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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): September 25, 1997
Total Control Products, Inc.
(Exact name of registrant as specified in its charter)
Illinois 333-18539 36-3209178
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File number) Identification No.)
2001 North Janice Avenue
Melrose Park, Illinois 60160
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 345-5500
_____________________________________________________
Former name or former address, if changed since last report
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Item 5. OTHER EVENTS.
On September 26, 1997, a majority owned subsidiary of Total Control
Products, Inc. (the "Registrant"), Taylor Industrial Software, Inc., an
Alberta corporation ("TIS") sold its TESS software product to Taylor
Manufacturing Systems, Inc., a Georgia corporation ("TMS") and Neil Taylor
("Taylor"), a director and executive officer of the Registrant for
approximately $4 million (U.S.), pursuant to the terms of an asset purchase
agreement (the "Agreement") effective as of August 1, 1997 by and among the
Registrant, TIS, Taylor Industrial Software (USA), Inc., a Nevada
corporation, TMS and Taylor. A copy of the Agreement is attached hereto as
Exhibit 10.1 and is hereby incorporated by reference.
In connection with the transaction, the Registrant loaned Taylor $2
million (U.S.) pursuant to a promissory note (the "Note") dated September 25,
1997. The Note bears interest at 8% per annum and is payable in five equal
annual installments beginning on September 25, 1999 and ending on September
25, 2003. A copy of the Note is attached hereto as Exhibit 10.2 and is hereby
incorporated by reference.
Taylor is a shareholder of TMS, and will remain on the Registrant's Board
of Directors and continue as the Registrant's Senior Vice President of
Software Development on a full time basis.
A copy of the press release of the Registrant, dated September 29, 1997,
is attached hereto as Exhibit 10.3 and is hereby incorporated by reference.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
10.1 Asset Purchase Agreement dated as of August 1, 1997 by and among
the Registrant, Taylor Industrial Software, Inc., an Alberta
corporation, Taylor Industrial Software (USA), Inc., a Nevada
corporation, Taylor Manufacturing Systems, Inc., a Georgia
corporation and Neil Taylor ("Taylor").
10.2 Promissory Notes dated September 25, 1997, executed by Neil
Taylor.
10.3 Press Release dated September 29, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: October 21, 1997 TOTAL CONTROL PRODUCTS, INC.
By: /s/Nic Gihl
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Name: Nic Gihl
Title: President, Chief Executive
Officer and Chairman
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INDEX
Exhibit
Number Description of Document
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10.1 Asset Purchase Agreement dated as of August 1, 1997 by and among
the Registrant, Taylor Industrial Software, Inc., an Alberta
corporation, Taylor Industrial Software (USA), Inc., a Nevada
corporation, Taylor Manufacturing Systems, Inc., a Georgia
corporation and Neil Taylor ("Taylor").
10.2 Promissory Notes dated September 25, 1997, executed by
Neil Taylor.
10.3 Press Release dated September 29, 1997.
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), is made and entered into
on the 26th day of September, 1997 (the "Closing Date"), but is expressly made
effective as of 12:01 a.m. e.s.t. on August 1, 1997 (the "Effective Date"), by
and among TAYLOR INDUSTRIAL SOFTWARE INC., an Alberta corporation ("TIS"),
TAYLOR INDUSTRIAL SOFTWARE (USA), INC., a Nevada corporation ("USA"), and TOTAL
CONTROL PRODUCTS, INC., an Illinois corporation ("TCP") (TIS, USA, and TCP are
sometimes collectively referred to herein as "Seller"); TAYLOR MANUFACTURING
SYSTEMS, INC., a Georgia corporation ("Buyer"); and NEIL R. TAYLOR, a resident
of Alberta, Canada ("Taylor").
WITNESSETH:
WHEREAS, TIS, among other businesses, and USA are engaged in the business
of developing, marketing, and supporting the Programs (as herein defined), which
business is referred to herein as the "Business";
WHEREAS, TIS is a subsidiary of TCP, and USA is a wholly-owned subsidiary
of TIS;
WHEREAS, Taylor is the sole shareholder of N. R. Taylor Holdings Ltd., an
Alberta corporation ("Holdings"), and Holdings is the sole shareholder of Buyer;
WHEREAS, Buyer desires to purchase from TIS and USA, and TIS and USA desire
to sell to Buyer, upon the terms hereinafter set forth, substantially all of the
assets and rights of TIS and USA used in the Business, as more specifically
identified herein; and
WHEREAS, following the closing of the transactions contemplated hereby,
Seller and Buyer wish to continue their relationship in certain respects, as
more specifically provided for herein.
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants, and agreements of the parties hereinafter set forth, the
parties hereto, intending to be legally bound, do hereby agree as follows:
ARTICLE I. PURCHASE AND SALE OF ASSETS
1.1 PURCHASE AND SALE OF ASSETS. Effective as of the Effective Date, TIS
and USA hereby grant, sell, assign, convey, transfer, and deliver to Buyer, and
Buyer hereby purchases, accepts, assumes, and acquires from TIS and USA, all
right, title, and interest of TIS and USA in and to the Business as a going
concern and the assets described below, except for the Excluded Assets (as
herein defined) (which Business, assets, properties, and rights are sometimes
referred
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to herein collectively as the "Assets"), free and clear of all mortgages,
liens, pledges, security interests, charges, claims, restrictions, and
encumbrances of any kind or nature whatsoever (collectively, the "Claims"),
except those which arise out of liabilities or obligations expressly assumed
by Buyer pursuant to this Agreement. The Assets shall include only the
following assets, properties, and rights of TIS and USA:
(a) PROGRAMS. The computer programs and systems, modules, databases,
software products, and related data and materials (whether in source code,
object code, customization code, or other form) described on SCHEDULE 1.1(a)
(the "Programs");
(b) PERSONALTY. The machinery, equipment, tools, vehicles,
furniture, furnishings, leasehold improvements, goods, supplies, and other
tangible personal property listed on SCHEDULE 1.1(b) (the "Personalty");
(c) PREPAID ITEMS. The prepaid items and unbilled costs and fees
listed on SCHEDULE 1.1(c);
(d) ACCOUNTS RECEIVABLE. The accounts, notes, and other receivables
(the "Accounts Receivable") listed on SCHEDULE 1.1(d);
(e) RECORDS. All customer and prospect lists, customer credit
information, supplier lists, general ledgers, accounts payable and accounts
receivable records, sales history, and other books and records relating to the
Business, whether in written form or otherwise (the "Records");
(f) CONTRACTS. The licenses, development contracts, distribution
agreements, marketing agreements, joint development agreements, strategic
alliances, lease agreements, reservations, purchase orders, sales contracts,
commitments, and other contracts and agreements listed on SCHEDULE 1.1(f), to
the extent Seller has the power to transfer such agreements to Buyer (the
"Contracts");
(g) INTELLECTUAL PROPERTY. All forms of industrial or intellectual
property and technology relating primarily to the Programs; the trademarks,
service marks, and design marks related primarily to the Programs, and any
applications therefor, which are listed on SCHEDULE 1.1(g), together (if
applicable) with their respective registration numbers and jurisdictions of
registration (the "Trademarks"); all designs, processes, know-how, technology,
formulae, customer lists, trade secrets, proprietary information (the "Trade
Secrets") now used in or necessary for the operation of the Programs, or
developed, licensed, or acquired in connection with the Programs; all of the
intangible property and assets of TIS or USA relating primarily to the Programs
(the "Technology"); and all copyrights that relate primarily to the Programs or
developed, licensed, or acquired primarily for the Programs, together with all
moral rights and other rights to claim or make application, whether in equity or
at law or otherwise, under the laws
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of copyright that relate primarily to the Programs (all of the foregoing are
sometimes collectively referred to herein as the "Intellectual Property");
(h) TELEPHONE NUMBERS. The telephone and facsimile numbers listed on
SCHEDULE 1.1(h);
(i) MARKETING MATERIALS. All brochures, manuals, advertising copy,
artwork, and other marketing, advertising and other promotional materials
relating to the Programs, whether in written form or other medium; and
(j) GOODWILL. All goodwill of the Business.
1.2 EXCLUDED ASSETS. Notwithstanding anything contained in this Agreement
to the contrary, it is understood that the Assets specifically exclude (a) any
assets, properties, or rights of Seller which are not specifically identified in
Section 1.1; and (b) any intellectual property relating primarily to Seller's
PROCESS WINDOW, WALTZ, SECUREWORX, and PROWORX software, and all related
versions thereof (hereinafter referred to collectively as the "Excluded
Assets"); provided, however, Buyer shall have equal rights to the bridge module
owned by Seller that communicates between Seller's PROCESS WINDOW software and
the TESS database.
1.3 EXCEPTIONS TO SALE OF RECORDS. Following the execution and delivery
hereof, Seller may maintain a single file copy of the Records, for archival and
recordkeeping purposes, subject to the provisions concerning confidentiality set
forth in Section 5.2. In addition, to the extent any of the Records consist of
information regarding customers, prospective customers, or other third parties
that is subject to an agreement or other legal obligation of confidentiality by
Seller, then those confidential portions of the Records shall be delivered by
Seller to Buyer at such time, and only at such time, as appropriate consent is
obtained from the applicable customer, prospective customer, or third party.
ARTICLE II. PURCHASE PRICE
2.1 PURCHASE PRICE. The aggregate purchase price of the Assets (the
"Purchase Price") shall be FOUR MILLION ONE HUNDRED FORTY-SEVEN THOUSAND FOUR
HUNDRED NINETY-NINE AND NO/100 DOLLARS ($4,147,499.00), subject to adjustments,
credits, and prorations as provided in this Agreement, to be paid at Closing by
(i) wire transfer of immediately available funds in the amount of FOUR MILLION
ONE HUNDRED FORTY-TWO THOUSAND FOUR HUNDRED NINETY-NINE AND NO/100 DOLLARS
($4,142,499.00), and (ii) Seller's retention of a cash payment previously made
by Buyer to Seller, as earnest money, in the amount of FIVE THOUSAND AND NO/100
DOLLARS ($5,000.00).
2.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets as set forth on SCHEDULE 2.2. Buyer and Seller each hereby
covenant and agree that it will not take a position on any income tax return,
before any governmental agency charged with the
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collection of any income tax, or in any judicial proceeding that is in any
way inconsistent with the terms of SCHEDULE 2.2.
2.3 DOLLAR FIGURES. Unless otherwise expressly noted in this Agreement,
all dollar figures contained in this Agreement shall be deemed references to
U.S. Dollars. Any required conversion of Canadian Dollars into U.S. Dollars
shall be made as of the date the calculation is made based upon the exchange
rates set forth in THE WALL STREET JOURNAL on the date immediately preceding the
date the calculation is made.
2.4 ASSUMPTION OF LIABILITIES. Effective as of the Effective Date, and
except as otherwise provided in this Section 2.4, Buyer hereby assumes and
agrees to pay, discharge, or perform, as appropriate, the liabilities and
obligations of Seller described in this Section 2.4. Except as expressly
provided in this Section 2.4, it is hereby expressly understood and agreed that
Buyer does not assume or agree hereunder to pay, perform, or discharge and
Seller shall remain liable for and shall discharge, any debt, obligation, tax,
or liability, known or unknown, contingent or otherwise, of Seller of any kind
or nature whatsoever, and Seller shall and does hereby hold Buyer wholly
harmless from any and all such debts, obligations, taxes, and liabilities in
accordance with Article VII. The liabilities and obligations to be assumed by
Buyer effective as of the Effective Date, are as follows:
(i)(A) all liabilities and obligations of TIS and USA listed on
SCHEDULE 2.4(i); and (B) all other liabilities and obligations of TIS and
USA in respect of the Business which were known prior to the Effective Date
by Taylor or Ursula Hess (collectively, the "TMS Management Group"; for
purposes of this Agreement, the knowledge of a member of the TMS Management
Group shall be deemed limited to the actual knowledge as of the Effective
Date of either Taylor or Ursula Hess, without giving effect to imputed
knowledge);
(ii) all liabilities and obligations of TIS and USA arising out of the
operation of the Business after the Effective Date;
(iii) all liabilities and obligations of Seller in respect of the
Contracts;
(iv) all severance obligations owed by TIS or USA to any of the
Employees (as herein defined), if any;
(v) all liabilities and obligations relating to broker's commissions,
finder's fees, investment banking fees, or similar payments to arrange the
transactions contemplated by this Agreement, including, without limitation,
any fees owed to Concord Corporation (or its principals), but specifically
excluding any such amounts owed to (A) Michael Blitzer Associates (or its
principals), or (B) Adams, Harkness & Hill (or its principals); and
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(vi) all liabilities and obligations relating to customer returns and
warranty claims, other than liabilities and obligations relating to the
customer returns and warranty claims listed on SCHEDULE 2.4(vi).
Notwithstanding anything to the contrary contained in items (i)(B) and (iii)
above, Buyer shall not assume or agree to pay, discharge, or perform any:
(A) liabilities or obligations arising out of a breach by Seller of
any Contract prior to the Effective Date, unless such failure to
perform was known prior to the Effective Date by either member of the
TMS Management Group;
(B) product liability or any claim for injury to person or property,
regardless of when made or asserted, in connection with any service
performed or product sold or leased by or on behalf of Seller on or
prior to the Effective Date, including, without limitation, any claim
relating to any product delivered in connection with the performance
of such service and any claim seeking recovery for consequential
damage, lost revenue, or income, unless any such product liability or
claim for injury was known prior to the Effective Date by either
member of the TMS Management Group;
(C) liabilities or obligations arising out of any litigation or
proceeding, in law or in equity, pending or threatened as of the
Effective Date against Seller or any of its respective officers,
directors, or affiliates with respect to or affecting the Business or
the assets, operations, business, products, sales practices, or
financial condition thereof, or related to the consummation of the
transactions contemplated by this Agreement, unless any such
litigation or proceeding was known prior to the Effective Date by
either member of the TMS Management Group;
(D) Taxes (as herein defined) payable with respect to the Business or
the Assets arising prior to the Effective Date (As used in this
Agreement, the term "Taxes" means all federal, provincial, local,
foreign, and other net income, gross income, gross receipts, sales,
use, value-added, ad valorem, transfer, franchise, profits, license,
lease, service, service use, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits,
customs, duties, or other taxes, fees, assessments, or charges of any
kind whatsoever, together with any interest thereon and any penalties,
additions to tax, or additional amounts with respect thereto);
(E) liabilities or obligations under or in connection with any of the
Excluded Assets;
(F) except as otherwise expressly assumed by Buyer in this Agreement
(including, without limitation, the liabilities described in Section
2.4), liabilities or obligations
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arising prior to the Effective Date to any employees, agents, or
independent contractors of Seller employed or engaged primarily in
connection with the Business, whether or not employed by Buyer after
the Effective Date, or under any benefit arrangement with respect
thereto, unless any such liability or obligation was known prior to
the Effective Date by either member of the TMS Management Group; or
(G) notwithstanding anything to the contrary in items (A), (B), or
(C) above, all liabilities and obligations of TIS or USA listed on
SCHEDULE 2.4(G).
2.5 PRORATIONS. All rents, fees, and other charges required to be paid
under the Contracts, and all other current charges and expenses, shall be
prorated as of the Effective Date.
ARTICLE III. CLOSING
3.1 CLOSING. The closing of the transaction contemplated by this
Agreement (the "Closing") shall take place at the offices of Gambrell & Stolz,
L.L.P., at 303 Peachtree Street, Suite 4300, Atlanta, Georgia 30308 at 1:00
p.m. e.s.t. on September 26, 1997, but shall be effective as of the Effective
Date.
3.2 MANNER OF EFFECTING PURCHASE AND SALE. The sale, conveyance,
transfer, assignment and delivery of the Assets by TIS and USA to Buyer at
Closing shall be effected, as of the Effective Date, by bills of sale,
endorsements, assignments, transfers, and other instruments of transfer and
conveyance, all in such form as the parties may agree. In connection with the
transfer of all intangible assets related to the Business, TIS and USA, as
appropriate, shall provide to Buyer any and all written or recorded information
concerning any such property, including, but not limited to, documents
evidencing TIS' and/or USA's right and title to the Intellectual Property,
including, without limitation, the Trademarks, and TIS' or USA's, as the case
may be, sales and purchase records, accounts, and similar documentation relating
to the Business, TIS' or USA's, as the case may be, know-how concerning the
Business, as well as all of TIS' or USA's, as the case may be, business
documents and correspondence related to the Business.
3.3 THIRD PARTY CONSENTS. To the extent that TIS' or USA's, as the case
may be, rights under any Contract may not be assigned without the consent of
another person, which consent has not been obtained, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof or be unlawful, and Buyer, at Buyer expense, shall
use commercially reasonable efforts to obtain any such required consent(s) as
promptly as possible, and TIS or USA, as appropriate shall promptly cooperate
with all reasonable requests of Buyer to facilitate Buyer's efforts to obtain
such consents. If any such consent shall not be obtained, or if any attempted
assignment would be ineffective or would impair Buyer's rights under the
Contract in question so that Buyer would not in effect acquire the benefit of
all such rights, TIS or USA, as the case may be, to the maximum extent permitted
by law and under such Contract, shall (i) act after the Closing as Buyer's
agent, and at Buyer's expense, in order
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to obtain for it the benefits thereunder, and (ii) cooperate with Buyer in
all other reasonable arrangements designed to provide such benefits to Buyer.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller, as of the Effective Date, as follows:
(a) ORGANIZATION. Buyer is a corporation duly incorporated and
organized, validly existing, and in good standing, under the laws of the State
of Georgia. Buyer has full corporate power and authority to carry on its
business as such business is now being conducted.
(b) POWER, AUTHORITY, AND ENFORCEABILITY. Buyer has full corporate
power and authority to enter into and perform this Agreement and all agreements
to be executed and delivered by Buyer in connection herewith (collectively,
"Buyer's Ancillary Documents"), to the extent Buyer is a party thereto. The
execution and delivery by Buyer of this Agreement and each of Buyer's Ancillary
Documents and the performance by Buyer of its obligations hereunder and
thereunder have been duly authorized and approved by all requisite corporate
action. This Agreement is, and when executed and delivered, each of Buyer's
Ancillary Documents will be, the legal, valid, and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective terms. This
Agreement has been, and when executed and delivered, each of Buyer's Ancillary
Documents will be, duly executed and delivered by a duly authorized officer of
Buyer, to the extent Buyer is a party thereto.
(c) CONSENTS. No consent, authorization, order, or approval of, or
filing or registration with, any government, political subdivision, agency, or
other entity, exercising executive, legislative, judicial, regulatory, or
administrative functions of government (each, a "Governmental Authority") is
required for or in connection with the consummation by Buyer of the transactions
contemplated by this Agreement or Buyer's Ancillary Documents.
(d) NO VIOLATION. Neither the execution and delivery of this
Agreement or Buyer's Ancillary Documents by Buyer, nor the consummation by Buyer
of the transactions contemplated hereby or thereby, will conflict with or result
in a breach of any of the terms, conditions, or provisions of Buyer's Articles
of Incorporation or by-laws, or of any statute or administrative regulations, or
of any order, writ, injunction, judgment, or decree of any court or Governmental
Authority, or of any arbitration award or agreement binding on Buyer.
(e) BROKERAGE COMMISSIONS. Other than Concord Corporation (or its
principals), Buyer has not dealt with any person or entity who is or may be
entitled to a broker's commission, finder's fee, investment banker's fee, or
similar payment for arranging the transactions contemplated by this Agreement or
introducing the parties to each other.
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4.2 REPRESENTATIONS AND WARRANTIES OF SELLER. TIS, USA, and TCP jointly
and severally represent and warrant to Buyer, as of the Effective Date, that,
except as set forth in the schedule delivered by Seller to Buyer concurrently
herewith and identified as the "DISCLOSURE SCHEDULE" (any disclosure set forth
on the Disclosure Schedule, or any other schedule to this Agreement, shall be
deemed disclosed on all applicable schedules; provided, however, nothing that is
not specifically disclosed on one schedule shall be deemed disclosed with
respect to any other schedule), to Seller's knowledge, which knowledge
limitation extends to all representations and warranties made by any of TIS,
USA, or TCP in this Section 4.2 (including, without limitation, any
representation or warranty relating to the information contained in the
Disclosure Schedule):
(a) ORGANIZATION. Each Seller is a corporation duly incorporated and
organized, validly existing, and in good standing under the laws of its
jurisdiction of organization. TIS and USA have (i) all requisite power and
authority to own or lease and operate the Assets and to carry on the Business as
now conducted and as proposed to be conducted; and (ii) obtained all licenses,
permits, franchises, and other governmental authorizations necessary for the
ownership or operation of the Assets or the conduct of the Business.
(b) POWER, AUTHORITY, AND ENFORCEABILITY. Each Seller has full
corporate power and authority to enter into and perform this Agreement and all
agreements to be executed and delivered by such Seller in connection herewith
(collectively, "Seller's Ancillary Documents"), to the extent such Seller is a
party thereto. The execution and delivery by each Seller of this Agreement and
each of Seller's Ancillary Documents, to the extent each Seller is a party
thereto, and the performance by each Seller of its respective obligations
hereunder and thereunder, to the extent such Seller is a party thereto, have
been duly authorized and approved by all requisite corporate action. This
Agreement is, and when executed and delivered, each of Seller's Ancillary
Documents will be, the legal, valid, and binding obligations of each Seller, to
the extent such Seller is a party thereto, enforceable against such Seller in
accordance with their respective terms, to the extent each Seller is a party
thereto. This Agreement has been, and when executed and delivered, each of
Seller's Ancillary Documents will be, duly executed and delivered by a duly
authorized officer of each Seller, to the extent such Seller is a party thereto.
(c) NO CONSENT. No consent, authorization, order, or approval of, or
filing or registration with, any Governmental Authority is required for or in
connection with the consummation by Seller of the transactions contemplated by
this Agreement or Seller's Ancillary Documents.
(d) NO VIOLATION. Neither the execution and delivery of this
Agreement or Seller's Ancillary Documents by Seller, nor the consummation by
Seller of the transactions contemplated hereby or thereby, will conflict with or
result in a breach of any of the terms, conditions, or provisions of Seller's
Articles of Incorporation or by-laws, or of any statute or administrative
regulations, or of any order, writ, injunction, judgment, or decree of any court
or Governmental Authority, or of any arbitration award or any of the Contracts.
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(e) TITLE TO ASSETS. Either TIS or USA has good and marketable title
to the Assets, free and clear of any Claims, except for liens imposed by statute
securing the payment of taxes which are not due at the relevant time. No
unreleased mortgage, trust deed, chattel mortgage, security agreement, financing
statement, or other instrument encumbering any of the Assets has been recorded,
filed, executed, or delivered. There is no agreement, option, or other right or
privilege outstanding in favor of any person for the purchase from TIS or USA of
any of the Assets out of the ordinary course of business.
(f) INTERIM TRANSACTIONS. Since the Effective Date, TIS and USA have
operated the Business in the usual and ordinary course of business in accordance
with past practices (the foregoing representation and warranty shall not be
deemed to be breached by virtue of the entry by TIS and USA into this Agreement
or their consummation of the transaction contemplated hereby).
(g) MATERIAL ADVERSE CHANGE. Since the Effective Date, the Business
has not suffered or been threatened with any material adverse change in its
business, operations, assets, liabilities, financial condition, or prospects,
including, without limitation, the existence or threat of a labor dispute, or
any material adverse change in or loss of any relationship between TIS or USA
and any of its customers, suppliers, or key employees relating to the Business.
(h) CONTRACTS. All Contracts are in full force and binding upon the
parties thereto. No breach or default by TIS or USA or the other contracting
parties has occurred under any Contract.
(i) LITIGATION. The Disclosure Schedule includes a description of
all current or pending litigation known to Seller with respect to or affecting
the Business or the Assets or Seller's ability to consummate the transaction
contemplated under this Agreement. Except as set forth in the Disclosure
Schedule, there is no litigation or proceeding, in law or in equity, and there
are no proceedings or governmental investigations known to Seller before any
commission or other administrative authority, pending or threatened with respect
to or affecting the Business or the Assets, or related to the consummation of
the transaction contemplated under this Agreement.
(j) WARRANTIES. Seller has not made any oral or written warranties
with respect to the quality or absence of defects of the products or services
sold or performed in connection with the Business which are in force as of the
Effective Date, except as are described in the Disclosure Schedule. There are
no material claims pending, anticipated, or threatened against TIS or USA with
respect to the quality of or absence of defects in such products or services.
(k) ACCOUNTS RECEIVABLE. None of the Accounts Receivable is subject
to any counterclaim or set off, and all of the Accounts Receivable arose out of
bona fide, arms length transactions for the sale of goods or performance of
services.
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(l) INTELLECTUAL PROPERTY AND PROGRAMS. Except as provided in the
Disclosure Schedule, (i) all of the Intellectual Property is owned by TIS or
USA, as the case may be; (ii) the Trademarks have all been used without
interruption in the United States of America and Canada by USA or TIS, as the
case may be, or their respective predecessors-in-title; (iii) no other party has
been permitted to use or granted a license to use any of the Intellectual
Property other than in the ordinary course of business; (iv) TIS or USA is the
sole legal and beneficial owner of and is entitled to use the Intellectual
Property without payment of any royalty or other fees; (v) no proceedings have
been instituted or threatened that challenge the right of TIS or USA to own,
use, or license others to use any of the Intellectual Property or to distribute
the Programs to others; (vi) no: (A) process, method, or algorithm used,
practiced, performed, sold, or licensed to any party; (B) product, device, or
apparatus made, used, produced, sold, or licensed to any party; or (C) service
provided by TIS or USA or on their behalf, nor the conduct of the Business,
infringe any patent, trademark, trade name, trade secret, know-how, industrial
design, design patent, utility model, integrated circuit topography, mask work,
copyright, moral rights, neighboring right, or other industrial or intellectual
property or other right owned or used by another nor is the subject of any
pending or threatened legal, administrative, or regulatory proceedings or
outstanding court order; (vii) neither TIS nor USA has any pending or potential
claim, demand, or allegation charging any party with violation of its rights
with respect to the Intellectual Property or Programs; (viii) there is no patent
or patent application nor investigation by any person that would adversely
affect the Business or any product, apparatus, method, process, or design of TIS
or USA related to the Business; (ix) there is no government restriction or any
limitation, domestic or foreign, on the manner in which any of the Intellectual
Property may be used or licensed, other than certain governmental export
restrictions of general application; (x) TIS or USA has promptly identified any
invention made, conceived, or reduced to practice and has promptly filed
applicable patent applications for protection of any such invention and has,
until such filing of the first patent application has occurred, kept the
invention strictly secret and not permitted any disclosure, public use, or
publication of the elements of the invention or other means by which the
elements of the invention may become available to the public; (xi) all of the
Intellectual Property and Programs were created by employees of TIS or USA or
their predecessors-in-title working within the scope of the employment; (xii) in
each case of development of Intellectual Property and Programs set out in the
Disclosure Schedule, TIS or USA has obtained either a duly executed assignment
of all copyright, trademarks, obligations of confidence, property rights or any
other right, title, or interest in and to such Intellectual Property and
Programs as may have been developed or had such individual duly execute an
employment agreement with TIS or USA which employment agreement shall, in
addition to its other terms, transfer all such copyrights, trademarks,
obligations of confidence, property rights, and any other right, title or
interest in such prior developed Intellectual Property and Programs or any part
thereof to TIS or USA; (xiii) none of the Intellectual Property or Programs
violates or infringes any rights of others and neither TIS or USA has received
any notice of any claim or threat of such a violation or infringement; (xiv)
neither TIS or USA, nor any shareholder, officer, director, employee or former
employee of TIS or USA, or any third party, has disclosed any confidential
information of TIS or USA which relates to the Business, except in the ordinary
course of business of TIS or USA or with the authority of TIS or USA; (xv) TIS
or USA has obtained waivers of moral rights from any authors of the Programs
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such that TIS or USA may enjoy uninterrupted use, sale, distribution
modification, alteration and attribution of or for each such Program; and (xvi)
TIS or USA has obtained assignments or waivers of all applicable neighboring
rights from any authors of any Programs such that TIS or USA may enjoy
uninterrupted use, sale, distribution, reproduction, modification, alteration,
public display, publication, and attribution of or for each such Program.
(m) PROGRAMS AND TECHNOLOGY. Except as provided in the Disclosure
Schedule, (i) all rights in the Programs and the Technology are owned by TIS or
USA, as the case may be, and no further rights other than those under third
party licenses are necessary or desirable to use, manufacture, reproduce,
perform, operate, market, distribute, display, adapt, modify, create derivative
works, sell, license, or otherwise deal with any products, Programs, or
Technology of TIS or USA used in the Business; (ii) the use, manufacture,
reproduction, performance, operation, marketing, distribution, display,
adaptation, modification, creation of derivative works, sale, licensing or other
dealing with any of the products, Programs, or Technology of TIS or USA used in
the Business does not infringe on any rights of any third party; (iii) all of
the Programs distributed by TIS or USA in connection with the Business have been
developed, tested, and installed, and operate substantially in accordance with
TIS' or USA's specifications and user documentation therefor; (iv) Neither TIS
nor USA has provided any end user of any of the Programs except in circumstances
where the use of that Program is subject to the provisions of TIS' or USA's end
user license agreement (the "End User License Agreements"), copies of which have
been provided in the Disclosure Schedule; (v) except as set forth in the End
User License Agreements, neither TIS nor USA has any obligation or commitment to
develop, implement, or install modifications, corrections, enhancements,
improvements, or additional functions of the Programs distributed by TIS or USA
in connection with the Business; (vi) TIS or USA has maintained the Programs,
including, without limitation, all source code relating thereto, as strictly
confidential and a Trade Secret and has maintained sufficient contractual and
other arrangements to protect the confidentiality thereof; and (vii) none of the
Programs or Technology contains any trade secret of a third party; there is and
has been no infringement or claim of infringement of any rights of third parties
in or by the use of such Programs and Technology; there does not exist any facts
or circumstances which cause any of the rights represented by the Technology to
be unenforceable or which limit or restrict the scope of use, manufacture,
reproduction, performance, operation, marketing, distribution, display,
adaptation, modification, creation of derivative works, sale, licensing or other
dealing with any of the products, Programs, or Technology of TIS or USA.
(n) BROKERAGE COMMISSIONS. Other than Concord Corporation (or its
principals), Seller has not dealt with any person or entity who is or may be
entitled to a broker's commission, finder's fee, investment banker's fee, or
similar payment for arranging the transactions contemplated by this Agreement or
introducing the parties to each other.
4.3 LIMITATION ON WARRANTIES. Except as expressly set forth in Section
4.2, Seller makes no express or implied warranty of any kind whatsoever,
including, without limitation, any representation as to physical condition or
value of any of the Assets or the future profitability or
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future earnings performance of the Business. ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED.
Notwithstanding anything to the contrary contained in this Section 4.2,
Seller makes no representations or warranties with respect to the "TESS"
trademark, which is being purchased by Buyer "as is".
4.4 DEFINITION OF KNOWLEDGE. For the purposes of this Agreement, the
knowledge of Seller shall be deemed limited to the actual knowledge as of the
Effective Date of either Nicholas Gihl or Peter Nicholson, without giving effect
to imputed knowledge.
ARTICLE V. COVENANTS OF SELLER AND BUYER
5.1 INSPECTION OF RECORDS. From and after the Closing, Seller and Buyer,
and their respective affiliates, shall each retain and make their respective
books and records (including expired insurance policies and work papers in the
possession of their respective accountants) with respect to the Business
available for inspection by the other party, or by its duly authorized
representatives, for reasonable business purposes at all reasonable times during
normal business hours, for a seven (7) year period after the date hereof, with
respect to all transactions of Seller with respect to the Business occurring
prior to and relating to the Closing, and the historical financial condition,
assets, liabilities, operations, and cash flows of Seller with respect to the
Business. As used in this Section 5.1, the right of inspection includes the
right to make extracts or copies at the expense of the party requesting same.
Any investigation shall be conducted in such a manner so as not to interfere
unreasonably with the operation of the Business.
5.2 CONFIDENTIALITY. From and after the Closing, Seller agrees not to
communicate or divulge to any third party, or use for any purpose other than
evaluating and carrying out the transaction contemplated hereby, any
Confidential Information regarding the Business. Intending that the term shall
be broadly construed to include anything protectable under applicable law,
"Confidential Information" means all information, documents, and other tangible
items which record information, which at the time or times concerned is
predictable as a trade secret under applicable law. The preceding portions of
this Section 5.2 shall not apply to information (i) which was or becomes in the
public domain or independently received by Seller from a third party with a
right to disclose such information, or (ii) to the extent that disclosure is
required by law. Seller shall advise Buyer of any request, including a subpoena
or similar legal inquiry, to disclose any such Confidential Information, so that
Buyer can seek appropriate legal relief.
5.3 USE OF TRADEMARKS. From and after Closing, Seller shall not use, and
shall cause their respective affiliates not to use, and shall not license or
permit any third party to use, any name, slogan, logo, or trademark which is
similar or deceptively similar to any of the Trademarks.
5.4 HIRING AWAY EMPLOYEES. As an inducement to enter into this Agreement,
the parties agree that for the period from the Effective Date through August 1,
1999:
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(i) Seller shall not, and shall cause their respective affiliates not
to, hire or offer to hire any salaried, technical, or professional
employees of Buyer employed by Buyer in connection with the Business; and
(ii) Buyer shall not, and shall cause its affiliates not to, hire or
offer to hire any salaried, technical, or professional employees of Seller
employed by Seller, other than the Employees (as herein defined).
5.5 COVENANT NOT TO COMPETE. As an inducement for Buyer to enter into
this Agreement, Seller agrees that:
(A) NON-COMPETE. From and after the Closing and continuing for three
(3) years from the Effective Date, no Seller, nor any Affiliate of a Seller,
shall do any one or more of the following, directly or indirectly: (i) engage or
participate, anywhere in the continental United States or Canada, as an owner,
partner, shareholder, consultant, or (without limitation by the specific
enumeration of the foregoing) otherwise in any business engaged in the business
of developing, marketing, or supporting any product which performs the same or
substantially similar functions as the Programs (a "Competing Business"); or
(ii) solicit any customer of Buyer which has been a customer of the Business
within the past one (1) year to purchase from any source other than Buyer any
product or service which is the same or substantially similar to the Programs.
Notwithstanding the foregoing, the ownership by any Seller, or any Affiliate of
a Seller, of up to five percent (5%) of the issued capital stock of any publicly
traded company involved in a Competing Business by itself shall not constitute a
violation of any provision of this Section 5.5. For purposes hereof, (i) the
term "Affiliate" means, with respect to a particular person, any person or
entity which Controls that person, which that person Controls, or which is under
common Control with that person; provided, however, that any Affiliate of TIS,
USA, or TCP shall specifically not include (A) Digital Electronics Corporation
or its Affiliates; (B) any non-employee director of any Seller or their
respective Affiliates; or (C) any employees of any Seller, other than members of
TCP's management team; and (ii) the term "Control" means the power, direct or
indirect, to direct or cause the direction of the management and policies of a
person or entity through voting securities, contract, or otherwise.
(B) TOLLING; REASONABLENESS OF COVENANT. In the event of any breach
of paragraph (a) of this Section 5.5, the time period of the breached covenant
shall be extended for the period of such breach. Seller recognizes that the
territorial time and scope limitations set forth in this Section 5.5 are
reasonable and are required for the protection of Buyer, and in the event that
any such territorial, time, or scope limitations are deemed to be unreasonable
by a court of competent jurisdiction, Buyer and Seller agree to the reduction of
any of said territorial, time, or scope limitations to such an area, period, or
scope as said court shall deem reasonable under the circumstances.
(C) SALE OF TCP. Notwithstanding anything to the contrary in
subparagraphs (a) and (b) above, if any third party which is not an Affiliate of
TCP (i) acquires all or
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substantially all of the assets of TCP; (ii) enters into a transaction
involving a merger or consolidation with TCP where TCP is not the surviving
corporation of the transaction or the outstanding capital stock of TCP is
exchanged into consideration other than shares of capital stock of the
surviving corporation of the merger or consolidation; or (iii) acquires a
majority of the outstanding capital stock of TCP, then, in any such event,
such third party shall not be bound by the provisions of this Section 5.5.
5.6 INJUNCTIVE RELIEF. Seller specifically recognizes that any breach of
Sections 5.2, 5.3, 5.4(i), or 5.5 of this Agreement will cause irreparable
injury to Buyer, and Buyer specifically recognizes that any breach of Section
5.4(ii) will cause irreparable injury to Seller, and that actual damages may be
difficult to ascertain and, in any event, may be inadequate. Accordingly (and
without limiting the availability of legal or equitable, including injunctive,
remedies under any other provisions of this Agreement), Seller and Buyer agree
that in the event of any such breach, Buyer or Seller, as the case may be, shall
be entitled to injunctive relief in addition to such other legal and equitable
remedies that may be available.
5.7 EMPLOYEES. Buyer shall offer employment to all of the employees
listed on SCHEDULE 1.1(f) (the "Employees"), pursuant to such terms and at such
compensation as Buyer and such Employees may agree. Effective as of the
Effective Date, all such Employees employed by Buyer shall cease to be employees
of TIS or USA, as the case may be.
5.8 EFFECT OF TAYLOR'S EXISTING RELATIONSHIP WITH SELLER. The parties
expressly acknowledge that Taylor is a director of TCP, a shareholder, director,
officer, and employee of TIS, and a director and officer of USA, and the parties
expressly agree that the execution and delivery by Buyer and Taylor of this
Agreement, and their consummation of the transactions contemplated under this
Agreement, do not constitute a breach of any duty of loyalty which Taylor may
owe to Seller. Without limitation of the generality of the preceding sentence,
TIS expressly acknowledges and agrees that Buyer's and Taylor's consummation of
the transactions contemplated under this Agreement shall not constitute a breach
of any covenant or obligation to TIS of Taylor under that certain Employment
Agreement between Taylor and TIS, dated September 19, 1996, including, without
limitation, Section 6 of such Employment Agreement.
ARTICLE VI. CERTAIN TRANSITION MATTERS
6.1 CLOSING BALANCE SHEET; POST-CLOSING RECONCILIATION.
(a) On or before November 15, 1997, Seller shall cause to be prepared
and delivered to Buyer a statement (the "Closing Balance Sheet") of (i) all
Accounts Receivable that are collected by Seller, the proceeds of which are
retained by Seller; (ii) all accounts receivable which arise out of the
operation of the Business after the Effective Date, the proceeds of which are
retained by Seller; (iii) all liabilities and obligations which arise out of the
operation of the Business prior to the Effective Date (other than those
liabilities and obligations listed on SCHEDULE 2.4(i)) which are paid by Buyer;
(iv) all liabilities and obligations which (A) arise out of the
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operation of the Business after the Effective Date or (B) are listed on
SCHEDULE 2.4(i), which have been paid by Seller; and (v) all accounts
receivable (other than the Accounts Receivable) which arose out of the
operation of the Business prior to the Effective Date, the proceeds of which
are retained by Buyer. Subject to subparagraph (b) below, within ten (10)
days of Seller's presentation of the Closing Balance Sheet to Buyer, (A) if
the sum of items (i), (ii), and (iii) above exceed the sum of items (iv) and
(v) above, Seller shall pay such excess to Buyer; or (B) if the sum of items
(iv) and (v) above exceed the sum of items (i), (ii), and (iii) above, Buyer
shall pay such excess to Seller.
(b) The Closing Balance Sheet shall be subject to Buyer's review and
approval, which approval shall not be unreasonably withheld or delayed.
Notwithstanding anything to the contrary in this Section 6.1, in the event
Buyer, within ten (10) days of its receipt of Seller's proposed Closing Balance
Sheet, provides Seller with notice of Buyer's reasonable objections to such
proposed Closing Balance Sheet, then Buyer and Seller shall in good faith seek a
prompt compromise of any dispute over the Closing Balance Sheet. If any such
dispute is not resolved to the parties' mutual satisfaction within twenty (20)
days after Buyer's receipt of the Closing Balance Sheet, then Buyer and Seller
agree that Seller's proposed Closing Balance Sheet shall be submitted to Price
Waterhouse for final determination, which determination shall be binding upon
the parties. The cost of such review and report by Price Waterhouse shall, in
such event, be shared equally by TCP and Buyer. If Buyer does not notify Seller
of Buyer's reasonable objections to such proposed Closing Balance Sheet within
ten (10) days of its receipt thereof, Buyer shall be deemed satisfied with the
Closing Balance Sheet presented by Seller.
6.2 SELLER'S USE OF TRADE SHOW BOOTH. The parties acknowledge and agree
that TCP shall be provided exclusive use of the Trade Show Booth (as identified
in SCHEDULE 1.1(b)), including accessories and attachments thereto, at that
certain trade show to be held in Anaheim, California in October, 1997. Use of
the Trade Show Booth for such limited purpose shall be without charge to TCP,
provided TCP shall be responsible for all costs in connection with its use of
the Trade Show Booth, including transportation, assembly, and insurance costs,
and TCP shall be responsible at all times for risk of loss or damage to the
Trade Show Booth in connection with its use, transportation, and assembly
thereof. TCP will provide Buyer with reasonable advance notice of the dates of
TCP's retrieval and delivery of the Trade Show Booth, which retrieval and
delivery shall take place during normal business hours. Any persons or entities
engaged by Seller to transport or assemble the Trade Show Booth shall be subject
to Buyer's reasonable satisfaction.
6.3 E-MAIL ADDRESS AND DOMAIN NAME. For a period of one (1) year
following the Effective Date, Seller shall, at no expense to Buyer, "link"
Buyer's Universal Resource Locator ("URL") address for "Taylor Manufacturing
Systems" from Seller's primary URL address.
6.4 GUARANTEE OF LINE OF CREDIT. At Closing, or within a responsible
period of time thereafter, TCP shall enter into an unconditional Guaranty
Agreement, in such form as reasonably acceptable to TCP, guaranteeing a line of
credit to Buyer of up to $200,000 from a financial institution or other
institutional leader selected by Buyer. If so required by Buyer's financial
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institution or institutional lender, such Guaranty Agreement shall be secured by
a letter of credit from a lending source satisfactory to Buyer's financial
institution or other institutional lender. Such guarantee and letter of credit,
if required, shall be provided by TCP at no charge to Buyer, but in any event
may, in TCP's sole and absolute discretion, be cancelled by TCP upon the
ninetieth (90th) day after the Closing Date.
6.5 ACCOUNTING SERVICES FROM TIS. For a period of ninety (90) days
following the Closing Date, or such lesser time as elected by Buyer, TIS shall
provide to Buyer, at no cost to Buyer, administrative and business processing
services substantially similar in scope, quality, and nature to those provided
to, or procured on behalf of, TIS and USA immediately prior to the Effective
Date, including, without limitation, sales invoicing, accounts receivable
administration, accounts payable preparation, Canadian goods and sales tax
return preparation, Georgia sales tax return preparation, and monthly financial
reporting (within twenty-one (21) days of the previous month end). Such
accounting services shall expressly include assistance with preparing carry
forward schedules up to the Effective Date and reconciliations at the end of
such ninety (90) day period.
6.6 SUBSEQUENT SALE OF THE BUSINESS. If (A) any of the following
transactions are consummated on or before March 31, 1998 with any of the
entities identified on SCHEDULE 6.6 (a "Scheduled Purchaser"), or, (B) as of
March 31, 1998, an agreement in principal is reached or a non-binding letter of
intent or similar written expression of intent or understanding is entered into
by Buyer with respect to any of the following transactions, and such transaction
is actually consummated pursuant to such agreement or letter or expression of
intent:
(a) Buyer consummates a sale, lease, transfer, or other disposition of all
or substantially all of the assets or operations of the Business;
(b) Holdings consummates a sale, transfer, conveyance, or other
disposition of all or any stock in Buyer held or beneficially held of
record by Holdings;
(c) Taylor consummates a sale, transfer, conveyance, or other disposition
of all or any stock in Holdings held or beneficially held of record by
Taylor;
(d) Holdings or Buyer issues additional shares of stock in an amount equal
to or in excess of fifty percent (50%) of the total outstanding voting
shares of Holdings or Buyer, as the case may be, immediately after the
consummation of such transaction; or
(e) Holdings or Buyer enters into a merger or consolidation, whereby,
after the consummation of such transaction, the Scheduled Purchaser holds
at least fifty percent (50%) of the voting shares of stock of Holdings,
Buyer, or the surviving corporation, as the case may be;
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then, in any such event, at the closing of such transaction, Buyer, Holdings,
and Taylor jointly and severally shall pay TCP a cash payment equal to the
product of fifty percent (50%) of the difference between, (i) the value of all
consideration paid by the Scheduled Purchaser to Buyer, Holdings, and/or Taylor
in connection with such transaction, less (ii) the sum of:
(1) the Purchase Price, as adjusted pursuant to this Agreement;
(2) all capital expenditures made by Buyer in connection with the
Business on or after the Effective Date;
(3) all legal, financial, accounting, consulting, and brokerage costs
and expenses incurred by Buyer, Holdings, or Taylor in connection with
the consummation of transactions contemplated by this Agreement and
the consummation of the transaction with the Scheduled Purchaser, but
excluding legal, financial, accounting, consulting, and brokerage
costs and expenses incurred by Buyer, Holdings, or Taylor in obtaining
financing utilized for the consummation of the transactions
contemplated by this Agreement; and
(4) any consideration paid by the Scheduled Purchaser to Taylor or any
principal, director, officer, or employee of Holdings or Buyer as
payment for future services to be provided after the consummation of
the transaction with the Scheduled Purchaser to the extent that the
amount of consideration paid by the Scheduled Purchaser to Taylor or
such principal, director, officer, or employee, as the case may be,
does not exceed the value of the services to be provided.
Notwithstanding the foregoing, if Taylor or members of his immediate family do
not, either directly or indirectly, beneficially own all of the outstanding
capital stock of Buyer immediately prior to the consummation of any of the
transactions described above, then any payment to be made to TCP upon the
occurrence of any of the events described in subparagraph (a), (d), or (e) above
shall be reduced PRO RATA by the percentage of stock in Buyer, directly or
indirectly held or held beneficially of record by any person or entity other
than Taylor or an immediate family member of Taylor. Additionally, if Taylor
or members of his immediate family, either directly or indirectly, do not
dispose of their entire interest in Holdings under subparagraph (c) above, or if
Holdings, either directly or indirectly, does not dispose of its entire interest
in Buyer under subparagraph (b) above, then the amounts set forth in items (1),
(2), and (3) above shall be reduced PRO RATA by the percentage of stock in Buyer
or Holdings, as the case may be, directly or indirectly held or held
beneficially of record by Holdings or Taylor, or an immediate family member of
Taylor immediately after the consummation of such transaction.
In the event any portion of the Purchase Price to be paid by the Scheduled
Purchaser to Buyer or Taylor is deferred, the payment to be made to TCP pursuant
to this Section 6.6 shall be similarly deferred to represent that percentage of
the Purchase Price which is deferred. For purposes of determining the value of
consideration received by Taylor, Buyer, or Holdings, (i)
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all non-cash consideration received by Taylor, Buyer, or Holdings shall be
valued at its fair market value to be mutually agreed upon by Seller and
Buyer; and (ii) such value shall be increased by any debt of Taylor, Buyer,
or Holdings assumed by the Scheduled Purchaser in connection with such
transaction.
6.7 EMPLOYEE BENEFITS. No portion of the assets of any employee benefit,
welfare, bonus, profit sharing, deferred compensation, stock option, stock
purchase or stock compensation (including, without limitation, the "virtual
stock" plan maintained by TIS and USA for the Employees), retirement,
hospitalization insurance, medical and dental insurance, disability insurance,
or similar plan or practice relating to the Employees, whether written or
unwritten, heretofore sponsored or maintained by Seller (and no amount
attributable to any such plan) shall be transferred to Buyer, and Buyer shall
not be required to continue any such plan after the Effective Date, except for
accrued vacation liabilities to the extent they appear on SCHEDULE 2.4(i). In
no event shall Buyer be liable for any claim for insurance, reimbursement, or
other benefits payable by reason of any event which occurs prior to the
Effective Date. All amounts payable directly to Employees, or to any such plan
maintained by Seller for Employees, shall be paid by Seller within thirty (30)
days after the Closing Date to the extent that such payment is not inconsistent
with the terms of such plan.
6.8 INSTALLATION, MAINTENANCE, SERVICE, AND SUPPORT OBLIGATIONS. The
Disclosure Schedule includes a list of all agreements with customers of the
Business, as of the Effective Date, pursuant to which Seller is required to
install Programs or provide maintenance, service, or support for the Programs
(all such installation, maintenance, service, and support obligations being
collectively referred to herein as the "Customer Obligations"). The Disclosure
Statement additionally sets forth, as of the Effective Date, the amount of fees
invoiced and/or paid by customers under such agreements, the basis (i.e., hourly
vs. annual) for the calculation of such fees, the Customer Obligations performed
by Seller up to the Effective Date and to be performed by Buyer on or after the
Effective Date under such agreements, and an allocation thereof between Seller
and Buyer based on that portion of the Customer Obligation period remaining as
of the Effective Date. Buyer agrees to assume Seller's Customer Obligations
under all such agreements described in the Disclosure Schedule, subject to
obtaining from the customers consents required therefor, pursuant to Section
3.3. In addition to Buyer's rights under Section 3.3, to the extent Seller is
unable to obtain a customer consent to the assignment and assumption of Seller's
Customer Obligations, as contemplated hereunder, Seller shall retain such
Customer Obligations, and Seller and Buyer shall enter into a subcontract
agreement under which Buyer shall be obligated to provide such Customer
Obligations to the customer in accordance with the terms of the contractual
arrangement between Seller and the customer, in which event Seller shall
promptly remit to Buyer all funds received by Seller from customer for such
Customer Obligations. If a satisfactory customer consent is obtained from any of
such customers, such subcontract agreement shall terminate with respect to such
particular customer, and Buyer shall assume Seller's prospective Customer
Obligations with respect to such particular customer.
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6.9 EXCLUDED ACCOUNTS RECEIVABLE. Buyer will use reasonable commercial
efforts to collect any account receivable existing as of the Effective Date
which is not included in the Accounts Receivables, provided, however, in no
event shall Buyer be required to institute litigation to collect any such
account receivable. Buyer shall remit to Seller, within thirty (30) days of the
month end in which such funds are received by Buyer, any funds which Buyer
receives representing payment made on an account receivable which is not
included in the Accounts Receivable.
ARTICLE VII. INDEMNITY
7.1 GENERAL. From and after the Closing, the parties shall indemnify each
other as provided in this Article VII. As used in this Agreement, the term
"Damages" shall mean all liabilities, demands, claims, actions, or causes of
action, regulatory, legislative, or judicial proceedings or investigations,
assessments, levies, losses, fines, penalties, damages, costs, and expenses,
including, without limitation, reasonable attorneys', accountants',
investigators', and experts' fees and expenses, sustained or incurred in
connection with the defense or investigation of any claim for Damages.
7.2 SELLER'S LNDEMNIFICATION OBLIGATIONS. Each Seller, jointly and
severally, shall indemnify, save, and keep Buyer and its successors and assigns
(each a "Buyer Indemnitee" and collectively the "Buyer Indemnitees") forever
harmless against and from all Damages sustained or incurred by any Buyer
Indemnitee, as a result of, arising out of, or by virtue of:
(i) any inaccuracy in or breach of any representation or
warranty made by Seller to Buyer in this Agreement or in any Seller's
Ancillary Document;
(ii) any breach by any Seller of, or failure of any Seller to
comply with, any of the covenants or obligations under this Agreement
or any Seller's Ancillary Document to be performed by any Seller
(including, without limitation, its obligations under this Article
VII); or
(iii) the failure to pay when due any of the liabilities
retained by Seller pursuant to Sections 2.4(A)-(G).
7.3 BUYER'S INDEMNIFICATION COVENANTS. Buyer shall indemnify, save, and
keep Seller and their respective successors and assigns (each a "Seller
Indemnitee" and collectively the "Seller Indemnitees"), forever harmless against
and from all Damages sustained or incurred by any Seller Indemnitee, as a result
of, arising out of, or by virtue of:
(i) any inaccuracy in or breach of any representation or
warranty made by Buyer to Seller in this Agreement or in any Buyer's
Ancillary Document;
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(ii) any breach by Buyer of, or failure of Buyer to comply with,
any of the covenants or obligations under this Agreement or any
Buyer's Ancillary Document to be performed by Buyer (including,
without limitation, its obligations under this Article VII); or
(iii) the failure to pay when due any of the liabilities assumed
by Buyer pursuant to Sections 2.4(i)-(vi).
7.4 CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for
indemnification hereunder, the claiming party (the "Indemnified Party") shall
promptly (and in no event more than 120 days after the later to occur of
incurring Damages or discovering the facts giving rise to the claim) notify the
indemnifying parties (the "Indemnifying Parties") of the claim and, when known,
the facts constituting the basis for such claim, provided that the Indemnified
Party's failure to give such notice shall not affect any rights or remedies of
the Indemnified Party hereunder with respect to indemnification for Damages
except to the extent that the Indemnifying Parties are materially prejudiced
thereby. In the event of any claim for indemnification hereunder resulting from
or in connection with any claim or legal proceedings by a third party, the
notice to the Indemnified Parties shall specify, if known, the amount or an
estimate of the amount of the liability arising therefrom. The Indemnified
Party shall not settle or compromise any claim by a third party for which it is
entitled to indemnification hereunder, without the prior written consent of the
Indemnifying Parties (which shall not be reasonably withheld).
7.5 DEFENSE BY INDEMNIFYING PARTIES. In connection with any claim giving
rise to indemnity hereunder or resulting or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the Indemnifying
Parties, at their sole cost and expense may, upon written notice to the
Indemnified Party, assume the defense of any such claim or legal proceeding if
they acknowledge to the Indemnified Party in writing their obligations to
indemnify the Indemnified Party with respect to all elements of such claim and
thereafter diligently conduct the defense thereof. The Indemnified Party shall
be entitled to participate in (but not control) the defense of any such action
with its counsel and at its own expense. If the Indemnifying Parties do not
assume or fail to conduct in a diligent manner the defense of any such claim or
litigation resulting therefrom, (i) the Indemnified Party may defend against
such claim or litigation, in such manner as it may deem appropriate, provided,
however, that the Indemnified Party shall not settle any such claim or
litigation without the prior written consent of the Indemnifying Parties, which
consent shall not be unreasonable withheld, and (ii) the Indemnifying Parties
shall be entitled to participate in (but not control) the defense of such action
with their counsel and at their own expense. If the Indemnifying Parties
thereafter seek to question the manner in which the Indemnified Party defended
such third party claim, the Indemnifying Parties shall have the burden to prove
by a preponderance of the evidence that the Indemnified Party did not defend
such third party claim in a reasonably prudent manner. Each party agrees to
cooperate fully with the other, such cooperation to include, without limitation,
attendance at depositions and the provision of relevant documents as may be
reasonably requested by the Indemnifying Parties, provided that the
20
<PAGE>
Indemnifying Parties will hold the Indemnified Party harmless from all of
their out of pocket expenses, incurred in connection with such cooperation by
the Indemnified Party.
7.6 EXCEPTIONS TO INDEMNIFICATION OBLIGATIONS. Notwithstanding anything
to the contrary contained herein, (i) an Indemnified Party shall not be entitled
to maintain a claim against any Indemnifying Party in respect of any Damage of
any nature suffered or incurred by an Indemnified Party as a result of such
party's own gross negligence or wilful misconduct, or as a result of any
occurrence, matter, or thing, the occurrence, existence, or nondisclosure of
which constitutes a breach of failure of any representation, warranty, covenant,
or other obligation of any Indemnified Party hereunder; (ii) an Indemnified
Party shall not be entitled to recover any indirect, incidental, consequential,
or special damages from any Indemnifying Party; (iii) each Indemnified Party
shall be obligated to use reasonable efforts to mitigate any Damages sustained
by it in connection with any matter for which an Indemnified Party may have
liability to it; (iv) an Indemnified Party shall not be entitled to
indemnification pursuant to this Article VII (A) for any claim, or series of
related claims, for Damages which are less than $1,000 in the aggregate; (B) for
any claim, or series of related claims, for Damages that are equal to or exceed
$1,000 in the aggregate, until the total amount of Damages incurred by such
Indemnified Party with respect to such claims exceeds $5,000 in the aggregate,
provided, however, that once the aggregate amount of Damages incurred by such
Indemnified Party with respect to such claims exceeds $5,000 in the aggregate,
such Indemnified Party shall be entitled to indemnification from the
Indemnifying Parties for all amounts of Damages incurred with respect to such
claims; and (C) to the extent the claim for indemnification is based upon
circumstances which resulted in a payment to the Indemnified Party pursuant to
Section 6.1; (v) except in the case of a matter involving fraud on the part of
any Indemnifying Party, all claims for indemnification pursuant to this Article
VII must be asserted in writing and delivered to the Indemnifying Party on or
prior to the two year anniversary from the Effective Date, except for (x) claims
for indemnification pursuant to Section 7.2(i) with respect to a breach of
Sections 4.2(a), (b), and (e) which may be asserted at any time after the date
hereof; (y) claims for indemnification pursuant to Section 7.3(i) with respect
to a breach of Sections 4.l(a) or (b) which may be asserted at any time after
the date hereof; and (z) claims for indemnification pursuant to Section 7.2(iii)
with respect to Seller's failure to pay the liabilities described in Section
2.4(D) which may be asserted at any time prior to the expiration of any
applicable statute of limitations (other than claims for Damages relating to
sales and use taxes which may only be asserted for a period of two years from
the Effective Date); (vi) Seller Indemnitees' indemnification obligation
hereunder shall be limited to the remaining outstanding principal balance of
that certain Promissory Note (the "Note") from Taylor in favor of TCP, dated
September 25, 1997, as of the date a claim for indemnification is made; (vii)
Buyer Indemnitees' indemnification obligation hereunder shall be limited to
$2,000,000; (viii) with respect to claims for Damages by a Buyer Indemnitee
relating to sales and use taxes, (1) the $1,000 threshold set forth in
subsection 7.6(iv)(A) above shall be deemed to be a $2,000 limitation, and (2)
the aggregate claims for Damages by a Buyer Indemnitee shall be limited to fifty
percent (50%) of such Damages; (ix) an Indemnified Party shall not be entitled
to recover under this Article VII to the extent the Indemnified Party receives
payment for such claim under any insurance policy maintained by such Indemnified
Party; and (x) the Buyer Indemnitees shall not be entitled to
21
<PAGE>
indemnification pursuant to this Article VII to the extent the matter subject
to the claim for indemnification was known by either member of the TMS
Management Group prior to the Effective Date, except for claims relating to
(A) any liability or obligation of TIS or USA listed on Schedule 2.4(G); (B)
Taxes; (C) liens held by American National Bank & Trust Company of Chicago on
the Assets; (D) customer returns and warranty claims listed on SCHEDULE
2.4(vi); (E) any fees that may be owed by Seller to Michael Blitzer
Associates or Adams, Harkness & Hill, Inc.; and (F) any liabilities or
obligations under or in connection with any of the Excluded Assets.
7.7 SET-OFF. Upon the final resolution of any claim for indemnification
by Buyer or Taylor pursuant to this Article VII, Taylor may, at his sole
election, set off its right, or the right of Buyer, to receive payment under
this Agreement from each Seller, whether for a Seller's breach or otherwise,
against amounts owed by Buyer to such Seller pursuant to the terms of this
Agreement and/or the Note, on a dollar for dollar basis, with any such set off
being effective upon the final resolution of such claim for indemnification.
7.8 EXCLUSIVITY. The provisions of this Article VII shall apply to any
claim for breach of any covenant, representation, warranty, or other provision
of this Agreement or any Buyer Ancillary Document or Seller Ancillary Document,
as the case may be (other than a claim for specific performance or injunctive
relief), with the intent that all such claims shall be subject to the
limitations and other provisions contained in Article VII. Except in a matter
involving fraud on the part of an Indemnifying Party, (i) indemnification
pursuant to the provisions of this Article VII shall be the exclusive remedy of
the parties for any misrepresentation or breach of warranty or covenant
contained herein or in any closing document executed and delivered pursuant to
the provisions hereof; (ii) the only legal action which may be asserted by any
party with respect to any matter which is the subject of this Article VII shall
be a contract action to enforce, or to recover damages for the breach of, this
Article VII; and (iii) without limiting the generality of the preceding
sentence, no legal action sounding in tort or strict liability may be maintained
by any party.
ARTICLE VIII. MISCELLANEOUS
8.1 NOTICES. Any notices required or permitted to be given hereunder
shall be in writing and may be delivered by hand, by facsimile, or by nationally
recognized private courier. Notices delivered by hand, by facsimile, or by
nationally recognized private courier shall be deemed given on the first
business day following receipt; provided, however, that a notice delivered by
facsimile shall only be effective if such notice is also delivered by hand, or
deposited in the United States mail. All notices shall be addressed as follows:
If to Buyer or Taylor:
Taylor Manufacturing Systems, Inc.
5255 Triangle Parkway, Suite 500
Norcross, Georgia 30092
22
<PAGE>
ATTN: President
Fax: (770) 368-4998
with a copy to:
Neil R. Taylor
7711 139th Street
Edmonton, Alberta, Canada T5R OE9
Fax: (403) 481-9859
and
Gambrell & Stolz, L.L.P.
303 Peachtree Street, N.E.
Suite 4300
Atlanta, Georgia 30308
ATTN: James R. McGuone
Fax: (404) 221-6501
If to Seller:
Total Control Products, Inc.
2001 North Janice Avenue
Melrose Park, Illinois 60160
ATTN: Mr. Nicholas Gihl
Fax: (708) 345-5670
with a copy to:
D'Ancona & Pflaum
30 North LaSalle Street, Suite 2900
Chicago, Illinois 60602
ATTN: Mark Albert, Esq.
Fax: (312) 580-0923
and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section 8.1.
8.2 EXPENSES. Except as otherwise provided herein, each party hereto
shall bear all costs, fees, and expenses incurred by such party in connection
with, relating to, or arising out of the negotiation, preparation, execution,
delivery, and performance of this Agreement and all agreements executed and
delivered in connection herewith and the consummation of the transaction
23
<PAGE>
contemplated hereby and thereby, including, without limitation, attorneys',
accountants', environmental consultants', brokers', and other professional fees
and expenses.
8.3 ENTIRE AGREEMENT. This Agreement and the instruments to be delivered
by the parties pursuant to the provisions hereof or in connection herewith
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall be binding upon and inure to the benefit of the parties
hereto and their respective legal representatives, successors, and permitted
assigns. Each Exhibit and Schedule, including the Disclosure Schedule, shall be
considered incorporated into this Agreement. Any amendments, or alternative or
supplementary provisions to this Agreement, must be made in writing and duly
executed by an authorized representative or agent of each of the parties hereto.
8.4 SURVIVAL; NON-WAIVER. All representations and warranties shall
survive the Closing for a period of time set forth in Section 7.6(v) hereof.
The failure in any one or more instances of a party to insist upon performance
of any of the terms, covenants, or conditions of this Agreement, to exercise any
right or privilege in this Agreement conferred, or the waiver by said party of
any breach of any of the terms, covenants, or conditions of this Agreement shall
not be construed as a subsequent waiver of any such terms, covenants,
conditions, rights, or privileges, but the same shall continue and remain in
full force and effect as if no such forbearance or waiver had occurred. No
waiver shall be effective unless it is in writing and signed by an authorized
representative of the waiving party. A breach of any representation, warranty,
or covenant shall not be affected by the fact that a more general or more
specific representation, warranty, or covenant was not also breached.
8.5 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall constitute but one instrument.
8.6 SEVERABILITY. The invalidity of any provision of this Agreement, or
portion of a provision, shall not affect the validity of any other provision of
this Agreement or the remaining portion of the applicable provision.
8.7 APPLICABLE LAW. This Agreement shall be governed by, and interpreted
and enforced in accordance with, the laws of the State of Georgia (excluding any
conflict of laws, rule or principle which might refer such interpretation to the
laws of another jurisdiction) and the laws of United States of America
applicable therein. Additionally, in any litigation brought by Buyer, TIS
waives personal service of any summons and agrees that service thereof to TIS
may be made by certified or registered mail directed to TIS, care of TCP, at
TCP's address set forth in Section 8.1.
8.8 BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto, and their successors and permitted assigns.
Nothing in this Agreement, express or implied, is intended to confer on any
person other than the parties hereto, and their respective
24
<PAGE>
successors and permitted assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
8.9 ASSIGNABILITY. This Agreement shall not be assignable by either party
without the prior written consent of the other party.
8.10 AMENDMENTS. This Agreement shall not be modified or amended except
pursuant to an instrument in writing executed and delivered on behalf of each of
the parties hereto.
8.11 HEADINGS. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
25
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on their behalf on the date indicated.
SELLER:
TAYLOR INDUSTRIAL SOFTWARE INC.
BY: /s/Nic Gihl
----------------------------------------------
TITLE: President
-------------------------------------------
TAYLOR INDUSTRIAL SOFTWARE
(USA), INC.
BY: /s/Nic Gihl
----------------------------------------------
TITLE: Vice President
-------------------------------------------
TOTAL CONTROL PRODUCTS, INC.
BY: /s/Nic Gihl
----------------------------------------------
TITLE: President & CEO
-------------------------------------------
BUYER:
TAYLOR MANUFACTURING SYSTEMS, INC.
By: /s/ Ursula Hess
----------------------------------------------
Title: President
-------------------------------------------
TAYLOR:
/s/Neil R. Taylor
-------------------------------------------------
NEIL R. TAYLOR
26
<PAGE>
SCHEDULE 1.1(a)
[DESCRIPTION OF PROGRAMS]
TAYLOR EXECUTIVE SCHEDULING SYSTEM (TESS) - All computer programs and
systems, modules, databases, software products, and related data and materials
(whether in source code, object code, customization code, or other form)
associated with all versions of Taylor Executive Scheduling System (TESS)
(whether released or not), a modular, Windows-based, ODBC compliant production
scheduling application, including the following modules:
- Scheduling engine (C);
- Graphical Gantt chart (C);
- Powerbuilder developed data display and maintenance screens;
- Import/export modules (C); and
- ODBC compliant database interface module.
MANUFACTURING RESOURCE SCHEDULER (MRS) - All computer programs and
systems, modules, databases, software products, and related data and materials
(whether in source code, object code, customization code, or other form)
associated with all versions of Manufacturing Resource Scheduler (MRS )
(whether released or not).
<PAGE>
SCHEDULE 1.1(b)
[LIST OF PERSONALTY]
OFFICE EQUIPMENT/HARDWARE
Item Serial /ID Number
---- ------------------
Reception ACROS 486DX2/50 495621
Monitor - WYSE 29JX4A16076
Seiko Instrument label printer Z940170144
Toshiba Fax TF651 Turbo 95040322
Toshiba Copier 3550 JK313196
Ibimatic binder machine 26149CG
HP 4L printer USCC527249
HP 4L plus printer JPGLL059921
CD Player 3601085
3M 910 Overhead projector 684956
Ursula Toshiba 410CS Satellite Pro 11513609 - dead
Toshiba 430CDS Satellite Pro 02728538-3
Fred Toshiba 430CDS Satellite 04798418-3
Pro/Pentium 120
HP Laser Printer USFB022160
Model #C3990A
Fax Machine Brother A57232294
AT&T Phone #1720 A207GD
Answering Machine B065GD
Caller ID C0392067760
[FCC #E6JCHN-21956-ND-T]
Darren Texas Instruments TravelMate 07719402935
4000E 486 Win DX2/50Mhz
Andrew Toshiba Satellite Pro 435CDS 11513609
Pentium 120
Weger Toshiba Satellite Pro 420CDS 07650948-3
Monitor Packard Bell GSMN44535691
Empty Acer 486 4200 072055 or 91.AA228.004 A644178
Cubicle Monitor: KFC serial A4KKU4B49894
near supply Modem: US Robotics
Sportster 33.6 external
fax modem 0008390364425608
Empty Adventech 612186
Cubicle IBM 23-8062340
near kitchen Monitor 20Z02740
<PAGE>
Item Serial /ID Number
---- ------------------
Spare Texas Instruments 387A330276
Computer Acer M001975
Leap ACER Pentium-S CPU 100MHz #05079611
Monitor: ACER 55 M5AP60502435 P 1
Joiner Pentium 166 10149625
Monitor Acer Acerview 76i M7EH62527160 H1
Malcolm Advantech Pentium-90 no serial #
32MB RAM, 520MB + 1.5GB HD
KFC 1716DL 17" monitor ALKKU4857958
Jeff Advantech Pentium 100 612191
Monitor : KFC ALKKU4B57926
Sathya Pentium 166MHz 32MB RAM,
1.6 GB HD,
Toshiba CD-ROM. 11049605
AcerView 76ie 17" monitor, M7EH62527269 H1
Pleak Monitor: Acer 15" Monitor - # M5HP64405371
Toshiba Satellite 110CT/810 -# 08651396-1
Dean Toshiba 430CDS, Pentium 120 12626875-1
Texas Instrument 4000E
Color 486DX 2/50 507A3300777
Ingo's stuff
===================
Texas Instruments TravelMate 4000E 18719401289
Advantech 486DX2-66 612185
16MB RAM, 520MB HD, Supra Faxmodem
AOpen Pentium-166 11049606
32MB RAM, 2.1 GB HD
KFC 14" monitor C1KKU5548171
ACER Acerview 76ie 17" monitor M7EH65256003
ZOOM V.34 Faxmodem 1115ZX8L0936
Intel Faxmodem PCFM6401 00653612313
Colorado 350 external tape drive US01418585
Iomega ditto Easy 800 external tape drive U026216168
US Robotics Faxmodem
<PAGE>
Item Serial /ID Number
---- ------------------
The file servers
===================
Panasonic PanaSync 1381 monitor KH0362081
APC 600 UPS FB9645101774
No name 486-33 none
32MB RAM, 200MB + 500MB HD
AOpen Pentium-133 109607987
64MB RAM, 2.1 GB HD
Iomega ditto 3200 internal tape drive U3063910K7
US-Robotics internal Faxmodem 8400362601356
ADDITIONAL ITEMS
- ----------------
Cables
<PAGE>
TMS OFFICE FURNITURE
- --------------------
URSULA:
1 Bookcase
1 Executive Desk
1 Credenza
1 Round Conference Table
1 Top Hat Hi-back chair (blk)
2 Lateral File (personal)
2 Hi-back guest chairs (gray)
PLEAK:
1 Executive Desk
1 Bookcase
1 Pendaflex file
1 Top Hat Hi-back chair (blk)
2 Guest chairs (round gray)
ANDREW:
1 Executive Desk
1 Credenza
1 Top Hat hi-back chair (blk)
2 Guest chairs (round gray)
OFFICE NEXT TO URSULA:
1 Executive Chair
Bookcase
1 Blue work chair
SMALL CONFERENCE ROOM:
1 Table
4 Round gray chairs
LARGE CONFERENCE ROOM:
4 Tables
5 Hi-back gray chairs
1 Lateral metal file cabinet
1 Projector Screen
1 Projector Cart
RECEPTION/STOCK/MAIL AREAS:
Meridian / Norstar Telephone System
3 Bernhardt chairs (tan)
2 Coffee tables
2 Lateral files
1 Work chairs
1 Desk/computer stand work unit
5 Large bookcases (3 blk, 2 mahogany)
2 Brown tables
1 Gray table
2 Gray file cabinets (1 in Malcolm's cubicle)
1 Gray supply cabinet
1 Metal desk
12 Work chairs (blue)
1 Work chair (gray)
4 red chairs (kitchen)
1 table (kitchen)
APPLIANCES (GA OFFICE):
Refrigerator
2 Coffee Makers
Microwave
Toaster Oven
Water Cooler (leased)
Additional Items - GA Office
Plants
11 Cubicles (workstations)
Trade Show booth
FRED CALLAHAN:
Executive Desk
Credenza
Executive Chair
EDMONTON:
TESS user Guides and related supplies
<PAGE>
SCHEDULE 1.1(c)
[LIST OF PREPAID ITEMS]
ENTITY: AMOUNT:
Ohio Bureau of Workers Compensation $ 148.10
Peterson Management 5,380.05
Alliance Credit Corporation 809.59
Alliance Credit Corporation 1,004.24
Advanced Manufacturing Research 1,666.71
Digitel Corp. 1,021.56
----------
$10,030.25
<PAGE>
SCHEDULE 1.1(d)
[LIST OF ACCOUNTS RECEIVABLE]
CUSTOMER: AMOUNT:
Wyeth Ayerst Laboratories $ 22,924.00
Union Camp 371.00
Spargo Wire 16,875.00
Rexroth Corporation 19,800.00
Alcan Cable 19,841.00
ESAB Welding and Cutting 13,650.00
Lamb Grays Harbour 14,550.00
Zenith Specialty Bag 18,636.00
Banner Packaging 5,310.00
CMI Industries 12,750.00
Pfizer Italiana 6,045.00
SSA 56,400.00
Chicago Bridge and Iron 83,413.00
Phelps Dodge Corporation 5,096.00
Phelps Dodge Corporation 36,000.00
Alcon Laboratories 5,231.00
Unifirst Corporation 79,025.00
Chineta 4,306.00
Phizer Pharmaceuticals 3,000.00
Quaker Fabrics 3,523.00
Island Paper 2,472.00
-----------
$429,218.00
<PAGE>
SCHEDULE 1.1(f)
[LIST OF CONTRACTS]
A. THIRD PARTY SOFTWARE LICENSES:
TESS
1. Microsoft Visual C++
2. Borland C++
3. Powerbuilder
4. PVCS Version Control
5. PVCS Tracker, error tracking database
6. Sybase SQL Anywhere Database
7. Oracle 7.x Database
8. Microsoft Access Database
9. Microsoft SQL Server Database
10. Windows 3.x, Windows 95, Windows NT
11. Microsoft Project
12. Microsoft Office ('95-'97)
13. Lotus Screen Cam
14. Win Help Office
15. Paint Shop Pro
16. Info Maker
MRS
1. DBASE
2. Watcom C
3. PVCS Version Control
4. MS DOS
MISCELLANEOUS
1. Harvard Graphics 3.0
2. Harvard Graphics Special Upgrade
3. Borland Paradox
4. PowerBuilder 3.1
5. PowerBuilder Entreprise (Japanese Version 4.0)
6. PowerBuilder 5.0
7. SQL Watcom (single user)
8. SQL Watcom (3 user network)
9. Maximizer
10. Novell New Ware 3.1 (10 user license)
11. Visio
12. McAfee Virus Scan
13. Filemaker Pro
14. Oracle 7.1 for Novell
15. OS/2 Warp 3.0
16. StarDesignor
<PAGE>
17. MS Windows Workgroup
18. MS SQL Server Training 6.5
19. MS Developer Network
20. MS Windows NT Server 4.0
21. MS Client License Pak
22. Robohelp 3
23. Robohelp
B. ALL LICENSE AGREEMENTS WITH RESPECT TO THE PROGRAMS FOR THE FOLLOWING
CUSTOMERS:
1. Adams Elevator
2. Alcan Cable
3. American National Can
4. Amgen
5. Banner Packaging (Bemis Corporation)
6. CEF Industries
7. Centre de Technologies Noranda
8. Chicago Bridge & Iron
9. Chineta
10. CIM Competative Solutions
11. Clarity Development
12. Clemson Univ.
13. CMI
14. Crowe Chizek
15. Dunlop Tire
16. Duron Paint & Wallcoverings
17. ESAB Welding & Cutting
18. Evergreen Packaging
19. Freightliner Corporation
20. Geneva Pharmaceutical
21. Harris Canada-GE
22. Hydril
23. Illbruck
24. InBrand
25. Island Paper
26. Kamco
27. Kawneer
28. Kyocera
29. Lamb Grays Harbor
30. Menasha
31. National Steel (Phillipines)
32. Novatec GmBh
33. Paklog
34. Pfizer - Australia
35. Pfizer - France
<PAGE>
36. Pfizer - Europe
37. Pfizer - Italy
38. Pfizer - Japan
39. Pfizer - Puerto Rico
40. Pfizer - Zaventem
41. Pfizer Pharmaceuticals, Inc.
42. Phelps-Dodge
43. RBW Graphics
44. Rexroth
45. Seton Company
46. Spargo Wire
47. Spactrum Group
48. SSA
49. Tietex
50. Tremco
51. Unifirst Corp.
52. Union Camp
53. Van Leer
54. Walsh Automation
55. Winis Conseil
56. Wyeth-Ayerst
57. Wynn's Precision
58. Zenith Bag
C. MARKETING RELATED AGREEMENTS:
1. System Software Associates, Inc.
2. Interactive Group Incorporated
3. Aries Inganieria Sistemas, S.A.
D. EMPLOYMENT AGREEMENTS OF THE FOLLOWING INDIVIDUALS:
Fred Callahan
Malcolm Campbell
Darrien Dines
Ursula Hess
David Joiner
Bonnie Lasater
David Leap
Jeff Muelhauser
David Pleak
Dean Rosychuk
Sandi Thomas
Andrew Vick
Satya Vrid
<PAGE>
James Walton
David Weger
Ingo Wilhelm
E. LEASES:
1. Lease Agreement entered into between Boca Corners, L.P. (now
CarrAmerica Realty Corporation) and Taylor Industrial Software (USA)
Inc. for space located at Suite 500, 5255 Triangle Parkway, Norcross,
Georgia 30092, dated March 27, 1995.
2. Lease Agreements between Taylor Industrial Software Inc. and Alliance
Credit Corporation:
a) No. 541053 - Toshiba Copier
b) No Number - Partitions, Work Surfaces, Equipment
3. Pitney Bowes Credit Corporation, Account No. 9634791, for mail machine
and related equipment
4. CTG, a division of TIE/Communications Canada Inc. - telephone sets,
lines, display sets and other equipment
F. EMPLOYEE BENEFIT AGREEMENTS:
1. Fortis Benefits Insurance Company, Group # 72931-0 (Life)
2. Guardian Insurance Co., Group # 305831 (Dental)
3. Humana Employers Health Plan of Georgia, Inc., Group # 6041228
(Medical)
<PAGE>
SCHEDULE 1.1(g)
[LIST OF TRADEMARKS]
1. Taylor Manufacturing Systems
2. Taylor Execution Scheduling System
3. TESS
4. Manufacturing Resource Scheduler
5. MRS
<PAGE>
SCHEDULE 1.1(h)
[LIST OF TELEPHONE AND FACSIMILE NUMBERS]
TMS - Norcross, GA (Headquarters)
Ph: (770) 368-4999 and direct dial numbers related thereto
Fax: (770) 368-4998
TMS - Englewood, CO (Darren Dines)
Ph: (303) 221-2002
Fax: (303) 221-6228
TMS - Westford, MA (Fred Callahan)
Ph: (508) 692-1270
Fax: (508) 692-1269
<PAGE>
SCHEDULE 2.2
[ALLOCATION OF PURCHASE PRICE]
Accounts Receivable $ 429,218.00
Supplies Inventory 2,793.00
Prepaid Expenses 10,030.00
Personalty 80,000.00
Intellectual Property
- TESS 3,919,980.00
- MRS 10.00
Goodwill 10.00
Liabilities as per Net Asset Schedule
(294,542.00)
-------------
Total Purchase Price $4,147,499.00
=============
<PAGE>
SCHEDULE 2.4(i)
[LIST OF ASSUMED LIABILITIES]
MAINTENANCE: US$
CMI Industries $11,721.00
Alcan Cable 24,659.00
Adams Elevator 8,376.00
Inbrand Corporation 350.00
ESAB Welding and Cutting 12,513.00
Lambs Grey Harbor 13,338.00
Rexroth Corporation 18,150.00
Spargo Wire 15,469.00
Wyeth-Ayerst Laboratory 16,500.00
Zenith Specialty Bag Co. 11,275.00
----------
132,349.00
----------
WARRANTY:
Tactair Fluid Controls 44.00
Banner Packaging 876.00
Alcan Cable 530.00
Hydril Company 1,435.00
Inbrand Corporation 1,033.00
Pfizer Pty Ltd. 1,660.00
Kyocera Industrial Ceramics 1,352.00
GE Harris 19.00
Sandvik Steel 0.00
Island Paper Mills 3,525.00
Chicago Bridge & Iron 3,950.00
Union Camp Corp. 18.00
Unifirst Corp. 4,938.00
Pfizer Italiana 375.00
---------
19,753.00
---------
ACCOUNTS PAYABLE & DEALER COMMISSION:
48,247.00
EMPLOYEE RUMERATION: 32,193.00
---------
(Includes commissions payable of $4,430.00 and vacation accrual)
CUSTOMER RETURN RIGHT:
<PAGE>
Phelps Dodge Corporation 27,000.00
---------
DEFERRED REVENUE:
Menasha 35,000.00
POTENTIAL LIABILITY:
Pritzker - Trademark Settlement Unknown
<PAGE>
SCHEDULE 2.4(vi)
[LIST OF EXCLUDED CUSTOMER RETURNS]
CUSTOMER: AMOUNT:
Chicago Bridge & Iron $79,000
<PAGE>
SCHEDULE 2.4(G)
[LIST OF RETAINED LIABILITIES]
Any and all liabilities arising out of or relating to TESS software
products licensed by Taylor MFG Systems Inc. to Haworth, Inc. under Purchase
Order number P960000368, dated February 15, 1996.
<PAGE>
SCHEDULE 6.6
[LIST OF SCHEDULED PURCHASERS]
1. Avalon Software, Inc.
2. Computer Associates
3. Desoo Corporation
4. IBM
5. Intellution
6. J.D. Edwards & Co.
7. Lawson Software
8. Manugistics, Inc.
9. Oracle Corp.
10. QAD, Inc.
11. Ross Systems, Inc.
12. Siemens Corporation
13. Symix Computer Systems, Inc.
14. System Software Associates
15. TL Ventures
16. T/A Associates
17. Wonderware Corp.
<PAGE>
NET ASSETS
Accounts Receivable $429,218.00
Prepaid Expenses 10,030.00
Supplies Inventory 2,793.00
-----------
442,041.00
-----------
Accounts & Dealer Commissions Payable 48,247.00
Accrued Employee Remuneration 32,193.00
Warranty Provision 19,753.00
Maintenance Provision 132,349.00
Deferred Revenue
- - Menasha 35,000.00
- - Phelps Dodge Corporation 27,000.00
-----------
294,542.00
-----------
Net Assets 147,499.00
===========
<PAGE>
2,000,000.00 SEPTEMBER 25, 1997
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned (together with his permitted
successors and "Borrower") promises to pay to the order of TOTAL CONTROL
PRODUCTS, INC., an Illinois corporation (together with its permitted
successors and assigns, "Holder"), at 2001 North Janice Avenue, Melrose Park,
Illinois 60160, ATTN: Mr. Nicholas Gihl, or at such other place as Holder
may from time to time designate in writing, the principal sum of TWO MILLION
AND NO/100 DOLLARS ($2,000,000.00), in lawful money of the United States, or
such lesser amount of may be payable due to offsets, if any, as provided for
herein.
The principal amount hereof shall be payable in five (5) equal annual
installments in the amount of Four Hundred Thousand and No/100 Dollars
($400,000.00) each, or such lesser amount as may be payable due to offsets,
if any, as provided for herein, commencing on September 25, 1999 and ending
on September 25, 2003, at which later time the entire principal amount of
this Note then outstanding together with any outstanding accrued and unpaid
interest shall be due and payable.
Borrower also promises to pay interest on the unpaid principal amount in
like money at such place, from the date hereof until payment of the principal
amount hereof has been made in full, at the rate of eight percent (8%) per
annum, payable annually commencing on September 25, 1998 and ending with the
final payment of the principal due hereunder. Holder acknowledges and agrees
that Borrower shall withhold and report payments of interest to be made to
Holder under this Note to the extent, and in the manner, required by the
Income Tax Act (Canada).
Borrower may at any time prepay, without payment of premium or penalty,
in whole or in part, all amounts due under this Note . Any prepayments
received by Holder will be applied first to costs and expenses due hereunder,
second to any interest then due, third to any principal then due, fourth to
any interest accrued but not then due, and fifth to any principal outstanding.
In addition to Borrower's optional right of prepayment described in the
preceding paragraph, Borrower shall be required to make a mandatory
prepayment of all amounts due under this Note, without payment of premium or
penalty, to Holder within five (5) business days after the closing of any of
the following events (each, a "Triggering Event"): (i) a registered initial
public offering of any class of stock of Taylor Manufacturing Systems, Inc.,
a Georgia corporation ("TMS"); (ii) sale or disposition of all or
substantially all of the assets of TMS to an unaffiliated third party; (iii)
a transaction or series of related transactions pursuant to which over fifty
percent (50%) of the voting control of TMS is transferred to one person or
any group of related persons; or (iv) the transactions contemplated under the
Purchase Agreement (as herein defined) are not consummated before 5:00 p.m.
e.s.t. on October 31, 1997.
<PAGE>
Borrower agrees to pay on demand all costs and expenses incurred by
Holder in endeavoring to enforce this Note (including court costs and
reasonable out-of-pocket attorneys' fees and disbursements) or the Pledge
Agreement (as herein defined). All principal and interest due hereunder,
together with all costs, expenses, and other amounts payable hereunder are
collectively referred to herein as the "Liabilities".
To secure the prompt payment when due of all amounts hereunder, Borrower,
shall, concurrent with the execution and delivery of this Note, grant to
Holder a continuing security interest in 250,000 shares (the "Collateral") of
convertible preferred stock of Taylor Industrial Systems Inc. held
beneficially of record by Borrower, pursuant to the terms of a Pledge
Agreement entered into by Borrower and Holder effective as of the date hereof
(the "Pledge Agreement"). Reference is made to the Pledge Agreement, which is
incorporated in this Note by this reference as though set forth below, for a
statement of the covenants and agreements in that document, a statement of
the rights and remedies afforded by that document, and all other matters
therein.
Each of the following events or occurrences shall constitute a default
under this Note: (i) Borrower shall fail to pay any amount payable hereunder
when due (and such failure shall continue for a period of forty-five (45)
days after Borrower's receipt of written notice from Holder of Borrower's
failure to pay such installment); (ii) Borrower shall fail to duly perform
any of its obligations hereunder or under the Pledge Agreement or shall be in
breach of any representation or covenant made hereunder or under the Pledge
Agreement, where such breach or failure is reasonably likely to affect either
(a) the value of the Collateral in any material respect, or (b) Holder's
right to payment of the amounts due hereunder, in each case, where such
breach continues for a period of forty-five (45) days after Borrower's
receipt of written notice of such failure or breach from Holder; (iii)
Borrower or TMS shall become insolvent, a receiver, trustee, or custodian
shall be appointed for Borrower or TMS or any part of the property of
Borrower or TMS, or any proceeding shall be commenced by Borrower or TMS
under any bankruptcy, reorganization, debt arrangement, or insolvency law; or
(iv) any proceeding shall be commenced against Borrower or TMS under any
bankruptcy, reorganization, debt arrangement, or insolvency law, where such
proceeding is not dismissed within forty-five (45) days after the filing
thereof.
Upon a default and during the continuance thereof, Holder shall have (A)
all rights and remedies available to it pursuant to applicable law,
including, without limitation, the right to declare all Liabilities to be
immediately due and payable, without further notice, demand, or presentment
of any kind (provided, that, all amounts due hereunder shall be immediately
due and payable upon a default under subparagraphs (iii) and (iv) above); (B)
all rights of conversion afforded to the holder of the Collateral; and (C)
the right to immediately sell, assign, or otherwise dispose of any of the
Collateral, with the costs of such disposition to be borne by Borrower, and
account to Borrower for the excess of the net proceeds received from such
sale, assignment, or disposition over all Liabilities. In lieu of selling
the Collateral, Holder may elect to cancel all or any portion of the
Collateral as consideration for the payment of all or any portion of the
-2-
<PAGE>
Liabilities remaining due and payable, where each share of convertible
preferred stock of Holder cancelled shall be valued at the same price as a
share of common stock of Total Control Products, Inc., as published in THE
WALL STREET JOURNAL on the date on which the underlying default occurred.
The Holder hereby acknowledges and agrees that each of the foregoing remedies
shall be mutually exclusive. Notwithstanding anything to the contrary
contained in this Note or the Pledge Agreement, Borrower's liability under
this Note and the Pledge Agreement shall be enforceable only out of the
Collateral, and in no event shall Borrower have any personal liability
hereunder or thereunder.
The remedies of Holder as provided herein, and in any other documents
governing or securing repayment hereof, shall be cumulative and concurrent
and may be pursued singly, successively, or together, at the sole discretion
of Holder, and may be exercised as often as occasion therefor shall arise.
No act of omission or commission of Holder, including specifically (but
without limitation) any failure to exercise any right, remedy, or recourse,
shall be effective unless set forth in a written document executed by Holder,
and then only to the extent specifically recited therein. A waiver or
release with reference to one event shall not be construed as continuing to
any subsequent event. No delay or failure on the part of Holder in the
exercise of any right or remedy hereunder shall operate as a waiver thereof,
nor as an acquiescence in any default, nor as a novation of this Note or a
waiver of the right of Holder to insist upon strict compliance with the
terms, hereof, nor shall any single or partial exercise by Holder of any
right or remedy preclude any other right or remedy.
Notwithstanding anything to the contrary contained in this Note, all
principal and interest due under this Note may be offset by Borrower at any
tune or from time to time to the extent of the full amount of any Damages (as
defined in that certain Asset Purchase Agreement, by and among Taylor
Industrial Software Inc., Taylor Industrial Software (USA), Inc., Holder,
TMS, and Borrower, dated of even date herewith (the "Purchase Agreement")),
as provided for in, and subject to the terms and provisions of, the Purchase
Agreement. Any such set-off right shall be applied in the order of priority
set forth in the fourth paragraph of this Note. Except for the set-off
rights set forth in this paragraph, Borrower shall have no set-off rights of
any kind against Holder, and Borrower hereby waives all other rights of
set-off against Holder, whether through contract or common law.
All notices required or permitted to be given hereunder shall be in
writing and may be delivered by hand, by facsimile, by nationally recognized
private courier, or by Canadian or United states mail. Notices delivered by
mail shall be deemed given three (3) business days after deposited in the
Canadian or United States mail, postage prepaid, registered or certified
mail. Notices delivered by hand, by facsimile, by nationally recognized
private courier shall be deemed given on the first (lst) business day
following receipt; provided, however that a notice delivered by facsimile
shall only be effective if such notice is also delivered by hand , or
deposited in the Canadian or United States mail, postage prepaid , registered
or certified mail, on or before two (2) business days after its delivery by
facsimile. All notices shall be addressed as set forth below (or to such
other address as may be designated by notice to the other party):
-3-
<PAGE>
If to Borrower:
Mr. Neil R. Taylor
7711 139th Street
Edmonton, Alberta, Canada T5R OE9
Fax: (403) 481-9855
with a copy to:
Gambrell & Stolz, L.L.P.
303 Peachtree Street, N.E.
Suite 4300
Atlanta, Georgia 30308
ATTN: James R. McGuone
Fax: (404) 221-6501
If to Holder:
Total Control Products, Inc.
2001 North Janice Avenue
Melrose Park, Illinois 60160
ATTN: Mr. Nicholas Gihl
Fax: (208) 345-5670
with a copy to:
D'Ancona & Pflaum
30 North LaSalle Street, Suite 2900
Chicago, Illinois 60602
ATTN: Mark Albert, Esq.
Fax: (312) 580-0923
Borrower hereby irrevocably waives diligence in collection or protection,
presentment, protest, notice of protest, demand, dishonor, default,
non-payment, creation, and existence of any amounts due hereunder and any
security or collateral for any amounts due hereunder.
Wherever possible each provision of this Note shall be interpreted in
such a manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law,
such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or remaining
provisions of this Note.
Whenever used in this Note, the words "Borrower" and "Holder" shall be
deemed to include Borrower and Holder named in the opening paragraph of this
-4-
<PAGE>
Note, and their respective heirs, executors, administrators, legal
representatives, successors and permitted assigns. The foregoing
notwithstanding, Borrower shall not assign this note without the prior
written consent of Holder, and Holder shall not assign this Note without the
prior written consent of Borrower.
THE PARTIES WAIVE THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY SUIT,
ACTION, OR PROCEEDING SEEKING ENFORCEMENT OF ITS OBLIGATIONS UNDER THIS NOTE.
This Note shall be construed and enforced in accordance with the law of
the State of Illinois. Time shall be of the essence of this Note.
The pronouns used herein shall include, when appropriate, either gender
and both singular and plural, and the grammatical construction of sentences
shall confirm thereto.
All references herein to any document, instrument or agreement shall be
deemed to refer to such document, instrument or agreement as the same may be
amended, modified, restated, supplemented or replaced from time to time. The
foregoing notwithstanding, no provision of this Note may be waived, amended,
released, or otherwise changed, except by a writing signed by the party
against which enforcement is sought.
IN WITNESS WHEREOF, the undersigned Borrower has signed this instrument,
as of the 25th day of September, 1997.
/s/ Neil R. Taylor
------------------------------
Neil R. Taylor
-5-
<PAGE>
Total Control Products, Inc. Announces Final Agreement
for the Sale of TESS Software Product Line
MELROSE PARK, Ill., Sept. 29 /PRNewswire/ -- Total Control Products, Inc.
(Nasdaq:TCPS) announced today that Taylor Industrial Software, Inc., the
Company's majority-owned subsidiary, (``Taylor'') completed the Company's
sale of its TESS software product to an entity controlled by Neil R. Taylor,
the former principal shareholder of Taylor and a director and executive
officer of the Company. The Company received approximately $4 million, of
which $2 million was paid in the form of a note, with the remainder paid in
cash.
Mr. Taylor's role in the TESS investment will be one of a passive investor.
Mr. Taylor will continue to serve on the Company's board of directors and as
the Senior Vice-President of Software Development on a full-time basis.
Total Control designs, develops and markets products and technology for the
control segment of the industrial automation market. These products range
from closed architecture programmable logic controller operator interfaces to
open architecture control software and systems, and are sold primarily
through an international network of independent distributors with over 225
sales locations.
For further information contact Peter Nicholson, Chief Financial Officer at
Total Control Products, Inc. 2001 N. Janice Ave., Melrose Park, Illinois,
60160, 708-345-5500.
Note: Statements and projections concerning the future financial condition,
results of operations and business of Total Control Products, Inc. and
subsidiaries are ``forward-looking'' statements which are inherently
uncertain. Actual performance and results are subject to many risk factors,
including changing market conditions, the timing of new product introductions
by the Company, its competitors or third parties, the loss of any significant
distributors, currency fluctuations, disruption in the supply of components
for the Company's products, and other factors discussed in the Company's
March 11, 1997 prospectus for its initial public offering.
SOURCE Total Control Products, Inc.
