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TRIAD SYSTEMS CORPORATION
REAL ESTATE DISTRIBUTION AGREEMENT
This Real Estate Distribution Agreement (this "AGREEMENT") is entered
into as of February 26, 1997 (the "EFFECTIVE DATE") among Triad Systems
Corporation, a Delaware corporation ("TRIAD"), 0000 Xxxxx Xx. Corp., a
California corporation and a wholly-owned subsidiary of Triad ("3055"), 3055
Management Corp., a California corporation ("3055 MANAGEMENT"), and Triad Park,
LLC, a Delaware limited liability company ("PARK"), in the following factual
context:
A. Triad owns certain land located in Triad Park, Livermore,
California;
B. 3055 owns three (3) buildings (comprising 220,000 square feet)
and certain land situated in Triad Park, Livermore, California, which are
leased to Triad for use as its headquarters in Livermore, California;
C. Cooperative Computing, Inc., a Texas corporation ("CCI"), CCI
Acquisition Corp., a Delaware corporation ("CCI ACQUISITION"), and Triad are
parties to an Agreement and Plan of Merger, dated as of October 17, 1996 (as
the same may be amended from time to time, the "MERGER AGREEMENT"), pursuant to
which the parties thereto, among other things, agreed that, subject to the
terms and conditions specified therein, Triad would declare and pay a dividend
consisting of interests in an entity owning certain real property then held by
Triad, certain real property then owned by 3055, and certain related assets;
THE PARTIES NOW AGREE AS FOLLOWS:
SECTION 1: CERTAIN DEFINITIONS
As used herein, the following terms shall have the indicated meanings:
1.1 "AAA" shall mean the American Arbitration Association.
1.2 "After-tax basis" shall have the meaning given to such term in
Section 11.4 of this Agreement.
1.3 "American General Consent" shall mean the letter agreement
among 3055, Park and The Variable Annuity Life Insurance Company, an affiliate
of American General Insurance Company, in the form of Exhibit 1.3 to this
Agreement, relating to the termination of certain obligations under the 3055
Note and the 3055 Deed of Trust.
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1.4 "Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement, to be dated as of the Contribution Date,
among Triad, 3055 and Park, in the form attached as Exhibit 1.4 to this
Agreement.
1.5 "Assumed Obligations" shall mean all liabilities or
obligations of Triad or any of its subsidiaries (including, without limitation,
3055, but excluding Park) under the following:
(i) the Specified Secured Debt;
(ii) the 3055 Note;
(iii) the 3055 Deed of Trust;
(iv) the Dividend Expenses; and
(v) the Real Property Agreements.
In addition, "Assumed Obligations" shall mean all obligations of 3055 under the
Lease Agreement, as amended by the Lease Amendment.
1.6 "Code" shall have the meaning given to such term in Section
11.1 of this Agreement.
1.7 "Commission" shall mean the Securities and Exchange
Commission.
1.8 "Contribution Date" shall mean the date on which shares of
Triad Common Stock are purchased pursuant to the Offer to Purchase.
1.9 "Damages" shall mean any and all losses, liabilities, claims,
damages, obligations, payments, costs and expenses, including, without
limitation, costs and expenses of investigation and reasonable fees and
disbursements of counsel.
1.10 "Deemed Sales" shall have the meaning given to such term in
Section 11.1 of this Agreement.
1.11 "Designated Park Employees" shall have the meaning given to
such term in Section 9.1 of this Agreement.
1.12 "Distribution Agent" shall mean the existing transfer agent
and registrar for the Triad Common Stock or such other person as may be
selected by Park prior to the distribution of the Dividend, which will serve as
the distribution agent for the Dividend.
1.13 "Dividend" shall have the meaning set forth in Section 2 of
this Agreement.
1.14 "Dividend Expenses" shall mean all costs and expenses solely
attributable to the transactions contemplated hereby, whether incurred before
or after consummation of the Offer to Purchase, and including, without
limitation, any and all
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(i) necessary and reasonable fees and expenses of counsel,
accountants and advisors,
(ii) filing fees,
(iii) escrow fees charges by any title company engaged in
connection with the consummation of any of the transactions contemplated
hereby,
(iv) costs and expenses of obtaining current tax certificates
for any of the Triad Designated Assets and of recording the Triad Deed in the
County Records of Alameda County, California,
(v) costs and expenses of any title examination,
(vi) costs and expenses of obtaining a current, as-built
survey of the real property included in the Triad Designated Assets, and
(vii) costs and expenses of issuance of an Owner's Title
Policy, if any, insuring title in accordance with the terms of this Agreement.
1.15 "Environmental Costs and Liabilities" shall have the meaning
given to such term in the Merger Agreement.
1.16 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated by the Commission
thereunder.
1.17 "Indemnified Party" and "Indemnified Parties" shall have the
respective meanings given to such terms in Section 9.1 of this Agreement.
1.18 "Information Statement" shall mean the definitive information
statement, as amended or supplemented, mailed to the Record Holders in
connection with the Dividend.
1.19 "Lease Agreement" shall mean that certain Project Lease
Agreement, dated as of August 1, 1988, between Triad and 3055.
1.20 "Lease Amendment" shall mean that certain First Amendment to
Project Lease Agreement, to be dated as of the Contribution Date, among Triad,
3055 and Park.
1.21 "Mailing Date" shall mean the date the Information Statement
is first mailed to the stockholders of Triad.
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1.22 "Merger" shall have the meaning given to such term in
Section 4 of this Agreement.
1.23 "Net Proceeds" shall mean, with respect to the sale, transfer,
assignment or conveyance of any Triad Designated Asset, the net proceeds
received by Triad or 3055, as applicable, after deduction for all costs
incurred by Triad, 3055 or any of their respective subsidiaries, whether or not
at such time such costs have been paid, in connection with such sale, transfer,
assignment or conveyance.
1.24 "Offer to Purchase" shall mean the Offer to Purchase for Cash
all Outstanding Shares of Common Stock (Including the Associated Rights) of
Triad, dated October 23, 1996, by CCI Acquisition.
1.25 "Partnership Item Tax Contest" shall have the meaning given to
such term in Section 11.2 of this Agreement.
1.26 "Real Property" means all of the approximately 206 acres owned
by Triad or 3055 in Livermore, California, commonly known as Triad Park, and
which is particularly described upon SCHEDULE 1.26, including the three
buildings containing approximately 220,000 square feet (excluding cubicles,
furniture and office equipment).
1.27 "Real Property Agreements" means the agreements listed on
SCHEDULE 1.27.
1.28 "Record Holders" shall mean the record holders of Triad Common
Stock immediately preceding the acceptance of shares pursuant to the Offer of
Purchase.
1.29 "Registration Statement" shall mean the registration statement
on Form 10SB, if available, or Form 10 to be filed with the Commission under
the Exchange Act in connection with the Dividend, in the form declared
effective by the Commission, as amended or supplemented.
1.30 "Rules" shall have the meaning given to such term in Section
13.1 of this Agreement.
1.31 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.32 "Specified Claim" shall have the meaning given to such term in
Section 13.8 of this Agreement.
1.33 "Specified Secured Debt" shall mean any indebtedness of Triad
or any of its subsidiaries (other than the Triad Revolving Credit Agreement)
that is secured, in whole or in part, by any of the Triad Designated Assets,
including, without limitation, the 3055 Note.
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1.34 "Spin-Off Tax Contest" shall have the meaning given to such
term in Section 11.2 of this Agreement.
1.35 "Statement" shall have the meaning given to such term in
Section 11.6 of this Agreement.
1.36 "Taxes" shall have the meaning given to such term in the
Merger Agreement.
1.37 "Tax Returns" shall have the meaning given to such term in the
Merger Agreement.
1.38 "Third Party Claim" shall have the meaning given to such term
in Section 10.2 of this Agreement.
1.39 "3055 Deed of Trust" shall mean that certain First Deed of
Trust and Assignment of Rents, Security Agreement and Fixture Filing, by and
between 3055, as Trustor, Xxxxx-XxXxxxxx Financial Corporation, as Trustee, and
The Variable Annuity Life Insurance Company, as Beneficiary.
1.40 "3055 Management" shall mean 3055 Management Corp., a
California corporation.
1.41 "3055 Management Contribution Note" shall have the meaning set
out in Section 5.4.
1.42 "3055 Management Membership Interest" shall mean the limited
liability company interest (as defined in the Delaware Limited Liability
Company Act, as amended) in Park received by 3055 Management in exchange for
the contribution to Park of the 3055 Management Contribution Note pursuant to
Section 5.4 of this Agreement.
1.43 "3055 Note" shall mean that certain Promissory Note, dated as
of August 23, 1988, in the original principal amount of $15,500,000, by 3055,
as Maker, and The Variable Annuity Life Insurance Company, a Texas corporation,
as Payee.
1.44 "Transaction Documents" shall mean, collectively, this
Agreement and each other document, agreement or instrument contemplated by, or
otherwise executed and delivered in connection with, this Agreement.
1.45 "Triad Common Stock" shall mean shares of common stock, $.01
par value per share, of Triad.
1.46 "Triad Deed" shall have the meaning given to such term in
Section 5.3 of this Agreement.
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1.47 "Triad Designated Assets" shall mean all of the Real Property
and all related rights, privileges, easements, improvements, fixtures and
appurtenances, including but not limited to the following:
(i) All rights, subject to all obligations, under the Real
Property Agreements;
(ii) the Net Proceeds received by Triad upon the consummation of
any sale of any Triad Designated Asset from and after October 17, 1996 and
prior to the conveyance of the Triad Designated Assets to Park as described in
Section 5.3 of this Agreement;
(iii) all Triad Sales Agreements;
(iv) all of the landlord's interest under the Lease Agreement, as
amended by the Lease Amendment;
(v) all rights to Triad Park on and off site improvements and to
any reimbursements to be paid by the City of Livermore, any utility company or
any other property owner within the improvement district; and
(vi) Copies of all books and records related to any of the
foregoing or related to the 3055 Note and the 3055 Deed of Trust or the Assumed
Liabilities.
1.48 "Triad Excluded Assets" shall mean those Triad Designated
Assets sold, assigned, transferred or conveyed by Triad prior to the conveyance
of the Triad Designated Assets to Park as described in Section 5.3 of this
Agreement.
1.49 "Triad Membership Interest" shall mean the limited liability
company interest (as defined in the Delaware Limited Liability Company Act, as
amended) in Park received by Triad in exchange for the conveyance by Triad to
Park of the Triad Designated Assets pursuant to Section 5.3 of this Agreement.
1.50 "Triad Revolving Credit Agreement" shall mean that certain
Revolving Credit Loan Agreement, dated as of June 30, 1992, by and between
Triad and Comerica Bank-California.
1.51 "Triad Sales Agreement" shall mean any agreement to which
Triad is a party pursuant to which Triad has agreed or agrees to sell, assign,
transfer or convey any Triad Designated Asset.
1.52 "Waiver of Conflicts" shall mean the Conflict Agreement among
Triad, CCI, 3055, 3055 Management, Park and McCutchen, Doyle, Xxxxx & Enersen,
LLP, dated as of the Contribution Date, in the form of Exhibit 1.51 to this
Agreement.
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SECTION 2: DECLARATION OF DIVIDEND
Subject to the terms and conditions of this Agreement, the Board of
Directors of Triad will declare a dividend of the Triad Membership Interest
(the "DIVIDEND") payable to the Record Holders on a pro rata basis upon the
satisfaction of the conditions set forth herein. Following the satisfaction of
the conditions to the payment of the Dividend, Triad shall deliver to the
Distribution Agent a certificate representing the Triad Membership Interest and
instruct the Distribution Agent to distribute, as soon as practicable, such
membership interest to the Record Holders.
SECTION 3: CONDITION PRECEDENT
The payment of the Dividend by Triad is conditioned in all respects
upon the following:
(a) The Triad Board of Directors shall have declared such Dividend
as provided in Section 2 of this Agreement.
(b) The transactions contemplated by Section 4 and Section 5 of
this Agreement, and the deliveries contemplated by Section 7 of this Agreement,
all to occur on the Contribution Date, shall have been consummated in all
respects and the Lease Amendment shall be in full force and effect.
(c) The Registration Statement shall have become effective under
the Exchange Act and shall continue to be effective as of the payment date for
the Dividend, and no stop order shall have been issued and no proceeding by the
Commission shall have been instituted to suspend the use of the Registration
Statement or the Information Statement.
(d) The Information Statement is ready to be distributed to the
holders of Triad Common Stock in accordance with the requirements of the
Exchange Act and the Commission.
(e) All authorizations, consents, approvals and clearances of all
federal, state, local and foreign governmental agencies or authorities required
to permit the valid consummation by the parties hereto of the transactions
contemplated hereby shall have been obtained and shall be in full force and
effect.
(f) No preliminary or permanent injunction or other order, decree
or ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or authority, and no statute, rule,
regulation, or executive order promulgated or enacted by any governmental
agency or authority, shall be in effect preventing the payment of the Dividend.
(g) The Dividend shall be payable in accordance with applicable
law.
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(h) Coopers & Xxxxxxx shall have issued to Triad a "cold comfort"
letter consistent in form and content with applicable professional standards,
regarding the historical financial information contained in the Registration
Statement and the Information Statement.
(i) Triad shall have received an opinion, dated as of the Mailing
Date and otherwise in form and substance reasonably acceptable to Triad, from
McCutchen, Doyle, Xxxxx & Enersen, LLP, counsel to Park, as to the matters set
forth on Exhibit 3(i) to this Agreement.
SECTION 4: MERGER OF 3055
Upon the Contribution Date and immediately prior to the contributions
to Park under Section 5, Triad shall cause 3055 to be merged with and into
Triad.
SECTION 5: FORMATION OF TRIAD PARK, LLC
5.1 FORMATION OF PARK. Immediately prior to the execution and
delivery hereof, Triad and 3055 Management have formed Park. The limited
liability company agreement of Park and the Certificate of Formation of Park
are attached hereto as Exhibit 5.1A and Exhibit 5.1B, respectively. Each such
document is in full force and effect in the form attached hereto.
5.2 RELEASE OF CERTAIN LIENS, CONSENT. On or before the
Contribution Date, and without the payment or delivery of any consideration, or
the incurrence of any obligation to pay or deliver any consideration, by Triad
or any of its subsidiaries (other than Park), Triad shall obtain the American
General Consent.
5.3 CONVEYANCE BY TRIAD. Upon the Contribution Date, subject to
the terms and conditions hereof, Triad will sell, assign, transfer and convey
to Park all of Triad's right, title and interest in the Triad Designated Assets
(other than the Triad Excluded Assets) in exchange for the issuance to Triad of
the Triad Membership Interest, equal to 99% of the capital, profits and losses
of Park, and the assumption by Park of the Assumed Obligations. The conveyance
of the real property included in the Triad Designated Assets (other than the
Triad Excluded Assets) shall be effected through the execution and delivery by
Triad of a grant deed in the form of Exhibit 5.3 to this Agreement (the "TRIAD
DEED"). The conveyance of the remaining property included in the Triad
Designated Assets (other than the Triad Excluded Assets), and the assumption of
the Assumed Obligations, shall be effected through the execution and delivery
of the Assignment and Assumption Agreement by Triad and Park. The real
property included in the Triad Designated Assets shall be free and clear of
monetary liens and encumbrances granted or created under the Tender Facility or
the Interim Facility (as defined in the Offer to Purchase); otherwise the
recourse for breach of title
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warranties of Triad under the Triad Deed will be strictly limited to the extent
that Triad is insured therefor under its title insurance in effect prior to the
Effective Date.
5.4 CONTRIBUTION OF 3055 MANAGEMENT. Upon the Contribution Date,
3055 Management will contribute its recourse promissory note due in 120 days,
without interest, equal to 1.01 percent of the total value of the contributions
to Park by Triad (the "3055 MANAGEMENT CONTRIBUTION NOTE") in exchange for a
one percent (1%) interest in the capital, profits and losses of Park.
5.5 CONDITIONS TO CONVEYANCES. The conveyances described in
Section 5.3 and Section 5.4 of this Agreement are conditioned in all respects
upon the occurrence of the actions described in Section 4.
5.6 NO REPRESENTATIONS OR WARRANTIES. Park understands and agrees
that, except as specifically provided in Section 5.3, neither Triad nor 3055
is, in any Transaction Document, nor shall Triad or 3055 be deemed or implied
to be, making any representation or warranty as to the value of any Triad
Designated Asset, the absence of any encumbrance on any Triad Designated Asset,
the title to any Triad Designated Asset, the legal sufficiency to convey title
to any Triad Designated Asset, or as to any other matter regarding any Triad
Designated Asset, it being understood and agreed that each of Triad and 3055 is
merely conveying such person's right, title and interest, if any, in the Triad
Designated Assets to Park and that all such Triad Designated Assets are being
conveyed "AS IS, WHERE IS" and that Park shall bear the economic and legal risk
that any conveyances of any Triad Designated Assets shall prove to be
insufficient or that Triad's or 3055's title to any such assets shall be other
than good and marketable title free from encumbrances. Similarly, Park
understands and agrees that neither Triad nor 3055 is, in any Transaction
Document, nor shall Triad or 3055 be deemed or implied to be, making any
representation or warranty as to whether any consents, authorizations,
approvals, waivers, applications, filings or amendments are necessary in
connection with the execution, delivery or performance of, or the consummation
of the transactions contemplated by, any Transaction Document to satisfy the
requirements of any applicable agreements, laws, rules, regulations, judgments,
orders or decrees, it being understood and agreed that Park shall bear the
economic and legal risk that any necessary consents, authorizations, approvals,
waivers, applications, filings or amendments are not obtained or that the
requirements of any law, rule, regulation, judgment, order or decree are not
complied with.
5.7 SALE AGREEMENTS. Each Triad Sale Agreement entered into by
Triad from and after the date of this Agreement shall provide that, upon the
conveyance by Triad of the Triad Designated Assets to Park pursuant to this
Agreement, the purchaser agrees to an automatic novation substituting Park for
Triad in the Triad Sale Agreement.
5.8 LOAN BY TRIAD. Immediately prior to the payment of the
Dividend, Park shall deliver to Triad a balance sheet as of that time,
certified by a duly authorized
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officer of Park. In the event that, upon the payment of the Dividend, Park
shall not have cash and/or cash equivalent assets totaling at least $100,000,
Triad shall make a loan to Park in an amount equal to the difference between
$100,000 and total amount of cash and cash equivalent assets of Park, such loan
to be evidenced and governed by a promissory note which shall be due in one
year, shall bear interest at nine percent (9%) per annum, payable at maturity.
5.9 INSURANCE. Effective upon the Contribution Date, the
participation by Park in any insurance coverage of Triad or any of its
subsidiaries (including, without limitation, 3055) shall cease. Park shall
retain any claims under the pre-existing insurance coverage arising out of
events occurring before the Contribution Date.
5.10 APPRAISAL. Triad has commissioned Xxxxxxxx-Xxxxxxxxx &
Partners, Inc., an independent qualified real estate valuation expert, to
prepare an appraisal of the real property included in the Triad Designated
Assets (the "APPRAISAL"). The Xxxxxxxx-Xxxxxxxxx appraisal is the agreed-upon
appraisal to be used for the purposes described in Section 6.10 of the Merger
Agreement. The Appraisal shall also be used to determine the size of the
capital accounts of Triad and 3055 Management as follows:
(a) The capital account of Triad in Park shall be equal to the
value of the Triad Designated Assets and the value of the real property
included shall be determined by the Appraisal, less any indebtedness assumed by
Park;
(b) The capital account of 3055 Management in Park shall be equal
to the face amount of the 3055 Management Note.
SECTION 6: [INTENTIONALLY LEFT BLANK]
SECTION 7: CLOSING DELIVERIES
7.1 DELIVERIES BY TRIAD. On the Contribution Date, Triad shall
deliver the following:
(a) The Triad Deed;
(b) A counterpart of the Assignment and Assumption
Agreement;
(c) A counterpart of the Lease Amendment fully executed
by Triad;
(d) A copy of the resolutions of Triad's Board of
Directors, certified by its Secretary, declaring the Dividend, authorizing or
ratifying its execution and delivery of this Agreement, the Lease Amendment,
the actions of 3055 in connection with this
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Agreement and the Lease Amendment, and the consummation of the transactions
contemplated by this Agreement and the Lease Amendment;
(e) The American General Consent; and
(f) A counterpart of the Waiver of Conflicts.
7.2 DELIVERIES BY 3055. On the Contribution Date, 3055 shall
deliver the following:
(a) A copy of the resolutions of the Board of Directors,
certified by 3055's Secretary, authorizing or ratifying its execution and
delivery of this Agreement, the Merger and the consummation of the transactions
contemplated by this Agreement;
(b) A copy of the resolutions by Triad, as the sole
stockholder of 3055, certified by 3055's Secretary, authorizing or ratifying
the Merger;
(c) A counterpart of the Waiver of Conflicts.
7.3 DELIVERIES BY PARK. On the Contribution Date, Park shall
deliver the following:
(a) A counterpart of the Lease Amendment fully executed
by Park;
(b) Evidence of the Triad Membership Interests and the
3055 Management Membership Interests;
(c) A counterpart of the Assignment and Assumption
Agreement;
(d) A counterpart of the Waiver of Conflicts;
(e) Confirmation that 3055 Management is the sole manager
of Park and is authorized to execute and deliver this Agreement, the Lease
Amendment, the Assignment and Assumption Agreement and the Consummation of the
transactions contemplated by this Agreement.
7.4 DELIVERIES BY MANAGEMENT. On the Contribution Date,
Management shall deliver the following:
(a) A copy of the resolutions of the Board of Directors,
certified by Management's' Secretary, authorizing or ratifying Management's
execution and delivery of this Agreement, and as Manager of Park of the Lease
Amendment and the consummation of the transactions contemplated by this
Agreement and the Lease Amendment;
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(b) A counterpart of the Waiver of Conflicts.
SECTION 8: SECURITIES EXCHANGE ACT OF 1934 UNDERTAKING
Promptly following the Contribution Date, Park shall prepare and file
with the Commission the Registration Statement and Triad shall prepare and file
with the Commission the Information Statement.
SECTION 9: CERTAIN COVENANTS
9.1 SUPPORT. In order to facilitate the orderly management of
Park following the Spin-Off Transaction, for a period of one year following the
Contribution Date, Triad shall provide to Park at Triad's Livermore corporate
offices (at no cost to Park) the following:
(a) Two cubicles of office space, reasonable filing
space, and two telephones (provided, however, that all telephone service
charges for such telephones (including, without limitation, fees for basic
service, long distance charges, and repair and maintenance services) shall be
paid by Park); and
(b) During normal business hours, (i) reasonable access
to the cubicles and filing space referenced in clause (a) above by two Park
employees that may be designated from time to time by Park (the "DESIGNATED
PARK EMPLOYEES"), (ii) reasonable light and heating and air conditioning for
the immediate area in which the cubicles referenced in clause (a) above are
located, (iii) secretarial support for the Designated Park Employees, (iv)
reasonable access by the Designated Park Employees to two word processing
computers and such other office equipment and facilities as is reasonably
necessary for the performance of their duties.
Notwithstanding the foregoing, Park shall be liable for all damages to any
equipment or improvements provided by Triad in accordance with the foregoing
provisions to the extent such damages result from the conduct of any employees
or representatives of Park.
9.2 FURTHER ASSURANCES. From time to time after the Contribution
Date, each party to this Agreement shall, without further consideration, take
such actions as any other party hereto may reasonably request in order to more
effectively consummate the transactions contemplated hereby. Should any claim
be made against Triad by the holders of Specified Secured Debt, Park shall
obtain the complete and unconditional release of Triad from those claims.
9.3 CONTRACT SERVICES AGREEMENT. In order for Park to meet its
reporting requirements under the Securities Exchange Act of 1934 and to conduct
its real estate operations, Triad shall provide Park for a period of two years
after the Contribution Date, with administrative assistance from such members
of Triad's in-house legal staff
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and accounting staff who have experience with the particular matters as Triad
may reasonably designate from time to time with sales contracts, regulatory
filings, tax returns, and information management. Park shall reimburse Triad
for its fully burdened hourly cost of providing these services . Triad shall
have no liability to Park whatsoever arising out of the provision of services
by its employees pursuant to this Section 9.3.
9.4 PROPERTY MANAGERS. Following the Contribution Date, Triad and
Park shall jointly agree to the selection and/or replacement of property
managers who will act as the facilities managers for Triad and the development
mangers for Park as described in SCHEDULE 9.4 (the "PROPERTY MANAGERS"). On
the Contribution Date, the Property Managers shall be actively employed by
Triad for fifty percent (50%) of their time and by Park for fifty percent (50%)
of their time. Park shall reimburse Triad for fifty percent (50%) of the
Property Managers' salary and benefits listed on SCHEDULE 9.4. Triad shall
have no liability to Park whatsoever arising out of the provision of services
by its employees pursuant to this Section 9.4.
9.5 LIMITED LICENSE. Effective upon payment of the Dividend,
Triad grants Park a perpetual license, free of any royalty payments, to use the
name "Triad Park" or Triad Business Park in references to the real property
included in the Triad Designated Assets in connection with the operations of
Park related to the disposition of the Triad Designated Assets.
9.6 PARK NET WORTH REQUIREMENT. At all times following the
Contribution Date until the expiration of Park's indemnity obligations under
Section 11 in accordance with Section 11.8, Park shall not, directly or
indirectly, without the prior written consent of Triad, declare or pay any
dividend or distribution (whether in cash, property, securities or otherwise)
which after giving effect to the dividend or distribution would result in Park
have a Specified Net Worth less than the Minimum Worth. If at any time the
Specified Net Worth of Park drops below the Trigger Amount, then Triad may
elect to require the remaining Real Property of Park to be appraised with the
costs of appraisal shared equally by Triad and Park. In addition, Triad may
request an appraisal at any time at its sole cost. Any appraisal shall be
conducted by an independent appraiser mutually acceptable to Triad and Park.
The results of the appraisal shall be used to recalculate Park's Specified Net
Worth for the purposes of this Section.
As used in this Section 9.6, the following terms shall have the
following meanings:
"Specified Net Worth" is the net worth of Park determined in
accordance with generally accepted accounting principles consistently applied,
except that for the purposes of this calculation: (i) the value of the
remaining Real Property shall be included at the value determined by the
Appraisal, or if a subsequent appraisal has been performed in accordance with
this Section, by that more recent appraisal, each as adjusted by depreciation
since the appraisal date; and (ii) there shall be no liability
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attributable to Park's obligations under Section 11 included in the calculation
of Specified Net Worth.
"Minimum Worth" shall mean the greater of: (i) an amount equal to
$2,350,000 plus interest on $2,350,000 at the Interest Rate computed from the
75th day following the Contribution Date; or (ii) the amount of any deficiency
proposed in writing by the Internal Revenue Service which would be subject to
indemnification under Section 11 plus interest on that amount at the Interest
Rate computed from the date of the writing stating the proposed deficiency.
"Trigger Amount" shall mean $4,000,000 plus interest on $4,000,000 at
the Interest Rate from the Contribution Date.
"Interest Rate" shall mean ten percent (10%) per annum, compounded
annually.
SECTION 10. CERTAIN INDEMNIFICATION PROVISIONS
10.1 INDEMNIFICATION FOR CERTAIN MATTERS. From and after the
Contribution Date, Park shall indemnify, defend and hold harmless each of Triad
and 3055 and their respective officers, directors and affiliates, and each
person, if any, who controls any of the foregoing within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, and each of the
heirs, executors, successors and assigns of any of the foregoing (each an
"INDEMNIFIED PARTY" and, collectively, the "INDEMNIFIED PARTIES") from and
against any and all Damages arising out of, related to or based upon:
(a) Any untrue statement (or alleged untrue statement) of
a material fact contained in the Registration Statement as of the effective
date thereof, the Mailing Date or the payment date of the Dividend, or in the
Information Statement as of the Mailing Date or the payment date of the
Dividend;
(b) Any omission (or alleged omission) to state in the
Registration Statement, as of the effective date thereof, the Mailing Date or
the payment date of the Dividend, or in the Information Statement, as of the
Mailing Date or the payment date of the Dividend, a material fact required to
be stated therein or necessary to make the statements therein not misleading;
(c) The failure to register all or any portion of the
Triad Membership Interest under the Securities Act or any state securities or
"blue sky" laws;
(d) The Assumed Obligations;
(e) All Environmental Costs and Liabilities with respect
to any of the Triad Designated Assets;
(f) The Dividend Expenses; and
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(g) The breach by Park of any of its representations or
warranties under this Agreement or the failure by Park to perform any of its
covenants, agreements or obligations under this Agreement.
10.2 CERTAIN PROCEDURES. Any Indemnified Party will (i) give
prompt written notice to Park of any claim with respect to which it seeks
indemnification under this Section 10 (but the failure to so notify shall not
relieve Park from any liability which it may have under this Agreement except
to the extent such failure materially prejudices Park), and (ii) permit Park to
assume the defense of any claim made against such Indemnified Party by any
person other than Park or any affiliate or controlling person of Park (a "THIRD
PARTY CLAIM") with counsel reasonably satisfactory to the Indemnified Party.
Any Indemnified Party hereunder shall have the right to employ separate counsel
and to participate in the defense of such Third Party Claim, but the fees and
expenses of such separate counsel shall be at the expense of such Indemnified
Party unless (X) Park has agreed to pay such fees or expenses, (Y) Park shall
have failed to assume the defense of such Third Party Claim and employ counsel
reasonably satisfactory to such Indemnified Party, or (Z) the parties to such
action include both the Indemnified Party and Park and, in the reasonable
judgment of the Indemnified Party, a conflict of interest may exist between the
Indemnified Party and Park (in which case Park shall not have the right to
assume the defense of such action on behalf of the Indemnified Party). Park
shall not settle any pending or threatened claim in respect of which any
Indemnified Party is or could have been a party and in respect of which
indemnification could have been sought hereunder unless such settlement shall
provide for a complete and unconditional release of each of the Indemnified
Parties hereunder. If the defense of a Third Party Claim is not assumed by
Park as permitted hereunder, Park will not be subject to any liability for any
settlement made by the Indemnified Party without its consent (but such consent
will not be unreasonably withheld).
10.3 CONTRIBUTION. If the indemnification provided for in clause
(a), (b) or (c) of Section 10.1 is unavailable to an Indemnified Party in
respect of any Damages referred to therein, then Park, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages in such proportion as shall be
appropriate to reflect the relative fault of Park, on the one hand, and the
Indemnified Party, on the other hand, with respect to the facts and
circumstances that resulted in such Damages, as well as any other equitable
considerations. With respect to the indemnification provided in clauses (a)
and (b) of Section 10.1, the relative fault shall be determined by reference to
whether the untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by Park or persons acting on behalf of Park, on the one hand, or the
Indemnified Party, on the other hand, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission, but not by reference to Triad's ownership interest
in Park. With respect to the indemnification provided in clause (c) of Section
10.1, because Park is being advised by counsel with respect to the legal
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requirements of the transactions contemplated hereby, Park shall be deemed to
be solely at fault.
SECTION 11: TAX INDEMNITY
11.1 REPORTING. For income Tax purposes, Triad and Park shall
report the transactions contemplated by this Agreement based upon the following
principles: (i) Park is a partnership; (ii) the Liquidation is a liquidation
described in Section 332 of the Code; (iii) the conveyances of the Triad
Designated Assets by Triad and of the 3055 Management Contribution Note in
exchange for the Triad Membership Interest and the 3055 Management Membership
Interest, respectively, are transactions described in Section 721 of the
Internal Revenue Code of 1986, as amended (the "CODE"); (iv) the Dividend gives
rise to a sale or exchange of the Membership Interest pursuant to Section 311
of the Code (the "DEEMED SALES"); (v) the amount realized in the Deemed Sales
and the amount distributed to the stockholders of Triad shall be equal to the
appraised value of the Triad Designated Assets as set forth in the Appraisal
(adjusted as appropriate to reflect Park's liabilities and taking into account
any adjustments pursuant to Section 752 of the Code); (vi) the adjusted basis
of the Triad Membership Interest shall be equal to the adjusted basis of the
Triad Designated Assets on the date of contribution to Park as determined by
the accounting firm selected under the terms of Section 6.10 of the Merger
Agreement, adjusted in accordance with Sections 705, 722, 733 and 752 of the
Code; and (vii) the Dividend gives rise to a termination and reconstitution of
Park for purposes of Section 708(b)(1)(B) of the Code. Triad and Park shall
file all Tax Returns in a manner consistent with this Section 11.1 and neither
Triad nor Park shall amend its Tax Returns or file a claim for refund of Taxes
in a manner which is inconsistent with this Section 11.1 without the prior
written consent of Park or Triad, as the case may be, which consent shall not
be unreasonably withheld. For purposes of this Section 11, the term "Triad"
shall include all corporations which join with Triad in the filing of
consolidated or combined tax returns.
11.2 TAX CONTEST.
(a) Upon receipt of a formal written notification from a
taxing authority of an audit of any Tax Returns relating to the transactions
contemplated by this Agreement or of a proposed adjustment to the Tax reporting
of the transactions contemplated by this Agreement, Triad or Park, as the case
shall be, shall promptly notify Park or Triad, as applicable, of the audit or
the proposed adjustment.
(b) In the case of an audit of or proposed adjustment to a
Tax Return of Triad relating to the transactions contemplated by this
Agreement, Park shall be permitted to participate in and conduct, at Park's
expense and subject to Triad's right of supervision and review, those aspects
of an audit, examination or proceeding relating to Taxes for which Park would
be responsible under this Section 11 (a "SPIN-OFF TAX CONTEST"). Triad will
deliver to Park any limited power of attorney required to enable Park and its
representatives to participate in a Spin-Off Tax Contest. With respect to a
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Spin-Off Tax Contest, Park shall have the right to determine, subject to
Triad's consent which shall not be unreasonably withheld, (i) the attorneys,
accountants and/or experts to represent Triad in connection with the Spin-Off
Tax Contest, (ii) whether or not to protest or appeal any decision of any
administrative or judicial body, and (iii) whether or not to settle the
Spin-Off Tax Contest. Triad will not agree, without Park's written consent, to
any extension of the applicable statute of limitations with respect to taxable
periods which include the Tax consequences of transactions subject to
indemnification by Park hereunder, which consent will not be unreasonably
withheld; provided that such consent of Park will not be required if the
failure to agree to such extension may reasonably be expected to result in the
proposed assessment of a deficiency for material Taxes unrelated to the
transactions contemplated by this Agreement.
(c) In the case of an audit of or a proposed adjustment with
respect to Park pursuant to Sections 6221 to 6233 of the Code and relating to
the transactions contemplated by this Agreement (a "PARTNERSHIP ITEM TAX
CONTEST"), Park shall keep Triad fully informed of the progress of such
Partnership Item Tax Contest and shall permit the participation, supervision
and review of Triad in such matter, and Park shall not settle the Partnership
Item Tax Contest without the prior written consent of Triad, which consent
shall not be unreasonably withheld.
11.3 TAX INDEMNITY. Park shall indemnify and hold Triad harmless
from and against any Taxes (and any fees, costs, expenses and other damages
with respect to such Taxes or any dispute thereof) attributable to, arising out
of or relating to (i) any sale, exchange, dividend, distribution or other
disposition of Triad Designated Assets after October 17, 1996, (ii) Park, (iii)
the formation of Park, (iv) the transfer by Triad or any affiliate of the Triad
Designated Assets to Park, (v) the assumption or refinancing of any liabilities
(including the Assumed Obligations) with respect to the Triad Designated
Assets, (vi) the sale, exchange, distribution or other disposition of any
assets by Park, (vii) the sale, exchange, distribution, dividend or other
disposition of the Triad Membership Interest by Triad or any affiliate, (viii)
the Liquidation, and (ix) any steps which are attendant to or necessary in
connection with any of the foregoing transactions. Park's indemnification
obligations under this Section 11.3 shall be computed without reduction, offset
or credit for (i) any net operating loss carryforwards, capital loss
carryforwards, or tax credit carryforwards of Triad from taxable periods ending
before the date of the Dividend, or (ii) any net operating losses, capital
losses, or tax credits for the taxable period which includes the date of the
Dividend.
11.4 AFTER-TAX BASIS. Any indemnity payment under this Agreement
shall be made on an "after-tax basis." The term "after-tax basis" means any
indemnity payment shall be (i) decreased by any Tax reductions (net of any Tax
increases) actually realized by the indemnified party or any affiliate as a
result of the indemnified loss, and (ii) increased by any increase in Taxes
actually realized by the indemnified party or any affiliate as a result of the
receipt or accrual of an indemnity payment (including any additional payments
pursuant to this sentence).
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11.5 LIMITATIONS. Notwithstanding Section 11.3, Park shall not be
required to indemnify Triad for any interest or penalties caused by Triad's
failure to timely file any Tax Return.
11.6 DEMAND AND PAYMENT. In connection with each payment of
estimated Taxes, the filing of Tax Returns, the payment of any additional Taxes
due in connection with an audit, administrative or judicial proceeding, and at
the time any other indemnified matters relating to Taxes are due and payable,
Triad shall provide Park with a written statement setting forth the amount of
Taxes and other indemnified items due from Park under this Section 11 (the
"STATEMENT"). Unless Park disagrees with the calculation of the amount of its
indemnity obligation under this Section 11 reflected in the Statement, Park
shall pay to Triad the amount shown as due in the Statement within ten days
after receipt of such notice, but in no event, in the case of current period
and estimated Taxes, shall Park be required to pay any Taxes earlier than three
business days prior to the due date of such Taxes. Any payment which is not
timely paid by Park shall bear interest at the rate of 9 percent (9%) per
annum. If Park disagrees with the amount set forth in the Statement, Park and
Triad shall attempt to resolve such disagreement over a period of seven days.
If Park and Triad fail to resolve any dispute within such period, then any
computational disagreement shall be submitted to arbitration in accordance with
this Agreement, except that the arbitrator shall be a tax partner from a big
six accounting firm with offices in the San Francisco Bay Area agreed upon by
the parties or, if they cannot agree, selected by the AAA. Park shall pay to
Triad the amount determined to be due pursuant to such arbitration within five
business days of the arbitrator's written resolution thereof.
11.7 COOPERATION. Triad and Park agree to cooperate in regard to
the filing of all Tax Returns relating to this Agreement and any audit or
administrative or judicial proceeding with respect thereto, and each party
shall provide the other party with reasonable access to Tax and accounting
records which relate to such Taxes and Tax Returns.
11.8 SURVIVAL. Any indemnification pursuant to this Section 11
shall survive and remain in full force and effect thereafter until sixty days
after the expiration of all applicable statutes of limitations for the
assessment or collection of Taxes (including all periods of extension, whether
automatic or permissive).
SECTION 12: AMOUNTS TO BE PRORATED
12.1 On the Contribution Date, the following items shall be
prorated between Triad and Park as of the Contribution Date: (i) property
taxes for the year during which the Contribution Date occurs, (ii) interest on
the 3055 Note for the month in which the Contribution Date occurs, (iii)
rentals paid under the Lease Agreement attributable to the month in which the
Contribution Date occurs, including, without limitation, fixed or minimum rent,
additional rent and expense pass-throughs, (iv) utility expenses, and
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other costs and expenses attributable to the Property, and (v) any other items
listed on SCHEDULE 12.1 attached hereto.
12.2 If any of the prorations are based upon estimates as of the
Contribution Date, it is mutually agreed as a covenant to survive the closing
that an accurate adjustment shall be made by cash settlement between Triad and
Park within thirty (30) days after the estimated item is known for certain. In
the event that on the Contribution Date Triad shall not have received tax
statements for the calendar year during which the closing occurs, estimated tax
figures for that year based upon tax receipts for the immediately preceding
calendar year shall, by mutual consent, be used for the purpose of prorating
taxes at the closing. It is mutually agreed, as a covenant expressly to
survive the closing, that upon receipt of tax statements for the calendar year
during which the closing occurs, an accurate adjustment of such tax proration
shall be made by cash settlement between Triad and Park within thirty (30) days
after receipt of all such tax invoices.
SECTION 13: ARBITRATION OF DISPUTES
13.1 AGREEMENT TO ARBITRATE. (a) The parties specifically agree
that any controversy, claim or dispute arising out of or relating in any way to
this Agreement or any of the other Transaction Documents, or any alleged breach
thereof, shall be settled exclusively by arbitration. Subject to the
modifications set forth herein, any arbitration shall be administered by the
San Francisco, California office of the AAA in accordance with its Commercial
Arbitration Rules and the Supplementary Procedures for Large, Complex Disputes
in effect at the time the arbitration is initiated (collectively, the "RULES"),
unless all parties to the dispute agree in writing that the total amount in
controversy is less than one million dollars, in which case, the Commercial
Arbitration Rules in effect at the time the arbitration is initiated alone
shall govern.
13.2 NUMBER, SELECTION AND AUTHORITY OF ARBITRATORS.
(a) As soon as a demand for arbitration shall be made by any
party to this Agreement, the AAA shall proceed to provide a list of the Large,
Complex Case Panel (unless the agreement to use the Commercial Rules has been
made by all of the parties to the dispute as provided for in the preceding
paragraph, in which case arbitrators from the Commercial Panel shall be used)
from which the parties shall select a panel of three arbitrators in accordance
with the Rules and normal procedures of the San Francisco, California office of
the AAA. If necessary, the AAA shall select some or all of the arbitrators
when it is authorized to do so under the Rules.
(b) The arbitration panel shall be empowered to render full
and complete resolution of the dispute. The panel shall also have the
authority and discretion to order, as it sees fit, the payment of the parties'
attorneys' fees and any and all expenses of the arbitration, including payment
of the arbitrators' compensation. In the event the arbitration panel finds
that any party has abused or failed to comply with the
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applicable arbitration or discovery provisions in this contract or in the
Rules, the panel shall be empowered to render any sanction that would otherwise
be available under the Federal Rules of Civil Procedure, including without
limitation rendition of an award for complete relief (including attorneys' fees
and all arbitration expenses), in favor of the non-offending parties and
against the offending party. All arbitrations shall take place in San
Francisco, California.
13.3 SCHEDULE FOR ARBITRATION. The parties agree that the
expeditious conclusion of the arbitration is critical to all parties, and they
direct and agree that the arbitration panel shall so allocate time and impose
deadlines that the complete proceeding from the initial demand for arbitration
to the decision of the panel shall be completed within one hundred and eighty
(180) calendar days. In order to promote this expeditious resolution, the
following procedural sequence shall be followed by the parties and shall be
enforced by the panel:
(a) Any party who makes demand for arbitration (whether an
initial demand or by counterclaim or cross claim) shall specify and quantify
the remedies that it seeks, including all amounts of money claimed to be
payable, transfers of property, or undertakings of obligations (including,
without limitation, indemnity and assumption of the defense of litigation).
(b) Within ten calendar days after receipt (by fax, telecopy,
express delivery, certified mail, or otherwise) of a demand for arbitration,
each responding party shall deliver to the opposing party a written response
that states with specificity the portions of the relief that it does not
contest and that provides a narrative summary of all grounds for contesting
each claim for relief that is contested.
(c) Any relief that is not contested shall be provided
(including, without limitation, the payment of money admitted to be due or the
performance of other contractual obligations) within ten calendar days after a
responding party admits that it does not contest some aspect of an arbitration
demand, and the presence of continuing controversy about other requests for
relief shall not be the basis for failure to provide the relief that is not
contested during the pendency of the arbitration.
(d) The panel shall establish a schedule for discovery,
conferences, any written submissions, the hearing, and other matters that
permits it to hold a hearing and return its award within the one hundred
eighty-day period specified, and all parties agree to abide by directions of
the panel with regard to scheduling.
(e) If the panel finds that any party has failed to cooperate
in good faith with these scheduling provisions, or if any party fails to comply
with a scheduling order of the panel, the panel may award damages and impose
sanctions for all injuries caused by this delay or failure to comply with these
provisions, including, but not limited to, attorneys fees. If the panel finds
that actual damages arising from delay are impractical to estimate with
reasonable certainty, the parties agree that reasonable
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liquidated damages for delay shall be $5,000 per day, which may be assessed by
the panel as a part of its award.
13.4 CONSOLIDATION OF PENDING ARBITRATIONS.
(a) In the event that any subsequent or further controversy,
claim or dispute arising out of or relating in any way to this Agreement or any
of the other Transaction Documents, or any alleged breach thereof, arises while
any arbitration demand under any such document is pending but before the
arbitration panel appointed as a result thereof has rendered its final
decision, such panel shall have exclusive jurisdiction over the resolution of
such subsequent or further controversies, claims or disputes and shall
consolidate all such controversies, claims or disputes before the panel.
(b) In the event any arbitration panel created to resolve any
controversies, claims and disputes under this Agreement has already rendered a
final decision on the controversies, claims and disputes pending before it
prior to the initiation of arbitration for any subsequent or further
controversy, claim or dispute, such subsequent or further controversy, claim or
dispute shall be resolved by a new panel of arbitrators appointed pursuant to
the provisions of this Section. No arbitrator who previously served on an
arbitration panel appointed pursuant to an arbitration provision set forth in
the Agreement, shall be appointed to any subsequent arbitration panel without
the express agreement of all parties to the dispute.
13.5 DISCOVERY PROCEDURES. Unless otherwise agreed to by all
parties or ordered by the arbitration panel, discovery shall be limited in the
arbitration to the following:
(a) The number of depositions concerning any single or
consolidated arbitration shall be limited to four (4) depositions by each side
to the dispute, regardless of whether more than one party is allied on one side
of the dispute;
(b) Each deposition shall last no more than one business day
and may commence no earlier than 9:00 a.m. and continue no later than 5:00
p.m., as measured at the location of the deposition;
(c) The parties may exchange three (3) sets of requests for
documents, but the documents called for in each request shall be limited so as
not to exceed 100 pages unless a greater page limit is directed by the Panel;
(d) Unless a different time is specified by the arbitration
panel, production of requested documents for inspection and copying by all
other parties to the dispute shall occur within thirty days of actual receipt
of the request, whether served by U.S. mail, telecopy, fax, hand delivery or
overnight delivery;
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(e) Subject to other provisions hereof and the Rules, the
scheduling and conduct of depositions and document requests and production
shall be governed by the Federal Rules of Civil Procedure, as modified by the
local rules for the United States District Court for Northern District of
California; and
(f) All testimony, whether by deposition, at a hearing, or in
written submissions, must be submitted under oath or under penalty of perjury.
13.6 JUDICIAL DETERMINATION. With regard to this arbitration
provision, the parties intend that the proceeding may be initiated and continue
under the guidance of the AAA and the appointed arbitrators without the need
for judicial intervention, but, to the extent any party seeks a judicial
determination of the meaning of this arbitration provision or seeks to compel,
prevent, or limit a pending arbitration, all parties consent to exclusive
jurisdiction for any such controversy in any court of competent jurisdiction in
San Francisco, California.
13.7 ENFORCEMENT OF ARBITRATION AWARD. Any award or decision of an
arbitration panel appointed pursuant to this Section may be confirmed by any
court of competent jurisdiction.
13.8 THIRD PARTY CLAIMS. Notwithstanding any provision of this
Agreement or any of the other Transaction Documents to the contrary, in the
event a claim otherwise subject to arbitration hereunder (a "SPECIFIED CLAIM")
arises as a result of a Third Party Claim and such Third Party Claim is
asserted in a proceeding before a court or other governmental tribunal, the
party to this Agreement in whose favor such Specified Claim arises may, at its
option, assert such Specified Claim against a party hereto in such proceeding.
SECTION 14: REPRESENTATIONS AND WARRANTIES
Triad, Park, 3055 Management and 3055 each have the corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated by this Agreement, which have been duly authorized by
the Board of Directors of Triad, Park, 3055 Management and 3055; no other
corporate proceedings on the part of Triad, Park, 3055 Management or 3055 are
necessary to authorize Xxxxx, Xxxx, 0000 Management or 3055 to enter into this
Agreement or to consummate the transactions contemplated by this Agreement; and
this Agreement is the legal, valid, and binding obligation of Triad, Park, 3055
Management and 3055.
SECTION 15: MISCELLANEOUS PROVISIONS
15.1 ATTORNEYS' FEES. If any legal action or other proceeding is
commenced to enforce or interpret any provision of, or otherwise relating to,
this Agreement, the losing party shall pay the prevailing party's actual
expenses incurred in the investigation
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of any claim leading to the proceeding, preparation for and participation in
the proceeding, any appeal or other post judgment motion, and any action to
enforce or collect the judgment including contempt, garnishment, levy,
discovery and bankruptcy. For this purpose "expenses" include, without
limitation, court or other proceeding costs and experts' and attorneys' fees
and their expenses. The phrase "prevailing party" shall mean the party who is
determined in the proceeding to have prevailed or who prevails by dismissal,
default or otherwise.
15.2 CHOICE OF LAW. This Agreement shall be construed in
accordance with, and governed by, the internal laws of the State of Delaware,
without giving effect to the principle of conflicts of laws thereof.
15.3 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and counterpart
signature pages may be assembled to form a single original document.
15.4 NOTICES. All notices, consents, requests, demands or other
communications to or upon the respective parties shall be in writing and shall
be effective for all purposes upon receipt on any business day before 5:00 PM
local time and on the next business day if received after 5:00 PM or on other
than a business day, including without limitation, in the case of (i) personal
delivery, (ii) delivery by messenger, express or air courier or similar
courier, (iii) delivery by United States first class certified or registered
mail, postage prepaid and (iv) transmittal by telecopier or facsimile,
addressed as follows:
If to Triad or 3055, to:
Triad Systems Corporation
0000 Xxx Xxxx Xxxx
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
Triad Systems Corporation
0000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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Weil, Gotshal & Xxxxxx, LLP
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and
Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxxx X. Xxxxxx, Xx.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Park or to 3055 Management, to:
Triad Park, LLC
0000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
McCutchen, Doyle, Xxxxx & Enersen, LLP
Three Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
In this section "business days" means days other than Saturdays, Sundays, and
federal and state legal holidays. Either party may change its address by
written notice to the other in the manner set forth above. Receipt of
communications by United States first class or registered mail will be
sufficiently evidenced by return receipt. Receipt of communications by
facsimile will be sufficiently evidenced by a machine generated confirmation of
transmission without an error message. In the case of illegible or otherwise
unreadable facsimile transmissions, the receiving party shall promptly notify
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the transmitting party of any transmission problem and the transmitting party
shall promptly re-send any affected pages.
15.5 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. No rights of any party
under this Agreement are assignable without the written consent of all other
parties, which any other party may withhold in its absolute discretion.
15.6 THIRD PARTIES. Except as expressly provided herein, nothing
in this Agreement shall be construed to give any person other than the express
parties to this Agreement any benefits, rights or remedies.
15.7 TERMS. Undefined capitalized terms used in this Agreement
have the meaning attributed to those terms as set forth in the Merger
Agreement.
15.8 WAIVER/MODIFICATION/AMENDMENT. No amendment of, or waiver of
any obligation under, this Agreement will be enforceable unless set forth in a
writing signed by the party against which enforcement is sought.
The parties have executed this Agreement as of the Effective Date.
Triad Systems Corporation
By: /s/ XXXXX X. XXXXXX
-------------------
Its: President
0000 Xxxxx Xx. Corp.
By: /s/ XXXXX X. XXXXXX
-------------------
Its: President
Triad Park, LLC
By: Triad Systems Corporation
By: /s/ XXXXX X. XXXXXX
-------------------
Its: President
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By: 3055 Management Corp.
By: /s/ XXXXX X. XXXXXX
-------------------
Its: Vice President, Secretary, & CFO
3055 Management Corp.
By: /s/ XXXXX X. XXXXXX
-------------------
Its: Vice President, Secretary, & CFO
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EXHIBIT 1.3
TO EXHIBIT 6.1
[AMERICAN GENERAL REALTY ADVISORS, INC. LETTERHEAD]
February 26, 1997
0000 Xxxxx Xxxxx Corp.
0000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx
RE: Loan No. 802-0007708; Promissory Note (the "Note") dated
August 23, 1988, in the original principal sum of
$15,500,000, executed by 0000 Xxxxx Xxxxx Corp. (the
"Borrower"), payable to the order of The Variable Annuity
Life Insurance Company (the "Lender"), secured by, among
other things, a First Deed of Trust and Assignment of
Rents, Security Agreement and Fixture Filing of even date
therewith, recorded under Series No. 88-215552 in the
Official Records of Alameda County, California (the
"Mortgage"), covering the real and personal property
described therein (the "Mortgaged Property").
Gentlemen:
American General Realty Advisors, Inc. serves as mortgage lending
agent for the Lender. Borrower has requested that Lender consent to: (1) a
transfer of ownership (the "Transfer") in the Mortgaged Property from the
Borrower to Triad Park LLC (the "Transferee"), (ii) a proposed amendment to the
existing lease (the "Amendment") by and between the Transferee, and Triad
Systems Corporation, as Tenant, demising 219,818 sf of the Mortgaged Property,
which amendment reduces the term of the lease to an expiration date five (5)
years after the date of the Transfer, and (iii) the execution of a Subordination
Attornment and Non-Disturbance Agreement (the "SANDA"). The Transfer, Amendment
and SANDA may hereinafter be referred to collectively as the "Transactions".
Lender consents to the Transactions subject to and in accordance with
satisfaction of the following terms and conditions:
1. Borrower shall furnish Lender with true and correct copy of
all Transfer and Amendment documents, and all other documents
relating to the proposed Transactions, the terms and forms of
which shall be subject to approval by Lender;
2. At the time of the Transactions there must be no default
existing or circumstances which, with the giving of notice or
passage of time, or both, would constitute a default under the
Note, the Mortgage, or any other security documents or lien
instruments executed in connection with the Note;
[LOGO]
Page One of Three
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0000 Xxxxx Xxxxx Corp
Page Two of Three
3. Borrower and Transferee shall execute and deliver (or cause
to be executed and delivered) to Lender any such
instruments as Lender may request in connection with the
transaction contemplated hereby, including but not limited
to an assumption agreement executed by Borrower and
Transferee, the terms and conditions of which shall be
acceptable to Lender and Lender's legal counsel, and the
SANDA, the terms and conditions of which shall be
acceptable to Lender and Lender's legal counsel. The
Transfer and assumption agreement shall not release
Borrower from any liability or obligation under the Note or
Mortgage;
4. Borrower shall pay (or cause to be paid), whether or not such
transaction is consummated, any and all costs and expenses of
Lender in connection with the proposed transaction described
herein, including, without limitation, attorney's fees;
5. At closing, Borrower shall provide Lender with proof of
insurance on the Mortgaged Property sufficient to comply
with Lender's insurance standards as outlined in the
Mortgage;
6. Borrower shall pay (or cause to be paid) to Lender an
administrative fee in the amount of $15,000;
7. Lender shall have been finished with an endorsement to its
Mortgagee's Policy of Title Insurance (the "Mortgagee's
Policy") presently in effect, recognizing and agreeing,
inter alia, that the Mortgagee's Policy is still in effect
and unimpaired, notwithstanding the execution and delivery
of the Transfer, insuring that the Mortgage continues to
constitute a first and prior lien with respect to the
Mortgaged Property described therein, subject only to the
exceptions contained in the Mortgagee's Policy and
providing for such additional endorsements as Lender's
legal counsel may advise;
8. The consent contained herein shall not be deemed a consent by
the undersigned to any future conveyance, assignment,
transfer, mortgage, lease or hypothecation; nor shall such
consent constitute a contractual obligation to consent to such
transactions in the future or a waiver of any such requirement
of the Mortgage that Lender's consent to any such transactions
be obtained in the future; and
9. The consent granted in this letter shall be effective only
if (i) the foregoing conditions are satisfied, (ii) all
documents executed in connection with this transaction
conform in all respects with and are identical with any
documents furnished to Lender and approved by Lender in
accordance with this letter, and (iii) subsequent to the
Transfer referred to herein, certified copies and/or
originals, if applicable, of all documents executed in
connection therewith are delivered to the Lender.
29
0000 Xxxxx Xxxxx Corp
Page Three of Three
This letter shall be effective only if a fully-executed counterpart
is returned to the attention of Xx. Xxxxx X. Xxxxxxxx, 0000 Xxxxx Xxxxxxx, 00xx
Xxxxx, Xxxxxxx, Xxxxx 00000, by the close of business fourteen (14) calendar
days after the date of this letter. If a fully executed counterpart is not so
returned, then this letter shall be null and void and of no further force or
effect.
Sincerely,
/s/ XXXXXXX X. XXXXX
---------------------------------
Xxxxxxx X. Xxxxx
Vice President
AGREED TO AND ACCEPTED BY:
0000 XXXXX XXXXX CORP.
a California corporation
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Name: Xxxxx X. Xxxxxx
------------------------
Title: President
-----------------------
Dated: February 26, 1997
----------------------------
30
EXHIBIT 1.4
TO EXHIBIT 6.1
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement ("ASSIGNMENT"), effective as of
February 27, 1997 (the "EFFECTIVE DATE") is between Triad Systems Corporation, a
Delaware corporation ("ASSIGNOR"), and Triad Park, LLC, a Delaware limited
liability company ("ASSIGNEE").
RECITALS
A. 0000 Xxxxx Xx. Corp., a California corporation and a wholly-owned
subsidiary of Assignor ("3055"), is a party to the Note and First Deed of Trust
(as defined below).
B. Immediately prior to the effectiveness of this Agreement, 3055 has
merged with and into Assignor, with Assignor as the surviving corporation (the
"MERGER"). By virtue of the Merger, Assignor has assumed all rights and
obligations of 3055, including, without limitation, those under the Note and the
First Deed of Trust.
C. Assignor now desires to assign to Assignee all of its rights and
obligations arising from the Note and the First Deed of Trust, and Assignee
desires to accept the assignment and to assume all future liabilities under the
Note and First Deed of Trust for the benefit of The Variable Annuity Life
Insurance Company, a Texas corporation.
AGREEMENTS
FOR VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged,
Assignor and Assignee agree as follows:
1. DEFINITIONS.
(A) As used in this Agreement, "NOTE" means the Promissory Note, dated
August 23, 1988, in the original principal sum of $15,500,000, executed by 3055
as Maker in favor of the Variable Annuity Life Insurance Company, a Texas
corporation ("VARIABLE").
(B) As used in this Agreement, "FIRST DEED OF TRUST" means the First Deed
of Trust and Assignment of Rents, Security Agreement and Fixture Filing, dated
as of August 23, 1988, by and among 3055, as Trustor, Xxxxx-XxXxxxxx Financial
Corporation, as Trustee, and Variable, as Beneficiary, recorded as Series No.
88-215552, in Alameda County, State of California
2. ASSIGNMENT. Assignor assigns to Assignee all of its rights and
obligations under the Note and the First Deed of Trust.
3. ASSUMPTION. Assignee assumes and agrees to perform all obligations of
Assignor to be performed under the Note and the First Deed of Trust after the
Effective
31
Date. This assumption is not intended to amend the provision of the Note
defining the circumstances when the Maker does or does not have recourse
liability.
4. INDEMNITY. Assignee shall indemnify, defend and hold Assignor harmless
from and against all claims, losses, damages, costs, expenses and liabilities
(including reasonable attorneys' fees) arising out of or relating to the
performance of the Note and the First Deed of Trust after the Effective Date.
5. ATTORNEYS' FEES. If any legal action or other proceeding is commenced
to enforce or interpret any provision of, or otherwise relating to, this
Agreement, the losing party shall pay the prevailing party's actual expenses
incurred in the investigation of any claim leading to the proceeding,
preparation for and participation in the proceeding, any appeal or other post
judgment motion, and any action to enforce or collect the judgment including
contempt, garnishment, levy, discovery and bankruptcy. For this purpose
"EXPENSES" include, without limitation, court or other proceeding costs and
experts' and attorneys' fees and their expenses. The phrase "prevailing party"
shall mean the party who is determined in the proceeding to have prevailed or
who prevails by dismissal, default or otherwise.
6. CHOICE OF LAW AND FORUM. This Agreement shall be construed in
accordance with, and governed by, the internal laws of the State of California.
Any action to enforce or interpret its provisions must be brought in State or
Federal Courts located in San Francisco, California.
7. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, and counterpart signature pages may
be assembled to form a single original document.
8. NOTICES. All notices, consents, requests, demands or other
communications to or upon the respective parties shall be in writing and shall
be effective for all purposes upon receipt on any business day before 5:00 PM
local time and on the next business day if received after 5:00 PM or on other
than a business day, including without limitation, in the case of (i) personal
delivery, (ii) delivery by messenger, express or air courier or similar courier,
(iii) delivery by United States first class certified or registered mail,
postage prepaid and (iv) transmittal by telecopier or facsimile, addressed as
follows:
If to Assignor, to:
Triad Systems Corporation
0000 Xxx Xxxx Xxxx
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
2
32
With a copy to:
Weil, Gotshal & Xxxxxx, LLP
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Assignee, to:
Triad Park, LLC
0000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
McCutchen, Doyle, Xxxxx & Enersen, LLP
Three Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
In this section "BUSINESS DAYS" means days other than Saturdays, Sundays, and
federal and state legal holidays. Either party may change its address by written
notice to the other in the manner set forth above. Receipt of communications by
United States first class or registered mail will be sufficiently evidenced by
return receipt. Receipt of communications by facsimile will be sufficiently
evidenced by a machine generated confirmation of transmission without an error
message. In the case of illegible or otherwise unreadable facsimile
transmissions, the receiving party shall promptly notify the transmitting party
of any transmission problem and the transmitting party shall promptly resend any
affected pages.
9. SUCCESSORS AND ASSIGNS: ASSIGNABILITY. No rights of any party under
this Agreement are assignable without the written consent of all other parties,
which any other party may withhold in its absolute discretion.
10. THIRD PARTIES. This Agreement is for the express benefit of The
Variable Annuity Life Insurance Company, a Texas corporation ("BENEFICIARY")
whose address is c/o American General Realty Advisors, Inc., Attention:
Director, Mortgage Loans-Asset Management, Xxx 0000, Xxxxxxx, Xxxxx 00000.
Nothing in this Agreement shall be
3
33
construed to give any person other than the express parties to this Agreement
and Beneficiary any benefits, rights or remedies.
11. WAIVER/MODIFICATION/AMENDMENT. No amendment of, or waiver
of any obligation under, this Agreement will be enforceable unless set forth
in a writing signed by the party against which enforcement is sought.
The parties have executed this Assignment and Assumption Agreement as of
the Effective Date.
"ASSIGNOR"
TRIAD SYSTEMS CORPORATION
By: /s/ XXXXX X. XXXXXX
---------------------------
Name: XXXXX X. XXXXXX
Title: PRESIDENT
"ASSIGNEE"
TRIAD PARK, LLC
By 3055 MANAGEMENT CORP., ITS SOLE MANAGER
By: /s/ XXXXX X. XXXXXX
---------------------------
Name: XXXXX X. XXXXXX
Title: VICE PRESIDENT
4
34
EXHIBIT 1.51
TO EXHIBIT 6.1
EXHIBIT 1.51
Conflict Agreement (see Exhibit 12.3 to Form 10-SB)
35
EXHIBIT 3(i)
TO EXHIBIT 6.1
EXHIBIT 3(i)
None
36
EXHIBIT 5.1A
TO EXHIBIT 6.1
EXHIBIT 5.1A
Limited Liability Company Agreement of Triad Park, LLC (see Exhibit 2.1 to Form
10-SB)
37
EXHIBIT 5.1B
TO EXHIBIT 6.1
CERTIFICATE OF FORMATION
OF
TRIAD PARK, LLC
This Certificate of Formation of Triad Park, LLC (the "Company") is
being executed by the undersigned for the purpose of forming a limited liability
company pursuant to the Delaware Limited Liability Company Act.
1. The name of the Company is Triad Park, LLC.
2. The address of its registered office in Delaware is 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000. The name of its
registered agent at such address is The Corporation Trust Company.
IN WITNESS WHEREOF, the undersigned, an authorized person of the
Company, has executed this Certificate of Formation this 10th day of February,
1997.
/s/ XXXXX X. XXXXXX
-----------------------------
Xxxxx X. Xxxxxx, Authorized Person
38
EXHIBIT 5.3
TO EXHIBIT 6.1
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
McCutchen, Doyle, Xxxxx & Enersen, LLP
Xxxxx Xxxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx
SPACE ABOVE THIS LINE FOR RECORDER'S USE
GRANT DEED
FOR VALUABLE CONSIDERATION, TRIAD SYSTEMS CORPORATION, a Delaware
corporation ("Grantor"), hereby GRANTS to TRIAD PARK, LLC, a Delaware limited
liability company ("Grantee"), all of its right, title and interest (including
that received or to be received as a result of the merger of Grantor's wholly
owned subsidiary, 0000 Xxxxx Xx. Corp., a California corporation, into Grantor)
in the real property commonly known as Triad Park located in the City of
Livermore, County of Alameda, State of California, as more particularly
described on the attached Exhibit A (the "Real Property").
Dated FEBRUARY 27, 0000
XXXXX XX XXXXXXXXXX )
) ss.
COUNTY OF )
On FEBRUARY 27, 1997 before me, XXXXXX XXX XXX, a Notary Public in and for said
State, personally appeared, Xxxxx X. Xxxxxx and Xxxxxx X. X'Xxxxxx personally
known to me to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that they executed the same in their
authorized capacity(ies), and that by their signature(s) on the instrument the
person(s) or the entity upon behalf of which the person(s) acted, executed the
instrument. WITNESS my hand and official seal.
/s/ XXXXXX XXX XXX
-----------------------------------------------
Xxxxxx Xxx Xxx
Notary Public
TRIAD SYSTEMS CORPORATION,
a Delaware corporation
By: /s/ XXXXX X. XXXXXX
---------------------------------
Its: PRES/CEO
--------------------------------
By: XXXXXX X. X'XXXXXX
--------------------------------
Its: VP and Asst. Secretary
--------------------------------
XXXXXX XXX XXX
COMM. #994507
Notary Public-California
ALAMEDA COUNTY
My Comm. Expires MAY 9, 1997
MAIL TAX STATEMENTS TO: DOCUMENTARY TRANSFER TAX $ 13,094.01
Computed on the consideration or
----- value of property conveyed; OR
Triad Park, LLC X Computed on the consideration or
0000 Xxxxx Xxxxx ----- value less liens or encumbrances
Xxxxxxxxx, XX 00000 remaining at time of sale.
Triad Systems Corporation
By /s/ XXXXX X. XXXXXX
--------------------------------
Xxxxx X. Xxxxxx
Signature of Declarant Determining Tax
39
EXHIBIT A
LEGAL DESCRIPTION OF TRIAD PARK
