EXHIBIT A to
XxXxxxxxxx Principal Share Purchase and Voting Agreement
Form of
GUARANTEE AND PROMISE TO PAY
This GUARANTEE AND PROMISE TO PAY, dated as of _______ __, 2001, made by
XXXXXX X. XXXXX (the "Guarantor"), in favor of XXXXXXX X. XXXXXXXXXX
("XxXxxxxxxx").
W I T N E S S E T H:
WHEREAS, pursuant to the Agreement and Plan of Merger dated as
of December 6, 2001, by and among Landmark Systems Corporation, a Virginia
corporation ("Landmark"), ASG Sub, Inc., a Virginia corporation ("ASG Sub") and
wholly owned subsidiary of Xxxxx Systems Group, Inc., a Delaware corporation
("ASG"), and ASG (the "Merger Agreement"), ASG Sub and Landmark have agreed to
merge (the "Merger");
WHEREAS, as a result of the Merger, the separate corporate
existence of ASG Sub and Landmark shall cease and all properties, rights,
privileges, powers and franchises of ASG Sub and Landmark will vest in the
surviving corporation (the "Surviving Corporation"), and all debts, liabilities
and duties of ASG Sub and Landmark will become the debts, liabilities and duties
of the Surviving Corporation;
WHEREAS, concurrently with the execution and delivery of the
Merger Agreement, XxXxxxxxxx entered into a Principal Share Purchase and Voting
Agreement (the "XxXxxxxxxx Principal Share Purchase and Voting Agreement") by
and among ASG, ASG Sub and XxXxxxxxxx pursuant to which XxXxxxxxxx agreed to
sell, exchange and deliver, immediately prior to the effective time of the
Merger, his shares of Landmark common stock, par value $0.01 per share
("XxXxxxxxxx Shares") in return for the Share Consideration (as such term is
defined in the XxXxxxxxxx Principal Share Purchase and Voting Agreement);
WHEREAS, concurrently with the execution and delivery of the
Merger Agreement, Xxxxxxxxx X. Xxxxx ("Xxxxx") entered into a Principal Share
Purchase and Voting Agreement ("Xxxxx Principal Share Purchase and Voting
Agreement" and together with the XxXxxxxxxx Principal Share Purchase and Voting
Agreement, the "Principal Share Purchase and Voting Agreements") by and among
ASG, ASG Sub and Xxxxx pursuant to which Xxxxx agreed to sell, exchange and
deliver, immediately prior to the effective time of the Merger, her shares of
Landmark common stock, par value $0.01 per share ("Xxxxx Shares") (and together
with the XxXxxxxxxx Shares, the "Principal Shares") in return for the Share
Consideration (as such term is defined in the Xxxxx Principal Share Purchase and
Voting Agreement);
WHEREAS, concurrently with the execution and delivery of this
Guarantee, the Closing of the Merger is taking place;
WHEREAS, XxXxxxxxxx is willing to accept the XxXxxxxxxx
Contingent Payments (as defined below), in satisfaction of the purchase of the
XxXxxxxxxx Shares only upon the terms and subject to the conditions hereinafter
set forth;
WHEREAS, the Guarantor owns directly or indirectly 100% of the
issued and outstanding capital stock of ASG;
WHEREAS, it is a condition precedent to the obligation of
XxXxxxxxxx to close the sale of the XxXxxxxxxx Shares to ASG under the
XxXxxxxxxx Principal Share Purchase and Voting Agreement that the Guarantor
shall have executed and delivered this Guarantee to XxXxxxxxxx;
NOW, THEREFORE, in consideration of the premises and to induce
XxXxxxxxxx to close the sale of the XxXxxxxxxx Shares, the Guarantor hereby
agrees with XxXxxxxxxx, as follows:
1. Defined Terms.
(a) Unless otherwise defined herein, terms defined in the XxXxxxxxxx
Principal Share Purchase and Voting Agreement and used herein shall have the
meanings given to them in the XxXxxxxxxx Principal Share Purchase and Voting
Agreement and the following terms shall have the following meanings:
"Aggregate Contingent Payments": the XxXxxxxxxx Contingent Payments and
the Xxxxx Contingent Payments.
"Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing.
"Change of Control": (a) the failure of the Guarantor to continue to
own, directly or indirectly, a majority of the Capital Stock of ASG, (b) any
Person shall have acquired beneficial ownership of 35% or more of any
outstanding Capital Stock having ordinary voting power in the election of
directors of ASG, (c) the Guarantor shall cease to serve on the board of
directors of ASG and as the president and chief executive officer of ASG or (d)
any sale or other disposition by ASG of all or substantially all of its assets
to another Person who is not an Affiliate.
"Xxxxx Contingent Payments": "Share Consideration" as such term is
defined in the Xxxxx Principal Share Purchase and Voting Agreement.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such
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Person is a party or by which it or any of its property is bound.
"Credit Agreement": the Credit Agreement dated April 26, 2000 among ASG,
ASG Sub, Inc., the financial institutions that are or may from time to time
become a party thereto and LaSalle Bank National Association, as a lender and
the administrative agent and KeyBank National Association as a lender and the
syndication agent, as such agreement may be: (i) amended, supplemented, renewed,
extended or otherwise modified from time to time, or (ii) replaced by a new
credit agreement in which the existing debt is refinanced, refunded or replaced.
"Disposition": with respect to any property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof. The
terms Dispose and Disposed of shall have correlative meanings.
"e-Security Shares": Five Million (5,000,000) shares of common stock of
e-Security, Inc., a Delaware corporation.
"e-Security Stockholders' Agreement": The Stockholders' Agreement by and
among the Guarantor, e-Security, Inc. and the Persons identified therein, dated
as of December 27, 2000.
"Escrow Agent": the Person selected by the parties to act as Escrow
Agent under the Stock Pledge Agreement (if entered into by the parties).
"GAAP": generally accepted accounting principles in the United States of
America as in effect from time to time and as applied by the Guarantor or ASG
and its Subsidiaries, as applicable, in the preparation of its financial
statements.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.
"Guarantee": this Guarantee and Promise to Pay, as amended, supplemented
or otherwise modified from time to time in accordance with the terms hereof.
"Guarantee Obligation": any obligation of the Guarantor guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of the Guarantor
incurred for the purpose of providing credit support, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or
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services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof.
"Indebtedness": of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than
current trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all Indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all capital lease obligations of
such Person, (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under or in respect of acceptances, letters of
credit, surety bonds or similar arrangements, (g) the liquidation value of all
redeemable preferred Capital Stock of such Person, (h) all guarantee obligations
of such Person in respect of obligations of the kind referred to in clauses (a)
through (g) above, and (i) all obligations of the kind referred to in clauses
(a) through (h) above secured by (or for which the holder of such obligation has
an existing right, contingent or otherwise, to be secured by) any Lien on
property (including accounts and contract rights) owned by such Person, whether
or not such Person has assumed or become liable for the payment of such
obligation. The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness expressly provide that such Person is
not liable therefor.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"XxXxxxxxxx Contingent Payments": "Share Consideration" as such term is
defined in the XxXxxxxxxx Principal Share Purchase and Voting Agreement.
"Obligations": the XxXxxxxxxx Contingent Payments (including interest
accruing after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Guarantor,
ASG or any of its Subsidiaries, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) and all other obligations
and liabilities of ASG and/or the Guarantor to XxXxxxxxxx, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with,
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this Guarantee, the Stock Pledge Agreement (if entered into by the parties) or
the XxXxxxxxxx Principal Share Purchase and Voting Agreement.
"Requirement of Law": as to any Person, the certificate of incorporation
and by-laws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"Stock Pledge Agreement": the Stock Pledge Agreement (if entered into by
the parties) substantially in the form attached as Exhibit A with respect to the
e-Security Shares.
"Tangible Net Worth": the excess of total assets over total liabilities,
total assets and total liabilities each to be determined in accordance with
generally accepted accounting principles excluding however, from the
determination of total assets (a) all assets that would be classified as
intangible assets under GAAP, (b) all assets exempted from creditor levy under
Federal and Florida state bankruptcy law and (c) all assets held in any offshore
trust or other trust that cannot be levied by creditors.
"Termination Date": the date on which the Obligations have been
irrevocably paid in full.
(b) The words "hereof," "hereto", "herein" and "hereunder" and words
of similar import when used in this Guarantee shall refer to this Guarantee as a
whole and not to any particular provision of this Guarantee, and section and
paragraph references are to this Guarantee unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Guarantee and Promise to Pay.
(a) Guarantor hereby unconditionally and irrevocably guarantees to
XxXxxxxxxx, and for his successors, indorsees, transferees and assigns, the
prompt and complete payment and performance by ASG when due (whether at the
stated due date, by acceleration or otherwise) of the Obligations.
(b) Guarantor hereby guarantees that the cumulative amounts of
Contingent Payments made to XxXxxxxxxx for Year 1 (due on the earlier of (i) 30
days after the first anniversary of the Effective Time and (ii) March 15, 2003)
shall be a minimum of $6,400,741.02; for Year 2 (due within 30 days after the
end of Year 2) shall be a minimum of $3,827,894.14 (for a total aggregate amount
due by the end of such 30 days of $10,228,635.16); for Year 3 (due within 30
days after the end of Year 3) shall be a minimum of $1,317,799.62 (for a total
aggregate amount due by the end of such 30 days of $11,546,434.78); and for Year
4 (due within 30 days after the end of Year 4)
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shall be a minimum of $1,317,799.62 (for a total aggregate amount due by the end
of such 30 days of $12,864,234.40) (collectively the "Yearly Minimum
Commitments"). If the total Contingent Payments made by ASG by the due dates
specified in the preceding sentence are less than the aggregate Yearly Minimum
Commitments due by such time, then the Guarantor shall pay the shortfall in such
amount to XxXxxxxxxx within ten (10) Business Days after the due date specified
in the preceding sentence. For purposes hereof, Year 1 shall mean the period
beginning at the Effective Time and ending on the earlier of the first
anniversary thereof and March 15, 2003. Year 2 shall mean the period beginning
on the date on which the payment in respect of Year 1 is made and ending on the
second anniversary of the Effective Time. Years 3, 4 and 5 shall follow
accordingly. Year 1, Year 2, Year 3, Year 4 and Year 5 are each referred to
herein as a "Year".. All payments by the Guarantor hereunder shall be treated as
having been paid as Share Consideration (as such term is defined in the
XxXxxxxxxx Principal Share Purchase and Voting Agreement), on behalf of ASG
incurred in connection with ASG's purchase of the XxXxxxxxxx Shares under the
XxXxxxxxxx Principal Share Purchase and Voting Agreement. Such payments shall be
treated consistently by the parties for income tax purposes as paid by the
Guarantor on behalf of ASG as a contribution to the capital of ASG by the
Guarantor and received by XxXxxxxxxx as a payment by ASG of XxXxxxxxxx
Contingent Payments. For the avoidance of doubt, Yearly Minimum Commitments
shall not be due for any Year if Guarantor or ASG has paid in full the Total
Contingent Consideration prior to the end of any such Year.
(c) In addition, if ASG and/or Guarantor has not paid or caused to
be paid the XxXxxxxxxx Contingent Payments to XxXxxxxxxx within thirty days
after the end of Year 5, Guarantor shall pay the shortfall in such amount to
XxXxxxxxxx within ten (10) Business Days thereafter.
(d) Notwithstanding the foregoing, upon an Acceleration Event, the
aggregate amount of XxXxxxxxxx Contingent Payments shall become immediately due
and payable by the Guarantor. For the purposes hereof, "Acceleration Event"
shall mean the occurrence of any of the following:
(i) The Guarantor shall fail to pay any amount payable by
the Guarantor to XxXxxxxxxx under this Guarantee when due, and such failure
continues for 10 days; or
(ii) Any representation or warranty made or deemed made by
the Guarantor herein or in the Stock Pledge Agreement (if entered into by the
parties), or by ASG in the XxXxxxxxxx Principal Share Purchase and Voting
Agreement, or which is contained in any certificate, document or financial or
other statement furnished by the Guarantor or ASG at any time under or in
connection with this Guarantee shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or
(iii) The Guarantor shall default in the observance or
performance of
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any other material obligation of Guarantor contained in this Guarantee or the
Stock Pledge Agreement (if entered into by the parties) and the same shall
remain unremedied for 30 days; or
(iv) ASG shall default in the observance or performance of
any other material agreement contained in the XxXxxxxxxx Principal Share
Purchase and Voting Agreement and the same shall remain unremedied for 30 days;
or
(v) Any default (unless duly waived in writing by the
obligee) shall occur with respect to the Credit Agreement if (A) Guarantor has
failed to pay amounts owed under Section 2(b) or 2(c) hereof and (B) the
creditors accelerate the maturity of the Indebtedness owed under the Credit
Agreement; or
(vi) An involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, winding up,
dissolution, reorganization, or other relief in respect of ASG or any ASG
Subsidiary that derives annual revenues equal to five percent or more of ASG's
total annual revenues (a "Material Subsidiary") or the respective debts of ASG
or any Material Subsidiaries, or of a substantial part of the assets of ASG or
any of its Material Subsidiaries, under any bankruptcy, insolvency,
receivership, administration or similar law in any jurisdiction now or hereafter
in effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator, administrator or similar official for ASG or any of
its Material Subsidiaries or for a substantial part of the assets of ASG or any
of its Material Subsidiaries, and, in any such case, such proceeding or petition
shall continue undismissed for 60 days or until such proceeding or petition is
advertised, whichever is earlier, or until an order or decree approving or
ordering any of the foregoing shall be entered; or
(vii) ASG or any of its Material Subsidiaries shall (i)
voluntarily commence any proceeding or pass an effective resolution or file any
petition seeking liquidation, winding up, dissolution, reorganization,
amalgamation, reconstruction or other relief under any federal, state or foreign
bankruptcy, insolvency, receivership, administration or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in clause
(vi) of this Section, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator, administrator or
similar official for ASG or any of its Material Subsidiaries or a substantial
part of the assets of ASG or any of its Material Subsidiaries, (iv) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding or (v) make a general arrangement or composite assignment for
the benefit of creditors; or
(viii) ASG or any Material Subsidiary shall become unable,
admit in writing or fail generally to pay its debts as they become due; or
(ix) The XxXxxxxxxx Principal Share Purchase and Voting
Agreement or this Guarantee shall cease for any reason to be in full force and
effect (other than pursuant to the terms hereof or thereof), or the Guarantor or
ASG shall so assert in
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writing; or
(x) Any Change of Control shall have occurred that was not
previously approved by XxXxxxxxxx and Xxxxx; or
(xi) The Guarantor becomes insolvent, is unable to pay his
debts as they fall due, stops, suspends or threatens to stop or suspend payment
of all or a material part of his debts, or makes a general assignment or an
arrangement or composition with or for the benefit of his creditors, and the
same shall remain unremedied for a period of 30 days; or
(xii) The Guarantor dies or is declared (by an appropriate
authority) incompetent or of unsound mind and the administrator of the
Guarantor's estate (or other representative of Guarantor), Xxxxx and XxXxxxxxxx
are unable within two (2) months from the date of Guarantor's death or
declaration of incompetency or unsoundness to agree on the terms of the payment
of amounts owed to Xxxxx and XxXxxxxxxx pursuant to the Principal Share Purchase
and Voting Agreements and this Guarantee; or
(xiii) Any Lien created by the Stock Pledge Agreement (if
entered into by the parties) shall cease to be enforceable and of the same
effect and priority purported to be created thereby or the Guarantor shall so
assert in writing.
(e) The Guarantor further agrees to pay any and all reasonable
expenses (including, without limitation, all reasonable fees and disbursements
of counsel) which may be paid or incurred by XxXxxxxxxx in enforcing, or
obtaining the advice of counsel in respect of any or all of the Obligations
and/or enforcing any rights with respect to, enforcing, or obtaining advice of
counsel in respect of, any rights with respect to, or collecting, any or all of
the Obligations and/or enforcing any rights with respect to, or collecting
against, the Guarantor under this Guarantee, provided, however, that for any
such individual matter for which XxXxxxxxxx seeks payment from Guarantor
pursuant to this sentence, Guarantor shall not be obligated to make any payments
unless (and only to the extent that) the expenses that XxXxxxxxxx has incurred
with respect to such individual matter exceed $25,000. Without limiting the
generality of the foregoing, the Guarantor's liability shall extend to all
amounts that constitute part of the Obligations and would be owed by the
Guarantor or ASG but for the fact that they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving the Guarantor or ASG. This Guarantee shall remain in full force and
effect until (and shall terminate on) the Termination Date, notwithstanding that
from time to time prior thereto ASG may be free from any Obligations. The
provisions of the first and second sentences of this paragraph shall survive the
termination of this Guarantee and the payment in full of the Obligations.
(f) The Guarantor agrees that whenever, at any time, or from time to
time, it shall make any payment to XxXxxxxxxx on account of its liability
hereunder, it will notify XxXxxxxxxx in writing that such payment is made under
this Guarantee for such
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purpose.
(g) The Guarantor hereby promises to pay to XxXxxxxxxx any amount
that XxXxxxxxxx is required to pay to the Banks pursuant to paragraph 6 of that
certain Agreement dated _______ __, 200_ among LaSalle Bank National
Association, Xxxxx and XxXxxxxxxx (the "Payment to Banks"), immediately upon
notice by XxXxxxxxxx to the Guarantor of the amount of such Payment to Banks.
3. No Subrogation. Notwithstanding any payment or payments made by the
Guarantor hereunder, the Guarantor shall not be entitled to be subrogated to any
of the rights of XxXxxxxxxx against ASG or any collateral security or guarantee
held by XxXxxxxxxx for the payment of the Obligations, nor shall the Guarantor
seek or be entitled to seek any contribution or reimbursement from ASG in
respect of payments made by the Guarantor hereunder, until all amounts owing by
ASG to XxXxxxxxxx on account of the Obligations are paid in full. If any amount
shall be paid to the Guarantor on account of such subrogation rights at any time
when all of the Obligations shall not have been paid in full, such amount shall
be held by the Guarantor in trust for XxXxxxxxxx, segregated from other funds of
the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned
over to XxXxxxxxxx in the exact form received by the Guarantor (duly indorsed by
the Guarantor to XxXxxxxxxx, if required), to be applied against the
Obligations, whether matured or unmatured.
4. Amendments, etc. with respect to the Obligations; Waiver of Rights. The
Guarantor shall remain obligated hereunder notwithstanding that any demand for
payment of any of the Obligations made by XxXxxxxxxx may be rescinded by such
party and any of the Obligations continued, and the Obligations, or the
liability of any other party upon or for any part thereof, or any collateral
security or guarantee therefor, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by XxXxxxxxxx, the Transaction Agreements may be
amended, modified, supplemented or terminated, in whole or in part, in
accordance with the terms thereof, and any collateral security or guarantee at
any time held by XxXxxxxxxx for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released. When making any demand hereunder
against the Guarantor, XxXxxxxxxx may, but shall be under no obligation to, make
a similar demand on ASG, and any failure by XxXxxxxxxx to make any such demand
or to collect any payments from ASG or any release of ASG shall not relieve the
Guarantor in respect of which a demand or collection is not made or the
Guarantor not so released of its several obligations or liabilities hereunder,
and shall not impair or affect the rights and remedies, express or implied, or
as a matter of law, of XxXxxxxxxx against the Guarantor. For the purposes hereof
"demand" shall include the commencement and continuance of any legal
proceedings.
5. Guarantee Absolute and Unconditional. The Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Obligations
and notice of or proof of reliance by XxXxxxxxxx upon this Guarantee or
acceptance of this Guarantee; the Obligations, and any of them, shall
conclusively be deemed to have been created,
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contracted or incurred, or renewed, extended, amended or waived, in reliance
upon this Guarantee; and all dealings between ASG and the Guarantor, on the one
hand, and XxXxxxxxxx, on the other hand, likewise shall be conclusively presumed
to have been had or consummated in reliance upon this Guarantee. Except as
expressly stated herein, the Guarantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon Guarantor with
respect to the Obligations. The Guarantor understands and agrees that this
Guarantee shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity, regularity or
enforceability of the XxXxxxxxxx Principal Share Purchase and Voting Agreement,
any other document, instrument or agreement relating to the Obligations, any of
the Obligations or other collateral security therefor or guarantee with respect
thereto at any time or from time to time held by XxXxxxxxxx, (b) any defense or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by ASG against XxXxxxxxxx, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of ASG or the
Guarantor) which constitutes, or might be construed to constitute, an equitable
or legal discharge of ASG for the Obligations, or of the Guarantor under this
Guarantee, in bankruptcy or in any other instance.
6. Pursuit of Rights and Remedies. Except as expressly stated herein, when
pursuing its rights and remedies hereunder against the Guarantor, XxXxxxxxxx
may, but shall be under no obligation to, pursue such rights and remedies as it
may have against ASG or any other Person or against any collateral security or
guarantee for the Obligations, and any failure by XxXxxxxxxx to pursue such
other rights or remedies or to collect any payments from ASG or any such other
Person or to realize upon any such collateral security or guarantee, or any
release of ASG or any such other Person or any such collateral security or
guarantee shall not relieve the Guarantor of any liability hereunder, and shall
not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of XxXxxxxxxx against the Guarantor. This
Guarantee shall remain in full force and effect and be binding in accordance
with and to the extent of its terms upon the Guarantor and the successors and
assigns thereof, and shall inure to the benefit of XxXxxxxxxx, and his
successors, indorsees, transferees and assigns, until the Termination Date.
7. Reinstatement. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
XxXxxxxxxx upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of ASG or the Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, ASG or the Guarantor or any substantial part of its property, or
otherwise, all as though such payments had not been made.
8. Payments. The Guarantor hereby guarantees that payments hereunder will
be paid to XxXxxxxxxx without set-off or counterclaim in U.S. Dollars at the
address set forth in Section 11.
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9. Representations and Warranties. The Guarantor hereby represents and
warrants that, as of the date hereof:
(a) he has the power and authority and the legal right to execute
and deliver, and to perform his obligations under, this Guarantee, and has taken
all necessary action to authorize his execution, delivery and performance of
this Guarantee;
(b) this Guarantee constitutes a legal, valid and binding obligation
of the Guarantor enforceable in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting the enforcement of creditors' rights
generally, general equitable principles and an implied covenant of good faith
and fair dealing;
(c) the execution, delivery and performance of this Guarantee will
not violate any provision of any Requirement of Law or Contractual Obligation of
the Guarantor (except to the extent that any such violation would not reasonably
be expected to have a Material Adverse Effect on the Guarantor) and will not
result in or require the creation or imposition of any Lien on any of the
properties or other assets, revenues or income of the Guarantor pursuant to any
Requirement of Law or Contractual Obligation of the Guarantor;
(d) no consent or authorization of, filing with, or other act by or
in respect of, any arbitrator or Governmental Authority and no consent of any
other Person (including, without limitation, any creditor of the Guarantor) is
required in connection with the execution, delivery, performance, validity or
enforceability of this Guarantee, other than any which have been obtained or
made prior to the date hereof and remain in full force and effect; and
(e) no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of the
Guarantor, threatened by or against the Guarantor or against any of its
properties or revenues with respect to this Guarantee or any of the transactions
contemplated hereby.
10. Covenants:
(a) Net Worth. The Guarantor shall maintain at all times a Tangible
Net Worth of not less than $5,000,000.
(b) Limitation on Guarantee Obligations. The Guarantor shall not
create, incur, assume or suffer to exist any Guarantee Obligation, except
Guarantee Obligations (i) in existence on the date hereof and listed on Schedule
1 hereto or (ii) limited, individually and in the aggregate, to the Permitted
Amount. For purposes hereof, the "Permitted Amount" shall mean $250,000 on the
date hereof and shall increase in $250,000 increments for each and every
aggregate $5,000,000 payment that is made to the Principal Shareholders with
respect to the Aggregate Contingent Payments.
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(c) Financial Reporting. The Guarantor shall furnish to XxXxxxxxxx:
(i) as soon as available, but in any event within 90 days
after the end of each calendar year, a copy of the Statement of Financial
Condition of the Guarantor as at the end of such year, compiled by Xxxxxxx
Xxxxxx or another independent certified public accountant; and
(ii) in the event that the Guarantor is required by any other
Person to provide an audited balance sheet and related statements of income and
retained earnings and of cashflows for the Guarantor, a copy of such balance
sheet and statements provided to such Person at the time provided to such
Person; and
(iii) as soon as available, copies of all tax returns of the
Guarantor filed with the Internal Revenue Service.
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail.
(d) Disposition. Subject to the written consent of the creditors
under the Credit Agreement, the Guarantor shall cause any cash received by ASG
from the sale or other disposition of any material portion of its property,
whether now owned or hereafter acquired, in excess of amounts due to the
creditors under the Credit Agreement to be paid to the Principal Shareholders
pro rata to reduce the remainder of the Total Contingent Consideration not yet
paid;
(e) Refinancing. Subject to written consent of the creditors, the
Guarantor shall cause any cash received by ASG from any refinancing or refunding
of the debt owed by ASG under the Credit Agreement in excess of amounts due to
creditors under the Credit Agreement, to be paid to the Principal Shareholders
pro rata to reduce the remainder of the Total Contingent Consideration not yet
paid.
(f) Reports, Certificates and Other Information. The Guarantor shall
cause ASG to furnish XxXxxxxxxx with a copy of each report, certificate or other
document furnished to the Senior Lenders pursuant to Section 10.1 of the Credit
Agreement at the same time that such report, certificate or other document is
delivered to the Senior Lenders. In the event that the Credit Agreement is
terminated prior to the Termination Date, the Guarantor shall continue to cause
ASG to furnish XxXxxxxxxx with all reports, certificates or other documents
required under Section 10.1 of the Credit Agreement until the Termination Date.
(g) Negative Covenants Contained in Credit Agreement. In the event
that the Credit Agreement is terminated prior to the Termination Date, the
Guarantor shall prohibit and prevent ASG from violating any of the covenants
contained in Sections 10.6, 10.7, 10.8, 10.9, 10.10 and 10.11 of the Credit
Agreement.
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(h) Stock Pledge. The Guarantor shall use his reasonable best
efforts to cause those Persons whose consent is required under the e-Security
Stockholders Agreement to consent to the execution and delivery by the Guarantor
of the Stock Pledge Agreement. In the event that Guarantor is unable to obtain
such consent, Guarantor shall transfer the e-Security Shares to Updata Capital,
Inc. to hold in escrow. Guarantor shall not Dispose of the e-Security Shares or
any of his rights with respect thereto without the prior written consent of
XxXxxxxxxx.
11. Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by facsimile),
and, unless otherwise expressly provided herein, shall be deemed to have been
duly given or made when received by the recipient, whether delivered by hand or
after being deposited in the mail, postage prepaid, or by facsimile, addressed
as follows:
(a) if to XxXxxxxxxx, to
Xxxxxxx X. XxXxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
000-000-0000
with copy to:
Xxxxx Xxxxxxxx, Esq.
Xxxx Xxxxxxx LLP
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Fax: 202--663-8007
(b) if to Guarantor, to:
Xxxxxx X. Xxxxx
0000 0xx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Fax: 000-000-0000
with copies to:
General Counsel
Xxxxx Systems Group, Inc.
0000 0xx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Fax: 000-000-0000
and
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Xxxxxx X. XxXxxxxxxx, Xxx.
Steptoe & Xxxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Fax: 000-000-0000
XxXxxxxxxx and the Guarantor may change their respective addresses and
transmission numbers for notices by notice in the manner provided in this
Section.
12. Severability. Any provision of this Guarantee which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13. Integration. This Guarantee, the XxXxxxxxxx Principal Share Purchase and
Voting Agreement, the Merger Agreement and the Stock Pledge Agreement (if
entered into by the parties) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter set forth herein and is not intended to
confer upon any Person other than the parties any rights or remedies hereunder.
14. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Guarantee may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by the Guarantor and XxXxxxxxxx, provided that any provision of this
Guarantee may be waived by XxXxxxxxxx in a letter or agreement executed by
XxXxxxxxxx or by facsimile transmission from XxXxxxxxxx.
(b) XxXxxxxxxx shall not by any act (except by a written instrument
pursuant to paragraph 14(a) hereof), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Acceleration Event or in any breach of any of the terms and conditions hereof.
No failure to exercise, nor any delay in exercising, on the part of XxXxxxxxxx,
any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by XxXxxxxxxx of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which XxXxxxxxxx would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
15. Section Headings. The section headings used in this Guarantee are for
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convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
16. Successors and Assigns. This Guarantee shall be binding upon the
successors and assigns of the Guarantor and shall inure to the benefit of
XxXxxxxxxx and his successors and assigns.
17. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF VIRGINIA WITHOUT
REGARD TO THE CONFLICTS OF LAWS PROVISIONS THEREOF.
18. Arbitration and Waiver of Jury Trial. Notwithstanding anything to the
contrary contained in this Guarantee, all claims, disputes and controversies
between the Guarantor and XxXxxxxxxx, whether arising in contract, tort or by
statute, including but not limited to controversies or claims that arise out of
or relate to: (i) this Guarantee (including any renewals, extensions or
modifications); (ii) the Stock Pledge Agreement (if entered into by the
parties); or (iii) the XxXxxxxxxx Principal Share Purchase and Voting Agreement,
shall be resolved by binding arbitration in the Commonwealth of Virginia in
accordance with this Section 18 and, to the extent not inconsistent herewith,
the Expedited Procedures and Commercial Arbitration Rules of the American
Arbitration Association.
(a) Procedure. Any arbitration called for by this Section 18 shall
be conducted in accordance with the following procedures:
(i) The Guarantor, XxXxxxxxxx or the Escrow Agent (the
"Requesting Party") may demand arbitration pursuant to this Section 18 hereof at
any time by giving written notice of such demand (the "Demand Notice") to the
other party to this Guarantee, which Demand Notice shall describe in reasonable
detail the nature of the claim, dispute or controversy.
(ii) Within 5 days after the giving of a Demand Notice, the
Requesting Party, on the one hand, and the party against whom the claim has been
made or with respect to which a dispute has arisen (collectively, the
"Responding Party"), on the other hand, shall select and designate in writing to
the other party one reputable, disinterested individual deemed competent to
arbitrate the claim, dispute or controversy (a "Qualified Individual") willing
to act as an arbitrator of the claim, dispute or controversy. Within five days
after the foregoing selections have been made, the arbitrators so selected shall
jointly select a third Qualified Individual willing to act as an arbitrator of
the claim, dispute or controversy. In the event that the two arbitrators
initially selected are unable to agree on the third arbitrator within the second
five-day period referred to above, then, on the application of either party, the
American Arbitration Association shall promptly select and appoint a Qualified
Individual to act as the third arbitrator. The three arbitrators selected
pursuant to this Section 18(a)(ii) shall constitute the arbitration panel for
the arbitration in question.
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(iii) The presentations of the parties hereto in the
arbitration proceeding shall be commenced and completed within 10 days after the
selection of the arbitration panel pursuant to Section 18(a)(ii) above, and the
arbitration panel shall render its decision in writing within 10 days after the
completion of such presentations. Any decision concurred in by any two of the
arbitrators shall constitute the decision of the arbitration panel, and
unanimity shall not be required.
(iv) The arbitration panel shall have the discretion to
include in its decision a direction that all or part of the attorneys' fees and
costs of any party and/or the costs of such arbitration be paid by any other
party. On the application of a party before or after the initial decision of the
arbitration panel, and proof of its attorneys' fees and costs, the arbitration
panel shall order the other party to make any payments directed pursuant to the
preceding sentence.
(v) Notwithstanding anything to the contrary contained above
in this Section 18, if either party fails to select a Qualified Individual to
act as an arbitrator for such party with the five-day time period set forth in
the first sentence of Section 18(a)(ii), the Qualified Individual selected by
the other party shall serve as sole arbitrator under this Section 18 in lieu of
the arbitration panel. Such sole arbitrator shall have all of the rights and
duties of the arbitration panel set forth above in this Section 18.
(b) Binding Character. Any decision rendered by the arbitration
panel pursuant to this Section 18 shall be final and binding on the parties
hereto, and judgment thereon may be entered by any state or federal court of
competent jurisdiction.
(c) No Alteration of Agreement. Nothing contained herein shall be
deemed to give the arbitrators any authority, power or right to alter, change,
amend, modify, add to, or subtract from any of the provisions of this Guarantee.
(d) Reservation of Rights. Nothing in this arbitration provision
shall be deemed to (i) limit the applicable statutes of limitation or repose and
any waivers contained in this Guarantee; or (ii) limit the right of any of the
parties hereto to obtain from a court provisional or ancillary remedies such as
(but not limited to) injunctive relief. Any of the parties hereto may obtain
such ancillary remedies before, during or after the pendency of any arbitration
proceeding brought pursuant to this Guarantee The institution or maintenance of
an action for provisional or ancillary remedies shall not constitute a waiver of
the right of any party, including the claimant in any such action, to arbitrate
the merits of the controversy or claim occasioning resort to such remedies.
19. Termination. This Guarantee and the obligations of the Guarantor
hereunder shall terminate on the Termination Date. In the event of the death of
the Guarantor, the liability of his estate shall continue in full force and
effect in respect of the payment in full of the Obligations and other
obligations of the Guarantor under Section 2.
[SIGNATURE BEGINS ON THE NEXT PAGE]
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IN WITNESS WHEREOF, the undersigned have caused this Guarantee to be
duly executed and delivered as of the day and year first above written.
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Xxxxxx X. Xxxxx
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Xxxxxxx X. XxXxxxxxxx
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