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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ......... to ...........
Commission file number 0-26194
SEER TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3556562
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8000 Regency Parkway
Cary, North Carolina
27511
(Address of principal executive offices)
(Zip Code)
(919) 380-5000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes ....X.... No ........
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 8, 1996
Common Stock, $0.01 par value 11,558,142 shares
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1
SEER TECHNOLOGIES, INC.
Index
Page
PART I. Financial Information Number
Item 1. Consolidated Financial Statements:
Consolidated balance sheets as of June 30, 1996
(unaudited)and September 30, 1995 3
Consolidated statements of operations (unaudited)
for the three months and nine months
ended June 30, 1996 and 1995 4
Consolidated statements of cash flows (unaudited)
for the nine months ended June 30, 1996 and 1995 5
Notes to consolidated financial statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. Other Information 13
SIGNATURES 15
2
PART I. Financial Information
Item 1. Financial Statements
SEER TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amount)
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
( unaudited )
------------- -------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $1,278 $13,650
Trade accounts receivable,less allowance for
doubtful accounts 55,279 42,949
Prepaid expenses and other current assets 3,980 4,071
Deferred income taxes 4,635 964
----------- -----------
Total current assets 65,172 61,634
Trade accounts receivable, net 3,827 5,004
Property and equipment, net 7,212 6,828
Capitalized software costs, net 2,908 2,425
Other assets 500 502
Deferred income taxes 5,034 51
----------- -----------
Total assets $84,653 $76,444
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable, due on demand $17,738 $
Accounts payable 4,156 2,976
Accrued expenses:
Compensation 782 5,553
Commissions 5,704 5,312
Restructuring costs 2,100
Other 5,509 4,179
Deferred revenue 11,197 7,134
Income taxes payable 2,351 2,393
---------- ----------
Total current liabilities 49,537 27,547
Deferred revenue 1,720 459
Stockholders' equity:
Common stock, $0.01 par value 115 114
Additional paid-in-capital 56,958 56,541
Cumulative translation adjustments (345) (395)
Accumulated deficit (23,332) (7,822)
---------- -----------
Total stockholders' equity 33,396 48,438
---------- -----------
Total liabilities and stockholders' equity $84,653 $76,444
========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
SEER TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30 June 30
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Software license $11,001 $13,137 $26,546 $37,497
Maintenance 3,120 3,040 9,152 8,280
Services 13,935 14,329 40,323 37,921
-------- -------- -------- --------
Total revenue 28,056 30,506 76,021 83,698
Cost of revenue:
Software products 534 148 1,065 444
Maintenance 1,999 1,920 5,818 5,597
Services 12,254 10,012 34,962 28,353
-------- -------- -------- --------
Cost of revenue 14,787 12,080 41,845 34,394
Gross profit 13,269 18,426 34,176 49,304
Operating expenses:
Sales and marketing 10,360 10,273 33,373 26,777
Research and product
development 3,835 3,607 12,427 10,087
General and administrative 2,538 2,267 7,806 6,318
Restructuring charges 3,000 3,000
-------- -------- -------- --------
Total operating expenses 19,733 16,147 56,606 43,182
-------- -------- -------- --------
Income (loss) from operations (6,464) 2,279 (22,430) 6,122
Other Income (expense):
Interest income 125 25 541 56
Interest expense (280) (313) (414) (668)
-------- -------- -------- --------
Other income (expense), net (155) (288) 127 (612)
-------- -------- -------- --------
Income (loss) before
provision for income taxes (6,619) 1,991 (22,303) 5,510
Income tax provision (benefit) (1,459) 712 (6,793) 2,706
-------- -------- -------- --------
Net income (loss) $(5,160) $1,279 $(15,510) $2,804
======== ======== ======== ========
Earnings (loss) per common
and common equivalent
share (Note 2) $(0.45) $0.12 $(1.36) $0.25
======== ======== ======== ========
Weighted average common and
common equivalent shares
outstanding (Note 2) 11,454 11,065 11,414 11,058
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
SEER TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
1996 1995
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (15,510) $ 2,804
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 3,051 1,844
Deferred income taxes (8,654) (52)
Changes in assets and liabilities:
Trade accounts receivable (11,097) (10,873)
Prepaid expenses and other assets 91 (854)
Accounts payable and accrued expenses 189 (1,772)
Deferred revenue 5,324 1,303
-------- --------
Net cash used in operating activities (26,606) (7,600)
Cash flows from investing activities:
Purchases of property and equipment (2,762) (2,750)
Capitalization of software development costs (1,154) (474)
-------- --------
Net cash used in investing activities (3,916) (3,224)
Cash flows from financing activities:
Issuance of common shares 418 174
Repurchase of common shares (22)
Preferred stock dividend (776)
Net borrowings under line of credit 17,738 10,900
-------- --------
Net cash provided by financing activities 18,156 10,276
Effect of exchange rate changes on cash (6) (100)
-------- --------
Net decrease in cash and cash equivalents (12,372) (648)
Cash and cash equivalents:
Beginning of period 13,650 1,278
-------- --------
End of period $ 1,278 $ 630
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
SEER TECHNOLOGIES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Interim Financial Statements
The accompanying unaudited financial statements should be read in conjunction
with the audited financial statements and notes thereto contained in the
Company's Annual Report on Form 10-K for the year ended September 30, 1995.
The results of operations for the interim periods shown in this report are not
necessarily indicative of results to be expected for other interim periods or
for the full fiscal year. In the opinion of management, the information
contained herein reflects all adjustments necessary for a fair statement of
the interim results of operations. All such adjustments are of a normal,
recurring nature, except for a $3 million restructuring charge related
primarily to employee severance benefits and leased facilities. See Note 5.
Certain 1995 amounts in the accompanying financial statements have been
reclassified to conform to the 1996 presentation.
Note 2. Earnings (loss) Per Share
Earnings (loss) per share is computed based upon the weighted average number
of common shares outstanding. Common equivalent shares, using the treasury
stock method, are included in the per share calculations only when the effect
of their inclusion would be dilutive, except that common and common equivalent
shares issued during the twelve month period prior to the Company's initial
filing of its registration statement on Form S-1 on June 30, 1995 have been
included in the calculation for the three months and nine months ended June
30, 1995 as if they were outstanding for all periods prior to the initial
public offering. Common equivalent shares consist solely of stock options.
Note 3. Income Taxes
The Company's effective tax rate differs from the statutory rate primarily due
to income taxes from foreign subsidiaries and foreign withholding taxes.
Note 4. Use of Accounting Estimates
The preparation of 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 date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual amounts could differ from these estimates.
Note 5. Restructuring Charges
During the third fiscal quarter of 1996, the Company developed and
implemented a plan of reorganization which included, among other things,
a 9% staff reduction (approximately 75 employees) and the abandonment of
certain leased facilities. The Company recorded a restructuring charge of
$3 million during the quarter, which consisted of approximately $1.4 million
in personnel-related charges and approximately $1.6 million of costs
associated with carrying the vacated space until the lease expiration date.
To date, the Company has paid approximately $.9 million in cash related to
the restructuring. The Company believes the accrued restructuring costs of
$2.1 million at June 30, 1996 represents its remaining cash obligations.
6
Note 6. Subsequent Events
At June 30, 1996, the Company maintained a line of credit providing for
borrowings of up to $25 million for working capital purposes based on the
Company's accounts receivable. Borrowings under the line of credit bear
interest at the London Interbank Offered Rate ("LIBOR") plus 3.0% with a
maximum rate not to exceed the prime rate minus 1/4%. The line of credit
requires the Company's compliance with various covenants, which among other
things, require the Company to maintain various financial ratios and limits
the amount of dividends and other payments by the Company. As of June 30,
1996, the Company was not in compliance with the financial ratio covenants.
The Bank has waived the covenant violations. In July 1996, the Company and
the Bank completed an amendment to the line of credit facility which, among
other things, increases the available borrowings from $25 million to $32.5
million. Borrowings up to $12.5 million are guaranteed by the Company's
principal stockholder, Welsh, Carson, Anderson, & Stowe VI, L.P. ("WCAS"),
pursuant to an agreement with the Company, while borrowings in excess of $12.5
million are collateralized by the Company's accounts receivable and other
assets of the Company. The Company issued 75,000 shares of its common stock
to WCAS in connection with the guaranty agreement. As of June 30, 1996, the
Company had outstanding borrowings of $17.7 million under this credit
facility. The new line of credit expires on September 30, 1997.
During August 1996, the Company completed its agreement to sell 2,094,143
shares of its Series A Convertible Preferred Stock (the "Preferred Stock") to
WCAS and certain WCAS affiliates, resulting in gross proceeds to the Company
of $12.5 million. The proceeds from the sale of the Preferred Stock will be
used for general corporate purposes. The sale of the Preferred Stock was made
in a private transaction exempt from the registration requirements of the
federal securities laws.
Each share of Preferred Stock may be converted at any time at the option of
the holder into shares of common stock of the Company at a conversion rate of
one common share for each share of Preferred Stock, subject to adjustment
upon the occurrence of certain events. The Preferred Stock is not entitled to
receive dividends in any fixed amount but will receive dividends on an as
converted basis in the event that a dividend is paid on the Company's common
stock. The Preferred Stock will rank senior in right of payment to the
Company's common stock. In the event of any liquidation, dissolution or
winding up of the Company, holders of Preferred Stock will be entitled to
receive a liquidation preference of $5.969 per share before payment is made or
assets are distributed to holders of the Company's common stock. In addition,
the holders of Preferred Stock are entitled to vote together with the holders
of common stock on all matters to be voted on by the stockholders of the
Company.
The Company is subject to certain restrictions while shares of Preferred Stock
remaining outstanding, including restrictions on the Company's ability to
declare dividends, purchase or redeem any outstanding shares of its common
stock, create or authorize the creation of additional classes of capital stock
of the Company, increase the authorized amount of Preferred Stock, create or
authorize the creation of any securities convertible into shares of Preferred
Stock or any other class of capital stock of the Company.
7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Seer Technologies, Inc. (the "Company") designs, develops, markets and
supports software products and provides related services that enable its
customers to create, distribute and manage large-scale mission critical
information processing applications that utilize client/server technologies.
The Company's application development tools, related software products and
consulting services are designed to reduce the time, cost and risk involved in
developing, deploying and maintaining complex client/server applications and
enable efficient integration of those applications with the customer's
existing systems.
During the third quarter, the Company released Seer/7000, a Windows NT-based
development environment for creating mission-critical applications deployed on
large scale client/server environments. The Company continued to implement
its strategy of leveraging its direct sales force and marketing its products
through alliances with key vendors in the computer industry. During the third
quarter, the Company entered into marketing agreements with Hewlett-Packard
and Tandem Computer, Inc. to market the Seer/7000 application development
environment worldwide.
The Company has three categories of revenue: software products, maintenance
and services. Software products revenue is comprised primarily of fees from
licensing the Company's proprietary software products and, to a lesser extent,
from product development contracts. Maintenance revenue is comprised of fees
for maintaining, supporting and providing periodic upgrades of the Company's
software products. Services revenue is composed primarily of fees for
consulting and training services.
The Company's revenues vary from quarter to quarter, with the largest portion
of revenue typically recognized in the last month of each fiscal quarter and
the third and fourth quarters of each fiscal year. The Company believes that
these patterns are partly attributable to the Company's sales commission
policies, which compensate sales personnel for meeting or exceeding quarterly
and annual quotas, and to the budgeting and purchasing cycles of customers.
Furthermore, individual sales can be very large; therefore, a single customer
or sale may have a significant impact on a quarter. In addition, the
substantial commitment of a potential customer's financial resources
historically involved in its decision to purchase the Company's products
increases the length of the sales cycle and the likelihood of quarter-to-
quarter fluctuations in the Company's sales and results of operations. The
Company's services revenue may also fluctuate from quarter to quarter due to
the completion or commencement of significant assignments, the number of
working days in a quarter and the utilization rate of services personnel. The
Company typically does not have any material backlog of unfilled software
orders, and product revenue in any quarter is substantially dependent upon
orders received in that quarter. Because the Company's operating expenses are
based on anticipated revenue levels and are relatively fixed over the short
term, variations in the timing of recognition of revenue can cause significant
variations in operating results from quarter to quarter. Fluctuations in
operating results may result in volatility in the price of the Company's
common stock.
8
Results of Operations
The following table sets forth, for the periods indicated, the Company's
unaudited results of operations expressed as a percentage of revenue:
<TABLE>
<CAPTION>
Three months ended Nine months ended
June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Software products 39.2 % 43.1 % 34.9 % 44.8 %
Maintenance 11.1 % 10.0 % 12.0 % 9.9 %
Services 49.7 % 46.9 % 53.1 % 45.3 %
-------- -------- -------- --------
Total 100.0 % 100.0 % 100.0 % 100.0 %
Cost of revenue:
Software products 1.9 % 0.5 % 1.4 % 0.5 %
Maintenance 7.1 % 6.3 % 7.6 % 6.7 %
Services 43.7 % 32.8 % 46.0 % 33.9 %
-------- -------- -------- --------
Total 52.7 % 39.6 % 55.0 % 41.1 %
Gross profit 47.3 % 60.4 % 45.0 % 58.9 %
Operating expenses:
Sales and marketing 36.9 % 33.7 % 43.9 % 32.0 %
Research and product development 13.7 % 11.8 % 16.3 % 12.1 %
General and administrative 9.0 % 7.5 % 10.3 % 7.5 %
Restructuring charges 10.7 % 4.0 %
-------- -------- -------- --------
Total 70.3 % 53.0 % 74.5 % 51.6 %
Interest income (expense), net (0.6)% (0.9)% 0.2 % (0.7)%
-------- -------- -------- --------
Income (loss) before taxes (23.6)% 6.5 % (29.3)% 6.6 %
Income tax provision (benefit) (5.2)% 2.3 % (8.9)% 3.2 %
-------- -------- -------- --------
Net income (loss) (18.4)% 4.2 % (20.4)% 3.4 %
======== ======== ======== ========
</TABLE>
The following table sets forth unaudited data for total revenue by country of
origin as a percentage of total revenue for the periods indicated:
<TABLE>
<CAPTION>
Three months ended Nine months ended
June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
United States 31.4% 23.8% 29.8% 27.0%
Mexico 0.3% - 6.0% -
Brazil 0.8% 7.0% 1.4% 3.8%
Argentina 13.8% 0.2% 6.2% 0.1%
Germany 5.2% 2.9% 11.3% 3.6%
Italy 24.1% 16.2% 14.8% 25.0%
Denmark 3.9% 4.5% 5.5% 3.9%
Norway 2.3% 7.2% 2.5% 3.0%
United Kingdom 6.5% 24.8% 7.2% 18.1%
Australia 1.7% 1.1% 3.6% 1.0%
South Africa 1.7% .7% 3.0% 2.9%
Other 8.3% 11.6% 8.7% 11.6%
-------- -------- -------- --------
100.0% 100.0% 100.0% 100.0%
======== ======== ======== ========
</TABLE>
Revenue. The Company's total revenue decreased 8% and 9% for the third
quarter and year-to-date periods of 1996 compared to the prior year. The
decrease was primarily attributable to a decrease in software products
revenue, which was offset by increases in maintenance revenues for the third
quarter and increases in maintenance revenues and services revenues for the
year-to-date period.
9
Software products. Software products revenue decreased 16% for the third
quarter and 29% for the year-to-date period from the comparable periods of
1995. The decrease is primarily a result of the Company's transition from
selling large contracts to mainframe-based IBM accounts to selling a balanced
array of products. The average value of contracts that closed decreased
approximately 40% for the quarter and year-to-date periods while the number of
contracts that closed increased approximately 40% and 20% for the quarter and
year-to-date periods, respectively. As the Company continues to reorient its
sales and marketing efforts to address this transition, the Company may face
increased revenue volatility in the near term.
Maintenance. Maintenance revenue increased by 3% and 11% compared to the
prior year for the third quarter and year-to-date periods, respectively.
Because substantially all of the Company's existing customers have
historically renewed their maintenance contracts, the increase for 1996 is
primarily a result of new customers added during the fiscal year ended
September 30, 1995.
Services. Services revenue for the third quarter decreased 3% compared to the
third quarter of 1995, primarily as a result of non-recurring cost overruns
on a single consulting contract which could not be passed on to the customer
due to the terms of the contract. For the year-to-date period, services
revenue increased 6% from the comparable period of 1995. The increase in
services revenue for the year-to-date period is due primarily to services
related to license sales made in the third and fourth quarters of 1995, as
well as the expanded use of the Seer*HPS family of products by existing
customers for more numerous and complex applications.
Gross Profit. Total gross profit for the third quarter decreased 28% from the
third quarter of 1995. For the year-to-date period, total gross profit
decreased 31% from the comparable period in 1995. Total gross margin
decreased to 47% for the third quarter as compared to 60% for the comparable
period in 1995 and decreased to 45% for the year-to-date period as compared to
59% in 1995. These decreases are due primarily to the decrease in software
revenue as a percentage of total revenue in the 1996 periods.
Software gross margin decreased to 95% for the third quarter and 96% for the
year-to-date periods as compared to 99% for the comparable periods in 1995.
The decline is a result of higher software amortization during the nine months
ended June 30, 1996. The higher amortization resulted from costs associated
with Seer*HPS 5.3 which began to be amortized when it became generally
available in the quarter ended December 31, 1995.
Maintenance gross margins remained relatively constant for the third quarter
(36% compared to 37% for the comparable period of 1995) and increased to 36%
for the nine months ended June 30, 1996 as compared to 32% in 1995. The
improvement in maintenance gross margins for the year-to-date period was
primarily due to an increase in revenue from first year and renewal contracts
while associated headcount and other expenses remained relatively constant.
Services margins for the third quarter decreased to 12% as compared to 30% for
the comparable period of 1995 and decreased to 13% for the year-to-date period
as compared to 25% for the comparable period of 1995. The decline in services
margin is primarily a result of the costs associated with headcount, outside
contractors and other consulting obligations increasing approximately 22%
during the 1996 periods while revenue decreased by 3% for the quarter and
increased by only 6% for the year-to-date period.
Sales and Marketing Expense. Sales and marketing expense remained relatively
constant for the third quarter and increased 25% year-to-date, compared to the
prior year periods. The year-to-date increase is the result of the expansion
of the Company's sales force worldwide, as well as an increase in certain
commissions. Average sales and marketing headcount has increased 17% compared
to the year-to-date period of 1995. The 1996 year-to-date amounts were also
impacted by $.9 million of marketing expenses recorded in conjunction with the
sale of software to a large customer in Europe and an increase of $.5 million
in commissions paid to IBM for sales of the Company's software products in
South America made by IBM.
Research and Product Development Expense. Research and development expense
increased 6% and 23% compared to the prior year for the third quarter and
year-to-date periods, respectively. The increase is primarily a result of
personnel additions to develop and test new products. Costs associated with
headcount and outside contractors increased 9% and 22% for the quarter and
year-to-date periods, respectively. Capitalization of costs related to the
development of Seer/7000 partially offset the impact of personnel additions on
the third quarter research and development expense in comparison to the prior
year.
10
General and Administrative Expense. General and administrative expenses
increased 12% and 24% compared to the prior year for the third quarter and
year-to-date periods, respectively. The increase for the quarter and year-to-
date periods is primarily a result of additional outside and professional
services utilized in the third quarter of 1996. The year-to-date expense was
also impacted by a 13% increase in personnel necessary to manage and support
the Company's growth prior to the restructuring. Additionally, a
strengthening dollar in the second quarter of 1996 caused foreign currency
exchange gains and losses to be unfavorably impacted for the year-to-date
period as compared to 1995, when the dollar was weaker.
Income Taxes. The income tax benefits recorded for the third quarter and
year-to-date periods of 1996 were $1.5 million and $6.8 million compared to
income tax expense of $0.7 million and $2.7 million for the comparable periods
of 1995. The benefits for the 1996 periods consisted of the expected
realization of the benefit of the operating losses incurred during the periods
at an effective tax rate of 36% less the current period income taxes on
foreign subsidiaries and foreign withholding taxes. Income tax expense for
the 1995 periods consisted primarily of income taxes on foreign subsidiaries
and foreign withholding taxes.
Liquidity and Capital Resources
Cash flow used in operations increased significantly in comparison to the
prior year period due to the loss from operations for the year-to-date period
of 1996. The impact of the operating loss on cash flow from operations was
partially offset by an increase of $5.3 million in deferred revenue. The
$11.2 million increase in trade accounts receivable is due primarily to the
payment terms of certain software and consulting contracts signed during the
1996 year-to-date period.
Due to the payment terms of certain software contracts, a portion of the
related receivables are classified as non-current assets. As of June 30,
1996, the Company has evaluated the collectibility of the non-current
receivable based upon the customers' prior payment history and determined that
the receivables are collectible.
During the year-to-date period for 1996, the Company has recorded a deferred
tax asset of approximately $6.8 million for the future realization of the
operating loss incurred during the current period. Approximately $6.0 million
of the deferred tax asset has been classified as noncurrent based upon the
estimated realization period.
Cash used by investing activities increased 21% for the year-to-date period of
1996 compared to the same period of 1995. This increase is primarily a result
of the capitalization of $800,000 in software development costs related to
Seer/7000 during the third quarter of 1996. During the third quarter of
1996, the Company entered into an operating lease for certain computer
equipment. Payments under the lease agreement will approximate $550,000 per
year for each of the next three years. As of June 30, 1996, the Company did
not have any other material commitments for capital expenditures.
The 77% increase in cash provided by financing activities for the year-to-date
period of 1996 compared to the same period of 1995 resulted primarily from an
increase in net borrowings under the Company's line of credit.
At June 30, 1996, the Company maintained a line of credit providing for
borrowings of up to $25 million for working capital purposes based on the
Company's accounts receivable. Borrowings under the line of credit bear
interest at the London Interbank Offered Rate ("LIBOR") plus 3.0% with a
maximum rate not to exceed the prime rate minus 1/4%. The line of credit
requires the Company's compliance with various covenants, which among other
things, require the Company to maintain various financial ratios and limits
the amount of dividends and other payments by the Company. As of June 30,
1996, the Company was not in compliance with the financial ratio covenants.
The Bank has waived the covenant violations. In July 1996, the Company and
the Bank completed an amendment to the line of credit facility which, among
other things, increases the available borrowings from $25 million to $32.5
million. Borrowings up to $12.5 million are guaranteed by the Company's
principal stockholder, Welsh, Carson, Anderson, & Stowe VI, L.P. ("WCAS"),
pursuant to an agreement with the Company, while borrowings in excess of $12.5
million are collateralized by the Company's accounts receivable and other
assets of the Company. The Company issued 75,000 shares of its common stock
to WCAS in connection with the guaranty agreement. As of June 30, 1996, the
Company had outstanding borrowings of $17.7 million under this credit
facility. The new line of credit expires on September 30, 1997.
11
In addition, the Company had a line of credit as of June 30, 1996 of up to $3
million available to enter into foreign exchange contracts. The aggregate
notional amount of foreign exchange contracts outstanding under this facility
cannot exceed $23.3 million. At June 30, 1996 the aggregate notional amount
of foreign exchange contracts outstanding was $12.4 million.
During August 1996, the Company completed its agreement to sell 2,094,143
shares of its Series A Convertible Preferred Stock (the "Preferred Stock") to
WCAS and certain WCAS affiliates, resulting in gross proceeds to the Company
of $12.5 million. The proceeds from the sale of the Preferred Stock will be
used for general corporate purposes. The sale of the Preferred Stock was made
in a private transaction exempt from the registration requirements of the
federal securities laws.
Each share of Preferred Stock may be converted at any time at the option of
the holder into shares of common stock of the Company at a conversion rate of
one common share for each share of Preferred Stock, subject to adjustment
upon the occurrence of certain events. The Preferred Stock is not entitled to
receive dividends in any fixed amount but will receive dividends on an as
converted basis in the event that a dividend is paid on the Company's common
stock. The Preferred Stock will rank senior in right of payment to the
Company's common stock. In the event of any liquidation, dissolution or
winding up of the Company, holders of Preferred Stock will be entitled to
receive a liquidation preference of $5.969 per share before payment is made or
assets are distributed to holders of the Company's common stock. In addition,
the holders of Preferred Stock are entitled to vote together with the holders
of common stock on all matters to be voted on by the stockholders of the
Company.
The Company is subject to certain restrictions while shares of Preferred Stock
remaining outstanding, including restrictions on the Company's ability to
declare dividends, purchase or redeem any outstanding shares of its common
stock, create or authorize the creation of additional classes of capital stock
of the Company, increase the authorized amount of Preferred Stock, create or
authorize the creation of any securities convertible into shares of Preferred
Stock or any other class of capital stock of the Company.
The Company believes that existing cash on hand, the additional equity
financing from WCAS, and additional borrowings under the line of credit will
be sufficient to finance its operations and expected working capital and
capital expenditure requirements for at least the next twelve months.
Thereafter, the Company's liquidity will depend upon the results of future
operations, as well as available sources of financing. There can be no
assurance that the Company will be able to meet its loan covenants, achieve
its operating plan or, if needed, obtain additional financing on acceptable
terms, and the failure to do so may have an adverse impact on the Company's
business and operations.
12
PART II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
13
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4.3 Specimen Preferred Stock Certificate.
4.4 Certificate of Designation of Series A Convertible
Preferred Stock of the Company.
10.39 Credit Agreement and related Promissory Note between
Seer Technologies, Inc. and NationsBank, N.A. and
related Guaranty between the Company and WCAS, all
dated July 15, 1996.
10.40 Second Consolidated Amendment Agreement dated
July 19, 1996 between Seer Technologies, Inc. and
NationsBank.
10.41 Preferred Stock Purchase Agreement dated August 8,
1996, among the Company, WCAS and certain WCAS
affiliates named therein.
10.42 Stock Agreement dated August 8, 1996, between the
Company and WCAS.
11.3 Statement Regarding Computation of Earnings Per
Share.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEER TECHNOLOGIES, INC.
/s/ EUGENE F. BEDELL
Date: August 14, 1996 ..............................................
Eugene F. Bedell
President and Chief Executive Officer
/s/ MARK BARIC
Date: August 14, 1996 ..............................................
Mark Baric
Acting Chief Financial Officer
15
EXHIBIT 4.3
Incorporated Under the Laws of the State of Delaware
[Certificate Number] [Number of shares]
Seer Technologies, Inc.
Series A Convertible Preferred Stock
Par Value $.01 Each
This is to certify that _________________________________ is the owner of
_____________fully paid and non-assessable shares of the Series A Convertible
Preferred Stock of Seer Technologies, Inc. transferable on the books of the
Corporation by the holder hereof in person or by duly authorized Attorney,
upon surrender of this Certificate, properly endorsed.
Witness, the seal of the Corporation and the signatures of its duly
authorized officers.
Dated:
_____________________________ ________________________________
Secretary/Treasurer President
EXHIBIT 4.4
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
SEER TECHNOLOGIES, INC.
(Pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware)
Seer Technologies, Inc., a corporation organized and existing under the
General Corporation Law (the "GCL") of the State of Delaware (hereinafter
called the "Corporation"), hereby certifies that, pursuant to authority vested
in the Board of Directors of the Corporation by Article Fourth of the Restated
Certificate of Incorporation of the Corporation, the following resolution was
adopted by unanimous written consent dated as of August 8, 1996 of the Board
of Directors of the Corporation pursuant to Section 151(g) of the GCL:
RESOLVED that, pursuant to authority vested in the Board of Directors of
the Corporation by Article Fourth of the Restated Certificate of Incorporation
of the Corporation, 2,094,143 shares of the Corporation's Preferred Stock, par
value $.01 per share, designated as "Series A Convertible Preferred Stock"
("Series A Preferred Stock") are authorized for issuance with the voting
powers, preferences and other special rights, and qualifications, limitations
and restrictions thereof set forth below:
1. Dividends. The holders of Series A Preferred Stock shall not be
entitled to receive dividends in any fixed amount, provided, however,
that in the event that the Corporation shall at any time pay a dividend
on the Common Stock (other than a dividend payable solely in shares of
Common Stock), it shall, at the same time, pay to each holder of Series A
Preferred Stock a dividend equal to the dividend that would have been
payable to such holder if the shares of Series A Preferred Stock held by
such holder had been converted into Common Stock on the date of
determination of holders of Common Stock entitled to receive such
dividend.
In no event, so long as any shares of Series A Preferred Stock shall
remain outstanding, shall any shares of Common Stock be purchased or
redeemed by the Corporation, nor shall any moneys be paid to or made
available for a sinking fund for the purchase or redemption of any shares
of Common Stock, (without the written consent of the holders of 66 2/3%
of the outstanding Series A Preferred Stock) except that the Corporation
may repurchase or redeem shares of Common Stock owned by employees,
consultants, agents, brokers, officers or directors of the Corporation,
provided, that the Corporation shall not repurchase or redeem any shares
of Common Stock for a consideration in excess of the amount paid therefor
by such employee, consultant, broker, officer or director unless such
repurchase or redemption shall have been authorized or approved by at
least 75% of the members of the Board of Directors of the Corporation.
2. Liquidation. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of the
shares of Series A Preferred Stock shall be entitled, before any
distribution or payment is made upon any Common Stock, to be paid an
amount equal to $5.969 per share, plus any accrued but unpaid dividends
thereon to the date of such payment, and the holders of the Series A
Preferred Stock shall not be entitled to any further payment, such
amounts being herein sometimes referred to as the "Liquidation Payments".
If upon such liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the assets to be distributed among the
holders of Series A Preferred Stock of the Corporation shall be
insufficient to permit payment to the holders of Series A Preferred Stock
of the full amount of the Liquidation Payments, then the entire assets of
the Corporation to be so distributed shall be distributed ratably per
share among the holders of Series A Preferred Stock in proportion to the
amounts to which they respectively are entitled. Upon any such
liquidation, dissolution or winding up of the Corporation, after the
holders of the Series A Preferred Stock shall have been paid in full the
amounts to which they shall be entitled, the remaining net assets of the
Corporation shall be distributed ratably to the holders of Common Stock.
Written notice of such liquidation, dissolution or winding up, stating a
payment date, the amount of the Liquidation Payment and the place where
said sums shall be payable shall be given by mail, postage prepaid, not
less than 30 or more than 60 days prior to the payment date stated
therein, to the holders of record of the Series A Preferred Stock and the
Common Stock, such notice to be addressed to each shareholder at his post
office address as shown by the records of the Corporation. Neither the
consolidation or merger of the Corporation into or with any other
corporation or corporations, nor the sale or transfer by the Corporation
of all or any part of its assets, shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of any of
the provisions of this paragraph 2.
3. Conversion.
3A. Right to Convert. Subject to the terms and conditions of this
paragraph 3, the holder of any share or shares of Series A Preferred
Stock shall have the right, at its option at any time, to convert any
such shares of Series A Preferred Stock (except that upon any liquidation
of the Corporation the right of conversion shall terminate at the close
of business on the last full business day next preceding the date fixed
for payment of the amount distributable on the Series A Preferred Stock)
into such number of fully paid and nonassessable whole shares of Common
Stock as is obtained by multiplying the number of shares of Series A
Preferred Stock so to be converted by $5.969 and dividing the result by
the conversion price of $5.969 per share or, if there has been an
adjustment of the conversion price, by the conversion price as last
adjusted and in effect at the date any share or shares of Series A
Preferred Stock are surrendered for conversion (such price, or such price
as last adjusted, being referred to herein as the "Conversion Price").
Such rights of conversion shall be exercised by the holder thereof by
giving written notice that the holder elects to convert a stated number
of shares of Series A Preferred Stock into Common Stock and by surrender
of a certificate or certificates for the shares so to be converted to the
Corporation at its principal office (or such other office or agency of
the Corporation as the Corporation may designate by notice in writing to
the holder or holders of the Series A Preferred Stock) at any time during
its usual business hours on the date set forth in such notice, together
with a statement of the name or names (with address), subject to
compliance with applicable laws to the extent such designation shall
involve a transfer, in which the certificate or certificates for shares
of Common Stock shall be issued.
3B. Issuance of Certificates; Time Conversion Effected. Promptly
after the receipt by the Corporation of the written notice referred to in
subparagraph 3A and surrender of the certificate or certificates for the
share or shares of the Series A Preferred Stock to be converted, the
Corporation shall issue and deliver, or cause to be issued and delivered,
to the holder, registered in such name or names as such holder may
direct, subject to compliance with applicable laws to the extent such
designation shall involve a transfer, a certificate or certificates for
the number of whole shares of Common Stock issuable upon the conversion
of such share or shares of Series A Preferred Stock. To the extent
permitted by law, such conversion shall be deemed to have been effected
and the Conversion Price shall be determined as of the close of business
on the date on which such written notice shall have been received by the
Corporation and the certificate or certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of
the holder of such share or shares of Series A Preferred Stock shall
cease, and the person or persons in whose name or names any certificate
or certificates for shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record
of the shares represented thereby.
3C. Fractional Shares; Dividends; Partial Conversion. No fractional
shares shall be issued upon conversion of the Series A Preferred Stock
into Common Stock and the number of shares of Common Stock to be issued
shall be rounded to the nearest whole share, and no payment or adjustment
shall be made upon any conversion on account of any cash dividends on the
Series A Preferred Stock so converted or the Common Stock issued upon
such conversion. In case the number of shares of Series A Preferred
Stock represented by the certificate or certificates surrendered pursuant
to subparagraph 3A exceeds the number of shares converted, the
Corporation shall, upon such conversion, execute and deliver to the
holder thereof, at the expense of the Corporation, a new certificate or
certificates for the number of shares of Series A Preferred Stock,
represented by the certificate or certificates surrendered which are not
to be converted.
3D. Adjustment of Price Upon Issuance of Common Shares. Except as
provided in subparagraph 3E hereof, if and whenever the Corporation shall
issue or sell, or is, in accordance with subparagraphs 3D(1) through
3D(7), deemed to have issued or sold, any shares of its Common Stock
without consideration or for a consideration per share less than the
Conversion Price in effect immediately prior to the time of such issue or
sale, then, forthwith upon such issue or sale, the Conversion Price shall
be reduced to the price (calculated to the nearest cent) determined by
dividing (i) an amount equal to the sum of (a) the number of shares of
Common Stock outstanding immediately prior to such issue or sale
(including as outstanding all shares of Common Stock issuable upon
conversion of outstanding Series A Preferred Stock) multiplied by the
then existing Conversion Price, and (b) the consideration, if any,
received by the Corporation upon such issue or sale, by (ii) the total
number of shares of Common Stock outstanding immediately after such issue
or sale (including as outstanding all shares of Common Stock issuable
upon conversion of outstanding Series A Preferred Stock without giving
effect to any adjustment in the number of shares so issuable by reason of
such issue and sale).
No adjustment of the Conversion Price, however, shall be made in an
amount less than $.01 per share, and any such lesser adjustment shall be
carried forward and shall be made at the time and together with the next
subsequent adjustment which together with any adjustments so carried
forward shall amount to $.01 per share or more.
For purposes of this subparagraph 3D, the following subparagraphs
3D(1) to 3D(7) shall also be applicable:
3D(1). Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by assumption
in a merger or otherwise) any rights to subscribe for or to purchase, or
any options for the purchase of, Common Stock or any stock or securities
convertible into or exchangeable for Common Stock (such rights or options
being herein called "Options" and such convertible or exchangeable stock
or securities being herein called "Convertible Securities") whether or
not such Options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities (determined by
dividing (i) the total amount, if any, received or receivable by the
Corporation as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case of
such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the exercise
of such Options) shall be less than the Conversion Price in effect
immediately prior to the time of the granting of such Options, then the
total maximum number of shares of Common Stock issuable upon the exercise
of such Options or upon conversion or exchange of the total maximum
amount of such Convertible Securities issuable upon the exercise of such
Options shall be deemed to have been issued for such price per share as
of the date of granting of such Options and thereafter shall be deemed to
be outstanding. Except as otherwise provided in subparagraph 3D(3), no
adjustment of the Conversion Price shall be made upon the actual issue of
such Common Stock or of such Convertible Securities upon exercise of such
Options or upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.
3D(2). Issuance of Convertible Securities. In case the Corporation
shall in any manner issue (whether directly or by assumption in a merger
or otherwise) or sell any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing (i) the total amount
received or receivable by the Corporation as consideration for the issue
or sale of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Corporation upon the
conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities) shall be less than the Conversion Price in
effect immediately prior to the time of such issue or sale, then the
total maximum number of shares of Common Stock issuable upon conversion
or exchange of all such Convertible Securities shall be deemed to have
been issued for such price per share as of the date of the issue or sale
of such Convertible Securities and thereafter shall be deemed to be
outstanding, provided that (a) except as otherwise provided in
subparagraph 3D(3) below, no adjustment of the Conversion Price shall be
made upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities, and (b) if any such issue or
sale of such Convertible Securities is made upon exercise of any Option
to purchase any such Convertible Securities for which adjustments of the
Conversion Price have been or are to be made pursuant to other provisions
of this subparagraph 3D, no further adjustment of the Conversion Price
shall be made by reason of such issue or sale.
3D(3). Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase price
provided for in any Option referred to in subparagraph 3D(1), the
additional consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in subparagraph 3D(1) or 3D(2),
or the rate at which any Convertible Securities referred to in
subparagraph 3D(1) or 3D(2) are convertible into or exchangeable for
Common Stock shall change at any time (in each case other than under or
by reason of provisions designed to protect against dilution), the
Conversion Price in effect at the time of such event shall forthwith be
readjusted to the Conversion Price which would have been in effect at
such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted,
issued or sold; and on the expiration of any such Option or the
termination of any such right to convert or exchange such Convertible
Securities, the Conversion Price then in effect hereunder shall forthwith
be increased to the Conversion Price which would have been in effect at
the time of such expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such
expiration or termination, never been issued, and the Common Stock
issuable thereunder shall no longer be deemed to be outstanding. If the
purchase price provided for in any such Option referred to in
subparagraph 3D(1) or the rate at which any Convertible Securities
referred to in subparagraph 3D(1) or 3D(2) are convertible into or
exchangeable for Common Stock shall be reduced at any time under or by
reason of provisions with respect thereto designed to protect against
dilution, then, in case of the delivery of Common Stock upon the exercise
of any such Option or upon conversion or exchange of any such Convertible
Securities, the Conversion Price then in effect hereunder shall forthwith
be adjusted to such respective amount as would have been obtained had
such Option or Convertible Securities never been issued as to such Common
Stock and had adjustments been made upon the issuance of the shares of
Common Stock delivered as aforesaid, but only if as a result of such
adjustment the Conversion Price then in effect hereunder is thereby
reduced.
3D(4). Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the Corporation
payable in Common Stock, Options or Convertible Securities, any Common
Stock, Options or Convertible Securities, as the case may be, issuable in
payment of such dividend or distribution shall be deemed to have been
issued or sold without consideration.
3D(5). Subdivision or Combination of Stock. In case the
Corporation shall at any time subdivide its outstanding shares of Common
Stock into a greater number of shares or shall declare or pay a dividend
on its outstanding shares of Common Stock payable in shares of Common
Stock, the Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Corporation shall be combined
into a smaller number of shares, the Conversion Price in effect
immediately prior to such combination shall be proportionately increased.
3D(6). Consideration for Stock. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor, without deduction therefrom
of any expenses incurred or any underwriting commissions or concessions
paid or allowed by the Corporation in connection therewith. In case any
shares of Common Stock, Options or Convertible Securities shall be issued
or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Corporation shall be deemed
to be the fair value of such consideration as determined in good faith by
the Board of Directors of the Corporation, without deduction of any
expenses incurred or any underwriting commissions or concessions paid or
allowed by the Corporation in connection therewith. The amount of
consideration deemed to be received by the Corporation pursuant to the
foregoing provisions of this subparagraph 3D(6) upon any issuance and/or
sale of shares of Common Stock, Options or Convertible Securities,
pursuant to an established compensation plan of the Corporation, to
directors, officers or employees of the Corporation in connection with
their employment shall be increased by the amount of any tax benefit
realized by the Corporation as a result of such issuance and/or sale, the
amount of such tax benefit being the amount by which the Federal and/or
state income or other tax liability of the Corporation shall be reduced
by reason of any deduction or credit in respect of such issuance and/or
sale. In case any Options shall be issued in connection with the issue
and sale of other securities of the Corporation, together comprising one
integral transaction in which no specific consideration is allocated to
such Options by the parties thereto, such Options shall be deemed to have
been issued without consideration.
3D(7). Record Date. In case the Corporation shall take a record of
the holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options
or Convertible Securities, or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be.
3E. Certain Issues of Common Stock Excepted. Anything herein to the
contrary notwithstanding, the Corporation shall not make any adjustment
of the Conversion Price in the case of (i) the issuance of shares of
Common Stock upon conversion of Series A Preferred Stock, (ii) the
issuance of Common Stock or stock options granted pursuant to the
Corporation's Stock Option and Restricted Stock Purchase Plan or Stock
Option Plan for Non-Employee Directors or pursuant to any other employee
benefit plan approved by the Board of Directors of the Corporation, or
(iii) the issuance of Common Stock upon conversion of any convertible
securities or exercise of any rights or warrants outstanding as of the
date hereof.
3F. Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the
Corporation shall be effected in such a way (including, without
limitation, by way of consolidation or merger) that holders of Common
Stock shall be entitled to receive stock, securities or assets with
respect to or in exchange for Common Stock, then, as a condition of such
reorganization or reclassification, lawful and adequate provision (in
form satisfactory to the holders of at least 66-2/3% of the outstanding
shares of Series A Preferred Stock) shall be made whereby each holder of
a share or shares of Series A Preferred Stock shall thereafter have the
right to receive, upon the basis and upon the terms and conditions
specified herein and in lieu of the shares of Common Stock of the
Corporation immediately theretofore receivable upon the conversion of
such share or shares of the Series A Preferred Stock, such shares of
stock, securities or assets as may be issued or payable with respect to
or in exchange for a number of outstanding shares of such Common Stock
equal to the number of shares of such stock immediately theretofore so
receivable had such reorganization or reclassification not taken place,
and in any such case appropriate provision shall be made with respect to
the rights and interests of such holder to the end that the provisions
hereof (including without limitation provisions for adjustments of the
Conversion Price) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights (including an
immediate adjustment, by reason of such reorganization or
reclassification, of the Conversion Price to the value for the Common
Stock reflected by the terms of such reorganization or reclassification
if the value so reflected is less than the Conversion Price in effect
immediately prior to such reorganization or reclassification). In the
event of a merger or consolidation of the Corporation as a result of
which a greater or lesser number of shares of common stock of the
surviving corporation are issuable to holders of Common Stock of the
Corporation outstanding immediately prior to such merger or
consolidation, the Conversion Price in effect immediately prior to such
merger or consolidation shall be adjusted in the same manner as though
there were a subdivision or combination of the outstanding shares of
Common Stock of the Corporation. The Corporation will not effect any
such consolidation or merger, or any sale of all or substantially all its
assets and properties, unless prior to the consummation thereof the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets shall
assume by written instrument (in form reasonably satisfactory to the
holders of at least 66-2/3% of the shares of Series A Preferred Stock at
the time outstanding) executed and mailed or delivered to each holder of
shares of Series A Preferred Stock at the last address of such holder
appearing on the books of the Corporation, the obligation to deliver to
such holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such holder may be entitled to receive.
3H. Notice of Adjustment. Upon any adjustment of the Conversion
Price, then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, addressed to each
holder of shares of Series A Preferred Stock at the address of such
holder as shown on the books of the Corporation, which notice shall state
the Conversion Price resulting from such adjustment, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
3I. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon
its Common Stock payable in cash or stock or make any other distribution
to the holders of its Common Stock;
(2) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class
or other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a
consolidation or merger of the Corporation with, or a sale of all or
substantially all its assets to, another corporation; or
(4) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by
first class mail, postage prepaid, addressed to each holder of any shares
of Series A Preferred Stock at the address of such holder as shown on the
books of the Corporation, (a) at least 15 days' prior written notice of
the date on which the books of the Corporation shall close or a record
shall be taken for such dividend, distribution or subscription rights or
for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation
or winding up, and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation
or winding up, at least 15 days' prior written notice of the date when
the same shall take place. Such notice in accordance with the foregoing
clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of
Common Stock shall be entitled thereto, and such notice in accordance
with the foregoing clause (b) shall also specify the date on which the
holders of Common Stock shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation
or winding up, as the case may be.
3J. Stock to be Reserved. The Corporation will at all times
reserve and keep available out of its authorized but unissued Common
Stock, solely for the purpose of issuance upon the conversion of the
Series A Preferred Stock as herein provided, such number of shares of
Common Stock as shall then be issuable upon the conversion of all
outstanding shares of Series A Preferred Stock. All shares of Common
Stock which shall be so issued shall be duly and validly issued and fully
paid and nonassessable and free from all taxes, liens and charges arising
out of or by reason of the issue thereof, and, without limiting the
generality of the foregoing, the Corporation covenants that it will from
time to time take all such action as may be requisite to assure that the
par value per share of the Common Stock is at all times equal to or less
than the effective Conversion Price. The Corporation will take all such
action within its control as may be necessary on its part to assure that
all such shares of Common Stock may be so issued without violation of any
applicable law or regulation, or of any requirements of any national
securities exchange upon which the Common Stock of the Corporation may be
listed. The Corporation will not take any action which results in any
adjustment of the Conversion Price if after such action the total number
of shares of Common Stock issued and outstanding and thereafter issuable
upon exercise of all options and conversion of Convertible Securities,
including upon conversion of the Series A Preferred Stock, would exceed
the total number of shares of Common Stock then authorized by the
Corporation's Restated Certificate of Incorporation.
3K. No Reissuance of Series A Preferred Stock. Shares of Series A
Preferred Stock that are converted into shares of Common Stock as
provided herein shall not be reissued.
3L. Issue Tax. The issuance of certificates for shares of Common
Stock upon conversion of the Series A Preferred Stock shall be made
without charge to the holders thereof for any issuance tax in respect
thereof, provided that the Corporation shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the
holder of the Series A Preferred Stock which is being converted.
3M. Closing of Books. The Corporation will at no time close its
transfer books against the transfer of any Series A Preferred Stock or of
any shares of Common Stock issued or issuable upon the conversion of any
shares of Series A Preferred Stock in any manner which interferes with
the timely conversion of such Series A Preferred Stock.
3N. Definition of Common Stock. As used in this paragraph 3, the
term "Common Stock" shall mean and include the Corporation's authorized
Common Stock as constituted on the date of filing of this Certificate of
Designation and shall also include any capital stock of any class of the
Corporation thereafter authorized that shall not be limited to a fixed
sum in respect of the rights of the holders thereof to participate in
dividends or in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation;
provided, however, that such term, when used to describe the securities
receivable upon conversion of shares of the Series A Preferred Stock of
the Corporation, shall include only shares designated as Common Stock of
the Corporation on the date of filing of this Certificate of Designation,
any shares resulting from any combination or subdivision thereof referred
to in paragraph 3D(5), or in case of any reorganization or
reclassification of the outstanding shares thereof, the stock, securities
or assets provided for in subparagraph 3F.
4. Voting. Series A Preferred. Except as otherwise provided by
law and the Corporation's Restated Certificate of Incorporation, the
holders of Series A Preferred Stock shall vote together with the holders
of Common Stock on all matters to be voted on by the stockholders of the
Corporation, and each holder of Series A Preferred Stock shall be
entitled to one vote for each share of Common Stock that would be
issuable to such holder upon the conversion of all the shares of Series A
Preferred Stock held by such holder on the record date for the
determination of shareholders entitled to vote.
5. Restrictions. At any time when shares of Series A Preferred
Stock are outstanding, and in addition to any other vote of stockholders
required by law or by the Corporation's Restated Certificate of
Incorporation, without the prior consent of the holders of 66 2/3% of the
outstanding Series A Preferred Stock, given in person or by proxy, either
in writing or at a special meeting called for that purpose, at which
meeting the holders of the shares of such Series A Preferred Stock shall
vote together as a class:
(i) the Corporation will not (x) create or authorize the creation
of any additional class of shares unless the same ranks junior to the
Series A Preferred Stock as to the distribution of assets on liquidation
and pari passu as to dividends, or (y) increase the authorized amount of
the Series A Preferred Stock, or increase the authorized amount of any
additional class of shares unless the same ranks junior to the Series A
Preferred Stock as to the distribution of assets on liquidation and pari
passu as to dividends or (z) create or authorize any obligations or
securities convertible into shares of Series A Preferred Stock or into
shares of any other class unless the same ranks junior to the Series A
Preferred Stock as to the distribution of assets on liquidation and pari
passu as to dividends, in each case whether any such creation or
authorization or increase shall be by means of amendment of the
Corporation's Restated Certificate of Incorporation, merger,
consolidation or otherwise; and
(ii) the Corporation will not amend, alter or repeal the
Corporation's Restated Certificate of Incorporation or By-laws in any
manner, or file any directors' resolutions pursuant to the General
Corporation Law of the State of Delaware containing any provision, in
either case which affects the respective preferences, voting power,
qualifications, special or relative rights or privileges of the Series A
Preferred Stock or which in any manner adversely affects the Series A
Preferred Stock or the holders thereof.
IN WITNESS WHEREOF, this Certificate of Designation has been executed by
the Corporation by its President and Chief Executive Officer and attested by
its Secretary as of this 8th day of August 1996.
SEER TECHNOLOGIES, INC.
By
President and Chief
Executive Officer
ATTEST:
Secretary
EXHIBIT 10.39
$12,500,000
CREDIT AGREEMENT
BETWEEN
SEER TECHNOLOGIES, INC.
AND
NATIONSBANK, N.A.
July 15, 1996
TABLE OF CONTENTS
Page
ARTICLE 1
Definitions
Section 1.1 Defined Terms 1
Section 1.2 Amendments and Renewals 7
Section 1.3 Construction 7
ARTICLE 2
Advances
Section 2.1 The Advances 7
Section 2.2 Manner of Borrowing and Disbursement 8
Section 2.3 Interest 9
(a) On Base Rate Advances 9
(b) On LIBOR Advances 10
(c) Interest if No Notice of Selection
of Interest Rate Basis 10
(d) Interest After an Event of Default 10
Section 2.4 Commitment Fee 10
Section 2.5 Prepayment 11
(a) Voluntary Prepayments 11
(b) Mandatory Prepayment 11
(c) Prepayments, Generally 11
Section 2.6 Reduction of Commitment 11
(a) Voluntary Reduction 11
(b) Mandatory Reduction 11
(c) General Requirements 12
Section 2.7 Payment of Principal of Advances 12
Section 2.8 Reimbursement 12
Section 2.9 Manner of Payment 12
Section 2.10 LIBOR Lending Offices 13
Section 2.11 Calculation of Rates 13
Section 2.12 Booking Loans 13
Section 2.13 Taxes 13
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advance 13
Section 3.2 Conditions Precedent to All Advances 14
Section 3.3 Conditions Precedent to Conversions and Continuations 15
ARTICLE 4
Representations and Warranties
Section 4.1 Organization and Good Standing 15
Section 4.2 Authorization and Power 15
Section 4.3 No Conflicts or Consents 16
Section 4.4 Enforceable Obligations 16
Section 4.5 No Liens 16
Section 4.6 Financial Condition 16
Section 4.7 Full Disclosure 16
Section 4.8 No Default or Event of Default 17
Section 4.9 Material Agreements 17
Section 4.10 No Litigation 17
Section 4.11 Regulatory Defects 17
Section 4.12 Use of Proceeds; Margin Stock 17
Section 4.13 Taxes 17
Section 4.14 ERISA 18
Section 4.15 Compliance with Law 18
Section 4.16 Insider 18
Section 4.17 Solvency 18
Section 4.18 Representations and Warranties 18
Section 4.19 Survival of Representations, Etc. 18
ARTICLE 5
Business Covenants
Section 5.1 Existing Loan Agreement Covenants 19
Section 5.2 Notice of Default or Event of Default 19
Section 5.3 Indemnity 19
ARTICLE 6
Default
Section 6.1 Events of Default 21
Section 6.2 Remedies 23
ARTICLE 7
Changes in Circumstances
Section 7.1 LIBOR Basis Determination Inadequate 23
Section 7.2 Illegality 23
Section 7.3 Increased Costs 24
Section 7.4 Effect On Base Rate Advances 25
Section 7.5 Capital Adequacy 25
ARTICLE 8
Miscellaneous
Section 8.1 Notices 26
Section 8.2 Expenses 26
Section 8.3 Waivers 27
Section 8.4 Determination by the Bank Conclusive and Binding 27
Section 8.5 Set-Off 27
Section 8.6 Assignment 28
Section 8.7 Counterparts 28
Section 8.8 Severability 28
Section 8.9 Interest and Charges 28
Section 8.10 Headings 29
Section 8.11 Amendment and Waiver 29
SECTION 8.12 GOVERNING LAW 29
SECTION 8.13 ENTIRE AGREEMENT 29
Schedules
Schedule 1 LIBOR Lending Office
Exhibits
Exhibit A: Promissory Note
Exhibit B: Guaranty
Exhibit C: Notice of Borrowing
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of July 15, 1996, between SEER
TECHNOLOGIES, INC., a Delaware corporation ("Borrower"), and NATIONSBANK,
N.A., a national banking association (the "Bank").
BACKGROUND
The Borrower has requested that the Bank make a credit facility
available to the Borrower in the maximum principal amount of $12,500,000. The
Bank has agreed to do so, subject to the terms and conditions set forth below.
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1 Defined Terms. For purposes of this Agreement:
"Additional Costs" has the meaning specified in Section 7.5 hereof.
"Advance" means an Advance made pursuant to Section 2.1 hereof.
"Agreement" means this Credit Agreement, as amended, modified,
supplemented and restated from time to time.
"Agreement Date" means the date of this Agreement.
"Applicable Law" means (a) in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies
or regulatory agencies applicable to such Person and its properties,
including, without limiting the foregoing, all orders and decrees of all
courts and arbitrators in proceedings or actions to which the Person in
question is a party, and (b) in respect of contracts relating to interest or
finance charges that are made or performed in the State of North Carolina,
"Applicable Law" shall mean the laws of the United States of America,
including without limitation 12 USC Sec. 85 and 86, as amended from time to
time, and any other statute of the United States of America now or at any time
hereafter prescribing the maximum rates of interest on loans and extensions of
credit, and the laws of the State of North Carolina now or at any time
hereafter prescribing maximum rates of interest on loans and extensions of
credit.
"Applicable Margin" means for any LIBOR Advance a rate of interest per
annum equal to 1.25%.
"Authorized Officer" means any of the following officers of the
Borrower: President, Chief Financial Officer, Vice President-Finance or Vice
President-Treasurer.
"Authorized Signatory" means such senior personnel of the Borrower as
may be duly authorized and designated in writing by the Borrower to execute
documents, agreements and instruments on behalf of the Borrower, and to
request Advances hereunder.
"Base Rate Advance" means an Advance which bears interest at the Base
Rate Basis.
"Base Rate Basis" means, for any day, a per annum interest rate equal to
the higher of (a) the sum of (i) 0.50% plus (ii) the Federal Funds Rate on
such day, or (b) the Prime Rate on such day. The Base Rate Basis shall be
adjusted automatically as of the opening of business on the effective date of
each change in the Prime Rate to account for such change.
"Borrower" has the meaning specified in the introductory paragraph.
"Business Day" means a day on which banks are open for the transaction
of business in Charlotte, North Carolina, and, with respect to any LIBOR
Advance, in London, England.
"Code" means the Internal Revenue Code of 1986, as amended, together
with all regulations thereunder.
"Commitment" means $12,500,000, as reduced pursuant to Section 2.6
hereof.
"Commitment Fee" has the meaning specified in Section 2.4 hereof.
"Consequential Loss", with respect to (a) the Borrower's payment of all
or any portion of the then-outstanding principal amount of a LIBOR Advance on
a day other than the last day of the Interest Period related thereto, (b) a
LIBOR Advance made on a date other than the date on which such Advance is to
be made according to Section 2.2(b) hereof or Section 2.2(c) hereof, or (c)
any of the circumstances specified in Sections 2.5 and 2.6 hereof on which a
Consequential Loss may be incurred, means any loss, cost or expense incurred
by the Bank as a result of the timing of such payment or LIBOR Advance or in
liquidating, redeploying, reinvesting or redepositing the principal amount so
paid or affected by the timing of such Advance or the circumstances described
in Sections 2.5 and 2.6 hereof, which amount shall be the sum of (a) the
interest which, but for such payment or timing of such Advance, the Bank would
have earned in respect of such principal amount, for the remainder of the
Interest Period applicable to such sum, reduced, if the Bank is able to
deposit such principal amount for the balance of such Interest Period, by the
interest earned by the Bank as a result of so redepositing, redeploying or
reinvesting such principal amount plus (b) any expense or penalty incurred by
the Bank on redepositing, redeploying, reinvesting or liquidating such
principal amount.
"Debtor Relief Laws" means any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief laws affecting the rights of creditors generally from time to
time in effect.
"Default" means an Event of Default and/or any of the events specified
in Section 6.1, regardless of whether there shall have occurred any passage of
time or giving of notice that would be necessary in order to constitute such
event an Event of Default.
"Default Rate" means a simple per annum interest rate equal to the
lesser of (a) the Highest Lawful Rate, or (b) the sum of the Base Rate Basis
plus three percent.
"Dollars" and the sign "$" means lawful currency of the United States of
America.
"Event of Default" means any of the events specified in Section 6.1,
provided that any requirement for notice or lapse of time has been satisfied.
"Existing Credit Agreement" means that certain Loan Agreement, dated as
of February 24, 1995, between the Borrower and NationsBank, N.A. (formerly
known as NationsBank N.A. (Carolinas)), as amended, modified, supplemented or
restated from time to time, and any agreement which refinances the debt
outstanding in respect of such Loan Agreement so long as the Bank is a lender
under such agreement.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of Richmond on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate quoted to
the Bank on such day on such transactions as determined by the Bank.
"Governmental Authority" means any domestic or foreign government (or
any political subdivision thereof), court, bureau, agency or other
governmental authority having jurisdiction over the Borrower or any of its
business, operations or properties.
"Guarantor" means Welsh, Carson, Anderson & Stowe VI, L.P., a Delaware
limited partnership.
"Guaranty Agreement" means the Guaranty executed by the Guarantor
guaranteeing payment and performance of the Obligation, substantially in the
form of Exhibit B hereto, as such agreement may be amended, modified,
supplemented or restated from time to time.
"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, the Bank is then
permitted to charge on the Obligation. If the maximum rate of interest which,
under Applicable Law, the Bank is permitted to charge on the Obligation shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective time of each change in the Highest Lawful Rate without notice to the
Borrower.
"Increased Advance Costs" has the meaning specified in Section 7.3
hereof.
"Indemnified Matters" has the meaning specified in Section 5.3(a)
hereof.
"Indemnitees" has the meaning specified in Section 5.3(a) hereof.
"Interest Period" means the period beginning on the day any LIBOR
Advance is made and ending one, two, three or six months thereafter (as the
Borrower shall select); provided, however, that all of the foregoing
provisions are subject to the following:
(a) if any Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless, with respect to a LIBOR Advance, the result
of such extension would be to extend such Interest Period into another
calendar month, in which event such Interest Period shall end on the
immediately preceding Business Day;
(b) any Interest Period with respect to a LIBOR Advance that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a calendar month;
(c) the Borrower may not select any Interest Period which ends
after the Maturity Date;
(d) the Borrower may not select any Interest Period in respect
of LIBOR Advances having an aggregate amount less than $500,000; and
(e) there shall be outstanding at any one time no more than four
Interest Periods in the aggregate.
"LIBOR Advance" means an Advance which the Borrower requests to be made
as a LIBOR Advance or which is continued as a LIBOR Advance, in accordance
with the provisions of Section 2.2 hereof.
"LIBOR Basis" means, with respect to each LIBOR Advance for each
Interest Period, a rate per annum equal to the lesser of (a) the Highest
Lawful Rate or (b) the sum of the LIBOR Rate plus the Applicable Margin.
"LIBOR Lending Office" means the office of the Bank designated as its
LIBOR Lending Office on Schedule 1 attached hereto, and such other office of
the Bank or any of its affiliates hereafter designated by notice to the
Borrower and the Bank.
"LIBOR Rate" means the interest rate per annum (rounded upward to the
nearest 1/16th of one percent) determined by the Bank at approximately 11:00
a.m., Charlotte time, two Business Days before the first day of such Interest
Period to be the offered quotations that appear on the Reuter's Screen LIBO
page for dollar deposits in the London interbank market for a length of time
approximately equal to the Interest Period for the LIBOR Advance sought by the
Borrower (If at least two such offered quotations appear on the Reuter's
Screen LIBO page, the LIBOR Rate shall be the arithmetic mean (rounded upward
to the nearest 1/16th of one percent) of such offered quotations, as
determined by the Bank. If the Reuter's Screen LIBO page is not available or
has been discontinued, the LIBOR Rate shall be the rate per annum that the
Bank determines to be the arithmetic mean (rounded as aforesaid) of the per
annum rates of interest at which deposits in dollars in an amount
approximately equal to the principal amount of, and for a length of time
approximately equal to the Interest Period for, the LIBOR Advance sought by
the Borrower are offered to the Bank in immediately available funds in the
London interbank market at 11:00 a.m., London time, on the date which is two
Business Days prior to the first day of an Interest Period).
"Lien" means any lien, mortgage, security interest, tax lien, pledge,
encumbrance, conditional sale or title retention agreement, or any other
interest in property designed to secure the repayment of indebtedness, whether
arising by agreement or under any statute or law, or otherwise.
"Loan Papers" means this Agreement, the Note, the Guaranty Agreement,
and any other document or agreement executed or delivered from time to time by
the Borrower or any other Person in connection herewith or as security for all
or any part of the Obligation.
"Material Adverse Effect" means any circumstance or event which (a)
could reasonably be expected to materially impair the validity, performance or
enforceability of any Loan Papers, (b) could reasonably be expected to be
material and adverse to the financial condition, business operations or
prospects of the Borrower, (c) could reasonably be expected to impair the
ability of the Borrower to fulfill its obligations under the Loan Papers, (d)
causes an Event of Default or (e) causes a Default which could reasonably be
expected to become an Event of Default.
"Maturity Date" means (a) the date which is 364 days from the Agreement
Date provided that if such date does not fall on a Business Day, the Maturity
Date shall be the immediately preceding Business Day, or (b) the earlier date
of termination in whole of the Commitment pursuant to Section 2.6 or 6.2
hereof.
"Maximum Amount" means the maximum amount of interest which, under
Applicable Law, the Bank is permitted to charge on the Obligation.
"Note" means any Promissory Note of the Borrower evidencing Advances
hereunder, substantially in the form of Exhibit A hereto, together with any
extension, renewal or amendment thereof or substitution therefor.
"Notice of Borrowing" has the meaning specified in Section 2.2(a)
hereof.
"Obligation" means (a) all obligations of any nature (whether matured or
unmatured, fixed or contingent) of the Borrower or any other Person to the
Bank under the Loan Papers as they may be amended from time to time, and (b)
all obligations of the Borrower, any Subsidiary or any other Person for
losses, damages, expenses or any other liabilities of any kind that the Bank
may suffer by reason of a breach by the Borrower or any other Person of any
obligation, covenant or undertaking with respect to any Loan Paper.
"Payment Date" means the last day of the Interest Period for any LIBOR
Advance.
"Person" means and includes an individual, corporation, partnership,
trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Prime Rate" means, at any time, the prime interest rate announced or
published by the Bank from time to time as its reference rate for the
determination of interest rates for loans of varying maturities in United
States dollars to United States residents of varying degrees of
creditworthiness and being quoted at such time by the Bank as its "prime
rate;" it being understood that such rate may not be the lowest rate of
interest charged by the Bank.
"Quarterly Date" means the last Business Day of each March, June,
September and December, beginning September, 1996.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System from time to time in effect and shall include any
successor or other regulation relating to reserve requirements applicable to
member banks of the Federal Reserve System.
"Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System from time to time in effect and shall include any
successor or other regulation relating to reserve requirements applicable to
member banks of the Federal Reserve System.
"Regulation U" means Regulation U promulgated by the Board of Governors
of the Federal Reserve System, 12 C.F.R. Part 221, or any other regulation
hereafter promulgated by said Board to replace the prior Regulation U and
having substantially the same function.
"Regulatory Defect" means (a) any failure of the Borrower to comply with
any rules, regulations and other requirements as contemplated in Section 4.15
hereof which would have or which would result in a Material Adverse Effect,
and/or (b) any unfavorable examination report received by the Borrower from
any regulatory authority or similar Governmental Authorities regulating any of
the businesses or activities in which the Borrower is engaged, if such report
would have a Material Adverse Effect.
"Release Date" means the date on which the Note has been paid, all other
portions of the Obligation due and owing have been paid and performed in full,
and the Commitment has been terminated.
"Rights" means rights, remedies, powers and privileges.
"Solvent" means, with respect to any Person, that the fair value of the
assets of such Person (both at fair valuation and at present fair saleable
value) is, on the date of determination, greater than the total amount of
liabilities of such Person as of such date and that, as of such date, such
Person is able to pay all liabilities of such Person as such liabilities
mature and such Person does not have unreasonably small capital with which to
carry on its business.
"Special Counsel" means the law firm of Donohoe, Jameson & Carroll,
P.C., or such other legal counsel as the Bank may select.
"Taxes" has the meaning specified in Section 2.13 hereof.
"UCC" means the Uniform Commercial Code of North Carolina, as amended
from time to time.
Section 1.2 Amendments and Renewals. Each definition of an agreement in
this Article 1 shall include such agreement as amended to date, and as amended
or renewed from time to time in accordance with its terms, but only with the
prior written consent of the Bank.
Section 1.3 Construction. The terms defined in this Article 1 (except
as otherwise expressly provided in this Agreement) for all purposes shall have
the meanings set forth in Section 1.1 hereof, and the singular shall include
the plural, and vice versa, unless otherwise specifically required by the
context.
ARTICLE 2
Advances
Section 2.1 The Advances. The Bank agrees, upon the terms and subject
to the conditions of this Agreement, to make Advances to the Borrower from
time to time up to and including the Maturity Date in an aggregate amount not
to exceed an amount equal to the Commitment for the purposes set forth in
Section 4.12 hereof. Subject to Section 2.8 hereof, Advances may be repaid
and then reborrowed. Any Advance shall, at the option of the Borrower as
provided in Section 2.2 hereof (and, in the case of LIBOR Advances, subject to
availability and to the provisions of Article 7 hereof), be made as a Base
Rate Advance or a LIBOR Advance; provided that there shall not be outstanding,
at any one time, more than four LIBOR Advances. On the Maturity Date unless
sooner paid as provided herein, the outstanding Advances shall be repaid in
full.
Section 2.2 Manner of Borrowing and Disbursement.
(a) In the case of Base Rate Advances, the Borrower, through an
Authorized Signatory, shall give the Bank irrevocable written notice, or
irrevocable telephonic notice followed immediately by written notice, in
substantially the form of Exhibit C hereto (a "Notice of Borrowing") prior to
11:00 a.m., Charlotte, North Carolina time on the day of such Base Rate
Advance (provided, however, that the Borrower's failure to confirm any
telephonic notice in writing shall not invalidate any notice so given), of its
intention to borrow or reborrow a Base Rate Advance hereunder. Such Notice of
Borrowing shall specify the requested funding date, which shall be a Business
Day, and the amount of the proposed aggregate Base Rate Advances to be made by
the Bank.
(b) In the case of LIBOR Advances, the Borrower, through an Authorized
Signatory, shall give the Bank at least two Business Days' irrevocable written
notice for LIBOR Advances, or irrevocable telephonic notice followed
immediately by written notice (provided, however, that the Borrower's failure
to confirm any telephonic notice in writing shall not invalidate any notice so
given) pursuant to a Notice of Borrowing, of its intention to borrow or
continue a LIBOR Advance hereunder. Notice shall be given to the Bank prior
to 11:00 a.m., Charlotte, North Carolina time, in order for such Business Day
to count toward the minimum number of Business Days required. LIBOR Advances
shall in all cases be subject to availability and to Article 7 hereof. For
LIBOR Advances, the Notice of Borrowing shall specify the requested funding
date, which shall be a Business Day, the amount of the proposed aggregate
LIBOR Advances to be made by the Bank and the Interest Period selected by the
Borrower, provided that no such Interest Period shall extend past the Maturity
Date.
(c) Subject to Sections 2.1 and 2.8 hereof, the Borrower shall have
the option (i) to convert at any time all or any part of the outstanding Base
Rate Advances to LIBOR Advances and all or any part of the outstanding LIBOR
Advances to Base Rate Advances or (ii) upon expiration of any Interest Period
applicable to a LIBOR Advance, to continue all or any portion of such LIBOR
Advance equal to $500,000 and integral multiples of $100,000 in excess of that
amount as a LIBOR Advance and the succeeding Interest Period(s) of such
continued LIBOR Advance shall commence on the last day of the Interest Period
of the LIBOR Advance to be continued; provided, however, (a) LIBOR Advances
may only be converted into Base Rate Advances on the expiration date of the
Interest Period applicable thereto and (b) notwithstanding anything in this
Agreement to the contrary, no outstanding Advance may be continued as, or
converted into, a LIBOR Advance when any Default or Event of Default has
occurred and is continuing. At least two Business Days prior to a proposed
conversion/continuation date, the Borrower, through an Authorized Signatory,
shall give the Bank irrevocable written notice, or irrevocable telephonic
notice followed immediately by written notice (provided, however, that the
Borrower's failure to confirm any telephonic notice in writing shall not
invalidate any notice so given), stating (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount
of the Advance to be converted/continued, (iii) in the case of a conversion
to, or a continuation of, a LIBOR Advance, the requested Interest Period, and
(iv) in the case of a conversion of a Base Rate Advance to a LIBOR Advance or
continuation of a LIBOR Advance, stating that no Default or Event of Default
has occurred and is continuing. If the Borrower shall fail to give any notice
in accordance with this Section 2.2(d), the Borrower shall be deemed
irrevocably to have requested that such LIBOR Advance be converted to a Base
Rate Advance in the same principal amount. Notice shall be given to the Bank
prior to 11:00 a.m., Charlotte, North Carolina time, in order for such
Business Day to count toward the minimum number of Business Days required.
(d) The aggregate amount of Base Rate Advances to be made by the Bank
on any day shall be in a principal amount which is at least $500,000 and which
is an integral multiple of $100,000; provided, however, that such amount may
equal the unused amount of the Commitment. The aggregate amount of LIBOR
Advances having the same Interest Period and to be made by the Bank on any day
shall be in a principal amount which is at least $500,000 and which is an
integral multiple of $100,000.
(e) Prior to 2:00 p.m., Charlotte, North Carolina time, on the date of
any Advance hereunder, the Bank shall, subject to satisfaction of the
conditions set forth in Article 3, disburse the amounts of the Advance by (i)
transferring such amounts by wire transfer pursuant to the Borrower's
instructions, or (ii) in the absence of such instructions, crediting such
amounts to the account of the Borrower maintained with the Bank.
Section 2.3 Interest.
(a) On Base Rate Advances.
(i) The Borrower shall pay interest on the outstanding unpaid
principal amount of each Base Rate Advance, from the date such Advance is made
until it is due (whether at maturity, by reason of acceleration, by scheduled
reduction, or otherwise) or repaid, at a rate per annum equal to the Base Rate
Basis in effect from time to time provided that interest on such Base Rate
Advance shall not exceed the Highest Lawful Rate. If at any time the Base
Rate Basis would otherwise exceed the Highest Lawful Rate, interest payable on
such Base Rate Advance shall be limited to the Highest Lawful Rate, but the
Base Rate Basis shall not thereafter be reduced below the Highest Lawful Rate
until the total amount of interest accrued on such Advance equals the amount
of interest that would have accrued if the Base Rate Basis had been in effect
at all times.
(ii) Interest on each Base Rate Advance shall be computed on the
basis of a year of 365 or 366 days, as applicable, for the number of days
actually elapsed, and shall be payable in arrears on each Quarterly Date and
on the Maturity Date.
(b) On LIBOR Advances.
(i) The Borrower shall pay interest on the unpaid principal
amount of each LIBOR Advance, from the date such Advance is made until it is
due (whether at maturity, by reason of acceleration, by scheduled reduction,
or otherwise) or repaid, at a rate per annum equal to the LIBOR Basis for such
Advance. The Bank shall determine the LIBOR Basis on the second Business Day
prior to the applicable funding date and shall notify the Borrower of such
LIBOR Basis.
(ii) Subject to Section 8.9 hereof, interest on each LIBOR
Advance shall be computed on the basis of a 360-day year for the actual number
of days elapsed, and shall be payable in arrears on the applicable Payment
Date and on the Maturity Date; provided, however, that if the Interest Period
for such Advance exceeds three months, interest shall also be due and payable
in arrears on the three-month anniversary of the first day of such Interest
Period.
(c) Interest if No Notice of Selection of Interest Rate Basis. If the
Borrower fails to give the Bank timely notice of its selection of a LIBOR
Basis or an Interest Period for a LIBOR Advance, or if for any reason a
determination of a LIBOR Basis for any Advance is not timely concluded due to
the fault of the Borrower, the appropriate Base Rate Basis shall apply to such
Advance.
(d) Interest After an Event of Default. (i) After an Event of Default
(other than an Event of Default specified in Section 6.1(h) or 6.1(i) hereof)
and during any continuance thereof, at the option of the Bank, and (ii) after
an Event of Default specified in Section 6.1(h) or 6.1(i) hereof and during
any continuance thereof, automatically and without any action by the Bank, the
Obligation shall bear interest at a rate per annum equal to the Default Rate,
and which shall be computed on a basis of 365 or 366 days, as applicable, for
the actual number of days elapsed. Such interest shall be payable on the
earlier of demand or the Maturity Date, and shall accrue until the earlier of
(i) waiver or cure of the applicable Event of Default, (ii) agreement by the
Bank to rescind the charging of interest at the Default Rate, or (iii) payment
in full of the Obligation. The Bank shall not be required to accelerate the
maturity of the Advances or to exercise any other rights or remedies under the
Loan Papers to charge interest at the Default Rate.
Section 2.4 Commitment Fee. Subject to Section 8.9 hereof, the Borrower
agrees to pay to the Bank a commitment fee (the "Commitment Fee") on the
average daily unused portion of the Commitment, commencing on the Agreement
Date and continuing through the Maturity Date, at a per annum percentage of
0.250%, payable quarterly in arrears on each Quarterly Date and on the
Maturity Date. The Commitment Fee shall be computed on a basis of a 360-day
year for the actual number of days elapsed.
Section 2.5 Prepayment.
(a) Voluntary Prepayments. Upon three Business Days' prior telephonic
notice (to be promptly followed by written notice) by an Authorized Signatory
to the Bank, LIBOR Advances may be voluntarily prepaid, but only so long as
the Borrower concurrently reimburses the Bank for any Consequential Loss in
accordance with Section 2.8 hereof. The principal amount of any Base Rate
Advance may be prepaid in full or in part at any time, without penalty. Any
notice of prepayment shall be irrevocable.
(b) Mandatory Prepayment. On or before the date of any reduction of
the Commitment, the Borrower shall prepay outstanding Advances in an amount
necessary to reduce the same to an amount less than or equal to the Commitment
as so reduced. The Borrower shall first prepay all Base Rate Advances and
shall thereafter prepay LIBOR Advances. To the extent that any prepayment
requires that a LIBOR Advance be repaid on a date other than the last day of
its Interest Period, the Borrower shall reimburse the Bank in accordance with
Section 2.8 hereof. To the extent that the outstanding Advances exceed the
Commitment after any reduction thereof, the Borrower shall repay any such
excess amount and all accrued interest thereon on the date of such reduction.
(c) Prepayments, Generally. Any prepayment of an Advance (other than
a Base Rate Advance) shall be accompanied by interest accrued on the principal
amount being prepaid. Any voluntary partial prepayment of a Base Rate Advance
shall be in a principal amount of $100,000 or an integral multiple thereof.
Any voluntary partial prepayment of a LIBOR Advance shall be in a principal
amount of $500,000 or an integral multiple of $100,000 if in excess thereof.
All voluntary prepayments shall be applied in the order directed in writing by
the Borrower to the Bank. If the Borrower fails to so direct the Bank or if
the prepayment occurs during the occurrence and continuance of an Event of
Default, such prepayment shall be applied in the inverse order of maturity.
Section 2.6 Reduction of Commitment.
(a) Voluntary Reduction. The Borrower shall have the right, upon not
less than 10 Business Days' notice (provided no notice shall be required for a
termination in whole of the Commitment) by an Authorized Signatory to the Bank
(if telephonic, to be confirmed by telex or in writing on or before the date
of reduction or termination) to terminate or reduce the Commitment, in whole
or in part. Each partial termination shall be in an aggregate amount which is
at least $1,000,000 and which is an integral multiple of $100,000, and no
voluntary reduction in the Commitment shall cause any LIBOR Advance to be
repaid prior to the last day of its Interest Period.
(b) Mandatory Reduction. On the Maturity Date, the Commitment shall
automatically reduce to zero.
(c) General Requirements. Upon any reduction of the Commitment
pursuant to this Section, the Borrower shall immediately make a prepayment of
applicable Advances in accordance with Section 2.5(b) hereof. The Borrower
shall reimburse the Bank for any Consequential Loss incurred by the Bank in
connection with any such payment, as set forth in Section 2.8 hereof to the
extent applicable. The Borrower shall not have any right to rescind any
termination or reduction. Once reduced, the Commitment may not be increased
or reinstated.
Section 2.7 Payment of Principal of Advances. To the extent not
otherwise required to be paid earlier as provided herein, the principal amount
of the Advances, all accrued interest and fees thereon, and all other
Obligation related thereto, shall be due and payable in full on the Maturity
Date.
Section 2.8 Reimbursement. Whenever the Bank shall sustain or incur any
losses or reasonable out-of-pocket expenses in connection with (a) failure by
the Borrower to borrow any LIBOR Advance after having given notice of its
intention to borrow in accordance with Section 2.2 hereof (whether by reason
of the Borrower's election not to proceed or the non-fulfillment of any of the
conditions set forth in Article 3 hereof), or (b) any prepayment for any
reason of any LIBOR Advance in whole or in part on a date other than the last
day of its Interest Period, the Borrower agrees to pay to the Bank, upon its
demand, an amount equal to the Consequential Loss of the Bank related thereto,
subject to Section 8.9 hereof. The Bank's good faith determination of the
amount of the Consequential Loss, calculated in its usual fashion, absent
manifest error, shall be binding and conclusive.
Section 2.9 Manner of Payment.
(a) Each payment (including prepayments) by the Borrower of the
principal of or interest on the Advances, fees, and any other amount owed
under this Agreement or any other Loan Paper shall be made not later than
12:00 noon (Charlotte, North Carolina time) on the date specified for payment
under this Agreement to the Bank at the Bank's office, in lawful money of the
United States of America constituting immediately available funds.
(b) If any payment under this Agreement or any other Loan Paper shall
be specified to be made upon a day which is not a Business Day, it shall be
made on the next succeeding day which is a Business Day, unless, with respect
to a LIBOR Advance, such Business Day falls in another calendar month, in
which case payment shall be made on the preceding Business Day. Any extension
or reduction of time shall in such case be included in computing interest and
fees, if any, in connection with such payment.
(c) The Borrower agrees to pay principal, interest, fees and all other
amounts due under the Loan Papers without deduction for set-off or
counterclaim or any deduction whatsoever.
(d) If some but less than all amounts due from the Borrower are
received by the Bank, the Bank shall apply such amounts in the following order
of priority: (i) to the payment of all fees and amounts then due and payable
under the Loan Papers; (ii) to the payment of interest then due and payable on
the Advances; and (iii) to the payment of principal then due and payable on
the Advances.
Section 2.10 LIBOR Lending Offices. The Bank's initial LIBOR
Lending Office is set forth opposite its name in Schedule 1 attached hereto.
The Bank shall have the right at any time and from time to time to designate a
different office of itself or of any Affiliate as the Bank's LIBOR Lending
Office, and to transfer any outstanding LIBOR Advance to such LIBOR Lending
Office. No such designation or transfer shall result in any liability on the
part of the Borrower for increased costs or expenses resulting solely from
such designation or transfer (except any such transfer which is made by the
Bank pursuant to Section 7.2 or 7.3 hereof, or otherwise for the purpose of
complying with Applicable Law).
Section 2.11 Calculation of Rates. The provisions of this
Agreement relating to calculation of the LIBOR Rate are included only for the
purpose of determining the rate of interest or other amounts to be paid
hereunder that are based upon such rate, it being understood that the Bank
shall be entitled to fund and maintain its funding of all or any part of a
LIBOR Advance as it sees fit.
Section 2.12 Booking Loans. The Bank may make, carry or transfer
Advances at, to or for the account of any of its branch offices or the office
of any Affiliate of the Bank.
Section 2.13 Taxes. Any and all payments by the Borrower hereunder
shall be made, in accordance with Section 2.9, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deducts,
charges and withholdings, and all liabilities (collectively, "Taxes") with
respect thereto, excluding, in the case of the Bank, taxes imposed on, based
upon or measured by its overall net income, net worth or capital, and
franchise taxes, doing business taxes or minimum taxes imposed on it. If the
Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder to the Bank, (x) the sum payable shall be increased
as may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.13) the
bank receives an amount equal to the sum it would have received had no such
deductions been made, (y) the Borrower shall make such deductions and (y) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advance. The obligation
of the Bank to make the initial Advance is subject to receipt by the Bank or
satisfaction of the following:
(a) a loan certificate of the Borrower certifying as to the accuracy
of its representations and warranties in the Loan Papers, certifying that no
Default or Event of Default has occurred, and including a certificate of
incumbency with respect to each Authorized Signatory, and including (i) a copy
of the articles of incorporation of the Borrower, certified to be true,
complete and correct by the secretary of state of its state of incorporation,
(ii) a copy of the by-laws of the Borrower, as in effect on the Agreement
Date, and (iii) a copy of the resolutions of the Borrower authorizing it to
execute, deliver and perform this Agreement, the Note and the other Loan
Papers to which it is a party;
(b) a duly executed Note, payable to the order of the Bank in the
amount of the Commitment;
(c) opinions of counsel to the Borrower and the Guarantor addressed to
the Bank and in form and substance satisfactory to the Bank, dated the
Agreement Date, and covering such matters incident to the transactions
contemplated hereby as the Bank or Special Counsel may reasonably request;
(d) reimbursement to the Bank for Special Counsel's reasonable fees
and expenses rendered through the Agreement Date;
(e) evidence that all corporate or other proceedings of the Borrower
and the Guarantor taken in connection with the transactions contemplated by
this Agreement and the other Loan Papers shall be reasonably satisfactory in
form and substance to the Bank and Special Counsel; and the Bank shall have
received copies of all documents or other evidence which the Bank or Special
Counsel may reasonably request in connection with such transactions;
(f) the Guaranty Agreement duly executed by the Guarantor;
(g) in form and substance satisfactory to the Bank and Special
Counsel, such other documents, instruments and certificates as the Bank may
reasonably require in connection with the transactions contemplated hereby,
including without limitation documents regarding the status, organization or
authority of the Borrower or the Guarantor, and the enforceability of the
Obligation.
Section 3.2 Conditions Precedent to All Advances. The obligation of the
Bank to make each Advance hereunder (including the initial Advance) hereunder
is subject to fulfillment of the following conditions immediately prior to or
contemporaneously with each such Advance:
(a) With respect to Advances, all of the representations and
warranties of the Borrower under this Agreement, which, pursuant to Section
4.18 hereof, are made at and as of the time of such Advance, shall be true and
correct at such time in all material respects, both before and after giving
effect to the application of the proceeds of the Advance;
(b) The incumbency of the Authorized Signatories shall be as stated in
the certificate of incumbency delivered in the Borrower's loan certificate
pursuant to Section 3.1(a) or as subsequently modified and reflected in a
certificate of incumbency delivered to the Bank. The Bank may, without
waiving this condition, consider it fulfilled and a representation by the
Borrower made to such effect if no written notice to the contrary, dated on or
before the date of such Advance, is received by the Bank from the Borrower
prior to the making of such Advance;
(c) There shall not exist a Default or Event of Default hereunder;
(d) The aggregate Advances, after giving effect to such proposed
Advance, shall not exceed the maximum principal amount then permitted to be
outstanding hereunder; and
(e) The Bank shall have received all such other certificates, reports,
statements, opinions of counsel or other documents as the Bank may reasonably
request.
Section 3.3 Conditions Precedent to Conversions and Continuations. The
obligation of the Bank to convert any existing Base Rate Advance into a LIBOR
Advance or to continue any existing LIBOR Advance is subject to the condition
precedent that on the date of such conversion or continuation no Default or
Event of Default shall have occurred and be continuing or would result from
the making of such conversion or continuation. The acceptance of the benefits
of each such conversion and continuation shall constitute a representation and
warranty by the Borrower to the Bank that no Default or Event of Default shall
have occurred and be continuing or would result from the making of such
conversion or continuation.
ARTICLE 4
Representations and Warranties
To induce the Bank to make Advances, the Borrower represents and
warrants that:
Section 4.1 Organization and Good Standing. The Borrower is a
corporation duly organized and existing in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified as a foreign corporation
and in good standing in all jurisdictions in which it is doing business and
has the corporate power and authority to own its properties and assets and to
transact the business in which it is engaged and is qualified in those
jurisdictions wherein it proposes to transact business in the future, if
failure to be so qualified would have a Material Adverse Effect.
Section 4.2 Authorization and Power. The Borrower has the corporate
power and requisite authority to execute, deliver and perform the Loan Papers
to be executed by it. The Borrower is duly authorized to, and has taken all
corporate action necessary to authorize its execution, delivery and
performance of this Agreement, the Note and the other Loan Papers to be
executed by it and is and will continue to be duly authorized to perform this
Agreement, the Note and the other Loan Papers.
Section 4.3 No Conflicts or Consents. Neither the execution and
delivery of this Agreement, the Note or the other Loan Papers, nor the
consummation of any of the transactions herein or therein contemplated, nor
compliance with the terms and provisions hereof or with the terms and
provisions thereof, will contravene or materially conflict with any provision
of law, statute or regulation to which the Borrower is subject or any
judgment, license, order or permit applicable to the Borrower, or any
indenture, loan agreement (other than the Existing Credit Agreement),
mortgage, deed of trust, or other material agreement or instrument to which
the Borrower is a party or by which the Borrower may be bound, or to which the
Borrower may be subject, or result in or require the creation or imposition of
any Lien upon or with respect to any property now owned or hereafter acquired
by the Borrower, or violate any provision of the charter, bylaws, or other
organizational documents of the Borrower. No consent, approval, authorization
or order of any court or Governmental Authority or third party is required in
connection with the execution and delivery by the Borrower of the Loan Papers
or to consummate the transactions contemplated hereby or thereby.
Section 4.4 Enforceable Obligations. This Agreement, the Note and the
other Loan Papers executed by the Borrower are the legal and binding
obligations of the Borrower, all enforceable in accordance with their
respective terms, except as limited by Debtor Relief Laws.
Section 4.5 No Liens. All of the properties and assets of the Borrower
are free and clear of all mortgages, liens, encumbrances and other adverse
claims of any nature, except for Liens permitted pursuant to the Existing
Credit Agreement, and the Borrower has good and marketable title to such
properties and assets.
Section 4.6 Financial Condition. The Borrower has delivered to the Bank
copies of its balance sheet as of December 31, 1995, and the related
statements of income, stockholders' equity and statements of cash flows for
the year ended such date, certified by independent certified public
accountants; such financial statements fairly present the financial condition
of the Borrower as of such date on an unqualified basis and have been prepared
in accordance with GAAP applied on a basis consistent with that of prior
periods; as of the Agreement Date, there are no obligations, liabilities or
indebtedness (including contingent and indirect liabilities and obligations or
unusual forward or long-term commitments) of the Borrower which are
(separately or in the aggregate) material and are not reflected in such
financial statements or the notes thereto. Other than as disclosed in the
Borrower's (a) filings with the Securities and Exchange Commission prior to
the Agreement Date, and (b) preliminary earnings report for the fiscal quarter
ending June 30, 1996 delivered to the Bank on July 1, 1996, no changes having
a Material Adverse Effect have occurred in the financial condition or business
of the Borrower since the date of such financial statements.
Section 4.7 Full Disclosure. There is no material fact known to the
Borrower that the Borrower has not disclosed to the Bank which could
reasonably be expected to have a Material Adverse Effect. Neither the
financial statements referred to in Section 4.6 hereof, nor any certificate or
statement delivered by the Borrower to the Bank in connection with
negotiations of this Agreement, contains any untrue statement of a material
fact or omits to state any material fact necessary to keep the statements
contained herein or therein from being misleading.
Section 4.8 No Default or Event of Default. No event or condition has
occurred and is continuing which constitutes a Default or an Event of Default.
Section 4.9 Material Agreements. The Borrower is not in default in any
respect under any loan agreement, indenture, mortgage, security agreement or
other material agreement or obligation to which it is a party or by which any
of its properties is bound, which default would have a Material Adverse
Effect.
Section 4.10 No Litigation. There are no actions, suits or legal,
equitable, arbitration or administrative proceedings pending, or to the
knowledge of the Borrower threatened, against the Borrower (a) that would, if
adversely determined, have a Material Adverse Effect or (b) that purports to
affect the legality, validity or enforceability of this Agreement or any other
Loan Paper.
Section 4.11 Regulatory Defects. There are no Regulatory Defects
of which the Borrower has been advised or has actual knowledge.
Section 4.12 Use of Proceeds; Margin Stock. The proceeds of the
Advances will be used for the Borrower's working capital purposes and other
lawful, general corporate purposes. None of such proceeds will be used for
the purpose of purchasing or carrying any investment securities, except as may
be specifically authorized herein, and none of such proceeds will be used for
the purpose of purchasing or carrying any "margin stock" as defined in
Regulation U or G of the Board of Governors of the Federal Reserve System (12
C.F.R. Part 221 and 207), or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry a margin stock
or for any other purpose which might constitute this transaction a "purpose
credit" within the meaning of such Regulation U or G. The Borrower is not
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stocks. Neither the Borrower nor any Person acting on behalf
of the Borrower has taken or will take any action which might cause the Note
or any of the other Loan Papers, including this Agreement, to violate
Regulation U or G or any other regulations of the Board of Governors of the
Federal Reserve System or to violate Section 7 of the Exchange Act or any rule
or regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect. The Borrower does not own any "margin stock".
Section 4.13 Taxes. All material tax returns required to be filed
by the Borrower in all jurisdictions have been filed and all taxes (including
mortgage recording taxes), assessments, fees and other governmental charges
upon the Borrower and upon its properties, income or franchises have been paid
by the date or dates, respectively, on which such taxes, assessments, fees and
other charges are due, except for amounts contested in good faith and for
which sufficient reserves have been established and immaterial amounts which
may unintentionally remain unpaid due to such matters as inadvertent
discrepancies between taxes shown to be due in prepared tax returns and actual
taxes due. There is no proposed tax assessment against the Borrower which
would have a Material Adverse Effect and there is no basis for such
assessment.
Section 4.14 ERISA. Neither the Borrower, any member of the
controlled group of corporations as defined in Section 1563 of the Code, or
the group of trades or businesses under common control as defined in Section
414(c) of the Code, as amended, of which the Borrower is a part or may become
a part, has ever established or maintained, nor does the Borrower presently
intend to establish or maintain, an employee pension benefit plan or other
similar or related employee pension benefit plan for employees of the Borrower
and covered by Title IV of the Employee Retirement Income Security Act of
1974, as amended, together with all regulations issued pursuant thereto, or
subject to the minimum funding standards under Section 412 of the Code, as
amended, or any similar or related employee pension benefit plan, whether
domestic or foreign, which might be created or formed pursuant to any laws or
regulations which ever succeed or replace the foregoing laws or regulations.
Section 4.15 Compliance with Law. The Borrower is in compliance
with all laws, rules, regulations, ordinances, orders and decrees of every
Governmental Authority which are applicable to the Borrower and its business
or properties, the failure to comply with which would have a Material Adverse
Effect. The Borrower has not been notified by any Governmental Authority that
the Borrower has failed to comply with any such laws, rules, regulations,
orders or decrees the failure to comply with which would result in a Material
Adverse Effect.
Section 4.16 Insider. The Borrower is not, and no Person having
"control" (as that term is defined in 12 U.S.C. Sec. 375(b)(5) or in
regulations promulgated pursuant thereto) of the Borrower is, an "executive
officer", "director", or "person who directly or indirectly or in concert
with one or more persons owns, controls, or has the power to vote more than
10% of any class of voting securities" (as those terms are defined in
12 U.S.C. Sec. 375(b) or in regulations promulgated pursuant thereto) of the
Bank, of a bank holding company of which the Bank is a subsidiary, or of any
subsidiary of a bank holding company of which the Bank is a subsidiary, or of
any bank at which the Bank maintains a correspondent account, or of any bank
which maintains a correspondent account with the Bank.
Section 4.17 Solvency. The Borrower is Solvent.
Section 4.18 Representations and Warranties. Each request for an
Advance shall constitute, without the necessity of specifically containing a
written statement, a representation and warranty by the Borrower that no
Default or Event of Default exists and that all representations and warranties
contained in this Article 4 and in any other Loan Paper are true and correct
at and as of the date that the Advance is made, and after giving effect
thereto.
Section 4.19 Survival of Representations, Etc. All representations
and warranties by the Borrower herein shall survive delivery of the Note and
the making of the Advances, and any investigation at any time made by or on
behalf of the Bank shall not diminish the Bank's right to rely thereon.
ARTICLE 5
Business Covenants
Until the Commitment shall be terminated in accordance with the terms
hereof and until payment in full of the Note and the Obligation, the Borrower
agrees that:
Section 5.1 Existing Loan Agreement Covenants. The Borrower will comply
with all of the covenants and agreements set forth in Paragraphs 3 and 4 of
the Existing Loan Agreement. For purposes hereof, all of the covenants and
agreements of the Borrower set forth in Paragraphs 3 and 4 of the Existing
Loan Agreement and all definitions related thereto are hereby reaffirmed and
adopted by the Borrower and are incorporated herein, mutatis mutandis. In the
event of termination of the Existing Loan Agreement prior to the Release Date,
the Borrower covenants and agrees that, until the full and final payment and
satisfaction of the Obligation, the covenants and agreements of the Borrower
shall nevertheless remain in full force and effect and be binding upon the
Borrower, and the Borrower shall continue to perform and comply with all of
the covenants set forth in Paragraphs 3 and 4 of the Existing Loan Agreement.
For purposes hereof, references in the incorporated Paragraphs of the Existing
Loan Agreement to "Bank" shall be deemed a reference to NationsBank, N.A.
Section 5.2 Notice of Default or Event of Default. The Borrower will
furnish to the Bank immediately upon becoming aware of the existence of any
condition or event which constitutes a Default or an Event of Default, a
written notice specifying the nature and period of existence thereof and the
action which the Borrower is taking or proposes to take with respect thereto.
Section 5.3 Indemnity.
(a) THE BORROWER AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD
HARMLESS THE BANK, EACH OF ITS AFFILIATES, AND EACH OF ITS (INCLUDING SUCH
AFFILIATES') OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS, SHAREHOLDERS
AND CONSULTANTS (INCLUDING, WITHOUT LIMITATION, THOSE RETAINED IN CONNECTION
WITH THE SATISFACTION OR ATTEMPTED SATISFACTION OF ANY OF THE CONDITIONS SET
FORTH HEREIN) OF EACH OF THE FOREGOING (COLLECTIVELY, "INDEMNITEES") FROM AND
AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES AND DISBURSEMENTS
(INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL FOR SUCH INDEMNITEES IN CONNECTION WITH ANY INVESTIGATIVE,
ADMINISTRATIVE OR JUDICIAL PROCEEDING, WHETHER OR NOT SUCH INDEMNITEES SHALL
BE DESIGNATED A PARTY THERETO), IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST
SUCH INDEMNITEES, IN ANY MANNER RELATING TO OR ARISING OUT OF THIS AGREEMENT,
THE OTHER LOAN PAPERS, OR ANY ACT, EVENT OR TRANSACTION OR ALLEGED ACT, EVENT
OR TRANSACTION RELATING OR ATTENDANT THERETO, INCLUDING IN CONNECTION WITH, OR
AS A RESULT OF ANY NEGLIGENCE OF THE BANK, OR THE USE OR INTENDED USE OF THE
PROCEEDS OF THE ADVANCES HEREUNDER, OR IN CONNECTION WITH ANY THIRD PARTY
INVESTIGATION OF ANY POTENTIAL MATTER COVERED HEREBY, BUT EXCLUDING (i) ANY
CLAIM OR LIABILITY THAT ARISES AS THE RESULT OF THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF ANY INDEMNITEE, AS FINALLY JUDICIALLY DETERMINED BY A
COURT OF COMPETENT JURISDICTION, AND (ii) MATTERS RAISED BY THE BORROWER
DIRECTLY AGAINST AN INDEMNITY OR BY ONE INDEMNITEE AGAINST ANOTHER INDEMNITEE
(COLLECTIVELY, "INDEMNIFIED MATTERS"). TO THE EXTENT THAT ANY INDEMNIFIED
MATTER INVOLVES ONE OR MORE INDEMNITEES, SUCH INDEMNITEES SHALL USE THE SAME
LEGAL COUNSEL UNLESS ANY INDEMNITEE IN ITS REASONABLE DISCRETION DETERMINES
THAT CONFLICTS EXIST OR MAY ARISE IN CONNECTION WITH SUCH REPRESENTATION.
(b) EACH INDEMNITEE AGREES WITH RESPECT TO ANY ACTION AGAINST IT IN
RESPECT OF WHICH INDEMNITY MAY BE SOUGHT UNDER THIS SECTION 5.3, THAT SUCH
INDEMNITEE WILL GIVE WRITTEN NOTICE OF THE COMMENCEMENT OF SUCH ACTION TO THE
BORROWER WITHIN A REASONABLE TIME AFTER SUCH INDEMNITEE IS MADE A PARTY TO
SUCH ACTION. UPON RECEIPT OF ANY SUCH NOTICE BY THE BORROWER, THE BORROWER,
UNLESS SUCH INDEMNITEE SHALL BE ADVISED BY ITS COUNSEL THAT THERE ARE OR MAY
BE LEGAL DEFENSES AVAILABLE TO SUCH INDEMNITEE THAT ARE DIFFERENT FROM, IN
ADDITION TO, OR IN CONFLICT WITH, THE DEFENSES AVAILABLE TO THE BORROWER, MAY
PARTICIPATE WITH THE INDEMNITEE IN THE DEFENSE OF SUCH INDEMNIFIED MATTER,
INCLUDING THE EMPLOYMENT OF COUNSEL CONSENTED TO BY SUCH INDEMNITEE (WHICH
CONSENT SHALL NOT BE UNREASONABLY WITHHELD); PROVIDED, HOWEVER, NOTHING
PROVIDED HEREIN SHALL (i) ENTITLE THE BORROWER TO ASSUME THE DEFENSE OF SUCH
INDEMNIFIED MATTER OR (ii) REQUIRE THE CONSENT OF THE BORROWER FOR ANY
SETTLEMENT OR ACTION IN RESPECT OF SUCH INDEMNIFIED MATTER, ALTHOUGH EACH
INDEMNITEE AGREES TO CONFER AND CONSULT WITH THE BORROWER BEFORE MAKING ANY
SETTLEMENT OF SUCH INDEMNIFIED MATTER.
(c) THE INDEMNITY OBLIGATIONS UNDER THIS SECTION SHALL BE IN ADDITION
TO ANY LIABILITY WHICH THE BORROWER MAY OTHERWISE HAVE, SHALL EXTEND UPON THE
SAME TERMS AND CONDITIONS TO EACH INDEMNITEE, AND SHALL BE BINDING UPON AND
INURE TO THE BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL
REPRESENTATIVES OF THE BORROWER, THE BANK AND ALL OTHER INDEMNITEES. THIS
SECTION SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE
OBLIGATION.
ARTICLE 6
Default
Section 6.1 Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event, and whether
voluntary, involuntary, or effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) the Borrower shall fail to pay when due (i) any principal of, or
interest on, the Note or (ii) any fee, expense, reimbursement obligation or
any other amount due in connection herewith or with any other Loan Paper, and
such failure with respect to clause (ii) shall have continued for five (5)
Business Days after the Borrower's receipt from the Bank of notice of such
failure;
(b) any representation or warranty made under this Agreement, or any
of the other Loan Papers, or in any certificate or statement furnished or made
to the Bank pursuant hereto or in connection herewith or with the Advances
hereunder, shall prove to be untrue or inaccurate in any material respect as
of the date on which such representation or warranty is made;
(c) the Borrower shall fail to perform or observe any term or covenant
contained in Article 5 of this Agreement;
(d) an event of default shall occur under the Existing Loan Agreement;
(e) the Borrower shall fail to perform or observe any term or covenant
(or any condition shall occur) with respect to any indebtedness (including
contingent indebtedness in respect of letters of credit) of the Borrower
evidenced by or arising under any one or more agreements, contracts or
instruments in an amount in excess of $50,000.00, and such failure (or
condition) shall continue for more than the period of grace, if any, specified
therein if the effect of such failure (or condition) is to accelerate, or to
permit the acceleration of, the maturity of such indebtedness, or any such
indebtedness shall be declared to be due and payable or required to be
prepaid, redeemed or defeased, or an offer to prepay, redeem, purchase or
defease such indebtedness shall be required to be made, in each case prior to
the stated maturity thereof, or the principal of any such indebtedness is not
repaid in full upon the maturity thereof or in full or in part pursuant to any
regularly scheduled required prepayment, redemption, repurchase or defeasance;
(f) the Guarantor shall fail to pay any principal of, premium or
interest on or any other amount payable in respect of indebtedness (including
contingent indebtedness) that is outstanding in a principal amount of at least
$1,000,000 in the aggregate when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise);
(g) any of the Loan Papers shall cease to be legal, valid, binding
agreements enforceable against any party executing the same in accordance with
the respective terms thereof or shall in any way be terminated or become or be
declared ineffective or inoperative or shall in any way whatsoever cease to
give or provide the respective rights, remedies, powers or privileges intended
to be created thereby, and the same could have a Material Adverse Effect;
(h) the Borrower or the Guarantor shall (i) apply for or consent to
the appointment of a receiver, trustee, custodian, intervenor or liquidator of
itself or of all or a substantial part of its assets, (ii) file a voluntary
petition in bankruptcy or is generally unable to pay its debts as they become
due, (iii) make a general assignment for the benefit of creditors, (iv) file a
petition or answer seeking reorganization or an arrangement with creditors or
to take advantage of any bankruptcy or insolvency laws, (v) file an answer
admitting the material allegations of, or consent to, or default in answering,
a petition filed against it in any bankruptcy, reorganization or insolvency
proceeding, or (vi) take corporate action for the purpose of effecting any of
the foregoing;
(i) an involuntary petition or complaint shall be filed against the
Borrower or the Guarantor seeking bankruptcy or reorganization of the Borrower
or the Guarantor or the appointment of a receiver, custodian, trustee,
intervenor or liquidator of the Borrower or the Guarantor, or all or
substantially all of its assets, and such petition or complaint shall not have
been dismissed within 60 days of the filing thereof; or an order, order for
relief, judgment or decree shall be entered by any court of competent
jurisdiction or other competent authority approving a petition or complaint
seeking reorganization of the Borrower or the Guarantor or appointing a
receiver, custodian, trustee, intervenor or liquidator of the Borrower or the
Guarantor, or of all or substantially all of its assets, and such order,
judgment or decree shall continue unstayed and in effect for a period of sixty
(60) days;
(j) any final judgment(s) for the payment of money in excess of the
sum of $50,000.00 in the aggregate shall be rendered against the Borrower and
such judgment or judgments shall not be satisfied, discharged or stayed (with
sufficient reserves having been set aside by the Borrower to pay such judgment
or judgments) at least ten (10) days prior to the date on which any of its
assets could be lawfully sold to satisfy such judgment;
(k) any final judgment(s) for the payment of money in excess of the
sum of $1,000,000.00 in the aggregate shall be rendered against the Guarantor
and such judgment or judgments shall not be satisfied, discharged or stayed
(with sufficient reserves having been set aside by the Guarantor to pay such
judgment or judgments) at least ten (10) days prior to the date on which any
of its assets could be lawfully sold to satisfy such judgment; or
(l) the Guarantor shall fail to perform or observe any covenant
contained in the Guaranty Agreement.
Section 6.2 Remedies. If an Event of Default shall have occurred and
shall be continuing:
(a) With the exception of an Event of Default specified in Section
6.1(h) or 6.1(i) hereof, the Bank may, at its option, terminate the Commitment
and/or declare the principal of and interest on the Advances and all
Obligation and other amounts owed under the Loan Papers to be forthwith due
and payable without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, anything in the Loan Papers to the contrary
notwithstanding.
(b) Upon the occurrence of an Event of Default specified in Section
6.1(h) or 6.1(i) hereof, such principal, interest and other amounts shall
thereupon and concurrently therewith become due and payable and the Commitment
shall automatically forthwith terminate, all without any action by the Bank
and without presentment, demand, protest or other notice of any kind, all of
which are expressly waived, anything in the Loan Papers to the contrary
notwithstanding.
(c) The Bank may exercise all of the post-default rights granted to it
under the Loan Papers or under Applicable Law.
(d) The rights and remedies of the Bank hereunder shall be cumulative,
and not exclusive.
ARTICLE 7
Changes in Circumstances
Section 7.1 LIBOR Basis Determination Inadequate. If with respect to
any proposed LIBOR Advance for any Interest Period, the Bank determines that
(i) deposits in dollars (in the applicable amount) are not being offered to
that the Bank in the relevant market for such Interest Period or (ii) the
LIBOR Basis for such proposed LIBOR Advance does not adequately cover the cost
to the Bank of making and maintaining such proposed LIBOR Advance for such
Interest Period, the Bank shall forthwith give notice thereof to the Borrower,
whereupon until the Bank notifies the Borrower that the circumstances giving
rise to such situation no longer exist, the obligation of the Bank to make
LIBOR Advances shall be suspended.
Section 7.2 Illegality. If any Applicable Law, or any change therein or
adoption thereof, or interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank (or its
LIBOR Lending Office) with any request or directive (whether or not having the
force of law) of any such Governmental Authority, central bank or comparable
agency, shall make it unlawful or impossible for the Bank (or its LIBOR
Lending Office) to make, maintain or fund its LIBOR Advances, the Bank shall
so notify the Borrower. Before giving any notice to the Borrower pursuant to
this Section, the Bank shall designate a different LIBOR Lending Office or
other lending office if such designation will avoid the need for giving such
notice and will not, in the sole judgment of the Bank, be materially
disadvantageous to the Bank. Upon receipt of such notice, notwithstanding
anything contained in Article 2 hereof, the Borrower shall repay in full the
then outstanding principal amount of each LIBOR Advance owing to the Bank,
together with accrued interest thereon, on either (a) the last day of the
Interest Period applicable to such Advance, if the Bank may lawfully continue
to maintain and fund such Advance to such day, or (b) immediately, if the Bank
may not lawfully continue to fund and maintain such Advance to such day.
Section 7.3 Increased Costs.
(a) If any Applicable Law or any change therein or adoption thereof,
or any interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof or compliance by the Bank (or its LIBOR Lending Office)
with any request or directive (whether or not having the force of law) of any
such Governmental Authority, central bank or comparable agency:
(i) shall subject the Bank (or its LIBOR Lending Office) to any
Tax (net of any tax benefit engendered thereby) with respect to its LIBOR
Advances or its obligation to make such Advances, or shall change the basis of
taxation of payments to the Bank (or to its LIBOR Lending Office) of the
principal of or interest on its LIBOR Advances or in respect of any other
amounts due under this Agreement relating to LIBOR Advances, as the case may
be, or its obligation to make such Advances (except for changes in the rate of
tax on the overall net income, net worth or capital of the Bank and franchise
taxes, doing business taxes or minimum taxes imposed upon the Bank); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by, a Bank's LIBOR
Lending Office or shall impose on the Bank (or its LIBOR Lending Office) or on
the United States market for certificates of deposit or the London interbank
market any other condition affecting its LIBOR Advances or its obligation to
make such Advances;
and the result of any of the foregoing is to increase the cost to the Bank (or
its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to
reduce the amount of any sum received or receivable by the Bank (or its LIBOR
Lending Office) with respect thereto, by an amount reasonably deemed by the
Bank to be material ("Increased Advance Costs"), then, within 15 days after
written demand by the Bank and delivery of the certificate described in
Section 7.3(b) below, the Borrower agrees to pay to the Bank such additional
amount as will compensate the Bank for such increased costs or reduced
amounts, subject to Section 8.9 hereof. The Bank will as soon as practicable
notify the Borrower of any event of which it has knowledge, occurring after
the date hereof, which will entitle the Bank to compensation pursuant to this
Section and will designate a different LIBOR Lending Office or other lending
office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole judgment of the Bank made in good
faith, be materially disadvantageous to the Bank.
(b) A certificate of the Bank claiming compensation under this Section
and setting forth in detail the reasons for such Increased Advance Costs, the
additional amounts to be paid to it hereunder and calculations therefor shall
be conclusive in the absence of manifest error. In determining such amount,
the Bank may use any reasonable averaging and attribution methods. If the
Bank demands compensation under this Section, the Borrower may at any time,
upon at least two Business Days' prior notice to the Bank, after reimbursement
to the Bank by the Borrower in accordance with this Section of all costs
incurred, prepay in full the then outstanding LIBOR Advances of the Bank,
together with accrued interest thereon to the date of prepayment, along with
any reimbursement in compliance with the provisions of Section 2.8 hereof.
Concurrently with prepaying such LIBOR Advances, the Borrower shall borrow a
Base Rate Advance from the Bank, and the Bank shall make such Base Rate
Advance, in an amount such that the outstanding principal amount of the
Advances owing to the Bank shall equal the outstanding principal amount of the
Advances owing immediately prior to such prepayment.
Section 7.4 Effect On Base Rate Advances. If notice has been given
pursuant to Section 7.1, 7.2 or 7.3 hereof suspending the obligation of the
Bank to make LIBOR Advances, or requiring LIBOR Advances of the Bank to be
repaid or prepaid, then, unless and until the Bank notifies the Borrower that
the circumstances giving rise to such repayment no longer apply, all Advances
which would otherwise be made by the Bank as LIBOR Advances shall be made
instead as Base Rate Advances.
Section 7.5 Capital Adequacy. If either (a) the introduction of or any
change in or in the interpretation of any Applicable Law or (b) compliance by
the Bank with any Applicable Law or any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law)
affects or would affect the amount of capital required or expected to be
maintained by the Bank or any corporation controlling the Bank, and the Bank
determines that the amount of such capital is increased by or based upon the
existence of the Bank's Commitment or Advances hereunder and other commitments
or advances of the Bank of this type, then, upon demand by the Bank, subject
to Section 8.9, the Borrower shall immediately upon receipt of the certificate
noted below pay to the Bank, from time to time as specified by the Bank,
additional amounts sufficient to compensate the Bank with respect to such
circumstances (collectively, "Additional Costs"), to the extent that the Bank
reasonably determines in good faith such increase in capital to be allocable
to the existence of the Bank's Commitment hereunder. A certificate explaining
in detail such amounts and the relevant calculations thereto and reasons
therefor submitted to the Borrower by the Bank hereunder, shall, in the
absence of manifest error, be conclusive and binding for all purposes.
ARTICLE 8
Miscellaneous
Section 8.1 Notices.
(a) All notices and other communications under this Agreement shall be
in writing and shall be deemed to have been given on the date personally
delivered or sent by telecopy (answerback received), or three days after
deposit in the mail, designated as certified mail, return receipt requested,
postage-prepaid, or one Business Day after being entrusted to a reputable
commercial overnight delivery service for next Business Day delivery, or one
day after being delivered to the telegraph office or sent out by telex
addressed to the party to which such notice is directed at its address
determined as provided in this Section. All notices and other communications
under this Agreement shall be given to the parties hereto at the following
addresses:
(i) If to the Borrower, at:
Seer Technologies, Inc.
8000 Regency Parkway
Cary, North Carolina 27511
Attn: Chief Financial Officer
Telecopy No.: (919) 380-5121
with a copy to: General Counsel
(ii) If to the Bank, at:
NationsBank, N.A., in care of
NationsBank of Texas, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
Attn: Yousuf Omar, Senior Vice President
Telecopy No.: (214) 508-0980
(b) Any party hereto may change the address to which notices shall be
directed by giving 10 days' written notice of such change to the other
parties.
Section 8.2 Expenses. The Borrower shall promptly pay:
(a) all reasonable out-of-pocket expenses of the Bank in connection
with the preparation, negotiation, execution and delivery of this Agreement
and the other Loan Papers, the transactions contemplated hereunder and
thereunder, and the making of Advances hereunder, including without limitation
the reasonable fees and disbursements of Special Counsel;
(b) all reasonable out-of-pocket expenses and attorneys' fees of the
Bank in connection with the administration of the transactions contemplated in
this Agreement and the other Loan Papers and the preparation, negotiation,
execution and delivery of any waiver, amendment or consent by the Bank
relating to this Agreement or the other Loan Papers; and
(c) all costs, out-of-pocket expenses and attorneys' fees of the Bank
incurred for enforcement, collection, restructuring, refinancing and "work-
out", or otherwise incurred in obtaining performance under the Loan Papers,
and all costs and out-of-pocket expenses of collection, which in each case
shall include without limitation fees and expenses of consultants, counsel for
the Bank, and administrative fees for the Bank.
Section 8.3 Waivers. The rights and remedies of the Bank under this
Agreement and the other Loan Papers shall be cumulative and not exclusive of
any rights or remedies which it would otherwise have. No failure or delay by
the Bank in exercising any right shall operate as a waiver of such right. The
Bank expressly reserves the right to require strict compliance with the terms
of this Agreement in connection with any funding of a request for an Advance.
In the event that the Bank decides to fund an Advance at a time when the
borrower is not in strict compliance with the terms of this Agreement, such
decision by the Bank shall not be deemed to constitute an undertaking by the
Bank to fund any further requests for Advances or preclude the Bank from
exercising any rights available under the Loan Papers or at law or in equity.
Any waiver or indulgence granted by the Bank shall not constitute a
modification of this Agreement, except to the extent expressly provided in
such waiver or indulgence, or constitute a course of dealing by the Bank at
variance with the terms of the Agreement such as to require further notice by
the Bank of the Bank's intent to require strict adherence to the terms of the
Agreement in the future. Any such actions shall not in any way affect the
ability of the Bank, in its discretion, to exercise any rights available to it
under this Agreement or under any other agreement, whether or not the Bank is
a party thereto, relating to the Borrower.
Section 8.4 Determination by the Bank Conclusive and Binding. Any
material determination required or expressly permitted to be made by the Bank
under this Agreement shall be made in its reasonable judgment and in good
faith, and shall when made, absent manifest error, be conclusive and binding
on all parties.
Section 8.5 Set-Off. In addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, the Bank and any subsequent holder of the
Note is hereby authorized by the Borrower at any time or from time to time,
without prior notice to the Borrower or any other Person, any such notice
being hereby expressly waived, to set-off, appropriate and apply any deposits
(general or special (except trust and escrow accounts), time or demand,
including without limitation debt evidenced by certificates of deposit, in
each case whether matured or unmatured) and any other debt at any time held or
owing by the Bank or holder to or for the credit or the account of the
Borrower, against and on account of the Obligation of the Borrower to the Bank
or holder, irrespective of whether or not (a) the Bank or holder shall have
made any demand hereunder, or (b) the Bank or holder shall have declared the
principal of and interest on the Advances and other amounts due hereunder to
be due and payable as permitted by Section 6.2 and although such Obligation,
or any of them, shall be contingent or unmatured.
Section 8.6 Assignment.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under the other Loan Papers without the prior written
consent of the Bank.
(b) The Bank shall be entitled to assign its interest, in whole or in
part, in this Agreement, its Note and its Advances; provided, however, that no
assignee of the Bank's rights hereunder shall be entitled to receive any
greater payment under Section 2.8 or 7.3 hereof than the Bank would have been
entitled to receive with respect to the rights transferred.
Section 8.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same
instrument.
Section 8.8 Severability. Any provision of this Agreement or any other
Loan Paper which is for any reason prohibited or found or held invalid or
unenforceable by any Governmental Authority shall be ineffective to the extent
of such prohibition or invalidity or unenforceability without invalidating the
remaining provisions hereof in such jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 8.9 Interest and Charges. It is not the intention of any
parties to this Agreement to make an agreement in violation of the laws of any
applicable jurisdiction relating to usury. Regardless of any provision in any
Loan Papers, the Bank shall never be entitled to receive, collect or apply, as
interest on the Obligation, any amount in excess of the Maximum Amount. If
the Bank ever receives, collects or applies, as interest, any such excess,
such amount which would be excessive interest shall be deemed a partial
repayment of principal and treated hereunder as such; and if principal is paid
in full, any remaining excess shall be paid to the Borrower. In determining
whether or not the interest paid or payable, under any specific contingency,
exceeds the Maximum Amount, the Borrower and the Bank shall, to the maximum
extent permitted under Applicable Law, (a) characterize any nonprincipal
payment as an expense, fee or premium rather than as interest, (b) exclude
voluntary prepayments and the effect thereof, and (c) amortize, prorate,
allocate and spread in equal parts, the total amount of interest throughout
the entire contemplated term of the Obligation so that the interest rate is
uniform throughout the entire term of the Obligation; provided, however, that
if the Obligation are paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period
of existence thereof exceeds the Maximum Amount, the Bank shall refund to the
Borrower the amount of such excess or credit the amount of such excess against
the total principal amount of the Obligation owing, and, in such event, the
Bank shall not be subject to any penalties provided by any Applicable Law for
contracting for, charging or receiving interest in excess of the Maximum
Amount. This Section shall control every other provision of all agreements
pertaining to the transactions contemplated by or contained in the Loan
Papers.
Section 8.10 Headings. Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation
of any provision hereof.
Section 8.11 Amendment and Waiver. The provisions of this
agreement may not be amended, modified or waived except by the written
agreement of the Borrower and the Bank.
SECTION 8.12 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN
PAPERS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NORTH CAROLINA. WITHOUT EXCLUDING ANY OTHER JURISDICTION, THE
BORROWER AGREES THAT THE STATE COURTS OF NORTH CAROLINA LOCATED IN CHARLOTTE,
NORTH CAROLINA AND THE FEDERAL COURTS OF THE WESTERN DISTRICT OF NORTH
CAROLINA SHALL HAVE NON-EXCLUSIVE JURISDICTION OVER PROCEEDINGS IN CONNECTION
WITH THIS AGREEMENT AND THE OTHER LOAN PAPERS.
SECTION 8.13 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER
WITH THE OTHER LOAN PAPERS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
IN WITNESS WHEREOF, this Agreement is executed as of the date first set
forth above.
BORROWER: SEER TECHNOLOGIES, INC.
By: _________________________
Name:_____________________
Title:_____________________
BANK: NATIONSBANK, N.A.
By: _________________________
Name:_____________________
Title:____________________
SCHEDULE 1
LIBOR LENDING OFFICE
NATIONSBANK, N.A.
Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255-0001
EXHIBIT A
PROMISSORY NOTE
Dallas, Texas $12,500,000.00 July 15, 1996
SEER TECHNOLOGIES, INC., a Delaware corporation (the "Borrower"), for
value received, promises to pay to the order of NATIONSBANK, N.A. ("Bank"), in
lawful money of the United States of America, the principal sum of TWELVE
MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($12,500,000.00), or such
lesser sum as shall be due and payable from time to time hereunder, as
hereinafter provided. All terms used but not defined herein shall have the
meanings set forth in the Credit Agreement described below.
The Borrower promises to pay principal of and interest on the unpaid
principal balance of Advances under this Promissory Note from time to time
outstanding as set forth in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to the Bank as provided in the Credit Agreement.
This Promissory Note is issued pursuant to and evidences Advances under a
Credit Agreement, dated as of July 15, 1996, between the Borrower and the Bank
(as amended, restated, supplemented, renewed, extended or otherwise modified
from time to time, "Credit Agreement"), to which reference is made for a
statement of the rights and obligations of the Bank and the duties and
obligations of the Borrower in relation thereto; but neither this reference to
the Credit Agreement nor any provision thereof shall affect or impair the
absolute and unconditional obligation of the Borrower to pay the principal sum
of and interest on this Promissory Note when due.
The Borrower and all endorsers, sureties and guarantors of this
Promissory Note hereby severally waive demand, presentment for payment,
protest, notice of protest, notice of acceleration, notice of intention to
accelerate the maturity of this Promissory Note, and all other notices of any
kind, diligence in collecting, the bringing of any suit against any party and
any notice of or defense on account of any extensions, renewals, partial
payments or changes in any manner of or in this Promissory Note or in any of
its terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity.
THIS PROMISSORY NOTE, TOGETHER WITH THE OTHER LOAN PAPERS, REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SEER TECHNOLOGIES, INC.
By:_________________________
Name:____________________
Title:___________________
EXHIBIT B
GUARANTY
THIS GUARANTY AGREEMENT dated as of July 15, 1996 (the "Guaranty") is
made by Welsh, Carson, Anderson & Stowe VI, L.P., a Delaware limited
partnership (the "Guarantor"), in favor of NATIONSBANK, N.A., a national
banking association (the "Bank").
RECITALS
A. Seer Technologies, Inc., a Delaware corporation (the "Borrower"), has
requested the Bank to extend a line of credit in the aggregate principal
amount of $12,500,000 (the "Line of Credit") to the Borrower.
B. As a condition to the Bank extending the Line of Credit to the
Borrower, the Guarantor is required, among other things, to execute and
deliver this Guaranty.
C. The Guarantor has reviewed all notes, documents, agreements,
instruments and certificates furnished by or on behalf of the Borrower or the
Guarantor in connection with the Line of Credit (all of the foregoing with
extensions, renewals and amendments thereof, being collectively herein called
the "Financing Documents") and the Guarantor has determined that its execution
and delivery of this Guaranty and the execution of the Financing Documents by
the parties to them will either directly or indirectly benefit the Guarantor.
AGREEMENT
As an inducement to the Bank to enter into the transactions contemplated
by the Financing Documents, the Guarantor agrees with the Bank as follows.
1. The Guaranty. The Guarantor hereby unconditionally and irrevocably
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the Guaranteed Indebtedness (hereinafter
defined). Upon failure by the Borrower to pay the Guaranteed Indebtedness
when due (whether upon maturity, acceleration or otherwise), the Guarantor
shall forthwith on demand pay the amount not so paid at the place and in the
manner specified by the Bank.
2. Definition of Guaranteed Indebtedness. The term "Guaranteed
Indebtedness," as used herein, means: (i) the indebtedness evidenced by that
certain promissory note (as the same may hereafter be renewed, extended,
amended, modified, supplemented, and/or restated from time to time and at any
time, with or without notice to the Guarantor, herein called the "Note" dated
July 15, 1996, in the principal amount of $12,500,000.00, executed by the
Borrower, payable to the order of the Bank; (ii) interest on the indebtedness
evidenced by the Note, whether accruing before or after the commencement of
any case, proceeding or other action relating to the bankruptcy, insolvency or
reorganization of any one or more of the Borrower and the Guarantor and
whether or not allowed in such case, proceeding or other action; (iii) any and
all costs, attorneys fees, and expenses incurred by the Bank in enforcing this
Guaranty; and (iv) any renewal or extension of the indebtedness, costs, fees,
or expenses described in (i) through (iii) preceding, or any part thereof.
3. Continuing Guaranty. This Guaranty is a continuing and irrevocable
guaranty and the circumstance that at any time or from time to time the
Guaranteed Indebtedness may be paid in full shall not affect the obligations
of the Guarantor with respect to Guaranteed Indebtedness thereafter incurred
by the Borrower to Bank.
4. Guaranty Unconditional. The obligations of the Guarantor hereunder
shall be unconditional and absolute and, without limiting the generality of
the foregoing, shall not be released, discharged or otherwise affected by, and
the Guarantor, to the maximum extent permitted by applicable law, hereby
waives any defense to any of its obligations hereunder that might otherwise be
available to it on account of:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower or any other
guarantor under any Financing Document, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to any Financing
Document;
(iii) any modification, amendment, waiver, release, non-perfection or
invalidity of any direct or indirect security, or of any guarantee or any
liability of any third party, for any obligation of the Borrower under
any Financing Document;
(iv) any change in the corporate existence, structure or ownership
of the Borrower or any other guarantor, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower or any
other guarantor or any of its assets or any release or discharge of any
obligation of the Borrower or any other guarantor contained in any
Financing Document;
(v) the existence of any claim, setoff or other rights which the
Guarantor may have at any time against the Borrower or the Bank, whether
or not arising in connection herewith or with any Financing Document;
provided that nothing herein shall prevent the assertion of any such
claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against the
Borrower or any other guarantor for any reason of any Financing Document,
or any provision of applicable law or regulation purporting to prohibit
the payment by the Borrower or any other guarantor of the Guaranteed
Indebtedness;
(vii) any other act or omission to act or delay of any kind by the
Borrower, or the Bank or any other circumstance whatsoever that might,
but for the provisions of this paragraph, constitute a legal or equitable
discharge of the Guarantor's obligations hereunder;
(viii) the absence of any attempt to collect any of the Guaranteed
Indebtedness from the Borrower or from any other guarantor or any other
action to enforce the same or the election of any remedy by the Bank; or
(ix) any suretyship laws of the State of North Carolina.
5. Reinstatement In Certain Circumstances. If at any time an payment of
the Guaranteed Indebtedness is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of the Borrower or
otherwise, the Guarantor's obligations hereunder with respect to such payment
shall be reinstated as though such payment had been due but not made at such
time.
6. Waiver by the Guarantor. The Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and any notice not provided for herein,
as well as any requirement that at any time any action be taken by the Bank
against the Borrower or any other guarantor or any property subject to any
security interest, pledge, lien, assignment or against securing any
obligations of the Borrower or the Guarantor.
7. Waiver of Subrogation. Until the final payment in full of the
Guaranteed Indebtedness, the Guarantor shall not exercise any rights against
the Borrower arising as a result of payment by the Guarantor hereunder, by way
of subrogation, reimbursement, restitution, contribution or otherwise.
8. Stay of Acceleration. If acceleration of the time for payment of any
amount payable by the Borrower under any Financing Document is stayed upon the
insolvency, bankruptcy or reorganization of the Borrower, all such amounts
otherwise subject to acceleration under the terms of the Financing Documents
shall nonetheless be payable by the Guarantor hereunder forthwith on demand by
the Bank.
9. Insolvency. The Guarantor agrees that, in the event of the
dissolution or insolvency of the Borrower or the insolvency of the Guarantor,
or the inability of the Borrower or the Guarantor to pay debts as they mature,
or an assignment by the Borrower or the Guarantor for the benefit of
creditors, or the institution of any proceeding by or against the Borrower or
the Guarantor alleging that the Borrower or the Guarantor is insolvent or
unable to pay debts as they mature, and if such event shall occur at a time
when any of the Guaranteed Indebtedness may not then be due and payable, the
Guarantor will pay to the Bank forthwith the full amount which would be
payable hereunder by the Guarantor if all Guaranteed Indebtedness were then
due and payable.
10. Limit of Liability. The obligations of the Guarantor hereunder shall
be limited to the largest amount that would not render its obligations
hereunder and thereunder subject to avoidance under Section 548 of the
Bankruptcy Code of 1978, as amended, or any comparable provisions of
applicable state law.
11. Representations and Warranties. The Guarantor represents and
warrants to the Bank that:
(i) Partnership Existence and Power. The Guarantor is a limited
partnership duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, has all powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted and is duly qualified as a foreign limited
partnership licensed and in good standing in each jurisdiction where
qualification or licensing is required by the nature of its business or the
character and location of its property, business or customers and in which the
failure to have such license, authorization, consent, approval or
qualification, as the case may be, in the aggregate, could have a material
adverse effect on the ability of the Guarantor to perform its obligations
under this Guaranty.
(ii) Partnership and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Guarantor of this Guaranty are
within the power of the Guarantor, have been duly authorized by all necessary
partnership action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the charter
or partnership agreement of the Guarantor or of any agreement, judgment,
injunction, order, decree or other instrument that is material, individually
or in the aggregate, to the business of the Guarantor and that is binding upon
the Guarantor or result in any asset of the Guarantor being subject to any
security interest, pledge, lien, assignment or setoff.
(iii) Binding Effect. This Guaranty constitutes a valid and binding
agreement of the Guarantor.
12. Covenants. The Guarantor hereby covenants to the Bank as follows:
(a) Financial Information. As soon as available but in any event not
later than 90 days after the end of each fiscal year of the Guarantor, the
Guarantor shall deliver to the Bank copies of the audited financial statements
of the Guarantor consisting of at least the balance sheet, statement of
operations, with related notes specifying significant accounting practices and
their impact on such financial statements and schedules as at and for the year
then ended for the Guarantor, certified by a firm of independent certified
public accountants. Within 45 days after the end of each of the first three
quarters of the fiscal year of the Guarantor, the Guarantor shall deliver to
the Bank copies of the unaudited financial statements of the Guarantor. The
Guarantor shall also furnish to the Bank any other documents or information
which the Bank may from time to time reasonably request.
(b) Liquidity Covenant. The Guarantor will ensure that at any time and
from time to time until all of the Guaranteed Obligations have been paid in
full the aggregate fair market value of the Guarantor's assets (including non-
restricted marketable securities and restricted securities readily salable
pursuant to Rule 144 under the Securities Act of 1933, as amended) that are
readily available to pay the Guaranteed Indebtedness is sufficient to pay the
Guaranteed Indebtedness in full together with any of the other indebtedness or
contingent liabilities of the Guarantor, and forthwith upon any amount
becoming due and payable hereunder will take all steps necessary to liquidate
or otherwise apply such assets and call cash capital contributions in an
amount sufficient, and use the proceeds thereof, to pay the Guaranteed
Indebtedness in full.
13. Notices. Unless otherwise specified herein, all notices, requests
and other communications to any party hereunder shall be in writing (including
bank wire, telex, facsimile transmission or similar writing) and shall be
given to such party at its address or telex or facsimile transmission number
set forth on the signature pages hereof or such other address or telex or
facsimile transmission number as such party may hereafter specify for the
purpose by notice to the other party. Each such notice, request or other
communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified pursuant to this paragraph and the
appropriate answerback is received, (ii) if given by facsimile transmission,
when such facsimile is transmitted to the facsimile transmission number
specified pursuant to this paragraph and telephonic confirmation of receipt
thereof is received, (iii) if given by mail, 72 hours after such communication
is deposited in the malls with first class postage prepaid, addressed as
aforesaid, or (iv) if given by any other means, when delivered at the address
specified pursuant to this paragraph.
14. No Waiver. No failure or delay by the Bank in exercising any right,
power or privilege under any Financing Document shall operate as waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
15. Amendments and Waivers. Any provision of this guaranty may be
amended or waived if, but only if, such amendment or waiver is in writing and
is signed by the Guarantor and is consented to in writing by the Bank.
16. Successors and Assigns. This Guaranty is for the benefit of the
Bank, and its successors and assigns and in the event of an assignment of the
Guaranteed Indebtedness, the rights hereunder, to the extent applicable to the
Guaranteed Indebtedness so assigned, may be transferred with such Guaranteed
Indebtedness. All of the provisions of this Guaranty shall be binding upon
the parties hereto and their respective successors and assigns, except that
the Guarantor may not assign or transfer any of its rights or obligations
under this Guaranty.
17. Counterparts. This Guaranty may be signed m any number of
counterparts, each of which shall be an original, and all of which taken
together shall constitute a single instrument, with the same effect as if the
signature thereto and hereto were upon the same instrument.
18. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NORTH CAROLINA. THE GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF
NORTH CAROLINA AND OF ANY NORTH CAROLINA STATE COURT SITTING IN DALLAS FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY
OR THE TRANSACTIONS CONTEMPLATED HERE. THE GUARANTOR IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. THE GUARANTOR HEREBY AGREES THAT PROCESS MAY BE SERVED ON
IT BY THE MAILING OF SUCH PROCESS TO IT IN ACCORDANCE WITH PARAGRAPH 10. THE
GUARANTOR HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
19. Notice of Final Agreement. THIS WRITTEN GUARANTY AND THE
FINANCING DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
THIS GUARANTY is executed as of the date first above written.
"GUARANTOR"
WELSH, CARSON, ANDERSON & STOWE VI,
L.P., a Delaware limited partnership
By: WCAS VI PARTNERS, General Partner
By: _________________, General Partner
Name: ________________________
Address:
Telephone Number:
Facsimile Transmission
Number:
Executed by the Bank for the purpose of the Notice of Final Agreement set
forth above.
"BANK"
NATIONSBANK, N.A., a national
banking association
By:
Name:
Title:
Address: c/o NationsBank of Texas,
N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
Telephone Number: (214) 508-3347
Facsimile Transmission
Number: (214) 508-0980
EXHIBIT C
NOTICE OF BORROWING
[Date]
NationsBank, N.A.
c/o NationsBank of Texas, N.A.,
901 Main Street, 67th Floor
Dallas, Texas 75202
Attention: Linda Roach
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement dated as of July 15, 1996
(the "Credit Agreement", the terms defined therein being used herein as
therein defined) between Seer Technologies, Inc. and NationsBank, N.A., and
hereby gives you notice pursuant to Section 2.2 of the Credit Agreement that
the undersigned hereby requests [___________ borrowing[s] under the Credit
Agreement] [continuances/conversions of existing Advances], and in that
connection sets forth below the information relating to [each] such Advance
[(a "Proposed Borrowing")] [a "Proposed Continuation/Conversion")] as required
by Section 2.2 of the Credit Agreement:
Proposed Borrowing:
(i) The Business Day of such Proposed Borrowing is____________
___, 19__.
(ii) The type of Advance[s] comprising such Proposed Borrowing of
Revolving Credit Advances is [are] [Base Rate Advance [to the extent of
an aggregate amount of $__________]] [LIBOR Advance [to the extent of an
aggregate amount of $________________]].
(iii) The aggregate amount of such Proposed Borrowing is $__________.
[(iv) The initial Interest Period for each LIBOR Advance made as part
of such Proposed Borrowing is ________ months.]
Proposed Continuation/Conversion:
(i) The principal amount of existing [LIBOR Advances] [Base Rate
Advances] to be [converted] [continued] is $_____________.
(ii) The Business Day of such [continuation] [conversion] is
_____________, 199__.
(iii) The type of Advance[s] comprising such [continuation]
[conversion] of Revolving Credit Advances is [are] [Base Rate Advance [to
the extent of an aggregate amount of $__________]] [LIBOR Advance [to the
extent of an aggregate amount of $________________]].
(iv) The initial Interest Period for each LIBOR Advance made as part
of such [continuation] [conversion] is _______ months.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the [Proposed Borrowing]
[Proposed Continuation/Conversion], before and after giving effect thereto and
to the application of the proceeds therefrom:
(A) the conditions precedent specified in Article 3 of the Credit
Agreement have been satisfied with respect to the [Proposed Borrowing]
[Proposed Continuation/Conversion] and will remain satisfied on the date of
such [Proposed Borrowing] [Proposed Continuation/Conversion];
(B) the representations and warranties specified in Article 4 of the
Credit Agreement are true and correct in all material respects as though made
on and as of such date; and
(C) no event has occurred and is continuing or would result from such
[Proposed Borrowing] [Proposed Continuation/Conversion], which constitutes a
Default or Event of Default.
Very truly yours,
SEER TECHNOLOGIES, INC.
By:
Name:
Title:
EXHIBIT 10.40
NORTH CAROLINA
WAKE COUNTY SECOND CONSOLIDATED AMENDMENT AGREEMENT
THIS SECOND CONSOLIDATED AMENDMENT AGREEMENT (the "Amendment Agreement"),
made and entered into as of this _19th_ day of July, 1996, to be effective as
of March 31, 1996, by and between SEER TECHNOLOGIES, INC. a Delaware
corporation (the "Borrower"); and NATIONSBANK, N.A.(formerly known as
NationsBank N.A. (Carolinas)) a national banking association with its
principal office located in the city of Charlotte, North Carolina (the
"Bank"):
W I T N E S S E T H:
WHEREAS, the Borrower and the Bank have heretofore entered into a Loan
Agreement dated February 24, 1995 (the "Loan Agreement"), pursuant to which
the Bank agreed to establish for the Borrower a line of credit (the "Revolving
Credit") up to an aggregate principal amount at one time outstanding not in
excess of TWENTY-FIVE MILLION AND NO/100 DOLLARS ($25,000,000.00), which
Revolving Credit is evidenced by the Borrower's Promissory Note dated February
24, 1995 (the "Revolving Credit Note"); and
WHEREAS, the Revolving Credit is secured by a valid, perfected, first
priority lien with respect to all accounts receivable owned by the Borrower
pursuant to the terms of the Security Agreement dated February 24, 1995 (the
"Security Agreement"); and
WHEREAS, the Borrower and the Bank agreed to extend the maturity date of
the Revolving Credit to March 15, 1997, and to make certain other
modifications to the Loan Agreement and the Note, all as set forth in that
certain First Consolidated Amendment Agreement dated February 22, 1996 between
the Bank and the Borrower (the "First Amendment"); and
WHEREAS, the Borrower is in violation of certain financial covenants set
forth in the Loan Agreement as amended, and the Borrower has requested that
the Bank waive the covenant violations and amend the relevant financial
covenants; and
WHEREAS, the Bank has agreed to waive the covenant violations described
above and amend said covenants on the terms and conditions hereinafter set
forth; and
WHEREAS, the parties hereto desire to further amend the Loan Agreement
in the manner herein set forth;
NOW, THEREFORE in consideration of the mutual covenants, promises and
conditions hereinafter set forth, it is hereby agreed as follows:
1. The term "Loan Agreement," as used herein and in the Loan
Agreement, the Note and all other loan documents executed in connection with
the Revolving Credit (collectively referred to herein as the "Loan Documents")
shall have the same meaning as the Loan Agreement dated February 24, 1995, as
amended by the First Amendment, except as hereby amended and modified. Unless
the context otherwise requires, all terms used herein without definition shall
have the definitions provided therefor in the Loan Agreement.
2. Subject to the conditions set forth in Paragraphs 5 and 6 hereof,
the Loan Agreement shall be and hereby is amended, effective as of the
effective date hereof, as follows:
(a) Subpart (ii) of Paragraph 3(b) of the Loan Agreement is
hereby amended by deleting said subpart (ii) in its entirety and substituting
in lieu thereof the following:
"(ii) within thirty days after the end of each month of the
Borrower, company prepared financial statements of the Borrower, including a
balance sheet and income statement, certified by the borrower to be correct
and accurate, and within thirty days after the close of the first, second and
third quarters of each fiscal year of the Borrower, company prepared financial
statements of the Borrower, including a balance sheet and income statement,
certified by the Borrower to be correct and accurate and reviewed by
independent certified public accountants who are reasonably satisfactory to
the Bank; and"
(b) Paragraph 3(i) of the Loan Agreement is hereby amended to
provide that the Borrower will maintain a current ratio (as that term is
defined in the second sentence of Paragraph 3(i) of the Loan Agreement) of not
less than 1.35 to one at all times during the term of the Loan Agreement.
(c) The first sentence of Paragraph 3(j) of the Loan Agreement
is hereby amended by deleting said sentence in its entirety and substituting
in lieu thereof the following:
"The Borrower will maintain Borrower's Tangible Net Worth in an
amount not less than $34,500,000 as at the last day of each fiscal
quarter of the Borrower. For purposes of this Agreement, the
Borrower will be permitted to reduce the Tangible Net Worth
requirement by an amount equal to the Borrower's restructuring
expense (as such expense is defined in accordance with
generally accepted accounting principles); provided, however, such
restructuring expense reduction shall not exceed $1,500,000."
(d) Paragraph 4 of the Loan Agreement is hereby amended by
inserting a new Paragraph 4(i) to read as follows:
"The Borrower will not, without prior written consent of the Bank,
permit the ratio of total liabilities to tangible net worth (as
defined in Paragraph 3(j) above) at any time to be greater than
1.50 to one."
(e) Paragraph 10(b) of the Loan Agreement is hereby amended by
deleting said Paragraph 10(b) in its entirety and substituting in lieu thereof
the following:
"b) Unutilized Line of Credit Fee. The Borrower agrees to pay
to the Bank a commitment fee for the period from the closing of the Loan to
the maturity date of the Note at the rate per annum equal to three-eights
percent (3/8%) of the Unutilized Revolving Credit Commitment (as defined
herein), payable in arrears (i) on the last business day of each fiscal
quarter, beginning with the last business day of the fiscal quarter ending
March 31, 1996, and (ii) on the maturity date of the Note. For
purposes of this Loan Agreement, the term "Unutilized Revolving Credit
Commitment" shall mean, on the date of calculation thereof, the difference
between (i) $25,000,000 and (ii) the average daily principal amount
outstanding under the Note during the immediately preceding fiscal quarter."
(f) Paragraph 10(c) of the Loan Agreement is hereby amended by
deleting said Paragraph 10(c) in its entirety and substituting in lieu thereof
the following:
"c) Borrowing Base Agreement. Bank agrees, upon the terms and
conditions set forth herein, to make Revolving Credit Advances to the Borrower
during the term of this Loan Agreement up to an aggregate amount not exceeding
$25,000,000; provided, however, Bank will not be required and shall have no
obligation to make any Revolving Credit Advances (i) so long as a Default or
an Event of Default has occurred and is continuing; (ii) if, immediately after
giving effect to each advance, the balance due under the Loan exceeds the
Borrowing Base; or (iii) if, immediately after giving effect to each advance,
the balance due under the Loan exceeds $20,000,000, unless the Borrower
satisfies each of the Additional Availability Covenants (as defined below).
For purposes of this Loan Agreement:
1) "Revolving Credit Advance" shall mean an amount paid by
Bank to the Borrower pursuant to this Loan Agreement and evidenced by the
Note.
2) "Borrowing Base" shall mean an amount equal to the sum of
(i) eighty percent (80%) of Eligible Domestic Accounts, and (ii) sixty percent
(60%) of Eligible Foreign Accounts, as determined pursuant to the Borrowing
Base Certificate
3) "Accounts" means accounts, accounts receivables, chattel
paper, instruments and documents, whether now owned or hereafter acquired by
the Borrower.
4) "Borrowing Base Certificate" means a certificate in the
form attached hereto and marked as Schedule 1.
5) "Eligible Domestic Accounts" means those Accounts which
have been in existence for not more than ninety (90) days from the date of the
unpaid invoice as issued by the Borrower as determined pursuant to the
Borrowing Base Certificate; provided there shall be excluded from Accounts the
following: intercompany or interaffiliate Accounts; foreign Accounts (i.e.,
Accounts with an Account Debtor located outside the U.S. or Canada); general
provisions for credit memos; and Accounts which relate to consigned Inventory.
6) "Eligible Foreign Accounts" means those Accounts which
have been in existence for not more than ninety (90) days from the date of the
original invoice as issued by the Borrower as determined pursuant to the
Borrowing Base Certificate; provided there shall be excluded from Accounts the
following: Accounts with Account Debtors that, to the Bank's satisfaction, are
not of investment grade or equivalent; intercompany or interaffiliate
Accounts; domestic Accounts (i.e., Accounts with an Account Debtor located in
the U.S. or Canada); general provisions for credit memos; and Accounts which
relate to consigned Inventory.
7) If at any time the Borrower's outstanding indebtedness to
the Bank pursuant to the Note (the "Outstanding Indebtedness") exceeds the
Borrowing Base, Borrower shall immediately make a payment equal to the
difference between (i) the Outstanding Indebtedness and (ii) the
Borrowing Base. If at any time the Outstanding Indebtedness exceeds
$25,000,000, Borrower shall immediately make a payment equal to the difference
between (i) the Outstanding Indebtedness and (ii) $25,000,000. If at any time
the Outstanding Indebtedness exceeds $20,000,000 and the Borrower is out of
compliance with any of the Additional Availability Covenants, Borrower shall
immediately make a payment equal to the difference between (i) the Outstanding
Indebtedness and (ii) $20,000,000. Borrower shall provide Bank a Borrowing
Base Certificate in a form satisfactory to the Bank on the twentieth (20th)
day of each month and at such other times as Bank may request. Borrower shall
submit to Bank upon request, but not less frequently than monthly, a report
identifying all Accounts by Account Debtor, and reflecting the aging thereof
and containing sufficient information for Bank to calculate the amount of
Eligible Domestic Accounts and Eligible Foreign Accounts. The Borrower shall
submit to Bank upon request such other reports and information as the Bank
shall reasonably request.
8) During the term of this Loan Agreement, the Borrower may
use the Loan by borrowing, paying or prepaying such principal amount, and re-
borrowing all in accordance with the terms of this Loan Agreement.
9) The Bank's Commercial Credit Services shall monitor the
Revolving Credit Advances and Borrowing Base, and shall conduct, prepare and
complete such audits of the Borrower's operations as the Bank deems
appropriate. The Borrower shall cooperate fully with the Bank's
Commercial Credit Services in the monitoring and audit procedures. The
Borrower shall provide the Bank's Commercial Credit Services with such
additional schedules, reports and information as Bank may reasonably request.
The additional schedules, reports and information shall be in form reasonably
satisfactory to the Bank's Commercial Credit Services. Notwithstanding any
provision of this Loan Agreement to the contrary, the advance rates set forth
in Paragraph 10(c)(2) above may be adjusted by the Bank in its sole
discretion, upon 15 days' written notice to the Borrower, taking into account
all fluctuations of the value of the Accounts in light of the Bank's
experience and sound lending practices; provided, that in the event such an
adjustment results in an obligation on the part of the Borrower to repay a
portion of any Outstanding Indebtedness pursuant to Paragraph 10(c)(7) above,
such repayment shall be due and payable within thirty (30) days of such
adjustment.
10) Notwithstanding any provision of the Loan Agreement to the
contrary, the Bank shall be under no obligation to make any Revolving Credit
Advance if, after giving effect to such Revolving Credit Advance, the balance
under the Loan shall exceed $20,000,000, unless each of the following
conditions (the "Additional Availability Covenants") are satisfied:
(i) No Default or Event of Default shall have occurred and be
continuing;
(ii) The Borrower's Tangible Net Worth shall equal or exceed for
each period set forth below the amounts set forth below opposite each such
period:
Quarter Ending Tangible Net Worth
June 30, 1996 $37,000,000
September 30, 1996 $38,000,000
(iii) The Borrower's current ratio (as defined in Paragraph 3(i)
of this Loan Agreement) shall not be less than 1.50 to one.
(iv) The Borrower's ratio of total liabilities to tangible net
worth shall not exceed 1.25 to one.
(v) Net income of the Borrower after taxes (but before any gain
on sale of assets and/or extraordinary gains) shall equal or exceed $1,000,000
for the most recently completed quarter."
(g) Schedule 1 to the Loan Agreement is hereby amended by
deleting said Schedule 1 in its entirety and substituting in lieu thereof
Schedule 1 attached hereto and incorporated herein by reference.
(h) Paragraph 5 of the Loan Agreement is hereby amended to
provide that, as additional security for the Loan, the Borrower grants a
security interest in all "Collateral" owned by the Borrower, as that
term is defined in the Intellectual Property Security Agreement between Bank
and Borrower dated July 18, 1996 (the "IP Security Agreement").
(i) Paragraph 4(a) is hereby amended by deleting the first
sentence of said Paragraph 4(a) and substituting in lieu thereof the
following.
"(a) Except in favor of Bank, incur any additional
indebtedness for borrowed money, any additional contingent liability, or
transfer any of Borrower's assets, whether now owned or hereafter acquired,
except in the ordinary course of Borrower's business."
Except as amended hereby, the remaining sentences of Paragraph 4(a) shall
continue and remain unaffected.
3. Subject to the conditions set forth in Paragraphs 5 and 6 hereof,
the Revolving Credit Note shall be and hereby is amended, effective as of the
date hereof, as follows:
(a) The Exhibit A to the Promissory Note is hereby amended by
deleting said Exhibit A in its entirety and substituting in lieu thereof
Exhibit A attached hereto and incorporated herein by reference.
(b) The payment schedule set forth in the Promissory Note is
hereby amended by deleting said payment schedule in its entirety and
substituting in lieu thereof the following:
"Principal shall be paid in full in a single payment on
December 31, 1996. Interest thereon shall be paid monthly commencing on June
15, 1996, and continuing on the last day of each successive month thereafter,
with a final payment of all unpaid interest at the stated maturity of this
Note."
4. By the execution and delivery hereof, the Borrower hereby
represents and warrants to the Bank that as of the date hereof the Loan
Agreement has been reexamined and:
(a) The representations and warranties made by the Borrower in
Paragraph 1 of the Loan Agreement are true on and as of the date hereof;
(b) There has been no material change in the condition,
financial or otherwise, of the Borrower since the date of the most recent
financial reports of the Borrower received by the Bank, other than changes in
the ordinary course of business, none of which has been a materially adverse
change or other than ordinary operating losses consistent with past
performance;
(c) No authorization, approval or consent of any regulatory body
is necessary or required in connection with the lawful execution, delivery and
performance of this Amendment Agreement which has not been obtained; and
(d) The execution, delivery and performance of this Amendment
Agreement will not conflict with or result in the breach of any of the
provisions of or cause a default under, the articles of incorporation or
bylaws of the Borrower, or any applicable law, rule or regulation, or any
judgment, order, writ, injunction, decree of any court, administrative agency
or other instrumentality to which the Borrower is subject and will not result
in the creation or imposition of any security interest, lien, charge or
encumbrance on any of the assets of the Borrower except for the liens created
by the Security Agreement and the IP Security Agreement.
5. The effectiveness of this Amendment Agreement shall be subject to
the fulfillment of the following conditions precedent:
(a) The Borrower shall have delivered to the Bank a Borrower's
Affidavit to the effect that each of the Loan Documents has been reexamined on
behalf of the Borrower by the signatory thereto and that as of the date of f
delivery of said certificate no event has occurred and no condition exists
which constitutes, or with the giving of notice or lapse of time or both,
would constitute, an event of default under the Loan Agreement or any of the
other Loan Documents
(b) The Bank shall have received two (2) counterparts of this
Amendment Agreement duly executed by all signatories thereto.
(c) The Bank shall have received certified copies of resolutions
of the Board of Directors of the Borrower authorizing the execution and
delivery of, and the performance under, this Amendment Agreement and the other
Loan Documents.
(d) The Bank shall have received an Intellectual Property Rights
Security Agreement duly executed by the Borrower and such other instruments as
the Bank may request in order to create and perfect a valid security interest
in the "Collateral" described therein.
(e) The Bank shall have received an opinion of counsel
reasonably satisfactory to the Bank addressing corporate existence, authority,
execution and enforceability of this Amendment Agreement.
6. All instruments and documents incident to the consummation of the
transactions contemplated hereby shall be satisfactory in form and substance
to the Bank and its counsel; the Bank shall have received copies of all
additional agreements, instruments and documents which it may reasonably
request in connection therewith, such documents, when appropriate, to be
certified by appropriate governmental authorities; and all proceedings of the
Borrower relating to the matters provided for herein shall be satisfactory to
the Bank and its counsel.
7. This Amendment Agreement sets forth the entire understanding and
agreement of the parties hereto in relation to the subject matter hereof and
supersedes any prior negotiations and agreements among
the parties relative to such subject matter. No promise, condition,
representation or warranty, express or implied, not herein set forth shall
bind any party hereto and none of them has relied on any such promise,
condition, representation or warranty. Each of the parties hereto
acknowledges that, except as in this Amendment Agreement otherwise expressly
stated, no representations, warranties or commitments, express or implied,
have been made by any other party to the other. None of the terms or
conditions of this Amendment Agreement may be changed, modified, waived or
canceled orally or otherwise, except by writing, signed by the party to be
charged therewith, specifying such change, modification, waiver or
cancellations of such terms or conditions, or of any proceeding or succeeding
breach thereof, unless expressly so stated. In the event of a conflict
between the terms of the Loan Documents and the terms of
this Amendment Agreement, the terms of the Loan Documents shall be construed
in a manner consistent with the amendments and modifications set forth in this
Amendment Agreement.
8. Except as specifically amended, modified or supplemented, the Loan
Agreement, the Note, the Security Agreement and all of the other Loan
Documents are hereby confirmed and ratified in all respects and shall remain
in full force and effect according to their respective terms. In the event of
a conflict between the terms of the Loan Documents and the terms of this
Amendment Agreement, the terms of the Loan Documents shall be construed in a
manner consistent with the amendments and modifications set forth in this
Amendment Agreement.
9. All costs, fees and expenses incurred by the Borrower and the Bank
in connection with this Amendment Agreement and the satisfaction of all
conditions precedent hereunder whether incurred in connection with the
preparation and execution hereof or in connection with the parties'
performance hereunder, shall be paid by the Borrower, including without
limitation, such reasonable attorney's fees as Bank's counsel may charge and
Bank's audit and ongoing monitoring fees.
10. The parties hereto agree and acknowledge that the provisions of
this Amendment Agreement constitute amendments to, and not a novation of, the
indebtedness evidenced by the Revolving Credit Note.
11. This Amendment Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this
Amendment Agreement to be duly executed under seal by their duly authorized
representatives, all as of the day and year first above written.
SEER TECHNOLOGIES, INC., a Delaware
corporation
By:
__________President
ATTEST:
____________________
_________Secretary
[CORPORATE SEAL]
NATIONSBANK, N.A., a National Banking
Association
By:
________________Vice President
ATTEST:
________________________
____________ Secretary
[CORPORATE SEAL]
EXHIBIT A TO PROMISSORY NOTE
FROM SEER TECHNOLOGIES, INC.
TO NATIONSBANK, N.A.
DATED FEBRUARY 24,1995
IN THE ORIGINAL PRINCIPAL AMOUNT OF $25,000,000.00
The following provisions are incorporated and made part of the above-
referenced promissory note:
Interest. The outstanding Loan principal shall bear interest at the LIBOR
Rate (as defined below) plus three percent (3.0%). The interest rate
hereunder shall change as of the same date the LIBOR Rate changes.
Payment of Interest. Installments of interest for each calendar month shall
be due and payable in arrears on the 15th day of each month beginning with the
interest installment due on June 15, 1996 and continuing on the same day of
each successive month thereafter until the loan has been paid in full.
Definitions. For purposes hereof:
(a) "LIBOR Base Rate" means the rate (expressed as a percentage and
rounded upwards if necessary to the nearest 1/100 of 1%) for any particular
day determined by the Bank in good faith in accordance with
its usual procedures for its customers generally to be the average of the
rates per annum for deposits in Dollars offered to major banks in the London
interbank market for such particular day and for a term of thirty (30) days.
(b) "LIBOR Rate" means, for any particular day, the rate of interest
per annum determined pursuant to the following formula:
LIBOR LIBOR Base Rate
Rate = 1 - Reserve Requirement
(c) "Reserve Requirement" means the maximum aggregate rate at which
reserves (including, without limitation, any marginal, supplemental or
emergency reserves) are required to be maintained with respect thereto under
Regulation D by the member banks of the Federal Reserve System with respect to
Dollar funding in the London interbank market. Without limiting the effect of
the foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks by reason of any regulatory
change against (i) any category of liabilities which include deposits by
reference to which the LIBOR Base Rate is to be determined or (ii) any
category of extensions of credit or other assets which include advances under
the Note.
EXHIBIT 10.41
PREFERRED STOCK PURCHASE AGREEMENT
Among
SEER TECHNOLOGIES, INC.,
WELSH, CARSON, ANDERSON & STOWE VI, L.P.
and
THE SEVERAL OTHER PURCHASERS NAMED IN SCHEDULE I HERETO
Dated as of August 8, 1996
TABLE OF CONTENTS
Page
ARTICLE I. PURCHASE AND SALE OF THE SHARES 1
SECTION 1.01 Issuance, Sale and Delivery of the Shares 1
SECTION 1.02 Closing Date 2
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 2
SECTION 2.01 Organization, Qualifications and
Corporate Power 2
SECTION 2.02 Authorization of Agreements, Etc. 2
SECTION 2.03 Validity 3
SECTION 2.04 Authorized Capital Stock 3
SECTION 2.05 Financial Statements 4
SECTION 2.06 Disclosure 4
SECTION 2.07 Actions Pending 5
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS 5
ARTICLE IV. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS AND
THE COMPANY 6
SECTION 4.01 Conditions to the Obligations of the Purchasers 6
SECTION 4.02 Conditions to the Obligations of the Company 7
ARTICLE V. COVENANTS OF THE COMPANY 8
SECTION 5.01 Certain Registration Rights 8
SECTION 5.02 Availability of Rule 144 8
ARTICLE VI. MISCELLANEOUS 9
SECTION 6.01 Expenses 9
SECTION 6.02 Survival of Agreements 9
SECTION 6.03 Brokerage 9
SECTION 6.04 Parties in Interest 9
SECTION 6.05 Notices 9
SECTION 6.06 Law Governing 9
SECTION 6.07 Entire Agreement 9
SECTION 6.08 Counterparts 10
INDEX TO SCHEDULES
Schedule Description
I Purchasers
2.06 Amendments and Supplements
PREFERRED STOCK PURCHASE AGREEMENT, dated as of July
31, 1996, among SEER TECHNOLOGIES, INC., a Delaware corporation (the
"Company"), WELSH, CARSON, ANDERSON & STOWE VI, L.P., a Delaware limited
partnership ("WCAS VI"), and the several other purchasers named in Schedule I
hereto (such other purchasers together with WCAS VI being herein referred to
individually as a "Purchaser" and collectively as the "Purchasers").
WHEREAS, after giving effect to the filing of a Certificate of
Designation of the Company in the form annexed hereto as Exhibit A (the
"Certificate of Designation"), the Company shall designate shares of Series A
Convertible Preferred Stock ("Series A Preferred Stock") from the Company's
authorized 10,000,000 shares of Preferred Stock, par value $.01 per share (the
"Preferred Stock");
WHEREAS, the Company wishes to issue and sell to the Purchasers shares of
Series A Preferred Stock for the aggregate purchase price of $12,500,000 (the
"Purchase Price"); and
WHEREAS, the Purchasers wish to purchase said shares of Series A
Preferred Stock, all on the terms and subject to the conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereby agree as follows:
I.
PURCHASE AND SALE OF SHARES
SECTION 1.01 Issuance, Sale and Delivery of the Shares. (a) On the
Closing Date (as defined below), the Company shall issue and sell to each
Purchaser, and each Purchaser shall purchase from the Company, the number of
authorized but unissued shares of Series A Preferred Stock, rounded to the
nearest whole share (said aggregate shares being purchased by the Purchasers
being herein collectively called the "Shares"), obtained by dividing the
amount set forth opposite the name of such Purchaser in Schedule I hereto
under the heading "Purchase Price", by the Average Share Price (as defined
below), and the Company shall issue and deliver to each Purchaser stock
certificates in definitive form, registered in the name of such Purchaser,
representing the Shares being purchased by such Purchaser hereunder.
(b) The price per Share to be paid by each Purchaser on the Closing
Date (the "Average Share Price") shall be determined by taking the average of
the last reported sales price per share of Common Stock, par value $.01 per
share ("Common Stock"), of the Company quoted by the National Association of
Securities Dealers Automated Quotation System for the twenty (20) consecutive
trading days beginning on July 11, 1996.
(c) As payment in full for the Shares being purchased by each
Purchaser hereunder, and against delivery of the stock certificates therefor
as aforesaid, on the Closing Date each Purchaser shall wire transfer to the
account of the Company in immediately available funds the sum set forth
opposite the name of such Purchaser in Schedule I hereto under the heading
"Purchase Price".
SECTION 1.02 Closing Date. The closing of the sale and purchase of the
Shares shall take place at the offices of Reboul, MacMurray, Hewitt, Maynard &
Kristol, 45 Rockefeller Plaza, New York, New York, at 10 a.m., New York time,
on the date that is the next business day after the determination of the
Average Share Price, or at such other date and time as may be mutually agreed
upon between WCAS VI and the Company (such date and time of closing being
herein called the "Closing Date").
II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as follows:
SECTION 2.01 Organization, Qualifications and Corporate Power. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and is duly licensed or
qualified to transact business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of its business or the
ownership of its properties makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
material adverse effect on the operations or financial condition of the
Company. The Company has the corporate power and authority to own and hold
its properties and to carry on its business as currently conducted, to
execute, deliver and perform this Agreement and to issue, sell and deliver the
Shares.
SECTION 2.02 Authorization of Agreements, Etc. (a) The execution and
delivery by the Company of this Agreement and the performance by the Company
of its obligations hereunder have been duly authorized by all requisite
corporate action and will not violate any provision of law, any order of any
court or other agency of government, the Certificate of Incorporation or By-
laws of the Company, or any provision of any indenture, agreement or other
instrument by which the Company or any of its subsidiaries or any of their
respective properties or assets is bound, or conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under
any such indenture, agreement or other instrument, or result in the creation
or imposition of any lien, charge or encumbrance of any nature whatsoever upon
any of the properties or assets of the Company or any of its subsidiaries.
(b) The Shares have been duly authorized and designated, and when issued
in accordance with the terms of this Agreement, will be validly issued, fully
paid and nonassessable shares of Series A Preferred Stock. The issuance, sale
and delivery of the Shares are not subject to any preemptive rights of
stockholders of the Company or to any right of first refusal or other similar
right in favor of any person.
SECTION 2.03 Validity. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms.
SECTION 2.04 Authorized Capital Stock. On the date hereof, the
authorized capital stock of the Company consists of 30,000,000 shares of
Common Stock and 10,000,000 shares of Preferred Stock. After giving effect to
the filing of the Certificate of Designation, a number of shares of Preferred
Stock equal to 12,500,000 divided by the Average Share Price shall have been
designated Series A Preferred Stock. As of the date hereof, immediately prior
to giving effect to the purchase and sale of the Shares as contemplated
hereby, 11,481,992 shares of Common Stock and no shares of Preferred Stock are
validly issued and outstanding, fully paid and nonassessable.
(b) Except for the transactions contemplated herein or as set forth in
the Company's Form 10-K for the 1995 fiscal year or the Company's Form 10-Q
for the first quarter ended December 31, 1995 or the second quarter ended
March 31, 1996, referred to in Section 2.06 hereof, (i) no subscription,
warrant, option, convertible security or other right (contingent or other) to
purchase or acquire any shares of any class of capital stock of the Company is
authorized or outstanding, (ii) there is not any commitment of the Company to
issue any shares, warrants, options or other such rights or to distribute to
holders of any class of its capital stock any evidences of indebtedness or
assets, and (iii) the Company has no obligation (contingent or other) to
purchase, redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or make any other distribution in
respect thereof.
SECTION 2.05 Financial Statements. The Company has heretofore
furnished to the Purchasers: (i) the audited consolidated balance sheet of
the Company and its subsidiaries as of September 30, 1995, and the related
consolidated statements of operations, changes in stockholders' equity and
cash flows for the year then ended, certified by Coopers & Lybrand L.L.P.,
independent certified public accountants, and (ii) the unaudited consolidated
balance sheets of the Company and its subsidiaries as of December 31, 1995 and
March 31, 1996, and the related unaudited consolidated statements of
operations, changes in stockholders' equity and cash flows for the respective
three and six month periods then ended, certified by the principal financial
officer of the Company. All such financial statements (including any related
schedules and/or notes, if any) are complete and correct in all material
respects and have been prepared in accordance with generally accepted
accounting principles consistently applied. Each such balance sheet fairly
and accurately presents the financial position of the Company and its
subsidiaries as of its date, and each of said statements of operations,
changes in stockholders' equity and cash flows fairly and accurately presents
the results of operations of the Company and its subsidiaries for the period
covered thereby, subject, in the case of unaudited financial statements, to
normal year-end adjustments which are not, in the aggregate, material. Since
March 31, 1996, except as disclosed in the Company's earnings release for the
third quarter ended June 30, 1996, neither the business, operations, property
nor financial condition of the Company and its subsidiaries, taken as a whole,
have been materially adversely effected by any occurrence or development known
to the Company, whether or not insured against.
SECTION 2.06 Disclosure. Neither the Company's Annual Report on Form
10-K for the year ended September 30, 1995 nor its Quarterly Report on Form
10-Q for the first quarter ended December 31, 1995 or the second quarter ended
March 31, 1996, contain any untrue statement of material fact, or omit to
state any material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. Neither this Agreement nor any of the schedules, attachments,
written statements, documents, certificates or other items delivered by the
Company to the Purchasers pursuant to this Agreement contain any untrue
statement of material fact, or omit to state any material fact necessary in
order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading. The Company has furnished the
Purchasers with an accurate and complete copy of its annual report on Form 10-
K for the 1995 fiscal year and of all other reports or documents required to
be filed by the Company pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder (the "Exchange Act"), since the filing of the most
recent annual report to its stockholders. The Company has made all filings
with the Securities and Exchange Commission (the "Commission") that it has
been legally required to make. Except as disclosed in Schedule 2.06 attached
hereto, the Company has not received any request from the Commission to file
any amendment or supplement to any of the reports described in this Section
2.06.
SECTION 2.07 Actions Pending. Except as set forth in the Company's
Form 10-K for the 1995 fiscal year or the Company's Form 10-Q for the first
quarter ended December 31, 1995 or the second quarter ended March 31, 1996,
referred to in Section 2.06 hereof, there is no action, suit, proceeding or,
to the knowledge of the Company, investigation pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
subsidiaries or any of their respective properties or rights before any court
or by or before any governmental body or arbitration board or tribunal, the
outcome of which might result in any material adverse effect on the business,
prospects, operations, property or financial condition of the Company or any
of its subsidiaries, taken as a whole. To the knowledge of the Company, there
does not exist any basis for any such action, suit, investigation or
proceeding.
III.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser represents and warrants to the Company that it is
acquiring the Shares being purchased by it hereunder for its own account for
the purpose of investment and not with a view to, or for sale in connection
with, any distribution thereof. Each Purchaser further represents that it
understands that (i) the Shares have not been registered under the Securities
Act of 1933, as amended (the "Securities Act"), by reason of their issuance in
a transaction exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) thereof, (ii) the Shares must be held indefinitely
unless a subsequent disposition thereof is registered under the Securities Act
or is exempt from such registration, (iii) the Shares will bear a legend to
such effect and (iv) the Company will make a notation on its transfer books to
such effect. Each Purchaser further understands that the exemption from
registration afforded by Rule 144 under the Securities Act depends on the
satisfaction of various conditions and that, if applicable, Rule 144 affords
the basis of sales of the Shares (or of the shares of Common Stock issuable
upon conversion thereof) in limited amounts under certain conditions. Each
Purchaser acknowledges that it has had a full opportunity to request from the
Company to review and has received all information deemed relevant in making a
decision to enter into this Agreement and consummate the transactions
contemplated hereby.
IV.
CONDITIONS TO THE OBLIGATIONS
OF THE PURCHASERS AND THE COMPANY
SECTION 4.01 Conditions to the Obligations of the Purchasers. The
obligation of each Purchaser to purchase and pay for the Shares being
purchased by it hereunder on the Closing Date is, at its option, subject to
the satisfaction, on or before such date, of the following conditions:
(a) Representations and Warranties to be True and Correct. The
representations and warranties contained in Article II hereof shall be true
and correct on and as of the Closing Date with the same force and effect as
though such representations and warranties had been made on and as of such
date, and the Company shall have certified to such effect to the Purchasers in
writing.
(b) Performance. The Company shall have performed and complied with all
agreements and conditions contained herein required to be performed or
complied with by it prior to or at the Closing Date, and the Company shall
have certified to such effect to the Purchasers in writing.
(c) Credit Line Agreement. The $12,500,000 Credit Agreement (the
"Credit Agreement") between the Company and NationsBank, N.A., a national
banking association ("NationsBank"), shall have been executed and delivered by
the Company and NationsBank and shall be in full force and effect.
(d) Guaranty Agreement. The Agreement (the "Guaranty Agreement")
between the Company and WCAS VI, pursuant to which (i) WCAS VI shall agree to
execute a guaranty in connection with the Credit Agreement in order to protect
and enhance its existing substantial equity investment in the Company and to
induce NationsBank to enter into the Credit Agreement, and (ii) the Company
shall agree to issue to WCAS VI in recognition for the additional financial
risk assumed by WCAS VI in executing such guaranty (and not as compensation or
a payment for any services or otherwise in connection with the pursuit of a
trade or business) 75,000 shares (the "Guaranty Shares") of Common Stock,
shall have been executed and delivered by the Company and shall be in full
force and effect.
(e) Guaranty Shares. The Guaranty Shares shall have been issued and
delivered to WCAS VI pursuant to the Guaranty Agreement.
(f) Certificate of Designation. The Certificate of Designation shall
have been adopted by the Company by all necessary action of the Board of
Directors, and shall have been duly filed with the Secretary of State of
Delaware and become legally effective.
(g) All Proceedings to be Satisfactory. All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory
in form and substance to the Purchasers and the Purchasers shall have received
all such counterpart originals or certified or other copies of such documents
as they may reasonably request, including, without limitation, certified
copies of the resolutions of the Board of Directors of the Company approving
and authorizing the execution, delivery and performance of this Agreement and
the issue, sale and delivery of the Shares.
All such documents shall be satisfactory in form and substance to
the Purchasers.
SECTION 4.02 Conditions to the Obligations of the Company. The
obligation of the Company to sell the Shares on the Closing Date is, at its
option, subject to the satisfaction, on or before the Closing Date, of the
following conditions:
(a) Credit Line Agreement. The Credit Agreement shall have been
executed and delivered by NationsBank and shall be in full force and effect.
(b) Guaranty Agreement. The Guaranty Agreement shall have been executed
and delivered by WCAS VI and shall be in full force and effect.
(c) Guaranty. The Guaranty made by WCAS VI in favor of NationsBank in
connection with the Credit Agreement shall have been executed and delivered by
WCAS VI and shall be in full force and effect.
(d) Certificate of Designation. The Certificate of Designation shall
have been adopted by the Company by all necessary action of the Board of
Directors, and shall have been duly filed with the Secretary of State of
Delaware and become legally effective.
V.
COVENANTS OF THE COMPANY
SECTION 5.01 Certain Registration Rights. The Company hereby affirms and
agrees that the registration rights granted to the Purchasers and certain
other stockholders of the Company as set forth in Section 12 of the Preferred
Stock Purchase Agreement dated as of March 7, 1990, among, the Company and
International Business Machines, CS First Boston Securities Corporation and
the other parties named therein, as amended by, among other things, the
Securities Purchase Agreement dated as of September 30, 1994, among the
Company, WCAS Capital Partners II, L.P and the several securityholders named
in Annexes I and II thereto (said Section 12, as amended, herein referred to
as the "Registration Rights Agreement"), shall be deemed to continue in full
force and effect, provided, however, that the term "Registration Shares" shall
be modified to include (i) any shares of Common Stock issuable upon conversion
of the shares of Series A Preferred Stock issued to the Purchasers pursuant to
this Agreement, (ii) any shares of Common Stock issued to WCAS VI pursuant to
the Guaranty Agreement, and (iii) any securities issued or issuable with
respect to any shares of Series A Preferred Stock or Common Stock referred to
in clause (i) or (ii) by way of stock dividend or stock split or in connection
with any merger, consolidation or other reorganization or otherwise.
SECTION 5.02 Availability of Rule 144. So long as there are
Registration Shares (as defined in the Registration Rights Agreement)
outstanding, the Company hereby covenants and agrees that it shall file the
reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the Commission thereunder, to the
extent required from time to time to enable any holder of Registration Shares
to sell such Registration Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 or any similar
rule or regulation allowing such holders to sell without registration under
the Securities Act, as such Rule may be amended from time to time; provided,
however, that so long as there are Registration Shares outstanding, the
Company shall continue to file such reports as may be required to satisfy the
requirements of Rule 144(c) even if not required to do so pursuant to the
Exchange Act.
VI.
MISCELLANEOUS
SECTION 6.01 Expenses. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated.
SECTION 6.02 Survival of Agreements. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the issuance, sale and delivery of the Shares
pursuant hereto, and all statements contained in any certificate or other
instrument delivered by the Company hereunder shall be deemed to constitute
representations and warranties made by the Company.
SECTION 6.03 Brokerage. The Company, on the one hand, and the
Purchasers, on the other hand, shall indemnify and hold harmless the other
against and in respect of any claim for brokerage or other commissions
relative to this Agreement or to the transactions contemplated hereby, based
in any way on agreements, arrangements or understandings made or claimed to
have been made by such party with any third party.
SECTION 6.04 Parties in Interest. All covenants, agreements,
representations and warranties contained in this Agreement by or on behalf of
the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not.
SECTION 6.05 Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be sent by national
overnight courier service or certified mail, return receipt requested, in each
case with postage prepaid, addressed as follows:
(1) if to the Company, at 8000 Regency Parkway, Cary, North Carolina
27511, Attention: President; and
(b) if to any Purchaser, to its address set forth on Schedule I
hereto;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
SECTION 6.06 Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 6.07 Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and may not
be modified or amended except in writing.
SECTION 6.08 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
SEER TECHNOLOGIES, INC.
By:
Name:
Title:
WELSH, CARSON, ANDERSON
& STOWE VI, L.P.
By WCAS VI Partners, L.P., General
Partner
By
General Partner
WCAS INFORMATION PARTNERS, L.P.
By WCAS INFO Partners,
General Partner
By
General Partner
Patrick J. Welsh
Russell L. Carson
Bruce K. Anderson
Richard H. Stowe
Andrew M. Paul
Thomas E. McInerney
Laura VanBuren, individually
and as attorney-in-fact*
James B. Hoover
DELAWARE CHARTER TRUST CO., as
Trustee for the Benefit of the
IRA Rollover of James B. Hoover
By
Robert A. Minicucci
Anthony J. de Nicola
TRUST U/A DATED 11/26/84 for the
Benefit of Eric Welsh (Carol
Ann Welsh, Trustee)
By
TRUST U/A DATED 11/26/84 for the
Benefit of Randall Welsh (Carol
Ann Welsh, Trustee)
By
TRUST U/A DATED 11/26/84 for the
Benefit of Jennifer Welsh (Carol
Ann Welsh, Trustee)
By
David F. Bellet
REBOUL, MACMURRAY, HEWITT, MAYNARD
& KRISTOL
By
Schedule I
Series A Preferred Stock Purchasers
Name of Purchaser Purchase Price
Welsh, Carson, Anderson & Stowe VI, L.P. $11,810,526
WCAS Information Partners, L.P. 141,128
Patrick J. Welsh 70,566
TRUST U/A DATED 11/26/84 for the 10,079
Benefit of Eric Welsh (Carol
Ann Welsh, Trustee)
TRUST U/A DATED 11/26/84 for the 10,079
Benefit of Randall Welsh (Carol
Ann Welsh, Trustee)
TRUST U/A DATED 11/26/84 for the 10,079
Benefit of Jennifer Welsh (Carol
Ann Welsh, Trustee)
Russell L. Carson 100,802
Bruce K. Anderson 100,802
Richard H. Stowe 40,314
Andrew M. Paul 24,191
Thomas E. McInerney 20,161
Laura VanBuren 4,030
James B. Hoover 30,240
Delaware Charter Trust Co., as 10,079
Trustee for the Benefit of the
IRA Rollover of James B. Hoover
Robert A. Minicucci 50,401
Anthony J. de Nicola 6,044
David F. Bellet 40,320
Reboul, MacMurray, Hewitt, Maynard 20,159
& Kristol
TOTAL: $12,500,000
Schedule 2.06
On March 20, 1996, the Company received written comments from the Securities
and Exchange Commission (the "Commission") requesting certain additional
information in connection with the Company's Form 10-K filed December 29, 1995
and Form 10-Q filed February 12, 1996.
As part of the Company's response to the Commission's comments, the Company
filed with the Commission on April 5, 1996, an amendment to its Form 10-K.
EXHIBIT A
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
SEER TECHNOLOGIES, INC.
(Pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware)
Seer Technologies, Inc., a corporation organized and existing under the
General Corporation Law (the "GCL") of the State of Delaware (hereinafter
called the "Corporation"), hereby certifies that, pursuant to authority vested
in the Board of Directors of the Corporation by Article Fourth of the Restated
Certificate of Incorporation of the Corporation, the following resolution was
adopted by unanimous written consent dated as of August 8, 1996 of the Board
of Directors of the Corporation pursuant to Section 151(g) of the GCL:
RESOLVED that, pursuant to authority vested in the Board of Directors of
the Corporation by Article Fourth of the Restated Certificate of Incorporation
of the Corporation, 2,094,143 shares of the Corporation's Preferred Stock, par
value $.01 per share, designated as "Series A Convertible Preferred Stock"
("Series A Preferred Stock") are authorized for issuance with the voting
powers, preferences and other special rights, and qualifications, limitations
and restrictions thereof set forth below:
1. Dividends. The holders of Series A Preferred Stock shall not be
entitled to receive dividends in any fixed amount, provided, however,
that in the event that the Corporation shall at any time pay a dividend
on the Common Stock (other than a dividend payable solely in shares of
Common Stock), it shall, at the same time, pay to each holder of Series A
Preferred Stock a dividend equal to the dividend that would have been
payable to such holder if the shares of Series A Preferred Stock held by
such holder had been converted into Common Stock on the date of
determination of holders of Common Stock entitled to receive such
dividend.
In no event, so long as any shares of Series A Preferred Stock shall
remain outstanding, shall any shares of Common Stock be purchased or
redeemed by the Corporation, nor shall any moneys be paid to or made
available for a sinking fund for the purchase or redemption of any shares
of Common Stock, (without the written consent of the holders of 66 2/3%
of the outstanding Series A Preferred Stock) except that the Corporation
may repurchase or redeem shares of Common Stock owned by employees,
consultants, agents, brokers, officers or directors of the Corporation,
provided, that the Corporation shall not repurchase or redeem any shares
of Common Stock for a consideration in excess of the amount paid therefor
by such employee, consultant, broker, officer or director unless such
repurchase or redemption shall have been authorized or approved by at
least 75% of the members of the Board of Directors of the Corporation.
2. Liquidation. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of the
shares of Series A Preferred Stock shall be entitled, before any
distribution or payment is made upon any Common Stock, to be paid an
amount equal to $5.969 per share, plus any accrued but unpaid dividends
thereon to the date of such payment, and the holders of the Series A
Preferred Stock shall not be entitled to any further payment, such
amounts being herein sometimes referred to as the "Liquidation Payments".
If upon such liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the assets to be distributed among the
holders of Series A Preferred Stock of the Corporation shall be
insufficient to permit payment to the holders of Series A Preferred Stock
of the full amount of the Liquidation Payments, then the entire assets of
the Corporation to be so distributed shall be distributed ratably per
share among the holders of Series A Preferred Stock in proportion to the
amounts to which they respectively are entitled. Upon any such
liquidation, dissolution or winding up of the Corporation, after the
holders of the Series A Preferred Stock shall have been paid in full the
amounts to which they shall be entitled, the remaining net assets of the
Corporation shall be distributed ratably to the holders of Common Stock.
Written notice of such liquidation, dissolution or winding up, stating a
payment date, the amount of the Liquidation Payment and the place where
said sums shall be payable shall be given by mail, postage prepaid, not
less than 30 or more than 60 days prior to the payment date stated
therein, to the holders of record of the Series A Preferred Stock and the
Common Stock, such notice to be addressed to each shareholder at his post
office address as shown by the records of the Corporation. Neither the
consolidation or merger of the Corporation into or with any other
corporation or corporations, nor the sale or transfer by the Corporation
of all or any part of its assets, shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of any of
the provisions of this paragraph 2.
3. Conversion.
3A. Right to Convert. Subject to the terms and conditions of this
paragraph 3, the holder of any share or shares of Series A Preferred
Stock shall have the right, at its option at any time, to convert any
such shares of Series A Preferred Stock (except that upon any liquidation
of the Corporation the right of conversion shall terminate at the close
of business on the last full business day next preceding the date fixed
for payment of the amount distributable on the Series A Preferred Stock)
into such number of fully paid and nonassessable whole shares of Common
Stock as is obtained by multiplying the number of shares of Series A
Preferred Stock so to be converted by $5.969 and dividing the result by
the conversion price of $5.969 per share or, if there has been an
adjustment of the conversion price, by the conversion price as last
adjusted and in effect at the date any share or shares of Series A
Preferred Stock are surrendered for conversion (such price, or such price
as last adjusted, being referred to herein as the "Conversion Price").
Such rights of conversion shall be exercised by the holder thereof by
giving written notice that the holder elects to convert a stated number
of shares of Series A Preferred Stock into Common Stock and by surrender
of a certificate or certificates for the shares so to be converted to the
Corporation at its principal office (or such other office or agency of
the Corporation as the Corporation may designate by notice in writing to
the holder or holders of the Series A Preferred Stock) at any time during
its usual business hours on the date set forth in such notice, together
with a statement of the name or names (with address), subject to
compliance with applicable laws to the extent such designation shall
involve a transfer, in which the certificate or certificates for shares
of Common Stock shall be issued.
3B. Issuance of Certificates; Time Conversion Effected. Promptly
after the receipt by the Corporation of the written notice referred to in
subparagraph 3A and surrender of the certificate or certificates for the
share or shares of the Series A Preferred Stock to be converted, the
Corporation shall issue and deliver, or cause to be issued and delivered,
to the holder, registered in such name or names as such holder may
direct, subject to compliance with applicable laws to the extent such
designation shall involve a transfer, a certificate or certificates for
the number of whole shares of Common Stock issuable upon the conversion
of such share or shares of Series A Preferred Stock. To the extent
permitted by law, such conversion shall be deemed to have been effected
and the Conversion Price shall be determined as of the close of business
on the date on which such written notice shall have been received by the
Corporation and the certificate or certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of
the holder of such share or shares of Series A Preferred Stock shall
cease, and the person or persons in whose name or names any certificate
or certificates for shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record
of the shares represented thereby.
3C. Fractional Shares; Dividends; Partial Conversion. No fractional
shares shall be issued upon conversion of the Series A Preferred Stock
into Common Stock and the number of shares of Common Stock to be issued
shall be rounded to the nearest whole share, and no payment or adjustment
shall be made upon any conversion on account of any cash dividends on the
Series A Preferred Stock so converted or the Common Stock issued upon
such conversion. In case the number of shares of Series A Preferred
Stock represented by the certificate or certificates surrendered pursuant
to subparagraph 3A exceeds the number of shares converted, the
Corporation shall, upon such conversion, execute and deliver to the
holder thereof, at the expense of the Corporation, a new certificate or
certificates for the number of shares of Series A Preferred Stock,
represented by the certificate or certificates surrendered which are not
to be converted.
3D. Adjustment of Price Upon Issuance of Common Shares. Except as
provided in subparagraph 3E hereof, if and whenever the Corporation shall
issue or sell, or is, in accordance with subparagraphs 3D(1) through
3D(7), deemed to have issued or sold, any shares of its Common Stock
without consideration or for a consideration per share less than the
Conversion Price in effect immediately prior to the time of such issue or
sale, then, forthwith upon such issue or sale, the Conversion Price shall
be reduced to the price (calculated to the nearest cent) determined by
dividing (i) an amount equal to the sum of (a) the number of shares of
Common Stock outstanding immediately prior to such issue or sale
(including as outstanding all shares of Common Stock issuable upon
conversion of outstanding Series A Preferred Stock) multiplied by the
then existing Conversion Price, and (b) the consideration, if any,
received by the Corporation upon such issue or sale, by (ii) the total
number of shares of Common Stock outstanding immediately after such issue
or sale (including as outstanding all shares of Common Stock issuable
upon conversion of outstanding Series A Preferred Stock without giving
effect to any adjustment in the number of shares so issuable by reason of
such issue and sale).
No adjustment of the Conversion Price, however, shall be made in an
amount less than $.01 per share, and any such lesser adjustment shall be
carried forward and shall be made at the time and together with the next
subsequent adjustment which together with any adjustments so carried
forward shall amount to $.01 per share or more.
For purposes of this subparagraph 3D, the following subparagraphs
3D(1) to 3D(7) shall also be applicable:
3D(1). Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by assumption
in a merger or otherwise) any rights to subscribe for or to purchase, or
any options for the purchase of, Common Stock or any stock or securities
convertible into or exchangeable for Common Stock (such rights or options
being herein called "Options" and such convertible or exchangeable stock
or securities being herein called "Convertible Securities") whether or
not such Options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities (determined by
dividing (i) the total amount, if any, received or receivable by the
Corporation as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case of
such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the exercise
of such Options) shall be less than the Conversion Price in effect
immediately prior to the time of the granting of such Options, then the
total maximum number of shares of Common Stock issuable upon the exercise
of such Options or upon conversion or exchange of the total maximum
amount of such Convertible Securities issuable upon the exercise of such
Options shall be deemed to have been issued for such price per share as
of the date of granting of such Options and thereafter shall be deemed to
be outstanding. Except as otherwise provided in subparagraph 3D(3), no
adjustment of the Conversion Price shall be made upon the actual issue of
such Common Stock or of such Convertible Securities upon exercise of such
Options or upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.
3D(2). Issuance of Convertible Securities. In case the Corporation
shall in any manner issue (whether directly or by assumption in a merger
or otherwise) or sell any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing (i) the total amount
received or receivable by the Corporation as consideration for the issue
or sale of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Corporation upon the
conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities) shall be less than the Conversion Price in
effect immediately prior to the time of such issue or sale, then the
total maximum number of shares of Common Stock issuable upon conversion
or exchange of all such Convertible Securities shall be deemed to have
been issued for such price per share as of the date of the issue or sale
of such Convertible Securities and thereafter shall be deemed to be
outstanding, provided that (a) except as otherwise provided in
subparagraph 3D(3) below, no adjustment of the Conversion Price shall be
made upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities, and (b) if any such issue or
sale of such Convertible Securities is made upon exercise of any Option
to purchase any such Convertible Securities for which adjustments of the
Conversion Price have been or are to be made pursuant to other provisions
of this subparagraph 3D, no further adjustment of the Conversion Price
shall be made by reason of such issue or sale.
3D(3). Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase price
provided for in any Option referred to in subparagraph 3D(1), the
additional consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in subparagraph 3D(1) or 3D(2),
or the rate at which any Convertible Securities referred to in
subparagraph 3D(1) or 3D(2) are convertible into or exchangeable for
Common Stock shall change at any time (in each case other than under or
by reason of provisions designed to protect against dilution), the
Conversion Price in effect at the time of such event shall forthwith be
readjusted to the Conversion Price which would have been in effect at
such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted,
issued or sold; and on the expiration of any such Option or the
termination of any such right to convert or exchange such Convertible
Securities, the Conversion Price then in effect hereunder shall forthwith
be increased to the Conversion Price which would have been in effect at
the time of such expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such
expiration or termination, never been issued, and the Common Stock
issuable thereunder shall no longer be deemed to be outstanding. If the
purchase price provided for in any such Option referred to in
subparagraph 3D(1) or the rate at which any Convertible Securities
referred to in subparagraph 3D(1) or 3D(2) are convertible into or
exchangeable for Common Stock shall be reduced at any time under or by
reason of provisions with respect thereto designed to protect against
dilution, then, in case of the delivery of Common Stock upon the exercise
of any such Option or upon conversion or exchange of any such Convertible
Securities, the Conversion Price then in effect hereunder shall forthwith
be adjusted to such respective amount as would have been obtained had
such Option or Convertible Securities never been issued as to such Common
Stock and had adjustments been made upon the issuance of the shares of
Common Stock delivered as aforesaid, but only if as a result of such
adjustment the Conversion Price then in effect hereunder is thereby
reduced.
3D(4). Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the Corporation
payable in Common Stock, Options or Convertible Securities, any Common
Stock, Options or Convertible Securities, as the case may be, issuable in
payment of such dividend or distribution shall be deemed to have been
issued or sold without consideration.
3D(5). Subdivision or Combination of Stock. In case the
Corporation shall at any time subdivide its outstanding shares of Common
Stock into a greater number of shares or shall declare or pay a dividend
on its outstanding shares of Common Stock payable in shares of Common
Stock, the Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Corporation shall be combined
into a smaller number of shares, the Conversion Price in effect
immediately prior to such combination shall be proportionately increased.
3D(6). Consideration for Stock. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor, without deduction therefrom
of any expenses incurred or any underwriting commissions or concessions
paid or allowed by the Corporation in connection therewith. In case any
shares of Common Stock, Options or Convertible Securities shall be issued
or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Corporation shall be deemed
to be the fair value of such consideration as determined in good faith by
the Board of Directors of the Corporation, without deduction of any
expenses incurred or any underwriting commissions or concessions paid or
allowed by the Corporation in connection therewith. The amount of
consideration deemed to be received by the Corporation pursuant to the
foregoing provisions of this subparagraph 3D(6) upon any issuance and/or
sale of shares of Common Stock, Options or Convertible Securities,
pursuant to an established compensation plan of the Corporation, to
directors, officers or employees of the Corporation in connection with
their employment shall be increased by the amount of any tax benefit
realized by the Corporation as a result of such issuance and/or sale, the
amount of such tax benefit being the amount by which the Federal and/or
state income or other tax liability of the Corporation shall be reduced
by reason of any deduction or credit in respect of such issuance and/or
sale. In case any Options shall be issued in connection with the issue
and sale of other securities of the Corporation, together comprising one
integral transaction in which no specific consideration is allocated to
such Options by the parties thereto, such Options shall be deemed to have
been issued without consideration.
3D(7). Record Date. In case the Corporation shall take a record of
the holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options
or Convertible Securities, or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be.
3E. Certain Issues of Common Stock Excepted. Anything herein to the
contrary notwithstanding, the Corporation shall not make any adjustment
of the Conversion Price in the case of (i) the issuance of shares of
Common Stock upon conversion of Series A Preferred Stock, (ii) the
issuance of Common Stock or stock options granted pursuant to the
Corporation's Stock Option and Restricted Stock Purchase Plan or Stock
Option Plan for Non-Employee Directors or pursuant to any other employee
benefit plan approved by the Board of Directors of the Corporation, or
(iii) the issuance of Common Stock upon conversion of any convertible
securities or exercise of any rights or warrants outstanding as of the
date hereof.
3F. Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the
Corporation shall be effected in such a way (including, without
limitation, by way of consolidation or merger) that holders of Common
Stock shall be entitled to receive stock, securities or assets with
respect to or in exchange for Common Stock, then, as a condition of such
reorganization or reclassification, lawful and adequate provision (in
form satisfactory to the holders of at least 66-2/3% of the outstanding
shares of Series A Preferred Stock) shall be made whereby each holder of
a share or shares of Series A Preferred Stock shall thereafter have the
right to receive, upon the basis and upon the terms and conditions
specified herein and in lieu of the shares of Common Stock of the
Corporation immediately theretofore receivable upon the conversion of
such share or shares of the Series A Preferred Stock, such shares of
stock, securities or assets as may be issued or payable with respect to
or in exchange for a number of outstanding shares of such Common Stock
equal to the number of shares of such stock immediately theretofore so
receivable had such reorganization or reclassification not taken place,
and in any such case appropriate provision shall be made with respect to
the rights and interests of such holder to the end that the provisions
hereof (including without limitation provisions for adjustments of the
Conversion Price) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights (including an
immediate adjustment, by reason of such reorganization or
reclassification, of the Conversion Price to the value for the Common
Stock reflected by the terms of such reorganization or reclassification
if the value so reflected is less than the Conversion Price in effect
immediately prior to such reorganization or reclassification). In the
event of a merger or consolidation of the Corporation as a result of
which a greater or lesser number of shares of common stock of the
surviving corporation are issuable to holders of Common Stock of the
Corporation outstanding immediately prior to such merger or
consolidation, the Conversion Price in effect immediately prior to such
merger or consolidation shall be adjusted in the same manner as though
there were a subdivision or combination of the outstanding shares of
Common Stock of the Corporation. The Corporation will not effect any
such consolidation or merger, or any sale of all or substantially all its
assets and properties, unless prior to the consummation thereof the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets shall
assume by written instrument (in form reasonably satisfactory to the
holders of at least 66-2/3% of the shares of Series A Preferred Stock at
the time outstanding) executed and mailed or delivered to each holder of
shares of Series A Preferred Stock at the last address of such holder
appearing on the books of the Corporation, the obligation to deliver to
such holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such holder may be entitled to receive.
3H. Notice of Adjustment. Upon any adjustment of the Conversion
Price, then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, addressed to each
holder of shares of Series A Preferred Stock at the address of such
holder as shown on the books of the Corporation, which notice shall state
the Conversion Price resulting from such adjustment, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
3I. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon
its Common Stock payable in cash or stock or make any other distribution
to the holders of its Common Stock;
(2) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class
or other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a
consolidation or merger of the Corporation with, or a sale of all or
substantially all its assets to, another corporation; or
(4) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by
first class mail, postage prepaid, addressed to each holder of any shares
of Series A Preferred Stock at the address of such holder as shown on the
books of the Corporation, (a) at least 15 days' prior written notice of
the date on which the books of the Corporation shall close or a record
shall be taken for such dividend, distribution or subscription rights or
for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation
or winding up, and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation
or winding up, at least 15 days' prior written notice of the date when
the same shall take place. Such notice in accordance with the foregoing
clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of
Common Stock shall be entitled thereto, and such notice in accordance
with the foregoing clause (b) shall also specify the date on which the
holders of Common Stock shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation
or winding up, as the case may be.
3J. Stock to be Reserved. The Corporation will at all times
reserve and keep available out of its authorized but unissued Common
Stock, solely for the purpose of issuance upon the conversion of the
Series A Preferred Stock as herein provided, such number of shares of
Common Stock as shall then be issuable upon the conversion of all
outstanding shares of Series A Preferred Stock. All shares of Common
Stock which shall be so issued shall be duly and validly issued and fully
paid and nonassessable and free from all taxes, liens and charges arising
out of or by reason of the issue thereof, and, without limiting the
generality of the foregoing, the Corporation covenants that it will from
time to time take all such action as may be requisite to assure that the
par value per share of the Common Stock is at all times equal to or less
than the effective Conversion Price. The Corporation will take all such
action within its control as may be necessary on its part to assure that
all such shares of Common Stock may be so issued without violation of any
applicable law or regulation, or of any requirements of any national
securities exchange upon which the Common Stock of the Corporation may be
listed. The Corporation will not take any action which results in any
adjustment of the Conversion Price if after such action the total number
of shares of Common Stock issued and outstanding and thereafter issuable
upon exercise of all options and conversion of Convertible Securities,
including upon conversion of the Series A Preferred Stock, would exceed
the total number of shares of Common Stock then authorized by the
Corporation's Restated Certificate of Incorporation.
3K. No Reissuance of Series A Preferred Stock. Shares of Series A
Preferred Stock that are converted into shares of Common Stock as
provided herein shall not be reissued.
3L. Issue Tax. The issuance of certificates for shares of Common
Stock upon conversion of the Series A Preferred Stock shall be made
without charge to the holders thereof for any issuance tax in respect
thereof, provided that the Corporation shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the
holder of the Series A Preferred Stock which is being converted.
3M. Closing of Books. The Corporation will at no time close its
transfer books against the transfer of any Series A Preferred Stock or of
any shares of Common Stock issued or issuable upon the conversion of any
shares of Series A Preferred Stock in any manner which interferes with
the timely conversion of such Series A Preferred Stock.
3N. Definition of Common Stock. As used in this paragraph 3, the
term "Common Stock" shall mean and include the Corporation's authorized
Common Stock as constituted on the date of filing of this Certificate of
Designation and shall also include any capital stock of any class of the
Corporation thereafter authorized that shall not be limited to a fixed
sum in respect of the rights of the holders thereof to participate in
dividends or in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation;
provided, however, that such term, when used to describe the securities
receivable upon conversion of shares of the Series A Preferred Stock of
the Corporation, shall include only shares designated as Common Stock of
the Corporation on the date of filing of this Certificate of Designation,
any shares resulting from any combination or subdivision thereof referred
to in paragraph 3D(5), or in case of any reorganization or
reclassification of the outstanding shares thereof, the stock, securities
or assets provided for in subparagraph 3F.
4. Voting. Series A Preferred. Except as otherwise provided by
law and the Corporation's Restated Certificate of Incorporation, the
holders of Series A Preferred Stock shall vote together with the holders
of Common Stock on all matters to be voted on by the stockholders of the
Corporation, and each holder of Series A Preferred Stock shall be
entitled to one vote for each share of Common Stock that would be
issuable to such holder upon the conversion of all the shares of Series A
Preferred Stock held by such holder on the record date for the
determination of shareholders entitled to vote.
5. Restrictions. At any time when shares of Series A Preferred
Stock are outstanding, and in addition to any other vote of stockholders
required by law or by the Corporation's Restated Certificate of
Incorporation, without the prior consent of the holders of 66 2/3% of the
outstanding Series A Preferred Stock, given in person or by proxy, either
in writing or at a special meeting called for that purpose, at which
meeting the holders of the shares of such Series A Preferred Stock shall
vote together as a class:
(i) the Corporation will not (x) create or authorize the creation
of any additional class of shares unless the same ranks junior to the
Series A Preferred Stock as to the distribution of assets on liquidation
and pari passu as to dividends, or (y) increase the authorized amount of
the Series A Preferred Stock, or increase the authorized amount of any
additional class of shares unless the same ranks junior to the Series A
Preferred Stock as to the distribution of assets on liquidation and pari
passu as to dividends or (z) create or authorize any obligations or
securities convertible into shares of Series A Preferred Stock or into
shares of any other class unless the same ranks junior to the Series A
Preferred Stock as to the distribution of assets on liquidation and pari
passu as to dividends, in each case whether any such creation or
authorization or increase shall be by means of amendment of the
Corporation's Restated Certificate of Incorporation, merger,
consolidation or otherwise; and
(ii) the Corporation will not amend, alter or repeal the
Corporation's Restated Certificate of Incorporation or By-laws in any
manner, or file any directors' resolutions pursuant to the General
Corporation Law of the State of Delaware containing any provision, in
either case which affects the respective preferences, voting power,
qualifications, special or relative rights or privileges of the Series A
Preferred Stock or which in any manner adversely affects the Series A
Preferred Stock or the holders thereof.
IN WITNESS WHEREOF, this Certificate of Designation has been executed by
the Corporation by its President and Chief Executive Officer and attested by
its Secretary as of this 8th day of August 1996.
SEER TECHNOLOGIES, INC.
By
President and Chief
Executive Officer
ATTEST:
Secretary
EXHIBIT 10.42
AGREEMENT
AGREEMENT, dated as of August 8, 1996, between SEER TECHNOLOGIES, INC., a
Delaware corporation (the "Company"), and WELSH, CARSON, ANDERSON & STOWE VI
L.P., a Delaware limited partnership (the "Guarantor").
WHEREAS, the Guarantor is the owner of a majority of the outstanding
Common Stock, $.01 par value ("Common Stock"), of the Company; and
WHEREAS, the Company and the Guarantor have determined that it is
critical to the financial condition of the Company that the Company enter into
the Credit Agreement dated as of the date hereof (the "Credit Agreement") with
NationsBank, N.A., a national banking association (the "Bank"), providing for
a credit facility by the Bank to the Company in the maximum principal amount
of $12,500,000; and
WHEREAS, the Bank is unwilling to enter into the Credit Agreement or make
loans thereunder to the Company unless such loans are guaranteed by the
Guarantor; and
WHEREAS, in order to protect and enhance its existing substantial equity
investment in the Company and to ensure the Company's ongoing financial
viability, the Guarantor has agreed to make an additional equity investment in
the Company, pursuant to the Preferred Stock Purchase Agreement, dated on or
about the date hereof, between the Company, the Guarantor and the several
other purchasers named therein (the "Purchase Agreement"), and is willing to
assume additional financial risk in its role as stockholder by giving certain
guaranties with respect to the loans to be made by the Bank to the Company
under the Credit Agreement; and
WHEREAS, in recognition of the additional financial risk that the
Guarantor is assuming in its capacity as stockholder by making such guaranty
(and not as compensation or a payment for any services or otherwise in
connection with the pursuit of a trade or business), the Company is willing to
issue to the Guarantor shares of its Common Stock;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereby agree as follows:
I.
ISSUANCE OF COMMON STOCK
SECTION 1.01 Issuance of Common Stock. Upon the execution and delivery
by the Guarantor of its guaranty in substantially the form annexed hereto as
Exhibit A (the "Guaranty"), the Company agrees to issue to the Guarantor
75,000 shares of Common Stock (the "Shares") and to issue and deliver to the
Guarantor stock certificates in definitive form, registered in the name of the
Guarantor, representing the Shares.
SECTION 1.02 Tax and Accounting Treatment. The Company and the
Guarantor agree that for federal, state and local income tax, as well as for
financial accounting, purposes the execution and delivery of the Guaranty and
the issuance of the Shares by the Company to the Guarantor is a capital
transaction and is not compensation or a payment for any services or otherwise
in connection with the pursuit of a trade or business, and each hereby agrees
to treat the issuance of the Shares in such manner for all such purposes, all
to the maximum extent permitted by applicable law.
II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Guarantor as follows:
SECTION 2.01 Organization. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and is duly licensed or qualified to do business as a
foreign corporation and is in good standing in each of the jurisdictions in
which it owns or leases any real property or in which the nature of business
transacted by it makes such licensing or qualification necessary and where the
failure to be so licensed or qualified would have a material adverse affect on
the business, operations or financial condition of the Company. The Company
has the corporate power and authority to own and hold its properties and to
carry on its business as currently conducted, to execute, deliver and perform
this Agreement and to issue, sell and deliver the Shares.
SECTION 2.02 Authorization of Agreement, Etc. (a) The execution,
delivery and performance by the Company of this Agreement and the issuance,
sale and delivery of the Shares, have been duly authorized by all requisite
corporate action and will not violate any provision of law, any order of any
court or other agency of government, the Certificate of Incorporation or By-
laws of the Company, or any provision of any indenture, agreement or other
instrument by which the Company or any of its subsidiaries or any of their
respective properties or assets is bound, or conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under
any such indenture, agreement or other instrument, or result in the creation
or imposition of any lien, charge or incumbrance of any nature upon any of the
properties or assets of the Company or any of its subsidiaries.
(b) The Shares have been duly authorized and when issued in accordance
with the terms of this Agreement will be validly issued and outstanding, fully
paid and nonassessable shares of Common Stock. The issuance and delivery of
the Shares are not subject to any preemptive rights of stockholders of the
Company or to any right of first refusal or other similar right in favor of
any person.
SECTION 2.03 Validity. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms.
SECTION 2.04 Authorized Capital Stock. (a) The authorized capital stock
of the Company consists of 30,000,000 shares of Common Stock and 10,000,000
shares of Preferred Stock, par value $.01 per share. As of the date hereof,
immediately prior to giving effect to the issuance of the Shares as
contemplated hereby, 11,481,992 shares of Common Stock and no shares of
Preferred Stock are validly issued and outstanding, fully paid and
nonassessable.
(b) Except as set forth in the Company's Form 10-K for the 1995 fiscal
year or the Company's Form 10-Q for the first quarter ended December 31, 1996
or the second quarter ended March 31, 1996, referred to in Section 2.06 of the
Purchase Agreement, (i) no subscription, warrant, option, convertible security
or other right (contingent or other) to purchase or acquire any shares of any
class of capital stock of the Company is authorized or outstanding, (ii) there
is not any commitment of the Company to issue any shares, warrants, options or
other such rights or to distribute to holders of any class of its capital
stock any evidences of indebtedness or assets, and (iii) the Company has no
obligation (contingent or other) to purchase, redeem or otherwise acquire any
shares of its capital stock or any interest therein or to pay any dividend or
make any other distribution in respect thereof.
III.
REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR
The Guarantor represents and warrants to the Company that it is acquiring
the Shares, for its own account for purposes of investment and not with a view
to or for sale in connection with any distribution thereof. The Guarantor
further represents that it understands (i) that the Shares have not been
registered under the Securities Act by reason of their issuance in
transactions exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) thereof, (ii) the Shares must be held indefinitely
unless a subsequent disposition thereof is registered under the Securities Act
or is otherwise exempt from such registration, (iii) the Shares will bear a
legend to such effect and (iv) the Company will make a notation on its
transfer books to such effect. The Guarantor further understands that the
exemption from registration afforded by Rule 144 under the Securities Act
depends on the satisfaction of various conditions and that, if applicable,
affords the basis of sales of the Shares in limited amounts under certain
conditions. The Guarantor acknowledges that it has had a full opportunity to
request from the Company to review and has received all information deemed
relevant in making a decision to enter into this Agreement and consummate the
transactions contemplated hereby. The Guarantor is an "Accredited Investor"
within the meaning of Rule 501(a) of the Securities Act.
IV.
AGREEMENTS OF THE COMPANY
The Company covenants and agrees that any right to payment received by
the Guarantor in respect of the loans made under the Credit Agreement and its
guaranty thereof, whether by way of purchase, subrogation or otherwise, and
regardless whether and to what extent the same shall be subordinated to other
indebtedness to the Bank or shall have been waived pending certain events, may
be applied, both as to principal and accrued and unpaid interest, dollar for
dollar, by the Guarantor, as the purchase price of any equity securities
offered by the Company to investors for cash. In addition, in the event that
the Company shall be unable to make a payment under the Credit Agreement, the
Guarantor shall have the right (but not the obligation) (i) to purchase
additional equity securities of the Company and (ii) to require the Company to
use the net proceeds of such purchase to make such payment of its obligations
under the Credit Agreement. The equity securities so purchased shall be
issued at fair value, based upon current market conditions for the issuance of
equity securities. The Company shall use its best efforts to provide the
Guarantor with sufficient notice in advance of a payment default under the
Credit Agreement to enable the Guarantor to exercise its rights under this
Article IV.
V.
MISCELLANEOUS
SECTION 5.01 Expenses. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated.
SECTION 5.02 Survival of Agreements. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the Warrant and the issuance, sale and delivery
of the Warrant Shares.
SECTION 5.03 Parties in Interest. All covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not.
SECTION 5.04 Notices. All notices, requests, consent and other
communications hereunder shall be in writing and shall be mailed by first
class registered mail, postage prepaid, or sent by a recognized courier
service addressed as follows:
If to the Company to it at:
8000 Regency Parkway
Cary, North Carolina 27511
Attention: President
If to the Guarantor to it at:
One World Financial Center
Suite 3601
New York, New York 10281
Attention: Robert A. Minicucci
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the other.
SECTION 5.05 Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 5.06 Entire Agreement. This Agreement constitutes the entire
Agreement of the parties with respect to the subject matter hereof and may not
be modified or amended except in writing.
SECTION 5.07 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one in and the same instrument.
IN WITNESS WHEREOF, the Company and the Guarantor have executed this
Agreement as of the day and year first above written.
SEER TECHNOLOGIES, INC.
By____________________________
Name:
Title:
WELSH, CARSON, ANDERSON &
STOWE VI, L.P.
By WCAS VI Partners, L.P., General
Partner
By____________________________
General Partner
EXHIBIT A
GUARANTY
THIS GUARANTY AGREEMENT dated as of July 15, 1996 (the "Guaranty") is
made by Welsh, Carson, Anderson & Stowe VI, L.P., a Delaware limited
partnership (the "Guarantor"), in favor of NATIONSBANK, N.A., a national
banking association (the "Bank").
RECITALS
A. Seer Technologies, Inc., a Delaware corporation (the "Borrower"), has
requested the Bank to extend a line of credit in the aggregate principal
amount of $12,500,000 (the "Line of Credit") to the Borrower.
B. As a condition to the Bank extending the Line of Credit to the
Borrower, the Guarantor is required, among other things, to execute and
deliver this Guaranty.
C. The Guarantor has reviewed all notes, documents, agreements,
instruments and certificates furnished by or on behalf of the Borrower or the
Guarantor in connection with the Line of Credit (all of the foregoing with
extensions, renewals and amendments thereof, being collectively herein called
the "Financing Documents") and the Guarantor has determined that its execution
and delivery of this Guaranty and the execution of the Financing Documents by
the parties to them will either directly or indirectly benefit the Guarantor.
AGREEMENT
As an inducement to the Bank to enter into the transactions contemplated
by the Financing Documents, the Guarantor agrees with the Bank as follows.
1. The Guaranty. The Guarantor hereby unconditionally and irrevocably
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the Guaranteed Indebtedness (hereinafter
defined). Upon failure by the Borrower to pay the Guaranteed Indebtedness
when due (whether upon maturity, acceleration or otherwise), the Guarantor
shall forthwith on demand pay the amount not so paid at the place and in the
manner specified by the Bank.
2. Definition of Guaranteed Indebtedness. The term "Guaranteed
Indebtedness," as used herein, means: (i) the indebtedness evidenced by that
certain promissory note (as the same may hereafter be renewed, extended,
amended, modified, supplemented, and/or restated from time to time and at any
time, with or without notice to the Guarantor, herein called the "Note" dated
July 15, 1996, in the principal amount of $12,500,000.00, executed by the
Borrower, payable to the order of the Bank; (ii) interest on the indebtedness
evidenced by the Note, whether accruing before or after the commencement of
any case, proceeding or other action relating to the bankruptcy, insolvency or
reorganization of any one or more of the Borrower and the Guarantor and
whether or not allowed in such case, proceeding or other action; (iii) any and
all costs, attorneys fees, and expenses incurred by the Bank in enforcing this
Guaranty; and (iv) any renewal or extension of the indebtedness, costs, fees,
or expenses described in (i) through (iii) preceding, or any part thereof.
3. Continuing Guaranty. This Guaranty is a continuing and irrevocable
guaranty and the circumstance that at any time or from time to time the
Guaranteed Indebtedness may be paid in full shall not affect the obligations
of the Guarantor with respect to Guaranteed Indebtedness thereafter incurred
by the Borrower to Bank.
4. Guaranty Unconditional. The obligations of the Guarantor hereunder
shall be unconditional and absolute and, without limiting the generality of
the foregoing, shall not be released, discharged or otherwise affected by, and
the Guarantor, to the maximum extent permitted by applicable law, hereby
waives any defense to any of its obligations hereunder that might otherwise be
available to it on account of:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower or any other
guarantor under any Financing Document, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to any Financing
Document;
(iii) any modification, amendment, waiver, release, non-perfection or
invalidity of any direct or indirect security, or of any guarantee or any
liability of any third party, for any obligation of the Borrower under
any Financing Document;
(iv) any change in the corporate existence, structure or ownership
of the Borrower or any other guarantor, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower or any
other guarantor or any of its assets or any release or discharge of any
obligation of the Borrower or any other guarantor contained in any
Financing Document;
(v) the existence of any claim, setoff or other rights which the
Guarantor may have at any time against the Borrower or the Bank, whether
or not arising in connection herewith or with any Financing Document;
provided that nothing herein shall prevent the assertion of any such
claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against the
Borrower or any other guarantor for any reason of any Financing Document,
or any provision of applicable law or regulation purporting to prohibit
the payment by the Borrower or any other guarantor of the Guaranteed
Indebtedness;
(vii) any other act or omission to act or delay of any kind by the
Borrower, or the Bank or any other circumstance whatsoever that might,
but for the provisions of this paragraph, constitute a legal or equitable
discharge of the Guarantor's obligations hereunder;
(viii) the absence of any attempt to collect any of the Guaranteed
Indebtedness from the Borrower or from any other guarantor or any other
action to enforce the same or the election of any remedy by the Bank; or
(ix) any suretyship laws of the State of North Carolina.
5. Reinstatement In Certain Circumstances. If at any time an payment of
the Guaranteed Indebtedness is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of the Borrower or
otherwise, the Guarantor's obligations hereunder with respect to such payment
shall be reinstated as though such payment had been due but not made at such
time.
6. Waiver by the Guarantor. The Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and any notice not provided for herein,
as well as any requirement that at any time any action be taken by the Bank
against the Borrower or any other guarantor or any property subject to any
security interest, pledge, lien, assignment or against securing any
obligations of the Borrower or the Guarantor.
7. Waiver of Subrogation. Until the final payment in full of the
Guaranteed Indebtedness, the Guarantor shall not exercise any rights against
the Borrower arising as a result of payment by the Guarantor hereunder, by way
of subrogation, reimbursement, restitution, contribution or otherwise.
8. Stay of Acceleration. If acceleration of the time for payment of any
amount payable by the Borrower under any Financing Document is stayed upon the
insolvency, bankruptcy or reorganization of the Borrower, all such amounts
otherwise subject to acceleration under the terms of the Financing Documents
shall nonetheless be payable by the Guarantor hereunder forthwith on demand by
the Bank.
9. Insolvency. The Guarantor agrees that, in the event of the
dissolution or insolvency of the Borrower or the insolvency of the Guarantor,
or the inability of the Borrower or the Guarantor to pay debts as they mature,
or an assignment by the Borrower or the Guarantor for the benefit of
creditors, or the institution of any proceeding by or against the Borrower or
the Guarantor alleging that the Borrower or the Guarantor is insolvent or
unable to pay debts as they mature, and if such event shall occur at a time
when any of the Guaranteed Indebtedness may not then be due and payable, the
Guarantor will pay to the Bank forthwith the full amount which would be
payable hereunder by the Guarantor if all Guaranteed Indebtedness were then
due and payable.
10. Limit of Liability. The obligations of the Guarantor hereunder shall
be limited to the largest amount that would not render its obligations
hereunder and thereunder subject to avoidance under Section 548 of the
Bankruptcy Code of 1978, as amended, or any comparable provisions of
applicable state law.
11. Representations and Warranties. The Guarantor represents and
warrants to the Bank that:
(i) Partnership Existence and Power. The Guarantor is a limited
partnership duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, has all powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted and is duly qualified as a foreign limited
partnership licensed and in good standing in each jurisdiction where
qualification or licensing is required by the nature of its business or the
character and location of its property, business or customers and in which the
failure to have such license, authorization, consent, approval or
qualification, as the case may be, in the aggregate, could have a material
adverse effect on the ability of the Guarantor to perform its obligations
under this Guaranty.
(ii) Partnership and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Guarantor of this Guaranty are
within the power of the Guarantor, have been duly authorized by all necessary
partnership action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the charter
or partnership agreement of the Guarantor or of any agreement, judgment,
injunction, order, decree or other instrument that is material, individually
or in the aggregate, to the business of the Guarantor and that is binding upon
the Guarantor or result in any asset of the Guarantor being subject to any
security interest, pledge, lien, assignment or setoff.
(iii) Binding Effect. This Guaranty constitutes a valid and binding
agreement of the Guarantor.
12. Covenants. The Guarantor hereby covenants to the Bank as follows:
(a) Financial Information. As soon as available but in any event not
later than 90 days after the end of each fiscal year of the Guarantor, the
Guarantor shall deliver to the Bank copies of the audited financial statements
of the Guarantor consisting of at least the balance sheet, statement of
operations, with related notes specifying significant accounting practices and
their impact on such financial statements and schedules as at and for the year
then ended for the Guarantor, certified by a firm of independent certified
public accountants. Within 45 days after the end of each of the first three
quarters of the fiscal year of the Guarantor, the Guarantor shall deliver to
the Bank copies of the unaudited financial statements of the Guarantor. The
Guarantor shall also furnish to the Bank any other documents or information
which the Bank may from time to time reasonably request.
(b) Liquidity Covenant. The Guarantor will ensure that at any time and
from time to time until all of the Guaranteed Obligations have been paid in
full the aggregate fair market value of the Guarantor's assets (including non-
restricted marketable securities and restricted securities readily salable
pursuant to Rule 144 under the Securities Act of 1933, as amended) that are
readily available to pay the Guaranteed Indebtedness is sufficient to pay the
Guaranteed Indebtedness in full together with any of the other indebtedness or
contingent liabilities of the Guarantor, and forthwith upon any amount
becoming due and payable hereunder will take all steps necessary to liquidate
or otherwise apply such assets and call cash capital contributions in an
amount sufficient, and use the proceeds thereof, to pay the Guaranteed
Indebtedness in full.
13. Notices. Unless otherwise specified herein, all notices, requests
and other communications to any party hereunder shall be in writing (including
bank wire, telex, facsimile transmission or similar writing) and shall be
given to such party at its address or telex or facsimile transmission number
set forth on the signature pages hereof or such other address or telex or
facsimile transmission number as such party may hereafter specify for the
purpose by notice to the other party. Each such notice, request or other
communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified pursuant to this paragraph and the
appropriate answerback is received, (ii) if given by facsimile transmission,
when such facsimile is transmitted to the facsimile transmission number
specified pursuant to this paragraph and telephonic confirmation of receipt
thereof is received, (iii) if given by mail, 72 hours after such communication
is deposited in the malls with first class postage prepaid, addressed as
aforesaid, or (iv) if given by any other means, when delivered at the address
specified pursuant to this paragraph.
14. No Waiver. No failure or delay by the Bank in exercising any right,
power or privilege under any Financing Document shall operate as waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
15. Amendments and Waivers. Any provision of this guaranty may be
amended or waived if, but only if, such amendment or waiver is in writing and
is signed by the Guarantor and is consented to in writing by the Bank.
16. Successors and Assigns. This Guaranty is for the benefit of the
Bank, and its successors and assigns and in the event of an assignment of the
Guaranteed Indebtedness, the rights hereunder, to the extent applicable to the
Guaranteed Indebtedness so assigned, may be transferred with such Guaranteed
Indebtedness. All of the provisions of this Guaranty shall be binding upon
the parties hereto and their respective successors and assigns, except that
the Guarantor may not assign or transfer any of its rights or obligations
under this Guaranty.
17. Counterparts. This Guaranty may be signed m any number of
counterparts, each of which shall be an original, and all of which taken
together shall constitute a single instrument, with the same effect as if the
signature thereto and hereto were upon the same instrument.
18. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NORTH CAROLINA. THE GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF
NORTH CAROLINA AND OF ANY NORTH CAROLINA STATE COURT SITTING IN DALLAS FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY
OR THE TRANSACTIONS CONTEMPLATED HERE. THE GUARANTOR IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. THE GUARANTOR HEREBY AGREES THAT PROCESS MAY BE SERVED ON
IT BY THE MAILING OF SUCH PROCESS TO IT IN ACCORDANCE WITH PARAGRAPH 10. THE
GUARANTOR HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
19. Notice of Final Agreement. THIS WRITTEN GUARANTY AND THE
FINANCING DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
THIS GUARANTY is executed as of the date first above written.
"GUARANTOR"
WELSH, CARSON, ANDERSON & STOWE VI,
L.P., a Delaware limited partnership
By: WCAS VI PARTNERS, General Partner
By: _________________, General Partner
Name: ________________________
Address:
Telephone Number:
Facsimile Transmission
Number:
Executed by the Bank for the purpose of the Notice of Final Agreement set
forth above.
"BANK"
NATIONSBANK, N.A., a national
banking association
By:
Name:
Title:
Address: c/o NationsBank of Texas,
N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
Telephone Number: (214) 508-3347
Facsimile Transmission
Number: (214) 508-0980
Exhibit 11.3
SEER TECHNOLOGIES, INC.
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
(Pro Forma) (Pro Forma)
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Primary earnings per share:
Average common shares outstanding
(excluding convertible shares) 11,454 1,602 11,414 1,595
Common shares from conversion of
Series B Convertible Preferred - 6,594 - 6,594
Common shares from conversion of
Series C Convertible Preferred - 198 - 198
Shares issued for redemption of
Senior Preferred Stock (2) - 864 - 864
Common stock equivalents - 1,807(3) - 1,807(3)
-------- -------- -------- --------
Total common and common
equivalent shares outstanding 11,454 11,065 11,414 11,058
======== ======== ======== ========
Net income (loss) $(5,160) $1,279 $(15,510) $2,804
======== ======== ======== ========
Per share amount ($0.45) $0.12 ($1.36) $0.25
======== ======== ======== ========
Fully diluted earnings per share (1)
</TABLE>
(1) Presentation of fully diluted earnings per share is not required for the
three and nine months ended June 30, 1995. Fully diluted earnings per
share is not presented for the three and nine months ended June 30,
1996 due to the antidilutive effect of the Company's common stock
equivalents.
(2) Dividend - Senior Redeemable Preferred Stock 417
Principal - Senior Redeemable Preferred Stock 15,135
--------
Total redemption value 15,552
Divided by IPO price per share 18.00
--------
Number of equivalent shares of common stock 864
========
(3) Common stock equivalents presented assume a market price of $18.00 (the
IPO price).
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME
FILED AS PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 1,278
<SECURITIES> 0
<RECEIVABLES> 59,106
<ALLOWANCES> 621
<INVENTORY> 0
<CURRENT-ASSETS> 65,172
<PP&E> 18,016
<DEPRECIATION> 10,804
<TOTAL-ASSETS> 84,653
<CURRENT-LIABILITIES> 49,537
<BONDS> 0
0
0
<COMMON> 115
<OTHER-SE> 33,281
<TOTAL-LIABILITY-AND-EQUITY> 84,653
<SALES> 0
<TOTAL-REVENUES> 76,021
<CGS> 0
<TOTAL-COSTS> 41,845
<OTHER-EXPENSES> 56,606
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 414
<INCOME-PRETAX> (22,303)
<INCOME-TAX> (6,793)
<INCOME-CONTINUING> (15,510)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,510)
<EPS-PRIMARY> (1.36)
<EPS-DILUTED> (1.36)
</TABLE>
