
additional charge will apply), you agree to destroy the Program or Material and
all copies of it within 30 days of when this license ends.
2. NO WARRANTY:
SUBJECT TO ANY STATUTORY WARRANTIES WHICH CANNOT BE EXCLUDED, IBM MAKES NO
WARRANTIES OR CONDITIONS EITHER EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION, WARRANTIES OF NON-INFRINGEMENT AND THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, CONCERNING THE FUNCTION,
PERFORMANCE OR DOCUMENTATION FOR THE PROGRAM OR MATERIAL.
This exclusion also applies to any of IBM's subcontractors, suppliers or
program developers (collectively called "Suppliers').
3. LIMITATION OF LIABILITY:
NEITHER IBM NOR ITS SUPPLIERS WILL BE LIABLE FOR ANY DIRECT OR INDIRECT DAMAGES,
INCLUDING WITHOUT LIMITATION, LOST PROFITS, LOST SAVINGS, OR ANY INCIDENTAL,
SPECIAL, OR OTHER ECONOMIC CONSEQUENTIAL DAMAGES, EVEN IF IBM IS INFORMED OF
THEIR POSSIBILITY. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR LIMITATION
OF INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE EXCLUSION OR LIMITATION MAY
NOT APPLY TO YOU.
Page 1 of 3
<PAGE> 14
4. RIGHTS IN DATA:
You hereby assign to IBM all right, title, and interest (including ownership of
copyright) in any data, suggestions, and written materials related to your use
of the Program or Material you provide to IBM. If IBM requires it, you agree
to sign an appropriate document to assign such rights.
5. GENERAL
Neither of us will charge the other for this license or any work performed as a
result of this Agreement.
You agree to: 1) maintain a record of all copies of the Program or Material
and 2) ensure that anyone who uses the Program or Material (accessed either
locally or remotely) does so only for your authorized use and complies with the
terms of this Agreement.
All Materials licensed under this Agreement shall be subject to the terms and
conditions of 92-0016.
IBM may terminate this license immediately if you fail to comply with the terms
of this Agreement. If we do so, you agree to immediately destroy the Program
or Material and all copies you made of it.
Neither you nor IBM is responsible for failure to fulfill any obligations due
to causes beyond its control.
You may not export the Program or Material.
This Agreement is governed by the laws of the country in which you acquired the
Program or Material except: 1) in Australia, this Agreement will be governed by
the laws of the State or Territory in which the transaction is performed; 2) in
Central Europe and Russia, this Agreement will be governed by the laws of
Austria; 3) in Estonia, Latvia, and Lithuania, Finnish law shall apply; 4) in
Canada, the laws of the Province of Ontario govern this Agreement; and 5) in
the United States and Puerto Rico and People's Republic of China, the laws of
the State of New York govern this agreement.
Page 2 of 3
<PAGE> 15
IBM INTERNATIONAL LICENSE AGREEMENT FOR EARLY RELEASE OF PROGRAMS AND
MATERIALS
PART 2 - COUNTRY UNIQUE TERMS
________________________________________________________________________________
ASIA PACIFIC
AUSTRALIA: NO WARRANTY (SECTION 2): The warranties specified this Section are
in addition to any rights you may have under the Trade Practices Act or other
legislation and are only limited to the extent permitted by the applicable
legislation.
LIMITATION OF LIABILITY (SECTION 3): The following paragraph is added to this
Section:
Where IBM is in breach of a condition or warranty implied by the Trade
Practices Act 1974, IBM's liability is limited to: (a) where IBM supplied
services, the cost of having the services supplied again, or (b) where IBM
supplied goods, the repair or replacement of the goods, or the supply of
equivalent goods. Where that condition or warranty relates to right to sell,
quiet possession or clear title, or the goods are of a kind ordinarily acquired
for personal, domestic or household use or consumption, then none of the
limitations in this paragraph apply.
NEW ZEALAND: NO WARRANTY (SECTION 2): The warranties specified this Section
are in addition to any rights you may have under the Consumer Guarantees Act
1993 or other legislation which cannot be excluded or limited. The Consumer
Guarantees Act 1993 will not apply in respect of any goods or services which we
provide, if you require the goods and services for the purposes of a business
as defined in the ACT.
LIMITATION OF LIABILITY (SECTION 3): The following paragraph should be added to
this Section:
Where products or services are not acquired for the purposes of a business as
defined in the Consumer Guarantees Act 1993, the limitations in this Section
are subject to the limitations in that Act.
EUROPE, MIDDLE EAST, AFRICA (EMEA)
GERMANY: NO WARRANTY (SECTION 2): The warranty for an IBM Program covers the
functionally of the Program for its normal use. In case a Program is delivered
without specifications, IBM will only warrant that the Program information
correctly describes the Program and that the Program can be used according to
the Program information. The minimum warranty period is six (6) months.
LIMITATION OF LIABILITY (SECTION 3): The limitations and exclusions specified
in the Agreement will not apply to damages caused by us with intention or gross
negligence. IBM is liable for assured characteristics.
IRELAND: NO WARRANTY (SECTION 2): Except as expressly provided in these terms
and conditions, all statutory conditions, including all warranties implied, but
without prejudice to the generality of the foregoing all warranties implied by
the Sale of Goods Act 1983 or the Sale of Goods and Supply Act 1980 are hereby
excluded.
UNITED KINGDOM: LIMITATION OF LIABILITY (SECTION 3): Add the following
paragraph at the end of the first paragraph:
The limitation of liability shall not apply to any breach of IBM's obligations
implied by Section 12 of the Sales of Goods Act 1979 or Section 2 of the Supply
of Goods and Services Act 1982.
Page 3 of 3
<PAGE> 1
EXHIBIT 10.26
SYNON
SOFTWARE LICENSE AGREEMENT--PERPETUAL SYNON
SYNON
- --------------------------------------------------------------------------------
Software License Agreement between Synon, Inc. ("Synon") and the undersigned
Licensee ("Licensee"). This agreement sets forth the terms and conditions under
which Synon licenses Licensee to use the Programs in object code listed in
Schedule A ("Program(s)") and supporting documentation delivered with the
Program(s).
LICENSE: In consideration of payment of the License Fee specified in Schedule A
and subject to the terms hereof, Synon grants to Licensee a perpetual, personal,
non-transferable, non-exclusive license to use the Program(s) on the computer at
the location specified below. Unless otherwise agreed to in writing by Synon,
Licensee agrees (i) not to use the Program(s) to develop application software
for entities other than Licensee, (ii) not to permit any other entity to use the
Program(s) on a timesharing or other basis and, (iii) not to permit any other
entity to use the application software developed by the Program(s).
Licensee agrees that, upon execution of this Agreement, the License Fee is
Payable as provided in Schedule A. Failure to make payment of the License Fee
when due will be a breach of this Agreement, and in the event of such a breach,
Synon may render the Program(s) inoperative by withholding authorization codes
and may terminate this Agreement by written notice to Licensee. Licensee
acknowledges that the Program(s) will be or become inoperative if Synon
withholds authorization codes.
SYNON'S RIGHTS. Synon represents and warrants that it has the right to grant
this license. Synon is acting as principal and not as agent for any affiliate or
related entity of Synon in granting this license. Licensee acknowledges that it
has and is acquiring no rights against any affiliate or related entity of Synon
or any third party who may own the Program(s).
LIMITATION OF LIABILITY. Licensee agrees that, except for Synon's obligations to
indemnify Licensee under infringement actions, as provided herein, Synon's
liability for damages under or in connection with this Agreement, regardless of
the form of action, is limited to the License Fee received under this Agreement.
In no event will Synon be liable for consequential, indirect or incidental
damages, even if Synon foresees or has been advised of the possibility of those
damages. Licensee acknowledges that the amount of the License Fee payable under
this Agreement is related to the foregoing limitations on Synon's liability and
that the License Fee would be greater if Synon's liability were not so limited.
THIS AGREEMENT INCLUDES THE TERMS SET FORTH ON THE REVERSE SIDE OF THIS SHEET.
BY EXECUTION OF THIS AGREEMENT, LICENSEE ACKNOWLEDGES THAT IT HAS READ AND
ACCEPTED THOSE TERMS.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
LICENSEE: SYNON, INC.:
--------------------------- ------------------------------------------
By: By:
--------------------------------- ---------------------------------------------------
Printed Name: Printed Name:
---------------------- -----------------------------------------
Title: Date: Title: Date:
------------------------ -------------- ------------------------- ----------------
SCHEDULE A: CPU Model: CPU Serial #:
--------------------------------------------------------------- -----
Program: License Fee: Maint. Fee:
--------------------------------------- --------------------- -----
Program: License Fee: Maint. Fee:
--------------------------------------- --------------------- -----
Program: License Fee: Maint. Fee:
--------------------------------------- --------------------- -----
Total License Fee (US$): Maint. Fee:
--------------------- -----
Payable: Payable:
--------------------- -----
Site Address:
--------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
UPGRADES. This License is for use of the Program(s) on the CPU model specified
in Schedule A. If Licensee desires to use the Program(s) on a different CPU
model, Synon may charge an Upgrade Fee and an increased Maintenance Fee in
accordance with Synon's policy then in effect. Failure to make payment of the
Upgrade Fee when due will be a breach of this Agreement, and in the event of
such a breach, Synon may render the Program(s) inoperative on the new CPU model
by withholding authorization codes. Synon will issue a new authorization code
for the upgraded CPU model upon payment of the Upgrade Fee.
SUPPORT AND MAINTENANCE. Synon will provide Licensee with the following support
and maintenance for the Program(s) (i) for the first 90 days from the date of
this Agreement without additional charge, (ii) for the next 12 months upon
payment by Licensee of the Maintenance Fee by the date specified in Schedule A
and (iii) on an annual basis thereafter subject to payment of the applicable
Maintenance Fee within 30 days of invoice.
1. Telephone support through Synon's offices;
2. The right to receive support services at Licensee's site, at
Synon's standard billing rate, subject to availability and
scheduling of Synon personnel;
3. Updated versions of the Program(s) as they may be released; and
4. Error corrections as made.
WARRANTY. Synon warrants that the Program(s) will perform in substantial
compliance with the reference manual supplied by Synon with the Program(s). This
warranty shall extend for a period of 90 days from the date of this Agreement.
Synon's sole obligations in the event of a breach of this warranty will be to
correct any material defects or errors of which it is given written notice
within the 90 day period or, if it fails to correct those errors within 30 days
of receipt of written notice, to refund to Licensee the License Fee, if any,
against return of the Program(s) and all supporting documentation. Synon also
warrants that the Program(s) does not, as of the date of this Agreement,
infringe any copyright, trade secret or issued United States patent of any third
party. Synon's sole obligations in the event of breach of this warranty of
non-infringement are those specified in this paragraph. Synon agrees to
indemnify Licensee against legal fees and liability to third parties arising
from any claim of such infringement. Synon shall have the right to control the
defense or settlement of any such claim. If use of the Program(s) by Licensee is
enjoined by any such infringement proceeding, Synon shall if possible without
unreasonable expense obtain the right for Licensee to use the Program(s), or
shall refund to Licensee the License Fee, if any, paid under this Agreement for
the Program(s). Except for the express warranties made in this paragraph, SYNON
MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROGRAM(s),
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR
PURPOSE.
TAXES. Licensee agrees to pay, or reimburse Synon for, any taxes resulting from
this Agreement, exclusive of taxes based on Synon's net income.
PROPRIETARY DATA. Licensee acknowledges that the Program(s) and the supporting
documentation constitute and will remain property and trade secrets of Synon,
its affiliates and/or third parties and their respective successors and assigns,
and Licensee does not have and shall not acquire any proprietary rights thereto.
Licensee agrees that it will not, and will not permit others to, copy or
decompile, or use in any way not expressly authorized by this Agreement, the
Program(s) or the supporting documentation. Licensee may, however, make one copy
of the Program(s) for backup purposes.
TERMINATION. Synon may terminate Licensee's right to use the Program(s) by
notice in writing to Licensee if Licensee breaches any material term of this
Agreement and such breach is not cured within 10 days after notice from Synon to
Licensee. Upon any termination of Licensee's rights to use the Program(s),
Licensee shall discontinue use of the Program(s), return all copies of the
Program(s) and supporting documentation and delete all copies of the Program(s)
from Licensee's CPUs and certify to Synon that it has done so.
MISCELLANEOUS. This Agreement is the complete statement of the terms and
conditions of Synon's license of the Program(s) and Synon's obligations to
Licensee. There are no representations, warranties, undertakings or agreements
between Synon and Licensee except as set forth in this Agreement. This Agreement
shall be governed by and construed in accordance with the laws of the State of
California. This Agreement is effective upon execution by Synon at its principal
office located in Larkspur, California, USA.
<PAGE> 1
EXHIBIT 10.27
SYNON OBSYDIAN
SOFTWARE LICENSE AGREEMENT......................................................
THIS SYNON SOFTWARE LICENSE AGREEMENT SETS FORTH THE TERMS AND CONDITIONS
UNDER WHICH SYNON, INC. ("SYNON") LICENSES
--------------------------------
("LICENSEE") LOCATED AT
-------------------------------------------------------
TO USE THE PROGRAM BELOW, IN OBJECT CODE (THE "PROGRAM"), ALONG WITH THE
SUPPORTING DOCUMENTATION DELIVERED WITH THE PROGRAM, AND BY WHICH SYNON AGREES
TO PROVIDE CERTAIN SERVICES WITH RESPECT TO THE PROGRAM.
LICENSE: In consideration of payment of the fees specified below, Synon grants
to Licensee a perpetual, personal, non-transferable, non-exclusive license to
use each copy of the Program on one computer at a time, by one user at a time,
for the sole purpose of developing software applications for:
(a) use by Licensee and affiliates sharing common majority
ownership with Licensee, or
(b) licensing to third parties who are:
(i) notified in writing that the applications were
developed using the Program, and
(ii) offered the application design model for a reasonable
fee.
Licensee agrees to pay the fees specified below within thirty (30) days of the
date of this Agreement. Failure to pay the License Fee when due will be a breach
of this Agreement, and in the event of such a breach, Synon may render the
Program inoperative by withholding authorization codes and may terminate this
Agreement by written notice to Licensee. Licensee acknowledges that the Program
will be or become inoperative if Synon withholds authorization codes.
INSTALLATION: Licensee may install the Program on any number of computers but
may use only one copy of the installed Program at a time. THIS AGREEMENT
INCLUDES THE TERMS AND CONDITIONS SET FORTH ON THE REVERSE SIDE OF THIS SHEET.
BY EXECUTION OF THIS AGREEMENT, LICENSEE ACKNOWLEDGES THAT IT HAS READ AND
ACCEPTED THOSE TERMS AND CONDITIONS.
<TABLE>
<CAPTION>
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- ------------------------------------------------------------------------------------------------------------------------------------
APPROVED FOR LICENSEE ON: ACCEPTED FOR SYNON, INC. ON:
-------------- --------------
BY: BY:
------------------------------------- --------------------------------------
PRINTED NAME: PRINTED NAME:
---------------------------- ----------------------------
TITLE: TITLE:
---------------------------------- -----------------------------------
OBSYDIAN DESIGNER PAKS:
NUMBER OF USERS: [ ] 2 [ ] 6 [ ] 10 [ ] 15 [ ] ADDITIONAL USERS $
----------
ENVIRONMENT GENERATORS:
[ ] AS/400 C/S [ ] AS/400 5250 [ ] AS/400 MEDIA ----------
[ ] NT / ODBC [ ] OPEN DATABASE [ ]
--------------------- ----------
WINDOWS FOR ORACLE7: [ ] RS/6000 [ ] HP9000
----------
CLASS LIBRARIES: [ ] APPLICATION FRAMEWORKS [ ]
---------------------- ----------
IMPORT UTILITIES: [ ] DB2/400 IMPORT [ ]
---------------------- ----------
[ ] SYNON/2E FUNCTIONS [ ] SYNON/2E DATA IMPORT
----------
LICENSE FEE $
==========
INITIAL ANNUAL UPGRADE SERVICE FEE
----------
[ ] STANDARD [ ] PREMIUM [ ] CUSTOM ANNUAL SUPPORT SERVICE FEE
----------
TOTAL FEES PAYABLE $
-----------
</TABLE>
<PAGE> 2
SYNON'S RIGHTS: Synon represents and warrants that it has the right to grant
this license. The Program is owned by Synon Corporation and is protected by
United States copyright laws and international treaty provisions. The Program
disks, tapes, CD-ROM and printed documentation may not be copied without the
prior, written permission of Synon, except that Licensee may make one copy of
the disks and tapes for back-up or archival purposes only.
SECURITY MEASURES: Synon has installed a serial numbers and security measures
into the Program to protect and enforce Synon's rights of ownership and the
Licensee's rights and limitations on use of the Program. Licensee acknowledges
that if there is a violation of the terms of this Agreement, Synon may render
the Program inoperative by withholding authorization codes and may terminate
this Agreement by written notice to Licensee, without refund of fees, unless the
violation is cured within 10 days of notice of the violation.
LIMITATION OF LIABILITY: Licensee agrees that except for Synon's indemnification
obligations specified under WARRANTY, Synon's liability for damages in
connection with this Agreement, regardless of the form of action, is limited to
the License Fees received under this Agreement. In no event will Synon be liable
for consequential, indirect or incidental damages, even if Synon has been
advised of the possibility of such damages. Licensee acknowledges that the
amount of the License Fee payable under this Agreement is related to the
foregoing limitations on Synon's liability and that the License Fee would be
greater if Synon's liability were not so limited.
TECHNICAL SUPPORT SERVICES: Synon will provide technical support services to
Licensee for the Program in accordance with the INITIAL TECHNICAL SUPPORT
ADDENDUM to this Agreement, upon payment of the fees specified in this
Agreement. Synon will provide Helpline Product Installation Service, for thirty
(30) days from the date of this Agreement, at no charge.
Technical support services for subsequent, successive annual periods will be
available to Licensee upon payment of Synon's ANNUAL SERVICE INVOICE.
Synon reserves the right to make, from time to time, amendments to the INITIAL
TECHNICAL SUPPORT ADDENDUM and its annual service offerings, and to modify its
schedule of fees for services. Synon agrees, however, that any amendments or
increase in fees will be effective only upon Licensee's annual renewal of
technical support services by payment of Synon's Annual Service Invoice.
Licensee acknowledges that continuation of the Annual Upgrade Service and prompt
installation of fixes, enhancements and new releases of the Program are critical
to optimum utilization of the Program and cost-effective support for the
Program. Accordingly, in the event that Licensee does not remain current on
Annual Upgrade Service or does not install the latest version of the Program,
Synon may impose additional charges for other support services. Synon will have
no obligation to offer, provide or reinstate Annual Upgrade Service if Licensee
allows an interruption in continuous Annual Upgrade Service.
WARRANTY: Synon warrants for a period of ninety (90) days that the original copy
of the Program will perform in substantial compliance with the documentation
supplied by Synon under this Agreement. Synon's sole obligation in the event of
a breach of this warranty will be to correct any material defects or errors of
which it is given written notice within the warranty period or, if it fails to
correct those errors within thirty (30) days of receipt of written notice, to
refund to Licensee the License Fee paid under this Agreement against return of
the Program and all supporting documentation. Synon also warrants that the
Program does not, as of the date of this Agreement, infringe any copyright,
trade secret or issued United States patent of any third party. Synon agrees to
indemnify Licensee against legal fees and liability to third parties arising
from any claim of such infringement. Except for the express warranties made in
this paragraph, SYNON MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO THE PROGRAM, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF
FITNESS FOR A PARTICULAR PURPOSE.
TAXES: Licensee agrees to pay, or reimburse Synon for, any taxes resulting from
this Agreement, exclusive of taxes based on Synon's net income
MISCELLANEOUS: This Agreement is the complete statement of the terms and
conditions of Synon's license of the Program and the obligations between Synon
and the Licensee. There are no representations, warranties, undertakings or
agreements between Synon and Licensee except as set forth in this Agreement.
This Agreement shall be governed by and construed in accordance with the laws of
the State of California. This Agreement is effective upon acceptance by Synon at
its principal office located in Larkspur, California.
<PAGE> 3
SYNON OBSYDIAN
ADDENDUM TO SOFTWARE LICENSE AGREEMENT - INITIAL TECHNICAL SUPPORT..............
In consideration of payment of the fees specified on the Software License
Agreement dated __________________ SYNON WILL PROVIDE _____________ ("LICENSEE")
WITH THE FOLLOWING ANNUAL UPGRADE SERVICE AND ANNUAL SUPPORT SERVICE FOR THE
TWELVE (12) MONTHS ENDED ___________.
<TABLE>
<CAPTION>
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- -----------------------------------------------------------------------------------------------------------------
APPROVED FOR LICENSEE ON: ACCEPTED FOR SYNON, INC. ON:
------------- --------------
BY: BY:
------------------------------------- ----------------------------------------
PRINTED NAME: PRINTED NAME:
--------------------------- ------------------------------
TITLE: TITLE:
--------------------------------- -------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
ANNUAL UPGRADE SERVICE:
-------------------------------------------------------------------------------
For the Programs licensed on the Software License Agreement, Synon agrees to
provide Licensee with access to the following services on request. Annual
Upgrade Service Fees are based on the Programs licensed.
1. Error corrections and Program refreshes as made.
2. Updated versions of the Program(s) as released.
3. Electronic Customer Support as available.
Annual Upgrade Service is required for the initial year following the
licensing of any Obsydian Program. Thereafter, Annual Upgrade Service is
available for contiguous annual period(s), for the then current version of
Obsydian, upon payment of Synon's support service invoice.
- --------------------------------------------------------------------------------
ANNUAL SUPPORT SERVICE:
- --------------------------------------------------------------------------------
SUPPORT SERVICE LEVEL: [ ] STANDARD [ ] PREMIUM [ ] CUSTOM
---------------------
[ ] UNLIMITED CALLS OR [ ] UNLIMITED CONTACTS
- --------------------------------------------------------------------------------
NAMED LICENSEE CONTACTS:
-----------------------
(1) (2)
------------------------- --------------------------
- --------------------------------------------------------------------------------
ADDITIONAL NAMED LICENSEE CONTACTS:
----------------------------------
(3) (4)
------------------------- ---------------------------
(5) (6)
------------------------- ---------------------------
- --------------------------------------------------------------------------------
ADDITIONAL SERVICE REQUESTS:
--------------------------- QUANTITY
---------------------------
- --------------------------------------------------------------------------------
<PAGE> 4
ANNUAL SUPPORT SERVICES PROVIDED:
The following levels of Obsydian support are available on an annual basis.
During the initial year for each licensed location, at a minimum,
Synon's Standard level of Annual Support Service is required as a condition of
licensing. Thereafter, Annual Support Service is available upon payment of
Synon's Annual Service Invoice. Customer Support HelpLine is not intended to
replace documentation provided with the Program or to substitute for the
recommended Program training available from Synon.
STANDARD SUPPORT 1. Customer Support HelpLine response within 4
SERVICE hours for: (a) unlimited telephone service
requests from 2 named contacts, or (b) up to 50
telephone service requests from unlimited
Licensee contacts.
2. Additional named contacts and additional telephone
service requests available for an additional fee.
3. On-line Program instructions and information built
over Synon's internal database.
4. Five day response time for material Program errors
to Escalation Team.
5. Ten day response time for material Program errors
to Development.
6. Annual Service Report.
- --------------------------------------------------------------------------------
PREMIUM SUPPORT 7. Customer Support HelpLine response within 1 hour
SERVICE for:
(a) unlimited telephone service requests from 4
named contacts, or
(b) up to 90 telephone service requests from
unlimited Licensee contacts.
8. Additional named contacts and additional telephone
service requests available for an additional fee.
9. On-line Program instructions and information
built over Synon's internal database.
10. Two day response time for material Program errors
to Escalation Team.
11. Five day response time for material Program errors
to Development.
12. Six hours of telephone consultation on Program
usage.
13. Remote diagnostics for problem determination.
14. Quarterly Status Review.
15. Quarterly Environment Audit and Report via
telephone conference call.
- --------------------------------------------------------------------------------
CUSTOM SUPPORT Service package to include services to meet special
SERVICE business requirements of Licensee, as specified in a
separate agreement.
<PAGE> 1
EXHIBIT 10.28
LEASE #1
<PAGE> 2
OFFICE BUILDING LEASE
1. PARTIES. This Lease, dated, for reference purposes only SEPTEMBER 11,
1989, is made by and between Lincoln Property Company N.C., Inc. as manager and
agent for the owner (herein called "Landlord") and SYNON, INC., an Illinois
corporation (herein called "Tenant").
2. PREMISES. Landlord does hereby lease to Tenant and Tenant hereby leases
from Landlord that certain office space (hereinafter called "Premises")
consisting of 16,112 usable square feet outlined in red on Exhibit A attached
hereto and 18,048 rentable square feet, including corridors being situated on
the 2ND/3RD floor(s) of that certain building known as 1100 LARKSPUR LANDING
CIRCLE, SUITE 300, LARKSPUR, CALIFORNIA (hereinafter called "Building") which is
one of several buildings in Larkspur Landing Office Park (hereinafter called
"Office Park") *(SEE PAGE 13)
Said Lease is subject to the terms, covenants, and conditions herein set
forth and the Tenant covenants as a material part of the consideration for this
Lease to keep and perform each and all of said terms, covenants, and conditions
by it to be kept and performed and that this Lease is made upon the condition of
said performance.
For the purposes of maintaining an economical and proper distribution of
tenants throughout the Office Park which is acceptable to Landlord, Landlord
shall have the right from time to time during the term of this Lease to relocate
the Premises in the Office Park; provided, however, (i) that the rentable and
usable areas of the new location in the Office Park are of equal size to the
Premises (subject to a variance of up to 10%) and the amount of Basic Rent
(hereinafter defined) payable under this Lease is not increased, (ii) that if
the then prevailing rental for the new location is less than the amount of Basic
Rent being paid for the Premises, the Basic Rent shall be reduced to equal the
then prevailing base rental for the new location, (iii) that Landlord shall pay
the cost of providing improvements to Tenant in the new location comparable to
the improvements Tenant now has in the Premises, and (iv) that Landlord shall
pay the expenses reasonably incurred by Tenant in connection with the relocation
of the Premises, including without limitation the costs of moving, door
lettering, telephone relocation, and reasonable quantities of new stationery.
Landlord shall deliver to Tenant written notice of Landlord's election to
relocate the Premises, specifying the new location and the amount of Basic Rent
payable therefor at least thirty (30) days prior to the date that the relocation
is to be effective. If the relocation of the Premises is not acceptable to
Tenant, Tenant, for a period of ten (10) days after receipt of Landlord's notice
to relocate, shall have the right by delivering written notice to Landlord to
terminate this Lease effective thirty (30) days after the delivery of such
written notice to Landlord.
3. TERM. The term of this Lease shall be for SEVEN years, commencing on the
1ST day of OCTOBER, 1989, and ending on the 30TH day of SEPTEMBER, 1996.
4. POSSESSION. If the Landlord, for any reason whatsoever, cannot deliver
possession of the said Premises to the Tenant at the commencement of the term
hereof, this Lease shall not be void or voidable nor shall Landlord be liable to
Tenant for any loss or damage resulting therefrom, nor shall the expiration date
of the above term be in any way extended, but in that event, all rental amounts
shall be abated during the period between the commencement of said term and the
time when Landlord delivers possession.
In the event that Landlord shall permit Tenant to occupy the Premises
prior to the commencement date of the term, such occupancy shall be subject to
all provisions of this Lease. Said early possession shall not advance the
termination date hereinabove provided.
5. BASIC RENT. Tenant agrees to pay to Landlord as rental without prior
notice or demand, for the Premises the sum of: THIRTY-SIX THOUSAND SIX HUNDRED
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THIRTY-EIGHT AND NO/100 - - - - - - ($36,638.00) Dollars (hereinafter called
"Basic Rent", on or before the first day of the first full calendar month of the
terms hereof and a like sum, as adjusted in the manner specified in Article 6
(hereinafter called "Adjusted Basic Rent"), on or before the first day of each
and every successive calendar month thereafter during the terms hereof, except
that the first month's rent shall be paid upon the execution hereof. The Basic
Rent shall be paid until adjusted in the manner specified in Article 6.
Thereafter, the prevailing Adjusted Basic Rent shall be the amount paid. Rental
for any period during the term hereof which is for less than one (1) month shall
be a prorated portion of the monthly installment due under the terms herein,
based upon a thirty (30) day month. Said amount shall be paid to Landlord,
without deduction or offset, in lawful money of the United States of America,
which shall be legal tender at the time of payment at the Office of the
Building, or to such other person or at such other place as Landlord may from
time to time designate in writing.
6. ADJUSTED BASIC RENT. Each year during the term of this Lease other than
the Base Year, the Basic Rent or the prevailing Adjusted Basic Rent, as the case
may be, shall be adjusted for the ensuing twelve (12) months by the use of the
Consumer Price Index (All Urban Consumers component) for the San
Francisco-Oakland Area (1967 = 100) published by the Bureau of Labor Statistics
of the U. S. Department of Labor. The Basic Rent will be increased by the
percentage increase, if any, between the latest index published just prior to
the commencement of the Lease Term and the comparable latest index published
just prior to January of the following year to arrive at the Adjusted Basic
Rent. Each year thereafter, the Adjusted Basic Rent will be increased by the
percentage increase, if any, between the index published just prior to January
of the subsequent year and the comparable latest index published just prior to
January of the preceding year.
In case the U. S. Department of Labor shall discontinue the computation
and publication of said Consumer Price Index or the publication thereof should
be delayed so as to prevent its use hereunder at the times required, there shall
be substituted therefor by Landlord such other index or method of ascertaining
changes in the price level as, in the opinion of Landlord, most closely
resembles the Consumer Price Index and method of arriving at the index figure by
said Bureau.
7. ADDITIONAL RENT. Tenant agrees to pay to Landlord as additional rental
(hereinafter "Additional Rent") a sum equal to Tenant's Proportional Share
(hereinafter defined) of any increase in the Direct Costs (hereinafter defined).
For the purposes of this Article, Tenant's Proportional Share shall be a
sum equal to 23.10%.
For the purposes of this Article, the term "Direct Costs" shall include:
(i) property taxes paid or incurred by Landlord consisting of all real or
personal property taxes (and any tax levied wholly or partly lieu thereof)
imposed against the Building and all related improvements, including the
adjacent walks, parking lots, and the land upon which they are situated, but
shall not include any net income or franchise taxes; (ii) operating costs paid
or incurred by Landlord in maintaining, managing, and operating Building, its
equipment, and the adjacent walks, parking lots, landscaped areas, and the land
upon which they are located, including without limiting the generality of the
foregoing, the costs of services of both independent contractors and employees
(inclusive of employment taxes and fringe benefits) who perform duties connected
with the day to day management, operation, maintenance, and repair of the
Building, and the costs incurred by reason of any changes in any regulations,
rules, requirements, laws, codes, directives, or similar pronouncements of any
Federal, state, county, city, or other governmental or regulatory agency which
require changes in or to the physical construction of or related equipment of or
used in the Building or the adjacent walks, parking lots, landscaped areas,
and/or items used in the operation and maintenance thereof.
For the purposes of this Lease the term "Base Year" shall refer to and
mean the calendar year in which this Lease term commences.
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For the purposes of this Article, the term "Comparison Year" shall refer
to and mean each successive calendar year of the term of this Lease after the
Base Year.
For the purposes of this Article, the Term "Current Year" shall refer to
and mean each successive calendar year as it becomes the current calendar year,
beginning with the first calendar year next following the Base Year.
Each year during the term of this Lease other than the Base Year,
Landlord shall furnish to Tenant a written statement showing in reasonable
detail Landlord's Direct Costs for the applicable Comparison Year and for the
Base Year, and showing the amount, if any, of Additional Rent due from Tenant.
To compute the Additional Rent, if the Direct Costs paid or incurred by
the Landlord for the Comparison Year are in excess of the Direct Costs paid or
incurred by Landlord for the Base Year, then the Tenant shall pay, as Additional
Rent, Tenant's Proportional Share thereof. Upon Tenant's receipt of Landlord's
statement for the first Comparison Year, Tenant shall pay in full the total
amount of Additional Rent for the first Comparison Year, and, in addition, for
the Current Year the amount of such Additional Rent shall be used as an estimate
for the Current Year. The amount of the Additional Rent shall be divided in
twelve (12) equal monthly installments and Tenant shall pay to Landlord,
concurrently with the Basic Rent or the prevailing Adjusted Basic Rent, as the
case may be, which is next due following the receipt of said statement from
Landlord, an amount equal to one (1) such monthly installment multiplied by the
number of months from January in the Current Year in which Landlord's said
statement is submitted to the month of such statement, both months inclusive.
Subsequent installments of Additional Rent shall be payable concurrently with
the Basic Rent or the prevailing Adjusted Basic Rent, as the case may be, for
the balance for that Current Year and shall continue until the statement for the
next Comparison Year is rendered. If the next or any succeeding Comparison Year
results in an increase in Direct Costs over the immediately preceding Comparison
Year, then, upon receipt of said statement from Landlord, Tenant shall pay a
lump sum equal to Tenant's Proportional Share of the Direct Costs less the total
of the monthly installments paid during the immediately preceding Comparison
Year, and the estimated monthly installments of Additional Rent to then be paid
for the Current Year shall be adjusted to reflect such increased Direct Costs.
If the next or any succeeding Comparison Year results in a decrease in Direct
Costs over the immediately preceding Comparison Year, then, upon receipt of said
statement from Landlord, the estimated monthly installments of Additional Rent
to then be paid for Current Year shall be adjusted to reflect such decreased
Direct Costs, and the difference between Tenant's Proportional Share of the
decreased Direct Costs and the total of the monthly installments paid during the
immediately preceding Comparison Year shall be credited to the first (and
succeeding, if applicable) installments of Additional Rent to be paid for the
Current Year.
The Direct Costs for any Calendar Year that the Building is not at least
ninety-five percent (95%) occupied shall be adjusted to reflect a ninety-five
percent (95%) level of occupancy.
If the term of this Lease has expired and/or Tenant has vacated the
Premises, when the final determination is made of Tenant's share of Direct Costs
for the year in which this Lease terminated, Tenant shall immediately pay any
increase due over the estimated amounts paid and, conversely, any overpayment
made in the event said costs decrease shall be immediately rebated by Landlord
to Tenant.
8. SECURITY DEPOSIT. Tenant has deposited with Landlord the sum of
TWENTY-SIX THOUSAND NINE HUNDRED FIFTY AND NO/100* - - - - - - - - -($26,950.00)
Dollars. Said sum snail be held by Landlord as security for the faithful
performance by Tenant of all the terms, covenants, and conditions of this Lease
to be kept and performed by Tenant during the term hereof. If Tenant defaults
with respect to any provisions of this Lease, including, but not limited to the
provisions relating to the payment of rentals, Landlord may (but shall not be
required to) use, apply or retain all or any part of this security deposit for
the payment of any rental or any other sum in default, or for the payment of any
amount which Landlord may spend or become obligated to spend by reason of
Tenant's default, or to compensate Landlord for any other *Plus $9,688.00 which
has been deposited with Landlord as a Security Deposit pursuant to that certain
Lease dated March 9, 1988, for a total Security Deposit of $36,638.00.
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loss or damage which Landlord may suffer by reason of Tenant's default. If any
portion of said deposit is so used or applied, Tenant shall within five (5) days
after written demand therefor, deposit cash with Landlord in an amount
sufficient to restore the security deposit to its original amount and Tenant's
failure to do so shall be a material breach of this Lease. Landlord shall not be
required to keep this security deposit separate from its general funds, and
Tenant shall not be entitled to interest on such deposit. If Tenant shall fully
and faithfully perform every provision of this Lease to be performed by it, the
security deposit or any balance thereof shall be returned to Tenant (or, at
Landlord's option, to the last successor to Tenant' s interest hereunder) at the
expiration of the Lease term. In the event of termination of Landlord's interest
in this Lease, Landlord shall transfer said deposit to Landlord's successor in
interest.
9. USE. Tenant shall use the Premises for general office purposes and shall
not use or permit the Premises to be used for any other purpose without the
prior written consent of Landlord.
Tenant shall not do or permit anything to be done in or about the
Premises nor bring or keep anything therein which will in any way increase the
existing rate of or affect any fire or other insurance upon the Building or any
of its contents, or cause cancellation of any insurance policy covering the
Building or any part thereof or any of its contents. Tenant shall not do or
permit anything to be done in or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Building or injure or annoy them or use or allow the Premises to be used for any
improper, immoral, unlawful or objectionable purpose, nor shall Tenant cause,
maintain, or permit any nuisance in, on, or about the Premises. Tenant shall not
commit or suffer to be committed any waste in or upon the Premises.
10. COMPLIANCE WITH LAW. Tenant shall not use the Premises or permit
anything to be done in or about the Premises which will in any way conflict with
any law, statute, ordinance, or governmental rule or regulation now in force or
which may hereafter be enacted or promulgated. Tenant shall, at its sole cost
and expense, promptly comply with all laws, statutes, ordinances, and
governmental rules, regulations, or requirements now in force or which may
hereafter be in force, and with the requirements of any board of fire insurance
underwriters or other similar bodies now or hereafter constituted, relating to,
or affecting the condition, use, or occupancy of the Premises, excluding
structural changes not related to or affected by Tenant's improvements or acts.
The judgment of any court of competent jurisdiction or the admission of Tenant
in any action against Tenant, whether Landlord is a party thereto or not, that
Tenant has violated any law, statute, ordinance, or governmental rule,
regulation, or requirement, shall be conclusive of that fact as between the
Landlord and Tenant.
11. CONSTRUCTION. Prior to the commencement of the term hereof, Landlord
shall furnish and install within the Premises the tenant improvements shown on
preliminary plans dated 8/1/89, attached hereto and marked Exhibit B. The costs
to be paid by Tenant for such work are $ * . Tenant agrees that it will pay such
costs at the time the Premises are ready for Tenant's occupancy. *Landlord will
contribute up to the sum of $268,302.00 towards Tenant Improvement cost.
All work not within the normal scope of the construction trades employed
in building construction, such as the furnishing and installing of telephone
equipment and wiring, furniture, furnishings, office equipment, trade fixtures,
carpeting (unless installed by Landlord under the first part of this Article),
special draperies (in addition to Building standard casement draperies for which
no substitution is permitted), and other items of personal property, shall be
furnished and installed by the Tenant at Tenant's expense. Tenant shall adopt a
schedule in conformance with the schedule of Landlord's contractors and conduct
its work in such a manner as to maintain harmonious labor relations and so as
not to unreasonably interfere with or delay the work of the Landlord's
contractors. Tenant's contractors, subcontractors, and labor shall be acceptable
to and approved by Landlord, and shall be subject to the administrative
supervision of the Landlord's general contractor. Contractors or subcontractors
engaged by Tenant shall insure, as far as may be
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reasonably possible, the progress of the work without interruption on account of
strikes, work stoppage or other causes for delay.
Landlord shall give reasonable access and entry to the Premises to
Tenant and its contractors and subcontractors to enable Tenant to adapt the
Premises for Tenant's use.
12. ALTERATIONS AND ADDITIONS. Tenant shall not make or suffer to be made
any alterations, additions, or improvements to or of the Premises or any part
thereof without the written consent of Landlord first had and obtained and any
alterations, additions, or improvements to or of said Premises, including, but
not limited to, wall covering, paneling, and built-in cabinet work, but
excepting movable furniture and trade fixtures, shall on the expiration of the
term become a part of the realty and belong to the Landlord and shall be
surrendered with the Premises. In the event Landlord consents to the making of
any alterations, additions, or improvements to the Premises by Tenant, the same
shall be made by Tenant at Tenant's sole cost and expenses and any contractor or
person selected by Tenant to make the same must first be approved of in writing
by the Landlord. Upon the expiration or sooner termination of the term hereof,
Tenant shall, upon written demand by Landlord given at least thirty (30) days
prior to the end of the term, at Tenant' s sole cost and expense forthwith and
with all due diligence remove any alterations, additions, or improvements made
by Tenant which are designated by Landlord to be removed, and Tenant shall,
forthwith and with all due diligence at its sole cost and expense, repair any
damage to the Premises caused by such removal.
13. REPAIRS. By taking possession of the Premises, Tenant shall be deemed to
have accepted the Premises as being in good and sanitary order, condition, and
repair. Tenant shall, at Tenant's sole cost and expense, keep the Premises and
every part thereof in good condition and repair, damage thereto from causes
beyond the reasonable control of Tenant and from ordinary wear and tear
excepted. Tenant shall upon the expiration or sooner termination of this Lease
hereof surrender the Premises to the Landlord in good condition, ordinary wear
and tear and damage from causes beyond the reasonable control of Tenant
excepted. Except as specifically provided in an addendum, if any, to this Lease,
Landlord shall have no obligation whatsoever to alter, remodel, improve, repair,
decorate, or paint the Premises or any part thereof and the parties hereto
affirm that Landlord has made no representations to Tenant respecting the
condition of the Premises or the Building except as specifically herein set
forth.
Notwithstanding the provisions of Article 13(a), Landlord shall repair
and maintain the structural portions of the Building, including the basic
plumbing, air conditioning, heating, and electrical systems, installed or
furnished by Landlord, unless the need for such maintenance and repairs are
caused, in part or in whole, by the act, neglect, fault, or omission of any duty
by the Tenant, its agents, servants, employees, or invitees, in which case
Tenant shall pay to Landlord the reasonable cost of such maintenance and
repairs. Landlord shall not be liable for any failure to make any such repairs
or to perform any maintenance unless such failure shall persist for an
unreasonable time after written notice of the need of such repairs or
maintenance is given to Landlord by Tenant. Except as provided in Article 24,
there shall be no abatement of rent and no liability of Landlord by reason of
any injury to or interference with Tenant's business arising from the making of
any repairs, alterations, or improvements in or to any portion of the Building
or the Premises or in or to fixtures, appurtenances, and equipment therein.
Tenant waives the right to make repairs at Landlord's expense under any law,
statute, or ordinance now or hereafter in effect.
14. LIENS. Tenant shall keep the Premises and the Building free from any
liens arising out of any work performed, materials furnished, or obligations
incurred by Tenant. Landlord may require, at Landlord's sole option, that Tenant
shall provide to Landlord, at Tenant's sole cost and expense, a lien and
completion bond in an amount equal to one and one-half (1 1/2) times any and all
estimated costs of any improvements, additions, or alterations in the Premises
to insure Landlord against any liability for mechanics' and materialmen's liens
and to insure completion of the work.
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15. ASSIGNMENT AND SUBLETTING. Neither Tenant nor its heirs or assigns shall
either voluntarily or by operation of law, assign, transfer, mortgage, pledge,
hypothecate, or encumber this Least or any interest therein, and shall not
sublet the Premises, or any part thereof, or any right or privilege appurtenant
thereto , or suffer any other person (the employees, agents, servants, and
invitees of Tenant excepted) to occupy or use the said Premises, or any part
thereof, without the prior written consent of Landlord first had and obtained
and any attempt to do so without such consent shall be wholly void and shall
constitute a breach of this Lease.
In the event that Tenant desires to sublet the Premises or any part
thereof, Tenant shall notify Landlord in writing not less than ninety (90) days
in advance of the proposed subletting, designating in such writing the name and
legal composition of the proposed subtenant, the nature of the proposed
subtenant's business to be carried on in the Premises, the terms and provisions
of the proposed sublease, and shall therein or subsequently furnish such
reasonable financial information regarding the proposed subtenant as Landlord
may request. Landlord shall be allowed thirty (30) days after its receipt of
such notice from Tenant in which to give its written notice to Tenant that
Landlord will terminate this Lease as to the Premises, or the part thereof
proposed to be sublet, effective upon the date of such proposed subletting. If
Landlord fails to give such notice to Tenant, then Tenant may sublet the
Premises, or the part thereof designated in said notice to Landlord, only with
the written consent of Landlord first had and obtained, which consent shall not
be unreasonably withheld. For the purposes of this provision, Landlord may, at
its sole option, reasonably withhold its consent to the subletting if the
proposed subtenant is unwilling to execute a document in a form satisfactory to
Landlord in which it agrees to substantially all of the terms and conditions of
this Lease, and/or if the financial condition of the proposed subtenant is not
substantially similar to that of the Tenant as of the date of this Lease.
A consent by Landlord to one assignment, subletting, occupation, or use
by any other person shall not be deemed a consent to any subsequent assignment,
subletting, occupation, or use by another person.
16. HOLD HARMLESS. Tenant shall indemnify and hold harmless Landlord against
and from any and all claims arising from Tenant's use of the Premises for the
conduct of its business or from any activity, work, or other thing done,
permitted, or suffered by the Tenant in or about the Building, and shall further
indemnify and hold harmless Landlord against and from any and all claims arising
from any breach or default in the performance of any obligation on Tenant's part
to be performed under the terms of this Lease, or arising from any act or
negligence of the Tenant, or any officer, agent, employee, guest, or invitee of
Tenant, and from all and against all costs, attorneys' fees, expenses, and
liabilities incurred in or about any such claim or any action or proceeding
brought thereon, and, in any case, action, or proceeding to be brought against
landlord by reason of any such claim, Tenant, upon notice from Landlord, shall
defend the same at Tenant's expense by counsel reasonably satisfactory to
Landlord. Tenant, as a material part of the consideration to Landlord, hereby
assumes all risk of damage to property or injury to persons in, upon, or about
the Premises, from any cause other than landlord's negligence, and Tenant hereby
waives all claims in respect thereof against Landlord.
Landlord or its agents shall not be liable for any damage to property
entrusted by Tenant to employees of the Building, nor for loss or damage to any
property by theft or otherwise, nor for any injury to or damage to persons or
property resulting from fire, explosion, falling plaster, steam, gas,
electricity, water, or rain which may leak from any part of the Building or from
the pipes, appliances, or plumbing works therein or from the roof, street, or
subsurface, or from any other place resulting from dampness or any other cause
whatsoever, unless caused by or due to the negligence of Landlord, its agents,
servants, or employees. Landlord or its agents shall not be liable for
interference with the light or other incorporeal hereditaments, loss of business
by Tenant, or any latent defect in the Premises or in the Building. Tenant shall
give prompt notice to Landlord in case of fire or accidents in the Premises or
in the Building or of defects therein or in the fixtures or equipment.
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17. SUBROGATION. As long as their respective insurers so permit, Landlord
and Tenant hereby mutually waive their respective rights of recovery against
each other or any loss insured by fire, extended coverage, and other property
insurance policies existing for the benefit of the respective parties. Each
party shall obtain any special endorsements, if required by their insurer to
evidence compliance with the aforementioned waiver.
18. LIABILITY INSURANCE. Tenant shall, at Tenant's sole cost and expense,
obtain and keep in force during the term of this Lease a policy of comprehensive
public liability insurance insuring Landlord and Tenant against any liability
arising out of the ownership, use, occupancy, or maintenance of the Premises and
all areas appurtenant thereto. Such insurance at all times shall be a combined
single aggregate policy in an amount of not less than one million dollars
($1,000,000.00). These limits of said insurance shall not, however, limit the
liability of the Tenant hereunder. Tenant may carry said insurance under a
blanket policy, provided, however, said insurance by Tenant shall have a
protective liability endorsement attached thereto in favor of Landlord. If
Tenant shall fail to procure and maintain said insurance, Landlord may, but
shall not be required to, procure and maintain same, but at the expense of
Tenant. Insurance required hereunder, shall be in companies rated A+, AAA, or
better in "Best's Insurance Guide." Tenant shall deliver to Landlord prior to
occupancy of the Premises copies of policies of liability insurance required
herein or certificates evidencing the existence and amounts of such insurance
with a loss payable clause satisfactory to Landlord. No policy shall be
cancellable or subject to reduction of coverage except after ten (10) days,
prior written notice to Landlord.
19. SERVICES AND UTILITES. Provided that Tenant is not in default hereunder,
Landlord agrees to furnish to the Premises during reasonable hours of generally
recognized business days, to be determined by Landlord at its sole discretion,
and subject to the rules and regulations of the Building, electricity for normal
lighting and fractional horsepower office machines, heat, and air conditioning
required in Landlord's judgment for the comfortable use and occupation of the
Premises, and janitorial service. Landlord shall also maintain and keep lighted
the common stairs, common entries, and toilet rooms in the Building. Landlord
shall not be liable for, and Tenant shall not be entitled to, any reduction of
rental by reason of Landlord's failure to furnish any of the foregoing when such
failure is caused by accident, breakage, repairs, strikes, lockouts, or other
labor disturbances or labor disputes of any character, or by any other cause,
similar or dissimilar, beyond the reasonable control of Landlord. Landlord shall
not be liable under any circumstances for a loss of or injury to property,
however occurring, through or in connection with or incidental to the failure to
furnish any of the foregoing. Wherever heat generating machines or equipment are
used in the Premises which affect the temperature otherwise maintained by the
air conditioning system, Landlord reserves the right to install supplementary
air conditioning units in the Premises and the costs thereof, including the
costs of installation, operation, and maintenance thereof shall be paid by
Tenant to Landlord upon demand by Landlord.
Tenant will not, without the prior written consent of Landlord first had
and obtained, use any apparatus or device in the Premises, including, but
without limitation thereto, electronic data processing machines, punch card
machines, and machines using in excess of 120 volts, which will in any way
increase the amount of electricity usually furnished or supplied for the use of
the Premises as general office space; nor connect with electric current, except
through existing electrical outlets in the Premises, any apparatus or device for
the purpose of using electric current. If Tenant shall require water or electric
current in excess of that usually furnished or supplied for the use of the
Premises as general office space, Tenant shall first procure the written consent
of Landlord, which Landlord may refuse, to the use thereof and Landlord may
cause a water meter or electrical current meter to be installed in the Premises
so as to measure the amount of the water and electric current consumed for any
such use. The cost of any such meters and of installation, maintenance, and
repair thereof shall be paid for by the Tenant and Tenant agrees to pay to
Landlord promptly upon demand thereof by Landlord for all such water and
electric current consumed as shown by said meters, at the rates charged for such
services by the local public utility furnishing the same, plus any additional
expense incurred in keeping account of the water and
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electric current so consumed. If a separate meter is not installed, such excess
cost for such water and electric current will be established by an estimate made
by a utility company or electrical engineer. Tenant shall install a separate
submeter to measure electric current in excess of that usually furnished for the
use of the Premise as general office space. Tenant shall maintain the separate
air conditioning units installed in Tenant's computer room.
20. PROPERTY TAXES. Tenant shall pay, or cause to be paid, before
delinquency, any and all taxes levied or assessed and which become payable
during the term hereof upon all Tenant's leasehold improvements, equipment,
furniture, fixtures, and personal property located in the Premises, except that
which has been paid for by Landlord and is the standard of the Building. In the
event any or all of the Tenant's leasehold improvements, equipment, furniture,
fixtures, and personal property shall be assessed and taxed with the Building,
Tenant shall pay to Landlord its share of such taxes within ten (10) days after
delivery to Tenant by Landlord of a statement in writing setting forth the
amount of such taxes applicable to Tenant's property.
21. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with
the rules and regulations that Landlord shall from time to time promulgate.
Landlord reserves the right from time to time to make all reasonable
modifications to said rules. The additions and modifications to those rules
shall be binding upon Tenant upon delivery of a copy of them to Tenant. Landlord
shall not be responsible to Tenant for the nonperformance of any said rules and
regulations by any other tenants or occupants.
22. HOLDING OVER. If Tenant remains in possession of the Premises or any
part thereof after the expiration of the term hereof with the express written
consent of the Landlord, such occupancy shall be a tenancy from month to month
at a rental in the amount of the last monthly installment of Basic Rent or the
prevailing Adjusted Basic Rent, as the case may be, plus the last monthly
installment of Additional Rent and all other charges payable hereunder, and upon
all the terms hereof applicable to a month to month tenancy.
23. ENTRY BY LANDLORD. Landlord reserves and shall at any and all times have
the right to enter the Premises, inspect the same, supply janitorial service and
any other service to be provided by Landlord to Tenant hereunder, to submit said
Premises to inspection by prospective purchasers or tenants, to post notices of
non-responsibility, and to alter, improve, or repair the Premises or the
Building that Landlord may deem necessary or desirable, without abatement or
rent and may for that purpose erect scaffolding and other necessary structures
where reasonably required by the character of the work to be performed, always
providing that the entrance to the Premises shall not be blocked thereby, and
further providing that the business of the Tenant shall not be interfered with
unreasonably. Tenant hereby waives any claim for damages or for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned thereby. For
each of the aforesaid purposes, Landlord shall at all times have and retain a
key with which to unlock all of the doors in, upon, and about the Premises,
excluding Tenant's vaults, safes, and files, and Landlord shall have the right
to use any and all means which Landlord may deem proper to open said doors in an
emergency in order to obtain entry to the Premises without liability to Tenant
except for any failure to exercise due care for Tenant's property. Any entry to
the Premises obtained by Landlord by any of said means or otherwise shall not
under any circumstances be construed or deemed to be a forceable or unlawful
entry into or a detainer of the Premises, or an eviction of Tenant from the
Premises or any portion thereof.
24. RECONSTRUCTION. In the event the Premises or the Building are damaged by
fire or other perils covered by extended coverage insurance, Landlord agrees to
forthwith repair the same, and this Lease shall remain in full force and effect,
except that Tenant shall be entitled to a proportionate reduction of the Basic
Rent or the prevailing Adjusted Basic Rent, as the case may be, while such
repairs are being made, such proportionate reduction to be based upon the extent
to which the making of such repairs shall materially interfere with the business
carried on by the Tenant in the Premises. If the damage is due to the fault or
neglect of Tenant or its employees, there shall be no abatement of rentals.
-8-
<PAGE> 10
In the event the Premises or the Building or a part thereof are damaged as
a result of any cause other than the perils covered by fire and extended
coverage insurance, then Landlord shall forthwith repair the same, provided the
extent of the destruction be less than ten (10%) per cent of the then full
replacement cost of the Premises or the Building. In the event the destruction
of the Premises or the Building is to an extent greater than ten (10%) per cent
of the full replacement cost, then Landlord shall have the option (i) to repair
or restore such damage with this Lease continuing in full force and effect, but
with the rentals to be proportionately reduced as hereinabove provided in this
Article, or (ii) give notice to Tenant at any time within sixty (60) days after
such damage terminating this Lease as of the date specified in such notice,
which date shall be no less than thirty (30) and no more than sixty (60) days
after the giving of such notice. In the event of giving such notice, this Lease
shall expire and all interest of the Tenant in the Premises shall terminate on
the date so specified in such notice and the rentals, reduced as hereinabove
provided in this Article, shall be paid up to date of said termination.
Notwithstanding anything to the contrary contained in this Article,
Landlord shall not have any obligation whatsoever to repair, reconstruct, or
restore the Premises when the damage resulting from any casualty covered under
this Article occurs during the last twelve (12) months of the term of this Lease
or any extension thereof.
Landlord shall not be required to repair any injury or damage by fire or
other cause or to make any repairs or replacements of any panels, decoration,
office fixtures, railings, floor covering, partitions, or any other property
installed in the Premises by Tenant.
Tenant shall not be entitled to any compensation or damages from
Landlord for loss of the use of the whole or any part of the Premises, Tenant's
personal property, or any inconvenience or annoyance occasioned by such damage,
repair, reconstruction, or restoration.
25. DEFAULT. In addition to any other act or event elsewhere stated in this
Lease which will cause a default hereunder, the occurrence of any one or more of
the following acts or events shall constitute a default and breach of this Lease
by Tenant:
a. The vacating or abandonment of the Premises by Tenant.
b. The failure by Tenant to make any payment of rent or any other
payment required to be made by Tenant hereunder, as and when due, where such
failure shall continue for a period of three (3) days after written notice
thereof by Landlord to Tenant.
c. The failure by Tenant to observe or perform any of the
covenants, conditions, or provisions of this Lease to be observed or performed
by the Tenant, other than described in subparagraph (b) of this Article, where
such failure shall continue for a period of thirty (30) days after written
notice thereof by Landlord to Tenant, provided, however, that if the nature of
Tenant's default is such that more than thirty (30) days are reasonably required
for its cure, then Tenant shall not be deemed to be in default if Tenant
commences such cure within said thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
d. The making by Tenant of any general assignment or general
arrangement for the benefit of creditors; or the filing by or against Tenant of
a petition to have Tenant adjudged a bankrupt, or a petition or reorganization
or arrangement under any law relating to bankruptcy (unless, in the case of a
petition filed against Tenant, the same is dismissed within one hundred twenty
(120) days); or the appointment of a trustee or a receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within thirty
(30) days; or the attachment, execution, or other judicial seizure of
substantially all or Tenant's assets located at the Premises, or of Tenant's
interest in this Lease, where such seizure is not discharged within thirty (30)
days.
26. REMEDIES IN DEFAULT. In the event of any default or breach by Tenant,
Landlord may at any time thereafter, with or without notice or demand
-9-
<PAGE> 11
and without limiting Landlord in the exercise of a right or remedy which
Landlord may have by reason of such default or breach:
a. Terminate Tenant's right to possession of the Premises by any
lawful means in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Premises to Landlord. In such event
Landlord stall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant's default including, but not limited to, the cost
of recovering possession of the Premises; expenses of reletting, including
necessary renovation and alteration of the Premises; reasonable attorneys' fees
and costs; any real estate commissions and costs actually paid; the unpaid rent
for the balance of the term of the Lease or for the time the Premises are
vacant, whichever is shorter; that portion of the leasing commission paid by
Landlord and applicable to the unexpired term of this Lease. In the event Tenant
shall have abandoned the Premises, Landlord shall have the option of (i) taking
possession of the Premises and recovering from Tenant the amount specified in
this Article, or (ii) proceeding under the provisions of subparagraph (b) of
this Article.
b. Maintain Tenant's right to possession, in which case this Lease
shall continue in effect whether or not Tenant shall have abandoned the
Premises. In such event Landlord shall be entitled to enforce all of Landlord's
rights and remedies under this Lease, including the right to recover the rent as
it becomes due hereunder.
c. Pursue any other remedy now or hereafter available to Landlord
under the laws or judicial decisions of the state in which the Premises are
located.
27. EMINENT DOMAIN. If more than twenty-five (25%) per cent of the Building
shall be taken or appropriated by any public or quasi-public authority under the
power of eminent domain, either party hereto shall have the right, at its
option, to terminate this Lease, and Landlord shall be entitled to any and all
income, rental, award, or any interest therein whatsoever which may be paid or
made in connection with such public or quasi-public use or purpose, and Tenant
shall have no claim against Landlord for the value of any unexpired term of this
Lease. If either less than or more than twenty-five (25%) per cent of the
Building is taken, and neither party elects to terminate as herein provided, the
Basic Rent or prevailing Adjusted Basic Rent, as the case may be, thereafter to
be paid shall be equitably reduced. If any part of the Building other than the
Premises may be so taken or appropriated, Landlord shall have the right at its
option to terminate this Lease and shall be entitled to the entire award as
above provided.
28. OFFSET STATEMENT. Tenant shall at any time and from time to time upon
not less than ten (10) days' prior written notice from Landlord execute,
acknowledge, and deliver to Landlord a statement in writing (i) certifying that
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease, as so modified,
is in full force and effect), and the date on which the rentals and other
charges are paid, and (ii) acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on the part of the Landlord hereunder, or
specifying such defaults if any are claimed. Any such statement may be relied
upon by any prospective purchaser or encumbrancer of all or any portion of the
real property of which the Premises are a part.
29. PARKING. Tenant shall have the right to use in common with other tenants
or occupants of the Building the parking facilities of the Building, if any,
subject to the monthly rates, rules and regulations, and any other charges of
Landlord for such parking facilities which may be established or altered by
Landlord at any time or from time to time during the term hereof.
30. AUTHORITY OF TENANT. Tenant and each individual executing this Lease on
behalf of Tenant represents and warrants that he is duly authorized to execute
and deliver this Lease.
-10-
<PAGE> 12
31. GENERAL PROVISIONS.
a. Plats and Riders. Clauses, plats and riders, if any, signed by
the Landlord and the Tenant and endorsed on or affixed to this Lease are a part
hereof.
b. Waiver. The waiver by Landlord of any term, covenant, or
condition herein contained shall not be deemed to be a waiver of such term,
covenant, or condition on any subsequent breach of the same or any other term,
covenant, or condition herein contained. The subsequent acceptance of rentals
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant, or condition of this Lease, regardless of
Landlord's knowledge of such preceding breach at the time of the acceptance of
such rentals.
c. Notices. All notices and demands which may or are to be required
or permitted to be given by either party to the other hereunder shall be in
writing. All notices and demands by the Landlord to the Tenant shall be sent by
United States mail, postage prepaid, addressed to the Tenant at the Premises, or
to such other place as Tenant may from time to time designate in a notice to the
Landlord. All notices and demands by the Tenant to the Landlord shall be sent by
United States mail, postage prepaid, addressed to the Landlord at the Office of
the Building, or to such other person or place as the Landlord may from time to
time designate in a notice to the Tenant.
d. Joint Obligation. If there be more than one Tenant, the
obligations hereunder imposed upon Tenants shall be joint and several.
e. Marginal Headings. The marginal headings and titles to the
Articles of this Lease are not a part of this Lease and shall have no effect
upon the construction or interpretation of any part hereof.
f. Time. Time is of the essence of this Lease and each and all of
its provisions in which performance is a factor.
g. Successors and Assigns. The covenants and conditions herein
contained, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of the parties hereto.
h. Recordation. Neither Landlord nor Tenant shall record this Lease
or a short form memorandum hereof without the prior written consent of the other
party.
i. Quiet Possession. Upon Tenant paying the rent reserved hereunder
and observing and performing all of the covenants, conditions, and provisions on
Tenant's part to be observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the entire term hereof, subject to all the
provisions of this Lease.
j. Late Charge. Tenant hereby acknowledges that late payment by
Tenant to Landlord of rent or other sums due hereunder will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Landlord by terms of any mortgage or trust deed covering the Premises or the
Building. Accordingly, if any amount(s) due from Tenant shall not be received by
Landlord or Landlord's designee within three (3) days after said amount is due,
then Tenant shall pay to Landlord a late charge equal to ten (10%) per cent of
such overdue amount(s). The parties hereby agree that such late charges
represent a fair and reasonable estimate of the cost that Landlord will incur by
reason of the late payment by Tenant. Acceptance of such late charges by the
Landlord shall in no event constitute a waiver of Tenant's default with respect
to such overdue amount, nor prevent Landlord from exercising any of the other
rights and remedies granted hereunder.
k. Prior Agreements. This Lease contains all of the agreements of
the parties hereto with respect to any matter covered or mentioned in this
Lease, and no prior agreements or understandings pertaining to any such matters
shall be effective for any purpose. No provision of this Lease may be amended or
-11-
<PAGE> 13
added to except by an agreement in writing signed by the parties hereto or their
respective successors in interest. This Lease shall not be effective or binding
on any party until fully executed by both parties hereto.
l. Inability to Perform. This Lease and the obligations of the
Tenant hereunder shall not be affected or impaired because the Landlord is
unable to fulfill any of its obligations hereunder or is delayed in doing so, if
such inability or delay is caused by reason of strike, labor disputes, civil
disobedience, acts of God, or any other cause or condition beyond the reasonable
control of the Landlord.
m. Attorneys' Fees. In the event of any action or proceeding
brought by either party against the other under this Lease, the prevailing party
shall be entitled to recover all costs and expenses including the fees of its
attorneys in such action or proceeding in such amount as the court may adjudge
reasonable.
n. Sale of Building by Landlord. In the event of any sale of the
Building, Landlord shall be and is hereby entirely freed and relieved of all
liability under any and all of its covenants and obligations contained in or
derived from this Lease arising out of any act, occurrence, or omission
occurring after the consummation of such sale; and the purchaser, at such sale
or any subsequent sale of the Building shall be deemed, without any further
agreement between the parties or their successors in interest or between the
parties and any such purchaser, to have assumed and agreed to carry out any and
all of the covenants and obligations of the Landlord under this Lease.
o. Subordination, Attornment. Upon request of the Landlord, Tenant
will in writing subordinate its rights hereunder to the lien of any first
mortgage or first deed of trust to any bank, insurance company, or other leading
institution, now or hereafter in force against the Building or the underlying
land, and upon any buildings hereafter placed upon the land of which the
Premises are a part, and to all advances made or hereafter to be made upon the
security thereof. In the event any proceedings are brought for foreclosure, or
in the event of the exercise of the power of sale under any mortgage or deed of
trust made by the Landlord covering the Premises, the Tenant shall attorn to the
purchaser upon any such foreclosure or sale and recognize such purchaser as the
landlord under this Lease. The provisions of this Article to the contrary not
withstanding, and so long as Tenant is not in default hereunder, this Lease
shall remain in full force and effect for the full term hereof.
p. Name. Tenant shall not use the name of the Building or of the
development in which the Building is situated for any purpose other than as an
address of the business to be conducted by the Tenant in the Premises.
q. Separability. Any provision of this Lease which shall prove to
be invalid, void, or illegal shall in no way affect, impair, or invalidate any
other provision hereof and such other provisions shall remain in full force and
effect.
r. Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
s. Choice of Law. This Lease shall be governed by the laws of the
State in which the Premises are located.
t. Signs and Auctions. Tenant shall not place any sign upon the
Premises or Building or conduct any auction thereon without Landlord's prior
written consent.
32. BROKERS. Tenant warrants that it has had no dealings with any real
estate broker or agents in connection with the negotiation of this Lease
excepting only NONE and it knows of no other real estate broker or agent who is
entitled to a commission in connection with this Lease.
-12-
<PAGE> 14
The parties hereto have executed this Lease at the place and on the
dates specified immediately adjacent to their respective signatures.
If this Lease has been filled in, it has been prepared for submission to
your attorney for his approval. No representation or recommendation is made by
the real estate broker or its agents or employees as to the legal sufficiency,
legal effect, or tax consequences of this Lease or the transactions relating
thereto.
"LANDLORD"
Address 101 Lincoln Centre Dr., Lincoln Property Company N.C., Inc.
Foster City, CA 94404
Dated 9/28/89 By /s/ Burch Boone
------------------------------- -------------------------------
Burch Boone, Vice President
"TENANT"
1100 LARKSPUR LANDING CIRCLE,
Address SUITE 300 SYNON, INC.,
----------------------------- -------------------------------
LARKSPUR, CA 94939 an Illinois corporation
Date 9/18/89 By /s/ Dennis G. Holligan
-------------------------------- -------------------------------
Dennis G. Holligan
Chief Financial Officer
Date By
-------------------------------- -------------------------------
PREMISES: PLEASE INITIAL
<TABLE>
<CAPTION>
Useable Rentable
Square Feet Square Feet
----------- -----------
<S> <C> <C>
Suite 340 4,813 5,391
Suite 315 1,550 1,736
Suite 305 595 666
Suite 325 1,569 1,757
Suite 301 294 329
Corridor (3rd fl.) 112 125
Suite 200 3,808 4,265
Suite 248 326 368
Suite 205 1,515 1,697
Suite 225 1,530 1,714
------ ------
Total 16,112 18,048
====== ======
</TABLE>
-13-
<PAGE> 15
[EXHIBIT "A" SECOND FLOOR PLAN]
<PAGE> 16
[EXHIBIT "A" THIRD FLOOR PLAN]
<PAGE> 17
LEASE AMENDMENT AGREEMENT
This Amendment Agreement, made as of this date, May 10, 1991, by and between
LINCOLN PROPERTY COMPANY, N.C., INC., as Manager and Agent for Owner,
hereinafter referred to as Landlord, and SYNON, INC., an Illinois corporation,
hereinafter referred to as Tenant.
WITNESSTH:
WHEREAS, the Tenant leased from Landlord, by Lease dated September 11, 1989,
hereinafter referred to as the Lease, (the term "Lease" includes any amendments
or modifications thereof) 19,656 usable square feet and 22,017 rentable square
feet on the Second and Third Floors of that certain Building known as 1100
Larkspur Landing Circle, Suite 300, Larkspur, California.
WHEREAS, the Tenant leased from Landlord by Lease dated October 29, 1990,
hereinafter referred to as the Month-to-Month Lease, 669 usable square feet and
749 rentable square feet on the Third Floor of that certain Building known as
1100 Larkspur Landing Circle, Suite 353, Larkspur, California.
WHEREAS, the Tenant and Landlord now desire to amend the Lease dated September
11, 1989, to include the additional space of the Month-to-Month Lease dated
October 29, 1990, and Landlord and Tenant agree that said Month-to-Month Lease
is hereby terminated effective May 31, 1991.
NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained, it is mutually agreed between Landlord and Tenant as follows:
1. ADDITIONAL SPACE. Landlord hereby leases unto said Tenant and
said Tenant does hire and take from Landlord an additional area
of 669 USABLE SQUARE FEET outlined in red on Exhibit A attached
hereto, and 749 RENTABLE SQUARE FEET on the Third Floor of that
certain Building known as 1100 Larkspur Landing Circle, Suite
353, Larkspur, California, for a total of 20,325 USABLE SQUARE
FEET AND 22,766 RENTABLE SQUARE FEET.
2. TERM FOR SUITE 353. Sixty-four (64) months, COMMENCING JUNE 1,
1991, AND ENDING SEPTEMBER 30, 1996.
3. BASIC RENT. Tenant shall pay to Landlord for this additional
space, ONE THOUSAND SIX HUNDRED TEN AND NO/100 DOLLARS
($1,610.00) per month, making the total monthly Basic Rent for
Tenant FORTY-EIGHT THOUSAND NINE HUNDRED EIGHTY-SEVEN AND 76/100
DOLLARS ($48,987.76) until proper notice signed by the Landlord
directing otherwise.
4. ADDITIONAL RENT. Paragraph 7 of said Lease is hereby amended to
increase Tenant's proportionate share of any increase in the
Direct Costs to 29.14%.
5. SECURITY DEPOSIT. Tenant has deposited with Landlord ONE
THOUSAND SIX HUNDRED AND NO/100 DOLLARS ($1,610.00) pursuant to
that certain Month-to-Month Lease dated October 29, 1990, which
shall be added to the existing Security Deposit of FORTY-FOUR
THOUSAND SIX HUNDRED NINETY-SIX AND N0/100 DOLLARS ($44,696.00)
which has been deposited with Landlord pursuant to that certain
Lease dated September 11, 1989, for A TOTAL SECURITY DEPOSIT OF
FORTY-SIX THOUSAND THREE HUNDRED SIX AND NO/100 DOLLARS
($46,306.00).
<PAGE> 18
6. CONSTRUCTION. Landlord to contribute FOUR THOUSAND NINE HUNDRED
FORTY-THREE AND 71/100 DOLLARS ($4,943.71) towards Tenant
Improvement Cost for work which Landlord and Tenant hereby
acknowledge has been completed to Tenant's satisfaction.
All other terms and conditions of this Lease remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto subscribe their names as of the above
date.
LINCOLN PROPERTY COMPANY, N.C., INC.,
as Manager and Agent for Owner
BY: /s/ JOHN R. MILLER
------------------------------------------
"LANDLORD"
SYNON,INC.,
an Illinois corporation
BY: /s/ DENNIS G. HOLLIGAN
------------------------------------------
Dennis G. Holligan
Chief Financial Officer
"TENANT"
<PAGE> 19
[EXHIBIT "A" THIRD FLOOR PLAN]
<PAGE> 20
LEASE AMENDMENT AGREEMENT
This Amendment Agreement, made as of this date, December 26, 1989, by and
between LINCOLN PROPERTY COMPANY, N.C., INC., as Manager and Agent for Owner,
hereinafter referred to as Landlord, and SYNON, INC., an Illinois corporation,
hereinafter referred to as Tenant.
WITNESSETH:
WHEREAS, the Tenant leased from Landlord, by Lease dated September 11, 1989,
hereinafter referred to as the Lease, 16,112 USABLE SQUARE FEET AND 18,048
RENTABLE SQUARE FEET on the Second and Third Floors of that certain Building
known as 1100 Larkspur Landing Circle, Suite 300 Larkspur, California.
WHEREAS, the Tenant and Landlord now desire to amend this Lease to provide
additional space.
NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained, it is mutually agreed between Landlord and Tenant as follows:
1. SUITE 354. Landlord hereby leases unto said Tenant, and said
Tenant does hire and take from said Landlord an additional area
of 1,200 USEABLE SQUARE FEET outlined in red on Exhibit A
attached hereto, and 1,344 RENTABLE SQUARE FEET on the Third
Floor of that certain Building known as 1100 Larkspur Landing
Circle, Suite 354, Larkspur, California for a period of
eighty-one and one half (81 1/2) months COMMENCING DECEMBER 15,
1989 and ending September 30, 1996,
SUITE 203. Landlord hereby leases unto said Tenant, and said
Tenant does hire and take from said Landlord an additional area
of 770 USEABLE SQUARE FEET outlined in red on Exhibit A attached
hereto, and 862 RENTABLE SQUARE FEET on the Second Floor of that
certain Building known as 1100 Larkspur Landing Circle, Suite
203, Larkspur, California for a period of eighty-one (81) months
COMMENCING JANUARY 1, 1990 and ending September 30, 1996.
SUITE 356. Landlord hereby leases unto said Tenant, and said
Tenant does hire and take from said Landlord an additional area
of 1,574 USEABLE SQUARE FEET outlined in red on Exhibit A
attached hereto, and 1,763 RENTABLE SQUARE FEET on the Third
Floor of that certain Building known as 1100 Larkspur Landing
Circle, Suite 356, Larkspur, California for a period of eighty
(80) months COMMENCING FEBRUARY 1, 1990 and ending September 30,
1996.
2. BASIC RENT. Tenant shall pay to Landlord for the above
additional spaces the following monthly Basic Rent commencing on
the following dates:
<TABLE>
<CAPTION>
Suite Basic Rent Rent Commencement
----- ---------- -----------------
<S> <C> <C>
Suite 354 $2,729.00 December 15, 1989
Suite 203 $1,750.00 January 1, 1990
Suite 356 $3,579.00 February 1, 1990
</TABLE>
The above Basic Rents shall be added to the current Basic Rent
of THIRTY-SIX THOUSAND SIX HUNDRED THIRTY-EIGHT AND NO/100
DOLLARS ($36,638.00) as and when due until proper notice signed
by the Landlord directing otherwise.
<PAGE> 21
3. ADDITIONAL RENT. Paragraph 7 of said Lease is hereby amended to
increase Tenant's proportionate share of any increase in the
Direct Costs to 28.18%.
4. SECURITY DEPOSIT. Tenant shall deposit with Landlord the
additional sum of EIGHT THOUSAND FIFTY-EIGHT AND NO/100 DOLLARS
($8,058,00) to be added to the existing Security Deposit of
THIRTY-SIX THOUSAND SIX HUNDRED THIRTY-EIGHT AND NO/100 DOLLARS
which been deposited with Landlord pursuant to that certain
Lease dated September 11, 1989, for a total Security Deposit of
$44,696.00.
5. CONSTRUCTION. Landlord will contribute up to the sum of
$39,690.00 towards tenant improvement costs.
All other terms and conditions of this Lease remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto subscribe their names as of the above
date.
LINCOLN PROPERTY COMPANY, N.C., INC.,
as Manager and Agent for Owner
BY: /s/ BURCH BOONE
------------------------------------------
Burch Boone
Vice President
"LANDLORD"
SYNON,INC.,
an Illinois corporation
BY: /s/ DENNIS G. HOLLIGAN
------------------------------------------
Dennis G. Holligan
Chief Financial Officer
"TENANT"
<PAGE> 22
[EXHIBIT "A" SECOND FLOOR PLAN]
<PAGE> 23
[EXHIBIT "A" THIRD FLOOR PLAN]
<PAGE> 24
[EXHIBIT "A" SECOND FLOOR PLAN
<PAGE> 25
LEASE AMENDMENT THREE
-
This Lease Amendment Three, made as of this date, April 19, 1996, by and between
LINCOLN PROPERTY COMPANY N.C., INC., as Manager and Agent for Lincoln Larkspur
Office Three Associates, Ltd., hereinafter referred to as Landlord, and
SYNON,INC., an Illinois corporation, hereinafter referred to as Tenant.
WITNESSETH:
WHEREAS, the Tenant leased from Landlord, by Office Lease dated September 11,
1989, hereinafter referred to as the Lease,(the term "Lease" includes any
amendments or modifications thereof) approximately 22,766 rentable square feet
on the third and second floors of that certain Building known as 1100 LARKSPUR
LANDING CIRCLE, Suites 340, 315, 305, 325, 301, 200, 248, 205, 225 354, 203,
356, and 353 Larkspur, California.
WHEREAS, the Tenant and Landlord now desire to amend this Lease to provide an
extended term ("Extended Term One").
NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained, it is mutually agreed between Landlord and Tenant as follows:
A. TERM: Paragraph 3, "Term" of said Lease is hereby extended for
an additional term of twelve (12) months, ("Extended Term One"),
commencing October 1, 1996 and ending September 30, 1997.
B. BASIC RENT: Paragraph 5 "Basic Rent" of said Lease is hereby
amended to reduce Tenant's Basic Rent from $55,147.17 to
$51,223.50 per month, effective October 1, 1996.
All other terms and conditions of this Lease remain in full force and effect. If
any inconsistencies in the terms and conditions arise between the Lease and
Lease Amendment Three, the terms and conditions of Lease Amendment Three shall
prevail.
IN WITNESS WHEREOF, the Parties hereto subscribe their names as of the above
date.
LINCOLN PROPERTY COMPANY N.C., INC., as Manager and Agent for Lincoln Larkspur
Office Three Associates Ltd.
By: /s/ D. ALLEN PALMER
----------------------------------------
D. Allen Palmer
Its: Vice President
----------------------------------------
"LANDLORD"
SYNON, INC.
a Illinois corporation
By: /s/ DENNIS G. HOLLIGAN
----------------------------------------
Its: DIRECTOR OF ADMINISTRATION
----------------------------------------
"TENANT"
<PAGE> 26
LEASE AMENDMENT FOUR
This Lease Amendment Four, made as of this date, March 28, 1997, by and
between LINCOLN PROPERTY COMPANY N.C., INC., as Manager and Agent for Lincoln
Larkspur Office Three Associates, Ltd., hereinafter referred to as Landlord, and
SYNON, INC., an Illinois corporation, hereinafter referred to as Tenant.
WITNESSETH:
WHEREAS, the Tenant leased from Landlord, by Office Lease dated September 11,
1989, hereinafter referred to as the Lease, (the term "Lease" includes any
amendments or modifications thereof) approximately 22,766 RENTABLE SQUARE FEET
on the third and second floors of that certain Building known as 1100 LARKSPUR
LANDING CIRCLE, Suites 340, 315, 305, 325, 301, 200, 248, 205, 225, 354, 203,
356, and 353 Larkspur, California.
WHEREAS, the Tenant and Landlord now desire to amend this Lease to provide an
extended term ("Extended Term Two").
NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained, it is mutually agreed between Landlord and Tenant as follows:
A. TERM: Paragraph 3, "Term" of said Lease is hereby extended for
an additional term of thirty-six (36) months, ("Extended Term
Two"), commencing October 1, 1997 and ending September 30, 2000.
B. ADJUSTED BASIC RENT: Paragraph 6, "Adjusted Basic Rent" of said
Lease is hereby amended to exclude an increase in the Adjusted
Basic Rent for the year of 1997. Therefore, the next Adjustment
to Basic Rent shall be January 1, 1998.
C. ADDITIONAL RENT: Paragraph 7, "Additional Rent" of said Lease is
hereby amended to change the "Base Year" from 1989 to 1997,
effective January 1, 1997
D. TENANT IMPROVEMENT: Landlord shall contribute up to $68,298.00,
(22,766 sf x $3.00) towards Tenant Improvements which shall be
mutually acceptable between Landlord and Tenant.
All other terms and conditions of this Lease remain in full force and effect. If
any inconsistencies in the terms and conditions arise between the Lease and
Lease Amendment Four, the terms and conditions of Lease Amendment Four shall
prevail.
IN WITNESS WHEREOF, the Parties hereto subscribe their names as of the above
date.
LINCOLN PROPERTY COMPANY N.C., INC.,
as Manager and Agent for Lincoln Larkspur Office Three Associates, Ltd.
By: /s/ D. ALLEN PALMER
------------------------------------------
D. Allen Palmer, Vice President
"LANDLORD"
SYNON, INC.,
an Illinois corporation
By: /s/ DENNIS HOLLIGAN
----------------------------------------------
Dennis Holligan,
Director of Administration
"TENANT"
<PAGE> 27
OFFICE LEASE #2
LANDLORD: LARKSPUR LANDING
TENANT: SYNON, INC.
<PAGE> 28
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Terms and Definitions................................................1
2. Premises and Common Areas Leased.....................................2
3. Term.................................................................3
4. Possession...........................................................3
5. Annual Basic Rent....................................................3
6. Rental Adjustment....................................................3
7. Security Deposit.....................................................5
8. Use..................................................................5
9. Payments and Notices.................................................6
10. Brokers..............................................................6
11. Holding Over.........................................................6
12. Taxes on Tenant's Property...........................................6
13. Condition of Premises................................................7
14. Alterations..........................................................7
15. Repairs..............................................................9
16. Liens................................................................9
17. Entry by Land........................................................9
18. Utilities and Services...............................................9
19. Indemnification.....................................................10
20. Damage to Tenant's Property.........................................10
21. Insurance...........................................................10
22. Damage or Destruction...............................................11
23. Eminent Domain......................................................12
24. Bankruptcy..........................................................12
25. Defaults and Remedies...............................................12
26. Assignment and Subletting...........................................13
27. Quiet Enjoyment.....................................................14
28. Subordination.......................................................14
29. Estoppel Certificate................................................14
30. Building Planning...................................................15
31. Rules and Regulations...............................................15
32. Conflict of Laws ...................................................15
33. Successors and Assigns..............................................15
34. Surrender of Premises...............................................15
35. Professional Fees...................................................15
36. Performance by Tenant...............................................15
37. Mortgagee and Senior Lessor Protection..............................16
38. Definition of Landlord..............................................16
39. Waiver..............................................................16
40. Identification of Tenant............................................16
41. Parking and Transportation..........................................16
42. Office And Communications Services..................................16
43. Terms and Headings .................................................17
44. Examination of Lease................................................17
45. Time................................................................17
46. Prior Agreement: Amendments.........................................17
47. Separability........................................................17
48. Recording......................................................... 17
49. Limitation on Liability.............................................17
50. Riders..............................................................17
51. Signs...............................................................17
52. Modification for Lender.............................................17
53. Accord and Satisfaction.............................................17
54. Financial Statements................................................17
55. Tenant as Corporation...............................................17
56. No Partnership or Joint Venture.....................................17
57. Telecommunications/Intra-Building Network Cable.....................18
EXHIBITS
A. Outline of Floor Plan of Premises..................................A-1
B. Site Plan......................................................... B-1
C. Work Letter Agreement..............................................C-1
D. Sample Form of Notice of Lease Term Dates..........................D-1
E. Sample Form of Tenant Estoppel Certificate.........................E-I
F. Rules and Regulations .............................................F-I
G. Standard for Utilities & Services .................................G-1
H. Hazardous Waste....................................................H-1
</TABLE>
<PAGE> 29
STANDARD FORM OFFICE LEASE
THIS LEASE is made as of the 16th day of December, 1996, by and between Landlord
and Tenant.
WITNESSETH:
1. Term and Definitions. For the purposes of this Lease, the
following terms shall have the following definitions and meanings:
(a) Landlord: Lincoln Property Company N.C., Inc., as Manager and
Agent for Lincoln Larkspur Office Three Associates,
Ltd.
(b) Landlord's Address: Copy to:
1100 Larkspur Landing Circle, Suite 155
Larkspur, California 94939
(c) Tenant: Synon, Inc., an Illinois corporation
(d) Tenant's Address: (Prior to Commencement Date)
1100 Larkspur Landing Circle, Suite 300
Larkspur, CA 94939
Tenant's Address: (After Commencement Date)
Same as above
(e) Building Address: 1100 Larkspur Landing Circle,
Larkspur, CA 94939
(f) Suite Number: 360
(g) Floor(s) upon which the Premises are located: 3rd
(h) Premises: Those certain premises defined in Subparagraph 2(a)
hereinbelow.
(i) Site: The parcel of real property defined in Subparagraph 2(a)
below.
(j) Approximate Rentable Square Feet: 2,811
(k) Term: Three Lease Years and -0- Months.
(1) Building Standard Work: All the work to be done at Landlord's
expense, (including the "Allowance" as described in Subparagraph
6 of the Work Letter Agreement) in the Premises pursuant to the
provisions of the Work Letter Agreement described in Paragraph 2
below.
(m) Building Nonstandard Work: All the work done in the Premises by
Landlord pursuant to the provisions of the Work Letter Agreement
other than the Building Standard Work.
(n) Aggregate Improvements: The aggregate of the Building Standard
Work and the Building Nonstandard Work.
(o) Estimated Commencement Date: January 1, 1997
(p) Commencement Date: January 1, 1997
1
<PAGE> 30
(q) Annual Basic Rent: $75,897.00
Monthly Basic Rent: $6,324.80
(r) Operating Expenses: /*. *Tenant's percentage share of 1997
Operating Expenses
(s) Tenant's Percentage Share: 3.6%*
(t) Security Deposit: $6,044.00** **Currently on hand with
Landlord pursuant to Lease
dated 9/28/90, and which
expired 10/31/96.
(u) Permitted Use: Office Use
(v) Brokers: N/A
(w) Landlord's Construction Representative: N/A
__________ Telephone: ___________________
(x) Tenant's Construction Representative: N/A
__________ Telephone: ___________________
(y) Parking: See Paragraph 41.
(z) Riders: -0- through -0-, inclusive, which Riders are attached to
this Lease and are incorporated herein by this reference.
(aa) Lease Year: A period of twelve (12) consecutive months, the
first such period commencing on the Commencement Date and
consecutive periods beginning on each consecutive anniversary
thereof.
(bb) Exhibits; A through H inclusive, which Exhibits are attached to
this Lease and are incorporated herein by this reference.
2. Premises and Common Areas Leased.
(a) Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord, the Premises contained within the suite designated in Paragraph 1,
outlined on the Floor Plan attached hereto and marked Exhibit "A" and
incorporated herein by this reference in the building and parking facilities at
the address designated in Subparagraph 1 (e) above (the "Building"), located on
the parcel of real property (the "Site") outlined on the Site Plan attached
hereto as "Exhibit "B", and incorporated herein by this reference, and improved
or to be improved by Landlord with the Aggregate Improvements described in the
Work Letter Agreement, a copy of which is attached hereto and marked Exhibit "C"
and incorporated herein by this reference. By taking possession of the Premises
Tenant accepts the Aggregate Improvements as completed or as substantially
completed. In the latter case, Landlord shall provide Tenant with a list of
incomplete and/or corrective items, which list shall be approved and
acknowledged by Tenant within ten (10) days of receipt and which items Landlord
shall complete and/or correct promptly thereafter.
The parties hereto agree that said letting and hiring is upon and
subject to the terms, covenants and conditions herein set forth and Tenant
covenants as a material part of the consideration for this Lease to keep and
perform each and all of said terms, covenants and conditions by it to be kept
and performed and that this Lease in made upon the condition of such
performance.
(b) Tenant shall have the nonexclusive right to use in common with
other tenants in the Building and subject to the Rules and Regulations referred
to in Paragraph 31 below, the following areas ("Common Areas") appurtenant to
the Premises:
(i) The common entrances, lobbies, restrooms, elevators,
stairways and accessways, loading docks, ramps, drives and
platforms and any passageways and serviceways thereto, and the
common pipes, conduits, wires and appurtenant equipment serving
the Premises;
(ii) Parking areas (subject to the provisions of Paragraph 41
hereinbelow), loading and unloading areas, roadways, sidewalks,
walkways, parkways, driveways and landscaped areas appurtenant
to the Building.
(c) Landlord reserves the right from time to time without
unreasonable interference with Tenant's use.
(i) To install, use, maintain, repair and replace pipes,
ducts, conduits, wires and appurtenant meters and equipment for
service to other parts of the Building above the ceiling
surfaces, below the floor surfaces, within the walls and in the
central core areas, and to relocate any pipes, ducts, conduits,
wires and appurtenant meters and equipment included in the
Premises which are located in the Premises or located elsewhere
outside the Premises, and to expand the Building;
(ii) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of
driveways, entrances, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas and walkways and,
subject to Paragraph 41, parking spaces and parking areas;
2
<PAGE> 31
(iii) To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the
Premises remains available:
(iv) To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Building,
or any portion thereof;
(v) To do and perform such other acts and make such other
changes in, to or with respect to the Site, Common Areas and
Building as Landlord may, in the exercise of sound business
judgment. deem to be appropriate.
3. Term. The Term of this Lease shall be for the period designated
in Subparagraph 1(k) commencing on the Commencement Date, and ending on the
expiration of such period, unless the term hereby demised shall be sooner
terminated as hereinafter provided. The Commencement Date and the date upon
which the term of this Lease shall end shall be determined in accordance with
the provisions of Subparagraph 1(p) and said dates will be specified in
Landlord's Notice of Lease Term Dates ("Notice"), in the form of Exhibit "D"
which is attached hereto and is incorporated herein by this reference, and shall
be served upon Tenant as provided in Paragraph 9, after Landlord delivers or
tenders possession of the Premises to Tenant. The Notice shall be binding upon
Tenant unless Tenant objects to the Notice in writing, served upon Landlord as
provided for in Paragraph 9 hereof, within five (5) days of Tenant's receipt of
the Notice.
4. Possession. Tenant agrees that in the event of the inability of
Landlord to deliver possession of the Premises to Tenant on the date above
specified for the commencement of the term of this Lease, this Lease shall not
be void or voidable, nor shall Landlord be liable to Tenant for any loss or
damage resulting therefrom.
5. Annual Basic Rent.
(a) Tenant agrees to pay Landlord as Annual Basic Rent for
the Premises the Annual Basic Rent designated in Subparagraph 1(q) (subject to
adjustment as hereinafter provided) in twelve (12) equal monthly installments
("Monthly Basic Rent"), each in advance on the first day of each and every
calendar month during said Term, except that the first month's rent shall be
paid upon the execution hereof. In the event the term of this Lease commences or
ends on a day other than the first day of a calendar month. then the rental for
such periods shall be prorated in the proportion that the number of days this
Lease is in effect during such periods bears to thirty (30), and such rental
shall be paid at the commencement of such periods. In addition to said Annual
Basic Rent, Tenant agrees to pay the amount of the rental adjustments as and
when hereinafter provided in this Lease. Said Annual Basic Rent. additional
rent, and rental adjustments shall be paid to Landlord, without any prior demand
therefor and without any deduction or offset whatsoever in lawful money of the
United States of America, which shall be legal tender at the time of payment, at
the address of Landlord designated in Subparagraph 1(b) or to such other person
or at such other place as Landlord may from time to time designate in writing.
Further, all charges to be paid by Tenant hereunder, including, without
limitation, payments for real property taxes, insurance, repairs, and parking
shall be considered additional rent for the purposes of this Lease, and the word
"rent" in this Lease shall include such additional rent unless the context
specifically or clearly implies that only the Annual Basic Rent is referenced.
See Page 19, "ADJUSTED BASIC RENT"
6. Rental Adjustment
(a) For the purposes of this Subparagraph 6(a), the following terms
are defined as follows:
Tenant's Percentage Share. Tenant's Percentage Share shall mean
that portion of the total rentable area of the Building leased by Tenant
as set forth as percentage in Subparagraph 1(s) above.
Operating Expenses Allowance. Operating Expenses Allowance shall
mean that portion of Tenant's Percentage Share of the Operating Expenses
which Landlord has included in the Annual Basic Rent and which amount is
set forth in Subparagraph 1(r) above.
3
<PAGE> 32
0perating Expenses. Operating Expenses shall consist of all direct costs
of operation and maintenance of the Building, the Common Areas and the Site as
determined by standard accounting practices, calculated assuming the Building is
fully occupied. including the following costs by way of illustration, but not
limitation: real property taxes and assessments and any taxes or assessments
hereafter imposed in lieu thereof; rent taxes, gross receipt taxes (whether
assessed against Landlord or assessed against Tenant and collected by Landlord,
or both); water and sewer charges; the net cost and expense of insurance for
which Landlord is responsible hereunder or which Landlord or any first mortgagee
with a lien affecting the Premises reasonably deems necessary in connection with
the operation of the Building; utilities; janitorial services; security; labor;
parking expenses, utilities surcharges, or any other costs levied, assessed or
imposed by, or at the direction of, or resulting from statutes or regulations or
interpretations thereof, promulgated by any federal, state, regional, municipal
or local government authority in connection with the use or occupancy of the
Building or the Premises or the parking facilities serving the Building or the
Premises: the cost (amortized over such reasonable period as Landlord shall
determine together with interest at the maximum rate allowed by law on the
unamortized balance) of (a) any capital improvements made to the Building by the
Landlord after the first year of the term of the Lease that reduce other
Operating Expenses, or made to the Building by Landlord after the date of the
Lease that are required under any governmental law or regulation that was not
applicable to the Building at the time it was constructed, or (b) replacement of
any building equipment needed to operate the Building at the same quality levels
as prior to the replacement; costs incurred in the management of the Building,
if any (including supplies. wages and salaries of employees used in the
management, operation and maintenance of the Building, and payroll taxes and
similar governmental charges with respect thereto); on site Building management
office rental; a management fee; air conditioning; waste disposal; heating;
ventilating; elevator maintenance; supplies; materials; equipment; tools; repair
and maintenance of the structural portions of the Building, including the
plumbing, heating. ventilating, air conditioning and electrical systems
installed or furnished by Landlord; and maintenance, costs and upkeep of all
parking and common areas, rental of personal property used in maintenance; costs
and expenses of gardening and landscaping, maintenance of signs (other than
Tenant's signs); personal property taxes levied on or attributable to personal
property used in connection with the entire Building, including the Common
Areas; reasonable audit or verification fees; and costs and expenses of repairs,
resurfacing, repairing, maintenance, painting, lighting, cleaning, refuse
removal, security and similar items, including appropriate reserves. Operating
Expenses shall not include depreciation on the Building or equipment therein.
Landlord's executive salaries, real estate brokers' commissions, interest
expense on Building financing; amortization of cost of tenant improvements in
the Building; ground rent; income and franchise taxes: dividends: and attorney's
fees and expenses which are not related to the operation of the Building.
As used herein, the term "real property taxes" shall included any form
of assessment, license fee, license tax, business license fee, commercial rental
tax, levy, charge, penalty, tax or similar imposition, imposed by any authority
having the direct power to tax, including any city, county, state or federal
government, or any school agricultural, lighting, drainage or other improvement
or special assessment district thereof, as against any legal or equitable
interest of Landlord in the Premises, including, but not limited to, the
following:
(i) any tax on Landlord's "right" to rent or "right" to other income
from the Premises or as against Landlord's business of leasing the
Premises;
(ii) any assessment, tax, fee, levy or charge in substitution,
partially or totally, of any assessment. tax, fee, levy or charge
previously included within the definition of real estate tax, it being
acknowledged by Tenant and Landlord that Proposition 13 was adopted by
the voters of the State of California in the June, 1978 Election and
that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street,
sidewalk and road maintenance, refuse removal and for other governmental
services formerly provided without charge to property owners or
occupants. It is the intention of Tenant and Landlord that all such new
and increased assessments. taxes, fees, levies and charges be included
within the definition of "real property taxes" for the purposes of this
Lease;
(iii) any assessment, tax, fee, levy or charge allocable to or
measured by the area of the Premises or the rent payable hereunder,
including, without limitation, any gross income tax or excise tax levied
by the State, City or Federal government, or any political subdivision
thereof, with respect to the receipt of such rent, or upon or with
respect to the possession, leasing, operating, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises, or any
portion thereof;
(iv) any assessment, tax, fee, levy or charge upon this transaction
or any document to which Tenant is a party, creating or transferring an
interest or an estate in the Premises;
(v) any assessment, tax, fee, levy or charge by any governmental
agency related to any transportation plan, fund or system instituted
within the geographic area of which the Building is a part; or
(vi) reasonable legal and other professional fees, costs and
disbursements incurred in connection with/proceedings to contest,
determine or reduce real property taxes.
Notwithstanding any provision of this Subparagraph 6(a)
expressed or implied to the contrary "real property taxes" shall not
include Landlord's federal or state income, franchise, inheritance or
estate taxes.
4
<PAGE> 33
If Tenant's Percentage Share of the Operating Expenses estimated in the Estimate
Statement exceeds the Operating Expenses Allowance then such excess amount shall
be divided into twelve (12) equal monthly installments and Tenant shall pay to
Landlord, concurrently with The regular monthly rent payment next due following
the receipt of such statement, an amount equal to one (1) monthly installment
multiplied by the number of months from January in the calendar year in which
said statement is submitted to the month of such payment, both months inclusive.
Subsequent installments shall be paid concurrently with the regular monthly rent
payments for the balance of the calendar year and shall continue until the next
calendar year's Estimate Statement is rendered. By the first day of June of each
succeeding calendar year during the term of this Lease, Landlord shall endeavor
to deliver to Tenant a statement ("Actual Statement") wherein Landlord shall
state the actual Operating Expenses for the preceding calendar year. If the
Actual Statement reveals a greater increase in Tenant's Percentage Sham of
Operating Expenses than was estimated by Landlord in the Estimated Statement
delivered as provided herein, then upon receipt of the Actual Statement from
Landlord, Tenant shall pay a lump sum equal to said total increase over the
Operating Expenses Allowance, less the total of the monthly installments of
increases set forth on the Estimate Statement which were paid in the previous
calendar year. If, in any calendar year, Tenant's Percentage Share of Opening
Expenses is less than the preceding calendar year. then upon receipt of
Landlord's Actual Statement, any overpayment made by Tenant on the monthly
installment basis provided above shall be credited toward the next monthly rent
falling due and the monthly installment of Tenant's Percentage Share or
Operating Expenses to be paid pursuant to the then current Estimate Statement
shall be adjusted to reflect such lower expenses for the most recent calendar
year, or if this Lease has been terminated, such excess shall be credited
against any amount which Tenant owes Landlord pursuant to this Lease and, to the
extent all amounts which Tenant owes Landlord pursuant to this Lease have been
paid, Landlord shall promptly pay such excess to Tenant. Any delay or failure by
Landlord in delivering any estimate or statement pursuant to this Paragraph
shall not constitute a waiver of its right to require an increase in rent nor
shall it relieve Tenant of its obligations pursuant to this Paragraph, except
that Tenant "Shall not be obligated to make any payments based on such estimate
or statement until ten (10) days after receipt of such estimate or statement.
(c) Even though the term has expired and Tenant has vacated the
Premises; when the final determination is made of Tenant's Percentage Share of
Operating Expenses for the year in which this Lease terminates, Tenant shall
immediately pay any increase due over the estimated expenses paid and conversely
any overpayment made in the event said expenses decrease shall be immediately
rebated by Landlord to Tenant.
(d) Notwithstanding anything contained in this Paragraph 6, the
rental payable by Tenant shall in no event be less than the rent specified in
Paragraph 5 hereof.
7. Security Deposit. Tenant has deposited with Landlord the
Security Deposit designated in Subparagraph 1(t). Said deposit shall be held by
Landlord assecurity for the faithful performance by Tenant of all of the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant
during the term hereof. If Tenant defaults with respect to any provision of this
Lease, including but not limited to the provisions relating to the payment of
rent. Landlord may (but shall not be required to) use, apply or retain all or
any part of this Security Deposit for the payment of any rent or any other sum
in default, or for the payment of any other amount which Landlord may spend or
become obligated to spend by reason of Tenant's default or to compensate
Landlord for any loss or damage which Landlord may suffer by reason of Tenant's
default. If any portion of said deposit is so used or applied, Tenant shall,
within ten (10) days after demand therefor, deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to its original amount and
Tenant's failure to do so shall be a material breach of this Lease. Landlord
shall not be required to keep this Security Deposit separate from its general
funds. and Tenant shall not be entitled to interest on such Security Deposit. If
Tenant shall fully and faithfully perform every provision of this Lease to be
performed by it, the Security Deposit or any balance thereof shall be returned
to Tenant (or, at Landlord's option, to the last assignee of Tenant's interests
hereunder) at the expiration of the Lease term, provided that Landlord may
retain the Security Deposit until such time as any amount due from Tenant in
accordance with Paragraph 5 and 6 hereof has been determined and paid in full.
Should Landlord sell its interest in the Premises during the term hereof and if
Landlord deposits with the purchaser thereof the then unappropriated funds
deposited by Tenant as aforesaid, thereupon Landlord shall be discharged from
any further liability with respect to such Security Deposit.
8. Use. Tenant shall use the Premises for general office purposes
and purposes incident thereto in compliance with Exhibit H, Hazardous Waste, and
shall not use or permit the Premises to be used for any other purpose without
the prior written consent of Landlord. Tenant shall not use or occupy the
Premises in violation of any recorded covenants; conditions and restrictions
affecting the Site or of any law or of the Certificate of Occupancy issued for
the Building of which the Premises are a part, and shall upon five (5) days'
written notice from Landlord, discontinue any use of the Premises which is
declared by any governmental authority having jurisdiction to be a violation of
any recorded covenants, conditions and restrictions affecting the Site or of any
law or of said Certificate of Occupancy. Tenant may not offer shared tenant
services,
5
<PAGE> 34
such as but not limited to telecommunications, data processing or word
processing, to any unaffiliated tenant in the Building without Landlord's prior
written consent, which consent may be withheld by Landlord at its sole and
absolute discretion. Tenant shall not install any radio or television antenna,
loudspeaker or other device on the roof or exterior walls of the Building.
Tenant shall not interfere with radio or television broadcasting or reception
from or in the Building or elsewhere. Tenant shall comply with any direction of
any governmental authority having jurisdiction which shall, by reason of the
nature of Tenant's use or occupancy of the Premises, impose any duty upon Tenant
or Landlord with respect to the Premises or with respect to the use or
occupation thereof. Tenant shall not do or permit to be done anything which will
invalidate or increase the cost of any fire, extended coverage or any other
insurance policy covering the Building and/or property located therein and shall
comply with all rules, orders, regulations and requirements of the Pacific Fire
Rating Bureau or any other organization performing a similar function. Tenant
shall promptly upon demand reimburse Landlord as additional rent for any
additional premium charged for such policy by reason of Tenant's failure to
comply with the provisions of this Paragraph S. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way obstruct or
interfere with the rights of other tenants or occupants of the Building, or
injure or annoy them, or use or allow the Premises to be used for any improper,
immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain or
permit any nuisance in, on or about the Premises. Tenant shall not commit or
suffer to be committed any waste in, or upon the Premises and shall keep the
Premises in first class repair and appearance. Tenant shall not place a load
upon the Premises exceeding the average pounds of live load per square foot of
floor area specified for the Building by Landlord's architect, with the
partitions to be considered a part of the live load. Landlord reserves the right
to prescribe the weight and position of all safes, files and heavy equipment
which Tenant desires to place in the Premises so as to distribute properly the
weight thereof. Tenant's business machines and mechanical equipment which cause
vibration or noise that may be transmitted to the Building structure or to any
other space in the Building shall be so installed, maintained and used by Tenant
as to eliminate such vibration or noise. Tenant shall be responsible for all
structural engineering required to determine structural load. Tenant shall
fasten all files, bookcases and like furnishings to walls in a manner to prevent
tipping over in the event of earth movements. Landlord shall not be responsible
for any damage or liability for such events.
9. Payments and Notices. Payments will be by check, only, unless
Tenant is in default, as per Paragraph 25. All rents and other sums payable by
Tenant to Landlord hereunder shall be paid to Landlord by check. cashier's
check, or cash, at Landlord's option, at the address designated by Landlord in
Subparagraph 1 (b) above or at such other places as Landlord may hereafter
designate in writing. Any notice required or permitted to be given hereunder
must be in writing and may be given by personal delivery or by mail, and if
given by mail shall be deemed sufficiently given if sent by registered or
certified mail addressed to Tenant at the Building or to Landlord at both of the
addresses designated in Subparagraph 1(b). Either party may by written notice to
the other specify a different address for notice purposes except that Landlord
may in any event use the Premises as Tenant's address for notice purposes. If
more than one person or entity constitutes the "Tenant" under this Lease,
service of any notice upon any one of said persons or entities shall be deemed
as service upon all of said persons or entities.
10. Brokers. The parties recognize that the brokers who negotiated
this Lease are the brokers whose names are stated in Subparagraph 1(v), and
agree that Landlord shall be solely responsible for the payment of brokerage
commissions to said brokers, and that Tenant shall have no responsibility
therefor. As part of the consideration for the granting of this Lease, Tenant
represents and warrants to Landlord that to Tenant's knowledge no other broker,
agent or finder negotiated or was instrumental in negotiating or consummating
this Lease and that Tenant knows of no other real estate broker, agent or finder
who is, or might be, entitled to a commission or compensation in connection with
this Lease. Any broker, agent or finder of Tenant whom Tenant has failed to
disclose herein shall be paid by Tenant. Tenant shall hold Landlord harmless
from all damages and indemnify Landlord for all said damages paid or incurred by
Landlord resulting from any claims that may be asserted against Landlord by any
broker, agent or finder undisclosed by Tenant herein.
11. Holding Over. If Tenant holds over after the expiration or
earlier termination of the term hereof without the express written consent of
Landlord, Tenant shall become a tenant at sufferance only, at a rental rate
equal to (150%) of the Annual Basic Rent which would be applicable to the
Premises upon the date of such expiration (subject to adjustment as provided in
Paragraph 6 hereof and prorated on a daily basis), and otherwise subject to the
terms, covenants and conditions herein specified, so far as applicable.
Acceptance by Landlord of rent after such expiration or earlier termination
shall not constitute a holdover hereunder of result in a renewal. The foregoing
provisions of this Paragraph 11 are in addition to and do not affect Landlord's
right of re-entry or any rights of Landlord hereunder or as otherwise provided
by law. If Tenant fails to surrender the Premises upon the expiration of this
Lease despite demand to do so by Landlord, Tenant shall indemnify and hold
Landlord harmless from all loss or liability, including without limitation, any
claim made by any succeeding tenant founded on or resulting from such failure to
surrender.
12. Taxes on Tenant's Property.
(a) Tenant shall be liable for and shall pay at least ten (10) days
before delinquency, taxes levied against any personal property or trade fixtures
placed by Tenant in or about the Premises. If any such taxes on Tenant's
personal property or trade fixtures are levied against Landlord or Landlord's
property or if the assessed value of the Premises is increased by the inclusion
therein of a value placed upon such personal property or trade fixtures of
Tenant and if Landlord, after written notice to Tenant, pays the taxes based
upon such increased assessments, which Landlord shall have the right to do
regardless of the validity thereof, but only under proper protest if requested
by Tenant, Tenant shall upon demand repay to Landlord the taxes levied against
Landlord, or the proportion of such taxes resulting from such increase in the
assessment; provided that in any such event. at Tenant's sole cost and expense,
Tenant shall have the right, in the name of Landlord and with Landlord's full
cooperation, to bring suit in any court of competent jurisdiction to recover the
amount of any such taxes so paid under protest. any amount so recovered to
belong to Tenant.
(b) If the Aggregate Improvements in the Premises, whether installed
and/or paid for by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for real property tax
purposes at a
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valuation higher than the valuation at which Aggregate Improvements conforming
to Landlord's "Building Standard" in other space in the Building are assessed,
then the real property taxes and assessment levied against Landlord or the
property by reason of such excess assessed valuation shall be deemed to be taxes
levied against personal property of Tenant and shall be governed by the
provisions of Subparagraph 12(a), above. If the records of the County Assessor
are available and sufficiently detailed to serve as a basis for determining
whether said Aggregate Improvements are assessed at a higher valuation than
Landlord's "Building Standard," such records shall be binding on both Landlord
and Tenant. If the records of the County Assessor are not available or
sufficiently detailed to serve as a basis for making said determination, the
actual cost of construction shall be used.
13. Condition of Premises. Tenant acknowledges that neither Landlord
nor any agent of Landlord has made any representation or warranty with respect
to the Premises or the Building or with respect to the suitability of either for
the conduct of Tenant's business. The taking of possession of the Premises by
Tenant shall conclusively establish that the Premises and the Building were at
such time in satisfactory condition, however, occupancy and rent commencement
will not interfere with Landlord's obligation to complete Tenant Improvements.
Without limiting the foregoing, Tenant's execution of the Notice attached hereto
as Exhibit "D" shall constitute a specific acknowledgment and acceptance of the
various start-up inconveniences that may be associated with the use of the
Building Common Areas such as certain construction obstacles including
scaffolding, delays in the use of freight elevator service, certain elevators
not being available to Tenant, the passage of work crews using elevators, uneven
air conditioning service, and other typical conditions incident to recently
constructed office buildings. Further, Tenant's execution of said Notice shall
constitute an acknowledgment, in light of the practical impossibility of
ensuring that every floor slab has been installed with absolutely no deflection,
that all wood floor coverings, wood paneling, and similar interior Aggregate
Improvements have been and/or will be designed to accommodate the actual floor
slab deflection unique to each particular area of the Premises to be so
improved.
14. Alterations.
(a) Tenant may, at any time and from time to time during the term of
this Lease, at its sole cost and expense, make alterations, additions,
installations, substitutions, improvements and decorations (hereinafter
collectively called "Changes") in and to the Premises, excluding structural
changes, on the following conditions, and providing such Changes will not result
in a violation of or require a change in the Certificate of Occupancy applicable
to the Premises:
(i) The outside appearance, character or use of the Building
shall not be affected, and no Changes shall weaken or impair the
structural strength or, in the opinion of Landlord, lessen the
value of the Building or create the potential for unusual
expenses to be incurred upon the removal of Changes and the
restoration of the Premises upon the termination of this Lease.
(ii) No part of the Building outside of the Premises shall be
physically affected.
(iii) The proper functioning of any of the mechanical,
electrical, sanitary and other service systems or installations
of the Building ("Service Facilities") shall not be adversely
affected and there shall be no construction which might
interfere with Landlord's free access to the Service Facilities
or interfere with the moving of Landlord's equipment to or from
the enclosures containing the Service Facilities.
(iv) In performing the work involved in making such Changes,
Tenant shall be bound by and observe all of the conditions and
covenants contained in this Paragraph.
(v) All work shall be done at such times and in such manner
as Landlord from time to time may designate.
(vi) Tenant shall not be permitted to install and make part
of the Premises any materials, fixtures or articles which are
subject to liens, conditional sales contracts or chattel
mortgages.
(vii) At the date upon which the term of this Lease shall end,
or the date of any earlier termination of this Lease, Tenant
shall on Landlord's written request restore the Premises to
their condition prior to the making of any Changes permitted by
this Paragraph, reasonable wear and tear excepted.
(b) Before proceeding with any Change (exclusive of changes to items
constituting Tenant's personal property), Tenant shall submit to Landlord plans
and specifications for the work to be done, which shall require Landlord's
written approval. Landlord shall then prepare or cause to be prepared, at
Tenant's expense, mechanical, electrical and plumbing drawings and may confer
with consultants in connection with the preparation of such drawings and may
also submit to such consultant(s) any of the plans prepared by Tenant. If
Landlord or such consultant(s) shall disapprove of any of the Tenant's plans
Tenant shall be advised of the reasons of such disapproval. In any event, Tenant
agrees to pay to Landlord, as additional rent, the cost of such consultation and
review immediately upon receipt of invoices either from Landlord or such
consultant(s). Any Change for which approval has been received shall be
performed strictly in accordance with the approved plans and specifications, and
no amendments or additions to such plans and specifications shall be made
without the prior written consent of Landlord.
(c) If the proposed Change requires approval by or notice to the
lessor of a superior lease or the holder of a mortgage, no Change shall be
proceeded with until such approval has been received, or such notice has been
given, as the case may be, and all applicable conditions and provisions of said
superior lease or mortgage with respect to the proposed Change or alteration
have been met or complied with at Tenant's expense; and Landlord, if it approves
the Change, will request such approval or give such notice, as the case may be.
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(d) After Landlord's written approval has been sent to Tenant and
the approval by or notice to the lessor of a superior lease or the holder of a
superior mortgage has been received or given, as the case may be, Tenant shall
enter into an agreement for the performance of the work to be done pursuant to
this Paragraph with Landlord's contractor. In any event, Tenant agrees to pay to
Landlord, at Landlord's option, in advance of construction based upon Landlord's
cost estimates, or as additional rent, the cost of such construction immediately
upon receipt from Landlord of invoices from time to time during the course of
such construction. All costs and expenses incurred in Changes shall be paid by
Tenant within seven (7) days after each billing by Landlord or any such
contractor or contractors. If Landlord approves the construction of specific
interior improvements in the Premises by contractors or mechanics selected by
Tenant and approved by Landlord, then Tenant's contractors shall obtain on
behalf of Tenant and at Tenant's sole cost and expense, (i) all necessary
governmental permits and certificates for the commencement and prosecution of
Tenant's Changes and for final approval thereof upon completion, and (ii) a
completion and lien indemnity bond, or other surety, satisfactory to Landlord,
for the Changes. In the event Tenant shall request any changes in the work to be
performed after the submission of the plans referred to in this Paragraph 14,
such additional changes shall be subject to the same approvals and notices as
the changes initially submitted by Tenant.
(e) Tenant shall pay to Landlord for Landlord's services in the
event Landlord performs as a general contractor in connection with the work
performed pursuant to this Paragraph 14, a fee equal to seven percent (7%) of
the total cost of the changes, and Landlord's reasonable overhead related
thereto.
(f) All Changes and the performance thereof shall at all times
comply with (i) all laws, rules, orders, ordinances, directions, regulations and
requirements of all governmental authorities, agencies, offices, departments,
bureaus and boards having jurisdiction thereof, (ii) all rules, orders,
directions, regulations and requirements of the Pacific Fire Rating Bureau, or
of any similar insurance body or bodies, and (iii) all rules and regulations of
Landlord, and Tenant shall cause Changes to be performed in compliance therewith
and in good and first class workmanlike manner, using materials and equipment at
least equal in quality and class to the original installations of the Building.
Changes shall be performed in such manner as not to interfere with the occupancy
of any other tenant in the Building nor delay or impose any additional expense
upon Landlord in construction, maintenance or operation of the Building, and
shall be performed by Contractors or mechanics approved by Landlord and
submitted to Tenant pursuant to this Paragraph, who shall coordinate their work
in cooperation with any other work being performed with respect to the Building.
Throughout the performance of Changes, Tenant at its expense, shall carry, or
cause to be carried, workmen's compensation insurance in statutory limits, and
general liability insurance for any occurrence in or about the Building, of
which Landlord and its managing agent shall be named as parties insured, in such
limits as Landlord may reasonably prescribe, with insurers reasonably
satisfactory to Landlord all in compliance with Subparagraph 21 (b).
(g) Tenant further covenants and agrees that any mechanic's lien
filed against the Premises or against the Building for work claimed to have been
done for, or materials claimed to have been furnished to Tenant, will be
discharged by Tenant, by bond or otherwise, within ten (10) days after the
filing thereof, at the cost and expense of Tenant. All alterations, decorations,
additions or improvements upon the Premises, made by either party, including
(without limiting the generality of the foregoing) all wallcovering, built-in
cabinet work, panelling and the like, shall, unless Landlord elects otherwise,
become the property of Landlord, and shall remain upon, and be surrendered with
the Premises, as a part thereof, at the end of the term hereof, except that
Landlord may by written notice to Tenant, given at least thirty (30) days prior
to the end of the term, require Tenant to remove all partitions, counters,
railings and the like installed by Tenant, and Tenant shall repair any damage to
the Premises arising from such removal or, at Landlord's option, shall pay to
the Landlord all of Landlord's costs of such removal and repair.
(h) All articles of personal property and all business and trade
fixtures, machinery and equipment, furniture and movable partitions owned by
Tenant or installed by Tenant at its expense in the Premises shall be and remain
the property of Tenant and may be removed by Tenant at any time during the lease
term provided Tenant is not in default hereunder, and provided further that
Tenant shall repair any damage caused by such removal. If Tenant shall fail to
remove all of its effects from said Premises upon termination of this Lease for
any cause whatsoever, Landlord may, at its option, remove the same in any manner
that Landlord shall choose, and store said effects without liability to Tenant
for loss thereof, and Tenant agrees to pay Landlord upon demand any and all
expenses incurred in such removal, including court costs and attorneys' fees and
storage charges on such effects for any length of time that the same shall be in
Landlord's possession or Landlord may, at its option, without notice, sell said
effects, or any of the same, at private sale and without legal process, for such
price as Landlord may obtain and apply the proceeds of such sale upon any
amounts due under this Lease from Tenant to Landlord and upon the expense
incident to the removal and sale of said effects.
(i) Subject to Landlord's agreement to minimize any disturbance of
Tenant's use of the Premises, Landlord reserves the right at any time and from
time to time without the same constituting an actual or constructive eviction
and without incurring any liability to Tenant therefor or otherwise affecting
Tenant's obligations under this Lease, to make such changes, alterations,
additions, improvements, repairs or replacements in or to the Site or the
Building (including the Premises if required so to do by any law or regulation)
and the fixtures and equipment thereof, as well as in or to the street
entrances, halls, passages and stairways thereof, to change the name by which
the Building is commonly known except as controlled by the signage provision,
Rider #5, between Landlord and Tenant in that Lease dated April 22, 1991, as
Landlord my deem necessary or desirable. Nothing contained in this Paragraph 14
shall be deemed to relieve Tenant of any duty, obligation or liability of Tenant
with respect to making any repair, replacement or improvement or complying with
any law, order or requirement of any government or other authority and nothing
contained in this Paragraph 14, shall be deemed or construed to impose upon
Landlord any obligation, responsibility or liability whatsoever, for the care,
supervision of repair of the Building or any part thereof other than as
otherwise provided in this Lease.
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15. Repairs.
(a) By entry hereunder, Tenant accepts the Premises as being in good
and sanitary order, condition and repair, however, occupancy and rent
commencement will not interfere with Landlord's obligation to complete Tenant
Improvements. Tenant shall, when and if needed or whenever requested by Landlord
to do so, at Tenant's sole cost and expense, maintain and make all repairs to
the Premises and every part thereof, to keep, maintain and preserve the Premises
in first class condition, excepting ordinary wear and tear. Any such maintenance
and repairs shall be performed by Landlord's contractor, or a Landlord's
approved contractor or contractors. All costs and expenses incurred in such
maintenance and repair shall be paid by Tenant within seven (7) days after
billing by Landlord or such contractor or contractors. Tenant shall upon the
expiration or sooner termination of the term hereof surrender the Premises to
Landlord in the same condition as when received, reasonable wear and tear
excepted. Landlord shall have no obligation to alter, remodel, improve, repair,
decorate or paint the Premises or any part thereof and the parties hereto affirm
that Landlord has made no representations to Tenant respecting the condition of
the Premises or the Building except as specifically herein set forth.
(b) Anything contained in Subparagraph 15 a above to the contrary
notwithstanding, Landlord shall repair and maintain the structural portions of
the Building, including the basic plumbing, heating, ventilating, air
conditioning and electrical systems installed or furnished by Landlord, unless
such maintenance and repairs are caused in part or in whole by the act, neglect,
fault of or omission of any duty by Tenant, its agents, servants, employees or
invitees, in which case Tenant shall pay to Landlord as additional rent, the
reasonable cost of such maintenance and repairs. Landlord shall not be liable
for any failure to make any such repairs, or to perform any maintenance unless
such failure shall persist for an unreasonable time after written notice of the
need of such repairs or maintenance is given to Landlord by Tenant. Except as
provided in Paragraph 22 hereof there shall be no abatement of rent and no
liability of Landlord by reason of any injury to or interference with Tenant's
business arising from the making of any repairs, alterations or improvements in
or to any portion of the Building or the Premises or in or to fixtures,
appurtenances and equipment therein. Tenant waives the right to make repairs at
Landlord's expense under any law, statute or ordinance now or hereafter in
effect. Notwithstanding anything to the contrary contained in Subparagraphs (a)
and (b) of this Paragraph 15, Tenant shall maintain and repair at its sole cost
and expense, and with maintenance contractors approved by Landlord, all non-base
building facilities, including lavatory, shower, toilet, washbasin and kitchen
facilities and heating and air conditioning systems, including all plumbing
connected to said facilities or systems installed by Tenant or on behalf of
Tenant or existing in the Premises at the time of delivery of possession of the
Premises to Tenant by Landlord. The provisions of the immediately preceding
sentence shall not apply to the basic heating and air conditioning system
provided by Landlord to all tenants of the Building.
16. Liens. Tenant shall not permit any mechanic's, materialmen's or
other liens to be filed against the real property of which the Premises form a
part nor against the Tenant's leasehold interest in the Premises. Landlord shall
have the right at all reasonable times to post and keep posted on the Premises
any notices which it deems necessary for protection from such liens. If any such
liens are filed, Landlord may, without waiving its rights and remedies based on
such breach of Tenant and without releasing Tenant from any of its obligations,
cause such liens to be released by any means it shall deem proper, including
payment in satisfaction of the claim giving rise to such lien. Tenant shall pay
to Landlord at once, upon notice by Landlord, any sum paid by Landlord to remove
such liens, together with interest at the maximum rate per annum permitted by
law from the data of such payment by Landlord.
17. Entry by Landlord. Subject to Landlord's agreement to minimize
any disturbance of Tenant's use of the Premises by exercise of the following
rights, Landlord reserves and shall at any and all times have the right to enter
the Premises to inspect the same, to supply janitor service and any other
provided by Landlord to Tenant hereunder, to submit said Premises to prospective
purchasers or, during the last six (6) months of the term of this Lease, to
prospective tenants, to post notices of nonresponsibility, to alter, improve or
repair the Premises or any other portion of the Building, all without being
deemed guilty of any eviction of Tenant and without abatement of rent, and may,
in order to carry out such purposes, erect scaffolding and other necessary
structures where reasonably required by the character of the work to be
performed, provided that the business of Tenant shall be interfered with as
little as is reasonably practicable. Tenant hereby waives any claim for damages
for any injury or inconvenience to or interference with Tenant's business, any
loss of occupancy or quiet enjoyment of the Premises, and any other loss
occasioned thereby. For each of the aforesaid purposes, Landlord shall at all
times have and retain a key with which to unlock all of the doors in, upon and
about the Premises, excluding Tenant's vaults and safes, and Landlord shall have
the means which Landlord may deem proper to open said doors in an emergency in
order to obtain entry to the Premises, and any entry to the Premises obtained by
Landlord by any of said means, or otherwise, shall not under any circumstances
be construed or deemed to be a forcible or unlawful entry into, or a detainer
of, the Premises, or an eviction of Tenant from the Premises or any portion
thereof, and any damages caused on account thereof shall be paid by Tenant. It
is understood and agreed that no provision of this Lease shall be construed as
obligating Landlord to perform any repairs, alterations or decorations except as
otherwise expressly agreed herein to be performed by Landlord. Landlord shall
attempt in the exercise of its rights under this Paragraph 17 to minimize any
disturbance of Tenant's use and possession of the Premises and to provide as
much notice to Tenant as may be reasonably possible prior to any such exercise
of Landlord's rights under this Paragraph 17.
18. Utilities and Services. Provided that Tenant is not in default
hereunder, Landlord agrees, during the Lease term, to furnish to the Premises as
part of the Operating Expenses during those hours set forth in the Rules and
Regulations as defined in Paragraph 31 hereof, as may be amended in writing by
Landlord from time to time during the term of this Lease and delivered to
Tenant, reasonable quantities of electric current for normal lighting and
fractional horsepower office machines, water for lavatory and drinking purposes,
heat and air conditioning required in Landlord's judgment for the comfortable
use and occupation of the Premises, janitorial service (including washing of
windows with reasonable frequency as determined by Landlord) and elevator
service by non-attended automatic elevators. Landlord shall not be liable for,
and Tenant shall not be entitled to any abatement or reduction of rent by reason
of Landlord's failure to furnish any of the foregoing when such failure is
caused by accident, breakage, repairs, strikes, lockouts or other labor
disturbances or labor disputes of any character, or for any other causes. If
Tenant requires or utilizes more water or electric power than is considered
reasonable or normal by
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<PAGE> 39
Landlord, Landlord may at its option require Tenant to pay, as additional rent,
the cost, as fairly determined by Landlord, incurred by such extraordinary
usage. In addition, Landlord may install separate meter(s) for the Premises, at
Tenant's sole expense, and Tenant thereafter shall pay all charges of the
utility providing service. Tenant specifically undertakes to install and
maintain at Tenant's cost such fire protection equipment including, without
limitation, emergency lighting as required by any governmental authority or
insurer, and if so required, Tenant shall appoint one of Tenant's personnel to
coordinate with the fire protection facilities and personnel of Landlord. Any
incandescent light bulbs used in the Premises shall be paid for the Tenant. Upon
Tenant's request, Landlord's personnel shall install incandescent light bulbs or
other Building Nonstandard bulbs in the Premises. Tenant agrees to pay Landlord
upon demand Landlord's cost for all such incandescent light bulbs installed or
other Building Nonstandard improvements including but not limited to metallic
trim, wood floor covering, glass panels, windows, partitions, kitchens and
executive washrooms in the Premises. Landlord shall not be responsible in any
manner for said maintenance, cleaning and repair.
19. Indemnification. To the fullest extent permitted by law Tenant
hereby agrees to defend, indemnify and hold Landlord harmless against and from
any and all claims arising from Tenant's use of the Premises or the conduct of
its business or from any activity, work, or thing done, permitted or suffered by
Tenant, its agents, contractors, employees or invitees in or about the Premises
or elsewhere, and hereby agrees to further indemnify and hold harmless Landlord
against and from any and all claims arising from any breach or default in the
performance of any obligation on Tenant's part to be performed under the terms
of this Lease or arising from any act, neglect, fault or omission of Tenant, or
of its agents, employees or invitees, and from and against all costs, attorneys'
fees, expenses and liabilities incurred in or about the Premises for such claim
or any action or proceeding brought thereon. In case any action or proceeding is
brought against Landlord by reason of any such claim, Tenant upon notice from
Landlord hereby agrees to defend the same at Tenant's expense by counsel
approved in writing by Landlord. Tenant, as a material part of the consideration
to Landlord, hereby assumes all risk of damage to property or injury to persons
in, upon or about the Premises from any cause whatsoever except that which is
caused by the failure of Landlord to observe any of the terms and conditions of
this Lease and such failure has persisted for an unreasonable period of time
after written notice of such failure, and Tenant hereby waives all its claims in
respect thereof against Landlord.
20. Damage to Tenant's Property. Notwithstanding the provisions of
Paragraph 19 to the contrary, Landlord or its agents shall not be liable for any
damage to property entrusted to employees of the Building, nor for loss of or
damage to any property by theft or otherwise, nor for any injury or damage to
persons or property resulting from fire, explosion, falling plaster, steams,
gas, electricity, water or rain which may leak from any part of the Building or
from the pipes, appliances or plumbing works therein or from the roof, street or
sub-surface or from any other place or resulting from dampness or any other
patent or latent cause whatsoever. Landlord or its agents shall not be liable
for interference with the light or other incorporeal hereditaments. Tenant shall
give prompt notice to Landlord in case of fire or accidents in the Premises or
in the Building or of defects therein or in the fixtures or equipment located
therein.
21. Insurance.
(a) During the term hereof, Tenant, at its sole expense, shall
obtain and keep in force the following insurance:
(i) All Risk insurance upon property owned by Tenant and
located in the Building or for which Tenant is legally liable.
Aggregate Improvements (other than "Building Standard Work" as
described in Subparagraph 1(1) hereof), and alterations, in an
amount not less than ninety percent (90%) of the full
replacement cost thereof. All such insurance policies shall name
Tenant and Landlord as named insured thereunder and, at
Landlord's request, shall name Landlord's mortgagees (and, if
applicable, ground or primary lessors) as loss payees
thereunder, all as their respective interests may appear.
Landlord will not be required to carry insurance of any kind on
any "Building Non-Standard Work", as described in Subparagraph
1(m) hereof, on Tenant's furniture or furnishings, or on any of
Tenant's fixtures, equipment, improvements, or appurtenances
under this Lease, and Landlord shall not be obligated to repair
any damage thereto or replace the same.
(ii) Comprehensive general liability insurance coverage,
including personal injury, bodily injury, broad form property
damage, operations hazard, owner's protective coverage,
contractual liability, and products and completed operations
liability, in limits not less than $2,000,000 inclusive. All
such insurance policies shall name Tenant as named insured
thereunder and shall name Landlord and landlord's mortgagees
(and, if applicable, ground or primary lessors) as additional
insured thereunder, all as their respective interests may
appear.
(iii) Workers' Compensation and Employer's Liability
insurance, with a waiver of subrogation endorsement, in form and
amount satisfactory to Landlord.
(iv) [COPY DELETED]
(v) Liquor liability insurance coverage in limits of not
less than Five hundred Thousand Dollars ($5000,000) if at any
time during the term or on any occurrence hereof of any
alcoholic beverages of any nature are served on the Premises.
(vi) Any other form or forms of insurance as Tenant,
Landlord, or Landlord's mortgagees or ground or primary lessors
may reasonably require from time to time in form, in amounts,
and for insurance risks against which a prudent tenant of a
comparable size and in a comparable business would protect
itself.
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(b) All policies shall be issued by insurers that are acceptable to
Landlord and in form satisfactory from time to time to Landlord. Tenant will
deliver certificates of insurance to Landlord as soon as practicable after the
placing of the required insurance, but not later than ten (10) days prior to the
date Tenant takes possession of all or any pan of the Premises. All policies
shall contain an undertaking by the insurers to notify Landlord and Landlord's
mortgagee (and, if applicable, ground or primary lessors) in writing, not less
than thirty (30) days before any material change, reduction in coverage,
cancellation, or other termination thereof. Ten (10) days prior to the
expiration of any insurance policy, Tenant will provide Landlord with a
Certificate of Insurance extending the term of the original policy or a
certified copy of a new policy extending the required coverage.
(c) During the Term, Landlord shall insure the Building and the
Building Standard Work (excluding any property which Tenant is obligated to
insure under Subparagraph 21(a) hereof) against damage with All Risk insurance
and public liability insurance, all in such amounts and with such deductions as
Landlord considers appropriate, Landlord may, but shall not be obligated to,
obtain and carry any other form or forms of insurance as it or Landlord's
mortgagees may determine advisable. Notwithstanding any contribution by Tenant
to the cost of insurance premiums, as provided herein, Tenant acknowledges that
it has no right to receive any proceeds from any insurance policies carried by
Landlord.
(d) Tenant will not keep, use, sell, or offer for sale in, or on,
the Premises any article which may be prohibited by any insurance policy
periodically in force covering the Building and the Building Standard Work.
Tenant shall promptly comply with all reasonable requirements of the insurance
authority or any present or future insurer relating to the Premises.
(e) If any of Landlord's insurance policies shall be cancelled or
cancellation shall be threatened or the coverage thereunder reduced or
threatened to be reduced in any way because of the use of the Premises or any
part thereof by Tenant or any assignee or sub-tenant of Tenant or by anyone
Tenant permits on the Premises and, if Tenant fails to remedy the condition
giving rise to such cancellation, threatened cancellation, reduction of
coverage, threatened reduction of coverage, increase in premiums, or threatened
increase in premiums, within 48 hours after notice thereof, Landlord may, at its
option, either terminate this Lease or enter upon the Premises and attempt to
remedy such condition, and Tenant shall promptly pay the cost thereof to
Landlord as additional rent. Landlord shall not be liable for any damage or
injury caused to any property of Tenant or of others located on the Premises
resulting from such entry. If Landlord is unable, or elects not, to remedy such
condition, then Landlord shall have all of the remedies provided for in this
Lease in the event of a default by Tenant. Notwithstanding the foregoing
provisions of this Subparagraph 21(e), if Tenant fails to remedy as aforesaid,
Tenant shall be in default of its obligation hereunder and Landlord shall have
no obligation to remedy such default.
(f) All policies covering real or personal property which either
party obtains affecting the Premises shall include a clause or endorsement
denying the insurer any rights of subrogation against the other party to the
extent rights have been waived by the insured before the occurrence of injury or
loss, if same are obtainable without unreasonable cost. Landlord and Tenant
waive any rights of recovery against the other for injury or loss due to hazards
covered by policies of insurance containing such a waiver of subrogation clause
or endorsement, to the extent of the injury or loss covered thereby.
22. Damage or Destruction.
(a) In the event the Building and/or the Building Standard Work or
any insured alterations are damaged by fire or other perils covered by
Landlord's extended coverage insurance to an extent not exceeding twenty-five
percent (25%) of the full insurable value thereof and if the damage thereto is
such that the Building and/or the Building Standard Work and any insured
alterations may be repaired, reconstructed or restored within a period of ninety
(90) days from the date of the happening of such casualty and Landlord will
receive insurance proceeds sufficient to cover the cost of such repairs,
Landlord shall commence and proceed diligently with the work of repair,
reconstruction and restoration and the Lease shall continue in full force and
effect. If such work or repair, reconstruction and restoration is such as to
require a period longer than ninety (90) days or exceeds twenty-five percent
(25%) of the full insurable value thereof, or if said insurance proceeds will
not be sufficient to cover the cost of such repairs, Landlord either may elect
to so repair, reconstruct or restore the Building and/or Building Standard Work
and any insured alterations and the Lease shall continue in full force and
effect or Landlord may elect not to repair, reconstruct or restore the Building
and/or Building Standard Work and any insured alterations and the Lease shall in
such event terminate. Under any of the conditions of this Subparagraph 22(a),
Landlord shall give written notice to Tenant of its intention within thirty (30)
days from the date of such event of damage or destruction. In the event Landlord
elects not to restore said Building and/or Building Standard Work and any
insured alterations, this Lease shall be deemed to have terminated as of the
date of such partial destruction.
(b) Upon any termination of this lease under any of the provisions
of this Paragraph 22, the parties shall be released thereby without further
obligation to the other from the date possession of the Premises is surrendered
to Landlord except for items which have therefore accrued and are then unpaid.
(c) In the event of repair, reconstruction and restoration by
Landlord as herein provided, the rent provided to be paid under this Lease shall
be abated proportionately with the degree to which Tenant's use of the Premises
is impaired during the
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period of such repair, reconstruction or restoration. Tenant shall not be
entitled to any compensation or damages for loss in the use of the whole or any
part of the Premises and/or any inconvenience, annoyance or loss of business
occasioned by such damage, repairs reconstruction or restoration.
(d) Tenant shall not be released from any of its obligations under
this Lease except to the extent and upon the conditions expressly stated in this
Paragraph 22. Notwithstanding anything to the contrary contained in this
Paragraph 22, should Landlord be delayed or prevented from repairing or
restoring the damaged Premises within one (1) year after the occurrence of such
damage or destruction by reason of acts of God, war, governmental restrictions,
inability to procure the necessary labor or materials, or other cause beyond the
control of Landlord, Landlord shall be relieved of its obligation to make such
repairs or restoration and Tenant shall be released from its obligations under
this Lease as of the end of said year.
(e) In the event that damage is due to any cause other than fire or
other peril covered by extended coverage insurance, Landlord may elect to
terminate this Lease.
(f) It is hereby understood that if Landlord is obligated to or
elects to repair or restore as herein provided, Landlord shall be obligated to
make repairs or restoration only of those portions of the Building and the
Premises which were originally provided at Landlord's expense or which were
insured by either party and the proceeds of such insurance have been received by
Landlord, and the repair and restoration of items not provided at Landlord's
expense shall be the obligation of Tenant.
(g) Notwithstanding anything to the contrary contained in this
Paragraph 22, Landlord shall not have any obligations whatsoever to repair,
reconstruct or restore the Premises when the damage resulting from any casualty
covered under this Paragraph 22 occurs during the last twelve (12) months of the
term of this Lease or any extension hereof.
(h) The provisions of California Civil Code 1932, Subsection 2, and
1933, Subsection 4, are hereby waived by Tenant.
23. Eminent Domain.
(a) In case the whole of the Premises, or such part thereof as shall
substantially interfere with Tenant's use and occupancy thereof, shall be taken
for any public or quasi-public purpose by any lawful power or authority by
exercise of the right of appropriation, condemnation or eminent domain, or sold
to prevent such taking, either party shall have the right to terminate this
Lease effective as of the date possession is required to be surrendered to said
authority. Tenant shall not assert any claim against Landlord or the taking
authority for any compensation because of such taking, and Landlord shall be
entitled to receive the entire amount of any award without deduction for any
estate or interest of Tenant. In the event the amount of property or the type of
estate taken shall not substantially interfere with the conduct of Tenant's
business, Landlord shall be entitled to the entire amount of the award without
deduction for any estate or interest of Tenant, and landlord at his option may
terminate this Lease. If Landlord does not so elect, Landlord shall promptly
proceed to restore the Premises to substantially their same condition prior to
such partial taking, and a proportionate allowance shall be made to Tenant for
the rent corresponding to the time during which, and to the part of the Premises
of which, Tenant shall be so deprived on account of such taking and restoration.
Nothing contained in this Paragraph shall be deemed to give Landlord any
interest in any award separately made to Tenant for the taking of personal
property and trade fixtures belonging to Tenant or for moving costs incurred by
Tenant in relocating Tenant's business.
(b) In the event of taking of the Premises or my part thereof for
temporary use, (i) this Lease shall be and remain unaffected thereby and rent
shall not abate, and (ii) Tenant shall be entitled to receive for itself such
portion or portions of any award made for such use with respect to the period of
the taking which is within the term, provided that if such taking shall remain
in force at the expiration or earlier termination of this Lease, Tenant shall
then pay to Landlord a sum equal to the reasonable cost of performing Tenant's
obligations under Paragraph 15 with respect to surrender of the Premises and
upon such payment shall be excused from such obligations. For purpose of this
Subparagraph 23(b), a temporary taking shall be defined as a taking for a period
of 270 days or less.
24. Bankruptcy. If Tenant shall file a petition in bankruptcy under
any Chapter of federal bankruptcy law as then in effect, or if Tenant be
adjudicated a bankrupt in involuntary bankruptcy proceedings and such
adjudication shall not have been vacated within thirty (30) days from the date
thereof, or if a receiver or trustee be appointed of Tenant's property and the
order appointing such receiver or trustee not be set aside or vacated within
thirty (30) days after the entry thereof, or if Tenant shall assign Tenant's
estate or effects for the benefit of creditors, or if this Lease shall otherwise
by operation of law pass to any person or persons other than Tenant, then and in
any such event Landlord may, if Landlord so elects, with or without notice of
such election and with or without entry or action by Landlord, forthwith
terminate this Lease. Notwithstanding any other provisions of this Lease,
Landlord, in addition to any and all rights and remedies allowed by law or
equity, shall upon such termination be entitled to recover damages in the amount
provided in Subparagraph 25(b) below and neither Tenant nor any person claiming
through or under Tenant or by virtue of any statute or order of any court shall
be entitled to possession of the Premises but shall forthwith quit and surrender
the Premises to Landlord. Nothing herein contained shall limit or prejudice the
right of Landlord to prove and obtain as damages by reason of any such
termination an amount equal to the maximum allowed by any statute or rule of law
in effect at the time when, and governing the proceedings in which, such damages
are to be proved, whether or not such amount be greater, equal to, or less than
the amount of damages recoverable under the provisions of this Paragraph 24.
25. Defaults and Remedies.
(a) The occurrence of any one or more of the following events shall
constitute a default hereunder by Tenant:
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(i) The vacation or abandonment of the Premises by Tenant.
Abandonment is herein defined to included, but is not limited,
to, any absence by Tenant from the Premises for five (5) days or
longer while in default of any provision of this Lease.
(ii) The failure by Tenant to make any payment of rent or
additional rent or any other payment required to be made by
Tenant hereunder, as and when due.
(iii) The failure by Tenant to observe or perform any of the
express or implied covenants or provisions of this Lease to be
observed or performed by Tenant, other than as specified in
Subparagraph 25(a)(i) or (ii) above, where such failure shall
continue for a period of ten (10) days after written notice
thereof from Landlord to Tenant; provided, however, that any
such notice shall be in lieu of, and not in addition to, any
notice required under California Code of Civil Procedure 1161;
provided, further, that if the nature of Tenant's default is
such that more than ten (10) days are reasonably required for
its cure, then Tenant shall not be deemed to be in default if
Tenant shall commence such cure within said ten-day period and
thereafter diligently prosecute such cure to completion, which
completion shall occur not later than sixty (60) days from the
date of such notice from Landlord.
(iv) (1)The making by Tenant of any general assignment for
the benefit of creditors; (2) the filing by or against Tenant of
a petition to have Tenant adjudged a bankrupt or a petition for
reorganization or arrangement under any law relating to
bankruptcy (unless, in the cast of a petition filed against
Tenant, the same is dismissed within thirty (30 days); (3) the
appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or
of Tenant's interest in this Lease, where possession is not
restored to Tenant within thirty (30) days; or (4) the
attachment, execution or other judicial seizure of substantially
all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease where such seizure is not discharged
within thirty (30) days.
(b) In the event of any such default by Tenant, in addition to any
other remedies available to Landlord at law or in equity, Landlord shall have
the immediate option to terminate this Lease and all rights of Tenant hereunder.
In the event that Landlord shall elect to so terminate this lease then Landlord
may recover from Tenant:
(i) the worth at the time of award of any unpaid rent which
had been earned at the time of such termination; plus
(ii) the worth at the time of award of the amount by which
the unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss
that Tenant proves could have been reasonably avoided; plus
(iii) the worth at the time of award of the amount by which
the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that Tenant proves
could be reasonably avoided; plus
(iv) any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to
perform his obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom.
As used in Subparagraphs 25(b)(i) and (ii) above the "worth at the time
of award" is computed by allowing interest at the maximum rate permitted by law
per annum. As used in Subparagraph 25(b)(iii) above, the "worth at the time of
award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
(c) In the event of any such default by Tenant, Landlord shall also
have the right. with or without terminating this Lease, to re-enter the Premises
and remove all persons and property from the Premises. Such property may be
removed and stored in a public warehouse or elsewhere at the cost of and for the
account of Tenant for such period of time as may be required by applicable law
after which time Landlord may dispose of such property in accordance with
applicable law. No re-entry or taking possession of the Premises by Landlord
pursuant to this Subparagraph 25(c) shall be construed as an election to
terminate this Lease unless a written notice of such intention be given to
Tenant or unless the termination thereof be decreed by a court of competent
jurisdiction.
(d) All rights, options' and remedies of Landlord contained in this
Lease shall be construed and held to be cumulative, and no one of them shall be
exclusive of the other, and Landlord shall have the right to pursue any one or
all of such remedies or any other remedy or relief which may be provided by law,
whether or not stated in this Lease. No waiver of any default of Tenant
hereunder shall be implied from any acceptance by Landlord of any rent or other
payments due hereunder or any omission by Landlord to take any action on account
of such default if such default persists or is repeated, and no express waiver
shall affect defaults other than as specified in said waiver. The consent or
approval of Landlord to or of any act by Tenant requiring Landlord's consent or
approval shall not be deemed to waive or render unnecessary Landlord's consent
or approval to or of any subsequent similar acts by Tenant.
26. Assignment and Subletting. Tenant shall not voluntarily assign
or encumber its interest in this Lease or in the Premises, or sublease all or
any part of the Premises, or allow any other person or entity to occupy or use
all or any part of the Premises, without first obtaining Landlord's prior
written consent. Any assignment, encumbrance or sublease without Landlord's
prior written consent shall be voidable, at Landlord's election, and shall
constitute a default. For purposes hereof, in the event Tenant is a partnership,
a withdrawal or change of partners, or change of ownership of partners, owning
more than a fifty percent (50%) interest in the partnership, or if Tenant is a
corporation, any transfer of fifty percent (50%) of its stock, shall constitute
a voluntary assignment and shall be subject to these provisions. No consent to
any assignment. encumbrance, or sublease shall constitute a further waiver of
the provisions of this Paragraph. Tenant shall notify Landlord
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in writing of Tenant's intent to assign encumber, or sublease this lease, the
name of the proposed assignee or sublessee information concerning the financial
responsibility of the proposed assignee or sublessee and the terms of the
proposed assignment or subletting, and Landlord shall, within thirty (30) days
of receipt of such written notice, and additional information requested by
Landlord concerning the proposed assignee's or sublessee's financial
responsibility, elect one of the following:
(a) Consent to such proposed assignment, encumbrance or sublease;
(b) Refuse such consent, which refusal shall be on reasonable
grounds;
(c) Elect to terminate this Lease, or in the cast of a partial
sublease, terminate this Lease as to the portion of the Premises
proposed to be sublet.
Without limiting Landlord's grounds for disapproval, Landlord's disapproval
shall be deemed reasonable if it is based on Landlord's analysis of (a) the
proposed assignee's or sublessee's credit. character and business or
professional standing, (b) whether the assignee's or sublessee's use and
occupancy of the Premises will be consistent with Subparagraph 1(u) and
Paragraph 8 of this Lease and whether assignee's proposed intensity of use is
consistent with that shown by Tenant, (c) whether the proposed assignee or
sublessee is a then existing or prospective tenant of the Building, as a
condition for granting its consent to any assignment, encumbrance or sublease.
Landlord may require that the rent payable by such assignee or sublessee is at
the then current published rental rates for the Premises or comparable Premises
in the Building, but not less than the then current Annual Basic Rent under this
Lease and may require that the assignee or sublessee remit directly to Landlord
on a monthly basis, all monies due to Tenant by said assignee or sublessee. In
the event that Landlord shall consent to any assignment or sublease under the
provisions of this Paragraph 26, Tenant shall pay Landlord's processing costs
and attorneys' lees incurred in giving such consent. If for any proposed
assignment or sublease Tenant receives rent or other consideration either
initially or over the term of the assignment or sublease, in excess of the rent
called for hereunder or, in case of the sublease of a portion of the Premises,
in excess of such rent fairly allocable to such portion after appropriate
adjustments to assure that all other payments called for hereunder are taken
into account Tenant shall pay to Landlord as additional rent hereunder all of
the excess of each such payment of rent or other consideration received by
Tenant promptly after its receipt. Landlord's waiver or consent to any
assignment or subletting shall not relieve Tenant from any obligation under this
Lease. Occupancy of all or part of the Premises by parent, subsidiary, or
affiliated companies of Tenant shall not be deemed an assignment or subletting.
If Tenant requests Landlord's consent to any assignment of this Lease or any
subletting of all or a portion of the Premises, Landlord shall have the right,
to be exercised by giving written notice to Tenant within thirty (30) days of
receipt by Landlord of the financial responsibility information required by this
Paragraph 26 to terminate this Lease effective as of the date Tenant proposes to
assign this Lease or sublet all or a portion of the Premises. Landlord's right
to terminate this lease as to all or a portion of the Premises on assignment or
subletting shall not terminate as a result of Landlord's consent to the
assignment of this Lease or the subletting of all or a portion of the Premises,
or Landlord's failure to exercise this right with respect to any assignment or
subletting.
27. Quiet Enjoyment. Landlord convenants and agrees with Tenant that
upon Tenant paying the rent required under this Lease and paying all other
charges and performing all of the covenants and provisions aforesaid on Tenant's
part to be observed and performed under this Lease, Tenant shall and may
peaceably and quietly have, hold and enjoy the Premises in accordance with this
Lease.
28. Subordination. Without the necessity of any additional document
being executed by Tenant for the purpose of effecting a subordination, and at
the election of Landlord or any first mortgagee with a lien on the Building or
any ground lessor with respect to the Building, this least shall be subject and
subordinate at all times to; (a) all ground leases or underlying leases which
may now exist or hereafter be executed affecting the Building or the land upon
which the Building is situated or both, and (b) the lien of any mortgage or deed
of trust which may now exist or hereafter be executed in any amount for which
the Building, land, ground leases or underlying leases, or Landlord's interest
or estate in any of said items is specified as security. Nothwithstanding the
foregoing, Landlord shall have the right to subordinate or cause to be
subordinated any such ground leases or underlying leases or any such liens to
this lease. In the event that any ground lease or underlying lease terminates
for any reason or any mortgage or deed of trust is foreclosed or a conveyance in
lieu of foreclosure is made for any reason, Tenant shall, if requested by the
ground lessor, mortgagee or beneficiary, as applicable, attorn to and become the
Tenant of the successor in interest to Landlord and in such event Tenant's right
to possession of the Premises shall not be disturbed if Tenant is not in default
and so long as Tenant shall pay the rent and all other amounts required to be
Paid to Landlord pursuant to the terms hereof and observe and perform all of the
provisions of this Lease, unless the Lease is otherwise terminated pursuant to
its terms. Tenant covenants and agrees to execute and deliver upon demand by
Landlord and in the form requested by Landlord, any additional documents
evidencing the priority or subordination of this Lease with respect to any such
ground leases or underlying leases or the lien of any such mortgage or deed of
trust. Should Tenant fail to sign and return any such documents within ten (10)
business days of receipt, Tenant shall be in default. and Landlord may, at
Landlord's option, terminate this Lease provided written notice of such
termination is received by Tenant prior to Landlord's receipt of such documents.
29. Estoppel Certificate.
(a) Within ten (10) days following any written request which
Landlord may make from time to time, Tenant shall execute and deliver to
Landlord a statement, in a form substantially similar to the form of Exhibit 'E"
attached hereto certifying; (i) the Commencement Date of this Lease, (ii) the
fact that this Lease is unmodified and in full force and effect (or, if there
have been modifications hereto, that this Lease is in full force and effect, as
modified, and stating the date and nature of such modifications); (iii) the date
to which the rental and other sums payable under this Lease have been paid; (iv)
the fact that there are no current defaults under this Lease by either Landlord
or Tenant except as specified in Tenant's
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statement; and (v) such other matters requested by Landlord. Landlord and Tenant
intend that any statement delivered pursuant to this Paragraph 29 may be relied
upon by any mortgagee, beneficiary, purchaser or prospective purchaser of the
Building or any interest therein.
(b) Tenant's failure to deliver such statement within such time
shall be conclusive upon Tenant (i) that this Lease is in full force and effect,
without modification except as may be represented by Landlord, (ii) that there
are no uncured defaults in Landlord's performance, and (iii) that not more than
one (1) mouth's rent has been paid in advance, except as provided in Paragraph
36 hereof. Tenant's failure to deliver said statement to Landlord within ten
(10) working days of receipt shall constitute a default under this Lease, and
Landlord may, at Landlord's option, terminate the Lease provided written notice
of such termination is received by Tenant prior to Landlord's receipt of said
statement.
30. Building Planning. In the event Landlord requires the Premises
for use in conjunction with another suite or for other reasons connected with
the Building planning program upon notifying Tenant in writing, Landlord shall
have the right to move Tenant to other comparable space in the Building of which
the Premises forms a part, at Landlord's sole cost and expense, including all of
Tenant's moving expenses, telephone installation and stationery reprinting
charges, and the terms and conditions of the original Lease shall remain in full
force and effect save and excepting that a revised Exhibit "A" shall become part
of this Lease and shall reflect the location of the new space and Paragraph I of
this Lease shall be amended to include and state all correct data as to the new
space.
31. Rules and Regulations. Tenant shall faithfully observe and
comply with the "Rules and Regulations," a copy of which is attached hereto
and marked Exhibit "F" and all reasonable and nondiscriminatory modifications
thereof and additions thereto from time to time put into effect by Landlord.
Landlord shall not be responsible to Tenant for the violation or nonperformance
by any other tenant or occupant of the Building of any of said Rules and
Regulations.
32. Conflict of Laws. This Lease shall be governed by and construed
pursuant to the laws of the State of California.
33. Successors and Assigns. Except as otherwise provided in this
Lease, all of the covenants, conditions and provisions of this Lease shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representative, successors and assigns.
34. Surrender of Premises. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a merger,
and shall, at the option of Landlord, operate as an assignment to it of any or
all subleases or subtenancies. Upon the expiration or termination of this Lease,
Tenant shall peaceably surrender the Premises and all alterations and additions
thereto broom-clean. in good order, repair and condition, reasonable wear and
tear excepted, and shall comply with the provisions of Subparagraphs 14(g) and
14(h). The delivery of keys to any employee of Landlord or to Landlord's agent
or any employee thereof shall not be sufficient to constitute a termination of
this Lease or a surrender of the Premises.
35. Professional Fees.
(a) In the event that Landlord should bring suit for the possession
of the Premises, for the recovery of any sum due under this Lease, or because of
the breach of any provisions of this Lease, or for any other relief against
Tenant hereunder, or should either party bring suit against the other with
respect to matters arising from or growing out of this Lease, then all costs and
expenses, including without limitation, its actual professional fees such as
appraisers', accountants' and attorneys' fees, incurred by the prevailing part
therein shall be paid by the other party, which obligation on the part of the
other party shall be deemed to have accrued on the date of the commencement of
such action and shall be enforceable whether or not the action is prosecuted to
judgment.
(b) Should Landlord be named as a defendant in any suit brought
against Tenant in connection with or arising out of Tenant's occupancy
hereunder, Tenant shall pay to Landlord its costs and expenses incurred in such
suit, including without limitation, its actual professional fees such as
appraiser's, accountants' and attorneys' fees.
36. Performance by Tenant. All covenants and agreements to be
performed by Tenant under any of the terms of this Lease shall be performed by
Tenant at Tenant's sole cost and expense and without any abatement of rent.
Tenant acknowledges that the late payment by Tenant to Landlord of any sums due
under this Lease will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of such cost being extremely difficult and impractical
to fix. Such costs include, without limitation, processing and accounting
charges, and late charges that may be imposed on Landlord by the terms of any
encumbrance and note secured by any encumbrance covering the Premises or the
Building of which the Premises are a part. Therefore if any monthly installment
of Annual Basic Rent is not received by Landlord by the date when due, or if
Tenant fails to pay any other sum of money due hereunder and such failure
continues for ten (10) days after notice thereof by Landlord, Tenant shall pay
to Landlord, as additional rent, the sum of five percent (5 %) of the overdue
amount as a late charge. Such overdue amount shall also bear interest, as
additional rent, at the maximum rate permissible by law calculated, appropriate,
from the date either (a) the monthly installment of Annual Basic Rent is due, or
(b) of receipt of said notice, until the date of payment to Landlord. Landlord's
acceptance of any late charge or interest shall not constitute a waiver of
Tenant's default with respect to the overdue amount or prevent Landlord from
exercising any of the other rights and remedies available to Landlord under this
Lease or any law now or hereafter in effect. Further, in the event such late
charge is imposed by Landlord for two (2) consecutive months for whatever
reason, Landlord shall have the option to require that, beginning with the first
payment of rent due following the imposition of the second consecutive late
charge, rent shall no longer be Paid in monthly installments but shall be
payable three (3) months in advance.
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37. Mortgagee and Senior Lessor Protection. No act or failure to act
on the part of Landlord which would entitle Tenant under the terms of this
Lease, or by law, to be relieved of Tenant's obligations hereunder or to
terminate this Lease, shall result in a release of such obligations or a
termination of this Lease unless (a) Tenant has given notice by registered or
certified mail to any beneficiary of a dead of trust or mortgage covering the
Premises and to the Lessor under any master or ground lease covering the
Building, the Site or any interest therein whose identity and address shall have
been furnished to Tenant, and (b) Tenant offers such beneficiary, mortgagee or
Lessor a reasonable opportunity to cure the default, including time to obtain
possession of the Premises by power of sale or of judicial foreclosure, if such
should prove necessary to effect a cure.
38. Definition of Landlord. The term "Landlord" as used in this
Lease, so far as covenants or obligations on the part of Landlord are concerned,
shall be limited to mean and include only the owner or owners, at the time in
question, of the fee title to, or a lessee's interest in a ground lease of the
Site or master lease of the Building. In the event of any transfer, assignment
or other conveyance or transfer of any such title or interest, Landlord herein
named (and in case of any subsequent transfers or conveyances, the then grantor)
shall be automatically freed and relieved from and after the date of such
transfer, assignment or conveyance of all liability with respect to the
performance of any covenants or obligations on the part of Landlord contained in
this Lease thereafter to be performed and, without further agreement, the
transferee of such title or interest shall be deemed to have agreed to observe
and perform any and all obligations of Landlord hereunder, during its ownership
of the Premises, Landlord may transfer its interest in the Premises without the
consent of Tenant and such transfer or subsequent transfer shall not be deemed a
violation on Landlord's part of any of the terms and conditions of this Lease.
39. Waiver. The failure of Landlord to seek redress for violation
of, or to insist upon strict performance of, any term, covenant or condition of
this Lease or the Rules and Regulations attached hereto as Exhibit "F", shall
not be deemed a waiver of such violation or prevent a subsequent act which would
have originally constituted a violation from having all the force and effect of
an original violation, nor shall the failure of Landlord to enforce any of said
Rules and Regulations against any other tenant of the Building be deemed a
waiver of any such Rule or Regulation, nor shall any custom or practice which
may become established between the parties in the administration of the terms
hereof be deemed a waiver of, or in any way affect, the right of Landlord to
insist upon the performance by Tenant in strict accordance with said terms. The
subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a
waiver of any preceding breach by Tenant of any term, covenant or condition of
this Lease, other than the failure of Tenant to pay the particular rent so
accepted, regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such rent.
40. Identification of Tenant. Unless the provisions of Paragraph 55
herein below are applicable to this Lease, then if more thin one person executes
this Lease as Tenant, (a) each of them is jointly and severally liable for the
keeping observing and performing of all of the terms, covenants, conditions,
provisions and agreements of this Lease to be kept, observed and performed by
Tenant, and (b) the term "Tenant" as used in this Lease shall mean and include
each of them jointly and severally and the act of or notice from, or notice or
refund to, or the signature of, any one or more of them, with respect to the
tenancy or this Lease, including, but not limited to, any renewal, extension,
expiration, termination or modification of this Lease, shall be binding upon
each and all of the persons executing this Lease as Tenant with the same force
and effect as if each and all of them had so acted or so given or received such
notice or refund or so signed.
41. Parking. The use by Tenant, its employees and invitees, of the
parking facilities of the Building shall be on the terms and conditions set
forth in Exhibit F attached hereto and by this reference incorporated herein and
shall be subject to such other agreement between Landlord and Tenant as may
hereinafter be established.
42. [DELETED]
16
<PAGE> 46
43. Terms and Headings. The words "Landlord" and "Tenant" as used
herein shall include the plural as well as the singular. Words used in any
gender include other genders. If there be more than one Tenant, i.e., if two or
more persons or entities are jointly referred to in this Lease as "Tenant," the
obligations hereunder imposed upon Tenant shall be joint and several. The
Paragraph headings of this Lease are not a part of this Lease and shall have no
effect upon the construction or interpretation of any part hereof.
44. Examination of Lease. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or
option for Lease, and it is not effective as a Lease or otherwise until
execution by and delivery to both Landlord and Tenant.
45. Time. Time is of the essence with respect to the performance of
every provision of this Lease in which time or performance is a factor.
46. Prior Agreement: Amendments. This Lease contains all of the
agreements of the parties hereto with respect to any matter covered or mentioned
in this Lease, and no prior agreement or understanding, oral or written, express
or implied, pertaining to any such matter shall be effective for any purpose. No
provision of this Lease may be amended or added to except by an agreement in
writing signed by the parties hereto or their respective successors in interest.
The parties acknowledge that all prior agreements, representations and
negotiations are deemed superseded by the execution of this Lease to the extent
they are not incorporated herein.
47. Separability. Any provision of this Lease which shall prove to
be invalid, void or illegal in no way affects, impairs or invalidates any other
provision hereof, and such other provisions shall remain in full force and
effect.
48. Recording. Neither Landlord nor Tenant shall record this Lease
nor a short memorandum thereof without the consent of the other and if such
recording occurs, it shall be at the sole cost and expense of the party
requesting the recording, including any documentary transfer taxes or other
expenses related to such recordation.
49. Limitation on Liability. The obligations of Landlord under this
Lease do not constitute personal obligations of the individual partners,
directors, officers or shareholders of Landlord, and Tenant shall not seek
recourse against the individual partners, directors, officers or shareholders of
Landlord or any of their personal assets for satisfaction of any liability in
respect to this Lease. In consideration of the benefits accruing hereunder,
Tenant and all successors and assigns covenant and agree that in the event of
any actual or alleged failure, breach or default hereunder by Landlord, the sole
and exclusive remedy shall be against Landlord's interest in the Building.
50. Riders. Clauses, plats and riders, if any, signed by Landlord
and Tenant and affixed to this Lease are a part hereof.
51. Signs. Tenant shall not place any sign upon the Premises or the
Building without Landlord's prior written consent, except as specifically stated
in the signage provision, Rider #5, between Landlord and Tenant in that Lease
dated April 22, 1991.
52. Modification of Lender. If in connection with obtaining
construction, interim or permanent financing for the Building, the lender shall
request reasonable modifications in this Lease as a condition to such financing,
Tenant will not unreasonably withhold, delay or defer its consent thereto,
provided that such modifications do not increase the obligations of Tenant
hereunder or materially adversely affect the leasehold interest hereby created
or Tenant's rights hereunder.
53. Accord and Satisfaction. No payment by Tenant or receipt by
Landlord of a lessor amount than the rent payment herein stipulated shall be
deemed to be other than on account of the rent, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment as rent
be deemed an accord and satisfaction and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
rent or pursue any other remedy provided in this Lease. Tenant agrees that each
of the foregoing covenants and agreements shall be applicable to any covenant or
agreement either expressly contained in this lease or imposed by any statute or
at common law.
54. Financial Statements. At any time within reason during the term
of this Lease, Tenant shall, upon ten (10) days prior written notice from
Landlord, provide Landlord with a current financial statement and financial
statements of the two (2) years prior to the current financial statement year.
Such statement shall be prepared in accordance with generally accepted
accounting principles and, if such is the normal practice of Tenant, shall be
audited by an independent certified public accountant.
55. Tenant as Corporation. If Tenant executes this lease as a
corporation, then Tenant and the persons executing this Lease on behalf of
Tenant represent and warrant that the individuals executing this lease on
Tenant's behalf are duly authorized to execute and deliver this Lease on its
behalf in accordance with a duly adopted resolution of the board of directors of
Tenant, a copy of which is to be delivered to Landlord on execution hereof, and
in accordance with the By-Laws of Tenant and that this lease is binding upon
Tenant in accordance with its terms.
56. No Partnership or Joint Venture. Nothing in this Lease shall be
deemed to constitute Landlord and Tenant as partners or joint venturers. It is
the express intent of the parties hereto that their relationship with regard to
this Lease be and remain that of landlord and tenant.
17
<PAGE> 47
57. Telecommunications/Intra-Building Network Cable.
(a) Subject to the exclusions hereafter set forth, the
intra-building network cable ("INC") shall mean, collectively, all telephone
wiring in the Building that begins at the terminal block closest to where the
telephone company facilities enter the Building. The INC shall exclude the
following wiring: (1) the wiring extending from the central distribution panel
of the Building to the outlet at the Premises to the extent such wiring is used
exclusively to service the Premises and (2) the wiring extending from such
outlet to the various installations in the Premises.
(b) Upon discovering or suspecting a defect, deficiency or
malfunctioning in any telecommunication service or services in the Building,
Tenant shall give to Landlord prompt notice of any such known or suspected
defect, deficiency or malfunctioning so as to enable Landlord to remedy the
problem and restore full service or remove the risk of an interruption of or
breakdown in service. Under no circumstances, shall Tenant take or cause to be
taken any remedial action or measures or otherwise resort to "self-help", for
the purpose of restoring such telecommunication service or services; instead,
Tenant shall rely upon Landlord taking all necessary action or measures,
following receipt of notice from Tenant. Tenant further agrees that,
notwithstanding any provision of this Lease to the contrary, it will not do any
of the following: (i) use any electrical or electronic devices or equipment
unless the same complies with Rule 15 of the Federal Communications Commission
Rules or (ii) connect or attach any device with or to the INC without, first,
(A) having given advance notice thereof to Landlord, describing in sufficient
detail the action proposed to be taken by Tenant and (B) having received, prior
to taking such action, Landlord's written approval thereof.
(c) Without limiting the generality of Subparagraph 19(a), Tenant
shall indemnify and hold Landlord harmless, and shall, at its sole cost and
expense, defend Landlord from and against any and all claims, liability, loss,
damages, costs and expenses, including reasonable attorneys' fees, arising out
of or in any way connected with (i) any repairs, modifications or additions of
or to the INC made, in violation of the provisions of this Lease, by Tenant, its
agents, employees or business invitees or (ii) any damage to the INC or
interference with the telecommunications services in the Building caused by the
acts or omissions of Tenant, its agents, employees or business invitees;
further, the costs and expenses referred to in the foregoing provisions of this
Subparagraph (c) shall, in addition to the cost of correcting any such repairs,
modifications or additions to or of the INC, any such damage to the INC or any
such interference with telecommunication services, include the cost to the
Landlord of handling and disposing of claims or complaints of other tenants in
the Building whose telecommunications service was interrupted or otherwise
affected by the conduct or actions of Tenant, its agents, employees or business
invitees. The provisions of this Subparagraph 60(c) shall survive the expiration
of the Term of this Lease or earlier termination of this Lease pursuant to its
terms.
IN WITNESS WHEREOF, the parties have executed this Lease the day and year first
above written.
18
<PAGE> 48
LANDLORD: ADDRESS:
LINCOLN PROPERTY COMPANY N.C., INC. LARKSPUR LANDING OFFICE
As Manager and Agent for 1100 Larkspur Landing Circle
Lincoln Larkspur Office Three Associates, Ltd. Larkspur, California 94939
By: /s/ D. ALLEN PALMER Dated: 12-27-96
------------------------------------------- ----------------------
D. Allen Palmer
Vice President
TENANT: ADDRESS:
Synon, Inc. 1100 Larkspur Landing Circle
----------------------------------------- -----------------------------
a Illinois corporation
Suite 300
-----------------------------
Larkspur, CA 94939
-----------------------------
By: /s/ DENNIS HOLLIGAN Dated: 12/19/96
------------------------------------------ -----------------------------
Dennis Holligan
Its: Director of Administration
------------------------------------------
By: Dated:
------------------------------------------ ----------------------
Its:
-----------------------------------------
Continued from Page 3, "Rent Escalation":
ADJUSTED BASIC RENT. Each year during the term of this Lease other than
the Base Year, the Basic Rent or the prevailing Adjusted Basic Rent, as the case
may be, shall be adjusted for the ensuing twelve (12) months by the use of the
Consumer Price Index (All Urban Consumers component) for the San
Francisco-Oakland Area (1982 - 1984 - 100) published by the Bureau of Labor
Statistics of the U. S. Department of Labor. The Basic Rent will be increased by
the percentage increase, if any, between the latest index published just prior
to the commencement of the Lease Term and the comparable latest index published
just prior to January of the following year to arrive at the Adjusted Basic
Rent. Each year thereafter, the Adjusted Basic Rent will be increased by the
percentage increase, if any, between the index published just prior to January
of the subsequent year and the comparable latest index published just prior to
January of the preceding year.
In case the U.S. Department of Labor shall discontinue the computation
and publication of said Consumer Price Index or the publication thereof should
be delayed so as to prevent its use hereunder at the times required, there shall
be substituted therefor by Landlord such other index or method of ascertaining
changes in the price level as, in the opinion of Landlord, most closely
resembles the Consumer Price Index and method of arriving at the index figure by
said Bureau.
19
<PAGE> 49
EXHIBIT A
-
OUTLINE OF FLOOR PLAN OF PREMISES
[FLOOR PLAN]
A-1
<PAGE> 50
EXHIBIT B
SITE PLAN
-
[SITE PLAN]
B-1
<PAGE> 51
EXHIBIT C
WORK LETTER AGREEMENT
This Work Letter Agreement is entered into as of the 16th day of
December, 1996, by and between Lincoln Property Company N.C., Inc. as Manager
and Agent for Owner ("Landlord") and Synon, Inc., an Illinois corporation
("Tenant").
RECITALS:
A. Concurrently with the execution of this Work Letter Agreement,
Landlord and Tenant have entered into a lease (the "Lease") covering certain
promises (the "Premises") more particularly described in Exhibit A attached to
the Lease.
B. In order to induce Tenant to enter into the Lease (which is hereby
incorporated by reference to the extent that the provisions of this Work Letter
Agreement may apply thereto) and in consideration of the mutual covenants
hereinafter contained, Landlord and Tenant hereby agree as follows: Landlord to
provide a maximum Tenant improvement contribution or $3.00 per rentable square
foot toward mutually agreeable Tenant Improvement ($8,433.00).
[1-6 DELETED]
C-1
<PAGE> 52
7. COMPLETION AND RENTAL COMMENCEMENT DATE.
The commencement of the term of Lease and Tenant's obligation for the
payment of rental under the Lease shall not commence until substantial
completion of construction of the Tenant Improvements. However, if there shall
be a delay in substantial completion of the Tenant Improvements as a result of:
(i) Tenant's failure to approve any item or perform any other
obligation in accordance with and by the date specified in the
Work Schedule;
(ii) Tenant's request for materials, finishes or installations
other than those readily available; or
(iii) Tenant's changes in the Tenant Improvement Plans after
their approval by Tenant;
Then the commencement of the term of the Lease and the rental
commencement date shall be accelerated by the number of days of such delay.
Please Initial:
DAP/DH
C-2
<PAGE> 53
EXHIBIT D
NOTICE OF LEASE TERM DATES
To:
Date:
Re: Lease dated _______________ , 19 ____ between _______________,
Tenant, concerning Suite ____ located at ____________________.
Gentlemen:
In accordance with the subject Lease, we wish to advise and/or confirm
as follows:
1. That the Premises have been accepted herewith by the Tenant
as being substantially complete in accordance with the
subject Lease, and that there is no deficiency in
construction.
2. That the Tenant has possession of the subject Premises and
acknowledges that under the provisions of the subject
Lease, the term of said Lease shall commence as of
_______________ for a term of ___________, ending on
_______________.
3. That in accordance with the subject Lease, rental commenced
to accrue on _____________________________________________.
4. If the commencement date of the subject Lease is other than
the first day of the month, the first billing will contain
a pro rata adjustment. Each billing thereafter, with the
exception of the final billing, shall be for the full
amount of the monthly installment as provided for in said
Lease.
5. Rent is due and payable in advance on the first day of each
and every month during the term of said Lease. Your rent
checks should be made payable to __________________________
______________ at ________________________________________.
AGREED AND ACCEPTED
TENANT: LANDLORD:
____________________________________
By ____________________________________
Print Name ____________________________________
Its ____________________________________
By ____________________________________
Print Name ____________________________________
Its ____________________________________
D-1
<PAGE> 54
EXHIBIT E
TENANT ESTOPPEL CERTIFICATE
The undersigned, ______________________ ("Landlord"), with a mailing address c/o
_________ _____________________, ________________________, and _____________
("Tenant"), hereby certify to _________________________, a _____________________
_____________________________ as follows:
1. Attached hereto is a true, correct and complete copy of
that certain lease dated ______________, 19__ between
Landlord and Tenant (the "Lease"), which demises promises
which are located at _____________________________________.
The Lease is now in full force and effect and has not been
amended, modified or supplemented, except as set forth in
Paragraph 4 below.
2. The term of the Lease commenced on _______________, 19____.
3. The term of the Lease shall expire on_______________,
19____ .
4. The Lease has: (Initial one)
( ) not been amended, modified, supplemented, extended,
renewed or assigned.
( ) been amended, modified, supplemented, extended, renewed
or assigned by the following described agreements,
copies of which are attached hereto:
--------------------------
--------------------------
5. Tenant has accepted, is now in possession of and is now
conducting business in said Premises.
6. Tenant and Landlord acknowledge that the Lease will be
assigned to _____________ and that no modification,
adjustment, revision or cancellation of the Lease or
amendments thereto shall be effective unless written
consent of ______________is obtained, and that until
further notice, payments under the Lease may continue as
heretofore.
7. The amount of fixed monthly rent is $ _______ Rent shall be
increased based upon operating expense increases and as
follows: ______________
8. The amount of security deposits (if any) is $ ________.
No other security deposits have been made.
9. Tenant is paying the full lease rental, which has been paid
in full as of the date hereof. No rent under the Lease has
been paid for more than thirty (30) days in advance of its
due date.
10. All work required to be performed by Landlord under the
Lease has been completed and all required contributions by
Landlord to Tenant on account of Tenants improvements have
been received.
11. There are no defaults on the part of the Landlord or Tenant
under the Lease.
12. Tenant has no defense as to its obligations under the Lease
and claims no set-off or counterclaim against Landlord.
13. Tenant has no right to any concessions (rental or
otherwise) or similar compensation in connection with
renting the space it occupies, except as provided in the
Lease.
14. The Lease, amended as noted in Item 4 above, represents the
entire agreement between Landlord and Tenant as to this
leasing.
E-1
<PAGE> 55
All provisions of the Lease and the amendments thereto (if any)
referred to above are hereby ratified.
DATED: ________________________, 19 ____.
TENANT: LANDLORD:
____________________________________
By ____________________________________
Print Name ____________________________________
Its ____________________________________
By ____________________________________
Print Name ____________________________________
Its ____________________________________
E-2
<PAGE> 56
EXHIBIT F
RULES AND REGULATIONS
1. No sign, placard, picture, advertisement, name or notice shall be installed
or displayed on any part of the outside or inside of the Building without
the prior written consent of Landlord. Landlord shall have the right to
remove, at Tenant's expense and without notice, any sign installed or
displayed in violation of this rule. All approved signs or lettering on
doors, windows and walls shall be printed, painted, affixed or inscribed at
the expense of Tenant by a person chosen by Landlord, using materials of
Landlord's choice and in a style and format approved by Landlord.
2. Tenant must use Landlord's window coverings in all exterior and atrium
window offices. No awning shall be permitted on any part of the Premises.
Tenant shall not place anything against or near glass partitions or doors
or windows which may appear unsightly from outside the Premises.
3. Tenant shall not obstruct any sidewalks, halls passages, exits, entrances,
elevators escalators or stairways of the Building. The halls, passages,
exits, entrances, shopping malls, elevators, escalators and stairways are
not for the general public, and Landlord shall in all cases retain the
right to control and prevent access thereto of all persons whose presence
in the judgment of Landlord would be prejudicial to the safety, character,
reputation and interests of the Building and its tenants; provided that
nothing herein contained shall be construed to prevent such access to
persons with whom any tenant normally deals in the ordinary course of its
business, unless such persons are engaged in illegal activities. No tenant
and no employee or invitee of any tenant shall go upon the roof of the
Building without Landlord's consent.
4. The directory of the Building will be provided exclusively for the display
of the name and location of tenants only and Landlord reserves the right to
exclude any other names therefrom.
5. All cleaning and janitorial services for the Building and the Premises
shall be provided exclusively through Landlord, and except with the written
consent of Landlord, no person or persons other than those approved by
Landlord shall be employed by Tenant or permitted to enter the Building for
the purpose of cleaning the same. Tenant shall not cause any unnecessary
labor by carelessness or indifference to the good order and cleanliness of
the Premises. Landlord shall not in any way be responsible to any Tenant
for any loss of property on the Premises, however occurring. or for any
damage to any Tenant's property by the janitor or any other employee or any
other person.
6. Landlord will furnish Tenant, free of charge, with two keys to each door
lock in the Premises. Landlord may make a reasonable charge for any
additional keys. Tenant shall not make or have made additional keys, and
Tenant shall not alter any lock or install a new additional lock or bolt on
any door of its Premises. Tenant, upon the termination of its tenancy,
shall deliver to Landlord the keys of all doors which have been furnished
to Tenant, and in the event of loss of any keys so furnished, shall pay
Landlord therefor.
7. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord's instructions
in their installation.
8. Any freight elevator shall be available for use by all tenants in the
Building, subject to such reasonable scheduling as Landlord in its
discretion shall deem appropriate. No equipment, materials, furniture,
packages, supplies, merchandise or other property will be received in the
Building or carried in the elevators except between such hours and in such
elevators as may be designated by Landlord.
9. Tenant shall not place a load upon any floor of the Premises which exceeds
the load per square foot which such floor was designed to carry and which
is allowed by law. Landlord shall have the right to prescribe the weight,
size and position of all equipment, materials, furniture or other property
brought into the Building. Heavy objects, if such objects are considered
necessary by Tenant, as determined by Landlord, shall stand on such
platforms as determined by Landlord to be necessary to properly distribute
the weight. Business machines and mechanical equipment belonging to Tenant,
which cause noise or vibration that may be transmitted to the structure of
the Building or to any space therein to such a degree as to be
objectionable to Landlord or to any tenants in the Building, shall be
placed and maintained by Tenant, at Tenant's expense, on vibration
eliminators or other devices sufficient to eliminate noise or vibration.
The persons employed to move such equipment in or out of the Building must
be acceptable to Landlord. Landlord will not be responsible for loss of, or
damage to, any such equipment or other property from any cause, and all
damage done to the Building by maintaining or moving such equipment or
other property shall be repaired at the expense of Tenant.
10. Tenant shall not use or keep in the Premises any kerosene, gasoline or
inflammable or combustible fluid or material other than those limited
quantities necessary for the operation or maintenance of office equipment.
Tenant shall not use or permit to be used in the Premises any foul or
noxious gas or substance, or permit or allow the Premises to be occupied or
used in a manner offensive or objectionable to Landlord or other occupants
of the Building by reason of noise, odors or vibrations, nor shall Tenant
bring into or keep in or about the Premises any birds or animals, except
seeing-eye dogs when accompanied by their masters.
11. Tenant shall not use any method of heating or air conditioning other than
that supplied or approved by Landlord.
12. Tenant shall not waste electricity, water or air conditioning and agrees to
cooperate fully with Landlord to assure the most effective operation of the
Building's heating and air conditioning and to comply with any governmental
energy-saving rules, laws or regulations of which Tenant has actual notice,
and shall refrain from attempting to adjust controls other than room
thermostats installed for Tenant's use. Tenant shall keep corridor doors
closed, and shall close window
F-1
<PAGE> 57
coverings at the end of each business day. Heat and air conditioning shall
be provided during ordinary business hours of generally recognized business
days, but not less than the hours of 8:00 a.m. to 6:00 p.m. on Monday
through Friday (excluding in any event Saturdays, Sundays and legal
holidays).
13. Landlord reserves the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the Building.
14. Landlord reserves the right to exclude from the building between the hours
of 6:00 p.m. and 7:00 a.m. the following day, or such other hours as may be
established from time to time by Landlord, and on Saturdays, Sundays and
legal holidays, any person unless that person is known to the person or
employee in charge of the Building and has a pass or is property
identified. Tenant shall be responsible for all persons for whom it
requests passes and shall be liable to Landlord for all acts of such
persons. Landlord shall not be liable for damages for any error with regard
to the admission to or exclusion from the Building of any person. Landlord
reserves the right to prevent access to the Building in case of invasion,
mob, riot, public excitement or other commotion by closing the doors or by
other appropriate action.
15. Tenant shall close and lock the doors of its Premises and entirely shut off
all water faucets or other water apparatus, and, except with regard to
Tenant's computers and other equipment which requires utilities on a
twenty-four hour basis, all electricity, gas or air outlets before Tenant
and its employees leave the Premises. Tenant shall be responsible for any
damage or injuries sustained by other tenants or occupants of the Building
or by Landlord for noncompliance with this rule.
16. Tenant shall not obtain for use on the Premises ice, drinking water, food
beverage, towel or other similar services or accept barbering or
bootblacking services upon the Premises, except as such hours and under
such regulations as may be fixed by Landlord.
17. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed
and no foreign substance of any kind whatsoever shall be thrown therein.
The expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the tenant who, or whose employees
or invitees, shall have caused it.
18. Tenant shall not sell, or permit the sale at retail, of newspapers,
magazines, periodicals, theater tickets or any other goods or merchandise
to the general public in or on the Premises. Tenant shall not make any
room-to-room solicitation of business from other tenants in the Building.
Tenant shall not use the Premises for any business or activity other than
that specifically provided for in Tenant's Lease.
19. Tenant shall not mark, drive nails, screw or drill into the partitions,
woodwork or plaster or in any way deface the Premises or any part thereof,
except to install normal wall hangings, and to secure files and book cases
and other furniture that could fall over. Landlord reserves the right to
direct electricians as to where and how telephone and telegraph wires are
to be introduced to the Premises. Tenant shall not cut or bore holes for
wires. Tenant shall not affix any floor covering to the floor of the
Premises in any manner except as approved by Landlord. Tenant shall repair
any damage resulting from noncompliance with this rule.
20. Tenant shall not install, maintain or operate upon the Premises any vending
machine without the written consent of Landlord.
21. Canvassing, soliciting and distribution of handbills or any other written
material, and peddling in the Building or the Site are prohibited. and each
tenant shall cooperate to prevent same.
22. Landlord reserves the right to exclude or expel from the Building any
person who, in Landlord's judgment, is intoxicated or under the influence
of liquor or drugs or who is in violation of any of the Rules and
Regulations of the Building.
23 Tenant shall store all its trash and garbage within its Premises. Tenant
shall not place in any trash box or receptacle any material which cannot be
disposed of in the ordinary and customary manner of trash and garbage
disposal. All garbage and refuse disposal shall be made in accordance with
directions issued from time to time by Landlord.
24. The Premises shall not be used for the storage of merchandise held for sale
to the general public, or for lodging or for manufacturing of any kind, nor
shall the Premises be used for any improper, immoral or objectionable
purpose. No cooking shall be done or permitted by any tenant on the
Premises, except that use by Tenant of Underwriters' Laboratory-approved
equipment for brewing coffee, tea, hot chocolate and similar beverages
shall be permitted, and the use of a microwave oven shall be permitted,
provided that such equipment and use is in accordance with all applicable
federal, state, county and city laws, codes, ordinances, rules and
regulations. If odor is objectionable by Landlord or other Tenant's of
Building, microwave use may be prohibited by Landlord.
25. Tenant shall not use in any space or in the public halls of the Building
any mailcarts or hand trucks except those equipped with rubber tires and
side guards or such other material handling equipment as Landlord may
approve. Tenant shall not bring any other vehicles of any kind into the
Building except as provided in the Parking Rules and Regulations.
26. Without the written consent of Landlord, Tenant shall not use the name of
the Building in connection with or in promoting or advertising the business
of Tenant except as Tenant's address.
27. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental
agency.
F-2
<PAGE> 58
28. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.
29. The requirements of Tenant will be attended to only upon appropriate
application to the office of the Building by an authorized individual.
Employees of Landlord shall not perform any work or do anything outside of
their regular duties unless under special instructions from Landlord, and
no employee of Landlord will admit any person (Tenant or otherwise) to any
office without specific instructions from Landlord.
30. Landlord may waive any one or more of these Rules and Regulations for the
benefit of Tenant or any other tenant, but no such waiver by Landlord shall
be construed as a waiver of such Rules and Regulations in favor of Tenant
or any other tenant, nor prevent Landlord from thereafter enforcing any
such Rules and Regulations against any or all of the tenants of the
Building.
31. These Rules and Regulations (including Parking Rules and Regulations below)
are in addition to the terms, covenants. agreements and conditions of any
lease of premises in the Building. In the event these Rules and Regulations
conflict with any provision of the Lease, the Lease shall control.
32. Landlord reserves the right to make such other and reasonable Rules and
Regulations (including Parking Rules and Regulations) as, in its judgment,
may from time to time be needed for safety and security, for care and
cleanliness of the Building and for the preservation of good order therein.
Tenant agrees to abide by all such Rules and Regulations hereinabove stated
and any additional rules and regulations which are adopted.
33. Tenant shall be responsible for the observance of all of the foregoing
rules by Tenant's employees, agents, clients, customers, invitees and
guests.
34. Each tenant and all employees and visitors of Tenant shall not use public
areas of the Building from the upper ground floor level and above,
including elevators, while wearing athletic attire, including, without
limitation, bathing suits, sweatsuits, jogging clothes, etc. Smoking is
prohibited in all enclosed Common Areas of the Building including without
limitation the main lobby, all hallways, all elevators, all elevator
lobbies, building conference rooms, and recreation rooms.
35. Smoking is prohibited in all enclosed Common Arm of the building,
including, but not limited to, the main lobbies, hallways, stairwells,
elevators, elevator lobbies, locker/shower rooms. restrooms and conference
room. The foregoing shall not be deemed to prohibit smoking within demised
Promises. When smoking outside the building, ash receptacles must be used
and provided by the smoker if not provided by Landlord. Smokers must not
leave any ashtrays, smoking material or debris in the area where they have
been smoking, except in ash receptacles provided by Landlord.
PARKING RULES AND REGULATIONS
1. Tenant and employees of Tenant (hereinafter referred to as "Tenant") shall
not park vehicles in any parking areas designated by Landlord as areas for
parking by visitors to the Building. Tenant shall not leave vehicles in the
Building parking areas overnight nor park any vehicles in the Building
parking areas other than automobiles, motorcycles, motor driven or
non-motor driven bicycles or four-wheeled trucks. Landlord may, in its sole
discretion, designate separate areas for bicycles and motorcycles.
2. Cars must be parked entirely within the stall lines painted on the floor.
3 All directional signs and arrows must be observed.
4. The speed limit shall be 5 miles per hour.
5. Parking is prohibited, unless a floor parking attendant approved by
Landlord directs otherwise:
a. In areas not striped for parking;
b. In aisles;
c. Where "No Parking" or "Handicap" signs are posted;
d. On ramps;
e. In crosshatched areas; or
f. In such other areas as may be designated by Landlord, its agent, lessee
or licensee.
6. Parking stickers or any other device or form of identification which may be
supplied by Landlord shall remain the property of Landlord. Such parking
identification device must be displayed as requested and may not be
mutilated in any manner.
F-3
<PAGE> 59
7. Every Tenant is requested to park and lock his own car. All responsibility
for damage to cars to be repaired is assumed by Tenant. Tenant shall repair
or cause to be repaired at its sole cost and expense any and all damage to
the Building parking facility or any part thereof caused by Tenant or
resulting from vehicles of Tenant.
8. Loss or theft of parking identification devices from automobiles must be
reported to Landlord immediately. Any parking identification devices found
on any unauthorized car will be confiscated and the illegal holder will be
subject to prosecution. Lost or stolen devices previously reported and then
found must be reported found to the Landlord immediately.
9. Spaces are for the express purpose of one automobile per space unless
approved by Landlord directs otherwise. Washing, waxing, cleaning or
servicing of any vehicle by the Tenant and/or his agents is prohibited.
Storage of vehicles for periods exceeding one week is prohibited and said
vehicles shall be subject to towing.
10. The Landlord reserves the right to refuse the issuance of monthly stickers
or other parking identification devices to any Tenant or person and/or his
agents or representatives who willfully refuse to comply with the above
Rules And Regulations or any City, State or Federal ordinance, law or
agreement. Tenant shall not load or unload in areas other than those
designated by Landlord for such activities.
12. Landlord reserves the right to charge for parking on a nondiscriminatory
basis.
13. Tenants parked in prohibited areas are subject to towing at their own
expense.
F-4
<PAGE> 60
EXHIBIT G
STANDARDS FOR UTILITIES AND SERVICES
The following Standards for utilities and Services are in effect.
Landlord reserves the right to adopt nondiscriminatory modifications and
additions hereto:
As long as Tenant is not in default under any of the terms, covenants,
conditions, provisions or agreements of this Lease, Landlord shall:
(a) Provide non-attended automatic elevator facilities Monday through
Friday, except holidays from 8 a.m. to 6 p.m.
(b) On Monday through Friday, except holidays, from 8 a.m. to 6 p.m.
(and other times for a reasonable additional charge to be fixed by Landlord),
ventilate the Premises and furnish air conditioning or heating on such days and
hours, when in the judgment of Landlord it may be required for the comfortable
occupancy of the Premises. The air conditioning system achieves maximum cooling
when the window coverings are closed. Tenant agrees to cooperate fully at all
times with Landlord, and to abide by all regulations and requirements which
Landlord may prescribe for the proper function and protection of said air
conditioning system. Tenant agrees not to connect any apparatus, device conduit
or pipe to the Building chilled and hot water air conditioning supply lines.
Tenant further agrees that neither Tenant nor its servants, employees, agents,
visitors, licensees or contractors shall at any time enter mechanical
installations or facilities of the Building or adjust, tamper with, touch or
otherwise in any manner affect said installations or facilities. The cost of
maintenance and service calls to adjust and regulate the air conditioning system
shall be charged to tenant if the need for maintenance work results from either
Tenant's adjustment of room thermostats or Tenant's failure to comply with it
obligations under this section, including keeping window coverings closed as
needed. Such work shall be charged at hourly rates equal to then-current
journeymen's wages for air conditioning mechanics.
(c) Landlord shall furnish to the Premises, during the usual business
hours on business days, electric current as required by the Building standard
office lighting and fractional horsepower office business machines in an amount
not to exceed .025 KWH per square foot per normal business day. Tenant agrees,
should its electrical installation or electrical consumption be in excess of the
aforesaid quantity or extend beyond normal business hours, to reimburse Landlord
monthly for the measured consumption at the average cost per kilowatt hour
charged to the Building during the period. If a separate meter is not installed
at Tenant's cost, such excess cost will be established by an estimate agreed
upon by Landlord and Tenant, and if the parties fail to agree, as established by
an independent licensed engineer. Said estimates to be reviewed and adjusted
quarterly. Tenant agrees not to use any apparatus or device in, or upon, or
about the Premises which may in any way increase the amount of such services
usually furnished or supplied to said Premises, and Tenant further agrees not to
connect any apparatus or device with wires, conduits or pipes, or other means by
which such services are supplied, for the purpose of using additional or unusual
amounts of such services without written consent of Landlord. Should Tenant use
the same to excess, the refusal on the part of Tenant to pay upon demand of
Landlord the amount established by Landlord for such excess charge shall
constitute a breach of the obligation to pay rent under this Lease and shall
entitle Landlord to the rights therein granted for such breach. At a11 times
Tenant's use of electric current shall never exceed the capacity of the feeders
to the Building or the risers or wiring installation.
(d) Water will be available in public areas for drinking and lavatory
purposes only, but if Tenant requires, uses or consumes water for any purposes
in addition to ordinary drinking and lavatory purposes of which fact Tenant
constitutes Landlord to be the sole judge, Landlord may install a water meter
and thereby measure Tenant's water consumption for all purposes. Tenant shall
pay Landlord for the cost of the meter and the cost of the installation thereof
and throughout the duration of Tenant's occupancy Tenant shall keep said meter
and installation equipment in good working order and repair at Tenant's own cost
and expense, in default of which Landlord may cause such meter and equipment to
be replaced or repaired and collect the cost thereof from Tenant. Tenant agrees
to pay for water consumed, as shown on said meter, as and when bills are
rendered, and on default in making such payment. Landlord may pay such charges
and collect the same from Tenant. Any such costs or expenses incurred, or
payments made by Landlord for any of the reasons or purposes hereinabove stated
shall be deemed to be additional rent payable by Tenant and collectible by
Landlord as such.
(e) Provide janitor service to the Premises, provided the same are used
exclusively as offices, and are kept reasonably in order by Tenant, and if to be
kept clean by Tenant, no one other than persons approved by Landlord shall be
permitted to enter the Premises for such purposes. If the Promises are not used
exclusively as offices, they shall be kept clean and in order by Tenant, at
Tenant's expense, and to the satisfaction of Landlord, and by persons approved
by Landlord. Tenant shall pay to Landlord the cost of removal of any of Tenant's
refuse and rubbish, to the extent that the same exceeds the refuse and rubbish
usually attendant upon the use of the Premises as offices.
Landlord reserves the right to stop service of the elevators, plumbing,
ventilation, air conditioning and electric systems, when necessary, by reason of
accident or emergency or for repairs, alterations or improvements, in the
judgement of Landlord desirable or necessary to be made, until said repairs,
alterations or improvements shall have been completed, and shall further have no
responsibility or liability for failure to supply elevator facilities, plumbing,
ventilating, air conditioning or electric service, when prevented from so doing
by strike or accident or by any cause beyond Landlord's reasonable control, or
by laws, rules, orders, ordinances, directions, regulations or requirements of
any federal, state, county or municipal authority or failure of gas, oil or
other suitable fuel supply or inability by exercise of reasonable diligence to
obtain gas, oil or other suitable fuel. It is expressly understood and agreed
that any covenants on Landlord's part to furnish any service pursuant to any of
the terms, covenant, conditions, provisions or agreements of this Lease or to
perform any act or thing for the benefit of Tenant, shall not be deemed breached
if Landlord is unable to furnish or perform the same by virtue of a strike or
labor trouble or any other cause whatsoever beyond Landlord's control.
G-1
<PAGE> 61
EXHIBIT H
HAZARDOUS WASTE
Tenant shall use the Premises solely for the uses set forth in the
Basic Lease Information in Paragraph 8 and shall not use the Premises for any
other purpose without obtaining the prior written consent of Landlord.
In no event will Tenant use, introduce to the Premises, generate,
manufacture, produce, store, release, discharge or dispose of, on, under or
about the Premises or transport to or from the Premises any Hazardous Material
(as defined below) or allow its employees, agents, contractors, invitees or any
other person or entity to do so.
Tenant warrants that it shall not make any use of the Premises which
may cause contamination of the soil, the subsoil or ground water. Tenant shall
not do, bring, or keep anything in or about the Premises that will cause a
cancellation of any insurance covering the Premises. If the rate of any
insurance carried by Landlord is increased as a result of Tenant's use, Tenant
shall pay to Landlord within thirty (30) days before the date Landlord is
obligated to pay a premium on the insurance, or within ten (10) days after
Landlord delivers to Tenant a certified statement from Landlord's insurance
carrier stating that the rate increase was caused solely by an activity of
Tenant on the premises as permitted in this Lease, whichever date is later, a
sum equal to the difference between the original premium and the increased
premium.
Tenant shall keep and maintain the Premises in compliance with, and
shall not cause or permit the Premises to be in violation of any and all
federal, state or local laws, ordinances, rules or regulations pertaining to
health, industrial hygiene or the environmental conditions on, under or about
the Premises.
Tenant shall give immediate written notice to Landlord of (i) any
action, proceeding or inquiry by any governmental authority or any third party
with respect to the presence of any Hazardous Material on the Premises or the
migration thereof from or to other property or (ii) any spill, release or
discharge of Hazardous Materials that occurs with respect to the Premises or
Tenant's operations.
Tenant shall indemnify and hold harmless Landlord, its directors,
officers, employees, agents, successors and assigns (collectively "Landlord")
from and against any and all claims arising from (i) Tenant's uses of the
Premises for the conduct of its business or from any activity, work or other
things done or suffered by the Tenant in or about the Buildings, (ii) breach or
default in performance of any obligation on Tenant's part to be performed under
the terms of this Lease, (iii) any act or negligence of the Tenant, or any
officer, agent, employee, guest or invitee of Tenant. The indemnity shall
include all costs, fines, penalties, judgments, losses, attorney's fees,
expenses and liabilities incurred in or about the Premises for any such claim or
any action or proceeding brought thereon including, without limitation, (a) all
foreseeable consequential damages including without limitation loss of rental
income and diminution in property value; and (b) the costs of any cleanup,
detoxification or other ameliorative work of any kind or nature required by any
governmental agency having jurisdiction thereof or Landlord. This indemnity
shall survive the expiration or termination of this Lease. In any action or
proceeding brought against Landlord by reason of any such claim, upon notice
from Landlord if Landlord does not elect to retain separate counsel, Tenant
shall defend the same at Tenant's expense by counsel reasonably satisfactory to
Landlord.
HAZARDOUS MATERIAL DEFINITION:.
As used herein, the term "Hazardous Material" shall mean any substance
or material which has been determined by any state, federal or local government
authority to be capable of posing a risk of injury to health, safety or
property, including all of those materials and substances designated as
hazardous or toxic by the city in which the Premises are located, the U.S.
Environmental Protection Agency, the Consumer Product Safety Commission, the
Food and Drug Administration, the California Water Resources Control Board, the
Regional Water Quality Control Board, San Francisco Bay Region, the California
Air Resources Board, CAL/OSHA Standards Board, Division of Occupational Safety
and Health, the California Department of Food and Agriculture, the California
Department of Health Services, and any federal agencies that have overlapping
jurisdiction with such California agencies, or any other governmental agency now
or hereafter authorized to regulate materials and substances in the environment.
Without limiting the generality of the foregoing, the term 'Hazardous Material"
shall included all of those materials and substances defined as "hazardous
materials' or "hazardous waste" in Sections 66680 through 66685 of Title 22 of
the California Administrative Code, Division 4, Chapter 30, as the same shall be
amended from time to time, petroleum, petroleum-related substances and the
by-products, fractions, constituents and sub-constituents of petroleum or
petroleum-related substances, asbestos, and any other materials requiring
remediation now or in the future under federal, state or local statutes,
ordinances, regulations or policies.
H-1
<PAGE> 62
LEASE #3
<PAGE> 63
OFFICE LEASE
LANDLORD: LARKSPUR LANDING
TENANT: SYNON, INC.
<PAGE> 64
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Terms and Definitions ............................................. 1
2. Premises and Common Areas Leased .................................. 2
3. Term .............................................................. 3
4. Possession ........................................................ 3
5. Annual Basic Rent ................................................. 3
6. Rental Adjustment ................................................. 3
7. Security Deposit .................................................. 5
8. Use ............................................................... 5
9. Payments and Notices .............................................. 6
10. Brokers ........................................................... 6
11. Holding Over ...................................................... 6
12. Taxes on Tenant's Property ........................................ 6
13. Condition of Premises ............................................. 7
14. Alternations ...................................................... 7
15. Repairs ........................................................... 9
16. Liens ............................................................. 9
17. Entry by Landlord ................................................. 9
18. Utilities and Services ............................................ 9
19. Indemnification ................................................... 10
20. Damage to Tenant's Property ....................................... 10
21. Insurance ......................................................... 10
22. Damage or Destruction ............................................. 11
23. Eminent Domain .................................................... 12
24. Bankruptcy ........................................................ 12
25. Defaults and Remedies ............................................. 12
26. Assignment and Subletting ......................................... 13
27. Quiet Enjoyment ................................................... 14
28. Subordination ..................................................... 14
29. Estoppel Certificate .............................................. 14
30. Building Planning ................................................. 15
31. Rules and Regulations ............................................. 15
32. Conflict of Laws .................................................. 15
33. Successors and Assigns ............................................ 15
34. Surrender of Premises ............................................. 15
35. Professional Fees ................................................. 15
36. Performance by Tenant ............................................. 15
37. Mortgagee and Senior Lessor Protection ............................ 16
38. Definition of Landlord ............................................ 16
39. Waiver ............................................................ 16
40. Identification of Tenant .......................................... 16
41. Parking and Transportation ........................................ 16
42. Office and Communications Service ................................. 16
43. Terms and Headings ................................................ 16
44. Examination of Lease .............................................. 17
45. Time .............................................................. 17
46. Prior Agreement; Amendments ....................................... 17
47. Separability ...................................................... 17
48. Recording ......................................................... 17
49. Limitation on Liability ........................................... 17
50. Riders ............................................................ 17
51. Signs ............................................................. 17
52. Modification for Lender ........................................... 17
53. Accord and Satisfaction ........................................... 17
54. Financial Statements .............................................. 17
55. Tenant as Corporation ............................................. 17
56. No Partnership or Joint Venture ................................... 17
EXHIBITS
A. Outline of Floor Plan of Premises ................................. A-1
B. Site Plan ......................................................... B-1
C. Work Letter Agreement ............................................. C-1
D. Sample Form of Notice of Lease Term Dates ......................... D-1
E. Sample Form of Tenant Estoppel Certificate ........................ E-1
F. Rules and regulations ............................................. F-1
G. Standard for Utilities & Services ................................. G-1
H. Hazardous Waste ................................................... H-1
</TABLE>
A
<PAGE> 65
STANDARD FORM OFFICE LEASE
THIS LEASE is made as of the 22nd day of April, 1991, by and between Landlord
and Tenant.
WITNESSETH:
1. TERMS AND DEFINITIONS. For the purposes of this Lease, the
following terms shall have the following definitions and meanings:
(a) Landlord: Lincoln Property Company N.C., Inc.
(b) Landlord's Address: Copy to:
1100 Larkspur Landing Circle, Suite 155
Larkspur, California 94939
(c) Tenant: Synon, Inc. an Illinois Corporation
-------------------------------------------
(d) Tenant's Address (Prior to commencement Date)
1100 Larkspur Landing Circle
---------------------------------------------------
Suite 300
---------------------------------------------------
Larkspur, CA 94939
---------------------------------------------------
Tenant's Address: (After Commencement Date)
same as above
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
(e) Building Address:
1100 Larkspur Landing Circle
Larkspur, CA 94939
(f) Suite Numbers:
180, 150, 185, 195 & 175
(g) Floor(s) upon which the Premises are located: 1st
(h) Premises: Those certain premises defined in Subparagraph 2(a)
hereinbelow.
(i) Site: The parcel of real property defined in Subparagraph
(a) below.
(j) Approximate Rentable Square Feet: 11,715 *See Premises/Sq.
Footage Schedule, Page 18
(k) Term: 4 yrs. Lease Years and 10 Months.
(l) Building Standard Work: All the work to be done in the
Premises pursuant to the provisions of the Work Letter
Agreement described in Paragraph 2 below.
(m) Building Nonstandard Work: All the work done in the Premises
pursuant to the provisions of the Work Letter Agreement other
than the Building Standard Work.
(n) Aggregate Improvements: The aggregate of the Building Standard
Work and the Building Nonstandard Work.
(o) Estimated Commencement Date: June 1, 1991
(p) Commencement Date: The earlier of the following two dates:
(i) The date upon which the Tenant takes possession of the
entire Premises or commences the operation of its business
in the Premises, which Tenant agrees will be accomplished
as soon as reasonably possible after the issuance of the
Certificate of Occupancy or temporary Certificate of
Occupancy for the Premises; or
(ii) 6/1/91, unless time to construct Tenant Improvements
exceeds four (4) weeks from receipt of City permits. In
the event said construction time exceeds four (4) weeks,
commencement date shall be delayed accordingly. However,
in the event Tenant is cause of any construction delay,
commencement date shall remain the earlier of (i) or June
1, 1991.
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<PAGE> 66
(q) Annual Basic Rent: $302,244
Monthly Basic Rent: $25,187.00 Tenant's proportionate share
of actual 1991 Operating Expenses except that the first six
months of the least term shall be $20,033.00 per month.
(r) Operating Expenses Allowance:
(s) Tenant's Percentage Share: 14.99%
(t) Security Deposit: $25,187.00
(u) Permitted Use: office use
(v) Brokers: none
(w) Landlord's Construction Representative: Ross/Donovan, Inc.
___________________ Telephone: 461-8466
(x) Tenant's Construction Representative: N/A
___________________ Telephone: ___________________
(y) Parking: See Paragraph 41.
(z) Riders: 1 through 9, inclusive, which Riders are attached to
this Lease and are incorporated herein by this reference.
(aa) Lease Year: A period of twelve (12) consecutive months, the first
such period commencing on the Commencement Date and consecutive periods
beginning on each consecutive anniversary thereof.
(bb) Exhibits: A through H inclusive, which Exhibits are attached to
this Lease and are incorporated herein by this reference.
2. PREMISES AND COMMON AREAS LEASED.
(a) Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord, the Premises contained within the suite designated in Paragraph 1,
outlined on the Floor Plan attached hereto and marked Exhibit "A" and
incorporated herein by this reference in the building and parking facilities at
the address designated in Subparagraph 1(e) above (the "Building"), located on
the parcel of real property (the "Site") outlined on the Site Plan attached
hereto as Exhibit "B", and incorporated herein by this reference, and improved
or to be improved by Landlord with the Aggregate Improvements described in the
Work Letter Agreement, a copy of which is attached hereto and marked Exhibit "C"
and incorporated herein by this reference. By taking possession of the Premises,
Tenant accepts the Aggregate Improvements as completed or as substantially
completed. In the latter case, Landlord shall provide Tenant with a list of
incomplete and/or corrective items, which list shall be approved and
acknowledged by Tenant within ten (10) days of receipt and which items Landlord
shall complete and/or correct promptly thereafter.
The parties hereto agree that said letting and hiring is upon and
subject to the terms, covenants and conditions herein set forth and Tenant
covenants as a material part of the consideration for this Lease to keep and
perform each and all of said terms, covenants and conditions by it to be kept
and performed and that this Lease is made upon the condition of such
performance.
(b) Tenant shall have the nonexclusive right to use in common with
other tenants in the Building and subject to the Rules and Regulations referred
to in Paragraph 31 below, the following areas ("Common Area") appurtenant to the
Premises:
(i) The common entrances, lobbies, restrooms, elevators, stairways
and accessways, loading docks, ramps, drives and platforms and any
passageways and service ways thereto, and the common pipes,
conduits, wires and appurtenant equipment serving the Premises;
(ii) Parking areas (subject to the provisions of Paragraph 41
hereinbelow), loading and unloading areas, roadways, sidewalks,
walkways, parkways, driveways and landscaped areas appurtenant to
the Building.
(c) Landlord reserves the right from time to time without unreasonable
interference with Tenant's use:
(i) To install, use, maintain, repair and replace pipes, ducts,
conduits, wires and appurtenant meters and equipment for service to
others parts of the Building above the ceiling surfaces, below the
floor surfaces, within the walls and in the central core areas, and
to relocate any pipes, ducts, conduits, wires and appurtenant
meters and equipment included in the Premises which are located in
the Premises or located elsewhere outside the Premises, and to
expand the Building;
(ii) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of
driveways, entrances, loading and unloading areas, ingress, egress,
direction of traffic, landscaped areas and walkways and, subject to
Paragraph 41, parking spaces and parking areas.
2
<PAGE> 67
(iii) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains
available;
(iv) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Building, or any
portion thereof;
(v) To do and perform such other acts and make such other changes
in, to or with respect to the Site, Common Areas and Building as
Landlord may, in the exercise of sound business judgment, deem to
be appropriate.
3. TERM. The term of this Lease shall be for the period designated in
Subparagraph 1(k) commencing on the Commencement Date, and ending on the
expiration of such period, unless the term hereby demised shall be sooner
terminated as hereinafter provided. The Commencement Date and the date upon
which the term of this Lease shall end shall be determined in accordance with
the provisions of Subparagraph 1(Premises) and said dates will be specified in
Landlord's Notice of Lease Term Dates ("Notice"), in the form of Exhibit "D"
which is attached hereto and is incorporated herein by this reference, and shall
be served upon Tenant as provided in Paragraph 9, after Landlord delivers or
tenders possession of the Premises to Tenant. The Notice shall be binding upon
Tenant unless Tenant objects to the Notice in writing, served upon Landlord as
provided for in Paragraph 9 hereof, within five (5) days of Tenant's receipt of
the Notice.
4. POSSESSION. Tenant agrees that in the event of the inability of
Landlord to deliver possession of the Premises to Tenant on the date above
specified for the commencement of the term of this Lease, this Lease shall not
be void or voidable, nor shall Landlord be liable to Tenant for any loss or
damage resulting therefrom.
5. ANNUAL BASIC RENT.
(a) Tenant agrees to pay Landlord as Annual Basic Rent for the Premises
the Annual Basic Rent designated in Subparagraph 1(q) (subject to adjustment as
hereinafter provided) in twelve (12) equal monthly installments ("Monthly Basic
Rent"), each in advance of the first day of each and every calendar month during
said term, except that the first month's rent shall be paid upon the execution
hereof. In the event the term of this Lease commences or ends on a day other
than the first day of a calendar month, the rental for such periods shall be
prorated in the proportion that the number of days this Lease is in effect
during such periods bears to thirty (30), and such rental shall be paid at the
commencement of such periods. In addition to said Annual Basic Rent, Tenant
agrees to pay the amount of the rental adjustments as and when hereinafter
provided in this Lease. Said Annual Basic Rent, additional rent, and rental
adjustments shall be paid to Landlord, without any prior demand therefor and
without any deduction or offset whatsoever in lawful money of the United States
of America, which shall be legal tender at the time of payment, at the address
of Landlord designated in Subparagraph 1(B) or to such other person or at such
other place as Landlord may from time to time designate in writing. Further, all
charges to be paid by Tenant hereunder, including, without limitation, payments
for real property taxes, insurance, repairs, and parking shall be considered
additional rent for the purposes of this Lease, and the word "rent" in the Lease
shall include such additional rent unless the context specifically or clearly
implies that only the Annual Basic Rent is referenced.
(b) RENT ESCALATION. See page 18, "ADJUSTED BASIC RENT"
6. RENT ADJUSTMENT.
(a) For the purposes of this Subparagraph 6(a), the following terms are
defined as follows:
TENANT'S PERCENTAGE SHARE. Tenant's Percentage Share shall mean the
portion of the total rentable area of the Building leased by Tenant as set forth
as percentage in Subparagraph 1(s) above.
OPERATING EXPENSES ALLOWANCE. Operating Expenses Allowance shall mean
that portion of Tenant's percentage Share of the Operating Expenses which
Landlord has included in the Annual Basic Rent and which amount is set forth in
Subparagraph 1(r) above.
3
<PAGE> 68
OPERATING EXPENSES. Operating Expenses shall consist of all direct
costs of operation and maintenance of the Building, the Common Areas and the
Site as determined by standard accounting practices, calculated assuming the
Building is fully occupied, including the following costs by way of
illustration, but not limitation: real property taxes and assessments and any
taxes or assessments hereafter imposed in lieu thereof; rent taxes, gross
receipt taxes (whether assessed against Landlord or assessed against Tenant and
collected by Landlord, or both); water and sewer charges; the net cost and
expense of insurance for which Landlord is responsible hereunder or which
Landlord or any first mortgagee with a lien affecting the Premises reasonably
deems necessary in connection with the operation of the Building; utilities,
janitorial services; security; labor; parking expenses, utilities surcharges, or
any other costs levied, assessed or imposed by, or at the direction of, or
resulting from statutes or regulations or interpretations thereof, promulgated
by any federal, state, regional, municipal or local government authority in
connection with the use or occupancy of the Building or in the Premises or the
parking facilities serving the Building or the Premises; the cost (amortized
over such reasonable period as Landlord shall determine together with interest
at the maximum rate allowed by law on the unamortized balance) of (a) any
capital improvements made to the Building by the Landlord after the first year
of the term of the Lease that reduce other Operating Expenses, or made to the
Building by Landlord after the date of the Lease that are required under any
governmental law or regulation that was not applicable to the Building at the
time it was constructed, or (b) replacement of any building equipment needed to
operate the Building at the same quality levels as prior to the replacement;
costs incurred in the management of the Building, if any (including supplies,
wages and salaries of employees used in the management, operation and
maintenance of the Building, and payroll taxes and similar governmental charges
with respect thereto); on site Building management office rental; a management
fee; air conditioning, waste disposal; heating, ventilating; elevator
maintenance; supplies; materials; equipment; tools; repair and maintenance of
the structural portions of the Building, including the plumbing, heating,
ventilating, air conditioning and electrical systems installed or furnished by
Landlord; and maintenance, costs and upkeep of all parking and common areas,
rental of personal property used in maintenance; costs and expenses of gardening
and landscaping, maintenance of signs (other than Tenant's signs); personal
property taxes levied on or attributable to personal property used in connection
with the entire Building, including the Common Areas; reasonable audit or
verification fees; and costs and expenses of repairs, resurfacing, repairing,
maintenance, painting, lighting, cleaning, refuse removal, security and similar
items, including appropriate reserves. Operating Expenses shall not include
depreciation on the Building or equipment therein. Landlord's executive
salaries, real estate brokers' commissions, interest expense on Building
financing; amortization of cost of tenant improvements in the Building; ground
rent; income and franchise taxes, dividends; and attorney's fees and expenses
which are not related to the operation of the Building.
As used herein, the term "real property taxes" shall included any form
of assessment, license fee, license tax, business license fee, commercial rental
tax, levy, charge, penalty, tax or similar imposition, imposed by any authority
having the direct power to tax, including any city, country, state or federal
government, or any school agricultural, lighting, drainage or other improvements
or special assessment district thereof, as against any legal or equitable
interest of Landlord in the Premises, including, but not limited to, the
following:
(i) any tax on Landlord's "right" to rent or "right" to other income
from the Premises or as against Landlord's business of leasing the
Premises;
(ii) any assessment, tax, fee, levy or charge in substitution,
partially or totally, of any assessment, tax, fee, levy or charge
previously included within the definition of real estate tax, it being
acknowledged by Tenant and Landlord that Proposition 13 was adopted by
the voters of the State of California in the June, 1978 Election and
that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street,
sidewalk and road maintenance, refuse removal and for other
governmental services formerly provided without charge to property
owners or occupants. It is the intention of Tenant and Landlord that
all such new and increased assessments, taxes, fees, levies and charges
be included within the definition of "real property taxes" for the
purposes of this Lease;
(iii) any assessment, tax, fee, levy or charge allocable to or measured
by the area of the Premises or the rent payable hereunder, including,
without limitation, any gross income tax or excise tax levied by the
State, City or Federal government, or any political subdivision
thereof, with respect to the receipt of such rent, or upon or with
respect to the possession, leasing, operating, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises, or any
portion thereof;
(iv) any assessment, tax, fee, levy or charge upon this transaction or
any document to which Tenant is a party, creating or transferring an
interest or an estate in the Premises;
(v) any assessment, tax, fee, levy or charge by any governmental agency
related to any transportation plan, fund or system instituted within
the geographic area of which the Building is a part; or
(vi) reasonable legal and other professional fees, costs and
disbursements incurred in connection with proceedings to contest,
determine or reduce real property taxes.
Notwithstanding any provision to this sub 6(a) expressed or implied to
the contrary, "real property taxes" shall not include Landlord's federal or
state income, franchise, inheritance or estate taxes.
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By the first day of March of each succeeding calendar year during the term of
this Lease, Landlord shall endeavor to deliver to Tenant a statement ("Estimate
Statement") wherein Landlord shall estimate the Operating Expenses for the
current calendar year, and the amount by which Tenant's Percentage Share of the
Operating Expense on account of the operation or maintenance of the Building is
in excess of the Operating Expenses Allowance. If Tenant's Percentage Share of
the Operating Expense estimated in the Estimate Statement exceeds the Operating
Expenses Allowance then such excess amount shall be divided into twelve (12)
equal monthly installments and Tenant shall pay to Landlord, concurrently with
the regular monthly rent payment next due following the receipt of such
statement, an amount equal to one (1) monthly installment multiplied by the
number of months from January in the calendar year in which said statement is
submitted to the month of such payment, both months inclusive. Subsequent
installments shall be paid concurrently with the regular monthly rent payments
for the balance of the calendar year and shall continue until the next calendar
year's Estimate Statement is rendered. By the first day of June of each
succeeding calendar year during the term of this Lease, Landlord shall endeavor
to deliver to Tenant a statement ("Actual Statement") wherein Landlord shall
state the actual Operating Expenses for the preceding calendar year. If the
Actual Statement reveals a greater increase in Tenant's Percentage Share of
Operating Expenses that was estimated by Landlord in the Estimated Statement
delivered as provided herein, then upon receipt of the Actual Statement from
Landlord, Tenant shall pay a lump sum equal to said total increase over the
Operating Expenses Allowance, less the total of the monthly installments of
increases set forth on the Estimate Statement which were paid in the previous
calendar year. If, in any calendar year, Tenant's Percentage Share of Operating
Expenses is less than the preceding calendar year, then upon receipt of
Landlord's Actual Statement, any overpayment made by Tenant on the monthly
installment basis provided above shall be credited toward the next monthly rent
falling due and the monthly installment of Tenant's Percentage Share of
Operating Expenses to be paid pursuant to the then current Estimate Statement
shall be adjusted to reflect such lower expenses for the most recent calendar
year, or if this Lease has been terminated, such excess shall be credited
against any amount which Tenant owes Landlord pursuant to this Lease and, to the
extent all amounts which Tenant owes Landlord pursuant to this Lease have been
paid, Landlord shall promptly pay such excess to Tenant. Any delay or failure by
Landlord in delivering any estimate or statement pursuant to this Paragraph
shall not constitute a waiver of its right to require an increase in rent nor
shall it relieve Tenant of its obligations pursuant to this Paragraph, except
that Tenant shall not be obligated to make any payments based on such estimate
or statement until ten (10) days after receipt of such estimate or statement.
(c) Even though the term as expired and Tenant has vacated the
Premises, when the final determination is made of Tenant's Percentage Share of
Operating Expenses for the year in which this Lease terminates, Tenant shall
immediately pay any increase due over the estimated expenses paid and conversely
any overpayment made in the event said expenses decrease shall be immediately
rebated by Landlord to Tenant.
(d) Notwithstanding anything contained in this Paragraph 6, the rental
payable by Tenant shall in no event be less than the rent specified in Paragraph
5 hereof.
7. SECURITY DEPOSIT. Tenant has deposited with Landlord the Security
Deposit designated in Subparagraph 1(t). Said deposit shall be held by Landlord
as security for the faithful performance by Tenant of all of the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant
during the term hereof. If Tenant defaults with respect to any provision of this
Lease, including but not limited to the provisions relating to the payment of
rent, Landlord may (but shall not be required to) use, apply or retain all or
any part of this Security Deposit for the payment of any rent or any other sum
in default, or for the payment of any other amount which Landlord may spend or
become obligated to spend by reason of Tenant's default or to compensate
Landlord for any loss or damage which Landlord may suffer by reason of Tenant's
default. If any portio of said deposit is so used or applied, Tenant shall,
within ten (10) days after demand therefor, deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to its original amount and
Tenant's failure to do so shall be a material breach of this Lease. Landlord
shall not be required to keep this Security Deposit separate from its general
funds, and Tenant shall not be entitled to interest on such Security Deposit. If
Tenant shall fully and faithfully perform every provision of this Lease to be
performed by it, the Security Deposit or any balance thereof shall be returned
to Tenant (or, at Landlord's option, to the last assignee of Tenant's interests
hereunder) at the expiration of the Lease term, provided that Landlord may
retain the Security Deposit until such time as any amount due from Tenant in
accordance with Paragraph 5 and 6 hereof has been determined and paid in full.
Should Landlord sell its interest in the Premises during the term hereof and if
Landlord deposits with the purchaser thereof the then unappropriated funds
deposited by Tenant as aforesaid, thereupon Landlord shall be discharged from
any further liability with respect to such Security Deposit.
8. USE. Tenant shall use the Premises for general office purposes and
purposes incident thereto in compliance with Exhibit H, Hazardous Waste, and
shall not use or permit the Premises to be used for any other purposes without
the prior written consent of Landlord. Tenant shall not use or occupy the
Premises in violation of any recorded covenants, conditions, and restrictions
affecting the Site or of any law or of the Certificate of Occupancy issued for
the Building of which the Premises are a part, and shall upon five (5) days'
written notice from Landlord, discontinue any use of the Premises which is
declared by any governmental authority having jurisdiction to be a violation of
any recorded covenants, conditions and restrictions affecting the Site or of any
law or of said Certificate of Occupancy. Tenant may not offer shared tenant
services,
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such as but not limited to telecommunications, data processing or word
processing, to any unaffiliated tenant in the Building without Landlord's prior
written consent, which consent may be withheld by Landlord at its sole and
absolute discretion. Tenant shall not install any radio or television antenna,
loudspeaker or other device on the roof or exterior walls of the Building.
Tenant shall not interfere with radio or television broadcasting or reception
from or in the Building or elsewhere. Tenant shall comply with any direction of
any governmental authority having jurisdiction which shall, by reason of the
nature of Tenant's use or occupancy of the Premises, impose any duty upon Tenant
or landlord with respect to the Premises or with respect to the use or
occupation thereof. Tenant shall not do or permit to be done anything which will
invalidate or increase the cost of any fire, extended coverage or any other
insurance policy covering the Building and/or property located therein and shall
comply with all rules, orders, regulations and requirements of the Pacific Fire
Rating Bureau of any other organization performing a similar function. Tenant
shall promptly upon demand reimburse Landlord as additional rent for any
additional premium charged for such policy by reason of Tenant's failure to
comply with the provisions of this Paragraph 8. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way obstruct or
interfere with the rights of other tenants or occupants of the Building, or
injure or annoy them, or use or allow the Premises to be used for any improper,
immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain or
permit any nuisance in, on or about the Premises. Tenant shall not commit or
suffer to be committed any waste in or upon the Premises and shall keep the
Premises in the first class repair and appearance. Tenant shall not place a load
upon the Premises exceeding the average pounds of live load per square foot of
floor area specified for the Building by Landlord's architect, with the
partitions to be considered a part of the live load. Landlord reserves the right
to prescribe the weight and position of all safes, files and heavy equipment
which Tenant desires to place in the Premises so as to distribute properly the
weight thereof. Tenant's business machines and mechanical equipment which cause
vibration or noise that may be transmitted to the Building structure or to any
other space in the building shall be installed, maintained and used by Tenant as
to eliminate such vibration or noise. Tenant shall be responsible for all
structural engineering required to determine structural load. Tenant shall
fasten all files, bookcases and like furnishings to walls in a manner to prevent
tipping over the event of earth movements. Landlord shall not be responsible for
any damage or liability for such events.
9. PAYMENTS AND NOTICES. Payments will be by check, only, unless Tenant
is in default as per Paragraph 25. All rents and other sums payable by Tenant to
Landlord hereunder shall be paid to Landlord by check, cashier's check, or cash,
at Landlord's option, at the address designated by Landlord in Subparagraph 1(b)
above or at such other places as Landlord may hereafter designate in writing.
Any notice required or permitted to be given hereunder must be in writing and
may be given by personal delivery or by mail, and if given by mail shall be
deemed sufficiently if sent by registered or certified mail addressed to Tenant
at the Building or to Landlord at both of the addresses designated in
Subparagraph 1(b). Either party may by written notice to the other specify a
different address for notice purposes except that Landlord may in any event use
the Premises as Tenant's address for notice purposes. If more than one person or
entity constitutes the "Tenant" under this Lease, service of any notice upon any
one of said persons or entities shall be deemed as service upon all of said
persons or entities.
10. BROKERS. The parties recognize that the brokers who negotiated this
Lease are the brokers whose names are stated in Subparagraph 1(v), and agree
that Landlord shall be solely responsible for the payment of brokerage
commissions to said brokers, and that Tenant shall have no responsibility
therefor. As part of the consideration for the granting of this Lease, Tenant
represents and warrants to Landlord that to Tenant's knowledge no other broker,
agent or finder negotiated or was instrumental in negotiating or consummating
this Lease and that Tenant knows of no other real estate broker, agent or finder
who is, or might be, entitled to a commission or compensation in connection with
this Lease. Any broker, agent or finder of Tenant whom Tenant has failed to
disclose herein shall be paid by Tenant. Tenant shall hold Landlord harmless
from all damages and indemnify Landlord for all said damages paid or incurred by
Landlord resulting from any claims that may be asserted against Landlord by any
broker, agent or finder undisclosed by Tenant herein.
11. HOLDING OVER. It Tenant holds over after the expiration or earlier
termination of the term hereof without the express written consent of Landlord,
Tenant shall become a tenant at sufferance only, at a rental rate equal to
one-hundred fifty percent (150%) of the Annual Basic Rent which would be
applicable to the Premises upon the date of such expiration (subject to
adjustment as provided in Paragraph 6 hereof and prorated on a daily basis), and
otherwise subject to the terms, covenants and conditions herein specified, so
far as applicable. Acceptance by Landlord of rent after such expiration or
earlier termination shall not constitute a holdover hereunder or result in a
renewal. The foregoing provisions of this Paragraph 11 are in addition to and do
not affect Landlord's right of re-entry or any rights of Landlord hereunder or
as otherwise provided by law. If Tenant fails to surrender the Premises upon the
expiration of this Lease despite demand to do so by Landlord, Tenant shall
indemnify and hold Landlord harmless from all loss or liability, including
without limitation, any claim made by any succeeding tenant founded on or
resulting from such failure to surrender.
12. TAXES ON TENANT'S PROPERTY.
(a) Tenant shall be liable for and shall pay at least ten (10) days
before delinquency, taxes levied against any personal property or trade fixtures
placed by Tenant in or about the Premises. If any such taxes on Tenant's
personal property or trade fixtures are levied against Landlord or Landlord's
property or if the assessed value of the Premises is increased by inclusion
therein of a value placed upon such personal property or trade fixtures of
Tenant and if Landlord, after written notice to Tenant, pays the taxes based
upon such increased assessments, which Landlord shall have the right to do
regardless of the validity thereof, but only under proper protest if requested
by Tenant, Tenant shall upon demand repay to Landlord the taxes levied against
Landlord, or the proportion of such taxes resulting from such increase in the
assessment; provided that in any such event, at Tenant's sole cost and expense,
Tenant shall have the right, in the name of Landlord and with Landlord's full
cooperation, to bring suit in any court of competent jurisdiction to recover the
amount of any such taxes so paid under protest, any amount so recovered to
belong to Tenant.
(b) If the Aggregate Improvements in the Premises, whether installed
and/or paid for by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for real property taxes
purposes at a
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valuation higher than the valuation at which Aggregate Improvements conforming
to Landlord's "Building Standard" in other space in the Building are assessed,
then the real property taxes and assessment levied against the Landlord or the
property by reason of such excess assessed valuation shall be deemed to be taxes
levied against personal property of Tenant and shall be governed by the
provisions of Subparagraph 12(a), above. If the records of the County Assessor
are available and sufficiently detailed to serve as a basis for determining
whether said Aggregate Improvements are assessed at a higher valuation than
Landlord's "Building Standard," such records shall be binding on both Landlord
and Tenant. If the records of the County Assessor are not available or
sufficiently detailed to serve as a basis for making said determination, the
actual cost of construction shall be used.
13. CONDITION OF PREMISES. Tenant acknowledges that neither Landlord
nor any agent of Landlord has made any representation or warranty with respect
to the Premises or the Building or with respect to the suitability of either for
the conduct of Tenant's business. The taking of possession of the Premises by
Tenant shall conclusively establish that the Premises and the Building were at
such time in satisfactory condition, however, partial occupancy and rent
commencement will not interfere with Landlord's obligation to complete Tenant
Improvements. Without limiting the foregoing, Tenant's execution of the Notice
attached hereto as Exhibit "D" shall constitute a specific acknowledgment and
acceptance of the various start-up inconveniences that may be associated with
the use of the Building Common Areas such as certain construction obstacles
including scaffolding, delays in the use of freight elevator service, certain
elevators not being available to Tenant, the passage of work crews using
elevators, uneven air conditioning service, and other typical conditions
incident to recently constructed office buildings. Further, Tenant's execution
of said Notice shall constitute an acknowledgment, in light of the practical
impossibility of ensuring that every floor slab has been installed with
absolutely no deflection, that all wood floor coverings, wood paneling, and
similar interior Aggregate Improvements have been and/or will be designed to
accommodate the actual floor slab deflection unique to each particular area of
the Premises to be so improved.
14. ALTERATIONS.
(a) Tenant may, at any time and from time to time during the term of
this Lease, at its sole cost and expense, make alterations, additions,
installations, substitutions, improvements, and decorations (hereinafter
collectively called "Change") in and to the Premises, excluding structural
changes, on the following conditions, and providing such Changes will not result
in a violation of or require a change in the Certificate of Occupancy
application to the Premises:
(i) The outside appearance, character or use of the Building shall not
be affected, and no Changes shall weaken or impair the structural
strength or, in the opinion of Landlord, lessen the value of the
Building or create the potential for unusual expenses to be incurred
upon the removal of Changes and the restoration of the Premises upon
the termination of this Lease.
(ii) No part of the Building outside of the Premises shall be
physically affected.
(iii) The proper functioning of any of the mechanical, electrical,
sanitary and other service systems or installations of the Building
("Service Facilities") shall not be adversely affected and there shall
be no construction which might interfere with Landlord's free access to
the Service Facilities or interfere with the moving of Landlord's
equipment to or from the enclosures containing the Service Facilities.
(iv) In performing the work involved in making such Changes, Tenant
shall be bound by and observe all of the conditions and covenants
contained in this Paragraph.
(v) All work shall be done at such times and in such manner as Landlord
from time to time may designate.
(vi) Tenant shall not be permitted to install and make part of the
Premises any materials, fixtures or articles which are subject to
liens, conditional sales contracts or chattel mortgages.
(vii) At the date upon which the term of this Lease shall end, or the
date of any earlier termination of this Lease, Tenant shall on
Landlord's written request restore the Premises to their condition
prior to the making of any Changes permitted by this Paragraph,
reasonable wear and tear excepted.
(b) Before proceeding with any Change (exclusive of changes to items
constituting Tenant's personal property), Tenant shall submit to Landlord plans
and specifications for the work to be done, which shall require Landlord's
written approval. Landlord shall then prepare or cause to be prepared, at
Tenant's expense, mechanical, electrical and plumbing drawings and may confer
with consultants in connection with the preparation of such drawings and may
also submit to such consultant(s) any of the plans prepared by Tenant. If
Landlord or such consultant(s) shall disapprove of any of the Tenant's plans
Tenant shall be advised of the reasons of such disapproval. In any event, Tenant
agrees to pay to Landlord, as additional rent, the cost of such consultation and
review immediately upon receipt of invoices either from Landlord or such
consultant(s). Any Change for which approval has been received shall be
performed strictly in accordance with the approved plans and specifications, and
no amendments or additions to such plans and specifications shall be made
without the prior written consent of Landlord.
(c) If the proposed Change requires approval by or notice to the lessor
of a superior lease or the holder of a mortgage, no Change shall be proceeded
with until such approval has been received, or such notice has been given, as
the case may be and all applicable conditions and provisions of said superior
lease or mortgage with respect to the proposed Change or alteration have been
met or complied with at Tenant's expense; and Landlord, if it approves the
Change, will request such approval or give such notice, as the case may be.
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(d) After Landlord's written approval has been sent to Tenant and the
approval by or notice to the lessor of a superior lease or the holder of a
superior mortgage has been received or given, as the case may be, Tenant shall
enter into an agreement for the performance of the work to be done pursuant to
this Paragraph with Landlord's contractor. In any event, Tenant agrees to pay to
Landlord, at Landlord's option, in advance of construction based upon Landlord's
cost estimates, or as additional rent, the cost of such construction immediately
upon receipt from Landlord of invoices from time to time during the course of
such construction. All costs and expenses incurred in Changes shall be paid by
Tenant within seven (7) days after each billing by Landlord or any such
contractor or contractors. If Landlord approves the construction of specific
interior improvements in the Premises by contractors or mechanics selected by
Tenant and approved by Landlord, then Tenant's contractors shall obtain on
behalf of Tenant and at Tenant's sole cost and expense, (i) all necessary
governmental permits and certificates for the commencement and prosecution of
Tenant's Changes and for final approval thereof upon completion, and (ii) a
completion and lien indemnity bond, or other surety, satisfactory to Landlord,
for the Changes. In the event Tenant shall request any changes in the work to be
performed after the submission of the plans referred to in this Paragraph 14,
such additional changes shall be subject to the same approvals and notices as
the changes initially submitted by Tenant.
(e) Tenant shall pay to Landlord for Landlord's services in the event
Landlord performs as a general contractor in connection with the work performed
pursuant to this Paragraph 14, a fee equal to seven percent (7%) of the total
cost of the changes, and Landlord's reasonable overhead related thereto.
(f) All Changes and the performance thereof shall at all times comply
with (i) all laws, rules, orders, ordinances, directions, regulations and
requirements of all governmental authorities, agencies, offices, departments,
bureaus and boards having jurisdiction thereof, (ii) all rules, orders,
directions, regulations and requirements of the Pacific Fire Rating Bureau, or
of any similar insurance body or bodies, and (iii) all rules and regulations of
Landlord, and Tenant shall cause Changes to be performed in compliance therewith
and in good and first class workmanlike manner, using materials and equipment at
least equal in quality and class to the original installations of the Building.
Changes shall be performed in such manner as not to interfere with the occupancy
of any other tenant in the Building nor delay or impose any additional expense
upon Landlord in construction, maintenance or operation of the Building, and
shall be performed by Contractors or mechanics approved by Landlord and
submitted to Tenant pursuant to this Paragraph, who shall coordinate their work
in cooperation with any other work being performed with respect to the Building.
Throughout the performance of Changes, Tenant, at its expense, shall carry, or
cause to be carried, workmen's compensation insurance in statutory limits, and
general liability insurance for any occurrence in or about the Building, of
which Landlord and its managing agent shall be named as parties insured, in such
limits as Landlord may reasonably prescribe, with insurers reasonably
satisfactory to Landlord all in compliance with Subparagraph 21(b).
(g) Tenant further covenants and agrees that any mechanic's lien filed
against the Premises or against the Building for work claimed to have been done
for, or materials claimed to have been furnished to Tenant, will be discharged
by Tenant, by bond or otherwise, within ten (10) days after the filing thereof,
at the cost and expense of Tenant. All alterations, decorations, additions or
improvements upon the Premises, made by either party, including (without
limiting the generality of the foregoing) all wallcovering, built-in cabinet
work, paneling and the like, shall, unless Landlord elects otherwise, become the
property of Landlord, and shall remain upon, and be surrendered with the
Premises, as a part thereof, at the end of the term hereof, except that Landlord
may by written notice to Tenant, given at least thirty (30) days prior to the
end of the term, require Tenant to remove all partitions, counters, railings and
the like installed by Tenant, and Tenant shall repair any damage to the Premises
arising from such removal or, at Landlord's options, shall pay to the Landlord
all of Landlord's costs of such removal and repair.
(h) All articles of personal property and all business and trade
fixtures, machinery and equipment, furniture and movable partitions owned by
Tenant or installed by Tenant at its expense in the Premises shall be and remain
the property of Tenant and may be removed by Tenant at any time during the lease
term provided Tenant is not in default hereunder, and provided further that
Tenant shall repair any damage caused by such removal. If Tenant shall fail to
remove all of its effects from said Premises upon termination of this Lease for
any cause whatsoever, Landlord may, at its option, remove the same in any manner
that Landlord shall choose, and store said effects without liability to Tenant
for loss thereof, and Tenant agrees to pay Landlord upon demand any and all
expenses incurred in such removal, including court costs and attorney's fees and
storage charges on such effects for any length of time that the same shall be in
Landlord's possession or Landlord may, at its option, without notice, sell said
effects, or any of the same, at private sale and without legal process, for such
price as Landlord may obtain and apply the proceeds of such sale upon any
amounts due under this Lease from Tenant to Landlord and upon the expense
incident to the removal and sale of said effects.
(i) Subject to Landlord's agreement to minimize any disturbance of
Tenant's use of the Premises, Landlord reserves the right at any time and from
time to time without the same constituting an actual or constructive eviction
and without incurring any liability to Tenant therefor or otherwise affecting
Tenant's obligations under this Lease, to make such changes, alterations,
additions, improvements, repairs or replacements in or to the Site or the
Building (including the Premises required so to do by any law or regulation) and
the fixtures and equipment thereof, as well as in or to the street entrance,
halls, passages and stairways thereof, to change the name by which the Building
is commonly known, except as controlled by the signage provision, Rider #5, as
Landlord may deem necessary or desirable. Nothing contained in this Paragraph 14
shall be deemed to relieve Tenant of any duty, obligation, liability of Tenant
with respect to making any repair, replacement or improvement or complying with
any law, order or requirement of any government or other authority and nothing
contained in this Paragraph 14, shall be deemed or construed to impose upon
Landlord any obligation, responsibility or liability whatsoever, for the care,
supervision or repair of the Building or any part thereof other than as
otherwise provided in this Lease.
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15. REPAIRS.
(a) By entry hereunder, Tenant accepts the Premises as being in good
and sanitary order, condition and repair, however, partial occupancy and rent
commencement will not interfere with Landlord's obligation to complete Tenant
improvements. Tenant shall, when and if needed or whenever requested by Landlord
to do so, at Tenant's sole cost and expense, maintain and make all repairs to
the Premises and every part thereof, to keep, maintain and preserve the Premises
in first class condition, excepting ordinary wear and tear. Any such maintenance
and repairs shall be performed by Landlord's contractor, or a Landlord's
approved contractor or contractors. All costs and expenses incurred in such
maintenance and repair shall be paid by Tenant within seven (7) days after
billing by Landlord or such contractor or contractors. Tenant shall upon the
expiration or sooner termination of the term hereof surrender the Premises to
Landlord in the same condition as when received, reasonable wear and tear
excepted. Landlord shall have no obligation to alter, remodel, improve, repair,
decorate or paint the Premises or any part thereof and the parties hereto affirm
that Landlord has made no representations to Tenant respected to the condition
of the Premises or the Building except as specifically herein set forth.
(b) Anything contained in Subparagraph 15(a) above to the contrary
notwithstanding, Landlord shall repair and maintain the structural portions of
the Building, including the basic plumbing, heating, ventilating, air
conditioning and electrical systems installed or furnished by Landlord, unless
such maintenance and repairs are caused in part or in whole by the act, neglect,
fault of or omission of any duty by Tenant, its agents, servants, employees or
invitees, in which case Tenant shall pay to Landlord as additional rent, the
reasonable cost of such maintenance and repairs. Landlord shall not be liable
for any failure to make any such repairs, or to perform any maintenance unless
such failure shall persist for any unreasonable time after written notice of the
need of such repairs or maintenance is given to Landlord by Tenant. Except as
provided in Paragraph 22, hereof there shall be no abatement of rent and no
liability of Landlord by reason of any injury to or interferences with Tenant's
business arising from the making of any repairs, alterations or improvements in
or to any portion of the Building or the Premises or in or to fixtures,
appurtenances and equipment therein. Tenant waives the right to make repairs at
Landlord's expense under any law, statute or ordinance now or hereafter in
effect. Notwithstanding anything to the contrary contained in Subparagraph (a)
and (b) of this Paragraph 15, Tenant shall maintain and repair at its sole cost
and expense, and with maintenance contractors approved by Landlord, all non-base
building facilities, including lavatory, shower, toilet, washbasin and kitchen
facilities and heating and air conditioning systems, including all plumbing
connected to said facilities or systems installed by Tenant or on behavior of
Tenant or existing in the Premises at the time of delivery of possession of the
Premises to Tenant by Landlord. The provisions of the immediately preceding
sentence shall not apply to the basic heating and air conditioning system
provided by Landlord to all tenants in the Building.
16. LIENS. Tenant shall not permit any mechanic's, materialmen's or
other liens to be filed against the real property of which the Premises form a
part nor against the Tenant's leasehold interest in the Premises. Landlord shall
have the right at all reasonable times to post and keep posted on the Premises
any notices which it deems necessary for protection from such liens. If any such
liens are filed, Landlord may, without waiving its rights and remedies based on
such breach of Tenant and without releasing Tenant from any of its obligations,
cause such liens ton be released by any means if shall deem proper, including
payments in satisfaction of the claim giving rise to such lien. Tenant shall pay
to Landlord at once, upon notice by Landlord, any sum paid by Landlord to remove
such liens, together with interest at the maximum rate per annum permitted by
law from the date of such payment by Landlord.
17. ENTRY BY LANDLORD. Subject to Landlord's agreement to minimize any
disturbance of Tenant's use of the Premises by exercise of the following rights,
Landlord reserves and shall at any and all times have the right to enter the
Premises to inspect the same, to supply janitor service and any other service to
be provided by Landlord to Tenant hereunder to submit said Premises to
prospective purchasers or, during the last six (6) months of the term of this
Lease, prospective tenants, to post notices of nonresponsibility, to alter,
improve or repair the Premises or any other portion of the Building, all without
being deemed guilty of any eviction of Tenant and without abatement of rent, and
may, in order to carry out such purposes, erect scaffolding and other necessary
structures where reasonably required by the character of the work to be
performed, provided that the business of Tenant shall be interfered with as
little as is reasonable practicable. Tenant hereby waives any claim for damages
for any injury or inconvenience to or interferences with Tenant's business, any
loss of occupancy or quiet enjoyment of the Premises, and any other loss
occasioned thereby. For each of the aforesaid purposes, Landlord shall at all
times have and retain a key with which to unlock all of the doors in, upon and
about the Premises, excluding Tenant's vaults and safes, and Landlord shall have
the means which Landlord may deem proper to open said doors in an emergency in
order to obtain entry to the Premises, and any entry to the Premises obtained by
Landlord by any of said means or otherwise shall not under any circumstances be
construed or deemed to be forcible or unlawful entry into, or a detainer of, the
Premises, or an eviction of Tenant from the Premises or any portion thereof, and
any damages caused on account thereof shall be paid by Tenant. It is understood
and agreed that no provision of this Lease shall be construed as obligating
Landlord to perform any repairs, alterations or decorations except as otherwise
expressly agreed herein to be performed by Landlord. Landlord shall attempt in
the exercise of its rights under this Paragraph 17 to minimize any disturbance
of Tenant's use and possession of the Premises and to provide as much notice to
Tenant as may be reasonably possible prior to any such exercise of Landlord's
rights under this Paragraph 17.
18. UTILITIES AND SERVICES. Provided that Tenant is not in default
hereunder, Landlord agrees, during the Lease term, to furnish to the Premises as
part of the Operating Expenses during those hours set forth in the Rules and
Regulations as defined in Paragraph 31 hereof, as may be amended in writing by
Landlord from time to time during the term of this Lease and delivered to
Tenant, reasonable quantities of electric current for normal lighting and
fractional horsepower office machines, water for lavatory and drinking purposes,
heat and air conditioning required in Landlord's judgment for the comfortable
use and occupation of the Premises, janitorial service (including washing of
windows with reasonable frequency as determined by Landlord) and elevator
service by non-attended automatic elevators. Landlord shall not be liable for,
and Tenant shall not be entitled to any abatement or reduction of rent by reason
of Landlord's failure to furnish any of the foregoing when such failure is
caused by accident, breakage, repairs, strikes, lockouts or other labor
disturbances or labor disputes of any character, or for any other causes. If
Tenant requires or utilizes more water or electric power than is considered
reasonable or normal by
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Landlord, Landlord may at its option require Tenant to pay, as additional rent,
the cost, as fairly determined by Landlord, incurred by such extraordinary
usage. In addition, Landlord may install separate meter(s) for the Premises, at
Tenant's sole expense, and Tenant thereafter shall pay all charges of the
utility providing service. Tenant specifically undertakes to install and
maintain at Tenant's cost such fire protection equipment including, without
limitation, emergency lighting as required by any governmental authority or
insurer, and if so required, Tenant shall appoint one of Tenant's personnel to
coordinate with the fire protection facilities and personnel of Landlord. Any
incandescent light bulbs used in the Premises shall be paid for the Tenant. Upon
Tenant's request, Landlord's personnel shall install incandescent light bulbs or
other Building Nonstandard bulbs in the Premises. Tenant agrees to pay Landlord
upon demand Landlord's cost for all such incandescent light bulbs installed or
other Building nonstandard improvements including but not limited to metallic
trim, wood floor covering, glass panels, windows, partitions, kitchens and
executive washrooms in the Premises. Landlord shall not be responsible in any
manner for said maintenance, cleaning and repair.
19. INDEMNIFICATION. To the fullest extent permitted by law Tenant
hereby agrees to defend, indemnity and hold Landlord harmless against and from
any and all claims arising from Tenant's use of the Premises or the conduct of
its business or from any activity, work, or thing done, permitted or suffered by
Tenant, its agents, contractors, employees or invitees in or about the Premises
or elsewhere, and hereby agrees to further indemnify and hold harmless Landlord
against and from any and all claims arising from any breach or default in the
performance of any obligation on Tenant's part to be performed under the terms
of this Lease or arising from any act, neglect, fault or omission of Tenant, or
of its agents, employees or invitees, and from and against all costs, attorneys'
fees, expenses and liabilities incurred in or about such claim or any action or
proceeding brought thereon. In case any actin or proceeding is brought against
Landlord by reason of any such claim, Tenant upon notice from Landlord hereby
agrees to defend the same at Tenant's expense by counsel approved in writing by
Landlord. Tenant, as a material part of the consideration to Landlord, hereby
assumes all risk of damage to property or injury to persons in, upon or about
the Premises from any cause whatsoever except that which is caused by the
failure of Landlord to observe any of the terms and conditions of this Lease and
such failure has persisted for an unreasonable period of time after written
notice of such failure, and Tenant hereby waives all its claims in request
thereof against Landlord.
20. DAMAGE TO TENANT'S PROPERTY. Notwithstanding the provisions of
Paragraph 19 to the contrary, Landlord or its agents shall not be liable for any
damage to property entrusted to employees of the building, nor for loss of or
damage to any property by theft or otherwise, nor for any injury or damage to
persons or property resulting from fire, explosion, falling plaster, steams,
gas, electricity, water or rain which may leak from any part of the Building or
from the pipes, appliances or plumbing works therein or from the roof, street or
sub-surface or from any other place or resulting from dampness or any other
patent or latent cause whatsoever. Landlord or its agents shall not be liable
for interference with the light or other incorporeal hereditaments. Tenant
shall give prompt notice to Landlord in case of fire or accidents in the
Premises or in the Building or of defects therein or in the fixtures or
equipment located therein.
21. INSURANCE.
(a) During the term hereof, Tenant, at its sole expense, shall obtain
and keep in force the following insurance:
(i) All Risk insurance upon property owned by Tenant and located in
the Building for which Tenant is legally liable. Aggregate
Improvements (other than "Building Standard Work" as described in
Subparagraph 1(1) hereof), and alterations, in any amount not less
than ninety percent (90%) of the full replacement cost thereof. All
such insurance policies shall name Tenant and Landlord as named
insured thereunder and, at Landlord's request, shall name
Landlord's mortgagees (and, if applicable, ground or primary
lessors) as loss payees thereunder, all as their respective
interests may appear. Landlord will not be required to carry
insurance of any kind on any "Building Non-Standard Work", as
described in Subparagraph 1(m) hereof, on Tenant's furniture or
furnishings, or on any of Tenant's fixtures, equipment,
improvements, or appurtenances under this Lease, and Landlord shall
not be obligated to repair any damage thereto or replace the same.
(ii) Comprehensive general liability insurance coverage, including
personal injury, bodily injury, broad form property damage,
operations hazard, owner's protective coverage, contractual
liability, and products and completed operations liability, in
limits not less than $2,000,000 inclusive. All such insurance
policies shall name Tenant as named insured thereunder and shall
name Landlord and Landlord's mortgagees (and, if applicable, ground
or primary lessors) as additional insured thereunder, all as their
respective interests may appear.
(iii) Worker's Compensation and Employer's Liability insurance,
with a waiver of subrogation endorsement, in form and amount
satisfactory to Landlord.
(v) Liquor liability insurance coverage in limits of not less than
Five Hundred Thousand Dollars ($500,000) at any time during the
term or on any occurrence hereof any alcoholic beverages of any
nature are served on the Premises.
(vi) Any other form or forms of insurance as Tenant, Landlord, or
Landlord's mortgagees or ground or primary lessors may reasonably
require from time to time in form, in amounts, and for insurance
risks against which a prudent tenant of a comparable size and in a
comparable business would protect itself.
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(b) All policies shall be issued by insurers that are acceptable to
Landlord and in form satisfactory from time to time to Landlord. Tenant will
deliver certificates of insurance to Landlord as soon as practicable after the
placing of the required insurance, but not later than ten (10) days prior to the
date Tenant takes possession of all or any part of the Premises. All policies
shall contain an undertaking by the insurers to notify Landlord and Landlord's
mortgagees (and, if applicable, ground or primary lessors) in writing, not less
than thirty (30) days before any material change, reduction in coverage,
cancellation, or other termination thereof. Ten (10) days prior to the
expiration of any insurance policy, Tenant will provide Landlord with a
Certificate of Insurance extending the term of the original policy or a
certified copy of a new policy extending the required coverage.
(c) During the Term, Landlord shall insure the Building and the
Building Standard Work (excluding any property which Tenant is obligated to
insure under Subparagraph 21(a) hereof) against damage with All Risk insurance
and public liability insurance, all in such amounts and with such deductions as
Landlord considers appropriate, Landlord may, but shall not be obligated to,
obtain and carry any other form or forms of insurance as it or Landlord's
mortgagees may determine advisable. Notwithstanding any contribution by Tenant
to the cost of insurance premiums, as provided herein, Tenant acknowledges that
it has no right to receive any proceeds from any insurance policies carried by
Landlord.
(d) Tenant will not keep, use, sell, or offer for sale in, or upon, the
Premises any article which may be prohibited by any insurance policy
periodically in force covering the Building and the Building Standard Work.
Tenant shall promptly comply with all reasonable requirements of the insurance
authority or any present or future insurer relating to the Premises.
(e) If any Landlord's insurance policies shall be cancelled or
cancellation shall be threatened or the coverage thereunder reduced or
threatened to be reduced in any way because of the use of the Premises or any
part thereof by Tenant or any assignee or sub-tenant of Tenant or by anyone
Tenant permits on the Premises and, if Tenant fails to remedy the condition
giving rise to such cancellation, threatened cancellation, reduction of
coverage, threatened reduction of coverage, increase in premiums, or threatened
increase in premiums, within 48 hours after notice thereof, Landlord may, at its
option, either terminate this Lease or enter upon the Premises and attempt to
remedy such condition, and Tenant shall promptly pay the cost thereof to
Landlord as additional rent. Landlord shall not be liable for any damage or
injury caused to any property of Tenant or of others located on the Premises
resulting from such entry. If Landlord is unable, or elects not, to remedy such
condition, then Landlord shall have all of the remedies provided for in this
Lease in the event of a default by Tenant. Notwithstanding the foregoing
provisions of this Subparagraph 21(e), if Tenant fails to remedy as aforesaid,
Tenant shall be in default of its obligations hereunder and Landlord shall have
no obligations to remedy such default.
(f) All policies covering real or personal property which either party
obtains affecting the Premises shall include a clause or endorsement denying the
insurer any rights of subrogation against the other party to the extent rights
have been waived by the insured before the occurrence of injury or loss, if same
are obtainable without unreasonable cost. Landlord and Tenant waive any rights
of recovery against the other for injury or loss due to hazards covered by
policies of insurance containing such a waiver of subrogation clause or
endorsement, to the extent of the injury or loss covered thereby.
22. DAMAGE OR DESTRUCTION.
(a) In the event the Building and/or the Building Standard Work or any
insured alterations are damaged by fire or other perils covered by Landlord's
extended coverage insurance to an extent not exceeding twenty-five percent (25%)
of the full insurable value thereof and if the damage thereto is such that the
Building and/or the Building Standard Work and any insured alterations may be
repaired, reconstructed or restored within a period of ninety (90) days from the
date of the happening of such casualty and Landlord will receive insurance
proceeds sufficient to cover the cost of such repairs, Landlord shall commence
and proceed diligently with the work of repair, reconstruction and restoration
and the Lease shall continue in full force and effect. If such work or repair,
reconstruction and restoration is such as to require a period longer than ninety
(90) days or exceeds twenty-five percent (25%) of the full insurable value
thereof, or if said insurance proceeds will not be sufficient to cover the cost
of such repairs, Landlord either may elect to so repair, reconstruct or restore
the Building and/or Building Standard Work and any insured alterations and the
Lease shall continue in full force and effect or Landlord may elect not to
repair, reconstruct or restore the Building and/or Building Standard Work and
any insured alterations and the Lease shall in such event terminate. Under any
of the conditions of this Subparagraph 22(a), Landlord shall give written notice
to Tenant of its intention within thirty (30) days from the date of such event
of damage or destruction. In the event Landlord elects not to restore said
Building and/or Building Standard Work and any insured alterations, this Lease
shall be deemed to have terminated as of the date of such partial destructions.
(b) Upon any termination of this Lease under any of the provisions of
this Paragraph 22, the parties shall be released thereby without further
obligation to the other from the date possession of the Premises is surrendered
to Landlord except for items which have therefore accrued and are then unpaid.
(c) In the event of repair, reconstructions and restoration by Landlord
as herein provided, the rent provided to be paid under the Lease shall be abated
proportionately with the degree to which Tenant's use of the Premises is
impaired during the
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period of such repair, reconstruction or restoration. Tenant shall not be
entitled any compensation or damages for loss in the use of the whole or any
part of the Premises and/or any inconvenience, annoyance or loss of business
occasioned by such damage, repair, reconstruction or restoration.
(d) Tenant shall not be released from any of its obligations under this
Lease except to the extent and upon the conditions expressly stated in this
Paragraph 22. Notwithstanding anything to the contrary contained in this
Paragraph 22, should Landlord be delayed or prevented from repairing or
restoring the damaged Premises within one (1) year after the occurrence of such
damage or destruction by reason of acts of God, war, Governmental restrictions,
inability to procure the necessary labor or materials, or other cause beyond the
control of Landlord, Landlord shall be relieved of its obligation to make such
repairs or restoration and Tenant shall be released from its obligations under
this Lease as of the end of said year.
(e) In the event that damage is due to any cause other than fire or
other peril covered by extended coverage insurance, Landlord may elect to
terminate this Lease.
(f) It is hereby understood that if Landlord is obligated to or elects
to repair or restore as herein provided, Landlord shall be obligated to make
repairs or restoration only of those portions of the Building and the Premises
which were originally provided at Landlord's expense or which were insured by
either party and the proceeds of such insurance have been received by Landlord,
and the repair and restoration of items not provided at Landlord's expense shall
be the obligation of Tenant.
(g) Notwithstanding anything to the contrary contained in this
Paragraph 22, Landlord shall not have any obligations whatsoever to repair,
reconstruct or restore the Premises when the damage resulting from any casualty
covered under this Paragraph 22 occurs during the last twelve (12) months of the
term of this Lease or any extension hereof.
(h) The provisions of California Civil Code 1932, Subsection 2, and
1933, Subsection 4, are hereby waived by Tenant.
23. EMINENT DOMAIN.
(a) In case the whole of the Premises, or such part thereof as shall
substantially interfere with Tenant's use and occupancy thereof, shall be taken
for any public or quasi-public purpose by any lawful power or authority by
exercise of the right of appropriation, condemnation or eminent domain, or sold
to prevent such taking, either party shall have the right to terminate this
Lease effective as of the date possession is required to be surrendered to said
authority. Tenant shall not assert any claim against Landlord or the taking
authority for any compensation because of such taking, and Landlord shall be
entitled to receive the entire amount of any award without deduction for any
estate or interest of Tenant. In the event the amount of property or the type of
estate taken shall not substantially interfere with the conduct of Tenant's
business, Landlord shall be entitled to the entire amount of the award without
deduction for any estate or interest of Tenant, and Landlord at his option may
terminate this Lease. If Landlord does not so elect, Landlord shall promptly
proceed to restore the Premises to substantially their same condition prior to
such partial taking, and a proportionate allowance shall be made to Tenant for
the rent corresponding to the time during which, and to the part of the Premises
of which, Tenant shall be so deprived on account of such taking and restoration.
Nothing contained in this Paragraph shall be deemed to give Landlord any
interest in any aware separately made to Tenant for the taking of personal
property and trade fixtures belonging to Tenant or for moving costs incurred by
Tenant in relocating Tenant's business.
(b) In the event of taking of the Premises or any part thereof for
temporary use, (i) this Lease shall be and remain unaffected thereby and rent
shall not abate, and (ii) Tenant shall be entitled to receive for itself such
portion or portions of any award made for such use with respect to the period of
the taking which is within the term, provided that if such taking shall remain
in force at the expiration or earlier terminations of this Lease. Tenant shall
then pay to Landlord a sum equal to the reasonable cost of performing Tenant's
obligations under Paragraph 15 with respect to surrender of the Premises and
upon such payment shall be excused from such obligations. For the purpose of
this Subparagraph 23(b), a temporary taking shall be defined as a taking for a
period of 270 days or less.
24. BANKRUPTCY. If Tenant shall file a petition in bankruptcy under any
Chapter of federal bankruptcy law as then in effect, or if Tenant be adjudicated
a bankrupt in involuntary bankruptcy proceedings and such adjudications shall
not have been vacated within thirty (30) days from the date thereof, or if a
receiver or trustee be appointed of Tenant's property and the order appointing
such receiver or trustee not be set aside or vacated within thirty (30) days
after the entry thereof, or if Tenant shall assign Tenant's estate or effects
for the benefit or creditors, or if this Lease shall otherwise by operation of
law pass to any person or persons other than Tenant, then and in any such event
Landlord may, if Landlord so elects, with or without notice of such election and
with or without entry or action by Landlord, forthwith terminate this Lease.
Notwithstanding any other provisions of this Lease, Landlord, in addition to any
and all rights and remedies allowed by law or equity, shall upon such
termination be entitled to recover damages in the amount provided in
Subparagraph 25(b) below and neither Tenant nor any person claiming through or
under Tenant or by virtue of any statute or order of any court shall be entitled
to possession of the Premises but shall forthwith quit and surrender the
Premises to Landlord. Nothing herein contained shall limit or prejudice the
right of Landlord to prove and obtain as damages by reason of any such
termination an amount equal to the maximum allowed by any statute or rule of law
in effect at the time when, governing the proceedings in which, such damages are
proved, whether or not such amount be greater, equal to, or less than the amount
of damages recoverable under the provisions of this Paragraph 24.
25. DEFAULTS AND REMEDIES.
(a) The occurrence of any one or more of the following events
shall constitute a default hereunder by Tenant:
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(i) The vacation or abandonment of the Premises by Tenant.
Abandonment is herein defined to included, but is not limited, to,
any absence by Tenant from the Premises for five (5) days or longer
while in default of any provision of this Lease.
(ii) The failure by Tenant to make any payment of rent or
additional rent or any other payment required to be made by Tenant
hereunder, as and when due.
(iii) The failure by Tenant to observe or perform any of the
express or implied covenants or provisions of this Lease to be
observed or performed by Tenant, other than as specified in
Subparagraph 25(a)(i) or (ii) above, where such failure shall
continue for a period of ten (10) days after written notice thereof
from Landlord to Tenant; provided, however, that any such notice
shall be in lieu of, and not in addition to, any notice required
under California Code of Civil Procedure 1161; provided, further,
that if the nature of Tenant's default is such that more than ten
(10) days are reasonably required for its cure, then Tenant shall
not be deemed to be in default if Tenant shall commence such cure
within said ten-day period and, thereafter diligently prosecute
such cure to completion, which completion shall occur not later
than sixty (60) days from the date of such notice from Landlord.
(iv) (1) The making by Tenant of any general assignment for the
benefit of creditors; (2) the filing by or against Tenant of a
petition to have Tenant adjudged a bankrupt or a petition for
reorganization or arrangement under any law relating to bankruptcy
(unless, in the case of a petition filed against Tenant, the same
is dismissed within thirty (30) days; (3) the appointment of a
trustee or receiver to take possession of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in
this Lease, where possession is not restored to Tenant within
thirty (30) days; or (4) the attachment, execution or other
judicial seizure of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease where such
seizure is not discharged within thirty (30) days.
(b) In the event of any such default by Tenant, in addition to any
other remedies available to Landlord at law or in equity, Landlord shall have
the immediate option to terminate this Lease and all rights of Tenant hereunder.
In the event that Landlord shall elect to so terminate this Lease then Landlord
may recover from Tenant:
(i) the worth at the time of award of any unpaid rent which had
been earned at the time of such termination; plus
(ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until
the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; plus
(iii) the worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that Tenant proves could be
reasonably avoided; plus
(iv) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform his
obligations under this Lease or which in the ordinary course of
things would be likely a result therefrom.
As used in Subparagraph 25(b)(i) and (ii) above, the "worth at the time
of award" is computed by allowing interest at the maximum rate permitted by law
per annum. As used in Subparagraph 25(b)(iii) above, the "worth at the time of
award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of Service Facilities at the time of award plus one percent
(1%).
(c) In the event of any such default by Tenant, Landlord shall also
have the right, with or without terminating this Lease, to re-enter the Premises
and remove all persons and property from the Premises. Such property may be
removed and stored in a public warehouse or elsewhere at the cost of and for the
account of Tenant for such period of time as may be required by applicable law
after which Landlord may dispose of such property in accordance with applicable
law. No re-entry or taking possession of the Premises by Landlord pursuant to
this Subparagraph 25(c) shall be construed as an election to terminate this
Lease unless written notice of such intention be given to Tenant or unless the
termination thereof be decreed by a court of competent jurisdiction.
(d) All rights, options and remedies of Landlord contained in this
Lease shall be construed and held to be cumulative and no one of them shall be
exclusive of the other, and Landlord shall have the right to pursue any one or
all of such remedies or any other remedy or relief which may be provided by law,
whether or not stated in this Lease. No waiver of any default of Tenant
hereunder shall be implied from any acceptance by Landlord of any rent or other
payments due hereunder or any omission by Landlord to take any action on account
of such default if such default persists or is repeated, and no express waiver
shall affect defaults other than as specified in said waiver. The consent or
approval or Landlord to or of any act by Tenant requiring Landlord's consent or
approval shall be deemed to waive or render unnecessary Landlord's consent or
approval to or of any subsequent similar acts by Tenant.
26. ASSIGNMENT AND SUBLETTING. Tenant shall not voluntarily assign or
encumber its interest in this Lease or in the Premises, or sublease all or any
part of the Premises, or allow any other person or entity to occupy or use all
or any part of the Premises, without first obtaining Landlord's prior written
consent. Any assignment, encumbrance or sublease without Landlord's prior
written consent shall be voidable, at Landlord's election, and shall constitute
a default. For purposes hereof, in the event Tenant is a partnership, a
withdrawal or change of partners, or change of ownership of partners, owning
more than a fifty percent (50%) interest in the partnership, or if Tenant is a
corporation, any transfer of fifty percent (50%) of its stock, shall constitute
a voluntary assignment and shall be subject to these provisions. No consent to
any assignment encumbrance, or sublease shall constitute a further waiver of the
provisions of this Paragraph. Tenant shall notify Landlord
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in writing of Tenant's intent to assign encumber, or sublease this lease, the
name of the proposed assignee or sublessee, information concerning the financial
responsibility of the proposed assignee or sublessee and the terms of the
proposed assignment or subletting, and Landlord shall, within thirty (30) days
of receipt of such written notice, and additional information requested by
Landlord concerning the proposed assignee's or sublessee's financial
responsibility, elect one of the following:
(a) Consent to such proposed assignment, encumbrance or sublease;
(b) Refuse such consent, which refusal shall be on reasonable grounds;
(c) Elect to terminate this Lease, or in the case of a partial
sublease, terminate this Lease as to the portion of the Premises
proposed to be sublet.
Without limiting Landlord's grounds for disapproval, Landlord's
disapproval shall be deemed reasonable if it is based on Landlord's analysis of
(a) the proposed assignee's or sublessee's credit, character and business or
professional standing, (b) whether the assignee's or sublessee's use and
occupancy of the Premises will be consistent with Subparagraph 1(u) and
Paragraph 8 of this Lease and whether assignee's proposed intensity of use is
consistent with that shown by Tenant, (c) whether the proposed assignee or
sublessee is a then existing or prospective tenant of the Building, as a
condition for granting its consent to any assignment, encumbrance or sublease.
Landlord may require that the rent payable by such assignee or sublessee is at
the then current published rental rates for the Premises or comparable premises
in the Building, but not less than the then current Annual Basic Rent under this
Lease and may require that the assignee or sublessee remit directly to Landlord
on a monthly basis, all monies due to Tenant by said assignee or sublessee. In
the event that Landlord shall consent to any assignment or sublease under the
provisions of this Paragraph 26, Tenant shall pay Landlord's processing costs
and attorneys' fees incurred in giving such consent. If for any proposed
assignment or sublease Tenant receives rent or other consideration, either
initially or over the term of the assignment or sublease, in excess of the rent
called for hereunder, or, in case of the sublease of a portion of the Premises,
in excess of such rent fairly allocable to such portion, after appropriate
adjustments to assure that all other payments called for hereunder are taken
into account, Tenant shall pay to Landlord as additional rent hereunder all of
the excess of each such payment of rent or other consideration received by
Tenant promptly after its receipt. Landlord's waiver or consent to any
assignment or subletting shall not relieve Tenant from any obligation under this
Lease. Occupancy of all or part of the Premises by parent, subsidiary, or
affiliated companies of Tenant shall not be deemed an assignment or subletting.
If Tenant requests Landlord's consent to any assignment of this Lease or any
subletting of all or a portion of the Premises, Landlord shall have the right,
to be exercised by giving written notice to Tenant within thirty (30) days of
receipt by Landlord of the financial responsibility information required by this
Paragraph 26 to terminate this Lease effective as of the date Tenant proposes to
assign this Lease or sublet all or a portion of the Premises. Landlord's right
to terminate this lease as to all or a portion of the Premises on assignment or
subletting shall not terminated as a result of Landlord's consent to the
assignment of this Lease or the subletting of all or a portion of the Premises,
or Landlord's failure to exercise this right with respect to any assignment or
subletting.
27. QUIET ENJOYMENT. Landlord covenants and agrees with Tenant that
upon Tenant paying the rent required under this Lease and paying all other
charges and performing all of the covenants and provisions aforesaid on Tenant's
part to be observed and performed under this Lease, Tenant shall and may
peaceably and quietly have, hold and enjoy the Premises in accordance with this
Lease.
28. SUBORDINATION. Without the necessity of any additional document
being executed by Tenant for the purpose of effecting a subordination, and at
the election of Landlord or any first mortgagee with a lien on the Building or
any ground lessor with respect to the Building, this lease shall be subject and
subordinate at all times to: (a) all ground leases or underlying leases which
may now exist or hereafter be executed affecting the Building or the land upon
which the Building is situated or both, and (b) the lien of any mortgage or deed
of trust which may now exist or hereafter be executed in any amount for which
the Building, land, ground leases or underlying leases, or Landlord's interest
or estate in any of said items is specified as security. Notwithstanding the
foregoing, Landlord shall have the right to subordinate or cause to be
subordinated any such ground leases or underlying lease or any such liens to
this lease. In the event that any ground lease or underlying lease terminates
for any reason or any mortgage or deed of trust is foreclosed or a conveyance in
lieu of foreclosure is made for any reason, Tenant shall, if requested by the
ground lessor, mortgagee or beneficiary, as applicable, attorn to and become the
Tenant of the successor in interest to Landlord and in such event Tenant's right
to possession of the Premises shall not be disturbed if Tenant is not in default
and so long as Tenant shall pay the rent and all other amounts required to be
paid to Landlord pursuant to the terms hereof and observe and perform all of the
provisions of this Lease, unless the Lease is otherwise terminated pursuant to
its terms. Tenant covenants and agrees to execute and deliver, upon demand by
Landlord and in the form requested by Landlord, any additional documents
evidencing the priority or subordination of this Lease with respect to any such
ground leases or underlying leases or the lien of any such mortgage or deed of
trust. Should Tenant fail to sign and return any such documents within ten (10)
business days of receipt, Tenant shall be in default, and Landlord may at
Landlord's option, terminate this Lease provided written notice of such
termination is received by Tenant prior to Landlord.
29. ESTOPPEL CERTIFICATE.
(a) Within ten (10) days following any written request which Landlord
may make from time to time, Tenant shall execute and deliver to Landlord a
statement, in a form substantially similar to the form of Exhibit "E" attached
hereby, certifying: (i) the Commencement Date of this Lease; (ii) the fact that
this Lease is unmodified and in full force and effect for, if there have been
modifications hereto, that the Lease is in full force and effect, as modified,
and stating the date and nature of such modifications); (iii) the date to which
the rental and other sums payable under this Lease have been paid; (iv) the fact
that there are no current defaults under this Lease by either Landlord or Tenant
except as specified in Tenant's
14
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statement; and (v) such other matters requested by Landlord. Landlord and Tenant
intend that any statement delivered pursuant to this Paragraph 29 may be relied
upon by any mortgagee, beneficiary, purchaser or prospective purchaser of the
Building or any interest therein.
(b) Tenant's failure to deliver such statement within such time shall
be conclusive upon Tenant (i) that this Lease is in full force and effect,
without modification except as may be represented by Landlord, (ii) that there
are no uncured defaults in Landlord's performance, and (iii) that not more than
one (1) month's rent has been paid in advance, except as provided in Paragraph
36 hereof. Tenant's failure to deliver said statement to Landlord within ten
(10) working days of receipt shall constitute a default under this Lease, and
Landlord may, at Landlord's option, terminate the Lease, provided written notice
of such termination is received by Tenant prior to Landlord's receipt of said
statement.
30. BUILDING PLANNING. In the event Landlord requires the Premises for
use in conjunction with another suite or for other reasons connected with the
Building planning program, upon notifying Tenant in writing, Landlord shall have
the right to move Tenant to other comparable space in the Building of which the
Premises forms a part, at Landlord's sole cost and expense, including all of
Tenant's moving expenses, telephone installation and stationary reprinting
charges, and the terms and conditions of the original Lease shall remain in full
force and effect, safe and excepting that a revised Exhibit "A" shall become
part of this Lease and shall reflect the location of the new space and Paragraph
1 of this Lease shall be amended to include and state all correct data as to the
new space.
31. RULES AND REGULATIONS. Tenant shall faithfully observe and comply
with the "Rules and Regulations," ??? of which is attached hereto and marked
Exhibit "F", and all reasonable and nondiscriminatory modifications thereof and
additions thereto from time to time put into effect by Landlord. Landlord shall
not be responsible to Tenant for the violation or nonperformance by any other
tenant or occupant of the Building of any of said Rules and Regulations.
32. CONFLICT OF LAWS. This Lease shall be governed by and construed
pursuant to the laws of the State of California.
33. SUCCESSORS AND ASSIGNS. Except as otherwise provided in this Lease,
all of the covenants, conditions and provisions of this Lease shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, personal representative, successors and assigns.
34. SURRENDER OF PREMISES. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and
shall, at the option of Landlord, operate as an assignment to it of any or all
subleases or subtenancies. Upon the expiration or termination of this Lease,
Tenant shall peaceably surrender the Premises and all alterations and additions
thereto broom-clean, in good order, repair and condition, reasonable wear and
tear excepted, and shall comply with the provisions of Subparagraph 14(g) and
14(h). The delivery of keys to any employee of Landlord or to Landlord's agent
or any employee thereof shall not be sufficient to constitute a termination of
this Lease or a surrender of the Premises.
35. PROFESSIONAL FEES.
(a) In the event that Landlord should bring suit for the possession of
the Premises, for the recovery of any sum due under this Lease, or because of
the breach of any provisions of this Lease, or for any other relief against
Tenant hereunder, or should either party bring suit against the other with
respect to matters arising from or growing out of this Lease, then all costs and
expenses, including without limitation, its actual professional fees such as
appraisers', accountants' and attorneys' fees, incurred by the prevailing part
therein shall be paid by the other party, which obligation on the part of the
other party shall be deemed to have accrued on the date of the commencement of
such action and shall be enforceable whether or not the action is prosecuted to
judgment.
(b) Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant's occupancy hereunder, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including
without limitation its actual professional fees such as appraiser's,
accountants' and attorneys' fees.
36. PERFORMANCE BY TENANT. All covenants and agreements to be performed
by Tenant under any of the terms of this lease shall be performed by Tenant at
Tenant's sole cost and expense and without any abatement of rent. Tenant
acknowledges that the late payment by Tenant to Landlord of any sums due under
this Lease will cause Landlord to incur costs not contemplated by this Lease,
the exact amount of such cost being extremely difficult and impractical to fix.
Such costs include, without limitation, processing and accounting charges, and
late charges that may be imposed on Landlord by the terms of any encumbrance and
note secured by any encumbrance covering the Premises or the Building of which
the Premises are a part. Therefore if any monthly installment of Annual Basic
Rent is not received by Landlord by the date when due, or if Tenant fails to pay
any other sum of money due hereunder and such failure continues for ten (10)
days after notice thereof by Landlord, Tenant shall pay to Landlord, as
additional rent, the sum of five percent (5%) of the overdue amount as a late
charge. Such overdue amount shall also bear interest, as additional rent, at the
maximum rate permissible by law calculated, as appropriate, from the date either
(a) the monthly installment of Annual Basic Rent is due, or (b) of receipt of
said notice, until the date of payment to Landlord. Landlord's acceptance of any
late charge or interest shall not constitute a waiver of Tenant's default with
respect to the overdue amount or prevent Landlord from exercising any of the
other rights and remedies available to Landlord under this Lease or any law now
or hereafter in effect. Further, in the event such late charge is imposed by
Landlord for two (2) consecutive months for whatever reason, Landlord shall have
the option to require that, beginning with the first payment of rent due
following the imposition of the second consecutive late charge, rent shall no
longer be paid in monthly installments but shall be payable three (3) months in
advance.
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37. MORTGAGEE AND SENIOR LESSOR PROTECTION. No act or failure to act on
the part of Landlord which would entitle Tenant under the terms of this Lease,
or by law, to be relieved of Tenant's obligations hereunder or to terminate this
Lease, shall result in a release of such obligations or a termination of this
Lease unless (a) Tenant has given notice by registered or certified mail to any
beneficiary of a deed of trust or mortgage covering the Premises and to the
lessor under any master or ground lease covering the Building, the Site or any
interest therein whose identity and address shall have been furnished to Tenant,
and (b) Tenant offers such beneficiary, mortgagee or Lessor a reasonable
opportunity to cure the default, including time to obtain possession of the
Premises by power of sale or a judicial foreclosure, if such should prove
necessary to effect a cure.
38. DEFINITION OF LANDLORD. The term "Landlord" as used in this Lease,
so far as covenants or obligations on the part of Landlord are concerned, shall
be limited to mean and include only the owner or owners, at the time in
questions, of the fee title to, or a lessee's interest in a ground lease of the
Site or master lease of the Building. In the event of any transfer, assignment
or other conveyance or transfer of any such title or interest, Landlord herein
named (and in case of any subsequent transfers or conveyances, the then grantor)
shall be automatically freed and relieved from and after the date of such
transfer, assignment or conveyance of all liability with respect to the
performance of any covenants or obligations on the part of Landlord contained in
this Lease thereafter to be performed and, without further agreement, the
transferee of such title or interest shall be deemed to have agreed to observe
and perform any and all obligations of Landlord hereunder, during its ownership
of the Premises, Landlord may transfer its interest in the Premises without the
consent of Tenant and such transfer or subsequent transfer shall not be deemed a
violation on Landlord's part of any of the terms and conditions of this Lease.
39. WAIVER. The failure of Landlord to seek redress for violation of,
or to insist upon strict performance of, any term, covenant or condition of this
Lease or the Rules and Regulations attached hereto as Exhibit "F", shall not be
deemed a waiver of such violation or prevent a subsequent act which would have
originally constituted a violation from having all the force and effect of an
original violation, nor shall the failure of Landlord to enforce any of said
Rules and Regulations against any other tenant of the Building be deemed a
waiver of any such Rule and Regulation, nor shall any custom or practice which
may become established between the parties in the administration of the terms
hereof be deemed a waiver of, or in any way affect, the right of Landlord to
insist upon the performance by Tenant in strict accordance with said terms. The
subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a
waiver of any preceding breach by Tenant of any term, covenant or condition of
this Lease, other than the failure of Tenant to pay the particular rent so
accepted, regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such rent.
40. INDENTIFICATION OF TENANT. Unless the provisions of Paragraph 55
herein below are applicable to this Lease, then if more than one person executes
this Lease as Tenant, (a) each of them is jointly and severally liable for the
keeping, observing and performing of all of the terms, covenants, conditions,
provisions and agreements of this Lease to be kept observed and performed by
Tenant, and (b) the term "Tenant" as used in this Lease shall mean and include
each of them jointly and severally and the act of or notice from, or notice or
refund to, or the signature of, any one or more of them, with respect to the
tenancy of this Lease, including, but not limited to, any renewal extension,
expiration, termination or modification of this Lease, shall be binding upon
each and all of the personal executing this Lease as Tenant with the same force
and effect as if each and all of them had so acted or so given or received such
notice or refund or so signed.
41. PARKING. The use by Tenant, its employees and invitees, of the
parking facilities of the Building shall be on the terms and conditions set
forth in Exhibit F attached hereto and by this reference incorporated herein and
shall be subject to such other agreement between Landlord and Tenant as may
hereinafter be established.
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<PAGE> 81
43. TERMS AND HEADINGS. The words "Landlord" and "Tenant" as used
herein shall include the plural as well as the singular. Words used in any
gender include other genders. If there be more than one Tenant, i.e. if two or
more personal or entities are jointly referred to in this Lease as "Tenant," the
obligations hereunder imposed upon Tenant shall be joint and several. The
Paragraph headings of this Lease are not a part of this Lease and shall have no
effect upon the construction or interpretation of any part hereof.
44. EXAMINATION OF LEASE. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or option for Lease,
and it is not effective as a Lease or otherwise until execution by and delivery
to both Landlord and Tenant.
45. TIME. Time is of the essence with respect to the performance of
every provision of this Lease in which time or performance is a factor.
46. PRIOR AGREEMENT: AMENDMENTS. This Lease contains all of the
agreements of the parties hereto with respect to any matter covered or mentioned
in this Lease, and no prior agreement or understanding, oral or written, express
or implied, pertaining to any such matter shall be effective for any purpose. No
provision of this Lease may be amended or added to except by an agreement in
writing signed by the parties hereto or their respective successors in interest.
The parties acknowledge that all prior agreements, representations and
negotiations are deemed superseded by the execution of this Lease to the extent
they are not incorporated herein.
47. SEPARABILITY. Any provision of this Lease which shall prove to be
invalid, void or illegal in no way affects, impairs or invalidates any other
provision hereof, and such other provisions shall remain in full force and
effect.
48. RECORDING. Neither Landlord nor Tenant shall record this Lease nor
a short memorandum thereof without the consent of the other and if such
recording occurs, it shall be at the sole cost and expense of the party
requesting the recording, including any documentary transfer taxes or other
expenses related to such recordation.
49. LIMITATION ON LIABILITY. The obligations of Landlord under this
Lease do not constitute personal obligations of the individual partners,
directors, officers or shareholders of Landlord, and Tenant shall not seek
recourse against the individual partners, directors, officers or shareholders of
Landlord or any of their personal assets for satisfaction of any liability in
respect to this Lease. In consideration of the benefits accruing hereunder,
Tenant and all successors and assigns covenant and agree that in the event any
actual or alleged failure, breach or default hereunder by Landlord, the sole and
exclusive remedy shall be against Landlord's interest in the Building.
50. RIDERS. Clauses, plats and riders, if any, signed by Landlord and
Tenant and affixed to this Lease are a part hereof.
51. SIGNS. Tenant shall not place any sign upon the Premises or the
Building without Landlord's prior written consent except as specifically stated
in the signage provision, Rider #5.
52. MODIFICATION OF LENDER. If a connection with obtaining
construction, interim or permanent financing for the Building, the lender shall
request reasonable modifications in this Lease as a condition to such financing,
Tenant will not unreasonably withhold, delay or defer its consent thereto,
provided that such modifications do not increase the obligations of Tenant
hereunder or materially adversely affect the leasehold interest hereby created
or Tenant's rights hereunder.
53. ACCORD AND SATISFACTION. No payment by Tenant or receipt by
Landlord of a lesser amount than the rent payment herein stipulated shall be
deemed to be other than on account of the rent, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment as rent
be deemed an accord and satisfaction and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
rent or pursue any other remedy provided in this Lease. Tenant agrees that each
of the foregoing covenants and agreements shall be applicable to any covenant or
agreement either expressly contained in this lease or imposed by any status or
at common law.
54. FINANCIAL STATEMENTS. At any time within reason during the term of
this Lease, Tenant shall, upon ten (10) days prior written notice from Landlord,
provide Landlord with a current financial statement and financial statements of
the two (2) years prior to the current financial statement year. Such statement
shall be prepared in accordance with generally accepted accounting principles
and, if such is the normal practice of Tenant, shall be audited by an
independent certified public accountant.
55. TENANT AS CORPORATION. If Tenant executes this Lease as a
corporation, then Tenant and the persons executing this Lease on behalf of
Tenant represent and warrant that the individuals executing this Lease on
Tenant's behavior are duly authorized to execute and deliver this Lease on its
behalf in accordance with a duly adopted resolution of the board of directors of
Tenant, a copy of which is to be delivered to Landlord on execution hereof, and
in accordance with the By-Laws of Tenant and that this Lease is binding upon
Tenant in accordance with its terms.
56. NO PARTNERSHIP OR JOINT VENTURE. Nothing in this Lease shall be
deemed to constitute Landlord and Tenant as partners or joint ventures. It is
the express intent of the parties hereto that their relationship with regard to
this Lease be and remains that of landlord and tenant.
IN WITNESS WHEREOF, the parties have executed this Lease the day and
year first above written.
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LANDLORD: ADDRESS:
LINCOLN PROPERTY COMPANY N.C., INC. LARKSPUR LANDING OFFICE
1100 Larkspur Landing Circle, 155
Larkspur, California 94939
By: /s/ BURCH BOONE Dated: 5/14/91
------------------------------ --------------------------
Burch Boone
Vice President
TENANT: ADDRESS
Synon, Inc. 1100 Larkspur Landing Circle
------------------------------ ---------------------------------
An Illinois Corporation Suite 300
---------------------------------
Larkspur, CA 94939
---------------------------------
By: /s/ DENNIS HOLLIGAN Dated: 4/30/91
------------------------------ ---------------------------------
Dennis G. Holligan
Its: Chief Financial Officer
------------------------------
By: ______________________________ Dated: __________________________
Its: ______________________________
Continued from Page 1, "Premises/Sq. Footage Schedule":
1100 Larkspur Landing Circle
Suite Rentable Sq. Ft. Useable Sq. Ft.
180 6,083 5,431
150 1,408 1,257
185 1,008 900
195 1,086 970
175 2,130 1,902
Total 11,715 Rentable 10,460 Useable
Continued from Page 3, "Rent Escalation":
ADJUSTED BASIC RENT. Each year during the term of this Lease other than
the Base Year, the Basic Rent or the prevailing Adjusted Basic Rent, as the case
may be, shall be adjusted for the ensuing twelve (12) months by the use of the
Consumer Price Index (All Urban Consumers component) for the San
Francisco-Oakland Area (1982 - 1984 - 100) published by the Bureau of Labor
Statistics of the U.S. Department of Labor. The Basic Rent will be increased by
the percentage increase, if any, between the latest index published just prior
to the commencement of the Lease Term and the comparable latest index published
just prior to January of the following year to arrive at the Adjusted Basic
Rent. Each year thereafter, the Adjusted Basic Rent will be increased by the
percentage increase, if any, between the index published just prior to January
of the subsequent year and the comparable latest index published just prior to
January of the preceding year.
In case the U.S. Department of Labor shall discontinue the computation
and publication of said Consumer Price Index or the publication thereof should
be delayed so as to prevent its use hereunder at the times required, there shall
be substituted therefor by Landlord such other index or method of ascertaining
changes in the price level as, in the opinion of Landlord, most closely
resembles the Consumer Price Index and method of arriving at the index figure by
said Bureau.
<PAGE> 83
RIDERS 1 THROUGH 9
1. Option to Extend All Initial Terms: If Tenant is not in default in the
performance of any of its obligations under any of Tenant's Leases, Tenant shall
have the right, at its option, to extend the initial terms of all Synon, Inc.'s
Leases in the Building, one time only, for five (5) years, only, following the
expiration dates of the Landlord's (the "Extended Terms"). If Tenant elects not
to extend all Leases, this option shall be deemed null and void. The Leases of
the Premises during the Extended Terms shall be upon the same terms, covenants,
and conditions as are set forth in the Leases other than the rent and the terms
of the leaseholds. If Landlord does not receive from Tenant written notice of
Tenant's exercise of this option for all Leases on or before 5:00 p.m. on
October 1, 1995, (the "Option Notice") this option shall terminate. The monthly
rent for the extended terms shall be the then current market rent for comparable
space; however, the monthly rent shall in no event be less than the highest rent
paid during the initial terms of the Leases, (the "Fair Rental Value") agreed
upon solely by and between land Tenant and their agents appointed for this
purpose. Neither Landlord nor Tenant shall have the right to have a court or any
other third party or entity establish the Fair Rental Value.
If Landlord and Tenant are unable to agree on the Fair Rental Value for the
Extended Terms within sixty (60) days after receipt by Landlord of the Option
Notice, Landlord and Tenant being obligated only to act in good faith, this
option shall terminate, and the Leases shall terminate at the end of their
initial terms.
2. First Right of Notice: During the term of this Lease, Tenant will have the
first right ("First Right") to be notified by Landlord of the availability for
lease of the following spaces: 1100 Larkspur Landing Circle, SUITES 260/290,
255/275/285/299, 165, AND 100, (the "Expansion Spaces"). Prior to the expiration
date of a Lease for any of the Expansion Spaces or upon any of the Expansion
Spaces otherwise becoming available through Landlord (excludes subleases),
Landlord will give Tenant written notice (the "Negotiation Notice"). Tenant
shall have ten (10) business days from receipt of the Negotiation Notice in
which to negotiate with Landlord the terms and conditions of the Lease of the
space referenced in the Negotiation Notice. If the parties are unable to agree
on the terms and conditions of the Lease of said space within said ten (10) day
period, Landlord may lease the space described in the Negotiation Notice to a
third party.
This First Right shall not be applicable to any extension of a Lease by an
existing Tenant nor to any new Lease between Landlord and any existing Tenant of
any of the Expansion Spaces.
This First Right shall terminate and be of no force and effect if, at the time
of the delivery to Tenant of any Negotiation Notice, Tenant is in default of the
performance of any of the covenants, conditions or agreements to be performed by
Tenant under the Lease.
Neither party to the Lease shall have the right to have a court or arbitrator or
other third party set the rent or any of the other terms of the Lease for any of
the Expansion Spaces.
This First Right is personal to Tenant and may not be assigned by Tenant
separately or as a part of this Lease.
R-1
<PAGE> 84
3. First Right to Negotiate - Suite 365: On or before January 1, 1992, Tenant
will have the first right ("First Right") to negotiate with Landlord for the
lease of the contiguous 7,513 rentable square feet, commonly known as Suite 365,
(the "Expansion Space"). On or before January 1, 1992 Tenant will give Landlord
written notice (the "Negotiation Notice"). Tenant shall have sixty (60) days
from giving the Negotiation Notice in which to negotiate with Landlord the terms
and conditions of the Lease for Suite 365 which shall commence no sooner than
July 1, 1992, unless existing Tenant in Suite 365 vacates earlier. If the
parties are unable to agree on the terms and conditions of the Lease of said
space within said sixty (60) day period, Landlord may lease the space described
in the Negotiation Notice to a third party. Failure by Tenant to give timely
notice shall render this First Right null and void.
This First Right shall be for a Lease of the Expansion Space for a five (5) year
term, only. All other terms and conditions shall be negotiable in the sixty (60)
day negotiation period.
This First Right shall be exercisable one time only, that being on or before
January 1, 1992 as stated above.
This First Right shall terminate and be of no force and effect if, at the time
of the delivery to Tenant of the Negotiation Notice, Tenant is in default of the
performance of any of the covenants, conditions or agreements to be performed by
Tenant under the Lease.
Neither party to the Lease shall have the right to have a court or arbitrator or
other third party set the rent or any of the other terms of the Lease for the
Expansion Space.
This First Right is personal to Tenant and may not be assigned by Tenant
separately or as a part of this Lease.
4. First Right to Negotiate - Suite 190: During the term of this Lease, Tenant
will have the first right ("First Right") to negotiate with Landlord for the
Lease of the contiguous 952 rentable square feet, commonly known as Suite 190,
(the "Expansion space"), currently leased by R.E. Lewis, (the "Existing
Tenant").
Should Landlord determine that there is space comparable to the Expansion Space
within Larkspur Landing Office Park, this First Right shall be exercisable under
all of the following conditions:
a) The Existing Tenant executes a lease on comparable space, subject to
Landlord and Tenant agreeing to terms on the Expansion Space.
b) Tenant agrees in writing to pay the cost of providing improvements
in the new location within Larkspur Landing Office Park comparable to
the improvements of the Existing Tenant's current space.
c) Tenant agrees in writing to pay the expenses reasonably incurred by
the Existing Tenant in the relocation to new space including without
limitation, the costs of moving, telephone relocation, and reasonable
quantities of new stationery.
Upon the above conditions being met, Landlord shall give written notice to
Tenant of the availability of the Expansion Space (the "Negotiation Notice").
Tenant shall have ten (10) business days from receipt of the Negotiation Notice
in which to negotiate with Landlord the terms and conditions of the Lease of the
space referenced in the Negotiation Notice. If the parties are unable to agree
on the terms and conditions of the Lease of said space within said ten (10) day
period, this First Right shall become null and void.
R-2
<PAGE> 85
This First Right shall terminate and be of no force and effect if, at the time
of the delivery to Tenant of the Negotiation Notice, Tenant is in default of the
performance of any of the covenants, conditions, or agreements to be performed
by Tenant under the Lease.
Neither party to the Lease shall have the right to have a court or arbitrator or
other third party set the rent or any of the other terms of the Lease for the
Expansion Space.
This First Right is personal to Tenant and may not be assigned by Tenant
separately or as a part of the Lease.
5. Signage: Upon at least 56% occupancy of the Building (44,000 Rentable Square
Feet), Tenant, at Tenant's sole cost and expense, shall be entitled to modify
the monument sign in front of Building 1100 to include Tenant's name under the
following conditions:
a) Tenant shall be responsible for preparing all plans and obtaining
any necessary approvals by the City.
b) Tenant shall submit signage modification plan to Landlord for
Landlord's prior approval.
c) Any modifications to Building sign shall continue to designate the
Building address and Leasing Office.
d) If at any time Tenant's occupancy of the Building is less than 56%
Tenant shall, at Landlord's option, restore the sign to its
original condition at Tenant's sole cost and expense.
6. Landlord and Tenant hereby acknowledge that Suites 185 and 175 are subject to
U.S. Bankruptcy Court for the District of Delaware as pertains to SystemOne
Travel Resources/Continental Airlines. Landlord shall reimburse Tenant for all
actual and incurred costs should the Bankruptcy Court exercise its control over
these spaces.
7. All definitions and terms used in this Amendment shall have the same meaning
and definition as set forth in the Lease.
8. Except as amended in this Amendment, the terms and provisions of the Lease
are hereby ratified and confirmed and shall remain in full force and effect.
Should any inconsistency arise between this Amendment, then the terms of this
Amendment shall control.
9. Early Occupancy: Landlord agrees to allow Tenant to take early possession of
Suites 195 and 185 at a rental rate of $2.15 per rentable square foot per month,
pro-rated for partial month as per Paragraph 5(a) of the Lease.
IN WITNESS WHEREOF, the parties hereto subscribe their names as of the below
date.
LINCOLN PROPERTY COMPANY N.C., INC.
/s/ BURCH L. BOONE Date 5/14/91
- -------------------------------------------- -----------
Burch Boone, Vice President
"LANDLORD"
SYNON, INC.
/s/ DENNIS HOLLIGAN Date 4/30/91
- -------------------------------------------- -----------
Dennis G. Holligan, Chief Financial Officer
"TENANT"
R-3
<PAGE> 86
EXHIBIT A
OUTLINE OF FLOOR PLAN OF PREMISES
(TO BE ATTACHED)
A-1
<PAGE> 87
EXHIBIT B
SITE PLAN
[GRAPHIC -- DEPICTION OF FLOOR PLAN OMITTED].
B-1
<PAGE> 88
EXHIBIT C
WORK LETTER AGREEMENT
This Work Letter Agreement is entered into as of the 22 day of April,
1991, by and between LINCOLN PROPERTY COMPANY N.C., INC. ("Landlord"), and
Synon, Inc. ("Tenant").
RECITALS:
A. Concurrently with the execution of this Work Letter Agreement,
Landlord and Tenant have entered into a lease (the "Lease") covering certain
premises (the "Premises") more particularly described in Exhibit A attached to
the Lease.
B. In order to induce Tenant to enter into the Lease (which is hereby
incorporated by reference to the extent that the provisions of this Work Letter
Agreement may apply thereto) and in consideration of the mutual covenants
hereinafter contained, Landlord and Tenant hereby agree as follows: Landlord to
provide a maximum Tenant Improvement contribution of $6.00 per rentable square
foot ($70,290.00).
*Continued. See Page C-2.
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IN WITNESS WHEREOF, this Work Letter Agreement is executed as of the date first
above written.
*Continued from Page C-1: Tenant will pay 50% of all construction costs over
Landlord's maximum Tenant Improvement contribution prior to commencement of
construction, and the balance upon completion of work and billing by Landlord.
Notwithstanding the above, if Tenant's contribution towards Tenant Improvements
exceeds $135,000.00, all such excess Tenant Improvements shall be paid to
Landlord prior to commencement of construction.
Please Initial:
DH/BB
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<PAGE> 90
EXHIBIT D
NOTICE OF LEASE TERM DATES
To: Date:
Re: Lease dated __________, 19___ between _______________, Tenant,
concerning Suite ____ located at _____________________________________.
Gentlemen:
In accordance with the subject Lease, we wish to advise and/or confirm
as follows:
1. That the Premises have been accepted herewith by the Tenant as
being substantially complete in accordance with the subject Lease,
and that there is no deficiency in construction.
2. That the Tenant has possession of the subject Premises and
acknowledges that under the provisions of the subject Lease, the
term of said Lease shall commence as of ________ for a term of
__________, ending on __________.
3. That in accordance with the subject Lease, rental commenced to
accrue on _____________.
4. If the commencement date of the subject Lease is other than the
first day of the month, the first billing will contain a pro rata
adjustment. Each billing thereafter, with the exception of the
final billing, shall be for the full amount of the monthly
installment as provided for in said Lease.
5. Rent is due and payable in advance on the first day of each and
every month during the terms of said Lease. Your rent checks
should be made payable to __________________________ at
AGREED AND ACCEPTED
TENANT: LANDLORD:
_______________________________
BY _______________________________
Print Name _______________________________
Its _______________________________
By _______________________________
Print Name _______________________________
Its _________________________________
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EXHIBIT E
TENANT ESTOPPEL CERTIFICATE
The undersigned, ________________________ ("Landlord"), with a mailing address
c/o _________________________________, _____________________________________,
_____________________ and ____________________ ("Tenant"), hereby certify to
__________________________, a _________________________ as follows:
1. Attached hereto is a true, correct and complete copy of that
certain lease dated ______________, 19____ between Landlord and
Tenant (the "Lease"), which demises premises which are located at
________________________________.
The Lease is now in full force and effect and has not been
amended, modified or supplemented, except as set forth in
Paragraph 4 below.
2. The term of the Lease commenced on _________________, 19____.
3. The term of the Lease shall expire on _________________, 19____.
4. The Lease has: (Initial one)
( ) not been amended, modified, supplemented, extended, renewed
or assigned.
( ) been amended, modified, supplemented, extended, renewed or
assigned by the following described agreements, copies of
which are attached hereto:
------------------------------------------
------------------------------------------
5. Tenant has accepted, is now in possession of and is now conducting
business in said Premises.
6. Tenant and Landlord acknowledge that the Lease will be assigned to
______________ and that no modification, adjustment, revision or
cancellation of the Lease or amendments thereto shall be effective
unless written consent of ________________ is obtained, and that
until further notice, payments under the Lease may continue as
heretofore.
7. The amount of fixed monthly rent is $___________. Rent shall be
increased based upon operating expense increase and as follows:
_________________
8. The amount of security deposits (if any) is $____________.
No other security deposits have been made.
9. Tenant is paying the full lease rental, which has been paid in
full as of the date hereof. no rent under the Lease has been paid
for more than thirty (30) days in advance of its due date.
10. All work required to be performed by Landlord under the Lease has
been completed and all required contributions by Landlord to
Tenant on account of Tenants improvements have been received.
11. There are no defaults on the part of the Landlord or Tenant under
the Lease.
12. Tenant has no defense as to its obligations under the Lease and
claims no set-off or counterclaim against Landlord.
13. Tenant has no right to any concessions (rental or otherwise) or
similar compensation in connection with renting the space it
occupies, except as provided in the Lease.
14. The Lease, amended as noted in Item 4 above, represents the entire
agreement between Landlord and Tenant as to this leasing.
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All provisions of the Lease and the amendments thereto (if any)
referred to above are hereby ratified.
DATED: ____________________________, 19___.
TENANT: LANDLORD:
_______________________________
By _______________________________
Print Name _______________________________
Its _______________________________
By _______________________________
Print Name _______________________________
Its _______________________________
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<PAGE> 93
EXHIBIT F
RULES AND REGULATIONS
1. No sign, placard, picture, advertisement, name or notice shall be installed
or displayed on any part of the outside or inside of the Building without
the prior written consent of Landlord. Landlord shall have the right to
remove, at Tenant's expense and without notice, any sign installed or
displayed in violation of this rule. All approved signs or lettering on
doors, windows and walls shall be printed, painted, affixed or inscribed at
the expense of Tenant by a person chose by Landlord, using materials of
Landlord's choice and in a style and format approved by Landlord.
2. Tenant must use Landlord's window coverings in all exterior and atrium
window offices. No awning shall be permitted on any part of the Premises.
Tenant shall not place anything against or near glass partitions or doors
or windows which may appear unsightly from outside the Premises.
3. Tenant shall not obstruct any sidewalks, halls passages, exits, entrances,
elevators, escalators or stairways of the Building. The halls, passages,
exits, entrances, shopping malls, elevators, escalators and stairways are
not for the general public, and Landlord shall in all cases retain the
right to control and prevent access thereto of all persons whose presence
in the judgment of Landlord would be prejudicial to the safety, character,
reputation and interests of the Building and its tenants, provided that
nothing herein contained shall be construed to prevent such access to
persons with whom any tenant normally deals in the ordinary course of its
business, unless such persons are engaged in illegal activities. No tenant
and no employee or invitee of any tenant shall go upon the roof of the
Building without Landlord's consent.
4. The directory of the Building will be provided exclusively for the display
of the name and location of tenants only, and Landlord reserves the right
to exclude any other names therefrom.
5. All cleaning and janitorial services for the Building and the Premises
shall be provided exclusively through Landlord, and except with the written
consent of Landlord, no person or persons other than those approved by
Landlord shall be employed by Tenant or permitted to enter the Building for
the purpose of cleaning the same. Tenant shall not cause any unnecessary
labor by carelessness or indifference to the good order and cleanliness of
the Premises. Landlord shall not in any way be responsible to any Tenant
for any loss of property on the Premises, however occurring, or for any
damage to any Tenant's property by the janitor or any other employee or any
other person.
6. Landlord will furnish Tenant, free of charge, with two keys to each door
lock in the Premises. Landlord may make a reasonable charge for any
additional keys. Tenant shall not make or have made additional keys, and
Tenant shall not alter any lock or install a new additional lock or bolt on
any door of its Premises. Tenant, upon the termination of its tenancy,
shall deliver to Landlord the keys of all doors which have been furnished
to Tenant, and in the event of loss of any keys so furnished, shall pay
Landlord therefor.
7. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord's instructions
in their installation.
8. Any freight elevator shall be available for use by all tenants in the
Building, subject to such reasonable scheduling as Landlord in its
discretion shall deem appropriate. No equipment, materials, furniture,
packages, supplies, merchandise or other property will be received in the
Building or carried in the elevators except between such hours and in such
elevators as may be designated by Landlord.
9. Tenant shall not place or load upon any floor of the Premises which exceeds
the load per square foot which such floor was designed to carry and which
is allowed by law. Landlord shall have the right to prescribe the weight,
size and position of all equipment, materials, furniture or other property
brought into the Building. Heavy objects, if such objects are considered
necessary by Tenant, as determined by Landlord, shall stand on such
platforms as determined by Landlord to be necessary to properly distribute
the weight. Business machines and mechanical equipment belonging to Tenant,
which cause noise or vibration that may be transmitted to the structure of
the Building or to any space therein to such a degree as to be
objectionable to Landlord or to any tenants in the Building, shall be
placed and maintained by Tenant, at Tenant's expense, on vibration
eliminators or other devices sufficient to eliminate noise or vibration.
The persons employed to move such equipment in or out of the Building must
be acceptable to Landlord. Landlord will not be responsible for loss of, or
damage to, any such equipment or other property from any cause, and all
damage done to the Building by maintaining or moving such equipment or
other property shall be repaired at the expense of Tenant.
10. Tenant shall not use or keep in the Premises any kerosene, gasoline or
inflammable or combustible fluid or material other than those limited
quantities necessary for the operation or maintenance of office equipment.
Tenant shall not use or permit to be used in the Premises any foul or
noxious gas or substance, or permit or allow the Premises to be occupied or
used in a manner offensive or objectionable to Landlord or other occupants
of the Building by reason of noise, odors or vibrations, nor shall Tenant
bring into or keep in or about the Premises any birds or animals, except
seeing-eye dogs when accompanied by their masters.
11. Tenant shall not use any method of heating or air conditioning other than
the supplied or approved by Landlord.
12. Tenant shall not waste electricity, water or air conditioning and agrees to
cooperate fully with Landlord to assure the most effective operation of the
Building's heating and air conditioning and to comply with any governmental
energy-saving rules, laws or regulations of which Tenant has actual notice,
and shall refrain from attempting to adjust controls other than room
thermostats installed for Tenant's use. Tenant shall keep corridor doors
closed, and shall close window
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coverings at the end of each business day. Heat and air conditioning shall
be provided during ordinary business hours of generally recognized business
days, but not less than the hours of 8:00 a.m. to 6:00 p.m. on Monday
Friday (excluding in any event Saturdays, Sundays and legal holidays).
13. Landlord reserves the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the Building.
14. Landlord reserves the right to exclude from the building between the hours
of 6:00 p.m. and 7:00 a.m. the following day, or such other hours as may be
established from time to time by Landlord, and on Saturdays, Sundays and
legal holidays any person unless that person is known to the person or
employee in charge of the Building and has a pass or is properly
identified. Tenant shall be responsible for all persons for whom it
requests passes and shall be liable to Landlord for all acts of such
persons. Landlord shall not be liable for damages for any error with regard
to the admission to or exclusion from the Building of any person. Landlord
reserves the right to prevent access to the Building in case of invasion,
mob, riot, public excitement or other commotion by closing the doors or by
other appropriate action.
15. Tenant shall close and lock the doors of its Premises and entirely shut off
all water faucets or other water apparatus, and, except with regard to
Tenant's computers and other equipment which require utilities on a
twenty-four hour basis, all electricity, gas or air outlets before Tenant
and its employees leave the Premises. Tenant shall be responsible for any
damage or injuries sustained by other tenants or occupants of the Building
or by Landlord for noncompliance with this rule.
16. Tenant shall not obtain for use on the Premises ice, drinking water, food
beverage, towel or other similar services or accept barbering or
bootblacking services upon the Premises, except as such hours and under
such regulations as may be fixed by Landlord.
17. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed
and no foreign substance of any kind whatsoever shall be thrown therein.
The expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the tenant who, or whose employees
or invitees, shall have caused it.
18. Tenant shall not sell, or permit the sale at retail, of newspapers,
magazines, periodicals, theater tickets or any other goods or merchandise
to the general public in or on the Premises. Tenant shall not make any
room-to-room solicitation of business from other tenants in the Building.
Tenant shall not use the Premises for any business or activity other than
that specifically provided for in Tenant's Lease.
19. Tenant shall not mark, drive nails, screw or drill into the partitions,
woodwork or plaster or in any way deface the Premises or any part thereof,
except to install normal wall hangings, and to secure files and book cases
and other furniture that could fall over. Landlord reserves the right to
direct electricians as to where and how telephone and telegraph wires are
to be introduced to the Premises. Tenant shall not cut or bore holes or
wires. Tenant shall not affix any floor covering to the floor of the
Premises in any manner except as approved by Landlord. Tenant shall repair
any damage resulting from noncompliance with this rule.
20. Tenant shall not install, maintain or operate upon the Premises any vending
machine without the written consent of Landlord.
21. Canvassing, soliciting and distribution of handbills or any other written
material, and peddling in the Building or the Site are prohibited, and each
tenant shall cooperate to prevent same.
22. Landlord reserves the right to exclude or expel from the Building any
person who, in Landlord's judgment, is intoxicated or under the influence
of liquor or drugs or who is in violation of any of the Rules and
Regulations of the Building.
23. Tenant shall store all its trash and garbage within its Premises. Tenant
shall not place in any trash box or receptacle any material which cannot be
disposed of in the ordinary and customary manner of trash and garbage
disposal. All garbage and refuse disposal shall be made in accordance with
directions issued from time to time by Landlord.
24. The Premises shall not be used for the storage of merchandise held for sale
to the general public, or for lodging or for manufacturing of any kind, nor
shall the Premises be used for any improper, immoral or objectionable
purpose. No cooking shall be done or permitted by any tenant on the
Premises, except that use by Tenant of Underwriters' Laboratory-approved
equipment for brewing coffee, tea, hot chocolate and similar beverages
shall be permitted, and the use of a microwave oven shall be permitted,
provided that such equipment and use is in accordance with all applicable
federal, state, county and city laws, codes, ordinances, rules and
regulations. If odor is objectionable by Landlord or other Tenant's of
Building, microwave use may be prohibited by Landlord.
25. Tenant shall not use in any space or in the public halls of the Building
any mailcarts or hand trucks except those equipped with rubber tires and
side guards or such other material handling equipment as Landlord may
approve. Tenant shall not bring any other vehicles of any kind into the
Building except as provided in the Parking Rules and Regulations.
26. Without the written consent of Landlord, Tenant shall not use the name of
the Building in connection with or in promoting or advertising the business
of Tenant except as Tenant's address.
27. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental
agency.
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28. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.
29. The requirements of Tenant will be attended to only upon appropriate
application to the office of the Building by an authorized individual.
Employees of Landlord shall not perform any work or do anything outside of
their regular duties unless under special instructions from Landlord, and
no employee of Landlord will admit any person (Tenant or otherwise) to any
office without specific instructions from Landlord.
30. Landlord may waive any one or more of these Rules and Regulations for the
benefit of Tenant or any other tenant, but no such waiver by Landlord shall
be construed as a waiver of such Rules and Regulations in favor of Tenant
or any other tenant, nor prevent Landlord from thereafter enforcing any
such Rules and Regulations against any or all of the tenants of the
Building.
31. These Rules and Regulations (including Parking Rules and Regulations below)
are in addition to the terms, covenants, agreements and conditions of any
lease of premises in the Building. In the event these Rules and Regulations
conflict with any provision of the Lease, the Lease shall control.
32. Landlord reserves the right to make such other and reasonable Rules and
Regulations (including Parking Rules and Regulations) as, in its judgment,
may from time to time be needed for safety and security, for care and
cleanliness of the Building and for the preservation of good order therein.
Tenant agrees to abide by all such Rules and Regulations hereinabove stated
and any additional rules and regulations which are adopted.
33. Tenant shall be responsible for the observance of all of the foregoing
rules by Tenant's employees, agents, clients, customers, invitees and
guests.
34. Each tenant and all employees and visitors of Tenant shall not use public
areas of the Building from the upper ground floor level and above,
including elevators, while wearing athletic attire, including, without
limitations, bathing suits, sweatsuits, jogging clothes, etc. Smoking is
prohibited in all enclosed Common Areas of the Building including without
limitation the main lobby, all hallways, all elevators, all elevator
lobbies, building conference rooms, and recreation rooms.
PARKING RULES AND REGULATIONS
1. Tenant and employees of Tenant (hereinafter referred to as "Tenant") shall
not park vehicles in any parking areas designated by Landlord as areas for
parking by visitors to the Building. Tenant shall not leave vehicles in the
Building parking areas overnight nor park any vehicles in the Building
parking areas other than automobiles, motorcycles, motor driven or
non-motor driven bicycles or four-wheeled trucks. Landlord may, in its sole
discretion, designate separate areas for bicycles and motorcycles.
2. Cars must be parked entirely within the stall lines painted on the floor.
3. All directional signs and arrows must be observed.
4. The speed limit shall be 5 miles per hour.
5. Parking is prohibited, unless a floor parking attendant approved by
Landlord directs otherwise:
a. In areas not striped for parking;
b. In aisles;
c. Where "No Parking" or "Handicap" signs are posted;
d. On ramps;
e. In crosshatched areas; or
f. In such other areas as may be designated by Landlord, its
agent, lessee or licensee.
6. Parking stickers or any other device or form of identification which may be
supplied by Landlord shall remain the property of Landlord. Such parking
identification device must be displayed as requested and may not be
mutilated in any manner.
7. Every Tenant is requested to park and lock his own car. All responsibility
for damage to cars to be repaired is assumed by Tenant. Tenant shall repair
or cause to be repaired at its sole cost and expense any and all damage to
the Building parking facility or any part thereof caused by Tenant or
resulting from vehicles of Tenant.
8. Loss or theft of parking identification devices from automobiles must be
reported to Landlord immediately. Any parking identification devices found
on any unauthorized car will be confiscated and the illegal holder will be
subject to prosecution. Lost or stolen devices previously reported and then
found must be reported found to the Landlord immediately.
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<PAGE> 96
9. Spaces are for the express purpose of one automobile per space unless
approved by Landlord directs otherwise. Washing, waxing, cleaning or
servicing of any vehicle by the and/or his agents is prohibited. Storage of
vehicles for periods exceeding one week is prohibited and said vehicles
shall be subject to towing.
10. The Landlord reserves the right to refuse the issuance of monthly stickers
or other parking identification devices to any Tenant or person and/or his
agents or representatives who willfully refuse to comply with the above
Rules and Regulations or any City, State or Federal ordinance, law or
agreement. Tenant shall not load or unload in areas other than those
designated by Landlord for such activities.
12. Landlord reserves the right to charge for parking on a nondiscriminatory
basis.
13. Tenant parked in prohibited areas are subject to towing at their own
expense.
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EXHIBIT H
HAZARDOUS WASTE
Tenant shall use the Premises solely for the uses set forth in the
Basic Lease Information to Paragraph 8 and shall not use the Premises for any
other purpose without obtaining the prior written consent of Landlord.
In no event will Tenant use, introduce to the Premises, generate,
manufacture, produce, store, release, discharge or dispose of, on, under or
about the Premises or transport or from the Premises any Hazardous material (as
defined below) or allow its employees, agents, contractors, invitees or any
other person or entry to do so.
Tenant warrants that it shall not make any use of the Premises which
may cause contamination of the soil, the subsoil or ground water. Tenant shall
not do, bring, or keep anything in or about the Premises that will cause a
cancellation of any insurance covering the Premises. If the rate of any
insurance carried by Landlord is increased as a result of Tenant's use, Tenant
shall pay to Landlord within thirty (30) days before the date Landlord is
obligated to pay a premium on the insurance. or within ten (10) days after
Landlord delivers to Tenant a certified statement from Landlord's insurance
carrier stating that the rate increase was caused solely by an activity of
Tenant on the premises as permitted in this Lease, whichever date is later, a
sum equal to the difference between the original premium and the increased
premium.
Tenant shall keep and maintain the Premises in compliance with, and
shall not cause or permit the Premises to be in violation of any and all
federal, state or local laws, ordinances, rules or regulations pertaining to
health, industrial hygiene or the environmental conditions on, under or about
the Premises.
Tenant shall give immediate written notice of Landlord of (i) any
action, proceeding or inquiry by any governmental authority or any third party
with respect to the presence of any Hazardous Material on the Premises or the
migration thereof from or to other property or (ii) any spill, release or
discharge of Hazardous Materials that occurs with respect to the Premises or
Tenant's operations.
Tenant shall indemnify and hold harmless Landlord, its directors,
officers, employees, agents, successors and assigns (collectively "Landlord")
from and against any and all claims arising from (i) Tenant's use of the
Premises for the conduct of its business or from any activity, work or other
things done or suffered by the Tenant in or about the Buildings, (ii) breach of
or default in performance of any obligation on Tenant's part to be performed
under the terms of this Lease, (iii) any act or negligence of Tenant, or any
officer, agent, employee, guest or invitee of Tenant. The indemnity shall
include all costs, fines, penalties, judgments, losses, attorney's fees,
expenses and liabilities incurred in or about any such claim or any action or
proceeding brought thereon including, without limitation, (a) all foreseeable
consequential damages including without limitation loss of rental income and
diminution in property value; and (b) the costs of any cleanup, detoxification
or other ameliorative work of any kind or nature required by any governmental
agency having jurisdiction thereof or Landlord. This indemnity shall survive the
expiration or termination of this Lease. In any action or proceeding brought
against Landlord by reason of any such claim, upon notice from Landlord if
Landlord does not elect to retain separate counsel, Tenant shall defend the same
at Tenant's expense by counsel reasonably satisfactory to Landlord.
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EXHIBIT G
STANDARDS FOR UTILITIES AND SERVICES
The following Standards for utilities and Services are in effect.
Landlord reserves the right to adopt nondiscriminatory modifications and
additions hereto:
As long as Tenant is not in default under any of the terms, covenants,
conditions, provisions or agreements of this Lease, Landlord shall:
(a) Provide non-attended automatic elevator facilities Monday through
Friday, except holidays from 8 a.m. to 6 p.m.
(b) On Monday through Friday, except holidays, from 8 a.m. to 6 p.m.
(and other times for a reasonable additional charge to be fixed by Landlord),
ventilate the Premises and furnish air conditioning or heating on such days and
hours, when in the judgment of Landlord it may be required for the comfortable
occupancy of the Premises. The air conditioning system achieve maximum cooling
when the window coverings are closed. Tenant agrees to cooperate fully at all
times with Landlord, and to abide by all regulations and requirements which
Landlord may prescribe for the proper function and protection of said air
conditioning system. Tenant agrees not to connect any apparatus, device conduit
or pipe to the b chilled and hot water air conditioning supply lines. Tenant
further agrees that neither Tenant nor its servants, employees, agents,
visitors, licensees or contractors shall at any time enter mechanical
installations or facilities of the Building or adjust, tamper with, touch or
otherwise in any manner affect said installation or facilities. The cost of
maintenance and service calls to adjust and regulate the air conditioning system
shall be charged to tenant if the need for maintenance work results from either
Tenant's adjustment of room thermostats or Tenant's failure to comply with it
obligations under this section, including keeping window coverings closed as
needed. Such work shall be charged at hourly rates equal to then-current
journeymen's wages for air conditioning mechanics.
(c) Landlord shall furnish to the Premises, during the usual business
hours on business days, electric current as required by the Building standard
office lighting and fractional horsepower office business machines in an amount
not to exceed .025 KWH per square foot per normal business day. Tenant agrees,
should its electrical installation or electrical consumption be in excess of the
aforesaid quantity or extend beyond normal business hours, to reimburse Landlord
monthly for the measured consumption at the average cost per kilowatt hour
charged to the Building during the period. If a separate meter is not installed
at Tenant's cost, such excess cost will be established by an estimate agreed
upon by Landlord and Tenant, and if the parties fail to agree, as established by
an independent licensed engineer. Said estimates to be reviewed and adjusted
quarterly. Tenant agrees not to use any apparatus or device in, or upon. or
about the Premises which may in any way increase the amount of such services
usually furnished or supplied to said Premises, and Tenant further agrees not to
connect any apparatus or device with wires, conduits or pipes, or other means by
which such services are supplied, for the purpose of using additional or unusual
amounts of such services without written consent of Landlord. Should Tenant use
the same to excess, the refusal on the part of Tenant to pay upon demand of
Landlord the amount established by Landlord for such excess charge shall
constitute a breach of the obligation to pay rent under this Lease and shall
entitle Landlord to the rights therein granted for such breach. At all times
Tenant's use of electric current shall never exceed the capacity of the feeders
to the Building or the risers or wiring installation.
(d) Water will be available in public areas for drinking and lavatory
purposes only, but if Tenant requires, uses or consumes water for any purposes
in addition to ordinary drinking and lavatory purposes of which fact Tenant
constitutes Landlord to be the sole judge, Landlord may install a water meter
and thereby measure Tenant's water consumption for all purposes. Tenant shall
pay Landlord for the cost of the meter and the cost of the installation thereof
and throughout the duration of Tenant's occupancy Tenant shall keep said meter
and installation equipment in good working order and repair at Tenant's own cost
and expense, in default of which Landlord may cause such meter and equipment to
be replaced or repaired and collect the cost thereof from Tenant. Tenant agrees
to pay for water consumed, as shown on said meter, as and when bills are
rendered, and on default in making such payment. Landlord may pay such charges
and collect the same from Tenant. Any such costs or expenses incurred, or
payments made by Landlord for any of the reasons or purposes hereinabove stated
shall be deemed to be additional rent payable by Tenant and collectible by
Landlord as such.
(e) Provide janitor service to the Premises, provided the same are used
exclusively as offices, and are kept reasonably in order by Tenant, and if to be
kept clean by Tenant, no one other than persons approved by Landlord shall be
permitted to enter the Premises for such purposes. If the Premises are not used
exclusively as offices, they shall be kept clean and in order by Tenant, at
Tenant's expense and to the satisfaction of Landlord, and by persons approved by
Landlord. Tenant shall pay to Landlord the cost of removal of any of Tenant's
refuse and rubbish, to the extent that the same exceeds the refuse and rubbish
usually attendant upon the use of the pr as offices.
Landlord reserves the right to stop service of the elevators, plumbing,
ventilation, air conditioning and electric systems, when necessary, by reason of
accident or emergency or for repairs, alterations or improvements, in the
judgment of Landlord desirable or necessary to be made, until said repairs,
alterations or improvements shall have been completed, and shall further have no
responsibility or liability for failure to supply elevator facilities, plumbing,
ventilating, air conditioning or electric service, when prevented from so doing
by strike or accident or by any cause beyond Landlord's reasonable control, or
by laws, rules, orders, ordinances, directions, regulations or requirements of
any federal, state, county or municipal authority or failure of gas, oil or
other suitable fuel supply or inability by exercise of reasonable diligence to
obtain gas, oil or other suitable fuel. It is expressly understood and agreed
that any covenants on Landlord's part to furnish any service pursuant to any of
the terms, covenant, conditions, provisions or agreements of this Lease or to
perform any act or thing for the benefit of Tenant, shall not be deemed breached
if Landlord is unable to furnish or perform the same by virtue of a strike or
labor trouble or any other cause whatsoever beyond Landlord's control.
G-1
<PAGE> 99
EXHIBIT D
NOTICE OF LEASE TERM DATES
To: SYNON, INC.
Date: JUNE 18, 1991
Re: Lease dated APRIL 22, 1991 between SYNON, INC., Tenant, concerning
Suite * located at 1100 LARKSPUR LANDING CIRCLE, LARKSPUR, CA 94939
*SUITES 150 - 1,408 Rentable Sq. Ft.
180 - 6,083 Rentable Sq. Ft.
-----
7,491 Total
Gentlemen:
In accordance with the subject Lease, we wish to advise and/or confirm
as follows:
1. That the Premises above have been accepted herewith by the Tenant
as being substantially complete in accordance with the subject
Lease, and that there is no deficiency in construction.
2. That the Tenant has possession of the subject Premises and
acknowledges that under the provisions of the subject Lease, the
term of said Lease shall commence as of 6/22/91 for a term of 57
MONTHS and 9 days, ending on 3/31/96.
3. That in accordance with the subject Lease, rental commenced to
accrue on 6/21/91.
4. If the commencement date of the subject Lease is other than the
first day of the month, the first billing will contain a pro rata
adjustment. Each billing thereafter, with the exception of the
final billing, shall be for the full amount of the monthly
installment as provided for in said Lease.
5. Rent is due and payable in advance on the first day of each and
every month during the term of said Lease. Your rent checks should
be made payable to LINCOLN PROPERTY COMPANY at 1100 LARKSPUR
LANDING CIRCLE, STE 155, LARKSPUR, CA 94939.
AGREED AND ACCEPTED
TENANT: LANDLORD:
SYNON, INC. LINCOLN PROPERTY COMPANY N.C., INC.
---------------------------
By /s/ DENNIS HOLLIGAN By /s/ JOHN R. MILLER
--------------------------- -------------------------------
Print Name DENNIS G. HOLLIGAN
--------------------------
Its CHIEF FINANCIAL OFFICER
--------------------------
By __________________________
Print Name __________________________
Its __________________________
D-1
<PAGE> 100
EXHIBIT D
NOTICE OF LEASE TERM DATES
To: SYNON, INC. Date: JUNE 18, 1991
Re: Lease dated APRIL 22, 1991 between SYNON, INC., Tenant, concerning
Suite * located at 1100 LARKSPUR LANDING CIRCLE, LARKSPUR, CA 94939
*SUITE 175 - 2,130 Rentable Sq. Ft.
Gentlemen:
In accordance with the subject Lease, we wish to advise and/or confirm
as follows:
1. That the Premises above have been accepted herewith by the Tenant
as being substantially complete in accordance with the subject
Lease, and that there is no deficiency in construction.
2. That the Tenant has possession of the subject Premises and
acknowledges that under the provisions of the subject Lease, the
term of said Lease shall commence as of 6/15/91 for a term of 57
1/2 MONTHS, ending on 3/31/96.
3. That in accordance with the subject Lease, rental commenced to
accrue on 6/15/91.
4. If the commencement date of the subject Lease is other than the
first day of the month, the first billing will contain a pro rata
adjustment. Each billing thereafter, with the exception of the
final billing, shall be for the full amount of the monthly
installment as provided for in said Lease.
5. Rent is due and payable in advance on the first day of each and
every month during the term of said Lease. Your rent checks should
be made payable to LINCOLN PROPERTY COMPANY at 1100 LARKSPUR
LANDING CIRCLE, STE 155, LARKSPUR, CA 94939.
AGREED AND ACCEPTED
TENANT: LANDLORD:
SYNON, INC. LINCOLN PROPERTY COMPANY N.C., INC.
---------------------------
By /s/ DENNIS HOLLIGAN By /s/ JOHN R. MILLER
--------------------------- -------------------------------
Print Name Dennis G. Holligan
--------------------------
Its CHIEF FINANCIAL OFFICER
--------------------------
By __________________________
Print Name __________________________
Its __________________________
D-1
<PAGE> 101
EXHIBIT D
NOTICE OF LEASE TERM DATES
To: SYNON, INC. Date: May 29, 1991
Re: Lease dated April 22, 1991 between SYNON, INC., Tenant, concerning
Suite * located at 1100 LARKSPUR LANDING CIRCLE, LARKSPUR, CA 94939
*SUITES 185 - 1,008 rentable square feet
195 - 1,086 rentable square feet
-----
2,094 Total
Gentlemen:
In accordance with the subject Lease, we wish to advise and/or confirm
as follows:
1. That the Premises above have been accepted herewith by the Tenant
as being substantially complete in accordance with the subject
Lease, and that there is no deficiency in construction.
2. That the Tenant has possession of the subject Premises and
acknowledges that under the provisions of the subject Lease, the
term of said Lease shall commence as of 5/17/91 for a term of 58
1/2 Months, ending on 3/31/96.
3. That in accordance with the subject Lease, rental commenced to
accrue on 5/17/91.
4. If the commencement date of the subject Lease is other than the
first day of the month, the first billing will contain a pro rata
adjustment. Each billing thereafter, with the exception of the
final billing, shall be for the full amount of the monthly
installment as provided for in said Lease.
5. Rent is due and payable in advance on the first day of each and
every month during the term of said Lease. Your rent checks should
be made payable to Lincoln Property Company at 1100 Larkspur
Landing Circle, Ste 155, Larkspur, CA 94939.
6. That rent for the period of 5/17/91 - 5/31/91 shall be at the
Early Occupancy rate of $2.15 per rentable square feet per Rider
#9 of the Lease.
AGREED AND ACCEPTED
TENANT: LANDLORD:
SYNON, INC. LINCOLN PROPERTY COMPANY N.C., INC.
---------------------------
By /s/ DENNIS HOLLIGAN By /s/ BURCH BOONE
--------------------------- -------------------------------
Print Name Dennis G. Holligan Burch Boone
-------------------------- Vice President
Its CHIEF FINANCIAL OFFICER
--------------------------
By __________________________
Print Name __________________________
Its __________________________
D-1
<PAGE> 102
LEASE AMENDMENT AGREEMENT
The Amendment Agreement, made as of this date, October 1, 1992, by and between
LINCOLN PROPERTY COMPANY N.C., INC., as Manager and Agent for Owner, hereinafter
referred to as Landlord, and SYNON INC., an Illinois corporation hereinafter
referred to as Tenant.
WITNESSETH:
WHEREAS, the Tenant leased from Landlord, by Lease dated April 22, 1991,
hereinafter referred to as the Lease, (the term "Lease" includes any amendments
or modifications thereof) 10,460 useable square feet and 11,715 rentable square
feet on the First Floor of that certain Building known as 1100 Larkspur Landing
Circle, Suites, 180, 150, 185, 195, and
175, Larkspur, California.
WHEREAS, the Tenant and Landlord now desire to amend this Lease to eliminate a
portion of the Premises.
NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained, it is mutually agreed between Landlord and Tenant as follows:
1. PREMISES: The Premises, as defined in said Lease shall be
decreased by 1,902 useable square feet, and 2,130 rentable square
feet, outlined in red on Exhibit "B" attached hereto, on the First
Floor of that certain building known as 1100 Larkspur Landing
Circle, Suite 175, Larkspur, California, effective October 31,
1992.
2. BASIC RENT: Paragraph 1 (q) of said Lease is hereby amended to
decrease the Basic Rent stipulated therein from $25,187.00 per
month to $21,144.51 per month, effective October 31, 1992.
3. ADDITIONAL RENT: Paragraph 1(s) of said Lease is hereby amended to
decrease Tenant's proportionate share of any increase in Operating
Expenses to 12.27%.
4. SECURITY DEPOSIT: Paragraph 1 (t) of said Lease is hereby amended
to decrease the Security Deposit stipulated therein from $25,
187.00 to $21,144.51 for a Security Deposit refund of $4,042.49.
5. SIGNAGE: Rider #5, "Signage", of said Lease is hereby amended to
decrease Tenant's building occupancy requirement for signage from
56% (44,000 rentable square feet) to 54.6% (42,675 rentable square
feet).
All other terms and conditions of this Lease remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto subscribe their names as of the above
date.
LINCOLN PROPERTY COMPANY N.C., INC.,
as Manager and Agent for Owner
BY: /s/ ROGER LEE OSER 11/2/92
-----------------------------------
Roger Lee Oser, V.P.
"LANDLORD"
SYNON, INC.
an Illinois corporation
BY /s/ PAUL WILDE
-----------------------------------
Paul Wilde,
Vice President of Finance
"TENANT"
<PAGE> 103
EXHIBIT B
SITE PLAN
[GRAPHIC DEPICTION OF FLOOR PLAN OMITTED]
B-1
<PAGE> 104
LEASE AMENDMENT TWO
This Lease Amendment Two, made as of this date, April 19, 1996, by and between
LINCOLN PROPERTY COMPANY N.C., INC., as Manager and Agent for Lincoln Larkspur
Office Three Associates, Ltd., hereinafter referred to as Landlord, and SYNON,
INC., an Illinois corporation, hereinafter referred to as Tenant.
WITNESSETH:
WHEREAS, the Tenant leased from Landlord, by Office Lease dated April 22, 1991,
hereinafter referred to as the Lease, (the term "Lease" includes any amendments
or modifications thereof) approximately 9,585 rentable square feet on the first
floor of that certain Building known as 1100 Larkspur Landing Circle, Suites
180, 150, 185, and 195, Larkspur, California.
WHEREAS, the Tenant and Landlord now desire to amend this Lease to provide an
extended term ("Extended Term One").
NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained, it is mutually agreed between Landlord and Tenant as follows:
A. TERM: Paragraph 1(k), "Term" of said Lease is hereby extended for
an additional term of twelve (12) months, ("Extended Term One"),
commencing April 1, 1996 and ending March 31, 1997.
B. BASIC RENT: Paragraph 1(q) "Monthly Basic Rent" of said Lease is
hereby amended to reduce Tenant's Monthly Basic Rent from
$22,998.15 to $21,566.25 effective April 1, 1996, and thereby the
"Annual Basic Rent" shall be $258,795.00.
All other terms and conditions of this Lease remain in full force and effect. If
any inconsistencies in the terms and conditions arise between the Lease and the
Lease Amendment Two, the terms and conditions of Lease Amendment Two shall
prevail.
IN WITNESS WHEREOF, the Parties hereto subscribe their names as of the above
date.
LINCOLN PROPERTY COMPANY N.C., INC.,
as Manager and Agent for
Lincoln Larkspur Office Three Associates, Ltd.
By: /s/ D. ALLEN PALMER
---------------------------------------------
D. Allen Palmer
Its: Vice President
--------------------------------------------
"LANDLORD"
SYNON, INC.
an Illinois corporation
By: /s/ DENNIS HOLLIGAN
---------------------------------------------
Its: DIRECTOR OF ADMINISTRATION
--------------------------------------------
"TENANT"
<PAGE> 105
LEASE AMENDMENT THREE
This Lease Amendment Four, made as of this date, March 28, 1997, by and
between LINCOLN - PROPERTY COMPANY N.C., INC., as Manager and Agent for Lincoln
Larkspur Office Three Associates, Ltd., hereinafter referred to as Landlord, and
SYNON, INC., an Illinois corporation hereinafter referred to as Tenant.
WITNESSETH:
WHEREAS, the Tenant leased from Landlord, by Office Lease dated April 22, 1991,
hereinafter referred to as the Lease, (the term "Lease" includes any amendments
or modifications thereof) approximately 9,585 rentable square feet on the first
floor of that certain Building known as 1100 Larkspur Landing Circle, Suites
180,150,185, and 195, Larkspur, California.
WHEREAS, the Tenant and Landlord now desire to amend this Lease to provide an
extended term ("Extended Term Two").
NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained, it is mutually agreed between Landlord and Tenant as follows:
A. TERM: Paragraph 1 (k), "Term" of said Lease is hereby extended for
an additional term of thirty-six (36) months, ("Extended Term
Two"), commencing April 1, 1997 and ending March 31, 2000.
B. ADJUSTED BASIC RENT: Paragraph 5(b), "Adjusted Basic Rent" of said
Lease is hereby amended to exclude an increase in the Adjusted
Basic Rent for the year of 1997. Therefore, the next Adjustment to
Basic Rent shall be April 1, 1998.
C. OPERATING EXPENSE ALLOWANCE: Paragraph 1 (r), "Operating Expense
Allowance" of said Lease is hereby amended to change the Operating
Expense Allowance from Tenant's proportionate share of 1991 actual
Operating Expenses to Tenant's proportionate share of 1997 actual
Operating Expenses, effective January 1, 1997.
D. TENANT IMPROVEMENT: Landlord shall contribute up to $28,755.00
(9,585 sf x $3.00) towards Tenant Improvements which shall be
mutually acceptable between Landlord and Tenant.
E. FIRST RIGHT TO NEGOTIATE - SUITE 190: Landlord and Tenant
acknowledge that Rider #4, "First Right to Negotiate - Suite 190"
of said Lease is hereby made void with the execution of this Lease
Amendment Three.
All other terms and conditions of this Lease remain in full force and effect. If
any inconsistencies in the terms and conditions arise between the Lease and the
Lease Amendment Three, the terms and conditions of Lease Amendment Three shall
prevail.
IN WITNESS WHEREOF, the Parties hereto subscribe their names as of the above
date.
LINCOLN PROPERTY COMPANY N.C., INC.,
as Manager and Agent for Lincoln Larkspur Office Three Associates, Ltd.
By: /s/ D. ALLEN PALMER
---------------------------------------------
D. Allen Palmer, Vice President
"LANDLORD"
SYNON, INC.
an Illinois corporation
By: /s/ DENNIS HOLLIGAN
---------------------------------------------
Dennis Holligan, Director of Administration
"TENANT"
<PAGE> 106
OFFICE LEASE #4
LANDLORD: LARKSPUR LANDING
TENANT: SYNON, INC.
<PAGE> 107
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Terms and Definitions ............................................ 1
2. Promises and Common Areas Leased ................................. 2
3. Term ............................................................. 3
4. Possession ....................................................... 3
5. Annual Basic Rent ................................................ 3
6. Rental Adjustment ................................................ 3
7. Security Deposit ................................................. 5
8. Use .............................................................. 5
9. Payments and Notices ............................................. 6
10. Brokers .......................................................... 6
11. Holding Over ..................................................... 6
12. Taxes on Tenant's Property ....................................... 6
13. Condition of Premises ............................................ 7
14. Alterations ...................................................... 7
15. Repairs .......................................................... 9
16. Liens ............................................................ 9
17. Entry by Landlord ................................................ 9
18. Utilities and Services ........................................... 9
19. Indemnification .................................................. 10
20. Damage to Tenant's Property ...................................... 10
21. Insurance ........................................................ 10
22. Damage or Destruction ............................................ 11
23. Eminent Domain ................................................... 12
24. Bankruptcy ....................................................... 12
25. Defaults and Remedies ............................................ 12
26. Assignment and Subletting ........................................ 13
27. Quiet Enjoyment .................................................. 14
28. Subordination .................................................... 14
29. Estoppel Certificate ............................................. 14
30. Building Planning ................................................ 15
31 Rules and Regulations ............................................ 15
Conflict of Laws ................................................. 15
Successors and Assigns ........................................... 15
34. Surrender of Premises ............................................ 15
35. Professional Fees ................................................ 15
36. Performance by Tenant ............................................ 15
37. Mortgagee and Senior Lessor Protection ........................... 16
38. Definition of Landlord ........................................... 16
39. Waiver ........................................................... 16
40. Identification of Tenant ......................................... 16
41. Parking and Transportation ....................................... 16
42. Office and Communications Services ............................... 16
43. Terms and Headings ............................................... 17
44. Examination of Lease ............................................. 17
45. Time ............................................................. 17
46. Prior Agreement; Amendments ...................................... 17
47. Separability ..................................................... 17
48. Recording ........................................................ 17
49. Limitation on Liability .......................................... 17
50. Riders ........................................................... 17
51. Signs ............................................................ 17
52. Modification for Lender .......................................... 17
53. Accord and Satisfaction .......................................... 17
54. Financial Statements ............................................. 17
55. Tenant as Corporation ............................................ 17
56. No Partnership or Joint Venture .................................. 17
EXHIBITS
A. Outline of Floor Plan of Premises ................................ A-1
B. Site Plan ........................................................ B-1
C. Work Letter Agreement ............................................ C-1
D. Sample Form of Notice of Lease Term Dates ........................ D-1
E. Sample Form of Tenant Estoppel Certificate ....................... E-1
F. Rules and Regulations ............................................ F-1
G. Standard for Utilities Services .................................. G-1
H. Hazardous Waste .................................................. H-1
</TABLE>
<PAGE> 108
STANDARD FORM OFFICE LEASE
THIS LEASE is made as of the 22nd day of September, 1992, by and between
Landlord and Tenant.
WITNESSETH:
1. Terms and Definitions. For the purposes of this Lease, the following terms
shall have the following definitions and meanings:
(a) Landlord: Lincoln Property Company N.C., Inc.
(b) Landlord's Address: Copy to:
1100 Larkspur Landing Circle, Suite 155
Larkspur. California 94939
(c) Tenant: Synon. Inc., an Illinois corporation
------------------------------------------
(d) Tenant's Address: (Prior to Commencement Date)
1100 Larkspur Landing Circle, Suite 300
--------------------------------------------------
Larkspur, CA 94939
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
Tenant's Address: (After Commencement Date)
Same as above
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
(e) Building Address: 1100 Larkspur Landing Circle, Larkspur, CA 94939
(f) Suite Number. 365
(g) Floor(s) upon which the Premises arc located: 3rd
(h) Premises; Those certain premises defined in Subparagraph 2(a) hereinbelow.
(i) Site: The parcel of real property defined in Subparagraph 2(a) below.
(j) Approximate Rentable Square Feet: 7,513
(k) Term: four Lease Years and seven Months.
(1) Building Standard Work: All the work to be done at Landlord's expense
(including the "Allowance" as described in Subparagraph 6 of the Work
Letter Agreement) in the Premises pursuant to the provisions of the Work
Letter Agreement described in Paragraph 2 below.
(m) Building Nonstandard Work: All the work done in the Premises by Landlord
pursuant to the provisions of the Work Letter Agreement other than the
Building Standard Work.
(n) Aggregate Improvements: The aggregate of the Building Standard Work and the
Building Nonstandard Work.
(o) Estimated Commencement Date: November 1, 1992
(p) Commencement Date: The earlier of the following two dates:
(i) The date upon which the Tenant takes possession of or commences
the operation of its business in the Premises, which Tenant agrees
will be accomplished as soon as reasonably possible after the
issuance of the Certificate of Occupancy or temporary Certificate
of Occupancy for the Premises; or
(ii) The date upon which the Aggregate Improvements have been
substantially completed as determined by Landlord
1
<PAGE> 109
(q) Annual Basic Rent: $193,836.00
Monthly Basic Rent: $16,153.00
(r) Operating Expenses Allowance-Tenant's percentage share of 1993 Operating
Expenses
(s) Tenant's Percentage Share: 9.62%
(t) Security Deposit: $16,153.00
(u) Permitted Use: office use
(v) Brokers: N/A
(w) Landlord's Construction Representative: N/A Telephone:
(x) Tenant's Construction Representative: N/A Telephone:
(y) Parking: See Paragraph 41.
(z) Riders: -0- through -0- inclusive, which Riders are attached to this Lease
and are incorporated herein by this reference.
(aa) Lease Year: A period of twelve (12) consecutive months, the first such
period commencing on the Commencement Date and consecutive periods
beginning on each consecutive anniversary thereof.
(bb) Exhibits: A through H inclusive, which Exhibits are attached to this Lease
and are incorporated herein by this reference.
2. PREMISES AND COMMON AREAS LEASED.
(a) Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord, the Premises contained within the suite designated in Paragraph 1,
outlined on the Floor Plan attached hereto and marked Exhibit "A" and
incorporated herein by this reference in the building and parking facilities at
the address designated in Subparagraph 1(e) above (the "Building'), located the
parcel of real property (the "Site") outlined on the Site Plan attached hereto
as Exhibit "B", and incorporated herein by this reference, and improved or to be
improved by Landlord with the Aggregate Improvements described in the Work
Letter Agreement, a copy of which is attached hereto and marked Exhibit "C" and
incorporated herein by this reference. By taking possession of the Premises
Tenant accepts the Aggregate Improvements as completed or as substantially
completed. In the latter case, Landlord shall provide Tenant with a list of
incomplete and/or corrective items, which list shall be approved and
acknowledged by Tenant within ten (10) days of receipt and which items Landlord
shall complete and/or correct promptly thereafter.
The parties hereto agree that said letting and hiring is upon and
subject to the terms, covenants and conditions herein set forth and Tenant
covenants as a material part of the consideration for this Lease to keep and
perform each and all of said terms, covenants and conditions by it to be kept
and performed and that this Lease is made upon the condition of such
performance.
(b) Tenant shall have the nonexclusive right to us in common with other
tenants in the Building and subject to the Rules and Regulations referred to in
Paragraph 31 below, the following areas ("Common Areas") appurtenant to the
Premises:
(i) The common entrances, lobbies, restrooms, elevators, stairways
and accessways, loading docks, ramps, drives and platforms and
any passageways and serviceways thereto, and the common pipes,
conduits, wires and appurtenant equipment serving the
Premises;
(ii) Parking areas(subject to the provisions of Paragraph 41
hereinbelow), loading and unloading areas, roadways,
sidewalks, walkways, parkways, driveways and landscaped areas
appurtenant to the Building.
(c) Landlord reserves the right from time to time without unreasonable
interference with Tenant's use:
(i) To install, use, maintain, repair and replace pipes, ducts,
conduits, wires and appurtenant meters and equipment for
service to other parts of the Building above the ceiling
surfaces, below the floor surfaces, within the walls and in
the central core areas, and to relocate any pipes, ducts,
conduits, wires and appurtenant meters and equipment included
in the Premises which are located in the Premises or located
elsewhere outside the Premises, and to expand the Building;
(ii) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of
driveways, entrances, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas and walkways
and, subject to Paragraph 41, parking spaces and parking
areas;
2
<PAGE> 110
(iii) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains
available;
(iv) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Building, or any
portion thereof;
(v) To do and perform such other acts and make such other changes
in, to or with respect to the Site. Common Areas and Building
as Landlord may, in the exercise of sound business judgment,
deem to be appropriate.
3. TERM. The term of this Lease shall be for the period designated in
Subparagraph 1(k) commencing on the Commencement Date, and ending on the
expiration of such period. unless the term hereby demised shall be sooner
terminated as hereinafter provided. The Commencement Date and the date upon
which the term of this Lease shall end shall be determined in accordance with
the provisions of Subparagraph 1(p) and said dates will be specified in
Landlord's Notice of Lease Term Dates ("Notice"), in the form of Exhibit "D"
which is attached hereto and is incorporated herein by this reference, and shall
be served upon Tenant as provided in Paragraph 9, after Landlord delivers or
tenders possession of the Premises to Tenant. The Notice shall be binding upon
Tenant unless Tenant objects to the Notice in writing, served upon Landlord as
provided for in Paragraph 9 hereof, within five (5) days of Tenant's receipt of
the Notice.
4. POSSESSION. Tenant agrees that in the event of the inability of
Landlord to deliver possession of the Premises to Tenant on the date above
specified for the commencement of the term of this Lease, this Lease shall not
be void or voidable, nor shall Landlord be liable to Tenant for any loss or
damage resulting therefrom.
5. ANNUAL BASIC RENT.
(a) Tenant agrees to pay Landlord as Annual Basic Rent for the Premises
the Annual Basic Rent designated in Subparagraph 1(q) (subject to adjustment as
hereinafter provided) in twelve (12) equal monthly installments ("Monthly Basic
Rent"), each in advance on the first day of each and every calendar month during
said term, except that the first month's rent shall be paid upon the execution
hereof. In the event the term of this Lease commences or ends on a day other
than the first day of a calendar month, then the rental for such periods shall
be prorated in the proportion that the number of days this Lease is in effect
during such periods bears to thirty (30), and such rental shall be paid at the
commencement of such periods. In addition to said Annual Basic Rent, Tenant
agrees to pay the amount of the rental adjustments as and when hereinafter
provided in this Lease. Said Annual Basic Rent, additional rent, and rental
adjustments shall be paid to Landlord, without any prior demand therefor and
without any deduction or offset whatsoever in lawful money of the United States
of America, which shall be legal tender at the time of payment, at the address
of Landlord designated in Subparagraph 1(b) or to such other person at such
other place as Landlord may from time to time designate in writing. Further, all
charges to be paid by Tenant under, including, without limitation, payments for
real property taxes, insurance. repairs, and parking shall be considered
additional rent for the purposes of this Lease, and the word 'rent' in this
Lease shall include such additional rent unless the context specifically or
clearly implies that only the Annual Basic Rent is referenced.
(b) RENT ESCALATION. See Page 18, "ADJUSTED BASIC RENT"
6. RENTAL ADJUSTMENT.
(a) For the purposes of this Subparagraph 6(a), the following terms are
defined as follows:
TENANT'S PERCENTAGE SHARE. Tenant's Percentage Share shall mean that
portion of the total rentable area of the Building leased by Tenant as set forth
as percentage in Subparagraph 1(s) above.
OPERATING EXPENSES ALLOWANCE. Operating Expenses Allowance shall mean
that portion of Tenant's Percentage Share of the Operating Expenses which
Landlord has included in the Annual Basic Rent and which amount is set forth in
Subparagraph 1(r) above.
3
<PAGE> 111
OPERATING EXPENSES. Operating Expenses shall consist of a1l direct
costs of operation and maintenance of the Building, the Common Areas and the
Site as determined by standard accounting practices, calculated assuming the
Building is fully occupied, including the following costs by way of
illustration, but not limitation: real property taxes and assessments and any
taxes or assessments hereafter imposed in lieu thereof; rent taxes, gross
receipt taxes (whether assessed against Landlord or assessed against Tenant and
collected by Landlord, or both); water and sewer charges; the net cost and
expense of insurance for which Landlord is responsible hereunder or which
Landlord or any first mortgagee with a lien affecting the Premises reasonably
deems necessary in connection with the operation of the Building; utilities;
janitorial services; security; labor; parking expenses, utilities surcharges, or
any other costs levied, assessed or imposed by, or at the direction of, or
resulting from statutes or regulations or interpretations thereof, promulgated
by any federal, state, regional, municipal or local government authority in
connection with the use or occupancy of the Building or the Premises or the
parking facilities serving the Building or the Premises; the cost (amortized
over such reasonable period as Landlord shall determine together with interest
at the maximum rate allowed by law on the unamortized balance) of (a) any
capital improvements made to the Building by the Landlord after the first year
of the term of the Lease that reduce other Operating Expenses, or made to the
Building by Landlord after the date of the Lease that are required under any
governmental law or regulation that was not applicable to the Building at the
time it was constructed, or (b) replacement of any building equipment needed to
operate the Building at the same quality levels as prior to the replacement;
costs incurred in the management of the Building, if any (including supplies,
wages and salaries of employees used in the management, operation and
maintenance of the Building, and payroll taxes and similar governmental charges
with respect thereto); on site Building management office rental; a management
fee; air conditioning; waste disposal; heating; ventilating; elevator
maintenance; supplies; materials; equipment; tools; repair and maintenance of
the structural portions of the Building, including the plumbing, heating,
ventilating, air conditioning and electrical systems installed or furnished by
Landlord; and maintenance, costs and upkeep of all parking and common areas,
rental of personal property used in maintenance; costs and expenses of gardening
and landscaping, maintenance of signs (other than Tenant's signs); personal
property taxes levied on or attributable to personal property used in connection
with the entire Building, including the Common Areas; reasonable audit or
verification fees; and costs and expenses of repairs, resurfacing, repairing,
maintenance, painting, lighting, cleaning, refuse removal, security and similar
items, including appropriate reserves. Operating Expenses shall not include
depreciation on the Building or equipment therein, Landlord's executive
salaries, real estate brokers' commissions, interest expense on Building
financing; amortization of cost of tenant improvements in the Building; ground
rent; income and franchise taxes; dividends; and attorney's fees and expenses
which are not related to the operation of the Building.
As used herein, the term "real property taxes" shall included any form
of assessment, license fee, license tax, business license fee, commercial rental
tax, levy, charge, penalty, tax or similar imposition, imposed by any authority
having the direct power to tax, including any city, county, state or federal
government, or any school agricultural, lighting, drainage or other improvement
or special assessment district thereof, as against any legal or equitable
interest of Landlord in the Premises, including, but not limited to, the
following:
(i) any tax on Landlord's "right" to rent or "right" to other income
from the Premises or as against Landlord's business of leasing the
Premises;
(ii) any assessment, tax, fee, levy or charge in substitution,
partially or totally, of any assessment, tax, fee, levy or charge
previously included within the definition of real estate tax, it being
acknowledged by Tenant and Landlord that Proposition 13 was adopted by
the voters of the State of California in the June, 1978 Election and
that assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street,
sidewalk and road maintenance, refuse removal and for other
governmental services formerly provided without charge to property
owners or occupants. It is the intention of Tenant and Landlord that
all such new and increased assessments, taxes, fees, levies and charges
be included within the definition of "real property taxes" for the
purposes of this Lease;
(iii) any assessment, tax, fee, levy or charge allocable to or measured
by the area of the Premises or the rent payable hereunder, including,
without limitation, any gross income tax or excise tax levied by the
State, City or Federal government, or any political subdivision
thereof, with respect to the receipt of such rent, or upon or with
respect to the possession, leasing, operating, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises, or any
portion thereof:
(iv) any assessment, tax, fee, levy or charge upon this transaction or
any document to which Tenant is a party, creating or transferring an
interest or an estate in the Premises;
(v) any assessment, tax, fee, levy or charge by any governmental agency
related to any transportation plan, fund or system instituted within
the geographic area of which the Building is a part; or
(vi) reasonable legal and other professional fees, costs and
disbursements incurred in connection with proceedings to contest,
determine or reduce real property taxes.
Notwithstanding any provision of this Subparagraph 6(a) expressed or
implied to the contrary, "real property taxes" shall not include Landlord's
federal or state income, franchise, inheritance or estate taxes.
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Preceding calendar year during the term of this Lease, Landlord shall endeavor
to deliver to Tenant a statement ("Estimate Statement") wherein Landlord shall
estimate the Operating Expenses for the current calendar year, and the amount by
which Tenant's Percentage Share of the Operating Expenses on account of the
operation or maintenance of the Building is in excess of the Operating Expenses
Allowance. If Tenant's Percentage Share of the Operating Expenses estimated in
the Estimate Statement exceeds the Operating Expenses Allowance then such excess
amount shall be divided into twelve (12) equal monthly installments and Tenant
shall pay to Landlord, concurrently with the regular monthly rent payment next
due following the receipt of such statement, an amount equal to one (1) monthly
installment multiplied by the number of months from January in the calendar year
in which said statement is submitted to the month of such payment, both months
inclusive. Subsequent installments shall be paid concurrently with the regular
monthly rent payments for the balance of the calendar year and shall continue
until the next calendar year's Estimate Statement is rendered. By the first day
of June of each succeeding calendar year during the term of this Lease, Landlord
shall endeavor to deliver to Tenant a statement ("Actual Statement") wherein
Landlord shall state the actual Operating Expenses for the preceding calendar
year. If the Actual Statement reveals a greater increase in Tenant's Percentage
Share of Operating Expenses than was estimated by Landlord in the Estimated
Statement delivered its provided herein, then upon receipt of the Actual
Statement from Landlord, Tenant shall pay a lump sum equal to said total
increase over the Operating Expenses Allowance, less the total of the monthly
installments of increases set forth on the Estimate Statement which were paid in
the previous calendar year. If, in any calendar year, Tenant's Percentage Share
of Operating Expenses is less than the preceding calendar year, then upon
receipt of Landlord's Actual Statement, any overpayment made by Tenant on the
monthly installment basis provided above shall be credited toward the next
monthly rent falling due and the monthly installment of Tenant's Percentage
Share of Operating Expenses to be paid pursuant to the then current Estimate
Statement shall be adjusted to reflect such lower expenses for the most recent
calendar year, or if this Lease has been terminated, such excess shall be
credited against any amount which Tenant owes Landlord pursuant to this Lease
and, to the extent all amounts which Tenant owes Landlord pursuant to this Lease
have been paid, Landlord shall promptly pay such excess to Tenant. Any delay or
failure by Landlord in delivering any estimate or statement pursuant to this
Paragraph shall not constitute a waiver of its right to require an increase in
rent nor shall it relieve Tenant of its obligations pursuant to this Paragraph,
except that Tenant shall not be obligated to make any payments based on estimate
or statement until ten (10) days after receipt of such estimate or statement.
(c) Even though the term has expired and Tenant has vacated the
Premises, when the final determination is made of Tenant's Percentage Share of
Operating Expenses for the year in which this Lease terminates, Tenant shall
immediately pay any increase due over the estimated expenses paid and conversely
any overpayment made in the event said expenses decrease shall be immediately
rebated by Landlord to Tenant.
(d) Notwithstanding anything contained in this Paragraph 6, the rental
payable by Tenant shall in no event be less than the rent specified in Paragraph
5 hereof.
7. SECURITY DEPOSIT. Tenant has deposited with Landlord the Security
Deposit designated in Subparagraph I (t). Said deposit shall be held by Landlord
as security for the faithful performance by Tenant of all of the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant
during the term hereof. If Tenant defaults with respect to any provision of this
Lease, including but not limited to the provisions relating to the payment of
rent, Landlord may (but shall not be required to) use, apply or retain all or
any part of this Security Deposit for the payment of any rent or any other sum
in default, or for the payment of any other amount which Landlord may spend or
become obligated to spend by reason of Tenant's default or to compensate
Landlord for any loss or damage which Landlord may suffer by reason of Tenant's
default. If any portion of said deposit is so used or applied, Tenant shall,
within ten (10) days after demand therefor, deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to its original amount and
Tenant's failure to do so shall be a material breach of this Lease. Landlord
shall not be required to keep this Security Deposit separate from its general
funds, and Tenant shall not be entitled to interest on such Security Deposit. If
0Tenant shall fully and faithfully perform every provision of this Lease to be
performed by it, the Security Deposit or any balance thereof shall be returned
to Tenant (or, at Landlord's option, to the last assignee of Tenant's interests
hereunder) at the expiration of the Lease term, provided that Landlord may
retain the Security Deposit until such time as any amount due from Tenant in
accordance with Paragraph 5 and 6 hereof has been determined and paid in full.
Should Landlord sell its interest in the Premises during the term hereof and if
Landlord deposits with the purchaser thereof the then unappropriated funds
deposited by Tenant as aforesaid, thereupon Landlord shall be discharged from
any further liability with respect to such Security Deposit.
8. USE. Tenant shall use the Premises for general office purposes and
purposes incident thereto in compliance with Exhibit H, Hazardous Waste, and
shall not use or permit the Premises to be used for any other purpose without
the prior written consent of Landlord. Tenant shall not use or occupy the
Premises in violation of any recorded covenants, conditions and restrictions
affecting the Site or of any law or of the Certificate of Occupancy issued for
the Building of which the premises are a part, and shall upon five (5) days'
written notice from Landlord, discontinue any use of the Premises which declared
by any governmental authority having jurisdiction to be a violation of any
recorded covenants, conditions and restrictions affecting the Site or of any law
or of said Certificate of Occupancy. Tenant may not offer shared tenant
services,
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such as but not limited to telecommunications, data processing or word
processing, to any unaffiliated tenant in the Building without Landlord's prior
written consent, which consent may be withheld by Landlord at its sole and
absolute discretion. Tenant shall not install any radio or television antenna,
loudspeaker or other device on the roof or exterior walls of the Building.
Tenant shall not interfere with radio or television broadcasting or reception
from or in the Building or elsewhere. Tenant shall comply with any direction of
any governmental authority having jurisdiction which shall, by reason of the
nature of Tenant's use or occupancy of the Premises, impose any duty, upon
Tenant or Landlord with respect to the Premises or with respect to the use or
occupation thereof. Tenant shall not do or permit to be done anything which will
invalidate or increase the cost of any fire, extended coverage or any other
insurance policy covering the Building and/or property located therein and shall
comply with all rules, orders, regulations and requirements of the Pacific Fire
Rating Bureau or any other organization performing a similar function. Tenant
shall promptly upon demand reimburse Landlord as additional rent for any
additional premium charged for such policy by reason of Tenant's failure to
comply with the provisions of this Paragraph 8. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way obstruct or
interfere with the rights of other tenants or occupants of the Building, or
injure or annoy them, or use or allow the Premises to be used for any improper,
immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain or
permit any nuisance in, on or about the Promises. Tenant shall not commit or
suffer to be committed any waste in or upon the Premises and shall keep the
Premises in first class repair and appearance. Tenant shall not place a load
upon the Premises exceeding the average pounds of live load per square foot of
floor area specified for the Building by Landlord's architect, with the
partitions to be considered a part of the live load. Landlord reserves the right
to prescribe the weight and position of all safes, files and heavy equipment
which Tenant desires to place in the Premises so as to distribute properly the
weight thereof. Tenant's business machines and mechanical equipment which cause
vibration or noise that may be transmitted to the Building structure or to any
other space in the Building shall be so installed, maintained and used by Tenant
as to eliminate such vibration or noise. Tenant shall be responsible for all
structural engineering required to determine structural load. Tenant shall
fasten all files, bookcases and like furnishings to walls in a manner to prevent
tipping over in the event of earth movements. Landlord shall not be responsible
for any damage or liability for such events.
9. PAYMENTS AND NOTICES. *Payments will be by check only, unless Tenant
is in default, as per Paragraph 25. All rents and other sums payable by Tenant
to Landlord hereunder shall be paid to Landlord by check, cashier's check, or
cash, at Landlord's option, at the address designated by Landlord in
Subparagraph I (b) above or at such other places as Landlord may hereafter
designate in writing. Any notice required or permitted to be given hereunder
must be in writing and may be given by personal delivery or by mail, and if
given by mail shall be deemed sufficiently given if sent by registered or
certified mail addressed to Tenant at the Building or to Landlord at both of the
addresses designated in Subparagraph 1(b). Either party may by written notice to
the other specify a different address for notice purposes except that Landlord
may in any event use Premises as Tenant's address for notice purposes. If more
than one person or entity constitutes the "Tenant" under this Lease, service of
any notice upon any one of said persons or entities shall be deemed as service
upon all of said persons or entities.
10. BROKERS. The parties recognize that the brokers who negotiated this
Lease are the brokers whose names are stated Subparagraph l(v), and agree that
Landlord shall be solely responsible for the payment of brokerage commissions to
said brokers, and that Tenant shall have no responsibility therefor. As part of
the consideration for the granting of this Lease, Tenant represents and warrants
to Landlord that to Tenant's knowledge no other broker, agent or finder
negotiated or was instrumental in negotiating or consummating this Lease and
that Tenant knows of no other real estate broker, agent or finder who is, or
might be, entitled to a commission or compensation in connection with this
Lease. Any broker, agent or finder of Tenant whom Tenant has failed to disclose
herein shall be paid by Tenant. Tenant shall hold Landlord harmless from all
damages and indemnify Landlord for all said damages paid or incurred by Landlord
resulting from any claims that may be asserted against Landlord by any broker,
agent or finder undisclosed by Tenant herein.
11. HOLDING OVER. If Tenant holds over after the expiration or earlier
termination of the term hereof without the express written consent of Landlord,
Tenant shall become a tenant at sufferance only, at a rental rate equal to two
hundred fifty (250%) of the Annual Basic Rent which would be applicable to the
Premises upon the date of such expiration (subject to adjustment as provided in
Paragraph 6 hereof and prorated on a daily basis), and otherwise subject to the
terms, covenants and conditions herein specified, so far as applicable.
Acceptance by Landlord of rent after such expiration or earlier termination
shall not constitute a holdover hereunder or result in a renewal. The foregoing
provisions of this Paragraph 11 are in addition to and do not affect Landlord's
right of re-entry or any rights of Landlord hereunder or as otherwise provided
by law. If Tenant fails to surrender the Premises upon the expiration of this
Lease despite demand to do so by Landlord, Tenant shall indemnify and hold
Landlord harmless from all loss or liability, including without limitation, any
claim made by any succeeding tenant founded on or resulting from such failure to
surrender.
12. TAXES ON TENANT'S PROPERTY.
(a) Tenant shall be liable for and shall pay at least ten (10) days
before delinquency, taxes levied against any personal property or trade fixtures
placed by Tenant in or about the Premises. If any such taxes on Tenant's
personal property or trade fixtures are levied against Landlord or Landlord's
property or if the assessed value of the Premises is increased by the inclusion
therein of a value placed upon such personal property or trade fixtures of
Tenant and if Landlord, after written notice to Tenant, pays the taxes based
upon such increased assessments, which Landlord shall have the right to do
regardless of the validity thereof, but only under proper protest if requested
by Tenant, Tenant shall upon demand repay to Landlord the taxes levied against
Landlord, or the proportion of such taxes resulting from such increase in the
assessment; provided that in any such event, at Tenant's sole cost and expense,
Tenant shall have the right, in the name of Landlord and with Landlord's full
cooperation, to bring suit in any court of competent jurisdiction to recover the
amount of any such taxes so paid under protest, amount so recovered to belong to
Tenant.
(b) If the Aggregate Improvements in the Premises, whether installed
and/or paid for by Landlord or Tenant and whether or not affixed to the real
property so as to become a part thereof, are assessed for real property tax
purposes at a
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valuation higher than the valuation at which Aggregate Improvements conforming
to Landlord's "Building Standard" in other space in the Building are assessed,
then the real property taxes and assessment levied against Landlord or the
property by on of such excess assessed valuation shall be deemed to be taxes
levied against personal property of Tenant and shall be ned by the provisions of
Subparagraph l2(a),above. If the records of the County Assessor are available
and sufficiently ted to serve as a basis for determining whether said Aggregate
Improvements are assessed at a higher valuation than Landlord's "Building
Standard", such records shall be binding on both Landlord and Tenant. If the
records of the County Assessor are not available or sufficiently detailed to
serve as a basis for making said determination, the actual cost of construction
shall be used.
13. CONDITION OF PREMISES. Tenant acknowledges that neither Landlord
nor any agent of Landlord has made any representation or warranty with respect
to the Premises or the Building or with respect to the suitability of either for
the conduct of Tenant's business. The taking possession of the Premises by
Tenant shall conclusively establish that the Premises and be Building were a
such time in satisfactory condition however, partial occupancy and rent
commencement will not interfere with Landlord's obligation to complete Tenant
Improvements. Without limiting the foregoing, Tenant's execution of the Notice
attached hereto a Exhibit "D" shall constitute a specific acknowledgment and
acceptance of the various start-up inconveniences that may be associated with
the use of the Building Common Areas such as certain construction obstacles
including scaffolding, delays in the use of freight elevator service, certain
elevators not being available to Tenant, the passage of work crews using
elevators, uneven air conditioning service, and other typical conditions
incident to recently constructed office buildings. Further, Tenant's execution
of said Notice shall constitute an acknowledgment, in light of the practical
impossibility of ensuring that every floor slab has been installed with
absolutely no deflection, that all wood floor coverings, wood paneling , and
similar interior Aggregate Improvements have been and/or will be designed to
accommodate the actual floor slab deflection unique to each particular area of
the Premises to be so improved.
14. ALTERATIONS.
(a) Tenant may, at any time and from time to time during the term of
this Lease, at its sole cost and expense, make alterations, additions,
installations, substitutions, improvements and decorations (hereinafter
collectively called "Changes") in and to the Premises, excluding structural
changes, on the following conditions, and providing such Changes will not result
in a violation of or require a change in the Certificate of Occupancy applicable
to the Premises:
(i) The outside appearance, character or use of the Building shall not
be affected, and no Changes shall weaken or impair the structural
strength or, in the opinion of Landlord, lessen the value of the
Building or create the potential for unusual expenses to be incurred
upon the removal of Changes and the restoration of the Premises upon
the termination of this Lease.
(ii) No part of the Building outside of the Premises shall be
physically affected.
(iii) The proper functioning of any of the mechanical, electrical,
sanitary and other service systems or installations of the Building
("Service Facilities") shall not be adversely affected and there shall
be no construction which might interfere with Landlord's free access to
the Service Facilities or interfere with the moving of Landlord's
equipment to or from the enclosures containing the Service Facilities.
(iv) In performing the work involved in making such Changes, Tenant
shall be bound by and observe all of the conditions and covenants
contained in this Paragraph.
(v) All work shall be done at such times and in such manner as Landlord
from time to time may designate.
(vi) Tenant shall not be permitted to install and make part of the
Premises any materials, fixtures or articles which are subject to
liens, conditional sales contracts or chattel mortgages.
(vii) At the date upon which the term of this Lease shall end, or the
date of any earlier termination of this Lease, Tenant shall on
Landlord's written request restore the Premises to their condition
prior to the making of any Changes permitted by this Paragraph,
reasonable wear and tear excepted.
(b) Before proceeding with any Change (exclusive of changes to items
constituting Tenant's Personal Property), Tenant shall submit to Landlord plans
and specifications for the work to be done, which shall require Landlord's
written approval. Landlord shall then prepare or cause to be prepared, at
Tenant's expense, mechanical, electrical and plumbing drawings and may confer
with consultants in connection with the preparation of such drawings and may
also submit to such consultant(s) any of the plans prepared by Tenant. If
Landlord or such consultant(s) shall disapprove of any of the Tenant's plans
Tenant shall be advised of the reasons of such disapproval. In any event, Tenant
agrees to pay to Landlord, as additional rent, the cost of such consultation and
review immediately upon receipt of invoices either from Landlord or such
consultant(s). Any Change for which approval has been received shall be
performed strictly in accordance with the approved plans and specifications and
no amendments or additions to such plans and specifications shall be made
without the prior written consent of Landlord.
(c) If the proposed Change requires approval by or notice to the lessor
of a superior lease or the holder of a mortgage, no Change shall be proceeded
with until such approval has been received, or such notice has been given, as
the case may be and all applicable conditions and provisions of said superior
lease or mortgage with respect to the proposed Change or ation have been met or
complied with at Tenant's expense; and Landlord, if it approves the Change, will
request such roval or give such notice, as the case may be.
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(d) After Landlord's written approval has been sent to Tenant and the
approval by or notice to the lessor of a superior lease or the holder of a
superior mortgage has been received or given, as the case may be, Tenant shall
enter into an agreement the performance of the work to be done pursuant to this
Paragraph with Landlord's contractor. In any event, Tenant agrees to pay to
Landlord, at Landlord's option, in advance of construction based upon Landlord's
cost estimates, or as additional rent the cost of such construction immediately
upon receipt from Landlord of invoices from time to time during the course of
such construction. All costs and expenses incurred in Changes shall be paid by
Tenant within seven (7) days after each billing by Landlord or any such
contractor or contractors. If Landlord approves the construction of specific
interior improvements in the Premises by contractors or mechanics selected by
Tenant and approved by Landlord, then Tenant's contractors shall obtain on
behalf of Tenant and at Tenant's sole cost and expense, (i) all necessary
governmental permits and certificates for the commencement and prosecution of
Tenant's Changes and for final approval thereof upon completion, and (ii) a
completion and lien indemnity bond, or other surety, satisfactory to Landlord,
for the Changes. In the event Tenant shall request any changes in the work to be
performed after the submission of the plans referred to in this Paragraph 14,
such additional changes shall be subject to the same approvals and notices as
the changes initially submitted by Tenant.
(e) Tenant shall pay to Landlord for Landlord's services in the event
Landlord performs as a general contractor in connection with the work performed
pursuant to this Paragraph 14, a fee equal to 7% of the total cost of the
changes, and Landlord's reasonable overhead related thereto.
(f) All Changes and the performance thereof shall at all times comply
with (i) all laws, rules, orders, ordinances, directions, regulations and
requirements of all governmental authorities, agencies, offices, departments,
bureaus and boards having jurisdiction thereof, (ii) all rules, orders,
directions, regulations and requirements of the Pacific Fire Rating Bureau, or
of any similar insurance body or bodies, and (iii) all rules and regulations of
Landlord, and Tenant shall cause Changes to be performed in compliance therewith
and in good and first class workmanlike manner, using materials and equipment at
least equal in quality and class to the original installations of the Building.
Changes shall be performed in such manner as not to interfere with the occupancy
of any other tenant in the Building nor delay or impose any additional expense
upon Landlord in construction, maintenance or operation of the Building, and
shall be performed by Contractors or mechanics approved by Landlord and
submitted to Tenant pursuant to this Paragraph, who shall coordinate their work
in cooperation with any other work being performed with respect to the Building.
Throughout the performance of Changes, Tenant, at its expense, shall carry, or
cause to be carried, workmen's compensation insurance in statutory limits, and
general liability insurance for any occurrence in or about the Building, of
which Landlord and its managing agent shall be named as parties insured, in such
limits as Landlord may reasonably prescribe, with insurers reasonably
satisfactory to Landlord all in compliance with Subparagraph 21(b).
(g) Tenant further covenants and agrees that any mechanic's lien filed
against the Premises or against the Building for work claimed to have been done
for, or materials claimed to have been furnished to Tenant, will be discharged
by Tenant, bond or otherwise, within ten (10) days after the filing thereof, at
the cost and expense of Tenant. All alterations, decorations, additions or
improvements upon the Premises, made by either party, including (without
limiting the generality of the foregoing) all wallcovering, built-in cabinet
work, panelling and the like, shall, unless Landlord elects otherwise, become
the property of Landlord, and shall remain upon, and be surrendered with the
Premises, as a part thereof, at the end of the term hereof, except that Landlord
may by written notice to Tenant, given at least thirty (30) days prior to the
end of the term, require Tenant to remove all partitions, counters, railings and
the like installed by Tenant, and Tenant shall repair any damage to the Premises
arising from such removal or, at Landlord's option, shall pay to the Landlord
all of Landlord's costs of such removal and repair.
(h) All articles of personal property and all business and trade
fixtures, machinery and equipment, furniture and movable partitions owned by
Tenant or installed by Tenant at its expense in the Premises shall be and remain
the property of Tenant and may be removed by Tenant at any time during the lease
term provided Tenant is not in default hereunder, and provided further that
Tenant shall repair any damage caused by such removal. If Tenant shall fail to
remove all of its effects from said Premises upon termination of this Lease for
any cause whatsoever, Landlord may, at its option, remove the same in any manner
that Landlord shall choose, and store said effects without liability to Tenant
for loss thereof, and Tenant agrees to pay Landlord upon demand any and all
expenses incurred in such removal, including court costs and attorneys' fees and
storage charges on such effects for any length of time that the same shall be in
Landlord's possession or Landlord may, at its option, without notice, sell said
effects, or any of the same, at private sale and without legal process, for such
price as Landlord may obtain and apply the proceeds of such sale upon any
amounts due under this Lease from Tenant to Landlord and upon the expense
incident to the removal and sale of said effects.
(i) Subject to Landlord's agreement to minimize any disturbance of
Tenant's use of the Premises, Landlord reserves the right at any time and from
time to time without the same constituting an actual or constructive eviction
and without incurring any liability to Tenant therefor or otherwise affecting
Tenant's obligations under this Lease, to make such changes, alterations,
additions, improvements, repairs or replacements in or to the Site or the
Building (including the Premises required so to do by any law or regulation) and
the fixtures and equipment thereof, as wall as in or to the street entrances,
halls, passages and stairways thereof, to change the name by which the Building
is commonly known except as controlled by the signage provision, Rider #5,
between Landlord and Tenant in that Lease dated April 22, 1991, as Landlord may
deem necessary or desirable. Nothing contained in this Paragraph 14 shall be
deemed to relieve Tenant of any duty, obligation or liability of Tenant with
respect to making any repair, replacement or improvement or complying with any
law, order or requirement of any government or other authority and nothing
contained in this Paragraph 14, shall be deemed or construed to impose upon
Landlord any obligation, responsibility or liability whatsoever, for the care,
supervision of repair of the Building or any part thereof other than as
otherwise provided in this Lease.
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15. REPAIRS.
(a) By entry hereunder, Tenant accepts the Premises as being in good
and sanitary order, condition and repair however, partial occupancy and rent
commencement will not interfere with Landlord's obligation to complete Tenant
Improvements. Tenant shall, when and if needed or whenever requested by Landlord
to do so, at Tenant's sole cost and expense, maintain and make repairs to the
Premises and every part thereof, to keep, maintain and preserve the Premises in
first class conditions, excepting ordinary wear and tear. Any such maintenance
and repairs shall be performed by Landlord's contractor, or a Landlord's
approved contractor or contractors. All costs and expenses incurred in such
maintenance and repair shall be paid by Tenant within seven (7) days after
billing by Landlord or such contractor or contractors. Tenant shall upon the
expiration or sooner termination of the term hereof surrender the Premises to
Landlord in the same condition as when received, reasonable wear and tear
excepted. Landlord shall have no obligation to alter, remodel, improve, repair,
decorate or paint the Premises or any part thereof and the parties hereto affirm
that Landlord has made no representations to Tenant respecting the condition of
the Premises or the Building except as specifically herein set forth.
(b) Anything contained in Subparagraph 15(a) above to the contrary
notwithstanding, Landlord shall repair and maintain the structural portions of
the Building, including the basic plumbing, heating, ventilating, air
conditioning and electrical systems installed or furnished by Landlord, unless
such maintenance and repairs are caused in part or in whole by the act, neglect,
fault of or omission of any duty by Tenant, its agents, servants, employees or
invitees, in which case Tenant shall pay to Landlord as additional rent, the
reasonable cost of such maintenance and repairs. Landlord shall not be liable
for any failure to make any such repairs, or to perform any maintenance unless
such failure shall persist for an unreasonable time after written notice of the
need of such repairs or maintenance is given to Landlord by Tenant. Except as
provided in Paragraph 22 hereof there shall be no abatement of rent and no
liability of Landlord by reason of any injury to or interference with Tenant's
business arising from the making of any repairs, alterations or improvements in
or to any portion of the Building or the Premises or in or to fixtures,
appurtenances and equipment therein. Tenant waives the right to make repairs at
Landlord's expense under any law, statute or ordinance now or hereafter in
effect. Notwithstanding anything to the contrary contained in Subparagraphs (a)
and (b) of this Paragraph 15, Tenant shall maintain and repair at its sole cost
and expense, and with maintenance contractors approved by Landlord, all non-base
building facilities, including lavatory, shower, toilet, washbasin and kitchen
facilities and heating and air conditioning systems, including all plumbing
connected to said facilities or systems installed by Tenant or on behalf of
Tenant or existing in the Premises at the time of delivery of possession of the
Premises to Tenant by Landlord. The provisions of the immediately preceding
sentence shall not apply to the basic heating and air conditioning system
provided by Landlord to all tenants of the Building.
16. LIENS. Tenant shall not permit any mechanic's, materialmen's or
other liens to be filed against the real property of which the Premises form a
part nor against the Tenant's leasehold interest in the Premises. Landlord shall
have the right at all reasonable times to post and keep posted on the Premises
any notices which it deems necessary for protection from such liens. If any such
liens are filed, Landlord may, without waiving its rights and remedies based on
such breach of Tenant and without releasing Tenant from any of its obligations,
cause such liens to be released by any means it shall deem proper, uding payment
in satisfaction of the claim giving rise to such lien. Tenant shall pay to
Landlord at once, upon notice by Landlord, any sum paid by Landlord to remove
such liens, together with interest at the maximum rate per annum permitted by
law from the date of such payment by Landlord.
17. ENTRY BY LANDLORD. Subject to Landlord's agreement to minimize any
disturbance of Tenant's use of the Premises by exercise of the following rights,
Landlord reserves and shall at any and all times have the right to enter the
Premises to inspect the same, to supply janitor service and any other service to
be provided by Landlord to Tenant herunder, to submit said Premises to
prospective purchasers or, during the last six months of the term of this Lease,
to prospective tenants, to post notices of nonresponsibility, to after, improve
or repair the Premises or any other portion of the Building, all without being
deemed guilty of any eviction of Tenant and without abatement of rent, and may,
in order to carry out such purposes, erect scaffolding and other necessary
structures where reasonably required by the character of the work to be
performed, provided that the business of Tenant shall be interfered with as
little as is reasonably practicable. Tenant hereby waives any claim for damages
for any injury or inconvenience to or interference with Tenant's business, any
loss of occupancy or quiet enjoyment of the Premises and any other loss
occasioned thereby. For each of the aforesaid purposes, Landlord shall at all
times have and retain a key with which to unlock all of the doors in, upon and
about the Premises, excluding Tenant's vaults and safes, and Landlord shall have
the means which Landlord may deem proper to open said doors in an emergency in
order to obtain entry to the Premises, and any entry to the Premises obtained by
Landlord by any of said means, or otherwise, shall not under any circumstances
be construed or deemed to be a forcible or unlawful entry into, or a detainer
of, the Premises, or an eviction of Tenant from the Premises or any portion
thereof, and any damages caused on account thereof shall be paid by Tenant. It
is understood and agreed that no provision of this Lease shall be construed as
obligating Landlord to perform any repairs, alterations or decorations except as
otherwise expressly agreed herein to be performed by Landlord. Landlord shall
attempt in the exercise of its rights under this Paragraph 17 to minimize any
disturbance of Tenant's use and possession of the Premises and to provide as
much notice to Tenant as may be reasonably possible prior to any such exercise
of Landlord's rights under this Paragraph 17.
18. UTILITIES AND SERVICES. Provided that Tenant is not in default
hereunder, Landlord agrees, during the Lease term, to furnish to the Premises as
part of the Operating Expenses during those hours set forth in the Rules and
Regulations as defined in Paragraph 31 hereof, as may be amended in writing by
Landlord from time to time during the term of this Lease and delivered to
Tenant, reasonable quantities of electric current for normal lighting and
fractional horsepower office machines, water for lavatory and drinking purposes,
heat and air conditioning required in Landlord's judgment for the comfortable
use and occupation of the Premises, janitorial service (including washing of
windows with reasonable frequency as determined by landlord) and elevator
service by non-attended automatic elevators. Landlord shall not be liable for,
and Tenant shall not be led to any abatement or reduction of rent by reason of
Landlord's failure to furnish any of the foregoing when such failure is caused
by accident, breakage, repairs, strikes, lockouts or other labor disturbances or
labor disputes of any character, or for any other causes. If Tenant requires or
utilizes more water or electric power than is considered reasonable or normal by
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Landlord, Landlord may at its option require Tenant to pay, as additional rent,
the cost, as fairly determined by Landlord, incurred by such extraordinary
usage. In addition, Landlord may install separate meter(s) for the Premises, at
Tenant's sole expense, and Tenant thereafter shall pay all charges of the
utility providing service. Tenant specifically undertakes to install maintain at
Tenant's cost such fire protection equipment including, without limitation,
emergency lighting as required by governmental authority or insurer, and if so
required, Tenant shall appoint one of Tenant's personnel to coordinate with the
fire protection facilities and personnel of Landlord. Any incandescent light
bulbs used in the Premises shall be paid for the Tenant. Upon Tenant's request,
Landlord's personnel shall install incandescent light bulbs or other Building
Nonstandard bulbs in the Premises. Tenant agrees to pay Landlord upon demand
Landlord's cost for all such incandescent light bulbs installed or other
Building Nonstandard improvements including but not limited to metallic trim,
wood floor covering, glass panels, windows, partitions, kitchens and executive
washrooms in the Premises. Landlord shall not be responsible in any manner for
said maintenance, cleaning and repair.
19. INDEMNIFICATION. To the fullest extent permitted by law Tenant
hereby agrees to defend, indemnity and hold Landlord harmless against and from
any and all claims arising from Tenant's use of the Premises or the conduct of
its business or from any activity, work, or thing done, permitted or suffered by
Tenant, its agents, contractors, employees or invitees in or about the Premises
or elsewhere, and hereby agrees to further indemnify and hold harmless Landlord
against and from any and all claims arising from any breach or default in the
performance of any obligation on Tenant's part to be performed under the terms
of this Lease or arising from any act, neglect, fault or omission of Tenant, or
of its agents, employees or invitees, and from and against all costs, attorneys'
fees, expenses and liabilities incurred in or about such claim or any action or
proceeding brought thereon. In case any action or proceeding is brought against
Landlord by reason of any such claim, Tenant upon notice from Landlord hereby
agrees to defend the same at Tenant's expense by counsel approved in writing by
Landlord. Tenant, as a material part of the consideration to Landlord, hereby
assumes all risk of damage to property or injury to persons in, upon or about
the Premises from any cause whatsoever except that which is caused by the
failure of Landlord to observe any of the terms and conditions of this Lease and
such failure has persisted for an unreasonable period of time after written
notice of such failure, and Tenant hereby waives all its claims in respect
thereof against Landlord.
20. DAMAGE TO TENANT'S PROPERTY. Notwithstanding the provisions of
Paragraph 19 to the contrary, Landlord or its agents shall not be liable for any
damage to property entrusted to employees of the Building, nor for loss of or
damage to any property by theft or otherwise, nor for any injury or damage to
persons or property resulting from fire, explosion, failing plaster, steams,
gas, electricity, water or rain which may leak from any part of the Building or
from the pipes, appliances or plumbing works therein or from the roof, street or
sub-surface or from any other place or resulting from dampness or any other
patent or latent cause whatsoever. Landlord or its agents shall not be liable
for interference with the light or other incorporeal hereditaments. Tenant shall
give prompt notice to Landlord in case of fire or accidents in the Premises or
in the Building or of defects therein or in the fixtures or equipment located
therein.
21. INSURANCE.
(a) During the term hereof, Tenant, at its sole expense, shall obtain
and keep in force the following insurance:
(i) All Risk insurance upon property owned by Tenant and located in the
Building or for which Tenant is legally liable, Aggregate Improvements
(other than "Building Standard Work" as described in Subparagraph l(l)
hereof), and alterations, in an amount not less than ninety percent
(90%) of the full replacement cost thereof. All such insurance policies
shall name Tenant and Landlord as named insured thereunder and, at
Landlord's request shall same Landlord's mortgagees (and, if
applicable, ground or primary lessors) as loss payees thereunder, all
as their respective interests may appear. Landlord will not be required
to carry insurance of any kind on any "Building Non-Standard Work", as
described in Subparagraph I (m) hereof, on Tenant's furniture or
furnishings, or on any of Tenant's fixtures, equipment, improvements,
or appurtenances under this Lease, and Landlord shall not be obligated
to repair any damage thereto or replace the same.
(ii) Comprehensive general liability insurance coverage, including
personal injury, bodily injury, broad form property damage, operations
hazard, owner's protective coverage, contractual liability, and
products and completed operations liability, in limits not less than
$2,000,000.00 inclusive. All such insurance policies shall name Tenant
as named insured thereunder and shall name Landlord and Landlord's
mortgagees (and, if applicable, ground or primary lessors) as
additional insured thereunder, all as their respective interests may
appear.
(iii) Worker's Compensation and Employer's Liability insurance, with a
waiver of subrogation endorsement in form and amount satisfactory to
Landlord.
(iv) [DELETED]
(v) Liquor liability insurance coverage in limits of not less than Five
Hundred Thousand Dollars ($500,000) if at any time during the term or
on any occurrence hereof any alcoholic beverages of any nature are
served on the Premises.
(vi) Any other form or forms of insurance as Tenant, Landlord, or
Landlord's mortgagees or ground or primary lessors may reasonably
require from time to time in form, in amounts, and for insurance risks
against which a prudent tenant of a comparable size and in a comparable
business would protect itself.
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(b) All policies shall be issued by insurers that are acceptable to
Landlord and in form satisfactory from time to time to Landlord. Tenant will
deliver certificates of insurance to Landlord as soon as practicable after the
placing of the required insurance, but not later than ten (10) days prior to the
date Tenant takes posession of all or any part of the Premises. All policies
shall contain an undertaking by the insurers to notify Landlord and Landlord's
mortgagees (and, if applicable, ground or primary lessors) in writing, not less
than thirty (30) days before any material change, reduction in coverage,
cancellation or other termination thereof. Ten (10) days prior to the expiration
of any insurance policy, Tenant will provide Landlord with a Certificate of
Insurance extending the term of the original policy or a certified copy of a new
policy extending the required coverage.
(c) During the Term, Landlord shall insure the Building and the
Building Standard Work (excluding any property which Tenant is obligated to
insure under Subparagraph 21(a) hereof) against damage with All Risk insurance
and public liability insurance, all in such amounts and with such deductions as
Landlord considers appropriate, Landlord may, but shall not be obligated to,
obtain and carry any other form or forms of insurance as it or Landlord's
mortgagees may determine advisable. Notwithstanding any contribution by Tenant
to the cost of insurance premiums, as provided herein, Tenant acknowledges that
it has no right to receive any proceeds from any insurance policies carried by
Landlord.
(d) Tenant will not keep, use, sell, or offer for sale in, or upon, the
Premises any article which may be prohibited by any insurance policy
periodically in force covering the Building and the Building Standard Work.
Tenant shall promptly comply with all reasonable requirements of the insurance
authority or any present or future insurer relating to the Premises.
(e) If any of Landlord's insurance policies shall be cancelled or
cancellation shall be threatened or the coverage thereunder reduced or
threatened to be reduced in any way because of the use of the Premises or any
part thereof by Tenant or any assignee or subtenant of Tenant or by anyone
Tenant permits on the Premises and, if Tenant fails to remedy the condition
giving rise to such cancellation, threatened cancellation, reduction of
coverage, threatened reduction of coverage, increase in premiums, or threatened
increase in premiums, within 48 hours after notice thereof, Landlord may, at its
option, either terminate this Lease or enter upon the Premises and attempt to
remedy such condition, and Tenant shall promptly pay the cost thereof to
Landlord as additional rent. Landlord shall not be liable for any damage or
injury caused to any property or of others located on the Premises resulting
from such entry. If Landlord is unable, or elects not, to remedy such condition,
then Landlord shall have all of the remedies provided for in this Lease in the
event of a default by Tenant. Notwithstanding the foregoing provisions of this
Subparagraph 21(e), if Tenant fails to remedy as aforesaid, Tenant shall be in
default of its obligation hereunder and Landlord shall have no obligation to
remedy such default.
(f) All policies covering real or personal property which either party
obtains affecting the Premises shall include a clause or endorsement denying the
insurer any rights of subrogation against the other party to the extent rights
have been waived by the insured before the occurrence of injury or loss, if same
are obtainable without unreasonable cost. Landlord and Tenant waive any rights
of recovery against the other for injury or loss due to hazards covered by
policies of insurance containing such a waiver of subrogation clause or
endorsement, to the extent of the injury or loss covered thereby.
22. DAMAGE OR DESTRUCTION.
(a) In the event the Building and/or the Building Standard Work or any
insured alterations are damaged by fire or other perils covered by Landlord's
extended coverage insurance to an extent not exceeding twenty-five percent (25
%) of the full insurable value thereof and if the damage thereto is such that
the Building and/or the Building Standard Work and any insured alterations may
be repaired, reconstructed or restored within a period of ninety (90) days from
the date of the happening of such casualty and Landlord will receive insurance
proceeds sufficient to cover the cost of such repairs, Landlord shall commence
and proceed diligently with the work of repair, reconstruction and restoration
and the Lease shall continue in full force and effect. If such work or repair,
reconstruction and restoration is such as to require a period longer than ninety
(90) days or exceeds twenty-five percent (25%) of the full insurable value
thereof, or if said insurance proceeds will not be sufficient to cover the cost
of such repairs, Landlord either may elect to so repair, reconstruct or restore
the Building and/or Building Standard Work and any insured alterations and the
Lease shall continue in full force and effect or Landlord may elect not to
repair, reconstruct or restore the Building and/or Building Standard Work and
any insured alterations and the Lease shall in such event terminate. Under any
of the conditions of this Subparagraph 22(a), Landlord shall give written notice
to Tenant of its intention within thirty (30) days from the date of such event
of damage or destruction. In the event Landlord elects not to restore said
Building and/or Building Standard Work and any insured alterations, this Lease
shall be deemed to have terminated as of the date of such partial destruction.
(b) Upon any termination of this Lease under any of the provisions of
this Paragraph 22, the parties shall be released thereby without further
obligation to the other from the date possession of the Premises is surrendered
to Landlord except for which have therefore accrued and are then unpaid.
(c) In the event of repair, reconstruction and restoration by Landlord
as herein provided, the rent provided to be paid under this Lease shall be
abated proportionately with the degree to which Tenant's use of the Premises is
impaired during the
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period of such repair, reconstruction or restoration. Tenant shall not be
entitled to any compensation or damages for loss in the use of the whole or any
part of the Premises and/or any inconvenience, annoyance or loss of business
occasioned by such damage, repair, reconstruction or restoration.
(d) Tenant shall not be released from any of its obligations under this
Lease except to the extent and upon the conditions expressly stated in this
Paragraph 22. Notwithstanding anything to the contrary contained in this
Paragraph 22, should Landlord be delayed or prevented from repairing or
restoring the damaged Premises within one (1) year after the occurrence of such
damage or destruction by reason of acts of God, war, governmental restrictions,
inability to procure the necessary labor or materials, or other cause beyond me
control of Landlord, Landlord shall be relieved of its obligation to make such
repairs or restoration and Tenant shall be released from its obligations under
this Lease as of the end of said year.
(e) In the event that damage is due to any cause other than fire or
other peril covered by extended coverage insurance, Landlord may elect to
terminate this Lease.
(f) It is hereby understood that if Landlord is obligated to or elects
to repair or restore as herein provided, Landlord shall be obligated to make
repairs or restoration only of those portions of the Building and the Premises
which were originally provided at Landlord's expense or which were insured by
either party and the proceeds of such insurance have been received by Landlord,
and the repair and restoration of items not provided at Landlord's expense shall
be the obligation of Tenant.
(g) Notwithstanding anything to the contrary contained in this
Paragraph 22, Landlord shall not have any obligations whatsoever to repair,
reconstruct or restore the Premises when the damage resulting from any casualty
covered under this Paragraph 22 occurs during the last twelve (12) months of the
term of this Lease or any extension hereof.
(h) The provisions of California Civil Code 1932, Subsection 2, and
1933, Subsection 4, are hereby waived by Tenant.
23. EMINENT DOMAIN.
(a) In case the whole of the Premises, or such part thereof as shall
substantially interfere with Tenant's use and occupancy thereof, shall be taken
for any public or quasi-public purpose by any lawful power or authority by
exercise of the right of appropriation, condemnation or eminent domain, or sold
to prevent such taking, either party shall have the right to terminate this
Lease effective as of the date possession is required to be surrendered to said
authority. Tenant shall not assert any claim against Landlord or the taking
authority for any compensation because of such taking, and Landlord shall be
entitled to receive the entire amount of any award without deduction for any
estate or interest of Tenant. In the event the amount of property or the type of
estate taken shall not substantially interfere with the conduct of Tenant's
business, Landlord shall be entitled to the entire amount of the award without
deduction for any estate or interest of Tenant, and landlord at his option
terminate this Lease. If Landlord does not so elect, Landlord shall promptly
proceed to restore the Premises to unreadable their same condition prior to such
partial taking, and a proportionate allowance shall be made to Tenant for the
rent corresponding to the time during which, and to the part of the Premises of
which, Tenant shall be so deprived on account of such taking and restoration.
Nothing contained in this Paragraph shall be deemed to give Landlord any
interest in any award separately made to Tenant for the taking of personal
property and trade fixtures belonging to Tenant or for moving costs incurred by
Tenant in relocating Tenant's business.
(b) In the event of taking of the Premises or any part thereof for
temporary use, (i) this Lease shall be and remain unaffected thereby and rent
shall not abate, and (ii) Tenant shall be entitled to receive for itself such
portion or portions of any award made for such use with respect to the period of
the taking which is within the term, provided that if such taking shall remain
in force at the expiration or earlier termination of this Lease, Tenant shall
then pay to Landlord a sum equal to the reasonable cost of performing Tenant's
obligations under Paragraph 15 with respect to surrender of the Premises and
upon such payment shall be excused from such obligations. For purpose of this
Subparagraph 23(b), a temporary taking shall be defined as a taking for a period
of 270 days or less.
24. BANKRUPTCY. If Tenant shall file a petition in bankruptcy under any
Chapter of federal bankruptcy law as then in effect, or if Tenant be adjudicated
a bankrupt in involuntary bankruptcy proceedings and such adjudication shall not
have been vacated within thirty (30) days from the date thereof, or if a
receiver or trustee be appointed of Tenant's property and the order appointing
such receiver or trustee not be set aside or vacated within thirty (30) days
after the entry thereof, or if Tenant shall assign Tenant's estate or effects
for the benefit of creditors, or if this Lease shall otherwise by operation of
law pass to any person or persons other than Tenant, then and in any such event
Landlord may, if Landlord so elects, with or without notice of such election and
with or without entry or action by Landlord, forthwith terminate this Lease.
Notwithstanding any other provisions of this Lease, Landlord, in addition to any
and all rights and remedies allowed by law or equity, shall upon such
termination be entitled to recover damages in the amount provided in
Subparagraph 25(b) below and neither Tenant nor any person claiming through or
under Tenant or by virtue of any statute or order of any court shall be entitled
to possession of the Premises but shall forthwith quit and surrender the
Premises to Landlord. Nothing herein contained shall limit or prejudice the
right of Landlord to prove and obtain as damages by reason of any such
termination an amount equal to the maximum allowed by any statute or rule of law
in effect at the time when, and governing the proceedings in which, such damages
are to be proved, whether or not such amount be greater, equal to, or less than
the amount of damages recoverable under the provisions of this Paragraph 24.
25. DEFAULTS AND REMEDIES.
(a) The occurrence of any one or more of the following events shall
constitute a default hereunder by Tenant:
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(i) The vacation or abandonment of the Premises by Tenant. Abandonment
is herein defined to included, But is not limited, to, any absence by
Tenant from the Premises for five (5) days or longer while in default
of any provision of this Lease.
(ii) The failure by Tenant to make any payment of rent or additional
rent or any other payment required to be made by Tenant hereunder, as
and when due.
(iii) The failure by Tenant to observe or perform any of the express or
implied covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in Subparagraph 25(a)(i)
or (ii) above, where such failure shall continue for a period of ten
(10) days after written notice thereof from Landlord to Tenant;
provided, however, that any such notice shall be in lieu of, and not in
addition to, any notice required under California Code of Civil
Procedure 1161; provided, further, that if the nature of Tenant's
default is such that more than ten (10) days are reasonably required
for its cure, then Tenant shall not be deemed to be in default if
Tenant shall commence such cure within said ten-day period and
thereafter diligently prosecute such cure to completion, which
completion shall occur not later than sixty (60) days from the date of
such notice from Landlord.
(iv) (1) The making by Tenant of any general assignment for the benefit
of creditors; (2) the filing by or against Tenant of a petition to have
Tenant adjudged a bankrupt or a petition for reorganization or
arrangement under any law relating to bankruptcy (unless, in the case
of a petition filed against Tenant, the same is dismissed within thirty
(30) days); (3) the appointment of a trustee or receiver to take
possession of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where possession is not
restored to Tenant within thirty (30) days; or (4) the attachment,
execution or other judicial seizure of substantially all of Tenant's
assets located at the Premises or of Tenant's interest in this Lease
where such seizure is not discharged within thirty (30) days.
(b) In the event of any such default by Tenant, in addition to any
other remedies available to Landlord at law or in equity, Landlord shall have
the immediate option to terminate this Lease and all rights of Tenant hereunder.
In the event that Landlord shall elect to so terminate this lease then Landlord
may recover from Tenant:
(i) the worth at the time of award of any unpaid rent which had been
earned at the time of such termination; plus
(ii) the worth at the time of award of the amount by which the unpaid
rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; plus
(iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably
avoided; plus
(iv) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform his
obligations under this Lease or which in the ordinary course of things
would be likely to result therefrom.
As used in Subparagraphs 25(b)(i) and (ii) above, the "worth at the
time of award' is computed by allowing interest at the maximum rate permitted by
law per annum. As used in Subparagraph 25(b)(iii)above, the "worth at the time
of award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
(c) In the event of any such default by Tenant, Landlord shall also
have the right, with or without terminating this Lease, to re-enter the Premises
and remove all persons and property from the Premises. Such property may be
removed and stored in a public warehouse or elsewhere at the cost of and for the
account of Tenant for such period of time as may be required by applicable law
after which time Landlord may dispose of such property in accordance with
applicable law. No re-entry or taking possession of the Premises by Landlord
pursuant to this Subparagraph 25(c) shall be construed as an election to
terminate this Lease unless a written notice of such intention be given to
Tenant or unless the termination thereof be decreed by a court of competent
jurisdiction.
(d) All rights, options' and remedies of Landlord contained in this
Lease shall be construed and held to be cumulative, and no one of them shall be
exclusive of the other, and Landlord shall have the right to pursue any one or
all of such remedies or any other remedy or relief which may be provided by law,
whether or not stated in this Lease. No waiver of any default of Tenant
hereunder shall be implied from any acceptance by Landlord of any rent or other
payments due hereunder or any omission by Landlord to take any action on account
of such default if such default persists or is repeated, and no express waiver
shall affect defaults other than as specified in said waiver. The consent or
approval or Landlord to or of any act by Tenant requiring Landlord's consent or
approval shall not be deemed to waive or render unnecessary Landlord's consent
or approval to or of any subsequent similar acts by Tenant.
26. ASSIGNMENT AND SUBLETTING. Tenant shall not voluntarily assign or
encumber its interest in this Lease or in the Premises, or sublease all or any
part of the Premises, or allow any other person or entity to occupy or use all
or any part of the Premises, without first obtaining Landlord's prior written
consent. Any assignment, encumbrance or sublease without Landlord's prior
written consent shall be voidable, at Landlord's election, and shall constitute
a default. For purpose hereof, the event Tenant is a partnership, a withdrawal
or change of partners, or change of ownership of partners, owning more
unreadable a fifty percent (50%) interest in the partnership, or if Tenant is a
corporation, any transfer of fifty percent (50%) of its Stock, shall constitute
a voluntary assignment and shall be subject to these provisions. No consent to
any assignment, encumbrance, or sublease shall constitute a further waiver of
the provisions of this Paragraph. Tenant shall notify Landlord
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in writing of Tenant's intent to assign encumber, or sublease this lease, the
name of the proposed assignee or sublessee, information concerning the financial
responsibility of the proposed assignee or sublessee and the terms of the
proposed assignment or subletting, and Landlord shall, within thirty (30) days
of receipt of such written notice, and additional information requested by
Landlord concerning the proposed assignee's or sublessee's financial
responsibility, elect one of the following:
(a) Consent to such proposed assignment, encumbrance or sublease;
(b) Refuse such consent, which refusal shall be on reasonable grounds;
(c) Elect to terminate this Lease, or in the case of a partial
sublease, terminate this Lease as to the portion of the Premises
proposed to be sublet.
Without limiting Landlord's grounds for disapproval, Landlord's disapproval
shall be deemed reasonable if it is based on Landlord's analysis of (a) the
proposed assignee's or sublessee's credit, character and business or
professional standing, (b) whether the assignee's or sublessee's use and
occupancy of the Premises will be consistent with Subparagraph 1(u) and
Paragraph 8 of this Lease and whether assignee's proposed intensity of use is
consistent with that shown by Tenant, (c) whether the proposed assignee or
sublessee is a then existing or prospective tenant of the Building, as a
condition for granting its consent to any assignment, encumbrance or sublease.
Landlord may require that the rent payable by such assignee or sublessee is at
the then current published rental rates for the Premises or comparable premises
in the Building, but not less than the then current Annual Basic Rent under this
Lease and may require that the assignee or sublessee remit directly to Landlord
on a monthly basis, all monies due to Tenant by said assignee or sublessee. In
the event that Landlord shall consent to any assignment or sublease under the
provisions of this Paragraph 26, Tenant shall pay Landlord's processing costs
and attorneys' fees incurred in giving such consent. If for any proposed
assignment or sublease Tenant receives rent or other consideration, either
initially or over the term of the assignment or sublease, in excess of the rent
called for hereunder, or, in case of the sublease of a portion of the Premises,
in excess of such rent fairly allocable to such portion, after appropriate
adjustments to assure that all other payments called for hereunder are taken
into account, Tenant shall pay to Landlord as additional rent hereunder all of
the excess of each such payment of rent or other consideration received by
Tenant promptly after its receipt. Landlord's waiver or consent to any
assignment or subletting shall not relieve Tenant from any obligation under this
Lease. Occupancy of all or part of the Premises by parent, subsidiary, or
affiliated companies of Tenant shall not be deemed an assignment or subletting.
If Tenant requests Landlord's consent to any assignment of this Lease or any
subletting of all or a portion of the Premises, Landlord shall have the right,
to be exercised by giving written notice to Tenant within thirty (30) days of
receipt by Landlord of the financial responsibility information required by this
Paragraph 26 to terminate this Lease effective as of the date Tenant proposes to
assign this Lease or sublet all or a portion of the Premises. Landlord's right
to terminate this lease as to all or a portion of the Premises on assignment or
subletting shall not terminate as a result of Landlord's consent to the
assignment of this Lease or the subletting of all or a portion of the Premises,
or Landlord's failure exercise this right with respect to any assignment or
subletting.
27. QUIET ENJOYMENT. Landlord covenants and agrees with Tenant that
upon Tenant paying the rent required under this Lease and paying all other
charges and performing all of the covenants and provisions aforesaid on Tenant's
part to be observed and performed under this Lease, Tenant shall and may
peaceably and quietly have, hold and enjoy the Premises in accordance with this
Lease.
28. SUBORDINATION. Without the necessity of any additional document
being executed by Tenant for the purpose of effecting a subordination, and at
the election of Landlord or any first mortgagee with a lien on the Building or
any ground lessor with respect to the Building, this lease shall be subject and
subordinate at all times to; (a) all ground leases or underlying leases which
may now exist or hereafter be executed affecting the Building or the land upon
which the Building is situated or both, and (b) the lien of any mortgage or deed
of trust which may now exist or hereafter be executed in any amount for which
the Building, land, ground leases or underlying leases, or Landlord's interest
or estate in any of said items is specified as security. Notwithstanding the
foregoing, Landlord shall have the right to subordinate or cause to be
subordinated any such ground leases or underlying leases or any such liens to
this lease. In the event that any ground lease or underlying lease terminates
for any reason or any mortgage or deed of trust is foreclosed or a conveyance in
lieu of foreclosure is made for any reason, Tenant shall, if requested by the
ground lessor, mortgagee or beneficiary, as applicable, attorn to and become the
Tenant of the successor in interest to Landlord and in such event Tenant's right
to possession of the Premises shall not be disturbed if Tenant is not in default
and so long as Tenant shall pay the rent and all other amounts required to be
paid to Landlord pursuant to the terms hereof and observe and perform all of the
provisions of this Lease, unless the Lease is otherwise terminated pursuant to
its terms. Tenant covenants and agrees to execute and deliver, upon demand by
Landlord and in the form requested by Landlord, any additional documents
evidencing the priority or subordination of this Lease with respect to any such
ground leases or underlying leases or the lien of any such mortgage or deed of
trust. Should Tenant fail to sign and return any such documents within ten (10)
business days of receipt, Tenant shall be in default, and Landlord may, at
Landlord's option, terminate this Lease provided written notice of such
termination is received by Tenant prior to Landlord's receipt of such documents.
29. ESTOPPEL CERTIFICATE.
(a) Within ten (10) days following any written request which Landlord
may make from time to time, Tenant shall execute and deliver to Landlord a
statement, in a form substantially similar to the form of Exhibit "E" attached
hereto, certifying; (i) the Commencement Date of this Lease; (ii) the fact that
this Lease is unmodified and in full force and effect or, if there have been
modifications hereto, that this Lease is in full force and effect, as modified,
and stating the date and nature of such modifications); (iii) the date to which
the rental and other sums payable under this Lease have been paid; (iv) the fact
that there are no current defaults under this Lease by either Landlord or Tenant
except as specified in Tenant's
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statement; and (v) such other matters requested by Landlord. Landlord and Tenant
intend that any statement delivered pursuant to this Paragraph 29 may be relied
upon by any mortgagee, beneficiary, purchaser or prospective purchaser of the
Building or any interest therein.
(b) Tenant's failure to deliver such statement within such time shall
be conclusive upon Tenant (i) that this Lease is in full force and effect,
without modification except as may be represented by Landlord, (ii) that there
are no uncured defaults in Landlord's performances, and (iii) that not more than
one (1) month's rent has been paid in advance, except as provided in Paragraph
36 hereof. Tenant's failure to deliver said statement to Landlord within ten
(10) working days of receipt shall constitute a default under this Lease, and
Landlord may, at Landlord's option, terminate the Lease, provided written notice
of such termination is received by Tenant prior to Landlord's receipt of said
statement.
30. BUILDING PLANNING. In the event Landlord requires the Premises for
use in conjunction with another suite or for other reasons connected with the
Building planning program, upon notifying Tenant in writing, Landlord shall have
the right to move Tenant to other comparable space in the Building of which the
Premises forms a part, at Landlord's sole cost and expense including all of
Tenant's moving expenses, telephone installation and stationery reprinting
charges, and the terms and conditions of the original Lease shall remain in full
force and effect, save and excepting that a revised Exhibit "A" shall become
part of this Lease and shall reflect the location of the new space and Paragraph
1 of this Lease shall be amended to include and state all correct data as to the
new space.
31. RULES AND REGULATIONS. Tenant shall faithfully observe and comply
with the "Rules and Regulations," a copy of which is attached hereto and marked
Exhibit "F", and all reasonable and nondiscriminatory modifications thereof and
additions thereto from time to time put into effect by Landlord. Landlord shall
not be responsible to Tenant for the violation or nonperformance by any other
tenant or occupant of the Building of any of said Rules and Regulations.
32. CONFLICT OF LAWS. This Lease shall be governed by and construed
pursuant to the laws of the State of California.
33. SUCCESSORS AND ASSIGNS. Except as otherwise provided in this Lease,
all of the covenants, conditions and provisions of this Lease shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, personal representative, successors and assigns.
34. SURRENDER OF PREMISES. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and
shall, at the option of Landlord, operate as an assignment to it of any or all
subleases or subtenancies. Upon the expiration or termination of this Lease,
Tenant shall peaceably surrender the Premises and all alterations and additions
thereto broom-clean, in good order, repair and condition, reasonable wear and
tear excepted, and shall comply with the provisions of Subparagraphs 14(g) and
14(h). The delivery of keys to any employee of Landlord or to Landlord's agent
or any employee thereof shall not be sufficient to constitute a termination of
this Lease or a surrender of the Premises.
35. PROFESSIONAL FEES.
(a) In the event that Landlord should bring suit for the possession of
the Premises, for the recovery of any sum due under this Lease, or because of
the breach of any provisions of this Lease, or for any other relief against
Tenant hereunder, or should either party bring suit against the other with
respect to matters arising from or growing out of this Lease, then all costs and
expenses, including without limitation, its actual professional fees such as
appraisers', accountants' and attorneys' fees, incurred by the prevailing part
therein shall be paid by the other party, which obligation on the part of the
other party shall be deemed to have accrued on the date of the commencement of
such action and shall be enforceable whether or not the action is prosecuted to
judgment.
(b) Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant's occupancy hereunder, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including
without limitation, its actual professional fees such as appraiser's,
accountants' and attorneys' fees.
36. PERFORMANCE BY TENANT. All covenants and agreements to be performed
by Tenant under any of the terms of this Lease shall be performed by Tenant at
Tenant's sole cost and expense and without any abatement of rent. Tenant
acknowledges that the late payment by Tenant to Landlord of any sums due under
this Lease will cause Landlord to incur costs not contemplated by this Lease,
the exact amount of such cost being extremely difficult and impractical to fix.
Such costs include, without limitation, processing and accounting charges, and
late charges that may be imposed on Landlord by the terms of any encumbrance and
note secured by any encumbrance covering the Premises or the Building of which
the Premises are a part. Therefore if any monthly installment of Annual Basic
Rent is not received by Landlord by the date when due, or if Tenant fails to pay
any other sum of money due hereunder and such failure continues for ten (10)
days after notice thereof by Landlord, Tenant shall pay to Landlord, as
additional rent, the sum of five percent (5 %) of the overdue amount as a late
charge. Such overdue amount shall also bear interest, as additional rent, at the
maximum rate permissible by law calculated, as appropriate, from the date either
(a) the monthly installment of Annual Basic Rent is due, or (b) of receipt of
said notice, until the date of payment to Landlord. Landlord's acceptance of any
late charge or interest shall not constitute a waiver of Tenant's default with
respect to the overdue amount or prevent Landlord from exercising any of the
other rights and remedies available to Landlord under this Lease or any law now
or hereafter in effect. Further, in the event such late charge is imposed
Landlord for two (2) consecutive months for whatever reason, Landlord shall have
the option to require that, beginning It the first payment of rent due following
the imposition of the second consecutive late charge, rent shall no longer be
paid monthly installments but shall be payable three (3) months in advance.
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37. MORTGAGEE AND SENIOR LESSOR PROTECTION. No act or failure to act on
the part of Landlord which would entitle Tenant under the terms of the Lease, or
by law, to be relieved of Tenant's obligations hereunder or to terminate this
Lease, shall result in a release of such obligations or a termination of this
Lease unless (a) Tenant has given notice by stered or certified mail to any
beneficiary of a deed of trust or mortgage covering the Premises and to the
Lessor under master or ground lease covering the Building, the Site or any
interest therein whose identity and address shall have been furnished to Tenant,
and (b) Tenant offers such beneficiary, mortgagee or Lessor a reasonable
opportunity to cure the default, including time to obtain possession of the
Premises by power of sale or of judicial foreclosure, if such should prove
necessary to effect a cure.
38. DEFINITION OF LANDLORD. The term "Landlord" as used in this Lease,
so far as covenants or obligations on the part of Landlord are concerned, shall
be limited to mean and include only the owner or owners, at the time in
question, of the fee title to, or a lessee's interest in a ground lease of the
Site or master lease of the Building. In the event of any transfer, assignment
or other conveyance or transfer of any such title or interest, Landlord herein
named (and in case of any subsequent transfers or conveyances, the then grantor)
shall be automatically freed and relieved from and after the date of such
transfer, assignment or conveyance of all liability with respect to the
performance of any covenants or obligations on the part of Landlord contained in
this Lease thereafter to be performed and, without further agreement, the
transferee of such title or interest shall be deemed to have agreed to observe
and perform any and all obligations of Landlord hereunder, during its ownership
of the Premises, Landlord may transfer its interest in the Premises without the
consent of Tenant and such transfer or subsequent transfer shall not be deemed a
violation on Landlord's part of any of the terms and conditions of this Lease.
39. WAIVER. The failure of Landlord to seek redress for violation of,
or to insist upon strict performance of, any term, covenant or condition of this
Lease or the Rules and Regulations attached hereto as Exhibit "F", shall not be
deemed a waiver of such violation or prevent a subsequent act which would have
originally constituted a violation from having all the force and effect of an
original violation, nor shall the failure of Landlord to enforce any of said
Rules and Regulations against any other tenant of the Building be deemed a
waiver of any such Rule or Regulation, nor shall any custom or practice which
may become established between the parties in the administration of the terms
hereof be deemed a waiver of, or in any way affect, the right of Landlord to
insist upon the performance by Tenant in strict accordance with said terms. The
subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a
waiver of any preceding breach by Tenant of any term, covenant or condition of
this Lease, other than the failure of Tenant to pay the particular rent so
accepted, regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such rent.
40. IDENTIFICATION OF TENANT. Unless the provisions of Paragraph 55
herein below are applicable to this Lease, then if more than one person executes
this Lease as Tenant, (a) each of them is jointly and severally liable for the
keeping, observing and performing of all of the terms, covenants, conditions,
provisions and agreements of this Lease to be kept, observed and performed by
Tenant, and (b) the term "Tenant" as used in this Lease shall mean and include
each of them tly and severally and the act of or notice from, or notice or
refund to, or the signature of, any one or more of them, with respect to the
tenancy or this Lease, including, but not limited to, any renewal, extension,
expiration, termination or modification of this Lease, shall be binding upon
each and all of the persons executing this Lease as Tenant with the same force
and effect as if each and all of them had so acted or so given or received such
notice or refund or so signed.
41. PARKING. The use by Tenant, its employees and invitees, of the
parking facilities of the Building shall be on the terms and conditions set
forth in Exhibit F attached hereto and by this reference incorporated herein and
shall be subject to such other agreement between Landlord and Tenant as may
hereinafter be established.
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43. TERMS AND HEADINGS. The words "Landlord" and "Tenant" as used
herein shall include the plural as well as the singular. Words used in any
gender include other genders. If there be more than one Tenant, i.e. , if two or
more persons or entities are jointly referred to in this lease as "Tenant", the
obligations hereunder imposed upon Tenant shall be joint and ral. The Paragraph
headings of this Lease are not a part of this Lease and shall have no effect
upon the construction or interpretation of any part hereof.
44. EXAMINATION OF LEASE. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or option for Lease,
and it is not effective as a Lease or otherwise until execution by and delivery
to both Landlord and Tenant.
45. TIME. Time is of the essence with respect to the performance of
every provision of this Lease in which time or performance is a factor.
46. PRIOR AGREEMENT; AMENDMENTS. This Lease contains all of the
agreements of the parties hereto with respect to any matter covered or mentioned
in this Lease, and no prior agreement or understanding, oral or written, express
or implied, pertaining to any such matter shall be effective for any purpose. No
provision of this Lease may be amended or added to except by an agreement in
writing signed by the parties hereto or their respective successors in interest.
The parties acknowledge that all prior agreements, representations and
negotiations are deemed superseded by the execution of this Lease to the extent
they are not incorporated herein.
47. SEPARABILITY. Any provision of this Lease which shall prove to be
invalid, void or illegal in no way affects, impairs or invalidates any other
provision hereof, and such other provisions shall remain in full force and
effect.
48. RECORDING. Neither Landlord nor Tenant shall record this Lease nor
a short memorandum thereof without the consent of the other and if such
recording occurs, it shall be at the sole cost and expense of the party
requesting the recording, including any documentary transfer taxes or other
expenses related to such recordation.
49. LIMITATION ON LIABILITY. The obligations of Landlord under this
Lease do not constitute personal obligations of the individual partners,
directors, officers or shareholders of Landlord, and Tenant shall not seek
recourse against the individual partners, directors, officers or shareholders of
Landlord or any of their personal assets for satisfaction of any liability in
respect to this Lease. In consideration of the benefits accruing hereunder,
Tenant and all successors and assigns covenant and agree that in the event of
any actual or alleged failure, breach or default hereunder by Landlord, the sole
and exclusive remedy shall be against Landlord's interest in the Building.
5O. RIDERS. Clauses, plats and riders, if any, signed by Landlord and
Tenant and affixed to this Lease are a part thereof.
51. SIGNS. Tenant shall not place any sign upon the Premises or the
Building without Landlord's prior written consent, except as specifically stated
in the signage provision, Rider #5, between Landlord and Tenant in that Lease
dated April 22, 1991.
52. MODIFICATION OF LENDER. If in connection with obtaining
construction, interim or permanent financing for the Building, the lender shall
request reasonable modifications in this Lease as a condition to such financing,
Tenant will not unreasonably withhold, delay or defer its consent thereto,
provided that such modifications do not increase the obligations of Tenant
hereunder or materially adversely affect the leasehold interest hereby created
or Tenant's rights hereunder.
53. ACCORD AND SATISFACTION. No payment by Tenant or receipt by
Landlord of a lesser amount than the rent payment herein stipulated shall be
deemed to be other than on account of the rent, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment as rent
be deemed an accord and satisfaction and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
rent or pursue any other remedy provided in this Lease. Tenant agrees that each
of the foregoing covenants and agreements shall be applicable to any covenant or
agreement either expressly contained in this lease or imposed by any statute or
at common law.
54. FINANCIAL STATEMENTS. At any time within reason during the term of
this Lease, Tenant shall, upon ten (1O) days prior written notice from Landlord,
provide Landlord with a current financial statement and financial statements of
the two (2) years prior to the current financial statement year. Such statement
shall be prepared in accordance with generally accepted accounting principles
and, if such is the normal practice of Tenant, shall be audited by an
independent certified public accountant.
55. TENANT AS CORPORATION. If Tenant executes this Lease as a
corporation, then Tenant and the persons executing this Lease on behalf of
Tenant represent and warrant that the individuals executing this Lease on
Tenant's behalf are duly authorized to execute and deliver this Lease on its
behalf in accordance with a duly adopted resolution of the board of directors of
Tenant, a copy of which is to be delivered to Landlord on execution hereof, and
in accordance with the By-Laws of Tenant and that this Lease is binding upon
Tenant in accordance with its terms.
56. NO PARTNERSHIP OR JOINT VENTURE. Nothing in this Lease shall be
deemed to constitute Landlord and Tenant as partners or joint venturers. It is
the express intent of the parties hereto that their relationship with regard to
this Lease be and remain that of landlord and tenant.
IN WITNESS WHEREOF, the parties have executed this Lease the day and
year first above written.
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LANDLORD: ADDRESS:
LINCOLN PROPERTY COMPANY N.C., INC. LARKSPUR LANDING OFFICE
As Manager and Agent for Owner 1100 Larkspur Landing Circle, Ste 155
Larkspur, California 94939
By: /s/ ROGER LEE OSER Dated: 11/2/92
--------------------------- --------------------------------
Roger Lee Oser, VP
TENANT: ADDRESS:
Synon, Inc. 1100 Larkspur Landing Circle
--------------------------- --------------------------------------
an Illinois corporation Suite 300
--------------------------- --------------------------------------
Larkspur. CA 94939
--------------------------- --------------------------------------
By: /s/ PAUL WILDE Dated: 9/22/92
--------------------------- --------------------------------
Paul Wilde,
Its: Vice President of Finance
---------------------------
By: Dated:
--------------------------- -------------------------------
Its:
---------------------------
Continued from Page 3, "Rent Escalation":
ADJUSTED BASIC RENT. Each year during the term of this Lease other than
the Base Year, the Basic Rent or the prevailing Adjusted Basic Rent, as the case
may be, shall be adjusted for the ensuing twelve (12) months by the use of the
Consumer Price Index (All Urban Consumers component) for the San
Francisco-Oakland Area (1982 - 1984 - 100) published by the Bureau of Labor
Statistics of the U.S. Department of Labor. he Basic Rent will be increased by
the percentage increase, if any, between the latest index published just prior
to the commencement of the Lease Term and the comparable latest index published
just prior to January of the following year to arrive at the Adjusted Basic
Rent. Each year thereafter, the Adjusted Basic Rent will be increased by the
percentage increase, if any, between the index published just prior to January
of the subsequent year and the comparable latest index published just prior to
January of the preceding year.
In case the U.S. Department of Labor shall discontinue the computation
and publication of said Consumer Price Index or the publication thereof should
be delayed so as to prevent its use hereunder at the times required, there shall
be substituted therefor by Landlord such other index or method of ascertaining
changes in the price level as, in the opinion of Landlord, most closely
resembles the Consumer Price Index and method of arriving at the index figure by
said Bureau.
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[ FLOOR PLAN ]
<PAGE> 127
EXIBIT A
OUTLINE OF FLOOR PLAN OF PREMISES
(see EX. B)
A-1
<PAGE> 128
EXHIBIT B
SITE PLAN
[FLOOR PLAN]
B-1
<PAGE> 129
EXHIBIT C
WORK LETTER AGREEMENT
This Work Letter Agreement is entered into as of the 22nd day of
Sept.,1992 by and between Lincoln Property Company, N.C., Inc. ("Landlord"), and
Synon, Inc. ("Tenant").
RECITALS:
A. Concurrently with the execution of this Work Letter Agreement,
Landlord and Tenant have entered into a lease (the "Lease") covering certain
premises (the "Premises") more particularly described in Exhibit A attached to
the Lease.
B. In order to induce Tenant to enter into the Lease (which is hereby
incorporated by reference to the extent that the provisions of this Work Letter
Agreement may apply thereto) and in consideration of the mutual covenants
hereinafter contained, Landlord and Tenant hereby agree as follows: Landlord to
provide a maximum Tenant Improvement contribution of $6.00 per rentable square
foot ($45,078.00). In addition to the above allowance, Landlord shall contribute
up to $8,105.00 as a Carpet Allowance for the Premises known as 1100 Larkspur
Landing Circle, Suite 340, leased by Tenant in Lease dated September 1, 1989.
C-1
<PAGE> 130
7. COMPLETION AND RENTAL COMMENCEMENT DATE.
The commencement of the term of Lease and Tenant's obligation for the
payment of rental under the Lease shall not commence until substantial
completion of construction of the Tenant Improvements. However, if there shall
be a delay in substantial completion of the Tenant Improvements as a result of:
(i) Tenant's failure to approve any item or perform any other
obligation in accordance with and by the date specified in the Work
Schedule;
(ii) Tenant's request for materials, finishes or installations other
than those readily available; or
(iii) Tenant's changes in the Tenant Improvement Plans after their
approval by Tenant;
Then the commencement of the term of the Lease and the rental
commencement date shall be accelerated by the number of days of such delay.
Please Initial:
PW/M
C-2
<PAGE> 131
EXHIBIT D
NOTICE OF LEASE TERM DATES
To: Date:
Re: Lease dated__________19__ between_________________Tenant, concerning
Suite____ located at____________________.
Gentlemen:
In accordance with the subject Lease, we wish to advise and/or confirm
as follows:
1. That the Premises have been accepted herewith by the Tenant as
being substantially complete in accordance with the subject Lease,
and that there is no deficiency in construction.
2. That the Tenant has possession of the subject Premises and
acknowledges that under the provisions of the subject Lease, the
term of said Lease shall commence as of____________for a term
of_______ending_________on
3. That in accordance with the subject Lease, rental commenced to
accrue on_________________.
4. If the commencement date of the subject Lease is other than the
first day of the month, the first billing will contain a pro rata
adjustment. Each billing thereafter, with the exception of the
final billing, shall be for the full amount of the monthly
installment as provided for in said Lease.
5. Rent is due and payable in advance on the first day of each and
every month during the term of said Lease. Your rent checks should
be made payable to____________at_________________________________.
AGREED AND ACCEPTED
TENANT LANDLORD:
___________________________________
By ___________________________________
Print Name ___________________________________
Its ___________________________________
By ___________________________________
Print Name ___________________________________
Its ___________________________________
D-1
<PAGE> 132
All provisions of the Lease and the amendments thereto (if any)
referred to above are hereby ratified.
DATED:______________,19____.
TENANT LANDLORD:
___________________________________
By ___________________________________
Print Name ___________________________________
Its ___________________________________
By ___________________________________
Print Name ___________________________________
Its ___________________________________
E-2
<PAGE> 133
EXHIBIT F
RULES AND REGULATIONS
1. No sign, placard, picture, advertisement, name or notice shall be installed
or displayed on any part of the outside or inside of the Building without
the prior written consent of Landlord. Landlord shall have the right to
remove, at Tenant's expense and without notice, any sign installed or
displayed in violation of this rule. All approved signs or lettering on
doors, windows and walls shall be printed, printed, affixed or inscribed at
the expense of Tenant by a person chosen by Landlord, using materials of
Landlord's choice and in a style and format approved by Landlord.
2. Tenant must use Landlord's window coverings in all exterior and atrium
window offices. No awning shall be permitted on any part of the Premises.
Tenant shall not place anything against or near glass partitions or doors
or windows which may appear unsightly from outside the Premises.
3. Tenant shall not obstruct any sidewalks, halls passages, exits, entrances,
elevators, escalators or stairways of the Building. the halls, passages,
exits, entrances, shopping malls, elevators, escalators and stairways are
not for the general public, and Landlord shall in all cases retain the
right to control and prevent access thereto of all persons whose presence
in the judgment of Landlord would be prejudicial to the safety, character,
reputation and interests of the Building and its tenants; provided that
nothing herein contained shall be construed to prevent such access to
persons with whom any tenant normally deals in the ordinary course of its
business, unless such persons are engaged in illegal activities. No tenant
and no employee or invitee of any tenant shall go upon the roof of the
Building without Landlord's consent.
4. The directory of the Building will be provided exclusively for the display
of the name and location of tenants only, and Landlord reserves the right
to exclude any other names therefrom.
5. All cleaning and janitorial services for the Building and the Premises
shall be provided exclusively through Landlord, and except with the written
consent of Landlord, no person or persons other than lose approved by
Landlord shall be employed by Tenant or permitted to enter the Budding for
the purpose of cleaning the same. Tenant shall not cause any unnecessary
labor by carelessness or indifference to the good order and cleanliness of
the Premises. Landlord shall not in any way be responsible to any Tenant
for any loss of property on the Premises, however occurring, or for any
damage to any Tenant's property by the janitor or any other employee or any
other person.
6. Landlord will furnish Tenant, free of charge, with two keys to each door
lock in the Premises. Landlord may make a reasonable charge for any
additional keys. Tenant shall not make or have made additional keys, and
Tenant shall not alter any lock or install a new additional lock or bolt on
any door of its Premises. Tenant, upon the termination of its tenancy,
shall deliver to Landlord the keys of all doors which have been furnished
to Tenant, and in the event of loss of any keys so furnished, shall pay
Landlord therefor.
7. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord's instructions
in their installation.
8. Any freight elevator shall be available for use by all tenants in the
Building, subject to such reasonable scheduling as Landlord in its
discretion shall deem appropriate. No equipment, materials, furniture,
packages. supplies, merchandise or other property will be received in the
Building or carried in the elevators except between such hours and in such
elevators as may be designated by Landlord.
9. Tenant shall not place a load upon any floor of the Premises which exceeds
the load per square foot which such floor was designed to carry and which
is allowed by law. Landlord shall have the right to prescribe the weight,
size and position of all equipment, materials, furniture or other property
brought into the Building. Heavy objects, if such objects are considered
necessary by Tenant, as determined by Landlord, shall stand on such
platforms as determined by Landlord to be necessary to properly distribute
the weight. Business machines and mechanical equipment belonging to Tenant,
which cause noise or vibration that may be transmitted to the structure of
the Building or to any spaces therein to such a degree as to be
objectionable to Landlord or to any tenants in the Building, shall be
placed and maintained by Tenant, at Tenant's expense, on vibration
eliminators or other devices sufficient to eliminate noise or vibration.
The persons employed to move such equipment in or out of the Building must
be acceptable to Landlord. Landlord will not be responsible for loss of, or
damage to, any such equipment or other property from any cause, and all
damage done to the Building by maintaining or moving such equipment or
other property shall be repaired at the expense of Tenant.
10. Tenant shall not use or keep in the Premises any kerosene, gasoline or
inflammable or combustible fluid or material other than those limited
quantities necessary for the operation or maintenance of office equipment.
Tenant shall not use or permit to be used in the Premises any foul or
noxious gas or substance, or permit or allow the Premises to be occupied or
used in a manner offensive or objectionable to Landlord or other occupants
of the Building by reason of noise, odors or vibrations, nor shall Tenant
bring into or keep in or about the Premises any birds or animals, except
seeing-eye dogs when accompanied by their masters.
11. Tenant shall not use any method of heating or air conditioning other than
that supplied or approved by Landlord.
12. Tenant shall not waste electricity, water or air conditioning and agrees to
cooperate fully with Landlord to assure the most effective operation of the
Building's heating and air conditioning and to comply with any governmental
energy-saving rules, laws or regulations of which Tenant has actual notice,
and shall refrain from attempting to adjust controls other than room
thermostats installed for Tenant's use. Tenant shall keep corridor doors
closed, and shall close window
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coverings at the end of each business day. Heat and air conditioning shall
be provided during ordinary business hours of generally recognized business
days, but not less than the hours of 8:00 a.m. to 6:00 p.m. on Monday
through Friday (excluding in any event Saturdays, Sundays and legal
holidays).
13. Landlord reserves the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the Building.
14. Landlord reserves the right to exclude from the building between the hours
of 6:00 p.m. and 7:00 a.m. the following day, or such other hours as may be
established from time to time by Landlord, and on Saturdays, Sundays and
legal holidays, any person unless that person is known to the person or
employee in charge of the Building and has a pass or is properly
identified. Tenant shall be responsible for all persons for whom it
requests passes and shall be liable to Landlord for all acts of such
persons. Landlord shall not be liable for damages for any error with regard
to the admission to or exclusion from the Building of any person. Landlord
reserves the right to prevent access to the Building in case of invasion,
mob, riot, public excitement or other commotion by closing the doors or by
other appropriate action.
15. Tenant shall close and lock the doors of its Premises and entirely shut off
all water faucets or other water apparatus, and, except with regard to
Tenant's computers and other equipment which requires utilities on a
twenty-four hour basis, all electricity, gas or air outlets before Tenant
and its employees leave the Premises. Tenant shall be responsible for any
damage or injuries sustained by other tenants or occupants of the Building
or by Landlord for noncompliance with this rule.
16. Tenant shall not obtain for use on the Premises ice, drinking water, food
beverage, towel or other similar services or accept barbering or
bootblacking services upon the Premises, except as such hours and under
such regulations as may be fixed by Landlord.
17. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed
and no foreign substance of any kind whatsoever shall be thrown therein.
The expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the tenant who, or whose employees
or invitees, shall have caused it.
18. Tenant shall not sell, or permit the sale at retail, of newspapers,
magazines, periodicals, theater tickets or any other goods or merchandise
to the general public in or on the Premises. Tenant shall not make any
room-to-room solicitation of business from other tenants in the Building.
Tenant shall not use the Premises for any business or activity other than
that specifically provided for in Tenant's Lease.
19. Tenant shall not mark, drive nails, screw or drill into the partitions,
woodwork or plaster or in any way deface the Premises or any part thereof,
except to install normal wall hangings, and to secure files and book cases
and other furniture that could fall over. Landlord reserves the right to
direct electricians as to where and how telephone and telegraph wires are
to be introduced to the Premises. Tenant shall not cut or bore holes for
wires. Tenant shall not affix any floor covering to the floor of the
Premises in any manner except as approved by Landlord. Tenant shall repair
any damage resulting from noncompliance with this rule.
20. Tenant shall not install, maintain or operate upon the Premises any vending
machine without the written consent of Landlord.
21. Canvassing, soliciting and distribution of handbills or any other written
material, and peddling in the Building or the Site are prohibited, and each
tenant shall cooperate to prevent same.
22. Landlord reserves the right to exclude or expel from the Building any
person who, in Landlord's judgment, is intoxicated or under the influence
of liquor or drugs or who is in violation of any of the Rules and
Regulations of the Building.
23. Tenant shall store all its trash and garbage within its Premises. Tenant
shall not place in any trash box or receptacle any material which cannot be
disposed of in the ordinary and customary manner of trash and garbage
disposal. All garbage and refuse disposal shall be made in accordance with
directions issued from time to time by Landlord.
24. The Premises shall not be used for the storage of merchandise held for sale
to the general public, or for lodging or for manufacturing of any kind, nor
shall the Premises be used for any improper, immoral or objectionable
purpose. No cooking shall be done or permitted by any tenant on the
Premises, except that use by Tenant of Underwriters' Laboratory-approved
equipment for brewing coffee, tea, hot chocolate and similar beverages
shall be permitted, and the use of a microwave oven shall be permitted,
provided that such equipment and use is in accordance with all applicable
federal, state, county and city laws, codes, ordinances, rules and
regulations. If odor is objectionable by Landlord or other Tenant's of
Building, microwave use may be prohibited by Landlord.
25. Tenant shall not use in any space or in the public halls of the Building
any mailcarts or hand trucks except those equipped with rubber tires and
side guards or such other material handling equipment as Landlord may
approve. Tenant shall not bring any other vehicles of any kind into the
Building except as provided in the Parking Rules and Regulations.
26. Without the written consent of Landlord, Tenant shall not use the name of
the Building in connection with or in promoting or advertising the business
of Tenant except as Tenant's address.
27. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental
agency.
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28. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.
29. The requirements of Tenant will be attended to only upon appropriate
application to the office of the Building by an authorized individual.
Employees of Landlord shall not perform any work or do anything outside of
their regular duties unless under special instructions from Landlord, and
no employee of Landlord will admit any person (Tenant or otherwise) to any
office without specific instructions from Landlord.
30. Landlord may waive any one or more of these Rules and Regulations for the
benefit of Tenant or any other tenant, but no such waiver by Landlord shall
be construed as a waiver of such Rules and Regulations in favor of Tenant
or any other tenant, nor prevent Landlord from thereafter enforcing any
such Rules and Regulations against any or all of the tenants of the
Building.
31. These Rules and Regulations (including Parking Rules and Regulations below)
are in addition to the terms, covenants, agreements and conditions of any
lease of premises in the Building. In the event these Rules and Regulations
conflict with any provision of the Lease, the Lease shall control.
32. Landlord reserves the right to make such other and reasonable Rules and
Regulations (including Parking Rules and Regulations) as, in its judgment,
may from time to time be needed for safety and security, for care and
cleanliness of the Building and for the preservation of good order therein.
Tenant agrees to abide by all such Rules and Regulations hereinabove stated
and any additional rules and regulations which are adopted.
33. Tenant shall be responsible for the observance of all of the foregoing
rules by Tenant's employees, agents, clients, customers, invitees and
guests.
34. Each tenant and all employees and visitors of Tenant shall not use public
areas of the Building from the upper ground floor level and above,
including elevators, while wearing athletic attire, including, without
limitation, bathing suits, sweatsuits, jogging clothes, etc.Smoking is
prohibited in all enclosed Common Areas of the Building including without
limitation the main lobby, all hallways, all elevators, all elevator
lobbies, building conference rooms, and recreation rooms.
35. Smoking is prohibited in all enclosed Common Areas of the building,
including, but not limited to, the main lobbies, hallways, stairwells,
elevators, elevator lobbies, locker/shower rooms, restrooms and conference
room. The foregoing shall not be deemed to prohibit smoking within demised
Premises. When smoking outside the building, ash receptacles must be used
and provided by the smoker if not provided by Landlord. Smokers must not
leave any ashtrays, smoking material or debris in the area where they have
been smoking, except in ash receptacles provided by Landlord.
PARKING RULES AND REGULATIONS
1. Tenant and employees of Tenant (hereinafter referred to as "Tenant") shall
not park vehicles in any parking areas designated by Landlord as areas for
parking by visitors to the Building. Tenant shall not leave vehicles in the
Building parking areas overnight nor park any vehicles in the Building
parking areas other than automobiles, motorcycles, motor driven or
non-motor driven bicycles or four-wheeled trucks. Landlord may, in its sole
discretion, designate separate areas for bicycles and motorcycles.
2. Cars must be parked entirely within the stall lines painted on the floor.
3. All directional signs and arrows must be observed.
4 The speed limit shall be 5 miles per hour.
5. Parking is prohibited, unless a floor parking attendant approved by
Landlord directs otherwise:
a. In areas not striped for parking;
b. In aisles;
c. Where "No Parking" or "Handicap" signs am posted;
d. On ramps;
e. In crosshatched areas; or
f. In such other areas as may be designated by Landlord, its agent, lessee
or licensee.
6. Parking stickers or any other device or form of identification which may be
supplied by Landlord shall remain the property of Landlord. Such parking
identification device must be displayed as requested and may not be
mutilated in any manner.
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7. Every Tenant is requested to park and lock his own car. All responsibility
for damage to cars to be repaired is assumed by Tenant. Tenant shall
repair, or cause to be repaired at its sole cost and expense any and all
damage to the Building parking facility or any part thereof caused by
Tenant or resulting from vehicles of Tenant.
8. Loss or theft of parking identification devices from automobiles must be
reported to Landlord immediately. Any parking identification devices found
on any unauthorized car will be confiscated and the illegal holder will be
subject to prosecution. Lost or stolen devices previously reported and then
found must be reported found to the Landlord immediately.
9. Spaces are for the express purpose of one automobile per space unless
approved by Landlord directs otherwise. Washing, waxing, cleaning or
servicing of any vehicle by the Tenant and/or his agents is prohibited.
Storage of vehicles for periods exceeding one week is prohibited and said
vehicles shall be subject to towing.
10. The Landlord reserves the right to refuse the issuance of monthly stickers
or other parking identification devices to any Tenant or person and/or his
agents or representatives who willfully refuse to comply with the above
Rules and Regulations or any City, State or Federal ordinance, law or
agreement. Tenant shall not load or unload in areas other than those
designated by Landlord for such activities.
12. Landlord reserves the right to charge for parking on a nondiscriminatory
basis.
13. Tenants parked in prohibited areas are subject to towing at their own
expense.
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<PAGE> 137
EXHIBIT G
STANDARDS FOR UTILITIES AND SERVICES
The following Standards for utilities and Services are in effect.
Landlord reserves the right to adopt nondiscriminatory modifications and
additions hereto:
As long as Tenant is not in default under any of to terms, covenants,
conditions, provisions or agreements of this Lease, Landlord shall:
(a) Provide non-attended automatic elevator facilities Monday through
Friday, except holidays from 8 a.m. to 6 p.m.
(b) On Monday through Friday, except holidays, from 8 a.m. to 6 p.m.
(and other times for a reasonable additional charge to be fixed by Landlord),
ventilate the Premises and furnish air conditioning or heating on such days and
hours, when in the judgment of Landlord it may be required for the comfortable
occupancy of the Premises. The air conditioning system achieves maximum cooling
when the window coverings are closed. Tenant agrees to cooperate fully at all
times with Landlord, and to abide by all regulations and requirements which
Landlord may prescribe for the proper function and protection of said air
conditioning system. Tenant agrees not to connect any apparatus, device conduit
or pipe to the Building chilled and hot water air conditioning supply lines.
Tenant further agrees that neither Tenant nor its servants, employees, agents,
visitors, licensees or contractors shall at any time enter mechanical
installations or facilities of the Building or adjust, tamper with, touch or
otherwise in any manner affect said installations or facilities. The cost of
maintenance and service calls to adjust and regulate the air conditioning system
shall be charged to tenant if the need for maintenance work results from either
Tenant's adjustment of room thermostats or Tenant's failure to comply with it
obligations under this section, including keeping window coverings closed as
needed. Such work shall be charged at hourly rates equal to then-current
journeymen's wages for air conditioning mechanics.
(c) Landlord shall furnish to the Premises, during the usual business
hours on business days, electric current as required by the Building standard
office lighting and fractional horsepower office business machines in an amount
not to exceed .025 KWH per square fool per normal business day. Tenant agrees,
should its electrical installation or electrical consumption be in excess of the
aforesaid quantity or extend beyond normal business hours, to reimburse Landlord
monthly for the measured consumption at the average cost per kilowatt hour
charged to the Building during the period. If a separate meter is not installed
at Tenant's cost, such excess cost will be established by an estimate agreed
upon by Landlord and Tenant, and if the parties fail to agree, as established by
an independent licensed engineer. Said estimates to be reviewed and adjusted
quarterly. Tenant agrees not to use any apparatus or device in, or upon, or
about the Premises which may in any way increase the amount of such services
usually furnished or supplied to said Premises, and Tenant further agrees not to
connect any apparatus or device with wires, conduits or pipes, or other means by
which such services are supplied, for the purpose of using additional or unusual
amounts of such services without written consent of Landlord. Should Tenant use
the same to excess, the refusal on the part of Tenant to pay upon demand of
Landlord the amount established by Landlord for such excess charge shall
constitute a breach of the obligation to pay rent under this Lease and shall
entitle Landlord to the rights therein granted for such breach. At all times
Tenant's use of electric current shall never exceed the capacity of the feeders
to the Building or the risers or wiring installation.
(d) Water will be available in public areas for drinking and lavatory
purposes only, but if Tenant requires, uses or consumes water for any Purposes
in addition to ordinary drinking and lavatory purposes of which fact Tenant
constitutes Landlord to be the sole judge, Landlord may install a water meter
and thereby measure Tenant's water consumption for all purposes. Tenant shall
pay Landlord for the cost of the meter and the cost of the installation thereof
and throughout the duration of Tenant's occupancy Tenant shall keep said meter
and installation equipment in good working order and repair at Tenant's own cost
and expense, in default of which Landlord may cause such meter and equipment to
be replaced or repaired and collect the cost thereof from Tenant. Tenant agrees
to pay for water consumed, as shown on said meter, as and when bills are
rendered, and on default in making such payment. Landlord may pay such charges
and collect the same from Tenant. Any such costs or expenses incurred, or
payments made by Landlord for any of the reasons or purposes hereinabove stated
shall be deemed to be additional rent payable by Tenant and collectible by
Landlord as such.
(e) Provide janitor service to the Premises, provided the same are used
exclusively as offices, and are kept reasonably in order by Tenant, and if to be
kept clean by Tenant, no one other than persons approved by Landlord shall be
permitted to enter the Premises for such purposes. If the Premises are not used
exclusively as offices, they shall be kept clean and in order by Tenant, at
Tenant's expense, and to the satisfaction of Landlord, and by persons approved
by Landlord. Tenant shall pay to Landlord the cost of removal of any of Tenant's
refuse and rubbish, to the extent that the same exceeds the refuse and rubbish
usually attendant upon the use of the Premises as offices.
Landlord reserves the right to stop service of the elevators, plumbing,
ventilation, air conditioning and electric systems, when necessary, by reason of
accident or emergency or for repairs, alterations or improvements, in the
judgement of Landlord desirable or necessary to be made, until said repairs,
alterations or improvements shall have been completed, and shall further have no
responsibility or liability for failure to supply elevator facilities, plumbing,
ventilating, air conditioning or electric service, when prevented from so doing
by strike or accident or by any cause beyond Landlord's reasonable control, or
by laws, rules, orders, ordinances, directions, regulations or requirements of
any federal, state, county or municipal authority or failure of gas, oil or
other suitable fuel supply or inability by exercise of reasonable diligence to
obtain gas, oil or other suitable fuel. It is expressly understood and agreed
that any covenants on Landlord's part to furnish any service pursuant to any of
the terms, covenant, conditions, provisions or agreements of this Lease or to
perform any act or thing for the benefit of Tenant shall not be deemed breached
if Landlord is unable to furnish or perform the same by virtue of a strike or
labor trouble or any other cause whatsoever beyond Landlord's control.
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<PAGE> 138
EXHIBIT H
HAZARDOUS WASTE
Tenant shall use the Premises solely for the uses set forth in the
Basic Lease Information in Paragraph 8 and shall not use the Premises for any
other purpose without obtaining the prior written consent of Landlord.
In no event will Tenant use, introduce to the Premises, generate,
manufacture, produce, store, release, discharge or dispose of, on, under or
about the Premises or transport to or from the Premises any Hazardous Material
(as defined below) or allow its employees. agents, contractors, invitees or any
other person or entity to do so.
Tenant warrants that it shall not make any use of the Premises which
may cause contamination of the soil, the subsoil or ground water. Tenant shall
not do, bring, or keep anything in or about the Premises that will cause a
cancellation of any insurance covering the Premises. If the rate of any
insurance carried by Landlord is increased as a result of Tenant's use, Tenant
shall pay to Landlord within thirty (30) days before the date Landlord is
obligated to pay a premium on the insurance, or within ten (10) days after
Landlord delivers to Tenant a certified statement from Landlord's insurance
carrier stating that the rate increase was caused solely by an activity of
Tenant on the premises as permitted in this Lease, whichever date is later, a
sum equal to the difference between the original premium and the increased
premium.
Tenant shall keep and maintain the Premises in compliance with, and
shall not cause or permit the Premises to be in violation of any and all
federal, state or local laws, ordinances, rules or regulations pertaining to
health, industrial hygiene or the environmental conditions on, under or about
the Premises.
Tenant shall give immediate written notice to Landlord of (i) any
action, proceeding or inquiry by any governmental authority or any third party
with respect to the presence of any Hazardous Material on the Premises or the
migration thereof from or to other property or (ii) any spill, release or
discharge of Hazardous Materials that occurs with respect to the Premises or
Tenant's operations.
Tenant shall indemnify and hold harmless Landlord, its directors,
officers, employees, agents, successors and assigns (collectively "Landlord")
from and against any and all claims arising from (i) Tenant's uses of the
Premises for the conduct of its business or from any activity, work or other
things done or suffered by the Tenant in or about the Buildings, (ii) breach or
default in performance of any obligation on Tenant's part to be performed under
the terms of this Lease, (iii) any act or negligence of the Tenant, or any
officer, agent, employee, guest or invitee of Tenant. The indemnity shall
include all costs, fines, penalties, judgments, losses, attorney's fees,
expenses and liabilities incurred in or about any such claim or any action or
proceeding brought thereon including, without limitation, (a) all foreseeable
consequential damages including without limitation loss of rental income and
diminution in property value; and (b) the costs of any cleanup, detoxification
or other ameliorative work of any kind or nature required by any governmental
agency having jurisdiction thereof or Landlord. This indemnity shall survive the
expiration or termination of this Lease. In any action or proceeding brought
against Landlord by reason of any such claim, upon notice from Landlord if
Landlord does not elect to retain separate counsel, Tenant shall defend the same
at Tenant's expense by counsel reasonably satisfactory to Landlord.
HAZARDOUS MATERIAL DEFINITION:
As used herein, the term "Hazardous Material" shall mean any substance
or material which has been determined by any state, federal or local
governmental authority to be capable of posing a risk of injury to health,
safety or property, including all of those materials and substances designated
as hazardous or toxic by the city in which the Premises are located, the U.S.
Environmental Protection Agency, the Consumer Product Safety Commission, the
Food and Drug Administration, the California Water Resources Control Board, the
Regional Water Quality Control Board, San Francisco Bay Region, the California
Air Resources Board, CAL/OSHA Standards Board, Division of Occupational Safety
and Health, the California Department of Food and Agriculture, the California
Department of Health Services, and any federal agencies that have overlapping
jurisdiction with such California agencies, or any other governmental agency now
or hereafter authorized to regulate materials and substances in the environment.
Without limiting the generality of the foregoing, the term "Hazardous Material "
shall included all of those materials and substances defined as "hazardous
materials" or "hazardous waste" in Sections 66680 through 66685 of Title 22 of
the California Administrative Code, Division 4, Chapter 30, as the same shall be
amended from time to time, petroleum, petroleum-related substances and the
by-products, fractions, constituents and sub-constituents of petroleum or
petroleum-related substances, asbestos, and any other materials requiring
remediation now or in the future under federal, state or local statutes,
ordinances, regulations or policies.
H-I
<PAGE> 139
LEASE AMENDMENT ONE
This Lease Amendment One, made as of this date, April 19, 1996, by and between
LINCOLN PROPERTY COMPANY N.C., INC., as Manager and Agent for Lincoln Larkspur
Office Three Associates, Ltd., hereinafter referred to as Landlord, and SYNON.
INC., an Illinois corporation, hereinafter referred to as Tenant.
WITNESSETH:
WHEREAS, the Tenant leased from Landlord, by Office Lease dated September 22,
1992, hereinafter referred to as the Lease, (the term "Lease" includes any
amendments or modifications thereof) approximately 7,513 rentable square feet on
the third floor of that certain Building known as 1100 LARKSPUR LANDING CIRCLE,
Suite 365, Larkspur, California.
WHEREAS, the Tenant and Landlord now desire to amend this Lease to provide an
extended term ("Extended Term One").
NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained, it is mutually agreed between Landlord and Tenant as follows:
A. TERM: Paragraph 1(k), "Term" of said Lease is hereby extended for
and additional term of twelve (12) months, ("Extended Term One"),
commencing June 1, 1997 and ending May 31, 1998.
B. BASIC RENT: Paragraph I (q) "Monthly Basic Rent" of said Lease is
hereby amended to reduce Tenant's Monthly Basic Rent from the then
current Monthly Basic Rent to $16,904.25, effective June 1, 1997,
and thereby the "Annual Basic Rent" shall be $202, 851.00.
All other terms and conditions of this Lease remain in full force and effect. If
any inconsistencies in the terms and conditions arise between the Lease and
Lease Amendment One, the terms and conditions of Lease Amendment One shall
prevail.
IN WITNESS WHEREOF, the Parties hereto subscribe their names as of the above
date, LINCOLN PROPERTY COMPANY N.C., INC., as Manager and Agent for Lincoln
Larkspur Office Three Associates, Ltd.
By: /s/ D. ALLEN PALMER
--------------------------------
D. Allen Palmer
Its: Vice President
-------------------------------
"LANDLORD"
SYNON, INC.
a Illinois corporation
By: /s/ DENNIS HOLLIGAN
--------------------------------
Its: Director of Administration
-------------------------------
"TENANT"
<PAGE> 140
LEASE AMENDMENT TWO
This Lease Amendment Four, made as of this date, March 28, 1997, by and
between LINCOLN PROPERTY COMPANY N.C. INC., as Manager and Agent for Lincoln
Larkspur office Three Associates, Ltd., hereinafter referred to as Landlord, and
SYNON. INC., an Illinois corporation, hereinafter referred to as Tenant.
WITNESSETH:
WHEREAS, the Tenant leased from Landlord, by Office Lease dated September 22,
1992, hereinafter referred to as the Lease, (the term "Lease" includes any
amendments or modifications thereof) approximately 7,513 RENTABLE SQUARE FEET on
the third floor of that certain Building known as 1100 LARKSPUR LANDING CIRCLE,
Suite 365, Larkspur, California.
WHEREAS, the Tenant and Landlord now desire to amend this Lease to provide an
extended term ("Extended Term Two').
NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained, it is mutually agreed between Landlord and Tenant as follows:
A. TERM: Paragraph I (k), "Term" of said Lease is hereby extended for
an additional term of thirty-six (36) months, ("Extended Term
Two'), commencing June 1, 1998 and ending May 31, 2001.
B. BASIC RENT: Paragraph I (q) "Monthly Basic Rent" of said Lease is
hereby amended to reduce Tenant's current Monthly Basic Rent from
$17,024.29 to $16,904.25, effective January 1, 1997.
C. ADJUSTED BASIC RENT: Paragraph 5(b), "Adjusted Basic Rent" of said
Lease is hereby amended to exclude an increase in the Adjusted
Basic Rent for the years of 1997 and 1998. Therefore, the next
Adjustment to Basic Rent shall be January 1, 1998.
D. OPERATING EXPENSE ALLOWANCE: Paragraph I (r), "Operating Expense
Allowance" of said Lease is hereby amended to change the Operating
Expense Allowance from Tenant's proportionate share of 1991 actual
Operating Expenses to Tenant's proportionate share of 1997 actual
Operating Expenses, effective January 1. 1997.
E. TENANT IMPROVEMENT: Landlord shall contribute up to, $22,539.00,
(7,513 sf x $3.00) towards Tenant Improvements which shall be
mutually acceptable between Landlord and Tenant.
All other terms and conditions of this Lease remain in full force and effect. If
any inconsistencies in the terms and conditions arise between the Lease and
Lease Amendment Two, the terms and conditions of Lease Amendment Two shall
prevail.
IN WITNESS WHEREOF, the Parties hereto subscribe their names as of the above
date.
LINCOLN PROPERTY COMPANY N.C., INC.,
as Manager and Agent for Lincoln Larkspur Office Three Associates, Ltd.
By: /s/ D. ALLEN PALMER
--------------------------------
D. Allen Palmer, Vice President
"LANDLORD"
SYNON, INC.
a Illinois corporation
By: /s/ DENNIS HOLLIGAN
---------------------------------------------
Dennis Holligan, Director of Administration
"TENANT"
<PAGE> 1
Exhibit 10.29
DATE SIXTEENTH OCTOBER 1989
-------------------------------------------------------------
(1) DANBUILD INVESTMENTS (U.K.) LIMITED
(2) SYNON LIMITED
-------------------------------------------------------------
L E A S E
of premises at 77-85 Fulham Palace Road, London W6
-------------------------------------------------------------
Lipman Bray
Thrutchley House
1 Bickenhall Street
London W1H 31A
Re: TGM/
1
<PAGE> 2
H.M. LAND REGISTRY
Land Registration Acts (1925-1971)
LEASE OF PART
-------------
[DATE STAMP]
London Borough: London Borough of
Hammersmith & Fulham
Freehold Title No: NGL551831
Property: 4th floor Block A (Elsinore
House), 77-85
Fulham Palace Road, London W6
DATE: SIXTEENTH OCTOBER 1989
THIS LEASE is made BETWEEN (1) The Lessor and (2) The Tenant referred to in the
following particulars
PARTICULARS
-----------
- --------------------------------------------------------------------------------
The Lessor DANBUILD INVESTMENTS (U.K.) LIMITED
whose registered office is c/o
Bright Grahame Muriel Chartered
Accountants, 124-130 Seymour
Place,London
W1H 6AA
- --------------------------------------------------------------------------------
The Tenant SYNON LIMITED
whose registered office is at 19 St
Pauls Road London N1 2YW
- --------------------------------------------------------------------------------
The Building Block A, (Elsinore House)
77-85 Fulham Palace London W6 shown
edged brown on Plan 1
- --------------------------------------------------------------------------------
The Premises Fourth floor Premises edged red on
Plan 2 and further defined in the
First Schedule
- --------------------------------------------------------------------------------
The Term From and including lst July 1989 for
a period of 25 years ending on 30th
June 2 subject to the provisions in
this Lease for earlier termination.
- --------------------------------------------------------------------------------
2
<PAGE> 3
The Rent Commencement
Date One month from the date hereof
- --------------------------------------------------------------------------------
The Initial Rent THREE HUNDRED AND EIGHT THOUSAND
FOUR HUNDRED AND TWENTY FIVE POUNDS
STERLING per annum
(pound 308,425.00 p.a.)
- --------------------------------------------------------------------------------
The Review Dates 1st July 1994 1st July 2004
1st July 1999 1st July 2009
- --------------------------------------------------------------------------------
The Permitted Use As offices and for the purpose of
holding educational seminars and
courses
- --------------------------------------------------------------------------------
The Car Parking Spaces FOUR (4) car parking spaces
- --------------------------------------------------------------------------------
The Tenant's Break Date 30th June 2004
- --------------------------------------------------------------------------------
The Lessor's Break Date 30th June 2005
- --------------------------------------------------------------------------------
DEFINITIONS
1. IN THIS LEASE unless the context otherwise requires:-
1.1 The expressions in the first column of the Particulars shall
have the meanings given to them in the second column of the
Particulars and the Particulars form part of this Lease
1.2 "the Lessor" includes the person for the time being entitled
to the reversion immediately expectant on the Term and any
superior landlord
1.3 "the Tenant" includes the successors in title of the Tenant
1.4 "the Tenant or anyone connected with it" means any of the
Tenant its employees agents licensees invitees and anyone else
3
<PAGE> 4
on the Estate expressly or impliedly with the authority of the
Tenant
1.5 "the Gurantor" includes the estate and personal representatives
of the Guarantor)
1.6 "the Term" includes any continuation or extension thereof or
any period of holding over in each case whether by statute or
common law
1.7 "the Rent" means:-
1.7.1 From the date hereof until the Rent Commencement Date
a peppercorn (if demanded)
1.7.2 From the date hereof until the first of the Review
Dates the Initial Rent
1.7.3 Thereafter the Reviewed Rent
1.8 "the Reviewed Rent" means the Rent computed in accordance with
the terms of the Fifth Schedule
1.9 "the Rent Payment Days" means 1st, January 1st, April 1st July
and 1st October
1.10 "the Granted Rights" means the rights set out in the Second
Schedule
1.11 "the Reserved Rights" means the rights set out in the Third
Schedule
1.12 "the Estate" means the property known as 77-85 Fulham Palace
Road London W6 being the land comprised in the freehold title
mentioned above shown edged green on Plan 1 and the buildings
from time to time on it
1.13 "the Car Park" means the car park in the basement of Blocks B
and C (being the buildings on the parts of the Estate erected
or in the course of erection shown for the purpose of
identification only edged blue and purple respectively on Plan
1) and including the entrances driveways access ramps roadways
and other areas in or ancillary to it
1.14 "the Roadways" means the roads from time to time on the Estate
including the entrances driveways access ramps and roadways
forming part of the Car Park
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1.15 "the External Areas" means the Roadways and the forecourts
landscaped areas and other external areas on the Estate from
time to time and the boundary walls and fences of the Estate
1.16 "the Common Parts" means the entrance halls landings
staircases corridors, lifts, toilets and other parts of the
Building the use of which is or may be common to the Tenant
and the occupiers of any other part of the Building
1.17 "Adjoining Property" means any neighbouring or adjoining land
or property in which the Lessor or a Group Company has now or
at any time during the Term shall have acquired a freehold or
leasehold interest
1.18 "Insured Risk" means any of the risks referred to in Clauses
7.2.1 and 7.2.2 and any other risks against which the Lessor
shall at the time of the damage or destruction in question
have reasonably effected insurance subject to the excesses
exclusions or limitations referred to in Clause 7.1.1.2
1.19 "the Policy" means the insurance policy referred to in clause 7
1.20 "the Insurance Contribution" means the total of:-
1.20.1 the fair proportion (as determined by the Surveyor
acting as an independent expert and not as an
arbitrator) of the sums payable by the Lessor by way
of premiums for insuring the Estate against the
insured Risks referred to in clause 7.2.1 and 7.2.2;
and
1.20.2 all of the sums payable by the lessor by way of
premiums for insuring against loss of the Rent
payable under this Lease from time to time (having
regard to reasonable sums in respect of any review of
the Rent which may become due under this lease) for
five (5) years; and
1.20.3 all of any increased premium payable for any such
insurance relating to the Premises or to any other
part of the Estate and/or the loss of the rents
payable under this Lease or the lease of any other
part of the Estate as a result of any act or omission
of the Tenant or anyone connected with it
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1.21 "the Services" means the services and other matters set out in
the Sixth Schedule
1.22 "the Surveyor" means any person or firm appointed by or acting
for the Lessor from time to time (including an employee of the
Lessor or a Group Company) appointed by the lessor to perform
the function of a surveyor for any purpose of this Lease
1.23 "the Accountant" means any independent Accountant or firm of
Accountants appointed by or acting for the Lessor from time to
time or and independent Chartered Surveyor) or firm of
Chartered Surveyors who (in the case of surveyors) shall be
experienced in the preparation and auditing of service charge
accounts to perform the function of an accountant for any
purpose of this lease
1.24 "the Managing Agent" means any person or firm appointed by or
acting for the lessor from time to time (including an employee
of the lessor or a Group Company) to collect the rents from
and to manage the Estate
1.25 "Accounting Period" means a year commencing on 1st January or
such other date and/or period as the Lessor shall from time
to time decide
1.26 "the Total Service Cost" means the aggregate amount in each
Accounting Period of:-
1.26.1 The amounts properly incurred by or on behalf of the
Lessor in providing all or any of the Services
1.26.2 The amounts properly incurred by or on behalf of the
Lessor in connection with any of the matters referred
to in the Seventh Schedule
1.26.3 The amounts considered reasonably appropriate by the
Managing Agent or the Surveyor acting as an
independent expert and not as an arbitrator as a
reserve towards future expenses of a periodical or
non-annually recurring nature in connection with any
of the Services or the said matters
1.26.4 Value added tax payable on or in connection with any
of the said amounts save insofar as the Lessor can
recover the same
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1.26.5 The costs incurred by the Lessor of and in connection
with the obligation set out in clause 5.4 less any
sums actually recovered by the Lessor pursuant to its
obligations set out in clause 5.4
1.27 "the Service Charge" means the fair proportion or fair
proportions of the Total Service Cost attributable to the
Premises as determined from time to time by the Surveyor
(acting as an independent expert and not as an arbitrator)
PROVIDED THAT:-
1.27.1 different proportions may be applied to different
items within the Total Service Cost or to different
amounts within the same item; and
1.27.2 no part of the Total Service Cost shall be deemed to
be attributable to the Car Park notwithstanding that
expenditure relating to the Car Park forms part of
the Total Service cost
1.27.3 the fair proportion shall be calculated on the basis
that all premises on the Estate intended to be let
have been let and that all the Tenants of the
Building and the Estate are contributing a fair and
reasonable proportion to the respective elements of
the Total Service Cost
1.28 "The Interim Charge" means four equal instalments such sums to
be paid in advance on account of the Service Charge for an
Accounting Period as the Lessors or the Managing Agents shall
from time to time specify to be a fair and reasonable estimate
of the Service Charge that will be payable by the Tenant for
that Accounting Period PROVIDED THAT the Lessor may revise
such estimate during an Accounting Period if it shall be fair
and reasonable to do so in the circumstances and the remaining
instalments in such Accounting Period shall be adjusted
accordingly
1.29 "the Service Conduits" means pipes wires cables sewers drains
gutters flues other conducting media and any items similar to
any of them and all valves chambers covers fixings and similar
items ancillary to any of them
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1.30 "the Planning Acts" means the Town and Country Planning Acts
1971 to 1985 and any regulations or orders made under the
authority of any such Act (but subject to clause 2.6)
1.31 "enactment" means any statute Statutory Instrument order or
byelaw issued by any competent authority for the time being
and from time to time in force and any rule regulation scheme
plan or direction issued under or deriving authority from any
of them
1.32 "decorate" means and includes decorate paint paper
varnish treat and polish and the like (as the specific
instance may require) and decoration shall be construed
accordingly
1.33 "Interest" means interest during the period from the date on
which the payment is due or from such other date as may be
specified in this Lease to the date of payment (both before
and after any judgment) at 4% above the base rate from time to
time of Royal Bank of Scotland plc or such other British Town
clearing bank as the lessor may from time to time nominate or
should such base rate cease to exist such other rate of
interest as is most closely comparable with the Interest Rate
to be agreed between the parties or in default of agreement to
be determined by the Accountant (acting as an expert and not
as an arbitrator)
1.34 "the 1954 Act" means the Landlord and Tenant Act 1954
1.35 "Group Company" means a company that is from time to time a
member of the same Group as the Lessor or Tenant as the case
may be within the meaning of section 42 of the 1954 Act
1.36 References to "the last year of the Term" include the last
year of the Term if the same shall determine otherwise than by
effluxion of time and to "the end of the Term" include such
sooner determination of the Term
1.37 "the Premises" and "the Estate" include any part of the
Premises and any part of the Estate respectively
1.38 "the parties" or "party" shall mean the Lessor and/or the
Tenant but excludes the Guarantor
1.39 "Development" has the meaning given by Section 22 of the Town
and Country Planning Act 1971
1.40 "act or default" means act default negligence or omission
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1.41 "rates" means general water and other rates taxes charges
community charge assessments impositions and outgoings of
whatever nature but shall not include any tax payable as a
direct result of any dealings by the Lessor with its
reversionary interest in the Estate and/or the Building and/or
the Premises or any income tax or corporation tax payable by
the Lessor on any rents under this Lease or any other lease or
licence of whatsoever nature on the Estate
1.42 "planning permission" means any of planning permission listed
building consent conservation area consent and any other
permission or consent under the Planning Acts
1.43 "the General Specification" means the General Specification
for the West Six Centre a copy of which is annexed to this
Lease
1.44 "the Additional Works Specification" means the Additional
Works Specification a copy of which is annexed to this Lease
1.45 Any reference to "this Lease" is a reference to this Lease as
varied amended or supplemented from time to time and includes
a reference to any document which varies amends or is
supplemental to or made or given pursuant to or in accordance
with any of the terms of this Lease
INTERPRETATION
2. In this Lease:-
2.1 Any obligation in this lease not to do an act or thing shall
be deemed to include an obligation not to permit or suffer
that act or thing to be done
2.2 The singular shall include the plural and the masculine shall
include the feminine and neuter
2.3 Where the Tenant comprises more than one person the covenants
on the part of such party shall be joint and several
2.4 References to any right of the Lessor to have access to the
Premises shall be construed as extending to all persons
authorised by the Lessor (including agents, professional
advisers, contractors, workmen and others)
2.5 References to any right of the Tenant shall be construed as
extending to all persons authorised by the Tenant (including
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authorised undertenants agents professional advisers
contractors workmen servants and others
2.6 Any reference to a specific statute includes any statutory
extension or modification or re-enactment of such statute and
any regulations or orders made under it (except in the case of
the definitions of "the 1954 Act" and "Group Company")
2.7 The paragraph headings do not form part of this lease and
shall not be taken into account in its construction or
interpretation
2.8 References to clauses or schedules are to clauses or schedules
in this Lease and references in a schedule to clauses are to
clauses in that schedule
DEMISE
3. The Lessor demises to the Tenant for the Term the Premises:-
3.1 together (in common with the Lessor and all others authorised
by it or otherwise entitled) with the Granted Rights but
subject to temporary interruption for repair alterations
replacement or other works and so far as reasonably
practicable in the circumstances not materially to interfere
with the use and enjoyment by the Tenant of the Premises); but
3.2 excepting and reserving to the Lessor and all others
authorised by it or otherwise entitled the Reserved Rights; and
3.3 subject to the matters contained or referred to in entries
numbered 1, 4, 5, 6 and 10 of the Charges Register of the
title above mentioned insofar as they still subsist and relate
to the Premises or the Granted Rights
the Tenant paying to the Lessor by way of rent without any deductions
whatsoever the Rent which shall be paid by equal quarterly payments in
advance an the Rent Payment Days the first payment being made on the
execution of this Lease in respect of the period from the Rent
Commencement Date to the next following Rent Payment Day
TENANT'S COVENANTS
4. The Tenant covenants with the lessor to observe and perform the
covenants and obligations contained in the Fourth Schedule
LESSOR'S COVENANTS
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5. Subject to and conditionally upon the Tenant paying the Rent the
Interim Charge the Service Charge and all other moneys payable under
this lease and performing and observing the covenants on the part of
the Tenant and the conditions and agreements contained in this Lease
the Lessor covenants with the Tenant as follows:-
5.1 to permit the Tenant to peaceably hold and enjoy the Premises
during the Term without any lawful interruption by the Lessor
or any person claiming under or in trust for the Lessor; and
5.2 to perform the Services except insofar as it is beyond the
Lessor's reasonable control including (without limitation) any
failure or interruption in any of the Services by reason of
necessary repair, replacement, maintenance of any
installations or apparatus, or their damage or destruction, or
by reason of mechanical or other defect or breakdown, or frost
or other inclement conditions, or shortage of fuel, materials,
water or labour , or any other cause PROVIDED THAT the Lessor
uses all reasonable endeavours to remedy the same as soon as
reasonably practicable and PROVIDED THAT the Lessor shall not
be liable to the Tenant in respect of any act default omission
or negligence of any porter attendant or other person
undertaking the Services or any of them on behalf of the
Lessor
5.3 At the reasonable request and at the sole cost of the Tenant
(but the Landlord shall give credit for recovery of any costs
from any third party) and upon the Tenant giving an indemnity
to the Lessor for payment of all costs and expenses reasonably
to be incurred by the Lessor (including reasonable
reimbursement for time spent by the Lessor) and upon payment
from time to time of such sums by way of security for costs
and expenses as maybe reasonably requested to take all action
reasonably necessary (including legal proceedings) for the
benefit and protection of the Premises against any tenant of
the Building of any part of the Estate so as to compel such
tenant or tenants to comply with the terms of any lease
between the Lessor and such tenant
5.4 To take such steps as are reasonable (including if necessary
the institution and prosecution of legal proceedings) to
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enforce the obligations of contractors sub-contractors
architects and engineers pursuant to their several contracts
with the Lessor in relation to the construction of the
Premises and/or the Building and the Lessor shall hold all
and any monies received in accordance with the provisions of
Clause 8.10 hereof
5.5 To observe and perform the covenants (whether restrictive or
otherwise) and stipulations to which the Landlords
reversionary interest in the Estate is or may from time be
subject (while the reversion is vested in it but not after it
shall have parted with the reversion) and fully indemnify the
Tenant in respect of any breach or non observance thereof
FORFEITURE
6. If:-
6.1 the Rent or any part shall at any time be unpaid for
twenty-one days after becoming payable (whether formally
demanded or not); or
6.2 any other sum due from the Tenant under the terms of this
Lease shall at any time be unpaid for twenty-one days after
the later of demand and becoming payable; or
6.3 any of the Tenant's covenants or obligations in this Lease
shall not be performed or observed; or
6.4 in relation to the Tenant(being a company)
6.4.1 a proposal is made for a voluntary arrangement
pursuant to Part I Insolvency Act 1986; or
6.4.2 a petition is reasonably and properly presented for
an administration order pursuant to Part II of that
Act; or
6.4.3 a petition is reasonably and properly presented
pursuant to Part IV of that Act or a resolution
reasonably and properly proposed for winding-up in
either case whether compulsory or voluntary or a
meeting is convened or a resolution is proposed for
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the purchase redemption or reduction of any part of
the issued share capital of the Tenant (whether or
not to comply with S.142 Companies Act 1985) (except
in any such case for a reconstruction or amalgamation
not involving or arising out of insolvency); or
6.4.4 a receiver is appointed of the whole or any part of
its assets or undertaking (whether or not an
administrative receiver as defined in S.29(2) of the
Insolvency Act 1986)
6.5 in relation to the Tenant (being an individual)
6.5.1 an application is reasonably and properly made for an
interim order pursuant to Part VIII of that Act; or
6.5.2 a petition is presented for bankruptcy or a
bankruptcy order is made pursuant to Part IX of that
Act; or
6.5.3 an insolvency practitioner is appointed pursuant to
S.273 of that Act; or
6.6 the Tenant shall make a composition with creditors which would
in the Lessors reasonable opinion materially affect the
Tenants ability to perform its covenants hereunder
6.7 any distress or execution is levied on any of the Tenants'
goods or property which would in the Lessors reasonable
opinion materially affect the Tenants ability to perform its
covenants hereunder
(and in every case if the Tenant is more than one person if any of the
said matters shall occur in relation to any one of them then and in any
such case the Lessor may at any time thereafter re-enter upon the
Premises in the name of the whole and thereupon this demise shall
absolutely determine but without prejudice to the right of action of
the Lessor in respect of any antecedent breach
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(including if applicable that in relation to which the Lease is
forfeited) of the Tenant's covenants or the conditions contained in
this lease
7. INSURANCE
7.1 Subject to and conditionally upon the Tenant paying the
Insurance Contribution the Lessor covenants with the Tenant:-
7.1.1 to insure the Estate
7.1.1.1 unless such insurance shall be vitiated by
any act of the Tenant or by anyone connected
with the Tenant; and
7.1.1.2 subject to such excesses exclusions or
limitations as the Lessor's insurers may
reasonably require in such insurance office
of repute or with such underwriters and
through such agency as the Lessor may from
time to time reasonably and properly decide
in as being the full cost of rebuilding or
reinstatement including architects,
surveyors and other professional fees, the
cost of debris removal, demolition, site
clearance, any works as a result of such
rebuilding or reinstatement that may be
required by statute and incidental expenses
7.1.2 produce to the Tenant on request (but if more than
once a year then at the Tenant's expense) a copy of
the Policy and the last premium receipt or other
reasonable evidence of the terms of the Policy and
the fact that the last premium has been paid
7.1.3 notify the Tenant of any material change in the risks
covered by the Policy
7.1.4 procure that the interest of the Tenant and any
mortgagee or chargee is noted on the Policy (and
which shall be deemed satisfied by a general note on
the policy that the interests of tenants are noted)
7.2 Such insurance shall be against:-
7.2.1 loss or damage by fire, explosion, storm,
lightning,earthquake, explosion, subsidence, tempest,
flood,
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burst pipes, impact, and (in peacetime) aircraft and
articles dropped therefrom, riot heave, civil
commotion and malicious damage and such other risks
insurance against which the Lessor may (but without
obligation) from time to time reasonably decide
7.2.2 liability of the Lessor arising out of or in
connection with any matter involving or relating to
the Estate; and
7.2.3 the loss of the Rent payable under this Lease from
time to time (having regard to any reasonable sums in
respect of review of rent which may become due under
this Lease) for five years
7.3 If
7.3.1 the Premises or access to then are destroyed or
damaged by an Insured Risk so that the Premises or
any part of them are unfit for occupation or use, and
7.3.2 the insurance of the Premises has not been vitiated
by the act or default of the Tenant or anyone
connected with it
the Rent or a fair proportion of it according to the nature
and the extent of the damage sustained the amount of such
proportion in case of dispute to be determined by the Surveyor
(acting as an expert and not as an arbitrator) shall be
suspended and cease to be payable until the Premises, the
damaged part, or the access (as the case may be) shall have
been reinstated so that the Premises the damaged part or the
access are made fit for occupation or use or until the
expiration of five years from the date on which the
destruction or damage occurred whichever is the shorter
7.4 If
7.4.1 the Premises are damaged or destroyed by an Insured
Risk, and
7.4.2 the payment of the insurance monies is not refused in
whole or in part by reason of any act or default of
the Tenant or anyone connected with it
the Lessor will subject to clause 7.5.7 with all convenient
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speed take such necessary and proper steps to obtain any
planning permissions or other permits approvals and consents
that may be required under the Planning Acts or other
enactment to enable the Lessor to rebuild and reinstate the
Premises and will as soon as these have been obtained spend
and lay out all monies received in respect of such insurance
(except sums in respect of loss of rent) in rebuilding or
reinstating the Premises so destroyed or damaged and meeting
the related professional fees provided that the Lessor shall
not be liable to rebuild or reinstate the Premises if:-
7.4.3 the Lessor is unable (having used all reasonable
endeavours) to obtain all planning permissions,
permits and consents necessary to execute such
rebuilding and reinstating; or
7.4.4 if this Lease shall be frustrated; or
7.4.5 if the rebuilding or reinstating is prevented for any
other reason beyond the control of the Lessor
in any of which cases:-.
7.4.6 all the insurance monies shall belong to the Lessor
absolutely and the Lessor shall accordingly be
entitled to retain them; and/or
7.4.7 the Lessor may by giving to the Tenant not later than
three years after the date of damage two months
notice in writing determine this demise (unless this
Lease shall before such notice is given have been
frustrated or otherwise determined) (but without
prejudice to any claim by the Lessor in respect of
any antecedent breach of covenant) and any dispute
under this clause shall be determined by the Surveyor
(acting as an independent expert and not as an
arbitrator)
7.5 The Tenant covenants with the Lessor:
7.5.1 to pay the Insurance Contribution on demand
7.5.2 not to do or omit anything that could cause any
policy of insurance relating to the Estate to become
void or voidable wholly or in part nor (unless the
Tenant shall have previously notified the lessor and
have
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agreed to pay the increased premium) anything by
which additional insurance premiums may became payable
7.5.3 to keep the Premises supplied with such fire fighting
equipment as the insurers or the fire authority may
require and to maintain the same to their
satisfaction
7.5.4 not to store or bring on to the Premises any article,
substance or liquid of a specially combustible,
inflammable or explosive nature and to comply with
the requirements and recommendations of the fire
authority and/or the insurers and the reasonable
requirements of the Lessor as to fire precautions
relating to the Premises
7.5.5 not to obstruct the access to any fire equipment or
the means of escape from the Premises
7.5.6 to give notice to the lessor immediately any event
occurs which might affect the Policy
7.5.7 if the Estate is damaged or destroyed either:
7.5.7.1 by an Insured Risk and the insurance money
under the Policy is by reason of any act or
omission of the Tenant or anyone connected
with it wholly or partially irrecoverable; or
7.5.7.2 as a result of the act or omission of the
Tenant or anyone connected with the Tenant
to pay to the Lessor on demand with Interest the
amount of such insurance money so irrecoverable in
which event the provisions of clause 7.4 shall apply
7.5.8 if at any time the Tenant shall be entitled to the
benefit of any insurance on the Premises (which is
not effected or maintained in pursuance of any
obligation contained in this lease) to apply all
monies received by virtue of such insurance in making
good the loss or damage in respect of which it shall
have been received
7.5.9 if required by any enactment to obtain a fire
certificate for the Premises and on request to
produce it to the Lessor for inspection
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SERVICE CHARGE
8.1 The first payment of the Interim Charge (on account of the Service
Charge for the Accounting Period during which this lease is executed)
shall be paid by the Tenant to the Lessor on the execution of this
lease and thereafter the Interim Charge shall be paid by the Tenant to
the lessor by payments in advance on the Rent Payment Days
8.2 If the Interim Charge paid by the Tenant for any Accounting Period plus
any balance carried forward from the previous Accounting Period
together exceed the Service Charge for the Accounting Period then such
excess shall be carried forward by the Lessor and credited to the
account of the Tenant in computing the Service Charge in the next
Accounting Periods
8.3 If the Service Charge for any Accounting Period exceeds the Interim
Charge paid by the Tenant for that Accounting Period plus any balance
carried forward from the previous Accounting Period then the Tenant
shall pay such excess to the lessor within twenty-one days after
service upon the Tenant of the certificate referred to in the
following paragraph
8.4 As soon as reasonably practicable after the end of each Accounting
Period the Lessor shall serve or shall procure that there is served
upon the Tenant a certificate signed by the Lessor the Surveyor or the
Accountant containing the following information:
8.4.1 The amount of the Total Service Cost for that Accounting
Period with a summary of that amount showing the principal
constituent items
8.4.2 The amount of the Service Charge for that Accounting Period;
and
8.4.3 The amount of the Interim Charge paid by the Tenant for that
Accounting Period and of any balance carried forward from the
previous Accounting Period
8.4.4 A schedule showing the amount and aggregate amounts of any
reserves created pursuant to the relevant provisions of this
Lease
8.5.1 Save as hereinafter provided the said certificate and
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schedules shall be conclusive evidence for the purposes of
this Lease of all matters of fact to which they contain
reference save in relation to any patent error or omission
8.5.2 The Tenant nay at any reasonable time by prior appointment
with the Lessor but at its own cost inspect the records and
vouchers relating to the amount of the Total Service Costs
for: an Accounting Period during the period of one month after
the service of the certificate for that Accounting Period
pursuant to clause 8.4
8.6 In respect of the Accounting Periods current at the date of
this lease and at the end of the Term the Service Charge shall
be apportioned on a daily basis and the provisions of this
clause 8 shall continue to apply after the end of the Term in
respect of the then current Accounting Period
8.7 In no event shall the Service Charge be increased or altered
by reason only that at any relevant time any part of the
Estate intended for letting may be vacant or be occupied by
the Lessor or that any tenant or other occupier of another
part of the Estate may default in payment of his service
charge
8.8 The Tenant shall not be entitled to object to the Service
Charge (or any item comprised in it) or otherwise on any of
the following grounds:-
8.8.1 the inclusion in a subsequent Accounting Period of
any item of expenditure or liability omitted from the
Service Charge for any preceding Accounting Period
8.8.2 an item included at a proper cost might have been
provided or performed at a lower cost or
8.8.3 disagreement with any estimate of future expenditure
for which the lessor requires to make provision so
long as the Lessor has acted reasonably and in good
faith and in the absence of manifest error or
8.8.4 the manner in which the lessor exercises its
discretion in providing services so long as the
Lessor acts in good faith and in accordance with the
principles of good estate management or
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8.8.5 the employment of the Managing Agents to carry out
and provide on the Lessor's behalf any of the
services or matters referred to in the Seventh
Schedule
8.9 Nothing in this Lease shall oblige the Lessor to incur any of
the items of expenditure referred to in the Seventh Schedule
or to establish and/or maintain any such provision as is
referred to in paragraph 19 of the Seventh Schedule or to
maintain such a provision at any particular level
8.10 All sums received by the Lessor in respect of the provision
referred to in paragraph 19 of the Seventh Schedule shall be
credited to an account separate from the Lessor's own money
and shall be held by the Lessor on trust during the Term for
the persons who from time to time shall be tenants of the
Estate to apply the same and any interest accruing on it for
the purposes set out in the said paragraph 19 and at the
expiry of the Term the fair proportion of any such sums an
expenditure attributable to the Premises shall be paid to the
person who shall then be the tenant of the Premises or if the
Premises shall not then be let such fair proportion shall
belong to the Lessor absolutely
8.11 For the avoidance of doubt any sums in respect of which
recovery may be made pursuant to Clause 5.4 shall be included
in the Total Service Cost and the Service Charge shall be
payable accordingly notwithstanding the prospect of such
recovery
9. The Insurance Contribution the Interim Charge the Service Charge any
interest on any of them and any other sums payable by the Tenant to
the Lessor under the terms of this lease shall be payable by way of
further rent.
10. The Lessor shall not be liable or responsible for any damage suffered
by the Tenant or anyone connected with it through any defect in under
or upon the Premises except insofar as any such liability is covered
by insurance effected by the Lessor.
11. The Tenant's covenants shall remain in full force both at law and
equity notwithstanding that the lessor shall have waived or released
temporarily or permanently revocably or irrevocably or
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otherwise a similar covenant or similar covenants affecting any other
part of the Estate or Adjoining Property
12. The Tenant acknowledges that no warranties are given or implied in the
granting of this lease by or on behalf of the Lessor that the use to
which the Tenant proposes to put the Premises nor any alterations or
additions which the Tenant may now or subsequently decide to carry out
will not require planning permission under the Planning Acts.
13. The Tenant acknowledges that this Lease has not been entered into by
it in reliance wholly or partly on any statement or representation
made by or on behalf of the Lessor except for replies in writing given
prior hereto by the Lessor's solicitors enquiries raised in writing
with them by the Tenant's solicitors.
14. Except where any statutory provision prohibits the Tenant's right to
compensation being reduced or excluded by agreement the Tenant shall
not be entitled to claim from the Lessor on quitting the Premises or
any part thereof any compensation under the 1954 Act.
15. If
15.1 the Tenant gives to the Lessor notice in writing to that
effect such notice to be received by the Lessor not later than
9 months before the Tenant's Break Date (as to which time
shall be of the essence); and
15.2 the Tenant's covenants and the conditions in this lease shall
in all material respects be observed and performed up to and
including the Tenant's Break Date then
this Lease shall determine and the Term shall end on the Tenant's Break
Date but without prejudice to the rights and remedies of the Lessor in
respect of any antecedent breach non-observance or non- performance of
any of the Tenant's covenant or the conditions contained in this lease
16. If the Lessor gives to the Tenant not less than six months prior
notice in writing to that effect (as to which time shall be of the
essence) then this Lease shall determine and the Term shall end on the
Lessor's Break Date but without prejudice to the rights and remedies
of the Lessor in respect of any antecedent breach non-observance or
non-performance of any of the Tenant's covenant or the conditions
contained in this Lease
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17. The Lessor and the Tenant hereby acknowledge for the avoidance of
doubt that any costs incurred by the Lessor in the initial development
of the Estate, the construction and fitting out of the Building and
the Common Parts and the initial provision of the Roadways and the
External Areas and all other initial capital expenditure relating to
the development of the Estate by the lessor shall not be included in
the Total Service Cost nor any part of the Service Charge payable by
the Tenant.
18.1 In this clause "the Tenant" means Synon Limited and its
successors in title by virtue of a reconstruction or
amalgamation of Synon Limited or any such successor in title
but not its other successors in title
18.2 On or before the signing of this Lease the Tenant has procured
from Midland Bank PLC a guarantee ("the Guarantee") in the
form annexed to this Lease for the purpose of guaranteeing the
payment of the Rent and the performance of the Tenant's
covenants contained in this Lease
18.3 The Tenant hereby further covenants with the Lessor as
follows:-
l8.3.1 During the period of 30 days prior to the expiry of
the Guarantee or any guarantee procured by the Tenant
in favour of the Lessor pursuant to this sub-clause
and subject to sub-clause 3.3 hereof the Tenant shall
use reasonable endeavours to obtain a further
guarantee in favour of the Lessor from a member of
the committee of London & Scottish Bankers in
substantially the same form as the Guarantee and for
a period of three years and for the same amount as
the guarantee then expiring which it is to replace
PROVIDED ALWAYS that such replacement guarantee can
be obtained at reasonable cost to the Tenant.
18.3.2 If by the date of expiry of the Guarantee or any
other guarantee procured by the Tenant in favour of
the Lessor pursuant to the provisions of sub-clause
18,3.1 the Tenant shall not have complied with its
obligations to procure a further guarantee in favour
of the Lessor or be able to obtain a guarantee at
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reasonable cost to the Tenant it accordance with its
obligations under sub-clause 3.1 the Tenant shall
forthwith deposit with the Lessor a sum equal to one
year's rent as due under the lease such sum to be he]
by the Lessor under the terms of a Rent Security
Deposit Deed in such form reasonably required by the
Lessor and by which inter alia the Tenant shall
charge the said sum in favour of the Lessor with the
due payments of the rent and the due performance and
observance of the covenants on the part of the Tenant
and the conditions contained in this Lease such deed
to be duly executed by the Lessor and the Tenants
18.3.3 If the Tenant proves to the satisfaction of the
Landlord that net profit after tax in each case of
the three financial years ending last of not less
than 3 times the Rent at such date then this
requirement to provide a guarantee shall immediately
cease.
18.3.4 The Tenants shall pay to the Lessor forthwith on
demand all reasonable and proper costs incurred by
the Lessor in connection with the procuring of any
such guarantee or in connection with any such rent
security deposit deed
IN WITNESS of which the Parties have executed this Lease
THE FIRST SCHEDULE
(The Premises)
The Premises means that part of the Building specified in the Particulars and
shown edged red on Plan 2 and including (for the purposes of obligation as well
as grant):
1. the floors including the floor boards or other flooring materials the
plinths upon which the same are laid and by which they are supported
and the void between the flooring and the concrete structure beneath
it
2. the doors the windows and the frames and the glass in any of them
3. the internal plaster or plasterboard surfaces of any load bearing wall
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4. the suspended ceiling finishes and the voids above them including the
brackets or other devices by which the same are attached to the
concrete structure
5. one half severed vertically of non load bearing walls dividing the
Premises from other parts of the Building (which walls shall be
deemed to be party walls) and the entirety of any other
non-load-bearing internal walls
6. all Service Conduits which exclusively serve the Premises
7. all the Lessor's fixtures and fittings of every kind which are from
time to time in or upon the Premises whether original or substituted
and all other fixtures except those that can be removed by the Tenant
without damaging or defacing the Premises
8. all additions and improvements to the Premises
but excludes any part of the load bearing structure of the Building (which
includes without prejudice to the generality of the foregoing the roof and
foundations of the Building) other than the internal surfaces thereof
THE SECOND SCHEDULE
(The Granted Rights)
1. The free and uninterrupted passage and running of water soil gas and
electricity telecommunications and other services through all Service
Conduits which are now in on under or running through the Estate and
which serve the Premises
2. The right for all proper purposes in connection with the use of the
Premises to pass and repass
2.1 over and along the Roadways with or without vehicles (but so
that the Tenant and anyone connected with it shall not have
more vehicles on the Estate at any time than the number of the
Car Parking Spaces); and
2.2 without vehicles over and along the footpaths from time to
time forming part of the External Areas until such time as
they or such parts of them shall be adopted as public highways
3. The right of support and protection for the benefit of the Premises as
is now enjoyed from other parts of the Building
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4. The right to pass and repass over along and through the Common Parts
for all proper purposes in connection with the use of the Premises
5. The right to have the name or trading title of the Tenant affixed on
the communal notice board to be provided by the Lessor in the entrance
hall of the Building in such a position and in such manner as shall be
decided by the Lessor acting reasonably in the interests of good
Estate management
6. The right to use the Car Parking Spaces in such part or parts of the
Estate as the Lessor shall from time to time specify for the parking
of cars and for no other purpose
7. The right to enter the parts of the Building adjoining the Premise
with or without workmen and equipment on no less than five days notice
(save in the case of emergency) in order to comply with the Tenants'
covenants herein contained
8. Subject to the Tenant first having obtained all requisite planning
permissions and consents the right until such time as the Lessor shall
provide a communal facility to install an aerial of such size and
design and in such position as shall previously have been approved in
writing by the Lessor such consent not to be unreasonably withheld or
delayed for the reception of television signals from satellites but so
that this right shall immediately cease and determine upon the
installation by the Lessor of an aerial for the use of all Tenants of
the Lessor whereupon the Tenant shall forthwith remove any aerial
erected pursuant to this temporary right
THE THIRD SCHEDULE
(The Reserved Rights)
1. The free and uninterrupted passage and running of water soil gas
telecommunications and other services or supply electricity through
the Service Conduits which may now or in the future be in on under or
running through the Premises and which may serve any other part of the
Estate
2. The right at all times upon giving prior written notice (except in an
emergency) to carry out any works or repairs to or to build alter or
rebuild the Estate or any Adjoining Property in any manner
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and for any purpose notwithstanding any interference with the access
of light or air to the Premises or any temporary interference or
inconvenience with the Granted Rights
3. The right at all reasonable times upon giving to the Tenant not less
than 5 working days notice (except in case of emergency) for the
Lessor and persons authorised by it with or without tools materials
and equipment to enter on the Premises:-
3.1 for any purpose incidental to the provision of the Services
and/or to carry out any works in connection with such provision
3.2 to lay construct renew alter repair and maintain any Service
Conduits in the Building
3.3 to carry out any works or alteration incidental to the
building alteration repair or rebuilding of any part of the
Estate the person exercising such right making good all damage
to the Premises thereby caused
4. The right at all reasonable times to enter upon the Premises for
viewing and inspection and preparation of schedules of disrepair
5. The rights of light air support shelter and protection now or at any
time during the Perpetuity Period enjoyed by the Estate over the
Premises
6. The right to erect and retain scaffolding on or about the Building
for the purpose of works to or cleaning or decoration of the Building
notwithstanding that such scaffolding may temporarily restrict the
access to or enjoyment or use of the Premises
7. At all times all rights easements and the like enjoyed at the date
hereof by the Premises over Adjoining Property other than the Granted
Rights to the intent that S.62 Law of Property Act 1925 shall not
apply to this Lease
THE FOURTH SCHEDULE.
(Tenants Covenants)
Rent and Outgoings
1.1 To pay the Rent the Interim Charge the Service Charge and the
Insurance Contribution at the times and in the manner set out in this
Lease without any deduction and if so required by the Lessor
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by standing order to Bankers Credit Transfer or other similar method
specified by the Lessor
1.2 To pay and discharge all rates which are now or may at any time during
the Term be payable charged or assessed on or in respect of the
Premises or on the landlord tenant owner or occupier thereof(or in the
absence of direct assessment on the Premises a fair proportion of the
same as assessed by the Surveyor acting as an expert and not as an
arbitrator) and in every case any value added or other similar tax
payable in respect thereof.
1.3 To pay to the suppliers and to indemnify the Lessor against all
charges for all gas electricity telecommunication and other services
consumed or used on or supplied to the Premises.
1.4 If the Rent the Interim Charge the Service Charge the Insurance
Contribution or any other sum due from the Tenant under the terms of
this Lease or any part of any of them shall at any time be more than
seven days overdue to pay to the Lessor Interest thereon calculated
from the due date for payment until the date of actual payment (both
before and after judgment) PROVIDED THAT nothing in this clause shall
entitle the Tenant to withhold or delay any payment after the date
upon which it first falls due or in any way prejudice affect or
derogate from the rights of the Lessor in relation to the said
non-payment or under the proviso for re-entry.
1.5 To pay and indemnify the Lessor against any value added tax (or any
tax of a similar nature that may be substituted for it or levied in
addition to it) at the rate for the time being in force chargeable in
respect of any rents or other payments to be made by the Tenant to the
Lessor or any person on the Lessor's behalf in connection with or
under any of the provisions of this Lease save insofar as any such tax
is recoverable by the Lessor as an input for value added tax purposes,
and, in default of payment, the same shall be recoverable as rent in
arrear PROVIDED that (for the avoidance of doubt) the Lessor shall be
under no obligation to exercise or not exercise any option or right
conferred on it by any enactment so as to reduce or avoid any
liability to value added tax referred to in this clause
RESERVED RIGHTS
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2.1 To permit the Lessor and those authorised by him and others so
entitled to exercise the Reserved Rights and not to inhibit or
interfere with the exercise of any of them.
2.2 To permit upon reasonable notice at any time during the Term
prospective purchasers of or agents instructed in connection with the
prospective or actual sale of the Lessor's interest in the Estate to
view the Premises without interruption providing they are authorised
in writing by the Lessor or its agents
REPAIR AND DECORATION
3.1 To repair and keep in good and substantial repair and condition the
Premises and to renew and replace from time to time all Lessor's
fixtures and fittings and appurtenances in the Premises which may
become or be beyond repair at any time during or at the end of the
Term (in every case damage by any of the Insured Risks excepted save
where the insurance has been vitiated or payment of the insurance
money refused in whole or in part in consequence of some act or
default on the part of the Tenant or anyone connected with it)
PROVIDED always that the Tenant's obligations shall be suspended while
the Lessor is pursuing any steps under Clause 5.4 hereof
3.2 In every fifth year of the Term and also during the three months
preceding the end of the Tenn (during the said last three months of
the Term in such colours and patterns as the Lessor may reasonably
require) and using good quality materials to decorate completely in
accordance with then current good practice all the interior parts of
the Premises which have been or ought to be or normally are so
decorated the decoration to be carried out to the reasonable
satisfaction in all respects of the Lessor.
3.3 To clean both sides of all windows and doors of the Premises (other
than the glass in the doors and windows in the external walls) at
least once in every month.
3.4 Within one one month (or sooner if appropriate) after the Lessor shall
have given to the Tenant or left on the Premises a notice in writing
specifying any repairs cleaning maintenance or decoration of the
Premises which the Tenant has failed to carry out in breach of the
Tenant's responsibilities under this Lease to repair and make good the
same to a good and substantial condition and to the
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reasonable satisfaction of the Lessor or the Surveyor and in case of
default to permit the Lessor and the workmen or agents of the Lessor
to enter the Premises with or without plant equipment and materials
and execute such repairs or other works and all expenses incurred
thereby shall on demand be paid by the Tenant to the Lessor with
Interest
COSTS
4.1 To pay all reasonable and. proper costs charges and expenses
(including solicitors' costs and architects' and surveyors' fees)
incurred by the Lessor for the purposes of or incidental to the
preparation grant service or enforcement (whether by proceedings or
otherwise) of:-
4.1.1 Any notice under Section 146 or 147 of the Law of Property Act
1925 (as amended) requiring the Tenant to remedy a breach or
any of the Tenant's covenants contained in this Lease
notwithstanding forfeiture for such breach shall be avoided
otherwise than by relief granted by the Court.
4.l.2 Any notice to repair or Schedule of Dilapidations accrued
during the Term or accrued at or prior to the end or sooner
determination of the Term whether or no served during the Term
PROVIDED always that the Lessor shall only be entitled to
serve such notice before or within 12 months of the expiration
of the Term and only in relation to matters accrued during the
Term
4.1.3 The payment of any arrears of the Rent or any other sum
payable under this Lease or interest payable on any of then.
4.2 To pay the reasonable and proper costs charges and expenses (including
Solicitors' and Surveyors' fees) incurred by the Lessor in any
application by the Tenant for the Lessor's consent whether such
consent is granted reasonably refused or offered subject to any
reasonable conditions or such application is withdrawn unilaterally by
the Tenant
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4.3 To pay the Lessor's solicitors reasonable and proper costs and
disbursements of and in connection with the preparation and grant of
this Lease together with VAT thereon where applicable
DEALINGS
5.1 Not to assign underlet hold on trust part with possession or
occupation of or share occupation of any part of the Premises (as
distinct from the whole)
5.2 Not to part with possession or occupation (save upon an assignment or
underletting in accordance with clause 5.3 5.4 and 5.5) nor to share
occupation of nor to hold on trust the whole of the Premises.
5.3 Not to assign underlet the whole of the Premises without the Lessor's
prior written consent which shall not be unreasonably withheld or
delayed.
5.4 Not to assign or underlet the whole of the Premises unless on or
before such assignment or underletting:-
5.4.1 the assignee or underlessee has entered into a direct Deed of
Covenant (in a form reasonably specified by the Lessor) with
the Lessor to observe and perform the covenants on the part of
the Lessee and the conditions contained in this Lease except
in the case of an underletting the covenant to pay the Rent;
and
5.4.2 in the case of a limited company being the intended assignee
or underlessee either:-
5.4.2.1 at least two persons or one Company approved by the
Lessor (such approval not to be unreasonably
withheld) or delayed shall have joined in the said
Deed of Covenant to covenant with and guarantee to
the lessor in the terms of the Eighth Schedule; or
5.4.2.2 the intended assignee or underlessee shall have
deposited with the Lessor an amount equal to the Rent
for one year payable at such date or (if higher) the
then open market rent for the Premises for one year
at such date as reasonably estimated by the Lessor
such sum to be held by the Lessor as security for and
to be charged with the due performance and
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observance of the covenants on the part of Lessee and
the conditions contained in this Lease; or
5.4.2.3 shall have obtained from a clearing bank a guarantee
in favour of the Lessor for an amount equal to the
Rent for twelve months payable at such date
PROVIDED THAT the requirements of this clause 5.4.2 shall not
apply in the case of the proposed assignee or underlessee
being a public limited company
5.4.2.4 with a net profit after tax in each case of the three
financial years ending last before the date of the
application for Licence to Assign or Licence to
Underlet as the case be of not less than 3 times the
Rent at such date
5.4.2.5 with an issued and paid up non-redeemable share
capital of not less than 15 times the higher of the
Rent payable at such date or then open market rent
for the Premises for year at such date as reasonably
estimated b the Lessor
5.5.1 Not to underlet the whole of the Premises other than at a rent
not less than the then open market rental value of the
premises (to be approved by the Lessor such approval not to be
unreasonably withheld or delayed prior to the grant of any
such Underlease s approval not to be unreasonably withheld) or
the re then reserved and payable under this Lease (whichever
shall be the greater) and without any fine or premium other
than reasonable rent free inducements or reasonable reverse
premiums such rent to be payable advance by equal instalments
on the Rent Payment Date and to contain the following
provisions
5.5.1.1 provisions for the upwards only review of t rent
thereby reserved on the same basis or
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more frequent basis on which the rent is to be
reviewed in this Lease
5.5.1.2 prohibitions against the Underlessee doing or
allowing any act or thing in relation to the Premises
inconsistent with or in breach of the provisions of
this Lease
5.5.1.3 a condition for forfeiture of the Underlease by the
Underlessor on breach of any covenant by the Under-
lessee and
5.5.1.4 an absolute covenant against further underletting and
the same restrictions on assignment sharing holding
on trust for another parting with or sharing with
another possession or occupation of the premises and
the same provisions for direct covenants and
registration as in this Lease
5.5.2 To enforce the performance and observance by the Underlessee
of the provisions of the Underlease and not at any time either
expressly or by implication to waive any breach of the
covenants or conditions in the Underlease not to vary the
terms or accept a surrender of any Underlease
5.5.3 To procure that the rent is reviewed under the Underlease in
accordance with its terms but not to agree any such reviewed
rent with the Undertenant without the prior written consent of
the Lessor (which consent not to be unreasonably withheld or
delayed) and to procure that if the Lessor so requires the
Lessors representations as to the reviewed rent payable
thereunder are made to any independent person appointed to
determine the same to the reasonable satisfaction of the
Lessor
5.6 Within one month after the execution of any assignment transfer charge
or underlease or upon any transmission by reason of a death or
otherwise affecting the Premises or any sharing arrangement pursuant
to clause 5.7 to give notice thereof in duplicate to the Lessor's
solicitors and to produce to and leave with the Lessor's
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solicitors a certified copy of any relevant deed instrument or other
document and to pay to the Lessor or his Solicitor a registration fee
of thirty pounds plus Value Added Tax
5.7 The Tenant may share occupation of the Premises with an associate
company or a company that is from time to time a member of the same
Group as the Tenant within the meaning of Section 42 of the 1954 Act
(but clause 2.6 of this Lease shall not apply in this respect)
PROVIDED THAT
5.7.1 such other company is not entitled to the exclusive use or
occupation of the Premises or any part of it
5.7.2 no estate or interest in land in the Premises is created or
arises in favour of such other company
5.7.3 on the Tenant and such other company ceasing to be members of
the same said Group such other company shall forthwith vacate
the Premises and such sharing of occupation shall cease
5.7.4 the Tenant gives written notice to the Lessor forthwith upon
the commencement termination or any alteration of any such
sharing of the Premises
5.7.5 the Tenant at all times remains in occupation of the Premises
5.7.6 no relationship of Landlord and Tenant shall be created
ALTERATIONS AND ADDITIONS
6.1 Not to make any alterations or additions to the Premises or the
Service Conduits in the Building nor to commit or any waste spoil or
destruction in or upon the Premises nor to cut damage injure or allow
to be cut damaged or injured any of the roofs walls floors or other
structural parts of the Building or the Service Conduits fixtures or
fittings of the Premises PROVIDED THAT the Tenant may with the
Lessor's prior written consent (such consent not to be unreasonably
withheld or delayed) install or alter internal non-structural
demountable partitioning which the Tenant shall (if so required by the
Lessor) remove at the end of the Term and make good any damage so
caused PROVIDED FURTHER that the Lessor consents to the additional
works which it is carrying out for the Tenant at the Tenant's own cost
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6.2 Save as may be temporarily permitted by Clause 8 of the Second
Schedule not to erect any pole aerial mast dish or other thing
(whether in connection with telegraphic, telephonic, radio or
television communication or otherwise) upon any part of the outside of
the Building
6.3 Not to affix or exhibit to or upon any part of the Premises or in any
window thereof any placard poster advertisement sign or other notice
so as to be visible from outside the Premises save for the Tenant's
nameplate at the entrance to the Premises of such design and of such
dimension as shall previously have been approved by the Landlord such
approval not to be unreasonably withheld or delayed
USE
7.1 Not to carry on upon the Premises any use other than the Permitted
Use.
7.2 Not to leave the Premises unoccupied for more than one month without
notifying the Lessor and providing such caretaking or security
arrangements as the Lessor shall reasonably require and the insurers
shall require
7.3 Not to cause anything to be done on the Premises which way be or
become a nuisance or annoyance or cause damage to the Lessor or to the
owners tenants or occupiers of the Estate.
7.4 Not to use the Premises for any noxious noisy or offensive trade or
business nor far any illegal or immoral act or purpose.
7.5 Not to sleep on the Premises and not to use the Premises for
residential purposes nor to keep any animal fish reptile or bird on
the Premises
7.6 Save as hereby permitted as regards educational courses and seminars
not to hold on the Premises any exhibition public meeting public
entertainment or sale by auction.
7.7 In the event of the Premises having been unoccupied for the purposes
of payment of rates and in consequence the Lessor or any subsequent
occupier shall not obtain the maximum statutory relief from payment of
rates then:-
7.7.1 if at that time the relevant authority for rates is empowered
to levy rates on unoccupied property to pay to the Lessor on
demand (in addition to any sum due to the rating authority) a
sum equal to (and indemnify
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the Lessor against) the amount of rates payable after the end
of the Term to the rating authority pursuant to Section 17 of
the General Rate Act 1967 or any other enactment for a period
equal to the relevant period during which the Premises were
unoccupied
7.7.2 to pay to the Lessor on demand (in addition to any sum due to
the rating authority) a sum equal to (and indemnify the Lessor
against) any surcharge on the Premises payable after the end
of the Term pursuant to Section 17A or 17B of the General Rate
Act 1967 or any other enactment for a period equal to the said
relevant period.
CONDUCT
8.1 Not to permit to be discharged into the Service Conduits any oil or
grease, or any deleterious, objectionable, dangerous, poisonous or
explosive matter or substance, and to take all reasonable measures to
ensure that effluent discharged into the Service Conduits will not be
corrosive or otherwise harmful to the Service Conduits or cause
obstruction or deposit in them
8.2 Not to unload any goods or materials from vehicles and convey the same
into the Premises except through the approved entrance or entrances
provided for the purpose and not to cause congestion of the External
Areas or inconvenience to any other user of them
8.3 Not to park or leave any vehicles belonging to the Tenant or anyone
connected with it on the Estate Roads or its pavements (other than in
the Car Parking Spaces allotted to the Tenant from time to time)
8.4 Not to place any goods or items outside the Premises or the Building
or obstruct in any way the Common Parts or the External Areas other
than temporarily in the course of delivery to or removal from the
Premises.
8.5 Not to store or bring on the Premises any petrol or other dangerous
inflammable explosive or combustible substance.
8.6 Not to allow rubbish or refuse to accumulate on the Premises the
Common Parts or the External Areas or in the Service Conduits and to
clean thoroughly the Premises and the Service Conduits in the Premises
as often as may be necessary.
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8.7 To observe and conform to all reasonable regulations and restrictions
made by the Lessor:-
8.7.1 far the proper management of the Building or the Estate and
notified in writing by the Lessor to the Tenant from time to
time (Provided that the same shall not unreasonably interfere
with the Tenant's use of the Premises); and
8.7.2 for the management of vehicles and traffic as are displayed on
the Estate from time to time
8.8 To observe and perform the covenants subsisting at the date hereof
(whether restrictive or otherwise) restrictions and stipulations (if
any) to which the Lessor's reversionary interest in the Premises is
subject
MACHINERY AND INSTALLATIONS
9.1 To keep all plant, apparatus and machinery upon the Premises properly
maintained and in good working order, and for that purpose to employ
reputable contractors for the regular periodic inspection and
maintenance of them, to renew all working and other parts as and when
necessary or when recommended by such contractors, to ensure that
such plant, apparatus and machinery is properly operated, and to avoid
damage to the Premises by vibration or otherwise
9.2 Not to erect or install on the Premises any equipment engine machinery
other than normal office equipment or machinery.
9.3 Not to suspend any weight from nor to load or use the walls ceilings
floors or structure of the Premises in any manner which will cause
strain damage or interference with the structural parts of the
Building and not to have on the Premises any safe or other unusually
heavy item
9.4 Not to overload the electrical system or circuits in the Premises.
STATUTORY MATTERS
10.1 At the Tenant's own expense, to execute all works and provide and
maintain all arrangements upon or in respect of the Premises or the
use to which the Premises are being put that are required (whether by
the Lessor, the lessee or the occupier) in order to comply with the
requirements of any
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enactment or competent authority, or court of competent jurisdiction.
10.2 Not to do in or near the Premises any act or thing by reason of which
the Lessor may under any enactment incur, have imposed upon it, or
become liable to pay any penalty, damages, compensation, costs,
charges or expenses
10.3 Without prejudice to the generality of the preceding sub-clauses 10.1
and 10.2 to comply in all respects with the provisions of any
enactment applicable to the Premises or in regard to carrying on the
trade or business for the time being carried on by the Tenant on the
Premises or for the health and safety of the Tenant or anyone
connected with it
10.4 Upon receipt of any notice order or direction or other communication
from any competent authority likely to affect the Premises or its user
to deliver to the Lessor immediately a copy of the same and if so
reasonably required by the Lessor to take such steps and join with the
Lessor in making such representations or appeals in all cases as the
Lessor may consider desirable.
10.5 To give notice to the Lessor of any defect in the Premises which might
give rise to an obligation on the Lessor to do or refrain from doing
any act or thing in order to comply with the provisions of this Lease
or the duty of care imposed on the Lessor pursuant to the Defective
Premises Act 1972 or otherwise, and at all times to display and
maintain all notices which the Lessor may from time to time reasonably
require to be displayed at the Premises.
PLANNING
11.1 To comply with the provisions and requirements of the Planning Acts
whether as to the Permitted User or otherwise
11.2 Not to make any application for planning permission in relation to the
Premises (without the previous consent of the Lessor such consent not
to be unreasonably withheld or delayed in the case of an application
for change of use) and subject thereto at the expense of the Tenant,
to obtain all planning permissions and to serve all such notices as
may be required
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for the carrying out of any operations or user on the Premises which
may constitute Development,
11.3 Subject only to any enactment to the contrary, to pay and satisfy any
charge or levy that may hereafter be imposed under the Planning Acts
in respect of the carrying out of maintenance of any such operations,
or the commencement or continuance of any such user
11.4 Notwithstanding any consent which way be granted by the Lessor under
this Lease, not to carry out or make any alteration or addition to the
Premises, or any change of use until:
11.4.1 all necessary notices under the Planning Acts have been served
and copies produced to the Lessor
11.4.2 all necessary permissions under the Planning Acts have been
obtained and produced to the Lessor, and
11.4.3 the Lessor has acknowledged that every such necessary planning
permission is acceptable to it such acknowledgment not to be
unreasonably withheld or delayed
the Lessor being entitled to refuse to acknowledge that a planning
permission is acceptable to it on the grounds that any condition
contained in it, or anything omitted from it, or the period referred to
in it, would (in the reasonable opinion of the Surveyor acting as an
independent expert and not as an arbitrator) be (or would be likely to
be) prejudicial to the Lessor's interest in the Estate or any Adjoining
Property whether during or after the end of the Term
11.5 Unless the Lessor shall otherwise direct, to carry out and complete
before the end of the Term:
11.5.1 any works stipulated to be carried out to the Premises by a
date subsequent to the end of the Term as a condition of any
planning permission granted far any Development begun by the
Tenant before the end of the Term, and
11.5.2 any Development begun by the Tenant upon the Premises in
respect of which the Lessor shall be or become liable for any
charge or levy under the Planning Acts
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11.6 In any case where a planning permission is granted subject to
conditions, and if the Lessor reasonably so requires, to provide
security for the compliance with such conditions , and not to
implement the planning permission until such security has been
provided.
11.7 If reasonably required by the Lessor, but at the cost of the Tenant,
to appeal against any refusal of planning permission or the imposition
of any conditions on a planning permission relating to the Premises
resulting from an application by the Tenant
11.8 If the Tenant shall carry out any Development or carry out permit or
consent to any act matter or thing giving rise to a charge or fiscal
liability on the Lessor the Tenant will pay and indemnify the Lessor
against all liability for any tax, levy, charge or other fiscal
imposition of whatsoever nature (including interest on overdue tax and
penalties for failure to give appropriate notices and information)
under any enactment for which the Lessor shall be liable as a result
of such Development, act, matter or thing and shall on demand repay to
the Lessor the amount of the tax, levy, charge or fiscal imposition
11.9 The Tenant under the provisions of the preceding covenants shall be
excluded from any liability of any kind in relation to the original
construction of the Premises
END OF THE TERM
12.1 To permit the Lessor (provided the Lessor has served a proper notice
determining this Lease and the Tenant has not served a notice
indicating its desire to take a new lease) during the period
commencing six months prior to the end of the Term to affix and retain
without interference upon any part of the Premises a notice for
reletting the Premises but so that such notice shall not obstruct the
Tenant's existing rights of light or air and during such period to
permit persons with authority from the Lessor or its Agents at all
reasonable tones to view the Premises.
12.2 At the end of the Term to yield up the Premises (but not trade
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<PAGE> 40
and other tenant's fixtures and fittings as shall belong to the Tenant
Provided that the Tenant shall make good to the reasonable
satisfaction of the Lessor all damage to the Premises resulting foam
their removal) in good and substantial repair and condition and in
accordance with the Tenant's covenants in this Lease and to deliver to
the Lessor all the keys to the Premises and all entry access cards,
identity cards and other security devices relating to the Premises or
the Estate.
INFORMATION
13.1 To ensure that at all times the Lessor and the local police force have
written notice of the name, home address and home telephone number of
at least two keyholders of the Premises.
13.2 On request to produce to the Lessor or the Surveyor all plans,
documents and other evidence as the Lessor may reasonably require in
order to satisfy itself that the provisions of this Lease have been
complied with.
13.3 Whenever during the Term called upon so to do, to furnish to the
Lessor, in writing the information envisaged in section 40(l) of the
1954 Act within one calendar month of request by the Lessor
INDEMNITY
14. To indemnify and keep indemnified fully the Lessor against any claims
proceedings damages demands costs and expenses incurred by the Lessor
arising directly or indirectly:-
14.1 any act or omission however caused or occurring in or upon the
Premises (other than for death or personal injury arising from
the negligence of the Lessor or its employees)
14.2 relating to or arising from any breach non observance or non
performance by the Tenant of any of its covenants or the
conditions or other provisions of this Lease
14.3 from damage occasioned to the Estate or to any person caused
directly or indirectly by any act default or negligence of the
Tenant anyone connected with it
EASEMENTS
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15. Not to do anything by which the right of light or air to or belonging
to the Premises may be endangered or interfered with or lost and in
the event of any other person or persons doing any act or thing
whereby such right of light or air to the Premises is endangered
interfered with or lost forthwith to notify the Lessor and to permit
the Lessor to take such action at law or otherwise as may seem
necessary to it in the name of the Tenant (PROVIDED ALWAYS that the
consent of the Tenant to the use of its name be first obtained such
consent not to be unreasonably withheld or delayed) either alone or
jointly with the Lessor for the protection of their interests in the
Premises.
THE FIFTH SCHEDULE,
(Rent Review)
1. In this Schedule "the open market rent" means the rent at which
Premises might be expected to be let at the Review Date on the
following assumption on that date (whether or not facts):-
1.1 that the Premises are available to let on the open market
without a fine or premium with vacant possession by a willing
landlord to a willing tenant for a term commencing on and from
the Relevant Review Date of 10 years or (if longer) the
residue then unexpired of the Term
1.2 that the letting is to be of the Premises as a whole on the
same terms and conditions as are contained in this Lease
(other than as to the amount of the Rent but including the
provisions for rent review and exlcluding clause 16 of this
Lease and paragraph 1.13 of this Schedule) and without payment
of any fine or premium
1.3 that the Premises are fit for and fitted out and equipped for
immediate occupation and use as required by the hypothetical
tenant to enable him immediately to occupy and use the
Premises for the Permitted Use (or such other use as the
Lessor may allow or may have allowed on or before the Review
Date)
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1.4 that all of the works set out in the General Specification
have all been carried out to the Premises by the Lessor at its
own expense
1.5 that the Premises may lawfully be used for the Permitted Use
as varied or extended by any licence granted to this Lease
1.6 that the Tenant has complied with all its covenants and
obligations under this Lease
1.7 that if the Premises or the Estate or any amenity belonging to
either of them shall have been damaged or destroyed the same
had before the Review Date been fully repaired and reinstated
1.8 that no works have been carried out to the Premises by the
Tenant or its predecessors in title which would diminish the
rental value of the Premises
1.9 that no reduction is to be made to take account of any rent
free period or other rental concession which on a new letting
on the open market might be granted to the incoming tenant
1.10 that if any of the Additional Works would have been carried
out for the purpose described in paragraph 1.3 they had
already been carried out
but disregarding (if applicable)
1.11.1 Any goodwill attributable to the Premises by reason of any trade or
business carried on therein by the Tenant its predecessors in title or
any undertenant; and
1.11.2 Any effect on rent of any improvements to the Premises (to which the
Lessor shall have given consent) carried out otherwise than in
pursuance of an obligation to the Lessor or its predecessors in title
by the Tenant its undertenants or their respective predecessors in
title during the Term; and
1.11.3 Any effect on rent or the fact that the Tenant its predecessors in
title or any undertenant may have been in occupation of the Premises
1.12 any effect on rent of the Additional Works (but subject to the
assumption set out in paragraph 1.10 above)
1.13 the fact (if a fact) that the Tenant is not registered for the purpose
of value added tax
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2. The Reviewed Rent payable during the period commencing on a Review
Date and ending on the next Review Date or the termination of this
lease (as the case nay be) shall be the greater of:-
2.1 The Rent payable under this Lease immediately prior to the
Review Date upon which the period commences; and
2.2 The Open Market Rent at that Review Date
3. If the Lessor and the Tenant have not agreed on the Open Market Rent
by the Review Date then the determination of the Open Market Rent may
at any time after that Review Date be referred by either party to an
independent chartered surveyor of not less than ten years
qualification having practical experience and knowledge of commercial
rentals in West London postal districts ("the valuer") who shall act
as an expert and not as an arbitrator the valuer to be appointed (in
the event of the Lessor and the Tenant failing to agree on the
appointee) on the application of either party by or on behalf of the
President for the time being of the Royal Institution of Chartered
Surveyors
4. The fees and expenses of the valuer including the cost of his
nomination shall be borne by the Lessor and/or the Tenant as
determined by the valuer. The Lessor and Tenant shall otherwise bear
their own costs
5. The valuer shall afford the Lessor and the Tenant an opportunity to
make representations to him and in arriving at his determination the
valuer shall consider all representations and evidence submitted by or
on behalf of the Parties and in such determination he shall state that
all such representations and evidence shall have been taken into
account
6. If the valuer shall die delay or become unwilling, unfit or incapable
of acting or if for any other reason the President for the time being
of the Royal Institution of Chartered Surveyors or the person acting
on his behalf shall in his absolute discretion think fit he may on the
application of either party by writing discharge the valuer and
appoint another in his place
7. If the Reviewed Rent payable on and from any Review Date has not been
agreed by that Review Date rent shall continue to be payable at the
rate previously payable and forthwith upon the Reviewed Rent being
ascertained the Tenant shall pay to the Lessor any shortfall
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<PAGE> 44
between the rent and the Reviewed Rent payable up to and on the
preceding Rent Payment Date together with Interest at the rate
referred to in Clause 1.33 less 4% on any shortfall on a day to day
basis from the Review Date to the date of actual payment of any such
shortfall. For the purposes of this clause the Reviewed Rent shall be
deemed to have been ascertained on the date when it is agreed between
the parties or (as the case maybe) the date of notification of the
determination by the valuer
8. If either the Lessor or the Tenant shall fail to pay the appropriate
amount of the fees and expenses of the valuer as determined by him
within fourteen days of the same being demanded by the valuer, the
other shall be entitled to pay the same and the amount so paid shall
be repaid by the party chargeable on demand
9. If at any Review Date there shall be in force any enactment which
shall restrict curtail or modify the effect or operation of the
provisions of this Schedule then the Lessor shall in addition to the
review herein provided for on each occasion such enactment or any part
thereof is removed relaxed or modified be entitled on giving not less
than one month's notice in writing expiring after such removal
relaxation or modification to introduce a special review date which
shall be the date of expiration of such notice and the rent from such
special review date if any shall be determined in accordance with the
provisions of this Schedule mutatis mutandis
10. Immediately after agreement or determination of the Reviewed Rent a
memorandum as to its amount shall forthwith be signed by the Lessor
and the Tenant and a note thereof endorsed on this lease.
THE SIXTH SCHEDULE
The Services
1. Maintaining repairing cleaning resurfacing relaying overhauling
draining and emptying and (where reasonably necessary or reasonably
desirable) rebuilding reconstructing altering and renewing:-
1.1 the structure and exterior of the Building including (without
limitation) its foundations and roofs
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<PAGE> 45
1.2 those parts of the Building not let or intended to be let and
all Service Conduits apparatus plant machinery and equipment
within those parts
1.3 the Service Conduits in on or serving the Estate (except those
that are within and solely serving the Premises or any other
part of the Estate that is let or intended for letting) the
use of or benefit from which is or may be common to the
Building and any other part of the Estate
1.4 the External Areas (save for such part or parts of them as
shall from time to time become maintainable at public expense
and all apparatus plant machinery and equipment on them
1.5 the Car Park and all apparatus plant machinery and equipment
in it provided by the Lessor which relates to the Car Park
save for any such rebuilding and reconstructing altering and
renewing caused by or arising out of any inherent or latent
defect
2. As often as is reasonably necessary decorating the exterior of the
Building
3. As often as is reasonably necessary providing and maintaining plants
shrubs trees garden or grassed areas in the External Areas and keeping
the same planted tended and free from weeds and any grass cut
4. As often as is reasonably necessary cleaning the exterior of all
windows and window frames in the outside walls of the Building
5. As often as is reasonably necessary collecting and disposing of refuse
from the collection joints on the Estate allocated by the Lessor from
time to time and the provision repair maintenance and renewal of plant
and equipment for the collection treatment packaging or disposal of
refuse
6. Provision of security personnel and/or security facilities and
equipment on the Estate for the adequate security of the Estate
THE SEVENTH SCHEDULE
Additional items of Expenditure
1. The reasonable and proper fees and disbursements (and any value added
tax thereon) of the Surveyor or the Accountant the managing Agent and
any other person employed or retained for or in
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<PAGE> 46
connection with the management of the Estate or the provision of any
of the services or of any of the matters referred to in this Schedule.
2. The reasonable fees of the Lessor or a Group Company for the
management of the Estate or in connection with the provision of any of
the Services or any of the matters referred to in this Schedule that
shall be undertaken by the Lessor or a Group Company
3. The cost of employing (whether by the Lessor a Group Company the
Managing Agent or any other individual firm or company) such staff for
the provision of the Services matters referred to in this Schedule and
all other incidental expenditure in relation to such employment
including but without limitation
3.1 insurance, pension and welfare contributions transport
facilities and benefits in kind the provision of uniforms
working clothing vehicles, tools, appliances, cleaning and
other materials, fixtures, fittings and other equipment for
the proper performance of their duties; and
3.2 a notional rent (not exceeding current market rent such rent
to be determined by the Surveyor acting as an expert and not
as an arbitrator) for any office or rest accommodation
provided on the Estate for the proper performance of such
person's duties
4. The cost of and of entering into any contracts for the carrying out of
all or any of the Services or any of the matters referred to in this
Schedule
5. All existing and future rates payable in respect of the Estate
(excluding those imposed specifically on the Premises or on any other
part of the Estate that is let or intended for letting) or upon
residential or other accommodation for caretakers engineers and other
staff employed in connection with the Estate
6. The cost of the supply of electricity gas oil or other fuel for the
provision of the Services and for all purposes in connection with the
Estate
7. The amount which the Lessor shall pay or be called upon to pay as a
contribution towards the expense of making, repairing, maintaining,
rebuilding and cleansing any ways roads pavements or structures
service conduits party fences walls or anything which may belong to
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or be used for the Estate or exclusively or in common with other
premises near or adjoining the Estate
8. The reasonable and proper costs charges and expenses of preparing and
supplying to the tenants copies of any regulations made by the Lessor
relating to the Estate or its use
9. The reasonable and proper costs of taking all steps deemed desirable
or expedient by the lessor for complying with, making representations
against, or otherwise contesting the incidence of the provisions of
any proposed regulation, byelaw notice, legislation, order or
statutory requirements concerning town planning, public health,
highways, streets, drainage or other matters relating or alleged to
relate to the Estate or any part of it for which any tenant is not
directly liable
10. The reasonable and proper cost of abating a nuisance in respect of the
Estate in so far as the same is not the liability of any individual
tenant
11. The payment of all reasonable and proper legal charges incurred by the
Lessor:-
11.1 in the running and management of the Estate and in the
enforcement of the covenants conditions and regulations
contained in the Leases granted of the Estate; or
11.2 in making such applications and representations and taking
such action as the Lessor shall reasonably think necessary in
respect of any notice order regulation or bye-law or proposal
for any such thing in respect of the Estate
12. The reasonable and proper costs of provision of security facilities
and equipment and security personnel for the Estate
13. The reasonable and proper costs of any valuation or revaluation of the
Estate for insurance purposes and of making and pursuing any claim
under the Policy
14. The reasonable and proper costs of or resulting from the
discontinuance of any of the Services or the matters mentioned in this
Schedule
15. The reasonable and proper costs of controlling and regulating traffic
on the Estate
16. The reasonable and proper costs incurred in making and pursuing any
claim against any third party reimbursement payment or cancellation
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of any amount which forms or would form part of the Total Service Cost
17. The costs incurred in connection with such other services and matters
for the benefit of the Tenant or the other tenants of the Estate and
the carrying out of such other repairs and improvements works and
additions and the defraying of such other costs (including the
modernisation or replacement of plant and machinery) as the Lessor
shall reasonably consider appropriate or otherwise desirable in the
general interests of the Estate of the tenants or any of them
18. Any facility fees, interest or other financing costs properly incurred
in connection with any sums borrowed by or on behalf of the Lessor for
the purpose of meeting expenditure on any of the Services or any of
the matters referred to in this Schedule
19. Such provision (if any) for anticipated expenditure in respect of any
of the Services or any of the matters referred to in this Schedule as
the Lessor may in its absolute discretion consider appropriate in
respect of
19.1 periodically recurring items (whether regularly or irregularly
recurring)
19.2 renewal or replacement
20. The costs of installation connection rental maintenance and repair of
any communal aerial for the reception of television signals from
satellites
THE EIGHTH SCHEDULE
(Guarantor Covenant)
1. If at any time during the Term the Tenant shall make any default in
payment of the rents or in observing or performing any of the
covenants, conditions or other terms of this Lease the Guarantor will
pay the rents and observe or perform the covenants, conditions or
other terms in respect of which the Tenant shall be in default
notwithstanding
1.1 any time or indulgence granted by the Lessor to the Tenant, or
any neglect or forbearance of the Lessor in enforcing the
payment of rent or the observance or performance of the
Tenant's covenants or any refusal by the Lessor to accept rent
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tendered by or on behalf of the Tenant at a time when the Lessor was
entitled (or would after the service of a notice under Section 146 of
the Law of Property Act 1925 have been entitled) to re-enter the
Premises
1.2 the agreement or determination of the Reviewed Rent or that
the terms of this Lease may have been varied by agreement
between the parties
1.3 that the Tenant shall have surrendered part of the Premises,
in which event the liability of the Guarantor hereunder shall
continue in respect of the Part of the Premises not so
surrendered after making any necessary apportionments under
Section 140 of the Law of Property Act 1925, and
1.4 any other act or thing whereby but for this provision the
Guarantor would have been released
2. If this lease shall be disclaimed or be forfeited then in any such
event if the Lessor within three months of any such dis-claimer or
forfeiture by notice in writing so requires the Guarantor shall
forthwith after service of such notice accept as tenant a new lease
of the Premises for a term equivalent to the residue which if there
had been no disclaimer or forfeiture would have remained of the Term
at the same Rent as shall be payable under this Lease immediately
prior to such disclaimer or forfeiture (with provision for review of
rent at the times and in the manner contained in this Lease) and
subject to the same covenants provisos and conditions o the part of
the Lessor and the Tenant and the other terms as are contained in this
Lease the said new lease and the rights and liabilities under it to
take effect as from the date of such disclaimer or forfeiture and in
any such case the Guarantor shall pay the Lessor's costs of and accept
such new Lease accordingly at will execute and deliver to the Lessor a
counterpart thereof
THE COMMON SEAL of the Lessor was)
affixed hereto in the presence of:)
Director: /S/ [ILLEGIBLE]
Director/Secretary /S/ [ILLEGIBLE]
[SEAL]
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[DIAGRAM - MAP]
77 - 85 FULHAM PALACE ROAD LONDON W6
SITE PLAN SCALE 1:500
<PAGE> 51
[DIAGRAM - MAP]
77-85 FULHAM PALACE ROAD LONDON W6
BLOCK A FOURTH FLOOR PLAN SCALE 1:200
<PAGE> 52
DATED 20th May 1988
-------------------------------------------------
FOLGATE ESTATES LIMITED
to
SYNON LIMITED
========================================
LEASE
of
89/95 St. Paul's Road London N1
========================================
TERM COMMENCES:
FOR YEARS: Twenty-five
TERM ENDS:
ANNUAL RENT: Pounds 165,000
(subject to review)
SIMMONS & SIMMONS
14, Dominion Street,
London EC2M 2RJ.
Ref.:(1/G.37018/JRQ)
<PAGE> 53
[DATE STAMP OMITTED]
T H I S L E A S E is made the 20th day of
_________________1988
B E T W E E N
(1) FOLGATE ESTATES LIMITED whose registered office is situated at Hiview
House Highgate
Road London NW5 1TN ("the Landlord") and
(2) SYNON LIMITED whose registered office is situated at International
House 59 Compton Road London N1 2YU ("the Tenant")
1. IN this deed where the context so admits:-
(1) "the Landlord" shall include the person for the time being
entitled in reversion immediately expectant upon the tenancy granted by this
deed and "the Tenant" shall include its successors in title and assigns
(2) in the event of the Tenant being at any time more than one
individual "the Tenant" shall be deemed to include a reference to any of them
and any covenant on the part of the Tenant shall take effect as a joint and
several covenant
(3) "the property" means the property (including the fixtures
fittings plant machinery equipment and rights) demised by this deed and all
alterations improvements and additions to such property
(4) "adjacent premises" means any land or premises (whether
already or hereafter to be erected and whether belonging to the Landlord or
otherwise and whether or not
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<PAGE> 54
contiguous to the property) adjacent adjoining opposite or near to the property
(5) "the insured risks" means fire explosion (excluding steam
vessels) earthquake storm or tempest burst pipes (excluding sprinklers) riot
and civil commotion accidental damage lightning aircraft malicious damage flood
impact by any road vehicle and such other risks as the Landlord may from time
to time reasonably deem fit
(6) "the prescribed rate" means a rate of interest being three per
centum per annum above the base rate for the time being of National Westminster
Bank plc Provided That if National Westminster Bank plc shall not be in the
practice of publishing its base rate at the relevant time "the prescribed rate"
shall mean such other reasonable and equivalent rate of interest as the
Landlord shall from time to time in writing specify
2. THE Landlord demises to the Tenant. THE property known as 89/95 St.
Paul's Road London N1 (all which property is delineated and coloured pink on
the annexed plan) FOR the term of TWENTY-FIVE YEARS from the 25th day of March
1988 (subject to determination as hereinafter provided) and subject to the
matters referred to in the transfers mentioned in the First Schedule hereto (so
far as subsisting at the date hereof) AT the yearly rent of ONE HUNDRED AND
SIXTY-FIVE THOUSAND POUNDS (pounds 165,000) or such other sum as may become
payable under Clause 8 of this deed
3. THERE are included in this demise:
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<PAGE> 55
1. LAND REGISTRY
[MAP]
TITLE NUMBER
NGL346684
<PAGE> 56
(1) The Landlord's fixtures and fittings upon the property
(2) The right (in common with the Landlord and all other persons
from time to time entitled) to use all easements and services appurtenant to
the property and in particular a right of way for all purposes connected with
the use and enjoyment of the property over the road coloured brown on the
annexed plan
4. THERE are excepted and reserved out of this demise all rights and
privileges now enjoyed over or against the property and the particular rights
following namely:-
(1) The right but (except in emergency) only after giving
reasonable prior notice in writing to the Tenant and making a prior appointment
during normal working hours to construct and to maintain in over or under the
property and to repair cleanse renew and alter any easements or services for
the benefit of any adjacent premises
(2) The right at any time during the tenancy but (except in
emergency) only after giving reasonable prior notice in writing to the Tenant
to enter (or in emergency during the Tenant's absence to break and enter) upon
the property in order (i) to inspect or execute works in connection with any of
the easements or services excepted or reserved by this deed or (ii) to view the
condition of the property or (iii) to execute works upon any adjacent premises
in connection with which there is reserved also the right to build on or into
any external boundary wall of the property or (iv) to execute any repairs or
other works which should or
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<PAGE> 57
may be executed by the Landlord under the provisions of this deed or (v) to
erect and use scaffolding upon the property
(3) The right at any time during the tenancy to rebuild or execute
other works upon any adjacent premises (including the erection and use of
scaffolding upon the property)
Subject in all cases to the Landlord and the person exercising any such
rights in sub-clauses (1) (2) and (3) hereof causing as little damage and
inconvenience as practicable and making good all damage caused to the property
and the Tenants fixtures and fittings and causing the minimum of inconvenience
and disturbance to the Tenant and its business
(5) The right to pass on foot and with or without vehicles over
the road coloured brown on the annexed plan
(6) The free and uninterrupted running and passage of water and
soil through the sewers drains pipes or watercourses and of electricity gas and
other services through the cables wires and pipes which are now or may at any
time during the tenancy be in under or passing through or over the property
(7) The support and protection from the property now or hereinafter
enjoyed by any of the adjacent premises
5. THE Tenant covenants with the Landlord as follows:-
(1) To pay the above-mentioned rent by equal quarterly payments in
advance on the usual quarter days (without any deduction) Provided That the
first such payment or a proportionate part in respect of the period from and
including the 9th day of May 1988 to and including
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the 24th day of June 1988 to be paid on the grant of this deed And if the above
mentioned rent or any other sums reserved by or payable under this deed shall
remain unpaid for 14 working days it shall bear interest at the prescribed rate
from the due date until payment
(2) To pay all rates taxes charges and outgoings (except tax
assessable on the Landlord in respect of rents and other payments arising under
this deed or in respect of any consideration arising on any dealing with any
reversion expectant on the tenancy hereby granted) which are now or may at any
time be assessed or charged upon the property or be payable by the owner or
occupier in respect of the property including a fair and proper proportion (to
be determined by the Landlord) of all such payments as may be assessed charged
or payable upon or in respect of the property and any adjacent premises
(3) To pay for all gas electricity water and other fuels consumed
on the property and to observe and perform at the Tenant's expense all present
and future regulations and requirements of the supply authorities and to keep
the Landlord indemnified in respect of such regulations and requirements
(4) To pay to the Landlord from time to time on demand the sums
following namely:-
(i) An amount equal to (A) the premiums paid by the Landlord
for the purpose of insuring the property against (a) loss or damage by the
insured risks in such sum (including architects' surveyors' and other
professional
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<PAGE> 59
fees) as in the reasonable opinion of the Landlord may from time to time be the
reinstatement and rebuilding cost of the property including the cost of
demolition shoring up making safe and removing debris and (b) the loss of five
years' rent of the property (taking into account increases in rent pursuant to
the provisions of Clause 8 of this deed) and (B) the cost but not more than
once in every year properly incurred by the Landlord from time to time in
valuing the property for insurance purposes
(ii) A rateable proportion of the cost (as determined by
the Landlord's surveyor) incurred by the Landlord from time to time in respect
of any of the following namely repairing cleansing maintaining or lighting (as
shall in the reasonable opinion of the Landlord be appropriate) any roads party
walls fences or other structures drains sewers gutters or any other easements
or services used or to be used in common by the occupier of the property and the
occupiers of any adjacent premises
And if the above mentioned sums shall remain unpaid the same shall bear interest
at the prescribed rate from the time of demand until payment
(5) To repair and keep in good and substantial repair and if
necessary to rebuild the property (damage by latent patent and inherent defects
excepted and damage by any of the insured risks excepted save where the
insurance effected by the Landlord shall be vitiated in whole or in part by any
act or omission of the Tenant or its servants agents or licensees)
6
<PAGE> 60
(6) To keep such part of the property as shall not be built upon
in a clean and tidy condition and the whole of the property (including all
cisterns boilers and flues) properly cleansed and in particular to clean all
the windows (both inside and out) and all other glass once at least in every
month
(7) To keep all water and waste pipes gutters drains sewers ducts
and sanitary and water fittings in the property protected from frost and free
from obstruction and to make good and indemnify the Landlord against all damage
caused by any burst overflow or stoppage of pipes gutters sewers ducts fittings
or drains
(8) In the year ending on the 25th day of March 1995 and once in
every subsequent seven years and also in the last twelve months of the tenancy
(howsoever determined) to burn off prime and paint with two coats at least of
good quality paint and grain varnish and colour with materials of good quality
all such external parts of the property as are usually or ought to be so
painted grained varnished and coloured and at the same time to wash down and
clean all such external parts of the property as are usually or ought to be so
washed and cleansed and so often as may in the reasonable opinion of the
Landlord be necessary (but not more than once in every period of seven years)
to re-point any external brickwork of the property All such works to be carried
out in a workmanlike manner and if in the last twelve months of the tenancy the
Landlord so requires generally in conformity in all respects with the original
colour and appearance of
7
<PAGE> 61
the property as at the date of this deed (or such other colour and appearance as
the Landlord may approve such approval not to be unreasonably withheld or
delayed)
(9) In the year ending on the 25th day of March 1993 and once
in every subsequent five years and also in the last twelve months of the
tenancy (howsoever determined) to prime and paint with two coats at least of
good quality pint and grain varnish colour and paper with materials of good
quality all such parts of the inside of the property as are usually or ought to
be so painted grained varnished coloured and papered All such works to be
carried out in a workmanlike manner and in the last twelve months of the
tenancy if the Landlord so requires generally in conformity with such colour
and appearance as the Landlord may approve such approval not to be unreasonably
withheld or delayed
(10) To repair or replace forthwith by new articles of similar kind
and quality the Landlord's fixtures and fittings and any other fixtures
fittings plant machinery or equipment (other than tenant's or trade fittings)
upon the property which shall become in need of repair or replacement
(11) Within three months after service upon the Tenant of notice of
any disrepair for which the Tenant is liable (or immediately in case of need)
to commence to make good the disrepair and in default to permit the Landlord
and all persons authorised by it to execute the necessary work the cost of
which (including any reasonable and proper surveyor's fees incurred) shall be
paid forthwith to the Landlord by the Tenant
8
<PAGE> 62
(12) At the expiration or sooner determination of the tenancy to
yield up to the Landlord the property repaired cleansed and maintained in
accordance with the covenants herein contained
(13) (a) To forthwith effect and keep on foot suitable contracts
for the repair maintenance and replacement of the plant machinery and equipment
(including (without limitation)all motors and boilers) with such firms of
contractors as shall be approved by the Landlord such approval not to be
unreasonably withheld or delayed from time to time and to produce the contracts
to the Landlord whenever the Landlord shall reasonably require
(b) If default shall be made in effecting or keeping on foot
any such contracts or in producing any such contracts the Landlord may but only
after giving the Tenant reasonable prior notice effect such contracts the cost
of which shall be repaid forthwith by the Tenant
(14) To permit the Landlord and any persons authorised by it after
giving reasonable prior notice in writing to the Tenant to enter and view the
property or take inventories of the fixtures and things to be yielded up at the
determination of the tenancy or from time to time affix on the exterior of the
property notices for selling or re-letting (but in this case only in the last
six months of the tenancy) the property and to permit intending lessees or
purchasers to view the property provided such notices shall not diminish the
Tenants enjoyment of light of air to the property
9
<PAGE> 63
(15) Save as to the initial development of the Property by the
Landlord to comply forthwith in all respects with the provisions of every
enactment (which expression in this sub-clause includes every Act of Parliament
now or hereafter enacted and every instrument regulation and bye-law and every
notice order or direction and every licence consent or permission made or given
under it) so far as it shall affect the property And save as excepted as
aforesaid to execute forthwith all works which under any enactment shall be
required to be executed upon the property And to indemnify and keep the
Landlord indemnified in respect of all such matters
(16) To keep the property sufficiently supplied and equipped with
such fire fighting extinguishing appliances as shall from time to time be
required by law or by the local or other competent authority or as shall be
reasonably required by the Landlord and such appliances shall be open to
inspection and shall be maintained to the reasonable satisfaction of the
Landlord and any such local or other competent authority and also not to
obstruct or permit or suffer to be obstructed the access to or means of working
such appliances or the means of escape from the property in the case of fire
(17) To supply a copy to the Landlord of any order notice or
direction or licence consent or permission relating to the property within
seven days of its receipt by the Tenant and if reasonably required by the
Landlord to take all necessary steps to comply therewith and at the request of
the
10
<PAGE> 64
Landlord to make or join with the Landlord at the cost of the Landlord in
making such objections and representations against any such order notice or
direction or licence consent or permission as the Landlord shall reasonably
deem expedient save where it is against the Tenants business interests so to do
(18) (a) Not to make or suffer any assignment charge underletting or
parting with or sharing possession of the whole or any part of the property or
suffer any person to occupy the whole or any part of the property as licensee
(Provided Always That nothing contained in this covenant shall prevent the
Tenant from sharing occupation of the whole or any part or parts of the property
with any company (herein called "a Group Company") which is for the time being
in the same Group of Companies (as that expression is defined in Section 42 of
the Landlord and Tenant Act 1954 as amended) as the Tenant subject to the
condition that no relationship of Landlord and Tenant shall be created or be
deemed to exist between the Tenant and the Group Company) PROVIDED THAT the
consent of the Landlord shall not be unreasonably withheld or delayed to:-
(i) a charging of the whole of the property
(ii) an assignment of the whole of the property.
(b) Upon the Landlord consenting to any assignment of the
property to procure that the assignee enters into a covenant with the Landlord
(whose proper costs shall be paid by the Tenant) to pay the rents reserved by
this deed (including any increases in rent pursuant to the provisions
11
<PAGE> 65
of Clause 8 of this deed) and to perform and observe the covenants on the part
of the Tenant contained in this deed
(c) Within one month after any charging assignment or any
devolution of the interest of the Tenant in the property to give notice of it
in writing to the Landlord and to produce to the Landlord a certified copy of
the charge assignment or other document evidencing such devolution and to pay
to the Landlord a registration fee of pounds 20.00
(19) At all times during the tenancy to use the property for office
purposes and not to use or permit or suffer the same to be used for any other
purpose
(20) That neither the whole nor any part of the property shall be
used for any sale by auction or for any offensive or noisy trade business or
occupation or for illegal or immoral purposes or for the sale of wine beer
spirits or other intoxicating liquors or as a club or betting office or as a
dwelling house Provided Always the Tenant shall be entitled if it wishes to
have a canteen at the property
(21) That nothing shall be done on the property which may in the
reasonable opinion of the Landlord be a nuisance damage injury or annoyance
(including without prejudice to the generality of the foregoing annoyance
caused by radio television or other sound-producing apparatus or any machinery
or mechanical instrument)
(22) That no alteration or addition shall be made in or to the
property PROVIDED THAT with the previous consent in writing of the Landlord
(such consent not to be unreasonably withheld or delayed) the Tenant may carry
out internal
12
<PAGE> 66
non-structural alterations to the property in accordance with plans and
specifications previously submitted to and approved by the Landlord at the
Tenant's expense PROVIDED FURTHER THAT the Landlord may as a condition of
giving any such consent if reasonable so to do to require the Tenant to enter
into such covenants with the Landlord as the Landlord may reasonably require as
to (i) the carrying out of such alterations to the property and (ii) the
reinstatement thereof at the determination of the tenancy or otherwise to the
same condition in which it was before the carrying out of such alterations
(23) That without the previous consent in writing of the Landlord
such consent not to be unreasonably withheld or delayed no signboard
advertisement placard or nameplate shall be exhibited on the property
(24) That no articles shall be hung or exposed outside the property
or exhibited outside the entrance doors whether on the pavement or elsewhere
(25) That no excessive weight shall be placed or suspended on or
from the floors ceilings or walls of the property and not to use or permit or
suffer the property to be used in such manner as to subject the same to any
strain beyond that which it is designed to bear
(26) That no poles masts or wires shall be erected on the exterior
of the property (whether in connection with wireless or television apparatus or
otherwise) without the previous consent in writing of the Landlord such consent
not to be unreasonably withheld or delayed
13
<PAGE> 67
(27) That no alteration or addition shall be made to the central
heating hot water and air conditioning installations in the property without
the Landlords previous consent in writing such consent not to be unreasonably
withheld or delayed
(28) (a) That nothing shall be brought or done upon the
property which may invalidate or render any additional premium payable for any
insurance of the property or of any adjacent premises and in case of any
additional premium becoming payable it shall be paid by the Tenant on demand And
in the event of the property or any adjacent premises or any part thereof being
damaged or destroyed by any of the insured risks and the Landlord's insurance
having been vitiated in whole or in part and the insurance moneys under such
insurance having been wholly or partially irrecoverable by any act or omission
of the Tenant or its servants agents or licensees then the Tenant will forthwith
pay to the Landlord the whole or (as the case may require) the irrecoverable
proportion of the cost (including architect's surveyor's and other professional
fees) of completely rebuilding and reinstating the same
(b) Forthwith upon the happening of any event or thing
against which insurance has been effected by the Landlord under the provisions
of this deed to give notice thereof to the Landlord
(29) That the road referred to in Clause 3(2) of this deed shall
not be damaged or obstructed or used in such manner as to cause in the
reasonable opinion of the Landlord
14
<PAGE> 68
any nuisance damage or annoyance And no goods or other things shall be loaded
or unloaded into or from any trade vehicles on the said road
(30) Not to allow any trade empties or rubbish of any description
to accumulate on or outside the property but to place all refuse and rubbish in
proper receptacles
(31) That no window or other opening belonging to the property
shall be stopped up darkened or obstructed nor any window or other opening
belonging to adjacent premises obstructed and that no new window or other
opening or encroachment or easement shall be allowed or suffered so as to lead
to the acquisition of rights against the property And in case any such window
opening encroachment or easement shall be made or attempted to be made the
Tenant will give notice of it forthwith to the Landlord and at the request and
cost of the Landlord adopt such means as may reasonably be required for
preventing any such encroachment or the acquisition of any such rights
(32) (a) To pay all reasonable and proper costs charges and
expenses (including solicitor's costs and disbursements and surveyor's fees)
incurred by the Landlord for the purpose of or incidental to the preparation
and service of a notice under Sections 146 or 147 of the Law of Property Act
1925 (as amended) requiring the Tenant to remedy a breach of any of the
covenants contained in this deed (notwithstanding forfeiture for such breach
shall be avoided otherwise than by relief granted by the Court) or incidental
to the preparation
15
<PAGE> 69
and service of a schedule of dilapidations at any time during or after the
determination of the tenancy
(b) To pay to the Landlord all reasonable and proper
costs charges and expenses incurred by the Landlord (including solicitor's
costs and disbursements surveyor's and architect's fees) in connection with the
grant by the Landlord of any consent pursuant to the covenants contained in
this deed or any application for such consent save that the Tenant shall not be
responsible for such costs charges and expenses if the Landlord is held to have
unreasonably withheld its consent to an application under the Lease
(c) To pay all reasonable and proper costs charges and
expenses (including solicitor's costs and disbursements and surveyor's fees)
incurred by the Landlord for the purpose of or incidental to the enforcement of
the Tenant's covenants in this deed
(33) That in addition to the rent fees and other payments of
whatever nature which are or shall be reserved or which are or may become
payable pursuant to the provisions of this deed ("the payments") by or on
behalf of the Tenant to the Landlord or any person acting on its behalf the
Tenant shall pay any Value Added Tax which is or may at any time hereafter
become payable in respect of the payments save to the extent that the Landlord
is entitled to an input tax credit in respect thereof
(34) To perform and observe at its own expense all the covenants
terms and provisions of the documents mentioned in
16
<PAGE> 70
the First Schedule below and to indemnify and keep the Landlord indemnified in
respect thereof
(35) Forthwith upon becoming aware of the same to give notice in
writing to the Landlord of any defect in the state of the property which would
or might give rise to an obligation on the Landlord to do or refrain from doing
any act or thing in order to comply with the duty of care imposed on the
Landlord pursuant to the Defective Premises Act 1972 and indemnify and keep
indemnified the Landlord from and against any loss claims actions costs or
demands arising from a failure to give such notice and at all times to display
and maintain all notices (including the wording thereof) which the Landlord may
from time to time display or reasonably require to be displayed at the property
(36) At all times during the tenancy to indemnify and keep
indemnified the Landlord from and against all actions proceedings claims
demands damages or loss whatsoever which may be maintained or made against or
sustained by it by reason or in consequence of the state or condition of the
property or the Tenants use thereof
(37) Not without the consent in writing of the Landlord such consent
not to be unreasonably withheld or delayed to make any application for planning
permission in respect of the property
6. THE Landlord covenants with the Tenant as follows:-
(1) That the Tenant paying the rent reserved by this deed and
performing and observing the foregoing covenants shall quietly enjoy the
property for the term granted by this
17
<PAGE> 71
deed without any interruption by the Landlord or any person lawfully claiming
under or in trust for the Landlord
(2) The Landlord will procure insurance of the property against
loss or damage by the insured risks (including architect's surveyor's and other
professional fees) in the full reinstatement and rebuilding cost of the
property (subject to such exceptions and conditions as may be set out in the
policy of insurance from time to time) And if the Landlord's insurance has not
become vitiated in whole or in part by any act or omission of the Tenant or its
servants agents or licensees will procure any moneys received under such
insurance to be laid out in rebuilding or reinstating the property and in the
event of the property or any part thereof being destroyed or damaged by an
insured risk as soon as the necessary consents are obtained (which the Landlord
covenants to use all reasonable endeavours to obtain as expeditiously as
possible) to rebuild and reinstate the same and the Landlord will supply on
request a copy of the insurance policy for the property and evidence of payment
of the last premium and will make up any shortfall in the insurance monies out
of its own monies
(3) The Landlord shall not in any event be liable to the Tenant in
respect of any failure of the Landlord to perform any of its obligations to the
Tenant hereunder whether express or implied unless and until the Tenant has
notified the Landlord of the facts giving rise to the failure and the Landlord
has failed within a reasonable time to remedy the same
18
<PAGE> 72
(4) Subject to Section 4 of the Defective Premises Act 1972 (as
amended or re-enacted from time to time) so far as the same is applicable the
Landlord shall not in any circumstances incur any liability in respect of damage
to person or property or otherwise howsoever by reason of any act neglect
default or misfeasance of the Landlord its servants or employees or by reason of
any accidental damage which may at any time be done to the property or to any of
the goods persons or property of the Tenant or any other person caused by any
act or default of any other tenant of the Landlord in any adjacent premises or
of any servant employee or contractor as aforesaid in breach or neglect of his
or her duty
7. IT IS AGREED as follows:-
(1) If any rent reserved by this deed shall be unpaid for 21 days
after becoming payable (whether formally demanded or not) or if any covenant on
the Tenant's part shall not be performed or observed or if the Tenant (being a
company) shall enter into liquidation whether compulsory or voluntary (save for
the purpose of reconstruction or amalgamation without insolvency) or change the
liability of its shareholders from limited to unlimited (or vice versa) or (not
being a company) shall become bankrupt or shall call a meeting of or enter into
any composition with creditors then and in any such case it shall be lawful for
the Landlord to re-enter upon the property and thereupon this demise shall
determine but without prejudice to any claim by the Landlord in respect of any
antecedent breach of covenant
19
<PAGE> 73
(2) (a) If the Tenant shall make default in paying any sum (other
than rent) referred to in Clause 5 such sum shall be recoverable (whether
formally demanded or not) as if rent in arrear And the power of the Landlord to
distrain upon the property for rent in arrear (including any such
last-mentioned sum) shall extend to and include any tenant's fixtures and
fittings not otherwise by law distrainable
(b) Nothing herein contained shall entitle the Tenant to
withhold payment of any rent or other moneys payable under this deed after the
date upon which the same first falls due or in any way prejudice or affect the
rights of the Landlord under the provisions of sub- clause (1) of this Clause 7
(3) Any dispute arising between the Tenant and any owner or
occupier of any adjacent premises (other than the Landlord) as to any right or
privilege or any party or other wall or otherwise shall be determined on behalf
of the Tenant by the Landlord's surveyor whose decision shall bind the Tenant
and whose fees shall be payable as he may direct
(4) If the property is destroyed or damaged (or the access to or
egress from) by any of the insured risks as to be unfit for occupation or use
in whole or in part and the Landlord's insurance has not become vitiated by any
act or omission of the Tenant or its servants agents or licensees then the rent
reserved by this deed (or a proper proportion according to the extent of the
damage) shall from the date of such damage or destruction and until the
property shall have been reinstated or until the expiration of five years
from
20
<PAGE> 74
the date of the damage or destruction (whichever shall be the sooner) cease to
accrue And any dispute under this proviso shall be referred to the award of a
single arbitrator to be appointed by the President for the time being of the
Royal Institution of Chartered Surveyors and in accordance with the Arbitration
Act 1950 (as amended or re-enacted from time to time) Provided Always that
under no circumstances shall the amount of rent which ceases to accrue
hereunder exceed the amount received by the Landlord in respect of loss of rent
under the policy referred to in Clause 6(2) of this deed
(5) Upon quitting the property the Tenant shall not be entitled to
any compensation whatsoever whether under the provisions of any legislation
enacted before or after the date of this deed or otherwise PROVIDED THAT this
sub-clause shall take effect subject to the provisions of the Landlord and
Tenant Act 1954 (as amended or re-enacted from time to time) and shall not
extend to any claim against the Landlord for breach of covenant
(6) Any notice served under or in respect of this deed may be
served by posting it in a prepaid envelope addressed in the case of the
Landlord to its registered office or other last known address or in the case of
the Tenant to its registered office or to the property and shall be deemed to
have been served on the day after that on which it is posted and in proving
such service it shall be sufficient to prove that the envelope containing the
notice was properly addressed stamped and posted
21
<PAGE> 75
(7) The Landlord's reasonable and proper solicitor's costs and
disbursements (including the cost of engrossments of this deed and stamp duty
and any costs of mortgagees for consent to or registration of this deed and
surveyor's fees) in connection with the preparation and completion of this deed
and a counterpart shall be paid by the Tenant
(8) Nothing in this deed shall be construed or operate expressly
or impliedly to confer upon or grant to the Tenant any easement right or
privilege other than those expressly hereby granted under Clause 3 of this deed
(9) Nothing in this deed shall imply or warrant that the property
may be used for the purpose herein or subsequently authorised by the Landlord
and the Tenant hereby acknowledges and admits that the Landlord has not given
or made at any time any representation or warranty that any such use is or will
be or will remain a permitted use under the Town and Country Planning Acts
1962-1977 (as amended or re-enacted from time to time) and under every covenant
and condition now affecting the property
(10) The demand for and/or acceptance of rent by the Landlord or
its agents shall not constitute and shall not be construed to mean a waiver of
any prior breaches of the covenants on the part of the Tenant herein contained
or of the Landlord's rights in respect of such breaches
(11) Nothing herein contained shall confer on the Tenant any right
to the benefit of or to enforce any covenant or agreement on the lessee's part
contained in any lease or other instrument relating to any adjacent premises or
limit
22
<PAGE> 76
or affect the right of the Landlord or other the owner to deal with the same in
such manner as may be thought fit
8. (1) THE Landlord may by notice in writing served on the Tenant at
any time require the rent payable under this deed to be revised with effect from
any of the review dates hereinafter defined and from any such review date the
rent shall be such sum as shall (in default of agreement between the Landlord
and the Tenant within two months after service of such notice) be determined by
a valuer ("the Valuer") nominated at the request of either the Landlord or the
Tenant by the President for the time being of the Royal Institution of Chartered
Surveyors to represent the rack rental value of the property as between a
willing landlord and a willing tenant without taking a fine or premium at such
review date for a term of 15 years with vacant possession and on the assumption
(if not the fact) that (a) the property is in a good state of repair and
decorative condition (b) the property is fully fitted out and fit for immediate
occupation and use and could and would be immediately occupied by a willing
tenant (c) the Landlord and the Tenant have performed and observed all the
covenants and conditions on their respective parts herein contained (d) the
property can be and is capable of being used for the purposes herein authorised
and (e) in the event of the property or the access thereto having been wholly or
substantially damaged or destroyed the property and the access thereto has been
fully rebuilt and reinstated PROVIDED THAT no account shall be taken of (i) any
goodwill attributable to the property by
23
<PAGE> 77
reason of the Tenant's or Permitted Occupiers (ii) business any alterations or
additions made (with the consent of the Landlord where such consent is necessary
hereunder) to the property after the date hereof by and at the cost of the
Tenant or Permitted Occupier and without any liability on the part of the
Landlord to pay compensation in respect thereof and otherwise than in pursuance
of an obligation to the Landlord (iii) any diminution in rent attributable to
work carried out or to be carried out by or anything done or to be done or
omitted by the Tenant or Permitted Occupier whether with or without the consent
of the Landlord (iv) any occupation of the Permitted Occupier and (v) any
fitting out works carried out by the Tenant at its expense whether before or
after the date of this deed BUT in all other respects by reference to the terms
of this deed (including this sub-clause) PROVIDED FURTHER THAT (i) the rent so
revised shall not be less than that reserved immediately prior to such review
date (ii) the rent shall be revised once only during the period of five years
commencing at each such review date and (iii) the Valuer shall act as an
arbitrator
(2) The review dates referred to in the preceding sub-clause are
the 25th day of March 1993 the 25th day of March 1998 and the 25th day of March
2003 and the 25th day of March 2008
(3) In the event that at each such review date or the expiration
of two months after the service of the Landlord's notice under sub-clause (1)
of this Clause (whichever shall be the later) the revised rent shall not have
been determined
24
<PAGE> 78
as provided for in this Clause 8 then the Tenant shall continue to pay rent at
the rate reserved immediately prior to such review date on each day appointed
by this deed for payment of rent until such revised rent shall be determined
and within 14 days after such determination the Tenant shall pay to the
Landlord as arrears of rent a sum equal to the amount whereby the rent so
revised shall exceed the rent reserved immediately prior to such review date
but duly apportioned in respect of the period commencing on such review date
and ending on the quarter day immediately following the date on which such
revised rent is determined as aforesaid together with interest on such arrears
of rent as aforesaid at the base rate for the time being of National
Westminster Bank plc from such review date until payment by the Tenant
(4) Any revised rent determined under sub-clause (1) of this
Clause 8 shall be embodied in a document to be prepared by the Landlord and
duly executed by the Landlord and the Tenant and the Tenant shall bear the
costs charges and expenses incurred by the Landlord in connection with the
preparation and completion of such document
I N W I T N E S S whereof the parties hereto have caused their Common
Seals to be hereunto affixed the day and year first before written
25
<PAGE> 79
THE FIRST SCHEDULE
------------------
<TABLE>
<CAPTION>
Date Document Parties
---- -------- -------
<S> <C> <C>
29.1.1979 Transfer Grovegate Investments Limited (1)
Amo Management Services Limited (2)
29.1.1979 Transfer Grovegate Investments Limited (1)
Grangedove Limited (2)
29.1.1979 Transfer Grovegate Investments Limited (1)
Vistadene Limited (2)
19.12.1978 Transfer The British Petroleum Trust
Limited (1) BP Trustees Limited (2)
Grovegate Investments Limited (3)
</TABLE>
[SEAL OMITTED]
THE COMMON SEAL of
--- ------ ----
FOLGATE ESTATES LIMITED
------- ------- --------
was hereunto affixed in
the presence of:
/S/: [ILLEGIBLE]
/S/: [ILLEGIBLE]
[SEAL OMITTED]
THE COMMON SEAL of
--- ------ ----
SYNON LIMITED was
----- -------
hereunto affixed in
the presence of:
/S/: [ILLEGIBLE]
/S/: [ILLEGIBLE]
26
<PAGE> 80
[Folgate Estates Ltd - LETTERHEAD]
[DATE STAMP OMITTED]
Your Ref:
Our Ref: TJF/TR
Date: 7 January 1993
Mr Andrew Newton
Synon Europe Limited
91 St Paul's Road
London N1 2YU
Dear Mr Newton,
RENT REVIEW 91 ST PAUL'S ROAD
You will recall that I wrote to your recently reference our intention at
Folgate Estates Limited to review the rent in respect of the premises you
occupy under a lease dated the 20th May 1988. I now propose that the rent will
be reviewed to the yearly sum of pounds 210,000 (Two hundred and ten thousand
pounds) with effect from the 25th March 1993.
Your attention is drawn to the revisions of the lease in the event that my
proposals are unacceptable to you.
I will be happy to meet with you to discuss this matter and other outstanding
issues between our respective companies.
Yours sincerely,
FOLGATE ESTATES LIMITED
/s/: Thomas J. Fanning
- -------------------------------
THOMAS J. FANNING
<PAGE> 81
DATE 15th September 1989
-----------------------------------------------------
(1) DANBUILD INVESTMENTS (U.K.) LIMITED
(2) SYNON LIMITED
-----------------------------------------------------
L E A S E
of premises at 77-85 Fulham Palace Road, London W6
-----------------------------------------------------
Lipman Bray
Thrutchley House
1 Bickenhall Street
London W1H 3LA
Ref: TGM/
3rd Floor
1
<PAGE> 82
H.M. LAND REGISTRY
Land Registration Acts (1925-1971)
(LEASE OF PART)
London Borough: London Borough Hammersmith & Fulham
Freehold Title No: NGL551831
Property: 3rd floor Block A (Elsinore House), 77-85
Fulham Palace Road, London W6
DATE: 15th September 1989
THIS LEASE is made BETWEEN (1) The Lessor and (2) The Tenant referred to
in following particulars
PARTICULARS
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The Lessor DANBUILD INVESTMENTS (U.K.) LIMITED
whose registered office is c/o Bright Grahame Murray,
Chartered Accountants, 124- 130 Seymour Place,
London W1H 6AA
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The Tenant SYNON LIMITED
whose registered office is at 19 St Pauls Road
London. N1 2YW
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The Building Block A, (Elsinore House) 77-85 Fulham Palace Road,
London W6 shown edged brown on Plan I
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The Premises Third floor premises edged red on Plan 2 and as
further defined in the First Schedule
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The Term From and including 1st July 1989
for a period of 25 years ending on 30th June 2014 but
subject to the provisions in this Lease for earlier
termination.
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The Rent Commencement Date One month from the date
hereof
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The Initial Rent THREE HUNDRED AND EIGHT THOUSAND FOUR HUNDRED
AND TWENTY FIVE POUNDS STERLING per annum
(pounds 308,425.00 p.a.)
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The Review Dates 1st July 1994 1st July 2004
1st July 1999 1st July 2009
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The Permitted Use As offices and for the purpose of holding
educational seminars and courses
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The Car Parking Spaces FOUR (4) car parking spaces
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The Tenant's Break Date 30th June 2004
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The Lessor's Break Date 30th June 2005
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DEFINITIONS
1. IN THIS LEASE unless the context otherwise requires:-
1.1 The expressions in the first column of the Particulars shall
have the meanings given to then in the second column of the
Particulars and the Particulars form part of this Lease
1.2 "the Lessor" includes the person for the time being entitled
to the reversion immediately expectant on the Term and any
superior landlord
1.3 "the Tenant" includes the successors in title of the Tenant
1.4 "the Tenant or anyone connected with it" means any of the
Tenant its employees agents licensees invitees and anyone else
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on the Estate expressly or impliedly with the authority of the
Tenant
1.5 "the Guarantor" includes the estate and personal
representatives of the Guarantor)
1.6 "the Term" includes any continuation or extension thereof or
any period of holding over in each case whether by statute or
common law
1.7 "the Rent" means:-
1.7.1 From the date hereof until the Rent Commencement Date
a peppercorn (if demanded)
1.7.2 From the date hereof until the first of the Review
Dates the Initial Rent
1.7.3 Thereafter the Reviewed Rent
1.8 "the Reviewed Rent" means the Rent computed in accordance with
the terms of the Fifth Schedule
1.9 "the Rent Payment Days" means 1st January 1st April 1st July
and 1st October
1.10 "the Granted Rights" means the rights set out in the Second
Schedule
1.11 "the Reserved Rights" means the rights set out in the Third
Schedule
1.12 "the Estate" means the property known as 77-85 Fulham Palace
Road London W6 being the land comprised in the freehold title
mentioned above shown edged green on Plan 1 and the buildings
from time to time on it
1.13 "the Car Park" means the car park in the basement of Blocks B
and C (being the buildings on the parts of the Estate erected
or in the course erection shown for the purpose of
identification only edged blue and purple respectively on Plan
1) and including the entrances driveways access ramps roadways
and other areas in or ancillary to it
1.14 "the Roadways" means the roads from time to time on the Estate
including the entrances driveways access ramps and roadways
forming part of the Car Park
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1.15 "the External Areas" means the Roadways and the forecourts
landscaped areas and other external areas on the Estate from
time to time and the boundary walls and fences of the Estate
1.16 "the Common Parts" means the entrance halls landings
staircases corridors, lifts, toilets and other parts of the
Building the use of which is or may be common to the Tenant
and the occupiers of any other part of the Building
1.17 "Adjoining Property" means any neighbouring or adjoining land
or property in which the Lessor or a Group Company has now or
at any time during the Term shall have acquired a freehold or
leasehold interest
1.18 "Insured Risk" means any of the risks referred to in Clauses
7.2.1 and 7.2.2 and any other risks against which the Lessor
shall at the time of the damage or destructicn in question
have reasonably effected insurance subject to the excesses
exclusions or limitations referred to in Clause 7.1.1.2
1.19 "the Policy" means the insurance policy referred to in clause 7
1.20 "the Insurance Contribution" means the total of:-
1.20.1 the fair proportion (as determined by the Surveyor
acting as an independent expert and not as an
arbitrator) of the sums payable by the Lessor by way
of premiums for insuring the Estate against the
Insured Risks referred to in clause 7.2.1 and 7.2.2;
and
1.20.2 all of the sums payable by the Lessor by way of
premiums for insuring against loss of the Rent
payable under this Lease from time to time (having
regard to reasonable sums in respect of any review of
the Rent which may become due under this Lease) for
five (5) years; and
1.20.3 all of any increased premium payable for any such
insurance relating to the Premises or to any other
part of the Estate and/or the loss of the rents
payable under this Lease or the lease of any other
part of the Estate as a result of any act or omission
of the Tenant or anyone connected with it
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1.21 "the Services" means the services and other matters set out in
the Sixth Schedule
1.22 "the Surveyor" means any person or firm appointed by or acting
for the Lessor from time to time (including an employee of the
Lessor or a Group Company) appointed by the Lessor to perform
the function of a surveyor for any purpose of this Lease
1.23 "the Accountant" means any independent Accountant or firm of
Accountants appointed by or acting for the Lessor from time to
time or and independent Chartered Surveyor) or firm of
Chartered Surveyors who (in the case of surveyors) shall be
experienced in the preparation and auditing of service charge
accounts to perform the function of an accountant for any
purpose of this lease
1.24 "the Managing Agent" means any person or firm appointed by or
acting for the Lessor from time to time (including an employee
of the Lessor or a Group Company) to collect the rents from
and to manage the Estate
1.25 "Accounting Period" means a year commencing on 1st January or
such other date and/or period as the Lessor shall from time to
time decide
1.26 "the Total Service Cost" means the aggregate amount in each
Accounting Period of:-
1.26.l The amounts properly incurred by or on behalf of the
Lessor in providing all or any of the Services
1.26.2 The amounts properly incurred by or on behalf of the
Lessor in connection with any of the matters referred
to in the Seventh Schedule
1.26.3 The amounts considered reasonably appropriate by the
Managing Agent or the Surveyor acting as an
independent expert and not as an arbitrator as a
reserve towards future expenses of a periodical or
non-annually recurring nature in connection with any
of the Services or the said matters
1.26.4 Value added tax payable on or in connection with any
of the said amounts save insofar as the Lessor can
recover the same
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1.26.5 The costs incurred by the Lessor of and in connection
with the obligation set out in clause 5.4 less any
sums actually recovered by the Lessor pursuant to its
obligations set out in clause 5.4
1.27 "the Service Charge" means the fair proportion or fair
proportions of the Total Service Cost attributable to the
Premises as determined from time to time by the Surveyor
(acting as an independent expert and not as an arbitrator)
PROVIDED THAT:-
1.27.1 different proportions may be applied to different
items within the Total Service Cost or to different
amounts within the same item; and
1.27.2 no part of the Total Service Cost shall be deemed to
be attributable to the Car Park notwithstanding that
expenditure relating to the Car Park forms part of
the Total Service Cost
1.27.3 the fair proportion shall be calculated on the basis
that all premises on the Estate intended to be let
have been let and that all the Tenants of the
Building and the Estate are contributing a fair and
reasonable proportion to the respective elements of
the Total Service Cost
1.28 "The Interim Charge" means four equal instalments such sums to
be paid in advance on account of the Service Charge for an
Accounting Period as the lessors or the Managing Agents shall
from time to time specify to be a fair and reasonable estimate
of the Service Charge that will be payable by the Tenant for
that Accounting Period PROVIDED THAT the Lessor may revise
such estimate during an Accounting Period if it shall be fair
and reasonable to do so in the circumstances and the remaining
instalments in such Accounting Period shall be adjusted
accordingly
1.29 "the Service Conduits" means pipes wires cables sewers drains
gutters flues other conducting media and any items similar to
any of them and all valves chambers covers fixings and similar
items ancillary to any of them
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1.30 "the Planning Acts" means the Town and Country Planning Acts
1971 to 1985 and any regulations or orders made under the
authority of any such Act (but subject to clause 2.6)
1.31 "enactment" means any statute Statutory Instrument order or
byelaw issued by any competent authority for the time being
and from time to time in force and any rule regulation scheme
plan or direction issued under or deriving authority from any
of them
1.32 "decorate" means and includes decorate paint paper varnish
treat and polish and the like (as the specific instance may
require) and decoration shall be construed accordingly
1.33 "Interest" means interest during the period from the date on
which the payment is due or from such other date as may be
specified in this Lease to the date of payment (both before
and after any judgment) at 4% above the base rate from time
to time of Royal Bank of Scotland plc or such other British
Town clearing bank as the Lessor may from time to time
nominate or should such base rate cease to exist such other
rate of interest as is most closely comparable with the
Interest Rate to be agreed between the parties or in default
of agreement to be determined by the Accountant (acting as an
expert and not as an arbitrator)
1.34 "the 1954 Act" means the Landlord and Tenant Act 1954
1.35 "Group Company" means a company that is from time to time
a member of the same Group as the Lessor or Tenant as the case
may be within the meaning of section 42 of the 1954 Act
1.36 References to "the last year of tie Term" include the last
year of the Term if the same shall determine otherwise than by
effluxion of time and to "the end of the Term" include such
sooner determination of the Term
1.37 "the Premises" and "the Estate" include any part of the
Premises and any part of the Estate respectively
1.38 "the parties" or "party" shall mean the Lessor and/or the
Tenant but excludes the Guarantor
1.39 "Development" has the meaning given by Section 22 of the Town
and Country Planning Act 1971
1.40 "act or default" means act default negligence or omission
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1.41 "rates" means general water and other rates taxes charges
community charge assessments impositions and outgoings of
whatever nature but shall not include any tax payable as a
direct result of any dealings by the Lessor with its
reversionary interest in the Estate and/or the Building and/or
the Premises or any income tax or corporation tax payable by
the Lessor on any rents under this Lease or any other lease or
licence of whatsoever nature on the Estate
1.42 "planning permission" means any of planning permission listed
building consent conservation area consent and any other
permission or consent under the Planning Acts
1.43 "the General Specification" means the General Specification
for the West Six Centre a copy of which is annexed to this
Lease
1.44 "the Additional Works Specification" means the Additional
Works Specification a copy of which is annexed to this Lease
l.45 Any reference to "this Lease" is a reference to this Lease as
varied amended or supplemented from time to time and includes
a reference to any document which varies amends or is
supplemental to or made or given pursuant to or in accordance
with any of the terms of this Lease
INTERPRETATION
2. In this Lease:-
2.1 Any obligation in this lease not to do an act or thing shall
be deemed to include an obligation not to permit or suffer
that act or thing to be done
2.2 The singular shall include the plural and the masculine shall
include the feminine and neuter
2.3 Where the Tenant comprises more than one person the covenants
on the part of such party shall be joint and several
2.4 References to any right of the Lessor to have access to the
Premises shall be construed as extending to all persons
authorised by the Lessor (including agents, professional
advisers, contractors, workmen and others)
2.5 References to any right of the Tenant shall be construed as
extending to all persons authorised by the Tenant (including
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authorised undertenants agents professional advisers
contractors workmen servants and others
2.6 Any reference to a specific statute includes any statutory
extension or modification or re-enactment of such statute and
any regulations or orders made under it (except in the case of
the definitions of "the 1954 Act" and "Group Company")
2.7 The paragraph headings do not form part of this Lease and
shall not be taken into account in its construction or
interpretation
2.8 References to clauses or schedules are to clauses or schedules
in this lease and references in a schedule to clauses are to
clauses in that schedule
DEMISE
3. The Lessor demises to the Tenant for the Term the Premises:-
3.1 together (in common with the lessor and all others authorised
by it or otherwise entitled) with the Granted Rights but
subject to temporary interruption for repair alterations
replacement or other works and so far as reasonably
practicable in the circumstances not materially to interfere
with the use and enjoyment by the Tenant of the Premises); but
3.2 excepting and reserving to the Lessor and all others
authorised by it or otherwise entitled the Reserved Rights; and
3.3 subject to the matters contained or referred to in entries
numbered 1, 4, 5, 6 and 10 of the Charges Register of the
title above mentioned insofar as they still subsist and relate
to the Premises or the Granted Rights
the Tenant paying to the Lessor by way of rent without any deductions
whatsoever the Rent which shall be paid by equal quarterly payments in
advance on the Rent Payment Days the first payment being made on the
execution of this Lease in respect of the period from the Rent
Commencement Date to the next following Rent Payment Day
TENANT'S COVENANTS
4. The Tenant covenants with the Lessor to observe and perform the
covenants and obligations contained in the Fourth Schedule
LESSOR'S COVENANTS
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5. Subject to and conditionally upon the Tenant paying the Rent the
Interim Charge the Service Charge and all other moneys payable under
this Lease and performing and observing the covenants on the part of
the Tenant and the conditions and agreements contained in this Lease
the Lessor covenants with the Tenant as follows:-
5.1 to permit the Tenant to peaceably hold and enjoy the Promises
during the Term without any lawful interruption by the Lessor
or any person claiming under or in trust for the Lessor; and
5.2 to perform the Services except insofar as it is beyond the
Lessor's reasonable control including (without limitation) any
failure or interruption in any of the Services by reason of
necessary repair, replacement, maintenance of any
installations or apparatus, or their damage or destruction, or
by reason of mechanical or other defect or breakdown, or frost
or other inclement conditions, or shortage of fuel, materials,
water or labour, or any other cause PROVIDED THAT the Lessor
uses all reasonable endeavours to remedy the same as soon as
reasonably practicable and PROVIDED THAT the lessor shall not
be liable to the Tenant in respect of any act default omission
or negligence of any porter attendant or other person
undertaking the Services or any of them on behalf of the
Lessor
5.3 At the reasonable request and at the sole cost of the
Tenant(but the Landlord shall give credit for recovery of any
costs from any third party) and upon the Tenant giving an
indemnity to the Lessor for payment of all costs and expenses
reasonably to be incurred by the Lessor (including reasonable
reimbursement for time spent by the Lessor) and upon payment
from time to time of such sums by way of security for costs
and expenses as may be reasonably requested to take all action
reasonably necessary (including legal proceedings) for the
benefit and protection of the Premises against any tenant of
the Building of any part of the Estate so as to compel such
tenant or tenants to comply with the terms of any lease
between the Lessor and such tenant
5.4 To take such steps as are reasonable (including if necessary
the institution and prosecution of legal proceedings) to
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enforce the obligations of contractors sub-contractors
architects and engineers pursuant to their several contracts
with the Lessor in relation to the construction of the
Premises and/or the Building and the Lessor shall hold all and
any monies received in accordance with the provisions of
Clause 8.10 hereof
5.5 To observe and perform the covenants (whether restrictive or
otherwise) and stipulations to which the Landlords
reversionary interest in the Estate is or may from time be
subject (while the reversion is vested in it but not after it
shall have parted with the reversion) and fully indemnify the
Tenant in respect of any breach or non observance thereof
FORFEITURE
6. If:-
6.1 the Rent or any part shall at any time be unpaid for
twenty-one days after becoming payable (whether formally
demanded or not); or
6.2 any other sum due from the Tenant under the terms of this
Lease shall at any time be unpaid for twenty-one days after
the later of demand and becoming payable; or
6.3 any of the Tenant's covenants or obligations in this Lease
shall not be performed or observed; or
6.4 in relation to the Tenant(being a company)
6.4.1 a proposal is made for a voluntary arrangement
pursuant to Part I Insolvency Act 1986; or
6.4.2 a petition is reasonably and properly presented for
an administration order pursuant to Part II of that
Act; or
6.4.3 a petition is reasonably and properly presented
pursuant to Part IV of that Act or a resolution
reasonably and properly proposed for winding-up in
either case whether compulsory or voluntary or a
meeting is convened or a resolution is proposed for
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the purchase redemption or reduction of any part of
the issued share capital of the Tenant (whether or
not to comply with S.142 Companies Act 1985)(except
in any such case for a reconstruction or amalgamation
not involving or arising out of insolvency); or
6.4.4 a receiver is appointed of the whole or any part of
its assets or undertaking (whether or not an
administrative receiver as defined in S.29(2) of the
Insolvency Act 1986)
6.5 in relation to the Tenant (being an individual)
6.5.1 an application is reasonably and properly made for an
interim order pursuant to Part VIII of that Act; or
6.5.2 a petition is presented for bankruptcy or a
bankruptcy order is made pursuant to Part IX of that
Act; or
6.5.3 an insolvency practitioner is appointed pursuant to
S.273 of that Act; or
6.6 the Tenant, shall make a composition with creditors which
would in the Lessors reasonable opinion materially affect the
Tenants ability to perform its covenants hereunder
6.7 any distress or execution is levied on any of the Tenants'
goods or property which would in the Lessors reasonable
opinion materially affect the Tenants ability to perform its
covenants hereunder
(and in every case if the Tenant is more than one person if any of
the said matters shall occur in relation to any one of them then and
in any such case the lessor may at any time thereafter re-enter upon
the Premises in the name of the whole and thereupon this demise shall
absolutely determine but without prejudice to the right of action of
the Lessor in respect of any antecedent breach
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(including if applicable that in relation to which the Lease is
forfeited) of the Tenant's covenants or the conditions contained in
this lease
7. INSURANCE
7.1 Subject to and conditionally upon the Tenant paying the
Insurance Contribution the Lessor covenants with the Tenant:-
7.1.1 to insure the Estate
7.1.1.1 unless such insurance shall be vitiated by
any act of the Tenant or by anyone connected
with the Tenant; and
7.1.1.2 subject to such excesses exclusions or
limitations as the Lessor's insurers may
reasonably require
in such insurance office of repute or with such
underwriters and through such agency as the Lessor may
from time to time reasonably and properly decide in as
being the full cost of rebuilding or reinstatement
including architects, surveyors and other professional
fees, the cost of debris removal, demolition, site
clearance, any works as a result of such rebuilding or
reinstatement that may be required by statute and
incidental expenses
7.1.2 produce to the Tenant on request (but if more than
once a year then at the Tenant's expense) a copy of
the Policy and the last premium receipt or other
reasonable evidence of the terms of the Policy and
the fact that the last premium has been paid
7.1.3 notify the Tenant of any material change in the
risks covered by the Policy
7.1.4 procure that the interest of the Tenant and any
mortgagee or chargee is noted on the Policy (and
which shall be deemed satisfied by a general note on
the policy that the interests of tenants are noted)
7.2 Such insurance shall be against:-
7.2.1 loss or damage by fire, explosion, storm, lightning,
earthquake, explosion, subsidence, tempest, flood,
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burst pipes, impact, and (in peacetime) aircraft and
articles dropped therefrom, riot heave, civil
commotion and malicious damage and such other risks
insurance against which the lessor may (but without
obligation) from time to time reasonably decide
7.2.2 liability of the Lessor arising out of or in
connection with any matter involving or relating to
the Estate; and
7.2.3 the loss of the Rent payable under this Lease from
time to time (having regard to any reasonable sums in
respect of review of rent which may become due under
this lease) for five years
7.3 If
7.3.1 the Premises or access to them are destroyed or
damaged by an Insured Risk so that the Premises or
any part of them are unfit for occupation or use, and
7.3.2 the insurance of the Premises has not been vitiated
by the the act or default of the Tenant or anyone
connected with it
the Rent or a fair proportion of it according to the nature
and the extent of the damage sustained the amount of such
proportion in case of dispute to be determined by the Surveyor
(acting as an expert and not as an arbitrator) shall be
suspended and cease to be payable until the Premises, the
damaged part, or the access (as the case may be) shall have
been reinstated so that the Premises the damaged part or the
access are made fit for occupation or use or until the
expiration of five years from the date on which the
destruction or damage occurred whichever is the shorter
7.4 If
7.4.1 the Premises are damaged or destroyed by an Insured
Risk, and
7.4.2 the payment of the insurance monies is not refused in
whole or in part by reason of any act or default of
the Tenant or anyone connected with it.
the Lessor will subject to clause 7.5.7 with all convenient
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speed take such necessary and proper steps to obtain any
planning permissions or other permits approvals and consents
that may be required under the Planning Acts or other
enactment to enable the Lessor to rebuild and reinstate the
Premises and will as soon as these have been obtained spend
and lay out all monies received in respect of such insurance
(except sums in respect of loss of rent) in rebuilding or
reinstating the Premises so destroyed or damaged and meeting
the related professional fees provided that the Lessor shall
not be liable to rebuild or reinstate the Premises if:-
7.4.3 the lessor is unable (having used all reasonable
endeavours) to obtain all planning permissions,
permits and consents necessary to execute such
rebuilding and reinstating; or
7.4.4 if this lease shall be frustrated; or
7.4.5 if the rebuilding or reinstating is prevented for any
other reason beyond the control of the Lessor
in any of which cases:-
7.4.6 all the insurance monies shall belong to the Lessor
absolutely and the Lessor shall accordingly be
entitled to retain them; and/or
7.4.7 the Lessor may by giving to the Tenant not later than
three years after the date of damage two months
notice in writing determine this demise (unless this
Lease shall before such notice is given have been
frustrated or otherwise determined) (but without
prejudice to any claim by the Lessor in respect of
any antecedent breach of covenant) and any dispute
under this clause shall be determined by the Surveyor
(acting as an independent expert and not as an
arbitrator)
7.5 The Tenant covenants with the Lessor:
7.5.1 to pay the Insurance Contribution on demand
7.5.2 not to do or omit anything that could cause any
policy of insurance relating to the Estate to become
void or previously notified the lessor and have
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agreed to pay the increased premium) anything by which
additional insurance premiums may become payable
7.5.3 to keep the Premises supplied with such fire fighting
equipment as the insurers or the fire authority may require
and to maintain the same to their satisfaction
7.5.4 not to store or bring on to the Premises any article,
substance or liquid of a specially combustible, inflammable or
explosive nature and to comply with the requirements and
recommendations of the fire authority and/or the insurers and
the reasonable requirements of the Lessor as to fire
precautions relating to the Premises
7.5.5 not to obstruct the access to any fire equipment or the means
of escape from the Premises
7.5.6 to give notice to the Lessor immediately any event occurs
which might affect the Policy
7.5.7 if the Estate is damaged or destroyed either:-
7.5.7.1 by an Insured Risk and the insurance money under the
Policy is by reason of any act or omission of the
Tenant or anyone connected with it wholly or
partially irrecoverable; or
7.5.7.2 as a result of the act or omission of the Tenant or
anyone connected with the Tenant
to pay to the Lessor on demand with Interest the amount of such
insurance money so irrecoverable in which event the provisions
of clause 7.4 shall apply
7.5.8 if at any time the Tenant shall be entitled to the benefit of
any insurance on the Premises (which is not effected or
maintained in pursuance of any obligation contained in this
Lease) to apply all monies received by virtue of such
insurance in making good the loss or damage in respect of
which it shall have been received
7.5.9 if required by any enactment to obtain a fire certificate for
the Premises and on request to produce it to the Lessor for
inspection
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SERVICE CHARGE
8.1 The first payment of the Interim Charge (on account of the
Service Charge for the Accounting Period during which this
lease is executed) shall be paid by the Tenant to the Lessor
on the execution of this Lease and thereafter the Interim
Charge shall be paid by the Tenant to the Lessor by payments
in advance on the Rent Payment Days
8.2 If the Interim Charge paid by the Tenant for any Accounting
Period plus any balance carried forward from the previous
Accounting Period together exceed the Service Charge for the
Accounting Period then such excess shall be carried forward by
the lessor and credited to the account of the Tenant in
computing the Service Charge in the next Accounting Periods
8.3 If the Service Charge for any Accounting Period exceeds the
Interim Charge paid by the Tenant for that Accounting Period
plus any balance carried forward from the previous Accounting
Period then the Tenant shall pay such excess to the Lessor
within twenty-one days after service upon the Tenant of the
certificate referred to in the following paragraph
8.4 As soon as reasonably practicable after the end of each
Accounting Period the lessor shall serve or shall procure that
there is served upon the Tenant a certificate signed by the
Lessor the Surveyor or the Accountant containing the following
information:
8.4.1 The amount of the Total Service Cost for that
Accounting Period with a summary of that amount
showing the principal constituent items
8.4.2 The amount of the Service Charge for that Accounting
Period; and
8.4.3 The amount of the Interim Charge paid by the Tenant
for that Accounting Period and of any balance carried
forward from the previous Accounting Period
8.4.4 A schedule showing the amount and aggregate amounts
of any reserves created pursuant to the relevant
provisions of this Lease
8.5.1 Save as hereinafter provided the said certificate and
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schedules shall be conclusive evidence for the purposes of
this Lease of all matters of fact to which they contain
reference save in relation to any patent error or omission
8.5.2 The Tenant may at any reasonable time by prior appointment
with the Lessor but at its own cost inspect the records and
vouchers relating to the amount of the Total Service Costs for
an Accounting Period during the period of one month after the
service of the certificate for that Accounting Period pursuant
to clause 8.4
8.6 In respect of the Accounting Periods current at the date of
this lease and at the end of the Term the Service Charge shall
be apportioned an a daily basis and the provisions of this
clause 8 shall continue to apply after the end of the Term in
respect of the then current Accounting Period
8.7 In no event shall the Service Charge be increased or altered
by reason only that at any relevant time any part of the
Estate intended for letting may be vacant or be occupied by
the Lessor or that any tenant or other occupier of another
part of the Estate may default in payment of his service
charge
8.8 The Tenant shall not be entitled to object to the Service
Charge (or any item comprised in it) or otherwise on any of
the following grounds:-
8.8.1 the inclusion in a subsequent Accounting Period of
any item of expenditure or liability omitted from the
Service Charge for any preceding Accounting Period
8.8.2 an item included at a proper cost might have been
provided or performed at a lower cost or
8.8.3 disagreement with any estimate of future expenditure
for which the Lessor requires to make provision so
long as the Lessor has acted reasonably and in good
faith and in the absence of manifest error or
8.8.4 the manner in which the Lessor exercises its
discretion in providing services so long as the Lessor
acts in good faith and in accordance with the
principles of good estate management or
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8.8.5 the employment of the Managing Agents to carry out and
provide on the Lessor's behalf any of the services or
matters referred to in the Seventh Schedule
8.9 Nothing in this Lease shall oblige the Lessor to incur any of
the items of expenditure referred to in the Seventh Schedule
or to establish and/or maintain any such provision as is
referred to in paragraph 19 of the Seventh Schedule or to
maintain such a provision at any particular level
8.10 All sums received by the Lessor in respect of the provision
referred to in paragraph 19 of the Seventh Schedule shall be
credited to an account separate from the Lessor's own monev
and shall be held by the lessor on trust during the Term for
the persons who from time to time shall be tenants of the
Estate to apply the same and any interest accruing on it for
the purposes set out in the said paragraph 19 and at the
expiry of the Term the fair proportion of any such sums on
expenditure attributable to the Premises shall be paid to the
person who shall then be the tenant of the Premises or if the
Premises shall not then be let such fair proportion shall
belong to the Lessor absolutely
8.11 For the avoidance of doubt any sums in respect of which
recovery may be made pursuant to Clause 5.4 shall be included
in the Total Service Cost and the Service Charge shall be
payable accordingly notwithstanding the prospect of such
recovery
9. The Insurance Contribution the Interim Charge the Service Charge any
interest on any of them and any other sums payable by the Tenant to
the Lessor under the terms of this Lease shall be payable by way of
further rent.
10. The Lessor shall not be liable or responsible for any damage suffered
by the Tenant or anyone connected with it through any defect in under
or upon the Premises except insofar as any such liability is covered
by insurance effected by the Lessor.
11. The Tenant's covenants shall remain in full force both at law and
equity notwithstanding that the lessor shall have waived or released
temporarily ox permanently revocably or irrevocably or
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otherwise a similar covenant or similar covenants affecting any other
part of the Estate or Adjoining Property
12. The Tenant acknowledges that no warranties are given or implied in the
granting of this lease by or on behalf of the Lessor that the use to
which the Tenant proposes to put the Premises nor any alterations or
additions which the Tenant may now or subsequently decide to carry out
will not require planning permission under the Planning Acts.
13. The Tenant acknowledges that this Lease has not been entered into by
it in reliance wholly or partly on any statement or representation
made by or an behalf of the Lessor except for replies in writing given
prior hereto by the Lessor's solicitors to enquiries raised in writing
with them by the Tenant's solicitors.
14. Except where any statutory provision prohibits the Tenant's right to
compensation being reduced or excluded by agreement the Tenant shall
not be entitled to claim from the Lessor on quitting the Premises or
any part thereof any compensation under the 1954 Act.
15. If
15.1 the Tenant gives to the Lessor notice in writing to that
effect such notice to be received by the Lessor not later than
9 months before the Tenant's Break Date (as to which time
shall be of the essence); and
15.2 the Tenant's covenants and the conditions in this Lease shall
in all material respects be observed and performed up to and
including the Tenant's Break Date
then this lease shall determine and the Term shall end on the Tenant's
Break Date but without prejudice to the rights and remedies of the
Lessor in respect of any antecedent breach non-observance or non-
performance of any of the Tenant's covenants or the conditions
contained in this Lease
16. If the Lessor gives to the Tenant not less than six months prior
notice in writing to that effect (as to which time shall be of the
essence) then this lease shall determine and the Term shall end on the
Lessor's Break Date but without prejudice to the rights and remedies
of the Lessor in respect of any antecedent breach non-observance or
non-performance of any of the Tenant's covenants or the conditions
contained in this Lease
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17. The Lessor and the Tenant hereby acknowledge for the avoidance of
doubt that any costs incurred by the lessor in the initial development
of the Estate, the construction and fitting out of the Building and
the Common Parts and the initial provision of the Roadways and the
External Areas and all other initial capital expenditure relating to
the development of the Estate by the Lessor shall not be included in
the Total Service Cost nor any part of the Service Charge payable by
the Tenant.
18.1 In this clause "the Tenant" means Synon Limited and its
successors in title by virtue of a reconstruction or
amalgamation of Synon Limited or any such successor in title
but not its other successors in title
18.2 On or before the signing of this Lease the Tenant has procured
from Midland Bank PLC a guarantee ("the Guarantee") in the
form annexed to this Lease for the purpose of guaranteeing the
payment of the Rent and the performance of the Tenant's
covenants contained in this Lease
18.3 The Tenant hereby further covenants with the Lessor as
follows:-
18.3.1 During the period of 30 days prior to the expiry of
the Guarantee or any guarantee procured by the Tenant
in favour of the Lessor pursuant to this sub-clause
and subject to sub-clause 3.3 hereof the Tenant shall
use reasonable endeavours to obtain a further
guarantee in favour of the lessor from a member of
the committee of London & Scottish Bankers in
substantially the same form as the Guarantee and for
a period of three years and for the same amount as
the guarantee then expiring which it is to replace
PROVIDED ALWAYS that such replacement guarantee can
be obtained at reasonable cost to the Tenant.
18.3.2 If by the date of expiry of the Guarantee or any
other guarantee procured by the Tenant in favour of
the Lessor pursuant to the provisions of sub-clause
18.3.1 the Tenant shall not have complied with its
obligations to procure a further guarantee in favour
of the Lessor or be able to obtain a guarantee at
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reasonable cost to the Tenant it accordance with its
obligations under sub-clause 3.1 the Tenant shall
forthwith deposit with the lessor a sum equal to one
year's rent as due under the lease such sum to be
held by the Lessor under the terms of a Rent Security
Deposit Deed in such form reasonably required by the
Lessor and by which inter alia the Tenant shall
charge the said sum in favour of the Lessor with the
due payments of the rent and the due performance and
observance of the covenants on the part of the Tenant
and the conditions contained in this lease such deed
to be duly executed by the Lessor and the Tenants
18.3.3 If the Tenant proves to the satisfaction of the
Landlord that net profit after tax in each case of
the three financial years ending last of not less
than 3 times the Rent at such date then this
requirement to provide a guarantee shall immediately
cease.
18.3.4 The Tenants shall pay to the lessor forthwith on
demand all reasonable and proper costs incurred by
the Lessor in connection with the procuring of any
such guarantee or in connection with any such rent
security deposit deed
IN WITNESS of which the Parties have executed this Lease
THE FIRST SCHEDULE
(The Premises)
The Premises means that part of the Building specified in the Particulars and
shown edged red on Plan 2 and including (for the purposes of obligation as well
as grant):
1. the floors including the floor boards or other flooring materials the
plinths upon which the same are laid and by which they are supported
and the void between the flooring and the concrete structure beneath
it
2. the doors the windows and the frames and the glass in any of them
3. the internal plaster or plasterboard surfaces of any load bearing wall
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4. the suspended ceiling finishes and the voids above them including the
brackets or other devices by which the same are attached to the
concrete structure
5. one half severed vertically of non load bearing walls dividing the
Premises from other parts of the Building (which walls shall be deemed
to be party walls) and the entirety of any other non-load-bearing
internal walls
6. all Service Conduits which exclusively serve the Premises
7. all the Lessor's fixtures and fittings of every kind which are from
time to time in or upon the Premises whether original or substituted
and all other fixtures except those that can be removed by the Tenant
without damaging or defacing the Premises
8. all additions and improvements to the Premises
but excludes any part of the load bearing structure of the Building (which
includes without prejudice to the generality of the foregoing the roof and
foundations of the Building) other than the internal surfaces thereof
THE SECOND SCHEDULE
(The Granted Rights)
1. The free and uninterrupted passage and running of water soil gas and
electricity telecommunications and other services through all Service
Conduits which are now in on under or running through the Estate and
which serve the Premises
2. The right for all proper purposes in connection with the use of the
Premises to pass and repass
2.1 over and along the Roadways with or without vehicles (but so
that the Tenant and anyone connected with it shall not have
more vehicles on the Estate at any time than the number of the
car parking Spaces); and
2.2 without vehicles over and along the footpaths from time to time
forming part of the External Areas
until such time as they or such parts of then shall be adopted as
public highways
3. The right of support and protection for the benefit of the PremiseS as
is now enjoyed from other parts of the Building
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4. The right to pass and repass over along and through the Common Parts
for all proper purposes in connection with the use of the Premises
5. The right to have the name or trading title of the Tenant affixed on
the communal notice board to be provided by the Lessor in the entrance
hall of the Building in such a position and in such manner as shall be
decided by the Lessor acting reasonably in the interests of good
Estate management
6. The right to use the Car Parking Spaces in such part or parts of the
Estate as the Lessor shall from time to time specify for the parking
of cars and for no other purpose
7. The right to enter the parts of the Building adjoining the Premises
with or without workmen and equipment on no less than five days notice
(save in the case of emergency) in order to comply with the Tenants'
covenants herein contained
8. Subject to the Tenant having obtained all requisite planning
permissions and consents the right until such time as the Lessor shall
provide a communal facility to install an aerial of such size and
design and in such position as shall previously have been approved in
writing by the Lessor such consent not to be unreasonably withheld or
delayed for the reception of television signals from satellites but so
that this right shall immediately cease and determine upon the
installation by the Lessor of an aerial for the use of all Tenants of
the Lessor whereupon the Tenant shall forthwith remove any aerial
erected pursuant to this temporary right
THE THIRD SCHEDULE
(The Reserved Rights)
1. The free and uninterrupted passage and running of water soil gas
telecommunications and other services or supply electricity through
the Service Conduits which may now or in the future be in on under or
running through the Premises and which may serve any other part of the
Estate
2. The right at all times upon giving prior written notice (except in an
emergency) to carry out any works or repairs to or to build alter or
rebuild the Estate or any Adjoining Property in any manner
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and for any purpose notwithstanding any interference with the access of
light or air to the Premises or any temporary interference or
inconvenience with the Granted Rights
3. The right at all reasonable times upon giving to the Tenant not less
than 5 working days notice (except in case of emergency) for the
Lessor and persons authorised by it with or without tools materials
and equipment to enter on the Premises:-
3.1 for any purpose incidental to the provision of the Services
and/or to carry out any works in connection with such provision
3.2 to lay construct renew alter repair and maintain any Service
Conduits in the Building
3.3 to carry out any works or alteration incidental to the building
alteration repair or rebuilding of any part of the Estate
the person exercising such right making good all damage to the Premises
thereby caused
4. The right at all reasonable times to enter upon the Premises for
viewing and inspection and preparation of schedules of disrepair
5. The rights of light air support shelter and protection now or at any
time during the Perpetuity Period enjoyed by the Estate over the
Premises
6. The right to erect and retain scaffolding on or about the Building for
the purpose of works to or cleaning or decoration of the Building
notwithstanding that such scaffolding may temporarily restrict the
access to or enjoyment or use of the Premises
7. At all times all rights easements and the like enjoyed at the date
hereof by the Premises over Adjoining Property other than the Granted
Rights to the intent that S.62 law of Property Act 1925 shall not
apply to this Lease
THE FOURTH SCHEDULE,
(Tenants Covenants)
Rent and Outgoings
1.1 To pay the Rent the Interim Charge the Service Charge and the
Insurance Contribution at the times and in the manner set out in
this Lease without any deduction and if so required by the Lessor
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by standing order to Bankers Credit Transfer or other similar method
specified by the Lessor
1.2 To pay and discharge all rates which are now or may at any time during
the Term be payable charged or assessed on or in respect of the
Premises or on the landlord tenant owner or occupier thereof (or in
the absence of direct assessment on the Premises a fair proportion of
the same as assessed by the Surveyor acting as an expert and not as an
arbitrator) and in every case any value added or other similar tax
payable in respect thereof.
1.3 To pay to the suppliers and to indemnify the Lessor against all
charges for all gas electricity telecommunication and other services
consumed or used on or supplied to the Premises.
1.4 If the Rent the Interim Charge the Service Charge the Insurance
Contribution or any other sum due from the Tenant under the terms of
this Lease or any part of any of them shall at any time be more than
seven days overdue to pay to the Lessor Interest thereon calculated
from the due date for payment until the date of actual payment (both
before and after judgment) PROVIDED THAT nothing in this clause shall
entitle the Tenant to withhold or delay any payment after the date
upon which it first falls due or in any way prejudice affect or
derogate from the rights of the Lessor in relation to the said
non-payment or under the proviso for re-entry.
1.5 To pay and indemnify the Lessor against any value added tax (or any
tax of a similar nature that may be substituted for it or levied in
addition to it) at the rate for the time being in force chargeable in
respect of any rents or other payments to be made by the Tenant to the
Lessor or any person on the Lessor's behalf in connection with or
under any of the provisions of this lease save insofar as any such tax
is recoverable by the Lessor as an input for value added tax purposes,
and, in default of payment, the same shall be recoverable as rent in
arrear PROVIDED that (for the avoidance of doubt) the Lessor shall be
under no obligation to exercise or not exercise any option or right
conferred on it by any enactment so as to reduce or avoid any
liability to value added tax referred to in this clause
RESERVED RIGHTS
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2.l To permit the Lessor and those authorised by him and others so
entitled to exercise the Reserved Rights and not to inhibit or
interfere with the exercise of any of them.
2.2 To permit upon reasonable notice at any time during the Term
prospective purchasers of or agents instructed in connection with the
prospective or actual sale of the Lessor's interest in the Estate to
view the Premises without interruption providing they are authorised
in writing by the Lessor or its agents
REPAIR AND DECORATION
3.l To repair and keep in good and substantial repair and condition the
Premises and to renew and replace from time to time all Lessor's
fixtures and fittings and appurtenances in the Premises which may
become or be beyond repair at any time during or at the end of the
Term (in every case damage by any of the Insured Risks excepted save
where the insurance has been vitiated or payment of the insurance
money refused in whole or in part in consequence of some act or
default on the part of the Tenant or anyone connected with it)
PROVIDED always that the Tenant's obligations shall be suspended while
the Lessor is pursuing any steps under Clause 5.4 hereof
3.2 In every fifth year of the Term and also during the three months
preceding the end of the Term (during the said last three months of
the Term in such colours and patterns as the Lessor may reasonably
require) and using good quality materials to decorate completely in
accordance with then current good practice all the interior parts of
the Premises which have been or ought to be or normally are so
decorated the decoration to be carried out to the reasonable
satisfaction in all respects of the Lessor.
3.3 To clean both sides of all windows and doors of the Premises (other
than the glass in the doors and windows in the external walls) at
least once in every month.
3.4 Within one month (or sooner if appropriate) after the Lessor shall
have given to the Tenant or left on the Premises a notice in writing
specifying any repairs cleaning maintenance or decoration of the
Premises which the Tenant has failed to carry out in breach of the
Tenant's responsibilities under this lease to repair and make good the
same to a good and substantial condition and to the
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reasonable satisfaction of the Lessor or the Surveyor and in case of
default to permit the Lessor and the workmen or agents of the Lessor to
enter the Premises with or without plant equipment and materials and
execute such repairs or other works and all expenses incurred thereby
shall on demand be paid by the Tenant to the Lessor with Interest
COSTS
4.1 To pay all reasonable and proper costs charges and expenses
(including solicitors' costs and architects' and surveyors' fees)
incurred by the Lessor for the purposes of or incidental to the
preparation grant service or enforcement (whether by proceedings or
otherwise) of:-
4.1.1 Any notice under Section 146 or 147 of the Law of Property Act
1925 (as amended) requiring the Tenant to remedy a breach or
any of the Tenant's covenants contained in this lease
notwithstanding forfeiture for such breach shall be avoided
otherwise than by relief granted by the Court.
4.1.2 Any notice to repair or Schedule of Dilapidations accrued
during the Term or accrued at or prior to the end or sooner
determination of the Term whether or not served during the Term
PROVIDED always that the Lessor shall only be entitled to serve
such notice before or within 12 months of the expiration of the
Term and only in relation to matters accrued during the Term
4.1.3 The payment of any arrears of the Rent or any other sum payable
under this Lease or interest payable on any of them.
4.2 To pay the Reasonable and proper costs charges and expenses
(including Solicitors' and Surveyors' fees) incurred by the Lessor in
any application by the Tenant for the Lessor's consent whether such
consent is granted reasonably refused or offered subject to any
reasonable conditions or such application is withdrawn unilaterally by
the Tenant
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4.3 To pay the Lessor's solicitors reasonable and proper costs and
disbursements of and in connection with the preparation and grant of
this Lease together with VAT thereon where applicable
DEALINGS
5.1 Not to assign underlet hold on trust part with possession or
occupation of or share occupation of any part of the Premises (as
distinct from the whole)
5.2 Not to part with possession or occupation (save upon an assignment or
underletting in accordance with clause 5.3 5.4 and 5.5) nor to share
occupation of nor to hold on trust the whole of the Premises.
5.3 Not to assign underlet the whole of the Premises without the Lessor's
prior written consent which shall not be unreasonably withheld or
delayed.
5.4 Not to assign or underlet the whole of the Premises unless on or before
such assignment or underletting:-
5.4.1 the assignee or underlessee has entered into a direct Deed of
Covenant (in a form reasonably specified by the Lessor) with
the Lessor to observe and perform the covenants on the part of
the Lessee and the conditions contained in this Lease except in
the case of an underletting the covenant to pay the Rent; and
5.4.2 in the case of a limited company being the intended assignee or
underlessee either:-
5.4.2.1 at least two persons or one Company approved by the
Lessor (such approval not to be unreasonably
withheld) or delayed shall have joined in the said
Deed of Covenant to covenant with and guarantee to
the Lessor in the terms of the Eighth Schedule; or
5.4.2.2 the intended assignee or underlessee shall have
deposited with the Lessor an amount equal to the Rent
for one year payable at such date or (if higher) the
then open market rent for the Premises for one year
at such date as reasonably estimated by the Lessor
such sum to be held by the Lessor as security for and
to be charged with the due performance and
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observance of the covenants on the part of the Lessee
and the conditions contained in this Lease; or
5.4.2.3 shall have obtained from a clearing bank a guarantee
in favour of the Lessor for an amount equal to the
Rent for twelve months payable at such date
PROVIDED THAT the requirements of this clause 5.4.2 shall not
apply in the case of the proposed assignee or underlessee being
a public limited company
5.4.2.4 with a net profit after tax in each case of the three
financial years ending last before the date of the
application for Licence to Assign or Licence to
Underlet as the case my be of not less than 3 times
the Rent at such date
5.4.2.5 with an issued and paid up non-redeemable share
capital of not less than 15 times the higher of the
Rent payable at such date or the then open market
rent for the Premises for one year at such date as
reasonably estimated by the Lessor
5.5.1 Not to underlet the whole of the Premises other than at a rent
not less than the then open market rental value of the premises
(to be approved by the Lessor such approval not to be
unreasonably withheld or delayed prior to the grant of any such
Underlease such approval not to be unreasonably withheld) or
the rent then reserved and payable under this Lease (whichever
shall be the greater) and without any fine or premium other
than reasonable rent free inducements or reasonable reverse
premiums such rent to be payable in advance by equal
instalments on the Rent Payment Days and to contain the
following provisions
5.5.1.1 provisions for the upwards only review of the rent
thereby reserved on the same basis or
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more frequent basis on which the rent is to be
reviewed in this Lease
5.5.1.2 prohibitions against the Underlessee doing or
allowing any act or thing in relation to the Premises
inconsistent with or in breach of the provisions of
this Lease
5.5.1.3 a condition for forfeiture of the Underlease by the
Underlessor on breach of any covenant by the Under-
lessee and
5.5.1.4 an absolute covenant against further underletting and
the same restrictions on assignment sharing holding
on trust far another parting with or sharing with
another possession or occupation of the premises and
the same provisions for direct covenants and
registration as in this Lease
5.5.2 To enforce the performance and observance by the Underlessee of
the provisions of the Underlease and not at any time either
expressly or by implication to waive any breach of the
covenants or conditions in the Underlease not to vary the terms
or accept a surrender of any Underlease
5.5.3 To procure that the rent is reviewed under the Underlease in
accordance with its terms but not to agree any such reviewed
rent with the Undertenant without the prior written consent of
the Lessor (which consent not to be unreasonably withheld or
delayed) and to procure that if the Lessor so requires the
Lessors representations as to the reviewed rent payable
thereunder are made to any independent person appointed to
determine the same to the reasonable satisfaction of the Lessor
5.6 Within one month after the execution of any assignment transfer charge
or underlease or upon any transmission by reason of a death or
otherwise affecting the Premises or any sharing arrangement pursuant
to clause 5.7 to give notice thereof in duplicate to the Lessor's
solicitors and to produce to and leave with the Lessor's
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solicitors a certified copy of any relevant deed instrument or other
document and to pay to the Lessor or his Solicitor a registration fee
of thirty pounds plus Value Added Tax
5.7 The Tenant may share occupation of the Premises with an associate
company or a company that is from time to time a member of the same
Group as the Tenant within the meaning of Section 42 of the 1954 Act
(but clause 2.6 of this Lease shall not apply in this respect)
PROVIDED THAT
5.7.1 such other company is not entitled to the exclusive use or
occupation of the Premises or any part of it
5.7.2 no estate or interest in land in the Premises is created or
arises in favour of such other ccmpany
5.7.3 on the Tenant and such other company ceasing to be members of
the same said Group such other company shall forthwith vacate
the Premises and such sharing of occupation shall cease
5.7.4 the Tenant gives written notice to the Lessor forthwith upon
the commencement termination or any alteration of any such
sharing of the Premises
5.7.5 the Tenant at all times remains in occupation of the Premises
5.7.6 no relationship of Landlord and Tenant shall be created
ALTERATIONS AND ADDITIONS
6.1 Not to make any alterations or additions to the Premises or the
Service Conduits in the Building nor to commit or any waste spoil or
destruction in or upon the Premises nor to cut damage injure or allow
to be cut damaged or injured any of the roofs walls floors or other
structural parts of the Building or the Service Conduits fixtures or
fittings of the Premises PROVIDED THAT the Tenant may with the
Lessor's prior written consent (such consent not to be unreasonably
withheld or delayed) install or alter internal non-structural
demountable partitioning which the Tenant shall (if so required by the
Lessor) remove at the end of the Term and make good any damage so
caused PROVIDED FURTHER that the Lessor consents to the additional
works which it is carrying out for the Tenant at the Tenant's own cost
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6.2 Save as may be temporarily permitted by Clause 8 of the Second Schedule
not to erect any pole aerial mast dish or other thing (whether in
connection with telegraphic, telephonic, radio or television
communication or otherwise) upon any part of the outside of the
Building
6.3 Not to affix or exhibit to or upon any part of the Premises or in
any window thereof any placard poster advertisement sign or other
notice so as to be visible from outside the Premises save for the
Tenant's nameplate at the entrance to the Premises of such design and
of such dimension as shall previously have been approved by the
Landlord such approval not to be unreasonably withheld or delayed
USE
7.1 Not to carry on upon the Premises any use other than the Permitted Use.
7.2 Not to leave the Premises unoccupied for more than one month without
notifying the Lessor and providing such caretaking or security
arrangements as the Lessor shall reasonably require and the insurers
shall require
7.3 Not to cause anything to be done on the Premises which may be or
become a nuisance or annoyance or cause damage to the Lessor or to the
owners tenants or occupiers of the Estate.
7.4 Not to use the Premises for any noxious noisy or offensive trade or
business nor for any illegal or immoral act or purpose.
7.5 Not to sleep on the Premises and not to use the Premises for
residential purposes nor to keep any animal fish reptile or bird on
the Premises
7.6 Save as hereby permitted as regards educational courses and seminars
not to hold on the Premises any exhibition public meeting public
entertainment or sale by auction.
7.7 In the event of the Premises having been unoccupied for the purposes
of payment of rates and in consequence the Lessor or any subsequent
occupier shall not obtain the maximum statutory relief from payment of
rates then:-
7.7.1 if at that time the relevant authority for rates is empowered
to levy rates on unoccupied property to pay to the Lessor on
demand (in addition to any sum due to the rating authority) a
sum equal to (and indemnify
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the Lessor against) the amount of rates payable after the end
of the Term to the rating authority pursuant to Section 17 of
the General Rate Act 1967 or any other enactment for a period
equal to the relevant period during which the Premises were
unoccupied
7.7.2 to pay to the Lessor on demand (in addition to any sum due to
the rating authority) a sum equal to (and indemnify the Lessor
against) any surcharge on the Premises payable after the end of
the Term Pursuant to Section 17A or 17B of the General Rate Act
1967 or any other enactment for a period equal to the said
relevant period
CONDUCT
8.1 Not to permit to be discharged into the Service Conduits any oil or
grease, or any deleterious, objectionable, dangerous, poisonous or
explosive matter or substance, and to take all reasonable measures to
ensure that effluent discharged into the Service Conduits will not be
corrosive or otherwise harmful to the Service Conduits or cause
obstruction or deposit in them
8.2 Not to unload any goods or materials from vehicles and convey the same
into the Premises except through the approved entrance or entrances
provided for the purpose and not to cause congestion of the External
Areas or inconvenience to any other user of them
8.3 Not to park or leave any vehicles belonging to the Tenant or anyone
connected with it on the Estate Roads or its pavements (other than in
the Car Parking Spaces allotted to the Tenant from time to time)
8.4 Not to place any goods or items outside the Premises or the Building
or obstruct in any way the Common Parts or the External Areas other
than temporarily in the course of delivery to or removal from the
Premises.
8.5 Not to store or bring on the Premises any petrol or other dangerous
inflammable explosive or combustible substance.
8.6 Not to allow rubbish or refuse to accumulate on the Premises the
Common Parts or the External Areas or in the Service Conduits and to
clean thoroughly the Premises and the Service Conduits in the Premises
as often as may be necessary.
35
<PAGE> 116
8.7 To observe and conform to all reasonable regulations and restrictions
made by the Lessor:-
8.7.1 for the proper management of the Building or the Estate and
notified in writing by the Lessor to the Tenant from time to
time (Provided that the same shall not unreasonably interfere
with the Tenant's use of the Premises); and
8.7.2 for the management of vehicles and traffic as are displayed on
the Estate from time to time
8.8 To observe and perform the covenants subsisting at the date hereof
(whether restrictive or otherwise) restrictions and stipulations (if
any) to which the Lessor's reversionary interest in the Premises is
subject
MACHINERY AND INSTALLATIONS
9.1 To keep all plant, apparatus and machinery upon the Premises properly
maintained and in good working order, and for that purpose to employ
reputable contractors for the regular periodic inspection and
maintenance of them, to renew all working and other parts as and when
necessary or when recommended by such contractors, to ensure that such
plant, apparatus and machinery is properly operated, and to avoid
damage to the Premises by vibration or otherwise
9.2 Not to erect or install on the Premises any equipment engine or
machinery other than normal office equipment or machinery.
9.3 Not to suspend any weight from nor to load or use the walls ceilings
floors or structure of the Premises in any manner which will cause
strain damage or interference with the structural parts of the
Building and not to have on the Premises any safe or other unusually
heavy item
9.4 Not to overload the electrical system or circuits in the Premises.
STATUTORY MATTERS
10.1 At the Tenant's own expense, to execute all works and provide and
maintain all arrangements upon or in respect of the Premises or the use
to which the Premises are being put that are required (whether by the
lessor, the lessee or the occupier) in order to comply with the
requirements of any
36
<PAGE> 117
enactment or competent authority, or court of competent jurisdiction.
10.2 Not to do in or near the Premises any act or thing by reason of which
the lessor may under any enactment incur, have imposed upon it, or
become liable to pay any penalty, damages, compensation, costs, charges
or expenses
10.3 Without prejudice to the generality of the preceding sub-clauses 10.1
and 10.2 to comply in all respects with the provisions of any enactment
applicable to the Premises or in regard to carrying on the trade or
business for the time being carried on by the Tenant on the Premises or
for the health and safety of the Tenant or anyone connected with it
10.4 Upon receipt of any notice order or direction or other communication
from any competent authority likely to affect the Premises or its user
to deliver to the Lessor immediately a copy of the same and if so
reasonably required by the Lessor to take such steps and join with the
lessor in making such representations or appeals in all cases as the
Lessor may consider desirable.
10.5 To give notice to the lessor of any defect in the Premises which might
give rise to an obligation on the Lessor to do or refrain from doing
any act or thing in order to comply with the provisions of this Lease
or the duty of care imposed on the Lessor pursuant to the Defective
Premises Act 1972 or otherwise, and at all times to display and
maintain all notices which the lessor may from time to time reasonably
require to be displayed at the Premises.
PLANNING
11.1 To comply with the provisions and requirements of the Planning Acts
whether as to the Permitted User or otherwise
11.2 Not to make any application for planning permission in relation to the
Premises (without the previous consent of the Lessor such consent not
to be unreasonably withheld or delayed in the case of an application
for change of use) and subject thereto at the expense of the Tenant, to
obtain all planning permissions and to serve all such notices as may be
required
37
<PAGE> 118
for the carrying out of any operations or user on the Premises which
may constitute Development,
11.3 Subject only to any enactment to the contrary, to pay and satisfy any
charge or levy that may hereafter be imposed under the Planning Acts in
respect of the carrying out of maintenance of any such operations, or
the commencement or continuance of any such user
11.4 Notwithstanding any consent which may be granted by the Lessor under
this Lease, not to carry out or make any alteration or addition to the
Premises, or any change of use until:
11.4.1 all necessary notices under the Planning Acts have been served
and copies produced to the Lessor, and
11.4.2 all necessary permissions under the Planning Acts have been
obtained and produced to the Lessor, and
11.4.3 the Lessor has acknowledged that every such necessary planning
permission is acceptable to it such acknowledgement not to be
unreasonably withheld or delayed
the Lessor being entitled to refuse to acknowledge that a planning
permission is acceptable to it on the grounds that any condition
contained in it, or anything omitted from it, or the period referred to
in it, would (in the reasonable opinion of the Surveyor acting as an
independent expert and not as an arbitrator) be (or would be likely to
be) prejudicial to the Lessor's interest in the Estate or any Adjoining
Property whether during or after the end of the Term
11.5 Unless the Lessor shall otherwise direct, to carry out and complete
before the end of the Term:
11.5.1 any works stipulated to be carried out to the Premises by a
date subsequent to the end of the Term as a condition of any
planning permission granted for any Development begun by the
Tenant before the end of the Term, and
11.5.2 any Development begun by the Tenant upon the Premises in
respect of which the Lessor shall be or become liable for any
charge or levy under the Planning Acts
38
<PAGE> 119
11.6 In any case where a planning permission is granted subject to
conditions, and if the Lessor reasonably so requires, to provide
security for the compliance with such conditions, and not to implement
the planning permission until such security has been provided.
11.7 If reasonably required by the Lessor, but at the cost of the Tenant,
to appeal against any refusal of planning permission or the imposition
of any conditions on a planning permissicn relating to the Premises
resulting from an application by the Tenant
11.8 If the Tenant shall carry out any Development or carry out permit or
consent to any act matter or thing giving rise to a charge or fiscal
liability on the Lessor the Tenant will pay and indemnify the Lessor
against all liability for any tax, levy, charge or other fiscal
imposition of whatsoever nature (including interest on overdue tax and
penalties for failure to give appropriate notices and information)
under any enactment for which the Lessor shall he liable as a result
of such Development, act, matter or thing and shall on demand repay to
the lessor the amount of the tax, levy, charge or fiscal imposition
11.9 The Tenant under the provisions of the preceding covenants shall be
excluded from any liability of any kind in relation to the original
construction of the Premises
END OF THE TERM
12.1 To permit the Lessor (provided the Lessor has served a proper notice
determining this Lease and the Tenant has not served a notice
indicating its desire to take a new lease) during the period
commencing six months prior to the end of the Term to affix and retain
without interference upon any part of the Premises a notice for
reletting the Premises but so that such notice shall not obstruct the
Tenant's existing rights of light or air and during such period to
permit persons with authority from the Lessor or its Agents at all
reasonable times to view the Premises.
12.2 At the end of the Term to yield up the Premises (but not trade
39
<PAGE> 120
and other tenant's fixtures and fittings as shall belong to the Tenant
Provided that the Tenant shall make good to the reasonable
satisfaction of the Lessor all damage to the Premises resulting from
their removal) in good and substantial repair and condition and in
accordance with the Tenant's covenants in this lease and to deliver to
the Lessor all the keys to the Premises and all entry access cards,
identity cards and other security devices relating to the Premises or
the Estate.
INFORMATION
13.1 To ensure that at all times the Lessor and the local police force have
written notice of the name, home address and home telephone number of
at least two keyholders of the Premises.
13.2 On request to produce to the Lessor or the Surveyor all plans,
documents and other evidence as the Lessor may reasonably require in
order to satisfy itself that the provisions of this Lease have been
complied with.
13.3 Whenever during the Term called upon so to do, to furnish to the
lessor, in writing the information envisaged in section 40(1) of the
1954 Act within one calendar month of request by the Lessor
INDEMNITY
14. To indemnify and keep indemnified fully the Lessor against any claims
proceedings damages demands costs and expenses incurred by the Lessor
arising directly or indirectly:-
14.1 any act or omission however caused or occurring in or upon the
Premises (other than for death or personal injury arising from
the negligence of the lessor or its employees)
14.2 relating to or arising from any breach non observance or non
performance by the Tenant of any of its covenants or the
conditions or other provisions of this Lease
14.3 from damage occasioned to the Estate or to any person caused
directly or indirectly by any act default or negligence of the
Tenant anyone connected with it
EASEMENTS
40
<PAGE> 121
15. Not to do anything by which the right of light or air to or belonging
to the Premises may be endangered or interfered with or lost and in
the event of any other person or persons doing any act or thing
whereby such right of light or air to the Premises is endangered
interfered with or lost forthwith to notify the Lessor and to permit
the Lessor to take such action at law or otherwise as may seem
necessary to it in the name of the Tenant (PROVIDED ALWAYS that the
consent of the Tenant to the use of its name be first obtained such
consent not to be unreasonably withheld or delayed) either alone or
jointly with the Lessor for the protection of their interests in the
Premises.
THE FIFTH SCHEDULE.
(Rent Review)
1. In this Schedule "the open market rent" means the rent at which the
Premises might be expected to be let at the Review Date on the
following assumption on that date (whether or not facts):-
1.1 that the Premises are available to let on the open market
without a fine or premium with vacant possession by a willing
landlord to a willing tenant for a term commencing on and from
the Relevant Review Date of 10 years or (if longer) the residue
then unexpired of the Term
1.2 that the letting is to be of the Premises as a whole on the
same terms and conditions as are contained in this Lease (other
than as to the amount of the Rent but including the provisions
for rent review and excluding clause 16 of this lease and
paragraph 1.13 of this Schedule) and without payment of any
fine or premium
1.3 that the Premises are fit for and fitted out and equipped for
immediate occupation and use as required by the hypothetical
tenant to enable him immediately to occupy and use the Premises
for the Permitted Use (or such other use as the Lessor may
allow or may have allowed on or before the Review Date)
41
<PAGE> 122
1.4 that all of the works set out in the General specification have
all been carried out to the Premises by the Lessor at its own
expense
1.5 that the Premises may lawfully be used for the Permitted Use as
varied or extended by any licence granted to this Lease
1.6 that the Tenant has complied with all its covenants and
obligations under this Lease
1.7 that if the Premises or the Estate or any amenity belonging to
either of them shall have been damaged or destroyed the same
had before the Review Date been fully repaired and reinstated
1.8 that no works have been carried out to the Premises by the
Tenant or its predecessors in title which would diminish the
rental value of the Premises
1.9 that no reduction is to be made to take account of any rent
free period or other rental concession which on a new letting
an the open market might be granted to the incoming tenant
1.10 that if any of the Additional Works would have been carried out
for the purpose described in paragraph 1.3 they had already
been carried out
but disregarding (if applicable)
1.11.1 Any goodwill attributable to the Premises by reason of any
trade or business carried on therein by the Tenant its
predecessors in title or any undertenant; and
1.11.2 Any effect on rent of any improvements to the Premises (to
which the Lessor shall have given consent) carried out
otherwise than in pursuance of an obligation to the Lessor or
its predecessors in title by the Tenant its undertenants or
their respective predecessors in title during the Term; and
1.11.3 Any effect on rent or the fact that the Tenant its predecessors
in title or any undertenant may have been in occupation of the
Premises
1.12 any effect on rent of the Additional Works (but subject to the
assumption set out in paragraph 1.10 above)
1.13 the fact (if a fact) that the Tenant is not registered for
purpose of value added tax
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<PAGE> 123
2. The Reviewed Rent payable during the period commencing on a Review
Date and ending on the next Review Date or the termination of this
Lease (as the case may be) shall be the greater of:-
2.1 The Rent payable under this Lease immediately prior to the
Review Date upon which the period commences; and
2.2 The Open Market Rent at that Review Date
3. If the Lessor and the Tenant have not agreed on the Open Market Rent
by the Review Date then the determination of the Open Market Rent may
at any time after that Review Date be referred by either party to an
independent chartered surveyor of not less than ten years
qualification having practical experience and knowledge of commercial
rentals in West London postal districts ("the valuer") who shall act
as an expert and not as an arbitrator the valuer to be appointed (in
the event of the Lessor and the Tenant failing to agree on the
appointee) on the application of either party by or on behalf of the
President for the time being of the Royal Institution of Chartered
Surveyors
4. The fees and expenses of the valuer including the cost of his
nomination shall be borne by the Lessor and/or the Tenant as
determined by the valuer. The lessor and Tenant shall otherwise bear
their own costs
5. The valuer shall afford the lessor and the Tenant an opportunity to
make representations to him and in arriving at his determination the
valuer shall consider all representations and evidence submitted by or
on behalf of the Parties and in such determination he shall state that
all such representations and evidence shall have been taken into
account
6. If the valuer shall die delay or become unwilling, unfit or incapable
of acting or if for any other reason the President for the time being
of the Royal Institution of Chartered Surveyors or the person acting
on his behalf shall in his absolute discretion think fit he may on the
application of either party by writing discharge the valuer and
appoint another in his place
7. If the Reviewed Rent payable on and from any Review Date has not been
agreed by that Review Date rent shall continue to be payable at the
rate previously payable and forthwith upon the Reviewed Rent being
ascertained the Tenant shall pay to the Lessor any shortfall
43
<PAGE> 124
between the rent and the Reviewed Rent payable up to and on the
preceding Rent Payment Date together with Interest at the rate
referred to in Clause 1.33 less 4% on any shortfall on a day to day
basis from the Review Date to the date of actual payment of any such
shortfall. For the purposes of this clause the Reviewed Rent shall be
deemed to have been ascertained on the date when it is agreed between
the parties or (as the case may be) the date of notification of the
determination by the valuer
8. If either the Lessor or the Tenant shall fail to pay the appropriate
amount of the fees and expenses of the valuer as determined by him
within fourteen days of the same being demanded by the valuer, the
other shall be entitled to pay the same and the amount so paid shall
be repaid by the party chargeable on demand
9. If at any Review Date there shall be in force any enactment which
shall restrict curtail or modify the effect or operation of the
provisions of this Schedule then the Lessor shall in addition to the
review herein provided for on each occasion such enactment or any part
thereof is removed relaxed or modified be entitled on giving not less
than one month's notice in writing expiring after such removal
relaxation or modification to introduce a special review date which
shall be the date of expiration of such notice and the rent from such
special review date if any shall be determined in accordance with the
provisions of this Schedule mutatis mutandis
10. Immediately after agreement or determination of the Reviewed Rent a
memorandum as to its amount shall forthwith be signed by the Lessor
and the Tenant and a note thereof endorsed on this Lease.
THE SIXTH SCHEDULE
The Services
1. Maintaining repairing cleaning resurfacing relaying overhauling
draining and emptying and (where reasonably necessary or reasonably
desirable) rebuilding reconstructing altering and renewing:-
1.1 the structure and exterior of the Building including (without
limitation) its foundations and roofs
44
<PAGE> 125
1.2 those parts of the Building not let or intended to be let and
all Service Conduits apparatus plant machinery and equipment
within those parts
1.3 the Service Conduits in on or serving the Estate (except those
that are within and solely serving the Premises or any other
part of the Estate that is let or intended for letting) the
use of or benefit from which is or may be common to the
Building and any other part of the Estate
1.4 the External Areas (save for such part or parts of them as
shall from time to time become maintainable at public expense)
and all apparatus plant machinery and equipment on them
1.5 the Car Park and all apparatus plant machinery and equipment
in it provided by the Lessor which relates to the Car Park
save for any such rebuilding and reconstructing altering and
renewing caused by or arising out of any inherent or latent
defect
2. As often as is reasonably necessary decorating the exterior of the
Building
3. As often as is reasonably necessary providing and maintaining plants
shrubs trees garden or grassed areas in the External Areas and keeping
the same planted tended and free from weeds and any grass cut
4. As often as is reasonably necessary cleaning the exterior of all
windows and window frames in the outside walls of the Building
5. As often as is reasonably necessary collecting and disposing of refuse
from the collection points on the Estate allocated by the Lessor from
time to time and the provision repair maintenance and treatment
renewal of plant and equipment for the collection treament packaging
or disposal of refuse
6. Provision of security personnel and/or security facilities and
equipment on the Estate for the adequate security of the Estate
THE SEVENTH SCHEDULE
Additional items of Expenditure
1. The reasonable and proper fees and disbursements (and any value added
tax thereon) of the Surveyor or the Accountant the Managing Agent and
any other person employed or retained for or in
45
<PAGE> 126
connection with the management of the Estate or the provision of any
of the Services or of any of the matters referred to in this Schedule.
2. The reasonable fees of the Lessor or a Group Company for the
management of the Estate or in connection with the provision of the
Services or any of the matters referred to in this Schedule that shall
be undertaken by the Lessor or a Group Company
3. The cost of employing (whether by the Lessor a Group Company the
Managing Agent or any other individual firm or company) such staff for
the provision of the Services matters referred to in this Schedule and
all other incidental expenditure in relation to such employment
including but without limitation
3.1 insurance, pension and welfare contributions transport
facilities and benefits in kind the provision of uniforms
working clothing vehicles, tools, appliances, cleaning and
other materials, fixtures, fittings and other equipment for
the proper performance of their duties; and
3.2 a notional rent (not exceeding current market rent such rent
to be determined by the Surveyor acting as an expert and not
as an arbitrator) for any office or rest accommodation
provided on the Estate for the proper performance of such a
person's duties
4. The cost of and of entering into any contracts for the carrying out of
all or any of the Services or any of the matters referred to in this
Schedule
5. All existing and future rates payable in respect of the Estate
(excluding those imposed specifically on the Premises or on any other
part of the Estate that is let or intended for letting) or upon
residential or other accommodation for caretakers engineers and other
staff employed in connection with the Estate
6. The cost of the supply of electricity gas oil or other fuel for
provision of the Services and for all purposes in connection with the
Estate
7. The amount which the Lessor shall pay or be called upon to pay as a
contribution towards the expanse of making, repairing, maintaining
rebuilding and cleansing any ways roads pavements or structures
service conduits party fences walls or anything which may belong to
46
<PAGE> 127
or be used for the Estate or exclusively or in common with other
premises near or adjoining the Estate
8. The reasonable and proper costs charges and expenses of preparing and
supplying to the tenants copies of any regulations made by the Lessor
relating to the Estate or its use
9. The reasonable and proper costs of taking all steps deemed desirable
or expedient by the lessor for complying with, making representations
against, or otherwise contesting the incidence of the provisions of
any proposed regulation, byelaw notice, legislation, order or
statutory requirements concerning town planning, public health,
highways, streets, drainage or other matters relating or alleged to
relate to the Estate or any part of it for which any tenant is not
directly liable
10. The reasonable and proper cost of abating a nuisance in respect of the
Estate in so far as the same is not the liability of any individual
tenant
11. The payment of all reasonable and proper legal charges incurred by
the Lessor:-
11.1 in the running and management of the Estate and in the
enforcement of the covenants conditions and regulations
contained in the leases granted of the Estate; or
11.2 in making such applications and representations and taking
such action as the lessor shall reasonably think necessary in
respect of any notice order regulation or bye-law or proposal
for any such thing in respect of the Estate
12. The reasonable and proper costs of provision of security facilities and
equipment and security personnel for the Estate
13. The reasonable and proper costs of any valuation or revaluation of the
Estate for insurance purposes and of making and pursuing any claim
under the Policy
14. The reasonable and proper costs of or resulting from the
discontinuance of any of the Services or the matters mentioned in this
Schedule
15. The reasonable and proper costs of controlling and regulating traffic
on the Estate
16. The reasonable and proper costs incurred in making and pursuing any
claim against any third party reimbursement payment or cancellation
47
<PAGE> 128
of any amount which forms or would form part of the Total Service Cost
17. The costs incurred in connection with such other services and matters
for the benefit of the Tenant or the other tenants of the Estate and
the carrying out of such other repairs and improvements works and
additions and the defraying of such other costs (including the
modernisation or replacement of plant and machinery) as the Lessor
shall reasonably consider appropriate or otherwise desirable in the
general interests of the Estate of the tenants or any of then
18. Any facility fees, interest or other financing costs properly incurred
in connection with any sums borrowed by or on behalf of the Lessor for
the purpose of meeting expenditure on any of the Services or any of
the matters referred to in this Schedule
19. Such provision (if any) for anticipated expenditure in respect of any
of the Services or any of the matters referred to in this Schedule as
the Lessor may in its absolute discretion consider appropriate in
respect of
19.1 periodically recurring items (whether regularly or irregularly
recurring)
19.2 renewal or replacement
20. The costs of installation connection rental maintenance and repair of
any communal aerial for the reception of television signals from
satellites
THE EIGHTH SCHEDULE
(Guarantor Covenant)
1. If at any time during the Term the Tenant shall make any default in
payment of the rents or in observing or performing any of the
covenants, conditions or other terms of this Lease the Guarantor will
pay the rents and observe or perform the covenants, conditions or
other terms in respect of which the Tenant shall be in default
notwithstanding
1.1 any time or indulgence granted by the Lessor to the Tenant,
any neglect or forbearance of the Lessor in enforcing the
payment of rent or the observance or performance of the
Tenant's covenants or any refusal by the lessor to accept rent
48
<PAGE> 129
tendered by or an behalf of the Tenant at a time when the
lessor was entitled (or would after the service of a notice
under Section 146 of the Law of Property Act 1925 have been
entitled) to re-enter the Premises
1.2 the agreement or determination of the Reviewed Rent or that
the terms of this lease may have been varied by agreement
between the parties
1.3 that the Tenant shall have surrendered part of the Premises,
in which event the liability of the Guarantor hereunder shall
continue in respect of the Part of the Premises not so
surrendered after making any necessary apportionments under
Section 140 of the Law of Property Act 1925, and
1.4 any other act or thing whereby but for this provision the
Guarantor would have been released
2. If this lease shall be disclaimed or be forfeited then in any such
event if the Lessor within three months of any such disclaimer or
forfeiture by notice in writing so requires the Guarantor shall
forthwith after service of such notice accept as tenant a new lease of
the Premises for a term equivalent to the residue which if there had
been no disclaimer or forfeiture would have remained of the Term at the
same Rent as shall be payable under this lease immediately prior to
such disclaimer or forfeiture (with provision for review of rent at the
times and in the manner contained in this Lease) and subject to the
same covenants provisos and conditions on the part of the Lessor and
the Tenant and the other terms as are contained in this Lease the said
new lease and the rights and liabilities under it to take effect as
from the date of such disclaimer or forfeiture and in any such case the
Guarantor shall pay the Lessor's costs of and accept such new lease
accordingly and will execute and deliver to the Lessor a counterpart
thereof
THE COMMON SEAL of the Lessor was )
affixed hereto in the presence of:)
Director /s/ Signature Illegible
Director/Secretary /s/ Signature Illegible
49
<PAGE> 130
77 - 85 FULHAM PALACE ROAD LONDON W6
SITE PLAN
[Graphic depiction of
site plan omitted]
<PAGE> 131
77 - 85 FULHAM PALACE ROAD LONDON W6
BLOCK A THIRD FLOOR PLAN
[Graphic depiction of
floor plan omitted]
<PAGE> 132
R E N T R E V I E W M E M O R A N D U M
-------------------------------------------
DATED: 1994
THE LANDLORD: DANBUILD INVESTMENTS (UK) LIMITED
whose registered office is at
124-130 Seymour Place
London W.1
THE TENANT: SYNON EUROPE LIMITED
principal place of business in UK
(by assignment) 91 St Pauls Road
Islington
London N.1.
By this Memorandum the Landlord and the Tenant desire to record the By this
fact that pursuant to and in accordance with the Lease particulars whereof
appear below the Rent has been reviewed and the parties have agreed that from
and including the 1st day of July 1994 the Rent shall remain at TWO HUNDRED AND
NINETY SEVEN THOUSAND THREE HUNDRED AND SEVENTY FIVE POUNDS (pounds 297,375.00)
per annum subject to further review in accordance with the provisions of the
Lease
THE LEASE
<TABLE>
<CAPTION>
DATE PARTIES PROPERTY TERM
- ---- ------- -------- ----
<S> <C> <C> <C>
01-09-1989 THE LANDLORD (1) 3RD FLOOR OFFICES 25 YEARS
ELSINORE HOUSE FROM
SYNON LIMITED (2) 77 FULHAM PALACE 01-07-1989
ROAD
LONDON W.6
</TABLE>
[SIG] [SIG]
- --------------------------------- ------------------------------
Signed for and on behalf of Signed for and on behalf of
the Tenant the Landlord
<PAGE> 133
R E N T R E V I E W M E M O R A N D U M
-----------------------------------------
DATED:
THE LANDLORD: DANBUILD INVESTMENTS (UK) LIMITED
whose registered office is at
124-130 Seymour Place
London W.1
THE TENANT: SYNON EUROPE LIMITED
principal place of business in UK
(by assignment) 91 St Pauls Road
Islington
London N.1.
By this Memorandum the Landlord and the Tenant desire to record the fact that
pursuant to and in accordance with the Lease particulars whereof appear below
the Rent has been reviewed and the parties have agreed that from and including
the 1st day of July 1994 the Rent shall remain at TWO HUNDRED AND NINETY SEVEN
THOUSAND THREE HUNDRED AND SEVENTY FIVE POUNDS (pounds 297,375.00) per annum
subject to further review in accordance with the provisions of the Lease
THE LEASE
<TABLE>
<CAPTION>
DATE PARTIES PROPERTY TERM
- ---- ------- -------- ----
<S> <C> <C> <C>
01-09-1989 THE LANDLORD (1) 3RD FLOOR OFFICES 25 YEARS
ELSINORE HOUSE FROM
SYNON LIMITED (2) 77 FULHAM PALACE 01-07-1989
ROAD
LONDON W.6
</TABLE>
[SIG] [SIG]
- --------------------------------- ------------------------------
Signed for and on behalf of Signed for and on behalf of
the Tenant the Landlord
<PAGE> 134
DATED 3/8/95 199
- -------------------------------------------------------------------------------
(1) ZAMBON (UK) LIMITED
(2) SYNON EUROPE LIMITED
==========================================
DEED OF VARIATION
RELATING TO
UNIT 5 AND PART UNIT 6 ELSINORE HOUSE
77-85 FULHAM PALACE ROAD LONDON W6
==========================================
OLSWANG
90 Long Acre
London WC2E 9TT
Tel:0171-208 8888
Fax:0171-208 8800
Ref:SXU/S3959-69
<PAGE> 135
DEED OF VARIATION made the day of 199
1. PARTICULARS
1.1 THE LANDLORD: Zambon (UK) Limited whose registered office is at
Elsinore House 77 Fulham Palace Road London W6
1.2 THE TENANT: Synon Europe Limited whose registered office is at 91 St.
Paul's Road London N1 2YU
1.3 THE LEASE: An Under-lease dated the 8th day of March 1995 made between
the Landlord (1) and the Tenant (2).
1.4 THE PREMISES: Unit 5 and part of Unit 6 Elsinore House 77-85 Fulham
Palace Road London W6 more particularly described in the Lease.
1.5 THE TERM: Three years from the 1st day of March 1994.
1.6 THE HEADLEASE: A Lease dated 29th October 1992 made between the
Superior Landlord (1) and the Landlord (2).
1.7 THE SUPERIOR LANDLORD: Danbuild Investments (UK) Limited who
registered office is c/o Bright Grahame Murray 124-130 Seymour Place
London WlH 6AA.
2. DEFINITIONS AND INTERPRETATION
In this Deed:
2.1 The word and expressions in Clause I shall have the meanings specified.
2
<PAGE> 136
2.2 "The Landlord" includes the person in whom the reversion immediately
expectant on the determination of the Term is for the time being
vested.
2.3 "The Tenant" includes its successors in title.
2.4 If the Landlord or the Tenant is at any time more than one person its
obligations shall be joint and several obligations of such persons.
2.5 "The Lease" includes all or any deeds and documents supplemental to the
Lease whether or not expressed to be so.
2.6 Words importing one gender import any other gender words importing the
singular import the plural and vice versa and any reference to a
person includes a reference to a company authority board department or
other body.
2.7 The clause headings shall not be taken into account for the purposes of
its construction or interpretation.
3. RECITALS
3.1 This deed is supplemental to the Lease by which the Premises were
demised for the Term subject to the payment of the rents reserved by
and the observance and performance of the covenants on the lessee's
part and the conditions contained in the Lease.
3.2 The reversion immediately expectant on the determination of the Term
is vested in the Landlord and the unexpired residue of the Term is
vested in the Tenant
3.3 The Landlord and the Tenant have agreed that the Lease shall be
extended so that the term expires on 31st January 1998 and varied to
the intent that from me doe hereof the Lease shall be read and
construed as if the variations set out in the Schedule hereto had
originally been contained in the Lease.
3
<PAGE> 137
3.4 The covenants and conditions contained in the Lease (save as varied by
this Deed) shall continue in full force and effect.
3.5 The Landlord and the Tenant acknowledge that this Deed represents the
grant of a new lease of the Premises and it is hereby agreed between
the Landlord and the Tenant (having been authorised to do so by an
Order of the Mayor's and City of London Court made on the day
of 1996 under the provisions of Section 38(4) of the Landlord
and Tenant Act 1954 (as amended by Section 5 of the Law of Property Act
1969) that the provisions of Sections of 24 to 28 inclusive of the
Landlord and Tenant Act 1954 shall be excluded in relation to this
Deed.
3.6 The Tenant covenants to pay the Landlord's solicitor's reasonable fees
and disbursements of pounds 600.00 and the Superior Landlord's
Solicitor's reasonable fees and disbursements of pounds 675.00 and the
Superior Landlord's mortgagee's solicitor's reasonable fees and
disbursements of pounds 75.00 (if charged) and the registration fee of
pounds 25.00 payable pursuant to the Headlease for the registration of
this Deed (including value added tax in all cases save in
circumstances where such value added tax can be reclaimed from H M
Customs and Excise) in connection with the negotiation preparation
completion and registration of the Deed and the consent required under
the terms of the Headlease from the Superior Landlord and the
mortgagee of the Superior Landlord.
IN WITNESS whereof the parties hereto have executed and delivered this Deed the
day and year first before written.
4
<PAGE> 138
SCHEDULE
In the Particulars (as defined in the Lease) the definition of the Term shall
be revised so that the words "From the Rent commencement date for a period of
three (3) years" are deleted and replaced by the words "From the Rent
commencement date for a period expiring on 31st January 1998"
Clause 12 of the Lease is deleted.
The Common Seal of Zambon (UK) Limited
was hereunto affixed in the presence of:-
Director
/s/ Signature Illegible
Director/Secretary
/s/ Signature Illegible
The Common Seal of Synon Europe Limited
was hereunto affixed in the presence of:-
Director
[SEAL OF SYNON] Secretary [SEAL OF ZAMBON]
/s/ VICTOR BHALLA
5
<PAGE> 139
DATED 1996
----------------------------------------------
DANBUILD INVESTMENTS (U.K.) LIMITED
- and -
ZAMBON (UK) Limited
- and -
ZAMBON GROUP SpA
- and -
SYNON EUROPE Limited
--------------------------------
LICENCE TO UNDERLET
- of -
Units 5 & 6 Block A
Elsinore House
77-85 Fulham Palace Road
London W6
--------------------------------
Mishcon de Reya
21 Southampton Row
London WC1B 5HS
Ref: DPS
MISHCON DE REYA Solicitors
21 Southampton Row, London WC1B 5HS
Tel: +44(0)171-405 3711 Fax: +44(0)171-404 5982 DX 37954 Kingsway
Internet: [email protected]
<PAGE> 140
LICENCE TO UNDERLET
DATE: 1996
THIS LICENCE is made between (1) the Lessor (2) the Tenant (3) the Tenant's
Guarantor and (4) the Sub-Tenant named in the Particulars below.
PARTICULARS
The Lessor: DANBUILD INVESTMENTS (U.K.) LIMITED whose
registered office is 124-130 Seymour Place
London W1H 6AA
The Tenant: ZAMBON (UK) LIMITED whose registered office is
at Elsinore House 77 Fulham Palace Road London
W6
The Tenant's Guarantor: ZAMBON GROUP SpA of Via Lillode Duca 10 -
20091 Bresso Milan Italy
The Sub-Tenant: SYNON EUROPE LIMITED whose principle place of
business in the United Kingdom is at 91 St
Paul's Road London N1 2YU
The Premises: Unit 5 and Unit 6 within Block A (Elsinore
House) 77-85 Fulham Palace Road, London W6
comprised in and demised by the Lease
The Lease: Dated 29th October 1992
Between: (1) the Lessor
(2) Zambon (UK) Limited
The Term of the Lease: 25 years from 1st January 1990 subject to the
provisions of the Lease for earlier
determination
The Underlease: A lease dated the 8th March 1995 made between
the Tenant (1) and the Sub-Tenant (2)
The Deed of Variation: Means a deed of variation in the form of the
draft deed of variation annexed hereto
The Property to be sublet: The whole of Unit 5 and the second floor only
of Unit 6 shown edged red on the plans
attached to the Underlease being part of the
Premises
The Guarantee: The Deed of Guarantee dated 29th October 1992
between the Lessor (1) the Tenant (2) and the
Tenant's Guarantor(3)
-1-
<PAGE> 141
A. RECITALS
1. By the Lease the Premises were demised for the Term subject to the
rents and to the covenants agreements conditions and other matters
contained by the Lease.
2. The Lease provides that the Tenant shall not:
2.1 underlet any part of the Premises without the Lessor's prior
written consent; nor
2.2 underlet any part of the Premises save for a Permitted Part as
defined in the Lease; nor
2.3 underlet the whole or a Permitted Part of the Premises at a
rent less than the open market rental value of the Premises
(or in the case of a Permitted part pro rata) or the rent then
reserved and payable under the Lease (whichever should be the
greater) nor
2.4 underlet the whole or a Permitted Part of the Premises without
including provisions in the Underlease for the upwards only
review of the rent thereby reserved and on the basis and on
the dates on which the rent is to be reviewed in this Lease
nor
2.5 underlet the whole or a Permitted Part of the Premises unless
stipulation relating to the provision of guarantors or a bank
guarantee or a rent deposit have been complied with nor
2.6 underlet the whole or a Permitted Part of the Premises without
an absolute covenant against further underletting and the same
restrictions on assignment sharing holding on trust for
another parting with or sharing with another possession or
occupation of the Premises
3. Notwithstanding the provisions of the Lease the Tenant has requested
the Lessor to grant consent to an underletting of the Property to be
sub-let not being a Permitted Part and at a rent which is below the
- 2 -
<PAGE> 142
Rent reserved by the Lease and without provisions relating to rent
review and without provisions relating to guarantors, rent deposit or
bank guarantee and without an absolute covenant against further
underletting or assignment which the Lessor has agreed to do on the
terms and conditions set out in this Licence.
4. The Lessor the Tenant and the Sub-Tenant have agreed that the
Underlease should be extended so that the term of the Underlease
expires on 31st January 1998 and that Clause 12 of the Underlease is
deleted.
B. OPERATIVE PROVISIONS
1. In this Licence unless the context otherwise requires:
1.1 The expressions in the first column of the Particulars shall
have the meanings given to them in the second column of the
Particulars.
1.2 The singular shall include the plural and the masculine shall
include the feminine and neuter.
1.3 Where the Tenant and/or Sub-Tenant comprises more than one
person the obligations on the part of the Tenant and
Sub-Tenant shall be join and several.
2. The Lessor hereby grants to the Tenant Licence to sub-let the Property
to be sub-let upon the terms and conditions set out in the Underlease
as varied by the Deed of Variation and for the avoidance of doubt but
for the purpose only of this Licence the Lessor hereby waives the
provisions of the Lease referred to in the Recitals of this Licence
3. The Tenant hereby covenants with the Lessor:
3.1 not without the Lessor's consent in writing at any time either
expressly or by implication to waive the covenants and
conditions to be contained in the Underlease as varied by the
Deed of Variation or any of them so far as possible and to
enforce the
- 3 -
<PAGE> 143
said covenants and conditions upon any breach of any of the
said covenants or conditions to re-enter on the Property to be
sublet; and
3.2 that forthwith upon the expiry of the term granted by the
Underlease as varied by the Deed of Variation or upon the
earlier termination thereof, the Tenant will immediately
recover possession of the Property to be sub-let thereby
demised; and
3.3 not to accept a surrender of the Underlease as varied by the
Deed of Variation without the prior consent in writing of the
Lessor such consent not to be unreasonably withheld or
delayed; and
3.4 to give notice to the Lessor's solicitors of completion of the
Underlease as varied by the Deed of Variation and to pay their
registration fee of pounds 25 plus VAT in that connection and
to supply a certified copy of the completed Deed of Variation
with such notice.
4. The Sub-Tenant hereby covenants with the Lessor:
4.1 to observe and perform the covenants on the part of the Tenant
contained in the Lease (other than the covenant therein to pay
rent and other outgoings) insofar as the same affect or relate
to the Property to be sub-let; and
4.2 to observe and perform the covenants on its part contained in
the Underlease as varied by the Deed of Variation insofar as
the same affect or relate to the Lessor.
5. It is hereby agreed and declared that the condition for re-entry
contained in the Lease shall be exercisable on breach of any of the
covenants contained herein as well as upon the happening of any of the
events mentioned in the said condition contained in the Lease.
6. This Licence shall not permit any further or other underletting or
parting with possession of the Premises or any part thereof and nor
- 4 -
<PAGE> 144
shall it otherwise prejudice or affect any of the covenants or
conditions contained in the Lease save that the sub-tenant may share
possession of the Property to be sub-let with a company being a member
of the same Group of Companies as is more particularly set out in the
Underlease.
7. This Licence is conditional upon the Deed of Variation being completed
and registered with the Lessor's solicitors within three months of the
date hereof.
8. As the Deed of Variation represents the grant of a new underlease this
Licence is conditional upon the Tenant and the Sub-Tenant first
obtaining an Order of the County Court excluding the provisions of
Section 24 to 28 Landlord and Tenant Act 1954 in relation to the Deed
of Variation and unless and until such Court Order shall have been
obtained and supplied to the Lessor this Licence shall have no effect.
9. The Guarantee shall remain in full force and effect which the Tenant's
Guarantor now confirms and the Tenant's Guarantor consents to the
terms of this Deed and the Deed of Variation.
10. It is agreed and declared that the rent payable pursuant to the
Underlease as varied by the Deed of Variation shall not be allowable
as evidence of comparable open market rent for the purpose of Rent
Review as set out in the Fifth Schedule to the Lease or for evidence
of comparable open market rent in respect of any other premises
occupied by the Tenant or the Sub-Tenant anywhere on the Estate.
THE COMMON SEAL of ZAMBON )
(UK) LIMITED was affixed to )
this Deed in the presence of:)
Director
Secretary
- 5 -
<PAGE> 145
EXECUTED as a Deed on behalf )
of ZAMBON GROUP SpA )
Director
Secretary
THE COMMON SEAL of SYNON )
EUROPE LIMITED was affixed to )
this Deed in the presence of: )
[SEAL OF SYNON]
Director
Secretary /s/ VICTOR BHALLA
- 6 -
<PAGE> 146
[SYNON LETTERHEAD]
1st December 1995
Mr S. Unwin,
Oslwang,
90, Long Acre,
London WC2E 9TT
SUBJECT TO CONTRACT
Dear Stephen.
UNIT 5 & 6, ELSINORE HOUSE
Further to our telephone conversation today I am writing to confirm that we
wish you to act on our behalf concerning the deed of variation for Unit 5 & 6
Elsinore House.
Bailey, Shaw and Gillett have confirmed to me that they have the original
documentation which they have promised to forward to me as soon as possible.
I am enclosing a letter from Bruce Gallie of Danbuild (owners of Elsinore House)
acting on behalf of Zambon detailing the terms and conditions of the proposed
variation.
Details:
Original Term 1/1/94 to 28/2/97 extension to 31/1/98 providing we do not
exercise our break clause in March 1996. Rental and all other terms to remain as
per our existing agreement.
Should you have any queries regarding this matter please do not hesitate to
contact me on 0171-226-5164. Thank you.
Yours sincerely,
/s/ LOUISE MARCHANT
- -------------------------
Louise Marchant
Facilities Manager
cc. Bruce Gallie-Danbuild
<PAGE> 147
[DANBUILD LETTERHEAD]
Ms Louise Marchant
SYNON LTD
91 St Pauls Road
London
N1 2YU
SUBJECT TO CONTRACT
Our reference Date
LM\RBG.sm.Ll9 20 November 1995
\letters\synon
Dear Louise
RE: UNIT 5, SECOND FLOOR UNIT 6
Further to our various discussions I confirm that Zambon have agreed in
principle to a variation of your lease for Unit 5 and 6 on the following terms:
l. Synon relinquish the right to break their lease as provided for in the
current lease contract, in March 1996.
2. Synon indemnify Zambon against any costs incurred in the extension. As
I explained I can only foresee this including legal costs of
documentation.
3. In return for the above Zambon will agree to an extension of your
existing lease, to expire on 31st January 1998. Rental and all other
terms will remain as per the existing agreement.
Please confirm your agreement to the above at which point I will instruct
solicitors.
Yours sincerely
/s/ Bruce Gallie
- -------------------
Bruce Gallie
cc ext: Leo Derieuw, Zambon
<PAGE> 148
[BAILEYS SHAW & GILLETT LETTERHEAD]
V. Bhalla, Esq.,
Synon Europe Ltd.
91 St. Paul's Road
London N1 2YU
25 October 1994 Our Ref: AJHS.4744.210.8
Your Ref:
Dear Mr. Bhalla,
RE: SYNON/ZAMBON
I refer to our telephone conversation of Monday this week. Your company is in
possession of the Premises pursuant to an Agreement for Lease. As I mentioned
I received various documents in relation to the completion of this matter which
require attention. I enclose the following:-
1. The engrossment of a Counterpart Underlease. This should be sealed by
your Company and witnessed where shown on page 21 and returned to me
undated. I have corrected the spelling of your Company's name in
manuscript.
2. The Counterpart Licence for Alteration. This needs to be sealed on
page 6 by the Sub-Tenant. You will note in this case and the case
above that of course it will have to be witnessed by two Directors or
the Director and the Company Secretary.
3. Engrossment of the Licence to Underlet (somewhat modest engrossment
but rather than delay it further I suggest we accept it). This should
be pleased sealed and witnessed where shown with a yellow sticker.
Again I have corrected your corporate name. Please date and return
this to me at your earliest convenience.
If you have any questions or queries, or if I can help in any way, then please
do not hesitate to let me know. There is one outstanding Licence for
Alterations, which I am pressing Danbuild's solicitors on.
I look forward to hearing further from you.
Yours Sincerely,
/s/ ANDREW SHAW
- -------------------
Andrew Shaw
<PAGE> 149
Dated 1994
Zambon (UK) Limited
and
Synon Europe Ltd
COUNTERPART
U N D E R L E A S E
of
Unit 5 and Part of Unit 6 Elsinore House
77-85 Fulham Palace Road London W.6
Sharpe Pritchard
Elizabeth House
Fulwood Place
London WC1V 6HG
<PAGE> 150
1
THIS UNDERLEASE is made BETWEEN (1) the Landlord and (2) The Tenant referred to
in the following particulars
Date
PARTICULARS
The Landlord: ZAMBON (UK) LIMITED whose registered office is
at Elsinore House 77 Fulham Palace Road London
W.6
The Tenant: SYNON EUROPE LTD whose registered office is at
91 Paul's Road London Nl 2YU
The Building: Block A (Elsinore House) 77-85 Fulham Palace
Road London W.6 shown edged brown on Plan 1
The Premises: Unit 5 shown for identification purposes only
edged red on Plans 2a 2b and 2c and as further
defined in the First Schedule and the second
floor being part of Unit 6 shown for
identification purposes only edged blue on
Plan 2c and as further defined in the First
Schedule
The Term: From the Rent commencement Date for a period
of three (3) years
The Rent Commencement Date:
The Rent: Forty thousand nine hundred and ten pounds
(pounds 40,910.00) per annum exclusive of
V.A.T.
The Permitted Use: As offices
The Car Parking Spaces: One (1) car parking space (referred to in the
Second Schedule)
DEFINITIONS
IN THIS LEASE unless the context otherwise requires:
1.1. The expressions in the first column of the Particulars shall have the
meanings given to them in the second
<PAGE> 151
2
column of the Particulars and the Particulars form part of this
Underlease
1.2. "the Headlease" means the superior lease under which the Landlord holds
the Premises together with other property made the Twenty-ninth day of
October 1992 between (1) Danbuild Investments (UK) Limited ("the
Superior Landlord") and (2) the Landlord for a term of twenty-five (25)
years from the twenty-seventh day of December 1992
1.3 "the Landlord" includes the person for the time being entitled to the
reversion immediately expectant on the Term and any superior landlord
l.4. "the Tenant" includes the successors in title of the Tenant
1.5. "the Tenant or anyone connected with it" means any of the Tenant its
employees agents licensees invitees and anyone else on the Estate
expressly or impliedly with the authority of the Tenant
l.6. "the Rent Payment Days" means lst January 1st April lst July and 1st
October
1.7. "the Granted Rights" means the rights set out in the Second Schedule
1.8. "the Reserved Rights" means the rights set out in the Third Schedule
1.9. "the Estate" means the property known as 77-85 Fulham Palace Road
London W.6 being the land comprised in the freehold title mentioned
above shown edged green on Plan 1 and the buildings from time to time
on it
<PAGE> 152
3
1.10. "the Car Park" means the car part in the basement of Blocks B and C
(being the buildings on the parts of the Estate shown for the purpose
of identification only edged blue and purple respectively on Plan 1)
and including the entrances driveways access ramps roadways and other
areas in or ancillary to it
l.ll. "the Roadways" means the roads from time to time on the Estate
including the entrances driveways access ramps and roadways forming
part of the Car Park
l.l2. "the External Areas" means the Roadways and the forecourts landscaped
areas and other external areas on the Estate from time to time and the
boundary walls and fences of the Estate
l.l3. "the Common Parts" means the entrance halls landings staircases
corridors and other parts of the Building the use of which is or may be
common to the Tenant and the occupiers of any other part of the
Building
l.l4. "Adjoining Property" means any neighbouring or adjoining land or
property in which the Superior Landlord has now or at any time during
the Term shall have acquired a freehold or leasehold interest
1.15. "Insured Risk" means as defined in the Headlease
1.l6. "the Services" means as defined in the Headlease
l.l7. "the Managing Agent" means any person or firm appointed by or acting
for the Superior Landlord from time to time (including an employee of
the Superior Landlord or a Group Company) to collect the rents and to
manage the Estate
<PAGE> 153
4
l.l8. "Accounting Period" means a year commencing on the lst January or such
other date and/or period as the Superior Landlord shall from time to
time reasonably decide
1.19. "the Service Conduits" means pipes wires cables sewers drains gutters
flues other conducting media and any items similar to any of them and
all valves chambers covers fixings and similar items ancillary to any
of them
l.20. "the Planning Acts" means the Town and country Planning Acts 1971 to
1990 and any Regulations or Orders made under the authority of any such
Act
1.21. "enactment" means any statute Statutory Instrument order of byelaw
issued by any competent authority for the time being and from time to
time in force and any rule regulation scheme plan or direction issued
under or deriving authority from any of them
1.22. "interest" means interest during the period from the date on which the
payment is due to the date of payment (both before and after any
judgment) at Four percent (4%) above the base rate from time to time of
Royal Bank of Scotland Plc or such other clearing bank as the Landlord
may from time to time nominate
l.23. "the 1954 Act" means the Landlord and Tenant Act 1954
1.24. "Group Company" means a company that is from time to time a member of
the same Group as the Landlord or Tenant as the case may be within the
meaning of Section 42 of the 1954 Act
<PAGE> 154
5
1.25. References to "the last year of the Term" include the last year of the
Term if the same shall determine otherwise than by effluxion of time
and to "the end of the Term" include such sooner determination of the
Term
1.26 "the Premises" and "the Estate" include any part of the Premises and
any part of the Estate respectively
1.27. "the parties" or "party" shall mean the Landlord and/or the Tenant
1.28. "Development" has the meaning given by Section 22 of the town and
country Planning Act 1971
1.29. "act or default" means act default negligence or omission
1.30. "rates" means general water and other rates taxes charges community
charge assessments impositions or whatever nature but shall not include
any tax payable as a direct result of any dealings by the Superior
Landlord with its reversionary interest in the Estate and/or the
building and/or the Premises or any Income Tax or Corporation Tax
payable by the Landlord or Superior Landlord on any rents under this
Underlease or any other lease or licence of whatsoever nature on the
Estate
1.31. "planning permission" means any of planning permission listed building
consent conservation area consent and any other permission or consent
under the Planning Acts
INTERPRETATION
<PAGE> 155
6
2. In this Lease:-
2.l. Any obligation in this Underlease not to do an act or thing shall be
deemed to include an obligation not to permit or suffer that act or
thing to be done
2.2. The singular shall include the plural and the masculine shall include
the feminine and neuter
2.3. Where the Tenant comprises more than one person the covenants on the
part of such party shall be joint and several
2.4. References to any right of the Landlord to have access to the Premises
shall be construed as extending to all persons authorised by the
Landlord (including agents professional advisers contractors workmen
and others)
2.5. References to any right of the Tenant shall be construed as extending
to all persons authorised by the Tenant (including authorised
undertenants agents professional advisers contractors workmen servants
and others)
2.6. Reference to any right exercisable by the Landlord or any right
exercisable by the Tenant in common with the Landlord shall be
construed as including (where appropriate) the exercise of such right:-
2.6.1 by the Superior Landlord and all persons authorised by the
Superior Landlord and:
2.6.2 in common with all other persons having a like right
2.7. Any reference to a specific statute includes any
<PAGE> 156
7
statutory extension or modification or re-enactment of such statute and
any regulations or orders made under it (except in the case of the
definitions of "the 1954 Act" and "Group Company")
2.8. The paragraph headings do not form part of this Underlease and shall
not be taken into account in its construction or interpretation
2.9. References to Clauses or Schedules are to Clauses or Schedules in this
Underlease and references in a Schedule to Clauses are to Clauses in
that Schedule
DEMISE
3. The Landlord demises to the Tenant for the Term the Premises:-
3.1 together (in common with the Landlord and all others authorised by
it or otherwise entitled) with the Granted Rights (but subject to
temporary interruption for repair alterations replacement or other
works); but
3.2. excepting and reserving to the Landlord and all others authorised
by it or otherwise entitled the Reserved Rights; and
3.3. the Tenant paying to the Landlord by way of rent without any
deductions whatsoever the Rent which shall be paid by equal
quarterly payments in advance on the Rent Payment Days the first
payment being made on the execution of this Underlease in respect
of the period from the Rent Commencement Date to the next
following Rent Payment Date and by way of further rent payable
<PAGE> 157
8
on demand in respect of Unit 5 amounts equal to 100% and in
respect of Unit 6 amounts equal to 34.4% of the Insurance
Contribution the Service Charge and the Interim Charge (as such
terms are defined in the Headlease) paid from time to time by the
Landlord pursuant to the terms of the Headlease
TENANT'S COVENANTS
4. The Tenant covenants with the Landlord to observe and perform the
covenants and obligations contained in the Fourth Schedule
LANDLORD'S COVENANTS
5. Subject to and conditionally upon the Tenant paying the Rent the
Insurance Contribution the Service Charge and the Interim Charge and
all other moneys payable under this Underlease and performing and
observing the covenants on the part of the Tenant and the conditions
and agreements contained in this Underlease The Landlord covenants
with the Tenant as follows:-
5.1. To permit the Tenant peaceably to hold and enjoy the Premises
during the Term without any lawful interruption by the Landlord or
any person claiming under or in trust for the Landlord
5.2. To pay the rents reserved by the Headlease
5.3. On the request of the Tenant to use all reasonable endeavours to
enforce the covenants on the part of the Superior Landlord
contained in the Headlease
FORFEITURE
6. If:-
<PAGE> 158
9
6.l. the Rent or any part shall at any time be unpaid for twenty-one
(21) days after becoming payable (whether formally demanded or
not); or
6.2. any other sum due from the Tenant under the terms of this
Underlease shall at any time be unpaid for twenty-one (21) days
after the later of demand and becoming payable; or
6.3. any of the Tenant's covenants or obligations in this Underlease
shall not be performed or observed; or
6.4. in relation to the Tenant:-
6.4.1. a proposal is made for a voluntary arrangement pursuant to
Part I Insolvency Act 1986; or
6.4.2. a petition is reasonably and properly presented for an
administration order pursuant to Part II of that Act; or
6.4.3. a petition is reasonably and properly presented pursuant to
Part IV of that Act or a resolution reasonably and properly
proposed for winding-up in either case whether compulsory or
voluntary or a meeting is convened or a resolution is proposed
for the purchase redemption or reduction of any part of the
issued share capital of the Tenant (whether or not to comply
with S.142 Companies Act 1985) (except in any such case for
reconstruction or amalgamation not involving or arising out of
insolvency); or
6.4.4. a receiver is appointed of the whole or any part of its assets
or undertaking (whether or not an
<PAGE> 159
10
administrative receiver as defined in S.29(2) of the
Insolvency Act 1986)
6.5. the Tenant shall make a composition with creditors
6.6. any distress or execution is levied on any of the Tenant's goods
or property (and in every case if the Tenant is more than one
person if any of the said matters shall occur in relation to any
one of them) then and in any such case the Landlord may at any
time thereafter re-enter upon the Premises in the name of the
whole and thereupon this demise shall absolutely determine but
without prejudice to the right of action of the Landlord in
respect of any antecedent breach (including if applicable that in
relation to which the Underlease is forfeited) of the Tenant's
covenants or the conditions contained in this Underlease
7. The Landlord shall not be liable or responsible for any damage
suffered by the Tenant or anyone connected with it through any defect
in under or upon the Premises except insofar as any such liability
arises under any of the provisions of this Underlease or is covered by
insurance effected by the Superior Landlord
8. The Tenant's covenants shall remain in full force both at law and
equity notwithstanding that the Superior Landlord shall have waived or
released temporarily or permanently revocably or irrevocably or
otherwise a similar covenant or similar covenants affecting any other
part of the Estate or Adjoining Property
9. The Tenant acknowledges that no warranties are given or
<PAGE> 160
11
implied in the granting of this Underlease by or on behalf of the
Landlord that the use to which the Tenant proposes to put the Premises
nor any alterations or additions which the Tenant may now or
subsequently decide to carry out will not require planning permission
under the Planning Acts
10. The Tenant acknowledges that this Underlease has not been entered into
by it in reliance wholly or partly on any statement or representation
made by or on behalf of the Landlord except for replies in writing
given prior hereto by the Landlord's solicitors or the Landlord to
enquiries raised in writing with them by the Tenant's solicitors
11. Except where any statutory provision prohibits the Tenant's right to
compensation being reduced or excluded by agreement the Tenant shall
not be entitled to claim from the Landlord on quitting the Premises or
any part thereof any compensation under the 1954 Act
12. The Tenant can terminate this Underlease on the 29th February 1996 by
giving the Landlord at least three months prior written notice but
without prejudice to the rights and remedies of either party in
respect of any antecedent breach non-observance or non-performance of
any of the covenants or conditions contained in this Underlease
13. Any notice of any description whether statutory or in accordance with
the terms of this Underlease to be given or made to the Landlord will
only be validly given or made if sent to and received by the
Landlord's solicitors from time to time
14. It is hereby agreed between the Landlord and the Tenant
<PAGE> 161
12
(having been authorised to do so by an Order of the Central London
County Court made on the 17th August 1994 under the provisions of
Section 38(4) of the Landlord and Tenant Act 1954 as amended by
Section 5 of the Law of Property Act 1969) that the provisions of
Sections 24 to 28 inclusive of the Landlord and Tenant Act 1954 shall
be excluded in relation to this Underlease
IN WITNESS of which the Parties have executed this Underlease
THE FIRST SCHEDULE
(The Premises)
The Premises means those parts of the Building specified in the Particulars and
shown edged red on Plans 2a 2b and 2c and shown edged blue on Plan 2c including
(for the purposes of obligation as well as grant);-
l. the floors including the floor boards or other flooring materials the
plinths upon which the same are laid and by which they are supported
and the void between the flooring and the concrete structure beneath
it
2. the doors the windows and the frames and the glass in any of them
3. the internal plaster or plasterboard surfaces of any loadbearing wall
4. the suspended ceiling finishes and the voids above them including the
brackets or other devices by which the same are attached to the
concrete structure
5. one half severed vertically of non load-bearing walls dividing the
Premises from other parts of the Building
<PAGE> 162
13
(which walls shall be deemed to be party walls) and the entirety of any
other non load-bearing internal walls
6. all Service Conduits which exclusively serve the Premises
7. all the Landlord's or Superior Landlord's fixtures and fittings of
every kind which are from time to time in or upon the Premises whether
original or substituted and all other fixtures except those that can
be removed by the Tenant without damaging or defacing the Premises
8. all additions and improvements to the Premises but excluding any part
of the load-bearing structure of the Building (which includes without
prejudice to the generality of the foregoing the roof and foundations
of the Building) other than the internal surfaces thereof
THE SECOND SCHEDULE
(The Granted Rights)
1. The free and uninterrupted passage and running of water soil gas and
electricity telecommunications and other services through all Service
conduits which are now or are at any other time during the Term in on
under or running through the Estate and which serve or are capable of
serving the Premises
2. The right for all proper purposes in connection with the use of the
Premises to pass and repass:-
2.l. over and along the roadways with or without vehicles (but so
that the Tenant and anyone connected with it shall not have
more vehicles on the Estate at any time than the number of Car
Parking Spaces to which the Tenant may be entitled by reason
of the provisions of
<PAGE> 163
14
this Underlease and any further space or spaces to which the
Tenant may be entitled from time to time by reason of any
licence from the Landlord); and
2.2. without vehicles over and along the footpaths and forecourts
from time to time forming part of the External Areas until such
time as they or such parts of them shall be adopted as public
highways
3. The right of support shelter and protection for the benefit of the
Premises as is now enjoyed from other parts of the Building
4. The right to pass and re-pass over along and through the Common Parts
for all proper purposes in connection with the use of the Premises
5. The right to have the name or trading title of the Tenant affixed on
the communal notice board to be provided by the Superior Landlord in
the entrance hall of the building in such a position and in such
manner as shall be decided by the Landlord and/or the Superior
Landlord and to retain a sign bearing the name of the Tenant installed
or constructed at or closely proximate to the main entrance to the
Premises
6. The right to use the Car Parking Space in such part or parts of the
Estate as the Superior Landlord shall from time to time specify for
the parking of cars and for no other purpose
7. The right to enter the parts of the Building adjoining the Premises
with or without workmen and equipment on no less
<PAGE> 164
than five (5) days' notice (save in the case of emergency) in order to
comply with the Tenant's covenants herein contained
8. Subject to the Tenant first having obtained all requisite planning
permissions and consents the right until such time as the Superior
Landlord shall provide a communal facility to install an aerial
satellite dish or the like of such size and design and in such
position as shall previously have been approved in writing by the
Superior Landlord for inter alia the reception of television signals
from satellites but so that this right shall immediately cease and
determine upon the installation by the Superior Landlord of an aerial
for the use of all Lessees whereupon the Tenant shall forthwith remove
any aerial erected pursuant to this temporary right
9. The right in common with all others duly authorised by the Lessor and
subject to all administrative regulations (including if applicable the
payment of any reasonable fees for the use of them imposed in
connection with the use of them upon all users by the Superior
Landlord or the Managing Agent from time to time) to use the Squash
Courts in the Basement of Block B
THE THIRD SCHEDULE
(The Reserved Rights)
1. The free and uninterrupted passage and running of water soil gas
telecommunications and other services or supply electricity through
the Service Conduits which may now or in the future be in on under or
running through the
<PAGE> 165
16
Premises and which may serve any other part of the Estate
2. The right at all times to carry out any works or repairs to or to
build alter or rebuild the Estate or any Adjoining Property in any
manner and for any purpose notwithstanding any interference with the
access of light or air to the Premises or any temporary interference
or inconvenience with the Granted Rights provided that any such
interruption is kept to a minimum and/or as little inconvenience as is
reasonably practicable is caused to the Tenant and any damage caused
to the Premises is made good
3. The right at all reasonable times upon giving to the Tenant not less
than five (5) working days' notice (except in case of emergency) for
the Landlord and persons authorised by it with or without tools
materials and equipment to enter on the Premises:-
3.1. for any purpose incidental to the provision of the Services
and/or to carry out any works reasonably necessary in
connection with such provision
3.2. to lay construct renew alter repair and maintain any Service
conduits in the building
3.3. to carry out any works or alteration incidental to the
building alteration repair or rebuilding of any part of the
Estate the person exercising such right causing as little
inconvenience as reasonably practicable making good all damage
to the Premises thereby caused
4. The right at all reasonable times on reasonable prior written notice
to enter upon the Premises for viewing and
<PAGE> 166
17
inspection and preparation of schedules of disrepair
5. The rights of light air support shelter and protection now or at any
time during the Term enjoyed by the Estate over the Premises subject
as provided in paragraph 4 of the Second Schedule
6. The right to erect and retain scaffolding on a temporary basis on or
about the building for the purposes of works to or cleaning or
decoration of the Building notwithstanding that such scaffolding may
temporarily restrict the access to or enjoyment or use of the Premises
7. At all times all rights easements and the like enjoyed at the date
hereof by the Premises over Adjoining Property other than the Granted
Rights to the intent that S.62 Law of Property At 1925 shall not apply
to this Lease
THE FOURTH SCHEDULE
(Tenant's Covenants)
RENT AND OUTGOINGS
1.1 To observe and perform the covenants and conditions on the
part of the Lessee contained in the Headlease so far as they
relate to the Premises but except in so far as the Landlord
expressly covenants in this Underlease to observe and perform
the same and to indemnity the Landlord from and against any
actions proceedings claims damages costs expenses or losses
arising from any breach or non-observance or non-performance
of such covenants and conditions
1.2 To observe and perform the covenants and conditions as to
repair and decoration on the part of the Lessee
<PAGE> 167
18
contained in the Headlease so far as they relate to the
Premises but except in so far as the Landlord expressly
covenants to observe and perform the same and to indemnity the
Landlord from and against any actions proceedings claims
damages costs expenses or losses arising from any breach or
non-observance or non-performance of such covenants and
conditions both during and at the determination of the Term
1.3. To permit the Landlord and all persons authorised by the
Landlord (including agents professional advisers contractors
workmen and others) upon reasonable notice (except in the case
of emergency) to enter upon the Premises for any purpose that
is in the opinion of the Landlord necessary to enable it to
comply with the covenants on its part and the conditions
contained in the Headlease
2. To pay the Landlord on demand by way of further rent amounts in
respect of Unit 5 equal to 100% and in respect of Unit 6 amounts equal
to 34.4% of the Insurance Contribution the Service Charge and the
Interim charge (as such terms are defined in the Headlease) paid from
time to time by the Landlord pursuant to the terms of the Headlease
3. To observe the covenants terms and conditions and obligations set out
in the Annex hereto save where such terms and conditions are deleted
in black and initialled by the parties' solicitors and for the
avoidance of doubt Lessor shall mean Landlord and Lease shall mean
Underlease wherever these terms occur in the Annex
<PAGE> 168
19
4. Not to assign underlet charge hold on trust part with possession or
occupation of or share occupation of the whole or any part of the
Premises save the Tenant may share occupation of the Premises with an
associate company or a company that is from time to time a member of
the same group as the Tenant PROVIDED THAT
4.1. such other company is not entitled to the exclusive use or
occupation of the Premises or any part of it
4.2. no rent or other payment is made by such other company for such
sharing of occupation
4.3. no estate or interest in land in the Premises is created or
arises in favour of such other company
4.4 on the Tenant and such other company ceasing to be members of
the same said group such other company shall forthwith vacate
the Premises and such sharing of occupation shall cease
4.5. the Tenant gives written notice to the Landlord forthwith upon
the commencement termination or any alteration of any such
sharing of the Premises
4.6 the Tenant at all times remains in occupation of the Premises
5.1. Not to do or omit anything that could cause any policy of
insurance relating to the Premises or the Estate to become
void or voidable wholly or in part nor (unless the Tenant
shall have previously notified the Landlord and Superior
Landlord and have agreed to pay the increased premium)
anything by which additional insurance premiums may become
payable
<PAGE> 169
20
5.2. To keep the Premises supplied with such fire fighting
equipment as the insurers or the fire authority may require
and to maintain the same to their satisfaction
5.3. Not to store or bring on to the Premises any article substance
or liquid of a specially combustible inflammable or explosive
nature and to comply with the requirements and recommendations
of the fire authority and/or the insurers and the reasonable
requirements of the Landlord and Superior Landlord as to fire
precautions relating to the Premises
5.4. Not to obstruct the access to any fire equipment or the means
of escape from the Premises
5.5. To give notice to the Landlord and Superior Landlord
immediately any event occurs which might affect the Policy
5.6. If the Estate is damaged or destroyed either
5.6.l. by an Insured Risk and the insurance money under the
Policy is by reason of any act or omission of the
tenant or anyone connected with it wholly or
particularly irrecoverable; or:
5.6.2. as a result of the act or omission of the Tenant or
anyone connected with the Tenant
to pay to the Landlord on demand with Interest the amount of
such insurance money so irrecoverable
5.7. Forthwith to inform the Landlord and Superior Landlord in
writing of any conviction judgment or finding of any court or
Tribunal relating to the Tenant (or any director or other
officer or major shareholder of the
<PAGE> 170
21
Tenant) of such nature as to be likely to affect the decision
of any insurer or underwriter to grant or to continue any
insurance of or relating to the Estate
5.8. If at any time the Tenant shall be entitled to the benefit of
any insurance on the Premises (which is not effected or
maintained in pursuance of any obligation contained in this
Underlease) to apply all monies received by virtue of such
insurance in making good the loss or damage in respect of
which it shall have been received
5.9. To permit the Landlord to enter the Premises where it is
required by any enactment to obtain a fire certificate for the
Premises
THE COMMON SEAL of SYNON )
EUROPE Ltd was hereunto )
affixed in the presence of:- )
Director /s/ D.C. MOORE
Secretary /s/ [SIGNATURE ILLEGIBLE]
[SEAL]
<PAGE> 171
22
ANNEX
RENT AND OUTGOINGS
1.1 To pay the Rent the Interim Charge the Service Charge and the
Insurance Contribution at the times and in the manner set out in this
Lease without any deduction and if so required by the Lessor by
standing order to Bankers Credit Transfer or other similar method
specified by the Lessor
1.2 To pay and discharge all rates which are now or may at any time during
the Term be payable charged or assessed on or in respect of the
Premises or on the landlord tenant owner or occupier thereof (or in
the absence of direct assessment on the Premises a fair proportion of
the same as assessed by the Surveyor acting as an independent expert
and not as an arbitrator) and in every case any value added or other
similar tax payable in respect thereof
1.3 To pay to the suppliers and to indemnify the Lessor against all
<PAGE> 172
23
charges for all gas electricity telecommunication and other services
consumed or used on or supplied to the Premises
1.4 If the Rent the Interim Charge the Service Charge the Insurance
Contribution or any other sum due from the Tenant under the terms of
this Lease or any part of any of them shall at any time be more than
fourteen days overdue to pay to the Lessor Interest thereon calculated
from the due date for payment until the date of actual payment (both
before and after judgment) PROVIDED THAT nothing in this clause shall
entitle the Tenant to withhold or delay any payment after the date
upon which it first falls due or in any way prejudice affect or
derogate from the rights of the Lessor in relation to the said
non-payment or under the proviso for re-entry
1.5 In relation to Value Added Tax (or any tax of a similar nature that may
be substituted for it or levied in addition to it) ("VAT"):-
1.5.1 to pay to the Lessor VAT at the rate for the time being in
force chargeable on or in respect of the rents or any other
payments to be made by the Tenant to the Lessor or any person
on the Lessor's behalf in connection with or under any of the
provisions of this Lease; and
1.5.2 to pay and indemnify the Lessor against any VAT payable by or
on behalf of the Lessor in connection with or under any of the
provisions of this Lease save insofar as any such VAT is
recoverable by the Lessor as an input for Value Added Tax
purposes
and in default of such payment or indemnity the same shall be recoverable by
the Lessor from the Tenant as rent in arrear
<PAGE> 173
24
PROVIDED THAT (for the avoidance of doubt) the Lessor shall be under no
obligation to exercise the election to waive exemption from Value Added Tax
pursuant to paragraph 2 of Schedule 6(a) of the Value Added Tax Act 1983 or any
other option or right conferred on the Lessor by any enactment which would or
might reduce or avoid any liability to VAT
RESERVED RIGHTS
2.1 To permit the Lessor and those authorised by him and others so
entitled to exercise the Reserved Rights and not to inhibit or
interfere with the exercise of any of them
2.2 To permit upon prior appointment being made with the Lessee reasonable
notice at any time during the Term prospective purchasers of or agents
instructed in connection with the prospective or actual sale of the
Lessor's interest in the Estate to view the Premises without
interruption providing they are authorised in writing by the Lessor or
its agents
REPAIR AND DECORATION
3.1 To repair and keep in good and substantial repair and condition the
Premises and to renew and replace from time to time all Lessor's
fixtures and fittings and appurtenances in the Premises which may
become or be beyond repair at any time during or at the end of the
Term (in every case damage by any of the Insured Risks excepted save
where the insurance has been vitiated or payment of the insurance
money refused in whole or in part in consequence of some act or
default on the part of the Tenant or anyone connected with it)
3.2 During the three months
<PAGE> 174
25
preceding the end of the Term (during the said last three months of
the Term in such colours and patterns as the Lessor may reasonably
require) and using good quality materials to decorate completely in
accordance with then current good practice all the interior parts of
the Premises which have been or ought to be or normally are so
decorated the decoration to be carried out to the reasonable
satisfaction in all respects of the Lessor
3.3 To clean both sides of all windows and doors of the Premises (other
than the glass in the doors and windows in the external walls) at
least once in every month
3.4 Within one month (or sooner if appropriate) after the Lessor shall
have given to the Tenant or left on the Premises a notice in writing
specifying any repairs cleaning maintenance or decoration of the
Premises which the Tenant has failed to carry out in breach of the
Tenant's responsibilities under this Lease to commence and thereafter
diligently proceed to repair and make good the same to a good and
substantial condition and to the reasonable satisfaction of the Lessor
or the Surveyor and in case of default to permit the Lessor and the
workmen or agents of the Lessor to enter the Premises with or without
plant equipment and materials and execute such repairs or other works
and all reasonable expenses properly incurred thereby shall on demand
be paid by the Tenant to the Lessor with Interest
COSTS
4.1 To pay all reasonable and proper costs charges and expenses (including
solicitors' costs and architects' and surveyors' fees) reasonably and
properly incurred by the Lessor for the purposes of or incidental to
the preparation grant service or enforcement
<PAGE> 175
26
(whether by proceedings or otherwise) of:-
4.1.1 Any notice under Section 146 or 147 of the Law of Property Act 1925
(as amended) requiring the Tenant to remedy a breach of any of the
Tenant's covenants contained in this Lease notwithstanding forfeiture
for such breach shall be avoided otherwise than by relief granted by
the Court
4.1.2 Any notice to repair or Schedule of Dilapidations accrued
during the Term or accrued at or prior to the end or sooner
determination of the Term whether or not served during the
Term
4.1.3 The payment of any arrears of the Rent or any other sum
payable under this Lease or interest payable on any of them
4.2 To pay the reasonable and proper costs charges and expenses (including
Solicitors' and Surveyors' fees) reasonably and properly incurred by
the Lessor in any application by the Tenant for the Lessor's consent
whether such consent is granted properly refused or offered subject to
any appropriate conditions or such application is withdrawn save
nothing in this clause shall be taken to mean a fee payable to the
Lessor for the consent itself
[5.1 through 5.7.6 deleted]
<PAGE> 176
32
ALTERATIONS AND ADDITIONS
6.1 Not to make any alterations or additions to the Premises or the Service
Conduits in the Building nor to commit any waste spoil or destruction
in or upon the Premises nor to cut damage injure or allow to be cut
damaged or injured any of the roofs walls floors or other structural
parts of the Building or the Service Conduits fixtures or fittings of
the Premises PROVIDED THAT the Tenant may with the Lessor's prior
written consent (such consent not to be unreasonably withheld or
delayed) install or alter internal non-structural demountable
partitioning which the Tenant shall (if so required by the Lessor)
remove at the end of the Term and make good any damage so caused
6.2 Save as may be temporarily permitted by Clause 8 of the Second
Schedule not to erect any pole aerial mast dish or other thing
(whether in connection with telegraphic, telephonic, radio or
television communication or otherwise) upon any part of the outside of
the Building
6.3 Not to affix or exhibit to or upon any part of the Premises or in any
window thereof any placard poster advertisement sign or other notice
so as to be visible from outside the Premises save for the Tenant's
nameplate at the entrance to the Premises of such design and of such
dimension as shall previously have been approved by
<PAGE> 177
33
the Landlord such approval not to be unreasonably withheld or delayed
USE
7.1 Not to carry on upon the Premises any use other than the Permitted Use
7.2 Not to leave the Premises unoccupied for more than one month without
notifying the Lessor and providing such caretaking or security
arrangements as the Lessor shall reasonably require and the insurers
shall require
7.3 Not to cause anything to be done on the Premises which may be or
become a nuisance or annoyance or cause damage to the Lessor or to the
owners tenants or occupiers of the Estate
7.4 Not to use the Premises for any noxious noisy or offensive trade or
business nor for any illegal or immoral act or purpose
7.5 Not to permit any person to sleep on the Premises and not to use the
Premises for residential purposes nor to keep any animal fish reptile
or bird on the Premises
7.6 Not to hold on the Premises any exhibition public meeting public
entertainment or sale by auction
7.7 In the event of the Premises having been unoccupied for the purposes
of payment of rates and in consequence the Lessor or any subsequent
occupier shall not obtain the maximum statutory relief from payment of
rates then:-
7.8.1 if at that time the relevant authority for rates is
empowered to levy rates on unoccupied property to pay
to the Lessor on demand (in addition to any sum due
to the rating authority) a sum equal to (and
indemnify the Lessor against) the amount of rates
payable after the
<PAGE> 178
34
end of the Term to the rating authority pursuant to
Section 17 of the General Rate Act 1967 or any other
enactment for a period equal to the relevant period
during which the Premises were unoccupied
7.8.2 to pay to the Lessor on demand (in addition to any
sum due to the rating authority) a sum equal to (and
indemnify the Lessor against) any surcharge on the
Premises payable after the end of the Term pursuant
to Section 17A or 17B of the General Rate Act 1967 or
any other enactment for a period equal to the said
relevant period
CONDUCT
8.1 Not to permit to be discharged into the Service Conduits any oil or
grease, or any deleterious, objectionable, dangerous, poisonous or
explosive matter or substance, and to take all reasonable measures to
ensure that effluent discharged into the Service Conduits will not be
corrosive or otherwise harmful to the Service Conduits or cause
obstruction or deposit in them
8.2 Not to unload any goods or materials from vehicles and convey the same
into the Premises except through the approved entrance or entrances
provided for the purpose and not to cause congestion of the External
Areas or inconvenience to any other user of them
8.3 Not to park or leave any vehicles belonging to the Tenant or anyone
connected with it on the Estate Roads or its pavements (other than in
the Car Parking Spaces allotted to the Tenant from time to time)
8.4 Not to place any goods or items outside the Premises or the Building or
obstruct in any way the Common Parts or the External
<PAGE> 179
35
Areas other than temporarily in the course of delivery to or removal
from the Premises.
8.5 Not to store or bring on the Premises any petrol or other dangerous
inflammable explosive or combustible substance
8.6 Not to allow rubbish or refuse to accumulate on the Premises the
Common Parts or the External Areas (save in areas specifically
designated for that purpose) or in the Service Conduits and to clean
thoroughly the Premises and the Service Conduits in the Premises as
often as may be necessary
8.7 To observe and conform to all reasonable regulations and restrictions
made by the Lessor:-
8.7.1 for the proper management of the Building or the Estate and
notified in writing by the Lessor to the Tenant from time to
time (Provided that the same shall not unreasonably interfere
with the Tenant's use of the Premises); and
8.7.2 for the management of vehicles and traffic as are displayed on
the Estate from time to time
8.8 To observe and perform the covenants subsisting at the date hereof
(whether restrictive or otherwise) restrictions and stipulations (if
any) to which the Lessor's reversionary interest in the Premises is
subject insofar as same insist and are capable of affecting the
Premises
MACHINERY AND INSTALLATIONS
9.1 To keep all plant, apparatus and machinery upon the Premises properly
maintained and in good working order, and for that purpose to employ
reputable contractors for the regular periodic
<PAGE> 180
36
inspection and maintenance of them, to renew all working and other
parts as and when necessary or when recommended by such contractors,
to ensure that such plant, apparatus and machinery is properly
operated, and to avoid damage to the Premises by vibration or
otherwise
9.2 Not to erect or install on the Premises any equipment engine or
machinery other than normal office equipment or machinery used in
connection with the business of the tenant of the Premises from time
to time
9.3 Not to suspend any weight from nor to load or use the walls ceilings
floors or structure of the Premises in any manner which will cause
strain damage or interference with the structural parts of the
Building and not to have on the Premises any unusually heavy item
9.4 Not to overload the electrical system or circuits in the Premises
STATUTORY MATTERS
10.1 At the Tenant's own expense, to execute all works and provide and
maintain all arrangements upon or in respect of the Premises or the
use to which the Premises are being put (whether by the Lessor, the
Tenant or the occupier) that are required in order to comply with the
requirements of any enactment or competent authority, or court of
competent jurisdiction
10.2 Not to do in or near the Premises any act or thing by reason of which
the Lessor may under any enactment incur, have imposed upon it, or
become liable to pay any penalty, damages, compensation, costs,
charges or expenses
10.3 Without prejudice to the generality of the preceding sub-clauses
<PAGE> 181
37
10.1 and 10.2 to comply in all respects with the provisions of any
enactment applicable to the Premises or in regard to carrying on the
trade or business for the time being carried on by the Tenant on the
Premises or for the health and safety of the Tenant or anyone
connected with it
10.4 Upon receipt of any notice order or direction or other communication
from any competent authority likely to affect the Premises or its user
to deliver to the Lessor immediately a copy of the same and if so
reasonably required by the Lessor at the joint cost of the Lessor or
Tenant to take such steps and join with the Lessor in making such
representations or appeals in all cases as the Lessor may consider
desirable
10.5 To give notice to the Lessor of any defect in the Premises which might
give rise to an obligation on the Lessor to do or refrain from doing
any act or thing in order to comply with the provisions of this Lease
or the duty of care imposed on the Lessor pursuant to the Defective
Premises Act 1972 or otherwise, and at all times to display and
maintain all notices which the Lessor may from time to time reasonably
require to be displayed at the Premises.
PLANNING
11.1 In relation to the Premises to comply with the provisions and
requirements of the Planning Acts whether as to the Permitted User or
otherwise
11.2 Not to make any application for planning permission in relation to the
Premises (without the previous consent of the Lessor such consent not
to be unreasonably withheld or delayed in the case of an application
for change of use) and subject thereto at the
<PAGE> 182
expense of the Tenant, to obtain all planning permissions and to serve
all such notices as may be required for the carrying out of any
operations or user on the Premises which may constitute Development
11.3 Subject only to any enactment to the contrary, to pay and satisfy any
charge or levy that may hereafter be imposed under the Planning Acts
in respect of the carrying out of maintenance of any such operations,
or the commencement or continuance of any such user for the Premises
11.4 Notwithstanding any consent which may be granted by the Lessor under
this Lease, not to carry out or make any alteration or addition to the
Premises, or any change of use until:
11.4.1 all necessary notices under the Planning Acts have been served
and copies produced to the Lessor
11.4.2 all necessary permissions under the Planning Acts have been
obtained and produced to the Lessor, and
11.4.3 the Lessor has acknowledged that every such necessary planning
permission is acceptable to it the Lessor being entitled to
refuse to acknowledge that a planning permission is acceptable
to it on the grounds that any condition contained in it, or
anything omitted from it, or the period referred to in it,
would (in the reasonable opinion of the Surveyor acting as an
expert and not as an arbitrator) be (or would be likely to be)
materially prejudicial to the Lessor's interest in the Estate
or any Adjoining Property whether during or after the end of
the Term
11.5 Unless the Lessor shall otherwise direct, to carry out and complete
before the end of the Term:
<PAGE> 183
39
11.5.1 any works stipulated to be carried out to the Premises by a
date subsequent to the end of the Term as a condition of any
planning permission granted for any Development begun by the
Tenant before the end of the Term, and
11.5.2 any Development begun by the Tenant upon the Premises in
respect of which the Lessor shall be or become liable for any
charge or levy under the Planning Acts
11.6 In any case where a planning permission is granted subject to
conditions, and if the Lessor reasonably so requires, to provide
security for the compliance with such conditions, and not to implement
the planning permission until such security has been provided
11.7 If reasonably required by the Lessor, but at the cost of the Tenant,
to appeal against any refusal of planning permission or the imposition
of any conditions on a planning permission relating to the Premises
resulting from an application by the Tenant
11.8 If the Tenant shall carry out any Development or carry out permit or
consent to any act matter or thing giving rise to a charge or fiscal
liability on the Lessor the Tenant will pay and indemnify the Lessor
against all liability for any tax, levy, charge or other fiscal
imposition of whatsoever nature (including interest on overdue tax and
penalties for failure to give appropriate notices and information)
under any enactment for which the Lessor shall be liable as a result
of such Development, act, matter or thing and shall on demand repay to
the Lessor the amount of the tax, levy, charge or fiscal imposition
<PAGE> 184
40
END OF THE TERM
12.1 To permit the Lessor during the period commencing six months prior to
the end of the Term to affix and retain without interference upon any
part of the Premises a notice for reletting the Premises provided that
such notice does not materially affect the light air or use enjoyed by
the Premises and during such period to permit persons with authority
from the Lessor or its Agents at all reasonable times to view the
Premises on prior appointment with the Lessee
12.2 At the end of the Term to yield up the Premises (but not trade and
other tenant's fixtures and fittings as shall belong to the Tenant
Provided that the Tenant shall make good to the reasonable
satisfaction of the Lessor all damage to the Premises resulting from
their removal) in good and substantial repair and condition and in
accordance with the Tenant's covenants in this Lease and to deliver to
the Lessor all the keys to the Premises and all entry access cards,
identity cards and other security devices relating to the Premises or
the Estate
INFORMATION
13.1 To ensure that at all times the Lessor and the local police force have
written notice of the name, home address and home telephone number of
at least two keyholders of the Premises
13.2 On request to produce to the Lessor or the Surveyor all plans,
documents and other evidence as the Lessor may reasonably require in
order to satisfy itself that the provisions of this Lease have been
complied with
13.3 Whenever during the Term called upon so to do, to furnish to the
<PAGE> 185
41
Lessor, in writing the information envisaged in Section 40(l) of the
1954 Act within one calendar month of request by the Lessor
INDEMNITY
14. To indemnify and keep indemnified fully the Lessor against any claims
proceedings damages demands costs and expenses reasonably or properly
incurred by the Lessor arising directly or indirectly:-
14.1 from any act or omission by the Tenant or anyone connected with it
however caused or occurring in or upon the Premises
14.2 from any breach non observance or non performance by the Tenant of any
of its covenants or the conditions or other provisions of this Lease
14.3 from damage occasioned to the Estate or to any person caused directly
or indirectly by any act default or negligence of the Tenant or anyone
connected with it
EASEMENTS
15. Not to do anything by which the right of light or air to or belonging
to the Premises may be endangered or interfered with or lost and in
the event of any other person or persons doing any act or thing
whereby such right of light or air to the Premises is endangered
interfered with or lost forthwith to notify the Lessor and to permit
the Lessor at its own cost to take such action at law or otherwise as
may seem necessary to it in the name of the Tenant either alone or
jointly with the Lessor for the protection of their interests in the
Premises
<PAGE> 186
DATED 1994
----------------------------------
DANBUILD INVESTMENTS (UK) LIMITED
- and -
ZAMBON (UK) LTD
- and -
ZAMBON GROUP SP.A.
- and -
SYNON EUROPE LTD
---------------------------------
LICENCE TO UNDERLET
- of -
Units 5 & 6 Block A
Elsinore House
77-85 Fulham Palace Road
London W6
---------------------------------
RABIN LEACOCK LIPMAN
7-10 Chandos Street
LONDON W1M 9DE
TEL: 071-631-4380
REF: TGM/ID/O521R
DATE: 06/09/1994
<PAGE> 187
LICENCE TO UNDERLET
DATE:
THIS LICENCE is made between (1) the Lessor (2) the Tenant and (3) the Tenant's
Guarantor and (4) the Sub-Tenant named in the Particulars below.
PARTICULARS
THE LESSOR: DANBUILD INVESTMENTS (UK) LIMITED whose registered
office is c/o Bright Grahame Murray Chartered
Accountants 124-130 Seymour Place London W1H 6AA
THE TENANT: ZAMBON (UK) LTD whose registered office is at Elsinore
House 77 Fulham Palace Road London W6
THE TENANT'S ZAMBON GROUP SP.A. of Via Lillode Duca 10 - 20091
GUARANTOR: Bresso Milan Italy
THE SUB-TENANT: SYNON EUROPE LTD whose principle place of business in
the United Kingdom is at 91 St Paul's Road London N1
2YU
THE PREMISES: Unit 5 and Unit 6 within Block A (Elsinore House)
77-85 Fulham Palace Road, London W6 comprised in and
demised by the Lease
THE LEASE: Dated 29th October 1992
Between: (1) the Lessor
(2) Zambon (UK) Limited
THE TERM 25 years from 1st January 1990 subject to the
OF THE LEASE: provisions of the Lease for earlier determination
THE PROPERTY The whole of Unit 5 and the second floor only of Unit
TO BE SUBLET: 6 shown edged red on the plans attached hereto being
part of the Premises
THE SUBLEASE 3 years from the to be contracted outside the
TERM provisions of Part II of the Landlord and Tenant Act
1954
THE GUARANTEE the Deed of Guarantee dated 29th October 1992 between
The Lessor (1) the Tenant (2) and the Tenant's
Guarantor (3)
<PAGE> 188
RECITALS
1. By the Lease the Premises were demised for the Term subject to the
rents and to the covenants agreements conditions and other matters
contained by the Lease.
2. The Lease provides that the Tenant shall not:
2.1 underlet any part of the Premises without the Lessor's prior written
consent; nor
2.2 underlet any part of the Premises save for a Permitted Part as defined
in the Lease; nor
2.3 underlet the whole or a Permitted Part of the Premises at a rent less
than the open market rental value of the Premises (or in the case of a
Permitted Part pro rata) or the rent then reserved and payable under
the Lease (whichever should be the greater) nor
2.4 underlet the whole or a Permitted Part of the Premises without
including provisions in the Underlease for the upwards only review of
the rent thereby reserved and on the basis and on the dates on which
the rent is to be reviewed in this Lease nor
2.5 underlet the whole or a Permitted Part of the Premises unless
stipulation relating to the provision of guarantors or a bank
guarantee or a rent deposit have been complied with nor
2.6 underlet the whole or a Permitted Part of the Premises without an
absolute covenant against further underletting and the same
restrictions on assignment sharing holding on trust for another
parting with or sharing with another possession or occupation of the
Premises
3. Notwithstanding the provisions of the Lease the Tenant has requested
the Lessor to grant consent to an underletting of the Property to be
sublet not being a Permitted Part and at a rent which is below the
<PAGE> 189
Rent reserved by the Lease and without provisions relating to rent
review and without provisions relating to guarantors, rent deposit or
bank guarantee and without an absolute covenant against further
underletting or assignment which the Lessor has agreed to do on the
terms and conditions set out in this Licence.
4. The Lessor the Tenant and the Tenant's Guarantor apprehend that the
Guarantee contains an error which the parties have agreed to rectify
by this Deed.
B. OPERATIVE PROVISIONS
1. In this Licence unless the context otherwise requires:
1.1 The expressions in the first column of the Particulars shall have the
meanings given to them in the second column of the Particulars.
1.2 The singular shall include the plural and the masculine shall include
the feminine and neuter.
1.3 Where the Tenant and/or Sub-Tenant comprises more than one person the
obligations on the part of the Tenant and sub-Tenant shall be joint
and several.
1.4 "the Underlease" means an underlease in the form of the draft annexed
hereto.
2. The Lessor hereby grants to the Tenant Licence to sub-let the Property
to be sub-let upon the terms and conditions set out in the Underlease.
and for the avoidance of doubt but for the purpose only of this
Licence the Lessor hereby waives the provisions of the Lease referred
to in the Recitals of this Licence
3. The Tenant hereby covenants with the Lessor:
<PAGE> 190
not without the Lessor's consent in writing at any time either
expressly or by implication to waive the covenants and conditions to
be contained in the Underlease or any of them so far as possible and
to enforce the said covenants and conditions upon any breach of any of
the said covenants or conditions to re-enter on the Property to be
sub-let; and
3.2 that forthwith upon the expiry of the term granted by the Underlease
for which consent is hereby given or upon the earlier termination
thereof, the Tenant will immediately recover possession of the
Property to be sub-let thereby demised; and
3.3 not to accept a surrender of the Underlease without the prior consent
in writing of the Lessor such consent not to be unreasonably withheld
or delayed; and
3.4 to give notice to the Lessor's solicitors of completion of the
Underlease and to pay their reasonable registration fee in that
connection and to supply a certified copy of the completed stamped
counterpart of the Underlease with such notice.
4. The Sub-Tenant hereby covenants with the Lessor:
4.1 to observe and perform the covenants on the part of the Tenant
contained in the Lease (other than the covenant therein to pay rent
and other outgoings) in so far as the same affect or relate to the
Property to be sub-let; and
4.2 to observe and perform the covenants on its part contained in the
Underlease in so far as the same affect or relate to the Lessor.
5. It is hereby agreed and declared that the condition for re-entry
contained in the Lease shall be exerciseable on breach of any of the
covenants contained herein as well as upon the happening of any of the
events mentioned in the said condition contained in the Lease.
6. This Licence shall not permit any further or other underletting or
<PAGE> 191
parting with possession of the Premises or any part thereof and nor
shall it otherwise prejudice or affect any of the covenants or
conditions contained in the Lease save that the sub-tenant may share
possession of the Property to be sub-let with a company being a member
of the same Group of Companies as is more particularly set out in the
Underlease,
7. This Licence is conditional upon the Underlease being completed and
registered with the Lessor's solicitors within three months of the
date hereof.
8. This Licence is conditional upon the Tenant and the Sub-Tenant first
obtaining an Order of the County Court excluding the provisions of
Sections 24 to 28 Landlord and Tenant Act 1954 in relation to the
Underlease and unless and until such Court Order shall have been
obtained and supplied to the Lessor this Licence shall have no effect.
9. The Guarantee shall henceforth be read and construed as if the words
"or underlet" were deleted from the second and third lines of Clause
1.4.3 but save in this respect the Guarantee shall remain in full force
and effect which the Tenant's Guarantor now confirms.
10. It is agreed and declared that the rent payable pursuant to the
Underlease shall not be allowable as evidence of comparable open market
rent for the purpose of Rent Review as set out in the Fifth Schedule to
the Lease or for evidence of comparable open market rent in respect of
any other premises occupied by the Tenant or the Sub-Tenant anywhere on
the Estate.
THE COMMON SEAL of DANBUILD )
INVESTMENTS (UK) LIMITED was )
affixed to this Deed in the )
presence of: )
Director
/s/ Signature Illegible
Secretary
/s/ Signature Illegible
<PAGE> 192
THE COMMON SEAL of ZAMBON )
(UK) LIMITED was affixed to )
this deed in the presence of: )
Director
/s/ Signature Illegible
Secretary
/s/ Signature Illegible
EXECUTED as a Deed on )
behalf of ZAMBON GROUP )
SP.A. : )
Director
/s/ Signature Illegible
Director
/s/ Signature Illegible
THE COMMON SEAL of SYNON )
EUROPE LTD was affixed to )
this Deed in the presence of: )
Director
/s/ D.C. MOORE
Secretary
/s/ V. BHALLA
[SEAL]
<PAGE> 1
EXHIBIT 10.30
CGI SYSTEMS CONTRACTOR DISCLOSURE STATEMENT
-------------------------------------------
If CGI Systems is to consider a company as a legitimate corporation providing
independent subcontractors to us, an Officer of the Corporation must complete
and sign this form, attesting to the validity of all the statements contained
herein.
1. Name of Corporation: SYNON, INC.
2. State of Incorporation: ILLINOIS
3. Corporation's Federal Tax Identification number: 68-0130886
4. The Corporation has Workers Comp and Liability insurance covering all
the employees that will be provided to CGI Systems. (Initial) DH
-----
5. The Corporation will withhold all applicable Federal, State, and Local
taxes for all employees that will be provided to CGI Systems. (Initial) DH
-----
6. The Corporation is providing services to companies other than CGI
Systems. (Initial) DH
-----
7. The payments made to the Corporation by CGI systems in any of the
Corporation's fiscal years will represent less than 50% of the Corporation's
expected revenue in that fiscal year. (Initial) DH
-----
Attested to by:
Name: Dennis G. Holligan
---------------------
Signature: /s/DENNIS G. HOLLIGAN
---------------------
Corporate Title: Secretary
---------------------
Date: 8/30/96
---------------------
8
<PAGE> 2
CGI SYSTEMS CONTRACTOR AGREEMENT
--------------------------------
An agreement made this 30th day of August 30, 1996, between CGI Systems Inc.
and Synon, Inc., incorporated in the state of Illinois, with a Federal Tax
Identification number of 68-0130886, at 1100 Larkspur Landing Circle, Larkspur,
California 94939, hereinafter referred to as Contractor, wherein the parties
agree as follows:
TERM
This Agreement shall continue in effect until either party terminates the
Agreement by providing a one month written notice to the other party. This
Agreement shall remain in effect regarding any Statement of Work already in
effect until such Statement of Work is terminated or performance is completed.
SCOPE OF SERVICES
The Contractor shall provide the computer consulting and/or programming
services specified in the Statement of Work which is attached and made a part
hereof (see EXHIBIT A), and the services specified in any future Statement of
Work which may be agreed to between the parties.
CONTRACTOR STATUS
Contractor is an independent contractor and neither Contractor nor Contractor's
staff is, or shall be deemed to be employed by CGI Systems. CGI Systems is
hereby contracting with Contractor for the services described on Exhibit A,
Statement of Work, and Contractor reserves the right to determine the method,
manner and means by which the services will be performed. Contractor is not
required to perform the services during a fixed hourly or daily time and if the
services are performed at the premises of CGI Systems or its Client, then
Contractor's time spent at the premises is to be at the discretion of the
Contractor, subject to CGI Systems or its Client's normal business hours and
security requirements. Contractor hereby confirms to the Client that the Client
will not be required to furnish or provide any training to the Contractor to
enable the Contractor to perform the services required hereunder. The services
shall be performed by the Contractor, or the Contractor's staff, and CGI
Systems or its Client shall not be required to hire, supervise or pay any
assistants to help the Contractor who performs the services under this
Agreement. Contractor shall not be required to devote the Contractor's full
time nor the full time of the Contractor's staff to the performance of the
services required hereunder, and it is acknowledged that Contractor has other
Clients and Contractor offers services to the general public. The order or
sequence in which the work is to be performed shall be under the control of the
Contractor. Except to the extent that the Contractor's work must be performed
on or with the computer or existing software of CGI Systems or its Client, all
materials used in providing the services shall be provided by the Contractor.
The Contractor shall have the right in its sole discretion to determine which of
its staff shall be assigned to perform services for CGI Systems or its Client
under this Agreement and shall have the sole right to replace any staff person
(provided that such replacement does not interfere with the services required
to be performed under this Agreement).
<PAGE> 3
CGI Systems shall have the right of approval with respect to any staff proposed
by the Contractor to perform services under this Agreement. CGI Systems shall
have the right to interview any of the Contractor's staff proposed for
assignment to CGI Systems and based upon the skills and background required for
the services, reject any such staff as long as such rejection does not violate
any laws regarding discrimination in the workplace.
CONFIDENTIALITY
A. As part of the consideration required of the Contractor under this Agreement,
the Contractor and its employees agree that, except as necessary to carry out
the provisions of this Agreement and except as may be required by law, it shall
not, at any time during the terms of this Agreement, use for its own benefit or
divulge, disclose or communicate, to any individual or entity, in any form or
manner whatsoever, any information concerning any matters affecting or relating
to the business of CGI Systems or its Client, or which the Contractor has
received or will receive during the course of it relationship with CGI Systems
or its Client hereunder, including, without limiting the generality of the
foregoing, information concerning any of the Client's price lists, marketing
lists, business strategies, innovations, trade secrets, or any other information
concerning the business, manner of operation financial condition, prospects or
data of CGI Systems or its Client. The parties hereby stipulate that all such
information is confidential material and affects the successful conduct of the
business and the goodwill of CGI Systems or its Client.
B. The Contractor agrees not to copy, disclose, or use for its own purposes or
willfully or negligently to permit others to copy, disclose, or use for their
own purposes any financial information, customer list, management technique,
design, or process, or other trade secret or confidential information relating
to CGI Systems or its Client's business, customers, suppliers or organization.
The Contractor will return to CGI Systems or its Client, upon request by CGI
Systems at any time, all copies of all documents and information obtained by
the Contractor from CGI Systems or its Client.
C. The Contractor and its staff agrees that all data and techniques concerning
CGI Systems or its Client's system design and file formats or contents, and
information of any nature that are made available by CGI Systems or its Client,
or that become available to the Contractor by virtue of this Agreement or
relationship created by this Agreement shall be held in strict confidence by the
Contractor and its staff. Such confidential disclosures that are made or such
confidential information that is made or becomes available to the Contractor and
its staff is made in reliance of this promise.
OWNERSHIP
All work performed by the Contractor under the terms of this Agreement,
including but not limited to, systems, computer programs operating
instructions, unique design concepts and all other documentation developed
during the performance of the Statement of Work (the "Intellectual Property")
will be the property of the Contractor. Rights for use of the Intellectual
Property will be granted to Client as described in the Statement of Work.
The Contractor's staff, CGI Systems and its Client will observe all copyright
and patent laws relating to the Intellectual Property.
<PAGE> 4
TAXES AND BENEFITS
Contractor has advised its employees, and any non CGI Systems subcontractors
("Contractor Personnel"), that they are not employees of CGI Systems or its
Client, or are they entitled to any benefits provided or rights guaranteed by
CGI Systems or its Client, or by operation of law, to their respective
employees, including but not limited to group insurance, liability insurance,
disability insurance, paid vacations, sick leave or other leave, retirement
plans, health plans, premium "overtime" pay, and the like. It is understood and
agreed that since the Contractor Personnel are not employees of CGI Systems, CGI
systems will make no deductions from fees paid to Contractor for any federal or
state taxes or FICA relating to Contractor Personnel, and CGI Systems or its
Client have no obligation to provide Worker's Compensation coverage for
Contractor Personnel or to make any premium "overtime" payments. It is agreed
that it is the Contractor's responsibility to provide Worker's Compensation and,
if applicable, pay any premium "overtime" rate for Contractor Personnel who work
on the project covered by this Agreement and to make required FICA, FUTA, income
tax withholding or other payments related to such Contractor Personnel. In the
event of any claims brought or threatened by any party against CGI Systems or
its Client relating to the status, acts or omissions of Contractor or Contractor
Personnel. Contractor and Contractor Personnel agrees to cooperate in all
reasonable respects, including to support the assertions of employment status
made in this Agreement.
INSURANCE
Contractor will obtain for itself and its Personnel before providing services,
at its own expense, comprehensive General Liability (GL) insurance coverage for
projects covered by this Agreement, for limits of liability not less than
$100,000 and will name CGI Systems as an Additional Insured, and hold CGI
systems harmless for any damages or expenses, including attorneys' fees,
incurred as a result of misconduct of Contractor or its Personnel involving CGI
Systems or its Client. COVENANT NOT TO COMPETE The contractor retains the right
to contract for similar services with other businesses or with individuals
subject to the following limitations:
(1) Contractor agrees that during the term of this Agreement or any extension
thereof, and for a period of (1) year after the termination of this Agreement,
the Contractor will not directly or indirectly or in any capacity, compete or
attempt to compete with CGI systems to provide computer programming or data
processing services similar to the services provided under the Statement of
Work (a) by soliciting or otherwise inducing the CGI Systems' Client referred to
in this Agreement to discontinue its relationship with CGI systems, or (b) in
any capacity, by performing or accepting an engagement to perform services of
the type being performed by the Contractor under the Statement of Work for the
client of CGI systems; and
(2) Contractor agrees that during the term of this Agreement or any extension
thereof, and for a period of (1) year after the termination of this Agreement,
the Contractor will not directly or indirectly or in any capacity, compete or
attempt to compete with CGI systems by inducing any personnel of CGI systems or
its Client to leave the service of CGI Systems or its Client.
The provisions of this non-competition clause shall be construed as an
agreement independent of any other provision contained herein and shall be
enforceable in both law and equity, including by temporary or permanent
restraining orders, notwithstanding the existence of any claim or cause of
action by the Contractor against CGI Systems or by CGI Systems against the
Contractor whether predicated on this Agreement or otherwise. This provision
survives termination of this Agreement.
3
<PAGE> 5
If any provision of this Restrictive Covenant is held to be unenforceable
because of its scope, duration or area of its applicability, or otherwise, the
court making the determination will have the power to modify the scope,
duration or area, or all of them, and the provision will then apply in that
modified form.
NON-SOLICITATION
Each of the parties hereto agrees that, while performing Services under this
Agreement, and for a period of twelve (12) months following the termination of
this Agreement, neither party will, except with the other party's prior written
approval, solicit or offer employment to the other party's employees.
LIABILITY
The Contractor assumes and agrees to indemnify and save harmless CGI Systems
and its Client from any and all claims, expenses, damages, suits, costs, or
judgments whatsoever, whether groundless or otherwise, arising in whole or in
part out of any act or failure to act on the part of the Contractor,* and
provided such act or failure to act be within the scope of the Statement of
Work, unless such act or failure to act was at the specific direction of CGI
Systems or its Client.
The Contractor agrees to assume full liability for bodily injury, property
damage, fire, theft or collision claims arising out of the use of machinery,
equipment, material or vehicles provided by CGI Systems or its Client while in
the care, custody or control of the Contractor, its agents or employees unless
attributable to the negligence of CGI Systems or its Client.
The Contractor is responsible for the professional competence of the assigned
individuals and for their ability to perform the services to be provided by
them in a professional fashion.
Neither party shall be liable for general, special or consequential damages.
TERMINATION
No Statement of Work attached hereto may be terminated by either party prior to
the completion of the project described in the Statement of Work, except in the
following cases:
a. CGI Systems shall have the right to terminate the Statement of Work
immediately for cause.
b. CGI Systems or the Contractor shall have the right to terminate the
Statement of Work without cause with 14 (fourteen) days notice.
PAYMENT FOR SERVICES
Payment for services for hours actually worked or deliverables developed will
be made in the corporate name of Contractor on the periodic basis or payment
schedule set forth in the Statement of Work. Payment to the Contractor will be
in accordance with the agreed-upon payment terms specified in the Statement of
Work and no other compensation in any form, including benefits, will be
provided by CGI Systems or anyone else. Contractor shall maintain records of
hours during which services have been performed, and submit to CGI Systems
those records along with Contractor's invoice for the amount due to Contractor
for the hours worked or work delivered. CGI Systems' policy is to pay within
fifteen (15) business days of receipt of invoice and appropriate documentation.
Due to holidays and other factors, some delays in the Accounts
4
<PAGE> 6
that, if any one provision or clause conflicts with existing or future
applicable law, or may not be given full effect because of such law, this shall
not affect any other provision of the Agreement which can be given effect
without the conflicting provision or clause. To the extent that there may be
any conflict between the terms of this Agreement and the Statement of Work,
this Agreement shall take precedence. Contractor represents that Contractor
has read and understands the terms of this Agreement, has had an opportunity
to ask any questions and to seek the assistance of legal counsel regarding
these terms, and is not relying upon any advice from CGI Systems in this regard.
This Agreement shall be governed by the laws of the State of Delaware,
regardless of where Contractors' work is performed, and any litigation shall
be brought in the state or federal courts of the State of Delaware.
CGI SYSTEMS, INC.: SYNON, INC.:
Signature /s/ THOMAS K. SHERIDAN Signature /s/ DENNIS G. HOLLIGAN
-------------------------- ----------------------------
Thomas K. Sheridan Dennis G. Holligan
Managing Director Director of Administration
Date 10/18/96 Date 8/30/96
------------------------------- ---------------------------------
6
<PAGE> 7
EXHIBIT A
STATEMENT OF WORK
-----------------
CLIENT: INTERNATIONAL BUSINESS MACHINES ("IBM")
CLIENT LOCATION: ROCHESTER, MINNESOTA
DESCRIPTION OF ENGAGEMENT:
CONTRACTOR TO PROVIDE TWO APPLICATION CONSULTANTS TO IBM FOR THE
"OBJECT ORIENTED JUMP-START LABORATORY" TO PROVIDE:
1. EDUCATION AND MENTORING TO IBM AND SYNON INDEPENDENT SOFTWARE VENDORS
AND TO LARGE IBM AND SYNON CUSTOMERS ON ADVANCED TECHNOLOGY IN OBJECT
ORIENTATION AND CLIENT SERVER TECHNOLOGY.
2. DEVELOP CLASS LIBRARIES TO EXPLOIT AS/400 ADVANCED TECHNOLOGIES SUCH
AS [ ]*.
3. OWNERSHIP OF CLASS LIBRARIES TO REMAIN WITH SYNON.
4. ROYALTIES TO IBM OF [ ]* OF REVENUES GENERATED FORM LICENSING OF CLASS
LIBRARIES DEVELOPED UNDER THIS STATEMENT OF WORK.
TYPE OF SERVICES: SOFTWARE EDUCATION AND DEVELOPMENT
EXPECTED START DATE: SEPTEMBER 3, 1996
ESTIMATED COMPLETION DATE: [ ]*
OPTION TO EXTEND: NONE
SCHEDULE AND RATE OF PAYMENT:
1. TWO APPLICATION CONSULTANTS @ $70.00 PER HOUR, INCLUSIVE OF EXPENSES.
2. STRAIGHT TIME FOR OVERTIME.
3. SYNON TO SUBMIT TIME SHEETS AND INVOICES TO CGI ON A WEEKLY BASIS.
ESTIMATE VALUE OF ENGAGEMENT: $300,000
CONTRACTOR'S STAFF ASSIGNED TO PROJECT: MICHAEL TOPP CHRIS SMITH
CGI Systems, Inc.: Synon, Inc.:
Signature /s/THOMAS K. SHERIDAN Signature /s/ DENNIS G. HOLLIGAN
----------------------- --------------------------
Thomas K. Sheridan Dennis G. Holligan
Managing Director Director of Administration
Date 10/18/96 Date 8/30/96
--------------------------- -------------------------------
- --------------------------------------------------------------------------------
By signing this Statement of Work, I assert that I have read and understand the
attached Agreement between CGI Systems and Synon, Inc., of whom I am an
employee or agent, and I agree to all of the terms and conditions as stated in
that Agreement. I agree to adhere to this Agreement for its full term, whether
as an employee of Synon, Inc. or otherwise.
Name of Contractor's Staff Signature Date
-------------------------- --------- ----
Michael Topp
------------------------------- ----------------
Chris Smith
------------------------------- ----------------
* Confidential treatment has been requested from the Securities and Exchange
Commission. Omitted portions have been filed separately with the Commission.
7
<PAGE> 1
EXHIBIT 10.31
SYNON CORPORATION
==============================================
SILICON VALLEY BANK
AGREEMENT & BACKUP
MARCH 1994
Synon Confidential
<PAGE> 2
----------------------------------------------------------
SYNON CORPORATION
SYNON, INC.
LOAN AND SECURITY AGREEMENT
----------------------------------------------------------
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
1. DEFINITIONS AND CONSTRUCTION.......................................................... 1
1.1 Definitions.................................................................. 1
1.2 Accounting Terms............................................................. 8
2. LOAN AND TERMS OF PAYMENT............................................................. 9
2.1 Revolving Advances........................................................... 9
2.2 Overadvances................................................................. 9
2.3 Accounts Collection.......................................................... 9
2.4 Interest Rates, Payments, and Calculations................................... 9
2.7 Additional Costs............................................................. 10
2.8 Term......................................................................... 11
3. CONDITIONS OF LOANS................................................................... 11
3.1 Conditions Precedent to Initial Loan......................................... 11
3.2 Conditions Precedent to all Loans............................................ 11
4. CREATION OF SECURITY INTEREST......................................................... 12
4.1 Grant of Security Interest................................................... 12
4.2 Delivery of Additional Documentation Required................................ 12
4.3 Right to Inspect............................................................. 12
5. REPRESENTATIONS AND WARRANTIES........................................................ 12
5.1 Due Organization and Qualification........................................... 12
5.2 Due Authorization; No Conflict............................................... 12
5.3 No Prior Encumbrances........................................................ 12
5.4 Bona Fide Accounts........................................................... 13
5.5 Merchantable Inventory....................................................... 13
5.6 Name; Location of Chief Executive Office..................................... 13
5.7 Litigation................................................................... 13
5.9 Solvency..................................................................... 13
5.10 Regulatory Compliance........................................................ 13
5.11 Environmental Condition...................................................... 13
5.12 Taxes........................................................................ 14
5.13 Subsidiaries................................................................. 14
5.14 Government Consents.......................................................... 14
5.15 Full Disclosure.............................................................. 14
6. AFFIRMATIVE COVENANTS................................................................. 14
6.1 Good Standing................................................................ 14
6.2 Government Compliance........................................................ 14
6.3 Financial Statements, Reports, Certificates.................................. 14
6.4 Returns...................................................................... 15
6.5 Taxes........................................................................ 15
6.6 Insurance.................................................................... 15
6.7 Principal Depository......................................................... 16
6.8 Quick Ratio.................................................................. 16
6.9 Additional Quick Ratio....................................................... 16
6.10 Debt-Net Worth Ratio......................................................... 16
6.11 Profitability................................................................ 16
6.13 Further Assurances........................................................... 16
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C> <C>
7. NEGATIVE COVENANTS.................................................................... 16
7.2 Change in Business........................................................... 17
7.3 Mergers or Acquisitions...................................................... 17
7.4 Indebtedness................................................................. 17
7.5 Encumbrances................................................................. 17
7.6 Distributions................................................................ 17
7.7 Investments.................................................................. 17
7.8 Transactions with Affiliates................................................. 17
7.9 Subordinated Debt............................................................ 18
7.10 Inventory.................................................................... 18
7.11 Compliance................................................................... 18
8. EVENTS OF DEFAULT..................................................................... 18
8.1 Payment Default.............................................................. 18
8.2 Covenant Default............................................................. 18
8.3 Attachment................................................................... 19
8.4 Insolvency................................................................... 19
8.5 Other Agreements............................................................. 19
8.6 Subordinated Debt............................................................ 19
8.7 Judgments.................................................................... 19
8.8 Misrepresentations........................................................... 19
9. BANK'S RIGHTS AND REMEDIES............................................................ 19
9.1 Rights and Remedies.......................................................... 19
9.2 Power of Attorney............................................................ 20
9.3 Bank Expenses................................................................ 20
9.4 Remedies Cumulative.......................................................... 21
10. WAIVERS; INDEMNIFICATION.............................................................. 21
10.1 Demand; Protest.............................................................. 21
10.2 Bank's Liability for Collateral.............................................. 21
10.3 Indemnification.............................................................. 21
10.4 Subrogation and Similar Rights............................................... 21
10.5 Waivers of Notice............................................................ 21
10.6 Subrogation Defenses......................................................... 22
10.7 Right to Settle, Release..................................................... 22
10.8 Primary Obligation........................................................... 22
10.9 Subordination................................................................ 22
10.10 Enforcement of Rights........................................................ 23
11. NOTICES............................................................................... 23
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER............................................ 23
13. GENERAL PROVISIONS.................................................................... 23
13.1 Successors and Assigns....................................................... 23
13.2 Time of Essence.............................................................. 24
13.3 Severability of Provisions................................................... 24
13.4 Amendments in Writing, Integration........................................... 24
13.5 Counterparts................................................................. 25
13.6 Survival..................................................................... 25
</TABLE>
ii
<PAGE> 5
This LOAN AND SECURITY AGREEMENT is entered into as of March 17,1994,
by and between SILICON VALLEY BANK ("Bank") and Synon Corporation and Synon,
Inc. (individually, "Borrower" and collectively, "Borrowers").
RECITALS
Borrowers wish to borrow money from time to time from Bank, and Bank
desires to lend money to Borrowers. This Agreement sets forth the terms on
which Bank will lend to Borrowers, and Borrowers will repay the loan to Bank.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions. As used in this Agreement, the following
terms shall have the following definitions:
"Accounts" means all presently existing and hereafter
arising accounts, contract rights, and all other forms of obligations owing to
a Borrower arising out of the sale or lease of goods or the rendering of
services by such Borrower, whether or not earned by performance, and any and
all credit insurance, guaranties, and other security therefor, as well as all
merchandise returned to or reclaimed by such Borrower and Borrower's Books
relating to any of the foregoing.
"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means, with respect to any Person, any
Person that owns or controls directly or indirectly such Person, any Person
that controls or is controlled by or is under common control with such Person
or any Affiliate of such Person or each of such Person's senior executive
officers, directors, or partners.
"Bank Expenses" means all: reasonable costs or
expenses (including reasonable attorneys' fees and expenses) incurred in
connection with the preparation, negotiation, administration and enforcement of
the Loan Documents; and Bank's reasonable attorneys' fees and expenses incurred
in amending, enforcing or defending the Loan Documents, whether or not suit is
brought. The term "Bank Expenses" shall not include any items covered by
Sections 2.7 or 10.3.
"Borrowers' Books" means all of books and records of
either Borrower including: ledgers; records concerning Borrower's assets or
liabilities, the Collateral, business operations or financial condition; and all
computer programs, or tape files, and the equipment, containing such
information.
"Borrowing Base" has the meaning set forth in Section
2.1 hereof.
"Business Day" means any day that is not a Saturday,
Sunday, or other day on which banks in the State of California are authorized or
required to close.
"Closing Date" means the date of this Agreement.
"Code" means the California Uniform Commercial Code.
"Collateral" means the property described on Exhibit A
attached hereto.
1
<PAGE> 6
"Committed Line" means $4,000,000.
"Contingent Obligation" means, as applied to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person with respect to any indebtedness, lease, dividend, letter of credit or
other obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed (otherwise than for collection or
deposit in the ordinary course of business), co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable. The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determined amount of the
primary obligation in respect of which such Contingent Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith; provided, however,
that such amount shall not in any event exceed the maximum amount of the
obligations under the guarantee or other support arrangement.
"Current Assets" means, as of any applicable date,
all amounts that should, in accordance with GAAP, be included as current assets
on the consolidated balance sheet of Parent and its Subsidiaries as at such
date.
"Current Liabilities" means, as of any applicable
date, all amounts that should, in accordance with GAAP, be included as current
liabilities on the consolidated balance sheet of Parent and its Subsidiaries as
at such date, plus, to the extent not already included therein, all Advances
made under this Agreement, including all Indebtedness that is payable upon
demand or within one year from the date of determination thereof unless such
Indebtedness is renewable or extendable at the option of Borrowers or any
subsidiary to a date more than one year from the date of determination but
excluding Subordinated Debt.
"Daily Balance" means the amount of the Obligations
owed at the end of a given day.
"Eligible Accounts" means those Accounts that arise
in the ordinary course of a Borrower's business from such Borrower's sale or
lease of goods (including, without limitation, the licensing of software and
other technology) or rendering of services that comply with all of such
Borrower's representations and warranties to Bank set forth in Section 5.4 and
that are and at all times shall continue to be acceptable to Bank in all
respects, together with Accounts of a like character acquired by such Borrower
from other entities; provided, that standards of eligibility may be fixed and
revised from time to time by Bank in Bank's reasonable judgment and upon not
less than thirty (30) days' notification thereof to such Borrower in accordance
with the provisions hereof. Unless otherwise agreed to by Bank, Eligible
Accounts shall not include the following:
(a) Accounts that the account debtor has failed
to pay within ninety (90) days of invoice date;
(b) Accounts with respect to an account debtor,
fifty percent (50%) of whose Accounts the account debtor has failed to pay
within ninety (90) days of invoice date;
(c) Accounts with respect to which the account
debtor is an officer, employee, or agent of Borrower;
(d) Accounts with respect to which services are
provided under fixed contract consulting arrangements or goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, bill and hold,
or other terms by reason of which the payment by the account debtor may be
conditional;
2
<PAGE> 7
(e) Accounts with respect to which the account
debtor is an Affiliate (other than by virtue of being directly or indirectly
under common ownership or control with a Borrower) of either Borrower;
(f) Accounts with respect to which the account
debtor is not a resident of the United States or Canada except for Eligible
Foreign Accounts and Accounts arising from products shipped to or services
provided to branches or offices located in the United States of foreign account
debtors as Bank may approve in writing on a case-by-case basis;
(g) Accounts with respect to which the account
debtor is the United States or any department, agency, or instrumentality of
the United States;
(h) Accounts with respect to which Borrower is
liable to the account debtor for goods sold or services rendered by the account
debtor to Borrower, but only to the extent of any amounts owing to the account
debtor against amounts owed to Borrower;
(i) Accounts with respect to an account debtor,
including subsidiaries and affiliates, whose total obligations to Borrower
exceed twenty-five percent (25%) of all Accounts, to the extent such
obligations exceed the aforementioned percentage;
(j) Accounts with respect to which the account
debtor disputes liability or makes any claim with respect thereto as to which
Bank believes, in its sole discretion, that there may be a basis for dispute
(but only to the extent of the amount subject to such dispute or claim), or is
subject to any Insolvency Proceeding, or becomes insolvent, or goes out of
business; and
(k) Accounts the collection of which Bank
reasonably determines after reasonable inquiry and reasonable consultation with
Borrower to be doubtful by reason of the account debtor's financial condition.
"Eligible Foreign Accounts" means Accounts with
respect to which the account debtor is not a resident of the United States or
Canada and that are: (1) covered by credit insurance in form and amount, and by
an insurer satisfactory to Bank less the amount of any deductible(s) which may
be or become owing thereon; or (2) supported by one or more letters of credit
in favor of Bank as beneficiary, in an amount and of a tenor, and issued by a
financial institution, acceptable to Bank, or (3) that are owed by an account
debtor that Bank may approve in writing on a case-by-case basis.
"Equipment" means machinery, equipment, furniture,
fixtures, vehicles, tools, parts and attachments.
"ERISA" means the Employment Retirement Income
Security Act of 1974, as amended, and the regulations thereunder.
"Excluded Intellectual Property" shall mean all
intellectual property rights (i) arising under the laws of countries other than
the United States, and (ii) intellectual property rights (A) that must be
registered with, and with respect to which a filing is required by the secured
party with, the United States Patent and Trademark Officer or the United States
Copyright Office, as applicable, to perfect a security interest in such rights,
and (B) are not required to be registered under the terms of Section 6.12
hereof.
"Foreign Subsidiary" means all Subsidiaries of
Borrower other than Subsidiaries that are incorporated under the laws of any
state of the United States.
"GAAP" means generally accepted accounting principles
as in effect from time to time.
3
<PAGE> 8
"Indebtedness" means (a) all indebtedness for
borrowed money or the deferred purchase price of property or services,
including without limitation reimbursement and other obligations with respect
to surety bonds and letters of credit, (b) all obligations evidenced by notes,
bonds, debentures or similar instruments, (c) all capital lease obligations,
and (d) all Contingent Obligations.
"Insolvency Proceeding" means any proceeding
commenced by or against any Person under any provision of the United States
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law,
including a general assignment for the benefit of substantially all creditors,
compositions, extension generally with substantially all of its creditors, or
proceedings seeking reorganization, arrangement or other relief.
"Inventory" means all present and future inventory in
which either Borrower has any interest, including merchandise, raw materials,
parts, supplies, packing and shipping materials, work in process and finished
products intended for sale or lease or to be furnished under a contract of
service, of every kind and description now or at any time hereafter owned by or
in the custody or possession, actual or constructive, of such Borrower,
including such inventory as is temporarily out of its custody or possession or
in transit and including any returns upon any accounts or other proceeds,
including insurance proceeds, resulting from the sale or disposition of any of
the foregoing and any documents of title representing any of the above, and
Borrower's Books relating to any of the foregoing.
"Investment" means any beneficial interest in
(including stock, partnership interest, or other securities of) any Person, or
any loan, advance, or capital contribution to, any Person.
"IRC" means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
"Lien" means any mortgage, lien, security interest or
other encumbrance.
"Loan Documents" means, collectively, this Agreement,
any note or notes executed by Borrowers, and any other agreement entered into
between either Borrower and Bank in connection with this Agreement, all as
amended or extended from time to time.
"Material Adverse Effect" means a material adverse
effect on the business operations or financial condition of Borrower and its
Subsidiaries taken as a whole.
"Maturity Date" means April 30, 1995.
"Modified Cash Flow" means, for any period, net
income for such period minus any net increases in capitalized software for such
period.
"Negotiable Collateral" means a1l of each Borrower's
present and future letters of credit of which it is a beneficiary, notes,
drafts, instruments, documents of title, and chattel paper, and Borrower's
Books relating to any of the foregoing.
"Net Worth" means at any date as of which the amount
thereof shall be determined, the consolidated total assets of Parent and its
Subsidiaries minus (ii) Total Liabilities.
"Non-Borrower Subsidiary" means a Subsidiary of
Parent other than Synon, Inc.
"Obligations" means all debt, principal, interest,
Bank expenses and other payment obligations (including all amounts charged to a
Borrower's loan account pursuant to any agreement authorizing Bank to charge
such Borrower's loan account), owed by a Borrower to Bank of any kind and
description (whether pursuant to or evidenced by the Loan Documents, or by any
other agreement between Bank and a Borrower).
4
<PAGE> 9
"Parent" means Synon Corporation, a Delaware
corporation.
"Periodic Payments" means all installments or similar
recurring payments that Borrower may now or hereafter become obligated to pay
to Bank pursuant to the terms and provisions of any instrument, or agreement
now or hereafter in existence between Borrower and Bank.
"Permitted Indebtedness" means:
(a) Indebtedness of a Borrower in favor of Bank
arising under this Agreement or any other Loan Document;
(b) The existing Indebtedness disclosed on the
schedule of exceptions attached hereto (the "Schedule");
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in
the ordinary course of business;
(e) Indebtedness of any Non-Borrower Subsidiary
to a Borrower and Contingent Obligations of any Non-Borrower Subsidiary with
respect to obligations of a Borrower (provided that the primary obligations are
not prohibited hereby); provided that the incurrence of such Indebtedness or
Contingent Obligations, as the case may be, does not result in a violation of
Section 7.6 as a consequence of the provisos set forth in paragraph (d) of the
definition of "Permitted Investments;"
(f) (i) Indebtedness of a Borrower to any
Subsidiary and Contingent Obligations of a Non-Borrower Subsidiary with respect
to obligations of any Borrower (provided that the primary obligations are not
prohibited hereby), (ii) Indebtedness of any Subsidiary to any other Subsidiary
and Contingent Obligations of any Subsidiary with respect to obligations of any
other Subsidiary (provided that the primary obligations are not prohibited
hereby) and (iii) Indebtedness of one Borrower to the other Borrower and
Contingent Obligations of one Borrower to the Other Borrower with respect to
obligations of any other Borrower (provided that the primary obligations are
not prohibited hereby);
(g) Indebtedness secured by Permitted Liens;
(h) Other Indebtedness not otherwise permitted by
Section 7.5 not exceeding $100,000 in the aggregate outstanding at any time;
(i) Indebtedness by a Borrower and its
Subsidiaries consisting of guarantees (and other credit support) of the
obligations of vendors and suppliers of a Borrower or its Subsidiaries in
respect of transactions entered into in the ordinary course of business
provided that such guarantees (and other credit support) shall not at any time
exceed $100,000; and
(j) Extensions, refinancings, modifications,
amendments and restatements of any of items of Permitted Indebtedness (a)
through (i) above, provided that the principal amount thereof is not increased
or the terms thereof are not modified to impose more burdensome terms upon
Borrower.
"Permitted Investment" means:
(a) Investments existing on the Closing Date
disclosed in the Schedule;
(b) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one (1) year from the date of acquisition
thereof, (ii) commercial paper maturing no more than one (1) year from the date
of
5
<PAGE> 10
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Corporation or Moody's Investors Service, Inc., (iii)
certificates of deposit maturing no more than one (1) year from the date of
investment therein issued by Bank, and (iv) any Investments permitted by
Parent's investment policy, as amended from time to time, provided that such
investment policy (and any such amendment thereto) has been approved by the
Bank, which approval shall not be unreasonably withheld;
(c) Investments consisting of the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business;
(d) Investments (whether consisting of the
purchase of securities, loans, capital contributions or otherwise, but
excluding Investments permitted under clause (o) of this definition of
Permitted Investments) of a Borrower in or to Non-Borrower Subsidiaries and
Investments by a Borrower in or to companies which simultaneously with such
Investments become Subsidiaries, provided that the sum of (i) all such
Investments by the Borrowers in or to Non-Borrower Subsidiaries, plus (ii)
Contingent Obligations of Borrowers outstanding at any time with respect to the
obligations of Non-Borrower Subsidiaries, minus the sum of (x) Investments by
Non-Borrower Subsidiaries in or to either Borrower, plus (y) payments to either
Borrower on account of Investments by either Borrower in or to Non-Borrower
Subsidiaries, plus (z) distributions or dividends by Non-Borrower Subsidiaries
to either Borrower, in each case, made, incurred or arising on or after the
date hereof, does not at any time exceed $1,000,000; provided, further, that to
the extent that inter-company royalties due to a Borrower constitute
Investments, such inter-company royalties shall not be counted in the foregoing
limitation (but such royalties due shall be Permitted Investments);
(e) Investments (whether consisting of the
purchase of securities, loans, capital contributions, or otherwise) of
Subsidiaries in or to other Subsidiaries or in Borrower;
(f) Investments consisting of receivables owing
to Borrower or its Subsidiaries by Persons and advances to customers or
suppliers, in each case, if created, acquired or made in ordinary course of
business; provided that this paragraph (f) shall not apply to Investments owing
by Subsidiaries to Borrower;
(g) Investments consisting of (i) compensation of
employees, officers and directors of Borrower or its Subsidiaries so long as
the Board of Directors of Borrower determines that such compensation is in the
best interests of Borrower, (ii) travel advances, employee relocation loans and
other employee loans and advances in the ordinary course of business, (iii)
loans to employees, officers or directors relating to the purchase of equity
securities of Borrower or its Subsidiaries, (iv) other loans to officers and
employees approved by the Board of Directors in an aggregate amount not in
excess of $50,000 outstanding at any time;
(h) Investments (including debt obligations)
received in connection with the bankruptcy or reorganization of customers or
suppliers and in settlement of, and other disputes with, customers or suppliers
arising in the ordinary course of business;
(i) Investments pursuant to or arising under
currency agreements or interest rate agreements;
(j) Investments consisting of notes receivable
of, or prepaid royalties and other credit extensions to, customers and
suppliers who are not Affiliates in the ordinary course of business; provided
that this paragraph (j) shall not apply to Investments by Borrower in any
Subsidiary,
(k) Investments constituting acquisitions
permitted under Section 7.3;
(l) Deposit accounts of Borrower in which Bank
has a Lien prior to any other Lien;
6
<PAGE> 11
(m) Deposit accounts of any Subsidiaries
maintained in the ordinary course of business;
(n) Investments accepted in connection with
Transfers permitted by Section 7.1;
(o) Investments of a Borrower in any Subsidiary
consisting of transfers of cash or cash equivalents for marketing, general
administration and other operating activities but not in excess of $750,000 in
any fiscal year (in addition to other Investments otherwise permitted
hereunder); and
(p) Other Investments aggregating not in excess of
$100,000 at any time.
"Permitted Liens" means the following:
(a) Any Liens existing as of the date hereof and
disclosed in the Schedule or arising under this Agreement and the other Loan
Documents;
(b) Liens for taxes, fees, assessments or other
governmental charges or levies, either not delinquent or being contested in
good faith by appropriate proceedings, provided the same have no priority over
any of Bank's security interests;
(c) Liens (i) upon or in any equipment acquired or
held by the Borrower or any of its subsidiaries to secure the purchase price of
such equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the time of
its acquisition, provided that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment;
(d) Liens consisting of leases or subleases and
license and sublicenses granted to others in the ordinary course of a
Borrower's business not interfering in any material respect with the business
of a Borrower and its Subsidiaries taken as a whole, and any interest or title
of a lessor, licensor or under any lease or license;
(e) Liens on assets (including the proceeds
thereof and accessions thereto) that existed at the time such assets were
acquired by a Borrower or any Subsidiary (including Liens on assets of any
corporation that existed at the time it became or becomes a Subsidiary);
(f) Liens on Equipment leased by a Borrower or
any Subsidiary pursuant to an operating lease in the ordinary course of
business (including proceeds thereof and accessions thereto) incurred solely
for the purpose of financing the lease of such Equipment (including Liens
pursuant to leases permitted pursuant to Section 7.1 and Liens arising from UCC
financing statements regarding leases permitted by this Agreement);
(g) Liens arising from judgments, decrees or
attachments in circumstances not constituting an Event of Default under Section
8.7;
(h) Easements, reservations, rights-of-way,
restrictions, minor defects or irregularities in title and other similar
charges or encumbrances affecting real property not interfering in any material
respect with the ordinary conduct of the business of a Borrower and its
Subsidiaries, taken as a whole;
(i) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods;
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<PAGE> 12
(j) Liens that are not prior to the Lien of Bank
which constitute rights of set-off of a customary nature or bankers' Liens with
respect to amounts on deposit, whether arising by operation of law or by
contract, in connection with arrangements entered into with banks in the
ordinary course of business;
(k) Earn-out and royalty obligations existing on
the date hereof or entered into in connection with an acquisition permitted by
Section 7.3;
(1) Liens, not otherwise permitted by Section
7.5, which Liens do not in the aggregate exceed $100,000 at any time; and
(m) Liens incurred in connection with the
extension, renewal or refinancing of the indebtedness secured by Liens of the
type described in clauses (a), (c) and (k) above, provided that any extension,
renewal or replacement Lien shall be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, firm, joint stock
company, estate, entity or governmental agency.
"Prime Rate" means the variable rate of interest, per
annum, most recently announced by Bank, as its "prime rate," whether or not
such announced rate is the lowest rate available from Bank.
"Quick Assets" means at any date as of which the
amount thereof shall be determined, the consolidated cash, cash equivalents,
accounts receivable and investments with maturities not to exceed 90 days, of
Parent and its Subsidiaries determined in accordance with GAAP.
"Responsible Officer" means each of the Chief
Executive Officer, the Chief Financial Officer and the Controller of Borrower.
"Revolving Facility" means the facility under which
Borrower may request Bank to issue cash advances or commercial letters of
credit, as specified in Section 2.1 hereof.
"Revolving Note" means a promissory note in
substantially the form of Exhibit B attached hereto.
"Subordinated Debt" means any debt subordinated to the
debt owing by a Borrower to Bank on terms acceptable to Bank (and identified as
being such by such Borrower and Bank).
"Subsidiary" means any corporation or partnership in
which (i) any general partnership interest or (ii) more than 50% of the stock
of which by the terms thereof ordinary voting power to elect the Board of
Directors, managers or trustees of the entity shall, at the time as of which
any determination is being made, is owned by Borrower, either directly or
indirectly. Unless the context otherwise required, any reference to Subsidiary
shall be a reference to a Subsidiary of Parent and any collective reference to
Subsidiaries shall include Synon, Inc. unless otherwise indicated.
"Total Liabilities" means at any date as of which the
amount thereof shall be determined all obligations that should, in accordance
with GAAP be classified as liabilities on the consolidated balance sheet of
Parent and its Subsidiaries, including in any event all Indebtedness, but
specifically excluding Subordinated Debt.
1.2 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP and all
calculations made hereunder shall be made in accordance with
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GAAP When used herein, the terms "financial statements" shall include the notes
and schedules thereto to the extent they are audited.
2. LOAN AND TERMS OF PAYMENT
2.1 Revolving Advances. Subject to the terms and
conditions of this Agreement, Bank agrees to make cash advances ("Advances") to
Borrowers in an aggregate amount not to exceed the lesser of the Committed Line
or the Borrowing Base, provided that Borrowers may not at any time have
outstanding Advances in excess of Two Million Five Hundred Thousand Dollars
($2,500,000) until the first date on which Parent reports in the consolidated
financial statements delivered under Section 6.3 that Parent and its
Subsidiaries have achieved an aggregate Modified Cash Flow of not less than One
Million Dollars ($1,000,000) at any time during Borrowers' fiscal year 1994.
For purposes of this Agreement "Borrowing Base" shall mean an amount equal to
seventy percent (70%) of Eligible Accounts.
To evidence the Advances, Borrowers shall execute and deliver to Bank
on the date hereof the Revolving Note.
Whenever Borrowers desire an Advance, Borrowers will notify Bank by
facsimile transmission or telephone no later than 11:00 a.m. California time,
one Business Day before the day the Advance is to be made. Each such
notification shall be promptly confirmed by a Borrowing Certificate in
substantially the form of Exhibit C hereto. Bank shall be entitled to rely on
any such telephonic notice given by any person who Bank reasonably believes to
be a Responsible Officer of either Borrower, and Borrowers shall indemnify and
hold Bank harmless for any damage or loss suffered by Bank as a result of such
reliance.
Bank is authorized to make Advances under this Agreement, based upon
instructions received from a Responsible Officer of either Borrower, or without
instructions if in Bank's discretion such Advances are necessary to meet
Obligations which have become due and remain unpaid. Bank will credit the amount
of Advances made under this Section 2.1 to a Borrower's loan account. Amounts
borrowed pursuant to this Section 2.1 may be repaid and reborrowed at any time
during the term of this Agreement so long as no Event of Default has occurred
and is continuing.
The Revolving Facility shall terminate on the Maturity Date, at which
time all amounts advanced under this Section 2.1 shall be immediately due and
payable.
2.2 Overadvances. If, at any time or for any reason, the
amount of Obligations owed by Borrowers to Bank pursuant to Section 2.1 of this
Agreement is greater than the lesser of (i) the Committed Line or (ii) the
Borrowing Base, Borrower shall immediately pay to Bank, in cash, the amount of
such excess.
2.3 Accounts Collection. Borrowers shall enter into a
lockbox agreement with Bank, pursuant to which all funds received by each
Borrower from any source shall immediately be deposited. Borrower shall direct
all account debtors to mail or deliver all checks or other forms of payment for
amounts owing to Borrower in the ordinary course of Borrower's business to such
lockbox designated by Bank. Borrower shall hold in trust as collateral for
Bank all amounts that Borrower receives despite the directions to make payments
to such lockbox, and immediately deliver such payments to Bank in their
original form as received from the account debtor, with proper endorsements for
deposit into an account held by Bank. Bank shall have a security interest in
all such proceeds, but will not exercise any rights against such proceeds
except upon the occurrence and during the continuance of an Event of Default.
2.4 Interest Rates, Payments, and Calculations.
(a) Interest Rate. Except as set forth in
Section 2.4(b), any Advances evidenced by the Note shall bear interest, on the
average Daily Balance, at a rate equal to two (2.0)
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percentage points above the Prime Rate; provided that the rate shall be the
Prime Rate plus one and one quarter (1.25) percentage points above the Prime
Rate from and after the first date on which Parent reports in the financial
statements delivered under Section 6.3 that Borrowers have achieved an
aggregate Modified Cash Flow of not less than Two Hundred Fifty Thousand
Dollars ($250,000) at any time during Borrowers' fiscal year 1994.
(b) Past-Due Rate. If all or a portion of the
principal amount of any of the Advances made hereunder or any interest accrued
thereon or any Bank Expenses shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), then any such overdue amounts shall
bear interest at a rate per annum which is four (4) percentage points above the
rate otherwise then applicable.
(c) Payments. Interest hereunder shall be due
and payable on the last Business Day of each calendar month during the term
hereof. Bank shall, at its option, charge such interest, all Bank Expenses,
and all Periodic Payments against either Borrower's loan account or against the
Committed Line, in which case those amounts shall thereafter accrue interest at
the rate then applicable hereunder. Each Borrower authorizes Bank
automatically to deduct from such Borrower's account or accounts with Bank the
amount of any payment due hereunder.
(d) Computation. In the event the Prime Rate is
changed from time to time hereafter, the applicable rate of interest hereunder
shall be increased or decreased effective as of 12:01 a.m. on the day the Prime
Rate is changed, by an amount equal to such change in the Prime Rate. All
interest chargeable under the Loan Documents shall be computed on the basis of
a three hundred sixty (360) day year for the actual number of days elapsed.
2.5 Crediting Payments. The receipt by Bank of any wire
transfer of funds, check, or other item of payment shall be immediately applied
to conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds and is
made to the appropriate deposit account of Bank or unless and until such check
or other item of payment is honored when presented for payment.
Notwithstanding anything to the contrary contained herein, any payment (other
than a wire transfer of immediately available funds) received by Bank after
11:00 a.m. California time shall be deemed to have been received by Bank as of
the opening of business on the immediately following Business Day.
2.6 Fees. Borrowers shall pay to Bank the following:
(a) Facility Fee. Upon the date hereof, a
nonrefundable Commitment Fee equal to Fifteen Thousand Dollars ($15,000)
(Borrower having previously paid to Bank $15,000 constituting a partial payment
of the Commitment Fee), which shall be due upon the date of this Agreement and
shall be fully earned and nonrefundable;
(b) Financial Examination and Appraisal Fees.
Bank's customary fees and out-of-pocket expenses for Bank's audits of either
Borrower's Accounts and Inventory, and for each appraisal of Collateral and
financial analysis and examination of such Borrower performed from time to time
by Bank or its agents (not to exceed $1,000 per audit); and
(c) Bank Expenses. Upon the date hereof, all
Bank Expenses incurred through the date hereof, including reasonable attorneys'
fees (not to exceed $5,000) and expenses.
2.7 Additional Costs. In case any law, regulation,
treaty or official directive or the interpretation or application thereof by
any court of any governmental authority charged with the administration thereof
or the compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):
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(a) subjects Bank to any tax with respect to
payments of principal or interest or any other amounts payable hereunder by
Borrower or otherwise with respect to the transactions contemplated hereby
(except for taxes on the overall net income of Bank imposed by the United
States of America or any political subdivision thereof); or
(b) imposes, modifies or deems applicable any
deposit insurance, reserve, special deposit or similar requirement against
assets held by, or deposits in or for the account of, or loans by, Bank; or
(c) imposes upon Bank any other condition with
respect to their performance under this Agreement, and the result of any of the
foregoing is to increase the cost to Bank, reduce the income receivable by Bank
or impose any expense upon Bank with respect to any loans, Bank shall notify
Borrowers thereof. Borrowers agree to pay to Bank the amount of such increase
in cost, reduction in income or additional expense as and when such cost,
reduction or expense is incurred or determined, upon presentation by Bank of a
statement in the amount and setting forth Bank's calculation thereof, all in
reasonable detail, which statement shall be deemed true and correct absent
manifest error; provided, however, that the Borrowers shall not be liable for
any such amount attributable to any period prior to the date one hundred eighty
(180) days prior to the date of such certificate.
2.8 Term. This Agreement shall become effective upon the
date hereof and shall continue in full force and effect for a term ending on
the Maturity Date. Notwithstanding the foregoing, Bank shall have the right to
terminate its obligation to make Advances under this Agreement immediately and
without notice upon the occurrence and during the continuance of an Event of
Default.
3. CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Loan. The obligation
of Bank to make the initial Advance is subject to the condition precedent that
Bank shall have received, in form and substance satisfactory to Bank, the
following:
(a) this Agreement and the Note, each duly
executed by Borrowers;
(b) a certificate of the secretary of each
Borrower with respect to incumbency and resolutions authorizing the execution
and delivery of this Agreement;
(c) an opinion of Borrowers' counsel;
(d) an accounts receivable audit;
(e) an intellectual property security agreement;
(f) a guaranty of Synon Europe;
(g) payment of the fees and Bank Expenses then due
specified in Section 2.5 herof; and
(h) such other documents, and completion of such
other matters, as Bank may deem necessary or appropriate.
3.2 Conditions Precedent to all Loans. The obligation of
Bank to make each Advance, including the initial Advance, is further subject to
the following conditions:
(a) timely receipt by Bank of the Borrowing
Certificate as provided in Section 2.1; and
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(b) the representations and warranties contained
in Section 5 shall be true and correct in all material respects on and as of
the date of such Borrowing Certificate and on the effective date of each
Advance as though made at and as of each such date, and no Event of Default
shall have occurred and be continuing, or would result from such Advance.
The making of each Advance shall be deemed to be a representation and
warranty by Borrowers on the date of such Advance as to the accuracy of the
facts referred to in this Section 3.2(b).
4. CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest. Borrowers grant to Bank
a continuing security interest in all presently existing and hereafter acquired
or arising Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrowers of each of
their respective covenants and duties under the Loan Documents. Except as set
forth in the Schedule, such security interest constitutes a valid, first
priority security interest in the presently existing Collateral (other than
Excluded Intellectual Property), and will constitute a valid, first priority
security interest in Collateral acquired after the date hereof (other than
Excluded Intellectual Property).
4.2 Delivery of Additional Documentation Required.
Borrowers shall from time to time execute and deliver to Bank, at the request
of Bank, all financing statements, all Negotiable Collateral and other
documents that Bank may reasonably request, in form satisfactory to Bank, to
perfect and continue perfected Bank's security interests in the Collateral and
in order to fully consummate all of the transactions contemplated under the
Loan Documents.
4.3 Right to Inspect. Subject to Section 13.7, Bank
(through any of its officers, employees, or agents) shall have the right, upon
reasonable prior notice, from time to time during each Borrower's usual
business hours, to inspect Borrower's Books and to make copies thereof and to
check, test, and appraise the Collateral in order to verify such Borrower's
financial condition or the amount, condition of, or any other matter relating
to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants as follows:
5.1 Due Organization and Qualification. Such Borrower is
a corporation duly existing and in good standing under the laws of its state of
incorporation and qualified and licensed to do business in, and is in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be so qualified, except for such states as to which
any failure so to qualify is not reasonably likely to have a Material Adverse
Effect on such Borrower.
5.2 Due Authorization: No Conflict. The execution,
delivery, and performance of the Loan Documents are within such Borrower's
powers, have been duly authorized, and are not in conflict with nor constitute
a breach of any provision contained in such Borrower's Articles or Certificate
of Incorporation as appropriate, or Bylaws, nor will they constitute an event
of default under any material agreement to which such Borrower is a party or by
which such Borrower is bound. Such Borrower is not in default under any
agreement to which it is a party or by which it is bound, which default is
reasonably likely to have a Material Adverse Effect on such Borrower.
5.3 No Prior Encumbrances. Such Borrower has good and
indefeasible title to the Collateral, free and clear of Liens, except for
Permitted Liens. Except as disclosed in the Schedule, such Borrower has not
acquired any part of the Collateral from an assignor outside the ordinary
course of such assignor's business.
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5.4 Bona Fide Accounts. The Eligible Accounts are bona
fide existing obligations created by the sale and delivery of Inventory or the
rendition of services to account debtors in the ordinary course of such
Borrower's business, unconditionally owed to such Borrower without defenses,
disputes, offsets, counterclaims, or rights of return or cancellation. The
property giving rise to such Eligible Accounts has been delivered to the
account debtor or to the account debtor's agent for immediate shipment to and
unconditional acceptance by the account debtor. Such Borrower has not received
notice of actual or imminent Insolvency Proceedings of any account debtor at
the time an account due from such account debtor is included in any Borrowing
Base Certificate as an Eligible Account
5.5 Merchantable Inventory. All Inventory is in all
material respects of good and marketable quality.
5.6 Name; Location of Chief Executive Office. Except as
disclosed in the Schedule, such Borrower has not done business under any name
other than that specified on the signature page hereof. The chief executive
office of such Borrower is located at the address indicated in Section 11
hereof.
5.7 Litigation. Except as set forth in the Schedule,
there are no actions or proceedings pending by or against such Borrower before
any court or administrative agency in which an adverse decision can be
reasonably expected to have a Material Adverse Effect on such Borrower or the
Collateral. Except as set forth in the Schedule, such Borrower does not have
knowledge of any such pending or threatened actions or proceedings.
5.8 No Material Adverse Change. All financial statements
relating to such Borrower (consolidated, in the case of Parent) that have been
delivered by such Borrower to Bank fairly present in all material respects such
Borrower's financial condition as of the date thereof and Borrower's results of
operations for the period then ended. There has not been a material adverse
change in the financial condition of such Borrower since the date of the most
recent of such financial statements submitted to Bank. Since such date, there
has not occurred a material adverse change in Borrower's business, a material
impairment of the prospect of repayment of any portion of the Obligations owing
to Bank or a material impairment of the value of priority of Bank's security
interest in the Collateral.
5.9 Solvency. Such Borrower is solvent and able to pay
its debts (including trade debts) as they mature.
5.10 Regulatory Compliance. Such Borrower has met the
minimum funding requirements of ERISA with respect to any employee benefit plans
subject to ERISA. No event has occurred resulting from Borrower's failure to
comply with ERISA that is reasonably likely to result in such Borrower's
incurring any liability that is reasonably likely to have a Material Adverse
Effect on such Borrower. Such Borrower is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940. Such Borrower is not engaged principally, or as
one of the important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulations G, T and U of the Board of Governors of the Federal Reserve System).
Such Borrower has complied with all the provisions of the Federal Fair Labor
Standards Act.
5.11 Environmental Condition. None of such Borrower's
properties or assets has ever been used by such Borrower or, to the best of
such Borrower's knowledge, by previous owners or operators, in the disposal of,
or to produce, store, handle, treat, release, or transport, any hazardous waste
or hazardous substance other than in accordance with applicable law; to the
best of such Borrower's knowledge, none of such Borrower's properties or assets
has ever been designated or identified in any manner pursuant to any
environmental protection statute as a hazardous waste or hazardous substance
disposal site, or a candidate for closure pursuant to any environmental
protection statute; no lien arising under any environmental protection statute
has attached to any revenues or to any real or personal property owned by such
Borrower, and such Borrower has not received a summons, citation, notice, or
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directive from the Environmental Protection Agency or any other federal or
state governmental agency concerning any action or omission by Borrower
resulting in the releasing, or otherwise disposing of hazardous waste or
hazardous substances into the environment.
5.12 Taxes. Such Borrower has filed or caused to be filed
all material tax returns required to be filed, and has paid, or has made
adequate provision for the payment of, all taxes reflected therein.
5.13 Subsidiaries. Such Borrower does not own any stock,
partnership interest or other equity securities of any entity, except for
Permitted Investments,
5.14 Government Consents. Such Borrower has obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of such Borrower's business as currently conducted
except where the failure to do so is not likely to have a Material Adverse
Effect.
5.15 Full Disclosure. The representations, warranties and
other statements included in the documents, certificates and written statements
furnished by each Borrower to Bank prior to or as of the date of this Agreement
for use in connection with the transactions contemplated by this Agreement,
taken as a whole, do not contain any untrue statement of a material fact or
omit to state a material fact (known to such Borrower, in the case of any
document not furnished by it) necessary in order to make the statements
contained herein or therein not misleading (it being recognized by Bank that
the projections and forecasts provided by each Borrower are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections and forecasts may differ from the projected or forecasted results).
6. AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that, until payment in full
of the Obligations, such Borrower shall do or cause to be done all of the
following:
6.1 Good Standing. Such Borrower shall maintain its
corporate existence and its good standing in its jurisdiction of incorporation
and maintain qualification in each jurisdiction in which the failure to so
qualify is reasonably likely to have a Material Adverse Effect on such Borrower.
Such Borrower shall maintain in force all licenses, approvals and agreements,
the loss of which is reasonably likely to have a Material Adverse Effect on such
Borrower.
6.2 Government Compliance. Such Borrower shall comply
with all statutes, laws, ordinances and government rules and regulations to
which it is subject, noncompliance with which is reasonably likely to have a
Material Adverse Effect on such Borrower.
6.3 Financial Statements, Reports, Certificates. Such
Borrower shall deliver to Bank: (a) as soon as available, but in any event
within thirty (30) days after the end of each month, a company prepared balance
sheet, income statement and cash flow statement covering such Borrower's
consolidated operations during such period, certified by an officer of such
Borrower reasonably acceptable to Bank; (b) as soon as available, but in any
event within thirty (30) days after the end of each month, company prepared
consolidating financial statements including a schedule of intercompany charges
for each of such Borrower's foreign subsidiary; (c) as soon as available, but
in any event within ninety (90) days after the end of such Borrower's fiscal
year, audited financial statements of Borrower on a consolidated basis prepared
in accordance with GAAP, consistently applied, together with an unqualified
opinion on such financial statements of an independent certified public
accounting firm reasonably acceptable to Bank (which audits for the years 1992
and 1993 shall contain no material changes from preliminary draft financial
statements or company prepared financial statements delivered to Bank), and (at
the time of filing with the appropriate tax authorities) the federal tax
returns of Borrower, (d) promptly upon
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becoming available, copies of all statements, reports and notices sent or made
available generally by such Borrower to its security holders or to any holders
of Subordinated Debt; (e) promptly upon receipt of notice thereof, a report of
any legal actions pending or threatened against such Borrower which may result
in damages to such Borrower in excess of $250,000; and (f) such budgets, sales
projections, operating plans or other financial information as Bank may
reasonably request from time to time.
Within thirty (30) days of the last day of each month, Borrowers shall
deliver to Bank a borrowing base certificate signed by an officer of Parent on
behalf of Borrowers in substantially the form of Exhibit D hereto, together
with aged listings of accounts receivable and accounts payable; provided that,
for any period in which any Advances are outstanding under this Agreement,
Borrowers shall deliver such borrowing base certificate semi-monthly, within
(ten) 10 days of the end of each two-week period.
Borrowers shall deliver to Bank with the monthly financial statements
a compliance certificate signed by a Responsible Officer of Parent in
substantially the form of Exhibit
Exhibit E hereto.
Bank shall have a right from time to time thereafter to audit either
Borrower's Accounts at such Borrower's expense, provided that such audits will
be conducted no more often than three (3) times per year unless an Event of
Default has occurred and is continuing.
6.4 Returns. Returns and allowances, if any, as between
such Borrower and its account debtors shall be on the same basis and in
accordance with the usual customary practices of such Borrower, as they exist
at the time of the execution and delivery of this Agreement. Such Borrower
shall promptly notify Bank of all returns and recoveries and of all disputes
and claims, where the return, recovery, dispute or claim involves more than Two
Hundred Thousand Dollars ($200,000).
6.5 Taxes. Such Borrower shall make due and timely
payment or deposit of all material federal, state, and local taxes,
assessments, or contributions required of it by law, and will execute and
deliver to Bank, on demand, appropriate certificates attesting to the payment
or deposit thereof; and such Borrower will make timely payment or deposit of
all material tax payments and withholding taxes required of it by applicable
laws, including, but not limited to, those laws concerning F.I.C.A., F.U.T.A.,
state disability, and local, state, and federal income taxes, and will,
upon request, furnish Bank with proof satisfactory to Bank indicating that such
Borrower has made such payments or deposits; provided that Borrower need not
make any payment if the amount or validity of such payment is contested in good
faith by appropriate proceedings and is adequately reserved against (to the
extent required by GAAP) by such Borrower.
6.6 Insurance.
(a) Such Borrower, at its expense, shall keep the
Collateral insured against loss or damage by fire, theft, explosion,
sprinklers, and all other hazards and risks, and in such amounts, as ordinarily
insured against by other owners in similar businesses conducted in the
locations where Borrower's business is conducted on the date hereof. Each
Borrower shall also maintain insurance relating to Borrower's ownership and use
of the Collateral in amounts and of a type that are customary to businesses
similar to Borrower's.
(b) All such policies of insurance shall be in
such form, with such companies, and in such amounts as reasonably satisfactory
to Bank. All such policies of property insurance shall contain a lender's loss
payable endorsement, in a form satisfactory to Bank, showing Bank as an
additional loss payee thereof, and all liability insurance policies shall show
the Bank as an additional insured, and shall specify that the insurer must give
at least twenty (20) days notice to Bank before canceling its policy for any
reason. Borrower shall deliver to Bank certified copies of such policies of
insurance and evidence of the payments of all premiums therefor. All proceeds
payable under any such policy shall, at the option of Bank, be payable to Bank
to be applied on account of the Obligations.
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6.7 Principal Depository. Each Borrower shall maintain
its depository and operating accounts with Bank, except for a single deposit
account No. 4539-036939 of Synon, Inc. which will be maintained at Wells Fargo
Bank with an account balance not to exceed $250,000.
6.8 Quick Ratio. Parent shall maintain, on a
consolidated basis with its Subsidiaries, as of the last day of each calendar
month, a ratio of Quick Assets to Current Liabilities (excluding deferred
revenue relating to maintenance income) of at least 1.05 to 1.00 for the period
from the Closing Date until August 31, 1994; 1.10 to 1.0 thereafter until
September 30, 1994, and 1.25 to 1.0 thereafter.
6.9 Additional Quick Ratio. Borrowers shall maintain,
for Borrowers only and not on a consolidated basis with any other entity, as of
the last day of each calendar month, a ratio of Quick Assets (of Borrowers
only) to Current Liabilities (of Borrowers only) (excluding deferred revenue
relating to maintenance income) of at least 1.05 to 1.00 for the period from
the Closing Date until August 31, 1994; 1.10 to 1.0 thereafter until September
30, 1994, and 1.25 to 1.0 thereafter.
6.10 Debt-Net Worth Ratio. Parent shall maintain, on a
consolidated basis with its Subsidiaries, as of the last day of each calendar
month, a ratio of Total Liabilities less Subordinated Debt (and excluding
deferred revenue relating to maintenance income) to Net Worth plus Subordinated
Debt of not more than (i) for the period from the Closing Date to November 30,
1994, 3.00 to 1.00 and (ii) thereafter, 2.25 to 1.00.
6.11 Profitability. Parent shall, on a consolidated basis
with its Subsidiaries, not suffer a loss in excess of Seven Hundred Fifty
Thousand Dollars ($750,000) for the first fiscal quarter of 1994, shall be
profitable for the second fiscal quarter of 1994, shall not suffer a loss in
excess of Three Hundred Thousand Dollars ($300,000) for the third fiscal
quarter of 1994 and, thereafter, shall be profitable before taxes and after
taxes for each fiscal quarter.
6.12 Registration of Intellectual Property Rights.
Borrowers shall register or cause to be registered (to the extent not already
registered) with the United States Patent and Trademark Office or the United
States Copyright Office, as applicable, those intellectual property rights
listed on Exhibits A, B and C to the Intellectual Property Security Agreement,
dated the date hereof, delivered to Bank by Borrower, as soon as is practicable.
Borrowers shall register or cause to be registered with the United States Patent
and Trademark Office or the United States Copyright Office, as applicable, those
additional United States material registrable intellectual property rights
developed or acquired by Borrower from time to time; provided, however, that
Borrower shall only be required to register (i) copyrights for source (codes and
user manuals for new products that are expected to eventually constitute a
material portion of Borrower's revenue, which copyrights shall be registered
within 90 days of the commercial availability of such product, (ii) copyrights
for source codes and user manuals for major revisions to existing registered
products, (iii) patent rights to the extent that Borrower in consultation with
patent counsel determines in good faith that patent protection is desirable, and
(iv) trademark rights to the extent a trademark is utilized in connection with a
product which is expected to constitute or constitutes a material portion of
Borrower's revenue. Borrower shall notify Bank annually of each intellectual
property right registration and shall execute and deliver such additional
instruments and documents from time to time as Bank shall reasonably request to
perfect Bank's security interest in such additional intellectual property
rights.
6.13 Further Assurances. At any time and from time to time
each Borrower shall execute and deliver such further instruments and take such
further action as may reasonably be requested by Bank to effect the purposes of
this Agreement.
7. NEGATIVE COVENANTS
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until payment in full of the outstanding
Obligations, neither Borrower will do, or permit to be done, any of the
following without the prior written consent of Bank:
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7.1 Dispositions. Convey, sell, lease, transfer or
otherwise dispose of (collectively, a "Transfer"), or permit any Subsidiary to
Transfer, all or any part of its business or property, other than: (i)
Transfers in the ordinary course of business; (ii) Transfers of non-exclusive
licenses and similar arrangements for the use of the property of Parent or its
Subsidiaries; (iii) Transfers of worn-out or obsolete property; (iv) Transfers
which constitute liquidation of Investments permitted under Section ;(v)
Transfers from any Subsidiary to another Subsidiary or Parent and any Transfers
from either Borrower to a Non-Borrower Subsidiary that are Permitted
Investments; and (vi) other Transfers not otherwise permitted by this Section
7.1 not exceeding $100,000 in any fiscal year.
7.2 Change in Business. Neither Parent nor any of its
Subsidiaries shall engage in any business other than the businesses currently
engaged in by Parent and its Subsidiaries and any business substantially
similar or related thereto (or incidental thereto). Borrowers will not,
without thirty (30) days prior written notification to Bank, relocate their
chief executive offices.
7.3 Mergers or Acquisitions. Merge or consolidate, or
permit any of the Subsidiaries to merger or consolidate, with or into any other
business organization, or acquire, or permit any of the Subsidiaries to
acquire, all or substantially all of the capital stock or property of another
Person in any transaction valued in excess of Five Hundred Thousand Dollars
($500,000); provided that this Section 7.3 shall not apply to transactions
among Borrowers and the Non-Borrower Subsidiaries in which a Borrower is the
surviving entity or among the Non-Borrower Subsidiaries or to purchases of
inventory, equipment or intellectual property rights in any transaction valued
at less than Five Hundred Thousand Dollars ($500,000) in the ordinary course of
business.
7.4 Indebtedness. Create, incur, assume or be or remain
liable with respect to any Indebtedness other than Permitted Indebtedness.
7.5 Encumbrances. Create, incur, assume or suffer to
exist any Lien with respect to any of its property, or assign or otherwise
convey any right to receive income, including the sale of any Accounts, or
permit any of the Subsidiaries so to do, except for Permitted Liens.
7.6 Distributions. Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock, provided that (1) a Borrower may declare and make any
dividend payment or other distribution payable in its equity securities, (2) a
Borrower may convert any of its convertible securities into other securities
pursuant to the terms of such convertible securities or otherwise in exchange
therefor, (3) Parent may repurchase shares of its Series E Preferred Stock
pursuant to Section 8.01(b) of that certain Stock Purchase Agreement, dated as
of August 28, 1992, between Parent and International Business Machines
Corporation; provided Parent is in compliance with Sections 6.8 and 6.10 hereof
before and after such repurchase and Parent has given Bank copies of all
notices issued in connection with such repurchase at the same time as Parent
has given the notices to International Business Machines Corporation, and (4) a
Borrower may redeem or repurchase its securities in an amount in any fiscal
year not exceeding $150,000 in connection with any agreement between Parent or
the Subsidiaries and any officer, director, employee or consultant of Parent or
its Subsidiaries entered into in the ordinary course of business wherein Parent
(or its Subsidiaries) is obligated or entitled to repurchase from such officer,
director, employee or consultant shares of equity securities of a Borrower (or
its Subsidiaries) upon such Person's termination of employment or services or
other event.
7.7 Investments. Directly or indirectly acquire or own or
make any Investments in or to any Person, or permit any of the Subsidiaries so
to do, other than Permitted Investments.
7.8 Transactions with Affiliates. Directly or indirectly
enter into or permit to exist any material transaction with any Affiliate of a
Borrower except for transactions that are in the ordinary course of such
Borrower's business, upon fair and reasonable terms that are no less favorable
to such Borrower than would be obtained in an arm's length transaction with a
nonaffiliated Person and except for
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transactions with the Non-Borrower Subsidiaries that are upon fair and
reasonable terms and transactions constituting Permitted Investments.
7.9 Subordinated Debt. Make any payment in respect of
any Subordinated Debt, or permit any of the Subsidiaries to make any such
payment, except in compliance with the terms of such Subordinated Debt.
7.10 Inventory. Store the Inventory with a bailee,
warehouseman, or similar party unless Bank has received a pledge of the
warehouse receipt covering such Inventory. Except for Inventory sold in the
ordinary course of business and except for such other locations as Bank may
approve in writing, Borrowers shall keep the Inventory only at the location set
forth in Section 11 hereof and such other locations of which the Borrowers give
Bank prior written notice and as to which a Borrower signs and files a
financing statement where needed to perfect Bank's security interest.
7.11 Compliance. Become an "investment company" or be
controlled by an "investment company",' within the meaning of the Investment
Company Act of 1940, or become principally engaged in, or undertake as one of
its important activities, the business of extending credit for the purpose of
purchasing or carrying margin stock, or use the proceeds of any Advance for
such purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, fail
to comply with the Federal Fair Labor Standards Act or violate any law or
regulation, which violation is reasonably likely to have a Material Adverse
Effect or a material adverse effect on the Collateral or the priority of Bank's
lien on the Collateral, or permit any of its Subsidiaries to do any of the
foregoing.
8. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an
Event of Default by Borrowers under this Agreement
8.1 Payment Default. If Borrowers fail to pay the
principal of, or any interest on, any Advances when due and payable, or any
portion of any other Obligations not constituting such principal or interest,
including without limitation Bank Expenses, within thirty (30) days of receipt
by Borrower of an invoice therefor.
8.2 Covenant Default. If either Borrower or Borrowers,
as applicable, fail to perform any obligation under Sections 6.6, 6.7, 6.8,
6.9, 6.10 or 6.11, or violate any of the covenants contained in Article 7
(other than 7.5, 7.7, and 7.10) of this Agreement or fail or neglect to
perform, keep, or observe any other material term, provision, condition,
covenant, or agreement contained in this Agreement, in any of the Loan
Documents, or in any other present or future agreement between Borrower and
Bank and as to any default under such other term, provision, condition,
covenant or agreement that can be cured, have failed to cure such default
within ten (10) days after the Borrower receives notice thereof or any
Responsible Officer of Borrower become aware thereof (provided that no Advances
will be required to be made during such cure period); provided, however, that
if the default cannot by its nature be cured within the ten (10) day period or
cannot after diligent attempts by Borrower be cured within such ten (10) day
period, and such default is likely to be cured within a reasonable time (which
shall not in any case exceed thirty (30) days), then Borrower shall have an
additional reasonable period to attempt to cure such default, and within such
reasonable time period the failure to have cured such default shall not be
deemed an Event of Default; provided further that no such additional reasonable
time shall be available (i) to care a failure to provide the statements,
reports and other documents and information to be delivered under Section 6.3
or (ii) to cure a default if a default of a similar nature or under the same
provision hereof occurred within six (6) months of such later default;
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8.3 Attachment. If any material portion of either
Borrower's assets is attached, seized, subjected to a writ or distress warrant,
or is levied upon, or comes into the possession of any trustee, receiver or
person acting in a similar capacity and such attachment, seizure, writ or
distress warrant or levy has not been removed, discharged or rescinded within
thirty (30) consecutive days, or if either Borrower is enjoined, restrained, or
in any way prevented by court order from continuing to conduct all or any
material part of its business affairs, or if a judgment or other claim becomes
a lien or encumbrance upon any material portion of either Borrower's assets, or
if a notice of lien, levy, or assessment is filed of record with respect to any
of either Borrower's assets by the United States Government, or any department,
agency, or instrumentality thereof, or by any state, county, municipal, or
governmental agency, and the same is not paid within thirty (30) days after
such Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contesting by such Borrower
(provided that no Advances will be made during such cure period);
8.4 Insolvency. If an Insolvency Proceeding is commenced
by a Borrower, or if an Insolvency Proceeding is commenced against a Borrower
and is not dismissed or stayed within twenty (20) consecutive days (provided
that, except as Bank may determine in its sole and absolute discretion, no
Advances will be made prior to the dismissal of such Insolvency Proceeding);
8.5 Other Agreements. If there is a default in any
agreement to which a Borrower is a party with a third party or parties or by
which a Borrower is otherwise bound resulting in a right by such third party or
parties, whether or not exercised, to accelerate the maturity of any
Indebtedness in an amount in excess of Five Hundred Thousand Dollars ($500,000)
or which would be reasonably likely to have a Material Adverse Effect;
8.6 Subordinated Debt. If a Borrower makes any payment on
account of Subordinated Debt, except to the extent such payment is allowed
under any subordination agreement entered into with Bank;
8.7 Judgments. If a final judgment or judgments for the
payment of money in an amount, individually or in the aggregate, of at least One
Hundred Fifty Thousand Dollars ($150,000) shall be rendered against a Borrower
and shall remain unsatisfied and unstayed for a period of ten (10) days
(provided that, except as Bank may determine in its sole and absolute
discretion, no Advances will be made prior to the satisfaction or stay of such
judgment); or
8.8 Misrepresentations. If any material
misrepresentation or material misstatement exists now or hereafter in any
warranty or representation made to Bank by any Responsible Officer of a
Borrower pursuant to this Agreement or any Loan Document.
9. BANK'S RIGHTS AND REMEDIES
9.1 Rights and Remedies. Upon the occurrence and during
the continuance of an Event of Default, Bank may, at its election, without
notice of its election and without demand, except as required by law, do any
one or more of the following, all of which are authorized by Borrowers:
(a) Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable (provided that upon the occurrence of an Event of Default
described in Section 8.5 all Obligations shall become immediately due and
payable without any action by Bank);
(b) Cease advancing money or extending credit to
or for the benefit of Borrowers under this Agreement or under any other
agreement between either Borrower and Bank;
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(c) Settle or adjust disputes and claims directly
with account debtors for amounts, upon terms and in whatever order that Bank
reasonably considers advisable;
(d) Without notice to or demand upon Borrower,
make such payments and do such acts as Bank considers necessary or reasonable
to protect its security interest in the Collateral. Borrowers agree to
assemble the Collateral if Bank so requires, and to make the Collateral
available to Bank as Bank may designate. Borrowers authorize Bank to enter the
premises where the Collateral is located, to take and maintain possession of
the Collateral, or any part of it, and to pay, purchase, contest, or compromise
any encumbrance, charge, or lien which in Bank's determination appears to be
prior or superior to its security interest and to pay all expenses incurred in
connection therewith. With respect to any of either Borrower's owned premises,
each Borrower hereby grants Bank a license to enter into possession of such
premises and to occupy the same, without charge, for up to one hundred twenty
(120) days in order to exercise any of Bank's rights or remedies provided
herein, at law, in equity, or otherwise;
(e) Without notice to either Borrower set off and
apply to the Obligations any and all (i) balances and deposits of either
Borrower held by Bank, or (ii) indebtedness at any time owing to or for the
credit or the account of either Borrower held by Bank;
(f) Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell (in the manner
provided for herein) the Collateral. Bank is hereby granted a license or other
right, solely pursuant to the provisions of this Section 9.1, to use, without
charge, any Borrower's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any property of a similar nature, as it pertains to the Collateral, in
completing production of, advertising for sale, and selling any Collateral and,
in connection with Bank's exercise of its rights under this Section 9.1, any
Borrower's rights under all licenses and all franchise agreements shall inure
to Bank's benefit;
(g) Sell the Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including any Borrower's
premises) as Bank determines is commercially reasonable;
(h) Bank may credit bid and purchase at any public
sale; and
(i) Any deficiency that exists after disposition
of the Collateral as provided above will be paid immediately by Borrowers.
9.2 Power of Attorney. Effective only upon the
occurrence and during the continuance of an Event of Default, each Borrower
hereby irrevocably and appoints Bank (and any of Bank's designated officers, or
employees) as such Borrower's true and lawful attorney to: (a) send requests for
verification of Accounts or notify account debtors of Bank's security interest
in the Accounts; (b) endorse such Borrower's name on any checks or other forms
of payment or security that may come into Bank's possession; (c) sign the name
of such Borrower on any of the documents described in Section 4.5; (d) sign such
Borrower's name on any invoice or bill of lading relating to any Account, drafts
against account debtors, schedules and assignments of Accounts, verifications of
Accounts, and notices to account debtors; (e) make, settle, and adjust all
claims under and decisions with respect to such Borrower's policies of
insurance; and (f) settle and adjust disputes and claims respecting the accounts
directly with account debtors, for amounts and upon terms which Bank determines
to be reasonable. The appointment of Bank as such Borrower's attorney in fact,
and each and every one of Bank's rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully repaid and
performed and Bank's obligation to provide advances hereunder is terminated.
9.3 Bank Expenses. If any Borrower fails to pay any
amounts or furnish any required proof of payment due to third Persons, as
required under the terms of this Agreement, then Bank may do any or all of the
following: (a) make payment of the same or any part thereof, (b) set up such
reserves in
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such Borrower's loan account as Bank deems necessary to protect Bank from the
exposure created by such failure; or (c) obtain and maintain insurance policies
of the type discussed in Section 6.6 of this Agreement, and take any action
with respect to such policies as Bank deems prudent. Any amounts paid or
deposited by Bank shall constitute Bank Expenses, shall be immediately due and
payable, and shall bear interest at the then applicable rate hereinabove
provided, and shall be secured by the Collateral. Any payments made by Bank
shall not constitute an agreement by Bank to make similar payments in the
future or a waiver by Bank of any Event of Default under this Agreement.
9.4 Remedies Cumulative. Bank's rights and remedies
under this Agreement and the Loan Documents, shall be cumulative. Bank shall
have all other rights and remedies not inconsistent herewith as provided under
the Code, by law, or in equity. No exercise by Bank of one right or remedy
shall be deemed an election, and no waiver by Bank of any Event of Default on
Borrower's part shall be deemed a continuing waiver. No delay by Bank shall
constitute a waiver, election, or acquiescence by it.
10. WAIVERS, INDEMNIFICATION
10.1 Demand: Protest. Each Borrower waives demand,
protest, notice of protest, notice of default or dishonor, notice of payment
and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees at any time held by Bank on which
such Borrower may in any way be liable.
10.2 Banks liability for Collateral. So long as Bank
complies with its obligations under Section 9207 of the Code and reasonable
banking practices, Bank shall not in any way or manner be liable or responsible
for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto
occurring or arising in any manner or fashion from any cause; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person whomsoever. All risk
of loss, damage or destruction of the Collateral shall be borne by Borrowers.
10.3 Indemnification. Each Borrower shall defend,
indemnify and hold harmless Bank and its officers, employees, and agents against
(a) all obligations, demands, claims, and liabilities claimed or asserted by any
other party in connection with the transactions contemplated by this Agreement;
and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by
Bank as a result of or in any way arising out of, from, to transactions between
Bank and such Borrower under this Agreement, or any other Loan Document
(including without limitation reasonable attorneys fees and expenses), except
for losses caused by Bank's gross negligence or willful misconduct.
10.4 Subrogation and Similar Rights. Notwithstanding any
other provision of this Agreement or any other Loan Document, each Borrower
irrevocably waives all rights that it may have at law or in equity (including,
without limitation, any law subrogating the Borrower to the rights of Lender
under the Loan Documents) to seek contribution, indemnification, or any other
form of reimbursement from any other Borrower, or any other Person now or
hereafter primarily or secondarily liable for any of the Obligations, for any
payment made by the Borrower with respect to the Obligations in connection with
the Loan Documents or otherwise and all rights that it might have to benefit
from, or to participate in, any security for the Obligations as a result of any
payment made by the Borrower with respect to the Obligations in connection with
the Loan Documents or otherwise. Any agreement providing for indemnification,
reimbursement or any other arrangement prohibited under this subsection (c)(i)
shall be null and void. If any payment is made to a Borrower in contravention
of this subsection (c)(i), such Borrower shall hold such payment in trust for
Bank and such payment shall be promptly delivered to Bank for application to
the Obligations, whether matured or unmatured.
10.5 Waivers of Notice. Each Borrower waives notice of
acceptance hereof, notice of the existence, creation or acquisition of any of
the Obligations; notice of the amount of the Obligations outstanding at any
time; notice of acceleration; notice of any adverse change in the financial
condition of any other Borrower or of any other fact that might increase the
Borrower's risk presentment for payment;
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demand; protest and notice thereof as to any instrument; and all other notices
and demands to which the Borrower would otherwise be entitled. Each Borrower
waives any defense arising from any defense of any other Borrower, or by reason
of the cessation from any cause whatsoever of the liability of any other
Borrower. Bank's failure at any time to require strict performance by any
Borrower of any provision of the Loan Documents shall not waive, alter or
diminish any right of Bank thereafter to demand strict compliance and
performance therewith. Nothing contained herein shall prevent Bank from
foreclosing on the Lien of any deed of trust, mortgage or other security
instrument, or exercising any rights available thereunder, and the exercise of
any such rights shall not constitute a legal or equitable discharge of any
Borrower. Each Borrower also waives any defense arising from any act or
omission of Bank that changes the scope of the Borrower's risks hereunder.
Each Borrower hereby waives any right to assert against Bank any defense (legal
or equitable), setoff, counterclaim, or claims that such Borrower individually
may now or hereafter have against another Borrower or any other Person liable
to Lender with respect to the Obligations in any manner or whatsoever.
10.6 Subrogation Defenses. Each Borrower hereby waives
any defense based on impairment or destruction of its subrogation or other
rights against any other Borrower and waives all benefits which might otherwise
be available to it under California Civil Code Sections 2809, 2810, 2819, 2839,
2845, 2848, 2849, 2850, 2899, and 3433, as those statutory provisions are now
in effect and hereafter amended, and under any other similar statutes now and
hereafter in effect.
10.7 Right to Settle. Release.
(a) The liability of Borrowers hereunder shall
not be diminished by (i) any agreement, understanding or representation that
any of the Obligations is or was to be guaranteed by another Person or secured
by other property, or (ii) any release or unenforceability, whether partial or
total, of rights, if any, which Lender may now or hereafter have against any
other Person, including another Borrower, or property with respect to any of
the Obligations.
(b) Without notice to any Borrower and without
affecting the liability of any Borrower hereunder, Bank may (i) compromise,
settle, renew, extend the time for payment, change the manner or terms of
payment, discharge the performance of, decline to enforce, or release all or any
of the Obligations with respect to a Borrower, (ii) grant other indulgences to a
Borrower in respect of the Obligations, (iii) modify in any manner any documents
relating to the Obligations with respect to a Borrower, (iv) release, surrender
or exchange any deposits or other property securing the Obligations, whether
pledged by a Borrower or any other Person, or (v) compromise, settle, renew, or
extend the time for payment, discharge the performance of, decline to enforce,
or release all or any obligations of any guarantor, endorser or other Person who
is now or may hereafter be liable with respect to any of the Obligations.
10.8 Primary Obligation. This Agreement is a primary and
original obligation of each Borrower and shall remain in effect notwithstanding
future changes in conditions, including any change of law or any invalidity or
irregularity in the creation or acquisition of any Obligations or in the
execution or delivery of any agreement between Bank and any Borrower. Each
Borrower shall be liable for existing and future Obligations as fully as if all
of the Advance were advanced to the Borrower Bank may rely on any certificate
or representation made by any Borrower as made on behalf of, and binding on,
all Borrowers, including without limitation Borrowing Certificates, Borrowing
Base Certificates and Compliance Certificates.
10.9 Subordination. All indebtedness of a Borrower now or
hereafter arising held by another Borrower is subordinated to the Obligations
and the Borrower holding the indebtedness shall take all actions reasonably
requested by Lender to effect, to enforce and to give notice of such
subordination.
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10.10 Enforcement of Rights. Borrowers are jointly and
severally liable for the Obligations and Bank may proceed against one or more
of the Borrowers to enforce the Obligations without waiving its right to
proceed against any of the other Borrowers.
11. NOTICES
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally, delivered or sent by certified
mail, postage prepaid, return receipt requested, or by prepaid telefacsimile to
Borrowers or to Bank, as the case may be, at its addresses set forth below:
If to Borrowers: Synon Corporation
1100 Larkspur Landing Circle
Larkspur, CA 94939
Attn: Mr. Paul K. Wilde
FAX: (415) 461-8948
Synon, Inc.
1100 Larkspur Landing Circle
Larkspur, CA 94939
Attn: Mr. Paul K. Wilde
FAX: (415) 461-8948
If to Bank: Silicon Valley Bank
1731 Embarcadero Road, Suite 220
Palo Alto, CA 94303
Attn: Mr. Greg Becker
FAX: (415) 812-0640
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California, without regard
to principles of conflicts of law. Each of the Borrowers and Bank hereby
submits to the exclusive jurisdiction of the state and Federal courts located
in the County of Santa Clara, State of California. Borrowers and Bank each
hereby waive their respective rights to a jury trial of any claim
or cause of action based upon or arising out of any of the Loan Documents or
any of the transactions contemplated therein, including contract claims, tort
claims, breach of duty claims, and all other common law or statutory claims.
Each party recognizes and agrees that the foregoing waiver constitutes a
material inducement for it to enter into this Agreement. Each party represents
and warrants that it has reviewed this waiver with its legal counsel and that
it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel.
13. GENERAL PROVISIONS
13.1 Successors and Assigns. This Agreement shall bind
and inure to the benefit ot the respective successors and permitted assigns of
each of the parties; provided, however, that neither this Agreement nor any
rights hereunder may be assigned by either Borrower without Bank's prior
written consent, which consent may be granted or withheld in Bank's sole
discretion.
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(b) Bank may sell, negotiate or grant
participations to other financial institutions in all or part of the
obligations of the Borrowers outstanding under the Loan Agreements, without
notice to or the approval of Borrowers; provided that any such sale,
negotiation or participation shall be in compliance with the applicable federal
and state securities laws and the other requirements of this Section 13.1.
Notwithstanding the sale, negotiation or grant of participations, Bank shall
remain solely responsible for the performance of its obligations under this
Agreement, Bank shall remain the holder of the Note for all purposes under this
Agreement and Borrowers shall continue to deal solely and directly with Bank in
connection with this Agreement and the other Loan Documents.
(c) The grant of a participation interest shall
be on such terms as the Bank determines are appropriate, provided only that (1)
the holder of such a participation interest shall not have any of the rights of
Bank under this Agreement except, if the participation agreement so provides,
rights to demand the payment of costs of the type described in Section 2.7,
provided that the aggregate amount that the Borrowers shall be required to pay
under Section 2.7 with respect to any ratable share of the Committed Line or
any Advance (including amounts paid to participants) shall not exceed the
amount that Borrowers would have had to pay if no participation agreements had
been entered into, and (2) the consent of the holder of such a participation
interest shall not be required for amendments or waivers of provisions of the
Loan Agreement other than those which (i) increase the amount of the Committed
Line, (ii) extend the term of this Agreement, (iii) decrease the rate of
interest or the amount of any fee or any other amount payable to Bank under
this Agreement, (iv) reduce the principal amount payable under this Agreement,
or (v) extend the date fixed for the payment of principal or interest or any
other amount payable under this Agreement.
(d) The Bank may assign, from time to time, all
or any portion of its pro rata share of the Committed Line and the Note to an
Affiliate of the Bank or, subject to the prior written approval of Borrower
(which approval will not be unreasonably withheld), to any other financial
institution; provided, that (i) the amount the Committed Line being assigned
pursuant to each such assignment shall in no event be less than $2,500,000 and
shall be an integral multiple of $500,000 and (ii) the parties to each such
assignment shall execute and deliver to Borrower an assignment agreement in a
form reasonably acceptable to each. Upon such execution and delivery, from and
after the effective date specified in such assignment agreement (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment
agreement, have the rights and obligations of a Bank hereunder and (y) Bank
shall, to the extent that rights and obligations hereunder have been assigned
by it pursuant to such assignment agreement, relinquish its rights and be
released from its obligations under this Agreement (other than pursuant to this
Section 13.1(d)), and, in the case of an assignment agreement covering all or
the remaining portion of Bank's rights and obligations under this Agreement,
Bank shall cease to be a party hereto. In the event of as assignment hereunder,
the parties agree to amend this Agreement to the extent necessary to reflect the
mechanical changes which are necessary to document such assignment and which are
standard for a multi-bank credit facility. Each party shall bear its own
expenses (including without limitation attorneys' fees and costs) with respect
to such an amendment.
13.2 Time of Essence. Time is of the essence for the
performance of all obligations set forth in this Agreement.
13.3 Severability of Provisions. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
13.4 Amendments in Writing, Integration. This Agreement
cannot be changed or terminated orally. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement.
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13.5 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement.
13.6 Survival. All covenants, representations and
warranties made in this Agreement shall continue in full force and effect so
long as any Obligations remain outstanding. The obligations of Borrowers to
indemnify Bank with respect to the expenses, damages, losses, costs and
liabilities described in Section 10.3 shall survive until all applicable
statute of limitations periods with respect to actions that may be brought
against Bank have run, provided that so long as the obligations set forth in
the first sentence of this Section 13.6 have been satisfied, and Bank shall
have no commitment to make any Advances or to make any other loans to
Borrowers, Bank shall release all security interests granted hereunder and
redeliver all Collateral held by it to Borrowers.
13.7 Confidentiality. In handling any confidential
information of Borrowers Bank shall exercise the same degree of care that it
exercises with respect to its own proprietary information of the same types to
maintain the confidentiality of any non-public information thereby received or
received pursuant to this Agreement except that disclosure of such information
may be made (i) to the subsidiaries or affiliates of Bank in connection with
their present or prospective business relations with Borrower, (ii) to
prospective transferees or purchasers of any interest in the Advances, provided
that they have entered into a comparable confidentiality agreement in favor of
Borrowers and have delivered a copy to Borrowers, (iii) as required by law,
regulations, rule or order, subpoena, judicial order or similar order, provided
that Borrowers are notified and given an opportunity to seek a protective
order, and (iv) as may be required in connection with the examination, audit or
similar investigation of Bank. Notwithstanding any provision of this Agreement
to the contrary, prior to the occurrence of an Event of Default neither
Borrower nor any of its Subsidiaries will be required to disclose, permit the
inspection, examination, copying or making extracts of, or discussions of; any
document, information or other matter that (i) constitutes non-financial trade
secrets or non-financial proprietary information (provided that the terms of
agreements that generate Accounts shall not be deemed to be "non-financial
trade secrets or proprietary information"), or (ii) in respect to which
disclosure to Bank (or designated representative) is then prohibited by (a)
law, or (b) an agreement binding upon Borrowers or any Subsidiary that was not
entered into by Borrowers or such Subsidiary for the primary purpose of
concealing information from Bank.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
SYNON CORPORATION
By: /s/ Richard Goldberg
---------------------------------
Title: President & CEO
------------------------------
By: /s/ Greg Becker
--------------------------------
Title: V. P. Finance & CFO
------------------------------
25
<PAGE> 30
SYNON, INC.
By: /s/ Richard Goldberg
----------------------------------
Title: President & CEO
-------------------------------
By: /s/ Paul Wilde
----------------------------------
Title: V. P. Finance & CFO
-------------------------------
SILICON VALLEY BANK
By: /s/ Greg Becker
----------------------------------
Title: A. V. P.
-------------------------------
26
<PAGE> 31
EXHIBIT A
The Collateral shall consist of all right, title and interest of each
Borrower in and to the following:
(a) All goods and equipment now owned or hereafter acquired,
including, without limitation, all machinery, fixtures, vehicles (including
motor vehicles and trailers), and any interest in any of the foregoing, and all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located;
(b) All inventory, now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies, packing
and shipping materials, work in process and finished products including such
inventory as is temporarily out of such Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds,
including insurance proceeds, resulting from the sale or disposition of any of
the foregoing and any documents of title representing any of the above, and
Borrower's Books relating to any of the foregoing;
(c) All contract rights and general intangibles now owned or
hereafter acquired, including, without limitation, goodwill, trademarks,
servicemarks, trade styles, trade names, patents, patent applications, leases,
license agreements, franchise agreements, blueprints, drawings, purchase
orders, customer lists, route lists, infringements, claims, computer programs,
computer discs, computer tapes, literature, reports, catalogs, design rights,
income tax refunds, payments of insurance and rights to payment of any kind;
(d) All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing to
such Borrower arising out of the sale or lease of goods, the licensing of
technology or the rendering of services by such Borrower, whether or not earned
by performance, and any and all credit insurance, guaranties, and other
security therefor, as well as all merchandise returned to or reclaimed by such
Borrower and Borrower's Books relating to any of the foregoing;
(e) All documents, cash, deposit accounts, securities (other than
the outstanding Capital Stock of Non-Borrower Subsidiaries), letters of credit,
certificates of deposit, instruments and chattel paper now owned or hereafter
acquired and Borrower's Books relating to the foregoing;
(f) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter
acquired;
(g) All trade secret rights, including all rights to unpatented
inventions, know-how, operating manuals, license rights and agreements and
confidential information, now owned or hereafter acquired;
(h) All mask work or similar rights available for the protection
of semiconductor chips, now owned or hereafter acquired;
(i) All claims for damages by way of any past, present and future
infringement of any of the rights described above; and
(j) Any and all claims, rights and interests in any of the above
and all substitutions for, additions and accessions to and proceeds thereof.
27
<PAGE> 32
EXHIBIT B
Revolving Promissory Note
$4,000,000 Santa Clara, California
March___, 1994
FOR VALUE RECEIVED, the undersigned, Synon Corporation and Synon, Inc.
(the "Borrowers"), jointly and severally promise to pay to the order of Silicon
Valley Bank ("Bank"), at such place as the holder hereof may designate, in
lawful money of the United States of America, the aggregate unpaid principal
amount of all advances ("Advances") made by Bank to Borrowers under the terms of
the Loan Agreement (as defined below) up to a maximum principal amount of Four
Million Dollars ($4,000,000). Borrowers shall also pay interest on the aggregate
unpaid principal amount of such Advances at the rates and in accordance with the
terms of the Loan and Security Agreement between Borrowers and Bank of even date
herewith, as amended from time to time (the "Loan Agreement") on the last
Business Day of each month after an Advance has been made. The entire principal
amount and all accrued interest shall be due and payable on April 30, 1995.
Borrowers irrevocably waive after the occurrence and during the
continuance of an Event of Default the right to direct the application of any
and all payments at any time hereafter received by Bank from or on behalf of
Borrowers, and each Borrower irrevocably agrees that Bank shall have the
continuing exclusive right to apply any and all such payments against the then
due and owing obligations of Borrowers as Bank may deem advisable. In the
absence of a specific determination by Bank with respect thereto, all payments
shall be applied in the following order: (a) then due and payable fees and
expenses; (b) then due and payable interest payments and mandatory prepayments;
and (c) then due and payable principal payments and optional prepayments.
Bank is hereby authorized by Borrowers to endorse on Bank's book and
records each Advance made by Bank under this Note and the amount of each payment
or prepayment of principal of each such Advance received by Bank; it being
understood, however, that failure to make any such endorsement (or any errors in
notation) shall not affect the obligations of Borrowers with respect to Advances
made hereunder, and payments of principal by Borrowers shall be credited to
Borrower notwithstanding the failure to make a notation (or any errors in
notation) thereof on such books and records.
Each Borrower promises to pay Bank all costs and expenses of collection
of this Note and to pay all reasonable attorneys' fees incurred in such
collection or in any suit or action to collect this Note or in any appeal
thereof. Borrowers waive presentment, demand, protest, notice of protest, notice
of dishonor, notice of nonpayment, and any and all other notices and demands in
connection with the delivery, acceptance, performance, default or enforcement of
this Note, as well as any applicable statute of limitations. No delay by Bank in
exercising any power or right hereunder shall operate as a waiver of any power
or right. Time is of the essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern
the rights and obligations of Borrower with respect to all obligations
hereunder.
This Note shall be deemed to be made under, and shall be construed in
accordance with and governed by, the laws of the State of California, excluding
conflicts of laws principles.
SYNON CORPORATION
By: _________________________________
Title: ______________________________
SYNON, Inc.
By: _________________________________
Title: ______________________________
28
<PAGE> 33
EXHIBIT C
BORROWING CERTIFICATE
The undersigned hereby certifies as follows:
I, _______________, am the duly elected and acting _______________ of
Synon Corporation.
This certificate is delivered pursuant to Section 2.1 of that certain
Loan and Security Agreement by and between Synon Corporation and Synon, Inc.
(collectively, "Borrowers") and Silicon Valley Bank ("Bank") (the "Loan
Agreement"). This certificate is made on behalf of both Borrowers. The terms
used in this Borrowing Certificate which are defined in the Loan Agreement have
the same meaning herein as ascribed to them therein.
Borrower is confirming its telephone request made on __________, 19___
for an Advance as follows:
(a) The date on which the Advance is to be made
is __________, 19___.
(b) The amount of the Advance is to be
$_________.
All representations and warranties of Borrower stated in the Loan
Agreement are true, accurate and complete in all material respects as of the
date of the telephone request for and Advance confirmed by this Borrowing
Certificate; provided, however, that those representations and warranties
expressly referring to another date shall be true, accurate and complete in all
material respects as of such date.
IN WITNESS WHEREOF, this Borrowing Certificate is executed by the
undersigned as of this __________ day of ___________, 199__.
SYNON CORPORATION
By: _____________________________
Title: __________________________
29
<PAGE> 34
EXHIBIT D
BORROWING BASE CERTIFICATE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Borrower: Synon Corporation Silicon Valley Bank
Synon, Inc. 1731 Embarcadero Road, Suite 220
1100 Larkspur Landing Circle Palo Alto, CA 94303
Larkspur, CA 94939
Commitment Amount: $4,000,000
- --------------------------------------------------------------------------------
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of _______ $_________
2. Additions (please explain on reverse) $_________
3. TOTAL ACCOUNTS RECEIVABLE $_________
ACCOUNTS RECEIVABLE DEDUCTIONS
4. Amounts over 90 days due $__________
5. Balance of 50% over 90 day accounts $__________
6. Concentration Limits $__________
7. Foreign Accounts $__________
8. Governmental Accounts $__________
9. Contra Accounts $__________
10. Promotion or Demo Accounts $__________
11. Intercompany/Employee Accounts $__________
12. Other,incl. fixed contract consulting accts $__________
(explain on reverse)
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $__________
14. Eligible Accounts (No. 13 - No. 14) $__________
15. LOAN VALUE OF ACCOUNTS (70% of No. 14)
BALANCES
16. Maximum Loan Amount $__________
17. Total Funds Available (Lesser of #16 or #15) $__________
18. Present balance owing on Line of Credit $__________
19. Outstanding under Sublimits ( ) $__________
20. RESERVE POSITIVE (#17-#18 and #19) $__________
The undersigned represents and warrants that the foregoing is true, complete
and correct, and that the information reflected in this Borrowing Base
Certificate complies with the representations and warranties set forth in
Section 5.4 of the Loan and Security Agreement between the undersigned and
Silicon Valley Bank.
COMMENTS:
BANK USE ONLY
Rec'd By:_____________________
Auth. Signer
_______________________________ Date:_________________________
Verified:_____________________
By:____________________________ Auth. Signer
Authorized Signer Date:_________________________
__________________________
</TABLE>
30
<PAGE> 35
EXHIBIT E
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
1731 Embarcadero Road, Suite 220
Palo Alto, CA 94303
FROM: Synon Corporation
Synon,Inc.
1100 Larkspur Landing Circle
Larkspur, CA 94939
The undersigned authorized officer of Synon Corporation hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrowers and Bank (the "Agreement"), (i) Borrowers
are in complete compliance for the period ending ________ of all required
conditions and terms except as noted below and (ii) all representations and
warranties of Borrowers stated in the Agreement are true, accurate and complete
in all material respects as of the date hereof. Attached herewith are the
required documents supporting the above certification. The Officer further
certifies that these are prepared in accordance with Generally Accepted
Accounting Principals (GAAP) and are consistent from one period to the next
except as explained in an accompanying letter or footnotes.
<TABLE>
<CAPTION>
Please indicate compliance status by circling Yes/No under "Complies" column.
<S> <C> <C>
Reporting Covenant Required Complies
------------------ -------- --------
Monthly financial statements Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
Consolidating financials Monthly within 30 days Yes No
A/R & A/P Agings Monthly within 15 days Yes No
A/R Audit Initial and up to 3 annually Yes No
Financial Covenant Required Actual Complies
------------------ -------- ------ --------
Maintain on a Monthly
Basis:
Minimum Quick Ratio 1.05:1/1.1:1/1.25:1 _____:1.0 Yes No
Additional Quick 1.05:1/1.1:1/1.25:1 _____:1.0 Yes No
Ratio
Maximum Debt/NW 3.0:1/2.25:1 _____:1.0 Yes No
Profitability Ql:(75O,OOO); $________ Yes No
Q2: Profitable; $________
Q3: (300,000); $________
Q4: Profitable $________
BANK USE ONLY
COMMENTS REGARDING EXCEPTIONS:
Received by:___________________
AUTHORIZED SIGNER
Sincerely,
_____________________________ Date:__________________________
SIGNATURE
Verified:______________________
_____________________________ AUTHORIZED SIGNER
TITLE
Date:
_____________________________ __________________________
DATE
Compliance Status: Yes No
</TABLE>
<PAGE> 36
DISBURSEMENT REQUEST AND AUTHORIZATION
Borrower: Synon Corporation Lender: SILICON VALLEY BANK
Synon, Inc. 1731 Embarcadero Road, Suite 220
1100 Larkspur Landing Circle Palo Alto, CA 94303
Larkspur, CA 94939
- --------------------------------------------------------------------------------
LOAN TYPE. This is a Variable Rate, Revolving Line of Credit of a principal
amount up to $4,000,000.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for business.
SPECIFIC PURPOSE. The specific purpose of this loan is: Short Term Working
Capital.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Bank's conditions for making the loan have been
satisfied. Please disburse the loan proceeds as follows:
<TABLE>
<CAPTION>
Revolving Line
--------------
<S> <C> <C>
Amount paid to Borrower directly: $__________
Undisbursed Funds $__________
Note Principal $__________
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the following charges:
Prepaid Finance Charges Paid in Cash: $__________
$______Loan Fee
$______Accounts Receivables Audit
Other Charges Paid in Cash: $__________
$______UCC Search Fees
$______UCC Filing Fees
$______Patent Filing Fees
$______Trademark Filing Fees
$______Copyright Filing Fees
$______Outside Counsel Fees and Expenses (Estimate)
Total Charges Paid in Cash $__________
</TABLE>
AUTOMATIC PAYMENTS. Borrower hereby authorizes Bank automatically to deduct
from Borrower's account numbered ______ the amount of any loan payment. If the
funds in the account are insufficient to cover any payment, Bank shall not be
obligated to advance funds to cover the payment. At any time and for any
reason, Borrower or Bank may voluntarily terminate Automatic Payments.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO BANK THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION AS
DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO BANK. THIS
AUTHORIZATION IS DATED AS OF______, 1994.
BORROWER:
-----------------------------------------------
-----------------------------------------------
Authorized Officer
================================================================================
<PAGE> 37
DISCLOSURE SCHEDULE
TO
LOAN AND SECURITY AGREEMENT
DATED AS OF MARCH 17, 1994
BETWEEN SYNON CORPORATION, SYNON, INC. AND SILICON VALLEY BANK
Section 1.1
Indebtedness being disclosed pursuant to clause (b) of the definition
of "Permitted Indebtedness":
Indebtedness in the amount of $1,500,000 to International Business
Machines Corporation ("IBM") pursuant to a Development Incentive
Agreement, dated as of September 27, 1990, between Synon Inc. and IBM,
as amended on August 28, 1992.
Synon Corporation and Synon Inc. have provided unlimited guarantees to
Midland Corporate Banking on behalf of Synon Europe Ltd. and Synon
Limited (inactive) with respect to a pounds 200,000 multi-currency
borrowing facility.
Synon Corporation has provided an unconditional guarantee for a rental
bond related to the lease of office space to Barclays Bank PLC on
behalf on Synon France SARL.
Synon Corporation has provided various guarantees to landlords and
lessors on behalf of Synon Corporation's subsidiaries.
Various intercompany balances as disclosed in the financial statements.
Various royalties due to third parties as accrued for in the financial
statements.
Investments being disclosed pursuant to clause (a) of the definition
of "Permitted Investments":
Loan to Chris Herron with a principal balance at December 31, 1993 to
$750,000 which is secured by Synon stock (was paid off March 10, 1994).
Loan to John de Wit with a principal balance at December 31, 1993 of
$45,000 which is secured by Synon stock.
Loan to Paul Wilde with a principal balance at December 31, 1993 of
$95,000 which is secured by real property and which is being forgiven
with passage of time.
Loan to Rick Brown with a principal balance at December 31, 1993 of
$24,764 which is secured by stock options and which is being forgiven
with passage of time.
<PAGE> 38
Various intercompany balances as disclosed in the financial statements.
Miscellaneous promissory notes for payment associated with the sales of
software licenses.
Miscellaneous prepaid royalties to third parties as reflected in the
financial statements.
<TABLE>
<CAPTION>
Investments in the following direct or indirect Subsidiaries:
Subsidiary Stock Ownership
---------- ---------------
<S> <C>
Synon Europe Ltd. 100% owned by Synon Corporation
Synon, Inc. 100% owned by Synon Europe Ltd.
Synon Canada Ltd. 100% owned by Synon, Inc.
Synon International
Limited (inactive) 100% owned by Synon Europe Ltd.
Synon U.K. Limited
(inactive) 100% owned by Synon Europe Ltd.
Synon Limited
(being liquidated) 100% owned by Synon Corporation
Synon France SARL 100% owned by Synon Corporation
Synon Japan Ltd. 51% owned by Synon corporation
49% owned by Toppan Moore
Systems Limited (Synon
Distributor)
Synon Italia S.r.l. 65% owned by Synon Corporation
35% owned by Systems &
Management S.p.A (Synon
distributor)
Synon Asia Ltd. 75% owned by Synon corporation
25% owned by Commercial Software
Services Limited (Synon
distributor)
Mallaig Enterprises Ltd.
(inactive N.Z. corp.) 100% owned by Synon Corporation
Synon Pty Ltd. 100% owned by Synon Corporation
</TABLE>
<PAGE> 39
<TABLE>
<S> <C>
Strategic Information
Systems Pty (inactive) 43% owned by Synon Pty Ltd
57% owned by M. Slattery (former
managing director)
Synon Research Limited 100% owned by Synon Corporation
</TABLE>
Liens being disclosed pursuant to clause (a) of the definition of
"Permitted Liens":
A purchase money security interest in one Xerox 4050 laser printer in
favor of Xerox Corporation.
A purchase money security interest in one Xerox 1090 copier in favor of
Xerox Corporation.
Synon, Inc. has leased various items of computer equipment from IBM
pursuant to equipment leases and related supplements.
Purchase money security interests in certain items of
telecommunications equipment in favor of Bruce Baum Associates, Inc.
Purchase money security interest in a telephone system in favor of NEC
America, Inc.
A lien in favor of IBM under the Development Incentive Agreement.
Liens falling within the exception set forth in clause (j) of the
definition of Permitted Liens:
Liens of the type described in such clause (j) arising in connection
with certain deposit accounts with Wells Fargo Bank, which accounts
will be closed promptly upon the clearance of outstanding checks under
such accounts or arising in connection with Borrower's investment
account at Morgan Stanley. One account (#4539-036939) at Wells Fargo
Bank will remain open pursuant to Section 6.7 of the Loan and Security
Agreement.
Section 4.1
Borrower's representation set forth in the second sentence of Section
4.1 is subject to the possible existence of Liens of the types set forth in
paragraphs (b), (c), (d), (e), (f), (h), (i), (j) and (k) of the definition of
Permitted Liens.
Section 5.3
3
<PAGE> 40
On September 15, 1992, Synon Corporation purchased the entire issued
share capital of Dysys (since renamed to Synon Research Limited) and in
conjunction with the purchase gave certain individuals author's
royalties on Synon's next generation tool.
Section 5.6
Synon Consulting, Inc. which was merged into Synon, Inc. did business
under the "Synon Consulting, Inc." name.
Prior to the establishment of Synon Corporation, Synon Limited acted as
the corporate parent for the Synon family.
Section 5.7
Synon Inc. has been served by ABC Home Health care in its suit against
IBM Corporation, but was not named in the suit. Synon Inc. was a
subcontractor to IBM.
4
<PAGE> 41
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of June 5, 1995, by
and between Synon, Inc. and Synon Corporation (the "Borrower") whose address is
1100 Larkspur Landing Circle, Larkspur, California 94939 and Silicon Valley
Bank ("Bank"), whose address is 3000 Lakeside Drive, Santa Clara, CA 95054.
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which
may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to,
among other documents, a Revolving Promissory Note dated June 5, 1995, in the
original principal amount of Four Million and 00/100 ($4,000,000.00) (the
"Line"). The Line, together with other promissory Lines from Borrower to
Lender, is governed by a Loan and Security Agreement dated March 1994, between
Borrower and Lender, as such agreement may be amended from time to time (the
"Loan Agreement"). Defined terms used but not otherwise defined herein shall
have the same meaning as in the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."
2. DESCRIPTION OF COLLATERAL AND GUARANTIES: Repayment of the Indebtedness
is secured by a Collateral as described in the Loan Agreement. Additionally,
repayment of the indebtedness is guaranteed by Synon Europe (the "Guarantor")
pursuant to an Unconditional Guaranty (the "Guaranty").
Hereinafter, the above-described security documents and guaranties, together
with all other documents securing payment of the Note (and other notes executed
by Borrower in favor of Bank) shall be referred to as the "Security Documents".
Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Indebtedness shall be referred to as the "Existing
Loan Documents."
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Loan Agreement
1. The term "Maturity Date" is hereby amended to mean May
31, 1996.
2. The term "Revolving Note" shall mean the Promissory Note
dated June 5, 1995, in the amount of Four Million and
00/100 Dollars ($4,000,000.00), which amends and
restates that certain Revolving Note dated March 17,
1994.
3. Section 6.8 entitled "Quick Ratio" is hereby amended to
read in its entirety:
Parent shall maintain, on a consolidated basis with its
Subsidiaries, on a monthly basis, as of the last day of
each calendar month, a ratio of Quick Assets to Current
Liabilities (excluding deferred revenue relating to
maintenance income) of at least 1.10 to 1.00.
4. Section 6.9 entitled "Additional Quick Ratio" is hereby
amended to read in its entirety:
Synon, Inc. shall maintain, on a quarterly basis, a
Quick Ratio of 0.90 to 1.00.
5. Section 6.10 entitled "Debt-Net Worth Ratio" is hereby
amended to read-in its entirety:
1
<PAGE> 42
Parent shall maintain, on a consolidated basis with its
Subsidiaries, on a monthly basis, as of the last day of
each calendar month, a ratio of Total Liabilities less
Subordinated Debt (and excluding deferred revenue
relating to maintenance income) to Net Worth plus
Subordinated Debt of not more than (i) for the period
from execution of this Loan Agreement until December
31, 1995, 3.00 to 1.00 and (ii) decreasing to 2.50 to
1.00 thereafter.
6. Section 6.11 entitled "Profitability" is hereby amended
to read in its entirety:
Parent shall, on a consolidated basis with its
Subsidiaries, not suffer a loss in excess of Seven
Hundred Fifty Thousand Dollars ($750,000) for the
second fiscal quarter of 1995, and Three Hundred
Thousand Dollars ($300,000) for the third fiscal
quarter of 1995 and, thereafter, shall be profitable
before taxes and after taxes for each fiscal quarter.
Additionally: Synon Corporation, on a consolidated
basis shall be profitable annually and Synon, Inc., on
a consolidating basis, shall be profitable annually.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.
5. PAYMENT OF LOAN FEE. Borrower shall pay Lender a fee either in the
amount of Thirty Thousand Three Hundred Fifty and No/100 Dollars ($30,000.00) or
Fifteen Thousand and 00/100 Dollars ($15,000.00) plus 15,000 shares of stocks in
the amount of $3.00 per share (the "Loan Fee").
6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor
signing below) agrees that, as of this date, it has no defenses against the
obligations to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing Indebtedness, Bank
is relying upon Borrower's representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to
this Loan Modification Agreement, the terms of the Existing Loan Documents
remain unchanged and in full force and effect. Bank's agreement to modifications
to the existing Indebtedness pursuant to this Loan Modification Agreement in no
way shall obligate Bank to make any future modifications to the Indebtedness.
Nothing in this Loan Modification Agreement shall constitute a satisfaction of
the Indebtedness. It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. No maker, endorser, or guarantor will be
released by virtue of this Loan Modification Agreement. The terms of this
Paragraph apply not only to this Loan Modification Agreement, but also to all
subsequent loan modification agreements.
8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon payment of the Loan Fee.
2
<PAGE> 43
This Loan Modification Agreement is executed as of the date first written
above.
BORROWER: BANK:
SYNON, INC. SILICON VALLEY BANK
By: /s/ PAUL WILDE By: /s/ KATHLEEN BARIE
-------------------------------- --------------------------------
Name: Paul Wilde Name: Kathleen Barie
------------------------------ ------------------------------
Title: CEO Title: Vice President
----------------------------- -----------------------------
SYNON CORPORATION
By: /s/ PAUL WILDE
--------------------------------
Name: Paul Wilde
------------------------------
Title: CEO
-----------------------------
Guarantor consents to the modifications to the indebtedness pursuant to this
Loan Modification Agreement, hereby ratifies the provisions of the Guaranty and
confirms that all provisions of that document are in full force and effect.
GUARANTOR:
SYNON EUROPE
By: /s/ RICHARD GOLDBERG Date: 6-15-95
-------------------------------- -----------
Name: Richard Goldberg
------------------------------
Title: Director
-----------------------------
<PAGE> 44
PROMISSORY NOTE
================================================================================
BORROWER: Synon, Inc. LENDER: Silicon Valley Bank
Synon Corporation Embarcadero/Technology
1100 Larkspur Landing Circle 1731 Embarcadero, Suite 220
Larkspur, CA 94939 Palo Alto, CA 94303
================================================================================
INITIAL RATE: 11.000%
PRINCIPAL AMOUNT: $4,000,000.00 DATE OF NOTE: JUNE 5, 1995
PROMISE TO PAY. Synon, Inc. and Synon Corporation ("Borrower") promise to pay
to Silicon Valley Bank ("Lender"), or order, in lawful money of the United
States of America, the principal amount of Four Million & 00/100 Dollars
($4,000,000.00) or so much as may be outstanding, together with interest on the
unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on May 31, 1996. In addition, Borrower will pay
regular monthly payments of accrued unpaid interest beginning July 31, 1995, and
all subsequent interest payments are due on the same day of each month after
that. Interest on this Note is computed on a 365/360 simple interest basis; that
is, by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days in the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is Lender's Prime Rate
(the "Index"). This is the rate Lender charges, or would charge, on 90-day
unsecured loans to the most creditworthy corporate customers. This rate may or
may not be the lowest rate available from Lender at any given time. Lender will
tell Borrower the current Index rate upon Borrower's request. Borrower
understands that Lender may make loans based on other rates as well. The
interest rate change will not occur more often than each time the prime rate is
adjusted by Silicon Valley Bank. The Index currently is 9.000% per annum. The
interest rate to be applied to the unpaid principal balance of this Note will
be at a rate of 2.000 percentage points over the Index, resulting in an initial
rate of 11.000% per annum. NOTICE: Under no circumstances will the interest
rate on this Note be more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to continue to make payments
of accrued unpaid interest. Rather, they will reduce the principal balance due.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to perform promptly at the time
and strictly in the manner provided in this Note or any agreement related to
this Note, or in any other agreement or loan Borrower has with Lender. (c)
Borrower defaults under any loan, extension of credit, security agreement,
purchase or sale agreement, or any other agreement, in favor of any other
creditor or person that may materially affect any of Borrower's property or
Borrower's ability to repay this Note or perform Borrower's obligations under
this Note or any of the Related Documents. (d) Any representation or statement
made or furnished to Lender by Borrower or on Borrower's behalf is false or
misleading in any material respect. (e) Borrower dies or becomes insolvent, a
receiver is appointed for any part of Borrower's property, Borrower makes an
assignment for the benefit of creditors, or any proceeding is commenced either
by Borrower or against Borrower under any bankruptcy or insolvency laws. (f)
Any creditor tries to take any of Borrower's property on or in which Lender has
a lien or security interest. This includes a garnishment of any of Borrower's
accounts with Lender. (g) Any of the events described in this default section
occurs with respect to any guarantor of this Note.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon Borrower's failure to pay
all amounts declared due pursuant to this section, including failure to pay
upon final maturity, Lender, at its option, may also, if permitted under
applicable law, do one or both of the following: (a) increase the variable
interest rate on this Note to 7.000 percentage points over the Index, and (b)
add any unpaid accrued interest to principal and such sum will bear interest
therefrom until paid at the rate provided in this Note (including any increased
rate). Lender may hire or pay someone else to help collect this Note if
Borrower does not pay. Borrower also will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's attorneys' fees
and Lender's legal expenses whether or not there is a lawsuit, including
attorneys' fees and legal expenses for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Borrower also will pay any court
costs, in addition to all other sums provided by law. This Note has been
delivered to Lender and accepted by Lender in the State of California. If there
is a lawsuit, Borrower agrees upon Lender's request to submit to the
jurisdiction of the courts of Santa Cruz County, the State of California.
(Initial here _______). Lender and Borrower hereby waive the right to any jury
trial in any action, proceeding, or counterclaim brought by either Lender or
Borrower against the other. This Note shall be governed by and construed in
accordance with the laws of the State of California.
LINE OF CREDIT. This Note evidence a revolving line of credit. Advances under
this Note, as well as directions for payment from Borrower's accounts, may be
requested orally or in writing by Borrower or by an authorized person. Lender
may, but need not, require that all oral requests be confirmed in writing.
Borrower agrees to be liable for all sums either: (a) advanced in accordance
with the instructions of an authorized person or (b) credited to any of
Borrower's accounts with Lender. The unpaid principal balance owing on this
Note at any time may be evidenced by endorsements on this Note or by Lender's
internal records, including daily computer print-outs. Lender will have no
obligations to advance funds under this Note if: (a) Borrower or any guarantor
is in default under the term of this Note or any agreement that Borrower or any
guarantor has with Lender, including any agreement made in connection with the
signing of this Note; (b) Borrower or any guarantor ceases doing business or is
insolvent; (c) any guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such guarantor's guarantee of this Note or any other loan with
Lender; or (d) Borrower has applied funds provided pursuant to this Note for
purposes other than those authorized by Lender.
REQUEST TO DEBIT ACCOUNTS. Borrower will regularly deposit all funds received
from its business activities in accounts maintained by Borrower at Silicon
Valley Bank. Borrower hereby requests and authorizes Lender to debit any of
Borrower's accounts with Lender, specifically, without limitation, Account
Number 02721376-70, for payments of principal and interest due on the loan and
any other obligations owing by Borrower to Lender. Lender will notify Borrower
of all debits which Lender makes against Borrower's accounts. Any such debits
against Borrower's accounts in no way shall be deemed a set-off.
LOAN AND SECURITY AGREEMENT. This Note is subject to and shall be governed by
all the terms and conditions of the Loan and Security Agreement dated March,
1994 between Lender and Borrower, as the same may be amended from time to time,
which Business Loan Agreement is incorporated herein by reference.
<PAGE> 45
PROMISSORY NOTE Page 2
(Continued)
===============================================================================
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
any applicable statute of limitations, presentment, demand for payment, protest
and notice of dishonor. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan, or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect Lender's security
interest in the collateral; and take any other action deemed necessary by
Lender without the consent of or notice to anyone. All such parties also agree
that Lender may modify this loan without the consent of or notice to anyone
other than the party with whom the modification is made. The obligations under
this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, EACH BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. EACH
BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A
COMPLETED COPY OF THE NOTE.
SYNON, INC. SYNON CORPORATION
By: /s/ Paul Wilde By: /s/ Paul Wilde
---------------------------- ----------------------------
Name: Paul Wilde, Title: CFO Name: Paul Wilde, Title: CFO
===============================================================================
Variable Rate, Line of Credit. LASER PRO, Reg. U.S. Pat. & T.M. Off.,
Var. 3, 19(c) 1985 CFI Pro Services, Inc.
All rights reserved. [CA-O20 SYNON.LN
G1.OVL]
AMENDMENT TO INTEREST RATE: Rate will decrease to prime plus 1.25% upon the
company achieving an aggregate Modified Profit of $250,000.
<PAGE> 46
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement (this "Agreement") is entered into as
of July 15, 1996, by and between Synon, Inc. and Synon Corporation
(individually, the "Borrower" and collectively, the "Borrowers") whose address
is 1100 Larkspur Landing Circle, Larkspur, CA 94939, and Silicon Valley Bank
("Bank") whose address is 3003 Tasman Drive, Santa Clara, CA 95054.
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which
may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to,
among other documents, a Promissory Note, dated June 5, 1995, in the original
principal amount of Four Million and 00/100 Dollars ($4,000,000.00) (the
"Revolving Note") and, being executed concurrently herewith, a Promissory Note
in the original principal amount of Four Hundred Thousand and 00/100 Dollars
($400,000.00) (the "Term Note"). The Revolving Note and the Term Note, together
with other promissory note from Borrower to Bank, are governed by a Loan and
Security Agreement dated March 1994, between Borrower and Bank, as such
agreement may be amended from time to time (the "Loan Agreement"). Defined terms
used but not otherwise defined herein shall have the same meaning as in the Loan
Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness".
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the
Indebtedness is secured by the Collateral as described in the Loan Agreement and
an Intellectual Property Security Agreement dated March 17, 1994. Additionally,
repayment of the Indebtedness is guaranteed by Synon Europe (the "Guarantor")
pursuant to an Unconditional Guaranty (the "Guaranty").
Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Revolving Note.
1. Payable in one payment of all outstanding principal
plus all accrued unpaid interest on July 14, 1997. In
addition, Borrower will pay regular monthly payments
of all accrued unpaid interest due as of each payment
date beginning August 14, 1996, and all subsequent
interest payments will be due on the same day of each
month thereafter.
2. The interest rate to be applied to the unpaid
principal balance of the Revolving Note is hereby
decreased, effective as of this date, to one and
one-quarter (1.25) percentage points over the Bank's
current Index (as defined therein).
B. Modification(s) to Loan Agreement.
1. The first paragraph of Section 2.1 entitled
"Revolving Advances" is hereby amended in its
entirety, to read as follows:
Subject to the terms and conditions of this
Agreement, Bank agrees to make cash advances
("Advances") to Borrowers in an aggregate amount not
to exceed the lesser of the Committed Line or the
Borrowing Base. For purposes of this Agreement,
"Borrowing Base" shall mean an amount equal to
seventy percent
1
<PAGE> 47
(70%) of Eligible Accounts less the Daylight
Overdraft Reserve (as defined herein) less any
outstandings under the Letter of Credit Sublimit (as
defined herein) less any outstandings under the Cash
Management Sublimit (as defined herein).
2. The following sections are hereby incorporated into
the Loan Agreement:
2.1.1 Letter of Credit Sublimit.
Subject to the terms and conditions of this
Agreement, as may be amended from time to time, Bank
agrees to issue or cause to be issued under the
Revolving Facility standby letters of credit for the
account of Borrowers in an aggregate face amount not
to exceed (i) the lesser of Two Million and 00/100
Dollars ($2,000,000.00) or the Borrowing Base. Each
such letter of credit shall have an expiry date of no
later than ninety (90) days after the maturity date
of the Revolving Facility; provided that Borrower's
letter of credit reimbursement obligation shall be
secured by cash on terms acceptable to Bank at any
time after the maturity date of Revolving Facility if
the term of this Agreement is not extended by Bank.
All such letters of credit shall be, in form and
substance, acceptable to Bank in its sole discretion
and shall be subject to the terms and conditions of
Bank's form of application and letter of credit
agreement.
2.1.2 Cash Management Sublimit.
Borrowers may utilize up to an aggregate amount not
to exceed Five Hundred Thousand and 00/100 Dollars
($500,000.00) for Cash Management Services provided
by Bank, which services may include merchant
services, PC-ACH, direct deposit of payroll, Business
Visa, Firstax, and other check cashing services as
defined in that certain Cash Management Services
Agreement provided to Borrowers in connection
herewith (a "Cash Management Service", or the "Cash
Management Services"). All amounts actually paid by
Bank in respect of a Cash Management Service or Cash
Management Services shall, when paid, constitute an
Advance under the Revolving Facility.
2.1.3 Daylight Overdraft Reserve.
Three Hundred Thousand and 00/100 Dollars
($300,000.00) (the "Daylight Overdraft Reserve") of
the Revolving Facility will be reserved to support
any daylight overdrafts created by the issuance of
checks or other debits (including wire transfers) in
excess of the collected funds in Borrower's deposit
account. The Daylight Overdraft Reserve shall be at
all times deducted from the Borrowing Base and the
Revolving Facility when determining availability
under the Borrowing Base. Borrowers agree that all
overdrafts which cannot be collected within five (5)
working days shall be deemed an Advance under the
Revolving Facility from the date the overdraft
occurred and shall accrue interest at the prevailing
interest rate.
2.1.4 Equipment Advances.
(a) At any time from the date hereof through April
15, 1997 (the "Equipment Availability End Date"),
Borrowers may from time to time request advances
(each an "Equipment Advance" and collectively, the
"Equipment Advances") from Bank in
2
<PAGE> 48
an aggregate amount not to exceed the Committed
Equipment Line. To evidence the Equipment Advance or
Equipment Advances, Borrowers shall deliver to Bank,
at the time of each Equipment Advance request, an
invoice for the equipment to be purchased. The
Equipment Advances shall be used only to purchase
equipment and shall not exceed one-hundred percent
(100%) of the invoice amount of such equipment
approved from time to time by Bank, excluding taxes,
shipping, warranty charges, freight discounts and
installation expense. SOFTWARE MAY, HOWEVER,
CONSTITUTE UP TO TWENTY PERCENT (20%) OF EACH
EQUIPMENT ADVANCE.
(b)Interest shall accrue from the date of each
Equipment Advance at the rate specified in Section in
Section 2.4(a), and shall be payable monthly for each
month through the month in which the Equipment
Availability End Date falls. Any Equipment Advances
or Equipment Advances that are outstanding on the
Equipment Availability End Date will be payable in
twenty-four (24) equal monthly installments of
principal plus all accrued interest, beginning on the
Payment Date of each month following the Equipment
Availability End Date.
(c)When Borrowers desires to obtain an Equipment
Advance, Borrowers shall notify Bank (which notice
shall be irrevocable) by facsimile transmission to be
received no later than 3:00 p.m. Pacific time one (1)
Business Day before the day on which the Equipment
Advance is to be made. Such notice shall be
substantially in the form of Exhibit B. The notice
shall be signed by a Responsible Officer and include
a copy of the invoice for the Equipment to be
financed.
3. Section 2.4(a) entitled "Interest Rate" is hereby
amended in its entirety, to read as follows:
Except as set forth in Section 2.4(b), (i) any
Advances evidenced by the Revolving Note shall bear
interest, on the average Daily Balance, at a rate
equal to one and one-quarter (1.25) percentage points
above the Prime Rate and (ii) any Equipment Advanced
evidenced by the Term Note shall bear interest, on
the average Daily Balance, at a rate equal to one and
three-quarters (1.75) percentage points above the
Prime Rate.
4. The first sentence of Section 2.4(c) entitled
"Payments" is hereby amended in its entirety, to read
as follows:
Interest under the Revolving Facility shall be due
and payable on the fourteenth (14th) Business Day of
each calendar month during the term hereof.
5. The fourth paragraph of Section 6.3 entitled
"Financial Statements, Reports, Certificates" is
hereby amended in its entirety, to read as follows:
For any period in which any Advances or Equipment
Advances are outstanding under this Agreement, Bank
shall have a right from time to time thereafter to
audit either Borrower's Accounts at such Borrower's
expense, provided that such audits will be conducted
no more often than two (2) times per year unless an
Event of Default has occurred and is continuing. In
addition, Borrowers shall provide to Bank, no later
than December 15, 1996, its projections for the year
1997.
3
<PAGE> 49
6. Section 6.8 entitled "Quick Ratio" is hereby amended
in its entirety, to read as follows:
Parent shall maintain, on a consolidated basis with
its Subsidiaries, on a monthly basis, as of the last
day of each calendar month, a ratio of Quick Assets
to Current Liabilities (excluding deferred revenue)
of at least 1.25 to 1.00.
7. Section 6.10 entitled "Debt-Net Worth Ratio" is
hereby amended in its entirety, to read as follows:
Parent shall maintain, on a consolidated basis with
its Subsidiaries, on a monthly basis, as of the last
day of each calendar month, a ratio of Total
Liabilities less Subordinated Debt (excluding
deferred revenue) to Net Worth (including intangible
assets) plus Subordinated Debt of not more than (i)
for the period from execution of this Agreement until
December 31,1996, of 2.50 to 1.00 and (ii) 2.00 to
1.00 thereafter.
8. Section 6.l1 entitled "Profitability" is hereby
amended in its entirety, to read as follows:
Parent shall, on a consolidated basis with its
Subsidiaries, not suffer a loss in excess of Four
Hundred Thousand Dollars ($400,000.00) for the second
fiscal quarter of 1996, and shall be profitable
before taxes and after taxes for each fiscal quarter
thereafter. Furthermore, Parent shall achieve minimum
profitability before taxes and after taxes, of One
Million Seven Hundred Thousand and 00/100 Dollars
($1,750,000.00) for the fourth fiscal quarter of
1996.
Additionally: Synon Corporation, on a consolidated
basis, shall be profitable annually and Synon, Inc.,
on a consolidating basis, shall be profitable
annually.
9. The following section is hereby incorporated into
Loan Agreement:
6.14. Liquidity Ratio. Borrowers shall maintain, for
Borrowers only and not on a consolidated basis with
any other entity, as of the last day of each month, a
ratio of Liquid Cash plus availability under the
Revolving Facility to outstandings under the Term
Facility of not more than 2.00 to 1.00.
10. Section 6.14 is hereby added to the list of Sections
under Section 8.2 entitled "Covenant Default".
11. The following Definitions are hereby added and/or
amended, and shall supersede any and all prior
Definitions"
"COMMITTED EQUIPMENT LINE" means Four Hundred
Thousand and 00/100 Dollars ($400,000.00).
"LIQUID CASH" means all of Borrowers cash on hand
(and cash equivalents).
"MATURITY DATE" means, for the Revolving Facility,
July 14, 1997.
"PROFITABILITY" means net income plus amortization of
capitalized software minus new capitalized software.
4
<PAGE> 50
"TERM FACILITY" means the facility under which
Borrowers may request Bank to make Equipment
Advances, as specified in Section 2.1.4 hereof.
"TERM FACILITY MATURITY DATE" means April 15,1999.
"TERM NOTE" mean a promissory note, dated July 15,
1996, in substantially the form of Exhibit A attached
hereto.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.
5. PAYMENT OF FACILITY FEE. Borrower shall pay to Bank a fee in the amount
of Thirty Thousand and 00/100 Dollars ($30,000.00) (the "Facility Fee")
plus all out-of-pocket expenses.
6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor
signing below) agrees that it has no defenses against the obligations
to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing
Indebtedness, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan
Documents. Except as expressly modified pursuant to this Loan
Modification Agreement, the terms of the Existing Loan Documents remain
unchanged and in full force and effect. Bank's agreement to
modifications to the existing Indebtedness pursuant to this Loan
Modification Agreement in no way shall obligate Bank to make any future
modifications to the Indebtedness. Nothing in this Loan Modification
Agreement shall constitute a satisfaction of the Indebtedness. It is
the intention of Bank and Borrower to retain as liable parties all
makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. No maker, endorser, or guarantor
will be released by virtue of this Loan Modification Agreement. The
terms of this paragraph apply not only to this Loan Modification
Agreement, but also to all subsequent loan modification agreements.
8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon:
(i) Borrower's payment of the Facility Fee;
(ii) an accounts receivable examination to be completed with
results satisfactory to Bank; and
(iii) Bank's receipt of Borrowers audited 1995 fiscal year end
financial statements.
5
<PAGE> 51
This Loan Modification Agreement is executed as of the date first written above.
BORROWER: BANK:
SYNON, INC. SILICON VALLEY BANK
By: /s/ Paul K. Wilde By: /s/ Kathleen Borie
------------------------------- -------------------------------
Name: Paul K. Wilde Name: Kathleen Borie
----------------------------- -----------------------------
Title: CFO Title: Senior Vice President
---------------------------- ----------------------------
SYNON, CORP
By: /s/ Paul K. Wilde
-------------------------------
Name: Paul K. Wilde
-----------------------------
Title: CFO
----------------------------
The undersigned hereby consents to the modifications to the Indebtedness
pursuant to this Loan Modification Agreement, hereby ratifies all the provisions
of the Guaranty and confirms that all provisions of that document are in full
force and effect.
GUARANTOR:
SYNON EUROPE
By: /s/ Richard Goldberg
-------------------------------
Name: Richard Goldberg
-----------------------------
Title: Director
----------------------------
6
<PAGE> 52
PROMISSORY NOTE
================================================================================
Borrower: Synon, Inc. and Synon Corporation Lender: Silicon Valley Bank
1100 Larkspur Landing Circle 3003 Tasman Drive
Larkspur, CA 94939 Santa Clara, CA 95054
================================================================================
Principal Initial
Amount: $400,000.00 Rate: 10.000% Date of Note: July 15, 1996
PROMISE TO PAY Synon, Inc. and Synon Corporation ("Borrower") promises to pay to
Silicon Valley Bank ("Lender"), or order, in lawful money of the United States
of America, the principal amount of Four Hundred Thousand and 00/100 Dollars
($400,000.00) or so much as may be outstanding, together with interest on the
unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in accordance with the following
payment schedule:
The Draw Period shall begin as of this date and shall end on April 15, 1997
(the "Draw Period"). During the Draw Period, Borrower shall pay regular
monthly payments of all accrued unpaid interest due as of each payment date,
beginning August 15, 1996 and all subsequent interest payments will be due on
the same day of each month thereafter. The outstanding principal balance on
April 15, 1997, will be payable in twenty-four (24) even payments of principal
plus interest will be due as of each payment date, beginning May 15,1997 and
all subsequent payments of principal plus interest will be due on the same day
of each month thereafter. The final payment, due, on April 15, 1999, will be
for all outstanding principal plus all accrued interest not yet paid.
Interest on this Note is computed on a 365/360 simple interest basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an index which is Lender's Prime Rate (the
"Index"). This is the rate Lender charges, or would charge, on 90-day unsecured
loans to the most creditworthy corporate customers. This rate may or may not be
the lowest rate available from Lender at any given time. Lender will tell
Borrower the current Index rate upon Borrower's, request. Borrower understands
that Lender may make loans based on other rates as well. The interest rate
change will not occur more often than each time the prime rate is adjusted by
Silicon Valley Bank. The Index currently is 8.250 per annum. The interest rate
to be applied to the unpaid principal balance of this Note will be at a rate of
1.750 percentage point over the Index, resulting in an initial rate of 10.000%
per annum. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower of
Borrower's obligation to continue to make payments of accrued unpaid interest.
Rather, they will reduce the principal balance due.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to perform promptly at the time
and strictly in the manner provided in this Note or any agreement related to
this Note, or in any other agreement or loan Borrower has with Lender. (c)
Borrower defaults under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of any other
creditor or person that may materially affect any of Borrower's property or
Borrower's ability to repay this Note or perform Borrower's obligations under
this Note or any of the Related Documents. (d) Any representation or statement
made or furnished to Lender by Borrower or on Borrowers behalf is false or
misleading in any material respect. (e) Borrower becomes insolvent, a receiver
is appointed for any part of Borrower's property, Borrower makes an assignment
for the benefit of creditors, or any proceeding is commenced either by Borrower
or against Borrower under any bankruptcy or insolvency laws. (f) Any creditor
tries to take any of Borrower's property on or in which Lender has a lien or
security interest. This includes a garnishment of any of Borrower's accounts
with Lender. (g) Any of the events described in this default section occurs with
respect to any guarantor of this Note.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon Borrowers failure to pay
all amounts declared due pursuant to this section, including failure to pay upon
final maturity, Lender, at its option, may also, if permitted under applicable
law, do one or both of the following: (a) increase the variable interest rate on
this Note to 5.000 percentage points over the otherwise effective interest rate,
and (b) add any unpaid accrued interest to principal and such sum will bear
interest therefrom until paid at the rate provided in this Note (including any
increased rate). Lender may hire or pay someone else to help collect this Note
if Borrower does not pay. Borrower also will pay Lender that amount. This
includes, subject to any limits under applicable law, Lenders attorneys' fees
and Lender's legal expenses whether or not there is a lawsuit, including
attorneys' fees and legal expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Borrower also will pay any court
costs, in addition to all other sums provided by law. THIS NOTE HAS BEEN
DELIVERED TO LENDER AND ACCEPTED BY LENDER IN THE STATE OF CALIFORNIA. IF THERE
IS A LAWSUIT, BORROWER AGREES UPON LENDER'S REQUEST TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF SANTA CLARA COUNTY, THE STATE OF CALIFORNIA.
(INITIAL HERE /s/ PW). Lender and Borrower hereby waive the right to any jury
trial in any action, proceeding, or counterclaim brought by either Lender or
Borrower against the other. This Note shall be governed by and construed in
accordance with the laws of the State of California.
<PAGE> 53
PROMISSORY NOTE
CONTINUED
LINE OF CREDIT. This note evidences a straight line of credit through the end of
the Draw Period. Once the total amount of principal has been advanced, Borrower
is not entitled to further loan advances. Advances under this Note, as well as
directions for payment from Borrower's accounts, may be requested orally or in
writing by Borrower or by an authorized person. Lender may, but need not,
require that all oral requests be confirmed in writing. Borrower agrees to be
liable for all sums either: (a) advanced in accordance with the instructions of
an authorized person or (b) credited to any of Borrowers accounts with Lender.
The unpaid principal balance owing on this Note at any time may be evidenced by
endorsements on this Note or by Lender's internal records, including daily
computer print-outs. Lender will have no obligation to advance funds under this
Note if; (a) Borrower or any guarantor is in default under the terms of this
Note or any agreement that Borrower or any guarantor has with Lender, including
any agreement made in connection with the signing of this Note; (b) Borrower or
any guarantor ceases doing business or is insolvent; (c) any guarantor seeks,
claims or otherwise attempts to limit, modify or revoke such guarantors
guarantee of this Note or any other loan with Lender; or (d) Borrower has
applied funds provided pursuant to this Note for purposes other than those
authorized by Lender.
ADVANCE RATE. At any time from the date hereof through the end of the Draw
Period, Borrower may request advances (each an "Equipment Advance" and
collectively, the "Equipment Advances") from Lender in an aggregate amount not
to exceed the principal amount of this Note. To evidence the Equipment Advances,
Borrower shall deliver to Lender, at the time of each advance request, an
invoice for the equipment to be purchased. The Advances shall be used only to
purchase equipment and shall not exceed one hundred percent (100%) of the
invoice amount approved from time to time by Lender, excluding taxes, shipping,
software and installation expense. Software may, however, constitute up to
twenty percent (20%) of each Equipment Advance.
LOAN AND SECURITY AGREEMENT. This Note is subject to and shall be governed by
all the terms and conditions of the Loan and Security Agreement dated March
1994, as such agreement may be amended from time to time, between Borrower and
Lender, which Loan and Security Agreement is incorporated herein by reference.
REQUEST TO DEBIT. Borrower will regularly deposit funds received from its
business activities in accounts maintained at Silicon Valley Bank. Borrower
hereby authorizes Lender to debit any accounts with Lender, including, without
limitation, Account Number ______________ for payments of principal and interest
due on the loan and any other obligations owing by Borrower to Lender. Lender
will notify Borrower of all debts which Lender makes against Borrower's
accounts. Any such debits against Borrower's accounts in no way shall be deemed
a set-off.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by low, waive any
applicable statute of limitations, presentment, demand for payment, protest and
notice of dishonor. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan, or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect Lenders security interest
in the collateral and take any other action deemed necessary by Lender without
the consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER HAS READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES
TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE
NOTE.
BORROWER:
SYNON INC. SYNON CORPORATION
By: /s/ PAUL K. WILDE By: /s/ PAUL K. WILDE
---------------------------- -------------------------------
Name: Paul K. Wilde Name: Paul K. Wilde
-------------------------- -----------------------------
Title: CFO Title: CFO
---------------------------- ----------------------------
<PAGE> 1
EXHIBIT 10.32
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This Intellectual Property Security Agreement is made as of March 17,
1994, by and between SYNON CORPORATION, a Delaware corporation ("Grantor"), and
SILICON VALLEY BANK, a California banking corporation ("Grantee").
RECITALS
A. Grantee has agreed to lend to Grantor certain funds (the
"Loan"), and Grantor desires to borrow such funds from Grantee. The Loan will be
evidenced by one or more promissory notes of even date herewith (a "Note" or,
collectively, the "Notes") and will be secured in part pursuant to the terms of
a Loan and Security Agreement of even date herewith (the "Loan Agreement").
B. In order to induce Grantee to make the Loan, Grantor has agreed
to assign certain intangible property to Grantee for purposes of securing the
obligations of Grantor to Grantee.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Grant of Security Interest. As collateral security for the
prompt and complete payment and performance of all of Grantor's present or
future indebtedness, obligations and liabilities to Grantee, Grantor hereby
grants a security interest to Grantee in and to Grantor's entire right, title
and interest in, to and under the following (all of which shall collectively be
called the "Collateral")":
(a) Any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not
the same also constitutes a trade secret, now or hereafter existing, created,
acquired or held, including without limitation those set forth on Exhibit A
attached hereto (collectively, the "Copyrights");
(b) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
(c) Any and all design rights which may be available to
Grantor now or hereafter existing, created, acquired or held;
(d) All patents, patent applications and like protections
including without limitation improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including without
limitation the patents and patent applications set forth on Exhibit B attached
hereto (collectively, the "Patents");
(e) Any trademark and servicemark rights, whether
registered or not, applications to register and registrations of the same and
like protections, and the entire goodwill of the business of Grantor connected
with and symbolized by such trademarks, including without limitation those set
forth on Exhibit C attached hereto (collectively, the "Trademarks");
(f) Any and all claims for damages by way of past, present
and future infringement of any of the rights included above, with the right,
but not the obligation, to sue for and collect such damages for said use or
infringement of the intellectual property rights identified above;
1
<PAGE> 2
(g) All licenses or other rights to use any of the
Copyrights, Patents or Trademarks, and all license fees and royalties arising
from such use to the extent permitted by such license or rights; and
(h) All amendments, renewals and extensions of any of the
Copyrights, Trademarks or Patents; and
(i) All proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.
Notwithstanding the foregoing, Grantor shall not be deemed to have
granted a security interest in any rights under any license which by its terms
prohibits the grant of a security interest.
2. Authorization and Request. Grantor authorizes and requests
that the Register of Copyrights and the Commissioner of Patents and Trademarks
record this security agreement.
3. Covenants and Warranties. Grantor represents, warrants,
covenants and agrees as follows:
(a) Grantor is now the sole owner of the Collateral, except
for non-exclusive licenses granted by Grantor to its customers in the ordinary
course of business and security interests in certain items of Collateral granted
to former owners of such Collateral;
(b) Assuming notice is given to the sellers under certain
Asset Purchase Agreements pursuant to which certain items of Collateral were
acquired, performance of this Security Agreement does not conflict with or
result in a breach of any agreement to which Grantor is party or by which
Grantor is bound, except to the extent that certain intellectual property
agreements prohibit the assignment of the rights thereunder to a third party
without the licensor's or other party's consent and this Security Agreement
constitutes an assignment;
(c) During the term of this Security Agreement, Grantor
will not transfer or otherwise encumber any interest in the Collateral, except
for non-exclusive licenses granted by Grantor in the ordinary course of
business or as set forth in this Security Agreement;
(d) To its knowledge, each of the Patents is valid and
enforceable, and no part of the Collateral has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Collateral violates the rights of any third party;
(e) Grantor shall promptly advise Grantee of any material
change in the composition of the Collateral, including but not limited to any
subsequent ownership right of the Grantor in or to any Trademark, Patent or
Copyright not specified in this Security Agreement;
(f) Grantor shall (i) protect, defend and maintain the
validity and enforceability of the Trademarks, Patents and Copyrights, (ii) use
its best efforts to detect infringements of the Trademarks, Patents and
Copyrights and promptly advise Grantee in writing of material infringements
detected and (iii) not allow any Trademarks, Patents or Copyrights to be
abandoned, forfeited or dedicated to the public without the written consent of
Grantee, which shall not be unreasonably withheld, unless Grantor determines
that reasonable business practices suggest that abandonment is appropriate.
(g) Grantor shall register the most recent versions of any
of Grantor's Copyrights in accordance with the provisions of Section 6.10 of
the Loan Agreement, and shall, from time to time, execute and file such other
instruments, and take such further actions as Grantee may reasonably request
from time to time to perfect or continue the perfection of Grantee's interest
in the Collateral;
(h) Except with respect to those items of Collateral in
which the party from which Grantor acquired such item of Collateral retains a
security interest to secure a portion of the acquisition
2
<PAGE> 3
price, this Security Agreement creates, and in the case of after acquired
Collateral, this Security Agreement will create at the time Grantor first has
rights in such after acquired Collateral, in favor of Grantee a valid first
priority security interest in the Collateral in the United States securing the
payment and performance of the obligations evidenced by the Note upon making
the filings referred to in clause (i) below;
(i) To its knowledge, except for, and upon, the filing
with the United States Patent and Trademark office with respect to the Patents
and Trademarks and the Register of Copyright with respect to the Copyrights
necessary to perfect the security interests and assignment created hereunder,
and except as has been already made or obtained, no authorization, approval or
other action by, and no notice to or filing with, any U.S. governmental
authority or U.S. regulatory body is required either (i) for the grant by
Grantor of the security interest granted hereby or for the execution, delivery
or performance of this Security Agreement by Grantor in the U.S. or (ii) for the
perfection in the United States or the exercise by Grantee of its rights and
remedies hereunder, provided that Grantor makes no representation with respect
to unregistered copyrights.
(j) To the best of Grantor's knowledge, all information
heretofore, herein or hereafter supplied to Grantee by or on behalf of Grantor
with respect to the Collateral is accurate and complete in all material
respects.
(k) Grantor shall not enter into any agreement that would
materially impair or conflict with Grantor's obligations hereunder without
Grantee's prior written consent, which consent shall not be unreasonably
withheld. Without Grantee's prior written consent, which shall not be
unreasonably withheld, Grantor shall not permit the inclusion in any material
contract to which it become a party of any provisions that could or might in
any way prevent the creation of a security interest in Grantor's rights and
interests in any property included within the definition of the Collateral
acquired under such contracts.
(l) Upon any executive officer of Grantor obtaining actual
knowledge thereof, Grantor will promptly notify Grantee in writing of any event
that materially adversely affects the value of any Collateral, the ability of
Grantor to dispose of any Collateral or the rights and remedies of Grantee in
relation thereto, including the levy of any legal process against any of the
Collateral.
4. Grantee's Rights. Grantee shall have the right, but not the
obligation, to take, at Grantor's sole expense, any actions that Grantor is
required under this Security Agreement to take but which Grantor fails to take,
after fifteen (15) days' notice to Grantor. Grantor shall reimburse and
indemnify Grantee for all reasonable costs and reasonable expenses incurred in
the reasonable exercise of its rights under this section 4.
5. Inspection Rights. Grantor hereby grants to Grantee and its
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable written notice to Grantor, and of Grantor's plants
and facilities that manufacture, install or store products (or that have done so
during the prior six-month period) that are sold utilizing any of the
Collateral, and to inspect the products and quality control records relating
thereto upon reasonable written notice to Grantor and as often as may be
reasonably requested.
6. Further Assurances; Attorney in Fact.
(a) On a continuing basis in accordance with the provisions
of Section 6.10 of the Loan Agreement, Grantor will, subject to any prior
licenses, encumbrances and restrictions and prospective licenses, make, execute,
acknowledge and deliver, and file and record in the proper filing and recording
places in the United States, all such instruments, including appropriate
financing and continuation statements and collateral agreements and filings
with the United States Patent and Trademark Office and the Register of
Copyrights, and take all such action as may reasonably be deemed necessary or
advisable, or as requested by Grantee, to perfect Grantee's security interest
in all Copyrights, Patents and Trademarks and otherwise to carry out the intent
and purposes of this Security Agreement or for assuring and confirming to
Grantee the grant or perfection of a security interest in all Collateral.
3
<PAGE> 4
(b) Grantor hereby irrevocably appoints Grantee as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor, from time to time in Grantee's discretion, to take any
action and to execute any instrument which Grantee may deem necessary or
advisable to accomplish the purposes of this Security Agreement, including:
(i) To modify, in its sole discretion, this
Security Agreement without first obtaining Grantor's approval of or signature to
such modification by amending Exhibit A, Exhibit B and Exhibit C, thereof, as
appropriate, to include reference to any right, title or interest in any
Copyrights, Patents or Trademarks acquired by Grantor after the execution hereof
or to delete any reference to any right, title or interest in any Copyrights,
Patents or Trademarks in which Grantor no longer has or claims any right, title
or interest; and
(ii) To file, in its sole discretion, one or more
financing or continuation statements and amendments thereto, relative to any of
the Collateral without the signature of Grantor where permitted by law.
7. Events of Default. The occurrence of any of the following shall
constitute an Event of Default under this Security Agreement:
(a) An Event of Default occurs under the Loan Agreement or
any Note; or
(b) Grantor breaches any warranty or agreement made by
Grantor in this Security Agreement and, as to any breach that is capable of
cure, Grantor fails to cure such breach within fifteen (15) days of the
occurrence of such breach.
8. Remedies. Upon the occurrence and continuance of an Event of
Default, Grantee shall have the right to exercise all the remedies of a secured
party under the California Uniform Commercial Code, including without limitation
the right to require Grantor to assemble the Collateral and any tangible
property in which Grantee has a security interest and to make it available to
Grantee at a place designated by Grantee. Grantee shall have a nonexclusive,
royalty free license to use the Copyrights, Patents and Trademarks to the extent
reasonably necessary to permit Grantee to exercise its rights and remedies upon
the occurrence and during the continuation of an Event of Default. Grantor will
pay any expenses (including reasonable attorneys' fees) incurred by Grantee in
connection with the exercise of any of Grantee's rights hereunder, including
without limitation any expense incurred in disposing of the Collateral. All of
Grantee's rights and remedies with respect to the Collateral shall be
cumulative.
9. Indemnity. Grantor agrees to defend, indemnify and hold
harmless Grantee and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Security
Agreement, and (b) all losses or expenses in any way suffered, incurred, or
paid by Grantee as a result of or in any way arising out of, following or
consequential to transactions between Grantee and Grantor, arising out of this
Security Agreement (including without limitation reasonable attorneys' fees and
reasonable expenses), except for losses arising from or out of Grantee's gross
negligence or willful misconduct.
10. Release. At such time as Grantor shall completely satisfy all
of the obligations secured hereunder, Grantee shall execute and deliver to
Grantor all instruments as may be necessary or proper to release Grantor's
security interest granted hereunder, subject to any disposition thereof which
may have been made by Grantee pursuant hereto.
11. Course of Dealing. No course of dealing, nor any failure to
exercise, nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.
12. Attorneys' Fees. If any action relating to this Security
Agreement is brought by either party hereto against the other party, the
prevailing party shall be entitled to recover reasonable attorneys' fees, costs
and disbursements.
4
<PAGE> 5
13. Amendments. This Security Agreement may be amended only by a
written instrument signed by both parties hereto.
14. Counterparts. This Security Agreement may be executed in two
or more counterparts, each of which shall be deemed an original but all of
which together shall constitute the same instrument.
15. California Law and Jurisdiction. This Security Agreement shall
be governed by the laws of the State of California, without regard for choice
of law provisions. Grantor and Grantee consent to the nonexclusive jurisdiction
of any state or federal court located in Santa Clara County, California.
16. Confidentiality. In handling any confidential information Bank
shall exercise the same degree of care that it exercises with respect to its
own proprietary information of the same types to maintain the confidentiality
of any non-public information thereby received or received pursuant to this
Agreement except that disclosure of such information may be made (i) to the
subsidiaries or affiliates of Bank in connection with their present or
prospective business relations with Borrower; (ii) to prospective transferees
or purchasers of any interest in the Loans, provided that they have entered
into a comparable confidentiality agreement in favor of Borrower and have
delivered a copy to Borrower, (iii) as required by law, regulations, rule or
order, subpoena, judicial order or similar order and (iv) as may be required in
connection with the examination, audit or similar investigation of Bank.
Notwithstanding any provision of this Agreement to the contrary, prior to the
occurrence of an Event of Default neither Borrower nor any of its Subsidiaries
will be required to disclose, permit the inspection, examination, copying or
making extracts of, or discussions of, any document, information or other
matter that (i) constitutes non-financial trade secrets or non-financial
proprietary information, or (ii) in respect to which disclosure to Bank (or
designated representative) is then prohibited by (a) law, or (b) an agreement
binding upon Borrower or any Subsidiary that was not entered into by Borrower
or such Subsidiary for the primary purpose of concealing information from Bank.
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement on the day and year first above written.
Address of Grantor: GRANTOR:
1100 Larkspur Landing Circle SYNON CORPORATION
Larkspur, CA 94939
Attn: Mr. Paul Wilde By: /s/ Paul Wilde
------------------------------
Title: V.P. Finance & CEO
---------------------------
Address of Grantee: GRANTEE:
1731 Embarcadero Road, Suite 220 SILICON VALLEY BANK
Palo Alto, CA 94303
Attn: Mr. Greg Becker By: /s/ Greg Becker
------------------------------
Title: A.V.P.
---------------------------
5
<PAGE> 6
State of CA )
---------)
)
County of Marin )
---------)
On March 17, 1994 before me, Linda M. Hurst, Notary Public, personally
appeared [Paul K. Wilde], personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person[s] whose name[s] [is] [are]
subscribed to the within instrument and acknowledged to me that [he] [she]
[they] executed the same in [his] [her] [their] authorized capacity[ies], and
that by [his] [her] [their] signature[s] on the instrument the person[s], or
the entity upon behalf of which the person[s] acted, executed the instrument.
Witness my hand and official seal.
- -------------------------------- /s/ LINDA M. HURST
[SEAL] LINDA M. HURST -------------------------
Comm. #997451 Notary Public
NOTARY PUBLIC - CALIFORNIA
Marin County
My Comm. Expires June 16, 1997
- --------------------------------
State of )
---------)
)
County of )
---------)
On ______________ before me, ______________, Notary Public, personally
appeared [_____________], personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person[s] whose name[s] [is] [are]
subscribed to the within instrument and acknowledged to me that [he] [she]
[they] executed the same in [his] [her] [their] authorized capacity[ies], and
that by [his] [her] [their] signature[s] on the instrument the person[s], or
the entity upon behalf of which the person[s] acted, executed the instrument.
Witness my hand and official seal.
-------------------------
Notary Public
6
<PAGE> 7
EXHIBIT A
Copyrights
Grantor owns copyrights in and to its existing software, user
manuals and other written materials. Grantor shall only be required to register
with the United States Copyright Office, the source code to the following
existing software programs:
Synon 2E
Synon 2G
Synon Client Server Generator
Synon Client Server Driver
<PAGE> 8
EXHIBIT B
Patents
Grantor's intellectual property rights may include certain
patent rights arising in connection with its software. Grantor has not filed
patent applications with respect to any such potential patent rights and will
do so only if it determines that patent protection offers significant
advantages as compared to only registering the copyrights to such software or
protecting the patent rights as trade secrets.
<PAGE> 9
EXHIBIT C
Trademarks
See attached list.
<PAGE> 10
PAGE 1
<TABLE>
<CAPTION>
Display App. App. Reg.
Proprietors Country Trademarks Class date no. date
- ----------- ------- ---------- ------- ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Synon Corporation Australia SYNON 16 18 DEC 1986
Synon Corporation Australia SYNON 9 18 DEC 1986
Synon Corporation Brazil SYNON 9
Synon Corporation Canada SYNON 9 30 JUN 1989
Synon Corporation Canada SYNON 9 26 MAR 1982
Synon Corporation Finland SYNON 9,16,41,42 20 NOV 1989
Synon Limited France SYNON 9,16,42 13 JUL 1988 941022 18 DEC 1986
</TABLE>
<TABLE>
<CAPTION>
Reg. Renewal Status
Proprietors no. due Goods
- ----------- ------- ---------- -------
<S> <C> <C> <C> <C>
Synon Corporation A457303 18 DEC 2007 REG Printed matter; instructional and
teaching materials (other than
apparatus); computer printout
paper; all other goods in this
class.
Synon Corporation A457384 18 DEC 2007 REG Computers, computer programs;
wires, tapes and discs, all being
magnetic and for/or bearing date;
electronic data input and output
terminals; printers and floppy disc
driving apparatus; all for use with
computers; visual display units;
parts and fittings included in
Class 9 for all the aforesaid
goods; all other goods in Class 9.
Synon Corporation REG Computer software, computers and
data processing apparatus.
Synon Corporation 357988 30 JUN 2004 REG Computer programs.
Synon Corporation 267638 26 MAR 1997 REG All goods in Classes 9, 16 & 41.
Class 42: Design of computer
systems; computer and computer
programming consultancy services;
computer programming.
Synon Limited 1610947 13 JUL 1998 REG Class 9; Computers; apparatus for
the storage, transmission,
processing retrieval and display of
data; printers for use with the
aforesaid goods; parts and fittings
for the aforesaid goods; computer
program; wires, tapes and disks
all bearing data. Class 16; Printed
matter, instructional and teaching
materials (other than apparatus),
paper, stationery and books. Class
42; Design of computer systems;
computer and computer programming
consultancy services; computer
</TABLE>
<PAGE> 11
PAGE 2 15:17:11 14 SEP 1993
<TABLE>
<CAPTION>
Display App. App. Reg.
Proprietors Country Trademarks Class date no. date
- ----------- ------- ---------- ------- ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Synon Corporation France SYNON ENTRY 9 16 AUG 1991 304028 16 AUG 1991
Synon Limited Hong Kong SYNON 9 27 JUL 1988 4600/88 27 JUL 1988
Synon Limited Hong Kong SYNON 16 27 JUL 1988 4601/88 27 JUL 1988
Synon Corporation Indonesia SYNON 9 28 AUG 1991 AM/3071
Synon Corporation Indonesia SYNON ENTRY 9 28 AUG 1991 AM/3072
Synon Limited Israel SYNON 9 15 JUL 1988 69847 15 JUL 1988
</TABLE>
<TABLE>
<CAPTION>
Reg. Renewal Status
Proprietors no. due Goods
- ----------- ------- ---------- -------
<S> <C> <C> <C> <C>
programming.
Synon Corporation 1687277 16 AUG 2001 REG Computers; data storage,
transmission, processing, retrieval
and display apparatus and
instruments; computer printers;
parts and fittings for all the
aforesaid goods; computer programs;
tapes and disks.
Synon Limited 3194/1989 27 JUL 1995 REG Computers; apparatus for the
storage, transmission, processing,
retrieval and display of data;
printers for use with the aforesaid
goods, parts and fittings for the
aforesaid goods; computer programs;
wires, tapes and disks all bearing
data.
Synon Limited 2945/89 27 JUL 1995 REG Printed matter, instructional and
teaching materials (other than
apparatus), paper, stationery, and
books.
Synon Corporation PEN Computers; data storage,
transmission, processing, retrieval
and display apparatus and
instruments; computer printers;
parts and fittings for all the
aforesaid goods; computer programs;
tapes and disks.
Synon Corporation PEN Computers; data storage,
transmission, processing, retrieval
and display apparatus and
instruments; computer printers
parts and fittings for all the
aforesaid goods; computer programs;
tapes and disks.
Synon Limited 69847 15 JUL 1995 REG Computers apparatus for the
storage, transmission, processing,
retrieval and display of data;
printers for use with the aforesaid
goods, parts and fittings included.
</TABLE>
<PAGE> 12
PAGE 1
<TABLE>
<CAPTION>
Display App. App. Reg.
Proprietors Country Trademarks Class date no. date
- ----------- ------- ---------- ------- ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Synon Limited Israel SYNON 16 31 JUL 1988 70007 31 JUL 1988
Synon limited Italy SYNON 9,16,42 21 JUL 1988 35714C/88 04 JUN 1991
Synon Corporation Norway SYNON 9,16,41,42 22 SEP 1987
</TABLE>
<TABLE>
<CAPTION>
Reg. Renewal Status
Proprietors no. due Goods
- ----------- ------- ---------- -------
<S> <C> <C> <C> <C>
Synon Limited 70007 31 JUL 1995 REG In Class 9 for the aforesaid goods;
computer programs; wires, tapes and
disks, all bearing data.
Synon Limited 546526 21 JUL 1998 REG Printed matter, instructional and
teaching materials (other than
apparatus), paper stationery, and
books.
Computers; apparatus for the
storage, transmission, processing,
retrieval and display of data;
printers for use with the aforesaid
goods, parts and fittings for the
aforesaid goods; computer programs;
wires, tapes and disks all bearing
data (Class 9). Printed matter,
Instructional and teaching
materials (other than apparatus),
paper, stationery and books (Class
16). Design of computer systems;
computer and computer programming
constancy services; computer
programming.
Synon Corporation 141091 26 APR 2000 REG Class 9: Scientific, nautical,
geodetic, electrical (not included
in other classes), photographic,
cinematographic and optical
apparatus and instruments for
weighing, measuring, signalling,
control, life-saving and
instruction; apparatus for
recording, transmission and
reproduction of sound and images;
magnetic data carriers, gramophone
records; automatic vending machines
and mechanisms for coin-operated
apparatus; cash registers,
calculating machines, data
processing equipment and data
machines; fire extinguishers, Class
</TABLE>
<PAGE> 13
PAGE 41
<TABLE>
<CAPTION>
Display App. App. Reg.
Proprietors Country Trademarks Class date no. date
- ----------- ------- ---------- ------- ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Synon Limited Singapore SYNON 16 20 SEP 1988 5132/88 20 SEP 1988
Synon Limited Singapore SYNON 9 20 SEP 1988 20 SEP 1988
Synon Corporation Singapore SYNON 9 13 MAY 1991 4811/91
</TABLE>
<TABLE>
<CAPTION>
Reg. Renewal Status
Proprietors no. due Goods
- ----------- ------- ---------- -------
<S> <C> <C> <C> <C>
16: Paper, cardboard and goods made
of those materials, not included in
other classes; printed matter;
bookbinding materials; photographs;
stationery (not included in other
classes); adhesives for stationery
and household use; artist's
requisites i.e. modelling
materials, chambers for marbling,
paintbrushes, canvas, rollers,
paint boxes, armrests for painters,
easels with palettes; brushes;
training and instruction material
(not apparatus); plastic packing
(not included in other classes);
playing cards; printing type,
printing blocks, Class 41; the
entire service class. Class 42; The
entire service class.
Synon Limited 5132/88 20 SEP 1995 REG Printed matter; instructional and
teaching materials (other than
apparatus); paper, stationery and
books.
Synon Limited 5133/88 20 SEP 1995 REG Computers: apparatus for the
storage, transmission, processing,
retrieval and display of data;
printers for use with the aforesaid
goods; parts and fittings for the
aforesaid goods; computer programs;
wires, tapes and disks all bearing
data.
Synon Corporation PEN Computers: data storage,
transmission, processing, retrieval
and display apparatus and
instruments; computer printers;
parts and fittings for all the
aforesaid goods; computer programs;
tapes and disks; all included in
class 9.
</TABLE>
<PAGE> 14
PAGE 5 15:17:16 14 SEP 1993
<TABLE>
<CAPTION>
Proprietor: Country Trademark Display Clas App. date App. no. Reg. date
<S> <C> <C> <C> <C> <C> <C>
Synon Limited South Africa SYNON 9 09 JUN 1987 87/4047 09 JUN 1987
Synon Limited Spain SYNON 16 25 AUG 1988 1270916 20 NOV 1990
Synon Limited Spain SYNON 9 25 AUG 1988 1270915 13 JUL 1992
Synon Limited Sweden SYNON 9,16,41,42 25 SEP 1987 87-7309 04 OCT 1991
Synon Limited Switzerland SYNON 9,16 15 MAR 1989 2085 15 MAR 1989
Reg. no. Renewal due Status Goods:
<C> <C> <C> <C>
87/4047 09 JUN 1997 REG Electrical, electronic and
electro-mechanical apparatus,
instruments and devices; apparatus
for recording, transmission or
reproduction of sound or images;
computers, computer programmes,
wires, tapes and discs, all being
magnetic and for/or bearing data,
electronic data input and output
apparatus for use with computers,
computer terminals, printers and
floppy disc driving apparatus all
for use with computers, visual
display units; data processing
equipment; parts, components,
accessories and fittings for all
the aforesaid goods.
1270916 20 NOV 2010 REG Printed matter, instructional and
teaching materials (other than
apparatus), paper, stationery and
books.
1270915 13 JUL 2012 REG Computers; apparatus for the
storage, transmission, processing,
retrieval and display of data;
printers for use with the aforesaid
goods; computer programs; wires,
tapes and disks all bearing data.
226849 04 OCT 2001 REG Class 9: Registered computer
programs; magnetic data carriers,
tapes, discs and records. Class 16:
All goods. Class 41: All services.
Class 42: Data processing services,
namely programming, system
analysis, preparation of software
and consulting services relating to
data processing; lease of
computers.
378132 15 MAR 2009 REG Class 9 - Computers, apparatus for
storage, transmission, processing,
</TABLE>
<PAGE> 15
PAGE 6 15:17:17 14 SEP 1993
<TABLE>
<CAPTION>
Proprietor: Country: Trademark: Display Clas App. date App. no.
<S> <C> <C> <C> <C> <C>
Synon Limited Taiwan SYNON 9 30 SEP 1988 439331
Synon Limited United Kingdom SYNON 42 12 JUN 1987 1312856
Synon Limited United Kingdom SYNON 41 12 JUN 1987 1312855
Synon Limited United Kingdom SYNON 9 08 DEC 1986 1295062
Synon Limited United Kingdom SYNON 16 08 DEC 1986 1295063
</TABLE>
<TABLE>
<CAPTION>
Reg. date Reg. no. Renewal due Status Goods:
<S> <C> <C> <C> <C>
retrieval and display of data,
printers for use with the aforesaid
goods, computer programs, wires,
tapes and disks all bearing data.
Class 16 - Printed matter,
instructional and teaching
materials (other than apparatus),
paper, stationery and books.
16 APR 1989 439331 15 APR 1999 REG Computers, information storage
device, keyboard, data processors,
word processors, printers, disk
drives, tapes, cards, disks and
drums recorded with computer
program.
12 JUN 1987 1312856 12 JUN 1994 REG Design of computer systems;
consultancy services relating to
computers and to computer programs;
computer programming services; all
included in Class 42.
12 JUN 1987 1312855 12 JUN 1987 REG Education services included in
Class 41; all relating to computers
and to computer programming.
08 DEC 1986 1295062 08 DEC 1993 REG Computers; computer programmers;
wires, tapes and discs, all being
magnetic and for bearing data;
electronic data input and output
apparatus for use with computers;
computer terminals; printers and
floppy disc drives, all for use
with computers; visual display
units; parts and fittings for all
the aforesaid goods; all included
in Class 9.
08 DEC 1986 1295063 08 DEC 1993 REG Printed matter, instructional and
teaching materials, computer
print-out paper; computer
programmes, data bases, all being
printed matter; books; all included
in Class 16.
</TABLE>
<PAGE> 16
<TABLE>
<CAPTION>
Display
Proprietor: Country: Trademark: Clas. App. Date App. No. Reg. Date Reg. No.
<S> <C> <C> <C> <C> <C> <C> <C>
Synon Limited United Kingdom SYNON MODEL 9 30 OCT 1989 1401991 30 OCT 1989 1401991
APPLICATIONS
Synon Limited United States SYNON 9 22 MAR 1983 1231692
Synon Limited United States SYNON 9 15 DEC 1987 20 SEP 1988 1504680
Synon Corporation United States SYNON/ENTRY 9 11 SEP 1991 74/202509
</TABLE>
<TABLE>
<CAPTION>
Renewal Due Status Goods:
<S> <C> <C>
30 OCT 1996 REG Computers; data storage, transmission,
processing, retrieval and display
apparatus and instruments; computer
printers; parts and fittings for all
the aforesaid goods; computer
programs; tapes and discs; all
included in Class 9.
22 MAR 2003 REG Electronic data processing equipment,
namely, microcomputers, in Class 9.
20 SEP 2008 REG Computer programs. Computer programs
for computer-aided software
engineering, in Class 9.
PEN Computer software for computer-aided
software engineering.
</TABLE>
13 Records Processed
<PAGE> 1
EXHIBIT 10.33
SYNON CORPORATION
NOTICE OF STOCK OPTION GRANT
Richard H. Goldberg
766 Old Quarry Rd. S.
Larkspur, CA 94939
You have been granted an option to purchase Common Stock of Synon Corporation
(the "Company") as follows:
TYPE OF OPTION: NONSTATUTORY STOCK OPTION
NUMBER OF SHARES GRANTED: 500,000
OPTION PRICE PER SHARE: $1.43
TOTAL PRICE OF SHARES GRANTED: $715,000
DATE OF GRANT: OCTOBER 1, 1992
TERM/EXPIRATION DATE: OCTOBER 1, 2002
EXERCISE AND VESTING SCHEDULE:
This option may be exercised, in whole or in part, in accordance with
the Vesting Schedule set forth below.
DATE OF VESTING: OCTOBER 1, 1993
NUMBER OF SHARES: 100,000
FOR EACH OF THE 48 MONTHS FOLLOWING
OCTOBER 1, 1993: 1.667% OF 500,000
In addition, (i) upon any Change of Control of Synon Corporation (as
defined herein) or initial public offering by Synon Corporation,
whichever occurs first, 50% of any unvested shares will vest
automatically and any of the then remaining unvested options will
vest monthly in equal increments over the balance of the two year
vesting period and (ii) if your employment is involuntarily
terminated or Constructively Terminated (as defined herein) within
twelve (12) months after a Change of Control (it being the intention
that you will agree to remain employed for at least one year
following a "Change of Control"), then your option shall be
accelerated to become immediately exercisable for 100% of the total
number of unvested shares subject thereto.
For purposes of the foregoing, a "Change of Control of Synon" shall
be deemed to have occurred if (i) Synon sells or otherwise disposes
of all or substantially all of its assets; (ii) there is a merger or
consolidation of Synon with any other corporation
<PAGE> 2
or corporations, provided that the shareholders of Synon, as a group,
do not hold, immediately after such event, at least 50% of the voting
power of the surviving or successor corporation; (iii) any person or
entity, including any "person" as such term is used in Section 13(d)
(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") becomes the "beneficial owner" (as defined in the Exchange Act)
of Common Stock of Synon representing 50% or more of the combined
voting power of the voting securities of Synon (exclusive of persons
who are now officers of directors of Synon).
For purposes of the foregoing, your employment with Synon shall be
deemed to have been "Constructively Terminated" if there shall occur
(i) a material reduction in salary or benefit (taken as a whole),
(ii) a material change in responsibility, or (iii) a requirement to
relocate, except for office relocations that would not increase your
one-way commute by more than 50 miles.
TERMINATION PERIOD:
Options may only be exercised while you are an Employee of the
Company except as set out in Sections 7 and 8 of the Stock Option
Agreement (but in no event later than the Expiration Date); provided,
however, that upon termination of your employment with the Company,
the Administrator may, in its sole discretion, permit you to exercise
the Option, to the extent already exercisable, during a period ending
on the earlier of 30 days after such termination of employment and
the date the Option expires in accordance with its terms.
By your signature and the signature of the Company's representative below, you
and the Company agree that this option is granted under and governed by the
terms and conditions of the 1990 Stock Option Plan and the
Incentive/Nonstatutory Stock Option Agreement, all of which are attached and
made a part of this document.
OPTIONEE: SYNON CORPORATION
/s/ RICHARD H. GOLDBERG By: /s/ PAUL K. WILDE
------------------------------- -------------------------------
Signature Paul K. Wilde
Chief Financial Officer
Richard H. Goldberg
-------------------------------
Print Name
<PAGE> 1
EXHIBIT 10.34
SYNON CORPORATION
NOTICE OF STOCK OPTION GRANT
Paul K. Wilde
19 Royal Oaks Ct.
Alamo, CA 94507
You have been granted an option to purchase Common Stock of Synon Corporation
(the "Company") as follows:
TYPE OF OPTION: INCENTIVE STOCK OPTION
NUMBER OF SHARES GRANTED: 220,000
OPTION PRICE PER SHARE: $1.43
TOTAL PRICE OF SHARES GRANTED: $314,600
DATE OF GRANT: JULY 22, 1992
TERM/EXPIRATION DATE: JULY 22, 2002
EXERCISE AND VESTING SCHEDULE:
This option may be exercised, in whole or in part, in accordance with
the Vesting Schedule set forth below.
DATE OF VESTING: APRIL 15, 1992
NUMBER OF SHARES: 44,000
FOR EACH OF THE 48 MONTHS FOLLOWING
APRIL 15, 1992: 1.667% OF 220,000
In addition, (i) upon any Change of Control of Synon Corporation (as
defined herein) or initial public offering by Synon Corporation,
whichever occurs first, 50% of any unvested shares will vest
automatically and any of the then remaining unvested options will
vest monthly in equal increments over the balance of the two year
vesting period and (ii) if your employment is involuntarily
terminated or Constructively Terminated (as defined herein) within
twelve (12) months after a Change of Control (it being the intention
that you will agree to remain employed for at least one year
following a "Change of Control"), then your option shall be
accelerated to become immediately exercisable for 100% of the total
number of unvested shares subject thereto.
For purposes of the foregoing, a "Change of Control of Synon" shall
be deemed to have occurred if (i) Synon sells or otherwise disposes
of all or substantially all of its assets; (ii) there is a merger or
consolidation of Synon with any other corporation
<PAGE> 2
or corporations, provided that the shareholders of Synon, as a group,
do not hold, immediately after such event, at least 50% of the voting
power of the surviving or successor corporation; (iii) any person or
entity, including any "person" as such term is used in Section 13(d)
(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") becomes the "beneficial owner" (as defined in the Exchange Act)
of Common Stock of Synon representing 50% or more of the combined
voting power of the voting securities of Synon (exclusive of persons
who are now officers of directors of Synon).
For purposes of the foregoing, your employment with Synon shall be
deemed to have been "Constructively Terminated" if there shall occur
(i) a material reduction in salary or benefit (taken as a whole),
(ii) a material change in responsibility, or (iii) a requirement to
relocate, except for office relocations that would not increase your
one-way commute by more than 50 miles.
TERMINATION PERIOD:
Options may only be exercised while you are an Employee of the
Company except as set out in Sections 7 and 8 of the Stock Option
Agreement (but in no event later than the Expiration Date); provided,
however, that upon termination of your employment with the Company,
the Administrator may, in its sole discretion, permit you to exercise
the Option, to the extent already exercisable, during a period ending
on the earlier of 30 days after such termination of employment and
the date the Option expires in accordance with its terms.
By your signature and the signature of the Company's representative below, you
and the Company agree that this option is granted under and governed by the
terms and conditions of the 1990 Stock Option Plan and the
Incentive/Nonstatutory Stock Option Agreement, all of which are attached and
made a part of this document.
OPTIONEE: SYNON CORPORATION
/s/ PAUL K. WILDE By: /s/ RICHARD H. GOLDBERG
------------------------------- -------------------------------
Signature Richard H. Goldberg
Chief Executive Officer
Paul K. Wilde
-------------------------------
Print Name
2
<PAGE> 1
EXHIBIT 10.35
SYNON CORPORATION
NOTICE OF STOCK OPTION GRANT
William R. Yeack
429 Fernwood
Moraga, CA 94556
You have been granted an option to purchase Common Stock of Synon Corporation
(the "Company") as follows:
TYPE OF OPTION: INCENTIVE STOCK OPTION
NUMBER OF SHARES GRANTED: 200,000
OPTION PRICE PER SHARE: $1.80
TOTAL PRICE OF SHARES GRANTED: $360,000
DATE OF GRANT: JANUARY 15, 1996
TERM/EXPIRATION DATE: JANUARY 15, 2006
EXERCISE AND VESTING SCHEDULE:
This option may be exercised, in whole or in part, in accordance with
the Vesting Schedule set forth below.
DATE OF VESTING: JANUARY 15, 1997
NUMBER OF SHARES: 40,000
FOR EACH OF THE 48 MONTHS FOLLOWING
JANUARY 15, 1997: 1.667% OF 200,000
In addition, (i) upon any Change of Control of Synon Corporation (as
defined herein) or initial public offering by Synon Corporation,
whichever occurs first, 50% of any unvested shares will vest
automatically and any of the then remaining unvested options will
vest monthly in equal increments over the balance of the two year
vesting period and (ii) if your employment is involuntarily
terminated or Constructively Terminated (as defined herein) within
twelve (12) months after a Change of Control (it being the intention
that you will agree to remain employed for at least one year
following a "Change of Control"), then your option shall be
accelerated to become immediately exercisable for 100% of the total
number of unvested shares subject thereto.
For purposes of the foregoing, a "Change of Control of Synon" shall
be deemed to have occurred if (i) Synon sells or otherwise disposes
of all or substantially all of its assets; (ii) there is a merger or
consolidation of Synon with any other corporation
<PAGE> 2
or corporations, provided that the shareholders of Synon, as a group,
do not hold, immediately after such event, at least 50% of the voting
power of the surviving or successor corporation; (iii) any person or
entity, including any "person" as such term is used in Section 13(d)
(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") becomes the "beneficial owner" (as defined in the Exchange Act)
of Common Stock of Synon representing 50% or more of the combined
voting power of the voting securities of Synon (exclusive of persons
who are now officers of directors of Synon).
For purposes of the foregoing, your employment with Synon shall be
deemed to have been "Constructively Terminated" if there shall occur
(i) a material reduction in salary or benefit (taken as a whole),
(ii) a material change in responsibility, or (iii) a requirement to
relocate, except for office relocations that would not increase your
one-way commute by more than 50 miles.
TERMINATION PERIOD:
Options may only be exercised while you are an Employee of the
Company except as set out in Sections 7 and 8 of the Stock Option
Agreement (but in no event later than the Expiration Date); provided,
however, that upon termination of your employment with the Company,
the Administrator may, in its sole discretion, permit you to exercise
the Option, to the extent already exercisable, during a period ending
on the earlier of 30 days after such termination of employment and
the date the Option expires in accordance with its terms.
By your signature and the signature of the Company's representative below, you
and the Company agree that this option is granted under and governed by the
terms and conditions of the 1990 Stock Option Plan and the
Incentive/Nonstatutory Stock Option Agreement, all of which are attached and
made a part of this document.
OPTIONEE: SYNON CORPORATION
/s/ WILLIAM R. YEACK By: /s/ PAUL K. WILDE
------------------------------- -------------------------------
Signature Paul K. Wilde
Chief Financial Officer
William R. Yeack
-------------------------------
Print Name
2
<PAGE> 1
EXHIBIT 10.36
SYNON CORPORATION
NOTICE OF STOCK OPTION GRANT
William O. Grabe
Two River Lane
Westport, CT 06880
You have been granted an option to purchase Common Stock of Synon Corporation
(the "Company") as follows:
TYPE OF OPTION: NONSTATUTORY STOCK OPTION
NUMBER OF SHARES GRANTED: 180,000
OPTION PRICE PER SHARE: $1.43
TOTAL PRICE OF SHARES GRANTED: $257,400
DATE OF GRANT: APRIL 24, 1992
TERM/EXPIRATION DATE: APRIL 24, 2002
EXERCISE AND VESTING SCHEDULE:
This option may be exercised, in whole or in part, in accordance with
the Vesting Schedule set forth below.
DATE OF VESTING: APRIL 1, 1993
NUMBER OF SHARES: 36,000
FOR EACH OF THE 48 MONTHS FOLLOWING
APRIL 1, 1993: 1.667% OF 180,000
TERMINATION PERIOD:
Options may only be exercised while you are an Employee of the
Company except as set out in Sections 7 and 8 of the Stock Option
Agreement (but in no event later than the Expiration Date); provided,
however, that upon termination of your employment with the Company,
the Administrator may, in its sole discretion, permit you to exercise
the Option, to the extent already exercisable, during a period ending
on the earlier of 30 days after such termination of employment and
the date the Option expires in accordance with its terms.
<PAGE> 2
By your signature and the signature of the Company's representative below, you
and the Company agree that this option is granted under and governed by the
terms and conditions of the 1990 Stock Option Plan and the
Incentive/Nonstatutory Stock Option Agreement, all of which are attached and
made a part of this document.
OPTIONEE: SYNON CORPORATION
/s/ WILLIAM O. GRABE By: /s/ Paul K. Wilde
------------------------------- ----------------------------
Signature Paul K. Wilde
Chief Financial Officer
William O. Grabe
-------------------------------
Print Name
2
<PAGE> 3
SYNON CORPORATION
NOTICE OF STOCK OPTION GRANT
William O. Grabe
Two River Lane
Westport, CT 06880
You have been granted an option to purchase Common Stock of Synon Corporation
(the "Company") as follows:
TYPE OF OPTION: NONSTATUTORY STOCK OPTION
NUMBER OF SHARES GRANTED: 180,000
OPTION PRICE PER SHARE: $1.43
TOTAL PRICE OF SHARES GRANTED: $257,400
DATE OF GRANT: APRIL 24, 1992
TERM/EXPIRATION DATE: APRIL 24, 2002
EXERCISE AND VESTING SCHEDULE:
This option may be exercised, in whole or in part, in accordance with
the Vesting Schedule set forth below.
DATE OF VESTING: APRIL 1, 1993
NUMBER OF SHARES: 36,000
FOR EACH OF THE 48 MONTHS FOLLOWING
APRIL 1, 1993: 1.667% OF 180,000
TERMINATION PERIOD:
Options may only be exercised while you are an Employee of the
Company except as set out in Sections 7 and 8 of the Stock Option
Agreement (but in no event later than the Expiration Date); provided,
however, that upon termination of your employment with the Company,
the Administrator may, in its sole discretion, permit you to exercise
the Option, to the extent already exercisable, during a period ending
on the earlier of 30 days after such termination of employment and
the date the Option expires in accordance with its terms.
<PAGE> 4
By your signature and the signature of the Company's representative below, you
and the Company agree that this option is granted under and governed by the
terms and conditions of the 1990 Stock Option Plan and the
Incentive/Nonstatutory Stock Option Agreement, all of which are attached and
made a part of this document.
OPTIONEE: SYNON CORPORATION
/s/ WILLIAM O. GRABE By: /s/ Paul K. Wilde
------------------------------- ----------------------------
Signature Paul K. Wilde
Chief Financial Officer
William O. Grabe
-------------------------------
Print Name
2
<PAGE> 1
EXHIBIT 10.37
SYNON CORPORATION
NOTICE OF STOCK OPTION GRANT
John F. Rockart
150 Cherry Brook Road
Weston, MA 02193
You have been granted an option to purchase Common Stock of Synon Corporation
(the "Company") as follows:
TYPE OF OPTION: INCENTIVE STOCK OPTION
NUMBER OF SHARES GRANTED: 20,000
OPTION PRICE PER SHARE: $1.43
TOTAL PRICE OF SHARES GRANTED: $28,600
DATE OF GRANT: APRIL 28, 1993
TERM/EXPIRATION DATE: APRIL 28, 2003
EXERCISE AND VESTING SCHEDULE:
This option may be exercised, in whole or in part, in accordance with
the Vesting Schedule set forth below.
DATE OF VESTING: APRIL 14, 1994
NUMBER OF SHARES: 4,000
FOR EACH OF THE 48 MONTHS FOLLOWING
APRIL 14, 1994: 1.667% OF 20,000
Termination Period:
Options may only be exercised while you are an Employee of the Company except
as set out in Sections 7 and 8 of the Stock Option Agreement (but in no event
later than the Expiration Date); provided, however, that upon termination of
your employment with the Company, the Administrator may, in its sole
discretion, permit you to exercise the Option, to the extent already
exercisable, during a period ending on the earlier of 30 days after such
termination of employment and the date the Option expires in accordance with
its terms.
By your signature and the signature of the Company's representative below, you
and the Company agree that this option is granted under and governed by the
terms and conditions of the 1990 Stock Option Plan and the
Incentive/Nonstatutory Stock Option Agreement, all of which are attached and
made a part of this document.
<PAGE> 2
OPTIONEE: SYNON CORPORATION
/s/ JOHN F. ROCKART By: /s/ PAUL K. WILDE
------------------------------- -------------------------------
Signature Paul K. Wilde
Chief Financial Officer
John F. Rockart
-------------------------------
Print Name
2
<PAGE> 1
EXHIBIT 10.38
SYNON CORPORATION
NOTICE OF STOCK OPTION GRANT
Duncan Moore
Downsmount
54 Yew Tree Bottom Rd., Epsom Downs
Surrey, ENGLAND KT17 3NQ
You have been granted an option to purchase Common Stock of Synon Corporation
(the "Company") as follows:
TYPE OF OPTION: INCENTIVE STOCK OPTION
NUMBER OF SHARES GRANTED: 220,000
OPTION PRICE PER SHARE: $1.43
TOTAL PRICE OF SHARES GRANTED: $314,600
DATE OF GRANT: APRIL 24, 1992
TERM/EXPIRATION DATE: APRIL 24, 2002
EXERCISE AND VESTING SCHEDULE:
This option may be exercised, in whole or in part, in accordance with
the Vesting Schedule set forth below.
DATE OF VESTING: FEBRUARY 7, 1993
NUMBER OF SHARES: 44,000
FOR EACH OF THE 48 MONTHS FOLLOWING
FEBRUARY 7, 1993: 1.667% OF 220,000
In addition, (i) upon any Change of Control of Synon Corporation (as
defined herein) or initial public offering by Synon Corporation,
whichever occurs first, 50% of any unvested shares will vest
automatically and any of the then remaining unvested options will
vest monthly in equal increments over the balance of the two year
vesting period and (ii) if your employment is involuntarily
terminated or Constructively Terminated (as defined herein) within
twelve (12) months after a Change of Control (it being the intention
that you will agree to remain employed for at least one year
following a "Change of Control"), then your option shall be
accelerated to become immediately exercisable for 100% of the total
number of unvested shares subject thereto.
For purposes of the foregoing, a "Change of Control of Synon" shall
be deemed to have occurred if (i) Synon sells or otherwise disposes
of all or substantially all of its
<PAGE> 2
assets; (ii) there is a merger or consolidation of Synon with any
other corporation or corporations, provided that the shareholders of
Synon, as a group, do not hold, immediately after such event, at
least 50% of the voting power of the surviving or successor
corporation; (iii) any person or entity, including any "person" as
such term is used in Section 13(d) (3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") becomes the "beneficial
owner" (as defined in the Exchange Act) of Common Stock of Synon
representing 50% or more of the combined voting power of the voting
securities of Synon (exclusive of persons who are now officers of
directors of Synon).
For purposes of the foregoing, your employment with Synon shall be
deemed to have been "Constructively Terminated" if there shall occur
(i) a material reduction in salary or benefit (taken as a whole),
(ii) a material change in responsibility, or (iii) a requirement to
relocate, except for office relocations that would not increase your
one-way commute by more than 50 miles.
TERMINATION PERIOD:
Options may only be exercised while you are an Employee of the
Company except as set out in Sections 7 and 8 of the Stock Option
Agreement (but in no event later than the Expiration Date); provided,
however, that upon termination of your employment with the Company,
the Administrator may, in its sole discretion, permit you to exercise
the Option, to the extent already exercisable, during a period ending
on the earlier of 30 days after such termination of employment and
the date the Option expires in accordance with its terms.
By your signature and the signature of the Company's representative below, you
and the Company agree that this option is granted under and governed by the
terms and conditions of the 1990 Stock Option Plan and the
Incentive/Nonstatutory Stock Option Agreement, all of which are attached and
made a part of this document.
OPTIONEE: SYNON CORPORATION
/s/ D.C. MOORE By: /s/ PAUL K. WILDE
------------------------------- -----------------------------
Signature Paul K. Wilde
Chief Financial Officer
Duncan C. Moore
-------------------------------
Print Name
2
<PAGE> 1
EXHIBIT 10.39
SYNON CORPORATION
NOTICE OF STOCK OPTION GRANT
William M. Stuek
18 Long Neck Point Road
Darien, CT 06820
You have been granted an option to purchase Common Stock of Synon Corporation
(the "Company") as follows:
TYPE OF OPTION: INCENTIVE STOCK OPTION
NUMBER OF SHARES GRANTED: 25,000
OPTION PRICE PER SHARE: $1.80
TOTAL PRICE OF SHARES GRANTED: $45,000
DATE OF GRANT: JANUARY 30, 1995
TERM/EXPIRATION DATE: JANUARY 30, 2005
EXERCISE AND VESTING SCHEDULE:
This option may be exercised, in whole or in part, in accordance with
the Vesting Schedule set forth below.
DATE OF VESTING: JANUARY 30, 1996
NUMBER OF SHARES: 12,500
FOR EACH OF THE 12 MONTHS FOLLOWING
JANUARY 30, 1996: 1/12 OF 12,500
TERMINATION PERIOD:
Options may only be exercised while you are an Employee of the
Company except as set out in Sections 7 and 8 of the Stock Option
Agreement (but in no event later than the Expiration Date); provided,
however, that upon termination of your employment with the Company,
the Administrator may, in its sole discretion, permit you to exercise
the Option, to the extent already exercisable, during a period ending
on the earlier of 30 days after such termination of employment and
the date the Option expires in accordance with its terms.
<PAGE> 2
By your signature and the signature of the Company's representative below, you
and the Company agree that this option is granted under and governed by the
terms and conditions of the 1990 Stock Option Plan and the
Incentive/Nonstatutory Stock Option Agreement, all of which are attached and
made a part of this document.
OPTIONEE: SYNON CORPORATION
/s/ WILLIAM M. STUEK By: /s/ PAUL K. WILDE
------------------------------- ----------------------------
Signature Paul K. Wilde
Chief Financial Officer
William M. Stuek
-------------------------------
Print Name
<PAGE> 1
EXHIBIT 11.1
SYNON CORPORATION AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF
NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE
(In thousands, except for share and per share amounts)
<TABLE>
<CAPTION>
Years ended Three months
December 31, ended March 31,
----------------------------------------- ------------------------
1994 1995 1996 1996 1997
--------- --------- --------- --------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Net income (loss) $1,314 $714 $1,139 $(559) $61
--------- --------- --------- --------- ---------
Weighted average common
shares outstanding 3,399,533 3,425,024 3,444,116 3,422,403 3,453,317
Weighted average
common equivalent
shares outstanding -
preferred shares 3,986,343 3,986,343 3,986,343 -- 3,986,343
Weighted average
common equivalent
shares outstanding -
common stock options 182,652 246,632 243,609 -- 582,753
Additional weighted average
shares of stock using
estimated initial
public offering price
under the treasury
stock method issued
one year prior to
initial filing of the
registration statement 203,820 203,820 203,820 203,820 203,820
--------- --------- --------- --------- ---------
Total common and common
equivalent shares outstanding 7,772,348 7,861,819 7,877,888 3,626,223 8,226,233
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net income per common and
common equivalent share $0.17 $0.09 $0.14 $(0.15) $0.01
===== ===== ===== ====== =====
</TABLE>
<PAGE> 1
EXHIBIT 21.1
List of Subsidiaries of the Registrant
Synon Europe Limited, a Delaware corporation
Synon, Inc., an Illinois corporation and wholly-owned subsidiary of Synon Europe
Limited
Synon Canada Ltd., an Ontario corporation and wholly-owned subsidiary of Synon,
Inc.
Synon France S.A.R.L., a French corporation
Synon Research Limited, a United Kingdom corporation
Synon Deutschland GmbH, a German corporation
Synon Pty Ltd., an Australian corporation
Synon Italia S.r.l., an Italian corporation (65% owned by Synon Corporation)
Synon Asia Ltd., a Hong Kong corporation (75% owned by Synon Corporation)
Synon Japan Ltd., a Japanese corporation (51% owned by Synon Corporation)
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of this
Registration Statement for Synon Corporation.
San Francisco, California
May 28, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S AUDITED 12/31/96 CONSOLIDATED FINANCIAL STATEMENTS AND THE COMPANY'S
UNAUDITED 3/31/97 CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> MAR-31-1997 DEC-31-1996
<CASH> 2,473 1,080
<SECURITIES> 0 0
<RECEIVABLES> 20,228 24,571
<ALLOWANCES> 1,853 1,794
<INVENTORY> 0 0
<CURRENT-ASSETS> 23,195 25,422
<PP&E> 13,378 13,291
<DEPRECIATION> 9,853 9,798
<TOTAL-ASSETS> 35,063 36,909
<CURRENT-LIABILITIES> 24,699 26,685
<BONDS> 0 0
7 5,000
0 7
<COMMON> 3 3
<OTHER-SE> 4,738 4,516
<TOTAL-LIABILITY-AND-EQUITY> 35,063 36,909
<SALES> 4,476 21,801
<TOTAL-REVENUES> 18,472 76,131
<CGS> 774 3,133
<TOTAL-COSTS> 17,395 71,270
<OTHER-EXPENSES> 225 162
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (4) 47
<INCOME-PRETAX> 82 1,519
<INCOME-TAX> 21 380
<INCOME-CONTINUING> 61 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 61 1,139
<EPS-PRIMARY> .01 .14
<EPS-DILUTED> .01 .14
</TABLE>
