SECOND AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
THIS
SECOND AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT is entered into as of
October 20, 2008 by and between TYLER TECHNOLOGIES, INC., a Delaware corporation
(“Borrower”), and
BANK OF TEXAS, N.A., a national banking association (“Lender”).
PRELIMINARY
STATEMENT
Borrower
and Lender are entering into a Second Amended and Restated Credit Agreement
dated of even date herewith (as it may be amended or modified from time to time,
the “Credit
Agreement”), providing, subject to the terms and conditions thereof, for
extensions of credit to be made by the Lender to the Borrower. To
induce Lender to enter into and extend credit to the Borrower under the Credit
Agreement, Borrower is entering into this Second Amended and Restated Pledge and
Security Agreement (as it may be amended or modified from time to time, the
“Security
Agreement”).
ACCORDINGLY,
Borrower and Lender, hereby agree as follows:
ARTICLE
I
DEFINITIONS
Section 1.1. Terms Defined
in Credit Agreement. All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the Credit
Agreement.
Section 1.2. Terms Defined
in Texas Business and Commerce Code. Terms defined in the
Texas Business and Commerce Code which are not otherwise defined in this
Security Agreement are used herein as defined in the Texas Business and Commerce
Code as in effect on the date hereof.
Section 1.3. Definitions
of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the Preliminary Statement, the
following terms shall have the following meanings:
“Accounts” means all
rights to payment for goods sold or leased or services rendered by Borrower,
whether or not earned by performance, together with all security interests or
other security held by or granted to Borrower to secure such rights to
payment.
“Article” means a
numbered article of this Security Agreement, unless another document is
specifically referenced.
“Chattel Paper” means
any writing or group of writings which evidences both a monetary obligation and
a security interest in or a lease of specific goods.
“Collateral” means all
Accounts, Chattel Paper, Documents, Equipment, Fixtures, General Intangibles,
Investment Property, Instruments, Inventory, Pledged Deposits, Stock Rights and
Other Collateral, wherever located, in which Borrower now has or hereafter
acquires any right or interest, and the proceeds, insurance proceeds and
products thereof, together with all books and records, customer lists, credit
files, computer files, programs, printouts and other computer materials and
records related thereto.
“Control” shall have
the meaning set forth in Chapter 8 of the Texas Business and Commerce Code as in
effect from time to time.
“Default” means an
event described in Section 5.1.
“Documents” means all
documents of title and goods evidenced thereby, including without limitation all
bills of lading, dock warrants, dock receipts, warehouse receipts and orders for
the delivery of goods, and also any other document which in the regular course
of business or financing is treated as adequately evidencing that the person in
possession of it is entitled to receive, hold and dispose of the document and
the goods it covers.
“Equipment” means all
equipment, machinery, furniture and goods used or usable by Borrower in its
business and all other tangible personal property (other than Inventory), and
all accessions and additions thereto, including, without limitation, all
Fixtures.
“Exhibit” refers to a
specific exhibit to this Security Agreement, unless another document is
specifically referenced.
“Fixtures” means all
goods which become so related to particular real estate that an interest in such
goods arises under any real estate law applicable thereto, including, without
limitation, all trade fixtures.
“General Intangibles”
means all intangible personal property (other than Accounts) including, without
limitation, all contract rights, rights to receive payments of money, choses in
action, causes of action, judgments, tax refunds and tax refund claims, patents,
trademarks, trade names, copyrights, licenses, franchises, computer programs,
software, goodwill, customer and supplier contracts, interests in general or
limited partnerships, joint ventures or limited liability companies,
reversionary interests in pension and profit sharing plans and reversionary,
beneficial and residual interests in trusts, leasehold interests in real or
personal property, rights to receive rentals of real or personal property and
guarantee and indemnity claims.
“Investment Property”
means stock or other securities, whether certificated or uncertificated, of any
other Person, or any direct or indirect loan, advance or capital contribution by
such Person to any other Person, or any other item which would be classified as
an “investment” on a balance sheet of such Person prepared in accordance with
GAAP, including any direct or indirect contribution by such Person of property
or assets to a joint venture, partnership or other business entity in which such
Person retains an interest.
“Instruments” means
all negotiable instruments (as defined in §3-104 of the Texas Business and
Commerce Code as in effect from time to time), certificated and uncertificated
securities and any replacements therefor and Stock Rights related thereto, and
other writings which
evidence a right to the payment of money and which are not themselves security
agreements or leases and are of a type which in the ordinary course of business
are transferred by delivery with any necessary endorsement or assignment,
including, without limitation, all checks, drafts, notes, bonds, debentures,
government securities, certificates of deposit, letters of credit, preferred and
common stocks, options and warrants.
“Inventory” means all
goods held for sale or lease, or furnished or to be furnished under contracts of
service, or consumed in Borrower’s business, including without limitation raw
materials, intermediates, work in process, packaging materials, finished goods,
semi-finished inventory, scrap inventory, manufacturing supplies and spare
parts, all such goods that have been returned to or repossessed by or on behalf
of Borrower, and all such goods released to Borrower or to third parties under
trust receipts or similar documents.
“Lenders” means each
lender that is from time to time a party to the Credit Agreement, and its
successors and assigns.
“Obligations” or
“Secured
Obligations” mean any and all existing and future indebtedness,
obligation and liability of every kind, nature and character, direct or
indirect, absolute or contingent (including all renewals, extensions and
modifications thereof and all fees, costs and expenses incurred by Lenders in
connection with the preparation, administration, collection or enforcement
thereof), of Borrower to Lenders arising under or pursuant to this Security
Agreement, the Credit Agreement and the promissory note or notes issued or
hereafter issued under the Credit Agreement (including, without limitation, the
Obligations as defined in the Credit Agreement.)
“Other Collateral”
means any property of Borrower, other than real estate, not included within the
defined terms Accounts, Chattel Paper, Documents, Equipment, Fixtures, General
Intangibles, Instruments, Inventory, Investment Property, Pledged Deposits and
Stock Rights, including, without limitation, all cash on hand and all deposit
accounts or other deposits (general or special, time or demand, provisional or
final) with any bank or other financial institution, it being intended that the
Collateral include all property of Borrower other than real estate.
“Person” shall mean an
individual, partnership, joint venture, corporation, limited liability company,
joint stock company, bank, trust, unincorporated organization and/or a
government or any department or agency thereof.
“Pledged Deposits”
means all time deposits of money, whether or not evidenced by certificates,
which Borrower may from time to time designate as pledged to Lender as security
for any Obligation, and all rights to receive interest on said
deposits.
“Receivables” means
the Accounts, Chattel Paper, Documents, Investment Property, Instruments or
Pledged Deposits, and any other rights or claims to receive money which are
General Intangibles or which are otherwise included as Collateral.
“Section” means a
numbered section of this Security Agreement, unless another document is
specifically referenced.
“Security” has the
meaning set forth in Chapter 8 of the Texas Business and Commerce Code as in
effect from time to time
“Stock Rights” means
any securities, dividends or other distributions and any other right or property
which Borrower shall receive or shall become entitled to receive for any reason
whatsoever with respect to, in substitution for or in exchange for any
securities or other ownership interests in a corporation, partnership, joint
venture or limited liability company constituting Collateral and any securities,
any right to receive securities and any right to receive earnings, in which
Borrower now has or hereafter acquires any right, issued by an issuer of such
securities.
“Unmatured Default”
means an event which but for the lapse of time or the giving of notice, or both,
would constitute a Default.
The
foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.
ARTICLE
II
GRANT
OF SECURITY INTEREST
Borrower
hereby pledges, assigns and grants to Lender a security interest in all of
Borrower’s right, title and interest in and to the Collateral to secure the
prompt and complete payment and performance of the Secured
Obligations.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
Borrower
represents and warrants to Lender that:
Section 3.1. Title,
Authorization, Validity and Enforceability. Borrower has good
and valid rights in and title to the Collateral with respect to which it has
purported to grant a security interest hereunder, free and clear of all Liens
except for Liens permitted under Section 4.1.6, and has full power and authority
to grant to Lender the security interest in such Collateral pursuant
hereto. The execution and delivery by Borrower of this Security
Agreement has been duly authorized by proper corporate proceedings, and this
Security Agreement constitutes a legal, valid and binding obligation of Borrower
and creates a security interest which is enforceable against Borrower in all now
owned and hereafter acquired Collateral except as limited by applicable
bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance,
reorganization, moratorium, or other similar laws at the time in effect
affecting the rights of creditors generally.
Section 3.2. Conflicting
Laws and Contracts. Neither the execution and delivery by
Borrower of this Security Agreement, the creation and perfection of the security
interest in the Collateral granted hereunder, nor compliance with the terms and
provisions hereof will (i) violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Borrower or Borrower’s articles
or certificate of incorporation or by-laws, or (ii) to the extent the same
could
reasonably be expected to have a Material Adverse Effect, violate the provisions
of any indenture, instrument or agreement to which Borrower is a party or is
subject, or by which it, or its property, is bound, or conflict with or
constitute a default thereunder, or result in the creation or imposition of any
Lien pursuant to the terms of any such indenture, instrument or agreement (other
than any Lien of Lenders).
Section 3.3. Principal
Location. Borrower’s mailing address, and the location of its
chief executive office and of the books and records relating to the Receivables,
is disclosed in Exhibit “A”. Borrower has no other places of business except
those set forth in Exhibit “A”. The State in which Borrower was
originally, and is still, incorporated is Delaware.
Section 3.4. Property
Locations. The Inventory, Equipment and Fixtures are located
solely at the locations described in Exhibit “A”. All of said
locations are owned by Borrower except for locations (i) which are leased by
Borrower as lessee and designated in Part B of Exhibit “A” and (ii) at which
Inventory is held in a public warehouse or is otherwise held by a bailee or on
consignment as designated in Part C of Exhibit “A”, with respect to which
Inventory Borrower has delivered bailment agreements, warehouse receipts,
financing statements or other documents satisfactory to Lender to protect
Lender’s security interest in such Inventory.
Section 3.5. No Other
Names. Since January 1, 2000, Borrower has not conducted
business under any name except the name in which it has executed this Security
Agreement.
Section 3.6. No
Default. No Default or Unmatured Default exists.
Section 3.7. Accounts and
Chattel Paper. The names of the obligors, amounts owing, due
dates and other information with respect to the Accounts and Chattel Paper are
and will be correctly stated in all material respects in all records of Borrower
relating thereto and in all invoices and reports with respect thereto furnished
to Lender by Borrower from time to time. As of the time when each
Account or each item of Chattel Paper arises, Borrower shall be deemed to have
represented and warranted that such Account or Chattel Paper, as the case may
be, and all records relating thereto, are genuine and in all material respects
what they purport to be.
Section 3.8. Filing
Requirements. None of the Equipment is covered by any
certificate of title, except for the vehicles described in Part A of Exhibit
“B”. None of the Collateral is of a type for which security interests
or liens may be perfected by filing under any federal statute except for (i) the
vehicles described in Part B of Exhibit “B” and (ii) patents, trademarks and
copyrights held by Borrower and described in Part C of Exhibit “B”.
Section 3.9. No Financing
Statements. No financing statement describing all or any
portion of the Collateral which has not lapsed or been terminated naming
Borrower as debtor has been filed in any jurisdiction except (i) financing
statements naming Lender as the secured party, (ii) as described in Exhibit “D”
or (iii) as permitted by Section 4.1.6.
Section 3.10. Federal
Employer Identification Number. Borrower’s Federal employer
identification number is 00-0000000.
Section 3.11. Pledged
Securities and Other Investment Property. Exhibit “E” sets
forth a complete and accurate list of the Instruments, Securities and other
Investment Property delivered
to Lender. Borrower is the direct and beneficial owner of each
Instrument, Security and other type of Investment Property listed on Exhibit “E”
as being owned by it, free and clear of any Liens, except for the security
interest granted to Lender hereunder. Borrower further represents and
warrants that (i) all such Instruments, Securities or other types of Investment
Property which are shares of stock in a corporation or ownership interests in a
partnership or limited liability company have been (to the extent such concepts
are relevant with respect to such Instrument, Security or other type of
Investment Property) duly and validly issued, are fully paid and non-assessable
and (ii) with respect to any certificates delivered to Lender representing an
ownership interest in a partnership or limited liability company, either such
certificates are Securities as defined in Article 8 of the Business and Commerce
Code of the applicable jurisdiction as a result of actions by the issuer or
otherwise, or, if such certificates are not Securities, Borrower has so informed
Lender so that Lender may take steps to perfect its security interest therein as
a General Intangible.
ARTICLE
IV
COVENANTS
From the
date of this Security Agreement, and thereafter until this Security Agreement is
terminated:
Section
4.1. General.
4.1.1 Inspection. Borrower
will permit Lender, by its representatives and agents (i) to inspect the
Collateral, (ii) to examine and make copies of the records of Borrower relating
to the Collateral and (iii) to discuss the Collateral and the related records of
Borrower with, and to be advised as to the same by, Borrower’s officers and
employees (and, in the case of any Receivable, with any person or entity which
is or may be obligated thereon), all at such reasonable times and intervals as
Lender may determine (but, except during the continuance of a Default, not more
than once in any fiscal quarter of Borrower), and all at Borrower’s
expense.
4.1.2 Taxes. Borrower
will pay when due all taxes, assessments and governmental charges and levies
upon the Collateral, except those which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been established in
accordance with GAAP without resulting in the occurrence of a Material Adverse
Effect.
4.1.3 Records and
Reports. Borrower will maintain complete and accurate books
and records with respect to the Collateral, and furnish to Lender such reports
relating to the Collateral as Lender shall from time to time
request.
4.1.4 Financing Statements
and Other Actions; Defense of Title. Borrower will execute and
deliver to Lender all financing statements and other documents and take such
other actions as may from time to time be requested by Lender in order to
maintain a first perfected security interest in and, in the case of Investment
Property, Control of, the Collateral, subject, however, to any Liens permitted
under Section 4.1.6. Borrower will take
any and all actions necessary to defend title to the Collateral against all
persons and to defend the security interest of Lender in the Collateral and the
priority thereof against any Lien not expressly permitted
hereunder.
4.1.5 Disposition of
Collateral. Borrower will not sell, lease or otherwise dispose
of the Collateral except (i) occasional sales or dispositions of immaterial
assets in the ordinary course of business and consistent with past practices for
a consideration equal to or exceeding book value, (ii) sales or other
dispositions, without necessity of consideration, of assets that are obsolete or
have negligible fair market value, (iii) sales or other dispositions of
equipment and trade fixtures for a fair and adequate consideration in connection
with the replacement thereof by the Person effecting such sale or other
disposition, (iv) other sales of assets, other than in the ordinary course of
business, for an aggregate sales price totaling not more than $250,000 in any
fiscal year, (v) collection of Accounts in the ordinary course of business
consistent with past practices, (vi) the discount of delinquent accounts
receivable in the ordinary course of business consistent with past practices for
purposes of facilitating collection, (vii) until such time following the
occurrence of a Default as Borrower receives a notice from Lender instructing
Borrower to cease such transactions, sales or leases of Inventory in the
ordinary course of business, and (viii) until such time as Borrower receives a
notice from Lender pursuant to Article VII, proceeds of Inventory and Accounts
collected in the ordinary course of business. In connection with any
sale or other disposition of Collateral permitted under this Security Agreement,
provided that no Default exists or would be caused thereby, upon reasonable
advance written notice from Borrower of the intent to so dispose of such
Collateral, Lender at Borrower’s expense shall release the Collateral to be sold
or disposed of from the Liens and security interests created by this Security
Agreement and the other Loan Documents and shall execute and deliver any
releases reasonably requested by Borrower to evidence such release.
4.1.6 Liens. Borrower
will not create, incur, or suffer to exist any Lien on the Collateral except (i)
the security interest created by this Security Agreement, (ii) existing Liens
described in Exhibit “D”, and (iii) other Liens permitted pursuant to Section
9.2 of the Credit Agreement.
4.1.7 Change in Location
or Name. Borrower will not (i) have any of its Inventory,
Equipment or Fixtures (other than Collateral disposed of as permitted by Section
4.1.5) at a location other than a location specified in Exhibit “A”, (ii)
maintain records relating to its Receivables at a location other than at the
location specified on Exhibit “A”, (iii) change its name or taxpayer
identification number or (iv) change its state of incorporation, unless Borrower
shall have given Lender not less than 30 days’ prior written notice thereof, and
Lender shall have determined that such change will not adversely affect the
validity, perfection or priority of Lender’s security interest in the
Collateral.
4.1.8 Other Financing
Statements. Borrower will not file or authorize the filing of
any financing statement naming it as debtor covering all or any portion of the
Collateral, except as permitted by Section 4.1.6.
Section
4.2. Receivables.
4.2.1 Certain Agreements
on Receivables. Borrower will not make or agree to make any
discount, credit, rebate or other reduction in the original amount owing on a
Receivable or accept in satisfaction of a Receivable less than the original
amount thereof, except that, prior to the occurrence of a Default, Borrower may
offer discounts, credits and rebates, and may reduce the amount of Accounts, in
accordance with its present policies and in the ordinary course of
business.
4.2.2 Collection of
Receivables. Except as otherwise provided in this Security
Agreement, Borrower will attempt to collect and enforce, at Borrower’s sole
expense, all amounts due or hereafter due to Borrower under the Receivables in a
manner consistent with its present collection, write-down and write-off
policies.
4.2.3 Delivery of
Invoices. Borrower will deliver to Lender
promptly upon its request after the occurrence of a Default duplicate
invoices with respect to each Account bearing such language of assignment as
Lender shall specify.
4.2.4 Disclosure of
Counterclaims on Receivables. If (i) any discount, credit or
agreement to make a rebate or to otherwise reduce the amount owing on a
Receivable exists or (ii) if, to the knowledge of Borrower, any dispute, setoff,
claim, counterclaim or defense exists or has been asserted or threatened with
respect to a Receivable, Borrower will disclose such fact to Lender in writing
in connection with Lender’s field examinations relating to such
Receivable.
Section
4.3. Inventory and Equipment.
4.3.1 Maintenance of
Goods. Borrower will do all things necessary to maintain,
preserve, protect and keep the Inventory and the Equipment in good repair and
working and saleable condition.
4.3.2 Insurance. Borrower
will maintain insurance in accordance with Section 8.11 of the
Credit Agreement.
4.3.3 Titled
Vehicles. Borrower will give Lender notice of its acquisition
of any vehicle covered by a certificate of title and deliver to Lender, upon
request, the original of any vehicle title certificate for any such vehicle that
is not subject to a Lien permitted under Section 4.1.6. and do all things
necessary to have the Lien of Lender noted on any such certificate.
Section 4.4. Instruments,
Securities, Chattel Paper, Documents and Pledged Deposits. Borrower will
(i) deliver to Lender immediately upon execution of this Security Agreement the
originals of all Chattel Paper, certificated Securities and Instruments (if any
then exist) constituting Collateral, (ii) hold in trust for Lender upon receipt
and immediately thereafter deliver to Lender any Chattel Paper, certificated
Securities and Instruments constituting Collateral, (iii) upon the designation
of any Pledged Deposits (as set forth in the definition thereof), deliver to
Lender such Pledged Deposits which are evidenced by certificates included in the
Collateral endorsed in blank, marked with such legends and assigned as Lender
shall specify, and (iv)
upon Lender’s request, after the occurrence and during the continuance of a
Default, deliver to Lender (and thereafter hold in trust for Lender
upon receipt and immediately deliver to Lender) any Document evidencing or
constituting Collateral. As to any limited partnership interests in
any limited partnership constituting a Subsidiary or ownership interests in a
limited liability company constituting a Subsidiary which are included within
the Collateral and which at any time constitute a Security as to the issuer of
any such interests, Borrower shall either (i) deliver all certificates or other
documents constituting such Security to Lender or (ii) cause the issuer of such
Security or a securities intermediary relating to such Security to enter into a
control agreement with respect to such Security and such Security is defined as
such under Article 8 of the Uniform Commercial Code of the applicable
jurisdiction, whether as a result of actions by the issuer thereof or
otherwise.
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
8
Section
4.5. Uncertificated Securities and Certain Other Investment Property.
Borrower will permit Lender from time to time to cause the appropriate
issuers (and, if held with a securities intermediary, such securities
intermediary) of uncertificated securities or other types of Investment Property
not represented by certificates which are Collateral to xxxx their books and
records with the numbers and face amounts of all such uncertificated securities
or other types of Investment Property not represented by certificates and all
rollovers and replacements therefor to reflect the Lien of Lender granted
pursuant to this Security Agreement. Borrower will take any actions
necessary to cause (i) the issuers of uncertificated securities which are
Collateral and which are Securities and (ii) any financial intermediary which is
the holder of any Investment Property which is Collateral, to cause Lender to
have and retain Control over such Securities or other Investment
Property. Without limiting the foregoing, Borrower will, with respect
to Investment Property which is Collateral and held with a financial
intermediary, cause such financial intermediary to enter into a control
agreement with Lender in form and substance satisfactory to Lender.
Section
4.6. Stock and Other Ownership Interests.
4.6.1 Changes in Capital
Structure of Issuers. Except in connection with a transaction permitted
under Section 9.7 of the Credit Agreement, Borrower will not vote any of the
Instruments, Securities or other Investment Property constituting Collateral in
favor of any action of, or transaction by, the issuer thereof to dissolve,
liquidate, retire any of its capital stock or other Instruments or Securities
evidencing ownership, reduce its capital or merge or consolidate with any other
entity.
4.6.2 Issuance of
Additional Securities. Borrower will not vote any of the
Instruments, Securities or other Investment Property constituting Collateral in
favor of any action of, or transaction by, the issuer thereof to issue any such
securities or other ownership interests, any right to receive the same or any
right to receive earnings, except to Borrower or to a Guarantor.
4.6.3 Registration of
Pledged Securities and other Investment Property. Borrower
will permit any registerable Collateral to be registered in the name of Lender
or its nominee at any time after the occurrence of a Default at the option of
Lender.
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
9
4.6.4 Exercise of Rights
in Pledged Securities and other Investment Property. Borrower
will permit Lender or its nominee at any time after the occurrence of a Default,
without notice, to exercise all voting and corporate rights relating to the
Collateral, including, without limitation, exchange, subscription or any other
rights, privileges, or options pertaining to any corporate securities or other
ownership interests or Investment Property in or of a corporation, partnership,
joint venture or limited liability company constituting Collateral and the Stock
Rights as if it were the absolute owner thereof.
Section 4.7. Pledged
Deposits. Borrower will not withdraw all or any portion of any
Pledged Deposit or fail to rollover said Pledged Deposit without the prior
written consent of Lender.
Section 4.8. Deposit
Accounts. Borrower will (i) upon Lender’s request, notify each
bank or other financial institution (other than Lender) in which it maintains a
deposit account or other deposit (general or special, time or demand,
provisional or final) of the security interest granted to Lender hereunder and
either cause each such bank or other financial institution to acknowledge such
notification in writing within thirty (30) days after Lender’s request or,
within such thirty (30) day period, cause such accounts to be terminated, and
(ii) upon Lender’s request after the occurrence and during the continuance of a
Default, deliver to each such bank or other financial institution a letter, in
form and substance acceptable to Lender, transferring dominion and control over
each such account to Lender until such time as no Default exists.
Section 4.9. Federal
Claims. Borrower will notify Lender of any Collateral which
constitutes a claim against the United States government or any instrumentality
or agency thereof, the assignment of which claim is expressly restricted by
federal law in a manner that would not permit Lender to obtain a Security
Interest therein under the Texas Business and Commerce Code or the Uniform
Commercial Code of any other applicable jurisdictions.
ARTICLE
V
DEFAULT
Section
5.1. Default. The occurrence of any one or more of
the following events shall constitute a Default:
5.1.1 The breach by
Borrower of any of the terms or provisions of Sections 4.1.1, 4.1.4 through
4.1.8, 4.2.1, 4.2.3, 4.2.4, and 4.4 through 4.9 or Article VII.
5.1.2 The
occurrence of any “Event of Default” under, and as defined in, the Credit
Agreement.
Section 5.2. Acceleration
and Remedies. Upon the acceleration of the Obligations under
the Credit Agreement, the Obligations shall immediately become due and payable
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived, and Lender shall at the request of, or may, with the
consent of, the Lender, exercise any or all of the following rights and
remedies:
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
10
5.2.1 Those rights
and remedies provided in this Security Agreement, the Credit Agreement, or any
other Loan Document, provided that this Section 5.2.1 shall not be understood to
limit any rights or remedies available to Lender prior to a
Default.
5.2.2 Those rights
and remedies available to a secured party under the Texas Business and Commerce
Code (whether or not the Texas Business and Commerce Code applies to the
affected Collateral) or under any other applicable law (including, without
limitation, any law governing the exercise of a bank’s right of setoff or
bankers’ lien) when a debtor is in default under a security
agreement.
5.2.3 Without
notice except as specifically provided in Section 8.1 or elsewhere herein, sell,
lease, assign, grant an option or options to purchase or otherwise dispose of
the Collateral or any part thereof in one or more parcels at public or private
sale, for cash, on credit or for future delivery, and upon such other terms as
Lender may deem commercially reasonable.
Section 5.3. Borrower’s
Obligations Upon Default. Upon the request of Lender after the
occurrence of a Default, Borrower will:
5.3.1 Assembly of
Collateral. Assemble and make available to Lender the
Collateral and all records relating thereto at any place or places specified by
Lender.
5.3.2 Secured Party
Access. Permit Lender, or Lender’s representatives and agents,
to enter any premises where all or any part of the Collateral, or the books and
records relating thereto, or both, are located, to take possession of all or any
part of the Collateral and to remove all or any part of the
Collateral.
Section
5.4. License. Lender is hereby granted a license or
other right to use, following the occurrence and during the continuance of a
Default, without charge, Borrower’s labels, patents, copyrights, rights of use
of any name, trade secrets, trade names, trademarks, service marks, customer
lists and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising for sale,
and selling any Collateral, and, following the occurrence and during the
continuance of a Default, Borrower’s rights under all licenses and all franchise
agreements shall inure to Lender’s benefit. In addition, Borrower
hereby irrevocably agrees that Lender may, following the occurrence and during
the continuance of a Default, sell any of Borrower’s Inventory directly to any
Person, including without limitation Persons who have previously purchased
Borrower’s Inventory from Borrower and in connection with any such sale or other
enforcement of Lender’s rights under this Agreement, may sell Inventory which
bears any trademark owned by or licensed to Borrower and any Inventory that is
covered by any copyright owned by or licensed to Borrower and Lender may finish
any work in process and affix any trademark owned by or licensed to Borrower and
sell such Inventory as provided herein.
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
11
ARTICLE
VI
WAIVERS,
AMENDMENTS AND REMEDIES
No
delay or omission of Lender to exercise any right or remedy granted under this
Security Agreement shall impair such right or remedy or be construed to be a
waiver of any Default or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude any other or further
exercise thereof or the exercise of any other right or remedy. No
waiver, amendment or other variation of the terms, conditions or provisions of
this Security Agreement whatsoever shall be valid unless in writing signed by
Lender, and then only to the extent in such writing specifically set
forth. All rights and remedies contained in this Security Agreement
or by law afforded shall be cumulative and all shall be available to Lender
until the Secured Obligations have been paid in full.
ARTICLE
VII
PROCEEDS;
COLLECTION OF RECEIVABLES
Section
7.1. Lockboxes. Upon request of Lender after the
occurrence and during the continuance of a Default, Borrower shall execute and
deliver to Lender irrevocable lockbox agreements in the form provided by or
otherwise acceptable to Lender, which agreements shall be accompanied by an
acknowledgment by the bank where the lockbox is located of the Lien of Lender
granted hereunder and of irrevocable instructions to wire all amounts collected
therein to a special collateral account at Lender.
Section 7.2. Collection of
Receivables. Lender may at any time in its sole discretion
after the occurrence and during the continuance of a Default, by giving Borrower
written notice, elect to require that the Receivables be paid directly to
Lender. In such event, Borrower shall, and shall permit Lender to,
promptly notify the account debtors or obligors under the Receivables of the
Lender’s interest therein and direct such account debtors or obligors to make
payment of all amounts then or thereafter due under the Receivables directly to
Lender. Upon receipt of any such notice from Lender, Borrower shall
thereafter hold in trust for Lender all amounts and proceeds received by it with
respect to the Receivables and Other Collateral and immediately and at all times
thereafter deliver to Lender all such amounts and proceeds in the same form as
so received, whether by cash, check, draft or otherwise, with any necessary
endorsements. Lender shall hold and apply funds so received as
provided by the terms of Sections 7.3 and 7.4.
Section 7.3. Special
Collateral Account. After the occurrence and during the
continuance of a Default, Lender may require all cash proceeds of the Collateral
to be deposited in a special non-interest bearing cash collateral account with
Lender and held there as security for the Secured
Obligations. Borrower shall have no control whatsoever over said cash
collateral account. So long as such Default is continuing but prior
to an acceleration of the Secured Obligations, Lender shall apply the collected
balances in said cash collateral account on each business day first to the payment
of the Secured Obligations outstanding under the Note whether or not such
Secured Obligations shall then be due, next to the retention
in the cash collateral account of an amount equal to 110% of the amount, if any,
by which, after giving effect to the preceding
application, (a) the sum of (i) the outstanding principal balance of the Note
plus (ii) the Letter of Credit Exposure, exceeds (b) the Borrowing Base, and
finally the
balance, if any, remaining after giving effect to the two preceding applications
into Borrower’s general operating account with Lender. After an
acceleration of the Secured Obligations, Lender shall be entitled to apply the
balance in such collateral account against the Secured Obligations in any manner
it shall determine in its sole discretion, and/or to retain any such balances as
cash collateral for any Letter of Credit Exposure.
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
12
Section 7.4. Application
of Proceeds. The proceeds of the Collateral realized by Lender
shall be applied by Lender to payment of the Secured Obligations in the
following order unless a court of competent jurisdiction shall otherwise
direct:
(a) FIRST, to
payment of all costs and expenses of Lender and Lenders incurred in connection
with the collection and enforcement of the Secured Obligations or of the
security interest granted to Lender pursuant to this Security
Agreement;
(b) SECOND, to
payment of that portion of the Secured Obligations constituting accrued and
unpaid interest and fees;
(c) THIRD, to
payment of the principal of the Secured Obligations;
(d) FOURTH, to
payment of any Secured Obligations (other than those listed above);
and
(e) FIFTH, the
balance, if any, after all of the Secured Obligations have been satisfied, shall
be deposited by Lender into Borrower’s general operating account with Bank of
Texas.
ARTICLE
VIII
GENERAL
PROVISIONS
Section 8.1. Notice of
Disposition of Collateral. Any notice of the time and place of
any public sale or the time after which any private sale or other disposition of
all or any part of the Collateral may be made shall be deemed reasonable if sent
to Borrower, in the xxxxx and addressed as set forth in Article IX, at least ten
days prior to (i) the date of any such public sale or (ii) the time after which
any such private sale or other disposition may be made.
Section 8.2. Compromises
and Collection of Collateral. Borrower and Lender recognize
that setoffs, counterclaims, defenses and other claims may be asserted by
obligors with respect to certain of the Receivables, that certain of the
Receivables may be or become uncollectable in whole or in part and that the
expense and probability of success in litigating a disputed Receivable may
exceed the amount that reasonably may be expected to be recovered with respect
to a Receivable. In view of the foregoing, Borrower agrees that
Lender may at any time and from time to time, if a Default has occurred and is
continuing, compromise with the obligor on any Receivable, accept in full
payment of any Receivable such amount as Lender in its sole discretion shall
determine or abandon any Receivable, and any such action by Lender shall be
commercially reasonable so long as Lender acts in good faith based on
information known to it at the time it takes any such action.
Section 8.3. Secured Party
Performance of Borrower Obligations. Without having any
obligation to do so, Lender may perform or pay any obligation which Borrower has
agreed to, and failed to, perform or pay in this Security Agreement and Borrower
shall reimburse Lender for any amounts paid by Lender pursuant to this Section
8.3. Borrower’s obligation to reimburse Lender pursuant to the
preceding sentence shall be a Secured Obligation payable on the second Business
Day after Lender’s demand for such payment.
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
13
Section 8.4. Authorization
for Secured Party to Take Certain Action. Borrower irrevocably
authorizes Lender at any time and from time to time in the sole discretion of
Lender and appoints Lender as its attorney in fact (i) to file financing
statements necessary or desirable in Lender’s sole discretion to perfect and to
maintain the perfection and priority of Lender’s security interest in the
Collateral, (ii) to indorse and collect any cash proceeds of the Collateral,
(iii) to file a carbon, photographic or other reproduction of this Security
Agreement or any financing statement with respect to the Collateral as a
financing statement in such offices as Lender in its sole discretion deems
necessary or desirable to perfect and to maintain the perfection and priority of
Lender’s security interest in the Collateral, (iv) to contact and enter into one
or more agreements with the issuers of uncertificated securities which are
Collateral and which are Securities or with financial intermediaries holding
other Investment Property as may be necessary or advisable to give Lender
Control over such Securities or other Investment Property, (v) subject to the
terms of Section 4.1.5, to enforce payment of the Receivables in the name of
Lender or Borrower, (vi) to apply the proceeds of any Collateral received by
Lender to the Secured Obligations as provided in Article VII and (vii) to
discharge past due taxes, assessments, charges, fees or Liens on the Collateral
(except for such Liens as are specifically permitted hereunder), and Borrower
agrees to reimburse Lender on demand for any payment made or any expense
incurred by Lender in connection therewith, provided that this authorization
shall not relieve Borrower of any of its obligations under this Security
Agreement or under the Credit Agreement.
Section 8.5. Specific
Performance of Certain Covenants. Borrower acknowledges and
agrees that a breach of any of the covenants contained in Sections 4.1.5, 4.1.6,
4.4, 5.3, or 8.7 or in Article VII will cause irreparable injury to Lenders,
that Lenders have no adequate remedy at law in respect of such breaches and
therefore agrees, without limiting the right of Lender to seek and obtain
specific performance of other obligations of Borrower contained in this Security
Agreement, that the covenants of Borrower contained in the Sections referred to
in this Section 8.5 shall be specifically enforceable against
Borrower.
Section 8.6. Use and
Possession of Certain Premises. Upon the occurrence of a
Default, Lender shall be entitled to occupy and use any premises owned or leased
by Borrower where any of the Collateral or any records relating to the
Collateral are located until the Secured Obligations are paid or the Collateral
is removed therefrom, whichever first occurs, without any obligation to pay
Borrower for such use and occupancy.
Section 8.7. Dispositions
Not Authorized. Borrower is not authorized to sell or
otherwise dispose of the Collateral except as set forth in Section 4.1.5 and
notwithstanding any course of
dealing between Borrower and Lender or other conduct of Lender, no authorization
to sell or otherwise dispose of the Collateral (except as set forth in Section
4.1.5) shall be binding upon Lender.
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
14
Section 8.8. Benefit of
Agreement. The terms and provisions of this Security Agreement
shall be binding upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns, except that Borrower shall not have the right
to assign its rights or delegate its obligations under this Security Agreement
or any interest herein, without the prior written consent of the
Lender.
Section 8.9. Survival of
Representations. All representations and warranties of
Borrower contained in this Security Agreement shall survive the execution and
delivery of this Security Agreement.
Section 8.10. Taxes and
Expenses. Any taxes, excluding taxes imposed on any Lender’s
net income (including penalties and interest payable in respect thereof) and
franchise taxes imposed on any Lender by any jurisdiction under the laws of
which such Lender is organized or doing business (or any political subdivision
thereof), payable or ruled payable by Federal or State authority in respect of
this Security Agreement shall be paid by Borrower, together with interest and
penalties, if any. Borrower shall reimburse such Lender for any and
all out-of-pocket expenses and internal charges (including reasonable
attorneys’, auditors’ and accountants’ fees and reasonable time charges of
attorneys, paralegals, auditors and accountants who may be employees of such
Lender) paid or incurred by such Lender in connection with the preparation,
execution, delivery, administration, collection and enforcement of this Security
Agreement and in the audit, analysis, administration, collection, preservation
or sale of the Collateral (including the expenses and charges associated with
any periodic or special audit of the Collateral). Any and all costs
and expenses incurred by Borrower in the performance of actions required
pursuant to the terms hereof shall be borne solely by Borrower.
Section
8.11. Headings. The title of and section headings
in this Security Agreement are for convenience of reference only, and shall not
govern the interpretation of any of the terms and provisions of this Security
Agreement.
Section
8.12. Termination. This Security Agreement shall
continue in effect (notwithstanding the fact that from time to time there may be
no Secured Obligations outstanding) until (i) the Credit Agreement has
terminated pursuant to its express terms and (ii) all of the Secured Obligations
have been indefeasibly paid and performed in full and no commitments of Lenders
which would give rise to any Secured Obligations are outstanding.
Section 8.13. Entire
Agreement. The Loan Documents collectively embody the entire
agreement and understanding between Borrower and Lender relating to the
Collateral and supersede all prior agreements and understandings between
Borrower and Lender relating to the Collateral.
Section
8.14. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS
(AND NOT THE LAW OF CONFLICTS) OF THE STATE OF TEXAS, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
Section 8.15. Amendment
and Restatement. This Security Agreement amends and restates
in its entirety that certain Pledge and Security Agreement dated February 27,
2002 by and between Borrower and Bank of Texas, N.A. (the “Original Security
Agreement”), but does not constitute a novation of the Original Security
Agreement, and does not extinguish the liens and security interests created and
evidenced by the Original Security Agreement, which liens and security interests
are hereby ratified, confirmed and extended by this Original Security
Agreement. None of execution, delivery, and performance of any other
documents executed in connection with this Agreement, including but not limited
to execution of any amendment or modification to the Credit Agreement, shall
constitute a novation of any indebtedness already existing.
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
15
ARTICLE
IX
NOTICES
Section 9.1. Sending
Notices. Any notice required or permitted to be given under
this Security Agreement shall be sent (and deemed received) in the manner and to
the addresses set forth in Section 12.4 of the Credit
Agreement. Notices to Borrower shall be sent to the address as
provided in Exhibit “A.”
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
16
IN WITNESS
WHEREOF, Borrower and Lender have executed this Security Agreement as of the
date first above written.
| BORROWER: | |||
|
TYLER
TECHNOLOGIES, INC., a
Delaware
corporation
|
|||
|
|
By:
|
||
| Xxxxx X. Xxxxxx, | |||
| Executive Vice President and | |||
| Chief Financial Officer | |||
| LENDER: | |||
|
BANK
OF TEXAS, N.A., a national
banking
association
|
|||
|
|
By:
|
||
| Xxxx Xxxxxxx, Vice President | |||
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
17
|
STATE
OF TEXAS
|
§
|
|
§
|
|
|
COUNTY
OF DALLAS
|
§
|
The
foregoing instrument was acknowledged before me this ___ day of October, 2008,
by Xxxxx X. Xxxxxx, an Executive Vice President and Chief Financial Officer of
TYLER TECHNOLOGIES, INC., on behalf of said corporation.
| _______________________ | ||
| Notary Public | ||
| My commission expires: | ||
| _______________________ |
|
STATE
OF TEXAS
|
§
|
|
§
|
|
|
COUNTY
OF DALLAS
|
§
|
The
foregoing instrument was acknowledged before me this ___ day of October, 2008,
by Xxxx Xxxxxxx, Vice President of Bank of Texas, N.A. on behalf of such banking
association.
| _______________________ | ||
| Notary Public | ||
| My commission expires: | ||
| _______________________ |
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
18
EXHIBIT
“A”
(See
Sections 3.3, 3.4, 4.1.7, and 9.1 of the Amended and Restated Pledge and
Security Agreement)
Principal
Place of Business and Mailing Address:
Tyler Technologies, Inc.
0000 Xxxxxx Xxxx, Xxxxx
0000
Xxxxxx, Xxxxx 00000
Attention: Treasurer
Federal
Taxpayer Identification Number: 00-0000000
Location
of Receivable Records: Same as above
Location
of Inventory and Equipment and Fixtures:
A. Properties
Owned by Borrower
|
|
·
|
0000
Xxxxxxxxx Xxxx, Xxxxxx, Xxxx 00000
|
|
|
·
|
000
Xxxxx Xxxx Xxx., Xxxxxx, Xxxxx
00000
|
|
|
·
|
0000
Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxx
00000
|
|
|
·
|
Xxx
Xxxx Xxxx Xxxxx, Xxxxxxxx, Xxxxx
00000
|
|
|
·
|
SE
Corner of 53rd
& Chicago, Xxxxxxx, Xxxxx 00000
|
B. Properties
Leased by Borrower:
|
|
·
|
0000
Xxxxxx Xxxx, Xxxxx 0000, Xxxxxx, Xxxxx
00000
|
|
|
·
|
0000
0xx
Xxxxxx, Xxxxxxx, Xxxxx 00000
|
|
|
·
|
0000
Xxxxxxxxxxxxx Xxxxxxx, Xxxxx 0000, Xxxxx, Xxxxx
00000
|
|
|
·
|
000
X.X. Xxxxx Xxx, Xxxxxxxx, Xxxxx
00000
|
|
|
·
|
000
Xxxx Xxxxx Xxxxxx, Xxxxx, Xxxxxxxx
00000
|
|
|
·
|
00
X. Xxxx, Xxxxxx, Xxxxx 00000
|
|
|
·
|
0000
Xxxx Xxxxxx, Xxxx, Xxxx 00000
|
|
|
·
|
000
Xxxx Xxxxx, Xxxxx 0, Xxx Xxxxx, Xxxxxxxx
00000
|
|
|
·
|
0000
Xxxxxxxxx Xxx. XX, Xxxxxx, Xxxxxxxxxx
00000
|
|
|
·
|
00000
Xxxxxx Xxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx
00000
|
|
|
·
|
0000
X. Xxxxxxxxxx Xx., Xxxxx 000, Xxxxx Xxxxx, Xxxxx Xxxxxx
00000
|
|
|
·
|
0000
Xxxx Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx
00000
|
|
|
·
|
000
Xxxx Xxxxxxxx Xxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxxxxx
00000
|
|
|
·
|
0000
X. Xxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxxxxxx
00000
|
|
|
·
|
0000
Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxxx,
Xxxxxxxx
|
|
|
·
|
0000
Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx
00000
|
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
19
|
|
·
|
000
Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx
00000
|
|
|
·
|
0
Xxxxxxx Xxxxxxxx Xxxx., Xxxxx 0, Xxxxxx, Xxx Xxxx
00000
|
|
|
·
|
0000
Xxxxxxx Xxxx. Xxxxx, Xxxxxxx, Xxxxxxxxxx
00000
|
|
|
·
|
000
Xxxxx Xxxx Xxxx, Xxxxx 0, Xx. Xxxxx, Xxxxxxxx
00000
|
|
|
·
|
00000
Xxxxxxxx Xx. 0, Xxxxxxx, Xxxxxxxx
00000
|
|
C.
|
Public
Warehouses of other locations pursuant to bailment or consignment
arrangements:
|
|
|
·
|
none
|
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
20
EXHIBIT
“B”
(See
Sections 3.8 of the Amended and Restated Pledge and Security
Agreement)
A. Vehicles
subject to certificate of title: none
|
Vehicle
|
VIN
|
|
|
1998
Pontiac Bonneville, #4454
|
0X0XX00X0XX000000
|
|
|
2003
Chevrolet Impala #3298
|
0X0XX00X000000000
|
|
|
1999
Ford Explorer, #4580
|
0XXXX00X0XXX00000
|
|
|
2008
Ford Taurus, #8035
|
0XXXX00X00X000000
|
|
|
2008
Ford Taurus, #1139
|
0XXXX00X00X000000
|
|
|
2005
Ford Taurus SD #9842
|
0XXXX00000X000000
|
|
|
2008
Ford Taurus #8893
|
0XXXX00X00X000000
|
|
|
2007
Chevrolet P/U Crew Cab #2663
|
0XXXX00X00X000000
|
|
|
1998
Mitsubishi Montero, S#7283
|
JA4LS41POWP027283
|
|
|
2007
Honda Civic 4DR AT #5174
|
0XXXX00000X000000
|
|
|
1995
Saab 900, S# 6942
|
XX0XX00X0X0000000
|
|
|
2006
Lexus IS 350 #5647
|
XXXXX000000000000
|
B. Other
Vehicles: none
C. Patents,
copyrights, trademarks protected under federal law:
Trademarks:
|
No.
933, 681
|
Scales
design only, Class 35, Owned by Tyler Technologies, Inc., Registered
5/9/72
|
|
|
No.
1,402,565
|
SEACOR,
Owned by Tyler Technologies, Inc., Registered 7/22/86
|
|
|
No.
1,616,006
|
Scales
design only, Class 35 and 36, Owned by Tyler Technologies, Inc.,
Registered 10/2/90
|
|
|
No.
1,610,740
|
CLT,
Owned by Tyler Technologies, Inc., Registered 8/21/90
|
|
|
No.
2,394,873
|
T
(and design), Owned by Tyler Technologies, Inc., Registered
10/17/2000
|
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
21
EXHIBIT
“C”
(Intentionally
Omitted)
Page
22
EXHIBIT
“D”
(See
Sections 3.9 and 4.1.6 of the Amended and Restated Pledge and Security
Agreement)
Existing
Liens on the Collateral: see attached UCC searches
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
23
EXHIBIT
“E”
(See
Sections 3.11 of the Amended and Restated Pledge and Security
Agreement)
A. Stocks:
None
X. Xxxxx: None
C. Government
Securities: see attached schedule
D. Other
Securities or Investment Property: see attached schedule
PLEDGE
AND SECURITY AGREEMENT (Tyler Technologies,
Inc.)
Page
24
