1
EXHIBIT 2.1
STOCK ACQUISITION AGREEMENT
BY AND AMONG
CBOOKS EXPRESS, INC.,
COMPUTER LITERACY BOOKSHOPS, INC.,
XXXXXX XXXXXXX AND
XXXXXX X. XXXXXXXXX,
DATED AS OF
MAY 28, 1997
2
TABLE OF CONTENTS
Page
----
ARTICLE I PURCHASE AND SALE OF STOCK.........................................................1
1.1 Purchase and Sale of Stock.......................................................1
1.2 Purchase Price...................................................................1
1.3 Purchase Price Adjustments.......................................................2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF CBOOKS..........................................3
2.1 Organization....................................................................3
2.2 Authorization...................................................................3
2.3 Compliance with other Instruments...............................................3
2.4 Litigation......................................................................3
2.5 Consents........................................................................4
2.7 Investment Representation.......................................................4
2.8 Financial Capability............................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF CLBI AND THE SHAREHOLDERS......................4
3.1 Organization, Good Standing and Qualification of CLBI...........................4
3.2 Capital Structure of CLBI.......................................................5
3.3 Authorization...................................................................5
3.4 Financial Information...........................................................5
3.5 Absence of Certain Changes and Events...........................................6
3.6 Receivables.....................................................................8
3.7 Taxes...........................................................................8
3.8 Compliance With Law............................................................10
3.10 Governmental Consents.........................................................10
3.10 Proprietary Rights............................................................10
3.11 Restrictive Documents or Orders...............................................11
3.12 Contracts and Commitments.....................................................11
3.13 Title to the Property.........................................................13
3.14 Insurance.....................................................................13
3.15 Litigation....................................................................14
3.16 No Conflict or Default........................................................14
3.17 Party Consents................................................................15
3.18 Certain Agreements............................................................15
3.19 Labor Relations...............................................................15
3.20 Employees and Employee Benefit Plans..........................................15
3.21 Interested Party Relationships................................................17
3.22 Environmental and Safety Matters..............................................17
3.23 Certain Payments..............................................................17
i
3
3.24 Product Warranties............................................................18
3.25 Customers.....................................................................18
3.26 Suppliers.....................................................................18
3.27 Books and Records.............................................................18
3.28 Bank Account..................................................................18
3.29 Complete Disclosure...........................................................18
3.30 No Other Agreements...........................................................19
ARTICLE IV COVENANTS OF CLBI AND THE SHAREHOLDERS...........................................19
4.1 Maintenance of Business........................................................19
4.2 Restricted Activities and Transactions.........................................19
4.3 Tax Forms......................................................................21
4.4 Negotiation With Others........................................................21
4.5 Consents, Approvals and Filings................................................21
4.6 Access to Records and Properties...............................................21
ARTICLE V MUTUAL COVENANTS..................................................................22
5.1 Confidentiality................................................................22
5.2 Public Announcements...........................................................22
5.3 Brokers and Finders............................................................23
5.4 Notice of Breach...............................................................23
5.5 Agreements to Cooperate........................................................23
5.6 Additional Agreements..........................................................23
5.7 Consulting Arrangements........................................................23
ARTICLE VI CLOSING..........................................................................23
6.1 Closing........................................................................23
6.2 Deliveries by the Shareholders and CLBI........................................24
6.3 Deliveries by CBooks...........................................................24
6.4 Related Agreements.............................................................25
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS.............................................25
7.1 Conditions to Obligations of CBooks............................................25
7.2 Conditions to Obligations of CLBI and the Shareholders.........................26
ARTICLE VIII INDEMNIFICATION................................................................27
8.1 Survival of Representations, Warranties, and Agreements........................27
8.2 Indemnification of CBooks......................................................27
8.3 Indemnification of the Shareholders............................................28
8.4 Procedure for Indemnification with Respect to Third-Party Claims...............28
8.5 Procedure For Indemnification with Respect to Non-Third Party Claims...........29
ARTICLE IX NONCOMPETITION AGREEMENT.........................................................29
9.1 Noncompete.....................................................................29
9.2 Nonsolicit.....................................................................30
9.3 No hire........................................................................30
ii
4
9.4 Extension of Restricted Period.................................................30
9.5 Irreparable Harm...............................................................30
9.6 Condition to Acquisition.......................................................30
9.7 Acknowledgment of Consideration................................................31
ARTICLE X TERMINATION AND AMENDMENT.........................................................31
10.1 Termination...................................................................31
10.2 Effect of Termination.........................................................32
ARTICLE XI MISCELLANEOUS PROVISIONS.........................................................32
11.1 Notice........................................................................32
11.2 Entire Agreement..............................................................32
11.3 Binding Effect; Assignment....................................................33
11.4 Captions......................................................................33
11.5 Expenses of Acquisition.......................................................33
11.6 Waiver; Consent...............................................................33
11.7 Third-Party Beneficiaries.....................................................33
11.8 Counterparts..................................................................34
11.9 Gender........................................................................34
11.10 Severability.................................................................34
11.11 Remedies of CBooks...........................................................34
11.12 Governing Law................................................................34
11.13 Arbitration, Attorneys' Fees.................................................34
EXHIBIT 1.2(a) Form of Escrow Agreement
EXHIBIT 3.4(a) February Financials
EXHIBIT 3.4(b) March Financials
EXHIBIT 3.4(c) April Financials
EXHIBIT 3.21 Peer-to-Peer Agreement
EXHIBIT 5.7 Consulting Agreement
EXHIBIT 6.2(a) Form of Stock Power and Assignment Separate from Certificate
EXHIBIT 6.3(d) Form of Opinion of Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx
Xxxxxxxx & Xxxxxxxxx, LLP
iii
5
STOCK ACQUISITION AGREEMENT
THIS AGREEMENT is dated as of May 28, 1997, by and among CBooks
Express, Inc., a California corporation ("CBOOKS" or the "COMPANY"), Computer
Literacy Bookshops, Inc., a California corporation ("CLBI"), Xxxxxx Xxxxxxx, an
individual residing at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
("XX. XXXXXXX"), and Xxxxxx X. Xxxxxxxxx, an individual residing at 0000
Xxxxxxxxx Xxxxx, Xxxxxxxxxxxxxxx, Xxxxxxxx 00000 ("XX. XXXXXXXXX"),
(collectively, Xx. Xxxxxxx and Xx. Xxxxxxxxx are referred to herein as the
"SHAREHOLDERS").
WHEREAS, CLBI is principally engaged in the operation of four
retail bookstores that primarily sell computer-related and other technical books
and written materials; and
WHEREAS, the Shareholders desire to sell to CBooks, and CBooks
desires to purchase from the Shareholders, all of the issued and outstanding
capital stock of CLBI subject to certain terms and conditions set forth herein,
including an agreement by the Shareholders not to compete with CBooks or CLBI
(collectively, the "ACQUISITION").
NOW, THEREFORE, in consideration of the mutual promises,
covenants and representations and warranties set forth herein, the parties
hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 Purchase and Sale of Stock. Upon the terms and subject to the
conditions of this Agreement, the Shareholders shall sell to CBooks, and CBooks
shall purchase from the Shareholders, all of the CLBI Shares (as defined below)
from the Shareholders at the Time of Closing (as defined below).
1.2 Purchase Price. Subject to the Adjustment Amount (defined below),
CBooks shall pay to the Shareholders an aggregate of Four Million Seven Hundred
Ninety Thousand Dollars ($4,790,000) as consideration for the CLBI Shares (as
defined below) and Two Hundred Ten Thousand Dollars ($210,000) as consideration
for the covenants and agreements set forth in Article IV hereof (together such
payments are herein referred to as the "CASH CONSIDERATION"), which Cash
Consideration shall be distributed at the Closing as follows:
(a) Two Million One Hundred Eighty Seven Thousand Nine Hundred
($2,187,900) shall be paid and delivered to Xx. Xxxxxxx in immediately available
funds by wire transfer of funds to an account designated by her as consideration
for the CLBI Shares owned by Xx. Xxxxxxx and One Hundred Fifty Thousand Dollars
($150,000) shall be paid and delivered to Xx. Xxxxxxx in immediately available
funds by wire transfer of funds to an account designated by her as consideration
for the covenants and agreements made by Xx. Xxxxxxx in Article IV hereof;
6
(b) Two Million One Hundred Two Thousand One Hundred Dollars
($2,102,100) shall be paid and delivered to Xx. Xxxxxxxxx in immediately
available funds by wire transfer of funds to an account designated by him as
consideration for the CLBI Shares owned by Xx. Xxxxxxxxx and Sixty Thousand
Dollars ($60,000) shall be paid and delivered to Xx. Xxxxxxxxx in immediately
available funds by wire transfer of funds to an account designated by him as
consideration for the covenants and agreements made by Xx. Xxxxxxxxx in Article
IV hereof; and
(c) Five Hundred Thousand Dollars ($500,000) (the "ESCROW
FUNDS") shall be delivered into escrow pursuant to the terms and conditions of
the Escrow Agreement attached as Exhibit 1.2(a) hereto (the "ESCROW AGREEMENT"),
and shall be held by the Escrow Agent (as defined in the Escrow Agreement) and
disbursed pursuant to the Escrow Agreement and Section 1.3(b) hereof. To the
extent that all or a portion of the Escrow Funds are available for delivery to
the Shareholders in accordance with the Escrow Agreement, first, the Escrow
Agent shall pay such professional fees and expenses of CLBI as are directed to
be paid by the Shareholders and thereafter, fifty-one percent (51%) of such
Escrow Funds shall be delivered to Xx. Xxxxxxx and forty-nine percent (49%) of
such Escrow Funds shall be delivered to Xx. Xxxxxxxxx.
1.3 Purchase Price Adjustments. Notwithstanding the provisions of
Section 1.2 above, the Cash Consideration shall be reduced or increased in
accordance with this Section 1.3 on a dollar for dollar basis as a result of any
decrease or increase in the Net Working Capital (as defined below) as reflected
on the Closing Date balance sheet ("CLOSING DATE BALANCE SHEET"), as compared to
that reflected on the February Financials (as defined in Section 3.4 hereof).
The parties agree that Net Working Capital as reflected on the February
Financials is Two Million Three Hundred Eighty One Thousand One Hundred Seven
Dollars and Twenty-Three Cents ($2,381,107.23). Such adjustment shall be made as
follows:
(a) If a decrease in the Cash Consideration, such decrease shall
be made by prompt return payment of such amount by the Shareholders to CBooks in
immediately available funds by bank cashier's check or by wire transfer of funds
to an account designated by CBooks; or
(b) If an increase in the Cash Consideration, (i) ten percent
(10%) of such increase shall be promptly delivered into escrow pursuant to the
terms and conditions of the Escrow Agreement, and shall be deemed to be included
in the definition of Escrow Funds (as set forth in Section 1.2 hereof), and as
such shall be held by the Escrow Agent and dispersed pursuant to the Escrow
Agreement and this Section 1.3 and (ii) ninety percent (90%) of such increase
shall be promptly paid by CBooks to the Shareholders in immediately available
funds by cashier's check or by wire transfer of funds to an account designated
by the Shareholders.
(c) "Net Working Capital" shall mean the total current assets of
CLBI minus the total current liabilities of CLBI. Net Working Capital on the
Closing Date (as reflected on the Closing Balance Sheet) shall be determined
based on the same accounting methodology and practices as Net Working Capital
was determined in the February Financials
2
7
and in a manner consistent with past practices of CLBI. The parties hereto
acknowledge that such Closing Balance Sheet will not be prepared in accordance
with GAAP. No later than June 20, 1997 (or as soon as available thereafter),
CBooks shall deliver to the Shareholders the Closing Balance Sheet. The
preparation of the Closing Balance Sheet shall be overseen and reviewed by Xxxx
Xxxx. If the Shareholders have not objected in writing to the Closing Balance
Sheet within twenty (20) business days of the receipt thereof by the
Shareholders, the Closing Balance Sheet shall be deemed accepted by the
Shareholders in the form in which it was delivered by CBooks. If the
Shareholders object in writing to the Closing Balance Sheet within twenty (20)
business days of the receipt thereof by the Shareholders, the Shareholders and
the CBooks agree to utilize all good faith efforts to attempt to resolve their
dispute during the next twenty (20) business days. If at the end of such forty
(40) business day period, CBooks and the Shareholders are unable to agree on the
Closing Balance Sheet, then the outstanding unresolved issues shall be submitted
to an arbitrator in accordance with Section 11.13 hereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CBOOKS
As of the date hereof and as of the Time of Closing, CBooks represents
and warrants to CLBI and the Shareholders as follows:
2.1 Organization. CBooks hereby represents and warrants to the
Shareholders that it is a corporation duly organized, validly existing and in
good standing under the laws of California.
2.2 Authorization. CBooks has full corporate power and authority to
enter into this Agreement and the Related Agreements (defined below) to which it
is a party, to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby, including, without
limitation, the execution and delivery of this Agreement and the Related
Agreements to which it is a party. CBooks has taken all necessary and
appropriate corporate action with respect to the execution and delivery of this
Agreement and the Related Agreements, and this Agreement and each of the Related
Agreements (to the extent to which it is a party) constitute valid and binding
obligations of CBooks enforceable in accordance with their terms, except as
limited by applicable bankruptcy, insolvency, moratorium, reorganization or
other laws affecting creditors' rights and remedies generally.
2.3 Compliance with Other Instruments. The Company's execution and
delivery of this Agreement and the Related Agreements, the consummation of the
transactions contemplated hereby and thereby, and the Company's compliance with
the terms hereof and thereof do not, or as of the Closing will not, conflict
with or result in a breach of any terms of, or constitute a default under, its
Articles of Incorporation or Bylaws, or any material agreement, obligation, or
instrument to which it is a party or by which it is bound.
2.4 Litigation. Other than the claim asserted against CBooks by CLBI
concerning the use of the xxxx "XXxxxx.xxx," there is no claim, litigation,
investigation,
3
8
inquiry, action, suit, or proceeding, administrative or judicial, pending or, to
its best knowledge, threatened against it, at law or in equity, before any
federal, state, or local court or regulatory agency, or other governmental
authority, that might have a material adverse effect on its ability to perform
any of its obligations under this Agreement or the Related Agreements.
2.5 Consents. No consent, approval, order, or authorization or
registration, qualification, designation, declaration, or filing with any
federal, state, local, or provincial governmental authority or any third party
on the part of CBooks is required in connection with the consummation of the
transactions contemplated hereunder.
2.6 Investment Representation. CBooks is acquiring the CLBI Shares from
the Shareholders for its own account for investment and not with a view to, or
for sale in connection with, any distribution thereof, nor with any present
intention of distributing or selling the same; and, except as contemplated by
this Agreement and the Related Agreements, CBooks has no present or contemplated
agreement, undertaking, arrangement, or contract providing for the disposition
thereof.
2.7 Financial Capability. CBooks has cash on hand or financing
commitments sufficient to satisfy all of its obligations under this Agreement
including, without limitation, the payment of the Cash Consideration.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CLBI AND THE SHAREHOLDERS
As of the date hereof and as of the Time of Closing, CLBI and the
Shareholders, jointly and severally, represent and warrant to CBooks as follows:
3.1 Organization, Good Standing and Qualification of CLBI. CLBI is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation and has all requisite corporate power and
authority and all necessary governmental authorizations to own, lease and
operate its properties and to conduct its business as it is now being conducted.
CLBI has no subsidiaries. CLBI is duly qualified or licensed to do business and
is in good standing as a foreign corporation in each state or other jurisdiction
in which the nature of its business or operations or ownership of its property
requires such qualification or licensing, except where the failure to be so
qualified or licensed would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), business,
properties, prospects, assets or results of operations of CLBI (collectively,
"CLBI'S BUSINESS") (such material adverse effect on CLBI's Business is referred
to herein as a "MATERIAL ADVERSE EFFECT"). Section 3.1 of the disclosure
schedule delivered by CLBI and the Shareholders to CBooks prior to execution of
this Agreement (the "CLBI DISCLOSURE SCHEDULE") sets forth a true, correct and
complete list of each such state and jurisdiction. The minute books of CLBI, as
made available to CBooks, contain complete and accurate records of any and all
corporate action material to CLBI's Business taken by CLBI since its date of
incorporation; provided, however, that the failure of such minute books to
contain a complete and accurate record of any corporate action that is disclosed
in this Agreement or the CLBI Disclosure Schedule shall not be deemed a
4
9
breach of the foregoing representation. CLBI does not own, directly or
indirectly, any outstanding capital stock or equity interest in any corporation,
partnership, joint venture, business association or other entity and has no
direct or indirect interest in or loans to any corporation, partnership, joint
venture, business association or other entity. CLBI has delivered or made
available to CBooks complete and correct copies of the Articles of Incorporation
and Bylaws of CLBI as amended to the date hereof.
3.2 Capital Structure of CLBI.
(a) The authorized capital stock of CLBI consists of 6,000,000
shares of common stock, no par value per share, 200,000 of which are issued and
are outstanding and held of record by the Shareholders (the "CLBI SHARES"); and
2,000,000 shares of preferred stock, none of which has been issued or are
outstanding. No other shares of capital stock of CLBI have been issued or are
outstanding.
(b) All of CLBI Shares have been validly issued, fully paid and
nonassessable, are not subject to preemptive rights created by statute, CLBI's
Articles of Incorporation or Bylaws or any agreement to which CLBI or the
Shareholders is a party or by which CLBI or the Shareholders may be bound, and
are owned free and clear of all voting trust arrangements, liens, options,
rights of first refusal, encumbrances, and claims whatsoever. There are no
agreements or understandings to which CLBI or the Shareholders are a party or
any other agreements or understandings with respect to the transfer or voting of
shares of CLBI capital stock.
(c) There are no options, warrants, calls, conversion rights,
commitments or agreement of any character to which CLBI or either of the
Shareholders are a party, or by which any of them may be bound, that do or may
obligate CLBI or either of the Shareholders to issue, deliver or sell, or cause
to be issued, delivered or sold, shares of the capital stock or other securities
of CLBI, or that do or may obligate CLBI or either of the Shareholders to grant,
extend or enter into any such option, warrant, call, conversion right,
commitment or agreement.
3.3 Authorization. Each of CLBI, Xx. Xxxxxxx and Xx. Xxxxxxxxx have full
power and authority to enter into this Agreement and Related Agreements, to
perform their obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby, including, without limitation, the
execution and delivery of this Agreement and the Related Agreements. CLBI has
taken all necessary and appropriate corporate action with respect to the
execution and delivery of this Agreement, the Closing Documents and the Related
Agreements. This Agreement and the Related Agreements constitute valid and
binding obligations of each of CLBI, Xx. Xxxxxxx and Xx. Xxxxxxxxx,
respectively, enforceable in accordance with their terms, except as limited by
applicable bankruptcy, insolvency, moratorium, reorganization or other laws
affecting creditors' rights and remedies generally.
3.4 Financial Information. CLBI and the Shareholders have delivered to
CBooks (a) unaudited financial statements (balance sheet, profit and loss
statement and shareholders' equity statement) for CLBI at and for the eight (8)
month period ended
5
10
February 28, 1997, copies of which are attached hereto as Exhibit 3.4(a) (the
balance sheet, profit and loss statement and shareholders' equity statement of
CLBI included in Exhibit 3.4(a) is hereinafter referred to as the "FEBRUARY
FINANCIALS") and (b) unaudited financial statements (balance sheet, profit and
loss statement and shareholders' equity statement) for CLBI at and for the nine
(9) month period ended March 31, 1997, copies of which are attached hereto as
Exhibit 3.4(b) (the balance sheet, profit and loss statement and shareholders'
equity statement of CLBI included in Exhibit 3.4(b) is hereinafter referred to
as the "MARCH FINANCIALS"), and will deliver on or prior to the Closing
unaudited financial statements (balance sheet, profit and loss statement and
shareholders' equity statement) for CLBI at and for the ten (10) month period
ended April 30, 1997, copies of which will be delivered on or before the Time of
Closing and will be attached hereto as Exhibit 3.4(c) (the balance sheet, profit
and loss statement and shareholders' equity statement of CLBI included in
Exhibit 3.4(c) is hereinafter referred to as the "APRIL FINANCIALS"), and (d)
unaudited financial statements (balance sheets, profit and loss statements and
shareholders equity) for CLBI at and for the years ended June 30, 1994, 1995 and
1996, (collectively, the "FINANCIAL STATEMENTS"). The Financial Statements are
complete and were prepared consistent with past practice. The Financial
Statements present fairly, in all material respects, the financial condition and
operating results of the CLBI Business as of the dates, and for the periods,
indicated therein. CLBI and the Shareholders have delivered, or in the case of
the April Financials, will deliver, to CBooks true, correct and complete copies
of the Financial Statements. There are no debts, liabilities or obligations with
respect to CLBI or to which any of its assets are subject, liquidated,
unliquidated, accrued, absolute, contingent, or otherwise, in excess of $5,000
individually, or in excess of $10,000 in the aggregate, except those expressly
set forth on the Financial Statements or disclosed in this Agreement or Section
3.4 of the CLBI Disclosure Schedule.
3.5 Absence of Certain Changes and Events. Except as contemplated herein
and as set forth in Section 3.5 of the CLBI Disclosure Schedule, since February
28, 1997 there has not been:
(a) Any change in the CLBI Business, and no event has occurred
and no action has been taken by CLBI or the Shareholders or, to the knowledge of
CLBI and the Shareholders, any other person, nor is any such event or action
contemplated or to the knowledge of CLBI and the Shareholders after due inquiry
of the officers, directors and management of CLBI, threatened, that might
reasonably be expected to have a Material Adverse Effect, except that no
representation is made as to general economic conditions, competition or matters
affecting CLBI's industry generally.
(b) Any event, including, without limitation, shortage of
materials or supplies, fire, explosion, accident, requisition or taking of
property by any governmental agency, flood, drought, earthquake, or other
natural event, riot, act of God or a public enemy, or damage, destruction, or
other casualty, whether covered by insurance or not, that has had or could
reasonably be expected to have a Material Adverse Effect;
6
11
(c) Any transaction relating to or involving the CLBI Business
(other than the transactions contemplated herein) that was entered into or
carried out by CLBI other than in the ordinary and usual course of business;
(d) Any change made by CLBI in its method of operating the CLBI
Business or its accounting practices relating thereto;
(e) Any mortgage, pledge, lien, security interest,
hypothecation, charge, or other encumbrance imposed or agreed to be imposed on
or with respect to the CLBI Business or its assets other than liens arising with
respect to taxes not yet due and payable, and such minor liens and encumbrances,
if any, that arise in the ordinary course of business and are not material in
nature or amount either individually or in the aggregate, and that do not
detract from the value of the CLBI Business or its assets or impair the
operations conducted thereon or any discharge or satisfaction thereof;
(f) Any sale, lease, or disposition of, or any agreement to
sell, lease, or dispose of any assets, other than sales, leases, or dispositions
in the usual and ordinary course of business and consistent with prior practice;
(g) Any modification, waiver, change, amendment, release,
rescission, accord and satisfaction, or termination of, or with respect to, any
term, condition, or provision of any contract, agreement, license, or other
instrument to which CLBI is a party and relating to or affecting the CLBI
Business or its Assets (as defined in Section 3.13 below), other than any
satisfaction by performance in accordance with the terms thereof in the usual
and ordinary course of business and consistent with prior practice;
(h) Any labor disputes or disturbances having a Material Adverse
Effect, and there has not been the filing of any petition or charge of unfair
labor practices regarding the CLBI Business or CLBI with the National Labor
Relations Board;
(i) Any increase in or modification of the compensation or
benefits payable or to become payable by CLBI to any director or any employee,
consultant or advisor of CLBI or the CLBI Business, including, but not limited
to the payment or commitment to pay a bonus, other than as required by existing
contracts or consistent with current practices;
(j) Any increase in or modification of any bonus, pension,
insurance, or other employee benefit plan, payment, or arrangement made to, for,
or with any of its employees;
(k) Any adverse relationships or conditions with vendors or
customers (except any condition arising only from the internal financial
condition of any such vendor or customer) of which CLBI has knowledge and could
reasonably be expected to have a Material Adverse Effect;
(l) Any waivers of any rights of substantial value by CLBI;
7
12
(m) Any dispositions or abandonment of any of CLBI's trademark,
tradename, patent, copyright, or other intellectual property rights (including,
without limitation, of any of CLBI's proprietary trade secrets or processes) or
any application therefore necessary or incidental to the conduct of the CLBI
Business;
(n) Any purchase or lease of or any agreements to purchase or
lease capital assets by CLBI in excess of $5,000 individually, or in excess of
$10,000 in the aggregate;
(o) Any issuance, redemption, repurchase, or other acquisition
of shares of capital stock of CLBI, or any declaration, setting aside, or
payment of any dividend or other distribution (whether in cash, stock, or
property) with respect to the capital stock of CLBI or any other payments,
transfers, assignments by CLBI of any rights, property or assets to its
shareholders; or
(p) Any other event or condition of any character that has a
Material Adverse Effects, or could reasonably be expected to have a Material
Adverse Effect.
3.6 Receivables. The accounts receivable shown on the February
Financials arose in the ordinary course of business, have been collected or are
collectible in the book amounts thereof. The accounts receivable of CLBI arising
after February 28, 1997 and before the Time of Closing (collectively, the
"ACCOUNTS RECEIVABLE") arose or will arise in the ordinary course of business
and have been collected or are collectible in the book amounts thereof, less
allowances for doubtful accounts equal to $21,535 as of April 30, 1997. None of
such Accounts Receivable are subject to any material claim of offset,
recoupment, setoff, or counter-claim and neither CLBI nor the Shareholders have
any knowledge of any specific facts or circumstances (whether asserted or
unasserted) that would give rise to any such claim. No amount of the Accounts
Receivable are contingent upon the performance by CLBI of any obligation or
contract. Except as set forth in Section 3.6 of the CLBI Disclosure Schedule, no
person has any lien on any of such Accounts Receivable and no agreement for
deduction or discount has been made with respect to such Accounts Receivables.
Section 3.6 of the CLBI Disclosure Schedule sets forth an aging of accounts
receivable of CLBI as of the date set forth thereon in the aggregate (0-30 days,
30-90 days and greater than 90 days).
3.7 Taxes.
(a) All Taxes (as hereinafter defined) due or payable by CLBI, and all interest
and penalties thereon, except for Taxes that are the subject of a good faith
dispute as disclosed in the Financial Statements or Section 3.7 of the CLBI
Disclosure Schedule and other than Taxes that have accrued but are not yet due
and payable and for which adequate reserves have been made, have been paid in
full. Except as disclosed in Section 3.7 of the CLBI Disclosure Schedule, each
of the Financial Statements, the February Financials, the March Financials and
the April Financials accrues all actual and contingent liabilities for current
and deferred Taxes. Except as disclosed in Section 3.7 of the CLBI Disclosure
Schedule, all Tax returns, statements, reports, forms and other documents
(including estimated Tax returns and reports and information returns with
reports) required to be filed in connection therewith have been accurately
prepared and duly and timely filed (and no extension of any filing date
8
13
applicable thereto has been requested or granted), and all deposits, or payments
required by law to be made by CLBI with respect to employees' or other
withholding taxes have been duly made. CLBI is not delinquent in the payment of
any Tax, assessment or governmental charge or deposit and CLBI did not have a
tax deficiency or claim outstanding or assessed against it; nor, to the best
knowledge of CLBI, is there any basis for such deficiency or claim. No tax is
required to be withheld pursuant to Section 1445 of the Internal Revenue Code of
1986, as amended (the "Code") as a result of the acquisition contemplated by
this Agreement, and CLBI is not a person other than a United States person
within the meaning of the Code. No recording or filing fees or sales, use,
transfer or documentary taxes are payable by CBooks in connection with, or as a
result of, the transactions provided for by this Agreement and the Related
Agreements under the laws of the State of California or any political
subdivision thereof. There are no liens for Taxes upon the Assets except liens
for current Taxes not yet due for which adequate reserves have been established.
There is no claim, audit, action, suit, proceeding, or investigation, now
pending (to the best knowledge of CLBI and the Shareholders) threatened against
or with respect to CLBI and no extensions or waivers of statutes of limitations
with respect to Tax matters have been given by or requested from CLBI. CLBI has
not entered into, nor will it enter into, any agreement or consent pursuant to
Section 341(f) of the Code. Except as set forth in Section 3.7 of the CLBI
Disclosure Schedule, CLBI is not a party to or bound by (nor will CLBI become a
party to or bound by) any Tax indemnity, Tax sharing or Tax allocation
agreement. CLBI has not been, nor to its best knowledge will it be, required to
include any material adjustment in taxable income for any period pursuant to
Sections 481, 482, or 263A of the Code or any comparable provision of state or
foreign Tax laws as a result of transactions, events or accounting methods
employed prior to the Time of Closing. There is no contract, agreement, plan or
arrangement, including but not limited to the provisions of this Agreement,
covering any employee or independent contractor or former employee or
independent contractor of CLBI that, individually or collectively, could give
rise to the payment by CLBI of any amount that would not be deductible pursuant
to Section 280G or Section 162 of the Code. None of the Assets (i) is property
that is required to be treated as owned by any other person pursuant to the
so-called "safe harbor lease" provisions of former Section 168(f)(8) of the
Code, (ii) directly or indirectly secures any debt the interest on which is tax
exempt under Section 103(a) of the Code or (iii) is "tax exempt use property"
within the meaning of Section 168(h) of the Code. The transactions contemplated
herein are not subject to the tax withholding provisions of Code Section 3406,
or of Subchapter A of Chapter 3 of the Code or of any other provision of law in
any jurisdiction. CLBI has never been a member of an affiliated group of
corporations, within the meaning of Section 1504 of the Code.
(b) For purposes of this Agreement, "Tax" (and, with correlative
meaning, "Taxes" and "Taxable") means (i) any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed by any governmental entity (a
"Taxing Authority") responsible for the imposition of any such tax (domestic or
foreign), (ii) any liability for the payment of any amounts of the type
described in (i) as a result of being a member of an
9
14
affiliated, consolidated, combined or unitary group for any Taxable period and
(iii) any liability for the payment of any amounts of the type described in (i)
or (ii) as a result of any express or implied obligation to indemnify any other
person.
3.8 Compliance With Law. CLBI has complied and is in compliance in all
material respects with all judicial or administrative decisions applicable to
the CLBI Business, and all applicable federal, state and local laws, statutes,
licensing requirements, rules and regulations. CLBI has been granted all
licenses, permits, authorizations and approvals ("PERMITS") from federal, state,
local, and foreign government regulatory bodies necessary to carry on the CLBI
Business as currently conducted, all of which are currently valid and in full
force and effect, and all of which are disclosed in Section 3.8 of the CLBI
Disclosure Schedule except where the failure to do so does not have a Material
Adverse Effect. All Permits (with the exception of the Permits identified in
Section 3.8 of the CLBI Disclosure Schedule as nontransferable governmental
permits) shall be effective as of the Closing, and shall be valid and in full
force and effect immediately following the Closing. Except as set forth in
Section 3.8 of the Disclosure Schedule, there is no order issued, investigation,
or proceeding pending or, to the knowledge of CLBI or the Shareholders after due
inquiry of the officers, directors and management of CLBI, threatened, or notice
served with respect to any violation of any law, ordinance, order, writ, decree,
rule, or regulation issued by any federal, state, local, or foreign court or
governmental agency or instrumentality with respect to the CLBI Business.
3.9 Governmental Consents. No consent, approval, order, or authorization
of, or registration, qualification, designation, declaration, or filing with any
federal, state, local, or provincial governmental authority on the part of CLBI
is required in connection with the consummation of the transactions contemplated
hereunder.
3.10 Proprietary Rights.
(a) Any of the Proprietary Rights (as defined in the following
sentence) that require the execution and filing with an appropriate governmental
agency, including, without limitation, the Patent and Trademark Office, have
been so indicated in Section 3.10 of the CLBI Disclosure Schedule. The
"PROPRIETARY RIGHTS" include all corporate names, trade names, trademarks,
service marks, patents, patent applications, copyrights, trade secrets,
information, proprietary rights and processes necessary for the CLBI Business as
now conducted and as proposed to be conducted in substantially the same manner
as conducted immediately prior to the date hereof without any conflict with or
infringement upon the rights of others. Section 3.10 of the CLBI Disclosure
Schedule sets out an accurate and complete list of the Proprietary Rights.
Except as set forth in Section 3.10 of the CLBI Disclosure Schedule, CLBI is the
sole owner of all right, title, and interest in and to all the Proprietary
Rights free and clear of all liens, encumbrances, claims, rights of use and
restrictions whatsoever. Except as set forth in Section 3.10 of the CLBI
Disclosure Schedule, there are no outstanding options, licenses, or agreements
of any kind relating to the Proprietary Rights nor is CLBI a party to any
options, licenses, or agreements of any kind with respect to the logos,
trademark and tradename rights, software, databases, source code, patents,
patent rights, copyrights, trade secrets, processes and
10
15
proprietary licenses, information, proprietary rights and processes of any other
person or entity which relates to the CLBI Business.
(b) Neither the Proprietary Rights nor any other processes,
methods, or operations employed by the CLBI Business, CLBI, now or in the past,
infringes upon any proprietary rights, or intellectual property of any other
person, firm, corporation, or other entity. There is not pending or threatened
any claim or litigation contesting the right of CLBI to engage in or employ any
such processes, methods, operations, or the Proprietary Rights. To the knowledge
of CLBI or the Shareholders, no employee of CLBI is in violation of any term of
any employment contract, proprietary information or inventions agreement, or any
other contract or agreement relating to the relationship of any such employee
with the CLBI Business or, to the knowledge of CLBI and the Shareholders, any
previous employer. To CLBI's and the Shareholders' knowledge, the employees of
CLBI are not obligated under any contract (including licenses, covenants, or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency that would conflict with
their obligation to use their best efforts to promote the interests of the CLBI
Business or that would conflict with the CLBI Business as conducted or as
proposed to be conducted in substantially the same manner as conducted
immediately prior to the date hereof.
3.11 Restrictive Documents or Orders. CLBI is not a party to or bound
under any agreement, contract, order, judgment, injunction or decree, or any
similar restriction not of general application that materially adversely
affects, or reasonably could be expected to materially adversely affect (a) the
continued operation by CBooks of the CLBI Business in substantially the same
manner as conducted immediately prior to the date hereof, (b) any acquisition of
property by CLBI or (c) the consummation of the transactions contemplated by
this Agreement.
3.12 Contracts and Commitments.
(a) Except as set forth in Section 3.12 of the CLBI Disclosure
Schedule, CLBI is not a party or subject to:
(i) Any collective bargaining agreement or other labor
union contract relating to the CLBI Business and applicable to the Employees,
any employment contract or arrangement, written or oral, providing for future
compensation with any officer, consultant, director or employee that is not
terminable by it at-will without penalty or obligation to make payments related
to such termination, other than such agreements as may be imposed or implied by
law;
(ii) Any plans, contracts or arrangements, written or
oral, that collectively require aggregate payments by CLBI in excess of $5,000
for bonuses, pensions, deferred compensation, severance pay or benefits,
retirement payments, profit-sharing, or the like;
11
16
(iii) Any joint marketing, joint development or joint
venture contract or arrangement or any other agreement which has involved or is
expected to involve a sharing of profits with other persons;
(iv) Any existing OEM agreement, distribution agreement,
volume purchase agreement, or other similar agreement pursuant to which CLBI has
granted or received most favored customer provisions or exclusive marketing
rights related to any product, group of products or territory;
(v) Any lease for real or personal property;
(vi) Any agreement, contract, mortgage, indenture,
lease, instrument, license, franchise, permit, concession, arrangement,
commitment or authorization that may be, by its terms, terminated or breached by
reason of the execution of this Agreement, the Related Agreements, or the
consummation of the transactions contemplated hereby or thereby;
(vii) Except for trade indebtedness incurred in the
ordinary course of business, any instrument evidencing or related in any way to
indebtedness in excess of $5,000 incurred in the acquisition of companies or
other entities or indebtedness in excess of $5,000 for borrowed money by way of
direct loan, sale of debt securities, purchase money obligation, conditional
sale, guarantee, indemnification or otherwise;
(viii) Any license agreement, either as licensor or
licensee;
(ix) Any contract containing covenants purporting to
limit CLBI's freedom to compete in any line of business or in any geographic
area or with any third party;
(x) Any agreement, contract or commitment relating to
capital expenditures and involving future obligations in excess of $5,000; or
(xi) Any other agreement, contract or commitment that is
material to CLBI.
(b) Each agreement, contract, mortgage, indenture, plan, lease,
instrument, permit, concession, franchise, arrangement, license and commitment
listed in Section 3.12 of the CLBI Disclosure Schedule is valid and binding on
CLBI and is in full force and effect. CLBI and the Shareholders have delivered
or made available to CBooks true, correct and complete copies of each such
agreement, contract, mortgage, indenture, plan, lease, instrument, permit,
concession, franchise, arrangement, license and commitment. Neither CLBI or the
Shareholders, nor to the knowledge of CLBI or the Shareholders, any other party
thereto, has breached in any material respect any provision of, or is in default
in any material respect under the terms of, any such agreement, contract,
mortgage, indenture, plan, lease, instrument, permit, concession, franchise,
arrangement, license or commitment.
12
17
(c) Section 3.12 of the CLBI Disclosure Schedule sets forth a
list of all agreements and other instruments under which CLBI is indebted for
borrowed money. CLBI and the Shareholders have delivered or made available to
CBooks true, correct and complete copies of each such agreement or other
instrument under or pursuant to which it has outstanding indebtedness for
borrowed money. Except as set forth in Section 3.12 of the CLBI Disclosure
Schedule, CLBI is not in default in any material respect under any of such
agreements or other instruments, nor is CLBI or the Shareholders aware of any
event that, with the passage of time, or notice, or both, would result in an
event of default thereunder. No employee, advisor or consultant of CLBI or the
CLBI Business is indebted to CLBI.
3.13 Title to the Property. CLBI has good and marketable title to all of
the assets necessary or incidental to the conduct of the CLBI Business in the
same manner as the CLBI Business was operated by CLBI prior to the Time of
Closing (the "ASSETS"), free and clear of all mortgages, pledges, liens,
encumbrances, security interests, equities, charges, and restrictions of any
nature whatsoever, except, with respect to tangible personal property, liens
arising from Taxes not yet due and payable, statutory mechanics and
materialman's liens incurred in the ordinary course of business to secure
obligations that are not past due and liens and encumbrances disclosed in
Section 3.13 of the CLBI Disclosure Schedule. The Assets include all assets,
including without limitation, all real property leased or owned by CLBI, all
intellectual property and all other property in which CLBI has any right, title
and interest necessary to operate the CLBI Business in the same manner as the
CLBI Business was operated by CLBI prior to the Time of Closing. Except as set
forth in Section 3.13 of the CLBI Disclosure Schedule, all of the Assets used in
the operation of the CLBI Business are suitable for the purposes for which they
are used, are in good operating condition (normal wear and tear excepted) and in
reasonable repair, free from any known defects, except such minor defects as do
not interfere with the continued use thereof. Section 3.13 of the CLBI
Disclosure Schedule contains a description of all real property owned by or
leased to CLBI together with a description of all buildings, fixtures and
improvements located on such real properties. CLBI does not own or lease any
other real property. CLBI has delivered or made available to CBooks true and
correct copies of all leases of real property to which CLBI is a party either as
lessee or lessor. In addition, Section 3.13 of the CLBI Disclosure Schedule
contains an accurate itemization of all tangible personal property, other than
inventory, owned or leased by CLBI with individual valuations of not less than
Five Hundred Dollars ($500).
3.14 Insurance. CLBI has not been refused any insurance by an insurance
carrier during the past three years nor has any insurance policy been canceled
with respect to CLBI, the CLBI Business or the Assets. Section 3.14 of the CLBI
Disclosure Schedule lists all insurance policies and fidelity bonds covering the
Assets, the CLBI Business, the employees, officers and directors of CLBI,
specifying the type of coverage, the amounts of coverage, the carrier and the
expiration date under each such policy and bond. CLBI and the Shareholders have
delivered or made available to CBooks true, correct and complete copies of all
such policies and bonds. There is no claim by CLBI pending under any of such
policies or bonds with respect to the CLBI Business, the Assets or the
employees, officers and directors. All premiums payable under all such policies
and bonds have been paid, and CLBI is otherwise in full compliance with the
material terms of such policies and bonds. Such policies of insurance and bonds
are of the
13
18
type and in amounts customarily carried by entities conducting business similar
to that of the CLBI Business. Neither CLBI nor the Shareholders knows of any
threatened termination of or premium increase with respect to any of such
policies.
3.15 Litigation. Except as set forth in Section 3.15 of the CLBI
Disclosure Schedule, none of CLBI's officers, directors or management, including
the Shareholders, is engaged in, or has received any threat of, any litigation,
arbitration, investigation, or other proceeding, at law or in equity, before any
federal, state, local or foreign court, or regulatory agency, or other
governmental authority, involving CLBI, the CLBI Business, the Assets or the
Employees (as defined below), or against or affecting the transactions
contemplated by the Agreement and the Related Agreements. Except as set forth in
Section 3.15 of the CLBI Disclosure Schedule, there is no action, suit,
proceeding or investigation pending or, to the knowledge of CLBI and the
Shareholders after due inquiry of the officers, directors and management of
CLBI, threatened against CLBI, the Shareholders or CLBI's officers, directors or
management that questions the validity of this Agreement, the Related
Agreements, or the right of CLBI, to enter into this Agreement, the Related
Agreements, or to consummate the transactions contemplated hereby or thereby, or
that might result in any Material Adverse Effect. Except as set forth in Section
3.15 of the CLBI Disclosure Schedule, there is no action, suit, proceeding, or
investigation by CLBI currently pending or that it currently intends to
initiate. None of CLBI nor CLBI's officers, directors or management is bound by
any judgment, decree, injunction, ruling, or order of any court, governmental,
regulatory or administrative department, commission, agency or instrumentality,
arbitrator, or any other person that has or could reasonably be expected to have
a Material Adverse Effect. Except for documentation relating to the dispute
between CLBI and CBooks, CLBI and the Shareholders have delivered or made
available to CBooks true, correct and complete copies of all material
documentation, pleadings, correspondence, memoranda and notes relating to any
action, suit, proceeding or investigation, at law or at equity, pending or, to
the knowledge of CLBI and the Shareholders after due inquiry of the officers,
directors and management of CLBI, threatened, of which CLBI, the Shareholders or
the officers, directors or management of CLBI is a party.
3.16 No Conflict or Default. Neither the execution and delivery of this
Agreement by CLBI and the Shareholders, nor compliance by each of CLBI and the
Shareholders with the terms and provisions hereof, including without limitation,
the consummation of the transactions contemplated hereby, will violate any
applicable statute, regulation, or ordinance of any governmental authority, or
conflict with or result in the breach of any term, condition, or provision of
the Articles of Incorporation, or the Bylaws of CLBI or of any agreement, deed,
contract, mortgage, indenture, writ, order, decree, legal obligation, or
instrument to which CLBI and the Shareholders are a party or by which they or
any of the Assets are or may be bound, or constitute a default (or an event
which, with the lapse of time or the giving of notice, or both, would constitute
a default) thereunder, where such violation, conflict and/or default could have
a material adverse effect on (a) the continued operation by CBooks of the CLBI
Business after the Time of Closing on substantially the same basis as
theretofore operated by CLBI, (b) the consummation of the transactions
contemplated by this Agreement, or (c) the Assets, or result in the creation or
imposition of any material lien, charge, or encumbrance, or other restriction of
any nature whatsoever with respect to any of such Assets, or
14
19
give to others any interest or rights, including rights of termination,
acceleration, or cancellation in or with respect to the Assets.
3.17 Third Party Consents. Except as set forth in Section 3.17 of the
CLBI Disclosure Schedule, no consent, approval, or authorization of any third
party on the part of CLBI is required in connection with the consummation of the
transactions contemplated hereunder, except where the failure to obtain such
consent, approval, and/or authorization could have a material adverse effect on
(a) the continued operation by CBooks of the CLBI Business after the Time of
Closing on substantially the same basis as theretofore operated, (b) the
consummation of the transactions contemplated by this Agreement or (c) the
Assets.
3.18 Certain Agreements. Neither the execution and delivery of this
Agreement or the Related Agreements (except as explicitly provided therein) nor
the consummation of the transactions contemplated hereby or thereby will (a)
result in any payment (including without limitation, severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due to any officer,
director or employee of or consultant to CLBI, (b) increase any benefits
otherwise payable under any employee benefit plan or (c) result in the
acceleration of the time of payment or vesting of any such benefits.
3.19 Labor Relations. Except as set forth in Section 3.19 of the
Disclosure Schedule, there are no labor controversies pending or, to the
knowledge of CLBI and the Shareholders after due inquiry of the officers,
directors and management, threatened between, CLBI and any of its past or
current temporary or regular employees (the "EMPLOYEES") or any labor union or
other collective bargaining unit representing any of the Employees.
3.20 Employees and Employee Benefit Plans.
(a) Section 3.20 of the CLBI Disclosure Schedule sets forth a
full and complete list of all directors, officers, Employees, advisors,
consultants, professionals (including attorneys and accountants) and any other
service providers (such service providers who CLBI has paid or expects to pay an
aggregate of at least $5,000) of CLBI and the CLBI Business (collectively,
"SERVICE PROVIDERS") as of May 15, 1997, and their respective job titles, and
their total compensation (including, without limitation, the total amount of
base salary, whether fixed or commission or a combination thereof); provided,
the total compensation paid to professionals shall not be required. None of the
Service Providers is subject to any contracts, written or unwritten, that
specify a particular employment or service term, or limit CLBI's right to
terminate the employment or service relationship of such Service Provider with
CLBI. CLBI does not have any contractual obligation (i) to provide any
particular form or period of notice prior to termination, or (ii) to pay any of
such Service Providers any severance benefits in connection with their
termination of employment or service. In addition, no severance pay will become
due to any Service Providers in connection with the transactions contemplated by
this Agreement, as a result of any CLBI agreement, plan, or program. Following
the consummation of the transactions contemplated by this Agreement, neither
CBooks nor CLBI will have any obligations towards any Service Provider, nor any
former Service Provider. To the knowledge of CLBI and the Shareholders, none of
the Service Providers is or will be in violation of any
15
20
judgment, decree, or order, or any term of any employment contract, or other
contract or agreement relating to the relationship of any such Service Provider
with CLBI, CBooks or any other party because of the nature of the CLBI Business
conducted by CLBI or the use by the Service Provider of such Service Provider's
best efforts with respect to such business. Neither CLBI nor the Shareholders is
aware that any Employee, or that any group of Employees, intends to terminate
their employment with it, nor does it have a present intention to terminate the
employment of any of the foregoing.
(b) With respect to the CLBI Business, CLBI has not failed to
comply in any material respect with Title VII of the Civil Rights Act of 1964,
as amended, the Fair Labor Standards Act, as amended, the Occupational Safety
and Health Act of 1970, as amended, the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), the Age Discrimination in Employment Act of 1967,
as amended, the Older Workers Benefit Protection Act, as amended, the Safe
Drinking Water and Toxic Enforcement Act of 1986, as amended, all applicable
federal, state, and local laws, rules, and regulations relating to employment,
and all applicable laws, rules, and regulations governing payment of minimum
wages and overtime rates, and the withholding and payment of or from
compensation of employees, where the failure to so comply could reasonably be
expected to have a Material Adverse Effect.
(c) Section 3.20 of the CLBI Disclosure Schedule sets forth a
full and complete list of CLBI's pension, profit sharing, savings, retirement,
or other deferred compensation plan, or any bonus (whether payable in cash or
stock) or incentive program, or any group health plan (whether insured or
self-funded), or cafeteria plan or severance plan, or any disability, accident
or group life insurance plan, or any stock option or stock purchase plan, or
other employee welfare benefit plan or employee pension benefit plan (the
"EMPLOYEE BENEFIT PLANS"). CLBI is not a party to, nor has made any contribution
to or otherwise incurred any obligation under, any "multiemployer plan" as
defined in Section 3(37) of ERISA. If any Employee Benefit Plan exists, CLBI has
furnished to CBooks or their counsel complete and accurate copies of such plans
and related plan documents, including but not limited to the most recent version
of trust documents, insurance policies or contracts, employee booklets, summary
plan descriptions, Form 5500s, IRS determination letters and other authorizing
documents. CLBI has prepared and timely filed all requisite governmental
reports, including but not limited to Form 5500 reports. In addition, CLBI has
prepared and timely filed any other IRS-required filings and has properly and
timely posted, or distributed all notices and reports to employees required to
be filed, posted, or distributed with respect to each of such plans (except as
would not have a Material Adverse Effect). Each Employee Benefit Plan which is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination from the IRS covering the provisions of the Tax Reform
Act of 1986 stating that such Employee Benefit Plan is so qualified and nothing
has occurred since the date of such letter that could reasonably be expected to
affect the qualified status of such plan (except as would not have a Material
Adverse Effect). Each Employee Benefit Plan, if any, has at all times been
operated and administered in all material respects in accordance with its terms
and all applicable laws currently in effect, including ERISA and the Code, and
including but not limited to, amendments to Section 401(a) of the Code enacted
by the Tax Reform Act of 1986, the Omnibus Budget Reconciliation Act of 1986,
the Omnibus Budget Reconciliation Act of 1987, the Technical and Miscellaneous
16
21
Revenue Act of 1988 and the Omnibus Budget Reconciliation Act of 1989 (except as
would not have a Material Adverse Effect).
(d) To CLBI's and the Shareholders' best knowledge, CLBI has not
violated any of the health care continuation coverage requirements of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") applicable to
its employees prior to the Time of Closing.
(e) Neither CLBI nor, to the Shareholders knowledge after due
inquiry, any trustee or administrator of any employee welfare plan within the
meaning of Section 3(1) of ERISA or any employee pension benefit plan within the
meaning of Section 3(2) of ERISA ("ERISA PLANS") covering any Employee nor any
party in interest (as defined in Section 3(14) of ERISA) or disqualified person
(as defined in Section 4975(e)(2) of the Code) with respect to any ERISA Plan
has engaged in any transaction that would subject CLBI, such plan, or any
trustee or administrator thereof, or any party dealing with any ERISA Plan or
any such trust to either a civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a tax imposed pursuant to Section 4975, 4976 or 4979 of the
Code (except as would not have a Material Adverse Effect).
(f) There are no material pending claims by or on behalf of any
ERISA Plan by any Employee or beneficiary covered under any such plan or
otherwise involving any such plan (other than routine claims for benefits).
(g) CLBI has no "defined benefit plans" as defined in Section
3(35) of ERISA.
3.21 Interested Party Relationships. Except as set forth in Section 3.21
of the CLBI Disclosure Schedule, neither CLBI, nor any officer or director of
CLBI (nor any family member of such officer or director of CLBI, nor any
corporation, partnership, or other entity which, directly or indirectly, alone
or together with others, controls, is controlled by, or is in common control
with CLBI, any officer director of CLBI, or any such family member), has any
financial interest, direct or indirect, in any supplier or customer of or to the
CLBI Business, or other party to any contract that is material to the CLBI
Business. CLBI and the Shareholders have delivered to CBooks true, correct and
complete copies of any and all agreements among CLBI, the officers, directors
and management of CLBI, including the agreement between CLBI and Peer-to-Peer
Communications, Inc., a California corporation ("PEER-TO-PEER"), a copy of which
is attached hereto as Exhibit 3.21.
3.22 Environmental and Safety Matters. To CLBI's and the Shareholder's
knowledge without independent investigation or inquiry, CLBI is not in violation
of in any material respect of any applicable statute, law, or regulation
relating to the environment or occupational health and safety, and to CLBI's and
the Shareholder's knowledge, no expenditures are or will be required in order to
comply with any such existing statute, law, or regulation.
3.23 Certain Payments. Neither CLBI nor any person directly or
indirectly on behalf of CLBI has made or received any payment that was not legal
to make or receive.
17
22
3.24 Product Warranties. CLBI does not have any warranty policies or
outstanding warranties or guarantees relating to any of CLBI's products or
services.
3.25 Customers. CLBI has compiled a customer mailing list (consisting of
individuals who received the February 1997 mailing by CLBI) (the "CUSTOMER
LIST") and a corporate account list (consisting of companies that had made
purchases from CLBI on account during the twelve month period ended March 31,
1997) (the "CORPORATE ACCOUNT LIST"). Neither CLBI nor the Shareholders is aware
of any event, happening, or fact that would lead them to believe that any of
said customers and corporate accounts will not continue substantially the same
level of purchases after the Closing. The Customer List consists of no less than
Ninety Thousand (90,000) separate names and addresses, and the Corporate Account
List consists of the names and addresses of not less than Two Hundred Fifty
(250) separate business entities or separate buying divisions of related
entities. True, correct and complete copies of the Customer List and Corporate
Account List will be made available to CBooks at or before the Closing in
accordance with Section 6.2 hereof.
3.26 Suppliers. Neither CLBI nor the Shareholders is aware of any event,
happening, or fact that would lead them to believe that any suppliers or vendors
will not continue to supply substantially the same level and type of products
purchased by CLBI under industry standard terms and conditions.
3.27 Books and Records. The books and records of CLBI to which CBooks
has been given access are the true books and records of CLBI and truly and
accurately reflect the underlying facts and transactions in all material
respects. No actions by the Shareholders or the Board of Directors of CLBI, or
any committee thereof, have been taken that are not therein reflected. CLBI and
the Shareholders have delivered or made available to CBooks true, correct and
complete copies of the books and records of CLBI; provided, however, that the
failure of such minute books to contain a complete and accurate record of any
corporate action that is disclosed in this Agreement or the CLBI Disclosure
Schedule shall not be deemed a breach of the foregoing representation.
3.28 Bank Account. Section 3.28 of the CLBI Disclosure Schedule contains
an accurate and complete list of bank accounts and/or safe deposit boxes
maintained by CLBI indicating the name and branch of the bank, the account
number, the type of account and the names of all persons authorized to draw
thereon or who have access thereto.
3.29 Complete Disclosure. No representation or warranty made by CLBI or
the Shareholders in this Agreement, the Related Agreements, the CLBI Disclosure
Schedule, nor any statement, certificate, schedule or exhibit delivered to
CBooks in accordance with Sections 6.2 and 7.1 hereof, contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements or facts contained herein or
therein not misleading in light of the circumstances under which they were
furnished. To the Shareholders' knowledge, after due inquiry, there is no event,
fact or condition that has resulted in, or could reasonably be expected to
result in, a Material Adverse Effect that has not been set forth in this
Agreement or in the CLBI Disclosure Schedule.
18
23
3.30 No Other Agreements. Except as provided in this Agreement, neither
CLBI nor the Shareholders have any legal obligation, absolute or contingent, to
any person or firm to sell any of its assets other than in the ordinary course
of business or to effect any merger, consolidation or reorganization of CLBI or
to enter into any agreement with respect thereto.
ARTICLE IV
COVENANTS OF CLBI AND THE SHAREHOLDERS
4.1 Maintenance of Business. During the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or the
Time of Closing, and except as otherwise consented to in writing by CBooks, CLBI
shall conduct the CLBI Business in the ordinary and usual course consistent with
past practice and shall use reasonable efforts to maintain and preserve intact
its business organizations, keep available the services of its officers and
employees and maintain relations with licensors, licensees, suppliers,
contractors, distributors, customers and others having business relationships
with them consistent with past practices. CLBI shall promptly notify CBooks of
any event or occurrence not in the ordinary course of business and will not
enter into or amend any agreement or take any action that reasonably could be
expected to have a Material Adverse Effect.
4.2 Restricted Activities and Transactions. Except as expressly provided
in this Agreement, or as otherwise consented to in writing by CBooks, prior to
the Time of Closing, neither CLBI nor the Shareholders shall:
(a) Propose, adopt or permit an amendment of CLBI's Articles of
Incorporation or Bylaws;
(b) Issue, sell, encumber or deliver, or agree to issue, sell,
encumber or deliver, any shares of any class of capital stock of CLBI or any
securities convertible into any such shares or convertible into securities in
turn so convertible, or any options, warrants, or other rights calling for the
issuance, sale or delivery of any such shares or convertible securities; or
authorize or propose any change in its equity capitalization;
(c) Split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance or authorization of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or repurchase, redeem or otherwise acquire any shares of its
capital stock;
(d) Declare or pay any dividend on its capital stock in cash,
stock or property, and will not redeem, repurchase or otherwise acquire any
shares, or rights to acquire shares, of its capital stock;
(e) Mortgage or pledge any of its assets, tangible or
intangible;
(f) (i) borrow, or agree to borrow, any funds or voluntarily
incur, assume or become subject to, whether directly or by way of guarantee or
otherwise, any obligation or liability (absolute or contingent), (ii) cancel or
agree to cancel any debts or claims,
19
24
(iii) lease, sell or transfer, agree to lease, sell or transfer, or grant or
agree to grant any preferential rights to lease or acquire, any of its assets,
property or rights (except for (A) dispositions of obsolete or worthless assets,
(B) sales of immaterial assets not in excess of $5,000 in the aggregate, (C)
sales in the ordinary course of business and (D) leases of equipment in the
ordinary course of business pursuant to previous commitments as set forth in the
CLBI Disclosure Schedule), or (iv) make or permit any amendments or termination
of any contracts, agreements, licenses or other rights to which it is a party
(except for termination resulting solely from expiration of nonrenewable terms
of duration);
(g) Grant any increase in, or otherwise amend the compensation
to any Service Provider (except as required by existing contracts or in the
ordinary course of business consistent with past practice which increases have
been identified to by CBooks in writing and have been listed in the CLBI
Disclosure Schedule), or amend in any respect the terms of any Plan or adopt any
new Plan or similar arrangements or agreements (except in each case as
specifically provided in this Agreement or as required by law), or enter into or
amend any employment, severance or similar arrangement;
(h) Hire any Service Provider except that CLBI may hire an
Employee to fill a vacancy resulting from the departure of a previous Employee
provided the terms of such new hire are the same as those applicable to the
departing employee, or terminate any Service Provider except for cause;
(i) Acquire control or ownership of any other corporation,
association, joint venture, partnership, business trust or other business
entity, or acquire control or ownership of all or a substantial portion of the
assets of any of the foregoing, or incorporate or form, or cause to be
incorporated or formed, any corporation, association, joint venture,
partnership, business trust or other business entity, or merge, consolidate or
otherwise combine with any other corporation (except as provided for in this
Agreement), or otherwise acquire or agree to acquire any assets that are
material, individually or in the aggregate, to the CLBI Business; or enter into
any agreement providing for any of the foregoing;
(j) Pay, discharge or satisfy any claims, liabilities or
obligations (whether absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction of liabilities in the ordinary course of
business consistent with past practice;
(k) Except in the ordinary course of business, negotiate, enter
into or agree to enter into any transaction;
(l) Transfer or license to any person or entity, or otherwise
extend, amend or modify, any rights to the Proprietary Rights;
(m) Enter into or amend any agreements pursuant to which any
other party is granted most favored customer status or exclusive marketing,
distribution or other similar rights with respect to any products of CLBI;
20
25
(n) Violate, amend or otherwise modify the terms of any of the
contracts set forth on the CLBI Disclosure Schedule;
(o) Commence a lawsuit other than for the routine collection of
bills, or settle a lawsuit;
(p) Take any action that would result in any of the
representations and warranties of CLBI set forth in this Agreement becoming
untrue; or
(q) Authorize or propose any of the foregoing, or enter into any
contract, agreement, commitment or arrangement to do any of the foregoing.
4.3 Tax Forms. CLBI shall prepare and timely file all returns and
amendments thereto required to be filed by it on or before the Closing Date.
CBooks shall have a reasonable opportunity to review all returns and amendments
thereto and to approve such returns (which approval shall not be unreasonably
withheld). CLBI shall pay and discharge all Taxes, assessments and governmental
charges upon or against it or any of its properties or assets, and all
liabilities relating to the period before the Closing and due prior to the
Closing, before the same shall become delinquent and before penalties accrue
thereon, except to the extent and as long as: (a) the same are being contested
in good faith and by appropriate proceedings pursued diligently and in such a
manner as not to a Material Adverse Effect; and (b) CLBI shall have set aside on
its books adequate reserves for such Taxes.
4.4 Negotiation With Others. From and after the date of this Agreement
until the earlier of the Time of Closing or the termination of this Agreement in
accordance with its terms, CLBI shall not: (a) directly or indirectly, solicit,
initiate discussions or engage in negotiations with any person (whether such
negotiations are initiated by CLBI or otherwise) or take any other action
intended or designed to facilitate the efforts of any person, other than CBooks,
relating to the possible acquisition of all or a material portion of CLBI
(whether by way of merger, purchase of capital stock, purchase of assets or
otherwise); or (b) enter into an agreement with any person, other than CBooks,
providing for any of the above.
4.5 Consents, Approvals and Filings. CLBI and the Shareholders will use
their respective best efforts to comply as promptly as practicable with all
applicable governmental requirements and to obtain on or before the Closing all
necessary approvals, authorizations, consents, waivers, licenses, clearances or
orders of Governmental Entities or of other persons referred to herein or in the
CLBI Disclosure Schedule. CLBI and the Shareholders shall each also use their
respective best efforts to obtain all necessary consents, waivers and approvals
under its contracts in connection with the transaction contemplated by this
Agreement.
4.6 Access to Records and Properties. CBooks may, prior to the Time of
Closing, through the Shareholders, Xxxx Xxxx, Xxxxx XxxXxxxxx, Xxxxxxx Xxxx,
Xxxxxxx Xxxxxxx and Xxxxxx Xxxxxxxxx, and CLBI's agents and representatives,
continue to conduct or cause to be conducted a review of the CLBI Business and
the financial condition, properties, assets, books and records of CLBI solely
for the purpose of facilitating the transition of the CLBI Business to CBooks.
Upon reasonable notice, CLBI and the Shareholders agree to provide CBooks
21
26
reasonable access to all its properties, books, contracts, commitments, and
computer systems (subject to the restrictions set forth below) and all other
information concerning its business, properties and personnel as CBooks may
reasonably request, and Xxxx Xxxx, Xxxxxxx Xxxx, Xxxxx XxxXxxxxx Xxxxxxx Xxxxxxx
and Xxxxxx Xxxxxxxxx, all for the purpose of facilitating the integration of the
CLBI Business with and into CBooks. The only computer access CLBI will provide
is a limited access account on the World Wide Web development computer, to be
accessed on-site at CLBI's Zanker Road location, which will be sufficient for
CLBI to create one or more HTML pages. No copies of any pages so created may be
made onto removable media. CLBI will be given copies of a few current CLBI
HTML-code pages which they can modify for use in advertising and/or linking to
their current site assuming the anticipated transaction is concluded; these
pages, or pages derived from them, may at no time be connected to the World Wide
Web until after the Closing.
ARTICLE V
MUTUAL COVENANTS
5.1 Confidentiality. CLBI, the Shareholders and CBooks each agree to continue to
comply with the terms of the Mutual Confidentiality Agreement dated as of April
28, 1997 after the Time of Closing. All information obtained by CBooks in the
course of its due diligence review of CLBI shall be subject to the terms of such
Mutual Confidentiality Agreement.
5.2 Public Announcements. Except as provided for herein, CBooks, CLBI
and the Shareholders shall not from and after the date hereof make, issue or
release any public announcement, press release, statement or acknowledgment of
the existence of, or reveal publicly the terms, (including without limitation,
the amount of the Cash Consideration) conditions and status of, the transactions
provided for herein (including any written communication to employees, customers
or the trade) without the prior written consent of the other parties as to the
content and time of release of and the media in which such statement or
announcement is to be made; provided, however, that in the case of
announcements, statements, acknowledgments or revelations that any party is in
the opinion of its counsel required by law to make, issue or release, the
making, issuing or releasing of any such announcement, statement, acknowledgment
or revelation by the party so required to do so by law shall not constitute a
breach of this Agreement if such party shall have given, to the extent
reasonably possible, not less than one calendar day prior notice to the other
party, and shall have attempted, to the extent reasonably possible, to clear
such announcement, statement, acknowledgment or revelation with the other party.
Each party hereto agrees that it will not unreasonably withhold any such consent
or clearance. CLBI and the Shareholders acknowledge that CBooks intends to issue
press release at or shortly after the Time of Closing and CLBI and the
Shareholders agree that they will promptly review such release and consent to
its release within a reasonable time period provided that content is reasonable.
Notwithstanding the foregoing, the limitations, restrictions and covenants of
this Section 5.2 shall apply following the Closing solely to public
announcements, press releases, statements or acknowledgments concerning the
material economic terms and provisions of this Agreement.
22
27
5.3 Brokers and Finders. The Shareholders agree, jointly and severally,
to indemnify and to hold harmless CBooks and CLBI from any liability for any
commission or compensation in the nature of a broker's or finders' fee (and the
costs and expenses of defending against such liability or asserted liability)
for which the Shareholders or CLBI, or any of its officers, partners, employees
or representatives is responsible. CBooks agrees to indemnify and to hold
harmless the Shareholders from any liability for any commission or compensation
in the nature of a broker's or finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which CBooks or any
of its officers, partners, employees, or representatives is responsible.
5.4 Notice of Breach. Each party shall promptly give written notice to
the other party upon becoming aware of the occurrence or, to its knowledge,
impending or threatened occurrence, of any event which would cause any of its
representations or warranties to be untrue at the Time of Closing or cause a
breach of any covenant contained or referenced in this Agreement and will use
all reasonable commercial efforts to prevent or promptly remedy the same. The
party receiving such notification shall have the right to terminate this
Agreement in accordance with Section 10.1(e) hereof. In the event such party
elects not to so terminate this Agreement, such notification shall require a
mutually satisfactory amendment hereto.
5.5 Agreements to Cooperate. Each party hereto will take all reasonable
actions necessary to comply promptly with all legal requirements that may be
imposed on it with respect to the transactions contemplated in this Agreement
and the Related Agreements (including obtaining any and all necessary third
party and governmental consents) and shall take all reasonable actions necessary
to cooperate promptly with and furnish information to the other party in
connection with any such requirements imposed upon the party in connection with
the transactions contemplated in this Agreement and the Related Agreements.
5.6 Additional Agreements. In case at any time after the Time of Closing
any further action is reasonably necessary to carry out the purposes, terms and
provisions of this Agreement or to vest CBooks with full title to all
properties, assets, rights, approvals, immunities and franchises of CLBI, the
proper officers and directors of each party to this Agreement shall take all
such necessary action.
5.7 Consulting Arrangements. Xx. Xxxxxxx agrees to provide consulting
services to CBooks commencing as of the Closing in accordance with the terms set
forth on Exhibit 5.7.
ARTICLE VI
CLOSING
6.1 Closing. The transactions contemplated by this Agreement shall be completed
on the first business day after the day on which the last of the conditions
contained in Article VII hereof is fulfilled or waived (the "TIME OF CLOSING");
provided, that in no event shall the Closing occur later than May 30, 1997
unless otherwise mutually agreed to by the parties ("TERMINATION DATE"). The
Closing shall take place at the offices of Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx
23
28
Franklin & Xxxxxxxxx, LLP, 000 Xxxxxxxxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx, or at
such other place or date as may be agreed upon from time to time in writing by
the parties. The "CLOSING" shall mean the deliveries to be made by CBooks, and
CLBI at the Time of Closing in accordance with this Agreement.
6.2 Deliveries by the Shareholders and CLBI. At the Closing, CLBI and
the Shareholders shall deliver to CBooks, all duly and properly executed, the
following:
(a) Valid stock certificates evidencing all of the CLBI Shares
(the "CERTIFICATES"), duly and validly endorsed for transfer to CBooks, or
accompanied by a Stock Power and Assignment Separate from Certificate, the form
of which is attached hereto as Exhibit 6.2(a), duly executed in such form as is
acceptable for transfer on the books of CLBI.
(b) An Officer's Certificate executed by the President of CLBI
certifying that the conditions specified in subsections (a)-(f) of Section 7.1
have been satisfied.
(c) Opinions of Xxxxxxx Xxxxxx & Green P.C. and Xxxxxxxxx Parish
& Xxxxxx, dated the date of the Closing, in form and substance mutually agreed
upon by Xxxxxxx Xxxxxx & Green P.C. and Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx
Xxxxxxxx & Xxxxxxxxx, LLP.
(d) A Certificate of the Secretary of CLBI attesting to the
incumbency of CLBI's officers, the authenticity of resolutions authorizing the
transactions contemplated by this Agreement, and the authenticity and continuing
validity of the Articles of Incorporation and Bylaws of CLBI.
(e) Executed copies of the Related Agreements to the extent to
which CLBI and the Shareholders are a party.
(f) A Certificate executed by each of the Shareholders certifying
that the conditions specified in subsections (a) - (f) of Section 7.1 have been
satisfied.
(g) True, correct and complete copies of the Customer List and
the Corporate Account List.
(h) Such other documents as are customary in transactions of this
type.
6.3 Deliveries by CBooks. At the Closing, CBooks shall deliver, or cause
to be delivered, to CLBI, the Shareholders, and the Escrow Agent as applicable,
all duly and properly executed, the following:
(a) The consideration as set forth in Article I.
(b) An Officer's Certificate executed by the President of CBooks certifying that
the conditions specified in subsections (a)-(f) of Section 7.2 have been
satisfied.
(c) A Certificate of the Secretary of CBooks attesting to the
incumbency of CBooks' officers, the authenticity of resolutions authorizing the
transactions
24
29
contemplated by this Agreement, and the authenticity and continuing validity of
the Articles of Incorporation and Bylaws of CBooks.
(d) An opinion of Xxxxxxxxx Xxxxxxx, dated the date of the
Closing, in substantially the form attached hereto as Exhibit 6.3(d).
(e) Executed copies of the Related Agreements.
(f) Such other documents as are customary in transactions of this
type.
6.4 Related Agreements. For the purposes of this Agreement, the term
"RELATED Agreements" shall mean the Escrow Agreement.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS
7.1 Conditions to Obligations of CBooks. Each and every obligation of CBooks to
be performed at the Closing shall be subject to the satisfaction as of or before
the Time of Closing of the following conditions (unless waived in writing by
CBooks):
(a) Representations and Warranties. The representations and
warranties of CLBI and the Shareholders set forth in Article III of this
Agreement shall have been true and correct in all material respects when made
and shall be true and correct in all material respects at and as of the Time of
Closing, as if such representations and warranties were made as of such date and
time and reflecting any mutually agreed amendments to the Disclosure Schedule,
reflected pursuant to Section 5.4 hereof.
(b) Consents. CLBI and the Shareholders shall have obtained and
delivered to CBooks all consents set forth on the CLBI Disclosure Schedule.
(c) Performance of Agreement. All covenants, conditions, and
other obligations under this Agreement that are to be performed or complied with
by CLBI and the Shareholders shall have been fully performed and complied with
at or prior to the Time of Closing.
(d) No Material Adverse Change. There shall have been no Material
Adverse Effect since February 28, 1997.
(e) Absence of Governmental or Other Objection. There shall be no
pending or threatened lawsuit challenging the transaction by any body or agency
of the federal, state, or local government or by any third party, and the
consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Time of Closing.
(f) Approval of Documentation. The form and substance of all
certificates, instruments, opinions, and other documents delivered or to be
delivered to CBooks under this Agreement shall be satisfactory to CBooks and its
counsel in all reasonable respects.
25
30
(g) Shareholder Approval. The Shareholders of CLBI shall have
unanimously approved this Agreement, the applicable Related Agreements, and the
transactions contemplated thereby, all in accordance with applicable laws and
regulatory requirements.
(h) Foreign Status Representation Letter. CLBI shall furnish
CBooks with an affidavit stating under penalty of perjury that, CLBI is not a
United States real property interest within the meaning of Sections 897 of the
Code and will provide in such affidavit its taxpayer identification number and
shall have executed a representation letter substantially in the form provided
before Closing to CLBI and its counsel and make such filings with such tax
authorities as are reasonably requested by CBooks in connection with such
representations.
(i) Tax Forms. The Shareholders shall have delivered to CBooks
properly completed and executed Internal Revenue Service Forms W-8 or W-9, as
applicable.
(j) Resignation of Officers and Directors. The officers and
directors of CLBI shall have resigned their respective officer positions and
directorships effective as of the Closing.
(k) Regulatory Compliance and Approval. All permits, consents,
approvals and waivers from governmental authorities necessary to the
consummation of this Agreement and the transactions contemplated hereby and for
the operations of the CLBI Business of CLBI after the consummation of such
transactions and the ownership of the Proprietary Information after the
consummation of such transactions shall have been obtained.
7.2 Conditions to Obligations of CLBI and the Shareholders. Each and
every obligation of the Shareholders and CLBI to be performed at the Time of
Closing shall be subject to the satisfaction as of or before such time of the
following conditions (unless waived in writing by CLBI):
(a) Representations and Warranties. CBooks's representations and
warranties set forth in Article II of this Agreement shall have been in all
material respects true and correct when made and shall be true and correct at
and as of the Time of Closing as if such representations and warranties were
made as of such time and date.
(b) Performance of Agreement. All conditions and other
obligations under this Agreement that are to be performed or complied with by
CBooks shall have been fully performed and complied with at or prior to the Time
of Closing.
(c) Absence of Governmental or Other Objection. There shall be no
pending or threatened lawsuit challenging the transaction by any body or agency
of the federal, state, or local government or by any third party, and the
consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Time of Closing.
(d) Approval of Documentation. The form and substance of all
certificates, instruments, opinions, and other documents delivered or to be
delivered to CLBI and
26
31
the Shareholders under this Agreement shall be satisfactory to CLBI and its
counsel in all reasonable respects.
ARTICLE VIII
INDEMNIFICATION
8.1 Survival of Representations, Warranties, and Agreements.
(a) Subject to this Article VIII, all representations,
warranties, covenants and agreements of each party in this Agreement shall
survive the execution, delivery, and performance of this Agreement and shall in
no way be affected by any investigation of the subject matter thereof made by or
on behalf of the parties to this Agreement. All representations and warranties
of each party set forth in this Agreement shall be deemed to have been made
again by such party at and as of the Time of Closing. The obligations of
indemnity provided in Sections 8.2 and 8.3 below shall terminate six (6) months
after the Closing; provided, however, that the representations and warranties
made by CLBI and the Shareholders with respect to discrepancies made on tax
returns filed by CLBI and the Shareholders concerning CLBI's inventory
accounting methodology and the representations, warranties, covenants and
agreements set forth in Section 5.3 and Article IX and the obligations of
indemnity therefor (the "CARVE OUTS") shall survive until the expiration of the
period specified therein, if applicable, or the applicable statutes of
limitation; and provided further that the foregoing shall in no way limit any
right CBooks may have in equity or under law for Damages (as defined below)
resulting from the gross negligence or willful misconduct of CLBI or the
Shareholders.
(b) As used in this Article, any reference to a representation,
warranty, or covenant contained in any Section of this Agreement shall include
the CLBI Disclosure Schedule relating to such Section.
8.2 Indemnification of CBooks. The Shareholders hereby agree to
indemnify and hold harmless CBooks, and its respective officers, directors and
affiliates against any and all losses, liabilities, damages, demands, claims,
suits, actions, judgments or causes of action, assessments, costs and expenses,
including, without limitation, interest, penalties, attorneys' fees, any and all
expenses incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation (collectively, "DAMAGES"),
asserted against, resulting from, imposed upon, or incurred or suffered by
CBooks as a result of or arising from any inaccuracy in or breach or
nonfulfillment of any of the representations, warranties, covenants, or
agreements made by CLBI or the Shareholders in this Agreement, the Related
Agreements, Disclosure Schedule or any statement, schedule, exhibit, or
certificate delivered to CBooks in accordance with Sections 6.2 and 7.1 hereof,
(all of which shall be referred to as "INDEMNIFIABLE CLAIMS"). CLBI's and the
Shareholder's indemnification obligations under this Section 8.2 shall not arise
if the aggregate amount of indemnity obligations otherwise payable does not
exceed Twenty-Five Thousand Dollars ($25,000) and shall not in the aggregate
exceed Five Hundred Thousand Dollars ($500,000) and repayment of indemnification
obligations shall be governed by the terms of the Escrow Agreement; provided,
however, such limitations shall neither apply nor limit any
27
32
indemnification obligations relating to Damages resulting from the gross
negligence, willful misconduct or fraud of CLBI or the Shareholders; and
provided further that such limitations shall neither apply nor limit any
indemnification obligations for Indemnifiable Claims involving the Carve Outs.
8.3 Indemnification of the Shareholders. CBooks hereby agrees to
indemnify and hold harmless the Shareholders against any and all losses,
liabilities, damages, demands, claims, suits, actions, judgments or causes of
action, assessments, costs and expenses, including, without limitation,
interest, penalties, attorneys' fees, any and all expenses incurred in
investigating, preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation (collectively, "Damages"), asserted against,
resulting from, imposed upon, or incurred or suffered by the Shareholders
directly or indirectly, as a result of or arising from any inaccuracy in or
breach or nonfulfillment of any of the representations, warranties, covenants,
or agreements made by CBooks in this Agreement, all of which shall be referred
to as "INDEMNIFIABLE CLAIMS." CBooks' indemnification obligations under this
Section 8.3 shall not arise if the aggregate amount of indemnity obligations
otherwise payable does not exceed Twenty-Five Thousand Dollars ($25,000) and
shall not in the aggregate exceed Five Hundred Thousand Dollars ($500,000).
8.4 Procedure for Indemnification with Respect to Third-Party Claims.
(a) If CBooks or the Shareholders determine to seek
indemnification under this Article VIII with respect to Indemnifiable Claims
(the party when seeking such indemnification shall hereinafter be referred to as
the "INDEMNIFIED PARTY," and the party against whom such indemnification is
sought shall hereinafter be referred to as the "INDEMNIFYING PARTY") resulting
from the assertion of liability by third parties, the Indemnified Party shall
give written notice to the Indemnifying Party within thirty (30) days of the
Indemnified Party becoming aware of any such Indemnifiable Claim or of facts
upon which any such Indemnifiable Claim will be based; the notice shall set
forth such material information with respect thereto as is then reasonably
available to the Indemnified Party. In case any such liability is asserted
against the Indemnified Party, and the Indemnified Party notifies the
Indemnifying Party thereof, the Indemnifying Party will be entitled, if it so
elects by written notice delivered to the Indemnified Party within thirty (30)
days after receiving the Indemnified Party's notice, to assume the defense
thereof with counsel reasonably satisfactory to the Indemnified Party provided
that Xxxxxxx Xxxxxx & Green, P.C. shall be deemed satisfactory. Notwithstanding
the foregoing, (i) the Indemnified Party shall also have the right to employ its
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of the Indemnified Party unless counsel to the Indemnified Party
advises the Indemnified Party that there is a conflict of interest between the
Shareholders and CBooks with respect to such Indemnifiable Claim, in which case
the fees and expenses of such counsel will be borne by the Indemnifying Party,
and (ii) the rights of the Indemnified Party to be indemnified hereunder in
respect of Indemnifiable Claims resulting from the assertion of liability by
third parties shall not be adversely affected by its failure to give notice
pursuant to the foregoing unless, and, if so, only to the extent that, the
Indemnifying Party is materially prejudiced thereby. With respect to any
assertion of liability by
28
33
a third party that results in an Indemnifiable Claim, the parties hereto shall
make available to each other all relevant information in their possession
material to any such assertion.
(b) In the event that the Indemnifying Party, within thirty (30)
days after receipt of the aforesaid notice of an Indemnifiable Claim, fails to
assume the defense of the Indemnified Party against such Indemnifiable Claim,
the Indemnified Party shall have the right to undertake the defense, compromise,
or settlement of such action on behalf of and for the account and risk of the
Indemnifying Party.
(c) Notwithstanding anything in this Section to the contrary, if
there is a reasonable probability that an Indemnifiable Claim may materially and
adversely affect the Indemnified Party, the Indemnified Party shall have the
right to participate, at its own cost and expense, in such defense, compromise,
or settlement and the Indemnifying Party shall not, without the Indemnified
Party's written consent (which consent shall not be unreasonably withheld),
settle or compromise any Indemnifiable Claim or consent to entry of any judgment
in respect thereof unless such settlement, compromise, or consent includes as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party a release from all liability in respect of such Indemnifiable
Claim.
8.5 Procedure For Indemnification with Respect to Non-Third Party
Claims. In the event that the Indemnified Party asserts the existence of a claim
giving rise to Damages (but excluding claims resulting from the assertion of
liability by third parties), it shall give written notice to the Indemnifying
Party. Such written notice shall state that it is being given pursuant to this
Section 8.5, specify with particularity the nature and amount of the claim
asserted, accompanied by any written materials supporting such claim, and
indicate the date on which such assertion shall be deemed accepted and the
amount of the claim deemed a valid claim (such date to be established in
accordance with the next sentence). If the Indemnifying Party, within fifteen
(15) days after the mailing of notice by the Indemnified Party, shall not give
written notice to the Indemnified Party announcing its intent to contest such
assertion of the Indemnified Party, such assertion shall be deemed accepted and
the amount of claim shall be deemed a valid claim. In the event, however, that
the Indemnifying Party contests the assertion of a claim by giving such written
notice to the Indemnified Party within said period, then the parties shall act
in good faith to reach agreement regarding such claim. If the parties hereto,
acting in good faith, cannot reach agreement with respect to such claim within
fifteen days after such notice, then the claim shall be finally settled by
arbitration as set forth in Section 11.13 hereof.
ARTICLE IX
NONCOMPETITION AGREEMENT
9.1 Noncompete. From the date of this Agreement until the earlier of its
termination or the fifth anniversary of the Time of Closing (the "RESTRICTED
PERIOD"), without the prior written consent of CBooks, each of the Shareholders
agree not to engage as an employee, director, officer, consultant advisor or
greater than five percent shareholder in any entity ("RESTRICTED ENTITY")
anywhere in the world that is in the business of selling books and other printed
materials
29
34
in the technical computer and electronics content categories such as currently
inventoried by CLBI through any distribution channel, including retail,
electronic (including the Internet and intranets), trade shows and conventions,
and direct mail (the "RESTRICTED FIELD") in the geographic area comprising the
entire world (the "PROTECTED TERRITORY"). Activities pertaining to the
publishing and/or exclusive wholesale distribution of technical book products,
and products authored or co-authored by one or both of the Shareholders, are
specifically excluded from the provisions of this section and Section 9.2.
9.2 Nonsolicit. As a separate and independent covenant, during the
Restricted Period, without the prior written consent of CBooks, each of the
Shareholders hereby agrees not to, in any way, directly or indirectly, for the
purpose of conducting or engaging in any business that is operating in the
Restricted Field, call upon, solicit, advise or otherwise do, or attempt to do,
business with any then existing customer of the Company or CLBI or their
respective affiliates, or take away or interfere with or attempt to interfere
with any custom, trade, business or patronage of the Company of CLBI or their
respective affiliates, in the Restricted Field.
9.3 No hire. As a separate and independent covenant, during the
Restricted Period, without the prior written consent of the Company, each of the
Shareholders hereby agrees not to, in any way, directly or indirectly,
irrespective of the Restricted Field, hire any employee or consultant of the
Company or CLBI or any of their respective affiliates, or attempt to induce any
employee or consultant of the Company or CLBI or any of their respective
affiliates, to leave the employ of the Company or CLBI or any of their
respective affiliates or to violate the terms of their contracts. CBooks hereby
acknowledges that Xxxx Xxxx and Xxxxx XxxXxxxxx are the beneficial record owners
of approximately 12% each of Peer-to-Peer and as such have each, on occasion,
provided consulting services to Peer-to-Peer for no consideration and to an
extent that has not interfered with the performance of either of their
responsibilities as full time employees of CLBI. CBooks acknowledges and agrees
that Xx. Xxxx and Ms. MacIntosh may continue to provide similar consulting
services to Peer-to-Peer for no consideration provided such consulting in no way
impairs or hampers their ability to perform their responsibilities as full-time
employees of CLBI.
9.4 Extension of Restricted Period. The Restricted Period shall be
extended by the length of any period during which either of the Shareholders are
in breach of the terms of this Agreement.
9.5 Irreparable Harm. Each of the Shareholders acknowledge that upon the
breach of any of the provisions of this Article, CBooks would sustain
irreparable harm, and, therefore, you agree that in addition to any other
remedies that CBooks may have under this Agreement or otherwise, CBooks shall be
entitled to obtain equitable relief, including specific performance and
injunctions restraining you from committing or continuing any such violation of
this Agreement.
9.6 Condition to Acquisition. Each of the Shareholders represent that
they are familiar with the covenants contained in this Article IX, and are fully
aware of their respective obligations hereunder. Each of the Shareholders hereby
acknowledges that the covenants and
30
35
agreements set forth in this Article IX are an essential element of the purchase
of their Shares by CBooks as contemplated herein and that, but for their
agreement to comply with these covenants, CBooks would not have entered into
this Agreement or the other agreements contemplated hereby. Each of the
Shareholders acknowledges that the period of restrictions and the geographic
area to which the restrictions imposed in this Article hereof shall apply are
fair and reasonable and are reasonably required for the protection of the
Company. If any provision of this Agreement is held to be invalid or
unenforceable by judicial order for any reason, such action shall not affect the
enforceability of the remaining provisions hereof and, without limiting the
foregoing, any such holdings shall in no event preclude the Company from
enforcing the provisions hereof for such term, in such territory and to such
extent not inconsistent with or prohibited by said judicial order. If the
provisions of this Agreement should ever be deemed to exceed the time, scope or
geographic limitations permitted by applicable law, then such provisions shall
be reformed to the maximum time, scope or geographic limitations, as the case
may be, permitted by applicable laws.
9.7 Acknowledgment of Consideration. CBooks and the Shareholders hereby
acknowledge that $150,000 and $60,000 of the Cash Consideration is being paid to
Xx. Xxxxxxx and Xx. Xxxxxxxxx, respectively, as consideration for the covenants
and agreements of each set forth in this Article IX.
ARTICLE X
TERMINATION AND AMENDMENT
10.1 Termination. This Agreement may be terminated at any time prior to the
Closing, whether before or after approval of the matters presented in connection
with the transactions contemplated hereby:
(a) by written consent of CBooks and the Shareholders; or
(b) by either CBooks or the Shareholders if the transactions
contemplated hereby shall not have been consummated by May 30, 1997; provided
that such failure results despite each parties good faith efforts to finalize
and consummate the transactions contemplated herein, and provided further that
the right to terminate this Agreement under this subsection shall not be
available to any party whose failure to fulfill any material obligation under
this Agreement has been the cause of or resulted in the failure of the
transactions contemplated hereby to occur on or before such date; or
(c) by either CBooks or the Shareholders, if a court of competent
jurisdiction or other governmental entity shall have issued a nonappealable
final order, decree or ruling or taken any other action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby, except, if the party relying on such order,
decree or ruling or other action has not materially complied with its
obligations under this Agreement; or
31
36
(d) by CBooks if any of the conditions to CBooks' obligations to
effect the transactions contemplated hereby that are specified herein have not
been met or waived by CBooks at such time as such condition is no longer
reasonably capable of satisfaction; provided CBooks is not otherwise in material
breach of its representations, warranties, covenants or agreements under this
Agreement; or
(e) by CBooks or CLBI, if there has been a material breach of any
representation, warranty, covenant or agreement on the part of either party,
which breach shall not have been cured, in the case of a representation or
warranty, prior to the Closing or, in the case of a covenant or agreement within
ten (10) business days following receipt by the breaching party of written
notice of such breach from the other party.
10.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 10.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of CBooks, CLBI,
or their respective officers, directors or shareholders, as the case may be, and
further except to the extent that such termination results from the intentional
breach by a party of any of its representations, warranties or covenants set
forth in this Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Notice. All notices and other communications required or permitted
under this Agreement shall be in writing and shall be delivered to the parties
at the address set forth below their respective signature blocks, or at such
other address that they designate by notice to all other parties in accordance
with this Section 11.1. Any party delivering notice to CLBI or the Shareholders,
shall also deliver a copy to: Xxxxxxx, Xxxxxx & Green, P.C., 00 Xxxxx Xxxxxx,
Xxxxxx, XX 00000, facsimile (000) 000-0000, Attn: Xxxxx X. Pravda, Esq. Any
party delivering notice to CBooks shall also deliver a copy to: Xxxxxxxxx
Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, 000 Xxxxxxxxxxxx Xxxxx, Xxxxx
Xxxx, Xxxxxxxxxx 00000, facsimile (000) 000-0000, Attn: Xxxxx X. Xxxxxxx III,
Esq. All notices and communications shall be deemed to have been received: (a)
in the case of personal delivery, on the date of such delivery; (b) in the case
of telex or facsimile transmission, on the date on which the sender receives
confirmation by telex or facsimile transmission that such notice was received by
the addressee, provided that a copy of such transmission is additionally sent by
mail as set forth in (d) below; (c) in the case of overnight air courier, on the
second business day following the day sent, with receipt confirmed by the
courier; and (d) in the case of mailing by first class certified or registered
mail, postage prepaid, return receipt requested, on the fifth business day
following such mailing.
11.2 Entire Agreement. This Agreement, the exhibits and schedules
hereto, and the documents referred to herein embody the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof,
and supersede all prior and contemporaneous agreements and understandings, oral
or written, relative to said subject matter including the letter of intent dated
April 28, 1997 except that the obligations of the Mutual Confidentiality
Agreement dated April 28, 1997 shall continue in full force and effect against
CBooks until the
32
37
Closing if the Closing occurs, and, if the Closing does not occur, for the term
specified therein, and against the Shareholders for the term specified therein.
11.3 Binding Effect; Assignment. This Agreement and the various rights
and obligations arising hereunder shall inure to the benefit of and be binding
upon CLBI, its successors and permitted assigns, and CBooks and its successors
and permitted assigns. Neither this Agreement nor any of the rights, interests,
or obligations hereunder shall be transferred or assigned (by operation of law
or otherwise) by either of the parties hereto without the prior written consent
of the other party; provided, however, that CBooks may, without such written
consent, assign its rights in connection with a merger of CBooks with or into
another entity, a sale of all or substantially all of CBooks's assets, or a
reorganization involving CBooks.
11.4 Captions. The Article and Section headings of this Agreement are
inserted for convenience only and shall not constitute a part of this Agreement
in construing or interpreting any provision hereof.
11.5 Expenses of Acquisition. The Shareholders shall pay in full all
fees and expenses incurred by CLBI and the Shareholders in connection with this
Agreement, and the transactions contemplated hereby, and all expenses associated
with establishing the escrow account contemplated by the Escrow Agreement;
provided, however, CLBI shall have the right to pay all fees and expenses
incurred by the Shareholders together with the payment of bonuses to certain
employees specified by the Shareholders (subject to standard withholdings), up
to an aggregate of $245,000, if the Net Working Capital of CLBI as of the
Closing minus such fees, expenses and bonuses is at least equal to the Net
Working Capital of CLBI as of February 28, 1997. CBooks shall pay all fees and
expenses incurred by CBooks in connection with this Agreement, and the
transactions contemplated hereby.
11.6 Waiver; Consent. This Agreement may not be changed, amended,
terminated, augmented, rescinded, or discharged (other than by performance), in
whole or in part, except by a writing executed by the parties hereto, and no
waiver of any of the provisions or conditions of this Agreement or any of the
rights of a party hereto shall be effective or binding unless such waiver shall
be in writing and signed by the party claimed to have given or consented
thereto. Except to the extent that a party hereto may have otherwise agreed in
writing, no waiver by that party of any condition of this Agreement or breach by
the other party of any of its obligations or representations hereunder or
thereunder shall be deemed to be a waiver of any other condition or subsequent
or prior breach of the same or any other obligation or representation by the
other party, nor shall any forbearance by the first party to seek a remedy for
any noncompliance or breach by the other party be deemed to be a waiver by the
first party of its rights and remedies with respect to such noncompliance or
breach.
11.7 Third-Party Beneficiaries. Except as otherwise expressly provided
for in this Agreement, nothing herein, expressed or implied, is intended or
shall be construed to confer upon or give to any person, firm, corporation, or
legal entity, other than the parties hereto, any rights, remedies, or other
benefits under or by reason of this Agreement.
33
38
11.8 Counterparts. This Agreement may be executed simultaneously in
multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
11.9 Gender. Whenever the context requires, words used in the singular
shall be construed to mean or include the plural and vice versa, and pronouns of
any gender shall be deemed to include and designate the masculine, feminine, or
neuter gender.
11.10 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
11.11 Remedies of CBooks. CLBI and the Shareholders agree that the CLBI
Business and the Assets are unique and not otherwise readily available to
CBooks. Accordingly, CLBI and the Shareholders acknowledge that, in addition to
all other remedies to which CBooks is entitled, CBooks shall have the right to
enforce the terms of this Agreement by a decree of specific performance,
provided CBooks is not in material default hereunder.
11.12 Governing Law. This Agreement shall in all respects be construed
in accordance with and governed by the laws of the State of California without
regard to conflicts of law provisions.
11.13 Arbitration, Attorneys' Fees. Any dispute arising out of this
Agreement shall be finally settled by arbitration in Palo Alto, California, in
accordance with the then current Commercial Arbitration Rules of the American
Arbitration Association (the "AAA"), and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. Such
arbitration shall be conducted by an arbitrator chosen by mutual agreement of
CBooks and the Shareholders, or failing such agreement, an arbitrator appointed
by the AAA. There shall be limited discovery prior to the arbitration hearing as
follows: (a) exchange of witness lists and copies of documentary evidence and
documents related to or arising out of the issues to be arbitrated, (b)
depositions of all party witnesses, and (c) such other depositions as may be
allowed by the arbitrators upon a showing of good cause. Depositions shall be
conducted in accordance with the California Code of Civil Procedure, the
arbitrator(s) shall be required to provide in writing to the parties the basis
for the award or order of such arbitrator(s), and a court reporter shall record
all hearings, with such record constituting the official transcript of such
proceedings. If any arbitration or action at law or in equity is necessary to
enforce or interpret the terms of this Agreement or to protect the rights
obtained hereunder the prevailing party shall be entitled to its reasonable
attorneys' fees, costs, and disbursements in addition to any other relief to
which it may be entitled.
34
39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
CLBI: COMPUTER LITERACY BOOKSHOPS, INC.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------------
Xxxxxx Xxxxxxx, President and Chief
Executive Officer
Address: 0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
THE SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxxxxx
Address: 0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
/s/ Xxxxxx Xxxxxxx
---------------------------------------------
Xxxxxx Xxxxxxx
Address: 0000 Xxxxxxxxx Xxxxx,
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
-- Signature Page to Stock Acquisition Agreement --
40
CBOOKS: CBOOKS EXPRESS, INC.
By: /s/ Xxxxx XxxXxxxxx
----------------------------------------
Xxxxx XxxXxxxxx, President and Chief
Executive Officer
Address: 0000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
-- Signature Page to Stock Acquisition Agreement --
