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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 March 31, 1997
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 May 9, 1997
Common Stock, $0.01 par value 11,700,952 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 March 31, 1997
(unaudited)and September 30, 1996 3
Consolidated statements of operations (unaudited)
for the three months and year-to-date periods
ended March 31, 1997 and 1996 4
Consolidated statements of cash flows (unaudited)
for the six months ended March 31, 1997 and 1996 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)
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
( unaudited )
------------- -------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 889 $377
Trade accounts receivable, less allowance
for doubtful accounts of $4,793 and $9,351
at March 31, 1997 and September 30, 1996,
respectively 33,035 42,938
Prepaid expenses and other current assets 1,763 4,116
Deferred income taxes 4,618 4,621
----------- -----------
Total current assets 40,305 52,052
Trade accounts receivable, net 1,696 3,803
Property and equipment, net 5,332 6,459
Capitalized software costs, net 2,964 3,057
Deferred income taxes 12,971 12,971
Other assets 444 462
----------- -----------
Total assets $63,712 $78,804
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable, due on demand $20,200 $14,379
Accounts payable 3,020 3,487
Accrued expenses:
Compensation 1,588 3,920
Commissions 955 4,401
Other 6,994 8,463
Deferred revenue 7,445 10,853
Income taxes payable 2,823 2,586
---------- ----------
Total current liabilities 43,025 48,089
Deferred revenue 961 662
Stockholders' equity:
Series A convertible preferred stock,
$.01 par value 21 21
Common stock, $0.01 par value 117 116
Additional paid-in-capital 70,205 69,825
Cumulative translation adjustments (457) (505)
Accumulated deficit (50,160) (39,404)
---------- -----------
Total stockholders' equity 19,726 30,053
---------- -----------
Total liabilities and stockholders' equity $63,712 $78,804
========== ===========
</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 Six Months Ended
March 31 March 31
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Software license $ 7,272 $ 8,507 $13,418 $15,546
Maintenance 3,900 3,204 7,037 6,032
Services 12,940 13,284 26,782 24,062
-------- -------- -------- --------
Total operating revenue 24,112 24,995 47,237 45,640
Cost of revenue:
Software products 336 271 661 531
Maintenance 2,013 2,171 4,122 3,955
Services 9,881 11,645 20,642 20,288
-------- -------- -------- --------
Total cost of revenue 12,230 14,087 25,425 24,774
Gross profit 11,882 10,908 21,812 20,866
Operating expenses:
Sales and marketing 7,662 11,725 14,566 22,963
Research and product
development 3,207 4,435 6,605 8,600
General and administrative 2,704 2,508 9,436 5,267
Restructuring charges - - 500 -
-------- -------- -------- --------
Total operating expenses 13,573 18,668 31,107 36,830
-------- -------- -------- --------
Loss from operations (1,691) (7,760) (9,295) (15,964)
Other income (expense):
Interest income 105 188 259 416
Interest expense (411) (131) (822) (134)
-------- -------- -------- --------
Other income (expense), net (306) 57 (563) 282
-------- -------- -------- --------
Loss before provision
for income taxes (1,997) (7,703) (9,858) (15,682)
Income tax provision (benefit) 439 (2,774) 848 (5,332)
-------- -------- -------- --------
Net loss $(2,436) $4,929 $(10,706) $(10,350)
======== ======== ======== ========
Primary loss per common
and common equivalent
share $(0.21) $(0.43) $(0.92) $(0.91)
======== ======== ======== ========
Weighted average common and
common equivalent shares
outstanding 11,687 11,425 11,655 11,394
======== ======== ======== ========
</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>
Six Months Ended
March 31,
1997 1996
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(10,706) $(10,350)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 2,384 1,987
Deferred income taxes 3 (6,271)
Provision for uncollectible taxes 4,040 527
Changes in assets and liabilities:
Trade accounts receivable 8,031 (5,978)
Prepaid expenses and other assets 2,170 (263)
Accounts payable, accrued expenses,
and income taxes payable (7,365) (4,974)
Deferred revenue (3,109) 4,607
-------- --------
Net cash used in operating activities (4,552) (20,715)
Cash flows from investing activities:
Purchases of property and equipment (467) (1,933)
Capitalization of software development costs (494) (466)
-------- --------
Net cash used in investing activities (961) (2,399)
Cash flows from financing activities:
Issuance of common shares 319 243
Repurchase of common shares (100) -
Net borrowings under line of credit 5,821 10,500
-------- --------
Net cash provided by financing activities 6,040 10,743
Effect of exchange rate changes on cash (15) (16)
-------- --------
Net increase (decrease) in cash and
cash equivalents 512 (12,387)
Cash and cash equivalents:
Beginning of period 377 13,650
-------- --------
End of period $ 889 $1,263
======== ========
</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 fiscal year 1996. The Company's
fiscal year ends September 30. 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 write-down of $3.8 million for a receivable which was determined to be
uncollectible and a $.5 million restructuring charge related primarily to
employee severance benefits and the consolidation of leased facilities, both
of which were recorded in the first quarter of fiscal year 1997.
Certain prior period amounts in the accompanying financial statements have
been reclassified to conform to the current period presentation.
Note 2. Loss Per Share
Primary loss per share is computed based upon the weighted average number of
common shares outstanding. Common equivalent shares consist of stock options
for the first and second quarters of fiscal year 1996 and stock options,
restricted stock, and Series A convertible preferred stock for the first and
second quarters of fiscal year 1997. Common equivalent shares are not
included in the per share calculations since the effect of their inclusion
would be antidilutive on the loss per share calculations. Presentation of
fully diluted earnings per share is not required for the periods presented.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"), which is
required to be adopted for financial statements issued after December 15,
1997. At that time, the Company will change the method currently used to
compute earnings per share and restate all prior periods presented. The
Company does not expect the adoption of SFAS No. 128 to have a material impact
on the Company's financial condition or results of operations.
Note 3. Income Taxes
The Company's effective tax rate differs from the statutory rate primarily due
to the fact that an income tax benefit was not recorded for the net loss for
the first two quarters of fiscal year 1997. A deferred tax asset has not been
recorded for the first two quarters of fiscal year 1997 due to the uncertainty
of its realization. Management believes that it is more likely than not that
the realization of deferred tax assets recorded in prior fiscal years will
occur in the future based on current earnings forecasts, tax planning
strategies, and reversals of book-tax timing differences. The Company will
continue to assess the realization of deferred tax assets on an ongoing basis.
Income tax expense for the second quarter and year-to-date period of fiscal
year 1997 is primarily related to income taxes from profitable foreign
operations and foreign withholding taxes.
6
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. Credit Facilities
At March 31, 1997, the Company maintained two credit facilities (the
"Revolving Facility" and the "Guaranteed Facility") which provide for combined
borrowings of up to $32.5 million for working capital purposes based on the
Company's eligible accounts receivable, as defined in the loan agreements.
The Revolving Facility allows for borrowings of up to $20 million, bears
interest at the London Interbank Offered Rate ("LIBOR") plus 3.0% and is
collateralized by the Company's accounts receivable and other assets. The
Guaranteed Facility allows for borrowings of up to $12.5 million and bears
interest at LIBOR plus 1.25% or the higher of .5% plus the prime rate quoted
by the Federal Reserve, depending on the type of advance, as defined in the
loan agreement. The Guaranteed Facility is guaranteed by the Company's
principal stockholder, Welsh, Carson, Anderson, & Stowe VI, L.P. ("WCAS"),
pursuant to an agreement with the Company. Borrowings are made under the
facilities based upon a ratio, defined in the loan agreements, which varies
with the Company's tangible net worth. The facilities require the Company's
compliance with various covenants, which among other things, require the
Company to maintain a minimum tangible net worth and limit the amount of
dividends and other payments by the Company. As of March 31, 1997, the
Company had outstanding borrowings of $10.6 million under the Revolving
Facility and $9.6 million under the Guaranteed Facility. The interest rates
for the Revolving Facility and the Guaranteed Facility were 8.5% and 8.25%,
respectively, at March 31, 1997.
During March, 1997, the Company entered into a new credit facility agreement
with a commercial lender. Under the new loan agreement, the Company can
borrow up to $25 million at an interest rate of LIBOR plus 5%. The
availability of funds under this line is based on eligible accounts receivable
as defined in the loan agreement. The collateral under the loan agreement is
the Company's accounts receivable, equipment, and intangibles. The loan is
due on demand and will terminate on March 31, 1998. The line of credit is
automatically renewed for successive additional terms of one year each, unless
terminated by either party. At March 31, 1997, there was no outstanding
balance under the new credit facility. Subsequent to March 31, 1997, the
Company borrowed funds under the new loan agreement to pay off the outstanding
balance of its Revolving Facility. There are no other specific financial
covenants, except for one which requires the outstanding balance of the new
credit facility to always exceed borrowings under the Company's Guaranteed
Facility.
7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
General
Seer Technologies, Inc. (the "Company"), designs, develops, markets and
supports software products and 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 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.
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.
Consistent with the American Institute of Certified Public Accountants
Statement of Position 91-1, "Software Revenue Recognition," the Company
allocates a portion of the software license fee to initial period maintenance
when the maintenance period is greater than three months. The remainder is
recognized as license fee revenue upon delivery of the software product to,
and acceptance by, the customer. Revenue from the initial period and
subsequently priced maintenance agreements is recognized ratably over the term
of the agreement. Consulting and training services revenue is recognized as
the services are performed.
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, as the size of individual sales is generally large, a single
customer may have a significant impact on a quarter. In addition, the
substantial commitment of executive time and financial resources historically
required of a potential customer to make a decision to purchase the Company's
products increases the risk of quarter-to-quarter fluctuations. 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.
This report contains forward-looking statements relating to such matters as
anticipated financial performance, business prospects, technological
developments, new products, research and development activities and similar
matters. The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. In order to comply with the terms of
the safe harbor, the Company notes that a variety of factors could cause its
actual results and experience to differ materially from the anticipated
results or other expectations expressed in the Company's forward-looking
statements. The Company's performance, development and results of operations
may be affected by the risks presented by: (i) continued market acceptance of
the Company's technology; (ii) fluctuations in quarterly operating results and
volatility of the price of the Company's common stock; (iii) competition; (iv)
the Company's reliance on its relationship with IBM; (v) customer
concentration; (vi) the potential failure to meet product delivery dates;
(vii) matters relating to international operations; and (viii) intellectual
property and proprietary rights. Other risks are also presented. The
Company's Registration Statement on Form S-1 (Registration N. 33-92050)
contains a full description of the risks presented by the Company's
operations.
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 Six months ended
March 31, March 31,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Software products 30.2 % 34.0 % 28.4 % 34.1 %
Maintenance 16.2 % 12.8 % 14.9 % 13.2 %
Services 53.6 % 53.2 % 56.7 % 52.7 %
-------- -------- -------- --------
Total 100.0 % 100.0 % 100.0 % 100.0 %
Cost of revenue:
Software products 1.4 % 1.1 % 1.4 % 1.2 %
Maintenance 8.3 % 8.7 % 8.7 % 8.7 %
Services 41.0 % 46.6 % 43.7 % 44.4 %
-------- -------- -------- --------
Total 50.7 % 56.4 % 53.8 % 54.3 %
Gross profit 49.3 % 43.6 % 46.2 % 45.7 %
Operating expenses:
Sales and marketing 31.8 % 46.9 % 30.8 % 50.3 %
Research and product development 13.3 % 17.7 % 14.0 % 18.9 %
General and administrative 11.2 % 10.0 % 20.0 % 11.5 %
Restructuring charges - - 1.1 % -
-------- -------- -------- --------
Total 56.3 % 74.6 % 65.9 % 80.7 %
Other income (expense), net (1.3)% 0.2 % (1.2)% 0.6 %
-------- -------- -------- --------
Loss before taxes (8.3)% (30.8)% (20.9)% (34.4)%
Income tax provision (benefit) 1.8 % (11.1)% 1.8 % (11.7)%
-------- -------- -------- --------
Net loss (10.1)% (19.7)% (22.7)% (22.7)%
======== ======== ======== ========
</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 Six months ended
March 31, March 31,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
United States 39.5% 31.4% 35.1% 28.5%
Mexico/Canada 2.6% 3.8% 2.5% 10.4%
South America 2.0% 4.0% 3.8% 3.4%
Europe 49.3% 50.2% 51.4% 46.9%
Middle East/Africa 1.6% 1.7% 2.0% 3.8%
Asia Pacific 5.0% 8.9% 5.2% 7.0%
-------- -------- -------- --------
100.0% 100.0% 100.0% 100.0%
======== ======== ======== ========
</TABLE>
9
Revenue. The Company's total revenue decreased 3.5% in the second quarter and
increased 3.5% for the year-to-date period of fiscal year 1997 as compared to
the same periods of fiscal year 1996. In the year-to-date period, software
revenue decreased from 34% to 28% of total revenue, maintenance revenue
increased from 13% to 15% of total revenue, and services revenue increased
from 53% to 57% of total revenue in comparison to the first half of fiscal
year 1996.
Software products. Software products revenue decreased 15% in the second
quarter and 14% in the year-to-date period of fiscal year 1997 as compared to
the same periods of fiscal year 1996. Management is implementing changes in
its business practices which include attempting to better align products to
customer needs and the establishment of long-term "partnerships" between the
Company and its customers. As a result of these and other changes, software
product sales to new customers as a percentage of total software products
revenue increased from 1% in the year-to-date period of fiscal year 1996 to
62% for the same period of fiscal year 1997. Management believes that
although these changes may lead to lower software revenue in the near-term,
they should lead to enhanced long-term profitability as greater emphasis is
placed on increasing the total number of partnerships, rather than large
individual transactions.
Maintenance. Maintenance revenue increased 22% for the second quarter and 17%
for the year-to-date period of fiscal year 1997 as compared to the same
periods of fiscal year 1996. The increase is primarily a result of
maintenance services associated with software sold to both new and existing
customers during fiscal year 1996 and the first quarter of fiscal year 1997.
Services. Services revenue decreased 3% in the second quarter and increased
11% in the year-to-date period of fiscal year 1997 as compared to the same
periods of fiscal year 1996. The increase in the year-to-date period is
primarily related to an increase in customer demand for assistance developing
applications utilizing the Company's licensed products from license sales made
in both the current and prior fiscal years.
Gross Profit. Total gross profit for the second quarter and the year-to-date
periods of fiscal year 1997 increased nearly $1 million from the same periods
of fiscal year 1996. Total gross margin increased to 49% for the second
quarter of fiscal year 1997 as compared to 44% for the second quarter of
fiscal year 1996. The gross margin is 46% for both the 1997 and 1996 year-to
date periods. The gross margin remains relatively unchanged due to
significantly higher margins in maintenance and services, which are offset by
a decrease in the software revenue as a percentage of total revenue from the
1996 period.
Software gross margin decreased to 95% for the second quarter and year-to-date
periods of fiscal year 1997 as compared to 97% for the comparable periods in
fiscal year 1996 due to an increase in the amortization of capitalized
software costs.
Maintenance gross margins increased from 32% to 48% for the second quarter and
from 34% to 41% in the year-to-date period from fiscal year 1996 to fiscal
year 1997. The increase in maintenance gross margins in the first half of
fiscal year 1997 is primarily due to a reduction in commissions paid to IBM,
which supplies certain levels of maintenance services to European customers.
In prior fiscal years, the fees related to this contract were based on a
percentage of the total software and maintenance revenues in Europe. During
the second quarter of fiscal year 1997, the contract was renegotiated to a
fixed fee arrangement. The contract renegotiation has also significantly
impacted the Company's accrued expenses and prepaid assets in the Consolidated
Balance Sheets.
Services margins increased to 24% in the second quarter and to 23% in the
year-to-date period of fiscal year 1997 as compared to 12% and 16% for the
same periods of fiscal year 1996. The increase in services margin is
primarily a result of better utilization of billable resources, including
employees and third-party contractors, and an increase in billing rates
charged to customers.
10
Sales and Marketing Expense. In fiscal year 1997 sales and marketing expense
decreased 35% for the second quarter and 37% in the year-to-date period as
compared to the same periods of fiscal year 1996. The decreases are the
result of the reduction of the Company's sales force, primarily in Europe and
the Americas, to reflect progressive changes in the Company's business model,
as well as make the sales process more efficient. As compared to the second
quarter and the year-to-date period of fiscal year 1996, average sales and
marketing headcount has decreased 32% in like periods of fiscal year 1997.
Additionally, sales expense for the year-to-date period of fiscal year 1996
included $2.2 million in commissions to IBM for sales of the Company's
software products made by IBM in Latin America and Europe. No such
commissions were payable for sales in Latin America and Europe in the year-to
date period of fiscal year 1997.
Research and Product Development Expense. In the second quarter and year-to
date periods of fiscal year 1997, research and development expense decreased
28% and 23%, respectively, over the same periods of the prior fiscal year.
This decrease is primarily a result of an 18% decrease in personnel and a
reduction in costs associated with the use of certain computer equipment.
General and Administrative Expense. General and administrative expenses were
most significantly impacted for the year-to-date period of fiscal year 1997 by
the recording of a $3.8 million reserve of accounts receivable for an account
which was determined to be uncollectible. Excluding this adjustment, general
and administrative expenses for the year-to-date period of fiscal year 1997
increased 7% over the comparable period of fiscal year 1996. This change was
caused by an increase in costs for leased computer equipment in the first
quarter and an increase in costs for professional services in the year-to
date period of fiscal year 1997.
Restructuring Charges. The Company recorded $.5 million of restructuring
expenses related primarily to severance benefits and the consolidation of
leased facilities during the first quarter of fiscal year 1997.
Income Taxes. Income tax expense increased from a benefit of ($2.8) million
for the second quarter and ($5.3) million for the year-to-date periods of
fiscal year 1996 to an expense of $.4 million and $.8 million for the same
periods of fiscal year 1997, respectively, primarily because an income tax
benefit was not recorded for the net loss incurred in the year-to-date period
of fiscal year 1997 due to the uncertainty of their realization.
Additionally, there was an increase in the level of foreign taxes withheld
from both the second quarter and year-to-date periods of fiscal year 1996 to
the same periods of fiscal year 1997.
A deferred tax asset has not been recorded for the first two quarters of
fiscal year 1997 due to the uncertainty of its realization. Management
believes that it is more likely than not the realization of deferred tax
assets recorded in prior fiscal years will occur in the future based on
current earnings forecasts, tax planning strategies, and reversals of book-tax
timing differences. The Company will continue to assess the realization of
existing deferred tax assets on an ongoing basis.
Liquidity and Capital Resources
Cash required to finance the Company's operations and capital expenditure
requirements is provided primarily through operations and borrowings under the
Company's credit facilities. Additionally, in the year-to-date period of
fiscal year 1996, the Company was also meeting its cash needs with cash
proceeds from its initial public offering completed in July, 1995.
At March 31, 1997, the Company maintained two credit facilities (the
"Revolving Facility" and the "Guaranteed Facility") which provide for combined
borrowings of up to $32.5 million for working capital purposes based on the
Company's eligible accounts receivable, as defined in the loan agreements.
The Revolving Facility allows for borrowings of up to $20 million, bears
interest at the London Interbank Offered Rate ("LIBOR") plus 3.0% and is
collateralized by the Company's accounts receivable and other assets. The
Guaranteed Facility allows for borrowings of up to $12.5 million and bears
interest at LIBOR plus 1.25% or the higher of .5% plus the prime rate quoted
by the Federal Reserve, depending on the type of advance, as defined in the
loan agreement. The Guaranteed Facility is guaranteed by the Company's
principal stockholder, Welsh, Carson, Anderson, & Stowe VI, L.P. ("WCAS"),
pursuant to an agreement with the Company. Borrowings are made under the
facilities based upon a ratio, defined in the loan agreements, which varies
with the Company's tangible net worth. The facilities require the Company's
11
compliance with various covenants, which among other things, require the
Company to maintain a minimum tangible net worth and limit the amount of
dividends and other payments by the Company. As of March 31, 1997, the
Company had outstanding borrowings of $10.6 million under the Revolving
Facility and $9.6 million under the Guaranteed Facility. The interest rates
for the Revolving Facility and the Guaranteed Facility were 8.5% and 8.25%,
respectively, at March 31, 1997.
During March, 1997, the Company entered into a new credit facility agreement
with a commercial lender. Under the new loan agreement, the Company can
borrow up to $25 million at an interest rate of LIBOR plus 5%. The
availability of funds under this line is based on eligible accounts receivable
as defined in the loan agreement. The collateral under the loan agreement is
the Company's accounts receivable, equipment, and intangibles. The loan is
due on demand and will terminate on March 31, 1998. The line of credit is
automatically renewed for successive additional terms of one year each, unless
terminated by either party. At March 31, 1997, there was no outstanding
balance under the new credit facility. Subsequent to March 31, 1997, the
Company borrowed funds under the new loan agreement to pay off the outstanding
balance of its Revolving Credit. There are no other specific financial
covenants, except for one which requires the outstanding balance of the new
credit facility to always exceed borrowings under the Company's Guaranteed
Facility.
In addition, the Company had a line of credit as of March 31, 1997 of up to
$3.5 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 March 31, 1997 the aggregate
notional amount of foreign exchange contracts outstanding was $17.9 million.
As a result of improvements in the timeliness of collections and reductions in
spending, the Company reduced its net cash used in operations from $21 million
to $5 million from the first half of fiscal year 1996 to the same period of
fiscal year 1997. As a result of this decrease, the Company was able to
decrease its net borrowings under its lines of credit by 45% in the first half
of fiscal year 1997 as compared to the first half of fiscal year 1996.
Additionally, in the first half of fiscal year 1996, the Company used
approximately $13 million from its July, 1995 initial public offering to
finance its operations.
Due to payment terms of certain software contracts, a portion of the related
receivables are classified as non-current assets. As of March 31, 1997, the
Company has evaluated the collectibility of the non-current receivables based
upon the customers' prior payment history and determined that the receivables
are collectible.
As of March 31, 1997, the Company did not have any material commitments for
capital expenditures. During the second quarter of fiscal year 1997, the
Company renewed its lease agreement for office space at its corporate
headquarters for seven years beginning April, 1997. The new lease calls for
minimum lease payments of approximately $8 million during its term.
The Company believes that existing cash on hand, cash provided by future
operations, and additional borrowings under its lines 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 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
In November 1996, the Company filed a lawsuit against IBM de Mexico S.A.
de C.V.("IBM Mexico") seeking to collect amounts due for software and
services purchased by IBM Mexico for its customer Instituto Mexicano Del
Seguro Social. In early January, IBM Mexico served the Company with its
answer and defenses to the lawsuit and a counterclaim against the
Company. IBM Mexico alleges in its counterclaim that the Company failed
to deliver proper services under its contract with IBM Mexico. The
Company has responded to the counterclaim and the suits have now moved
into the evidence gathering stage. It is too early in the cases to
determine the likelihood of success on the suit or the counterclaim. The
Company intends to vigorously pursue its case against IBM Mexico and
vigorously defend against the counterclaim.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the Company was held on February
28, 1997. The following is a brief description of each matter voted
upon at the meeting and the number of affirmative votes and the number
of negative votes cast with respect to each matter.
a) The stockholders elected the following persons as directors of the
Company: Bruce K. Anderson, Frank T. Cary, Anthony J. de Nicola,
George L. McTavish, Robert A. Minicucci, and Thomas A. Wilson. The
votes for, against(withheld) and votes abstaining for each nominee
were as follows:
<TABLE>
<CAPTION>
Votes Votes Votes
Nominee For Withheld Abstained
--------- ------- --------- ---------
<S> <C> <C> <C>
Bruce K. Anderson 12,701,744 38,508 -
Frank T. Cary 12,701,744 38,508 -
Anthony J. de Nicola 12,701,744 38,508 -
George L. McTavish 12,701,744 38,508 -
Robert A. Minicucci 12,701,744 38,508 -
Thomas A. Wilson 12,701,744 38,508 -
13
b) The shareholders were also asked to approve an amendment to the
Company's Stock Option and Restricted Stock Purchase Plan increasing
the number of shares of common stock reserved for issuance. The
Amendment was approved with 12,416,502 shares voting for, 446,913
shares voting against, and 11,517 shares abstained.
c) The shareholders also approved an amendment to the Company's Stock
Option and Restricted Stock Purchase Plan limiting an individual's
award thereunder with 12,844,235 shares voting for, 23,230 shares
voting against, and 7,767 shares abstained.
d) The shareholders ratified the appointment of Coopers & Lybrand as
the Company's independent public accountants by a vote of 12,853,315
shares voting for, 5,200 shares voting against, and 10,417 shares
abstained.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.46 Credit Agreement between Seer Technologies,
Inc. and Greyrock Business Credit, dated March 26,
1997
10.47 Lease Amendment for the Company's Cary Office,
dated March 31, 1997, between Seer Technologies,
Inc. and Regency Park Corporation (Cary, NC).
(Original lease is exhibit 10.21 to the Company's
Registration Statement on Form S-1, No. 33-92050)
10.48 First Amendment to Credit Agreement dated March
27, 1997 between Seer Technologies, Inc. and
Nationsbank, N.A. (Original agreement is exhibit
10.39 to the Quarterly Report on Form 10-Q for the
period ended June 30, 1996)
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/ Steven Dmiszewicki
Date: May 15, 1997 ..............................................
Steven Dmiszewicki
Senior Vice President and Chief
Financial Officer
15
</TABLE>
Loan and Security Agreement
Borrower: Seer Technologies, Inc.
Address: 8000 Regency Parkway
Cary, North Carolina 27511
Date: March 26, 1997
This Loan and Security Agreement is entered into on the
above date between GREYROCK BUSINESS CREDIT, a Division of
NationsCredit Commercial Corporation ("GBC"), whose address
is 10880 Wilshire Blvd., Suite 950, Los Angeles, CA 90024
and the borrower named above ("Borrower"), whose chief
executive office is located at the above address ("Borrower's Address").
The Schedule to this Agreement (the "Schedule") being signed concurrently
is an integral part of this Agreement. (Definitions of certain terms used
in this Agreement are set forth in Section 8 below.)
1. LOANS.
1.1 Loans. GBC will make loans to Borrower (the "Loans"),
in amounts determined by GBC in its sole * discretion, up to
the amounts (the "Credit Limit") shown on the Schedule,
provided no Default or Event of Default has occurred and is
continuing. If at any time or for any reason the total of
all outstanding Loans and all other Obligations exceeds the
Credit Limit, Borrower shall immediately pay the amount of the excess to GBC,
without notice or demand. * reasonable business
1.2 Interest. All Loans and all other monetary Obligations
shall bear interest at the rate shown on the Schedule,
except where expressly set forth to the contrary in this
Agreement or in another written agreement signed by GBC
and Borrower. Interest shall be payable monthly, on the last day of the
month. Interest may, in GBC's discretion,
be charged to Borrower's loan account, and the same shall
thereafter bear interest at the same rate as the other
Loans.
1.3 Fees. Borrower shall pay GBC the fee(s) shown on the
Schedule, which are in addition to all interest and other
sums payable to GBC and are not refundable.
2. SECURITY INTEREST.
2.1 Security Interest. To secure the payment and performance
of all of the Obligations when due, Borrower hereby grants to
GBC a security interest in all of Borrower's interest in the
following, whether now owned or hereafter acquired, and wherever
located (collectively, the "Collateral"): All Inventory, Equipment,
Receivables, and General Intangibles, including, without limitation,
all of Borrower's Deposit Accounts, all money, all collateral in
which GBC is granted a security interest pursuant to any
other present or future agreement, all property now or at
any time in the future in GBC's possession, and all proceeds
(including proceeds of any insurance policies, proceeds of
proceeds and claims against third parties), all products of
the foregoing, and all books and records related to any of
the foregoing.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
BORROWER.
In order to induce GBC to enter into this Agreement and to
make Loans, Borrower represents and warrants to GBC
as follows, and Borrower covenants that the following
representations will continue to be true, and that Borrower
will at all times comply with all of the following
covenants:
3.1 Corporate Existence and Authority. Borrower, if a
corporation, is and will continue to be, duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Borrower is and will
continue to be qualified and licensed to do business in all
jurisdictions in which any failure to do so would have a
material adverse effect on Borrower. The execution,
delivery and performance by Borrower of this Agreement, and
all other documents contemplated hereby (i) have been duly
and validly authorized, (ii) are enforceable against
Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by
bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to creditors' rights generally), (iii)
do not violate Borrower's articles or certificate of
incorporation, or Borrower's by-laws, or any law or any
material agreement or instrument which is binding upon
Borrower or its property, and (iv) do not constitute grounds
for acceleration of any material indebtedness or obligation
under any material agreement or instrument which is binding
upon Borrower or its property.
3.2 Name; Trade Names and Styles. The name of Borrower set
forth in the heading to this Agreement is its correct
name. Listed on the Schedule are all prior names of
Borrower and all of Borrower's present and prior trade
names. Borrower shall give GBC 30 days' prior written notice
before changing its name or doing business under any other
name. Borrower has complied, and will in the future comply,
with all laws relating to the conduct of business under
a fictitious business name.
3.3 Place of Business; Location of Collateral. The address
set forth in the heading to this Agreement is Borrower's
chief executive office. In addition, Borrower has places of
business and Collateral is located only at the locations
set forth on the Schedule. Borrower will give GBC at least
30 days prior written notice before opening any
additional place of business, changing its chief executive
office, or moving any of the Collateral to a location other
than Borrower's Address or one of the locations set forth on
the Schedule*.
*, which written notice shall be deemed automatically to amend the Schedule
3.4 Title to Collateral; Permitted Liens. Borrower is now,
and will at all times in the future be, the sole owner of
all the Collateral, except for items of Equipment which are
leased by Borrower. The Collateral now is and will remain
free and clear of any and all liens, charges, security
interests, encumbrances and adverse claims, except for
Permitted Liens. GBC now has, and will continue to have, a
first-priority perfected and enforceable security interest
in all of the Collateral, subject only to the Permitted
Liens, and Borrower will at all times defend GBC and the
Collateral against all claims of others. So long as any
Loan is outstanding which is a term loan, none of the
Collateral now is or will be affixed to any real property in
such a manner, or with such intent, as to become a
fixture. Borrower is not and will not become a lessee under
any real property lease pursuant to which the lessor
may obtain any rights in any of the Collateral and no such
lease now prohibits, restrains, impairs or will prohibit,
restrain or impair Borrower's right to remove any Collateral
from the leased premises. Whenever any Collateral is
located upon premises in which any third party has an
interest (whether as owner, mortgagee, beneficiary under a
deed of trust, lien or otherwise), Borrower shall, whenever
requested by GBC, use its best efforts to cause such third
party to execute and deliver to GBC, in form acceptable to
GBC, such waivers and subordinations as GBC shall
specify, so as to ensure that GBC's rights in the Collateral
are, and will continue to be, superior to the rights of any
such third party. Borrower will keep in full force and effect,
and will comply with all the terms of, any lease of real
property where any of the Collateral now or in the future may be located.
3.5 Maintenance of Collateral. Borrower will maintain the * Collateral
in good working condition, ordinary wear and tear excepted, and
Borrower will not use the * Collateral for any unlawful purpose.
Borrower will ** advise GBC in writing of any material
loss or damage to the * Collateral. * Equipment ** promptly
3.6 Books and Records. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising
an accounting system in accordance with generally accepted accounting
principles.
3.7 Financial Condition, Statements and Reports. All financial statements
now or in the future delivered to GBC have been, and will be, prepared in
conformity with generally accepted accounting principles * and now and in
the future will completely and fairly reflect the financial condition of
Borrower, at the times and for the periods therein stated**. Between the
last date covered by any such statement provided to GBC and the date hereof,
there has been no material adverse change in the financial condition or
business of Borrower. Borrower is now and will continue
to be solvent. * (GAAP) **, except that unaudited financial statements
may not contain all the notes required by GAAP and are subject
to normal year-end adjustments
3.8 Tax Returns and Payments; Pension Contributions. Borrower has
timely filed, and will timely file, all tax returns and reports required
by applicable law, and Borrower has timely paid, and will timely pay,
all applicable taxes, assessments, deposits and contributions now or in
the future owed by Borrower. Borrower may, however, defer payment of any
contested taxes, provided that Borrower (i) in good faith contests
Borrower's obligation to pay the taxes by appropriate proceedings promptly
and diligently instituted and conducted, (ii) notifies GBC in writing
of the commencement of, and any material development in, the proceedings,
and (iii) posts bonds or takes any other steps required to keep the
contested taxes from becoming a lien upon any of the Collateral. Borrower
is unaware of any claims or adjustments proposed for any of Borrower's
prior tax years which could result in * additional taxes becoming due and
payable by Borrower. Borrower has paid, and shall continue to pay all
amounts necessary to fund all present and future pension, profit sharing
and deferred compensation plans in accordance with their terms,
and Borrower has not and will not withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other
event with respect to, any such plan which could result in any liability of
Borrower, including any liability to the Pension Benefit Guaranty
Corporation or any other governmental agency. Borrower shall, at all times,
utilize the services of an outside payroll service providing for the
automatic deposit of all payroll taxes payable by Borrower.
* any material amount of
3.9 Compliance with Law. Borrower has complied, and will comply, in all
material respects, with all provisions ofall applicable laws and
regulations, including, but not limited to, those relating to Borrower's
ownership of real or personal property, the conduct and licensing of
Borrower's business, and all environmental matters.
3.10 Litigation. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of
Borrower's knowledge) threatened by or against or affecting Borrower in any
court or before any governmental agency (or any basis therefor known to
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of Borrower,
or in any material impairment in the ability of Borrower to carry on its
business in substantially the same manner as it is now being conducted.
Borrower will promptly inform GBC in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or
against Borrower involving any single claim of $50,000 or more, or
involving $100,000 or more in the aggregate.
3.11 Use of Proceeds. All proceeds of all Loans shall be used solely for
lawful business purposes.
4. RECEIVABLES.
4.1 Representations Relating to Receivables. Borrower represents and
warrants to GBC as follows: Each Receivable with respect to which Loans
are requested by Borrower shall, on the date each Loan is requested and
made, represent an undisputed, bona fide, existing, unconditional
obligation of the Account Debtor created by the sale, delivery, and
acceptance of goods or the rendition of services, in the ordinary course
of Borrower's business*. *, except for Receivables with respect to
maintenance, services and custom development work, for which Borrower
customarily bills in advance, as to which Receivables Borrower represents
and warrants to GBC that such Receivables are the undisputed, bona fide,
existing obligations of the Account Debtors and Borrower has no reason to
believe such Receivables will not be collected.
4.2 Representations Relating to Documents and Legal Compliance. Borrower
represents and warrants to GBC as follows: All statements made and all
unpaid balances appearing in all invoices, instruments and other documents
evidencing the Receivables are and shall be true and correct and all such
invoices, instruments and other documents and all of Borrower's books and
records are and shall be genuine and in all respects what they purport to
be, and all* signatories and endorsers** have the capacity to contract.
All sales and other transactions underlying or giving rise to each
Receivable shall comply with all applicable laws and governmental rules
and regulations. All * signatures and endorsements *** on all
documents, instruments, and agreements relating to all Receivables are
and shall be genuine, and all such documents, instruments and agreements
are and shall be legally enforceable in accordance with their terms.
* Borrower ** and, to Borrower's knowledge, all other signatories and
endorsers ** and, to Borrower's knowledge, all other signatures and
endorsements
4.3 Schedules and Documents relating to Receivables. Borrower shall
deliver to GBC transaction reports and loan requests, schedules and
assignments of all Receivables, and schedules of collections, all on
GBC's standard forms; provided, however, that Borrower's failure to execute
and deliver the same shall not affect or limit GBC's security
interest and other rights in all of Borrower's Receivables, nor shall
GBC's failure to advance or lend against a specific Receivable affect or
limit GBC's security interest and other rights therein. By GBC, Borrower
shall furnish GBC with copies (or, at GBC's request, originals) of all
contracts, orders, invoices, and other similar documents, and all original
shipping instructions, delivery receipts, bills of lading, and other
evidence of delivery, for any goods the sale or disposition of which gave
rise to such Receivables, and Borrower warrants the genuineness of all of
the foregoing. Borrower shall also furnish to GBC an aged accounts
receivable trial balance in such form and at such intervals as GBC shall
request. In addition, Borrower shall deliver to GBC the originals of all
instruments, chattel paper, security agreements, guarantees and other
documents and property evidencing or securing any Receivables, immediately
upon receipt thereof and in the same form as received, with all necessary
indorsements.
* Upon reasonable request
4.4 Collection of Receivables. Borrower shall have the
right to collect all Receivables, unless and until
an Event of Default has occurred. Borrower shall hold
all payments on, and proceeds of, Receivables in trust for
GBC, and Borrower shall deliver all such payments and
proceeds to GBC, within one business day after receipt of
the same, in their original form, duly endorsed, to be
applied to the Obligations in such order as GBC shall
determine.
4.5 Disputes. Borrower shall notify GBC promptly of all
disputes or claims relating to Receivables on the regular
reports to GBC. Borrower shall not forgive, or settle any
Receivable for less than payment in full, or agree to do
any of the foregoing, except that Borrower may do so,
provided that: (i) Borrower does so in good faith, in a
commercially reasonable manner, in the ordinary course of
business, and in arm's length transactions, which are
reported to GBC on the regular reports provided to GBC; (ii)
no Event of Default has occurred and is
continuing; and (iii) taking into account all such
settlements and forgiveness, the total outstanding Loans and
other Obligations will not exceed the Credit Limit.
4.6 Returns. Provided no Event of Default has occurred and
is continuing, if any Account Debtor returns any
Inventory to Borrower in the ordinary course of its
business, Borrower shall promptly determine the reason for such return and
promptly issue a credit memorandum to the Account Debtor in the appropriate
amount (sending a copy to GBC). In the event any attempted return occurs
after the occurrence of any Event of Default*, Borrower shall (i)
not accept any return without GBC's prior written consent,
* that is continuing ** and
4.7 Verification. GBC may, from time to time, verify
directly with the respective Account Debtors the validity,
amount and other matters relating to the Receivables, by
means of mail, telephone or otherwise, either in the name
of Borrower or GBC or such other name as GBC may choose, and
GBC or its designee may, at any time, notify
Account Debtors that it has a security interest in the
Receivables.
4.8 No Liability. GBC shall not under any circumstances be
responsible or liable for any shortage or discrepancy
in, damage to, or loss or destruction of, any goods, the
sale or other disposition of which gives rise to a
Receivable, or for any error, act, omission, or delay of any
kind occurring * in the settlement, failure to settle,
collection or failure to collect any Receivable, or for
settling any Receivable in good faith for less than the full
amount thereof, nor shall GBC be deemed to be responsible
for any of Borrower's obligations under any contract or
agreement giving rise to a Receivable. Nothing herein
shall, however, relieve GBC from liability for its own gross
negligence or willful misconduct. * in good faith
5. ADDITIONAL DUTIES OF THE BORROWER.
5.1 Insurance. Borrower shall, at all times, insure all of
the tangible personal property Collateral and carry such
other business insurance, with insurers reasonably
acceptable to GBC, in such form and amounts as GBC may
reasonably require, and Borrower shall provide evidence of
such insurance to GBC, so that GBC is satisfied that
such insurance is, at all times, in full force and effect.
All such insurance policies shall name GBC as an additional
loss payee, and shall contain a lenders loss payee
endorsement in form reasonably acceptable to GBC. Upon
receipt of the proceeds of any such insurance, GBC shall
apply such proceeds in reduction of the Obligations as GBC
shall determine in its sole discretion, except that, provided no Default or
Event of Default has occurred and is continuing, GBC shall release to
Borrower insurance proceeds, which shall be utilized by Borrower for
the replacement of the Equipment with respect to which the insurance proceeds
were paid. GBC may require reasonable assurance that the
insurance proceeds so released will be so used. If
Borrower fails to provide or pay for any insurance, GBC may,
but is not obligated to, obtain the same at Borrower's
expense. Borrower shall promptly deliver to GBC copies of
all reports made to insurance companies.
5.2 Reports. Borrower, at its expense, shall provide GBC
with the written reports set forth in the Schedule, and
such other written reports with respect to Borrower
(including budgets, sales projections, operating plans and other
financial documentation), as GBC shall from time to
time reasonably specify.
5.3 Access to Collateral, Books and Records. At reasonable
times, and on one business day's notice, GBC, or its
agents, shall have the right to inspect the Collateral, and
the right to audit and copy Borrower's books and records.
GBC shall take reasonable steps to keep confidential all
information obtained in any such inspection or audit, but
GBC shall have the right to disclose any such information *
to its auditors, regulatory agencies, and attorneys, and
pursuant to any subpoena or other legal process. The
foregoing inspections and audits shall be at Borrower's
expense and the charge therefor shall be $600 per person per day
(or such higher amount as shall represent GBC's
then current standard charge for the same), plus reasonable
out-of-pockets expenses. Borrower shall not be charged more than $3,000
per audit (plus reasonable out-of-pockets expenses), nor shall audits
be done more frequently than four times per calendar year, provided that
the foregoing limits shall not apply after the occurrence of
** Event of Default, nor shall they restrict GBC's right to conduct
audits at its own expense (whether or not ** Event of Default
has occurred). Borrower will not enter into any agreement with any
accounting firm, service bureau or third party to store Borrower's books
or records at any location other than Borrower's Address,
without first obtaining GBC's written consent, which may be conditioned
upon such accounting firm, service bureau or other third party agreeing
to give GBC the same rights with respect to access to books and records
and related rights as GBC has under this Agreement. * in confidence
** an
5.4 Remittance of Proceeds. All proceeds arising from the sale or other
disposition of any Collateral shall be delivered, in kind, by Borrower to
GBC in the original form in which received by Borrower not later than the
following business day after receipt by Borrower, to be applied to the
Obligations in such order as GBC shall determine; provided that, if no
Default or Event of Default has occurred and is continuing, and if no term
loan is outstanding hereunder, then Borrower shall not be obligated to remit
to GBC the proceeds of the sale of Equipment
* which is sold in the ordinary course of business, in a good-faith arm's
length transaction. Except for the proceeds of the sale of Equipment * as
set forth above, Borrower shall not commingle proceeds of Collateral with
any of Borrower's other funds or property, and shall hold such proceeds
separate and apart from such other funds and property and in an express
trust for GBC. Nothing in this Section limits the restrictions on
disposition of Collateral set forth elsewhere in this Agreement.
* Collateral
5.5 Negative Covenants. Except as may be permitted in the Schedule,
Borrower shall not, without GBC's prior written consent *, do any of the
following: (i) merge or consolidate with another corporation or entity **;
(ii) acquire any assets, except in the ordinary course of business;
(iii) enter into any other *** transaction outside the ordinary course of
business; (iv) sell or transfer any Collateral, except that, provided no
Event of Default has occurred and is continuing, Borrower may
(a) sell finished Inventory in the ordinary course of Borrower's
business, and (b) sell Equipment
in the ordinary course of business, in good-faith arm's length transactions;
(v) store any Inventory or other Collateral with any warehouseman or other
third party; (vi) sell any Inventory on a sale-or-return, guaranteed sale,
consignment, or other contingent basis; (vii) make any loans of any money
or other assets****; (viii) incur any debts, outside the ordinary course of
business, which would have a material, adverse effect on Borrower or on
the prospect of repayment of the Obligations; (ix) guarantee or otherwise
become liable with respect to the obligations of another party or entity;
(x) pay or declare any dividends on Borrower's stock (except for direpayment
of the Obligations; or (xiii) dissolve or elect to dissolve; or (xiv) agree
to do any of the foregoing.
* not to be unreasonably withheld
** (except for a subsidiary of Borrower)
*** material
**** other than advances to employees in the ordinary course of business not
to exceed, in the aggregate total, $250,000
*****, except for ordinary course repurchases from employees upon termination
of employments in an amount not to exceed, in the aggregate total, $1,000,000
per calendar year.
5.6 Litigation Cooperation. Should any third-party suit or proceeding be
instituted by or against GBC with respect to any Collateral or in any manner
relating to Borrower, Borrower shall, without expense to GBC, make available
Borrower and its officers, employees and agents, and Borrower's books and
records, without charge, to the extent that GBC may deem them reasonably
necessary in order to prosecute or defend any such suit or proceeding.
5.7 Notification of Changes. Borrower will promptly notify GBC in writing
of any change in its officers or directors, the opening of any new bank
account or other deposit account, and any material adverse change in the
business or financial affairs of Borrower.
5.8 Further Assurances. Borrower agrees, at its expense, on request by GBC,
to execute all documents and take all actions, as GBC * may deem
necessary or useful in order to perfect and maintain GBC's perfected security
interest in the Collateral, and in order to fully consummate the transactions
contemplated by this Agreement.
* reasonably
5.9 Indemnity. Borrower hereby agrees to indemnify GBC and hold GBC
harmless from and against any and all claims, debts, liabilities, demands,
obligations, actions, causes of action, penalties, costs and expenses
(including * attorneys' fees), of every nature, character and description,
which GBC may sustain or incur based upon or arising out of any of the
Obligations, any actual or alleged failure to collect and pay over any
withholding or other tax relating to Borrower or its employees, any
relationship or agreement between GBC and Borrower, any actual or
alleged failure of GBC to comply with any writ of attachment or other legal
process relating to Borrower or any of its property, or any other matter,
cause or thing whatsoever occurred, done, omitted or suffered to be done by
GBC ** relating to Borrower or the Obligations (except any such amounts
sustained or incurred as the result of the gross
negligence or willful misconduct of GBC or any of its
directors, officers, employees, agents, attorneys, or any other
person affiliated with or representing GBC). Notwithstanding any provision
in this Agreement to the contrary, the indemnity agreement set forth in this
Section shall survive any termination of this Agreement and shall for all
purposes continue in full force and effect.
* reasonable
** in good faith
6. TERM.
6.1 Maturity Date. This Agreement shall continue in effect until the
maturity date set forth on the Schedule (the "Maturity Date"); provided
that the Maturity Date shall automatically be extended, and this Agreement
shall automatically and continuously renew, for successive additional terms
of one year each, unless one party gives written notice to the other, not
less than sixty days prior to the next Maturity Date, that such party elects
to terminate this Agreement effective on the next Maturity Date.
6.2 Early Termination. This Agreement may be terminated prior to the Maturity
Date as follows: (i) by Borrower, effective three business days after
written notice of termination is given to GBC; or (ii) by GBC at any time
after the occurrence of an Event of Default, without notice, effective
immediately. If this Agreement is terminated by Borrower or by GBC under
this Section 6.2, Borrower shall pay to GBC a termination fee (the
"Termination Fee") in the amount shown on the Schedule. The Termination Fee
shall be due and payable on the effective date of termination and
thereafter shall bear interest at a rate equal to the highest rate
applicable to any of the Obligations.
6.3 Payment of Obligations. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full
all Obligations, whether evidenced by installment notes or otherwise,
and whether or not all or any part of such Obligations are otherwise
then due and payable. Without limiting the generality of the
foregoing, if on the Maturity Date, or on any earlier effective
date of termination, there are any outstanding letters of credit
issued based upon an application, guarantee, indemnity or similar
agreement on the part of GBC, then on such date Borrower shall
provide to GBC cash collateral in an amount equal to * of
the face amount of all such letters of credit plus all interest,
fees and costs due or (in GBC's ** estimation) likely to become
due in connection therewith, to secure all of the Obligations
standard form cash pledge agreement. Notwithstanding any termination
of this Agreement, all of GBC's security interests in all of the
Collateral and all of the terms and provisions of this Agreement
shall continue in full force and effect until all Obligations
have been paid and performed in full; provided that, without
limiting the fact that Loans are subject to the discretion of
GBC, GBC may, in its sole discretion, refuse to make any further Loans after
termination. No termination shall in any way affect or impair any right
or remedy of GBC, nor shall any such termination relieve Borrower of
any Obligation to GBC, until all of the Obligations have been paid and
performed in full. Upon payment and performance in full of all the
Obligations and termination of this Agreement, GBC shall promptly deliver
to Borrower termination statements, requests for reconveyances and such
other documents as may be reasonably required to terminate GBC's
security interests.
* 100%
** reasonable
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and Borrower
shall give GBC immediate written notice thereof: (a) Any warranty,
representation, statement, report or certificate made or delivered to
GBC by Borrower or any of Borrower's officers, employees or agents, now or
in the future, shall be untrue or misleading in a material respect; or
(b) Borrower shall fail to pay when due any Loan or any interest thereon
or any other monetary Obligation; or (c) the total Loans and other
Obligations outstanding at any time shall exceed the Credit Limit; or
(d) Borrower shall fail to perform any nonmonetary Obligation which by
its nature cannot be cured; or (e) Borrower shall fail to perform any other
nonmonetary Obligation, which failure is not cured within 5* business days
after the date performance is due; or (f) any levy, assessment, attachment,
seizure, lien or encumbrance (other than a Permitted Lien) is made on all or
any part of the Collateral which is not cured within 10 ** days after the
occurrence of the same; or (g) any default or event of
default occurs under any obligation secured by a Permitted Lien,
which is not cured within any applicable cure
period or waived in writing by the holder of the Permitted Lien; or
(i) dissolution, termination of existence,
*** insolvency of Borrower or any Guarantor; or appointment of a
receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of
any proceeding by Borrower or any Guarantor under any
reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect; or (j) the commencement of
any proceeding against Borrower or any Guarantor under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in
effect, which is not cured by the dismissal thereof within 45 days after the
date commenced; or (k) revocation or termination ****of , or *****limitation
or denial of liability upon, any guaranty of the Obligations or any attempt
to do any of the foregoing, or commencement of proceedings by or against
any such third party under any bankruptcy or insolvency law; or (m) Borrower
makes any payment on account of any indebtedness or obligation which has been
subordinated to the Obligations other than as permitted in the applicable
subordination agreement, or if any Person who has subordinated such indebted-
ness or obligations terminates or in any way limits or terminates its
subordination agreement(1) or (n) there shall be a change in the record or
beneficial ownership without the prior written consent of GBC; or (o) Borrower
shall generally not pay its debts as they become due, or Borrower shall
conceal, remove or transfer any part of its property, with intent to
hinder, delay or defraud its creditors, or make or
suffer any transfer of any of its property which may be fraudulent under
any bankruptcy, fraudulent conveyance or similar law; or (p) there shall
be a material adverse change in Borrower's business or financial condition(4)
. GBC may cease making any Loans hereunder during any of the above cure
periods, and thereafter if an Event of Default has occurred.
* 10
** 20 business
*** or
**** (without GBC's consent)
***** material
(1), which limitation or termination has a materially adverse effect on GBC
(2) an aggregate
(3) whereby Welsh Carson Anderson & Stowe VI, L.P., a Delaware limited
partnership's equity ownership decreases to less than 51%
(4); provided that no occurrence or condition shall be deemed to be a
material adverse change in Borrower's business or financial condition
hereunder to the extent that such occurrence or condition is consistent
in all material respects with Borrower's financial condition and results
of operations as of and for the 12-month period ended December 31, 1996;
or (q) the failure of Seer Technologies Benelux B.V. or Seer Technologies
Ireland Limited (collectively "Subsidiaries") to execute and deliver to
GBC a Continuing Guaranty of all Obligations of Borrower to
GBC, collateralized by a written security interest in those assets of
Subsidiaries designated by GBC and any related documents reasonably
requested by GBC; or (r) failure of Welsh, Carson, Anderson & Stowe VI,
L.P., a Delaware limited partnership, to maintain in effect, until all
Obligations of Borrower to GBC indefeasibly paid in full and
totally discharged, a Guaranty on terms identical or substantially similar
to that certain Guaranty dated July 15, 1996 in favor of NationsBank, N.A.
located in Dallas, Texas whereby Welsh, Carson, Anderson & Stowe VI, L.P. has,
among other things, guaranteed payment of the "Guaranteed Indebtedness"
(therein defined) of Borrower to said bank
7.2 Remedies. Upon the occurrence and during the continuance of any
Event of Default, and at any time thereafter, GBC, at its option, and
without notice or demand of any kind (all of which are hereby expressly
waived by Borrower), may do any one or more of the following*:
(a) Cease making Loans or otherwise extending credit to
Borrower under this Agreement or any other document or agreement;
(b) Accelerate and declare all or any part of the Obligations to be
immediately due, payable, and performable, notwithstanding any deferred
or installment payments allowed by any instrument evidencing or relating
to any Obligation; (c) Take possession of any or all of
the Collateral wherever it may be found, and for that purpose Borrower
hereby authorizes GBC without judicial process to enter onto any of
Borrower's premises without interference to search for, take possession
of, keep, store, or remove any of the Collateral, and remain on the
premises or cause a custodian to remain on the premises in
exclusive control thereof, without charge for so long as GBC ** deems
it necessary in order to complete the enforcement of its
rights under this Agreement or any other agreement; provided, however,
that should GBC seek to take possession of any of the Collateral by Court
process, Borrower hereby irrevocably waives: (i) any bond
and any surety or security relating thereto required by any statute,
court rule or otherwise as an incident to such possession; (ii) any demand
for possession prior to the commencement of any suit or action to recover
possession thereof; and (iii) any requirement that GBC retain possession of,
and not dispose of, any such Collateral until after trial or final judgment;
(d) Require Borrower to assemble any or all of the Collateral and make it
available to GBC at places designated by GBC which are reasonably convenient
to GBC and Borrower, and to remove the Collateral to such locations as GBC
may deem advisable; (e) Complete the processing, manufacturing or repair of
any Collateral prior to a disposition thereof and, for such purpose and for
the purpose of removal, GBC shall have the right to use Borrower's premises,
vehicles, hoists, lifts, cranes, equipment and all other property without
charge; (f)Sell, lease or otherwise dispose of any of the Collateral, in
its condition at the time GBC obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private
sales, in lots or in bulk, for cash, exchange or other property, or on
credit, and to adjourn any such sale from time to time without notice other
than oral announcement at the time scheduled for sale. GBC shall have the
right to conduct such disposition on Borrower's premises without charge,
for such time or times as GBC deems reasonable, or on GBC's premises, or
elsewhere and the Collateral need not be located at the place of disposition.
GBC may directly or through any affiliated company purchase or lease any
Collateral at any such public disposition, and if permissible under
applicable law, at any private disposition. Any sale or other disposition
of Collateral shall not relieve Borrower of any liability Borrower may have
if any Collateral is defective as to title or physical condition or otherwise
at the time of sale; (g) Demand payment of, and collect any Receivables and
General Intangibles comprising Collateral and, in connection therewith,
Borrower irrevocably authorizes GBC to endorse or sign Borrower's name on all
collections, receipts, instruments and other documents, to take possession
of and open mail addressed to Borrower and remove therefrom payments made
with respect to any item of the Collateral or proceeds thereof, and, in GBC's
sole discretion, to grant extensions of time to pay, compromise claims and
settle Receivables, General Intangibles and the like for less than face
value; and (h) Demand and receive possession of any of Borrower's federal
and state income tax returns and the books and records utilized in the
preparation thereof or referring thereto. All reasonable attorneys' fees,
expenses, costs, liabilities and obligations incurred by GBC with respect
to the foregoing shall be added to and become part of the Obligations,
Without limiting any of GBC's rights and remedies, *** of any Event of
Default, the interest rate applicable to the Obligations shall be increased by
an additional four percent per annum.
*, subject, in each case, to compliance with the Code
** reasonably
*** during the continuation
7.3 Standards for Determining Commercial Reasonableness. Borrower and GBC
agree that a sale or other disposition (collectively, "sale") of
any Collateral which complies with the following standards will conclusively
be deemed to be commercially reasonable: (i) Notice of the sale is given
to Borrower at least seven days prior to the
sale, and, in the case of a public sale, notice of the sale is published
at least seven days before the sale in a
newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
GBC, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase
price in cash or by cashier's check or wire transfer is required;
(vi) With respect to any sale of any of the Collateral, GBC may
(but is not obligated to) direct any prospective purchaser to ascertain from
the Borrower any and all information concerning the same. GBC shall be
free to employ other methods of noticing and
selling the Collateral, in its discretion, if they are commercially reasonable.
7.4 Power of Attorney. Upon the occurrence and during the continuance of
any Event of Default, without limiting GBC's other rights and remedies,
Borrower grants to GBC an irrevocable power of attorney coupled with an
interest, authorizing and permitting GBC (acting through any of its
employees, attorneys or agents) at any time, at its option, but without
obligation, with or without notice to Borrower, and at Borrower's expense,
to do any or all of the following, in Borrower's name or otherwise, but
GBC agrees to exercise the following powers in a commercially
reasonable manner: (a) Execute on behalf of Borrower any documents that
GBC may, in its sole * discretion, deem advisable in order to perfect and
maintain GBC's security interest in the Collateral, or in order to exercise
a right of Borrower or GBC, or in order to fully consummate all
the transactions contemplated under this Agreement, and all
other present and future agreements; (b) Execute on behalf of Borrower
any document exercising, transferring or
assigning any option to purchase, sell or otherwise dispose of or to
lease (as lessor or lessee) any real or personal
property which is part of GBC's Collateral or in which GBC has an
interest; (c) Execute on behalf of Borrower, any
invoices relating to any Receivable, any draft against any Account Debtor
and any notice to any Account Debtor,
any proof of claim in bankruptcy, any Notice of Lien, claim of
mechanic's, materialman's or other lien, or
assignment or satisfaction of mechanic's, materialman's or other lien;
(d) Take control in any manner of any cash or
non-cash items of payment or proceeds of Collateral; endorse the name of
Borrower upon any instruments, or
documents, evidence of payment or Collateral that may come into GBC's
possession; (e) Endorse all checks and
other forms of remittances received by GBC; (f) Pay, contest or settle
any lien, charge, encumbrance, security
interest and adverse claim in or to any of the Collateral, or any
judgment based thereon, or otherwise take any action
to terminate or discharge the same; (g) Grant extensions of time to pay,
compromise claims and settle Receivables
and General Intangibles for less than face value and execute all releases
and other documents in connection
therewith; (h) Pay any sums required on account of Borrower's taxes or
to secure the release of any liens therefor, or both; (i) Settle and adjust,
and give releases of, any insurance claim that relates to any of the
Collateral and obtain payment therefor; (j) Instruct any third party
having custody or control of any books or records belonging to, or
relating to, Borrower to give GBC the same rights of access and other
rights with respect thereto as GBC has under this Agreement; and (k)
Take any action or p her rights under this Agreement be deemed to indicate
that GBC is in control of the business, management or properties of Borrower.
* reasonable
7.5 Application of Proceeds. All proceeds realized as the result of
any sale or other disposition of the Collateral
shall be applied by GBC first to the reasonable costs, expenses,
liabilities, obligations and attorneys' fees incurred by GBC in the
exercise of its rights under this Agreement, second to the interest
due upon any of the Obligations, and third to the principal of the
Obligations, in such order as GBC shall determine in its sole discretion.
Any surplus shall be paid to Borrower or other persons legally entitled
thereto; Borrower shall remain liable to GBC for any deficiency.
If GBC, in its sole discretion, of either reducing the Obligations by the
principal amount of purchase price or deferring the reduction of the
Obligations until the actual receipt by GBC of the cash therefor.
7.6 Remedies Cumulative. In addition to the rights and remedies set
forth in this Agreement, GBC shall have all the other rights and remedies
accorded a secured party under the California Uniform Commercial Code and
under all other applicable laws, and under any other instrument or
agreement now or in the future entered into between GBC and Borrower, and
all of such rights and remedies are cumulative and none is exclusive.
Exercise or partial exercise by GBC of one or more of its rights or
remedies shall not be deemed an election, nor bar GBC from
subsequent exercise or partial exercise of any other rights or remedies.
The failure or delay of GBC to exercise any rights or remedies shall not
operate as a waiver thereof, but all rights and remedies shall continue
in full force and effect until all of the Obligations have been fully
paid and performed.
8. DEFINITIONS. As used in this Agreement, the following terms have
the following meanings:
"Account Debtor" means the obligor on a Receivable.
"Affiliate" means, with respect to any Person, director, officer,
or any parent or subsidiary of such Person, or any Person controlling,
controlled by or under common control with such Person.
"Agreement" and "this Agreement" means this Loan and Security Agreement
and all modifications and amendments thereto, extensions thereof, and
replacements therefor.
"Business Day" means a day on which GBC is open for business.
"Code" means the Uniform Commercial Code as adopted and in effect in the
State of California from time to time.
"Collateral" has the meaning set forth in Section 2.1 above.
"Default" means any event which with notice or passage of time or both,
would constitute an Event of Default.
"Deposit Account" has the meaning set forth in Section 9105 of the Code.
"Eligible Receivables" means Receivables arising in the ordinary course of
Borrower's business from the sale of goods or rendition of services,
which GBC, in its reasonable business judgment, shall deem eligible
for borrowing, based on such considerations as GBC may from time to time
deem appropriate. Without limiting the fact that the determination of
which Receivables are eligible for borrowing is a matter of GBC's
reasonable business discretion, the following (the "Minimum Eligibility
Requirements") are the minimum requirements for a Receivable to be an
Eligible Receivable: (i) the Receivable must not be outstanding for more
than 90 days from its due date, (ii) the Receivable must not be subject
to any contingencies (including Receivables arising from sales on consignment,
guaranteed sale or other terms pursuant to which payment by the Account
Debtor may be conditional) except for Receivables with respect to
maintenance, services and custom developed work, for which Borrower
customarily bills in advance, (iii) the Receivable must not be owing
from an Account Debtor with whom the Borrower has any
dispute (whether or not relating to the particular Receivable),
(iv) the Receivable must not be owing from an Affiliate of Borrower,
(v) the Receivable must not be owing from an Account Debtor which is
subject to any insolvency or bankruptcy proceeding, or whose financial
condition is not acceptable to GBC, or which, fails or goes
out of a material portion of its business, (vi) the Receivable must not be
owing from an Account Debtor to whom Borrower is or may be liable for
goods purchased from such Account Debtor or otherwise. If more than 50%
of the Receivables owing from an Account Debtor are outstanding more than
90 days from their due date (without regard to unapplied credits) or are
otherwise not eligible Receivables, then all Receivables owing from that
Account Debtor will be deemed ineligible for borrowing. GBC may, from
time to time, in its discretion, revise the Minimum
Eligibility Requirements, upon written notice to the Borrower.
"Equipment" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods
and other tangible personal property (other than Inventory) of every kind
and description used in Borrower's operations or owned by Borrower and
any interest in any of the foregoing, and all attachments, accessories,
accessions, replacements, substitutions, additions or improvements to
any of the foregoing, wherever located. "Event of Default" means any of
the events set forth in Section 7.1 of this Agreement.
"General Intangibles" means all general intangibles of Borrower, whether
now owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other
business records, Deposit Accounts, inventions, designs, drawings,
blueprints, patents, patent applications, trademarks and the goodwill of
the business symbolized thereby, names, trade names, trade secrets, goodwill,
copyrights, registrations, licenses, franchises, customer lists, security
and other deposits, rights in all litigation presently or hereafter pending
for any cause or claim (whether in contract, tort or otherwise), and all
judgments now or hereafter arising therefrom, all claims of Borrower
against GBC, rights to purchase or sell real or personal property, rights
as a licensor or licensee of any kind, royalties, telephone numbers,
proprietary information, purchase orders, and all insurance policies
and claims (including life insurance, key man insurance, credit insurance,
liability insurance, property insurance and other insurance), tax refunds
and claims, computer programs, discs, tapes and tape files, claims under
guaranties, security interests or other security held by or granted to
Borrower, all rights to indemnification and all other intangible property
of every kind and nature (other than Receivables).
"Guarantor" means any Person who has guaranteed any of the Obligations.
"Inventory" means all of Borrower's now owned and hereafter acquired goods,
merchandise or other personal property, wherever located, to be furnished
under any contract of service or held for sale or lease (including all raw
materials, work in process, finished goods and goods in transit), and all
materials and supplies of every kind, nature and description which are or
might be used or consumed in Borrower's business or used in connection with
the manufacture, packing, shipping, advertising, selling or finishing of
such goods, merchandise or other personal property, and all warehouse
receipts, documents of title and other documents representing any of
the foregoing.
"LIBOR Rate" means (i) the one-month London Interbank Offered Rate for
deposits in U.S. dollars, as shown each day in The Wall Street Journal
(Eastern Edition) under the caption "Money Rates - London Interbank Offered
Rates (LIBOR)"; or (ii) if the Wall Street Journal does not publish such
rate, the offered one-month rate for deposits in U.S. dollars which appears
on the Reuters Screen LIBO Page as of 10:00 a.m., New York time, each day,
provided that if at least two rates appear on the Reuters Screen LIBO Page
on any day, the "LIBOR Rate" for such day shall be the arithmetic mean of
such rates; or (iii) if the Wall Street Journal does not publish such rate
on a particular day and no such rate appears on the Reuters Screen LIBO
Page on such day, the rate per annum at which deposits in U.S. dollars
are offered to the principal London office of The Chase Manhattan Bank,
in the London interbank market at approximately 11:00 A.M., London time,
on such day in an amount approximately equal to the outstanding principal
amount of the Loans, for a period of one month, in each of the foregoing
cases as determined in good faith by GBC, which determination shall be
conclusive absent manifest error.
"Obligations" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness
at any time owing by Borrower to GBC, whether evidenced by this Agreement
or any note or other instrument or document, whether arising from an
extension of credit, opening of a letter of credit, banker's acceptance,
loan, guaranty, indemnification or otherwise, whether direct or indirect
(including, without limitation, those acquired by assignment and any
participation by GBC in Borrower's debts owing to others), absolute or
contingent, due or to become due, including, without limitation, all
interest, charges, expenses, fees, attorney's fees, expert witness fees,
audit fees, letter of credit fees, loan fees, termination fees,
minimum interest charges and any other sums chargeable to Borrower
under this Agreement or under any other present or future instrument
or agreement between Borrower and GBC.
"Permitted Liens" means the following: (i) purchase money
security interests in * specific items of Equipment; (ii)
leases of specific items of Equipment; (iii) liens for taxes not
yet payable; (iv) additional security interests and liens which are
subordinate to the security interest in favor of GBC and are consented
to in writing by GBC (which consent shall not be unreasonably withheld);
(v) security interests being terminated substantially concurrently with
this Agreement; (vi) liens of materialmen, mechanics, warehousemen,
carriers, or other similar liens arising in the ordinary course of
business and securing obligations which are not delinquent;
** (vii) liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by liens of the type described
above in
clauses (i) or (ii) *** above, provided that any extension,
renewal or replacement lien is limited to the property
encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or
refinanced does not increase;
(viii) **** Liens in favor of customs and revenue authorities which
secure payment of
customs duties in connection with the importation of goods.
GBC will have the right to require, as a condition to its
consent under subparagraph (iv) above, that the holder of
the additional security interest or lien sign an intercreditors
agreement on GBC's then standard form, acknowledge that the security
interest is subordinate to the security interest in favor of GBC, and
agree not to take any action to enforce its subordinate security interest
so long as any Obligations remain outstanding, and that Borrower agree that
any uncured default in any obligation secured by the subordinate security
interest shall also constititute an Event of Default under this Agreement.
* Inventory and
** (vii) liens incurred against deposits made in the
ordinary course of business in connection with worker's
compensation, unemployment insurance and social security benefits;
(viii) liens against cash securing the performance of bids, tenders,
statutory obligations, surety and other obligations
of a like nature incurred in the ordinary course of business;
(ix) liens upon any real property acquired or improved by Borrower or an
Affiliate thereof that are incurred within
six (6) months after such acquisition or improvement to secure or
provide for the payment of any part of the
purchase price of such real property or the cost of such improvement;
(x) liens in favor of GBC;
(xi)
*** (iv) or (ix)
**** (xii)
"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association,
corporation, government, or any agency or political division thereof,
or any other entity.
"Receivables" means all of Borrower's now owned and hereafter
acquired accounts (whether or not earned by performance), letters of credit,
contract rights, chattel paper, instruments, securities, documents and all
other forms of obligations at any time owing to Borrower, all guaranties and
other security therefor, all merchandise returned to or repossessed by
Borrower, and all rights of stoppage in transit and all other rights or
remedies of an unpaid vendor, lienor or secured party.
Other Terms. All accounting terms used in this Agreement, unless
otherwise indicated, shall have the meanings given to such terms in
accordance with generally accepted accounting principles, consistently
applied.
All other terms contained in this Agreement, unless otherwise indicated,
shall have the meanings provided by the Code, to the extent such terms are
defined therein.
9. GENERAL PROVISIONS.
9.1 Interest Computation. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by GBC
(including proceeds of Receivables and payment of the Obligations in full)
shall be deemed applied by GBC on account of the Obligations three Business
Days after receipt by GBC of immediately available funds. GBC shall not,
however, be required to credit Borrower's account for the amount of any
item of payment which is unsatisfactory to GBC in its * discretion, and
GBC may charge Borrower's Loan account for the amount of any item of payment
which is returned to GBC unpaid.
* reasonable
9.2 Application of Payments. All payments with respect to the
Obligations may be applied, and in GBC's sole discretion reversed
and re-applied, to the Obligations, in such order and manner as GBC
shall determine in its sole discretion.
9.3 Charges to Account. GBC may, in its discretion, require that
Borrower pay monetary Obligations * to GBC, or charge them
to Borrower's Loan account, in which event they will bear interest
at the same rate applicable to the Loans.
* immediately available funds
9.4 Monthly Accountings. GBC shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be * correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by GBC), unless
Borrower notifies GBC in writing to the contrary within sixty days
after each account is rendered, describing the nature of any alleged
errors or admissions.
* rebuttably presumed
9.5 Notices. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private
delivery service or by regular first-class mail, or certified mail
return receipt requested, addressed to GBC or Borrower at the addresses
shown in the heading to this Agreement, or at any other address designated
in writing by one party to the other party. All notices shall be deemed
to have been given upon delivery in the case of notices personally
delivered, or at the expiration of one business day following delivery
to the private delivery service, or two business days following the
deposit thereof in the United States mail, with postage prepaid.
9.6 Severability. Should any provision of this Agreement be held
by any court of competent jurisdiction to be void or unenforceable,
such defect shall not affect the remainder of this Agreement, which
shall continue in full force and effect.
9.7 Integration. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith
are the final, entire and complete agreement between Borrower and GBC
and supersede all prior and contemporaneous negotiations and oral
representations and agreements, all of which are merged and integrated
in this Agreement. There are no oral understandings, representations
or agreements between the parties which are not set forth in this
Agreement or in other written agreements signed by the parties in
connection herewith.
9.8 Waivers. The failure of GBC at any time or times to require
Borrower to strictly comply with any of the provisions of this
Agreement or any other present or future agreement between Borrower
and GBC shall not waive or diminish any right of GBC later to demand
and receive strict compliance therewith. Any waiver of any default
shall not waive or affect any other default, whether prior or
subsequent, and whether or not similar. None of the provisions
of this Agreement or any other agreement now or in the future
executed by Borrower and delivered to GBC shall be deemed to have
been waived by any act or knowledge of GBC or its agents or employees,
but only by a specific written waiver signed by an authorized officer
of GBC and delivered to Borrower. Borrower waives demand, protest,
notice of protest and notice of default or dishonor, notice of payment
and nonpayment, release, compromise, settlement, extension or renewal
of any commercial paper, instrument, account, General Intangible,
document or guaranty at any time held by GBC on which Borrower is or
may in any way be liable, and notice of any action taken by GBC,
unless expressly required by this Agreement.
9.9 Amendment. The terms and provisions of this Agreement may not
be waived or amended, except in a writing executed by Borrower
and a duly authorized officer of GBC.
9.10 Time of Essence. Time is of the essence in the performance
by Borrower of each and every obligation under this Agreement.
9.11 Attorneys Fees and Costs. Borrower shall reimburse GBC
for all reasonable attorneys' fees and all filing, recording,
search, title insurance, appraisal, audit, and other reasonable
costs incurred by GBC, pursuant to, or in connection with, or relating
to this Agreement (whether or not a lawsuit is filed), including, but
not limited to, any reasonable attorneys' fees and costs GBC
incurs in order to do the following: prepare and negotiate this Agreement
and the documents relating to this Agreement; obtain legal advice in
connection with this Agreement or Borrower; enforce, or seek
to enforce, any of its rights; prosecute actions against, or
defend actions by, Account Debtors; commence, intervene in, or defend
any action or proceeding; initiate any complaint to be relieved of the
automatic stay in bankruptcy; file or prosecute any probate claim,
bankruptcy claim, third-party claim, or other claim; examine, audit,
copy, and inspect any of the Collateral or any of Borrower's books
and records; protect, obtain possession of, lease, dispose of, or
otherwise enforce GBC's security interest in, the Collateral; and otherwise
represent GBC in any litigation relating to Borrower. If either GBC
or Borrower files any lawsuit against the other predicated on a breach of
this Agreement, the prevailing party in such action shall be entitled to
recover its reasonable costs and attorneys' fees, including (but not
limited to) reasonable attorneys' fees and costs incurred in the enforcement
of, execution upon or defense of any order, decree, award or judgment.
All attorneys' fees and costs to which GBC may be entitled pursuant to
this Paragraph shall immediately become part of Borrower's
Obligations, shall be due on demand, and shall bear interest at a rate
equal to the highest interest rate applicable to any of the Obligations.
9.12 Benefit of Agreement. The provisions of this Agreement shall
be binding upon and inure to the benefit of the respective successors,
assigns, heirs, beneficiaries and representatives of Borrower and GBC;
provided, however, that Borrower may not assign or transfer any of its
rights under this Agreement without the prior written consent of
GBC, and any prohibited assignment shall be void. No consent by
GBC to any assignment shall release Borrower from its liability
for the Obligations.
9.13 Joint and Several Liability. If Borrower consists of more than
one Person, their liability shall be joint and several, and the
compromise of any claim with, or the release of, any Borrower shall
not constitute a compromise with, or a release of, any other Borrower.
9.14 Limitation of Actions. Any claim or cause of action by Borrower
against GBC, its directors, officers, employees, agents, accountants
or attorneys, based upon, arising from, or relating to this Loan Agreement,
or any other present or future document or agreement, or any other
transaction contemplated hereby or thereby or relating hereto or thereto,
or any other matter, cause or thing whatsoever, occurred, done, omitted
or suffered to be done by GBC, its directors, officers, employees, agents,
accountants or attorneys, shall be barred unless asserted by Borrower by
the commencement of an action or proceeding in a court of competent
jurisdiction by the filing of a complaint within one year after the
first act, occurrence or omission upon which such claim or cause of
action, or any part thereof, is based, and the service of a summons
and complaint on an officer of GBC, or on any other person
authorized to accept service on behalf of GBC, within thirty (30) days
thereafter. Borrower agrees that such one year period is a reasonable
and sufficient time for Borrower to investigate and act upon any such
claim or cause of action. The one-year period provided herein shall not
be waived, tolled, or extended except by the written consent of GBC in
its sole discretion. This provision shall survive any termination of
this Loan Agreement or any other present or future agreement.
9.15 Paragraph Headings; Construction. Paragraph headings are only
used in this Agreement for convenience. Borrower and GBC acknowledge
that the headings may not describe completely the subject matter of the
applicable paragraph, and the headings shall not be used in any manner
to construe, limit, define or interpret any term or
provision of this Agreement. The term "including", whenever used in
this Agreement, shall mean "including (but not limited to)".
This Agreement has been fully reviewed and negotiated between
the parties and no uncertainty or ambiguity in any term or provision
of this Agreement shall be construed strictly against GBC or Borrower under
any rule of construction or otherwise.
9.16 Governing Law; Jurisdiction; Venue. This Agreement and all acts
and transactions hereunder and all rights and obligations of GBC and
Borrower shall be governed by the laws of the State of California.
As a material part of the consideration to * to enter into this
Agreement, Borrower (i) agrees that all actions and proceedings
relating directly or indirectly to this Agreement shall, at GBC's
option, be litigated in courts located within California, and that
the exclusive venue therefor shall be Los Angeles County; (ii) consents
to the jurisdiction and venue of any such court and consents to
service of process in any such action or proceeding by personal delivery or
any other method permitted by law; and (iii) waives any and all rights
Borrower may have to object to the jurisdiction of any such court, or
to transfer or change the venue of any such action or proceeding.
* the parties
9.17 Mutual Waiver of Jury Trial. BORROWER AND GBC EACH HEREBY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER
PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN GBC AND BORROWER, OR
ANY CONDUCT, ACTS OR OMISSIONS OF GBC OR BORROWER OR ANY OF THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS
AFFILIATED WITH GBC OR BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE. In witness whereof, the
parties hereto have executed and delivered this Agreement under seal
the date first above written.
Borrower:
SEER TECHNOLOGIES, INC.
By__/s/Steven Dmiszewicki______
President or Vice President
By__/s/Dennis McKinnie_____
Secretary
[AFFIX CORPORATE SEAL]
GBC:
GREYROCK BUSINESS CREDIT,
a Division of NationsCredit Commercial Corporation
By _ /s/ Richard Suhl______
Title President______
SCHEDULE TO LOAN AND SECURITY AGREEMENT
Schedule to
Loan and Security Agreement
Borrower: Seer Technologies, Inc.
Address: 8000 Regency Parkway
Cary, North Carolina 27511
Date: March 26, 1997
This Schedule is an integral part of the Loan and Security Agreement between
Greyrock Business Credit, a Division of NationsCredit Commercial
Corporation ("GBC") and the above-borrower ("Borrower") of even date.
1. CREDIT LIMIT
(Section 1.1): An amount not to exceed the lesser
of: (i) $25,000,000 (the "Dollar Limit") at any one
time outstanding; or (ii) 80% of the amount of
Borrower's Eligible Receivables (as defined in
Section 8 above); provided that until GBC obtains a
participant to participate in the Loans in a
principal amount of $5,000,000, pursuant to a
written participation agreement in form specified by
GBC, the Dollar Limit shall be $20,000,000.
2. INTEREST.
Interest Rate (Section 1.2):
The interest rate in effect throughout each calendar
month during the term of this Agreement shall be the highest "LIBOR Rate" in
effect during such month, plus 5% per annum, provided that the
interest charged for each month shall be a
minimum of $20,000, regardless of the amount of the
obligations outstanding. Interest shall be calculated on
the basis of a 360-day year for the actual number of days
elapsed. "LIBOR Rate" has the meaning set forth in Section
8 above.
3. FEES (Section 1.3/Section 6.2):
Loan Fee: $250,000, payable concurrently herewith.
Termination Fee: $20,000 per month for each month
(or portion thereof) from the effective date of
termination to the Maturity Date
NSF Check Charge: $15.00 per item.
Wire Transfers: $15.00 per transfer.
4. MATURITY DATE
(Section 6.1): March 31, 1998, subject to automatic
renewal as provided in Section 6.1 above, and early
termination as provided in Section 6.2 above.
5. REPORTING.
(Section 5.2): Borrower shall provide GBC with the
following: 1. Annual financial statements, as soon as
available, and in any event within 90 days following the end
of Borrower's fiscal year, certified by independent
certified public accountants acceptable to GBC.
2. Quarterly unaudited financial statements, as soon as available, and in any
event within 45 days after the end of each fiscal quarter of Borrower.
3. Monthly unaudited financial statements, as soon as available, and in
any event within 30 days after the end of each month.
4. Monthly Receivable agings, aged by invoice date, within
10 days after the end of each month.
5. Monthly accounts payable agings, aged by invoice date,
and outstanding or held check registers within 10 days after
the end of each month.
6. BORROWER INFORMATION:
Prior Names of
Borrower
(Section 3.2): None
Prior Trade
Names of Borrower
(Section 3.2): None
Existing Trade
Names of Borrower
(Section 3.2): None
Other Locations and
Addresses (Section 3.3): See Exhibit A hereto
Material Adverse
Litigation (Section 3.10): None
7. OTHER COVENANTS: Borrower shall at all times comply with all of
the following additional covenants:
(1) NationsBank, N.A. Line of Credit. Borrower presently has a $12.5
million line of credit (the "Other credit Line") from NationsBank, N.A.
("NationsBank"), which is guaranteed by Welsh, Carson, Anderson & Stowe VI,
L.P., a Delaware limited partnership ("Welsh"), pursuant to a written
guaranty dated July 15, 1996 (the "Welsh Guaranty"). Borrower agrees to
keep the Other Credit Line in effect throughout the term of this Agreement,
and to cause Welsh to keep the Welsh Guaranty in effect throughout the term of
this Agreement. Borrower also agrees (subject to the Credit
Limit set forth in Section 1.1 above), to maintain, at all
times, outstanding Loans under this Agreement in an amount
not less than the principal balance of the outstanding
loans under the Other Credit Line.
(2) Subordination Agreement. To the extend NationsBank has any
security interests in any assets of Borrower,
Borrower, prior to the funding of the first Loan hereunder,
Borrower shall provide GBC with a subordination agreement on
GBC's standard form, executed by NationsBank, subordinating such security
interests to the lien and security interest granted GBC by Borrower
(the "Subordination Agreement").
Throughout the term of this Agreement, Borrower shall cause
the Subordination Agreement to continue in full force and effect.
(3) Copyright Filings. Concurrently, Borrower is
executing and delivering to GBC a Security Agreement in
Copyrighted Works (the "Copyright Agreement"). Within 60
days after the date hereof, Borrower shall (i) cause all of
its computer software, the licensing of which results in
Receivables, to be filed for registration with the United
States Copyright Office, (ii) complete the Exhibits to the
Copyright Agreement with all of the information called for
with respect to such software, (iii) cause the Copyright
Agreement to be filed for recordation in the United States Copyright Office,
and (iv) provide evidence of such recordation to GBC.
Borrower:
SEER TECHNOLOGIES, INC.
By_/s/Steven Dmiszewicki_
President or Vice President
By_/s/Dennis McKinnie_____
Secretary or Ass't Secretary
[AFFIX CORPORATE SEAL]
GBC:
GREYROCK BUSINESS CREDIT,
a Division of NationsCredit Commercial Corporation
By_Richard Suhl__
Title__President___
EXHIBIT A
SEER TECHNOLOGIES, INC.
1850 Parkway Place
Suite 420
Marietta, GA 30067
85 Well Avenue
Suite 200
Newton, MA 02159
125 South Wacker Drive
Suite 300
Chicago, IL 60606
5005 LBJ Freeway
Suite 360
Dallas, TX 75244
5 Penn Plaza, 14th Floor
New York, NY 10001
595 Market Street
Suite 2430
San Francisco, CA 94105
Tysons Dulles Plaza
1420 Spring Hill Road
Suite 600
McLean, VA 22102
3rd Floor
Samarine House
22 Riebeeck Street
Capetown 8000
SOUTH AFRICA
AMENDED AND RESTATED LEASE AGREEMENT
NORTH CAROLINA
COUNTY OF WAKE
THIS AMENDED AND RESTATED LEASE AGREEMENT dated the 31st day of March,
1997, and entered into between REGENCY PARK CORPORATION, INCORPORATED, a North
Carolina corporation, doing business as REGENCY PARK CORPORATION, and having
its principal place of business in Cary, North Carolina (the "Landlord"), and
SEER TECHNOLOGIES, INC., a Delaware corporation having its principal place of
business in Cary, North Carolina (the "Tenant").
RECITALS:
1. The Landlord and the Tenant have previously entered into that certain
Lease Agreement, dated July 30, 1991, as amended by various addenda thereafter
executed by the parties hereto (the "Old Lease"). The Old Lease provides that
the Tenant leased from the Landlord the Premises (herein defined), specifically
including the Vacant Premises (as herein defined), for a term
through March 31, 1999.
2. The Tenant has never occupied the Vacant Premises under the Old Lease
and has requested that the Landlord grant certain concessions with respect to
the Vacant Premises, including a shortening of the term of the Old Lease with
respect to the Vacant Premises and, in addition, a right to reduced rent if
the Landlord can relet the Vacant Premises.
3. The Landlord is willing to grant the concessions and make the
amendments described herein, provided that the Tenant agrees to extend the
term of the lease with respect to the Occupied Premises as herein set out.
4. The Landlord and the Tenant have determined that, for simplicity and
mutual convenience of the parties, a replacement lease should be executed,
rather than an amendment, so that all of the terms and conditions of the lease
would be detailed in a single document.
NOW, THEREFORE, the Landlord and the Tenant, for good and valuable
consideration, do hereby agree as follows:
AGREEMENT
DEFINITIONS:
The following definitions shall be deemed to control herein.
ADDITIONAL RENT: Any adjustments to Annual Rental and other sums due
Landlord from Tenant.
BASE OPERATING EXPENSES: Means Operating Expenses for the Operating Year
ending November 30, 1991, which amount shall be as certified by Landlord's
auditors.
BASE REAL ESTATE TAXES: Means the lesser of:
a. the real estate taxes levied or imposed for the tax year ending
December 31, 1991, which amount shall be as certified by Landlord's auditors;
or
b. such lesser amount as may be fixed, settled, and compromised,
consented to, or determined as a result of contestation or otherwise.
BUILDING: 8000 Regency Parkway located in Cary, North Carolina.
LEASE: This Lease Agreement with all Exhibits and Riders attached
thereto.
LEASE YEAR: As used herein (i) shall mean each and every 12-month period
during the term of this Lease, or (ii) (in the event of Lease expiration or
termination) shall mean the period between the last 12-month period and said
expiration or termination. The first such 12-month period shall commence on
the 1st day of April, 1997, and end on the 31st day of March, 1998.
OPERATING EXPENSES: The Landlord's cost of operating the Building and
Property as more particularly described in Exhibit E attached hereto and made
a part hereof by this reference.
OPERATING YEAR: Means a year commencing on December 1, and terminating
on November 30, provided that Landlord shall be permitted at any time and from
time to time to change the commencement and termination dates of any operating
year of the Landlord.
PREMISES: The space as outlined on the floor plans which are attached
hereto as Exhibit A and made a part hereof by this reference. The Premises
constitutes One Hundred Six Thousand Four Hundred Eighty Five (106,485)
rentable square feet located on the first, second, third, fourth, and fifth
floors of the Building, and more specifically described below:
First Floor 19,289 rentable square feet
Second Floor 13,378 rentable square feet
Third Floor 24,606 rentable square feet
Fourth Floor 24,606 rentable square feet
Fifth Floor 24,606 rentable square feet
The portion of the Premises on the first floor, second floor, third floor and
that portion of the fourth floor presently occupied by the Tenant is
hereinafter referred to collectively as the "Occupied Premises" (the Occupied
Premises constitutes 58,617 square feet on such floors, all as shown on
Exhibit A-1 attached hereto). The portion of the Premises on the fourth floor
not occupied by the Tenant and the fifth floor are hereinafter referred to
collectively as the "Vacant Premises."
PROPERTY: The land upon which the Building is located, which land is
more particularly described in Exhibit B attached hereto and made a part
hereof by this reference.
RENTABLE AREA: One hundred forty-four thousand eight hundred seventy-
six (144,876) square feet located within the Building.
REAL ESTATE TAXES: Includes (i) personal property taxes (attributable
to the year in which assessed) imposed upon the furniture, fixtures,
machinery, equipment, apparatus, systems, and appurtenances used in
connection with the Building and the Property for the operating thereof; and
(ii) real estate taxes, assessments, sewer charges, taxes based upon the
receipt of rent and any other federal, state, or local governmental charge,
general, special, ordinary, or extraordinary taxes (but not including income
or franchise taxes or any other taxes imposed upon or measured by Landlord's
income or profits, unless the same shall be imposed in lieu of real estate
taxes) or any other tax which may now or hereafter be levied or assessed
against the Property, the Building, any other improvements hereinafter
constructed on the Property, or the rents derived from the Property, the
Building and such other improvements. (In the case of special taxes or
assessments which may be payable in installment, only the amount of each
installment paid during a calendar year shall be included in the taxes for
that year.)
Real Estate Taxes shall not include (1) income tax, tax on rents or
rentals, excess profits or revenue tax, excise tax or inheritance tax, gift
tax, gains tax, franchise tax, corporation tax, capital levy transfer, estate,
succession or other similar tax or charge that may be payable by or chargeable
to the Landlord under any presently or future laws; and (2) interest or
penalties imposed upon Landlord for late payment of Real Estate Taxes.
REAL ESTATE TAX YEAR: Means each successive 12-month period following
and corresponding to the period in respect of which the base real estate taxes
are established irrespective of the period or periods which may from time to
time in the future be established by competent authority for the purposes of
levying or imposing real estate taxes.
PREMISES
Landlord, for and in consideration of the rents, covenants, agreements,
and stipulations herein contained, to be paid, kept and performed by the
Tenant, has leased and by these presents leases unto the Tenant, and Tenant
hereby agrees to lease upon the terms and conditions herein contained, the
Premises located in the Building situate upon the Property.
1.0 TERM
The term of this Lease shall be for a period of seven (7) years
commencing on the 1st day of April, 1997, (hereinafter referred to as the
"Commencement Date"), and ending on the 31st day of March, 2004, inclusive
(the "Term"). The Term is comprised of two sub-terms: (i) that period
commencing on the Commencement Date and ending on March 31, 1998, inclusive
(the "First Term"), and (ii) that period commencing on April 1, 1998, and
ending on March 31, 2004, inclusive (the "Second Term") (the phase "Term"
refers to either the First Term, the Second Term, and both terms, as the case
may be).
2.0 ANNUAL RENTAL AND ADJUSTMENTS THEREOF
2.01 ANNUAL RENTAL: Tenant agrees to pay Landlord, at Landlord's
address above, or at such other place as Landlord may designate in writing,
without demand, deduction, credit or setoff and in lawful money of the United
States of America:
A. From April 1, 1997, up to and including March 31, 1998, an Annual
Rental of One Million Seven Hundred Eighty-Six Thousand Seven Hundred Sixteen
and No/100 Dollars ($1,786,716.00) per year ("Annual Rent"), payable in equal
monthly installments of One Hundred Forty-Eight Thousand Eight Hundred Ninety-
Three and No/100 Dollars ($148,893.00), in advance, on or before the first day
of each calendar month during the First Term.
Tenant shall be entitled to a "dollar-for-dollar" credit toward the
Annual Rent from April 1, 1997, through March 31, 1998, from the rent in fact
received (including any Additional Rent received) from any tenants leasing all
or any portion of the Vacant Premises during such period. The Tenant,
however, shall be liable for all rent due as hereinabove described less the
credit hereinabove described.
B. From April 1, 1998, up to and including March 31, 1999, the Annual
Rental shall be Nine Hundred Forty-Nine Thousand Twenty-Six and No/100 Dollars
($949,026.00) payable in equal monthly installments, due on the first day of
each month, of Seventy-Nine Thousand Eighty-Five and 50/100 Dollars
($79,085.50).
In addition, Supplemental Rent (as described in Section 2.02) shall also
be due and payable during such period of the Term.
C. From April 1, 1999, up to and including March 31, 2001, the Annual
Rental shall be One Million Six Thousand Two Hundred Ninety-Eight and 10/100
Dollars ($1,006,298.10) payable in equal monthly installments, due on the
first day of each month, of Eighty-Three Thousand Eight Hundred Fifty-Eight
and 18/100 Dollars ($83,858.18).
D. From April 1, 2001, up to and including March 31, 2004, the Annual
Rent shall be One Million Sixty-Four Thousand Nine Hundred Fifteen and 10/100
Dollars ($1,064,915.10) payable in equal monthly installments, due on the
first day of each month, of Eighty-Eight Thousand Seven Hundred Forty-Two and
93/100 Dollars ($88,742.93).
The Tenant is also obligated to pay to the Landlord Additional Rent and
certain other sums as provided for herein.
2.02 ADDITIONAL RENT; SUPPLEMENTAL RENT:
A. Additional Rent: Any adjustment to Annual Rent (including
Supplemental Rent described below) and other sums due Landlord from Tenant
shall be referred to collectively as "Additional Rent."
B. Supplemental Rent: In addition to Annual Rent described above, the
Tenant shall be obligated to pay (but only during the period of April 1, 1998,
to March 31, 1999) as supplemental rent for the Occupied Premises, an amount
per annum equal to the difference between (i) $17.50 per rentable square foot
multiplied by that portion of the rentable square footage of the Vacant
Premises that is in fact leased by the Landlord for such period, and (ii) the
stated annual rent for such period under each replacement lease entered into
by the Landlord with respect to the Vacant Premises (hereinafter referred to
as a "Replacement Lease") (such sum being hereinafter referred to as
"Supplemental Rent"). In no event shall the stated annual rent under such a
Replacement Lease be less than $14.50 per rentable square foot without the
Tenant's consent, which consent shall be either granted or denied within two
(2) business days following the Tenant's receipt of written notice to Tenant
of such a proposed rental rate. If the Tenant does not consent to such
Replacement Lease, the Landlord may nevertheless enter into such Replacement
Lease but the Tenant shall not be liable for the difference between (i) $14.50
per rentable square foot, and (ii) the stated annual rent per rentable square
foot under the Replacement Lease. Failure of the Tenant to respond in writing
to such a proposed rental rate shall be deemed to be consent to such a lower
rental rate for any particular proposed Replacement Lease. The Tenant,
however, shall not be otherwise liable to pay any sum with respect to rentable
square footage of the Vacant Premises that has not been leased for such
period. Such analysis shall be done on a lease-by-lease basis.
By way of example, if the Landlord enters into two leases with respect to the
48,000 rentable square feet in the Vacant Premises, one for 10,000 square feet
at $16.50 per rentable square foot, and a second for 20,000 rentable square
feet at $18.00 per rentable square foot, the Tenant would owe the following
sums under this provision:
$0.00 for any unleased space in the Vacant Premises (48,000 -
30,000 = 18,000).
$0.00 for the 20,000 rentable square feet leased at $18.00 per
rentable square foot.
$10,000 for the 10,000 rentable square feet leased at $16.50 per
rentable square foot (10,000 x $1.00, the difference
between $17.50 and $16.50).
Such sums shall only be due for Vacant Space in fact leased by the
Landlord, for which the rental term has commenced, but without regard to
whether the replacement tenant is in occupancy.
Supplemental Rent due under the foregoing provisions shall be calculated
each month by the Landlord and shall be payable in arrears on the first day of
each month by the Tenant. If a Replacement Lease term commences on a day
other than the first day of a month, the amount of Supplemental Rent for such
lease shall be prorated on the basis of the number of days for which the
Replacement Lease was effective.
2.02.01 OPERATING EXPENSES: Prior to commencement of each Operating
Year or as soon thereafter as is reasonably possible, Landlord will furnish to
Tenant an estimate of the Operating Expenses for such Operating Year and if
the same shall be in excess of the Base Operating Expenses, the installments
of rent payable hereunder in respect of each month of such Operating Year
shall be increased by way of Additional Rent by an amount equal to one-
twelfth (1/12) of seventy-three and five one hundredths percent (73.5%)
(during the First Term) or forty and five one hundredths percent (40.5%)
(during the Second Term) of such excess (the "Tenant's Estimated Share"), and
Tenant shall make payment thereof to Landlord accordingly.
After the end of each Operating Year, the Landlord shall furnish to
Tenant a statement of Landlord's actual Operating Expenses for such Operating
Year, and Tenant shall pay to Landlord an amount equal to seventy-three and
five one hundredths percent (73.5%) (during the First Term) or forty and five
one hundredths percent (40.5%) (during the Second Term) of the excess of such
Operating Expenses over the Base Operating Expenses ("Tenant's Actual Share").
If Tenant's Actual Share is greater than the amount paid by Tenant to Landlord
as Tenant's Estimated Share, then Tenant shall pay this difference to Landlord
within fourteen (14) days after delivery of such statement. If Tenant's
Actual Share is less than the amount paid by Tenant to Landlord as Tenant's
Estimated Share, then Landlord shall refund the excess to Tenant within
fourteen (14) days after delivery of such statement. Tenant shall have the
right to examine, at its expense, the Landlord's records with respect thereto
in the Landlord's office for a period of sixty (60) days from the Tenant's
receipt of such statement. Tenant shall not have the right to examine such
records thereafter.
Nothing contained in this Article shall be construed at any time so as to
reduce the monthly installments of rent payable hereunder below the amount
stipulated in Article 2.01.
If this Lease shall terminate other than on the expiry of an Operating
Year in any Operating Year, then in computing the amount payable by Tenant
under this Article for the period from the commencement of the Operating Year
in which the Lease terminates until the date of termination, the Base
Operating Expenses shall be deducted from the Operating Expenses for such
Operating Year and Tenant shall pay one-three hundred sixty-fifth (1/365) of
seventy-three and five one hundredths percent (73.5%) for each day of such
Operating Year during which this Lease shall have been in full force and
effect during the First Term and one-three hundred sixty-fifth (1/365) of
forty and five one hundredths percent (40.5%) of such sum during the Second
Term.
The obligations of the parties hereto to adjust sums owed pursuant to
this Article shall survive the expiration of the term of this Lease
Failure of Landlord to furnish a statement of actual Operating Expenses
or to give notice of an adjustment to Annual Rent under this Article in a
timely manner shall not prejudice or act as a waiver of Landlord's right to
furnish such statement or give such notice at a subsequent time or to collect
any adjustments to the Base Rent for any preceding period, provided, however,
that Landlord agrees to give any such statement no later than 12 months from
the expiration of any Lease Year.
2.02.02 REAL ESTATE TAXES: If at any time or from time to time during
the term of this Lease, the Real Estate Taxes for or attributable to any Real
Estate Tax Year shall be in excess of the Base Real Estate Taxes, and/or if
any new tax or increase of the effective rate of present taxes shall become
effective after the date hereof but before the normal tax escalation provision
shall take effect, the rent payable hereunder in respect of such year shall be
increased by an amount equal to seventy-three and five one hundredths percent
(73.5%) of such excess and/or such new tax or increase during the First Term
and forty and five one hundredths percent (40.5%) during the Second Term (the
"Tenant's Tax Share"). Tenant shall pay to Landlord, not later than the sixty
(60) days prior to the tax due date, or such other date as may be specified in
writing to Tenant by Landlord, the Tenant's Tax Share for such year. Where at
any time such amount has become payable to Landlord hereunder, in addition to
such amount, subsequent monthly installments of rent shall be increased by an
amount equal to one-twelfth (1/12) of the Tenant's Tax Share, and such monthly
amounts when paid to Landlord shall be available (without interest) as a
credit against subsequent obligations of Tenant to Landlord under this
Article. Landlord shall furnish to Tenant upon the specific written request
of Tenant copies of all notices of valuation and assessment and all tax bills
received by Landlord.
Tenant shall pay to Landlord as Additional Rent seventy-three and five
one hundredths percent (73.5%) of any expenses incurred by Landlord in
obtaining or attempting to obtain a reduction of any Real Estate Taxes during
the First Term and forty and five one hundredths percent (40.5%) of such sum
during the Second Term. Real Estate Taxes which are being contested by
Landlord shall nevertheless be included for purposes of the computation of the
liability of Tenant under this Article; provided, however, that in the event
that Tenant shall have paid any amount of increased rent pursuant to this
Article and Landlord shall thereafter receive a refund of any portion of the
Real Estate Taxes on which such payment shall have been based, Landlord shall
pay to Tenant the appropriate portion of such refund after deduction of the
aforementioned expenses.
Notwithstanding the year for which any such Real Estate Taxes or
assessments were levied, (i) in the case of taxes or assessments which may be
payable in installments over more than one (1) year, the amount of each
installment (other than interest and penalties for delinquent payments), paid
during a calendar year shall be included in Real Estate Taxes for that year,
and (ii) if any taxes or assessments payable during any calendar year shall be
computed with respect to a period in excess of twelve (12) calendar months,
then taxes or assessments applicable to the excess period shall be included in
Real Estate Taxes for the year in which paid only if due and payable in that
year. Except as hereinabove provided, all references to Taxes "for" a
particular year shall be deemed to refer to taxes levied, assessed or
otherwise imposed for each year without regard to when such taxes are payable.
Landlord shall take such steps and actions as are taken by owners of
similar office buildings to minimize Real Estate Taxes.
In the event of any tax or assessment refund on account of the Building
or the Property applicable to Real Estate Taxes paid by Tenant, Tenant shall
be entitled to and Landlord agrees to pay Tenant's proportionate share thereof
to Tenant within 60 days of receipt of the refund; provided that Landlord
shall be entitled, after giving notice thereof to Tenant, to set-off against
Tenant's proportionate share of such refund any amount then due and owing by
Tenant under the terms hereof. Tenant's right to such share of any such
refund as set forth above shall survive the termination of this Lease.
Except as set forth in the next succeeding sentence, Landlord shall have
no obligation to contest, object to or to litigate the levying or imposition
of any Real Estate Taxes and may settle, compromise, consent to, waive or
otherwise determine in its discretion any Real Estate Taxes without notice to,
consent or approval of Tenant. If tenants occupying more than forty percent
(40%) of the Building request that the Landlord contest the Real Estate Taxes
for any year, the Landlord shall either (i) contest such taxes in its own name
with the costs of such to be deemed to be Operating Expenses to be shared by
all tenants, or (ii) if permitted by applicable law allow the Tenant to
contest such taxes in its own name.
Nothing contained in this Article shall be construed at any time so as to
reduce the monthly installments of rent payable hereunder below the amount
stipulated in Article 2.01.
If the termination date of the Lease shall not coincide with the end of a
Real Estate Tax Year, then in computing the amount payable under this Article
for the period between the commencement of the applicable Real Estate Tax Year
in question and the termination date of this Lease, the Base Real Estate Taxes
shall be deducted from the Real Estate Taxes for the applicable Real Estate
Tax Year and, if such Real Estate Taxes exceed the Base Real Estate Taxes, the
Tenant shall pay one-three hundred sixty-fifth (1/365) of seventy-three and
five one hundredths percent (73.5%) for each day of such Real Estate Tax Year
during which the Lease shall have been in full force and effect during the
First Term and forty and five one hundredths percent (40.5%) during the Second
Term.
Tenant's obligation to pay under this Article for the final period of the
Lease shall survive the expiration of the term of this Lease.
Failure of Landlord to furnish a statement of actual Tax Expenses or to
give notice of an adjustment to Annual Rent under this Article in a timely
manner shall not prejudice or act as a waiver of Landlord's right to furnish
such statement or give such notice as a subsequent time or to collect any
adjustments to the Annual Rent for any preceding period provided such
statements are provided no later than twelve (12) months from the expiration
of any applicable Real Estate Tax Year.
2.02.03 INTEREST FOR LATE PAYMENT: Any payment provided for herein
to be made by the Tenant and not received by Landlord on the due date
specified in this Lease shall accrue interest from the due date at the rate of
one and one-half percent (1.5%) above the published prime rate of First Union
National Bank of North Carolina in effect from time to time (the "Prime
Rate"). For purposes of computing interest hereunder, changes in the Prime
Rate shall be effective on the date of each change.
The Tenant's failure to pay, within fifteen (15) days from the date such
payment is due, any amounts payable pursuant to the provision of Section 2.0
shall be deemed a default of the Tenant's covenant to pay rent and shall
entitle the Landlord to avail itself of all remedies provided herein and at
law or in equity on account of such default.
3.0 USE
The Premises shall be used and occupied only for general office use
(including the training of personnel with respect to any operating of
computers and related activities and any related development activities) and
shall not be used or occupied for any other purpose without the prior written
consent of Landlord which shall not be unreasonably withheld. Tenant shall
not display any signs on the Property without prior written consent of
Landlord. Tenant shall not conduct, or allow to be conducted, on the Premises
any business, or permit any act, (i) which constitutes a nuisance, (ii) which
is contrary to or in violation of the laws, statutes, or ordinances of the
United States, or the State or City in which the Premises are located, or
(iii) which is dangerous to persons or property or which may invalidate (or
increase the premium for) any policy of insurance carried on the Building or
the Premises. Tenant will comply with all police, fire, sanitary and all
other laws and regulations imposed by any governmental or municipal authority
or body or by Landlord's fire insurance underwriters. Any violation of this
provision by the Tenant which remains uncured under the terms of this Lease
shall be an Event of Default entitling Landlord to exercise any rights or
remedies contained herein or provided by law.
4.0 SERVICES OF LANDLORD
The Landlord shall provide, at the Landlord's expense except as otherwise
provided, the following services:
A. Access to the Premises 24 hours a day, 7 days a week.
B. Janitorial service in and about the Premises each day, Saturdays,
Sundays and holidays excepted, including but not limited to, the removal of
refuse and rubbish and installation of wash room supplies.
C. Heat and air-conditioning, daily from 7:00 a.m. to 7:00 p.m., and
8:00 a.m. to 1:00 p.m. on Saturdays (if not a holiday), Sundays and holidays
excepted, sufficient to maintain comfortable temperature on the basis of one
person per 100 square feet of space reasonably subdivided. This paragraph
shall conform to any government regulations preserving limitations thereon and
such conformity shall be deemed to satisfy this Landlord obligation.
Whenever heat generating machines or equipment which affect the
temperature otherwise maintained by the air-conditioning system are used in
the Premises, Landlord reserves the right, at its option, either to require
Tenant to discontinue the use of such heat generating machines or equipment or
to install supplementary air-conditioning equipment in the Premises. The cost
of such installation shall be paid by Tenant to Landlord promptly on being
billed therefor, and the cost of operation and maintenance of said
supplementary equipment shall be paid by Tenant to Landlord promptly on the
monthly rent payment dates at such rates as may be agreed on, but in no event
at a rate less than Landlord's actual cost therefor of labor, materials and
utilities.
D. Water for drinking, break rooms (where plumbing has been already
installed), lavatory and toilet purposes.
E. Passenger elevator service at all times. Any or all elevator service
may be automatic.
F. Window washing of all exterior windows, both inside and out, weather
permitting.
G. Provision, installation and replacement of ballasts and tubes for
lighting purposes.
H. Removal of ice and snow from walks, drives and parking facilities.
I. Landlord will cause an electric check meter to be installed in the
Premises or Landlord shall have the right to cause a reputable independent
electrical engineering or consulting firm to survey and determine the cost of
the electric service furnished for such electric current. Tenant agrees to
pay to Landlord, promptly upon demand therefor, for all such electric current
consumed as shown by said meters or by said survey at the rates charged for
such services by the city, or the local public utility, as the case may be,
furnishing the same.
If Tenant shall require electric current in excess of that usually
furnished or supplied for use of the Premises as general office space, Tenant
shall first procure the consent of Landlord (which Landlord may refuse in its
sole discretion) to the use thereof. Landlord may cause an electric check
meter to be installed in the Premises. Landlord shall also have the right to
cause a reputable independent electrical engineering or consulting firm to
survey and determine the value of the electric service furnished for such
excess electric current. The cost of any such survey or meters and of
installation, maintenance and repair thereof shall be paid for by Tenant.
Tenant agrees to pay to Landlord, promptly upon demand therefor, for all such
electric current consumed as shown by said meters or by said survey at the
rates charged for such services by the city, or the local public utility, as
the case may be, furnishing the same, plus any additional expense incurred in
monitoring the electric current so consumed.
Tenant covenants and agrees that at all times its use of electric current
shall never exceed Tenant's proportionate share of the capacity of existing
feeders to the Building or the risers of wiring installation. Any riser or
risers or wiring to meet Tenant's excess electrical requirements, upon written
request of Tenant, will be installed by Landlord, at the sole cost and expense
of Tenant if, in Landlord's sole judgment, the same are necessary and will not
cause permanent damage or injury to Building or Premises or cause or create a
dangerous or hazardous condition or entail excessive or unreasonable
alteration, repairs or expense or interfere with or disturb other tenants or
occupants.
Should Tenant require any additional work or service, including but not
limited to the additional work or service described above or service furnished
outside the stipulated hours, Landlord may, on terms to be agreed, upon
reasonable advance notice by Tenant, furnish such additional service. Tenant
agrees to pay the Landlord such charges as may be agreed on, but in no event
at a charge less than Landlord's actual cost plus overhead for the additional
services provided, it being agreed that the cost to the Landlord of such
additional services shall be excluded from Operating Expenses.
J. Building security sign-in guard services after normal business hours
is presently being provided (but the Landlord reserves the right to adopt a
different security system).
K. Exterior maintenance of the building, landscaping, parking area and
walkways.
Landlord does not warrant that any of the services referred to above, or
any other services which Landlord may supply, will be free from interruption.
Tenant acknowledges that any one or more of such services may be suspended by
reason of accident or of repairs, alterations or improvements necessary to be
made, or by strikes or lockouts, or by reason of operation of law, or causes
beyond the reasonable control of Landlord. Any such interruption or
discontinuance of service shall not constitute an eviction or disturbance of
Tenant's use and possession of the Premises, or any part thereof, or render
Landlord liable to Tenant for damages by abatement of rent or otherwise, or
relieve Tenant from performance of Tenant's obligations under this Lease. If
the interruption of occupancy by such events continues for more than three (3)
consecutive days, Tenant shall be entitled to abate rent as to the portion of
the Premises that cannot be occupied. Tenant may cure such interruption of
discontinuance of service and the cost of such cure shall be deducted from
Tenant's subsequently accruing monthly rental obligations until such amount is
fully recovered.
5.0 TENANT'S ACCEPTANCE AND MAINTENANCE OF PREMISES
Tenant, on occupancy of the Premises, represents to the Landlord that it
has examined and inspected the same, finds them to be as represented by the
Landlord and satisfactory for Tenant's intended use, and such occupancy
evidences Tenant's acceptance "AS IS." Landlord makes no representation or
warranty as to the condition of said Premises. Tenant shall maintain (and so
deliver at the end of the Lease) each and every part of the Premises in good
repair and condition, and shall make, at Tenant's sole cost and expense, such
replacements, restorations, renewals or repairs, in quality equivalent or
better than the original work, as may be required to so maintain the same,
ordinary wear and tear only excepted. Tenant, however, shall make no
structural or interior alterations, additions or improvements to the Premises
without Landlord's prior written consent, and any such work shall be performed
by Landlord at the Tenant's sole expense, and shall not disturb or
inconvenience other tenants in the Building. Tenant shall not at any time
perform any work on the Premises or permit any work to be performed on the
Premises unless the Landlord has permitted the Tenant to perform such work
directly. Any work so performed by the Tenant shall be performed by duly
licensed contractors or artisans, each of whom must carry general public
liability insurance in form and content satisfactory to the Landlord,
certificates of which shall be furnished Landlord. At no time may Tenant do
any work that results in a claim of lien against Landlord. All alterations,
additions or improvements (including, but not limited to, floor covering, wall
covering, wall and ceiling lighting fixtures, carpet, drapes and drapery
hardware) but specifically excluding the Liebert Unit made or installed by
Tenant or by Landlord for Tenant's benefit to the Premises, shall become the
property of Landlord upon the termination or earlier expiration of this Lease.
Landlord reserves the right to require Tenant, at Tenant's expense, (i) to
remove any improvements or additions made to the Premises by Tenant, or by
Landlord for Tenant's benefit, upon the expiration or earlier termination of
this Lease unless the Landlord has in fact consented in writing to the
installation of such improvements (and the Landlord may require, as a
condition of granting any such consent, that the Tenant agree to remove such
improvements upon termination or earlier expiration of the Lease); and (ii) to
repair all damage done by or in connection with installation or removal of
said improvements or additions. Tenant further agrees to do so prior to the
expiration date of this Lease, or within thirty (30) days after notice from
Landlord, whichever shall be later, provided that Landlord gives such notice
no later than thirty (30) days prior to the expiration date of this Lease.
If the sprinkler system as installed in the Building or any of its
appliances shall be damaged or injured or not in proper working order by
reason of any act or omission of the Tenant, Tenant's agents, servants,
employees, licensees or visitors, the Tenant shall forthwith restore the same
to good working conditions at its own expense. If the Board of Fire
Underwriters of Fire Insurance Exchange or any bureau, department or official
of the state, county or city government, requires or recommends that any
changes, modifications, alterations or additional sprinkler heads or other
equipment be made or supplied by reason of the Tenant's business, or the
location of partitions, trade fixtures, or other contents of the Premises, or
if any such changes, modifications, alterations, additional sprinkler heads or
other equipment become necessary to prevent the imposition of a penalty or
charge against the full allowance for a sprinkler system in the fire insurance
rate as fixed by said Exchange, or by any fire insurance company, Tenant
shall, at the Tenant's expense, promptly make and supply such changes,
modifications, alterations, additional sprinkler heads or other equipment.
Tenant shall not overload the floors, nor shall Tenant install any heavy
business machines or any safes or heavy equipment of any kind without prior
written consent of Landlord, which if granted, may be conditioned upon moving
by skilled licensed handlers, and installation and maintenance at Tenant's
expense of special reinforcings and settings adequate to carry the additional
weight and to absorb and prevent noise and vibration.
6.0 REPAIRS BY LANDLORD
Landlord shall have no duty to Tenant to make any repairs or improvements
to the Premises except such repairs as may be deemed necessary by Landlord for
normal maintenance operations of the Building's plumbing, lighting, heating
and air-conditioning and electrical systems, Building parking lots and
grounds, and such structural repairs necessary for safety and tenantability
and then only if not brought about by any act or neglect of Tenant, its
agents, employees or visitors. Notwithstanding the foregoing, Landlord agrees
to maintain the Building and the Property as a first class office building and
grounds consistent with a first class office park in Cary, North Carolina.
Tenant agrees to report immediately in writing to Landlord any defective
condition in or about the Premises in fact known to Tenant, and a failure to
so report any such condition caused by Tenant shall make Tenant liable to
Landlord for any expense or damage to Landlord resulting from such defective
condition. Landlord shall have the right of full access to the Premises
(including entry by use of master key) to make repairs without reduction or
abatement of rent.
7.0 INSURANCE AND INSURANCE RATES
Landlord shall carry fire, casualty and liability insurance insuring its
interest in the Building and the Premises. Tenant shall carry fire, casualty
and liability insurance insuring its interest, if any, in improvements to or
in the Premises and its interest in its office furniture, equipment, supplies
and other property. Tenant hereby waives any claim or right of action which
it may have against Landlord for loss or damage covered by such insurance, and
Tenant covenants and agrees that it will obtain a waiver from the carrier of
such insurance releasing such carrier's subrogation rights as against
Landlord. Tenant shall maintain a comprehensive liability policy covering
loss to person or property (a) in the amount of One Million and No/100 Dollars
($1,000,000) bodily injury per person, and One Hundred Thousand and No/100
Dollars ($100,000) property damage, or (b) in the amount of Three Million and
No/100 Dollars ($3,000,000) single limit for bodily injury and property
damage. Such policies shall name Landlord as an insured. Tenant shall
furnish Landlord a certificate of insurance indicating (a) current coverage
during the term of this Lease, and (b) a provision requiring a thirty (30) day
prior notice to the Landlord of cancellation.
Tenant shall not do or cause to be done or permit on the Premises or in
the Building anything deemed extrahazardous on account of fire, and Tenant
shall not use the Premises or the Building in any manner which will cause an
increase in the premium rate for any insurance in effect on the Building or a
part thereof. If, because of anything done by Tenant, the premium rate for
any kind of insurance in effect on the Building or any part thereof shall be
raised, Tenant shall pay Landlord the amount of any such increase in premium
in accordance with the provisions of this Lease. If Landlord shall demand
that Tenant remedy the condition which caused any such increase in an
insurance premium rate, Tenant shall remedy such condition as quickly as
practicable after receipt of such demand.
8.0 FIRE OR OTHER CASUALTY
In the event that before or during the term of this Lease, the
Premises shall be damaged by fire or other casualty which in the opinion of
Landlord does not render the Premises or a part thereof untenantable Landlord
will, at its option (subject to the other provisions of this Section 8.0),
repair the same with reasonable dispatch upon receipt of written notice of the
damage from Tenant, and there shall be no abatement of the rent.
In the event that before or during the term of this Lease the Premises
or the Building shall be damaged by fire or other casualty which in the
opinion of the Landlord renders the Building, the Premises or any part of the
Building or Premises untenantable, Landlord within twenty (20) days of notice
of such fire or casualty or of receipt of written notice from Tenant of such
damage (whichever shall last occur) shall have the right to and shall either
(i) serve written notice upon Tenant of Landlord's intent to repair said
damage or (ii) if in Landlord's opinion said damage renders so much of either
of the Premises or of the Building untenantable that repair would not be
advisable, serve written notice upon Tenant that this Lease is terminated. If
Landlord shall elect to terminate this Lease aforesaid, such termination shall
be effective immediately upon service of such notice by Landlord upon Tenant
if the term shall not have commenced or on the date specified in such notice
if during the term. In the event of such termination the rent shall be
apportioned and paid up to the time of such fire or other casualty if the
Premises are rendered wholly untenantable as aforesaid by such fire or other
casualty or up to the specified date of termination if the Premises are not
rendered wholly untenantable by such fire or other casualty. Any obligation
of Tenant to Landlord for any sum of money due under any provisions of this
Lease shall survive any such termination of this Lease by Landlord. If, on
the other hand, Landlord shall elect to repair such damage, such repairs shall
be commenced within forty-five (45) days of notice to Tenant of such election
and the Landlord shall diligently proceed with such restoration. Landlord's
obligation to repair or rebuild shall be limited to the availability of
insurance proceeds. Landlord covenants to maintain sufficient insurance to
repair the Building in case such event occurs. During the period of repair
the total amount of the rent provided for in Article 2.0 of this Lease shall
be reduced to an amount which in Landlord's opinion bears the same ratio to
the rent provided for in said Article 2.0 as the portion of the Premises then
available for use bears to the entire Premises. Upon completion of such
repair, rental payments shall resume in an manner as if no fire or other
casualty had occurred.
Notwithstanding the foregoing, in the event that before or during the
term of this Lease the Premises or the Building shall be damaged by fire or
other casualty which shall have been occasioned by the act of Tenant or of its
servants, agents, visitors, invitees or licensees, (i) there shall be no
apportionment or abatement of the rent, (ii) Landlord shall have the right but
shall have no obligation to repair the Premises or the Building, and (iii)
Tenant shall reimburse and compensate Landlord within five (5) days of
rendition of any statements to Tenant by Landlord for any expenditures made by
Landlord in making any such repairs. Any such actions shall be without
prejudice to any other rights and remedies of Landlord and without prejudice
to any rights of subrogation of any insurer of Landlord.
The other provisions of this Article 8.0 notwithstanding, except for
matters caused by the negligent act or omission or willful misconduct of
Landlord or its agents, Landlord shall have no obligation to replace or repair
any property in the Building or on the Premises belonging to Tenant or to
anyone claiming through or under Tenant, nor shall Landlord have any
obligation hereunder to replace or repair any property on the Premises which
Landlord may require Tenant to remove from the Premises.
9.0 WAIVER OF CERTAIN CLAIMS
The Tenant, to the extent permitted by law, waives all claims it may
have against the Landlord, and against the Landlord's agents and employees for
damage to person or property sustained by the Tenant or by any occupant of the
Premises or by any other person, resulting from any part of the Property or
any equipment or appurtenances becoming out of repair, or resulting from any
accident in or about the Property or resulting directly or indirectly from any
act or neglect of any tenant or occupant of any part of the Property or of any
other person, unless such damage is a result of the negligence or contributory
negligence of Landlord, or Landlord's agents or employees. If any damage
results from any act or neglect of the Tenant, the Landlord may, at the
Landlord's option, repair such damage and the Tenant shall thereupon pay to
the Landlord the total cost of such repair. All personal property belonging
to the Tenant or any occupant of the Premises that is in or on any part of the
Property shall be there at the risk of the Tenant or of such other person
only, and the Landlord, its agents and employees shall not be liable for any
damage thereto or for the theft or misappropriation thereof unless such
damage, theft or misappropriation is a result of the negligence or
contributory negligence of Landlord or Landlord's agents or employees. The
Tenant agrees to hold the Landlord harmless and to indemnify the Landlord
against claims and liability for injuries to all persons and for damage to or
loss of property occurring in or about the Property, due to any act of
negligence or default under this Lease by the Tenant, its agents or employees.
To the extent that the Tenant carries hazard insurance on any of its
property in the Premises and to the extent that the Landlord carries hazard
insurance on the Property, each policy of insurance shall contain (if
obtainable from the insurer selected by the Tenant or the Landlord, as the
case may be, without additional expense) a provision waiving subrogation
against the other party to this Lease. If such provision can be obtained only
at additional expense, the obligation to obtain such provision shall be
effective only if the other party, on notice, shall pay the amount of such
additional expense. Each of the parties hereto releases the other with
respect to any liability which the other may have for any damage by fire or
other casualty with respect to which the party against whom such release is
claimed shall be insured under a policy or policies of insurance containing
such provision waiving subrogation.
10.0 PARKING
Landlord shall have the right to change the area, level, location and
arrangement of and number of parking areas, as well as the number of parking
spaces, and to restrict parking areas with a view toward improving the
convenience and use thereof by the Tenant and other tenants, their customers
and employees. The Landlord presently provides a total of five hundred
seventy-five (575) parking spaces for this Building. Based on the Tenant's
proportionate share of space in the Building of seventy-three and five one
hundredth's percent (73.5%) during the First Term and forty and five one
hundredths percent (40.5%) during the Second Term (the same proportionate
share as found in Article 2.02.01 OPERATING EXPENSES and Article 2.02.02 REAL
ESTATE TAXES), the Tenant is entitled to seventy-three and five one hundredths
percent (73.5%) of the parking spaces during the First Term and forty and five
one hundredths percent (40.5%) of the parking spaces during the Second Term.
Where a Replacement Lease has been executed for the Vacant Premises during the
First Term, this percentage of nonexclusive parking to which the Tenant is
entitled shall be adjusted accordingly.
Subject to the other provisions of this Lease, Tenant shall have free
non-exclusive use of parking facilities, driveways and islands for Tenant,
Tenant's employees, Tenant's business invitees and Tenant's agents. Such
areas for non-exclusive parking spaces shall serve all tenants, their
employees, business invitees and agents. (Tenant shall, upon written notice
from Landlord, within five (5) days, furnish Landlord, or its authorized
agent, the state motor vehicle license number assigned to each of its motor
vehicles to be parked on the Property and the motor vehicle of all of its
employees to be employed on the Premises). Tenant shall not at any time park
any truck or delivery vehicles in any parking areas or driveways, except as
specifically designated by Landlord from time to time, and shall confine all
truck parking, loading and unloading to times and locations specifically
designated by Landlord from time to time. Tenant shall require all trucks
servicing Tenant to be promptly loaded or unloaded and removed from the
Property. Tenant covenants and agrees to enforce the provisions of this Lease
against Tenant's employees and business invitees. Landlord shall have the
right, but not the obligation: (a) to police said parking facilities, (b) to
provide parking attendants, (c) to change the area, level, location and
arrangement of parking areas, but not decrease the number of spaces by more
than five percent (5%), (d) to cause unauthorized motor vehicles to be towed
away at the sole risk and expense of the owner of such motor vehicles, (e) to
provide for such exclusive use as Landlord may determine, from time to time,
for the exclusive use of the handicapped and/or for the exclusive use of
visitors, (f) to use any portion of the parking facilities from time to time
and/or to deny access to the same temporarily to repair, maintain or restore
such facilities or to construct improvements under, over, along, across and
upon the same for the benefit of the Property and to grant easements therein
to public and quasi-public authorities, and (g) to adopt and modify from time
to time rules and regulations for parking and ingress, egress, speed, no
parking, no standing, and for times and places for move in, move out and
deliveries.
11.0 RIGHT OF ENTRY
Landlord with the Tenant's prior consent, which consent will not be
unreasonably withheld, shall have the right to enter and to grant licenses to
enter the Premises at any time and for such lengths of time as Landlord shall
deem reasonable without reduction or abatement of rent (a) to inspect the
Premises, (b) to exhibit the Premises to prospective tenants or purchasers of
the Building, (c) to make alterations or repairs to the Premises or the
Building and to temporarily store materials, tools and equipment for such
alterations or repairs for any purpose which Landlord shall deem necessary for
the operation and maintenance of the Building and the general welfare and
comfort of its tenants.
Landlord shall have the right to enter and to grant licenses to enter the
Premises at any time and for such lengths of time as Landlord shall deem
reasonable without reduction or abatement of rent for the purposes (a) of
removing from the Premises any placards, signs, fixtures, alterations or
additions not permitted by this agreement or by the Rules and Regulations, (b)
of abating any condition which constitutes a violation of any covenant or
condition of this Lease or of the Rules and Regulations, and (c) of an
emergency. No such entry by Landlord shall in any manner affect Tenant's
obligations and covenants under this Lease, and no such entry shall of itself
render Landlord liable for any loss of or damage to the property of Tenant.
12.0 QUIET ENJOYMENT; SUBORDINATION AND ATTORNMENT
If Tenant promptly and punctually complies with each of its obligations
hereunder, it shall peacefully have and enjoy the possession of the Premises
during the term hereof. No action of Landlord in other space in the Building,
or in repairing or restoring the leased space, however, shall be deemed a
breach of this covenant, or give Tenant any right to modify this Lease either
as to term, rent payable, or other obligations to perform.
This Lease is and shall continue to be subject and subordinate to any
mortgages or deeds of trust which may now or hereafter cover or affect the
land on which the Building is constructed or the Building, and to all
renewals, modifications, consolidations, replacements and extensions of any
such mortgages or deeds of trust. This clause shall be self-operative and no
further instrument of subordination shall be required. At any time and from
time to time, however, Tenant shall execute within ten (10) days after receipt
any certificate in confirmation of such subordination that Landlord may
request.
If any such mortgage or deed of trust is terminated or foreclosed, or if
title to the Property is transferred by deed in lieu of foreclosure, this
Lease (at the option of the purchaser at such foreclosure sale) shall not
terminate, nor be terminable by Tenant by reason of such foreclosure, and
Tenant shall, if requested, attorn to the purchaser at such foreclosure sale.
Notwithstanding anything herein to the contrary, the Landlord agrees to use
its best efforts to obtain a nondisturbance agreement in form satisfactory to
Tenant from any existing mortgagees. Landlord agrees that Tenant shall not be
required to subordinate its interest in the Premises to the right of any
future mortgagee unless and until Landlord delivers a non-disturbance
agreement from such mortgagee in form and in substance reasonably acceptable
to Tenant.
13.0 DEFAULT
13.01 Any one of the following events shall constitute an "Event of
Default:"
1. if Tenant shall fail to pay any monthly installment of Annual Rent,
any Additional Rent or any other sum payable by the Tenant within fifteen (15)
days after such sum is due in accordance with the terms of this Lease; or
2. if Tenant shall fail to keep or perform or abide by any other term,
condition, covenant or agreement of this Lease (whether or not specified
herein as an Event of Default) or of the Rules and Regulations now in effect
or hereafter adopted and such default shall continue for a period of thirty
(30) days after notice to Tenant of such default; or
3. if (a) Tenant (or, if Tenant is a partnership, if any partner in
Tenant) shall file a petition in bankruptcy or consent to any other action
seeking any such judicial decree or shall make any assignment for the benefit
of its creditors or shall admit in writing its inability to pay its debts
generally as they become due or if (b) any court of competent jurisdiction
shall enter a decree or order approving a petition filed against it or
appointing any trustee or receiver for Tenant or if any person shall file a
petition for involuntary bankruptcy against Tenant and such appointment or
petition shall not be stayed or vacated within ninety (90) days or entry
thereof; or
4. if Tenant's interest in this lease or the Premises shall be subjected
to any attachment, levy or sale pursuant to any order or decree entered
against Tenant in any legal proceeding and such order or decree shall not be
vacated within thirty (30) days of entry thereof; or
5. the Premises are deserted, vacated, or not used regularly or
consistently as would normally be expected for similar premises put to the
same or similar purposes, even though the Tenant continues to pay all rental
and charges provided for herein.
13.02 If there is an "Event of Default," Landlord, without declaring a
termination of the Lease (which right is, however, unconditionally and
absolutely reserved), may at its sole election exercise any one or more or all
of the following remedies, in addition to any other remedies Landlord may have
under this Lease or at law or in equity:
1. Landlord may re-enter the Premises and correct or repair any
condition which shall constitute a failure on Tenant's part to keep or perform
any covenant of this Lease or the Rules and Regulations, and Tenant shall
reimburse Landlord any expenditure made to make such correction or repair.
2. Landlord may, without terminating this Lease, demand that Tenant
vacate the Premises and remove all property belonging to Tenant, and Landlord
shall have the right to re-enter and take possession of the Premises without
such entry and possession relieving the Tenant, in whole or in part, from the
Tenant's obligation to pay the rent due hereunder for the full term of the
Lease. Any and all property which may be removed from the Premises by
Landlord pursuant to this section or at law, to which Tenant is or may be
entitled, may be handled, removed or stored by Landlord at risk, cost and
expense of Tenant, and Landlord shall in no event be responsible for the
value, preservation or safekeeping thereof. Tenant shall pay to Landlord upon
demand any and all expenses incurred in such removal and all storage charges
against such properties so long as the same shall be in Landlord's possession
or under Landlord's control. Tenant agrees that to the fullest extent
permitted by law any such property of Tenant not retaken from storage by
Tenant within thirty (30) days after the end of the term, however terminated,
may be disposed of by Landlord in any manner whatsoever, including without
limitation, the sale, scrapping of and/or destruction thereof without any
further obligation to Tenant, and Tenant shall pay to Landlord promptly on
demand reasonable expenses of such disposal.
3. Landlord without terminating this Lease may re-let the Premises at
any rental as the Landlord in its sole discretion deems advisable and Tenant
shall pay all costs of such re-letting, including but not limited to, any
necessary alterations, repairs, and the difference, if any, between the rent
collected from any subsequent tenant and the rental provided under this Lease.
4. The Landlord may elect to terminate this Lease. In such event,
Tenant shall remain liable to Landlord for damages, due and payable monthly on
the day rent would have been payable hereunder, and in the amount equal to the
rent and any other amounts which would have been owing by Tenant for the
balance of the term of the Lease, had this Lease not been terminated, less the
net proceeds, if any, of any re-letting of the Premises by Landlord, after
deducting all of the Landlord's costs associated with the termination of the
Lease (including but not limited to legal expenses and attorneys' fees), and
the cost to repair or alter the Premises incurred in connection or in any way
related to the termination of this Lease, eviction of Tenant and such re-
letting.
5. Landlord may recover from Tenant all costs associated with the
termination of this Lease or other remedial measures herein provided or
provided by law, including but not limited to, legal expenses and attorneys'
fees, the cost to repair or alter the Premises for re-letting, and all loss of
rents the Landlord may incur by reason of such termination.
6. With or without terminating the Lease, but in lieu of collecting rent
as such rent accrues under paragraphs 3 or 4 hereof, Landlord may declare the
entire amount of rent calculated on current rent being paid by Tenant and
Additional Rent which in Landlord's reasonable determination would become due
and payable during the remainder of the term of the Lease, discounted to
present value by using a reasonable discount rate selected by Landlord, to be
due and payable immediately. Upon acceleration of such amounts, Tenant agrees
to pay the same at once, together with all rent and other amounts theretofore
due, at Landlord's address as provided herein. Such payment shall not
constitute a penalty or forfeiture but shall constitute liquidated damages for
Tenant's failure to comply with the terms and provisions of this Lease
(Landlord and Tenant agreeing that Landlord's actual damages in such an event
are impossible to ascertain and that the amount set forth above is a
reasonable estimate thereof).
13.03 In the event of any re-entry of the Premises by Landlord pursuant
to any of the provisions of this Lease, Tenant hereby waives all claims for
damages which may be caused by such re-entry by Landlord, and Tenant shall
save Landlord harmless from any loss, cost (including legal expenses and
reasonable attorneys' fees) or damages suffered by Landlord by reason of such
re-entry. No such re-entry shall be considered or construed to be a forcible
entry.
13.04 No course of dealing between Landlord and Tenant or any delay on
the part of Landlord in exercising any rights it may have under this Lease
shall operate as a waiver of any of the rights of Landlord hereunder, nor
shall any waiver of a prior default operate as a waiver of any subsequent
default or defaults. No express waiver shall affect any condition, covenant,
rule or regulation other than the one specified in such waiver and that one
only for the time and in the manner specifically stated.
13.05 The exercise by Landlord of any one or more of the remedies
provided in this Lease shall not prevent the subsequent exercise by Landlord
of any one or more of the other remedies herein provided or provided by law.
All remedies provided for in this Lease are cumulative and may, at the
election of Landlord, be exercised alternatively, successively or in any other
manner and are in addition to any other rights provided by law.
13.06 Landlord, to the fullest extent permitted by law but subject to
the security interest of any lender providing financing to the Tenant, shall
have a lien on and the Tenant hereby grants Landlord a security interest in
all of the equipment, wares, chattels, fixtures, furniture and other property
of Tenant which may be in or upon the Premises, the Building or the Property.
Tenant hereby specifically, to the fullest extent permitted by law, waives any
and all exemptions allowed by law, and such lien and security interest may be
enforced upon the nonpayment of any installment of rent, Additional Rent or
other moneys due and payable hereunder by the taking and selling of such
property subject to at least fifteen (15) days advance written notice, or such
lien may be enforced in any lawful manner at the option of Landlord.
13.07 Tenant shall pay upon demand all Landlord's costs, charges and
expenses, including the fees of counsel, agents and others retained by
Landlord, incurred in enforcing its obligations hereunder or incurred by
Landlord in any litigation, negotiation or transaction in which Tenant causes
Landlord, without Landlord's fault to become involved or concerned.
14.0 NO ESTATE IN LAND
This Lease shall create only the relationship of landlord and tenant
between Landlord and Tenant.
15.0 INVALIDITY OF PARTICULAR PROVISIONS
If any clause or provision of this Lease is or becomes illegal, invalid,
or unenforceable because of present or future laws or any rule or regulation
of any governmental body or entity, effective during its term, the intention
of the parties hereto is that the remaining parts of this Lease shall not be
affected thereby unless such invalidity is, in the sole determination of
Landlord, essential to the rights of both parties, in which event Landlord has
the right to terminate this Lease on written notice to Tenant.
16.0 SUBSTITUTE PREMISES
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17.0 TENANT'S PERSONAL PROPERTY TAXES
Tenant shall pay prior to the delinquency all taxes assessed against or
levied upon its occupancy of the Premises, or upon the fixtures, furnishings,
equipment and all other personal property of Tenant located in the Premises.
Tenant shall cause said fixtures, furnishings, equipment and other personal
property to be assessed and billed separately from the property of Landlord.
In the event any or all of Tenant's fixtures, furnishings, equipment and other
personal property, shall be assessed and taxed as the property of Landlord,
Tenant shall pay to Landlord its share of such taxes within ten (10) days
after delivery to Tenant by Landlord of a statement in writing setting forth
the amount of such taxes applicable to Tenant's fixtures, furnishings,
equipment or personal property.
18.0 NOTICES AND CONSENTS
All notices, demands, requests, consents or approvals which may or are
required to be given by either party to the other shall be in writing and
shall be deemed given when sent by United States Certified or Registered Mail,
Return Receipt Requested, postage prepaid, (a) if for the Tenant, addressed to
the Tenant at the Building (Attention: Dennis McKinnie, Vice President and
General Counsel), or at such other place as the Tenant may from time to time
designate by written notice to the Landlord, or (b) if the Landlord, addressed
to the office of the Landlord at 3500 Regency Parkway, Suite C, Cary, North
Carolina 27511, with a copy to Landlord's attorney addressed to Womble Carlyle
Sandridge & Rice, PLLC, Attention: Mr. Leslie Browder, P. O. Drawer 84,
Winston-Salem, North Carolina 27102, or at such other place as the Landlord
may from time to time designate by written notice to the Tenant.
Alternatively, notices may be given by telecopy provided notice is also sent
by the other authorized method of notice, such notice being effective when
sent by telecopy. The Tenant's telecopy number is (919) 380-5090; the
Landlord's telecopy number is _________. Either party may from time to time
change by written notice to the other party the telecopy number to which
notices should be sent. All consents and approvals provided for herein must
be in writing to be valid. If the term "Tenant" as used in this Lease refers
to more than one person, any notice, consent, approval, requests, bill, demand
or statement, given as aforesaid to any one of such persons shall be deemed to
have been duly given to Tenant.
Except as specifically provided in this Lease, Tenant hereby expressly
waives the service of intention to terminate this Lease or to re-enter the
Premises and waives the service of any demand for payment of rent or for
possession and waives the services of any other notice or demand prescribed by
any statute or other law.
19.0 CONDEMNATION
19.01 If the whole or any portion of the Building shall be taken by
condemnation, which renders any material portion of the Premises unusable, or
(ii) any portion of the Premises shall be taken, then at the option of the
Tenant or the Landlord this Lease may be terminated on the date possession of
the Building is required to be surrendered to the condemnor, and rent payable
hereunder shall be prorated through such date.
19.02 If any portion of the Premises is taken or any other portion of
the Building is taken which renders any material portion of the Premises
unusable, but this Lease is not terminated as set forth in Section 19.01, this
Lease shall, at the option of the Landlord, terminate only as to the part of
the Premises so taken, but shall continue in full force as to the part of the
Premises not taken. In the event of such partial taking and the continuance
of this Lease for the part not so taken, then Landlord shall, at its cost and
expense, forthwith repair and restore the Building to as nearly as possible
its condition immediately prior to such taking. Notwithstanding the above,
Landlord's obligation to restore shall be limited to the availability of any
condemnation awards. From the date of the surrender of possession to the
condemnor to the date of the completion of the repairs and restoration of the
portion of the Building not so taken, there shall be no abatement of the rent,
except for the portion of the Premises, if any, that shall not be usable for
Tenant's business.
19.03 After the repairs and restoration have been completed following
the partial taking, the rent for the unexpired term shall not be reduced
unless the particular taking includes a part of the Premises and, in such
event, the rent for the unexpired term shall be reduced by that portion which
the area so taken shall bear to the entire area of the Premises immediately
prior to such taking.
19.04 Tenant agrees that if the Premises or any part thereof shall be
taken by condemnation, Tenant shall have no claim against the Landlord and
shall not have any claim or right to any portion of the amount that may be
awarded as damages or paid as a result of such condemnation.
20.0 ASSIGNMENT-SUBLEASE
Tenant shall not, without the prior written consent of Landlord (which
shall not be unreasonably withheld) assign, hypothecate, encumber or otherwise
transfer this Lease or any interest hereunder, or sublet the Premises or any
part thereof, or permit the use of the Premises by any party other than
Tenant. Tenant shall be allowed to assign, or sublet to an "Affiliate"
without consent of Landlord, providing the Tenant remains jointly and
severally responsible for all the terms and conditions of this Lease. The
term "Affiliate" shall mean any corporation or entity which controls, is
controlled by, or is under common control with Tenant.
If Tenant desires to sublease the Premises or any part thereof, Tenant
shall submit to Landlord a written request for the consent of Landlord to such
subletting, which request shall be accompanied by the name and address of the
proposed subtenant, a description identifying the space to be sublet, a copy
of the fully executed sublease conditioned only upon approval of Landlord, the
nature and character of the business of the proposed subtenant, and its
proposed use of the Premises, current financial information on the proposed
subtenant and such other information as Landlord may request.
Consent to any assignment or sublease shall not be unreasonably withheld.
The Tenant acknowledges that Landlord is entitled to withhold its consent in
the event the nature and character of the business of the proposed tenant, its
proposed use of the Premises or the financial condition of the proposed tenant
is objectionable or unsatisfactory to Landlord. Any Landlord consent to an
assignment or sublease shall not nullify this provision, and all later
assignments or subleases shall be made likewise only after the prior written
consent of Landlord is obtained in each instance. Unless otherwise expressly
agreed to by Landlord in writing, no sublease or assignment by Tenant shall
relieve Tenant of any liability hereunder. Tenant acknowledges and agrees
that Landlord may condition its consent to any proposed assignment or sublease
upon the agreement of Tenant to pay to Landlord the excess, if any, of the
rentals and other charges to be paid by Tenant's assignee or sublessee under
the terms and provisions of such proposed assignment or sublease over the
Annual Rent and Additional Rent and other charges to be paid by Tenant to
Landlord hereunder. The occupancy of the Premises by any successor firm of
the Tenant or by any firm into which or with which the Tenant may become
merged or consolidated shall be deemed an assignment of this Lease requiring
the prior written consent of Landlord. Notwithstanding the giving by Landlord
of its consent to any assignment or sublease with respect to the Premises, no
such assignee or sublessee may exercise any expansion option, right of first
refusal option, or renewal option under this Lease except in accordance with a
separate written agreement entered into directly between such assignee of
sublessee and Landlord.
In no event shall Tenant (1) advertise or publicize in any way the
availability of all or part of the Premises without the prior written consent
of the Landlord which shall not be unreasonably withheld, or (2) advertise or
publicize the Premises for subletting whether through a broker, agent,
representative or otherwise at a rental rate less than that for which space in
the Building is being offered for rent by Landlord. Tenant agrees to pay to
Landlord, on demand, all reasonable costs (including attorneys' fees) incurred
by Landlord in connection with any request by Tenant for Landlord's consent to
any assignment or subletting.
Landlord may assign this Lease to any construction or permanent mortgagee
("Mortgagee") of the Property as additional security for the payment of any
loan thereby secured. If the Tenant shall have received notice from Landlord
or Mortgagee of any such assignment, Tenant shall thereafter give written
notice of any breach or failure of performance by Landlord under this Lease to
Mortgagee and allow Mortgagee a reasonable period of time to remedy the same.
Any breach or failure of performance by Landlord hereunder shall not
constitute a default as between Landlord and Tenant until such notice shall
have been given.
Landlord, or its successors and assigns, may assign this Lease to a
subsequent purchaser of the Property without the consent or approval of the
Tenant, assignee or sublessee.
21.0 HOLDING OVER
In the event Tenant remains in possession of the Premises subsequent to
the expiration or other termination of this Lease and without regard to
Landlord's acquiescence or consent, Tenant shall pay as liquidated damages a
monthly rent double the monthly rent payable immediately prior to such
expiration or termination of the Lease for the duration of such period. No
such payment (or the acceptance thereof) shall in any way constitute a waiver
of the right of the Landlord to dispossess the Tenant and recover possession
or exercise any other remedy herein provided. If such holding over is with
the Landlord's consent, the Tenant shall be a tenant on a month-to-month basis
which tenancy shall be terminated absolutely and without remedy upon thirty
(30) days written notice of such intent by either party. There shall be no
renewal of this Lease by operation of law.
22.0 RULES AND REGULATIONS
The Rules and Regulations in regard to the Building attached hereto as
Exhibit F and all rules and regulations which Landlord may hereafter from time
to time adopt and promulgate for the government and management of said
Building (provided all such rules and regulations are applicable to all
tenants) are hereby made a part of this Lease and shall during the said Term
be in all things observed and performed by the Tenant and by the Tenant's
clerks, employees, servants and agents. Tenant does hereby accept and agree
to abide by and uphold the Rules and Regulations as shown in Exhibit F.
Insofar as the attached standard Rules and Regulations conflict with any of
the terms and provisions of this Lease Agreement, the terms and provisions of
the Lease shall control.
23.0 TIME IS OF THE ESSENCE
Time is of the essence of this Agreement.
24.0 ESTOPPEL CERTIFICATES
Within ten (10) days after request therefor by Landlord or any
mortgagee of the Property or any prospective purchaser of the Premises, Tenant
agrees to execute and deliver, in recordable form, at any time or from time to
time, an estoppel certificate addressed to any mortgagee or proposed mortgagee
or purchaser, of the Building, or addressed to the Landlord, certifying (if
such be the case) that this Lease is unmodified and in full force and effect
(and if there have been any modifications that the same is in full force and
effect as modified and stating said modifications); stating that there are no
defenses, defaults, or offsets against the enforcement of this Lease or
stating those claimed by Tenant; stating that rent has commenced to accrue,
and that Tenant has accepted and is occupying the Premises; stating the date
to which rentals and other charges are paid; and as to mortgagees or
prospective mortgagees, agreeing that in the event the mortgagee becomes owner
of the Premises or exercises an assignment of rents granted mortgagee by the
Landlord, the Tenant will accept and attorn to the mortgagee or to a party
designated by said mortgagee as its direct tenant, and that the mortgagee will
not be bound by or responsible for any rents paid in advance to Landlord or
offsets against Tenant or any prior defaults of the Tenant and that thereafter
all notices required or permitted under the Lease be given to Landlord shall
thereafter be given to said mortgagee. Such certificates shall also include
such other information as may be reasonably required by any mortgagee.
25.0 EVENTS BEYOND CONTROL OF LANDLORD AND TENANT
Landlord and/or Tenant shall be excused for the period of any delay and
shall not be deemed in default with respect to the performance of any of the
terms, covenants, and conditions of this Lease when prevented from so doing by
a cause or causes beyond the Landlord and/or Tenant's control, which shall
include, without limitation, all labor disputes, governmental regulations or
controls, fire or other casualty, inability to obtain any material or
services, acts of God, or any other cause, except the obligation of the Tenant
under this Lease to make prompt payment to Landlord of the rental payments and
all other charges due hereunder.
26.0 SIGNS
Tenant may not erect, install or display any sign or advertising material
upon the Premises and Building, the walls thereof, or in any window therein,
without prior written consent of Landlord. Landlord shall furnish, install
and maintain a building directory at a convenient location in the lobby
listing the name of Tenant and the room number of Tenant's entrance office and
shall furnish and install any approved sign for Tenant, the cost of which
shall be charged to the Tenant.
The Tenant shall not use the name "REGENCY PARK" or its logo unless the
Landlord should grant its prior written consent thereto.
27.0 BROKERAGE
Tenant represents and warrants that it has dealt with no broker, agent or
other person in connection with this transaction other than Anthony & Company
and/or Grubb & Ellis and that no other broker, agent or other person brought
about this transaction. Only the Tenant is liable for any commission payable
to Anthony & Company or Grubb and Ellis. Tenant agrees to indemnify and hold
Landlord harmless from and against any claims by any other broker, agent or
other person claiming a commission or other form of compensation by virtue of
having dealt with Tenant (specifically including, but not limited to, Anthony
& Company and Grubb & Ellis) with regard to this leasing transaction. The
provisions of this section shall survive the termination of this Lease.
28.0 RECORDATION OF LEASE
The Tenant will not record this Lease. Upon the request of either party
hereto, the other party will join in the execution of a Memorandum of Lease
for the purposes of recordation in the Office of the Register of Deeds, Wake
County, North Carolina. The Memorandum will be approved as to form by the
Landlord and will describe only the parties, the Premises, the term and any
options to renew the term.
29.0 GOVERNMENTAL COMPLIANCE
A. Tenant covenants and agrees to make use of the Premises in accordance
with all municipal, county, state and federal laws, rules and regulations,
including, but not limited to environmental laws, rules and regulations, and
all permitting, licensing and other governmental approvals now or hereafter
implemented. Tenant further covenants and agrees neither to cause nor permit
any hazardous or toxic waste or materials (as defined by state and federal
laws, rules and regulations) to be stored at or upon the Premises, the
Building and Property nor to cause nor permit any such material or waste to be
disposed of at the Premises or under or within the Building and Property.
Tenant will hold Landlord harmless for all costs, expenses, fines, charges
(including attorneys' and engineers' fees and charges) incurred by Landlord as
a direct or indirect expense caused by the breach of this Article by Tenant,
its employees, agents and invitees, and further covenants and agrees to, at
all times, include specific coverage to such effect as a part of Tenant's
public liability insurance coverage.
B. The Landlord represents and warrants to the Tenant that as of the
Commencement Date (and during the term hereof as to the Building and
Property), the Building, Property, and Premises will comply with applicable
municipal, county, state and federal laws, rules and regulations, including
but not limited to environmental laws, rules and regulations (collectively
"Laws"). Landlord further represents that the Building and Premises contain
no asbestos or asbestos containing materials. Landlord agrees for itself and
its successors and assigns to comply with applicable laws affecting the
Building and Property at its sole cost and expense. Landlord represents and
warrants that a Certificate of Occupancy has been issued with respect to the
Premises. Landlord shall and hereby does indemnify Tenant for all loss, cost,
and expenses incurred by Tenant as a result of Landlord's breach of the
foregoing representations.
30.0 HAZARDOUS MATERIALS
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31.0 COMMON AREAS
Tenant shall have the right, together with other tenants and occupants
and invitees, to the non-exclusive use of the sidewalks, driveways, stairways,
halls, lobbies, elevators and passages in the Building and on the Property for
reasonable ingress to and egress from the Premises and for no other purpose
subject to the other provisions of this Lease, including, without limitation,
the Rules and Regulations set for on Exhibit F.
32.0 POSSESSION
On the expiration or other termination of the term of this Lease, Tenant
shall quit and surrender to Landlord the Premises, broom clean, in good order
and condition, ordinary wear and tear excepted, and Tenant shall remove all of
its property except as provided in Article 5. Tenant's obligation to observe
and perform this covenant shall survive the expiration and other termination
of the term of this Lease.
33.0 VACANT PREMISES
33.01 TENANT'S OBLIGATIONS: Tenant agrees to pay its proportionate
share of all brokerage commissions due any broker or agent in connection with
the procurement of any new tenant leases for the Vacant Premises (each such
new lease of the Vacant Premises being hereinabove defined as a "Replacement
Lease"). In addition, Tenant agrees to pay its proportionate share of all
costs and expenses related to tenant upfit of the Vacant Premises following
the procurement of each Replacement Lease. An amount of $2.00 per rentable
square foot on any tenant upfit performed by the Landlord directly shall be
deducted from the sum otherwise payable by the Tenant for such tenant upfit
before the Landlord determines the Tenant's proportionate share of such tenant
upfit costs. The Tenant's proportionate share for such brokerage commissions
and tenant upfit shall be determined as follows: the number of months from the
commencement date of the Replacement Lease to March 31, 1999, shall be divided
by the number of months in the term of the Replacement Lease. The Landlord
shall be responsible for all tenant upfit and brokerage commissions with
respect to the Landlord's leasing of the Vacant Premises other than the
Tenant's proportionate share of such expenses as described above.
Tenant agrees that it will not enter into any brokerage agreements or
contracts with any broker, agent, or other person in connection with any lease
or sublease of the Vacant Premises. Tenant also agrees to refer any
prospective tenant of the Vacant Premises to the Landlord with respect to any
leasing transactions involving the Vacant Premises. All leasing for the
Vacant Premises and the Premises shall be the responsibility of the Landlord,
and the Tenant shall not have any further right to sublease the Vacant
Premises.
The Tenant's obligations to pay for upfit and leasing commissions apply
to any such expense incurred by the Landlord with respect to Replacement
Leases from the date hereof through and including March 31, 1999. The Tenant
shall have no obligation for tenant upfit or leasing commissions incurred
following March 31, 1999, even if a Replacement Lease was executed before such
date.
33.02 TENANT CONDITIONAL CREDIT: Commencing on March 31, 2000, and
continuing on each March 31 in the years 2001, 2002, 2003, and 2004, provided
the Conditions for Reimbursement (hereafter described) have been satisfied,
the Landlord shall pay to the Tenant, as a reimbursement for payments of
tenant upfit and leasing commissions, a sum equal to one-fifth of all sums in
fact paid by the Tenant to the Landlord pursuant to Section 33.01 (with the
$2.00 credit described in Section 33.01 already having been deducted from such
sum). As a condition precedent to such obligation of the Landlord to the
Tenant, each of the following criteria (the "Conditions for Reimbursement")
must have been satisfied:
A. The Tenant has paid monthly installments of Annual Rental throughout
the term of this Lease when and as such sums have been due (specifically not
including the fifteen day grace period existing before such failure becomes an
Event of Default hereunder).
B. The Tenant is not in default of any of its other obligations under
this Lease (irrespective of any notice or grace periods provided for herein).
C. The Tenant remains in occupancy of the Occupied Premises.
The foregoing reimbursement is owed only to Seer Technologies, Inc. and
is not owed to any assignee, subtenant, or Affiliate of Seer Technologies,
Inc., even if the Landlord has consented to such sublease or assignment. If
Seer Technologies, Inc. remains in possession of only a portion of the
Occupied Premises and has subleased or assigned the balance of the Occupied
Premises with the Landlord's consent, any sum to be paid hereunder shall be
prorated on the basis of the percentage of the Occupied Premises occupied by
Seer Technologies, Inc., at such time. The remaining portion of the credit
shall be deemed to have been forfeited.
34.0 RESTAURANT PROVISIONS
The Premises outlined in red on Exhibit A-1 attached hereto may be used
and occupied only for a family style restaurant provided the Tenant obtains
all necessary permits and licenses from all local, state, or other regulatory
bodies, and shall not be used or occupied for any other purpose without the
written consent of Landlord. Tenant shall not display any signs on the
Property without prior written consent of Landlord. During the Term of the
lease, the Tenant shall be required to operate these Premises described in
Exhibit A-1 as a restaurant facility.
Notwithstanding the foregoing, if during the Term of the Lease the Tenant
shall want to cease to operate the Premises outlined in Exhibit A-1 as a
restaurant; the Tenant shall request permission from the Landlord, which
permission shall not be unreasonably withheld. The Landlord shall have ninety
(90) days from granting the permission to find another operator for the eating
facility. If the Landlord is successful in so doing, the Tenant, upon
occupancy of the Premises by the new operator of the restaurant, shall be
relieved of its obligations for that area shown on Exhibit A-1 attached
hereto. If within this ninety (90) day period, the Landlord does not find a
suitable restaurant operator (one suitable to the Landlord, in its sole
discretion), then the Tenant may convert the seating area only into office use
at the sole cost of the Tenant. At no time may the existing kitchen area be
utilized for any other purpose without the express written consent of the
Landlord, in its sole discretion, and all furniture, fixtures and equipment
must be returned to the Landlord in its original condition, reasonable wear
and tear excepted. Should the Tenant convert this seating area to office
space, the Tenant's Annual Rental shall increase by the following schedule of
rental:
Date Annual Rental Monthly Rental
April 1, 1998 - March 31, 1999 $31,086.00 $2,590.50
April 1, 1999 - March 31, 2001 $32,970.00 $2,747.50
April 1, 2001 - March 31, 2004 $34,854.00 $2,904.50
Tenant represents to the Landlord that it has examined and inspected the
Premises, including the restaurant Equipment, finds it to be as represented by
the Landlord and satisfactory for Tenant's intended use, and evidences
Tenant's acceptance "as is." Landlord makes no representation or warranty as
to the condition of the Premises, including said Equipment. Tenant shall
maintain (and so deliver at the end of the Lease) each and every part of the
Premises in good repair and condition, and shall make, at Tenant's sole cost
and expense, such replacements, restorations, renewals or repairs, in quality
equivalent or better than the original work, as may be required to so maintain
the same, ordinary wear and tear only expected.
35.0 MISCELLANEOUS
A. The words "Landlord" and "Tenant" wherever used in the Lease shall be
construed to mean plural where necessary, and the necessary grammatical
changes required to make the provisions hereof apply either to corporations or
individuals, either men or women, shall in all cases be assumed as though in
each case fully expressed.
B. Each provision hereof shall extend to and shall bind and inure to the
benefit of Landlord and Tenant and their respective heirs, legal
representatives, assessors and assigns.
C. Submission of this instrument for examination does not constitute a
reservation of or option for the Premises. The instrument does not become
effective as a Lease or otherwise until executed and delivered by both
Landlord and Tenant.
D. The headings of sections are for convenience only and do not limit or
construe the contents of the sections.
E. Should any mortgagee require a modification or modifications of this
Lease, which modification or modifications will not bring about any increased
cost or expense to Tenant or in any way substantially change the rights and
obligations of Tenant hereunder, then in such event, Tenant agrees to execute
such an amendment.
F. The laws of the State of North Carolina shall govern the validity,
performance and enforcement of this Lease.
G. Other than a letter agreement signed by both the Landlord and Tenant,
dated the date hereof, this Lease contains the entire agreement of the parties
in regard to the Premises. There are no oral agreements existing between
them, and there shall be no oral changes. Neither Landlord nor any agent of
Landlord has made any representations, warranties or promises with respect to
the Premises, the Building or the Property, or the use of any amenities or
facilities except as expressly set forth herein. Any agreement hereafter made
shall be ineffective to change, waive, modify, discharge or terminate the
Lease in whole or in part unless such agreement is in writing and signed by
the party against whom enforcement of the change, waiver, modification,
discharge or termination is sought.
H. This Lease amends and restates the Old Lease in its entirety as of
the Commencement Date, and the Old Lease as of such date is superseded and
replaced by the terms hereof.
I. The shareholders, directors and officers of Landlord (collectively
the "Parties") shall not be liable for the performance of Landlord's
obligations under this Lease. Tenant shall look solely to Landlord to enforce
Landlord's obligations hereunder and shall not seek any damages against the
rest of the parties. A liability of Landlord for Landlord's obligations of
this Lease shall not exceed and shall be limited to a value of Landlord's
interest in the Property, and Tenant shall not look to the property or assets
of any of the Parties in seeking either to enforce Landlord's obligations
under the Lease or to satisfy a judgment for Landlord's failure to perform as
such obligation.
Exhibits A, B, A-1, E, and F consisting of thirteen (13) pages are
attached hereto and become part of this Lease.
IN WITNESS WHEREOF, Landlord and Tenant have respectively signed and sealed
this Lease in duplicate as the day and year first above written.
REGENCY PARK CORPORATION, INCORPORATED,
doing business as REGENCY PARK CORPORATION
Landlord
(CORPORATE SEAL) By: /s/ Eric Soloman
Vice President/Treasurer
ATTEST:
/s/ Patricia Messere
Assistant Secretary
SEER TECHNOLOGIES, INC.
Tenant
(CORPORATE SEAL) By: /s/ Steven Dmiszewicki
Title: Senior Vice President and Chief
Financial Officer
ATTEST:
/s/ Dennis M. McKinnie
Secretary
Exhibit A - Floor Plans
Exhibit A-1 - Floor Plan for Occupied Premises
Exhibit B - Property Description
Exhibit C - [Intentionally Deleted]
Exhibit D - [Intentionally Deleted]
Exhibit E - Operating Expenses
Exhibit F - Rules and Regulations
EXHIBIT A
[FLOOR PLANS FOR 1ST - 5TH FLOORS OF 8000 REGENCY PARKWAY]
EXHIBIT A-1
[FLOOR PLANS FOR OCCUPIED SPACE ON 1ST - 5TH FLOORS OF 8000 REGENCY PARKWAY]
EXHIBIT B
[MAP OF PROPERTY AROUND 8000 REGENCY PARKWAY]
EXHIBIT E
OPERATING EXPENSES
"Operating Expenses" shall mean those items of cost and expense paid or
incurred by, or on behalf of, Landlord for ownership security, maintenance,
repair, management or operation of the Building, adjacent sidewalks, the land
upon which the Building is located, and the personal property of Landlord used
in the operation of the Building as determined in accordance with generally
accepted principles of sound management consistently applied, which are
properly chargeable to the operation of the Building, including but not
limited to:
1. Landscaping and grounds maintenance costs and expenses, including
those attributable to the care and upkeep of the common areas of Regency Park
required or Property owners;
2. costs and expenses of redecorating, painting, and carpeting the
common areas of the Building and Property; provided, however, that, except as
specified in item 6 hereof, the cost of structural changes to the Building
which should be capitalized in accordance with sound accounting principles
shall not be allocated or charged to the Premises without Tenant's approval;
3. costs of all repairs, alterations, additions, changes, replacements,
and other items required by any law or governmental regulation imposed after
the date of this Lease, regardless of whether such costs, when incurred, are
classified as capital expenditures;
4. costs of wages and salaries of all persons engaged in the operation,
maintenance, repair, and security of the Building and the Property, and so-
called fringe benefits, including social security taxes, unemployment
insurance taxes, costs for providing coverage for disability benefits , cost
of any pensions, hospitalization, welfare or retirement plans, or any other
similar or like expenses incurred under the provisions of any collective
bargaining agreement, costs of uniforms, and all other cost or expenses that
the Landlord pays to or on behalf of employees engaged in the operation,
maintenance, repair, and security of the Building and the Property;
5. legal and accounting expenses, including, but not limited to, such
expenses as relate to seeking or obtaining reductions in and/or refunds of
real estate taxes;
6. amortization, with interest, of capital expenditures for capital
improvements made by Landlord after completion of the Building where such
capital improvements are for the purpose of, or result in, reducing Operating
Expenses; provided, however, that payments by Landlord of interest and
principal on any mortgage or similar instrument secured by the Property or the
Building shall not be included in Operating Expenses;
7. Landlord's insurance costs and expense for all types of insurance
carried by Landlord with respect to the Building and Property;
8. such other expenses paid by landlord, from time to time, in
connection with the operation and maintenance of the Building and the Property
as would be expected to be paid by a reasonable and prudent operator and
manager of a building and site comparable to the Building and the Property;
9. all costs of special services rendered to particular tenants to the
Building, which are paid by such tenants, shall not be included in Operating
Expenses;
10. the operating costs for the Regency Park Fitness Center. This
Fitness Center is for the benefit of all tenants of the Landlord and the
operating costs shall be proportionately shared by tenants of the Landlord.
EXHIBIT F
RULES AND REGULATIONS
1. The sidewalks, entry passages, corridors, halls, elevators, and
stairways shall not be obstructed by Tenants, or used by them for any purpose
other than those of ingress and egrees. The floors and skylights and windows
that reflect or admit light into any place in said Building shall not be
covered or obstructed by Tenants. The water closets and other water apparatus
shall not be used for any other purpose than those for which they were
constructed and no sweepings, rubbish, or other obstructing substances shall
be thrown therein. Any damage resulting to them or to associated systems,
from misuse, shall be borne by Tenants who, or whose clerks, agents, or
servants shall cause it.
2. No Tenant shall do or permit to be done in said Premises, or bring or
keep anything therein, which shall in any way increase the rate of fire
insurance on said Building, or on property kept therein, or obstruct or
interfere with the rights of other tenants or in any way injure or annoy them,
or conflict with the laws relating to fires, or with the regulations of the
Fire Department, or any part thereof, or conflict with any of the rules and
ordinances of the Board of Health. Tenants, their clerks and servants shall
maintain order in the Building, shall not make or permit any improper noise in
the Building or interfere in any way with other Tenants of those having
business with them. Nothing shall be thrown by Tenants, their clerks or
servants out of the windows or doors, or down the passages or skylights of the
Building. No rooms shall be occupied or used as sleeping or lodging
apartments at any time. No part of the Building shall be used or in any way
appropriated for gambling, immoral or other unlawful practices, and no
intoxicating liquor or liquors shall be sold in said Building.
3. Tenants shall not employ and persons other than the janitors of the
Landlord (who will be provided with pass keys into the offices) for the
purpose of cleaning or taking charge of said Premises. It is understood and
agreed that the Landlord shall not be responsible to any Tenant for any loss
of property from rental premises, however occurring, or for any damage done to
the furniture or other effects of any Tenant by the janitor or any of its
employees.
4. No animals, birds, bicycles or other vehicles, or other obstructions,
shall be allowed in the offices, halls, corridors, elevators or elsewhere in
the Building.
5. No painting shall be done, nor shall any alterations be made, to any
part of the Building by putting up or changing any partitions, doors or
windows, nor shall there be any nailing, boring or screwing into the woodwork
or plastering, nor shall any connection be made electric wires or gas or
electric fixtures, without the consent in writing on each occasion of the
Landlord or its agent. All glass, locks and trimmings in or upon the doors
and windows of the Building shall be kept whole and, when any part thereof
shall be broken, the same shall be immediately replaced or repaired and put
in order under the direction and to the satisfaction of Landlord, or its
agents, and shall be left whole and in good repair. Tenants shall not injure,
overload or deface the Building and Premises, woodwork or walls of the
Premises and Building, nor carry on upon the Premises or
in the Building any noisome, noxious, noisy, or offensive business.
6. Not more than two keys for each office will be furnished without
charge. No additional locks or latches shall be put upon any door without
consent of Landlord. Tenants, at termination of their lease of the Premises,
shall return to Landlord all keys to doors and entry to Building.
7. Landlord in all cases retains the power to prescribe the weight and
position of iron safes or other heavy articles. Tenants must make
arrangements with the Superintendent of the Building when the elevator
is required for the purpose of the carrying of any kind of freight.
8. Tenants shall not (without the Landlord's written consent) put up
or operate any steam engine, boiler, machinery or stove upon the Premises,
or carry on any mechanical business thereon, or do any cooking thereon, or
use or allow to be used in the demised Premises oil, burning fluids,
camphene, gasoline or kerosene for heating, warming, or lighting.
No article deemed extrahazardous on account of fire and no explosives shall
be brought into said Premises. No offensive gases or liquids will be
permitted.
9. If Tenants desire blinds or window covering of any kind over the
windows, other than what may be provided by Landlord, they must be of such
shape, color, and materials as may be prescribed by Landlord, and shall be
erected with Landlord's consent and at the expense of said Tenants. No
awnings shall be placed on said Building.
10. If Tenants require for a business machine, or a bell or buzz
system, such wiring shall be done by the Electrician of the Building only,
and no outside wiring men shall be allowed to do work of this kind unless by
the written permission of Landlord or its representatives. If telegraphic
or telephonic service is desired, the wiring for same shall be done as
directed by the Electrician of the Building or by some other employee of
Landlord who may be instructed by the Superintendent of the Building
to supervise same, and no boring or cutting for wiring shall be done
unless approved by Landlord or its representatives as stated.
The electric current shall not be used for
power or heating unless written permission to do so shall first have been
obtained from Landlord, or its representatives in writing and at an agreed
cost to Tenants.
11. Landlord will post on the directory of its Building one name to
be designated by the Tenant at no charge. All additional names which Tenant
shall desire put upon said directory must be first consented to by Landlord,
and if so approved, a charge will be made for each additional listing as
prescribed by Landlord to be paid to Landlord by Tenant.
12. The elevators in the Premises are not to be used by Tenants
or their agents for moving furniture into the Premises, incident to the
initial occupancy, or moving furniture out, incident to vacating, except
during the hours from 5:30 p.m. to 7:00 a.m. or on Saturdays after the
hour of 1:30 p.m. unless approved by Manager of the Building.
13. Landlord reserves all vending rights. Request for such service
will be made to Landlord.
14. Landlord shall have the right to make such other and further
reasonable rules and regulations as in its judgment may from time to time
be needful for the safety, care, and cleanliness of the Premises, and
for the preservation of good order therein and the same shall be kept
and observed by the Tenants, their agents, clerks, servants or employees.
15. All Public Areas of the Building are "No Smoking" areas. Public
Areas are defined as the corridors, ground floor lobby, elevator lobbies,
elevators, mens and ladies restrooms, stairwells, and entry vestibule.
Anyone wishing to smoke must do so either on their own Premises or outside
the Building. We will provide an ash urn at the delivery entrance of the
Building and would ask that special care be taken by those who wish to
smoke in keeping these areas clean.
16. The Tenant agrees to the foregoing Rules and Regulations which
are hereby made a part of the Lease, and each of them, and agrees that
for such persistent infraction of them, or any of them, as may in the
opinion of the Landlord be calculated to annoy or disturb the quiet
enjoyment of any other Tenant, or interfere with the proper operation of
the Building, the Landlord may declare a forfeiture and cancellation of
the accompanying Lease and may demand possession of the demised Premises
upon one week's notice.
17. The Landlord reserves the right to close the Building after
regular working hours and on legal holidays subject, however, to Tenant's
right of admittance, under such reasonable regulations as Landlord may
prescribe from time to time, which may include by way of example, but
not to limitation, that persons entering or leaving the Building identify
themselves to a watchman by registration or otherwise and that such
persons establish the right to enter or leave the Building.
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "First
Amendment"), dated as of March 27, 1997, is entered into between SEER
TECHNOLOGIES, INC., a Delaware corporation (the "Borrower"), and
NATIONSBANK, N.A. (the "Bank").
BACKGROUND
A. The Borrower and the Bank heretofore entered into that
certain Credit Agreement, dated as of July 15, 1996 (the "Credit Agreement";
the terms defined in the Credit Agreement and not otherwise defined herein
shall be used herein as defined in the Credit Agreement).
B. The Borrower and the Bank desire to amend the Credit
Agreement.
NOW, THEREFORE, in consideration of the covenants, conditions
and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are all hereby acknowledged,
the Borrower and the Bank covenant and agree as follows:
1. AMENDMENTS.
(a) The definition of "Existing Credit Agreement" set forth
in Article 1 of the Credit Agreement is hereby deleted and the following is
substituted in lieu thereof:
"'Existing Loan 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 by that certain First Consolidated Amendment Agreement, dated as of
February 22, 1996, between the Borrower and the Bank and that certain Second
Consolidated Amendment Agreement, dated as of July 19, 1996, and all
references herein to the Existing Loan Agreement shall continue not
withstanding the termination of the Existing Loan Agreement."
(b) The defined term "Incorporated Covenants" is hereby
added to Article 1 of the Credit Agreement to read as follows:
"'Incorporated Covenants' means, collectively,
(a) Paragraphs 3(a), 3(b), 3(c), 3(e), 3(f), 3(g), 3(h) and 3(k) of
the Existing Loan Agreement and
(b) Paragraphs 4(a), 4(c), 4(d), 4(e), and
4(j)(iii) of the Existing Loan Agreement."
(c) The definition of "Maturity Date" set forth in Article
1 of the Credit Agreement is hereby deleted and the following is substituted
in lieu thereof:
"'Maturity Date' means (a) June 30, 1998 or (b) the earlier
date of termination in whole of the Commitment pursuant to Section 2.6 of 6.2
hereof."
(d) Section 5.1 of the Credit Agreement is hereby deleted
and the following is substituted in lieu thereof:
"Section 5.1 Existing Loan Agreement Covenants. Until the
Release Date, the Borrower will comply with all of the Incorporated Covenants.
For purposes hereof, all of the Incorporated Covenants 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 the Incorporated Covenants 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 Incorporated Covenants until the Release
Date."
(e) Section 6.1(d) of the Credit Agreement is hereby
deleted and the following is substituted in lieu thereof:
"(d) INTENTIONALLY OMITTED"
2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By
its execution and delivery hereof, the Borrower represents and warrants that,
as of the date hereof and after giving effect to the amendments contemplated
by the foregoing Section 1:
(a) the representations and warranties contained in the
Credit Agreement are true and correct on and as of the date hereof as made on
and as of such date;
(b) no event has occurred and is continuing which
constitutes a Default or an Event of Default;
(c) the Borrower has full power and authority to execute
and deliver this First Amendment, and this First Amendment and the Credit
Agreement, as amended hereby, constitute the legal, valid and binding
obligations of the Borrower, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable debtor relief
laws and by general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) and except as rights to indemnity
may be limited by federal or state securities laws; and
(d) no authorization, approval, consent, or other action
by, notice to, or filing with, any governmental authority or other Person
(including the Board of Directors of the Borrower or any partner of the
Guarantor) is required for the execution, delivery or performance by the
Borrower of this First Amendment or the acknowledgement by the Guarantor of
this First Amendment.
3. CONDITIONS OF EFFECTIVENESS. This First Amendment shall be
effective as of the date first above written, subject to the following:
(a) the Bank shall have received counterparts of this First
Amendment executed by the Borrower and acknowledged by the Guarantor;
(b) the Bank shall have received an amendment fee from the
Borrower in the amount of $25,000, paid in immediately available funds; and
(c) the Bank shall have received, in form and substance
satisfactory to the Bank and its counsel, such other documents, certificates
and instruments as the Bank shall require.
4. GUARANTOR'S ACKNOWLEDGEMENT. By signing below, the Guarantor
(a) acknowledges this First Amendment,
(b) agrees that its obligations in respect of its Guaranty
Agreement (i) are not released, modified, impaired or affected in any manner
by this First Amendment or any of the provisions contemplated herein
and (ii) cover the Commitment as extended by this First Amendment,
(c) ratifies and confirms its obligations under its Guaranty
Agreement,
(d) acknowledges and agrees that it has no claims or offsets
against, or defenses or counterclaims to its obligations under, its Guaranty
Agreement, and
(e) represents and warrants that no consent or approval of
any partner of the Guarantor or any other Person is required for the
acknowledgement by the Guarantor of this First Amendment.
5. REFERENCE TO THE CREDIT AGREEMENT.
(a) Upon the effectiveness of this First Amendment, each
reference in the Credit Agreement to "this Agreement", "hereunder", or words
of like import shall mean and be a reference to the Credit Agreement, as
affected and amended hereby.
(b) The Credit Agreement, as amended by the amendments
referred to above, shall remain in full force and effect and is hereby
ratified and confirmed.
6. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on
demand all costs and expenses of the Bank in connection with the preparation,
reproduction, execution and delivery of this First Amendment and the other
instruments and documents to be delivered hereunder (including the reasonable
fees and out-of-pocket expenses of counsel for the Bank with respect thereto
and with respect to advising the Bank as to its rights and responsibilities
under the Credit Agreement, as hereby amended).
7. EXECUTION IN COUNTERPARTS. This First Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each which when so executed and delivered shall be
deemed to be an original and all of which when taken together shall constitute
but one and the same instrument.
8. GOVERNING LAW: BINDING EFFECT. This First Amendment shall be
governed by and construed in accordance with the laws of the State of North
Carolina and shall be binding upon the Borrower and each Bank and their
respective successors and assigns.
9. HEADINGS. Section headings in this First Amendment are
included herein for convenience of reference only and shall not constitute a
part of this First Amendment for any other purpose.
10. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS
FIRST AMENDMENT, AND THE OTHER LOAN PAPERS 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 ORAL UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
11. BANK ACKNOWLEDGEMENT. The Bank acknowledges and consents to
the Borrower's execution, delivery and performance of its obligations under
that Loan and Security Agreement, Security Agreement in Copyrighted Works and
Patent and Trademark Security Agreement, each dated March 28, 1997, with
Greyrock Business Credit, a division of NationsCredit Commercial Corporation,
and waives any Default or Event of Default under the Credit Agreement or other
Loan Documents that might otherwise be occasioned thereby.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as the date first above written.
SEER TECHNOLOGIES, INC.
By: /s/ Steven Dmiszewicki
Name: Steven Dmiszewicki
Title: Senior VP and CFO
NATIONSBANK, N.A.
By: /s/Yousuf Omar
Name: Yousuf Omar
Title: Senior VP
ACKNOWLEDGED AND AGREED:
WELSH, CARSON, ANDERSON & STOWE VI, L.P.,
a Delaware limited partnership
By: WCAS VI PARTNERS, a Delaware
limited partnership, General Partner
By:/s/ Anthony de Nicola
General Partner
Name: Anthony de Nicola
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TO SUCH FINANCIAL STATEMENTS.
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<FISCAL-YEAR-END> SEP-30-1997
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<PERIOD-END> MAR-31-1997
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