1
ASSET PURCHASE AGREEMENT
BY AND AMONG
TYLER TECHNOLOGIES, INC.,
CLT COMPANY
AND
DAY & XXXXXXXXXX, L.L.C.
NOVEMBER 3, 1999
TO BE EFFECTIVE AS OF OCTOBER 29, 1999
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TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF ASSETS; CLOSING.............................1
Section 1.01. Purchase of Assets.............................1
Section 1.02. Excluded Assets................................2
Section 1.03. Assumed Liabilities............................2
Section 1.04. Excluded Liabilities...........................3
Section 1.05. Closing........................................3
Section 1.06. Further Assurances.............................3
Section 1.07. Assets Not Assignable..........................4
ARTICLE II PURCHASE PRICE...................................................4
Section 2.01. Purchase Price.................................4
Section 2.02. Adjustments to the Purchase Price..............4
Section 2.03. Allocation of Purchase Price...................8
ARTICLE IIA PROVISIONS RELATING TO PARENT SHARES.............................9
Section 2A.01. Delivery of Parent Shares......................9
Section 2A.02. Rights of Seller...............................9
Section 2A.03. NYSE Listing...................................9
Section 2A.04. Restrictions on Transfer; Legend...............9
Section 2A.05. Price Protection on Parent Shares; Security
Interest.......................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER........................10
Section 3.01. Organization and Qualification................10
Section 3.02. Organization Documents........................10
Section 3.03. Authority.....................................10
Section 3.04. No Conflict; Required Filings and Consent.....11
Section 3.05. Permits; Compliance...........................11
Section 3.06. Title to Assets...............................11
Section 3.07. Inclusiveness of Assets.......................12
Section 3.08. Financial Statements..........................12
Section 3.09. Absence of Certain Changes or Events..........12
Section 3.10. Absence of Litigation.........................13
Section 3.11. Employee Benefit Plans; Labor Matters.........13
Section 3.12. Taxes.........................................14
Section 3.13. Environmental Matters.........................15
Section 3.14. Brokers; Other Transactions...................15
Section 3.15. Insurance.....................................16
Section 3.16. Properties....................................16
Section 3.17. Intellectual Property.........................16
Section 3.18. Certain Contracts; Licenses; Etc..............16
Section 3.19. Employees.....................................17
Section 3.20. Year 2000 Compliance..........................17
Section 3.21. Securities Laws Matters.......................17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT..............18
Section 4.01. Organization and Qualification................18
Section 4.02. Organization Documents........................18
Section 4.03. Authority. ...................................18
Section 4.04. No Conflict; Required Filings and Consents....19
Section 4.05. Brokers.......................................19
Section 4.06. Absence of Litigation.........................19
Section 4.07. Compliance with Laws..........................19
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Section 4.08. Financial Ability to Close....................20
Section 4.09. Forest City Notes.............................20
Section 4.10. Share Validity................................20
Section 4.11. Securities Law Compliance.....................20
Section 4.12. Public Filings................................21
Section 4.13. No Material Adverse Change....................21
ARTICLE V COVENANTS.......................................................21
Section 5.01. Affirmative Covenants of Seller...............21
Section 5.02. No-Shop Provisions............................23
Section 5.03. Access and Information........................23
Section 5.04. Notice of Breach; Supplemental Disclosure.....23
Section 5.05. Cooperation...................................24
Section 5.06. Governmental Permits and Approvals; Consents..24
Section 5.07. Publicity.....................................24
Section 5.08. Transaction Costs.............................24
Section 5.09. Parent Guarantee..............................24
Section 5.10. Competition...................................24
Section 5.11. Confidential Information......................26
Section 5.12. Tax Matters...................................27
Section 5.13. Audit of CLT's 1996, 1997, and 1998 Financial
Statements....................................28
Section 5.14. Disclaimer of Other Representations and
Warranties....................................28
Section 5.15. Transition Services...........................28
Section 5.16. Performance/Surety Bonds; Letters of Credit...28
Section 5.17. Securities Law Covenant to Permit Use of
Rule 144......................................29
Section 5.18. Post-Closing Documents for Transfer of
Premises......................................29
Section 5.19. Payment of Accrued Vacation Amounts...........29
ARTICLE VI INDEMNIFICATION.................................................29
Section 6.01. Indemnification of Parent and Buyer...........29
Section 6.02. Indemnification of Seller.....................29
Section 6.03. Procedures for Claims Between the Parties.....29
Section 6.04. Defense of Third-Party Actions................30
Section 6.05. Limitations on Indemnification................30
Section 6.06. Calculation of Losses.........................30
Section 6.07. Survival; Remedies............................30
ARTICLE VII CLOSING CONDITIONS..............................................31
Section 7.01. Conditions to Closing of Parent and Buyer.....31
Section 7.02. Conditions to Obligations of Seller...........32
ARTICLE VIII MISCELLANEOUS...................................................33
Section 8.01. Termination...................................34
Section 8.02. Notices.......................................34
Section 8.03. Attorneys' Fees and Costs.....................35
Section 8.04. Further Assurances............................35
Section 8.05. Counterparts; Facsimiles......................35
Section 8.06. Certain Definitions...........................35
Section 8.07. Assignment; Third Parties.....................36
Section 8.08. Entire Agreement..............................36
Section 8.09. Specific Performance..........................36
Section 8.10. Access to Records.............................36
Section 8.11. Indemnification of Brokerage..................37
Section 8.12. Computation of Days; Holidays.................37
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Section 8.13. Payment of Amounts Received After Closing;
Pre-Closing Checks............................37
Section 8.14. Governing Law.................................37
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LIST OF SCHEDULES AND EXHIBITS
EXHIBITS
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A Mortgage
B Security Agreement
C Administrative Services Agreement
D Xxxx of Sale
E Assignment of Patents, Copyrights and Trademarks
F Xxxxx Xxxxx Employment Agreement
G Assignment and Assumption Agreement
H FCAP Estoppel Certificate
SCHEDULES
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1.02 Excluded Assets
1.03 Assumed Liabilities
1.04 Excluded Liabilities
2.02 Asset and Liability Accounts Constituting Net Asset Value
3.04 No Conflict; Required Filings and Consents
3.05 Non-Compliance with Laws
3.06(a) Assets
3.06(b) Liens
3.08(a) Audited Financial Statements
3.06(b) Internally-Prepared Financial Statements
3.09 Changes Since Latest Balance Sheet
3.10 Litigation
3.11(a) Employee Benefit Plans
3.11(b) Post-Termination Benefits; Stay Put Bonuses
3.11(c) Non-At Will Employees; Employees with Employment Agreements
3.11(g) Severance Agreements, Plans, Policies
3.11(h) Amendments/Terminations of Plans since Balance Sheet Date
3.12(e) Taxes
3.13 Environmental Matters
3.15 Insurance
3.16 Condition and Sufficiency of Assets
3.17 Intellectual Property
3.18(a) Material Contracts
3.18(b) Material Permits
3.18(c) Breaches under Contracts and Permits
3.19 Employees
4.09 FCAP Transaction Documents
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated November 3,
1999 to be effective as of October 29, 1999 (the "Effective Date"), entered
into by and among TYLER TECHNOLOGIES, INC., a Delaware corporation ("Parent"),
CLT COMPANY, a Delaware corporation and wholly-owned subsidiary of Parent
("Buyer"), and DAY & XXXXXXXXXX, L.L.C., a Delaware limited liability company
("Seller").
BACKGROUND
Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, on a going concern basis, certain of the assets and properties of Xxxx
Layer Xxxxxxx Company, a division of Seller ("CLT"), primarily used in its
property tax outsourcing solutions business (the "Business"), and to further
transfer certain of the liabilities of the Business, on the terms and subject
to the conditions set forth in this Agreement.
THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth in this
Agreement and other good and valuable consideration, the receipt and
sufficiency of which all parties mutually acknowledge, the parties, intending
to be legally bound, agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS; CLOSING
Section 1.01. Purchase of Assets. At the Closing (as defined in
Section 1.05), Seller agrees to sell, transfer, assign, convey, and deliver to
Buyer the Assets (as defined below), and Buyer agrees to purchase and take the
Assets, on the terms and subject to the conditions set forth in this Agreement.
Subject to the provisions of Section 1.02, the term "Assets" means all tangible
and intangible assets of Seller primarily used or held for use to conduct the
Business, including, without limitation, unbilled accounts receivable, notes
receivable, inventory, raw materials, equipment, real property, fixtures,
furnishings, leasehold rights, leasehold improvements, vehicles, prepaid
assets, contract rights, licenses and permits (to the extent such licenses and
permits are transferable), customer, prospect, and marketing lists, sales data,
records, computer software and software licenses, proprietary information,
intellectual property, trade secrets, trademarks, copyrights, goodwill
associated with such intellectual property, owned by Seller or acquired by
Seller after the date hereof and prior to the Closing, except those sold or
otherwise disposed of in the ordinary course of business after the date hereof,
and specifically including (without limitation):
(a) all assets described in Schedule 3.06;
(b) all assets reflected on the Latest Balance Sheet (as
defined in Section 3.08), other than Excluded Assets, and all assets
acquired by Seller primarily used or held for use to conduct the
Business after the date of the Latest Balance Sheet, except Excluded
Assets and those assets sold for fair market value to unaffiliated
Persons after such date or otherwise disposed of or retired--in each
case, in the ordinary course of business;
(c) the Intellectual Property (as defined in Section 3.17);
(d) all goodwill associated with the Business and the Assets;
(e) all raw materials, supplies, samples, work-in-process,
finished goods, and other materials included in the inventory of the
Business;
(f) all mailing lists, customer lists, subscriber lists,
processes, computer software, manuals or business procedures, and
other proprietary or confidential information of Seller used primarily
in the Business, including, without limitation, all source and object
codes and documentation related thereto;
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(g) all rights, causes of action, and claims against third
parties relating to the Assets or the Business: (i) with respect to
any products or services that were marketed or sold by CLT prior to
Closing; and (ii) arising from events, transactions and occurrences on
and after the Effective Date (as hereinafter defined); and
(h) all books and records (including all data and other
information stored on computer disks, tapes, and other media) of
Seller primarily relating to the Assets and operations of the
Business.
Section 1.02. Excluded Assets. Notwithstanding the provisions of
Section 1.01, the Assets will exclude the following (the "Excluded Assets"):
(a) all cash, bank deposits, and cash equivalents of the
Business;
(b) the nontransferable permits and licenses and any other
agreement or related documents that are specifically identified in
Schedule 1.02;
(c) the Purchase Price (as hereinafter defined) and all other
rights of Seller under this Agreement;
(d) the accounts receivable related to the Business and
billed in the ordinary course of business as of the Effective Date;
(e) the names "Day & Xxxxxxxxxx", "D&Z", "DZ", all
derivations thereof, and all logos, slogans, trademarks, service marks
(and registrations thereof) associated therewith;
(f) all contracts of insurance;
(g) Seller's employee benefit agreements, plans or
arrangements;
(h) assets shared by Seller and CLT or with any Affiliate or
other divisions of Seller that are not primarily used by or for the
benefit of CLT or the Business (and any other Seller-owned assets not
used by or for the benefit of CLT or the Business);
(i) all Tax credits and Tax refund claims relating to
operating results of the Business up through the Effective Date;
(j) except to the extent that such items are shown as assets
on the Effective Date Balance Sheet (as hereinafter defined), and
except for such claims, causes of actions and rights described in
Section 1.01(g)(i), all claims, causes of action and rights of
recovery arising out of, or relating to, events or occurrences prior
to the Effective Date relating to CLT or the Business, whether
asserted or commenced before, on or after the Effective Date; and
(k) the personal effects, memorabilia and other assets
described on Schedule 1.02.
Section 1.03. Assumed Liabilities. On the Closing Date, Buyer will
assume and agree to discharge as and when due, subject to Section 1.04, the
liabilities of Seller related to the Business set forth below (collectively,
the "Assumed Liabilities"),
(a) the liabilities reflected in Schedule 1.03;
(b) the liabilities set forth on the Closing Statement (as
hereinafter defined);
(c) any liabilities or obligations with respect to any
products or services that were marketed or sold by CLT with respect to
the Business prior to Closing;
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(d) any liabilities and obligations of Seller to be paid or
performed after the Effective Date under (i) the leases, contracts and
other agreements set forth on Schedule 3.18, (ii) the leases,
contracts and other agreement relating primarily to CLT and the
Business not required by the provisions of Section 3.18 to be listed
in a schedule to this Agreement, and (iii) the leases, contracts and
other agreements relating primarily to CLT and the Business entered
into by Seller after the date hereof consistent with the provisions of
this Agreement; and
(e) all liabilities and obligations arising from events,
occurrences and transactions after the Effective Date related to
Buyer's ownership of the Assets and operation of the Business.
Section 1.04. Excluded Liabilities. It is understood and agreed that
Buyer will not assume or be obligated to pay, perform, or otherwise discharge
any liability or obligation of Seller or any other Person of any nature, direct
or indirect, whether absolute, accrued, contingent, liquidated or otherwise,
and whether due or to become due, asserted or unasserted, known or unknown, not
expressly assumed by Buyer pursuant to this Agreement (collectively, the
"Excluded Liabilities"), and all Excluded Liabilities shall remain the
obligations of Seller. The Excluded Liabilities include, without limitation,
the following:
(a) the liabilities or obligations set forth on Schedule
1.04;
(b) the liabilities or obligations in respect of Excluded
Assets (it being understood that the liability on the Closing
Statement "Fees Billed Not Earned" shall not be an Excluded
Liability);
(c) all costs and expenses incurred by Seller incident to its
negotiation and preparation of this Agreement and its performance and
compliance with the agreements and conditions contained herein;
(d) any indebtedness for borrowed money of Seller;
(e) any fees due to Xxxx Xxxxx Xxxx Xxxxxx Incorporated
("Xxxx Xxxxx") in connection with the transactions contemplated by
this Agreement; and
(f) any liabilities for Taxes payable by Seller or CLT for
operation of the Business during periods prior to and including the
Effective Date, except to the extent set forth on the Closing
Statement.
Section 1.05. Closing. The Closing of the transactions contemplated by
this Agreement (the "Closing") will take place at the offices of Buyer (or such
other place as the parties may agree) within five (5) business days after the
satisfaction or waiver of the conditions to Closing set forth in Article VII
(other than those conditions that constitute deliveries at the Closing) but in
no event later than November 8, 1999 (the "Outside Date"). Notwithstanding the
foregoing, the Closing will not take place unless all of the conditions set
forth in Article VII have been satisfied or waived on the date of the Closing
determined as provided above. The date of the Closing is referred to herein as
the "Closing Date." Notwithstanding the date that the Closing actually occurs,
the Closing shall be deemed to have occurred as of 11:59 pm (EDT) on the
Effective Date.
Section 1.06. Further Assurances. At or after the Closing, and without
further consideration, Seller, Parent, and Buyer will execute and deliver to
each other such further instruments of conveyance and transfer as any party may
reasonably request in order more effectively to convey and transfer the Assets
to Buyer, to put Buyer in operational control of the Business, or to aid or
assist the collecting and reducing to possession of any of the Assets and
exercising rights with respect to any of the Assets provided that no such
instruments will subject any party to any loss, cost, liability, obligation,
expense, or risk not contemplated by this Agreement.
Section 1.07. Assets Not Assignable. Subject to Section 5.06(b)
hereof, to the extent that any interest in a lease, contract, permit, license
or other Asset is not capable of being assigned, transferred or conveyed
without the consent, waiver or authorization of a third Person (including a
Governmental Entity), or if such assignment, transfer or conveyance or
attempted assignment, transfer or conveyance would constitute a breach of any
of such lease, contract, permit, license or other Asset, or a violation of any
Law (as hereinafter defined) or is not immediately practicable, this Agreement
shall not constitute an assignment, transfer or conveyance of such interest, or
an attempted assignment, transfer or conveyance of such interest,
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or an attempted assignment, transfer or conveyance of such interest (any such
interest being referred to herein as a "Restricted Interest"). Anything in this
Agreement to the contrary notwithstanding, Seller shall not be obligated to
transfer to Buyer any Restricted Interest without first having obtained the
required consent, waiver or authorization necessary for such transfer.
ARTICLE II
PURCHASE PRICE
Section 2.01. Purchase Price. Subject to adjustment as provided in
this Article II, the purchase price for the Assets shall consist of the
following ((a) through (d) below are collectively referred to herein as the
"Purchase Price"):
(a) $3,000,000 cash (the "Closing Cash Payment");
(b) that certain Senior Subordinated Secured Promissory Note
due March 26, 2002 of Forest City Auto Parts Company, a Delaware
corporation ("FCAP"), as maker, dated March 26, 1999 in the original
principal amount of $1,155,000;
(c) that certain Senior Subordinated Secured Promissory Note
due March 26, 2002 of FCAP, as maker, dated March 26, 1999 in the
original principal amount of $2,000,000 (collectively with (b), the
"Forest City Notes"); and
(d) 1,000,000 shares of Parent's common stock, $.01 par value
per share (collectively, the "Parent Shares").
Section 2.02. Adjustments to the Purchase Price. The Purchase Price
will be subject to the following two (2) adjustments, the net amount of which
will be transferred, subject to Sections 2.02(c) and (d), between Parent and
Buyer on the one hand and Seller on the other hand within ten (10) days
following the ninetieth (90th) day immediately following Closing:
(a) Accounts Receivable Adjustment.
(i) Within ten (10) days after the Closing Date,
Seller will prepare and deliver to Parent a schedule (the
"Initial Statement") setting forth the gross face amount of
all accounts receivable related to the Business that have
been billed in the ordinary course of business as of the
Effective Date (collectively, the "Effective Date Billed
A/R"). During the period commencing on the Closing Date and
continuing for ninety (90) days thereafter (the "Collection
Period"), each of Parent, Buyer, and Seller covenants and
agrees to use its respective commercially reasonable efforts
to collect all Effective Date Billed A/R, including
cooperation with the other party as may be reasonably
requested by such party. In the event that during the
Collection Period Parent or Buyer receive any payment in
respect of Effective Date Billed A/R, Parent or Buyer, as
applicable, shall promptly remit such payment to the lockbox
for the Effective Date Billed A/R maintained by Seller.
Within five (5) business days after expiration of the
Collection Period, Seller shall prepare and deliver to Parent
a new schedule (the "Final Statement") setting forth: (i) all
Effective Date Billed A/R that has been collected during the
Collection Period (collectively, the "Collected Effective
Date Billed A/R"); and (ii) all Effective Date Billed A/R
that has not been collected during the Collection Period
(collectively, the "Uncollected Effective Date Billed A/R")
together with a brief statement regarding the collection
efforts of Seller with respect to such Uncollected Effective
Date Billed A/R that are in excess of $10,000 and the reason
for the delinquency of such accounts
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(ii) In the event that the aggregate amount of the
Effective Date Billed A/R as shown on the Final Statement is
less than $5,995,388 (the "Target A/R Amount") but equals or
exceeds $5,750,000, within ten (10) days after the delivery
of the Final Statement:
(A) Seller shall pay to Buyer in
immediately available funds the amount by which the
Target A/R Amount exceeds the aggregate amount of
the Effective Date Billed A/R (the "Deficiency
Amount");
(B) Parent's maximum liability under the
Price Protection Guaranty (as defined in Section
2A.05(a)) shall be reduced by the amount of the
Deficiency Amount; provided that such reduction
shall not exceed $250,000; and
(C) Buyer shall purchase from Seller all
Uncollected Effective Date Billed A/R, if any, for a
price equal to the aggregate gross face amount of
such accounts (which purchase price shall be payable
in immediately available funds) (it being understood
that the payment described in clause (A) and the
payment described in (C), if any, shall be netted
against each other).
[By way of illustration, if the Effective Date
Billed A/R as shown on the Final Statement is $5,800,000 and
the Collected Effective Date Billed A/R as shown thereon is
$5,700,000: (i) Seller pays $195,388 to Buyer; (ii) Parent's
maximum liability under the Price Protection Guaranty is
reduced by $195,388; and (iii) Buyer purchases from Seller
the $100,000 of Uncollected Effective Date Billed A/R for a
price equal to $100,000 (which payment is netted against the
$195,388 payment from Seller resulting in a net payment to
Buyer of $95,388).]
(iii) In the event that the aggregate amount of the
Effective Date Billed A/R as shown on the Final Statement is
less than $5,750,000 but equals or exceeds $5,500,000, within
ten (10) days after the delivery of the Final Statement:
(A) Seller shall pay to Buyer in
immediately available funds the Deficiency Amount;
(B) Parent's maximum liability under the
Price Protection Guaranty shall be reduced by
$250,000; and
(C) The Target Per Share Proceeds (as
defined in Section 2A.05(a)) shall be reduced by the
product derived by multiplying $0.25 by a fraction,
the numerator of which equals the amount by which
the Effective Date Billed A/R is less than
$5,750,000, and the denominator of which equals
$250,000; and
(D) Buyer shall purchase from Seller all
Uncollected Effective Date Billed A/R, if any, for a
price equal to the aggregate gross face amount of
such accounts (which purchase price shall be payable
in immediately available funds) (it being understood
that the payment described in clause (A) and the
payment described in (D), if any, shall be netted
against each other).
[By way of illustration, if the Effective Date
Billed A/R as shown on the Final Statement is $5,600,000 and
the Collected Effective Date Billed A/R as shown thereon is
$5,400,000: (i) Seller pays $395,388 to Buyer; (ii) Parent's
maximum liability under the Price Protection Guaranty is
reduced by $250,000; (iii) the Target Per Share Proceeds is
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reduced by $0.15 to $6.35; and (iv) Buyer purchases from
Seller the $200,000 of Uncollected Effective Date Billed A/R
for a price equal to $200,000 (which payment is netted
against the $395,388 payment from Seller resulting in a net
payment to Buyer of $195,388).]
(iv) In the event that the aggregate amount of the
Effective Date Billed A/R as shown on the Final Statement is
less than $5,500,000 but equals or exceeds $5,000,000, within
ten (10) days after the delivery of the Final Statement:
(A) Seller shall pay to Buyer in
immediately available funds the Deficiency Amount;
(B) Parent's maximum liability under the
Price Protection Guaranty shall be reduced by
$250,000;
(C) The Target Per Share Proceeds shall be
reduced by $0.25; and
(D) Buyer shall purchase from Seller all
Uncollected Effective Date Billed A/R, if any, for a
price equal to the aggregate gross face amount of
such accounts (which purchase price shall be payable
in immediately available funds) (it being understood
that the payment described in clause (A) and the
payment described in (D), if any, shall be netted
against each other).
[By way of illustration, if the Effective Date
Billed A/R as shown on the Final Statement is $5,300,000 and
the Collected Effective Date Billed A/R as shown thereon is
$5,100,000: (i) Seller pays $695,388 to Buyer; (ii) Parent's
maximum liability under the Price Protection Guaranty is
reduced by $250,000; (iii) the Target Per Share Proceeds is
reduced by $0.25 to $6.25; and (iv) Buyer purchases from
Seller the $200,000 of Uncollected Effective Date Billed A/R
for a price equal to $200,000 (which payment is netted
against the $695,388 payment from Seller resulting in a net
payment to Buyer of $495,388).]
(v) In the event that the aggregate amount of the
Effective Date Billed A/R as shown on the Final Statement
exceeds the Target A/R Amount, within ten (10) days after the
delivery of the Final Statement Buyer shall purchase from
Seller all Uncollected Effective Date Billed A/R, if any, for
a price equal to the aggregate gross face amount of such
accounts (which purchase price shall be payable in
immediately available funds);
[By way of illustration, if the Effective Date
Billed A/R as shown on the Final Statement is $6,200,000 and
the Collected Effective Date Billed A/R as shown thereon is
$5,800,000, Buyer purchases from Seller the $400,000 of
Uncollected Effective Date Billed A/R for a price equal to
$400,000.]
(vi) In the event that the aggregate amount of the
Effective Date Billed A/R as shown on the Final Statement is
less than $5,000,000, within ten (10) days after the delivery
of the Final Statement:
(A) Seller shall pay to Buyer in
immediately available funds the Deficiency Amount
plus the amount by which by which the aggregate
amount of the Effective Date Billed A/R is less than
$5,000,000;
(B) Parent's maximum liability under the
Price Protection Guaranty shall be reduced by
$250,000;
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(C) The Target Per Share Proceeds shall be
reduced by $0.25; and
(D) Buyer shall purchase from Seller all
Uncollected Effective Date Billed A/R, if any, for a
price equal to the aggregate gross face amount of
such accounts (which purchase price shall be payable
in immediately available funds) (it being understood
that the payment described in clause (A) and the
payment described in (C), if any, shall be netted
against each other);
[By way of illustration, if the Effective Date
Billed A/R as shown on the Final Statement is $4,600,000 and
the Collected Effective Date Billed A/R as shown thereon is
$4,300,000: (i) Seller pays $1,795,388 ($1,395,388 +
$400,000) to Buyer; (ii) Parent's maximum liability under the
Price Protection Guaranty is reduced by $250,000; (iii) the
Target Per Share Proceeds is reduced by $0.25 to $6.25; and
(iv) Buyer purchases from Seller the $300,000 of Uncollected
Effective Date Billed A/R for a price equal to $300,000
(which payment is netted against the $1,795,388 payment from
Seller resulting in a net payment to Buyer of $1,495,388).]
(vii) The adjustment pursuant to clauses (ii),
(iii), (iv), (v) or (vi) above is hereinafter referred to as
the "A/R Adjustment". Seller shall use commercially
reasonable efforts to assist Buyer in the collection of any
Uncollected Effective Date Billed A/R following the transfer
of such accounts by Buyer, including, without limitation,
promptly delivering all funds received by Seller in relation
to such accounts receivable.
(b) Net Asset Value Adjustment.
(i) The Purchase Price will be adjusted upwards or
downwards in an amount equal to the difference between the
Closing Net Asset Value and the Agreed Net Asset Value (the
"Net Asset Adjustment"). For purposes of this Agreement, the
term "Closing Net Asset Value" means the net assets of the
Business as of the Effective Date (determined on a basis
consistent with Seller's past practice in preparing internal
financial statements and in accordance with generally
accepted accounting principles ("GAAP"), subject to the
exceptions to GAAP described in Section 3.08) based upon the
asset and liability accounts set forth on Schedule 2.02
representing the Assets and the Assumed Liabilities, and the
term "Agreed Net Asset Value" means minus Nine Hundred
Seventy-Six Thousand Eight-Hundred Twenty-Six Dollars
(-$976,826).
(ii) Within ninety (90) calendar days after the
Closing Date, Seller shall prepare and deliver to Buyer a
closing statement as of the close of business on the
Effective Date (the "Closing Statement"), prepared on a basis
consistent with Seller's past practice in preparing internal
financial statements and in accordance with GAAP, subject to
the exceptions to GAAP described in Section 3.08 setting
forth a calculation of the Closing Net Asset Value and the
Net Asset Adjustment, and shall certify that the Closing
Statement has been prepared in accordance with GAAP, subject
to the exceptions to GAAP described in Section 3.08.
(c) Dispute Resolution. If Buyer objects to any amounts
reflected on the Final Statement, or the Closing Statement, within ten
(10) days after Buyer's receipt of the Final Statement and Closing
Statement, Buyer must give written notice (the "Notice") to Seller
specifying in reasonable detail its objections, or Seller's
determination of the A/R Adjustment and Net Asset Adjustment shall be
final, binding, and conclusive on the parties. With respect to any
disputed amounts, the parties shall meet in person and negotiate in
good faith during the fifteen (15) day period (the "Resolution
Period") after the date of Seller's receipt of the Notice to resolve
any such disputes. Seller shall have the right to consult with and
seek the advice of PricewaterhouseCoopers LLP (CLT's prior auditors)
in the event that Buyer proposes auditing or financial reporting
practices, policies or principles that differ from those used by CLT
in preparing the Financial Statements (as defined in Section 3.08). If
the parties are unable to resolve all such
13
disputes within the Resolution Period, then within five (5) business
days after the expiration of the Resolution period, all disputes shall
be submitted to KPMG Peat Marwick, LLP (the "Independent Accountant")
who shall be engaged to provide a final and conclusive resolution of
all unresolved disputes within forty-five (45) days after such
engagement. The determination of the Independent Accountant shall be
final, binding and conclusive on the parties hereto, and the fees and
expenses of the Independent Accountant shall be borne by the party
who, in the Independent Accountant's determination, submitted a
disputed amount that differs more significantly from the amount
finally determined by the Independent Accountant. From and after the
Closing Date, Buyer will provide Seller with access to the books,
records, and personnel of Buyer that Seller reasonably determines is
necessary to prepare the Final Statement and Closing Statement.
(d) Adjustment Amounts Paid in One Transaction. The A/R
Adjustment and Net Asset Adjustment will be conducted in one
transaction, and the payments to be made between Buyer, on the one
hand, and Seller, on the other hand, pursuant to this Section 2.02
shall be netted against each other. Such payment shall occur within
ten (10) days following delivery of the Final Statement and Closing
Statement and shall be made in immediately available funds, or in the
event of a dispute that is resolved pursuant to Section 2.02(c),
within ten (10) days after the final resolution of such dispute.
Section 2.03. Allocation of Purchase Price. Within ten (10) business
days after the date hereof, Buyer and Seller shall agree upon a schedule
allocating the Purchase Price among the Assets. The parties agree to file IRS
Form 8594 containing the information agreed upon by the parties pursuant to
this Section 2.03 with their respective federal income tax returns for the tax
year in which the Closing occurs. Each of Seller and Buyer agrees not to assert
for income tax purposes (including in connection with any tax return, tax audit
or similar proceeding) any allocation of the Purchase Price that differs from
that determined pursuant to this section and contained in IRS Form 8594.
ARTICLE IIA
PROVISIONS RELATING TO PARENT SHARES
Section 2A.01. Delivery of Parent Shares. Within ten (10) business
days of the Closing, Parent will deliver a certificate or certificates
representing the Parent Shares to Seller, in such denominations and in such
names as Seller may request.
Section 2A.02. Rights of Seller. As of the Closing and subject to the
restrictions set forth in Section 2A.04, Seller will have all rights, including
voting rights and dividend rights, as all other holders of Parent's common
stock.
Section 2A.03. NYSE Listing. After the Closing, Parent shall cause the
Parent Shares to be approved for listing (subject to official notice of
issuance) on the New York Stock Exchange.
Section 2A.04. Restrictions on Transfer; Legend. The Parent Shares
issued pursuant to this Agreement will not be registered under the Securities
Act of 1933, as amended (the "Securities Act"). Any sale, assignment, gift,
pledge, disposal, or other transfer of the Parent Shares by Seller must be made
in compliance with the Securities Act. Each certificate representing Parent
Shares will bear substantially the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED, OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REQUIREMENTS OF ALL
SUCH LAWS.
14
Section 2A.05. Price Protection on Parent Shares; Security Interest.
(a) If Seller sells any of the Parent Shares in accordance
with federal securities laws during the period commencing on the first
anniversary of the Closing and ending on the second anniversary of
Closing (the "Price Protection Period") for net proceeds per share
less than $6.50 (the "Target Per Share Proceeds"), then, upon
presentment to Parent of reasonable documentation evidencing such sale
and net proceeds, Parent will deliver to Seller in immediately
available funds an amount per Parent Share sold during the Price
Protection Period equal to the difference between the actual sale
proceeds and the Target Per Share Proceeds (the "Price Protection
Guaranty"); provided, however, that in no event shall Parent be
obligated to pay Seller an amount under the Price Protection Guaranty
in excess of $3,000,000. The payment, if any, from Parent to Seller
pursuant to this Section 2A.05(a) shall be made in cash and shall
occur within five (5) business days after the end of each calendar
quarter during the Price Protection Period in respect of the sales of
Parent Shares, if any, that occurred during such calendar quarter.
(b) In order to secure the full and complete payment and
performance of Parent's obligation under the Price Protection
Guaranty, Parent and Buyer hereby grant to Seller: (i) a first
mortgage lien on the land and improvements located at 0000 Xxxxxxxxx
Xxxx, Xxxxxx, Xxxx 00000 included in the Assets (the "Premises")
pursuant to a certain Mortgage substantially in the form of Exhibit A
attached hereto (the "Mortgage"); and (ii) a first priority security
interest in the intellectual property and licenses (and the proceeds
thereof) associated with the IAS software programs included in the
Assets pursuant to a certain Security Agreement substantially in the
form of Exhibit B attached hereto (the "Security Agreement").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement and to Parent
to guarantee and be jointly and severally liable for the obligations of Buyer
contained in this Agreement, Seller hereby represents and warrants to Buyer and
Parent as follows:
Section 3.01. Organization and Qualification. Seller is a limited
liability company duly formed, validly existing, and in good standing under the
Laws of the State of Delaware, has all requisite power and authority to own,
lease, and operate its properties and to carry on its business as it is now
being conducted, and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary,
other than where the failure to be so duly qualified and in good standing would
not have a Material Adverse Effect. "Material Adverse Effect" means any change,
effect, or condition that, individually or when taken together with all other
such changes, effects, or conditions, would be materially adverse to the
business, operations, assets, financial condition, or results of operations of
the Business; provided that the effects of any events, circumstances or
conditions resulting from changes, developments or circumstances in worldwide,
national or local conditions (political, economic, regulatory or otherwise)
that adversely affect the markets in which CLT operates or affects industries
related to the Business generally (including proposed legislation or regulation
by any Governmental Entity or the introduction of any technological changes in
CLT's industry), or adversely affect a broad group of industries generally,
shall constitute a Material Adverse Effect.
Section 3.02. Organization Documents. Seller has furnished to Buyer a
true, complete, and correct copy of the certificate of formation and operating
agreement of Seller, as amended or restated to the date of this Agreement.
Seller is not in violation of any of the provisions of its certificate of
formation or operating agreement, as so amended, and such remain in full force
and effect.
Section 3.03. Authority. Seller has all requisite power and authority
to execute and deliver this Agreement and the other documents contemplated by
this Agreement (the "Ancillary Agreements") to which it is a party, to perform
its obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Ancillary Agreements to which Seller is a party
15
by Seller and the consummation by Seller of the transactions contemplated
hereby and thereby have been duly authorized by all necessary limited liability
company action and no other proceedings on the part of Seller are necessary to
authorize this Agreement or the Ancillary Agreements to which Seller is a party
or to consummate the transactions contemplated hereby or thereby. This
Agreement and the Ancillary Agreements have been duly executed and delivered by
Seller that are parties thereto and, assuming the due authorization, execution
and delivery of this Agreement and the Ancillary Agreements by Buyer and
Parent, constitute the legal, valid, and binding obligations of Seller,
enforceable in accordance with their respective terms, except to the extent
that their enforcement is limited by bankruptcy, insolvency, reorganization or
other Laws relating to or affecting the enforcement of creditors' rights
generally and by general principles of equity.
Section 3.04. No Conflict; Required Filings and Consents.
(a) Except as set forth in Schedule 3.04(a), the execution
and delivery of this Agreement and the Ancillary Agreements by Seller
do not, and the consummation of the transactions contemplated hereby
and thereby will not, (i) conflict with or violate the certificate of
formation or operating agreement of Seller, as amended or restated to
the date of this Agreement; (ii) conflict with or violate in any
respect any federal, state, foreign, or local law, statute, ordinance,
rule, regulation, order, judgment, or decree, including, without
limitation, laws relating to employment discrimination, fair
employment practices, fair labor standards, equal employment
opportunity, individual or collective employee rights, and
occupational health and safety (collectively, "Laws") applicable to
Seller or by which any of the Assets or the Business is bound or
subject; or (iii) result in any breach of or constitute a default (or
an event that with notice or lapse of time or both would become a
default) under, or give to any other Person any rights of termination,
amendment, acceleration, or cancellation of, or require payment under,
or result in the creation of a Lien (as hereinafter defined) on any of
the Assets pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, or other
material instrument or obligation to which Seller is a party or by or
to which Seller or any of the Assets is bound or subject.
(b) Except for the consents of the Governmental Entities and
other Persons described on Schedule 3.04(b), the execution and
delivery of this Agreement and the Ancillary Agreements by Seller does
not, and consummation of the transactions contemplated hereby and
thereby will not, require Seller to obtain any material consent,
license, permit, approval, waiver, authorization, or order of, or to
make any filing with or notification to, any governmental or
regulatory authority, domestic or foreign (collectively, "Governmental
Entities"), or any other Person.
Section 3.05. Permits; Compliance. Seller is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals, and orders necessary to own,
lease, and operate the properties and Assets and to carry on the Business as it
is now being conducted and currently proposed to be conducted (collectively,
the "Permits"), other than those Permits the failure of which to possess has
not had and would not reasonably be expected to have a Material Adverse Effect.
There is no action, proceeding, or investigation pending or, to the knowledge
of Seller, threatened regarding suspension or cancellation of any of the
Permits. Seller is not in conflict with or in default or violation of (a) any
Law applicable to Seller or by or to which any of the Assets is bound or to
which they may be subject or (b) any of the Permits, other than such conflicts,
defaults or violations that have not had and would not reasonably be expected
to have a Material Adverse Effect. Except as set forth on Schedule 3.05, since
January 1, 1997, Seller has not received any written notice with respect to
possible conflicts, defaults, or violations of Laws from any Governmental
Entity.
Section 3.06. Title to Assets.
(a) Set forth in Schedule 3.06(a) is a complete list
(including the street address, where applicable) of (i) all real
property owned, leased, or otherwise used by Seller in the Business;
(ii) each vehicle owned or leased by Seller used in the Business; and
(iii) each asset of Seller used primarily in the Business with a book
value or fair market value greater than $1,000.
16
(b) Seller has good and marketable title to all of the Assets
and owns all of the Assets free and clear of any liabilities,
obligations, liens, claims, security interests or, encumbrances of any
nature (collectively, "Liens"), other than (i) statutory Liens
securing current taxes and other obligations that are not yet
delinquent; (ii) the Liens described in Schedule 3.06(b) that are
designated to survive the Closing (including all Liens associated with
the Assumed Liabilities); (iii) the Liens described in Schedule
3.06(b) that are designated to be discharged prior to the Closing;
(iv) any Lien arising out of deposits made to secure leases or other
obligations of a like nature constituting Assumed Liabilities arising
in the ordinary course of business; and (v) any Lien that does not
materially interfere with the use by CLT of the real property or
leasehold interests subject thereto or affected thereby (including any
easements, rights of way, restrictions, installations or public
utilities, title imperfections and restrictions, reservations in land
patents, zoning ordinances or other similar Liens) or otherwise does
not materially impair the results of operations or financial results
of CLT considered as a whole. The execution and delivery of this
Agreement and the Ancillary Agreements by Seller at the Closing will
convey to and vest in Buyer good and marketable title to the Assets,
free and clear of any Liens, except the Liens described in clauses
(i), (ii), (iv), and (v) of the preceding sentence, and will convey to
and vest in Buyer all of Seller's rights in and to the real estate,
goodwill, and Intellectual Property included in the Assets.
Section 3.07. Inclusiveness of Assets. The Assets constitute all
assets (other than the Excluded Assets) used by Seller primarily in the conduct
of the Business.
Section 3.08. Financial Statements.
(a) Attached as Schedule 3.08 are true, correct, and complete
copies of (i) the audited financial statements of CLT as of and for
the fiscal year ended December 25, 1998 (the "Balance Sheet Date"),
including balance sheets and statements of income, cash flows, and
changes in members' equity, as audited by Seller's independent
certified public accountants, which are attached as Schedule 3.08(a);
and (ii) the internally-prepared financial statements of CLT as of and
for the period ended September 2, 1999, including a balance sheet as
of such date (the "Latest Balance Sheet") and a statement of income,
which are attached as Schedule 3.08(b) (collectively, the "Financial
Statements"). The Financial Statements present fairly, in all material
respects, the financial position of CLT at the dates shown and the
results of operations and cash flows for the periods covered thereby
in accordance with GAAP applied on a consistent basis, except that (A)
CLT does not capitalize the development costs associated with certain
computer software in accordance with GAAP, (B) CLT does not recognize
revenue associated with certain computer software in accordance with
GAAP, (C) reserves for bad debt are not treated in conformity with
GAAP, (D) intercompany accounts are not treated in conformity with
GAAP, (E) foreign, federal, state, and local income tax liability is
not accrued on CLT's financial statements in accordance with GAAP, (F)
the methodology used by CLT to calculate the bonus accruals under its
"Operation Incentive Plan" is not accordance with GAAP, and (G) the
interim Financial Statements lack footnotes, year-end adjustments, and
other items required by GAAP to be included in audited statements.
(b) Except for (i) liabilities reflected in the Latest
Balance Sheet; (ii) current liabilities of the same type and relative
amount as those reflected in the Latest Balance Sheet (that would be
disclosed under the same captions in a balance sheet prepared in
accordance with GAAP consistently applied and subject to the
exceptions described in subsection (a) above) incurred in the ordinary
course of business, consistent with past practice, since the date of
the Latest Balance Sheet; and (iii) liabilities disclosed in Schedule
3.09, CLT has no liabilities of any sort relating to the Business,
whether absolute or contingent, due or to become due, known or
unknown, asserted or unasserted.
Section 3.09. Absence of Certain Changes or Events. Except as
contemplated by this Agreement or as set forth in Schedule 3.09, since the
Latest Balance Sheet, Seller has conducted the Business only in the ordinary
course and in a manner consistent with past practice, and there has not been
(a) any damage, destruction, or loss (whether or not covered by insurance) with
respect to any of the Assets that exceeds $50,000; (b) any change by Seller in
its accounting or tax reporting methods, principles, or practices with respect
to the Business; (c) any increase in the benefits under, or the establishment
or amendment of, any bonus, insurance, severance, deferred
17
compensation, pension, retirement, profit sharing, or other employee benefit
plan, or any increase in the compensation payable to officers or employees of
Seller relating to the Business or CLT (other than regularly scheduled
compensation increases in the ordinary course of business); (d) any entry by
Seller into any material commitment or transaction relating to or affecting the
Business or the Assets not in the ordinary course of business and consistent
with past practice (other than this Agreement and the transactions contemplated
by this Agreement); and (e) any Material Adverse Effect.
Section 3.10. Absence of Litigation. Except as set forth on Schedule
3.10, there is no claim, action, suit, litigation, proceeding, arbitration, or
investigation of any kind, at law or in equity (including actions or
proceedings seeking injunctive relief), pending or threatened against Seller
relating to the Business, the Assets, CLT, or this Agreement or the
transactions contemplated hereby, and Seller is not subject to any continuing
order of, judgment, writ, injunction, decree, award, consent decree, settlement
agreement, or other similar written agreement with, or continuing investigation
by, any Governmental Entity or arbitrator relating to the Business, the Assets,
CLT, or this Agreement.
Section 3.11. Employee Benefit Plans; Labor Matters.
(a) Set forth on Schedule 3.11(a) is a complete list of all
of Seller's "employee benefit plans" (as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) in which
the employees of CLT or of Seller primarily used in the Business are
eligible to participate and any other plan or policy providing for
"fringe benefits" (including, but not limited to, vacation, paid
holidays, personal leave, employee discount, educational benefit, or
similar programs) in which such employees are eligible to participate,
and each other bonus, incentive, compensation, deferred compensation,
profit sharing, stock, severance, retirement, health, life,
disability, group insurance, employment, stock option, stock purchase,
stock appreciation right, supplemental unemployment, layoff,
consulting, or any other similar plan, agreement, policy, or
understanding (whether written or oral, qualified or nonqualified,
currently effective or terminated) covering such employees, and any
trust, escrow, or other agreement related thereto that (i) is or has
been established, maintained, or contributed to by Seller or any ERISA
Affiliate (as defined below) or with respect to which Seller or any
ERISA Affiliate has any liability, or (ii) provides benefits, or
describes policies or procedures applicable, to any officer, employee,
director, former officer, former employee, or former director of CLT
or any ERISA Affiliate, or any dependent thereof, regardless of
whether funded (each, an "Employee Plan", and collectively, the
"Employee Plans"). For purposes of this Agreement, "ERISA Affiliate"
means Seller and each Person or other trade or business, whether or
not incorporated, that is or has been treated as a single employer or
controlled group member with Seller pursuant to Code section 414 or
ERISA section 4001.
(b) No written or oral representations have been made by
Seller or CLT to any employee or officer or former employee or officer
of CLT or of Seller primarily used in the Business promising or
guaranteeing any coverage under any employee welfare plan for any
period of time beyond the end of the current plan year (except to the
extent of coverage required under Code section 4980B), and, except as
set forth on Schedule 3.11(b), no Employee Plan provides benefits to
any employee of CLT or of Seller primarily used in the Business or any
ERISA Affiliate or any employee's dependents after the employee
terminates employment other than as required by law. Except for the
"stay put" bonuses to which certain of the employees of Seller
primarily used in the business are entitled as set forth on Schedule
3.11(b), the consummation of the transactions contemplated by this
Agreement will not accelerate the time of payment or vesting, or
increase the amount of compensation (including amounts due under
Employee Plans) due to any employee, officer, former employee, or
former officer of CLT or of Seller primarily used in the Business.
(c) Except as set forth on Schedule 3.11(c), all employees of
CLT or of Seller used primarily in the Business are terminable at the
will of Seller or CLT, respectively, and neither Seller nor CLT has
made any binding commitments of Seller or CLT, respectively, written
or oral, to any present or former director, officer, agent, or
employee concerning his or her term, condition, or benefits of
employment.
18
(d) Seller has not failed to fund or contribute to, nor has
it terminated, any Employee Plans or other employee pension benefit
plan with respect to which Seller or CLT continues to have an
obligation to contribute or any other liability.
(e) To the knowledge of Seller, neither Seller nor any ERISA
Affiliate nor any plan fiduciary of any Employee Plan has engaged in
any transaction in violation of section 406(a) or (b) of ERISA or any
"prohibited transaction" (as defined in section 4975(c)(1) of the
Code), that has or would reasonably be expected to subject CLT, the
Assets, or the Business to any taxes, penalties, or other liabilities
resulting from such prohibited transaction. To the knowledge of
Seller, no condition exists that would subject CLT, the Assets, or the
Business to any excise tax, penalty tax, or fine related to any
Employee Plan.
(f) Seller is in compliance in all material respects with all
applicable laws respecting employment, employment practices, and wages
and hours regarding employees of CLT or of Seller used primarily in
the Business. There is no pending or, to the knowledge of Seller,
threatened labor dispute, strike, or work stoppage against Seller that
has interfered or would reasonably be expected to interfere with the
operation of the Business. To the knowledge of Seller, since January
1, 1997 neither Seller nor any of its representatives or employees has
committed any unfair labor practices in connection with the operation
of the Business.
(g) Except as set forth on Schedule 3.11(g), there are no
severance agreements, programs, policies, plans, or arrangements,
whether or not written, relating to employees of CLT or of Seller used
primarily in the Business.
(h) Except as set forth on Schedule 3.11(h), CLT has not
amended or terminated any of the Employee Plans since the Balance
Sheet Date.
Section 3.12. Taxes.
(a) All returns and reports (the "Tax Returns") of or with
respect to any Tax that were required to be filed on or prior to the
date hereof by or with respect to Seller relating to the Assets or the
Business have been duly and timely filed. All items of income, gain,
loss, deduction, and credit or other items required to be included in
each such Tax Return have been included, and all information provided
in each such Tax Return is true, correct, and complete in all material
respects. All Taxes with respect to the Assets or the Business that
have been or are due on or prior to the date hereof have been timely
paid in full, except in those cases in which the amount of the Tax is
being disputed in good faith by Seller, in which case such amounts
have been adequately reserved for. To Seller's knowledge, the Business
and Assets are not subject to taxation by any jurisdiction where
Seller does not file Tax Returns. All withholding Tax requirements
imposed on or with respect to Seller relating to the Business or the
Assets have been satisfied in full in all respects. No penalty,
interest, or other charge is due with respect to the late filing of
any such Tax Return or late payment of any such Tax.
(b) There are no pending audits, actions, proceedings,
investigations, disputes, or claims with respect to or against Seller
relating to the Assets or the Business for or with respect to any
Taxes; no assessment, deficiency, or adjustment has been assessed or
proposed with respect to any Tax Return of or with respect to Seller
relating to the Assets or the Business; and to Seller's knowledge,
there is no reasonable basis upon which any claim for a material
amount of Taxes can be asserted against Seller relating to the Assets
or the Business, other than those disclosed (and to which are attached
true and complete copies of all audit or similar reports) on Schedule
3.12(b).
(c) Except for inchoate statutory Liens for current Taxes not
yet due, no Liens for Taxes exist upon the Assets or the Business.
(d) Schedule 3.12(d) sets forth the following information
with respect to Seller as of the most recent practicable date: (i) its
basis in the Assets; and (ii) the amount of any net operating loss,
net capital
19
loss, unused investment or other credit, unused foreign tax, or excess
charitable contributions relating to the Business and the Assets.
Section 3.13. Environmental Matters. Except for matters disclosed in
Schedule 3.13:
(a) to the knowledge of Seller, the Assets and the operations
and activities of the Business comply currently with, and have at all
times that the Business has been owned or controlled by Seller or its
Affiliates complied with, all applicable Environmental Laws (as
defined below);
(b) the Assets and the Business are not subject to any
existing, pending, or, to the knowledge of Seller, threatened action,
suit, claim, investigation, inquiry, or proceeding by or before any
Governmental Entity under any Environmental Law;
(c) to the knowledge of Seller, there are no physical or
environmental conditions (i) existing on any real property used by
Seller primarily in the Business or constituting part of the Assets or
(ii) resulting from Seller's operations or activities in the Business
at any real property occupied by the Business, that would reasonably
be expected to give rise to any on-site or off-site remedial
obligations or other liabilities imposed under any Environmental Laws
or that would adversely affect the soil, groundwater, surface water,
or human health in violation of any applicable Environmental Laws;
(d) to the knowledge of Seller, there has been no exposure of
any Person or real property to hazardous substances or any pollutant
or contaminant in violation of any applicable Environmental Laws
arising from Seller's operation of the Business, nor has there been
any release of hazardous substances or any pollutant or contaminant
into the environment by Seller in violation of any applicable
Environmental Laws in connection with the operation of the Business;
and
(e) Seller has made available to the Buyer all internal and
external environmental audits and studies and all correspondence on
environmental matters in the possession of Seller relating to any of
the Assets or any current or former operations of Seller relating to
the Business.
For purposes of this Agreement, the term "Environmental Laws" means
any and all Laws pertaining to health or the environment currently in effect in
any and all jurisdictions in which Seller owns real property or conducts
business, including without limitation, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended; the
Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended; any state
Laws implementing the foregoing federal Laws; and all other environmental
conservation or protection Laws. For purposes of this Agreement, the terms
"hazardous substance" and "release" have the meanings specified in CERCLA and
RCRA, and the term "disposal" has the meaning specified in RCRA; provided,
however, that to the extent the Laws of the state in which the real property is
located establish a meaning for "hazardous substance," "release," or "disposal"
that is broader than that specified in either CERCLA or RCRA, such broader
meaning will apply with respect to such real property.
Section 3.14. Brokers; Other Transactions. Except for Xxxx Xxxxx, no
broker, finder, or investment banker is entitled to any brokerage, finder's, or
other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Seller. Seller
represents and warrants that except for this Agreement it is not party or
subject to any actual or prospective agreement, arrangement, or understanding,
written or oral, express or implied, involving a sale of a substantial portion
of the Assets or Business (whether through an asset sale, merger, or otherwise
involving Seller or CLT).
Section 3.15. Insurance. Schedule 3.15 lists all insurance policies
currently in effect under which Seller is a beneficiary or an insured that
insures the Assets and the Business. Such insurance coverage will remain in
effect (or will be replaced by similar policies) with respect to the Assets and
the Business as to all events occurring on or prior to the Closing Date. As of
the date of this Agreement, Seller has not received any notice that any of the
policies listed on Schedule 3.15 have been or will be canceled prior to its
scheduled termination date, or would not be renewed substantially on the same
terms now in effect if the insured party requested renewal or has
20
received notice from any of its insurance carriers that any insurance premiums
will be subject to increase in an amount materially disproportionate to the
amount of the increases with respect thereto (or with respect to similar
insurance) in prior years. Seller is not in default under any such policy
(except for such defaults that have not had and would not reasonably be
expected have a Material Adverse Effect) and all premiums due and payable with
respect to such coverage have been paid or accrued.
Section 3.16. Properties. All buildings and all fixtures, equipment,
and other property and assets that are material to the Business and are held
under leases by Seller are, to Seller's knowledge, held under valid instruments
enforceable by Seller in accordance with their respective terms. Except as set
forth on Schedule 3.16, the Assets, including, without limitation, information
systems, (i) have been maintained in accordance with industry standards and are
in good and serviceable condition, reasonable wear and tear excepted, and (ii)
are adequate for the uses to which they are being put and, following the
consummation of the transactions contemplated hereby, will have sufficient
capacity to conduct the Business in substantially the same manner as the
Business is presently conducted (after taking into account the absence of the
Excluded Assets).
Section 3.17. Intellectual Property. Schedule 3.17 sets forth a
complete and correct list of each patent, patent application, trademark
(whether or not registered), trademark application, trade name, service xxxx,
material copyright and other material item of proprietary intellectual property
(including, without limitation, material items of proprietary computer
software, whether in object or source form) (the "Intellectual Property") owned
by Seller (the "Owned IP") or used by Seller pursuant to a license with a third
party primarily in connection with the Business. To Seller's knowledge: (i) the
Owned IP is valid and enforceable; and (ii) Seller has the exclusive right to
use and license the use of such Owned IP. To the knowledge of Seller, the
current use by Seller of such Owned IP does not infringe the rights of any
other Person, and no other Person is infringing the rights of Seller in any
such Owned IP.
Section 3.18. Certain Contracts; Licenses; Etc.
(a) Schedule 3.18(a) lists, as of the date of this Agreement,
each agreement, contract, or commitment to which Seller is a party or
by which Seller is bound and which will be transferred to Buyer
pursuant to this Agreement (i) containing a lease for real property,
(ii) providing for consideration during the previous twelve months in
excess of $10,000 or that could reasonably be expected to involve
consideration in the twelve month period following the date of this
Agreement in excess of $10,000, or (iii) that is otherwise material to
the financial condition or results of operations of the Business and
that is not otherwise listed pursuant to this Section 3.18.
(b) Schedule 3.18(b) contains a list and description of all
currently effective material permits, licenses, and authorizations of
and registrations and qualifications with, Governmental Entities and
self-regulatory organizations applicable to the Business or the
Assets.
(c) Except as set forth on Schedule 3.18(c), none of the
items required to be disclosed on Schedule 3.18 is terminable as the
result of, has increased rights or obligations as a result of, or
becomes vested or accelerated by, or otherwise requires the consent or
other approval of any other Person with respect to or as a result of,
the transactions contemplated by this Agreement. Seller is in
compliance in all material respects of all items required to be
disclosed pursuant to this Section 3.18, and to Seller's knowledge,
each of the other parties thereto or bound thereby has performed in
all material respects all the obligations required to be performed by
it to date and is not in default thereunder. Each of the items
required to be disclosed in Schedule 3.18 is in full force and
constitutes a legal, valid, and binding obligation of Seller and, to
Seller's knowledge, the other parties thereto, enforceable in
accordance with its terms. To Seller's knowledge, no material client
or customer intends to terminate its relationship with Seller as a
result of the transactions contemplated by this Agreement. True and
complete copies of all items required to be disclosed on Schedule 3.18
have been delivered or otherwise made available to the Buyer.
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Section 3.19. Employees. Schedule 3.19 sets forth an accurate,
correct, and complete list of all employees of Seller utilized in the Business
as of the date hereof, including name, title or position, the present annual
compensation or wage rate, any interests in any bonus or incentive compensation
plan, and any other perquisite or form of non-cash compensation owed by Seller
to such employees.
Section 3.20. Year 2000 Compliance. All of the computer software
products currently being sold and supported by Seller and the material
components of computer hardware and software utilized in CLT's computer
software business (collectively, the "Systems") comply with all of the
following criteria (compliance with such criteria referred to herein as being
"Year 2000 Compliant"): (i) the Systems operate with dates that are less than,
equal to, or greater than 2000 when the date is 1999 or less; (ii) the Systems
operate with dates that are less than, equal to, or greater than 2000 when the
date is 2000 or greater; (iii) the Systems work when the date rolls between
12/31/99 and 01/01/2000; (iv) if any System is passing a date that contains a
year less than four digits to another application or system, it passes enough
information for the receiving system to comply with Section 3.20(i)-(iii); (v)
if any System is receiving a date that contains a year less than four digits
from another application or system, it is able to interpret the date received
to comply with Section 3.20(i)-(iii); (vi) the Systems recognize year 2000 as a
leap year and operate accordingly; (vii) the Systems recognize the correct day
of the week where required; (viii) date values sort correctly; (ix) date value
calculations operate and provide correct results; and (x) date values stored,
calculated, imported, exported, or displayed with less than a four digit year
are completely unambiguous. Schedule 3.20 sets forth the current status of
CLT's testing of the Systems to confirm that they are Year 2000 Compliant.
Section 3.21. Securities Law Matters.
(a) Seller, by reason of its business and financial
experience, has the capacity to protect its interests in investments
in illiquid securities such as the Parent Shares. Seller has carefully
evaluated its financial resources and investment position and the
risks associated with an investment in the Parent Shares and is able
to bear the economic risk of such investment. Seller has adequate
means for providing for its current needs and contingencies and has no
need for liquidity in this investment. Seller's overall commitment to
investments that are not readily marketable is not disproportionate to
its net worth and Seller's investment in the Parent Shares will not
cause such overall commitment to become excessive.
(b) Seller has reviewed the merits of an investment in the
Parent Shares with tax and legal counsel and an investment advisor to
the extent deemed advisable by Seller. Seller acknowledges that it has
been given a full opportunity to ask questions of and to receive
answers from the officers, agents, and representatives of Parent
concerning the terms and conditions of the investment and the business
of Parent and to obtain such other information as desired in order to
evaluate an investment in the Parent Shares. Seller further
acknowledges that it has relied solely upon its own independent
investigations and the representations and warranties of Parent
contained herein, and has received no representation or warranty from
Parent or any of its affiliates, employees or agents other than those
set forth in this Agreement. Seller further acknowledges and
understands that no federal or state agency has made any finding or
determination as to the fairness of an investment in, or any
recommendation or endorsement of, the Parent Shares.
(c) Seller understands that the Parent Shares to be issued
pursuant to this Agreement will constitute "restricted securities"
within the meaning of Rule 144 under the Securities Act and may not be
sold, pledged, or otherwise transferred in the absence of an effective
registration statement pertaining thereto under the Securities Act and
under any applicable state securities laws or an exemption from the
registration requirements thereof. Seller further understands that the
Parent Shares will bear substantially the legend set forth in Section
2A.04.
(d) Seller acknowledges and agrees that the sale of Parent
Shares will be solely for the Seller's account, and not for the
account of any other person or with a view to any resale or
distribution thereof. Seller understands that the Parent Shares have
not been registered under the Securities Act, or the securities laws
of certain states, in reliance upon specific exemptions from
registration thereunder, and agrees that the Parent Shares may not be
sold, offered for sale, transferred, pledged, hypothecated or
22
otherwise disposed of except in compliance with the Securities Act and
applicable state securities laws. Seller further understands that
Parent has no obligation and does not intend to cause the Parent
Shares to be registered under the Securities Act. Seller further
understands that it is not anticipated that there will be any market
for resale of the Parent Shares and that it may not be possible for
Seller to liquidate an investment in the Parent Shares on an emergency
basis.
(e) Seller understands that the representations and
warranties set forth in this Section 3.21 are being provided to
determine whether Parent Shares may be issued to Seller pursuant to
section 4(2) of the Securities Act and similar exemptions under
applicable state securities laws. Seller will notify the Parent
immediately of any change in any such information occurring prior to
the Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
As an inducement to Seller to enter into this Agreement, each of Buyer
and Parent hereby represents and warrants to Seller on a joint and several
basis as follows:
Section 4.01. Organization and Qualification. Each of Buyer and Parent
is a corporation duly formed, validly existing, and in good standing under the
Laws of the State of Delaware, has all requisite corporate power and authority
to own, lease, and operate its properties and to carry on its business as it is
now being conducted, and is duly qualified and in good standing to do business
in each jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary,
other than where the failure to be so duly qualified and in good standing would
affect the validity or enforceability of this Agreement or Buyer's or Parent's
ability to consummate the transactions contemplated hereby.
Section 4.02. Organization Documents. Each of Buyer and Parent has
furnished to Seller a true, complete, and correct copy of its certificate of
incorporation and bylaws, each as amended or restated to the date of this
Agreement. Each of Buyer and Parent is not in violation of any of the
provisions of its certificate of incorporation of bylaws, as so amended, and
such remain in full force and effect.
Section 4.03. Authority. Each of Buyer and Parent has all requisite
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements to which it is a party, to perform its obligations
hereunder and thereunder, and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
Ancillary Agreements to which it is a party by each of Buyer and Parent and the
consummation by Buyer and Parent of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action, and no
other corporate proceedings on the part of Buyer or Parent are necessary to
authorize this Agreement and the Ancillary Agreements to which it is a party or
to consummate the transactions contemplated hereby and thereby. This Agreement
and the Ancillary Agreements have been duly executed and delivered by each of
Buyer and Parent that is a party thereto and, assuming the due authorization,
execution, and delivery of this Agreement and the Ancillary Agreements by
Seller, constitute the legal, valid, and binding obligations of the Buyer and
Parent, respectively, enforceable in accordance with their respective terms,
except to the extent that their enforcement is limited by bankruptcy,
insolvency, reorganization or other Laws relating to or affecting the
enforcement of creditors' rights generally and by general principles of equity.
Section 4.04. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and the
Ancillary Agreements by each of Buyer and Parent does not, and the
consummation of the transactions contemplated hereby and thereby will
not, (i) conflict with or violate the certificate of incorporation or
bylaws, in each case as amended or restated as of the date of this
Agreement, of Buyer and Parent, respectively; (ii) conflict with or
violate any Laws applicable to Buyer or Parent or by which any of
their respective properties is bound or subject; or (iii) result in
any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or
23
cancellation of, or result in the creation of a Lien on any of the
properties or assets of Buyer or Parent pursuant to, any material
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise, or other material instrument or obligation to which
Buyer or Parent, respectively, is a party or by or to which either of
them or any of their respective properties is bound or subject.
(b) The execution and delivery of this Agreement and the
Ancillary Agreements by each of Buyer and Parent does not, and the
consummation of the transactions contemplated by this Agreement and
the Ancillary Agreements will not, require Buyer or Parent to obtain
any consent, license, permit, approval, waiver, authorization, or
order of, or to make any filing with or notification to, any
Governmental Entity or any other Person.
Section 4.05. Brokers. No broker, finder, or investment banker is
entitled to any brokerage, finder's, or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Parent, Buyer, or any Affiliate of Parent or Buyer.
Section 4.06. Absence of Litigation. Except as disclosed in Parent's
SEC Documents (as hereinafter defined), there is no claim, action, suit,
litigation, proceeding, arbitration, or investigation of any kind, at law or in
equity (including actions or proceedings seeking injunctive relief), pending or
threatened against Buyer or Parent relating to this Agreement or the
transactions contemplated hereby or that has had or would reasonably be
expected have a material adverse effect on Buyer's or Parent's ability to
consummate the transactions contemplated hereby, and neither Buyer nor Parent
is subject to any continuing order of, judgment, writ, injunction, decree,
award, consent decree, settlement agreement, or other similar written agreement
with, or continuing investigation by, any Governmental Entity or arbitrator
relating to this Agreement or the transactions contemplated hereby or that has
had or would reasonably be expected have a material adverse effect on the
business, operations, assets, financial condition, or results of operations of
Buyer or Parent or their respective ability to consummate the transactions
contemplated hereby.
Section 4.07. Compliance with Laws. Each of Buyer and Parent has
conducted its operations in compliance with all applicable Laws, except for
such noncompliance that has not had and would not reasonably be expected to
have a material adverse effect on the business, operations, assets, financial
condition, or results of operations of Buyer or Parent or their respective
ability to consummate the transactions contemplated hereby.
Section 4.08. Financial Ability to Close. Each of Parent and Buyer
has, and at Closing will have, the financial ability to perform its respective
obligations under this Agreement.
Section 4.09. Forest City Notes.
(a) Parent has good and marketable title to the Forest City
Notes and owns them free and clear of any Liens; provided that the
Forest City Notes are subject to the terms and conditions of a certain
Subordination and Intercreditor Agreement dated as of March 26, 1999
among Parent, FCAP, and Congress Financial Corporation (Central) (the
"Subordination Agreement").
(b) The Forest City Notes are freely transferable by Parent
to Seller without the need for the consent of any Governmental Entity
or other Person.
(c) Schedule 4.09 sets forth all of the transaction documents
executed in connection with the Forest City Notes (collectively, the
"Transaction Documents"). Each of the Forest City Notes and the
Transaction Documents is in full force and effect, has not been
modified, revised or amended (either in writing or orally), and
together constitute the complete agreement between FCAP and Parent
with respect to the indebtedness evidenced by the Forest City Notes.
(d) Except as set forth on Schedule 4.09, FCAP is not in
default under any of the provisions of the Forest City Notes or the
Transaction Documents and no event has occurred, which with the
passage of time or notice or both, would become an event of default
under the Forest City Notes or the Transaction
24
Documents by FCAP. No payment or prepayment of principal has been made
by FCAP under the Forest City Notes.
(e) Except as set forth on Schedule 4.09, Parent and its
Affiliates are not in default under any of the provisions of the
Transaction Documents and no event has occurred, which with the
passage of time or notice or both, would become an event of default
under the Transaction Documents by Parent or its Affiliates or could
otherwise give rise to a counterclaim or defense by FCAP to any demand
for payment under the Forest City Notes.
Section 4.10. Share Validity. The Parent Shares shall be, upon
issuance in accordance with this Agreement, duly authorized, validly issued,
fully paid and nonassessable, and free and clear of any liens and preemptive
and other similar rights.
Section 4.11. Securities Law Compliance. Assuming the representations
and warranties of Seller set forth in Section 3.21 hereof are true and correct,
the issuance of the Parent Shares pursuant to this Agreement will be exempt
from the registration requirements of the Securities Act and all applicable
state securities or "Blue Sky" laws. Parent has given Seller and its agents,
and agrees to continue to give Seller and its agent through the Closing Date,
the opportunity to ask questions of, and receive answers from, executive
officers of Parent concerning Parent and the Parent Shares. Neither Parent nor,
to Parent's knowledge, any Person acting on its behalf has, in connection with
the Parent Shares offered hereby, engaged in (i) any form of general
solicitation or general advertising (as those terms are used within the meaning
of Rule 502(c) under the Securities Act), (ii) any action involving a public
offering within the meaning of Section 4(2) of the Securities Act, or (iii) any
action that would require the registration under the Securities Act of the
offering and sale of the Parent Shares pursuant to this Agreement or that would
violate applicable state securities or "Blue Sky" laws. Parent has not made and
will not prior to the Closing make, directly or indirectly, any offer or sale
of securities of the same or a similar class as the Parent Shares if as a
result the offer and sale of the Parent Shares contemplated hereby would fail
to be entitled to exemption from the registration requirements of the
Securities Act. As used in this Section 4.11, the terms "offer" and "sale" have
the meanings specified in Section 2(3) of the Securities Act.
Section 4.12. Public Filings.
(a) Parent has made available to Seller true and complete
copies of its annual report on Form 10-K for the fiscal year ended
December 31, 1998, its quarterly reports on Form 10-Q for fiscal
quarters ended March 31, 1999 and June 30, 1999, respectively, all
current reports on Form 8-K filed since January 1, 1999, its 1998
Annual Report to Stockholders and its proxy statements in connection
with the 1999 annual meeting of stockholders (collectively, the "SEC
Documents") and will make available to Seller any similar SEC
Documents filed with the U.S. Securities and Exchange Commission (the
"SEC") on or before the Closing Date. As of their respective filing
dates, each SEC Document complied, or will comply, in all material
respects with the requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and as of their respective dates none
of the SEC Documents contained, or will contain, any untrue statement
of a material fact or omitted, or will omit, to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. As used in this Agreement, the consolidated
balance sheet of Parent and its consolidated subsidiaries as of June
30, 1999 include in the Form 10-Q for the fiscal quarter then ended is
hereinafter referred to herein as the "Parent Balance Sheet" and June
30, 1999 is hereinafter referred to herein as the "Parent Balance
Sheet Date".
(b) Except to the extent expressly set forth in, or
contemplated by, the Parent Balance Sheet, or the notes, schedules or
exhibits thereto, or as disclosed in, or contemplated by, the SEC
Documents: (i) as of the Parent Balance Sheet Date, neither Parent nor
any of its consolidated subsidiaries had any material liabilities or
obligations (whether absolute, contingent, accrued or otherwise) that
would be required to be included on a consolidated or condensed
balance sheet or in the notes, schedules or exhibits thereto prepared
in accordance with GAAP; and (ii) since the Parent Balance Sheet Date,
Parent and its
25
consolidated subsidiaries have not incurred any such material
liabilities or obligations other than in the ordinary course of
business or as so disclosed or contemplated.
Section 4.13. No Material Adverse Change. Since the Parent Balance
Sheet Date, there has been no material adverse effect on the business,
operations, assets, financial condition, or results of operations of Buyer or
Parent or their respective ability to consummate the transactions contemplated
hereby.
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of Seller. Seller hereby covenants
and agrees that, prior to the Closing Date, unless otherwise expressly
contemplated by this Agreement or consented to in writing by Buyer and Parent
(which consent shall not be unreasonably withheld, conditioned or delayed),
Seller will cause CLT:
(a) to operate the Business and the Assets in the ordinary
course, consistent with past practices and use commercially reasonable
efforts to preserve the goodwill of the Business and of its employees,
customers, suppliers, Governmental Entities and others having business
dealings with CLT and the Business;
(b) except as contemplated by this Agreement, not to engage
in any transaction relating to the Business or the Assets outside the
ordinary course of business, including, without limitation, by making
any material expenditure, investment, or commitment or entering into
any material agreement or arrangement of any kind (it being understood
that the payment by Seller of $25,000 in any 12-month period shall be
the measure of materiality under this Section 5.01(b));
(c) to maintain all insurance policies (or replacement
policies with substantially similar coverage) and all Permits that are
required for Seller to carry on the Business;
(d) subject to Section 5.04, not to take or permit any action
that would cause the Closing conditions contained in Article VII on
the obligations of the parties to effect the transactions contemplated
by this Agreement not to be fulfilled, including, without limitation,
by taking or causing to be taken any action that would cause the
representations and warranties made in this Agreement not to be true
and correct;
(e) not to increase the compensation payable to or to become
payable to any agent, consultant, or employee of Seller working in the
Business (other than regularly scheduled increases in compensation and
the awarding of bonuses in the ordinary course of business);
(f) except as contemplated by this Agreement, not to grant
any severance or termination pay (other than pursuant to the normal
severance policy and "stay put" agreements of the Seller as in effect
on the date of the Latest Balance Sheet) to, or enter into or amend
any employment or severance agreement with, any employee of the Seller
working in the Business whose base compensation exceeds the rate of
$20 per hour;
(g) not to sell, lease, exchange, mortgage, pledge, transfer,
or otherwise dispose of, or agree to sell, lease, exchange, mortgage,
pledge, transfer, or otherwise dispose of, any of the Assets or any
interest therein, except for dispositions of inventories and of assets
in the ordinary course of business and consistent with past practice;
(h) not to release any third party from its obligations, or
grant any consent, under any existing standstill provision relating to
any transaction referred to in Section 5.02 or otherwise under any
non-competition, confidentiality, or other agreement in favor of
Seller with respect to the Business, or fail to fully enforce any such
agreement;
26
(i) not to (A) change any of its methods of accounting
relating to the Assets or the Business in effect at the date of the
Latest Balance Sheet; (B) settle or compromise any claim, action,
suit, litigation, proceeding, arbitration, investigation, audit, or
controversy relating to the Assets or the Business (unless the
settlement or compromise involves only the payment of money damages,
includes a full release of Seller, and does not impose an injunction
or other equitable relief upon the Business or Assets); or (C) change
any of its methods of reporting income or deductions for federal
income tax purposes from those employed in the preparation of the
federal income tax returns for the taxable year ending December 25,
1998 relating to the Assets or the Business, except, in each case, as
may be required by Law or GAAP;
(j) not enter into any contract or agreement primarily
relating to the Business or the Assets and that is reasonably expected
to require a payment by CLT in excess of $25,000 during any 12-month
period;
(k) not to accelerate or delay any collection of any notes or
accounts receivable generated by the Business in advance or beyond
their regular due dates or the dates when the same would have been
collected in the ordinary course of business consistent with past
practice;
(l) not to delay or accelerate payment of any account payable
or other liability of the Business beyond or in advance of its due
date or the date when such liability would have been paid in the
ordinary course of business consistent with past practice;
(m) not to make or agree to make any payment of cash or
distribution of assets to any of its Affiliates (other than cash
realized upon collection of receivables generated in the ordinary
course of business and cash distributions to Seller's parent in the
ordinary course of business consistent with past practice);
(n) not to delay or postpone inventory purchases or the
repair and maintenance of personal or real properties, other than
delays or postponements in the ordinary course of business that do not
adversely impair the provision of goods and services to customers of
the Business; and
(o) to take all commercially reasonable steps to cause to be
fulfilled Buyer's and Parent's Closing conditions set forth in Section
7.01 that are dependent upon the actions of Seller.
Section 5.02. No-Shop Provisions. Until the earliest to occur of (i)
the Closing Date, (ii) the Outside Date or (iii) the termination of this
Agreement by either party in accordance with its terms (other than a
termination of this Agreement based upon a breach committed by Seller), Seller
will comply with the following no-shop provisions: (a) Seller will negotiate
exclusively and in good faith with Buyer and Parent with respect to the sale of
the Assets; and (b) Seller will not, directly or indirectly (through agents or
otherwise), encourage or solicit any inquiries or accept any proposals by, or
engage in any discussions or negotiations with or furnish any information to,
any other Person concerning a sale of a substantial portion of the Assets or
Business (whether through an asset sale, merger, or otherwise involving Seller
or CLT).
Section 5.03. Access and Information. Seller has caused and will,
until the Closing Date, continue to cause Buyer, Parent, and their respective
representatives to have reasonable access to Seller's and CLT's directors,
officers, employees, agents, assets, and properties and all relevant books,
records and documents of or relating to the Business and the Assets during
normal business hours upon reasonable advance notice to Xxxxx Xxxxx and Xxxx
Xxxxx, and will furnish to Buyer and Parent such information, financial
records, and other documents relating to Seller, the Business, and the Assets
as Buyer or Parent may reasonably request; provided, however, that any such
inspection shall be done in such a manner so as not to unreasonably disrupt the
Seller's conduct of the Business and shall be subject to any reasonable
restrictions imposed by Xxxxx Xxxxx and Xxxx Xxxxx (including limiting Buyer's
access to employees of CLT to certain categories of senior management). Seller
will permit Buyer, Parent, and their respective representatives reasonable
access to Seller's accountants, auditors, customers, suppliers, and
Governmental Entities having dealings with Seller for consultation or
verification of any information obtained by
27
Buyer and will use their respective commercially reasonable efforts to cause
such Persons to cooperate with Buyer and its representatives in such
consultation and in verifying such information. If this Agreement is terminated
for any reason, Buyer agrees to return or cause to be returned all tangible
embodiments of the information (including all books, records and documents, in
any form) provided to Buyer or its representatives within five (5) days after
the date of such termination.
Section 5.04. Notice of Breach; Supplemental Disclosure. Buyer agrees
to provide Seller with prompt written notice if Buyer determines that, based
upon information provided to Buyer or through its own investigation, Seller is
in breach of any of its representations, warranties or covenants set forth in
this Agreement. Seller will promptly supplement or amend each of the disclosure
schedules attached hereto with respect to any matter that arises or is
discovered after the date of this Agreement that, if existing or known at the
date of this Agreement, would have been required to be set forth or listed in
such schedule; provided that, for purposes of determining the rights and
obligations of the parties under this Agreement (other than the obligations of
Seller under this Section 5.04), any such supplemental or amended disclosure
will not be deemed to have been disclosed to Buyer and Parent unless Buyer and
Parent expressly consent to such disclosure in writing, which consent: (i)
shall not be unreasonably withheld, conditioned or delayed and (ii) shall be
deemed to cure any underlying breach by Seller.
Section 5.05 Cooperation. The parties hereto will use commercially
reasonable efforts to satisfy all conditions precedent contained in Articles
VII hereof, and will cooperate with each other in carrying out the transactions
contemplated hereby; in obtaining any and all required approvals, consents,
permits, and authorizations; and in executing and delivering all documents,
instruments, and copies thereof necessary to the other party.
Section 5.06 Governmental Permits and Approvals; Consents.
(a) Seller, Buyer, and Parent shall use commercially
reasonable efforts to obtain promptly all permits and approvals from
any Governmental Entity or other Person necessary for lawful
consummation of the Closing. In furtherance of the foregoing, Seller,
Buyer and Parent agree to provide all information (including financial
information) that is reasonably requested by any Person from whom any
approval or consent is necessary for lawful consummation of the
Closing (including information needed for inclusion in a filing with a
Governmental Entity).
(b) With respect to any consent that Seller is unable to
obtain and deliver to Buyer, the parties agree to use commercially
reasonable efforts to (i) provide to Buyer the benefits of the related
Restricted Interest, and (ii) cooperate in reasonable and lawful
arrangements designed to provide such benefits to Buyer.
Section 5.07. Publicity. Parent, Buyer, and Seller will cooperate with
each other in the development and distribution of all news releases and other
public disclosures relating to the transactions contemplated by this Agreement.
Neither Parent and Buyer, on the one hand, nor Seller, on the other hand, will
issue or make, or allow to have issued or made, any press release or public
announcement concerning the transactions contemplated by this Agreement without
the advance approval in writing of the form and substance thereof by the other
parties, unless otherwise required by applicable legal or stock exchange
requirements; provided that if any party is of the opinion that it is legally
obligated to make a disclosure, that party will advise the other parties in
advance before making the disclosure; and provided further that in no event
shall any such disclosure include the financial terms of this Agreement (other
than filings under the securities Laws requiring such disclosure).
Section 5.08. Transaction Costs. Each party will pay all attorneys',
accountants', finders', brokers', investment banking and other fees, costs and
expenses incurred by such party in connection with the preparation,
negotiation, execution, and performance of this Agreement or any of the
transactions contemplated by this Agreement, provided that (in addition to any
other remedies that any party may have under this Agreement): (a) Seller agrees
to reimburse Buyer and Parent for all of their respective expenses incurred in
connection with this Agreement if Buyer and Parent terminate this Agreement as
a result of any breach by Seller; and (b) Parent agrees to reimburse Seller for
all of Seller's expenses incurred in connection with this Agreement if Seller
terminates this Agreement as a result of any breach by Buyer or Parent.
Notwithstanding the foregoing: (i) Buyer and Parent will
28
bear the costs and expenses associated with the 1996 and 1997 audits described
in Section 5.13; and (ii) the parties will bear the costs and expenses
associated with transfer of the Premises in accordance with Section 5.18.
Section 5.09. Parent Guarantee. Parent hereby guarantees, and agrees
to be jointly and severally liable for, the full and prompt performance and
payment of any obligations incurred by Buyer pursuant to this Agreement and the
Ancillary Agreements.
Section 5.10. Competition.
(a) Seller acknowledges and agrees that this Agreement is
entered into in connection with the sale of the Business and that, as
part of the consideration and as a material inducement for the
execution of this Agreement and the purchase of the Business, Parent
and Buyer have required that Seller enter into this Section 5.10.
Seller acknowledges and agrees that Parent and Buyer would not enter
into this Agreement or purchase the Business absent Seller's covenants
contained in this Section 5.10. Seller also acknowledges that Buyer's
and Parent's acquisition of the Business includes the acquisition of
Confidential Information (as hereinafter defined), which knowledge and
information would provide invaluable benefits to competitors and
potential competitors of Buyer and Parent and the use, loss, dilution,
or impairment of which by Seller, its Affiliates, or any other Person
would materially damage Parent, Buyer, and the Business acquired.
Seller also acknowledges that the nature of the Business is not
confined by geography and that current technology and business and
communications methods enable and will enable the Business to offer
products and services and conduct business with customers and
potential customers and other Persons having business dealings with
Buyer and Parent related to the Business without regard to geographic
location.
(b) Seller covenants and agrees that, for a period beginning
on the Closing Date and ending on the fifth anniversary of the Closing
Date (the "Non-Compete Period"), without the written permission of
Parent, it will not, directly or indirectly, anywhere within the
United States (the "Non-Compete Area"):
(i) engage (whether as owner, partner, stockholder,
investor, employee, adviser, consultant, contracting party,
or referring source, or otherwise) in any business that
develops, markets, sells, or distributes, or provides any
services (consulting or otherwise) or products substantially
similar to or competitive with those services or products
developed, marketed, sold, or distributed, or provided by the
Business (the "Restricted Business") (except that Seller may
beneficially own less than five percent (5%) of the common
equity of a publicly traded entity engaged in the Restricted
Business);
(ii) solicit or attempt to solicit any Restricted
Business from any Person, including, but not limited to,
customers, clients, and prospective customers and clients of
Parent, Buyer, and their respective Affiliates or successors;
or
(iii) recruit or solicit, attempt to or assist in
any attempt to recruit or solicit, or initiate discussions
about employment or hiring with, any Person engaged in the
Restricted Business and employed by Seller or CLT prior to
the Closing Date or employed by Parent or Buyer or their
respective Affiliates and successors during the Non-Compete
Period.
(c) In the event that Seller engages in any conduct
prohibited by Section 5.10, then the Non-Compete Period will
automatically be extended by the period of time from when Seller began
such violation until it permanently ceases such violation.
(d) Seller acknowledges that this Section 5.10 is necessary
to protect the interests of Parent, Buyer, and their respective
Affiliates and that the restrictions and remedies contained in this
Agreement are reasonable in light of the consideration and other value
Seller has accepted pursuant to this Agreement. If any provision of
this Section 5.10 should be found by any court of competent
jurisdiction to be unreasonable by reason of its being too broad as to
the period of time, territory, and/or scope, then, and in
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that event, such provision will nevertheless remain valid and fully
effective, but will be considered to be amended so that the period of
time, territory, and/or scope set forth will be changed to be the
maximum period of time, the largest territory, and/or the broadest
scope, as the case may be, that would be found reasonable and
enforceable by such court.
Section 5.11. Confidential Information.
(a) Seller acknowledges that it has had access to
confidential information, and may in the future have access to
information proprietary to, used by, or in the possession of Parent,
Buyer, CLT, or their respective Affiliates, or any of their respective
customers or not generally known in the industry, including, but not
limited to, records regarding sales, price and cost information,
marketing plans, trade secrets, customer names, customer lists, sales
techniques, distribution plans or procedures, and other material
relating to the Business, Assets, and to Parent's or Buyer's or their
respective Affiliates' business (the "Confidential Information");
provided that Confidential Information shall not be deemed to include
information that (i) is or shall become generally available to the
public other than as a result of an unauthorized disclosure by Seller,
(ii) becomes available to Seller on a non-confidential basis from a
source other than Buyer, Parent or an Affiliate of Buyer or Parent
that is not bound by a legal or contractual obligation not to disclose
such information, or (iii) is required to be disclosed by Seller by
Law (or to defend itself against a claim by Buyer or Parent
hereunder),
(b) Seller for itself and for each Person controlled by
Seller agrees that during the Non-Compete Period it shall not use the
Confidential Information other than for the sole benefit of Parent or
Buyer or to disclose such Confidential Information to any Person,
without the prior written consent of Parent and Buyer. Seller shall be
responsible for breaches of this Section 5.11(b) committed by its
representatives. Seller further acknowledges that this covenant to
maintain Confidential Information is necessary to protect the goodwill
and proprietary interests of the Business, Assets, and of Parent and
Buyer and their respective Affiliates and that the restriction against
the disclosure of Confidential Information and the associated remedies
are reasonable in light of the consideration and other value Seller
has accepted pursuant to this Agreement. Seller agrees on request of
Parent or Buyer after the Closing Date immediately to surrender to
Parent or Buyer all Confidential Information and all copies thereof
and information containing Confidential Information in Seller's
possession or control as well as all other papers, documents,
electronic media, or property of Seller or the Buyer, or their
respective Affiliates embodying Confidential Information coming into
its possession or control.
(c) Each of Buyer and Parent acknowledges that it has had
access to Confidential Information of Seller, CLT and their respective
Affiliates. Consequently, each of Buyer and Parent for itself and for
each Person controlled by Buyer and Parent agrees that from and after
the date hereof it shall not use the Confidential Information or to
disclose such Confidential Information to any Person, without the
prior written consent of Seller except (A) to Buyer's and Parent's
representatives (who shall be informed of the confidential nature of
such information and who shall agree to keep such information
confidential), (B) as otherwise required by Laws, or (C) as required
to obtain any regulatory approvals or consents required to consummate
the transactions contemplated hereby. Each of Buyer and Parent shall
be responsible for breaches of this Section 5.11(c) committed by its
representatives. Each of Buyer and Parent further acknowledges that
this covenant to maintain Confidential information is necessary to
protect he goodwill and proprietary interests of the Business, Assets,
and of Seller and its Affiliates and that the restriction against the
disclosure of Confidential information and the associated remedies are
reasonable. If this Agreement is terminated for any reason or Closing
does not otherwise occur, each of Parent and Buyer agrees on request
of Seller to immediately to surrender to Seller all Confidential
Information and all copies thereof and information containing
Confidential Information in their possession or control as well as all
other papers, documents, electronic media, or property of Seller or
its Affiliates embodying confidential Information coming in to its
possession or control. Notwithstanding the foregoing, in the event
that Closing occurs, Buyer's and Parent's obligations under this
Section 5.11(c) with respect to Confidential Information of CLT shall
terminate.
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(d) If any provision of this Section 5.11 should be found by
any court of competent jurisdiction to be unreasonable by reason of
its being too broad as to the period of time, territory, and/or scope,
then, and in that event, such provision will nevertheless remain valid
and fully effective, but will be considered to be amended so that the
period of time, territory, and/or scope set forth will be changed to
be the maximum period of time, the largest territory, and/or the
broadest scope, as the case may be, which would be found reasonable
and enforceable by such court.
Section 5.12. Tax Matters.
(a) Liability for Tax Matters. Seller shall be liable for and
pay, and pursuant to Article VI shall indemnify and hold harmless
Parent and Buyer from and against all Taxes (whether assessed or
unassessed) applicable to the Business, the Assets, and the Assumed
Liabilities in each case attributable to all periods of time up to and
including the Effective Date. Seller shall be entitled to any refund
or credit therefor of any Taxes applicable to the Business, Assets,
and the Assumed Liabilities in each case attributable to all periods
of time up to and including the Effective Date. Parent and Buyer shall
be liable for and pay, and pursuant to Article VI shall indemnify and
hold harmless Seller from and against all Taxes (whether assessed or
unassessed) applicable to the Business, the Assets, and the Assumed
Liabilities in each case attributable to all periods of time following
the Effective Date. Parent and Buyer shall be entitled to any refund
or credit therefor of any Taxes applicable to the Business, Assets,
and the Assumed Liabilities in each case attributable to all periods
of time following the Effective Date.
(b) Transfer Taxes. Notwithstanding the foregoing Section
5.12(a), any sales Tax, use Tax, documentary stamp Tax, or similar Tax
attributable to the sale or transfer of the Business or Assets shall
be paid 50% by Seller and 50% by Parent and Buyer.
(c) Tax Returns. Each party will prepare and timely file when
due all Tax Returns in respect of pre-Effective Date and
post-Effective Date tax periods that are required under applicable Law
with respect to the Business, Assets, and Assumed Liabilities, and
will each remit (or cause to be remitted) any Taxes due in respect of
such returns.
(d) Notice. Each party shall provide reimbursement for any
Tax paid by one party all or a portion of which is the responsibility
of the other pursuant to this Section 5.12. Within a reasonable period
of time prior to the payment of any such Tax, the party paying such
Tax shall give written notice to the other party of the Tax payable
and the portion that is the liability of such party, although failure
to do so will not relieve the other party from its liability
hereunder.
(e) Reimbursement. Each party shall promptly pay the other
for any Taxes for which such party is liable under this Section 5.12,
but in no event later than five (5) days prior the due date of the
paying of such Taxes. The parties agree to negotiate in good faith to
resolve any disputes regarding the payment of any Taxes pursuant to
this Section 5.12.
(f) Assistance and Cooperation. After the Closing Date, each
party will (and will cause its respective Affiliates, representatives,
and agents to):
(i) assist the other party in preparing any Tax
Returns that such other party is responsible for preparing
and filing in accordance with this Section 5.12;
(ii) cooperate fully in preparing for any audits of,
or disputes with taxing authorities regarding, any Tax
Returns described in this Section 5.12; and
(iii) making available to the other party and to any
taxing authority as reasonably requested all information,
records, and documents relating to the Taxes described in
this Section 5.12.
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Section 5.13. Audit of CLT's 1996, 1997 and 1998 Financial Statements.
The parties acknowledge and agree that Parent and Buyer will require audited
financial statements of CLT for fiscal years 1996, 1997 and 1998 (in each case,
accompanied by an unqualified GAAP opinion from the auditors) for their use
after the Closing. The parties agree that Ernst & Young, LLP will conduct the
audit for fiscal years 1996, 1997 and 1998, which audit shall commence promptly
after the execution of this Agreement. From the date of this Agreement and
continuing until the audit has been completed, each party agrees to grant the
other party and Ernst & Young, LLP such access as may be reasonably requested
to complete such audit. Parent and Buyer will bear all costs and expenses
associated with such audit relating to fiscal years 1996 and 1997, including
the reasonable out-of-pocket expenses incurred by Seller in assisting Parent
and Buyer with such audit. Seller will bear all costs and expenses associated
with such audit relating to fiscal year 1998, including the reasonable
out-of-pocket expenses incurred by Seller in assisting Parent and Buyer with
such audit The parties agree that completion of such audits shall not be a
condition to Closing.
Section 5.14. Disclaimer of Other Representations and Warranties. Each
of Parent and Buyer acknowledges and agrees that Seller does not make, and has
not made, any representations or warranties relating to Seller, CLT, the Assets
or the Business other than the representations and warranties of Seller
expressly set forth in this Agreement. Without limiting the generality of the
disclaimer set forth in the preceding sentence, Seller does not make, and
Seller and its respective officers, members, managers, employees and agents
have not made, and shall not be deemed to have made any representations or
warranties in the CLT Confidential Descriptive Memorandum dated Xxxxxx, 0000,
and any supplements or addenda thereto (collectively, the "Offering
Memorandum"), any presentation relating to Seller, CLT, the Assets or the
Business given in connection with the transactions contemplated by this
Agreement, in any filing made by or on behalf of Seller with any Governmental
Entity or in any other information provided to or made available to Buyer, and
no statement contained in the Offering Memorandum, made in any such
presentation, made in any such filing or contained in any such other
information shall be deemed to be a representation or warranty of Seller
hereunder or otherwise. No person has been authorized by Seller to make any
representation or warranty in respect of Seller, CLT, the Assets or the
Business in connection with the transactions contemplated by this Agreement
that is inconsistent with or in addition to the representations and warranties
of Seller expressly set forth in this Agreement.
Section 5.15. Transition Services. For a period beginning on the
Effective Date and continuing for ninety (90) days thereafter, Seller shall use
commercially reasonable efforts to provide certain administrative and
transitional services to Parent and Buyer with respect to the Business pursuant
to the provisions of a certain Administrative Services Agreement substantially
in the form of Exhibit C attached hereto (the "Administrative Services
Agreement").
Section 5.16. Performance/Surety Bonds; Letters of Credit. The parties
acknowledge and agree that Seller and/or Seller's parent company, Day &
Xxxxxxxxxx, Inc. ("D&Z"), has supplied certain clients of the Business with (i)
performance/surety bonds issued by CNA or (ii) letters of credit to secure
performance, in each case, pursuant to the terms of CLT's engagements with such
clients (collectively, the "Bonds"). Seller agrees to keep in place (and to
cause D&Z to keep in place) all Bonds in effect as of the Effective Date until
such time as such Bonds expire by their terms, require renewal, or in the case
of "bid bonds", when the engagement relating thereto has been awarded to the
Business. Buyer and Parent agree to (A) obtain any required performance/surety
bonds or letters of credit with respect to all contracts signed and engagements
of the Business that commence after the Effective Date, (B) replace any Bonds
in effect as of the Effective Date when such Bonds expire by their terms,
require renewal, or in the case of "bid bonds", when the engagement relating
thereto has been awarded to the Business, and (C) indemnify and hold harmless
the Seller Parties (as defined in Section 6.02) from and against any and all
Losses (as defined in Section 6.01) any Seller Party may incur in connection
with the Bonds, but only to the extent such Losses arise from actions or
inactions after the Effective Date.
Section 5.17. Securities Law Covenant to Permit Use of Rule 144. To
make available to Seller the benefits of Rule 144 under the Securities Act,
Parent agrees to (i) use its best efforts to make and keep public information
available as those terms are understood as defined in Rule 144 (or any
successor rule thereto); and (ii) furnish to Seller, so long as Seller owns any
Parent Shares, forthwith upon request: (A) a written statement by Parent as to
its compliance with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act and (B) a
32
copy of the most recent annual or quarterly report of Parent and such other
reports and documents filed with the SEC by Parent.
Section 5.18. Post-Closing Documents for Transfer of Premises. As soon
as reasonably practicable after the Closing: (a) Buyer and Parent shall at
their expense obtain a title insurance commitment for the Premises and a
customary form of warranty deed for the Premises that complies with Ohio law
(provided that Seller shall bear the expense of such title insurance and deed
if Ohio custom typically assigns responsibility for such expenses to a seller
of commercial real property), conduct a Phase I environmental assessment of the
Premises, and prepare a survey of the Premises (if required by the title
insurer); and (b) Seller shall at its expense conform the Mortgage to the
requirements of Ohio law and record it in the appropriate filing offices. The
parties agree to cooperate with each other in accordance with Section 1.06 in
completing the foregoing actions.
Section 5.19. Payment of Accrued Vacation Amounts. As soon as
reasonably practicable after the termination of the payroll-related services
under the Administrative Services Agreement, Seller shall pay to each employee
of the Business the cash equivalent of such employees accrued and unused
vacation time as of the Effective Date in accordance with Seller's policy with
respect to accrued and unused vacation.
ARTICLE VI
INDEMNIFICATION
Section 6.01. Indemnification of Parent and Buyer. Subject to the
provisions of Sections 6.03, 6.04, 6.05, 6.06 and 6.07, Seller will indemnify
and hold Parent, Buyer, their respective subsidiaries, and their respective
directors, officers, employees, and agents (collectively, the "Buyer Parties")
harmless from any and all losses, Taxes, liabilities, damages, lawsuits,
deficiencies, claims, demands, costs or expenses, including interest, penalties
and reasonable attorneys' fees and disbursements (collectively, "Losses"), that
any Buyer Party may suffer or incur as a result of or relating to the breach or
inaccuracy of any of the representations, warranties, covenants, or agreements
made by Seller in this Agreement or pursuant to the Ancillary Agreements.
Section 6.02. Indemnification of Seller. Subject to the provisions of
Sections 6.03, 6.04, 6.05, 6.06 and 6.07, Parent and Buyer will, jointly and
severally, indemnify and hold Seller and its Affiliates and their respective
directors, officers, members, managers, officers, employees, and agents
(collectively, the "Seller Parties") harmless from any and all Losses that any
Seller Party may suffer or incur as a result of or relating to the breach or
inaccuracy of any of the representations, warranties, covenants (including
without limitation, Buyer's covenant to discharge the Assumed Liabilities), or
agreements made by Parent or Buyer in this Agreement or pursuant to the
Ancillary Agreements.
Section 6.03 Procedures for Claims Between the Parties. If a claim (a
"Claim") is to be made by the party claiming indemnification (the "Claimant")
against the other party (the "Indemnifying Party"), the Claimant shall give
written notice (a "Claim Notice") to the Indemnifying Party as soon as
practicable after the Claimant becomes aware of the facts, condition or event
that gave rise to Losses for which indemnification is sought under this Article
VI, provided that in no event shall such notice be effective if given after
expiration of the applicable survival period in Section 6.06. Following receipt
of the Claim Notice from the Claimant, the Indemnifying Party shall have thirty
(30) days to make such investigation of the Claim as the Indemnifying Party
deems necessary or desirable. For the purposes of such investigation, the
Claimant agrees to make available to the Indemnifying Party and/or its
authorized representative(s) the information relied upon by the Claimant to
substantiate the Claim. If the Claimant and the Indemnifying Party agree at or
prior to the expiration of said thirty (30) day period to the validity and
amount of such Claim, the Indemnifying Party shall pay to the Claimant the
amount of such Claim. If the Claimant and the Indemnifying Party do not agree
within said period, the Claimant may seek appropriate legal remedy.
Section 6.04 Defense of Third-Party Actions. If any lawsuit or
enforcement action (a "Third Party Action") is filed against a Claimant
entitled to the benefit of indemnity hereunder, written notice thereof (the
"Third-Party Action Notice") shall be given by the Claimant to the Indemnifying
Party as promptly as practicable (and in any event within five (5) days after
the service of the citation or summons or other manner of process); provided
that
33
in no event shall such notice be effective if given after expiration of the
applicable survival period in Section 6.06. After such notice, the Indemnifying
Party shall be entitled, if it so elects, (i) to take control of the defense
and investigation of such Third-Party Action, (ii) to employ and engage
attorneys of its choice to handle and defend the same, at the Indemnifying
Party's cost, risk and expense, and (iii) to compromise or settle such
Third-Party Action, which compromise or settlement shall be made only with the
written consent of the Claimant (such consent not to be unreasonably withheld,
conditioned or delayed) unless such compromise or settlement involves only the
payment of money damages and does not impose an injunction or other equitable
relief upon the Claimant. If the Indemnifying Party fails to assume the defense
of such Third-Party Action within fifteen (15) days after receipt of the
Third-Party Action Notice, the Claimant will (upon delivering notice to such
effect to the Indemnifying Party) have the right to undertake the defense,
compromise or settlement of such Third-Party Action; provided, however, that
such Third-Party Action shall not be compromised or settled without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld, conditioned or delayed. In the event the Claimant
assumes the defense of the Third-Party Action, the Claimant will keep the
Indemnifying Party timely informed of the progress of any such defense,
compromise or settlement.
Section 6.05 Limitations on Indemnification. The Indemnifying Party's
obligations to indemnify the Claimant pursuant to this Article VI shall be
subject to the following limitations:
(a) No indemnification shall be required to be made by the
Indemnifying Party until the aggregate amount of the Claimant's Losses
exceeds Two Hundred Thousand Dollars ($200,000) (the "Deductible") and
then indemnification shall only be required to be made by the
Indemnifying Party to the extent of such Losses that exceed the
Deductible.
(b) The Indemnifying Party's aggregate liability under this
Article VI shall be limited to Four Million Three Hundred Fifty
Thousand Dollars ($4,350,000) (the "Indemnification Cap").
(c) The indemnification obligation of an Indemnifying Party
shall be reduced so as to give effect to any net reduction in federal,
state, local or foreign income or franchise tax liability realized at
any time by the Claimant in connection with the satisfaction by the
Indemnifying Party of a Claim with respect to which indemnification is
sought hereunder (which for purposes of this Section 6.05(c), the
parties agree shall be based upon a marginal tax rate of thirty-four
percent (34%)). The indemnification obligation of an Indemnifying
Party shall also be reduced to the extent of any insurance proceeds
available to the Claimant; provided that the Claimant shall use its
commercially reasonable efforts to obtain insurance proceeds from its
applicable insurance coverage. Additionally, the Claimant shall refund
to the Indemnifying Party any amount of the Claimant's Losses that are
subsequently recovered by the Claimant pursuant to a settlement or
otherwise.
(d) The term "Losses" shall not include any incidental or
consequential damages to Claimant, whether or not based upon events
giving rise to indemnification hereunder, except in the case of a
Claim for indemnification based upon a breach of Sections 5.10 or 5.11
hereof.
(e) No Buyer Party shall be entitled to recovery pursuant to
an indemnification claim hereunder to the extent that such Buyer Party
has recovered such Losses through the A/R Adjustment or Net Asset
Adjustment.
(f) From and after the Closing Date, the indemnification
rights contained in this Article VI shall constitute the sole and
exclusive remedies of the parties hereunder and shall supersede and
displace all other rights that either party may have under statute or
common law, except for Claims (i) based upon fraud committed by a
party and (ii) for which equitable/injunctive remedies are available.
(g) The foregoing limitations contained in this Section 6.05
shall not apply with respect to any Claims (i) arising under any
breach of the representations, warranties, and covenants set forth in
Articles I, II and IIA, and Sections 3.03, 3.06(b), 3.21, 4.03, 4.10,
4.11, 5.02, 5.08, 5.09, 5.10, 5.11, 5.12, 5.15, 5.16, 5.17, 5.18, 5.19
and 8.11 or (ii) relating to Losses incurred by the Seller Parties in
connection
34
with the performance of their duties under the Administrative Services
Agreement (other than Losses caused by the gross negligence or willful
misconduct of the Seller Parties other than employees of the Business)
Section 6.06. Calculation of Losses. Notwithstanding anything to the
contrary contained in this Agreement, for purposes of calculating the amount of
Losses incurred by a party pursuant to this Article VI, the representations and
warranties of the parties contained herein shall be deemed to be made without
qualification as to a Material Adverse Effect or "material adverse effect".
Section 6.07. Survival; Remedies. All representations and warranties
made in or pursuant to this Agreement will survive the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
and continue until the first anniversary of Closing. Subject to Section 5.04,
each party agrees that no other party to this Agreement will be under any duty,
express or implied, to make any investigation of any representation or warranty
made by any other party to this Agreement, and that no failure to so
investigate will be considered negligent or unreasonable.
ARTICLE VII
CLOSING CONDITIONS
Section 7.01. Conditions to Closing of Parent and Buyer. The
obligations of Parent and Buyer to purchase the Assets and to consummate the
other transactions contemplated by this Agreement are subject to the
satisfaction at or prior to the Closing Date of the following conditions, any
or all of which may be waived in writing in the absolute discretion of Parent
and Buyer, in whole or in part (provided that if any condition shall not have
been satisfied due to the action or inaction of Parent and Buyer or any of
their Affiliates, such condition shall be deemed to have been satisfied or
waived by Parent and Buyer):
(a) Each of the representations and warranties of Seller
contained in this Agreement must be true and correct in all material
respects as of the Closing Date as though made on and as of the
Closing Date except for (i) changes contemplated by this Agreement,
(ii) representations and warranties that are made as of a specific
date (which shall remain true and correct in all material respects as
of such date), and (iii) inaccuracies that have been waived in writing
by Parent and Buyer;
(b) Seller must have performed or complied in all material
respects with all agreements and covenants required by this Agreement
to be performed or complied with by Seller on or prior to the Closing
Date;
(c) There must be no pending litigation in any court or any
proceeding before or by any Governmental Entity against Seller,
Parent, or Buyer to restrain or prohibit or obtain damages or other
relief with respect to this Agreement or the Ancillary Agreements or
the consummation of the transactions contemplated by this Agreement or
the Ancillary Agreements;
(d) Seller must have executed and delivered to Buyer a Xxxx
of Sale conveying the Assets to Buyer, substantially in the form of
Exhibit D attached hereto;
(e) Seller must have executed and delivered to Buyer an
Assignment of Patents, Copyrights and Trademarks conveying Seller's
interest in all patents, copyrights, trademarks and service marks
included within the Assets, substantially in the form of Exhibit E
attached hereto;
(f) Seller must have endorsed and delivered any certificates
of title necessary to effect or record the transfer of any vehicles or
other Assets for which ownership is evidenced by a certificate of
title;
(g) Seller must deliver or otherwise make available to Buyer
the originals or copies of all of Seller's books, records, ledgers,
disks, proprietary information and other data and all other written or
electronic depositories of information relating primarily to the
Business and the Assets;
35
(h) Xxxxx Xxxxx must have entered into an Employment
Agreement, substantially in the form of Exhibit F attached hereto (the
"Employment Agreement");
(i) Seller must have executed and delivered to Buyer the
Administrative Services Agreement and a joinder to the Subordination
Agreement;
(j) Seller must deliver a certificate of its secretary
attesting to: (i) the resolutions adopted by the appropriate
constituencies duly authorizing the execution, delivery and
performance of this Agreement, the Ancillary Agreements and the
transactions contemplated hereby and thereby; and (ii) the signatures
of the Persons who have been authorized to execute and deliver this
Agreement and the Ancillary Agreements on behalf of Seller;
(k) Seller must deliver a certificate of its president or
vice president, dated the Closing Date, certifying that the conditions
set forth in Sections 7.01(a) and 7.01(b) have been satisfied and that
all of the conditions precedent to the obligations of the Seller have
been waived by Seller or satisfied;
(l) Seller must deliver or cause the delivery of all such
other documents and instruments as Parent, Buyer or their counsel may
reasonably request in order to consummate the transactions
contemplated hereby.
Section 7.02. Conditions to Obligations of Seller. The obligations of
Seller to sell the Assets and to consummate the other transactions contemplated
by this Agreement are subject to the satisfaction at or prior to the Closing
Date of the following conditions, any or all of which may be waived in writing
in the absolute discretion of Seller, in whole or in part (provided that if any
condition shall not have been satisfied due to the action or inaction of Seller
or any of its Affiliates, such condition shall be deemed to have been satisfied
or waived by Seller):
(a) Each of the representations and warranties of Parent and
Buyer contained in this Agreement must be true and correct in all
material respects as of the Closing Date as though made on and as of
the Closing Date except for (i) changes contemplated by this
Agreement, (ii) representations and warranties that are made as of a
specific date (which shall remain true and correct in all material
respects as of such date), and (iii) inaccuracies that have been
waived in writing by Seller;
(b) Buyer and Parent must have performed or complied in all
material respects with all agreements and covenants required by this
Agreement to be performed or complied with by them on or prior to the
Closing Date;
(c) There must be no pending litigation in any court or any
proceeding before or by any Governmental Entity against Seller,
Parent, or Buyer to restrain or prohibit or obtain damages or other
relief with respect to this Agreement or the Ancillary Agreements or
the consummation of the transactions contemplated by this Agreement or
the Ancillary Agreements;
(d) Buyer must have delivered or caused the delivery of the
Purchase Price (other than the Parent Shares) by (i) wire transfer of
the Closing Cash Payment in immediately available funds to a bank
account designated in writing by Seller, and (ii) delivery of the
original Forest City Notes and all necessary documents assigning all
of Parent's rights therein to Seller;
(e) Parent must have executed and delivered to Seller the
Mortgage, Security Agreement, and Administrative Services Agreement;
(f) Buyer and Parent must have executed and delivered to
Seller an Assumption Agreement, substantially in the form of Exhibit G
attached hereto;
(g) Buyer must have executed and delivered the Employment
Agreement;
36
(h) Each of Buyer and Parent must deliver a certificate of
its secretary attesting to: (i) the resolutions adopted by the
appropriate constituencies duly authorizing the execution, delivery
and performance of this Agreement, the Ancillary Agreements and the
transactions contemplated hereby and thereby; and (ii) the signatures
of the Persons who have been authorized to execute and deliver this
Agreement and the Ancillary Agreements on its behalf;
(i) Each of Buyer and Parent must deliver a certificate of
its president or vice president, dated the Closing Date, certifying
that the conditions set forth in Sections 7.02(a) and 7.02(b) have
been satisfied and that all of the conditions precedent to the
obligations of Buyer and Parent (as applicable) have been waived by
Buyer and Parent (as applicable) or satisfied;
(j) Parent must deliver to Seller an estoppel certificate
duly executed by FCAP with respect to the Forest City Notes confirming
the representations and warranties of Parent and Buyer contained in
Section 4.09, substantially in the form of Exhibit H attached hereto;
(k) Buyer and Parent must deliver or cause the delivery of
all such other documents and instruments as Seller or its counsel may
reasonably request in order to consummate the transactions
contemplated hereby; and
(k) Buyer and Parent must have executed and delivered all
such documents of assignment or other documents conveying to Seller
all of Parent's right, title and interest in and to the security
interest securing the Forest City Notes.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Termination.
(a) Breaches and Defaults; Opportunity to Cure. Prior to the
exercise by a party of any termination rights afforded under this
Agreement (it being understood that Buyer and Parent constitute one
party for purposes of this Section 8.01), if either party (the
"Non-Breaching Party") believes the other party (the "Breaching
Party") to be in breach hereunder, the Non-Breaching Party shall
provide the Breaching Party with written notice specifying in
reasonable detail the nature of such breach, whereupon the Breaching
Party shall have thirty (30) days after the receipt of such notice to
cure such breach; provided, however, that if such breach is not
capable of being cured during such period and if the Breaching Party
shall have commenced action to cure such breach during such period and
is diligently attempting to cure such breach, then the Breaching Party
shall be afforded an additional reasonable amount of time to cure such
breach; provided, further, however, that Buyer/Parent shall have no
opportunity to cure the breach of its obligation to deliver any
required portion of the Purchase Price to be delivered to Seller at
Closing. If the breach is not cured within such time period, then the
Breaching Party shall be in default hereunder and the Non-Breaching
Party shall be entitled to terminate this Agreement (as provided in
Section 8.01(b)). This right of termination shall be in addition to,
and not in lieu of, any legal remedies available to the Non-Breaching
Party.
(b) Termination. This Agreement may be terminated at any time
prior to the Closing as follows:
(i) by mutual written agreement of the parties
hereto;
(ii) by Parent and Buyer, provided Parent and Buyer
are not then in breach of this Agreement, pursuant to a
written notice to Seller, (A) if any one or more of the
conditions to Parent's and Buyer's obligation to close has
not been fulfilled in any material respect as of the Closing
Date, (B) subject to Section 8.01(a), if Seller has breached
in any material respect any
37
representation, warranty, covenant or agreement contained in
this Agreement, or (C) if the Closing shall not have taken
place by the Outside Date (unless any of the foregoing events
shall have resulted primarily from Parent or Buyer breaching
any representation, warranty, covenant or agreement contained
in this Agreement); and
(iii) by Seller, provided Seller is not then in
breach of this Agreement, pursuant to a written notice to
Parent and Buyer, (A) if any one or more of the conditions to
Seller's obligation to close has not been fulfilled in any
material respect as of the Closing Date, (B) subject to
Section 8.01(a), if Parent or Buyer has breached in any
material respect any representation, warranty, covenant or
agreement contained in this Agreement, or (C) if the Closing
shall not have taken place by the Outside Date (unless any of
the foregoing events shall have resulted primarily from
Seller's breach of any representation, warranty, covenant or
agreement contained in this Agreement).
(c) Effect of Termination. In the event of any termination of
this Agreement, all obligations of the parties hereto under this
Agreement (except for the obligations contained in Sections 5.07 and
8.11) shall terminate as of such date of termination and this
Agreement shall thereafter become void and be of no further force and
effect, and upon such termination no party hereto shall be liable to
the other party, except for damages and expenses (including reasonable
attorneys', accounting and other professional fees and expenses)
resulting from breaches of this Agreement prior to such termination.
Section 8.02. Notices. All notices that are required or may be given
pursuant to this Agreement must be in writing and delivered personally against
receipt, by a recognized courier service, by a recognized overnight delivery
service, by facsimile transmission (with electronic confirmation of receipt),
or by registered or certified mail, postage prepaid, to the parties at the
following addresses (or to the attention of such other person or such other
address as any party may provide to the other parties by notice in accordance
with this Section 8.02):
If to Buyer or Parent:
Tyler Technologies, Inc.
0000 X. Xxxxxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Corporate Counsel
FAX: (000) 000-0000
If to Seller:
Day & Xxxxxxxxxx, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
FAX: (000) 000-0000
with a required copy to:
Xxxxxx X. Xxxxx, Esquire
Kleinbard, Xxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
FAX: (000) 000-0000
Any such notice or other communication will be deemed to have been given and
received (whether actually received or not) on the day it is personally
delivered or delivered by courier or overnight delivery service or sent by
facsimile or, if mailed, when actually received.
38
Section 8.03. Attorneys' Fees and Costs. If attorneys' fees or other
costs are incurred to secure performance of any obligations under this
Agreement, or to establish damages for the breach thereof or to obtain any
other appropriate relief, whether by way of prosecution or defense, the
prevailing party will be entitled to recover reasonable attorneys' fees and
costs incurred in connection therewith (subject to the limitations and other
conditions on indemnification contained in Article VI hereof).
Section 8.04. Further Assurances. Each party agrees to execute any and
all documents and to perform such other acts as may be necessary or expedient
to further the purposes of this Agreement and the transactions contemplated by
this Agreement.
Section 8.05. Counterparts; Facsimiles. This Agreement may be executed
in one or more counterparts for the convenience of the parties to this
Agreement, all of which together will constitute one and the same instrument.
This Agreement may be executed by facsimile transmission and such facsimile
signatures shall be deemed to be original signatures for all purposes.
Section 8.06. Certain Definitions. For the purposes of this Agreement,
the following terms have the meanings specified:
(a) "Affiliate" with respect to a Person means another Person
that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the first
mentioned Person.
(b) "Control" (including the terms "controlling,"
"controlled," "controlled by," and "under common control with") means
the possession, directly or indirectly, or as trustee or executor, of
the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of securities, or
as trustee or executor, by contract or credit arrangement or
otherwise.
(c) "Knowledge" or "to the knowledge of" and other phrases of
like substance mean with respect to any representation or warranty or
other statement in the Agreement qualified by the knowledge of:
(i) Seller, the actual knowledge of Xxxxx Xxxxx,
Xxxxxxx Xxxxx, Xxxxxxxx Story, Xxxxx Xxxxxx, Xxxx Xxxxx,
Xxxxxxxx Xxxxxxxxxx and Xxxx Xxxxx; or
(ii) Buyer or Parent, the actual knowledge of, Xxxx
X. Xxxxxx, Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxxx and H. Xxxx
Xxxxx, Xx.
(d) "Person" will be broadly construed to include to mean an
individual, corporation, partnership, association, trust,
unincorporated organization, Governmental Entity, other entity or
group (as used in Section l3(d) of the Securities Exchange Act of
1934, as amended).
(e) "Tax" or "taxes" means any and all taxes, charges, fees,
levies, assessments, duties, or other amounts payable to any federal,
state, local, or foreign taxing Governmental Entity, including,
without limitation, (i) income, franchise, profits, gross receipts,
minimum, alternative minimum, estimated, ad valorem, value added,
sales, use, service, real or personal property, capital stock,
license, payroll, withholding, disability, employment, social
security, workers compensation, unemployment compensation, utility,
severance, excise, stamp, windfall profits, transfer, and gains taxes;
(ii) customs, duties, imposts, charges, levies, or other similar
assessments of any kind; and (iii) interest, penalties, and additions
to tax imposed with respect thereto.
Section 8.07. Assignment; Third Parties. Neither this Agreement nor
any of the rights, interests or obligations under this Agreement will be
assigned or delegated by any party, without the prior written consent of the
39
other parties. This Agreement is not intended to confer any rights or benefits
to any Person (including, without limitation, any employees of Seller) other
than the parties to this Agreement.
Section 8.08. Entire Agreement. This Agreement and the related
documents contained as Exhibits and Schedules to this Agreement or expressly
contemplated by this Agreement contain the entire understanding of the parties
relating to the subject matter hereof and supersede all prior written or oral
and all contemporaneous oral agreements and understandings relating to the
subject matter hereof. This Agreement cannot be modified or amended except in
writing signed by all parties. The Exhibits and Schedules to this Agreement are
hereby incorporated by reference into and made a part of this Agreement for all
purposes.
Section 8.09. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
under this Agreement, including, without limitation, the covenants set forth in
Section 5.10 and Section 5.11, will cause irreparable injury to the other
parties for which damages, even if available, will not be an adequate remedy.
Accordingly, each party hereby consents to the issuance of injunctive relief by
any court of competent jurisdiction to compel performance of such party's
obligations and to the granting by any court of the remedy of specific
performance of its obligations under this Agreement.
Section 8.10 Access to Records. From and after the Closing Date,
Seller shall allow Buyer, Parent, and its counsel, accountants and other
representatives, such access to Seller's records that after the Closing are in
the custody or control of Seller as Buyer reasonably requires in order to
comply with its obligations under Law or under contracts constituting Assumed
Liabilities. From and after the Closing Date, Buyer and Parent shall allow
Seller, and its counsel, accountants and other representatives, such access to
records that after the Closing are in the custody or control of Buyer or Parent
as Seller reasonably require in order to comply with their obligations under
Law (including with respect to tax matters and the preparation of the Final
Statement). Each of Seller, Parent and Buyer shall retain the records described
in this Section 8.10 for period of at least six (6) years following the
Closing.
Section 8.11 Indemnification of Brokerage. Seller agrees to indemnify
and save Buyer and Parent harmless from any claim or demand for commissions or
other compensation by any broker, finder, agent or similar intermediary
claiming to have been employed by or on behalf of Seller or any Affiliate
(including Xxxx Xxxxx), and to bear the cost of reasonable legal fees and
expenses incurred in defending against any such claim. Buyer and Parent agree
to indemnify and save Seller harmless from any claim or demand for commissions
or other compensation by any broker, finder, agent or similar intermediary
claiming to have been employed by or on behalf of Buyer, Parent or any of their
Affiliates and to bear the cost of reasonable legal fees and expenses incurred
in defending against such claim.
Section 8.12 Computation of Days; Holidays. Whenever this Agreement
provides for a period of time that is expressed in terms of a numbers of days
prior to or within which actions or events are to occur or not occur, such time
period shall be measured in calendar days unless otherwise expressly provided.
Whenever this Agreement provides for a date, day or period of time on or prior
to which actions or events are to occur or not occur, and if such date, day or
last day of such period of time falls on a Saturday, Sunday, or legal holiday,
then the same shall be deemed to fall on the immediately following business
day.
Section 8.13 Payment of Amounts Received After Closing; Pre-Closing
Checks. Seller agrees that, after the Closing, it will pay over to Buyer any
and all amounts received by Seller from third parties that constitute Assets,
or that relate to Assumed Liabilities, the Uncollected Closing Date Billed A/R
assigned to Buyer pursuant to Section 2.02, or the operation of the Business
during post-Closing periods. Buyer agrees that, after the Closing, it will pay
over to Seller any and all amounts received by Buyer from third parties that
constitute Excluded Assets or that relate to Excluded Liabilities. In addition,
Seller agrees to honor all checks issued by Seller relating to the Business
prior to Closing.
SECTION 8.14. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE,
WITHOUT GIVING EFFECT TO ANY CONFLICTS-OF-LAW, RULE, OR PRINCIPLE THAT MIGHT
REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
40
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41
IN WITNESS WHEREOF, each of the parties to this Agreement has caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
PARENT:
TYLER TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: President
BUYER:
CLT COMPANY,
a Delaware corporation and wholly-owned
subsidiary of Parent
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: President
SELLER:
DAY & XXXXXXXXXX, L.L.C.,
a Delaware limited liability company
By: /s/ Xxxx X. Xxxxx
-----------------
Name: Xxxx X. Xxxxx
Title: Senior Vice PResident
42
EXHIBIT A
FORM OF MORTGAGE
OPEN-END MORTGAGE AND SECURITY AGREEMENT
CLT COMPANY, a Delaware corporation
Mortgagor
AND
DAY & XXXXXXXXXX, L.L.C., a Delaware limited liability company
Mortgagee
Return to:
Xxxxxx X. Xxxxxxxx, Esquire
Kleinbard, Xxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
43
[SUBJECT TO CHANGES REQUIRED BY OHIO LAW]
Open-End Mortgage
and Security Agreement
(This Mortgage Secures Future Advances)
THIS OPEN-END MORTGAGE AND SECURITY AGREEMENT (this "Mortgage") is
made as of the ____ day of November, 1999, by CLT COMPANY, a Delaware
corporation (the "Mortgagor") with an address at 0000 Xxxx Xxxxxxxxxxx Xxxx,
Xxxxxx, Xxxxx 00000 in favor of DAY & XXXXXXXXXX, L.L.C., a Delaware limited
liability company (the "Mortgagee"), with an address at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
WHEREAS, the Mortgagor is the fee owner of a certain tract or parcel
of land described in Exhibit A attached hereto and made a part hereof, together
with the improvements now or hereafter erected thereon, commonly known as
Dayton, _______ County, Ohio; and
WHEREAS, in connection with a certain Asset Purchase Agreement dated
November 3, 1999 to be effective as of October 29, 1999 (the "Asset Purchase
Agreement") among Mortgagor, Mortgagee and Tyler Technologies, Inc., a Delaware
corporation and parent company of Mortgagor ("Parent"), Parent is providing to
Mortgagee a certain Price Protection Guaranty in connection with the Parent
Shares that constitute a portion of the Purchase Price for the Assets being
purchased thereunder in an amount not to exceed THREE MILLION DOLLARS
($3,000,000.00) (the "Guaranty"). All capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to such terms in the Asset
Purchase Agreement.
NOW, THEREFORE, for the purpose of securing the payment and
performance of the following obligations (collectively called the
"Obligations"): the Guaranty (and the relevant provisions of the Asset Purchase
Agreement), all obligations, covenants and duties owing by Mortgagor to
Mortgagee under this Mortgage and the Security Agreement (collectively, the
"Guaranty Documents"), and all costs and expenses of the Mortgagee incurred in
the enforcement, collection or otherwise in connection with any of the
foregoing, including reasonable attorneys' fees and expenses,
The Mortgagor, for good and valuable consideration. receipt of which
is hereby acknowledged and intending to be legally bound hereby, does hereby
give, grant, bargain, sell, convey, assign, transfer, mortgage, hypothecate.
pledge, set over and confirm unto the Mortgagee and does agree that the
Mortgagee shall have a security interest in the following described property,
all accessions and additions thereto, all substitutions therefor and
replacements and proceeds thereof, and all reversions and remainders of such
property now owned or held or hereafter acquired (the "Property"), to wit:
(a) All of the Mortgagor's estate in the premises described in Exhibit
A, together with all of the easements, rights of way, privileges, liberties,
hereditaments, gores, streets, alleys, passages, ways. waters. watercourses,
rights and appurtenances thereunto belonging or appertaining, and all of the
Mortgagor's estate, right,
44
title, interest, claim and demand whatsoever therein and in the public streets
and ways adjacent thereto, either in law or in equity (the "Land");
(b) All the buildings, structures and improvements of every kind and
description now or hereafter erected or placed on the Land, and all facilities,
fixtures, machinery, apparatus, appliances, installations, machinery and
equipment, including all building materials to be incorporated into such
buildings, all electrical equipment necessary for the operation of such
buildings and heating, air conditioning and plumbing equipment now or hereafter
attached to, located in or used in connection with those buildings, structures
or other improvements (the "Improvements");
(c) All rents, issues and profits arising or issuing from the Land and
the Improvements (the "Rents") including the Rents arising or issuing from all
leases and subleases now or hereafter entered into covering all or any part of
the Land and Improvements (the "Lease"), all of which Leases and Rents are
hereby assigned to the Mortgagee by the Mortgagor. The foregoing assignment
shall include all fees, charges, accounts or other payments for the use or
occupancy of rooms and other public facilities in hotels, motels, or other
lodging properties, and all cash or securities deposited under Leases to secure
performance of lessees of their obligations thereunder, whether such cash or
securities are to be held until the expiration of the terms of such leases or
applied to one or more installments of rent coming due prior to the expiration
of such terms. The foregoing assignment extends to Rents arising both before
and after the commencement by or against the Mortgagor of any case or
proceeding under any Federal or State bankruptcy, insolvency or similar law,
and is intended as an absolute assignment and not merely the granting of a
security interest. The Mortgagor, however, shall have a license to collect.
retain and use the Rents so long as no Event of Default shall have occurred and
be continuing or shall exist. The Mortgagor will execute and deliver to the
Mortgagee, on demand, such additional assignments and instruments as the
Mortgagee may require to implement, confirm, maintain and continue the
assignment of Rent hereunder;
(d) All proceeds of the conversion, voluntary or involuntary, of any
of the foregoing into cash or liquidated claims;
(e) And without limiting any of the other provisions of this Mortgage,
the Mortgagor, as debtor, expressly grants unto the Mortgagee, as secured
party, a security interest in all those portions of the Property which may be
subject to the Uniform Commercial Code provisions applicable to secured
transactions under the laws of any state, and the Mortgagor will execute and
deliver to the Mortgagee on demand such financing statements and other
instruments as the Mortgagee may require in order to perfect and maintain such
security interest under the UCC on the aforesaid collateral.
To have and to hold the same unto the Mortgagee, its successors and
assigns, forever.
Provided, however, that if the Mortgagor shall pay to the Mortgagee
the Obligations, and if the Mortgagor shall keep and perform each of its other
covenants, conditions and agreements set forth herein and in the other Guaranty
Documents, then upon the termination of all obligations, duties and commitments
of the Mortgagor under the Obligations and this Mortgage, and subject to the
provisions of Section 23, the estate hereby granted and conveyed shall become
null and void.
45
This Mortgage is an "Open-End Mortgage" as set forth in
________________ and secures obligations up to a maximum principal amount of
indebtedness outstanding at any time equal to double the face amount of the
Guaranty, plus accrued and unpaid interest, including advances for the payment
of taxes and municipal assessments, maintenance charges, insurance premiums,
costs incurred for the protection of the Property or the lien of this Mortgage,
expenses incurred by the Mortgagee by reason of default by the Mortgagor under
this Mortgage and advances for construction, alteration or renovation on the
Property or for any other purpose, together with all other sums due hereunder
or secured hereby. All notices to be given to the Mortgagee pursuant to
_______________ shall be given as set forth in Section 18.
1. Representations and Warranties. The Mortgagor represents and
warrants to the Mortgagee that the Mortgagor has good and marketable title to
an estate in fee simple absolute in the Land and Improvements and has all
right, title and interest in all other property constituting a part of the
Property, in each case free and clear of all liens and encumbrances, except as
may otherwise be set forth on an Exhibit B hereto. This Mortgage is a valid and
enforceable first lien on the Property (except as set forth on Exhibit B), and
the Mortgagee shall, subject to the Mortgagor's right of possession prior to an
Event of Default, quietly enjoy and possess the Property. The Mortgagor shall
preserve such title as it warrants herein and the validity and priority of the
lien hereof and shall forever warrant and defend the same to the Mortgagee
against the claims of all persons.
2. Affirmative Covenants. Until all of the Obligations shall have been
fully paid, satisfied and discharged the Mortgagor shall:
(a) Payment and Performance of Obligations. Pay or cause to be paid
and perform all Obligations when due as provided in the Guaranty Documents.
(b) Legal Requirements. Promptly comply with and conform to or
cause to be promptly complied with and conformed to all present and future
laws, statutes, codes, ordinances, orders and regulations and all covenants,
restrictions and conditions which may be applicable to the Mortgagor or to any
of the Property (the "Legal Requirements").
(c) Impositions. Before interest or penalties are due thereon and
otherwise when due, the Mortgagor shall pay or cause to be paid all taxes of
every kind and nature, all charges for any easement or agreement maintained for
the benefit of any of the Property, all general and special assessments
(including any condominium or planned unit development assessments, if any),
levies, permits. inspection and license fees. all water and sewer rents and
charges, and all other charges and liens, whether of a like or different
nature. imposed upon or assessed against the Mortgagor or any of the Property
(the "Impositions"), within thirty (30) days after the payment of any
Imposition, the Mortgagor shall upon Mortgagee's request therefor deliver or
cause to be delivered to the Mortgagee evidence acceptable to the Mortgagee of
such payment. The Mortgagor's obligations to pay or cause to be paid the
Impositions shall survive the Mortgagee's taking title to the Property through
foreclosure, deed-in-lieu or otherwise.
46
(d) Maintenance of Security. Use, and permit others to use, the
Property only for its present use or such other uses as permitted by applicable
Legal Requirements and approved in writing by the Mortgagee, not to be
unreasonably withheld. The Mortgagor shall keep or cause to be kept the
Property in good condition and order and in a rentable and tenantable state of
repair and will make or cause to be made, as and when necessary, all repairs,
renewals, and replacements, structural and non-structural, exterior and
interior, foreseen and unforeseen, ordinary and extraordinary, provided,
however. that no structural repairs, renewals or replacements shall be made
without the Mortgagee's prior written consent not to be unreasonably withheld.
The Mortgagor shall not, nor shall permit any other person or entity to,
remove, demolish or alter the Property nor commit or suffer waste with respect
thereto, nor permit the Property to become deserted or abandoned. The Mortgagor
covenants and agrees not to take or permit any action with respect to the
Property which will in any manner impair the security of this Mortgage.
3. Leases. The Mortgagor shall not (a) execute an assignment or pledge
of the Rents or the Leases other than in favor of the Mortgagee; (b) accept any
prepayment of an installment of any Rents prior to the due date of such
installment; or (c) enter into or amend in any material respect any of the
terms of any of the Leases without the Mortgagee's prior written consent. Any
or all leases or subleases of all or any part of the Property shall be subject
in all respects to the Mortgagee's prior written consent (not to be
unreasonably withheld), shall be subordinated to this Mortgage and to the
Mortgagee's rights and, together with any and all rents, issues or profits
relating thereto, shall be assigned at the time of execution to the Mortgagee
as additional collateral security for the Obligations, all in such form,
substance and detail as is satisfactory to the Mortgagee in its reasonable
discretion.
4. Due on Sale Clause. The Mortgagor shall not sell, convey or
otherwise transfer any interest in the Property (whether voluntarily or by
operation of law), or agree to do so, without the Mortgagee's prior written
consent, including (a) any sale, conveyance, assignment, or other transfer of
(including installment land sale contracts), or the grant of a security
interest in, all or any part of the legal or equitable title to the Property;
or (b) any lease of all or any portion of the Property. Any default under this
Section shall cause an immediate acceleration of the Obligations without any
demand by the Mortgagee.
5. Insurance. The Mortgagor shall keep or cause to be kept the
Property continuously insured in an amount not less than the cost to replace
the Property or an amount not less than eighty percent (80%) of the full
insurable value of the Property, whichever is greater, against loss or damage
by fire, with extended coverage and against other hazards as the Mortgagee may
from time to time reasonably require. The Mortgagor shall also maintain. or
cause to be maintained, comprehensive general public liability insurance. in an
amount of not less than One Million Dollars ($1,000,000) per occurrence and Two
Million Dollars ($2,000,000) general aggregate per location, which includes
contractual liability insurance for the Mortgagor's obligations under the
Leases, and worker's compensation insurance. All property insurance shall
include protection for continuation of income for a period of twelve (12)
months, in the event of any damage caused by the perils referred to above. All
policies, including policies for any amounts carried in excess of the required
minimum and policies not specifically required by the Mortgagee, shall be with
an insurance company or companies reasonably satisfactory to the Mortgagee,
shall be in form reasonably satisfactory to the Mortgagee, shall meet all
coinsurance requirements of the Mortgagee, shall be maintained in full force
and effect, shall be assigned to the Mortgagee, with premiums prepaid, as
collateral security for payment of the Obligations, shall be endorsed with a
standard mortgagee clause in favor of the Mortgagee and shall provide for at
least thirty (30) days notice of cancellation to the Mortgagee. Such insurance
47
shall also name the Mortgagee as an additional insured under the comprehensive
general public liability policy and the Mortgagor shall also deliver to the
Mortgagee a copy of the replacement cost coverage endorsement. If the Property
is located in an area which has been identified by any governmental agency,
authority or body as a flood hazard area or the like, then the Mortgagor shall
maintain a flood insurance policy covering the Property in an amount not less
than the original principal amount of the Guaranty or the maximum limit of
coverage available under the federal program, whichever amount is less.
6. Rights of Mortgagee to Insurance Proceeds. In the event of loss in
excess of $100,000, the Mortgagee shall have the exclusive right to adjust,
collect and compromise all insurance claims. and the Mortgagor shall not
adjust, collect or compromise any claims under said policies without the
Mortgagee's prior written consent, which consent shall not be unreasonably
withheld. Each insurer is hereby authorized and directed to make payment for
such losses under said policies, including return of unearned premiums,
directly to the Mortgagee instead of to the Mortgagor and the Mortgagee jointly
and the Mortgagor appoints the Mortgagee as the Mortgagor's attorney-in-fact to
endorse any draft therefor. All insurance proceeds from such losses may, at the
Mortgagee's sole option, be applied to all or any part of the Obligations and
in any order (notwithstanding that such Obligations may not then otherwise be
due and payable) or to the repair and restoration of any of the Property under
such reasonable terms and conditions as the Mortgagee may impose.
7. Installments for Insurance, Taxes and Other Charges. The Mortgagor
shall, if requested by the Mortgagee, pay or cause to be paid to the Mortgagee
monthly, an amount equal to one-twelfth (1/12) of the annual premiums for the
insurance policies referred to hereinabove and the annual Impositions and any
other item which at any time may be or become a lien upon the Property (the
"Escrow Charges"). The amounts so paid shall be used in payment of the Escrow
Charges so long as no Event of Default shall have occurred. No amount so paid
to the Mortgagee shall be deemed to be trust funds, nor shall any sums paid
bear interest. The Mortgagee shall have no obligation to pay any insurance
premium or Imposition if at any time the funds being held by the Mortgagee for
such premium or Imposition are insufficient to make such payments. Upon the
occurrence of an Event of Default, the Mortgagee shall have the right, at its
election, to apply any amount so held against the Obligations due and payable
in such order as the Mortgagee may deem fit, and the Mortgagor hereby grants to
the Mortgagee a lien upon and security interest in such amounts for such
purpose.
8. Condemnation. The Mortgagor, immediately upon obtaining knowledge
of the institution of any proceedings for the condemnation or taking by eminent
domain of any of the Property, shall notify the Mortgagee of the pendency of
such proceedings. The Mortgagee may participate in any such proceedings and the
Mortgagor shall deliver to the Mortgagee all instruments requested by it, to
permit such participation. Any award or compensation for Property taken or for
damage to Property not taken, whether as a result of such proceedings or in
lieu thereof, is hereby assigned to and shall be received and collected
directly by the Mortgagee, and any award or compensation shall be applied, at
the Mortgagee's option, to any part of the Obligations and in any order
(notwithstanding that any of such Obligations may not then be due and payable)
or to the repair and restoration of any of the Property under such reasonable
terms and conditions as the Mortgagee may impose.
48
9. Environmental Matters.
(a) For purposes of this Section 9, the term "Environmental Laws"
shall mean all federal, state and local laws, regulations and orders. whether
now or in the future enacted or issued, pertaining to the protection of land,
water, air, health, safety or the environment. The term "Regulated Substances"
shall mean all substances regulated by Environmental Laws, or which are known
or considered to be harmful to the health or safety of persons, or the presence
of which may require investigation, notification or remediation under the
Environmental Laws. The term "Contamination" shall mean the discharge, release,
emission, disposal or escape of any Regulated Substances into the environment.
(b) The Mortgagor shall ensure, at its sole cost and expense, that
the Property and the conduct of all operations and activities thereon comply
and continue to comply with all Environmental Laws. The Mortgagor shall notify
the Mortgagee promptly and in reasonable detail in the event that the Mortgagor
becomes aware of any violation of any Environmental Laws, the presence or
release of any Contamination with respect to the Property, or any governmental
or third party claims relating to the environmental condition of the Property
or the conduct of operations or activities thereon. The Mortgagor also agrees
not to permit or allow the presence of Regulated Substances on any part of the
Property, except for those Regulated Substances (i) which are used in the
ordinary course of the Mortgagor's business, but only to the extent they are in
all cases used in a manner which complies with all Environmental Laws; and (ii)
those Regulated Substances which are naturally occurring on the Property. The
Mortgagor agrees not to cause. allow or permit the presence of any
Contamination on the Property.
(c) The Mortgagee shall not be liable for, and the Mortgagor shall
indemnify, defend and hold the Mortgagee and all of its officers, directors,
employees and agents, and all of their respective successors and assigns
harmless from and against all losses, costs, liabilities, damages, fines,
claims, penalties and expenses (including reasonable attorneys', consultants'
and contractors' fees, costs incurred in the investigation, defense and
settlement of claims, as well as costs incurred in connection with the
investigation, remediation or monitoring of any Regulated Substances or
Contamination that the Mortgagee may suffer or incur (including as holder of
the Mortgage, as mortgagee in possession or as successor in interest to the
Mortgagor as owner of the Property by virtue of a foreclosure or acceptance of
a deed in lieu of foreclosure) as a result of or in connection with (i) any
violation of the Environmental Laws arising from upon events and occurrences
after the date hereof (including the assertion that any lien existing or
arising pursuant to any Environmental Laws takes priority over the lien of the
Mortgage); (ii) the breach of any representation, warranty, covenant or
undertaking by the Mortgagor in this Section 9; (iii) the presence on or the
migration of any Contamination or Regulated Substances on, under or through the
Property arising from upon events and occurrences after the date hereof; or
(iv) any litigation or claim by the government or by any third party in
connection with the items described in clauses (i), (ii) and (iii).
10. Inspection of Property. The Mortgagee shall have the right to
enter upon the Property at any reasonable hour for the purpose of inspecting
the order, condition and repair of the buildings and improvements erected
thereon. as well as the conduct of operations and activities on the Property.
The Mortgagee may enter the Property (and cause the Mortgagee's employees,
agents and consultants to enter the Property), upon prior written notice to the
Mortgagor, to conduct any and all environmental testing deemed appropriate by
the Mortgagee in its sole discretion. The environmental testing shall be
accomplished by whatever means the Mortgagee may deem appropriate, including
the taking of soil samples and the installation of ground water monitoring
xxxxx or other intrusive environmental tests. The Mortgagor shall provide the
Mortgagee (and the Mortgagee's employees, agents
49
and consultants) reasonable rights of access to the Property as well as such
information about the Property and the past or present conduct of operations
and activities thereon as the Mortgagee shall reasonably request.
11. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default hereunder: (a) any Event
of Default (as defined in any of the Obligations); (b) any default under any of
the Obligations that does not have a defined set of "Events of Default" and the
lapse of any notice or cure period provided in such Obligations with respect to
such default; (c) the failure by the Mortgagor to perform any of its
obligations under this Mortgage; (d) falsity, inaccuracy or material breach by
the Mortgagor of any written warranty, representation or statement made or
furnished to the Mortgagee by or on behalf of the Mortgagor; (e) an uninsured
material loss, theft, damage, or destruction to any of the Property, or the
entry of any judgment against the Mortgagor or any lien against or the making
of any levy, seizure or attachment of or on the Property; (f) the failure of
the Mortgagee to have a mortgage lien on the Property with the priority
required under Section 1; (g) any indication or evidence received by the
Mortgagee that the Mortgagor may have directly or indirectly been engaged in
any type of activity that, in the Mortgagee's reasonable judgment, might result
in the forfeiture of any of the Property to any governmental entity, federal,
state or local; (h) foreclosure proceedings are instituted against the Property
upon any other lien or claim, whether alleged to be superior or junior to the
lien of this Mortgage; (i) the failure by the Mortgagor to pay any Impositions
as required under Section 2(c), or to maintain in full force and effect any
insurance required under Section 5; or (j) the Mortgagor or any other obligor
or guarantor of any of the Obligations, shall at any time deliver or cause to
be delivered to the Mortgagee a notice pursuant to _______________ electing to
limit the indebtedness secured by this Mortgage.
12. Rights and Remedies of Mortgagee. If an Event of Default occurs,
the Mortgagee may, at its option and without demand, notice or delay, do one or
more of the following:
(a) The Mortgagee may declare the entire unpaid principal balance
of the Obligations, together with all interest thereon, to be due and payable
immediately.
(b) The Mortgagee may (i) institute and maintain an action of
mortgage foreclosure against the Property and the interests of the Mortgagor
therein, (ii) institute and maintain an action on any instruments evidencing
the Obligations or any portion thereof, and (iii) take such other action at law
or in equity for the enforcement of any of the Guaranty Documents as the law
may allow, and in each such action the Mortgagee shall be entitled to all costs
of suit and attorneys fees.
(c) The Mortgagee may, in its sole and absolute discretion: (i)
collect any or all of the Rents, including any Rents past due and unpaid, (ii)
perform any obligation or exercise any right or remedy of the Mortgagor under
any Lease, or (iii) enforce any obligation of any tenant of any of the
Property. The Mortgagee may exercise any right under this subsection (c),
whether or not the Mortgagee shall have entered into possession of any of the
Property, and nothing herein contained shall be construed as constituting the
Mortgagee a "mortgagee in possession", unless the Mortgagee shall have entered
into and shall continue to be in actual possession of the Property. The
Mortgagor hereby authorizes and directs each and every present and future
tenant of any of the Property to pay all Rents directly to the Mortgagee and to
perform all other obligations of that tenant for the direct benefit of the
Mortgagee, as if the Mortgagee were the landlord under the Lease with that
tenant, immediately upon receipt of a demand by the Mortgagee to make such
payment or perform such obligations. The Mortgagor hereby
50
waives any right, claim or demand it may now or hereafter have against any such
tenant by reason of such payment of Rents or performance of obligations to the
Mortgagee, and any such payment or performance to the Mortgagee shall discharge
the obligations of the tenant to make such payment or performance to the
Mortgagor.
(d) The Mortgagee shall have the right, in connection with the
exercise of its remedies hereunder, to the appointment of a receiver to take
possession and control of the Property or to collect the Rents, without notice
and without regard to the adequacy of the Property to secure the Obligations. A
receiver while in possession of the Property shall have the right to make
repairs and to make improvements necessary or advisable in its or his opinion
to preserve the Property, or to make and keep them rentable to the best
advantage, and the Mortgagee may advance moneys to a receiver for such
purposes. Any moneys so expended or advanced by the Mortgagee or by a receiver
shall be added to and become a part of the Obligations secured by this
Mortgage.
13. Application of Proceeds. The Mortgagee shall apply the proceeds of
any foreclosure sale of, or other disposition or realization upon, or Rents or
profits from, the Property to satisfy the Obligations in such order of
application as the Mortgagee shall determine in its exclusive discretion.
14. Confession of Judgment in Ejectment. At any time after the
occurrence of an Event of Default, without further notice, regardless of
whether the Mortgagee has asserted any other right or exercised any other
remedy under this Mortgage or any of the other Loan Documents, it shall be
lawful for any attorney of any court of record as attorney for the Mortgagor to
confess judgment in ejectment against the Mortgagor and all persons claiming
under the Mortgagor for the recovery by the Mortgagee of possession of all or
any part of the Property, for which this Mortgage shall be sufficient warrant.
If for any reason after such action shall have commenced the same shall be
discontinued and the possession of the Property shall remain in or be restored
to the Mortgagor, the Mortgagee shall have the right upon any subsequent
default or defaults to bring one or more amicable action or actions as
hereinbefore set forth to recover possession of all or any part of the
Property.
15. Mortgagee's Right to Protect Security. The Mortgagee is hereby
authorized to do any one or more of the following, irrespective of whether an
Event of Default has occurred: (a) appear in and defend any action or
proceeding purporting to affect the security hereof or the Mortgagee's rights
or powers hereunder; (b) purchase such insurance policies covering the Property
as it may elect if the Mortgagor fails to maintain the insurance coverage
required hereunder: and (c) take such action as the Mortgagee may determine to
pay, perform or comply with any Impositions or Legal Requirements, to cure any
Events of Default and to protect its security in the Property.
16. Appointment of Mortgagee as Attorney-in-Fact. The Mortgagee, or
any of its officers, is hereby irrevocably appointed attorney-in-fact for the
Mortgagor (without requiring any of them to act as such), such appointment
being coupled with an interest, to do any or all of the following: (a) collect
the Rents after the occurrence of an Event of Default; (b) settle for, collect
and receive any awards payable under Section 8 from the authorities making the
same: and (c) execute, deliver and file such financing statements and other
instruments as the Mortgagee may require in order to perfect and maintain its
security interest under the Uniform Commercial Code on any portion of the
Property.
51
17. Certain Waivers. The Mortgagor hereby waives and releases all
benefit that might accrue to the Mortgagor by virtue of any present or future
law exempting the Property, or any part of the proceeds arising from any sale
thereof from attachment. levy or sale on execution, or providing for any stay
of execution, exemption from civil process or extension of time for payment,
and, unless specifically required herein. all notices of the Mortgagor's
default or of the Mortgagee's election to exercise, or the Mortgagee's actual
exercise of any option under this Mortgage or any other Guaranty Document.
18. Notices. All notices. demands, requests, consents, approvals and
other communications required or permitted hereunder must be in writing and
will be effective upon receipt if delivered personally against receipt to the
Mortgagor or the Mortgagee, or if sent by facsimile transmission with
confirmation of delivery, or by nationally recognized overnight courier
service, to the address set forth above or to such other address as the
Mortgagor or the Mortgagee may give to the other in writing for such purpose.
19. Preservation of Rights. No delay or omission on the Mortgagee's
part to exercise any right or power arising hereunder will impair any such
right or power or be considered a waiver of any such right or power, nor will
the Mortgagee's action or inaction impair any such right or power. The
Mortgagee's rights and remedies hereunder are cumulative and not exclusive of
any other rights or remedies which the Mortgagee may have under other
agreements, at law or in equity. The Mortgagee may exercise any one or more of
its rights and remedies without regard to the adequacy of its security.
20. Illegality. In case any one or more of the provisions contained in
this Mortgage should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
21. Changes in Writing. No modification, amendment or waiver of any
provision of this Mortgage nor consent to any departure by the Mortgagor
therefrom will be effective unless made in a writing signed by the Mortgagee,
and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on the
Mortgagor in any case will entitle the Mortgagor to any other or further notice
or demand in the same, similar or other circumstance.
22. Entire Agreement. This Mortgage together with the other Guaranty
Documents (including the documents and instruments referred to herein)
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, between the Mortgagor and the Mortgagee
with respect to the subject matter hereof.
23. Survival; Successors and Assigns. This Mortgage will be binding
upon and inure to the benefit of the Mortgagor and the Mortgagee and their
respective heirs, executors, administrators, successors and assigns; provided,
however, that the Mortgagor may not assign this Mortgage in whole or in part
without the Mortgagee's prior written consent and the Mortgagee at any time may
assign this Mortgage in whole or in part; and provided, further, that the
rights and benefits under Sections 9, 10 and 25 shall also inure to the benefit
of any persons or entities who acquire title or ownership of the Property from
or through the Mortgagee or through action of the Mortgagee (including a
foreclosure, sheriff's or judicial sale). The provisions of Sections 9, 10 and
25 shall survive
52
the termination, satisfaction or release of this Mortgage, the foreclosure of
this Mortgage or the delivery of a deed in lieu of foreclosure.
24. Interpretation. In this Mortgage, the singular includes the plural
and the plural the singular; references to statutes are to be construed as
including all statutory provisions consolidating, amending or replacing the
statute referred to; the word "or" shall be deemed, to include "and/or"; the
words "including", "includes" and "include" shall be deemed to be followed by
the words "without limitations"; and references to sections or exhibits are to
those of this Mortgage unless otherwise indicated. Section headings in this
Mortgage are included for convenience of reference only and shall not
constitute a part of this Mortgage for any other purpose. If this Mortgage is
executed by more than one party as Mortgagor, the obligations of such persons
or entities will be joint and several.
25. Indemnity. The Mortgagor agrees to indemnify each of the
Mortgagee, its directors. officers and employees and each legal entity, if any,
who controls the Mortgagee (the "Indemnified Parties") and to hold each
Indemnified Party harmless from and against any and all claims, damages,
losses, liabilities and expenses (including all reasonable fees of counsel with
whom any Indemnified Party may consult and all expenses of litigation or
preparation therefor) which any Indemnified Party may incur or which may be
asserted against any Indemnified Party in connection with or arising out of the
matters referred to in this Mortgage or in the other Loan Documents by any
person, entity or governmental authority (including any person or entity
claiming derivatively on behalf of the Mortgagor), whether (a) arising from or
incurred in connection with any breach of a representation, warranty or
covenant by the Mortgagor, or (b) arising out of or resulting from any suit,
action, claim, proceeding or governmental investigation, pending or threatened,
whether based on statute, regulation or order, or tort, or contract or
otherwise, before any court or governmental authority, which arises out of or
relates to this Mortgage, any other Guaranty Document, provided, however, that
the foregoing indemnity agreement shall not apply to claims, damages, losses,
liabilities and expenses solely attributable to an Indemnified Party's gross
negligence or willful misconduct. The indemnity agreement contained in this
Section shall survive the termination of this Mortgage, payment of any
Obligations and assignment of any rights hereunder. The Mortgagor may
participate at its expense in the defense of any such action or claim.
26. Governing Law and Jurisdiction. This Mortgage has been delivered
to and accepted by the Mortgagee and will be deemed to be trade in the State
where the Mortgagee's office indicated above is located. THIS MORTGAGE WILL BE
INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE MORTGAGOR AND THE MORTGAGEE
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE MORTGAGEE'S
OFFICE INDICATED ABOVE IS LOCATED, EXCEPT THAT THE LAWS OF THE STATE WHERE THE
PROPERTY IS LOCATED (IF DIFFERENT FROM THE STATE WHERE SUCH OFFICE OF THE
MORTGAGEE IS LOCATED) SHALL GOVERN THE CREATION, PERFECTION AND FORECLOSURE OF
THE LIENS CREATED HEREUNDER ON THE PROPERTY OR ANY INTEREST THEREIN. The
Mortgagor hereby irrevocably consents to the exclusive jurisdiction of any
state or federal court for the county or judicial district where the
Mortgagee's office indicated above is located, and consents that all service of
process be sent by nationally recognized overnight courier service directed to
the Mortgagor at the Mortgagor's address set forth herein and service so made
will be deemed to be completed on the business day after deposit with such
court, provided that nothing contained in this Mortgage will prevent the
53
Mortgagee from bringing any action, enforcing any award or judgment or
exercising any rights against the Mortgagor individually, against any security
or against any property of the Mortgagor within any other county, state or
other foreign or domestic jurisdiction. The Mortgagor acknowledges and agrees
that the venue provided above is the most convenient forum for both the
Mortgagee and the Mortgagor. The Mortgagor waives any objection to venue and
any objection based on a more convenient forum in any action instituted under
this Mortgage.
27. WAIVER OF JURY TRIAL. THE MORTGAGOR IRREVOCABLY WAIVES ANY AND ALL
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY
NATURE RELATING TO THIS MORTGAGE, ANY DOCUMENTS EXECUTED IN CONNECTION WITH
THIS MORTGAGE OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE
MORTGAGOR ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
The Mortgagor acknowledges that it has read and understood all the provisions
of this Mortgage, including the waiver of jury trial, and has been advised by
counsel as necessary or appropriate.
WITNESS the due execution hereof as a document under seal, as of the date first
written above.
[CORPORATE SEAL] CLT COMPANY, A DELAWARE CORPORATION
Attest: By:
-------------------------- -------------------------------------
Print Name: Print Name:
----------------------- ------------------------------
Title: Title:
---------------------------- ----------------------------------
CERTIFICATE OF RESIDENCE
The undersigned certifies that the address of the Mortgagee is 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
On behalf of the Mortgagee:
DAY & XXXXXXXXXX, L.L.C.
By:
--------------------------
Name:
Title:
00
XXXXX XX XXXXX
XXXXXX XX
Xx this, the _____ day of November, 1999, before me, a Notary Public,
the undersigned officer, personally appeared ____________________________ who
acknowledged himself to be the __________________________ of CLT Company, a
Delaware corporation, and that he, in such capacity, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
on behalf of said corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
------------------------------------
Notary Public
My commission expires:
55
EXHIBIT B
SECURITY AGREEMENT
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") dated November 3, 1999 to be
effective as of October 29, 1999 (the "Effective Date") is among TYLER
TECHNOLOGIES, INC., a Delaware corporation ("Debtor"), CLT COMPANY, a Delaware
corporation and wholly-owned subsidiary of the Debtor ("Buyer" and together
with Debtor, the "Tyler Parties"), and DAY & XXXXXXXXXX, L.L.C., a Delaware
limited liability company ("Secured Party").
Background
The Tyler Parties and Secured Party are parties to that certain Asset
Purchase Agreement dated November 3, 1999 to be effective as of the Effective
Date (the "Asset Purchase Agreement") pursuant to which Buyer has agreed to
purchase the Assets of Xxxx Layer Xxxxxxx Company, a division of Secured Party.
The Closing under the Asset Purchase Agreement is occurring concurrently with
the execution and delivery of this Agreement. All capitalized terms used but
not otherwise defined herein have the meanings ascribed to such terms in the
Asset Purchase Agreement.
A portion of the Purchase Price for the Assets consists of the Parent
Shares. Pursuant to Section 2A.05(a) of the Asset Purchase Agreement, Debtor
has agreed to provide Secured Party with a Price Protection Guaranty with
respect to the Parent Shares. Pursuant to Section 2A.05(b)(ii), the Tyler
Parties agreed to grant to Secured Party a first priority security interest in
the Collateral (as hereinafter defined) to secure, in part: (i) the payment and
performance when due of Debtor's obligations under Price Protection Guaranty;
and (ii) the repayment to Secured Party of any and all costs and expenses
incurred in the enforcement or collection of amounts due and owing under the
Price Protection Guaranty, including without limitation, reasonable attorneys'
fees and expenses (collectively, the "Obligations").
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements set forth herein and other good and valuable
considerations, the receipt and sufficiency of which all parties mutually
acknowledge, the parties, intending to be legally bound, hereby agree as
follows:
1. Grant of Security Interest. In order to secure the full and timely
payment and performance of the Obligations, Buyer hereby grants and assigns to
Secured Party a security interest (the "Security Interest") in all of its
right, title and interest in, to and under the following collateral
(collectively, the "Collateral"):
(a) all rights of copyright and any renewals or extensions thereof,
whether now owned or hereafter acquired, associated with the computer software
programs described on Schedule A attached hereto (collectively, the
"Programs"), together with all certificates of registration for such copyrights
and all applications for copyright registrations of the Programs (or portions
thereof), including without limitation, the United States copyright
registrations and applications for registration set forth on Schedule B
attached hereto (collectively, the "Copyrights");
(b) all of the trademarks, service marks, trade names, designs,
logotypes and general intangibles of a like nature, whether now owned or
hereafter acquired, used primarily in connection with the Programs and the
goodwill of the business associated therewith, together with all registrations,
recordings, applications for registrations, and renewals of registrations
thereof, including without limitation the trademarks and U.S. trademark
registrations and applications for registration shown in the attached Schedule
B (collectively, the "Trademarks");
(c) all trade secrets, confidential information, know-how,
technology, software source code, and other intellectual property associated
with the Programs (collectively, the "Trade Secrets" and together with the
Copyrights and Trademarks, the "Intellectual Property"); and
56
(d) all proceeds of the foregoing, including without limitation,
all licenses of the Intellectual Property, all license royalties associated
with the Intellectual Property and the right to collect such royalties, all
rights of action arising from the Intellectual Property, all claims by reason
of past, present or future infringement or dilution of the Intellectual
Property, and the right to xxx and collect damages for such infringement or
dilution.
2. Representations and Warranties of the Tyler Parties. The Tyler
Parties hereby represent and warrant to Secured Party as follows:
(a) Buyer has rights in and good title to the Collateral and has
full power and authority to grant the Security Interest without the consent or
approval of any other Person. Each of the Tyler Parties has full power and
authority to execute, deliver and perform its obligations in accordance with
the terms of this Agreement without the consent or approval of any other
Person. The Security Interest has been duly authorized by all proper and
requisite corporate action and will not conflict with or cause a breach of any
provision of the Tyler Parties' certificates of incorporation or bylaws or any
contract or agreement to which either of the Tyler Parties is a party or by
which the Collateral is bound.
(b) The Security Interest constitutes a valid and legal security
interest in all of the Collateral for payment and performance of the
Obligations and the Collateral is subject to no other lien, mortgage, pledge or
encumbrance of any nature whatsoever. The Security Interest constitutes a
valid, legal and perfected first priority security interest in all of the
Collateral in which a security interest may be perfected by filing in the
United States.
(c) There is no financing statement or similar notice now on file
in any public office covering any Collateral, or intended so to be, in which
the Tyler Parties are named as or have signed as a debtor except those naming
the Secured Party as secured party or for which termination statements are on
file.
(d) To Buyer's knowledge based solely upon the representations and
warranties of Secured Party contained in the Asset Purchase Agreement, as of
the date hereof, Buyer does not have any Trademarks or Copyrights registered,
or subject to pending applications, in the United States Copyright Office or
United States Patent and Trademark Office (collectively, the "Federal Offices")
or any similar office or agency in the United States other than those described
in Exhibit B attached hereto and has not granted any licenses with respect
thereto, except as disclosed to Secured Party.
(e) The Tyler Parties will not do any act, nor omit to do any act,
whereby the Intellectual Property may become abandoned, invalidated,
unenforceable, avoided, or avoidable. Each of the Tyler Parties shall notify
Secured Party promptly if it knows or has reason to know of any reason why any
application, registration or recording of the Intellectual Property may become
abandoned, cancelled, invalidated, avoided or avoidable.
(f) To Buyer's knowledge based solely upon the representations and
warranties of Secured Party contained in the Asset Purchase Agreement, there
are no claims, suits or proceedings by third parties pending or threatened
against the Tyler Parties with respect to the Collateral, and no orders, writs,
decrees, or judgments by any governmental or judicial authority are pending or
applicable to the Tyler Parties with respect to the Collateral. All of Tyler
Parties' representations and warranties contained herein shall survive the
execution, delivery and performance of this Agreement until the termination of
this Agreement pursuant to Section 5 hereof.
3. Covenants of Tyler Parties.
(a) Debtor agrees to perform and pay all Obligations at the time
and place and in the manner as provided in the Asset Purchase Agreement, and
each of the Tyler Parties agrees to comply with, perform and fulfill the terms,
covenants and conditions contained herein.
(b) The Tyler Parties at their expense will: (i) perform all acts
and execute all documents necessary to maintain the existence of the Collateral
as valid, subsisting and registered (if applicable) Intellectual Property
including without limitation, the filing of any renewal affidavits and
applications; and (ii) do, execute,
57
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, all such further acts, deeds, conveyances, mortgages, assignments,
transfers and assurances as may be necessary or desirable or as the Secured
Party reasonably may require for the perfection of the Security Interest being
herein provided for in the Collateral.
(c) The Tyler Parties will not grant any license relating to the
Intellectual Property without providing Secured Party with written notice
thereof.
(d) The Tyler Parties hereby authorize Secured Party to execute and
file one or more financing statements (or similar documents) with respect to
the Collateral signed only by Secured Party (or as otherwise determined by
Secured Party) and the Tyler Parties further authorize Secured Party to have
this or any similar security agreement filed with the Federal Offices or other
appropriate federal, state or government office.
(e) Buyer will, concurrently with the execution and delivery of
this Agreement, execute and deliver to Secured Party two (2) originals of a
Power of Attorney in the form of Exhibit 1 attached hereto for the
implementation of the assignment, sale or other disposition of the Collateral
pursuant to Secured Party's exercise of the rights and remedies granted to
Secured Party hereunder on and after an Event of Default exists or has occurred
and is continuing.
(f) Secured Party may, in its discretion, pay any amount or do any
act that the Tyler Parties fail to pay or do as required hereunder or as
reasonably requested by Secured Party to preserve, protect or maintain the
Collateral and, on and after an Event of Default exists or has occurred and is
continuing, enforce the Obligations, the Collateral, or the Security Interest,
including but not limited to, all filing or recording fees, court costs,
collection charges and reasonable attorneys' fees and legal expenses. The Tyler
Parties will be liable to Secured Party for any such payment together with
interest thereon at the rate of 2% per calendar month from the date of payment
or incurrence (or the highest payment permitted by law, if lower) (the
"Applicable Rate"), which payment and interest shall be payable on demand and
shall be part of the Obligations.
(g) Buyer shall not file any trademark or copyright application in
connection with the Programs with the Federal Offices or any similar office or
agency in the United States, any state therein, or any other country, unless
the Tyler Parties at least ten (10) days prior thereto provide written notice
Secured Party informing it of such action. Upon the request of Secured Party,
Buyer shall execute and deliver to Secured Party any and all assignments,
agreements, instruments, documents, and such other papers as may be requested
by Secured Party from time to time to evidence the security interests of
Secured Party in any such Trademark or Copyright acquired by Buyer after the
date hereof.
(h) The Tyler Parties will render any assistance necessary to
Secured Party in the exercise of its rights hereunder in any proceeding before
the Federal Offices, any federal or state court, or any similar office or
agency in the United States or any state therein or any other country to
maintain such application and registration of the Trademarks or Copyrights as
Buyer's exclusive property and to protect Secured Party's interest therein,
including without limitation, filing of renewals, affidavits of use, affidavits
of incontestability and opposition, interference, and cancellation proceedings.
(i) In the event that any Collateral is infringed, misappropriated
or diluted by a third party, the Tyler Parties shall notify Secured Party
within 15 days after they learn of such event and shall, if consistent with
reasonable business judgment, promptly xxx for infringement, misappropriation
or dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and take such other actions as are appropriate
under the circumstances to protect such Collateral.
(j) The Tyler Parties shall, at their cost and expense, take any
and all actions necessary to defend title to the Collateral against all Persons
(other than Secured Party) and to defend the Security Interest and the priority
thereof, against any adverse mortgage, pledge, security interest, lien, charge
or other encumbrance of any nature whatsoever (other than the Security
Interest).
58
(k) The Tyler Parties shall remain liable to observe and perform
all the conditions and obligations under each license of the Intellectual
Property and under each contract, agreement, interest or obligation relating to
the Collateral, and shall indemnify and hold Secured Party harmless from any
and all liabilities arising from the Tyler Parties' failure to do so.
(l) Buyer shall not make or permit to be made any assignment for
security, pledge or hypothecation of the Collateral, or grant any other
security interest in such Collateral. Buyer shall not make or permit to be made
any sale, assignment or other transfer of the Collateral, and Buyer shall
remain at all times in possession thereof (other than transfers to Secured
Party pursuant to the provisions hereof), except that, so long as no Event of
Default shall have occurred and be continuing, Buyer may use and license the
Collateral in any lawful manner not inconsistent with the provisions of this
Agreement, and so long as any of the Obligations remain in effect, the Buyer
will not execute, and there will not be on file in any public office any
financing statement or statements except the financing statements filed or to
be filed in respect of and for the Security Interest created hereunder. (m)
Buyer assumes all responsibility and liability arising from the use of the
Intellectual Property and the Tyler Parties hereby indemnify and hold Secured
Party harmless from and against any Losses arising out of (i) any alleged
defect in any product or service manufactured, promoted, or sold by the Tyler
Parties or their Affiliates in connection with the Intellectual Property or
(ii) the manufacture, promotion, labeling, sale or advertisement of any such
product or service by the Tyler Parties or their Affiliates.
4. Events of Default; Rights and Remedies Upon Default.
(a) The following events are hereby defined for all purposes of
this Agreement as "Events of Default":
(i) the failure by Debtor to pay to the Secured Party when due
any of the Obligations, including without limitation, any amount due to Secured
Party under the Price Protection Guaranty in accordance with the terms thereof;
(ii) any representation or warranty made by the Tyler Parties
in this Agreement shall prove to have been incorrect in any material respect
when made; or
(iii) a Tyler Party fails to perform or observe any other
covenant or agreement contained in this Agreement, and such failure is not
cured within a period of ten (10) days after notice thereof from the Secured
Party to the Tyler Parties.
(b) Upon the occurrence and during the continuance of any Event of
Default, in addition to all other rights and remedies of Secured Party, whether
provided under law (including the Uniform Commercial Code), the Asset Purchase
Agreement or otherwise, Secured Party shall have the following rights and
remedies which may be exercised without notice to, or consent by, Buyer, except
as such notice or consent is expressly provided for hereunder:
(i) Secured Party may require that neither the Tyler Parties
nor any of their Affiliates make any use of the Intellectual Property or other
Collateral for any purpose whatsoever. Secured Party may make use of any
Collateral for the sale of goods, completion of work-in-process or rendering of
services or otherwise.
(ii) Secured Party may grant such license or licenses relating
to the Collateral for such term or terms, on such conditions, and in such
manner, as Secured Party shall in its discretion deem appropriate. Such license
or licenses may be general, special, or otherwise, and may be granted on an
exclusive or non-exclusive basis throughout all or any part of the United
States of America, its territories and possessions, and all foreign countries.
59
(iii) Secured Party may assign, sell or otherwise dispose of
the Collateral or any part thereof, either with or without special conditions
or stipulations. Secured Party shall have the power to buy the Collateral or
any part thereof, and Secured Party shall also have the power to execute
assurances and perform all other acts that Secured Party may, in its
discretion, deem appropriate or proper to complete such assignment, sale, or
disposition.
(iv) In addition to the foregoing, in order to implement the
assignment, sale, or other disposition of any of the Collateral pursuant to
Section 4(b)(iii) hereof, Secured Party may at any time execute and deliver on
behalf of Buyer, pursuant to Section 3(c) hereof, one or more instruments of
assignment of the Collateral (or any applications, registration, or recording
relating thereto), in form suitable for filing, recording, or registration. The
Tyler Parties agree to pay Secured Party on demand all costs incurred in any
such transfer of the Collateral, including, but not limited to, any taxes,
fees, and reasonable attorneys' fees and legal expenses.
(v) Secured Party may protect and enforce its rights by
bringing such actions, at law or in equity or before any court or
administrative tribunal, as Secured Party, shall deem appropriate, including,
without limitation, actions for the specific performance of any covenant
hereof; and Secured Party shall be entitled to recover judgment for any and all
sums then, or during the continuance of any Event of Default, becoming due and
payable by the Tyler Parties under any provision hereof or of the Asset
Purchase Agreement and, in addition thereto, such amounts as shall be
sufficient to cover the costs and expenses of collection, including reasonable
attorneys' fees, and of other proceedings hereunder, and to collect out of the
Collateral in any manner provided by law all amounts adjudged or decreed to be
payable.
(vi) Secured Party as a matter of contract right and not as a
penalty shall be entitled to the appointment of a receiver of, or may enter
upon and take possession of, all or any part of the Collateral, and such
receiver or Secured Party shall thereupon be entitled to operate and use the
Collateral and to make all expenditures and to take all actions necessary or
desirable therefor, and to collect and retain all income and earnings arising
from the Collateral.
(vii) Upon receipt by the Tyler Parties or Secured Party of
checks, drafts, cash and other remittance payable to the Tyler Parties as
payment for the use and enjoyment of any of the Collateral, Secured Party may
require Debtor, Buyer or both, as the case may be, to provide all necessary
endorsements and deliver such remittance to Secured Party to be applied to
amounts due Secured Party with respect to the Obligations.
(viii) Secured Party may inform any third party licensing or
using any of the Intellectual Property that the Tyler Parties are in default
under this Agreement and the Asset Purchase Agreement and direct such third
parties, in the name and on behalf of the Tyler Parties, to remit to Secured
Party any royalties, fees and other amounts payable to the Tyler Parties under
such licenses until performance and payment in full of the Obligations.
(ix) Secured Party may first apply the proceeds actually
received from any such license, assignment, sale, or other disposition of
Collateral to the costs and expenses thereof, including, without limitation,
attorneys' fees and all legal, travel and other expenses which may be incurred
by Secured Party. Thereafter, Secured Party may apply any remaining proceeds to
such of the Obligations as Secured Party may in its discretion determine. Buyer
shall remain liable to Secured Party for any Obligations remaining unpaid after
the application of such proceeds, and Buyer will pay Secured Party on demand
any such unpaid amount, together with interest at the Applicable Rate.
(x) The Tyler Parties shall supply to Secured Party or its
designee, the Tyler Parties' knowledge and expertise necessary for the
manufacture, sale and distribution of the products and services associated with
the Collateral and Buyer's customer lists and other records relating to such
products and services.
(c) Nothing contained herein shall be construed as requiring
Secured Party to take any such action at any time. All of Secured Party's
rights and remedies, whether provided under law, the Asset Purchase
60
Agreement, this Agreement, or otherwise shall be cumulative and none is
exclusive. Such rights and remedies may be enforced alternatively,
successively, or concurrently.
5. Termination of Security Interest. Only at such time as Buyer has
paid the Obligations in full and has fully performed and fulfilled all of its
covenants and undertakings under this Agreement shall the Security Interest
terminate. At the request and expense of Buyer, Secured Party will execute and
deliver to Buyer such written evidence of termination, including termination
statements, and take such other action as Secured Party may reasonably request.
6. Notices. All notices, requests, demands, directions and other
communications that may or are required to be given, served or sent by the
Debtor, the Buyer or the Secured Party to the other shall be given, served or
sent as provided in the Asset Purchase Agreement and shall be effective in
accordance with the terms of the Asset Purchase Agreement.
7. Counterparts; Descriptive Headings. This Agreement is being
executed in any number of counterparts, each of which is an original and all of
which are identical. Each counterpart of this Agreement is to be deemed an
original hereof and all counterparts collectively are to be deemed but one
instrument. This Agreement may be executed and delivered by facsimile
transmission and any facsimile signatures shall be deemed original signatures
for all purposes. The descriptive headings of the several Sections to this
Agreement were inserted in this Agreement for convenience only and shall not be
deemed to affect the meaning or construction of any of the provisions hereof.
8. Governing Law. This Agreement will be governed by, and construed in
accordance with, the substantive laws of the State of Delaware, without giving
effect to any rule of construction or interpretation based upon which party
drafted this Agreement or any conflicts of law, rule or principle that might
require the application of the laws of another jurisdiction.
9. No Waiver. No failure or delay in exercising any right, power or
remedy under this Agreement, and no course of dealing between Secured Party and
Buyer, shall operate as a waiver of any right, power or remedy under this
Agreement. All rights and remedies granted by this Agreement are cumulative and
not exclusive of any other rights or remedies available to the parties. Any
waiver of any provision of this Agreement must be in writing and signed by the
party against which such waiver is sought to be enforced.
10. Severability. If any provision of this Agreement is held invalid
or unenforceable in any jurisdiction, such provision shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
of such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.
11. Entire Agreement. This Agreement, the Schedules and the Asset
Purchase Agreement set forth the entire agreement of the parties with respect
to the subject matter thereof and may not be amended or modified except by a
written instrument duly executed by the parties.
61
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first above written.
TYLER TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: President
CLT COMPANY,
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: President
DAY & XXXXXXXXXX, L.L.C.,
By: /s/ Xxxx X. Xxxxx
-----------------
Name: Xxxx X. Xxxxx
Title: Senior Vice PResident
62
EXHIBIT C
ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") dated
November 3, 1999 to be effective as of October 29, 1999 (the "Effective Date")
is among DAY & XXXXXXXXXX, INC., a Maryland corporation ("D&Z"), TYLER
TECHNOLOGIES, INC., a Delaware corporation ("Parent"), and CLT COMPANY, a
Delaware corporation ("Buyer", and together with Parent, the "Tyler Parties").
RECITALS
Day & Xxxxxxxxxx, L.L.C., a Delaware limited liability company and
subsidiary of D&Z ("Seller"), and the Tyler Parties have entered into an Asset
Purchase Agreement, dated November 3, 1999 to be effective as of October 29,
1999 (the "Asset Purchase Agreement") providing for the sale by Seller to Buyer
of certain of the assets of Xxxx Layer Xxxxxxx Company, a division of Seller.
The closing under the Asset Purchase Agreement (the "Closing") is occurring
concurrently with the execution and delivery of this Agreement. Pursuant to
this Agreement, the Tyler Parties desire that D&Z render certain transitional
services to Buyer on an interim basis to assist in the operation of the
Business. D&Z is willing to perform such services on the terms and conditions
set forth herein. All capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to such terms in the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and obligations set forth herein, the parties, intending to be
legally bound, hereby agree as follows:
1. Services and Fees.
(a) D&Z shall provide to Buyer, for use in connection with the
operation of the Business only, the services described on Schedule A attached
hereto (each, a "Service" and collectively, the "Services") in consideration of
the fees described in clause (b) below. Subject to the Tyler Parties' payment
of such fees, D&Z shall bear all out-of-pocket expenses incurred in connection
with the provision of the Services, including secretarial, administrative or
related overhead items.
(b) On alternate weeks during the Term (as hereinafter defined)
commencing the week of November 8, 1999, D&Z shall invoice the Tyler Parties in
advance for the Services by 12:00 noon on Wednesday of each such week. The
amount of each such invoice shall be calculated as follows: (i) the gross
amount of the payroll for the employees of the Business plus 30% of such amount
to cover payroll-related costs and expenses; plus (ii) the aggregate amount of
all other costs and expenses incurred by D&Z in connection with the providing
of the Services (i.e. other than the payroll-related items described in clause
(i) above) that constitute Assumed Liabilities. The Tyler Parties shall pay
each such invoice by wire transfer of immediately available funds to a bank
account designated by D&Z not later 12:00 noon on Friday of each week an
invoice is transmitted.
(c) Within forty-five (45) days after the expiration of the Term,
D&Z shall prepare and deliver to the Tyler Parties a statement (the
"Reconciliation Statement") setting forth (i) the actual amounts incurred
during the Term by D&Z for payroll, employment taxes, fringe benefits,
insurance and all other costs and expenses in connection with the providing of
the Services that constitute Assumed Liabilities; plus (ii) three percent (3%)
of such amount to cover D&Z's overhead costs associated with providing the
Services. The amount set forth on the Reconciliation Statement is referred to
herein as the "Actual Service Costs" and the aggregate amount of all invoices
issued by D&Z and paid by the Tyler Parties during the Term is referred to
herein as the "Estimated Service Costs".
(d) If the Tyler Parties object to any amounts reflected on the
Reconciliation Statement within ten (10) days after the Tyler Parties' receipt
of the Reconciliation Statement, the Tyler Parties must give written notice
(the "Notice") to D&Z specifying in reasonable detail its objections, or
Seller's determination of the Actual Service Costs and Estimated Service Costs
shall be final, binding, and conclusive on the parties. With
63
respect to any disputed amounts, the parties shall meet in person and negotiate
in good faith during the fifteen (15) day period (the "Resolution Period")
after the date of D&Z's receipt of the Notice to resolve any such disputes. If
the parties are unable to resolve all such disputes within the Resolution
Period, then within five (5) business days after the expiration of the
Resolution period, all disputes shall be submitted to KPMG Peat Marwick, LLP
(the "Independent Accountant") who shall be engaged to provide a final and
conclusive resolution of all unresolved disputes within forty-five (45) days
after such engagement. The determination of the Independent Accountant shall be
final, binding and conclusive on the parties hereto, and the fees and expenses
of the Independent Accountant shall be borne by the party who, in the
Independent Accountant's determination, submitted a disputed amount that
differs more significantly from the amount finally determined by the
Independent Accountant.
(e) In the event that the Actual Service Costs exceed the Estimated
Service Costs (as such amounts are finally determined hereunder), the Tyler
Parties shall remit to D&Z by wire transfer of immediately available funds such
deficiency within ten (10) business days after the date the Reconciliation
Statement is delivered to the Tyler Parties, or in the event of a dispute that
is resolved pursuant to Section 1(d) above, within ten (10) business days after
the final resolution of such dispute. In the event that the Estimated Service
Costs exceed the Actual Service Costs (as such amounts are finally determined
hereunder), D&Z shall remit to the Tyler Parties by wire transfer of
immediately available funds such excess within ten (10) business days after the
date the Reconciliation Statement is delivered to the Tyler Parties, or in the
event of a dispute that is resolved pursuant to Section 1(d) above, within ten
(10) business days after the final resolution of such dispute.
2. Term. D&Z shall provide the Services to Buyer for the period
commencing at the close of business on the Effective Date and ending at the
close of business on December 31, 1999 (the "Initial Term"); provided that
Buyer shall have the option of extending D&Z's provision of some or all of the
Services on the same terms and conditions (including pricing) for an additional
period ending January 31, 2000 (the "Extension Term") upon written notice to
D&Z given at least ten (10) business days prior to the expiration of the
Initial Term. The Initial Term and the Extension Term, if any, are referred to
herein as the "Term". Notwithstanding the foregoing, Buyer shall have the right
to terminate its purchasing of some or all of the Services at any time during
the Term upon at least ten (10) business days prior written notice to D&Z. The
parties acknowledge that the purpose of this Agreement is to provide Services
on an interim basis to permit Buyer to obtain alternate sources of supply or to
develop its own internal capabilities within a reasonable period of time after
the date hereof. Buyer shall use its best efforts to obtain alternate sources
of supply for the Services as soon as practicable after the date of this
Agreement.
3. Information. The Tyler Parties shall make available to D&Z on a
timely basis all information reasonably necessary for D&Z's performance of the
Services. The Tyler Parties shall be solely responsible for the timely delivery
of such information, and for the accuracy and completeness of such information.
4. No Consequential Damages. No party shall be liable to any other
party for any incidental or consequential damages, or loss of profits or
opportunities, or any exemplary or punitive damages, arising out of any breach
of this agreement, regardless of the circumstances from which such damages
arose, unless such breach is the result of willful misconduct of such party.
5. Force Majeure. Neither D&Z nor the Tyler Parties shall have any
liability to the other for any failure to fulfill any obligations hereunder
when such failure is directly or indirectly caused by (a) fire, flood,
explosion, riot, rebellion, revolution, labor trouble (whether or not due to
the fault of such party), requirements or acts of any government authority or
agency or subdivision thereof, loss of source of supplies or other inability to
obtain materials or suppliers; or (b) any other cause, whether similar or
dissimilar to the foregoing, beyond the reasonable control of the party
claiming benefit of this provision; provided however that such party shall
notify the other promptly of the cause and attempt in good faith to resume
performance as soon as reasonably possible, and there shall be no charge for
Services not in fact performed.
64
6. Independent Contractor; Indemnification.
(a) D&Z shall be an independent contractor in the performance of
its obligations hereunder. Persons rendering Services to Buyer shall not be
deemed employees of Buyer, and D&Z shall retain the exclusive right of control
with respect to such Persons.
(b) The Services shall be provided using Seller's Employer
Identification Number. Persons whose payroll and fringe benefits are being
administered as part of the Services shall not be deemed employees of Seller
for any purpose other than the administration of payroll and benefits. All such
Persons shall be subject to the direct control and supervision of the Tyler
Parties during and after the Term and D&Z, Seller and their respective
Affiliates shall have no responsibility or liability for any acts or omissions
committed by such Persons from and after the Effective Date. The Tyler Parties
shall jointly and severally indemnify, defend and hold D&Z and its Affiliates
harmless from and against any Losses incurred by D&Z and/or its Affiliates
arising from or in connection with any acts or omissions of such Persons from
and after the Effective Date.
7. Records. D&Z shall maintain all records relating to the Services
provided hereunder consistent with D&Z's past practices and shall, upon the
termination of this Agreement, promptly transfer a copy of such records to
Buyer.
8. Miscellaneous.
(a) Notices. Any and all notices to any of the parties hereto
provided for or permitted under this Agreement or by law shall be given in
writing by personal delivery (against receipt), facsimile transmission (with
electronic confirmation of receipt), overnight delivery service, or by
certified or registered mail, return receipt requested, postage prepaid,
addressed to such party at the address set forth below or otherwise designated
by such party for such purpose, and shall be effective upon actual receipt or,
if given by certified or registered mail, as of five (5) days after the date of
mailing:
(i) if to the Tyler Parties to:
Tyler Technologies, Inc.
0000 X. Xxxxxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Corporate Counsel
FAX: (000) 000-0000
(ii) if to D&Z to:
Day & Xxxxxxxxxx, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
FAX: (000) 000-0000
with a required copy to:
Kleinbard, Xxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esquire
FAX: (000) 000-0000
(b) Entire Agreement. This Agreement (together with its Schedule)
constitutes and contains the sole, only, and entire agreement of the parties
hereto relating to the subject matter hereof and correctly sets forth the
rights, duties, and obligations of each to the other as of this date. Any prior
agreements, promises, negotiations, practices, understandings, or
representations not expressly set forth in this Agreement are of no force or
effect.
65
(c) Amendments and Waivers. This Agreement may be modified or
amended, and the terms hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any such right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
(d) Additional Acts. Each party to this Agreement agrees to perform
such other and further acts and to execute and deliver such additional
documents as may be reasonably necessary to carry out the provisions of this
Agreement and accomplish its purpose and intent.
(e) Successors and Assigns. This Agreement may not be assigned by
either party hereto without the prior written consent of the other. Subject to
the foregoing, this Agreement shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors, heirs, administrators
and permitted assigns.
(f) Governing Law; Construction. All questions with respect to the
execution, validity, interpretation, and performance of this Agreement and the
rights and liabilities of the parties hereto shall be governed by the laws of
the Commonwealth of Pennsylvania, without giving effect to the doctrine of
conflict of laws or any rule of construction or interpretation based upon which
party drafted this Agreement.
(g) Headings. The descriptive article, section and paragraph
headings are inserted for convenience of reference only and do not constitute a
part of this Agreement and shall not control or affect the meaning or
construction of any provision of this Agreement.
(h) Counterpart and Facsimile Execution. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument. This
Agreement may be executed by facsimile transmission and any facsimile signature
shall be deemed to be an original signature for all purposes.
(i) Enforcement. In the event any party hereto fails to perform any
of its obligations under this Agreement or in the event a dispute arises
concerning the meaning or interpretation of any provision of this Agreement,
the defaulting party or the party not prevailing in such dispute, as the case
may be, shall pay any and all costs and expenses incurred by the other party in
enforcing or establishing its rights hereunder, including, without limitation,
court costs and reasonable attorneys' fees.
(j) Time of the Essence. Time is of the essence of this Agreement.
[Remainder of page intentionally left blank.]
66
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first hereinabove written.
"D&Z"
DAY & XXXXXXXXXX, INC., a Maryland
corporation
By: /s/ Xxxx X. Xxxxx
------------------
Name: Xxxx X. Xxxxx
Title: Senior Vice President
"TYLER PARTIES"
TYLER TECHNOLOGIES, INC., a Delaware
corporation
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: President and Chief Executive
Officer
CLT COMPANY, a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: President
67
SCHEDULE A
Services
[Schedule is not intended to be inclusive of all services currently provided by
Day & Xxxxxxxxxx, Inc. to the Business, but is meant to convey that all
administrative services currently handled by Day & Xxxxxxxxxx, Inc. for the
Business will continue uninterrupted until expiration of the Term or notice
from the Tyler Parties in accordance with the Agreement, whichever occurs
first. Notwithstanding the foregoing, the term "Services" shall not include the
provision of general liability, auto liability or casualty/fire insurance--such
insurance shall be obtained by the Tyler Parties as of the Closing.]
1. PAYROLL
Maintenance Bonus Check Processing
Banking/Finance Medical/Dental/Insurance Processing
Garnishment Processing W-2 Processing
Benefits Processing Credit Union
401k
2. ACCOUNTS PAYABLE
Banking/Finance
References
3. TAXES/FILINGS
Federal/State/Local SUTA
Payroll FICA
Income Personal Property
Sales Excise
FUTA Others
4. TREASURY & FINANCE: LOCKBOX SERVICES
5. LEGAL
Representation
Corporate Licensing/Registration/Certification
6. WORKERS' COMPENSATION
7. UNEMPLOYMENT CLAIMS REPRESENTATION/REPORTING
8. VOICE MAIL SERVICES
9. TRAVEL SERVICES
Airline Ticket Printer
10. PRICING RATES
Xerox
Federal Express/"Power Shipper"
Others
11. COMPANY CREDIT CARDS
American Express
Budget
Others
12. AUTO LEASING & LICENSING
68
EXHIBIT D
XXXX OF SALE
XXXX OF SALE
THIS XXXX OF SALE (the "Xxxx of Sale") is made and entered into this
3rd day of November, 1999 to be effective as of October 29, 1999 by DAY &
XXXXXXXXXX, L.L.C., a Delaware limited liability company ("Assignor"), in favor
of CLT COMPANY, a Delaware corporation ("Assignee").
In accordance with and pursuant to that certain Asset Purchase
Agreement dated November 3, 1999 to be effective as of October 29, 1999 (the
"Asset Purchase Agreement") by and among Assignor, Assignee and Tyler
Technologies, Inc., a Delaware corporation and parent of Assignee, Assignor has
agreed to deliver this Xxxx of Sale. Capitalized terms used but not otherwise
defined in this Xxxx of Sale shall have the meanings assigned to such terms in
the Asset Purchase Agreement.
NOW, THEREFORE, KNOW BY THESE PRESENTS, that, pursuant to the Asset
Purchase Agreement and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor does hereby sell,
transfer, assign, and convey to Assignee, its successors and assigns, all of
Assignor's right, title, and interest in and to the Assets.
TO HAVE TO HOLD, the Assets with such representations and warranties
as are set forth in the Asset Purchase Agreement unto Assignee, its successors
and assigns, to and for its and their proper use and benefit forever.
Assignor, for itself, its successors and assigns, further covenants
and agrees that Assignor and its successors and assigns shall do or cause to be
done all such further acts and shall execute, acknowledge, and deliver, or
cause to be executed, acknowledged, and delivered, any and all such further
deeds, assignments, transfers and conveyances, powers of attorney, and
assurances as Assignee, its successors and assigns, may reasonably require (i)
for the better assuring, assigning, transferring, and conveying unto Assignee,
its successors and assigns, all and singular, the Assets; and (ii) as may be
appropriate otherwise to carry out the transactions contemplated in the Asset
Purchase Agreement.
Assignor, for itself, its successors and assigns, irrevocably
constitutes and appoints Assignee, its successors and assigns, and each of
them, the true and lawful attorney of Assignor, its successors and assigns,
with full power of substitution and gives and grants unto Assignee, its
successors and assigns, and each of them, full power and authority in the name
of Assignor, its successors and assigns, at any time and from time to time, to
demand, xxx for, recover, and receive any and all rights, demands, claims, and
choses in action of every kind and description whatsoever incident or relating
to the Assets, for the purpose of fully vesting in Assignee, its successors and
assigns, all and singular, all the right, title, and interest in and to the
Assets.
This Xxxx of Sale will be binding upon the Assignor and its permitted
assigns and will inure to the benefit of Assignee and its successors and
assigns. Nothing contained in this Xxxx of Sale will be deemed to supersede,
modify, limit, or amend any of the rights or obligations of Assignor or
Assignee under the Asset Purchase Agreement. In the event of a conflict or an
apparent conflict between the provisions of this Xxxx of Sale and the
provisions of the Asset Purchase Agreement, the provisions of the Asset
Purchase Agreement shall control.
This Xxxx of Sale shall be governed by and construed and interpreted
in accordance with the substantive laws of the State of Delaware, without
giving effect to any conflicts of law rule or principle that might require the
application of the laws of another jurisdiction.
Executed November 3, 1999 to be effective as of October 29, 1999.
"Assignor"
69
DAY & XXXXXXXXXX, L.L.C.,
a Delaware limited liability company
By: /s/ Xxxx X. Xxxxx
-----------------
Xxxx X. Xxxxx
Senior Vice President, Treasurer
& Assistant Secretary
ACKNOWLEDGED & ACCEPTED:
"Assignee"
CLT COMPANY,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: President
70
EXHIBIT E
ASSIGNMENT OF INTELLECTUAL PROPERTY
ASSIGNMENT OF PATENTS, TRADEMARKS & COPYRIGHTS
THIS ASSIGNMENT OF PATENTS, TRADEMARKS & COPYRIGHTS (this
"Assignment") is made this 3rd day of November, 1999, to be effective as of
October 29, 1999, by DAY & XXXXXXXXXX, L.L.C., a Delaware limited liability
company with offices at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
("Assignor"), in favor of CLT COMPANY, a Delaware corporation with offices at
0000 Xxxx Xxxxxxxxxxx Xxxx, Xxxxxx, Xxxxx 00000 ("Assignee").
WHEREAS Assignor is the owner of the United States letters patent and
applications for United States letters patent used primarily in the conduct of
Assignor's property tax outsourcing solutions business (the "Business") set
forth on the attached Schedule A (collectively, the "Patents"); and
WHEREAS Assignor is the owner of all of the trademarks, service marks,
trade names, designs and logotypes used primarily in the Business and the
goodwill of the Business associated therewith (collectively, the "Trademarks"),
including without limitation the United States registrations and applications
for registration of the Trademarks set forth on the attached Schedule B
(collectively, the "Registrations"); and
WHEREAS Assignor is the owner of the United States copyright
registrations and applications for United States copyright registrations for
the textual works used primarily in the Business set forth on the attached
Schedule C (collectively, the "Copyrights"); and
WHEREAS, Assignor, Assignee, and Tyler Technologies, Inc., a Delaware
corporation and parent of Assignee, have entered into that certain Asset
Purchase Agreement dated November 3, 1999 to be effective as of October 29,
1999 (the "Asset Purchase Agreement"), providing, among other things, that
Assignor shall transfer and assign to Assignee all of Assignor's rights, title,
and interest in, to, and under all Intellectual Property (as defined in the
Asset Purchase Agreement) owned by Assignor or used by Assignor pursuant to a
license with a third party primarily in connection with the Business,
including, without limitation, all Patents and Marks (each as defined in the
Asset Purchase Agreement), and the applications and registrations thereof;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which all parties acknowledge, Assignor, intending to be legally
bound, does hereby transfer and assign to Assignee all or Assignor's right,
title, and interest in, to, and under:
(i) the Patents, including but not limited to all reissues,
reexaminations, divisions, continuations,
continuations-in-part and extensions of the Patents, all
rights of priority resulting from the applications for the
Patents, all rights of action arising from the Patents, all
claims by reason of infringement of the Patents and the right
to xxx and collect damages for such infringement, to be held
and enjoyed by Assignee for its own use and benefit and for
its successors and assigns as the same would have been held
by Assignor had this assignment not been made;
(ii) the Trademarks, the Registrations, the goodwill of the
Business associated with the Trademarks, all rights of action
arising from the Trademarks, all claims by reason of
infringement of the Trademarks and the right to xxx and
collect damages for such infringement, to be held and enjoyed
by Assignee for its own use and benefit and for its
successors and assigns as the same would have been held by
Assignor had this assignment not been made; and
(iii) the Copyrights, including all rights of copyright and any
renewals or extensions thereof, all certificates of
registration for the Copyrights, all rights of action arising
from the Copyrights, all claims for damages by reason of
infringement of the Copyrights and the right to xxx and
collect damages for such infringement, all to be held and
enjoyed by Assignee for its own use and benefit
71
and for its successors and assigns as the same would have
been held by Assignor had this assignment not been made.
This Assignment is not intended to modify, enlarge or restrict the
rights and obligations of the parties under the Asset Purchase Agreement
(including without limitation, the representations and warranties made by
Assignor with respect to the items assigned hereby), and to the extent that any
provision of this Assignment is inconsistent with the Asset Purchase Agreement,
the provisions of the Asset Purchase Agreement shall control.
Assignor agrees to execute all such other documents as may be
reasonably needed to establish Assignee as the record owner of the Patents,
Registrations and the Copyrights.
This Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective successors, legal representatives, and
permitted assigns.
This Assignment shall be governed by and construed in accordance with
the substantive laws of the State of Delaware and, to the extent applicable,
the Federal laws of the United States, without giving effect to any conflicts
of law rule or principle that might require the application of the laws of
another jurisdiction.
Capitalized terms used in this Assignment but not otherwise defined
herein shall have the meanings assigned to such terms in the Asset Purchase
Agreement.
Executed as of the date first written above.
"Assignor"
DAY & XXXXXXXXXX, L.L.C.,
a Delaware limited liability company
By: /s/ Xxxx X. Xxxxx
-----------------
Xxxx X. Xxxxx
Senior Vice President, Treasurer
& Assistant Secretary
Subscribed and sworn to
before me on November 3, 1999
----------------------------
Notary Public
ACKNOWLEDGED AND ACCEPTED:
"Assignee"
CLT COMPANY,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: President
72
EXHIBIT F
FORM OF EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
This Employment Agreement is between Tyler Technologies, Inc., a
Delaware corporation, or one of its subsidiaries or affiliates (Tyler
Technologies, Inc. and all of its subsidiaries and affiliates are collectively
referred to herein as "Tyler," and the specific organization employing the
Employee, CLT Company, a Delaware corporation and wholly-owned subsidiary of
Tyler Technologies, Inc., will sometimes be referred to as the "Company"), on
the one hand, and Xxxxx X. Xxxxx ("Employee"), on the other hand.
1. Duties. Employee will serve in the capacity of President of the
Company, or such other capacity or capacities as may be assigned to Employee by
the Tyler Board of Directors and which are commensurate with the education,
experience, and skills of employee. In such capacities, Employee shall have all
necessary powers to discharge his responsibilities, subject in each case to the
Tyler Board of Directors' supervision and control.
2. Compensation - Salary; Bonus; Benefits; Stock Options.
(a) Upon commencing employment with the Company, Employee's
salary will be $_______ per year.
(b) Employee will be entitled to receive an annual bonus in
an amount up to _____% of Employee's salary as set forth in Section
2(a) based upon the achievement of certain financial objectives of the
Company, which will be set between Tyler and the Company on an annual
basis.
(c) Employee will be entitled to receive benefits made
available from time to time by the Company to its employees generally
and to employees who hold positions similar to that of Employee,
including participation in medical and dental benefit plans and
programs, disability insurance, 401-K plans, and paid vacation.
(d) Upon the commencement of this Agreement, Tyler will grant
Employee options to purchase _______ shares of Tyler Technologies,
Inc. common stock, $.01 par value per share. The options will vest in
increments of ______ per year on the first, second, third, fourth, and
fifth anniversary of this Agreement and will otherwise be subject to
the Tyler stock option plan and individual stock option agreement. The
exercise price for the options will be the closing sale price of Tyler
Technologies, Inc. common stock as reported on the New York Stock
Exchange on the date of the commencement of this Agreement.
3. Term. This Agreement shall commence as of the date of the
consummation of the Merger described above and continue until the _____
anniversary of such date.
4. Termination. Employee and the Company understand that Employee's
employment is "at will" and can be terminated by either Employee or the Company
upon fifteen (15) days' written notice to the other, with or without cause, for
any reason not prohibited by law. If the Company terminates Employee without
Cause (as defined below), the Company will, upon such termination, pay Employee
a severance payment equal to the salary set forth in Section 2 for the then
remaining term of this Agreement. If Employee is terminated for Cause or if
Employee voluntarily terminates employment hereunder, Employee shall be
entitled to receive his salary and all benefits through the date of
termination.
For purposes of this Agreement, "Cause" shall mean (a) Employee's
failure to devote substantially all of his time during normal business hours to
the business of the Company, (b) Employee's conviction of a felony involving
theft, dishonesty, or moral turpitude under the laws of the United States or
any state thereof, (c) fraudulent action or conduct or conduct that is
materially harmful to the Company, and (d) a material breach by Employee of any
of the terms of this Agreement.
73
5. Outside Activities. While employed by the Company, Employee must
devote in good faith his full time and best efforts during reasonable business
hours and may not engage in any business activity that violates Section 7 of
this Agreement without Tyler Corporation's prior written consent; provided,
however, that this Agreement does not prohibit investment in less than 3% of
the securities of any company that is traded on a national securities exchange
or the NASDAQ national market system. Employee represents that the execution of
this Agreement, employment by the Company, and the performance of the duties
described hereunder will not conflict with any obligations that Employee has to
any former employer or other person.
6. Confidential Information.
(a) Employee acknowledges that Tyler is continuously
developing or receiving Confidential Information (as defined below),
and that during Employee's employment Employee will receive
Confidential Information from Tyler and special training relating to
Tyler's business methodologies. Employee further acknowledges and
agrees that Employee's employment by the Company creates a
relationship of confidence and trust between Employee and Tyler that
extends to all Confidential Information that becomes known to
Employee. Accordingly, Employee will not disclose or use any
Confidential Information, except in connection with the good faith
performance of his duties as an employee, and will take reasonable
precautions against the unauthorized disclosure or use of Confidential
Information. Upon Tyler's request, Employee will execute and comply
with a third party's agreement to protect its confidential and
proprietary information. In addition, Employee will not solicit or
induce the unauthorized disclosure or use of confidential or
proprietary information for the benefit of Tyler.
(b) For purposes of this Agreement, "Confidential
Information" means all written, machine-reproducible, oral and visual
data, information, and material, including, without limitation,
business, financial, and technical information, computer programs,
documents, and records (including those that Employee develops in the
scope of his employment) that (a) Tyler or any of its customers or
suppliers treats as confidential or proprietary through markings or
otherwise, (b) relates to Tyler or any of its customers or suppliers
or any of its business activities, products, or services (including
software programs and techniques) and is competitively sensitive or
not generally known in the relevant trade or industry, or (c) derives
independent economic value from not being known to, and is not
generally ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use. Confidential
Information does not include any information or material that is
approved by Tyler for unrestricted public disclosure.
"Confidential Information" shall not include
information or material that: (i) was in the public domain prior to
the date of this Agreement or subsequently came into the public domain
through no fault of Employee, (ii) was lawfully received by Employee
from a third party free of any obligation of confidentiality, or (iii)
is required to be disclosed in a judicial or administrative proceeding
or by a governmental or regulatory authority, domestic or foreign.
7. No Competition.
(a) Employee acknowledges that, in the course and as a result
of employment with the Company, Employee will obtain special training
and knowledge and will come in contact with the Company's and Tyler's
customers and potential customers, which training, knowledge, and
contacts would provide invaluable benefits to competitors and
potential competitors of the Company and Tyler. Accordingly, and in
consideration of Tyler entering into this Agreement, Employee
covenants and agrees that, for a period beginning on the date of this
Agreement and ending on the later of (i) the second anniversary of (A)
the termination or Employee's employment by the Company for any reason
or (B) the resignation of Employee or (C) the expiration of this
Agreement, if Employee leaves employment of the Company upon
expiration or (ii) the third anniversary of this Agreement (the
"Non-Compete Applicable Date"), without the written permission of
Tyler, he will not, directly or indirectly, anywhere within the United
States (the "Non-Compete Area"): (A) engage (whether as owner,
partner, investor, employee,
74
adviser, consultant, contracting party, or referring source, or
otherwise) in any business that is in competition with the business
presently conducted by the Company, Tyler, or their respective
Affiliates at any time prior to the Non-Compete Applicable Date,
including, but not limited to, activities with respect to the property
tax outsourcing solutions business or related fields (except that
Employee may beneficially own less than 3% of the common equity of a
publicly traded entity); (B) solicit or attempt to solicit any
business or employment from any Person that Employee or any person
that reported, directly or indirectly, to Employee during the term of
Employee's employment while Employee is or was an employee of the
Company or Tyler, called upon, solicited, or conducted business with
as of prior to the Non-Compete Applicable Date, including, but not
limited to, customers, clients, and prospective customers and clients
of Tyler and their respective Affiliates or successors; or (C) recruit
or hire, attempt to or assist in any attempt to recruit or hire, or
discuss employment or hiring with, any Person who has ever been or is
an employee of the Company or Tyler or their respective Affiliates or
successors.
(b) Employee acknowledges that this Section 7 is necessary to
protect the interests of Tyler and that the restrictions and remedies
contained in this Agreement are reasonable in light of the
consideration and other value Employee accepts pursuant to this
Agreement. If any provision of this Section 7 should be found by any
court of competent jurisdiction to be unreasonable by reason of its
being too broad as to the period of time, territory, and/or scope,
then, and in that event, such provision will nevertheless remain valid
and fully effective, but will be considered to be amended so that the
period of time, territory, and/or scope set forth will be changed to
be the maximum period of time, the largest territory, and/or the
broadest scope, as the case may be, that would be found reasonable and
enforceable by such court.
8. Proprietary Rights.
(a) Employee will disclose to the Company all works of
authorship and inventions that Employee produces while employed by the
Company, working alone or jointly with others, including all computer
programs, documents, and records, together with all related ideas,
know-how, and techniques. These disclosures will be considered
Confidential Information. All copyrights, patent rights, and other
intellectual property rights in and to works of authorship and
inventions that Employee produces while employed by the Company,
working alone or jointly with others, are intended to be and will be
owned solely by the Company, whether or not they are produced using
Company's equipment, facilities, supplies, or Confidential
Information.
(b) Employee assigns to the Company all of his rights in and
to all works of authorship and inventions that Employee produces while
employed by the Company, working alone or jointly with others, and
waives all moral or similar rights therein. Employee agrees to sign,
without additional compensation, all necessary documents and otherwise
assist the Company, at its expense, to register and enforce all
copyrights, patents, and other intellectual property rights. Employee
appoints the Company as his attorney-in-fact for the sole purpose of
executing all necessary documents relating to the registration or
enforcement of Company's copyrights, patents, and other intellectual
property rights. Notwithstanding the foregoing, Employee does not
assign works of authorship or inventions which (i) Employee developed
entirely on his own time without using the Company's equipment,
facilities, supplies, or Confidential Information, and (ii) do not
relate to either (A) Tyler's business, (B) Tyler's actual or
demonstrably anticipated research or development, or (C) work done by
Employee for Tyler.
(c) Tyler can waive the rights in any work of authorship or
invention only through a written instrument signed by an officer of
Tyler after Employee has fully and completely disclosed in writing the
existence and nature of that work or authorship or invention.
9. End of Employment
(a) Promptly upon the expiration or termination of Employee's
employment, Employee will return to the Company all tangible forms of
Confidential Information and all equipment,
75
records, and other physical property in Employee's possession or under
his control that was furnished to Employee, or is owned, by Tyler.
(b) Employee authorizes Tyler to offset any liquidated
amounts payable or reimbursable to Tyler by Employee against, and to
withhold such amounts from, any amounts payable or reimbursable to
Employee by Tyler, including, without limitation, any base salary,
bonus, other incentive compensation, and expense reimbursements to the
maximum extent permitted by law.
10. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE, EXCLUDING ANY
CONFLICTS OF LAW PROVISIONS THEREOF.
11. ARBITRATION. THE PARTIES AGREE THAT ANY CLAIMS, INCLUDING ANY
STATUTORY CLAIMS, ARISING OUT OF OR RELATING TO EMPLOYEE'S EMPLOYMENT WILL, AT
THE REQUEST OF EITHER PARTY, BE SUBJECT TO BINDING ARBITRATION CONDUCTED BY AND
IN ACCORDANCE WITH THE RULES OF AN INDEPENDENT, NATIONALLY-RECOGNIZED DISPUTE
RESOLUTION ORGANIZATION (E.G. THE AMERICAN ARBITRATION ASSOCIATION). THE
ARBITRATION PROCEEDING WILL BE CONDUCTED IN DALLAS, TEXAS. NEITHER PARTY WILL
BE LIABLE TO THE OTHER FOR PUNITIVE DAMAGES FOR ANY SUCH CLAIMS, AND EACH PARTY
HEREBY WAIVES ANY CLAIMS AGAINST THE OTHER FOR SUCH DAMAGES.
12. Specific Performance. Employee hereby acknowledges and agrees that
the failure of Employee to perform the agreements and covenants set forth in
Section 6, Section 7, and Section 8 of this Agreement will cause irreparable
injury to Tyler for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents, notwithstanding Section 11, to
the issuance of injunctive relief by any court of competent jurisdiction to
compel performance of such party's obligations and to the granting by any court
of the remedy of specific performance of such obligations.
13. Continuing Obligations. Employee acknowledges and agrees that the
Sections 6, 7, 8, and 9 will continue to be enforceable against Employee after
his employment with the Company ends.
14. Entire Agreement. This Agreement constitutes the entire agreement
between the parties related to the subject matter hereof and supersedes all
prior or contemporaneous discussions, promises, or agreements related to this
subject matter. This Agreement cannot be amended except in a writing signed by
both parties. If any part of this Agreement is too broad to be fully enforced,
it will be enforced to the extent permitted by law.
15. Notices. All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Company or Tyler: Tyler Technologies, Inc.
0000 X. Xxxxxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Corporate Counsel
If to Employee: At the current address of Employee as
shown on the Company records
76
EMPLOYEE TYLER TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxx
------------------ ------------------
Name: Xxxxx X. Xxxxx Its: President
77
EXHIBIT G
ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is made
and entered into this 3rd day of November, 1999 to be effective as of October
29, 1999, by and among DAY & XXXXXXXXXX, L.L.C., a Delaware limited liability
company ("Assignor"), and TYLER TECHNOLOGIES, INC., a Delaware corporation, and
CLT COMPANY, a Delaware corporation and wholly-owned subsidiary of Tyler
Technologies, Inc. (collectively, "Assignees").
In accordance with and pursuant to that certain Asset Purchase
Agreement dated November 3, 1999 to be effective as of October 29, 1999 (the
"Asset Purchase Agreement") by and among Assignor and Assignees, Assignor and
Assignees have agreed to enter into this Agreement. Capitalized terms used but
not otherwise defined in this Agreement shall have the meanings assigned to
such terms in the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of their respective promises,
agreements, covenants, obligations, and undertakings under the Asset Purchase
Agreement, and their respective promises, agreements, covenants, obligations,
and undertakings contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Assignor and Assignees, intending to be legally bound, hereby agree as follows:
1. Assignment. Assignor hereby assigns, transfers, and conveys to
Assignees all of Assignor's right, title, and interest in and to the Assumed
Liabilities.
2. Acceptance of Assignment; Performance. Assignees hereby, jointly
and severally, accept the assignment from Assignor of the Assumed Liabilities
as provided in Section 1, assume all obligations under and with respect to
Assumed Liabilities for any actions or performance required of Assignor
thereunder, and jointly and severally agree to pay, perform, and fully
discharge all obligations under the Assumed Liabilities when and as the same
become due.
3. Pursuant to Asset Purchase Agreement. This Agreement is executed
pursuant to and in furtherance of, and is subject to, the terms and conditions
of the Asset Purchase Agreement. It does not supersede, replace, substitute
for, expand, or extinguish any obligation or provision of the Asset Purchase
Agreement. In the event of a conflict or an apparent conflict between the
provisions of this Agreement and the provisions of the Asset Purchase
Agreement, the provisions of the Asset Purchase Agreement shall control.
4. Binding Agreement. This Agreement will be binding upon and inure to
the benefit of the parties hereto and their respective successors, legal
representatives, and permitted assigns.
5. Governing Law. This Agreement will be governed by and construed and
interpreted in accordance with the substantive laws of the State of Delaware,
without giving effect to any conflicts of law rule or principle that might
require the application of the laws of another jurisdiction.
78
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed by its duly authorized officer as of the day and year first written
above.
"Assignor"
DAY & XXXXXXXXXX, L.L.C.,
a Delaware limited liability company
By: /s/ Xxxx X. Xxxxx
-----------------
Xxxx X. Xxxxx
Senior Vice President, Treasurer
& Assistant Secretary
"Assignees"
TYLER TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: President and Chief Executive Officer
CLT COMPANY,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: President
79
EXHIBIT H
FORM OF ESTOPPEL CERTIFICATE
TYLER TECHNOLOGIES, INC.
0000 Xxxx Xxxxxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
November 2, 1999
Forest City Auto Parts Company
0000 Xxxxxxx Xxxx, 0xx Xxxxx
Xxxxx, Xxxx 00000
Attention: Xx. Xxxxxx Xxxxxxx
RE: DAY & XXXXXXXXXX, LLC
Dear Art:
As you may be aware, Tyler Technologies, Inc. f/k/a Tyler Corporation
("Tyler") has agreed to purchase from Day & Xxxxxxxxxx, LLC ("D&Z") certain
assets of Xxxx Layer Xxxxxxx Company, a division of D&Z (the "Acquisition"). A
portion of the purchase price for such assets will be those certain Senior
Subordinated Secured Promissory Notes due March 26, 2002 of Forest City Auto
Parts Company ("FCAP") in favor of Tyler Corporation in the original principal
amounts of $2,000,000 and $1,155,000, respectively (collectively, the "Notes"),
which will be assigned by Tyler to D&Z at the closing of the Acquisition.
One of the conditions to the closing of the Acquisition is FCAP's
certification of certain matters relating to the Notes. To that end, FCAP
confirms for the benefit of D&Z by signing in the space provided below that the
following are true and correct:
1. Schedule A attached hereto sets forth all of the transaction
documents executed in connection with the Notes
(collectively, the "Transaction Documents"). Each of the
Notes and the Transaction Documents is in full force and
effect, has not been modified, revised or amended (either in
writing or orally), and together constitute the complete
agreement between FCAP and Tyler with respect to the
indebtedness evidenced by the Notes.
2. Except as set forth on Schedule A, FCAP is not in default
under any of the provisions of the Notes or the Transaction
Documents and no event has occurred, which with the passage
of time or notice or both, would become an event of default
under the Notes or the Transaction Documents by FCAP. The
current principal balance due and owing under the Notes in
accordance with their terms is $2,000,000 and $1,155,000,
respectively. No payment or prepayment of principal has been
made by FCAP under the Notes.
3. Except as set forth on Schedule A, Tyler and its affiliates
are not in default under any of the provisions of the
Transaction Documents and no event has occurred, which with
the passage of time or notice or both, would become an event
of default under the Transaction Documents by Tyler or its
affiliates or could otherwise give rise to a counterclaim or
defense by FCAP to any demand for payment under the Notes.
4. The aggregate Cash Flow (as defined in the $1,155,000 Note)
of FCAP during the period commencing on the date of such Note
and through September 30, 1999 was $__________________.
80
If you have any questions about the foregoing, please do not hesitate
to contact me at 000-000-0000.
Very truly yours,
TYLER TECHNOLOGIES, INC.
By:
----------------------------------
H. Xxxx Xxxxx, Xx.
Corporate Counsel
ACKNOWLEDGED AND AGREED TO
AS OF THE ______ DAY OF NOVEMBER, 1999
FOREST CITY AUTO PARTS COMPANY
By
----------------------------
Name:
Title:
