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EXHIBIT 10.2
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMONG
TYLER CORPORATION,
T2 ACQUISITION CORPORATION,
THE SOFTWARE GROUP, INC.
▇▇▇▇▇ ▇. ▇▇▇▇▇
AND
▇▇▇▇▇ ▇. ▇▇▇▇▇
DATED AS OF DECEMBER 29, 1997
AND EFFECTIVE AS OF
OCTOBER 8, 1997
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TABLE OF CONTENTS
ARTICLE 1
THE MERGER
1.1 The Merger.................................................. 1
1.2 Closing..................................................... 1
1.3 Effective Time.............................................. 2
1.4 Effects of the Merger....................................... 2
1.5 Articles of Incorporation; Bylaws........................... 2
1.6 Directors and Officers...................................... 2
1.7 Conversion of Securities; Exchange; Fractional Shares....... 2
1.8 Adjustments to Prevent Dilution............................. 4
1.9 Taking of Necessary Action; Further Action.................. 5
ARTICLE 2
REPRESENTATIONS AND WARRANTS OF THE COMPANY
AND THE SHAREHOLDERS
2.1 Organization and Good Standing of Company................... 5
2.2 No Company Subsidiaries..................................... 5
2.3 No Other Investments........................................ 5
2.4 Foreign Qualification....................................... 5
2.5 Power and Authority to Conduct Business..................... 5
2.6 Authority to Consummate Merger.............................. 6
2.7 Binding Effect.............................................. 6
2.8 Compliance with Other Instruments........................... 6
2.9 Capitalization of Company................................... 7
2.10 [Intentionally Omitted]..................................... 7
2.11 [Intentionally Omitted]..................................... 7
2.12 Company Financial Statements................................ 7
2.13 Absence of Certain Changes.................................. 8
2.14 No Material Undisclosed Liabilities......................... 10
2.15 Tax Liabilities............................................. 10
2.16 Title to Properties......................................... 11
2.17 Condition of Tangible Assets................................ 13
2.18 Accounts Receivable......................................... 13
2.19 Inventories................................................. 13
2.20 Patents, Trademarks, and Copyrights......................... 13
2.21 Contracts................................................... 14
2.22 Litigation and Claims....................................... 15
2.23 Judgments, Decrees, and Orders in Restraint of Business..... 16
2.24 No Violation of Any Instrument.............................. 16
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2.25 Compliance With Laws........................................ 16
2.26 Compensation and Benefit Plans.............................. 16
2.27 Labor Relations............................................. 18
2.28 Adequate Insurance.......................................... 18
2.29 Contracts with Affiliates and Others........................ 19
2.30 Revenue Recognition......................................... 19
2.31 Certain Fees................................................ 19
2.32 Environmental Matters....................................... 19
2.33 Accuracy of Information Furnished........................... 20
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TYLER
3.1 Organization and Good Standing of Tyler..................... 20
3.2 Foreign Qualification....................................... 20
3.3 Power and Authority to Conduct Business..................... 21
3.4 Authority to Consummate Merger.............................. 21
3.5 Binding Effect.............................................. 21
3.6 Compliance with Other Instruments........................... 21
3.7 Capitalization of Tyler..................................... 22
3.8 Commission Filings; Financial Statements.................... 22
3.9 Absence of Certain Changes.................................. 23
3.10 No Material Undisclosed Liabilities......................... 24
3.11 Litigation and Government Claims............................ 24
3.12 No Violation of Any Instrument.............................. 24
3.13 Certain Fees................................................ 25
3.14 No Interim Operations of Sub................................ 25
3.15 Accuracy of Information Furnished........................... 25
ARTICLE 4
JOINT COVENANTS OF THE COMPANY, THE SHAREHOLDERS AND TYLER
4.1 Access; Confidentiality..................................... 25
4.2 Notice of any Material Change............................... 26
4.3 Monthly Financial Statements................................ 26
4.4 Antitrust Notification...................................... 26
4.5 Tax Matters................................................. 27
4.6 Cooperation Pending Closing................................. 30
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ARTICLE 5
COVENANTS OF THE COMPANY AND THE SHAREHOLDERS
5.1 Conduct of Business Prior to Closing Date................... 30
5.2 Employment Agreement........................................ 31
5.3 Noncompetition Agreements................................... 31
5.4 Agreement Not to Negotiate.................................. 31
5.5 Accuracy of Information Furnished........................... 31
5.6 Regulation S-X Financial Statements......................... 32
5.7 Termination of Shareholders Agreement....................... 32
5.8 Pre-Closing Bonuses......................................... 32
5.9 Form of Merger.............................................. 32
ARTICLE 6
COVENANTS OF TYLER
6.1 Conduct Prior to Closing Date............................... 32
6.2 Proxy Statement............................................. 33
6.3 Meetings of Stockholders.................................... 33
6.4 Stock Exchange Listing...................................... 33
6.5 Guaranties of Company Obligations........................... 33
6.6 Other Tyler Obligations..................................... 34
6.7 Company Indemnification Obligations......................... 34
ARTICLE 7
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
7.1 HSR Act..................................................... 35
7.2 Absence of Litigation....................................... 35
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
AND THE SHAREHOLDERS
8.1 Compliance.................................................. 36
8.2 Representations and Warranties.............................. 36
8.3 Opinion..................................................... 36
8.4 No Material Adverse Change.................................. 36
8.5 Financing................................................... 36
8.6 Certificates................................................ 37
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ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF TYLER
9.1 Compliance.................................................. 37
9.2 Representations and Warranties.............................. 37
9.3 Securities Law Compliance................................... 37
9.4 Opinions.................................................... 37
9.5 No Material Adverse Change.................................. 38
9.6 Consents to Transaction..................................... 38
9.7 Financing................................................... 38
9.8 Noncompetition Agreements................................... 38
9.9 Business Resources Corporation.............................. 38
9.10 Stockholder Approval........................................ 38
9.11 Certificates................................................ 38
ARTICLE 10
SECURITIES LAW REGISTRATION AND COMPLIANCE
10.1 Securities Law Compliance; Restrictions on Shares........... 38
10.2 Piggyback Registration...................................... 39
10.3 Registration Procedures..................................... 40
10.4 Expenses.................................................... 40
10.5 Indemnification............................................. 41
10.6 No Transferability of Registration Rights................... 43
ARTICLE 11
INDEMNIFICATION AND REMEDIES
11.1 Indemnification by the Shareholders Based on Agreement...... 43
11.2 Indemnification by Tyler Based on Agreement................. 43
11.3 Customer Claims............................................. 44
11.4 Claims Limitations.......................................... 45
11.5 Maximum Liability........................................... 46
11.6 Equitable Remedies.......................................... 46
11.7 Remedies of the Surviving Corporation....................... 46
11.8 Costs of Defense............................................ 46
ARTICLE 12
MISCELLANEOUS
12.1 Breach Discovered Prior to Closing.......................... 47
12.2 Termination................................................. 47
12.3 Expenses.................................................... 48
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12.4 Disclosure Schedules........................................ 48
12.5 Entire Agreement............................................ 48
12.6 Survival.................................................... 49
12.7 Counterparts................................................ 49
12.8 Notices..................................................... 49
12.9 Successors and Assigns...................................... 50
12.10 Governing Law............................................... 50
12.11 Waiver and Other Action..................................... 50
12.12 Severability................................................ 51
12.13 Knowledge................................................... 51
ANNEX I Shareholders and Optionholders
EXHIBITS
Exhibit A Surviving Corporation Directors and Officers
Exhibit B Employment and Noncompetition Agreement (Shareholders)
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT, dated as of the ____ day of
December, 1997 and effective as of the 8th day of October, 1997, is entered
into by and among Tyler Corporation, a Delaware corporation ("Tyler"), T2
Acquisition Corporation, a Texas corporation and wholly-owned subsidiary of
Tyler ("Sub"), The Software Group, Inc., a Texas corporation, (the "Company"),
▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ (each, a "Shareholder" and collectively, the
"Shareholders").
WITNESSETH:
WHEREAS, subject to and in accordance with the terms and conditions of this
Agreement, the respective Boards of Directors of Tyler, Sub and the Company, and
Tyler as sole shareholder of Sub, have approved the merger of Sub with and into
the Company (the "Merger"), whereby all the issued and outstanding shares of
common stock, without par value, of the Company (the "Company Common Stock") not
owned directly or indirectly by the Company will be converted into the right to
receive in the aggregate $12,000,000 in cash and 2,000,000 shares of common
stock, par value $0.01 per share, of Tyler ("Tyler Common Stock"), as provided
herein;
WHEREAS, the parties hereto desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
consummation of the Merger;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Subject to and in accordance with the terms and conditions
of this Agreement and in accordance with the Texas Business Corporation Act (the
"TBCA"), at the Effective Time (as defined in Section 1.3) Sub shall be merged
with and into Company. As a result of the Merger, the separate corporate
existence of the Sub shall cease and Company shall continue as the surviving
corporation (sometimes referred to herein as the "Surviving Corporation") and
shall succeed to and assume all of the rights and obligations of the Company in
accordance with the TBCA.
1.2 Closing. The closing of the Merger (the "Closing") shall take place at
the offices of Gardere & ▇▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ as soon as practicable after the satisfaction or waiver of the
conditions set forth in Article V or at such other time and place and on such
other date as Tyler and the Company shall agree; provided, that the closing
conditions
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set forth in Article V shall have been satisfied or waived at or prior to such
time. The date on which the Closing occurs is herein referred to as the "Closing
Date."
1.3 Effective Time. On the Closing Date, or as soon as practicable
thereafter, the Company and Sub will cause Articles of Merger (the "Articles of
Merger") to be filed with the Secretary of State of the State of Texas as
provided in Article 5.04 of the TBCA. The Merger will become effective at the
time that the Articles of Merger have been filed with the Secretary of State of
the State of Texas or at such other time specified in the Articles of Merger as
the effective time (the "Effective Time").
1.4 Effects of the Merger. The Merger shall have the effects set forth in
the applicable provisions of the TBCA.
1.5 Articles of Incorporation; Bylaws. The Articles of Incorporation (the
"Articles") and Bylaws (the "Bylaws") of the Company, as in effect immediately
prior to the Effective Time, shall be the articles of incorporation and bylaws
of the Surviving Corporation and thereafter shall continue to be its articles of
incorporation and bylaws until amended as provided therein and under the TBCA.
1.6 Directors and Officers. The persons specified as directors on Exhibit
A hereto shall be the initial directors of the Surviving Corporation, each to
hold office in accordance with the Articles and Bylaws, and the persons
specified as officers on Exhibit A hereto shall be the initial officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified in accordance with the Articles and Bylaws.
1.7 Conversion of Securities; Exchange; Fractional Shares. Subject to the
terms and conditions of this Agreement, at the Effective Time, by virtue of the
Merger and without any action on the part of the Company, Sub or their
Shareholder:
(a) Each share of the Company Common Stock issued and outstanding
immediately prior to the Effective Time, other than any shares of the
Company Common Stock to be canceled pursuant to Section 1.7(b), shall be
converted, subject to the provisions of this Section 1.7, into the right to
receive, without interest, $5.7943 in cash and 0.965717 shares of Tyler
Common Stock (collectively, the "Merger Consideration"); provided that no
fractional shares of Tyler Common Stock shall be issued, and, in lieu
thereof, a cash payment shall be made in accordance with the procedure set
forth in Section 1.7(h) hereof.
(b) Each share of Company Common Stock held in the treasury of the
Company and each share of Company Common Stock held by Sub, Tyler or any
direct or indirect wholly-owned subsidiary of Tyler, or the Company
immediately prior to the Effective Time shall be canceled and extinguished
at the Effective Time without any conversion thereof and no payment shall
be made with respect thereto.
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(c) Each option outstanding at the Effective Time to purchase shares
of Company Common Stock (a "Stock Option") granted under (i) the 1988 Stock
Option Plan for Software Group, Inc., as amended (the "Company Stock Option
Plan"), or (ii) any other stock plan or agreement of the Company, which by
its terms is not extinguished in the Merger, shall be exercised prior to
the Closing and the holders of any such Stock Options agree to exercise
such Stock Options at or prior to the Closing.
(d) Each share of common stock, par value $1.00 per share, of Sub
issued and outstanding immediately prior to the Effective Time shall at the
Effective Time be converted into one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
(e) At the Effective Time, each holder of an outstanding certificate
that prior thereto represented shares of Company Common Stock shall be
entitled to receive, upon surrender to the Surviving Corporation of such
certificate or certificates for cancellation and subject to any required
withholding of taxes, a certificate or certificates representing the
number of whole shares of Tyler Common Stock (of such denominations and
registered in such names as such holder may request) into which the shares
of Company Common Stock so surrendered shall have been converted. Each
holder of shares of Company Common Stock who would otherwise be entitled
to a fraction of a share of Tyler Common Stock shall, upon surrender to
the Surviving Corporation of the certificates representing shares of
Company Common Stock held by such holder, be paid an amount in cash in
accordance with the provisions of Section 1.7(h). Until so surrendered,
each outstanding certificate that prior to the Effective Time represented
shares of Company Common Stock shall be deemed from and after the
Effective Time to evidence the right to receive that amount of cash and
that number of full shares of Tyler Common Stock into which such shares of
Company Common Stock shall have been converted pursuant to this Section
1.7, and any cash in lieu of fractional shares of Tyler Common Stock,
subject to any of required withholding of taxes. No interest shall be paid
on the cash payable upon surrender of the certificate or certificates
evidencing shares of Company Common Stock. Unless and until any such
outstanding certificates representing shares of Company Common Stock shall
be surrendered, no dividends or other distributions declared and payable
to the holders of Tyler Common Stock on or after the Effective Time shall
be paid to the holders of such outstanding certificates which prior to the
Effective Time represented shares of Company Common Stock; provided,
however, that, upon surrender and exchange of such outstanding
certificates, there shall be paid to the record holders of the
certificates issued and exchanged therefor the amount, without interest
thereon, of dividends and other distributions, if any, that theretofore
were declared and became payable since the Effective Time with respect to
the number of full shares of Tyler Common Stock issued to such holders.
(f) The cash and shares of Tyler Common Stock into which the shares of
Company Common Stock shall have been converted pursuant to this Section 1.7
shall be issued in full satisfaction of all rights pertaining to such
converted shares of Company Common Stock.
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(g) If any certificate for shares of Tyler Common Stock is to be
issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance
thereof that the certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange shall have paid to Tyler or the Surviving Corporation any transfer
or other taxes required by reason of the issuance of a certificate for
shares of Tyler Common Stock in any name other than that of the registered
holder of the certificate surrendered, or established to the satisfaction
of Tyler or its transfer agent that such tax has been paid or is not
payable.
(h) No fraction of a share of Tyler Common Stock shall be issued, but
in lieu thereof each holder of shares of Company Common Stock who would
otherwise be entitled to a fraction of a share of Tyler Common Stock shall,
upon surrender to the Surviving Corporation of the certificate or
certificates representing the shares of Company Common Stock held by such
holder, be paid an amount in cash equal to the value of such fraction of a
share of Tyler Common Stock based upon the closing price of one share of
Tyler Common Stock on the New York Stock Exchange, Inc. ("NYSE") on the
last trading day prior to the Effective Time. No interest shall be paid on
such amount. All shares of Company Common Stock held by a record holder
shall be aggregated for purposes of computing the number of shares of Tyler
Common Stock to be issued pursuant to this Section 1.7.
(i) At the Closing, Tyler shall provide each holder of certificates
which prior to the Effective Time represented shares of Company Common
Stock a letter of transmittal and other documentation enabling such holder
to effect the exchange of stock certificates as contemplated by Article 1
of this Agreement.
(j) Neither Tyler, the Surviving Corporation, nor any other person
shall be liable to any former holder of shares of Company Common Stock for
any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(k) In the event any certificate formerly representing shares of the
Company Common Stock shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such certificate
to be lost, stolen or destroyed and, if required by Tyler or the Surviving
Corporation, the posting by such person of a bond in customary amount as
indemnity against any claim that may be made against Tyler or the Surviving
Corporation with respect to such certificate, the Surviving Corporation
shall deliver in exchange for such lost, stolen or destroyed certificate
the cash and shares of Tyler Common Stock that would be deliverable
pursuant to this Article 1 upon due surrender of the shares of Company
Common Stock represented by such lost, stolen or destroyed certificate.
1.8 Adjustments to Prevent Dilution. In the event that the Company changes
the number of shares of the Company Common Stock or securities convertible or
exchangeable into or exercisable for shares of the Company Common Stock, or
Tyler changes the number of shares of Tyler Common Stock or securities
convertible or exchangeable into or exercisable for shares of Tyler
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Common Stock, issued and outstanding prior to the Effective Time as a result of
a reclassification, stock split (including a reverse split or combination),
stock dividend or distribution, recapitalization, subdivision, or other similar
transaction, the Merger Consideration shall be correspondingly adjusted.
1.9 Taking of Necessary Action; Further Action. The parties hereto shall
take all such reasonable and lawful action as may be necessary or appropriate
in order to effectuate the Merger as promptly as possible. If at any time after
the Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company or Sub, such corporations shall direct their
respective officers and directors to take, and the Shareholders shall take, all
such lawful and necessary action.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE SHAREHOLDERS
The Company and the Shareholders jointly and severally represent and
warrant to Tyler and Sub as follows:
2.1 Organization and Good Standing of Company. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Texas.
2.2 No Company Subsidiaries. The Company is not, and has never been, the
record or beneficial owner, directly or indirectly, of 50% or more of the
capital stock of any corporation.
2.3 No Other Investments. The Company does not own, and has never owned,
any capital stock of any other corporation or any equity, profit sharing,
participation, or other interest of any type in any partnership, joint venture,
and other entity.
2.4 Foreign Qualification. The Company is duly qualified or licensed to do
business as a foreign corporation and in good standing in those jurisdictions
set forth in Section 2.4 of the schedule delivered by the Company concurrently
with the execution of this Agreement (the "Company Disclosure Schedule"). The
Company is duly qualified or licensed to do business as a foreign corporation in
every jurisdiction where the failure so to qualify could have a material adverse
effect on the businesses, operations, assets or financial condition of the
Company. For purposes of this Section 2.4, no material adverse effect shall be
deemed to have occurred as a result of non-payment of state or local franchise
taxes not exceeding $37,500 in the aggregate.
2.5 Power and Authority to Conduct Business. The Company has the corporate
power and authority, and possesses all licenses and permits required by
governmental authorities, to own, lease, and operate their properties and assets
and to carry on its business as currently being
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conducted, except where the failure to possess such license or permit would not
have a material adverse effect on the businesses, operations, assets or
financial condition of the Company.
2.6 Authority to Consummate Merger. The Company has the corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and the other agreements or documents executed or required to be
executed by the Company in connection with this Agreement, and the execution,
delivery, and performance by the Company of this Agreement and the other
documents executed or required to be executed by the Company in connection with
this Agreement have been duly authorized by all necessary corporate action. Each
Shareholder has the capacity and authority to execute, deliver and perform his
obligations under this Agreement, and the other agreements or documents executed
or required to be executed by him in connection herewith.
2.7 Binding Effect. This Agreement and the other agreements and documents
executed or required to be executed by the Company or the Shareholders in
connection with this Agreement have been or will have been duly executed and
delivered by the Company or the Shareholders, as appropriate, and are or will
be, when executed and delivered, the legal, valid, and binding obligations of
the Company or the Shareholders executing the same, enforceable in accordance
with their terms, except that:
(a) enforceability may be limited by bankruptcy, insolvency, or other
similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability; and
(c) rights to indemnification under Section 10.5 may be limited by
considerations of public policy.
2.8 Compliance with Other Instruments. Except as disclosed in Section 2.8
of the Company Disclosure Schedule, neither the execution and delivery by the
Company or the Shareholders of this Agreement, or the other agreements or
documents executed or required to be executed by the Company or the Shareholders
in connection herewith, nor the consummation by the Company or the Shareholders
of the transactions contemplated hereby and thereby, will (i) conflict with the
articles of incorporation or bylaws of the Company; (ii) assuming satisfaction
of the requirements set forth in clause (iii) below, violate any provision of
law applicable to the Company; (iii) except for (A) requirements arising out of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), and
(B) the filing of articles of merger in accordance with the TBCA, require any
consent, authorization, permit, license or approval of, or declaration,
registration or filing with or notice to, any person or governmental body or
authority, domestic or foreign, under any provision of law applicable to the
Company; or (iv) require any consent, approval or notice under, violate, breach,
be in conflict with, or constitute a default (or an event that, with notice or
lapse of time or both, would constitute a default) under, or permit the
termination or the acceleration of maturity of, or result in the imposition of
any lien, claim, or encumbrance upon any property or asset
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of the Company or either Shareholder, pursuant to any note, bond, indenture,
mortgage, deed of trust, evidence of indebtedness, loan or lease agreement, or
other agreement or instrument (including with customers) listed or required to
be listed in Section 2.21 of the Company Disclosure Schedule, or any judgment,
order, injunction, or decree by which the Company or either Shareholder is
bound, to which any of them is a party, or to which any of their assets is
subject, where any such failure to obtain any consent, approval or notice, or
violation, breach, conflict or default would result in a material adverse effect
on the businesses, operations, assets or financial condition of the Company.
2.9 Capitalization of Company.
(a) The authorized capital stock of the Company is 5,000,000 shares of
Company Common Stock, of which 1,921,000 shares of Company Common Stock are
issued and outstanding at the date hereof and 150,000 shares are subject to
Stock Options. All of the issued and outstanding shares of Company Common Stock
have been duly authorized and are validly issued, fully paid and nonassessable.
There are and at the Closing will be no shares of the capital stock of the
Company held in its treasury or in the treasury.
(b) At the Closing, each Shareholder will be the lawful record and
beneficial owner of the shares of the Company Common Stock, set forth opposite
such Shareholder's name on Annex I, free and clear of all liens, encumbrances,
and claims of every kind, and the shares so owned by the Shareholders will
constitute 93% of the issued and outstanding shares of the Company capital
stock. Set forth on Annex I are the number of shares of Company Common Stock
outstanding and Company Common Stock subject to options. Each Shareholder has
the right to vote or direct the vote of his shares at his discretion on any
matter submitted to a vote of the Company shareholders.
(c) Except as disclosed in Section 2.9 of the Company Disclosure Schedule,
there are no voting trusts, shareholder agreements, or other voting arrangements
among the shareholders of the Company.
(d) Except as described in Section 2.9 of the Company Disclosure Schedule,
there presently is no outstanding subscription, contract, convertible or
exchangeable security, option, warrant, call, or other right obligating the
Company or any Shareholder to issue, sell, exchange, or otherwise dispose of, or
to purchase, redeem, or otherwise acquire, shares of, or securities convertible
into or exchangeable for, capital stock of the Company; no such rights disclosed
in Section 2.9 of the Company Disclosure Schedule will remain outstanding at the
Closing. No shareholder of the Company is entitled to any preemptive right.
2.10 [Intentionally Omitted].
2.11 [Intentionally Omitted].
2.12 Company Financial Statements.
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(a) The Company has delivered to Tyler true, correct, and complete copies
of the following financial statements of the Company (the "Company Financial
Statements"), which are attached to Section 2.12 of the Company Disclosure
Schedule:
(i) the audited balance sheets of the Company as of October 31, 1996,
1995 and 1994 and the related audited statements of operations,
stockholder's equity, and cash flows for the years then ended, with notes
thereto, prepared in accordance with United States generally accepted
accounting principles, except as disclosed in the notes thereto; and
(ii) the unaudited balance sheet of the Company as of August 31, 1997
(the "Company Balance Sheet"), and the related unaudited statements of
operations, stockholder's equity, and cash flows for the ten months then
ended, with notes thereto, prepared in accordance with United States
generally accepted accounting principles, except as disclosed in the notes
thereto.
The Company Financial Statements present fairly, in all material respects, the
financial position of the Company as of the dates thereof and the results of
operations and cash flows for the periods then ended, in conformity with
generally accepted accounting principles applied, except as may be set forth in
the notes thereto, on a consistent basis throughout such periods.
(b) Since August 31, 1997, there has been no change in accounting
principles applicable to, or methods of accounting utilized by the Company, and
the books and records of Company have been and are being maintained in
accordance with all applicable legal and accounting requirements and what the
Shareholders believe in good faith to be good business practice, reflect only
valid transactions, are complete and correct in all material respects, and
accurately reflect in all material respects the basis for the financial position
and results of operations and cash flows of the Company set forth in the Company
Financial Statements.
2.13 Absence of Certain Changes. Since August 31, 1997 (or other date
indicated below), the Company has not (except as may be contemplated by this
Agreement or as may result from the transactions contemplated by this
Agreement):
(a) except as disclosed in Section 2.13 of the Company Disclosure
Schedule, suffered any change in its businesses, results of operations,
working capital, assets, liabilities, or financial condition or the manner
of conducting its business other than changes that, individually or in the
aggregate, have not had a material adverse effect on the businesses,
operations, assets or condition (financial or otherwise) of the Company;
(b) experienced a decline in the shareholder's equity of the Company
from its shareholder's equity shown on the Company Balance Sheet at August
31, 1997, determined using the same accounting principles applied in the
preparation of the Company Financial Statements (but without giving effect
to the payment of pre-closing bonuses, if any, pursuant to Section 5.8
hereof);
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(c) except as disclosed in Section 2.13 of the Company Disclosure
Schedule, suffered any damage or destruction to or loss of its assets not
covered by insurance, or any loss of customers or suppliers, or terminated
or lost the services of any key employee (including any employee who had
agreed with the Company to maintain the confidentiality of proprietary or
technical information or know-how or to assign inventions, patents, or
copyrights) that has had, or in the good faith belief of the Shareholders
is likely to have, a material adverse effect on the businesses, operations,
assets, financial condition, or prospects of the Company;
(d) acquired or disposed of any material asset, or incurred, assumed,
guaranteed, endorsed, paid, or discharged any material indebtedness,
liability, or obligation, or subjected or permitted to be subjected any
material amount of assets to any lien, claim, or encumbrance of any kind,
except in the ordinary course of business or pursuant to agreements in
force at the date of this Agreement;
(e) forgiven, compromised, canceled, released, waived, or permitted to
lapse any material rights or claims, except as disclosed in Section 2.13 of
the Company Disclosure Schedule;
(f) entered into or terminated any material agreement or commitment,
or agreed or made any changes in material leases or agreements, other than
renewals or extensions thereof and leases, agreements, and commitments
entered into, terminated, or modified in the ordinary course of business;
(g) written up, written down, or written off the book value of any
material amount of assets, except as disclosed in Section 2.13 of the
Company Disclosure Schedule;
(h) declared, paid, or set aside for payment any dividend or
distribution with respect to its capital stock;
(i) except as set forth in Section 2.13 of the Company Disclosure
Schedule, redeemed, purchased, or otherwise acquired, or sold, granted, or
otherwise disposed of, directly or indirectly, any of its capital stock or
securities or any rights to acquire such capital stock or securities, or
agreed to changes in the terms and conditions of any such rights;
(j) except as set forth in Section 2.13 of the Company Disclosure
Schedule, paid compensation, fees, bonuses or other payments to any
Shareholder or his family members or any of his affiliates, other than the
base salary of each Shareholder; or materially increased the compensation
of or paid any bonus to any other employee or contributed to any employee
benefit plan other than in accordance with policies, practices or
requirements established and in effect on October 31, 1996;
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(k) Entered into any employment, compensation, or collective
bargaining agreement with any person or group or consulting agreement not
identified in Section 2.13 of the Company Disclosure Schedule, other than
in the ordinary course of business;
(l) Entered into, adopted, or materially amended any employee benefit
plan; or
(m) Entered into any other material commitment or transaction not
disclosed elsewhere herein or in the Company Disclosure Schedule, other
than in the ordinary course of business.
2.14 No Material Undisclosed Liabilities. To the knowledge of the Company
or the Shareholders, there is no liability or obligation of the Company of any
nature, whether absolute, accrued, contingent, or otherwise, other than:
(a) the liabilities and obligations that are fully reflected, accrued,
or reserved against on the Company Balance Sheet, for which the reserves
are appropriate and reasonable, or incurred in the ordinary course of
business and consistent with past practices since August 31, 1997;
(b) the loss contingencies set forth in Section 2.14 of the Company
Disclosure Schedule;
(c) contractual liabilities or obligations of a nature not required to
be disclosed on a balance sheet prepared in accordance with generally
accepted accounting principles, but which, if material, are disclosed in
Section 2.14 of the Company Disclosure Schedule; and
(d) other liabilities and loss contingencies which are not material in
the aggregate to the business, operations, assets or condition (financial
or otherwise) of the Company.
The Company is not a signatory to, and is not in any manner a guarantor,
endorser, assumptor or otherwise primary or secondarily liable for or
responsible for the payment of, any notes payable other than those set forth in
Section 2.21 of the Company Disclosure Schedule.
2.15 Tax Liabilities. The Company has filed all material federal, state,
county, local, and foreign tax returns and reports required to be filed by
them, including those with respect to income, payroll, property, withholding,
social security, unemployment, franchise, excise, use and sales taxes, and has
either paid in full all taxes that have become due as reflected on any such
return or report and any interest and penalties with respect thereto or, as of
August 31, 1997, it has fully accrued on its books or has established adequate
reserves for all taxes payable but not yet due, except that at August 31, 1997
the unrecorded contingent liability of the Company with respect to payroll,
withholding, social security, unemployment, franchise, property, sales, use and
excise taxes did not exceed $37,500 in the aggregate for all such taxes. The
total of all payments made in 1996 and in 1997 for taxes, interest and
penalties of the Company for periods ended prior to November 1, 1996 have not
exceeded the accrued liability for such items shown on the Company Financial
Statements
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as of August 31, 1997 for periods ended October 31, 1996; the
Company has not, subsequent to October 31, 1996, accrued or set aside any
reserves on its books and records for any taxes, interest or penalties for any
period ended prior to November 1, 1996 nor has the Company made any payments in
1996 or 1997 of taxes, interest or penalties for periods ended prior to
November 1, 1996 that were not reflected in the accrued liability therefor
(including deferred taxes) shown on the Company Financial Statements as of
August 31, 1997 for periods ended October 31, 1996. There are no reserves
(other than for deferred taxes) reflected in the Company Financial Statements
as of August 31, 1997 for periods ended October 31, 1996 for taxes, interest or
penalties in excess of those shown to be due on any tax returns that have been
filed for any periods then ended. Except as disclosed on Section 2.15 of the
Company Disclosure Schedule, neither the Internal Revenue Service nor any other
taxing authority has audited or is in the process of auditing the tax returns
and reports of the Company, and no claim for additional taxes, interest, or
penalties for any fiscal year is pending. The Company has delivered to Tyler
true, complete and correct copies of (i) all federal and state income or
franchise tax returns for the Company for all periods ending on and after
October 31, 1994 and (ii) relevant portions of income and franchise tax
examination reports, statements of deficiencies, closing or other agreements
received by, assessed against or agreed to by the Company, relating to such
taxes, since October 31, 1994, if any. No extension or waiver of any statute of
limitations has been requested of or granted by the Company with respect to any
tax year, and no extension or waiver of time within which to file any tax
return has been requested by or granted to the Company except with respect to
tax returns not yet filed but otherwise due. No unsatisfied deficiency,
delinquency, or default for any tax, assessment, or governmental charge has
been claimed or assessed, or to the knowledge of the Company or the
Shareholders, proposed against the Company, nor has the Company received notice
of any such deficiency, delinquency, or default, for any tax period. Neither
the Company nor either Shareholder has any reason to believe that the Company
has any material contingent income tax liabilities other than those reflected
on the Company Balance Sheet and those arising in the ordinary course of
business since the date thereof, and those arising as a result of the
transactions contemplated hereby. The Company has not filed a consent under
sec.341(f) of the Internal Revenue Code of 1986, as amended (the "Code"),
concerning collapsible corporations. The Company has not made any material
payments, is not obligated to make any material payments, and is not a party to
any agreement that under certain circumstances could obligate it to make any
material payments that will not be deductible under Code sec.280G. The Company
is not a party to any tax allocation or sharing agreement. The Company (i) has
not been a member of an affiliated group filing a consolidated federal income
tax return and (ii) does not have any liability for the taxes of any person
under Treasury Reg. sec.1.1502-6 (or any similar provision of state, local or
foreign law) as a transferee or successor, by contract, or otherwise.
2.16 Title to Properties.
(a) The Company owns no real property.
(b) Except as disclosed in Section 2.16(b) of the Company Disclosure
Schedule and except as they have since been affected subsequent to August 31,
1997 by transactions in the ordinary course of business and consistent with past
practices, and except for assets subject to
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financing leases required to be capitalized under generally accepted accounting
principles which are reflected in the Company Balance Sheet or notes thereto,
the Company has good and marketable title to the assets reflected in the
Company Balance Sheet or otherwise on their books and records as being owned as
of August 31, 1997, or purchased by it since August 31, 1997, and to the assets
described in Section 2.20 below and to the following assets whether or not
reflected in the Company Balance Sheet or on such books and records:
The computer programs and applications software, in both object code and
source code form, and all documentation therefor (excluding operating systems
software leased by or licensed to the Company) utilized by the Company in its
business.
(c) The assets identified in subsection (b) above and the assets described
in Section 2.20 below are owned by or licensed to the Company free and clear of
any lien, claim or encumbrance except those disclosed in the Company Balance
Sheet or notes thereto or in Section 2.16(c) of the Company Disclosure Schedule
and except for:
(i) Liens for taxes, assessments, or other governmental charges not
yet delinquent, or the validity of which are being contested in good faith
by appropriate proceedings listed in Section 2.16(c) of the Company
Disclosure Schedule;
(ii) Statutory liens incurred in the ordinary course of business that
are not yet delinquent, or the validity of which are being contested in
good faith by appropriate proceedings described in Section 2.16(c) of the
Company Disclosure Schedule;
(iii) The rights of customers of the Company with respect to inventory
or work in progress under purchase orders or contracts entered into by the
Company in the ordinary course of business;
(iv) Liens, claims, or encumbrances consisting of leases of equipment
to customers entered into in the ordinary course of business;
(v) Liens, claims, or encumbrances described in real estate title
insurance binders or commitments, or abstracts of title to real estate,
furnished or to be furnished to Tyler in connection with the transactions
contemplated hereby, unless Tyler objects to the same in writing within
five business days after receipt of such title documents;
(vi) Restrictions and constraints set forth in the license agreements
described in Section 2.20 of the Company Disclosure Schedule; and
(vii) Other liens, claims, or encumbrances that, in the aggregate, do
not materially detract from the value of, or materially interfere with the
present use of, such assets.
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(d) Except for those assets acquired since the date of the Company Balance
Sheet, all tangible properties and assets material to the present operations of
the Company are reflected on the Company Balance Sheet and notes thereto in the
manner and to the extent required by generally accepted accounting principles.
Immediately after the Closing, the Company will own or lease or otherwise
possess the rights to use all assets necessary to the conduct of the business
conducted by the Company immediately before the Closing.
2.17 Condition of Tangible Assets. Except as set forth in Section 2.17 of
the Company Disclosure Schedule, the tangible assets of the Company which are
material to the business, operations, assets or financial condition of the
Company, are in good condition and repair and, in the good faith belief of each
Shareholder, are adequate for the uses to which they are being put in the
ordinary course of their respective businesses.
2.18 Accounts Receivable. To the knowledge of the Company or the
Shareholders, all accounts receivable reflected in the Company Balance Sheet or
arising since August 31, 1997 either have been collected or are enforceable and
collectible claims not subject to any valid defense, offset, or credit, except
to the extent of any reserves established for doubtful accounts in a manner
consistent with such practices in prior periods and except as set forth in
Section 2.18 of the Company Disclosure Schedule.
2.19 Inventories. The Company has no inventories.
2.20 Patents, Trademarks, and Copyrights. Set forth in Section 2.20 of the
Company Disclosure Schedule is a true and correct description of:
(a) all material trademarks, trade names, service marks, patents,
copyrights, and applications therefor and all license, royalty, assignment,
and other similar agreements relating to the foregoing currently owned, in
whole or in part, by the Company;
(b) all material agreements relating to technology, know-how, or
processes that the Company is licensed or authorized to use by others or
licenses or authorizes others to use; and
(c) all material trademarks, trade names, service marks, patents,
copyrights, and applications therefor and other similar and intangible
intellectual property and all license, royalty, assignment, and other
similar agreements relating to the foregoing and all material agreements
relating to technology, know-how, or processes used in connection with the
business of the Company.
Except to the extent set forth in Section 2.20 of the Company Disclosure
Schedule, the Company has, to the knowledge of the Company and each Shareholder,
the sole and exclusive right to use the patents, trademarks, trade names,
copyrights, service marks, technology, know-how, and processes identified in
such Section 2.20 without infringing or violating the rights of any other
person, and to the knowledge of the Company and each Shareholder no consent of
third parties will be required for
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the use thereof by the Company upon consummation of the Merger and there are no
past due or delinquent license fees, rents, royalties, or other charges that
the Company is required or obligated to pay with respect to any of the
foregoing. Except as disclosed in Section 2.20 of the Company Disclosure
Schedule, no claim has been asserted by any person to the ownership of or right
to use any such patent, trademark, trade name, copyright, service ▇▇▇▇,
technology, know-how, or process or challenging or questioning the validity or
effectiveness of any such license or agreement, and the Company knows of no
valid basis for any such claim. To the knowledge of the Company and each
Shareholder, except as disclosed in Section 2.20 of the Company Disclosure
Schedule, each of the foregoing is valid and subsisting, has not been canceled,
abandoned, or otherwise terminated, and, if applicable, has been duly issued or
filed.
2.21 Contracts. Set forth in Section 2.21 of the Company Disclosure
Schedule are complete and accurate lists of the following contracts and
commitments (including summaries of oral contracts) to which the Company is a
party or bound:
(a) Contracts with any labor union;
(b) Employee benefit plans or contracts;
(c) Employment or similar contracts, including confidentiality
agreements and agreements to assign inventions, patents and copyrights, and
consulting agreements (other than those entered into in the ordinary course
of business);
(d) Leases, whether as lessor or lessee, involving annual rental
payments in excess of $7,500, that are not terminable at will or upon
notice of 30 days or less by the Company;
(e) Loan agreements, mortgages, indentures, instruments of
indebtedness or commitments involving indebtedness for borrowed money or
money loaned to others in excess of $7,500, but excluding intercompany
items;
(f) Guaranty or suretyship, performance bond, indemnification, or
contribution agreements involving obligations in excess of $7,500, but
excluding intercompany items;
(g) Contracts with customers or suppliers that involve aggregate
payments to or by the Company of more than $15,000, and that are not
terminable at will or upon notice of 90 days or less by the Company;
(h) Distribution, marketing, dealership, sales, or agency agreements
material to the Company that are not terminable at will or upon notice of
30 days or less by the Company;
(i) Joint venture, partnership, or other agreements evidencing an
ownership interest or a participation in or sharing of profits;
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(j) Contracts containing noncompetition covenants, covenants to
register securities, or negative or restrictive financial covenants that
are not terminable at will or upon notice of 30 days or less by the
Company;
(k) Voting agreements relating to securities of the Company (whether
or not the Company is a party thereto;
(l) Insurance policies involving annual premium payments of more than
$750;
(m) Powers of attorney; and
(n) Contracts between the Company and any of the Shareholders, their
spouses or any affiliates or relatives thereof; and
(o) Other contracts not made in the ordinary course of business or
that, in the reasonable judgment of the Shareholders, are material to the
businesses, operations, assets, or financial condition of the Company.
No contract or commitment listed in Section 2.21 of the Company Disclosure
Schedule has been amended or modified or the rights and obligations evidenced
thereby otherwise affected in a manner materially adverse to the Company, except
by an instrument which is also included in such listing, and each contract or
commitment, as so amended, modified or affected, contains all material
provisions with respect to the subject matter thereof. The Company and the
Shareholders have furnished or made available to Tyler accurate and complete
copies of all of the contracts, commitments or instruments listed in Section
2.21 of the Company Disclosure Schedule. Except as set forth in Section 2.21 of
the Company Disclosure Schedule or with respect to contracts not material to the
businesses, operations, assets or financial condition of the Company, (i) to the
knowledge of the Company and the Shareholders, all such contracts are valid,
binding, subsisting, and enforceable in all material respects; (ii) to the
knowledge of the Company and the Shareholders and in their good faith belief the
Merger will not affect the continuance in full force and effect of such
contracts; and (iii) there is no material dispute among the parties to any such
contract and no material penalty has been incurred with respect thereto. Neither
the Company nor any Shareholder has received notice of any plan or intention of
any other party to any such contract or agreement to exercise any right to
cancel or terminate any such contract or agreement, and neither the Company nor
any Shareholder knows of any fact that would justify the exercise of such right.
Neither the Company nor any Shareholder currently contemplates, person or entity
currently contemplates, any amendment or change to any of the contracts or
agreements referred to in Section 2.21 of the Company Disclosure Schedule.
Except as disclosed in Section 2.21 of the Company Disclosure Schedule, none of
the Company's customers or suppliers, that during the fiscal year ended October
31, 1996 accounted for as much as 2% of consolidated sales or purchases of the
Company, has refused, or communicated that it will or may refuse, to purchase or
supply goods or services, as the case may be, or has communicated that it will
or may substantially reduce
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the amount of goods or services that it is willing to purchase from, or sell
to, the Company after the date hereof.
2.22 Litigation and Claims. Except as described in Section 2.22 of the
Company Disclosure Schedule, neither the Company nor any Shareholder is a party
to, and the businesses or assets of the Company are not the subject of or
affected by, any pending or to the knowledge of the Company or any Shareholder,
threatened suit, claim, action, or litigation with any party or any
administrative, arbitration, or other governmental proceeding, investigation, or
inquiry, or any pending change in any regulations, statutes or ordinances, which
would, severally or in the aggregate, have a material adverse effect on the
businesses, results of operations, assets, or the condition (financial or
otherwise) of the Company. Except as described in Section 2.22 of the Company
Disclosure Schedule, to the knowledge of the Company or any Shareholder, no
suit, claim, action or demand is currently pending, has been made or filed, or
is or has been threatened or contemplated by any person or entity, and there
exists no judgment or order (whether or not the Company is a party to any of the
foregoing) regarding or affecting the ownership, disclosure, copying, possession
or utilization by the Company of the assets reflected in the books and records
of the Company.
2.23 Judgments, Decrees, and Orders in Restraint of Business. The Company
is not a party to or subject to any judgment, order, or decree entered in any
suit or proceeding brought by any governmental agency or by any other person
enjoining it in respect of any business practice or the acquisition of any
property or the conduct of its business.
2.24 No Violation of Any Instrument. Except as disclosed in Section 2.24
of the Company Disclosure Schedule, the Company is not in violation of or
default under nor, to the knowledge of the Company or any Shareholder, has any
event occurred that, with or without the giving of notice, lapse of time or the
occurrence of any other event, would constitute a violation of or default
under, or permit the termination or the acceleration of maturity of, or result
in the imposition of a lien, claim, or encumbrance upon any property or asset
of the Company pursuant to, the articles or certificate of incorporation or
bylaws of the Company or any note, bond, indenture, mortgage, deed of trust,
evidence of indebtedness, loan or lease agreement, or other agreement or
instrument (including with customers) listed or required to be listed in
Section 2.21 of the Company Disclosure Schedule, or any judgment, order,
injunction, or decree, to which it is a party, by which it is bound, or to
which any of its assets is subject, which would have a material adverse effect
on the businesses, operations, assets or financial condition of the Company.
2.25 Compliance With Laws. The Company is substantially in compliance with
all laws applicable to their businesses, where failure so to comply would have a
material adverse effect on the businesses, operations, assets, prospects, or
financial condition of the Company.
2.26 Compensation and Benefit Plans.
(a) Section 2.26 of the Company Disclosure Schedule includes a complete and
accurate list of all pension, profit sharing, Section 401(k), thrift-savings,
simplified employee
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pension, excess benefit plan, deferred compensation, incentive compensation,
stock bonus, stock option, restricted stock, cash bonus, employee stock
ownership, severance pay, golden parachute, cafeteria, flexible compensation,
life insurance, medical, dental, disability, welfare, or vacation plans or
arrangements of any kind and any other Employee Pension Benefit Plan or
Employee Welfare Benefit Plan (as such terms are defined in the Employee
Retirement Income Security Act of 1974, as amended "ERISA") in which employees
or former employees of the Company participate (collectively, the "Benefit
Plans").
(b) The Company does not participate currently in and has never
participated in, and is not required currently to and has never been required to
contribute to or otherwise participate in, any "multi-employer plan," as defined
in Sections 3(37)(A) and 4001(a)(3) of ERISA and Section 414(f) of the Code. The
Company does not participate currently in and has never participated in, and is
not required currently to and has never been required to contribute to or
otherwise participate in, any plan, program or arrangement subject to Title IV
of ERISA.
(c) No former employee of the Company is entitled, and no current employee
will be entitled after termination of employment, to participate in any Employee
Welfare Benefit Plan as defined in ERISA, other than participation required to
be permitted by the Company under Section 4980B of the Code and Sections 601 to
609 of ERISA.
(d) The Company and the Shareholders have delivered to Tyler true, correct
and complete copies of the Benefit Plans and each applicable summary plan
description and the most recent Form 5500s applicable to such Benefit Plans.
Section 2.26 of the Company Disclosure Schedule sets forth the costs
attributable to each Benefit Plan determined on an annual basis. Except as
reflected or reserved against on the Company Balance Sheet, there is no unfunded
liability with respect to any Benefit Plan. None of the assets of the Company's
Benefit Plans are invested in any property constituting employer real property
or employer security within the meaning of Section 407(d) of ERISA.
(e) Each Employee Pension Benefit Plan sponsored, maintained or contributed
to by the Company is qualified under Section 401(a) of the Code; all related
trusts are exempt from federal income tax under Section 501(a) of the Code; each
such plan has received a determination letter from the IRS stating that the plan
is qualified under Section 401(a) of the Code and all related trusts are exempt
from federal income tax under Section 501(a) of the Code (which determination
letter includes all statutory and regulatory provisions of the Tax Reform Act of
1986 and subsequent legislation for which a determination letter may be
obtained); and to the knowledge of the Company, nothing has occurred since the
date of the last such determination which resulted in, or is likely to result
in, the revocation of such determination. A copy of the latest determination
letter applicable to any Employee Pension Benefit Plan has been delivered to
Tyler.
(f) Each of the Benefit Plans has been administered in material compliance
with its underlying documentation, the requirements of ERISA, the Code and all
other applicable laws. All returns required to be made under ERISA and the Code
with respect to the Benefit Plans have
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been timely filed and the Company has made all contributions required under the
terms of any Benefit Plan (including, but in no way limited to, employer
matching contributions and non-elective contributions and the deposit of
elective deferrals as such terms are defined in the Code) for all periods
through and including the date hereof.
(g) To the knowledge of the Company, there are not now, nor have there ever
been, any transactions involving the Benefit Plans or any fiduciary or
administrator thereof which are prohibited under ERISA or the Code or for which
an individual, class or statutory exemption is not available.
(h) There are no pending or, to the knowledge of the Company, any
threatened claims by or on behalf of the Benefit Plans, the United States
Department of Labor, the Internal Revenue Service, or any current or former
employee of the Company or beneficiary of such current or former employee
alleging a breach of any fiduciary duties or a violation of applicable state or
federal law which could result in liability on the part of the Company, or a
Benefit Plan under ERISA or any other law, nor, to the knowledge of the Company,
is there any basis for such a claim and neither the Company, nor, to the
knowledge of the Company, any administrator or fiduciary of any Benefit Plan (or
agent of the foregoing) has engaged in any transaction or acted or failed to act
in any manner which would subject the Company to any liability for a breach of
fiduciary duty under ERISA. The transactions contemplated by this Agreement
(either alone or together with any other event) will not (i) terminate or modify
the provisions of any Benefit Plan or (ii) trigger an event under any Benefit
Plan or employer benefit arrangement or law that will result in any payment
(whether of severance pay or otherwise) becoming due from the Company.
2.27 Labor Relations.
(a) To the knowledge of the Company or the Shareholders, the Company (i) is
in substantial compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment (including occupational
health and safety), nondiscrimination, and wages and hours and (ii) are not
engaged in any unfair labor practice, that in any such case would have a
material adverse effect on the businesses, operations, assets or financial
condition of the Company.
(b) Except as disclosed in Section 2.27 of the Company Disclosure Schedule,
there is no unfair labor practice complaint against Company pending or, to the
knowledge of the Company or any Shareholder, threatened before the National
Labor Relations Board.
(c) There is no strike, labor dispute, slowdown, stoppage, or other
material interference with or impairment by labor of the business of the Company
actually pending or, to the knowledge of the Company or any Shareholder,
threatened or contemplated against or directly affecting the Company.
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(d) To the knowledge of the Company or the Shareholders, no question of
union representation exists respecting the employees of the Company and no union
organizing activities are taking place.
(e) Since August 31, 1997, no key employees of the Company have been
terminated or have resigned their employment.
2.28 Adequate Insurance. The Company maintains insurance coverage that the
Company and the Shareholders believe is reasonably adequate to protect the
assets and operations of the Company, and is sufficient for material compliance
with all requirements of law and all agreements to which the Company is a party.
No notice of any termination or threatened termination of such policies has been
received by the Company and, to the knowledge of the Company or the
Shareholders, such policies are valid, binding, and enforceable.
2.29 Contracts with Affiliates and Others. Except as set forth in Section
2.29 of the Company Disclosure Schedule, no director or officer of the Company,
nor any person who is a spouse or descendant of such director or officer, has
any direct or indirect relationship with any customer or supplier of, or other
contracting party with, the Company (other than as a director, officer, or
shareholder of the Company) that would be required to be disclosed in a proxy
statement relating to the election of directors filed under the Securities
Exchange Act of ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇ ▇▇▇").
2.30 Revenue Recognition. The Company has not recognized and does not
recognize revenues from customers in advance of performing the services or
furnishing the products for which the revenues were or are received.
2.31 Certain Fees. Except as disclosed in Section 2.31 of the Company
Disclosure Schedule, neither the Company nor any officer, director, or employee
of the Company has employed any broker or finder or incurred any liability for
any brokerage fees, commissions, or finders' fees in connection with the
transactions contemplated hereby. Tyler recognizes and acknowledges that,
subject to the Company's satisfaction of the representation and warranty in
Section 2.13(b) hereof, the fees shown in Section 2.31 of the Company Disclosure
Schedule shall be paid by the Company at Closing.
2.32 Environmental Matters. To the knowledge of the Company or the
Shareholders:
The Company and its property (whether real, personal, owned, leased,
managed or operated) (collectively, "Business Facilities") are in compliance
with applicable laws, rules, regulations, ordinances, orders or guidance
documents now in effect of any applicable governmental authority or any judicial
or administrative decision relating thereto that relate in any manner to health,
Materials of Environmental Concern, the environment, or a community's right to
know (collectively, "Environmental Laws"). There are no Materials of
Environmental Concern on any Business Facility in any quantity or concentration
exceeding any limitation or standard established pursuant to
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Environmental Laws. There are no actual or threatened claims, demands,
allegations, actions, suits, investigations, notices, or proceedings against or
relating to the Company or any of its Business Facilities relating to or
arising out of the use, presence, or handling of Materials of Environmental
Concern or compliance with Environmental Laws (collectively, "Environmental
Claims"), and there is no basis for any such Environmental Claims. There are no
events, conditions, circumstances, facts, activities, practices, incidents or
plans relating to or arising out of the operations of the Company which will
prevent or interfere with compliance with Environmental Laws by Tyler after the
Closing, or which may give rise to any common law or statutory liability under
Environmental Laws or form the basis of an Environmental Claim against the
Company, or any of their respective Business Facilities.
"Materials of Environmental Concern" means: (i) those substances included
within the statutory and/or regulatory definitions of "hazardous substance,"
"hazardous waste," "extremely hazardous substance," "regulated substance,"
"hazardous materials," or "toxic substances," under any Environmental Law; (ii)
any material, waste or substance which is or contains: (A) petroleum, oil or a
fraction or constituent thereof, (B) asbestos, (C) polychlorinated biphenyls,
(D) formaldehyde, (E) explosives, or (F) radioactive materials (including NORM);
(iii) solid wastes (as defined under the Resource Conservation and Recovery Act,
42 U.S.C. sec.6901 et seq., and its implementing regulations) that post imminent
and substantial endangerment to health or the environment; (iv) any material,
waste or substance designated classified or regulated as a "Class I" or "Class
II" waste under Title 30 of the Texas Administrative Code; and (v) such other
substances, materials, or wastes that are or become classified or regulated as
hazardous or toxic under any applicable federal, state or local law or
regulation. To the extent that the laws or regulations of any applicable state
or local jurisdiction establish a meaning for any term defined herein through
reference to federal Environmental Laws which is broader than the meaning under
such federal Environmental Laws, such broader meaning shall apply.
2.33 Accuracy of Information Furnished. No representation or warranty by
the Company or the Shareholders in this Agreement (including the Company
Disclosure Schedule) or any other agreement or document executed or to be
executed by the Company or the Shareholders in connection herewith contains or
will contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not false or misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇
▇▇▇▇▇ and Sub jointly and severally represent and warrant to the Company
and the Shareholders as follows:
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3.1 Organization and Good Standing of Tyler. Tyler is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware. Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas.
3.2 Foreign Qualification. Tyler is duly qualified or licensed to do
business as a foreign corporation and in good standing in those jurisdictions
set forth in Section 3.2 of the schedule delivered by Tyler concurrently with
the execution of this Agreement (the "Tyler Disclosure Schedule"). Tyler is duly
qualified or licensed to do business as a foreign corporation in every
jurisdiction where the failure so to qualify would have a material adverse
effect on the businesses, operations, assets, or financial condition of Tyler
and the Tyler Subsidiaries (as defined in Section 3.7), taken as a whole. For
purposes of this Section 3.2, no material adverse affect shall be deemed to have
occurred as a result of non-payment of state or local franchise taxes not
exceeding $37,500 in the aggregate.
3.3 Power and Authority to Conduct Business. Each of Tyler and Sub has the
corporate power and authority, and possess all licenses and permits, required by
governmental authorities to own, lease, and operate its properties and assets
and to carry on its business as currently being conducted, except where the
failure to possess such license or permit does not and would not have a material
adverse effect on the business, operations, assets or financial condition of
Tyler and the Tyler Subsidiaries, taken as a whole.
3.4 Authority to Consummate Merger. Each of Tyler and Sub has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and the other agreements or documents executed or required
to be executed by it in connection with this Agreement and, subject to obtaining
the approval of the stockholders of Tyler, the execution, delivery and
performance by each of Tyler and Sub of this Agreement and the other documents
executed or to be executed by it in connection with this Agreement have been
duly authorized by all necessary corporate action.
3.5 Binding Effect. This Agreement and the other documents executed or
required to be executed by Tyler or Sub in connection with this Agreement have
been or will have been duly executed and delivered by Tyler or Sub and are or
will be, when executed and delivered, the legal, valid, and binding obligations
of Tyler or Sub executing the same, enforceable in accordance with their terms
except that:
(a) enforceability may be limited by bankruptcy, insolvency, or other
similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability; and
(c) rights to indemnification under Section 10.5 may be limited by
considerations of public policy.
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3.6 Compliance with Other Instruments. Subject to obtaining the approval
of the stockholders of Tyler and except as disclosed in Section 3.6 of the
Tyler Disclosure Schedule, neither the execution and delivery by Tyler or Sub
of this Agreement or the other agreements or documents executed or required to
be executed by Tyler or Sub in connection herewith, nor the consummation by
Tyler or Sub of the transactions contemplated hereby and thereby will (i)
conflict with the articles of incorporation or bylaws of Tyler or Sub, (ii)
assuming satisfaction of the requirements set forth in clause (iii) below,
violate any provision of law applicable to Tyler or any of the Tyler
Subsidiaries; (iii) except for (A) requirements arising out of the HSR Act, (B)
requirements of federal and state securities laws, and (C) the filing of
articles of merger in accordance with the TBCA, require any consent,
authorization, permit, license or approval of, or declaration, registration or
filing with or notice to, any person or governmental body or authority,
domestic or foreign, under any provision of law applicable to Tyler or any of
the Tyler Subsidiaries; or (iv) require any consent, approval or notice under,
violate, breach, be in conflict with, or constitute a default (or an event
that, with notice or lapse of time or both, would constitute a default) under,
or permit the termination or the acceleration of maturity of, or result in the
imposition of any lien, claim, or encumbrance upon any property or asset of
Tyler or any Tyler Subsidiary pursuant to any note, bond, indenture, mortgage,
deed of trust, evidence of indebtedness, loan or lease agreement, other
agreement or instrument or any judgment, order, injunction, or decree by which
Tyler or any Tyler Subsidiary is bound, to which any of them is a party, or to
which any of their assets is subject, except for those violations and breaches
that would not have a material adverse effect on the businesses, operations,
assets or financial condition of Tyler and the Tyler Subsidiaries, taken as a
whole.
3.7 Capitalization of Tyler
(a) The authorized capital stock of Tyler consists of 50,000,000 shares of
Tyler Common Stock, and 1,000,000 shares of preferred stock, par value $10.00
per share ("Tyler Preferred Stock"), of which 22,007,921 shares of Tyler Common
Stock and no shares of Tyler Preferred Stock were issued and outstanding as of
September 30, 1997 and 1,301,356 shares of Common Stock were held in treasury.
All of the issued and outstanding shares of Tyler Common Stock have been duly
authorized and are validly issued and are fully paid and nonassessable. There
are no shares of the capital stock of Tyler held in its treasury or in the
treasury of any corporation of which Tyler is the record or beneficial owner,
directly or indirectly, of 50% or more of the capital stock (each such
corporation being referred to as a "Tyler Subsidiary"). The shares of Tyler
Common Stock to be issued in the Merger, when issued and delivered, will be duly
authorized, validly issued, fully paid, and nonassessable.
(b) As of the date hereof, the authorized capital stock of Sub consists of
1,000 shares of common stock, par value $0.01 per share, all of which are
validly issued, fully paid and nonassessable and are owned by Tyler.
(c) Except as described in Section 3.7 of the Tyler Disclosure Schedule and
in the Tyler Financial Statements (as hereinafter defined), there is no
outstanding subscription, contract, convertible or exchangeable security,
option, warrant, call, or other right obligating Tyler or any
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Tyler Subsidiary to issue, sell, exchange, or otherwise dispose of, or to
purchase, redeem, or otherwise acquire shares of, or securities convertible
into or exchangeable for, capital stock of Tyler.
3.8 Commission Filings; Financial Statements. Section 3.8 of the Tyler
Disclosure Schedule lists all reports, registration statements and other
filings, together with any amendments required to be made with respect thereto,
that Tyler has filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), and the Exchange Act since October 1, 1995. All reports, registration
statements and other filings filed by Tyler with the Commission since October 1,
1995 through the date of this Agreement, together with any amendments thereto,
are sometimes collectively referred to as the "Tyler Commission Filings." Tyler
has heretofore provided the Company and the Shareholders true, correct and
complete copies of the Tyler Commission Filings. As of the respective dates of
their filing with the Commission, the Tyler Commission Filings complied in all
material respects with the Securities Act, the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading.
Each of the consolidated financial statements (including any related notes
or schedules) included in or incorporated by reference into the Tyler
Commission Filings ("Tyler Financial Statements") was, and each of the
consolidated financial statements to be included in the Proxy Statement (as
defined in Section 6.2) (except for those financial statements of the Company
furnished by or on behalf of the Company or the Shareholder to Tyler
specifically for use therein) will be, prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
noted therein or in the notes or schedules thereto), and fairly present or will
fairly present, as the case may be, the consolidated financial position of
Tyler and its consolidated subsidiaries as of the dates thereof and the results
of operations, cash flows and changes in stockholders' equity for the periods
then ended (subject, in the case of the unaudited interim financial statements,
to normal year-end audit adjustments). Since December 31, 1996, there has been
no change in accounting principles applicable to, or methods of accounting
utilized by, Tyler and the books and records of Tyler and the Tyler
Subsidiaries have been and are being maintained in accordance with all
applicable legal and accounting requirements and good business practice,
reflect only valid transactions, are complete and correct in all material
respects, and accurately reflect in all material respects the basis for the
consolidated financial position and consolidated results of operations and cash
flows of Tyler and its consolidated subsidiaries set forth in the Tyler
Financial Statements.
3.9 Absence of Certain Changes. Since June 30, 1997, Tyler has not (except
as contemplated by this Agreement or as may result from the transactions
contemplated by this Agreement or as described in the Tyler Disclosure
Schedule):
(a) suffered any change in its business, results of operations,
working capital, assets, liabilities, or financial condition or the manner
of conducting its business other than changes
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that, individually or in the aggregate, have not had a material adverse
effect on the businesses, operations, assets or financial condition of
Tyler and the Tyler Subsidiaries, taken as a whole;
(b) entered into any material commitment or transaction other than in
the ordinary course of business;
(c) written up, written down, or written off the book value of any
material amount of assets;
(d) declared, paid, or set aside for payment any dividend or
distribution with respect to the capital stock of Tyler; or
(e) redeemed, purchased, or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of the capital stock or
securities of Tyler or any rights to acquire such capital stock or
securities, other than normal or periodic purchases, sales and grants under
provisions of existing employee benefit plans and programs of Tyler.
3.10 No Material Undisclosed Liabilities. To the knowledge of Tyler, there
is no liability or obligation of Tyler and the Tyler Subsidiaries of any nature,
whether absolute, accrued, contingent, or otherwise, other than:
(a) the liabilities and obligations that are fully reflected, accrued,
or reserved against in the unaudited consolidated balance sheet of Tyler
and its consolidated subsidiaries as of June 30, 1997, for which the
reserves are appropriate and reasonable, or incurred in the ordinary course
of business and consistent with past practices since June 30, 1997;
(b) the loss contingencies set forth in Section 3.10 of the Tyler
Disclosure Schedule;
3.11 Litigation and Government Claims. Except as described in Section 3.11
of the Tyler Disclosure Schedule, neither Tyler nor any Tyler Subsidiary is a
party to, and the business or assets of Tyler and the Tyler Subsidiaries are not
the subject of, any pending or, to the knowledge of Tyler, threatened suit,
claim, action, or litigation with any party, or any administrative, arbitration,
or other governmental proceeding, investigation, or inquiry, in which the amount
involved and not covered by insurance exceeds $250,000. In the opinion of Tyler
and its management, none of such pending or threatened matters would, severally
or in the aggregate, have a material adverse effect on the
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business, operations, assets or financial condition of Tyler and the Tyler
Subsidiaries, taken as a whole.
3.12 No Violation of Any Instrument. Except as disclosed in Section 3.12
of the Tyler Disclosure Schedule, neither Tyler nor any Tyler Subsidiary is in
violation of or default under nor, to the knowledge of Tyler, has any event
occurred that, with the lapse of time or the giving of notice or both, would
constitute a violation of or default under, or permit the termination or the
acceleration of maturity of, or result in the imposition of a lien, claim, or
encumbrance upon any property or asset of Tyler or any Tyler Subsidiary pursuant
to the articles or certificate of incorporation or bylaws of Tyler or any Tyler
Subsidiary or any note, bond, indenture, mortgage, deed of trust, evidence of
indebtedness, loan or lease agreement, or other agreement or instrument or any
judgment, order, injunction, or decree to which it is a party, by which it is
bound, or to which any of its assets is subject, which would have a material
adverse effect on the business, operations, assets or financial condition of
Tyler and the Tyler Subsidiaries, taken as a whole.
3.13 Certain Fees. Neither Tyler nor any officer, director, or employee of
Tyler has has employed any broker or finder or incurred any liability for any
brokerage fees, commissions, or finders' fees in connection with the
transactions contemplated hereby.
3.14 No Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
3.15 Accuracy of Information Furnished. No representation or warranty by
Tyler or Sub in this Agreement (including the Tyler Disclosure Schedule) or any
other agreement or document executed or to be executed by Tyler or Sub in
connection herewith contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact necessary to make the
statements herein or therein, in light of the circumstances under which they
were made, not false or misleading.
ARTICLE 4
JOINT COVENANTS OF THE COMPANY, THE SHAREHOLDERS AND TYLER
4.1 Access; Confidentiality.
(a) During the period pending the Closing Date, the Company shall afford to
Tyler and its officers, employees, accountants, counsel, and other authorized
representatives, full access to and the right to review and make copies of the
Company's assets, properties, books, contracts, commitments, and records, view
their physical properties, and communicate with the key employees of the Company
on a basis reasonably satisfactory to the Company, and will furnish and cause
representatives to furnish promptly to Tyler such additional financial and
operating data and other documents and information (certified if requested and
reasonably susceptible to certification)
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relating to the Company's businesses and properties as Tyler or its duly
authorized representatives may from time to time reasonably request.
(b) During the period pending the Closing Date, Tyler shall afford to the
Company and the Shareholders and their accountants, counsel and other authorized
representatives the same rights of access to and inspection of the books,
records, properties, contracts and personnel of Tyler as those afforded to Tyler
and its representatives in Section 4.1(a) above.
(c) Notwithstanding any such investigation by Tyler, the Company, or the
Shareholders, or any information obtained pursuant thereto, it or he shall be
entitled to rely in full upon the accuracy of the representations and warranties
of the other party or parties contained in this Agreement and upon its or his
representations at Closing as to compliance with or performance of any covenants
made by it or him in this Agreement. Tyler, the Company, or the Shareholders
shall have no obligation to investigate any such matters and, if any such
matters are investigated, shall have no obligation to the other party or parties
with respect to information obtained thereby except as provided in Section 12.1
of this Agreement.
(d) The rights and obligations of the Shareholders, the Company and Tyler
pursuant to the Confidentiality Agreement (the "Confidentiality Agreement")
dated September 17, 1997 by and among the Shareholders, the Company and Tyler
will survive the execution and delivery of this Agreement, and all information
obtained by the Shareholders, the Company and Tyler or any of their respective
Representatives (as defined in the Confidentiality Agreement) pursuant hereto
shall be deemed "Information" as that term is defined in the Confidentiality
Agreement, and shall be subject to the provisions of the Confidentiality
Agreement, except to the extent that Tyler is advised by counsel that disclosure
of any such Information, including the existence of the Confidentiality
Agreement, is required by law in connection with the Merger.
4.2 Notice of any Material Change. Each of the Company and Tyler shall,
promptly after the first notice or occurrence or failure to occur thereof but
not later than the Closing Date, supplement or amend its Disclosure Schedule to
disclose the occurrence of any event or the existence of any state of facts that
would:
(a) make any of its representations and warranties in this Agreement
untrue in any material respect or constitute a material failure of such
party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder;
(b) make it necessary to amend the Proxy Statement in order to render
the statements therein not misleading or to comply with applicable law; or
(c) otherwise constitute a material adverse change in the respective
businesses, results of operations, working capital, assets, liabilities or
condition (financial or otherwise) of Tyler and the Tyler Subsidiaries,
taken as a whole, or the Company. Subject to the provisions of Section 12.1
of this Agreement, no supplement or amendment to any Disclosure Schedule
shall have any
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effect for the purpose of determining the satisfaction of or compliance
with the conditions to the obligations of the parties set forth elsewhere
in this Agreement.
4.3 Monthly Financial Statements. During the period pending the Closing
Date, each of Tyler and the Company shall furnish to the other its unaudited
consolidated balance sheet and related statements of operations, stockholders'
equity, and cash flows and any supporting schedules for the accounting periods
ending on or about the last day of each such month, promptly after they are
available, but not later than 30 days after the close of such accounting period.
4.4 Antitrust Notification. Within 10 days after the date hereof, Tyler
and the Company shall each file with the Federal Trade Commission ("FTC") and
the Antitrust Division of the U.S. Department of Justice ("DOJ") any
Notification and Report Form required to be filed pursuant to the HSR Act, and
shall timely supply any supplemental information that may be reasonably
requested by the FTC or DOJ in connection therewith. The Company and Tyler shall
furnish to each other such necessary information and reasons under the HSR Act.
The Company and Tyler shall furnish to each other copies of all correspondence,
filings, or communications (or memoranda setting forth the substance thereof),
between them or their representatives and the FTC or DOJ.
4.5 Tax Matters.
(a) Each Shareholder and the Company shall prepare and timely file all tax
returns and amendments thereto required to be filed by the Company on or before
the Closing Date. Tyler shall have a reasonable opportunity to review all such
tax returns of the Company and amendments thereto.
(b) Tyler or the Surviving Corporation, as appropriate, shall prepare and
file all tax returns of the Company that are due to be filed after the Closing
Date and relate to tax periods of the Company ending on or before the Closing
Date and shall pay all income taxes shown on such returns as due and owing. The
Shareholders shall reimburse Tyler for taxes of the Company with respect to such
periods within fifteen (15) days after payment by Tyler or the Company of such
taxes to the extent such taxes are not reflected in the reserve for tax
liability (other than any reserve for deferred taxes established to reflect
timing differences between book and tax income) shown on the face of the Company
Balance Sheet at Closing.
(c) Each Shareholder covenants and agrees that he will be fully responsible
for, and indemnifies and holds harmless Tyler and the Company from and against,
any and all claims, demands, losses, obligations and liabilities for income
taxes of the Company, any penalties and interest with respect thereto, and any
costs and expenses (including reasonable attorneys' and accountants' fees) of
Tyler or the Company incurred as an incident thereto, relating to tax periods of
the Company ending on or before the Closing Date. Tyler agrees that each
Shareholder shall have the sole right to contest, resolve and defend, at his
cost, against any
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assessment for additional income taxes, notices of income deficiency or other
adjustment of income taxes of the Company made or proposed by any taxing
authority for such periods. Each Shareholder shall be entitled to retain such
tax representatives, subject to the consent of Tyler (which shall not be
unreasonably withheld), as he selects to represent him in resolving any such
income tax controversies or disputes for tax periods ending on or before the
Closing Date, and Tyler or the Company, as appropriate, shall execute and
deliver powers of attorney, limited to such tax periods, in favor of each
Shareholder or his tax representatives as necessary to effectuate the
provisions of this Section 4.5.
(d) Subject to Closing, and specifically reserving any rights or remedies
Tyler or the Surviving Corporation may have for breach of the representations
and warranties of Shareholders contained in Article 2 of this Agreement, Tyler
covenants and agrees that either it or the Surviving Corporation, as
appropriate, will be fully responsible for, and Tyler indemnifies and holds
harmless each Shareholder from and against, any and all claims, demands, losses,
obligations and liabilities for income taxes of the Surviving Corporation, any
penalties and interest with respect thereto, and any costs and expenses
(including reasonable attorneys' and accountants' fees) of each Shareholder
incurred as an incident thereto, relating to tax periods of the Surviving
Corporation ending after the Closing Date; such responsibility of and indemnity
by Tyler shall include the amounts of any and all tax consequences or
liabilities attributable to any election by Tyler or the Surviving Corporation
after the Closing to change the tax accounting methods utilized by the Company
applicable to tax periods ending after the Closing Date. Each Shareholder agrees
that Tyler or the Surviving Corporation, as appropriate, shall have the sole
right to contest, resolve and defend, at its cost, against any assessment for
additional income taxes, notice of income tax deficiency or other adjustments of
income taxes of the Surviving Corporation made or proposed by any taxing
authority for tax periods ending after the Closing Date.
(e) All parties hereto agree if requested to reasonably cooperate with one
another and assist in the settlement, compromise, defense or other disposition
of any assessments for additional taxes, notices of deficiency, proposed
adjustments or other income tax disputes or controversies by or with taxing
authorities relating to the Company. Tyler or the Surviving Corporation, as
appropriate, will provide to each Shareholder or his tax representatives prompt
written notification and copies of any communications from or to any taxing
authority received or made by either of them relating to income tax liabilities
of the Company for any tax periods ended on or before the Closing Date. Each
Shareholder or his tax representatives will provide to Tyler prompt written
notification and copies of any communications from or to any taxing authority
received or made by either of them relating to income tax liabilities of the
Company. Subsequent to any such notice, Tyler and each Shareholder shall keep
the other fully advised of the status and developments with respect to such
proposed or asserted income tax liability, and of the terms of any settlement or
other final resolution thereof. Failure by any party to notify any other party,
as provided herein, shall not relieve the party otherwise entitled to such
notice from its obligations contained in this Section 4.5 of this Agreement;
provided, however, that the party entitled to such notice may pursue other
remedies available to it at law or in equity for breach, if any, of the covenant
to notify contained herein.
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(f) No Shareholder shall, in any capacity, agree to any audit adjustments
by a taxing authority, or settle, compromise or otherwise agree to a resolution
of any dispute or controversy, with respect to the income tax liability of the
Company if the effect of the adjustment or the terms of the settlement increases
the income tax liabilities (including loss of carry forwards) of the Company:
(i) for the taxable period commencing on November 1, 1996 and ending
on the Closing Date to an amount that, when added to the income taxes paid
for such period by Tyler or the Company in accordance with Section 4.5(b)
above (excluding the amount of any such income tax liability attributable
to any election by Tyler or the Company after the Closing to change tax
accounting methods utilized by the Company applicable to tax periods ending
on or after November 1, 1996) exceeds the tax liability (excluding deferred
taxes) accrued on the books and records of the Company for the period
commencing November 1, 1996 and ending on the Closing Date; or
(ii) for taxable periods commencing after the Closing Date (but
including the amount of any such income tax liability attributable to any
election by Tyler or the Company after the Closing to change tax
accounting methods utilized by the Company applicable to tax periods
ending on or after November 1, 1996), unless the Shareholder or his tax
representatives shall have in advance thereof consulted with Tyler and
shall have agreed on mutually acceptable terms to pay to Tyler or the
Surviving Corporation, as appropriate, the additional income taxes
(subject to the limitation set forth in Subsection (i) above) that would
be owed by Tyler or the Company for all periods subsequent to October 31,
1996 as a result of such settlement. In any event, each Shareholder shall
pay to Tyler or the Surviving Corporation, as appropriate, the amount of
any increase in income tax liabilities (including loss of carry forwards)
of the Company for all tax periods ending on or after the Closing Date
(subject to the limitation set forth in subsection (i) above) that results
from a final administrative or judicial determination adjusting the income
tax liabilities of the Company for any period ending on or before the
Closing Date, and such payment or payments shall be made at the time Tyler
or the Surviving Corporation files an income tax return with a taxing
authority covering a tax period that is affected by such increase in
income tax liability.
(g) Each Shareholder agrees that, all proceeds received from any refund of
taxes arising out of any carry back to prior tax periods of any net operating
loss of the Company for tax periods ending on or after the Closing Date,
including any benefits derived from such carry backs to otherwise reduce an
income tax liability for such prior periods, shall belong to Tyler or the
Company. At the request of Tyler or the Company and at their expense, each
Shareholder shall promptly file any and all necessary documents or prosecute all
other necessary proceedings to claim and recover such refunds.
(h) At the request of any Shareholder, Tyler or the Company, as
appropriate, shall submit for filing with the Internal Revenue Service a Request
for Prompt Assessment of Income Taxes pursuant to Section 6501(d)
of the Internal Revenue Code for all open tax periods through
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the Closing Date for which a federal income tax return or returns or amended
return or returns have been filed by the Company.
(i) From and after the Closing Date, no Shareholder will (a) extend the
statute of limitations; (b) make or change any elections affecting the Company;
(c) change a method of accounting, in each instance with respect to tax
liabilities of the Company relating to periods ending on or prior to the Closing
Date, without the prior written consent of Tyler (which consent shall not be
unreasonably withheld).
(j) To the extent the provisions of this Section 4.5 and the provisions of
Article 11 of this Agreement are inconsistent or conflict, the provisions of
this Section 4.5 shall be determinative of the rights and obligations of the
parties hereto.
(k) All tax sharing agreements or similar agreements with respect to or
involving the Company shall be terminated as of the Closing Date and, after the
Closing Date and the Company shall not be bound thereby or have any liability
thereunder.
4.6 Cooperation Pending Closing. Each of the parties hereto shall use its
reasonable best efforts to:
(a) proceed promptly to make or give the necessary applications,
notices, requests, and filings in an effort to obtain at the earliest
practicable date and, in any event, before the Closing Date, the approvals,
authorizations, and consents of third parties necessary to consummate the
transactions contemplated by this Agreement;
(b) cooperate with and keep the other informed in connection with this
Agreement; and
(c) take such actions as the other party may reasonably request to
consummate the transactions contemplated by this Agreement and use its
reasonable best efforts and diligently attempt to satisfy, to the extent
within its control, all conditions precedent to the obligations to close
this Agreement.
ARTICLE 5
COVENANTS OF THE COMPANY AND THE SHAREHOLDERS
5.1 Conduct of Business Prior to Closing Date. During the period pending
the Closing Date (or other indicated date), the Company and the Shareholders.
(a) shall use its reasonable best efforts to conduct the operations of
the Company in the ordinary and usual course of business consistent with
past and current practices, and to
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maintain marketing organizations intact and to preserve the goodwill of
their employees, representatives, suppliers, and customers;
(b) shall confer upon request of Tyler with one or more
representatives of Tyler to report material operational matters and the
general status of ongoing operations;
(c) shall notify Tyler of any emergency or other change in the normal
course of the Company's businesses and of any governmental complaints,
investigations, or hearings that are pending (or that the same may be
contemplated) if such emergency, complaint, investigation, or hearing would
be material to the Company's businesses or properties;
(d) shall take no action that, and shall not fail to use reasonable
best efforts to take (without material cost) any action the failure to take
which, would cause or permit their representations and warranties contained
in this Agreement to be untrue in any material respect on the Closing Date;
and
(e) except as may be permitted or required by this Agreement, shall
not directly or indirectly do any of the following: (i) issue, sell,
pledge, dispose of or encumber, (A) any capital stock of the Company or (B)
other than in the ordinary course of business and consistent with past
practice, any assets of the Company; (ii) amend or propose to amend the
respective charters or bylaws of the Company; (iii) split, combine or
reclassify any outstanding capital stock, or, except as provided in Section
5.6 hereof, declare, set aside or pay any dividend or distribution payable
in cash, stock, property or otherwise with respect to its capital stock
whether now or hereafter outstanding; (iv) redeem, purchase or acquire or
offer to acquire any of the Company's capital stock; or (v) enter into any
contract, agreement, commitment or arrangement with respect to any of the
matters set forth in this Section 5.1(e).
5.2 Employment Agreement. At or before the Closing each of the
Shareholders and the Company shall execute and deliver an Employment and
Noncompetition Agreement in substantially the form of Exhibit B hereto, with
such changes therein prior to execution as may be mutually approved by Tyler and
each Shareholder (the "Employment Agreements"), and providing for the employment
of the Shareholders by the Surviving Corporation after the Closing, covenants by
the Shareholders not to compete with the Surviving Corporation, and
compensation, all as provided therein.
5.3 Noncompetition Agreements. Each Shareholder agrees to use his best
efforts to cause the key management and other employees of the Company
identified by Tyler in Section 5.3 of the Tyler Disclosure Schedule (the
"Employees") to execute and deliver employment, confidentiality and
noncompetition agreements with the Company in a form acceptable to Tyler (the
"Noncompetition Agreements").
5.4 Agreement Not to Negotiate. Pending the Closing, and through the
period ending March 31, 1998 if this Agreement is terminated without closing by
the Company or the Shareholders
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the Company and the Shareholders shall not, either directly or indirectly
through an agent, representative or other person, solicit or authorize any
person to solicit, or initiate or encourage, directly or indirectly, any
proposal for the acquisition of all or any material part of the capital stock,
assets, or business of the Company, or for the merger, consolidation, or other
combination of the Company with any other person or entity, or enter into any
discussions or negotiations for any such proposal, or provide any person with
information or assistance in furtherance of any such proposal, and shall
promptly notify Tyler in writing of all proposals received with respect to such
matters.
5.5 Accuracy of Information Furnished. The information supplied by each
Shareholder to Tyler in writing expressly for inclusion in any documents
(including the Proxy Statement) filed with the Commission in connection with or
as a result of the transactions contemplated hereby, will, at the respective
times such documents are filed with the Commission, not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not false or misleading.
5.6 Regulation S-X Financial Statements. Not later than October 10, 1997,
the Company shall cause to be prepared and shall deliver to Tyler audited
balance sheets of the Company as of October 31, 1996, 1995 and 1994 and the
related audited statements of operations, stockholder's equity, and cash flows
for the years then ended, with notes thereto, prepared in accordance with
United States generally accepted accounting principles and Regulation S-X
("Regulation S-X") promulgated by the Securities and Exchange Commission,
reported upon without exception or qualification by ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇; and the unaudited balance sheet of the Company as of August 31, 1997,
and the related unaudited statements of operations, stockholder's equity, and
cash flows for the ten months then ended, with notes thereto, prepared in
accordance with United States generally accepted accounting principles and
Regulation S-X, reviewed by ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇.
5.7 Termination of Shareholders Agreement. The Shareholders agree to cause
that certain Shareholders Agreement among ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ and the Company to be terminated at or before the Closing. The
Shareholders hereby consent to, and waive any transfer restrictions under the
Shareholders Agreement that would limit, the transfer of all the outstanding
capital stock of the Company to Tyler pursuant to the Merger.
5.8 Pre-Closing Bonuses. Prior to the Closing, the Company shall be
entitled to pay bonuses to employees of the Company for past services rendered,
which bonuses shall not exceed an aggregate of $200,000.
5.9 Form of Merger. The Company, the Shareholders and Tyler may, pursuant
to written amendment to this Agreement, change the form of the Merger to a
merger of the Company with and into Sub, provided such a revised form of Merger
would qualify as a reorganization under Section 386 of the Code.
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ARTICLE 6
COVENANTS OF ▇▇▇▇▇
▇▇▇▇▇ covenants and agrees with the Company and the Shareholders as
follows:
6.1 Conduct Prior to Closing Date. Pending the Closing, Tyler shall:
(a) confer upon request of the Shareholders with one or more
representatives of the Shareholders to report material operational matters
and the general status of ongoing operations of Tyler and the Tyler
Subsidiaries; and
(b) take no action that, and shall not fail to use reasonable best
efforts to take (without material cost) any action the failure to take
which, would cause or permit its representations and warranties contained
in this Agreement to be untrue in any material respect at the Closing.
6.2 Proxy Statement. As promptly as practicable after the execution of
this Agreement, Tyler shall prepare and file with the Commission a proxy
statement (the "Proxy Statement") pursuant to the Exchange Act. Subject to the
fiduciary obligations of the Board of Directors of Tyler under applicable law,
the Proxy Statement shall contain the recommendation of the Board of Directors
of Tyler that the stockholders of Tyler vote to approve the Merger and this
Agreement. Except to the extent required by law (and in any such case only after
three business days' prior notice to the Shareholders), Tyler shall not include
in the Proxy Statement or otherwise make public the amount of compensation
payable to any Shareholder.
6.3 Meetings of Stockholders. Tyler shall promptly take all action
reasonably necessary in accordance with the Delaware General Corporation Law,
the rules of the NYSE and its articles of incorporation and bylaws to convene a
meeting of its stockholders to consider and vote upon the adoption and approval
of the Merger and this Agreement (the "Tyler Stockholders Meeting"). Subject to
its fiduciary obligations under applicable law and in accordance with the
provisions of this Agreement, the Board of Directors of Tyler (i) shall
recommend at such meeting that the stockholders of Tyler vote to adopt and
approve the Merger and this Agreement; (ii) shall use its reasonable efforts to
solicit from stockholders of Tyler proxies in favor of such adoption and
approval; and (iii) shall take all other action reasonably necessary to secure a
vote of its stockholders in favor of the adoption and approval of the Merger and
this Agreement.
6.4 Stock Exchange Listing. Tyler shall use its reasonable best efforts to
cause the shares of Tyler Common Stock to be issued upon consummation of the
Merger to be approved for listing on the NYSE, subject to official notice of
issuance, prior to the Closing Date.
6.5 Guaranties of Company Obligations.
(a) From and after the Closing, Tyler guarantees to each Shareholder,
respectively, and his heirs, successors and assigns, the full and prompt payment
by the Company of
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all amounts that become due and payable to them under or pursuant to the terms
of any Employment Agreement, to be entered into between the Company and the
Shareholder as provided in Section 5.2 of this Agreement, and the timely
performance by the Company of all of the terms, conditions, covenants and
agreements to be performed by the Company under or pursuant to the terms of
said Employment Agreement.
(b) The obligation of Tyler to make any payments or render performance
under this guaranty shall be coextensive with the obligation of the Company to
make payment or render performance under any Employment Agreement, and Tyler
shall be entitled to assert as a defense to or excuse for or delay in any
payment or performance by it the same defenses or excuses for payment or
performance as would be available to the Company. Subject to the foregoing, the
guaranty by Tyler contained herein is absolute and unconditional.
(c) Tyler waives notice of acceptance of this agreement of guaranty, and
waives diligence or presentment on the part of any Shareholder in the
enforcement of any liability, obligation or duty guaranteed hereby.
(d) Tyler agrees that the validity of this agreement of guaranty shall not
in any way be terminated, affected or impaired by reason of any waiver of or
failure to enforce any of the rights or remedies of any Shareholder contained in
any Employment Agreement, or by reason of any extension of time or other
forbearance granted to the Company by any Shareholder.
(e) Tyler agrees that, at the option of any Shareholder, it may be joined
in any action or proceedings commenced against the Company in connection with
and based upon any provisions of the Employment Agreement, and that recovery may
be had against Tyler in such action or proceedings, or in any independent action
or proceedings against Tyler, without requirement that any Shareholder or his
successors or assigns, first assert, prosecute, or exhaust any remedy or claim
against the Company.
(f) In the event of any bankruptcy, reorganization, winding up, or similar
proceedings with respect to the Company, no limitation on its liability under
the Employment Agreement which may now or hereafter be imposed or permitted by
any federal, state, or other statute, law regulation, or judicial or
administrative determination applicable to such proceedings, shall in any way
limit Tyler's obligations hereunder.
6.6 Other Tyler Obligations. At the Closing, if not theretofore
accomplished, Tyler will cause the Company to execute and deliver to the
Shareholders the Employment Agreements, against execution and delivery by the
Shareholders.
6.7 Company Indemnification Obligations. (a) Tyler and Sub agree that all
rights to indemnification existing in favor of the present or former directors,
officers, employees, fiduciaries and agents of the Company (collectively, the
"D&O Indemnified Parties") as provided in the Company's Articles of
Incorporation, Bylaws, or other organizational documents as in effect as of
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the date hereof, shall survive the Merger and shall continue in full force and
effect for six years after the Effective Time (without modification or
amendment, except as required by applicable law), to the fullest extent
permitted by law, and shall be enforceable by the D&O Indemnified Parties
against the Surviving Corporation; provided that in any event Tyler and the
Surviving Corporation shall pay and reimburse expenses in advance of the final
disposition of any action or proceeding to each D&O Indemnified Party to the
fullest extent permitted by law.
(b) The provisions of this Section 6.7 shall survive the consummation of
the Merger and expressly are intended to benefit each of the D&O Indemnified
Parties. Each of the D&O Indemnified Parties shall be entitled to enforce the
covenants contained herein.
(c) If the Surviving Corporation, or any of its successors or assigns (i)
reorganizes, amalgamates or consolidates with or merges into any other person
and is not the resulting, continuing or surviving corporation or entity of such
reorganization, amalgamation, consolidation or merger, or (ii) liquidates,
dissolves or transfers all or substantially all of its properties and assets to
any person or persons, then, and in such case, proper provision will be made so
that the successors or assigns of the Surviving Corporation assume all of the
obligations of the Surviving Corporation set forth in this Section 6.7.
6.8 Agreements Regarding Stock Options. Effective on the Closing Date,
Tyler agrees to grant options, conditioned on the consummation of the
transactions contemplated hereby and Tyler stockholder approval of any required
increase in the number of shares of Tyler Common Stock which may be issued
pursuant to the Tyler Stock Option Plan, to purchase an aggregate of 200,000
shares of Tyler Common Stock to employees of the Company designated by the
Shareholders. The selection by the Shareholders of such employees and the number
of option shares to be granted to each shall be subject to the reasonable
approval of Tyler. The exercise price of the options shall be equal to the
reported closing price of the Tyler Common Stock on the New York Stock Exchange
on the Closing Date. The options shall have a term of 10 years from the Closing
Date and shall vest on each of the first five anniversary dates at the rate of
20% of the original number of option shares granted. The options shall be
incentive stock options pursuant to the Tyler Stock Option Plan, as amended,
shall contain such other terms as are customary for options granted under that
plan, and shall be evidenced by option agreements incorporating all of such
terms.
6.9 Release of Shareholder Guaranties. At or prior to the Closing, Tyler
shall obtain and provide to the Shareholders an absolute and unconditional
release, executed by the holders of the indebtedness of the Company identified
in Section 2.21 of the Company Disclosure Schedule as guaranteed by the
Shareholders and by the surety companies that issued the performance bonds
identified in such Section 2.21, from any liability with respect to such
indebtedness or performance bonds whether as maker, endorser, surety, obligor,
guarantor or otherwise, or shall provide to the Shareholders the agreement of
Tyler to indemnify the Shareholders against any such liability, which
indemnification agreement shall be reasonably acceptable to the Shareholders.
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ARTICLE 7
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
Except as may be waived by both Tyler and the Shareholders, the obligations
of the Company, the Shareholders, Tyler and Sub to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the Closing Date, of each of the following conditions:
7.1 HSR Act. All filings required under the HSR Act shall have been made,
and all waiting periods, including any extension thereof, that may be applicable
to the transactions contemplated by this Agreement under the provisions of the
HSR Act shall have expired or been waived or otherwise terminated.
7.2 Absence of Litigation. No governmental agency or authority shall have
instituted, or threatened in writing to institute, any action or proceeding
seeking to delay, restrain, enjoin, or prohibit the consummation of the
transactions contemplated by this Agreement, and no order, judgment, or decree
by any court or governmental agency or authority shall be in effect that
enjoins, restrains, or prohibits the same or, in the reasonable judgment of
Tyler, otherwise would materially interfere with the operation of the assets and
business of Tyler and the Tyler Subsidiaries or the Company after the Closing
Date.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SHAREHOLDERS
Except as may be waived by the Company and the Shareholders, the
obligations of the Company and the Shareholders to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction on or before
the Closing Date of each of the following conditions:
8.1 Compliance. Tyler shall have, or shall have caused to be, satisfied or
complied with and performed in all material respects all terms, covenants, and
conditions of this Agreement to be complied with or performed by Tyler on or
before the Closing Date.
8.2 Representations and Warranties. All of the representations and
warranties made by Tyler in this Agreement, the Tyler Disclosure Schedule (prior
to supplementation or amendment thereto pursuant to Section 4.2 of this
Agreement), the Employment Agreements, and in all certificates and other
agreements delivered by Tyler to the Shareholders pursuant hereto or in
connection with the transactions contemplated hereby, shall have been true and
correct in all material respects as of the date hereof, and shall be true and
correct in all material respects at the Closing Date with the same force and
effect as if such representations and warranties had been made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement.
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8.3 Opinion. The Company and the Shareholders shall have received an
opinion of Liddell, Sapp, Zivley, Hill & ▇▇▇▇▇▇, L.L.P. ("Liddell, ▇▇▇▇"),
counsel for Tyler, dated the Closing Date, in form and substance reasonably
satisfactory to the Company, the Shareholders and their counsel, relating to the
matters set forth in the following Sections Of this Agreement:
3.1;
3.4; and
3.5 (except the opinion as to enforceability may exclude the
Employment Agreements and the Noncompetition Agreements).
8.4 No Material Adverse Change. There shall have occurred no material
adverse change in the businesses, properties, assets, liabilities, results of
operations or condition (financial or otherwise) of Tyler and the Tyler
Subsidiaries, taken as a whole.
8.5 Financing. On or before thirty days after the date hereof Tyler shall
have obtained financing for the transactions contemplated hereby acceptable to
Tyler.
8.6 Certificates. The Company and the Shareholders shall have received a
certificate or certificates, executed on behalf of Tyler by the President or any
Vice President of Tyler, to the effect that the conditions contained in Sections
7.1 and 7.2 hereof with respect to matters therein relating to Tyler, and in
Sections 8.1, 8.2, and 8.4 hereof, have been satisfied.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF TYLER
Except as may be waived by Tyler, the obligations of Tyler and Sub to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction, on or before the Closing Date, of each of the following
conditions:
9.1 Compliance. The Company and each Shareholder shall have, or shall have
caused to be, satisfied or complied with and performed in all material respects
all terms, covenants, and conditions of this Agreement to be complied with or
performed by any of them on or before the Closing Date.
9.2 Representations and Warranties. All of the representations and
warranties made by the Company and the Shareholders in this Agreement, the
Company Disclosure Schedule (prior to any supplementation or amendment pursuant
to Section 4.2 of this Agreement), and in all certificates and other documents
delivered by the Company and the Shareholders pursuant hereto or in connection
with the transactions contemplated hereby, shall have been true and correct in
all material respects as of the date hereof, and shall be true and correct in
all material respects at the Closing Date with the same force and effect as if
such representations and warranties had been made at and as of the Closing Date,
except for changes permitted or contemplated by this Agreement.
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9.3 Securities Law Compliance. The issuance and delivery of shares of
Tyler Common Stock in the Merger shall have been registered or qualified under
the Securities Act and all applicable state securities laws or counsel for
Tyler shall be satisfied that an exemption from such registration or
qualification is available; no stop order suspending the effectiveness of any
such registration or qualification shall be in effect; and no proceeding for
such purpose shall be pending before any agency or authority having
jurisdiction thereof.
9.4 Opinions. Tyler shall have received the opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇,
counsel for the Company and the Shareholder, dated as of the Closing Date, in
form and substance satisfactory to Tyler and its counsel, relating to the
matters set forth in the following Sections of this Agreement:
2.1;
2.6; and
2.7 (except the opinion as to enforceability may exclude the
Employment Agreements and the Noncompetition Agreements).
9.5 No Material Adverse Change. There shall have occurred no material
adverse change in the businesses, properties, assets, liabilities, results of
operations, or condition (financial or otherwise), of the Company.
9.6 Consents to Transaction. Tyler and the Company shall have received all
consents or approvals, and made all applications, requests, notices, and filings
with, any person, governmental authority, or governmental agency required to be
obtained or made in connection with the consummation of the transactions
contemplated by this Agreement, excluding actions required under the HSR Act
(which are conditions precedent to closing under Section 7.1), but including the
consents of the lenders and third parties set forth in the Company Disclosure
Schedule and the Tyler Disclosure Schedule.
9.7 Financing. On or before thirty days after the date hereof, Tyler shall
have obtained financing for the transactions contemplated hereby acceptable to
Tyler.
9.8 Noncompetition Agreements. Each of the Employees shall have duly
entered into Noncompetition Agreements with the Company acceptable to Tyler.
9.9 Business Resources Corporation. Tyler or a subsidiary of Tyler shall
have acquired all or substantially all of the outstanding capital stock or
assets of Business Resources Corporation ("BRC") pursuant to that certain
Agreement and Plan of Merger dated of even date herewith among Tyler, T1
Acquisition Corporation, BRC, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "BRC Merger Agreement").
9.10 Stockholder Approval. The stockholders of Tyler shall have approved
the Merger and this Agreement.
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9.11 Certificates. Tyler shall have received a certificate or
certificates, executed on behalf of the Company by the President of the Company,
and by each Shareholder in his individual capacity, to the effect that the
conditions in Sections 7.1 and 7.2 hereof with respect to matters therein
relating to the Company, and Sections 9.1, 9.2, and 9.5 hereof, have been
satisfied.
ARTICLE 10
SECURITIES LAW REGISTRATION AND COMPLIANCE
10.1 Securities Law Compliance; Restrictions on Shares. Each Shareholder
and each other holder of Stock Options or Company Common Stock acknowledges
receipt of the Tyler Commission Filing, this Agreement and the Tyler Disclosure
Schedule and the opportunity to ask questions of and receive answers from
representatives of the management of Tyler concerning the terms and conditions
of the transactions contemplated hereby and to obtain all additional information
that Tyler possesses or could acquire without unreasonable expense that is
necessary to verify the accuracy of information furnished to him, and
acknowledges and agrees:
(a) The shares of Tyler Common Stock to be received by him as a result
of the Merger have not been registered under the Securities Act or any
applicable state securities law;
(b) He is acquiring the shares so to be received in the Merger for his
own account and not with a view to the distribution or resale thereof and
will not sell, pledge, hypothecate, or otherwise transfer the shares unless
they are registered under the Securities Act and applicable state
securities laws unless, prior thereto, he shall have delivered to Tyler an
opinion, in form and substance reasonably satisfactory to Tyler, of counsel
experienced and competent in federal securities laws and acceptable to
Tyler, to the effect that an exemption from registration is available
therefor;
(c) Except as otherwise provided in this Agreement, Tyler has no
obligation to register any sales or transfers of the shares so received by
him;
(d) During the year after the Merger, he will not be able to sell,
transfer, or otherwise dispose of the shares so received unless, prior
thereto, the Shareholder shall have delivered to Tyler an opinion, in form
and substance reasonably satisfactory to Tyler, of counsel experienced and
competent in federal securities laws and acceptable to Tyler, to the effect
that an exemption from registration under the Securities Act and applicable
state securities laws is at the time available (unless registered as
elsewhere provided in this Agreement), and thereafter any sales, transfers,
or other dispositions may be limited by the provisions of Rule 144 under
the Securities Act (or by other rules then in effect);
(e) In view of the foregoing, he understands that he is at economic
risk with respect to his investment in the shares so received in the
Merger;
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(f) Tyler may place an appropriate legend on the certificate
representing the shares so to be received restricting their transfer, and
stop-transfer instructions will be given to the transfer agent for the
Tyler Common Stock with respect to such certificates; and
(g) To provide such information as may be requested by Tyler in order
for Tyler to determine if he is an accredited purchaser under Regulation D
of the Commission or otherwise can be qualified as a purchaser under Rule
506 of such Regulation D.
10.2 Piggyback Registration. If within one year after the Closing Date
Tyler proposes (whether or not for its own account) to register any of its
securities under the Securities Act for sale in a firm commitment underwritten
public offering, Tyler shall give written notice to the Shareholders of its
intention to effect such a registration not later than 15 days prior to the
anticipated date of filing with the Commission of a registration statement,
which notice shall offer each Shareholder the opportunity to include in such
registration statement any of the shares of Tyler Common Stock received in the
Merger and held by such Shareholder ("Shares") that such Shareholder may request
(a "Piggyback Registration"). Tyler's obligation under this Section 10.2 shall
be limited to registrations as to which a registration statement is to be filed
on or before one year after the date hereof. Subject to the provisions of this
Agreement, Tyler will use its reasonable efforts to cause all the Shares for
which the Shareholders have requested registration to be registered under the
Securities Act to the extent required to permit the sale by the Shareholders of
such Shares; provided, that if the registration relates to an underwritten
public offering and the managing underwriter or underwriters believe that the
inclusion of all shares requested to be included in the proposed registration
would adversely affect the marketing of such shares, Tyler may first include in
such registration all securities Tyler proposes to sell, and the Shareholders
shall accept a reduction (including a total elimination) in the number of shares
to be included in such registration, pro rata with the other holders of Tyler
Common Stock making requests for registration, on the basis of the number of
shares of Tyler Common Stock so requested to be included by the Shareholders and
the other selling shareholders. Nothing in this section shall limit Tyler's
ability to withdraw a registration statement it has filed either before or after
effectiveness.
10.3 Registration Procedures.
(a) In connection with any registration hereunder, each Shareholder will
furnish promptly to Tyler in writing such information (together with such
supplements as may be necessary from time to time) with respect to itself and
the proposed distribution by it as shall be reasonably necessary in order to
ensure compliance with federal and applicable state securities laws. Such
information shall not, at the time the registration statement is filed or
becomes effective, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not false or misleading.
(b) In any registration relating to an underwritten public offering of
Tyler Common Stock or other securities of Tyler entitled generally to vote in
the election of directors (or any securities convertible into or exchangeable
for or exercisable for the purchase of securities so entitled generally to vote
in the election of directors) (collectively, the "Voting Securities"), whether
or not a
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Shareholder is participating in such registered underwritten public offering,
at the request of the managing underwriter or underwriters, each Shareholder
will agree not to effect any sale or distribution, including any sale pursuant
to Rule 144 (or any successor provision) promulgated under the Securities Act
of any Shares, and not to effect any such sale or distribution of any other
Tyler Common Stock or Voting Securities (in each case, other than as part of
such registration) for such period of time as reasonably required by such
managing underwriter or underwriters ("Lockup Period"), but in no event shall
the Shareholder be required to agree to a Lockup Period longer than the Lockup
Period to which any other selling shareholder is subject.
10.4 Expenses. In connection with any proposed registration of securities
by Tyler, whether or not effected or consummated, Tyler, each Shareholder, and
any other selling shareholders shall each pay their pro rata share of Tyler's
out of pocket expenses incurred in connection with a proposed registration under
Section 10.2 in which Tyler is not selling any securities for its own account,
including, without limitation, all registration and filing fees, printing
expenses, and fees and disbursements of counsel and accountants for Tyler. Each
Shareholder shall pay all of his expenses, including his attorney's fees, and
including the underwriting discount, selling commissions and all expenses of the
underwriters relating to his Shares incurred in connection with each
registration pursuant to Section 10.2.
10.5 Indemnification.
(a) In the event of a registration of any of the Shares under the
Securities Act pursuant to Section 10.2, Tyler shall indemnify and hold harmless
each Shareholder and each underwriter of Shares thereunder and each person who
controls the Shareholder or underwriter within the meaning of the Securities Act
and the Exchange Act against any losses, claims, damages or liabilities
(including reasonable attorneys' fees), joint or several, to which the
Shareholder or underwriter or controlling person may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) or arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the registration statement under which such Shares were registered
under the Securities Act pursuant to Section 10.2, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each such Shareholder,
underwriter and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that Tyler will not be
liable in any such case if and to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by the Shareholder, underwriter or controlling person for
use in such registration statement or prospectus; provided, further, that Tyler
will not be liable hereunder to any underwriter or any person who controls any
underwriter within the meaning of the Securities Act and the Exchange Act for
any loss, claim, damage or liability that arises out of, or is based upon, any
untrue statement or alleged untrue statement or any omission or alleged omission
contained in any preliminary prospectus that was
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corrected by any subsequent prospectus, and the underwriter was required to
deliver but failed to deliver such prospectus as required by the Securities
Act.
(b) In the event of a registration of any of the Shares under the
Securities Act pursuant to Section 10.2, the Shareholder shall indemnify and
hold harmless Tyler and each person who controls Tyler within the meaning of
the Securities Act and the Exchange Act, each officer of Tyler who signs the
registration statement, each director of Tyler, each underwriter and each
person who controls any underwriter within the meaning of the Securities Act
and the Exchange Act against all losses, claims, damages or liabilities, joint
or several, to which Tyler or such officer or director or underwriter or
controlling person may become subject under the Securities Act, the Exchange
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the registration
statement under which such Shares were registered under the Securities Act
pursuant to Section 10.2, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein not misleading, and will reimburse Tyler and
each such officer, director, underwriter and controlling person for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Shareholder will be liable hereunder in any such case if and
only to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission relating to the Shareholder made in reliance upon and in
conformity with information pertaining to the Shareholder, as such, furnished
in writing to Tyler by the Shareholder for use in such registration statement
or prospectus ("Shareholder Information"); provided, further, that the
Shareholder will not be liable hereunder to any underwriter or any person who
controls an underwriter within the meaning of the Securities Act and the
Exchange Act for any loss, claim, damage or liability that arises out of, or is
based upon, any untrue statement or alleged untrue statement or any omission or
alleged omission in any Shareholder Information contained in any preliminary
prospectus that was corrected by any subsequent prospectus, and the underwriter
was required to deliver but failed to deliver such prospectus as required by
the Securities Act.
(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party other than under this Section 10.5. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel reasonably satisfactory to such
indemnified party and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Section 10.5 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected; provided,
however, that (i) if the indemnifying
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party has failed to assume the defense and employ counsel or (ii) if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it that are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the
interests of the indemnifying party, then the indemnified party shall have the
right to select a separate counsel and to assume such legal defense and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred.
(d) If the indemnification provided for in this Section 10.5 is unavailable
or insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities or actions in respect thereof, then each
indemnifying party shall in lieu of indemnifying such indemnified party
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or actions in such proportion as
is appropriate to reflect the relative fault of Tyler, on the one hand, and the
Shareholder, on the other, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or actions as well as any
other relevant equitable considerations, including the failure to give any
required notice. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by Tyler, on the one hand, or the Shareholder, on the
other, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. Tyler and the
Shareholder agree that it would not be just and equitable if contribution
pursuant to this Section 10.5(d) were determined by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 10.5(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities or actions in respect thereof referred to above in this Section
10.5(d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. No person guilty or fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
10.6 No Transferability of Registration Rights. Except with the prior
written consent of Tyler, the Shareholders' registration rights under Section
10.2 shall not inure to the benefit of any person to whom any Shares are
transferred, other than a spouse or descendant of a Shareholder ("Relative"), a
trust solely for the benefit of a Shareholder or Relative, or a partnership all
of the equity interests in which are directly or indirectly owned by a
Shareholder or Relative.
ARTICLE 11
INDEMNIFICATION AND REMEDIES
11.1 Indemnification by the Shareholders Based on Agreement. Each
Shareholder agrees jointly and severally to indemnify and hold harmless Tyler
(and if the transactions contemplated
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hereby are consummated, the Surviving Corporation), from and against any and
all claims, losses, obligations, damages, demands, and liabilities (after
giving effect to and reducing the same by (i) any net tax benefits realized by
Tyler or the Surviving Corporation as a result of such event, and (ii) the net
amount of any insurance proceeds received by Tyler or the Surviving Corporation
as a result of such event), including, without limitation, costs and expenses
of litigation (including reasonable attorneys' and accountants' fees)
(collectively, "Tyler Indemnified Losses"), based on, relating to, or arising
out of, or any allegation by any third party of, any facts or circumstances
that would constitute a breach by the Shareholders of any representation,
warranty, or covenant contained herein or in any agreement executed pursuant
hereto, but excluding from this covenant to indemnify any claims or liabilities
separately covered by Section 10.5 hereof or any Customer Claims (hereinafter
defined) to the extent and only while covered by the provisions of Section 11.3
hereof.
11.2 Indemnification by Tyler Based on Agreement. Tyler (and if the
transactions contemplated hereby are consummated, the Surviving Corporation)
agrees to indemnify and hold harmless the Shareholders from and against any and
all claims, losses, expenses, obligations, demands and liabilities (after giving
effect to and reducing the same by (i) any net tax benefits realized by the
Shareholders as a result of such event, and (ii) the net amount of any insurance
proceeds received by the Shareholders as a result of such event), including,
without limitation, costs and expenses of litigation and including reasonable
attorneys' and accountants' fees (collectively, "Shareholder Indemnified
Losses"), based on, relating to, or arising out of, or any allegation by any
third party of, any facts or circumstances that would constitute a breach by
Tyler of any representation, warranty, or covenant contained herein or in any
agreement executed pursuant hereto, but excluding from this covenant to
indemnify any claims or liabilities separately covered by the provisions of
Section 10.5 hereof.
11.3 Customer Claims. If any claim, demand, or cause of action of the type
referred to in Section 11.1 is asserted by a customer of the Company ("Customer
Claim"), the following provisions shall be applicable until such time as the
Customer Claim results in a filed and pending lawsuit or other judicial
proceeding (at which time the provisions of Section 11.1 shall be applicable):
(a) Tyler or the Surviving Corporation shall promptly notify the
Shareholders in writing that a Customer Claim has been made, describing the
nature of the Customer Claim to the extent then known.
(b) After receipt of Tyler's or the Surviving Corporation's written
notice, the parties hereto will fully cooperate with each other to
investigate the Customer Claim and determine whether the parties can agree
that the Customer Claim is an obligation or liability for which the
Shareholders are responsible. The investigation shall be conducted
expeditiously and with all reasonable due diligence, considering the
circumstances surrounding the Customer Claim.
(c) If, after an investigation, Tyler or the Surviving Corporation and
the Shareholders agree in writing that the Customer Claim is an obligation
or liability for which the Shareholders are responsible, the Shareholders
and Tyler or the Surviving Corporation agree to use their reasonable best
efforts to reach an agreement with the customer as to the terms and
conditions
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of settlement, compromise or satisfaction of the Customer Claim,
including, but not limited to, the amount that the Shareholders shall pay
to the customer for the damages, losses, costs or expenses incurred by it.
(d) If the provisions of this Section 11.3 are applicable, Tyler or
the Surviving Corporation shall conduct all communications and settlement
negotiations with the customer and shall convey to the customer any offers
of settlement or compromise by the Shareholders. Any amounts that the
Shareholders agree so to pay in settlement of the Customer Claim shall be
paid by them to Tyler or the Surviving Corporation, as the case may be, in
trust for payment over to the customer. If Tyler or the Surviving
Corporation agrees to pay the customer an amount in excess of that offered
for settlement purposes by the Shareholders, the excess shall be paid by
Tyler or the Surviving Corporation, as the case may be, without any right
to indemnification therefor from the Shareholders. If the amounts so paid
and entrusted to Tyler or the Surviving Corporation are paid over to the
customer, the payment over shall be deemed to be a release by Tyler or the
Surviving Corporation of any further claim with respect to that Customer
Claim against the Shareholders and Tyler and the Surviving Corporation
shall indemnify and hold harmless the Shareholders from any further
liability with respect thereto.
(e) In the absence of an agreement among the parties as to the
settlement of any Customer Claim not involving litigation, Tyler or the
Surviving Corporation may take such action with respect to the Customer
Claim as Tyler in its sole judgment may deem necessary or advisable under
the circumstances to settle, compromise or satisfy the Customer Claims
provided; however, neither Tyler nor the Surviving Corporation shall in any
such event be considered to have waived its right to pursue a judicial
action to determine its right against the Shareholders.
(f) An indemnified party shall give notice to the indemnifying party
or parties within 15 business days after actual receipt of service or
summons to appear in any action begun in respect of which indemnity may be
sought hereunder, or actual notice of assertion of a claim with respect to
which it seeks indemnification. Except as provided in Section 4.5, failure
so to notify the indemnifying party or parties shall cause the indemnified
party to lose its right to indemnification under this Article 11, but
failure so to notify the indemnifying party or parties shall not relieve
the indemnifying party or parties from any liability that they may have
other than on account of this Article 11. The indemnifying party or parties
may participate at their own expense and with their counsel in the defense
of such action.
Except as otherwise provided in Section 11.3(d), if the indemnifying party
or parties so elect within a reasonable time after receipt of such notice they
may assume the defense of such action with counsel chosen by the indemnifying
party or parties and approved by the indemnified party in such action, unless
the indemnified party reasonably objects to such assumption on the ground that
its counsel has advised it that there may be legal defenses available to it that
are different from or in addition to those available to the indemnifying party
or parties and counsel for the indemnifying party concurs in such advice, in
which case the indemnified party shall have the right to employ counsel approved
by the indemnifying party or parties. If the indemnifying party or parties
assume the defense of such action, the indemnifying party or parties shall not
be liable for
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fees and expenses of counsel for the indemnified party incurred thereafter in
connection with such action. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel for the
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances unless, in the reasonable opinion of such counsel,
there is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more indemnified parties.
11.4 Claims Limitations. Notwithstanding anything otherwise contained in
this Agreement, no party hereto shall assert any single claim or claims against
any other party hereto, unless the single claim (after giving effect to and
reducing the same by (i) any net tax benefits realized by the indemnified party
as a result of such event, and (ii) the net amount of any insurance proceeds
received by the indemnified party as a result of such event) exceeds the sum of
$18,750, and the sum of all such single claims in the aggregate exceeds
$150,000; provided, that claims made by Tyler or the Surviving Corporation
pursuant to Section 2.9 or 4.5 of this Agreement, or for breach of the
Employment Agreement or the Confidentiality Agreement shall not be subject to
the foregoing limitations; and provided further, that claims made by the
Shareholders pursuant to Section 3.7 or 4.5 of this Agreement, or for breach of
the Employment Agreement or the Confidentiality Agreement shall not be subject
to the foregoing limitations.
11.5 Maximum Liability. The maximum aggregate liability of the
Shareholders to Tyler or the Surviving Corporation for all claims made by Tyler
or the Company pursuant to this Agreement is $3,000,000; provided, that claims
made by Tyler or the Surviving Corporation pursuant to Sections 2.9 or 4.5 of
this Agreement, or for breach of the Employment Agreement or the Confidentiality
Agreement, shall not be subject to the foregoing limitation. The maximum
aggregate liability of Tyler or the Surviving Corporation to the Shareholders
for all claims made by the Shareholders pursuant to this Agreement is
$3,000,000; provided, that claims made by the Shareholders pursuant to Section
3.7 or 4.5 of this Agreement, or for breach of the Employment Agreement or the
Confidentiality Agreement, shall not be subject to the foregoing limitation. Any
claim based upon facts and circumstances that would, if true, constitute a
breach of any representation, warranty or covenant contained in this Agreement
shall be subject to the limitations contained herein, notwithstanding the fact
that such claim is asserted by a cause of action or legal theory other than
breach of contract. When calculating the amount of liability in a claim for
damages for purposes of this Section 11.5 (whether such calculation is through
agreement of the parties, litigation or otherwise) and the claim relates to the
breach of a representation as to the income of the Company for any period or
periods prior to the Closing Date, all of the parties hereto agree that, in
determining the amount involved in the claim, the damages shall be actual
damages incurred and proven and such actual damages shall not be computed by
using a multiplier or capitalization rate.
11.6 Equitable Remedies. The parties hereto acknowledge that a refusal by
a party to consummate the transactions contemplated hereby will cause
irreparable harm to the other parties, for which there may be no adequate remedy
at law. A party not in default at the time of such refusal shall be entitled, in
addition to other remedies at law or in equity, to specific performance of this
Agreement by the party that refused to consummate the transactions contemplated
hereby.
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11.7 Remedies of the Surviving Corporation. After the Closing, the
Surviving Corporation shall have the same rights and benefits under this
Agreement as does Tyler with respect to the representations, warranties and
covenants of the Shareholders contained herein, as fully as if such
representations, warranties and covenants had been made to the Surviving
Corporation in lieu or in place of Tyler or Sub. In any proceeding by the
Surviving Corporation to assert or prosecute any claims under, or to otherwise
enforce, this Agreement on behalf of itself or Tyler, each Shareholder agrees
that he shall not assert as a defense or bar to recovery by the Surviving
Corporation, and hereby waives any right to so assert such defense or bar such
recovery, that (a) prior to Closing, the Company shall have had knowledge of the
circumstances giving rise to the claim being pursued by it; (b) prior to
Closing, the Company engaged in conduct or took action that caused or brought
about the circumstances giving rise to its claim, or otherwise contributed
thereto; (c) the Company is estopped from asserting or recovering upon its claim
by reason of having joined in the representations, warranties and covenants made
by the Shareholders in this Agreement; or (d) the Shareholder has a right of
contribution from the Surviving Corporation to the extent that there is any
recovery against him.
11.8 Costs of Defense. If any claim for which an indemnified party seeks
indemnification under this Article 11 results in a judgment that no damages are
due the claimant on a basis for which the indemnifying party is responsible
hereunder, then, as between the indemnifying and indemnified parties, the
indemnified parties shall be liable for any damages awarded and the costs
(including attorneys' fees) of defending such claim.
ARTICLE 12
MISCELLANEOUS
12.1 Breach Discovered Prior to Closing.
(a) If, prior to the Time of Closing, Tyler has actual and certain
knowledge (as opposed to an opinion or belief) of any facts or circumstances
that it determines would constitute a failure to satisfy the conditions to the
obligations of Tyler to close this Agreement contained in Sections 9.1, 9.2 or
9.5 hereof, Tyler shall promptly give written notice to the Shareholders. If the
Shareholders fail to cure any such alleged defect within 15 days from the date
of notice, Tyler shall have the right either to (i) terminate this Agreement
pursuant to Section 12.2 below, in which case Tyler, shall, if not then in
default under this Agreement, be entitled to recover from the Company and the
Shareholders as liquidated damages the actual legal, accounting and other
out-of-pocket expenses incurred by it in connection with the negotiation,
preparation and execution of this Agreement and the other agreements and
instruments referred to herein, its investigation and examination of the affairs
of the Company, and other actions taken preparatory to consummating the
transactions contemplated hereby, or (ii) waive such defect as a condition to
closing this Agreement, in which case Tyler shall not be entitled to make any
claims against the Shareholders pursuant to this Agreement or to exercise any
other remedial rights with respect to such alleged defect.
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(b) If, prior to the Time of Closing, the Shareholders have actual and
certain knowledge (as opposed to an opinion or belief) of any facts or
circumstances that the Shareholders determine would constitute a failure to
satisfy the conditions to the obligations of the Company and the Shareholders to
close this Agreement contained in Sections 8.1, 8.2 and 8.4 hereof, the Company
and the Shareholders shall promptly give written notice to Tyler. If Tyler fails
to cure any such alleged defect, the Company and the Shareholders shall have the
right either to (i) terminate this Agreement pursuant to Section 12.2 below, in
which case the Company and the Shareholders shall, if not then in default under
this Agreement, be entitled to recover from Tyler as liquidated damages the
actual legal, accounting and other out-of-pocket expenses incurred by them (but
not including such expenses incurred to appropriately document the corporate
records and transactions of the Company and the Shareholders) in connection with
the negotiation, preparation and execution of this Agreement and the other
agreements and instruments referred to herein, their investigation and
examination of the affairs of Tyler, and other actions taken preparatory to
consummating the transactions contemplated hereby, or (ii) waive such defect as
a condition to closing this Agreement, in which case the Shareholders shall not
be entitled to make any claims against Tyler or the Surviving Corporation
pursuant to this Agreement or to exercise any other remedial rights with respect
to such alleged defect.
12.2 Termination. This Agreement and the transactions contemplated hereby
may be terminated at any time on or before the Closing Date:
(a) by mutual consent of Tyler and the Shareholders;
(b) by Tyler if there has been a material misrepresentation or breach
of warranty in the representations and warranties of the Company and the
Shareholders set forth herein or if there has been any material failure on
the part of the Company or the Shareholders to comply with their
obligations hereunder;
(c) by the Shareholders if there has been a material misrepresentation
or breach of warranty in the representations and warranties of Tyler set
forth herein or if there has been any material failure on the part of Tyler
to comply with its obligations hereunder;
(d) by either Tyler or the Shareholders if the transactions
contemplated by this Agreement have not been consummated by March 31, 1998,
unless such failure of consummation is due to the failure of the
terminating party to perform or observe the covenants, agreements, and
conditions hereof to be performed or observed by it at or before the
Closing Date;
(e) by either Tyler or the Shareholders if the conditions precedent to
its or their obligations to close this Agreement have not been satisfied or
waived by it or them at or before the Closing Date; and
(f) by either the Shareholders or Tyler if the transactions
contemplated hereby violate any non-appealable final order, decree, or
judgment of any court or governmental body or agency having competent
jurisdiction.
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12.3 Expenses. If the transactions contemplated by this Agreement are not
consummated, each party hereto shall pay its own expenses incurred in connection
with this Agreement and the transactions contemplated hereby, except as
otherwise provided in Section 12.1; provided, however, that if the transactions
contemplated hereby are not consummated because of the failure of either of the
conditions in Section 9.7 or 9.9 to be satisfied, Tyler shall reimburse the
Shareholders for their reasonable out-of-pocket expenses incurred in connection
with this Agreement and the transactions contemplated hereby, not to exceed
$30,000.
12.4 Disclosure Schedules. The Company Disclosure Schedule and the Tyler
Disclosure Schedule are incorporated herein by reference.
12.5 Entire Agreement. This Agreement and the Exhibits and Disclosure
Schedules hereto, the Confidentiality Agreement and the other agreements and
documents contemplated hereby, contain the complete agreement among the parties
with respect to the transactions contemplated hereby and supersede all prior
agreements and understandings among the parties with respect to such
transactions. Section and other headings, the table of contents and indexes to
the Disclosure Schedules are for reference purposes only and shall not affect
the interpretation or construction of this Agreement. The parties hereto have
not made any representation or warranty except as expressly set forth in this
Agreement, the Employment Agreement, the Confidentiality Agreement, and the
Noncompetition Agreements, the Company Disclosure Schedule, the Tyler Disclosure
Schedule or in any agreement, certificate or other document delivered pursuant
hereto or thereto. The obligations of any party under any agreement executed
pursuant to this Agreement shall not be affected by this Section.
12.6 Survival. All representations and warranties (except those contained
in Sections 2.9 and 2.15) of Tyler, Sub, the Company or the Shareholders
contained herein, in the Tyler Disclosure Schedule, in the Company Disclosure
Schedule, or in any exhibit, certificate, document or instrument delivered
pursuant to this Agreement shall survive the Closing and shall continue in full
force and effect for two years after the date of Closing. All representations
and warranties of the Shareholders contained in Section 2.9(b) above shall
survive the Closing and shall continue in full force and effect after the
Closing without time limitation. All representations and warranties of the
Shareholders contained in Sections 2.9(a), (c) and (d) above shall survive the
Closing and shall continue in full force and effect after the Closing until
expiration, in accordance with the laws of Texas, of the applicable time period
in which claims may be judicially asserted for breach of a written contract. All
representations and warranties of the Shareholders contained in Section 2.15
above shall survive the Closing and shall continue in full force and effect
after the Closing until expiration, in accordance with applicable law, of the
applicable time periods in which the taxing authority having jurisdiction may
assert a claim for failure of or deficiency in the payment of taxes. The
representations and warranties of the Company shall not survive the Closing.
12.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute only one original.
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12.8 Notices. All notices, demands, requests, or other communications that
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, or transmitted by hand delivery, telegram, or telecopy, addressed as
follows:
(i) If to the Company or the Shareholders:
The Software Group, Inc.
Jupiter North Technology Park
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Tyler:
Tyler Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman of the Board
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Liddell, Sapp, Zivley, Hill & ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Tower
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Each party may designate by notice in writing a new address to which any
notice, demand, request, or communication may thereafter be so given, served, or
sent. Each notice, demand, request, or communication that is mailed, delivered,
or transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt, the affidavit of
messenger, or (with
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respect to a telecopy) the confirmation being deemed conclusive evidence of
such delivery) or at such time as delivery is refused by the addressee upon
presentation.
12.9 Successors and Assigns. This Agreement and the rights, interests, and
obligations hereunder shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns.
12.10 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas (except the choice of law rules
thereof).
12.11 Waiver and Other Action. This Agreement may be amended, modified, or
supplemented only by a written instrument executed by the parties against which
enforcement of the amendment, modification, or supplement is sought.
12.12 Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable, such provision shall be fully severable,
and this Agreement shall be construed and enforced as if such illegal, invalid,
or unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance (except to the
extent such remaining provisions constitute obligations of another party to
this Agreement corresponding to the unenforceable provision); and in lieu of
such illegal, invalid, or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid, and enforceable.
12.13 Knowledge. At any time there is a reference in a representation,
covenant or warranty of a party to this Agreement that is qualified by the
knowledge of such party, the terms "knowledge" or "knows" or "known", or
"belief" or "believes" shall mean (i) as to the Company and the Shareholders,
the knowledge or belief of any Shareholder, and (ii) as to Tyler, the knowledge
or belief of its Chairman of the Board, Chief Executive Officer, Chief Financial
Officer, Chief Operating Officer, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
[The following page is the signature page.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TYLER CORPORATION
By: /s/ C.A. ▇▇▇▇▇▇▇, JR.
----------------------------------
C. A. ▇▇▇▇▇▇▇, Jr., President and
Chief Executive Officer
T2 ACQUISITION CORPORATION
By: /s/ C.A. ▇▇▇▇▇▇▇, JR.
----------------------------------
C.A. ▇▇▇▇▇▇▇, Jr., President
THE SOFTWARE GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually
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The undersigned execute this Agreement solely to indicate their agreement
to Sections 1.7(c) and 10.1 hereof:
/s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇
------------------------------------
▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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ANNEX I
SHAREHOLDERS SHARES
------------ -------
▇▇▇▇▇ ▇. ▇▇▇▇▇.............................................. 824,025
▇▇▇▇▇ ▇▇▇▇▇................................................. 136,475
▇▇▇▇▇ ▇. ▇▇▇▇▇.............................................. 960,500
SHARES
SUBJECT TO
OPTIONHOLDERS OPTIONS
------------- ----------
▇▇▇▇ ▇▇▇▇................................................... 75,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇.............................................. 75,000
54