EXHIBIT A to
Xxxxx 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 XXXXXXXXX X. XXXXX ("Xxxxx").
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, Xxxxx entered into a Principal Share Purchase and Voting
Agreement (the "Xxxxx Principal Share Purchase and Voting Agreement") 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") 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 the
Merger Agreement, Xxxxxxx X. XxXxxxxxxx ("XxXxxxxxxx") entered into a Principal
Share Purchase and Voting Agreement ("XxXxxxxxxx Principal Share Purchase and
Voting Agreement" and together with the Xxxxx Principal Share Purchase and
Voting Agreement, the "Principal Share Purchase and Voting Agreements") 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")
(and together with the Xxxxx Shares, the "Principal 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 this
Guarantee, the Closing of the Merger is taking place;
WHEREAS, Xxxxx is willing to accept the Xxxxx Contingent
Payments (as defined below), in satisfaction of the purchase of the Xxxxx 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 Xxxxx
to close the sale of the Xxxxx Shares to ASG under the Xxxxx Principal Share
Purchase and Voting Agreement that the Guarantor shall have executed and
delivered this Guarantee to Xxxxx;
NOW, THEREFORE, in consideration of the premises and to induce Xxxxx to
close the sale of the Xxxxx Shares, the Guarantor hereby agrees with Xxxxx, as
follows:
1. Defined Terms.
(a) Unless otherwise defined herein, terms defined in the Xxxxx
Principal Share Purchase and Voting Agreement and used herein shall have the
meanings given to them in the Xxxxx Principal Share Purchase and Voting
Agreement and the following terms shall have the following meanings:
"Aggregate Contingent Payments": the Xxxxx Contingent Payments and the
XxXxxxxxxx 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 Person is a party or by which it or any of its
property is bound.
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"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.
"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 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
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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 Xxxxx 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 Xxxxx, 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, this
Guarantee or the Xxxxx 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.
"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
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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
Xxxxx, and for her 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 Xxxxx 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 $3,799,258.98; for Year 2 (due within 30 days after the end of
Year 2) shall be a minimum of $2,272,105.86 (for a total aggregate amount due by
the end of such 30 days of $6,071,364.84); for Year 3 (due within 30 days after
the end of Year 3) shall be a minimum of $782,200.38 (for a total aggregate
amount due by the end of such 30 days of $6,853,565.22); and for Year 4 (due
within 30 days after the end of Year 4) shall be a minimum of $782,200.38 (for a
total aggregate amount due by the end of such 30 days of $7,635,765.60)
(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 Xxxxx 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 Xxxxx Principal Share Purchase and Voting
Agreement), on behalf of ASG incurred in connection with ASG's purchase of the
Xxxxx Shares under the Xxxxx Principal Share Purchase and Voting Agreement. Such
payments shall be treated consistently by the parties for income tax purposes as
paid
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by the Guarantor on behalf of ASG as a contribution to the capital of ASG by the
Guarantor and received by Xxxxx as a payment by ASG of Xxxxx 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 Xxxxx Contingent Payments to Xxxxx within thirty days after the end
of Year 5, Guarantor shall pay the shortfall in such amount to Xxxxx within ten
(10) Business Days thereafter.
(d) Notwithstanding the foregoing, upon an Acceleration Event, the
aggregate amount of Xxxxx 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 Xxxxx 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 by ASG in the Xxxxx 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 any other material obligation of Guarantor contained in this
Guarantee 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 Xxxxx 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
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(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 Xxxxx 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 writing; or
(x) Any Change of Control shall have occurred that was not
previously approved by Xxxxx and XxXxxxxxxx; or
(xi) 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 Agreement; or
(xii) 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.
(e) The Guarantor further agrees to pay any and all reasonable
expenses (including, without limitation, all reasonable fees and disbursements
of counsel) which
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may be paid or incurred by Xxxxx 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
Xxxxx 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 Xxxxx 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 Xxxxx on account of its liability hereunder,
it will notify Xxxxx in writing that such payment is made under this Guarantee
for such purpose.
(g) The Guarantor hereby promises to pay to Xxxxx any amount that
Xxxxx 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 Xxxxx 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 Xxxxx against ASG or any collateral security or guarantee held
by Xxxxx 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
Xxxxx 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 Xxxxx, segregated from other funds of the
Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to
Xxxxx in the exact form received by the Guarantor (duly indorsed by the
Guarantor to Xxxxx, 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 Xxxxx may be rescinded by such party
and any of the Obligations continued, and the Obligations, or the liability of
any other party
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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 Xxxxx,
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 Xxxxx for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. When making
any demand hereunder against the Guarantor, Xxxxx may, but shall be under no
obligation to, make a similar demand on ASG, and any failure by Xxxxx 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 Xxxxx 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 Xxxxx upon this Guarantee or acceptance of
this Guarantee; the Obligations, and any of them, shall conclusively be deemed
to have been created, 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 Xxxxx, 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 Xxxxx 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 Xxxxx,
(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 Xxxxx, 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, Xxxxx 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 Xxxxx 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,
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and shall not impair or affect the rights and remedies, whether express, implied
or available as a matter of law, of Xxxxx 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 Xxxxx, and her 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
Xxxxx 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 Xxxxx without set-off or counterclaim in U.S. Dollars at the
addresses set forth in Section 11.
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
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(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.
(c) Financial Reporting. The Guarantor shall furnish to Xxxxx:
(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
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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 Clark 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 Clark 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.
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 Xxxxx, to:
Xxxxxxxxx X. Xxxxx
00000 Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
000-000-0000
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxx Xxxxxxx LLP
0000 Xxxxxx Xxxx.
XxXxxx, XX 00000
Fax: 000-000-0000
and
Xxxxxxxx Xxxxx, Esq.
Xxxx Xxxxxxx LLP
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
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Fax: 000-000-0000
(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
Xxxxxx X. XxXxxxxxxx, Esq.
Steptoe & Xxxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Fax: 000-000-0000
Xxxxx 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 and Xxxxx Principal Share Purchase and
Voting Agreement 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 Xxxxx, provided that any provision of this
Guarantee may be waived by Xxxxx in a letter or agreement executed by Xxxxx or
by facsimile transmission
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from Xxxxx.
(b) Xxxxx 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 Xxxxx, 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 Xxxxx of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which Xxxxx
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
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 Xxxxx
and her 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 Xxxxx, 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 or (ii) the Xxxxx Principal Share Purchase and
Voting Agreement, (including any renewals, extensions or modifications) 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 or Xxxxx (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
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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.
(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.
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(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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Xxxxxxxxx X. Xxxxx
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