Exhibit 2.1
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
BY AND BETWEEN
XXXXXXXX HOLDINGS, INC.
AND
ITC LEARNING CORPORATION
Dated as of
November 20, 1997
_____________________________________________________
Relating to the Sale and Purchase of the
Outstanding Capital Stock of
Xxxxxxxx Soft-Teach,
a California corporation
_____________________________________________________
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TABLE OF CONTENTS
Page
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I. PURCHASE AND SALE OF SHARES.......................... 1
1.1 Agreement to Purchase and Sell................ 1
1.2 Closing....................................... 1
II. PURCHASE PRICE....................................... 2
2.1 Purchase Price................................ 2
III. REPRESENTATIONS AND WARRANTIES OF SELLER............. 2
3.1 Due Organizations............................. 3
3.2 Authorization; Validity....................... 3
3.3 No Conflicts.................................. 3
3.4 Capital Stock of the Company.................. 4
3.5 Transactions in Capital Stock................. 4
3.6 Subsidiaries.................................. 4
3.7 Predecessor Status; etc....................... 4
3.8 Spin-off by the Company....................... 4
3.9 Financial Statements.......................... 5
3.10 Liabilities and Obligations................... 5
3.11 Accounts and Notes Receivable................. 6
3.12 Permits and Intangibles....................... 6
3.13 Environmental Matters......................... 6
(a) Hazardous Material..................... 6
(b) Hazardous Materials Activities......... 7
(c) Permits................................ 7
(d) Environmental Liabilities.............. 7
3.14 Real and Personal Property.................... 7
3.15 Intellectual Property......................... 8
3.16 Significant Customers; Material Contracts
and Commitments............................... 11
3.17 Title to Real Property........................ 11
3.18 Insurance..................................... 12
3.19 Compensation; Employment Agreements........... 12
3.20 Employment, Labor and Other Relations......... 13
3.21 Employee Benefit Plans........................ 13
3.22 Conformity with Law; Litigation............... 14
3.23 Taxes......................................... 14
3.24 Government Contracts.......................... 16
3.25 Absence of Changes............................ 17
3.26 Bank Accounts; Powers of Attorney............. 18
3.27 Relations with Governments.................... 19
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3.28 Representations Complete...................... 19
3.29 Absence of Claims Against Company............. 19
3.30 Compliance with Laws.......................... 19
3.31 Complete Copies of Materials.................. 20
3.32 Company Working Capital....................... 20
IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER.......... 20
4.1 Due Organization.............................. 20
4.2 Investment Intent............................. 20
4.3 Authorization; Validity of Obligations........ 20
4.4 No Conflicts.................................. 21
V. COVENANTS........................................... 21
5.1 Access to Information; Confidentiality........ 22
5.2 Conduct of Business Pending Closing........... 23
5.3 Employee Benefits; Terminated Employees....... 23
5.4 Prohibited Activities......................... 23
5.5 No Shop....................................... 25
5.6 Notice of Certain Matters..................... 26
5.7 Cooperation in Obtaining Required Consents
and Approvals................................. 26
5.8 Tax Returns................................... 26
5.9 Tax Refund.................................... 26
5.10 Repurchase of Stock........................... 27
5.11 Certain Prohibitions.......................... 27
5.12 Inventory Fulfillment......................... 27
5.13 Pfizer Commission............................. 27
VI. CONDITIONS PRECEDENT TO OBLIGATIONS OF
PURCHASER........................................... 27
6.1 Representations and Warranties;
Performance of Obligations.................... 27
6.2 No Litigation................................. 27
6.3 Severance Agreement with Xxxxxx X.
Xxxxxxxx...................................... 28
6.4 Dealer Agreement.............................. 28
6.5 Opinion of Counsel............................ 28
6.6 Consents and Approvals........................ 28
6.7 Charter Documents; Good Standings............. 28
6.8 Due Diligence Review.......................... 28
6.9 No Material Adverse Change.................... 29
6.10 Shares........................................ 29
6.11 Corporate Books............................... 29
6.12 Resignations.................................. 29
6.13 Estoppel Certificate.......................... 29
6.14 Financing..................................... 29
6.15 Repurchase of Shares.......................... 29
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6.16 Proprietary Agreements............................... 29
VII. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER............... 30
7.1 Representations and Warranties;
Performance of Obligations........................... 30
7.2 Litigation........................................... 30
7.3 Opinion of Counsel................................... 30
7.4 Consents and Approvals............................... 30
7.5 Dealer Agreement..................................... 30
7.6 Severance Agreement with Xxxxxx X. Xxxxxxxx.......... 31
7.7 Charter Documents; Good Standings.................... 31
7.8 Delivery of Cash Consideration and Note.............. 31
VIII. INDEMNIFICATION; REMEDIES................................... 31
8.1 Survival; Right to Indemnification Not Affected by
Knowledge............................................ 31
8.2 Indemnification and Payment of Damages by Seller..... 31
8.3 Indemnification and Payment of Damages by Purchaser.. 32
8.4 Time Limitations..................................... 32
8.5 Limitations on Amount - Seller....................... 32
8.6 Limitations on Amount - Purchaser.................... 34
8.7 Procedure for Indemnification - Third Party Claims... 34
8.8 Procedure for Indemnification - Other Claims......... 35
8.9 Exclusive Remedies................................... 35
IX. GENERAL..................................................... 36
9.1 Termination......................................... 36
9.2 Effect of Termination............................... 36
9.3 Cooperation......................................... 37
9.4 Successors and Assigns.............................. 37
9.5 Entire Agreement.................................... 37
9.6 Counterparts........................................ 37
9.7 Brokers and Agents.................................. 37
9.8 Specific Performance; Remedies...................... 37
9.9 Notices............................................. 37
9.10 Governing Law....................................... 39
9.11 Severability........................................ 39
9.12 Absence of Third Party Beneficiary Rights........... 39
9.13 Mutual Drafting..................................... 39
9.14 Amendment; Waiver................................... 39
9.15 Public Disclosure................................... 39
9.16 Disclosure.......................................... 39
9.17 Knowledge of Seller................................. 39
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EXHIBITS AND SCHEDULES
Exhibit A - Form of Secured Promissory Note with Ancillary Agreements
Exhibit B - Form of Employee Non-Disclosure and Developments Agreement
Exhibit C - Inventory Fulfillment
Exhibit D - Form of Severance, Non-Disclosure and Non-Competition
Agreement with Xxxxxx X. Xxxxxxxx
Exhibit E - Form of Dealer Agreement
Exhibit F - Form of Opinion of Counsel to Seller
Exhibit G - Form of Opinion of Counsel to Purchaser
Schedule 3.1 - Due Organizations
Schedule 3.6 - Subsidiaries
Schedule 3.7 - Predecessor Status; etc.
Schedule 3.8 - Spin-Off by the Company
Schedule 3.9 - Financial Statements
Schedule 3.10 - Liabilities and Obligations
Schedule 3.11 - Accounts and Notes Receivable
Schedule 3.12 - Permits and Intangibles
Schedule 3.13 - Environmental Matters
Schedule 3.14 - Real and Personal Property
Schedule 3.15(b) - Patents, Trademarks, Copyrights, etc.
Schedule 3.15(c) - Licenses, Sublicenses and Other Agreements
Schedule 3.15(d) - Ownership of Company Intellectual Property
Rights
Schedule 3.15(e) - Asserted or threatened Claims with Respect to Intellectual
Property Rights
Schedule 3.15(f) - List of Employees and Contractors Without Proprietary
Agreements
Schedule 3.16 - Significant Customers; Material Contracts and Commitments
Schedule 3.17 - Title to Real Property
Schedule 3.18 - Insurance
Schedule 3.19 - Compensation; Employment Agreements
Schedule 3.20 - Employment, Labor and Other Relations
Schedule 3.21 - Employee Benefit Plans
Schedule 3.23 - Taxes
Schedule 3.24 - Government Contracts
Schedule 3.25 - Absence of Changes
Schedule 3.26 - Bank Accounts; Powers of Attorney
Schedule 4.4 - No Conflicts
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STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of the 20th day of November, 1997, by and between Xxxxxxxx Holdings, Inc., an
Illinois corporation ("Purchaser"), and ITC Learning Corporation, a Maryland
corporation ("Seller").
WITNESSETH
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WHEREAS, Xxxxxxxx Soft-Teach, a California corporation (the "Company"), is
engaged in the business of developing, producing and marketing multimedia and
videotape training courses in the use of personal computers and software for
business professionals;
WHEREAS, the Company is a wholly owned subsidiary of Seller; and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, One Thousand (1,000) shares of common stock, no par value,
of the Company, constituting all of the issued and outstanding shares of capital
stock of the Company, together with all rights incident thereto, including,
without limitation, the goodwill of the Company (the "Shares").
NOW THEREFORE, in consideration of the mutual agreements herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the parties hereto, the parties hereto hereby agree
as follows:
ARTICLE II
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Purchase and Sale of Shares
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II.1 Agreement to Purchase and Sell. Seller shall sell the Shares to
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Purchaser, and Purchaser shall purchase the Shares from Seller, on the terms and
subject to the conditions hereinafter provided.
II.2 Closing. The consummation of the purchase and sale of the Shares
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hereunder (the "Closing") shall take place at the offices of Purchaser's
counsel, Xxxxxxxx & Xxxxxx, 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000, at 10:00 A.M., local time, on November 20, 1997 or such other
date upon which Purchaser and Seller may mutually agree in writing (the "Closing
Date").
ARTICLE III
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Purchase Price
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III.1 Purchase Price. At Closing, Purchaser shall pay to Seller an amount
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equal to Four Million Nine Hundred Fifty Thousand Dollars ($4,950,000), in the
form of:
(a) Cash by wire transfer of immediately available funds to an account
designated by Seller, as elected by Purchaser, in the amount of Four
Million Dollars ($4,000,000) (the "Cash Consideration"); and
(b) A Secured Promissory Note (the "Note") dated the Closing Date in
the original principal amount of Nine Hundred Fifty Thousand Dollars
($950,000), in substantially the form of Exhibit A attached hereto.
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ARTICLE IV
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Representations and Warranties
of Seller
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To induce Purchaser to enter into this Agreement and to consummate the
transactions contemplated hereby, Seller represents and warrants to Purchaser as
follows:
3.1 Due Organizations. Each of the Company and the subsidiaries of the
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Company identified in Schedule 3.6 hereto ("Subsidiaries") is a corporation duly
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organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and each is duly authorized and qualified
under all applicable laws, regulations, ordinances and orders of public
authorities to own its properties and to carry on its business in the places and
in the manner as now conducted except where the failure to be so authorized or
qualified would not have a material adverse effect on the business, operations,
affairs, prospects, properties, assets, profits or condition (financial or
otherwise) of the Company and the Subsidiaries taken as a whole (a "Material
Adverse Effect"). Schedule 3.1 hereto contains a list of all jurisdictions in
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which the Company and each Subsidiary is authorized or qualified to do business.
The Company and each Subsidiary is in good standing as a foreign corporation in
each jurisdiction outside its jurisdiction of incorporation in which it does
business. The Company has delivered to Purchaser true, complete and correct
copies of the Articles of Incorporation and Bylaws of the Company and each of
its Subsidiaries as currently in effect. Such Articles of Incorporation and
Bylaws are collectively referred to as the "Charter Documents." The minute
books of the Company as previously made available to Purchaser (and as shall be
delivered to Purchaser at Closing) are the only minute books of the Company and
contain a reasonably accurate summary of all meetings of directors (or
committees thereof) and shareholders or actions by written consent since the
time of incorporation of the Company.
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3.2 Authorization; Validity. Seller has all requisite corporate power and
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authority to enter into and bind Seller to the terms of this Agreement. Seller
has the full legal right, power and authority to enter into this Agreement and
the other transactions contemplated hereby. The execution and delivery of this
Agreement by Seller and the performance by Seller of the other transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of Seller and this Agreement has been duly and validly authorized by
all necessary corporate action. This Agreement is a legal, valid and binding
obligation of Seller, enforceable in accordance with its terms.
3.3 No Conflicts. The execution, delivery and performance of this
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Agreement, the consummation of the transactions contemplated hereby, and the
fulfillment of the terms hereof will not:
(a) conflict with, or result in a breach or violation of, any of the
Charter Documents;
(b) materially conflict with, or result in a material default (or
would constitute a default but for any requirement of notice or lapse of time or
both) under any document, agreement or other instrument to which the Company or
a Subsidiary is a party, or result in the creation or imposition of any lien,
charge or encumbrance on any of the Company's or any Subsidiary's properties
pursuant to (i) any law or regulation to which either the Company or any
Subsidiary or any of their respective property is subject, or (ii) any judgment,
order or decree to which the Company or any Subsidiary is bound or any of their
respective property is subject;
(c) result in termination or any impairment of any material permit,
license, franchise, contractual right or other authorization of the Company or
any Subsidiary; or
(d) violate any law, order, judgment, rule, regulation, decree or
ordinance to which the Company or any Subsidiary is subject or by which the
Company or any Subsidiary is bound.
3.4 Capital Stock of the Company. The Company became the wholly-owned
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subsidiary of Seller pursuant to a merger (the "Merger") consummated pursuant to
that certain Agreement and Plan of Reorganization dated as of December 31, 1996
by and among Seller, ITC Acquisition Corp. and the Company (the "Merger
Agreement"). In connection with the Merger, an aggregate of 2,329,270 shares of
common stock of the Company, representing all of the then issued and outstanding
capital stock of the Company, were canceled in consideration of receipt by the
holders thereof of cash and shares of common stock of Seller. Effective upon
the Merger, the 1,000 shares of common stock of Seller's subsidiary held by
Seller was converted, without further action, into 1,000 shares of common stock
of the Company, as the survivor of the Merger.
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The Company has no obligations, duties or liabilities to Seller or any former
shareholder of the Company under the Merger Agreement or otherwise in connection
with the Merger. As of the date hereof, the authorized capital stock of the
Company consists of 20,000,000 shares of common stock, no par value, of which
one thousand (1,000) shares are issued and outstanding. All of the Shares have
been duly authorized and validly issued, are fully paid and nonassessable and
are owned of record and beneficially by Seller free and clear of all liens,
encumbrances and claims of every kind. All of the Shares were offered, issued,
sold and delivered by the Company in compliance with all applicable state and
federal laws concerning the issuance of securities. Further, none of the Shares
were issued in violation of the preemptive rights of any shareholder. There are
no voting agreements or voting trusts with respect to any of the Shares.
3.5 Transactions in Capital Stock. No option, warrant, call subscription
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right, conversion right or other contract or commitment of any kind or
character, written or oral, will exist at the Closing Date. The Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its capital stock or any interests therein or to pay any dividend or make
any distribution in respect thereof. As a result of the consummation of the
transactions contemplated hereby, Purchaser will be the record and beneficial
owner of all outstanding shares of capital stock of the Company and rights, if
any, to acquire all outstanding shares of capital stock of the Company.
3.6 Subsidiaries. The Company has no subsidiaries other than those listed
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on Schedule 3.6 (previously defined as the Subsidiaries), and does not presently
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own, of record or beneficially, or control, directly or indirectly, any capital
stock, securities convertible into capital stock or any other equity interest in
any corporation, limited liability company, association or business entity
(other than the Subsidiaries), nor is the Company, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
Schedule 3.6 lists the number of shares and class of authorized capital stock
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outstanding of each Subsidiary, all of which shares are owned by the Company,
free and clear of all liens, encumbrances and claims of every kind, and lists
the current officers and directors of each Subsidiary.
3.7 Predecessor Status; Etc. Schedule 3.7 sets forth a listing of all
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names of all predecessor companies of the Company, including without limitation
the names of any entities from whom the Company has acquired material assets.
Except as disclosed in Schedule 3.7, the Company has not at any time been a
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parent, subsidiary or division of another corporation or a part of an
acquisition that was later rescinded.
3.8 Spin-off by the Company. Except as disclosed in Schedule 3.8, there
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has not been any sale or spin-off of material assets of either the Company, any
Subsidiary or any other person or entity that directly, or indirectly through
one of more intermediaries, controls, is controlled by or is under common
control with the Company ("Affiliates") within the preceding two years.
3.9 Financial Statements. Schedule 3.9 includes (a) true, complete and
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correct copies
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of the Company's audited Balance Sheets as of December 31, 1996, June 30, 1996,
and June 30, 1995 (the end of each of its three most recent completed fiscal
years), and audited Statements of Income, Cash Flows and Retained Earnings for
each of its three most recent completed fiscal years (collectively, "Audited
Financials"), and (b) true, complete and correct copies of the Company's
unaudited Consolidated Balance Sheet ("Interim Balance Sheet") as of July 31,
1997 ("Balance Sheet Date") and unaudited Statements of Income, Cash Flows and
Retained Earnings for the four-month period ended as of September 30, 1997
(collectively, "Interim Financials," and together with the Audited Financials,
"Company Financial Statements"). The Company Financial Statements have been
prepared in accordance with Generally Accepted Accounting Principles ("GAAP"),
subject, in the case of the Interim Financials, to normal year-end audit
adjustments, that individually or in the aggregate will not be material, and to
the omission of footnote information. Each of the Consolidated Balance Sheets
included in the Company Financial Statements presents fairly the consolidated
financial condition of the Company as of the dates indicated thereon, and each
of the Consolidated Statements of Income, Cash Flows and Retained Earnings
included in the Company Financial Statements presents fairly the results of its
consolidated operations for the periods indicated thereon. Since the date of the
oldest Consolidated Balance Sheet included in the Audited Financials, except as
expressly disclosed in the Audited Financials or asotherwise disclosed in
Schedule 3.9, there have been no changes in the Company's accounting policies.
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3.10 Liabilities and Obligations.
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(a) Except as disclosed on Schedule 3.10 attached hereto, neither the
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Company nor any Subsidiary is liable for or subject to any liabilities except
for:
(i) those liabilities reflected on the Interim Balance Sheet and
not previously paid or discharged;
(ii) those liabilities arising in the ordinary course of its
business and consistent with past practice under any contract, commitment or
agreement specifically disclosed in any Schedule to this Agreement or not
required to be disclosed thereon because of the term or amount involved or
otherwise, which undisclosed liabilities are not, individually or in the
aggregate, material; provided, however, that any bonuses and commissions and
agent or third-party royalties anticipated to be paid within 90 days of the
Closing Date shall be set forth in Schedule 3.19, an d
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(iii) those liabilities incurred since the Balance Sheet Date in the
ordinary course of business and consistent with past practice, which liabilities
are not, individually or in the aggregate, material.
For purposes of this Section 3.10, the term "liabilities" shall include without
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limitation any direct
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or indirect liability, indebtedness, guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, either accrued,
absolute, contingent, mature, unmatured or otherwise and whether known or
unknown, fixed or unfixed, xxxxxx or inchoate, liquidated or unliquidated,
secured or unsecured.
(b) The Company has delivered to Purchaser, in the case of those
liabilities that are not fixed or uncontested, a reasonable estimate of the
maximum amount that may be payable.
3.11 Accounts and Notes Receivable. Schedule 3.11 sets forth an accurate
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list, as of a date not more than two business days prior to the date hereof, of
the accounts and notes receivable of the Company and each Subsidiary including
without limitation receivables from and advances to employees and the Seller,
which includes an aging of all accounts and notes receivable showing amounts due
in 30-day aging categories. The Company has reserves sufficient to cover the
accounts receivable set forth in Schedule 3.11.
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3.12 Permits and Intangibles. The Company and each Subsidiary owns or
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holds all licenses, franchises, permits and other governmental authorizations,
including without limitation permits, titles (including without limitation motor
vehicle titles and current registrations), fuel permits, licenses, franchises,
certificates, trademarks, trade names, patents, patent applications and
copyrights, the absence of any of which, individually or in the aggregate, could
have a Material Adverse Effect ("Material Permits"). Schedule 3.12 sets forth
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an accurate list and summary description, as of the date hereof, of all Material
Permits. To the knowledge of the Company the Material Permits are valid, and
the Company has not received any notice that any governmental authority or other
party intends to modify, cancel, terminate or not renew any Material Permit.
The Company and each Subsidiary has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in the Material Permits and other applicable orders, approvals, variances, rules
and regulations and is not in violation of any of the foregoing except where
such non-compliance or violation would not have a Material Adverse Effect. The
transactions contemplated by this Agreement will not result in a default under
or a breach or violation of, or adversely affect the rights and benefits
afforded to the Company or any Subsidiary by, any Material Permit.
3.13 Environmental Matters.
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(a) Hazardous Material. Except as set forth on Schedule 3.13, the
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Company has not: (i) operated any underground storage tanks at any property
that the Company has at any time owned, operated occupied or leased; or (ii)
illegally released any material amount of any substance that has been designated
by any governmental entity or by applicable federal, state, local or other
applicable law to be radioactive, toxic, hazardous or otherwise a danger to
health or the environment, including, without limitation, PCBs, asbestos,
petroleum, urea-formaldehyde
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and all substances listed as hazardous substances pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, or
defined as a hazardous waste pursuant to the United States Resource Conservation
and Recovery Act of 1976, as amended, and the regulations promulgated pursuant
to said laws (a "Hazardous Material"), but excluding office and janitorial
supplies properly and safely maintained. No Hazardous Materials are present, as
a result of deliberate actions of the Company, or, to the Company's knowledge,
as a result of any actions of any third party or otherwise, in, on or under any
property, including the land and improvements, ground water and surface water
thereof, that the Company has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Neither the Company nor any of
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its Subsidiaries has transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials in violation
of any law in effect on or before the Closing Date, nor has the Company or any
of its Subsidiaries disposed of, transported, sold, or manufactured any product
containing a Hazardous Material (collectively, "Company Hazardous Materials
Activities") in violation of any rule, regulation, treaty or statute promulgated
by any governmental entity in effect prior to or as of the date hereof to
prohibit, regulate or control Hazardous Materials or any Hazardous Material
Activity.
(c) Permits. The Company currently holds all environmental approvals,
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permits, licenses, clearances and consents ("Environmental Permits") necessary
for the conduct of the Company Hazardous Material Activities and other business
of the Company as such activities and business are currently being conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
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proceeding, amendment procedure, writ, injunction or claim is pending, or to the
best knowledge of the Company threatened concerning any Environmental Permit,
Hazardous Material or any Company Hazardous Materials Activity. The Company is
not aware of any fact or circumstance that could involve the Company in any
environmental litigation or impose upon the Company any material environmental
liability.
3.14 Real and Personal Property. Schedule 3.14 sets forth an accurate
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list of all real property owned or leased by the Company or any Subsidiary
(collectively, the "Real Property"), and all personal property included in
"property and equipment" on the Interim Balance Sheet and all other personal
property owned or leased by the Company or Subsidiary with a value in excess of
$2,000, and each piece's original purchase price, depreciated value for book and
tax purposes and current book value (a) as of the Balance Sheet Date and (b)
acquired since the Balance Sheet Date, including in each case true, complete and
correct copies of leases for material equipment and all real properties on which
are situated buildings, warehouses, workshops, garages and other structures used
in the operation of the business of the Company and the Subsidiaries and also
including an indication as to which assets are currently owned, or were formerly
owned, by
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business or personal affiliates of the Company. All of the material
equipment of the Company and the Subsidiaries listed on Schedule 3.14 are in
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good working order and condition, ordinary wear and tear excepted. All leases
set forth on Schedule 3.14 are in full force and effect and constitute valid and
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binding agreements of the Company or the Subsidiary and, to the knowledge of the
Company, the other parties thereto enforceable in accordance with their
respective terms. All fixed assets used by the Company or any Subsidiary that
are material to the operation of their business are either owned by the Company
or the Subsidiary or leased under an agreement listed on Schedule 3.14.
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Schedule 3.14 includes without limitation true, complete and correct copies of
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all title reports and title insurance policies received or owned by the Company
or any subsidiary that are still in effect. Schedule 3.14 also includes a
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summary description of all plans or projects involving the opening of new
operations, expansion or any existing operations or the acquisition of any real
property or existing business, to which management of the Company has made any
material expenditure in the two-year period prior to the date of this Agreement,
which if pursued by the Company or any Subsidiary would require additional
material expenditures of capital.
3.15 Intellectual Property.
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(a) The Company (i) validly owns, or (ii) is a valid licensee of, or
(iii) otherwise validly possesses, legally enforceable rights to use, modify,
license (or sublicense, as applicable), alter, and transfer any and all
"Intellectual Property" (as defined below) used in the business of the Company
as currently conducted or necessary to conduct the business of the Company as
now proposed to be conducted by the Company (collectively, "Company Intellectual
Property Rights").
As used herein, "Intellectual Property" means, collectively, all (i)
United States or foreign patents, patent applications, patent disclosures, and
all renewals, reissues, divisions, continuations, extensions or continuations-
in-part thereof, and all discoveries which may be patentable (collectively,
"Patent Properties"), (ii) trademarks, service marks, trade dress, trade names
and corporate names and registrations and applications for registration thereof
(collectively, "Trademark Properties"), (iii) copyrights (registered or
unregistered), registrations and applications for registration thereof,
including all renewals, derivative works, enhancements, modifications, updates,
new releases or other revisions thereof, and all works of authorship
(collectively, "Copyright Properties"), (iv) mask works and registrations and
applications for registration thereof, (v) computer software (including source
code and object code), data, databases, code segments, algorithms, objects,
routines, templates and documentation (collectively, "Software Properties"),
(vi) trade secrets and other confidential information, including, but not
limited to, ideas, processes, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know-how,
manufacturing and production processes and techniques, research and development
information, drawings, blue prints, specifications, designs, plans, proposals,
technical data, copyrightable works, financial and marketing plans, schematics,
net lists, and customer and supplier lists and information ("Trade Secrets"),
(vii) (A) rights to art, audiovisual works, animations, cartoons, characters,
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choreography, compilations, collective works, emblems, films, film clips,
graphics, images, illustrations, likenesses, motion pictures, musical
compositions, performances, photographs, pictorial works, songs, song lyrics,
sound recordings, scripts, screenplays, text, and video recordings, (B)
publication rights, display rights, attribution rights, integrity rights,
performance rights, mechanical rights, approval rights, and moral rights
associated with the foregoing, and (C) publicity rights or privacy rights (or
waivers or quitclaims thereof) of any person or entity (collectively,
"Multimedia Rights"), (viii) other intellectual property rights, (ix) rights to
third party warranties relating to the foregoing, including, without limitation,
rights to millennium compliancy warranties, (x) copies and tangible embodiments
of all of the foregoing (in whatever form or medium), (xi) the internet domain
name "xxx.xxxxx.xxx", (xii) the telephone numbers (000) 000-0000 and (800) 338-
4336 and the telefax number (000) 000-0000, and (xiii) all licenses and rights
to royalties, damages and payments under and with respect to all of the
foregoing, and the goodwill symbolized by all of the foregoing and connected
therewith throughout the world. Without in any way limiting the foregoing, as of
the Closing, Seller shall not retain, in any form or media whatsoever, any
portion of the Company's customer lists, mailing lists or databases, or any
other Trade Secrets.
(b) Schedule 3.15(b) lists all Patent Properties, Trademark
----------------
Properties, Copyright Properties, Software Properties, and Multimedia Rights
which comprise a portion of the Company Intellectual Property Rights and which
(A) are material to the conduct of the business of the Company as currently
conducted or as now proposed to be conducted, or (B) are registered or for which
applications for registration have been filed, and specifies, where applicable,
the jurisdictions in which each such Company Intellectual Property Right has
been issued or registered or in which an application for such issuance and
registration has been filed, including respective registration or application
numbers and the names of all registered owners.
(c) Schedule 3.15(c) lists all licenses, sublicenses and other
----------------
agreements to which the Company is a party and pursuant to which the Company or
any other person is authorized to use all or any portion of the Company
Intellectual Property Rights (excluding non-exclusive licenses under which the
Company is licensor, which licenses are granted to end-users in the ordinary
course of business, which licenses grant rights to use solely executable
versions of the Software Properties and which licenses prohibit such end-users
from reverse engineering, modifying, distributing, or sublicensing the same
(each, an "End-User License")), and includes the identity of all parties
thereto. The execution and delivery of this Agreement by the Seller, and the
consummation of the transactions contemplated hereby, will neither cause the
Company to be in violation or default under any End-User License or any such
license, sublicense or agreement, nor entitle any other party to any such
license, sublicense or agreement to any claim to, or any right or option to
purchase, any portion of the Company Intellectual Property Rights, or to
terminate or modify such license, sublicense or agreement.
(d) Except as set forth in Schedule 3.15(d), the Company is, as
----------------
applicable, the
-9-
sole and exclusive owner or licensee of, with all right, title
and interest in and to (free and clear of any mortgage, pledge, lien, security
interest, conditional sale agreement, claim, encumbrance, hypothecation or
charge) the Company Intellectual Property Rights, and has sole and exclusive
rights (and is not contractually obligated to pay any compensation to any third
party in respect thereof) to the use thereof or the material covered thereby in
connection with the services or products in respect of which the Company
Intellectual Property Rights are being used. None of the Company Intellectual
Property rights are subject to any renewal or maintenance fees, taxes, or
actions falling due within ninety days after the Closing, except as set forth on
Schedule 3.15(d), and all registered or otherwise perfected Trademark
----------------
Properties, Patent Properties, and Copyright Properties held by the Company are
valid and subsisting.
(e) Except as set forth in Schedule 3.15(e), to the Company's best
----------------
knowledge, no claims with respect to the Company Intellectual Property Rights
have been asserted or are threatened by any person, nor are there any valid
grounds for any bona fide claims (i) to the effect that the manufacture, sale,
licensing or use of any of the products of the Company infringes on any
Intellectual Property of any third party, (ii) against the use by the Company of
any Company Intellectual Property Rights, or (iii) challenging the ownership by
the Company of, or the validity or effectiveness of, any of the Company
Intellectual Property Rights. To the Company's best knowledge, the loss,
expiration, or abandonment of any material Company Intellectual Property Right
is not threatened, pending or reasonably foreseeable. The business of the
Company as currently conducted or as proposed to be conducted by the Company has
not infringed and does not infringe on any Intellectual Property or other
proprietary right of any third party. To the Company's best knowledge, there is
no material unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property Rights by any third party, including any employee
or former employee of the Company. No Company Intellectual Property Right or
product of the Company or any of its subsidiaries is subject to any outstanding
decree, order, judgment, or stipulation restricting in any manner the licensing
thereof by the Company.
(f) Except as set forth on Schedule 3.15(f), all current and former
----------------
employees and contractors of the Company who may have participated in the
development of or had access to any Company Intellectual Property Rights have
executed and delivered to the Company and Employee Non-Disclosure and
Developments Agreement substantially in the form of Exhibit B. The trade
---------
secrets and other confidential information of the Company are not part of the
public knowledge or literature, and have not been used, divulged, or
appropriated either for the benefit of any third party or to the detriment of
the Company.
(g) The Company is not in breach of warranty under any End-User
License or under any other licenses, sublicenses and other agreements with
respect to the Company Intellectual Property Rights under which the Company is
licensor, nor is any such breach threatened or reasonably foreseeable,
including, without limitation, with respect to any millennium compliancy
warranties. All products sold or licensed by the Company (including
-10-
under End-User Licenses), or presently contemplated to be sold or licensed by
the Company (including under End-User Licenses) and which are substantially
complete in their development, are, or shall be when developed, millennium
compliant. As used herein, "millennium compliant" (and "millennium compliancy")
shall mean the ability of any computer software to provide the following
functions: (i) to consistently handle date information before, during, and after
January 1, 2000, including, but not limited to, accepting date input, providing
date output, and performing calculations on dates or portions of dates; (ii) to
function accurately in accordance with applicable specifications and without
interruption before, during, and after January 1, 2000, without any change in
operations associated with the advent of the new century; (iii) to respond to
two-digit date input in a manner which resolves any ambiguity as to century in a
disclosed, defined and predetermined manner; and (iv) to store and provide
output of date information in manners that are unambiguous as to
century. Notwithstanding anything herein to the contrary, this Section 3.15(g)
---------------
relates only to products sold or licensed by the Company, and shall not be
construed to include any failure of such a product to be "millennium compliant"
that is caused by a hardware failure.
(h) Neither Seller, nor any of its affiliates (other than the Company), nor
any of their respective current or former employees, officers, directors, agents
or representatives is, or ever has been, in possession of any portion of the
source code for the Courseware Engine, the Authoring Engine or the Electronic
Support System Engine, or of the source code for any other Intellectual Property
owned by the Company, except with respect to Xxxxxx Xxxxxxxx, who has not been
in possession of any portion of said source code since at least January 1, 1997.
3.16 Significant Customers; Material Contracts and Commitments. Schedule
--------------------------------------------------------- --------
3.16 contains an accurate list of (a) all significant customers of the Company
----
(i.e., those customers representing 5% or more of the Company's revenues for the
-----
twelve (12) month period ending on the Balance Sheet Date, or who have paid to
the Company $25,000 or more in any of the past four fiscal quarters ending prior
to the Balance Sheet Date) and (b) all material contracts, commitments, leases,
instruments, agreements, licenses or permits to which the Company or any
Subsidiary is a party or by which it or its properties are bound (including
without limitation contracts with significant customers, joint venture or
partnership agreements, contracts with any labor organizations, loan agreements,
indemnity or guaranty agreements, bonds, mortgages, options to purchase land,
liens, pledges or other security agreements) (i) as of the Balance Sheet Date
and (ii) entered into since the Balance Sheet Date (collectively, the "Material
Contracts"). The Company has delivered to Purchaser true, complete and correct
copies of the Material Contracts. Except to the extent set forth on Schedule
--------
3.16, (x) none of the Company's significant customers has canceled or
----
substantially reduced or, to the knowledge of the Company, is currently
attempting or threatening or planning to cancel or substantially reduce service,
(y) the Company and the Subsidiaries have complied with all of their respective
material commitments and obligations and are not in default under any of the
Material Contracts and no notice of default has been received with respect to
any thereof and (z) there are no Material Contracts that
-11-
were not negotiated at arm's length with third parties not affiliated with the
Company or any officer or director of the Company. The Company has received no
customer complaints concerning its products and/or services, nor has it had any
of its products returned by a purchaser thereof except for normal warranty
returns consistent with past history and those returns that would not result in
a reversal of any revenue by the Company, which would have a material adverse
effect on the business, operations, affairs, prospects, properties, assets,
profits or condition (financial or otherwise) of the Company and the
Subsidiaries taken as a whole.
Each Material Contract is valid and binding on the Company and is in full
force and effect and to the best knowledge of the Company is not subject to any
default thereunder by any party obligated to the Company pursuant thereto. The
Company has obtained, or will obtain prior to the Closing Date, all necessary
consents, waivers and approvals of parties to any Material Contracts that are
required in connection with any of the transactions contemplated hereby, or as
are required by any governmental agency or other third party or as are advisable
in order that any such Material Contract remain in effect without modification
after the consummation of any such transactions and without giving rise to any
right of termination, cancellation or acceleration or loss of any right or
benefit ("Company Third Party Consents"). All Company Third Party Consents are
listed on Schedule 3.16.
-------------
Each Material Contract (or any other material agreement, document,
instrument, or understanding relating to the sale, license, transfer,
distribution or development of the Company's products and other Company
Intellectual Property Rights to which the Seller or any affiliate or subsidiary
of the Seller (other than the Company or Xxxxxxxx Soft-Teach Limited) is a party
or has any interest has been validly assigned to the Company pursuant to an
Assignment and Assumption Agreement in form and substance acceptable to
Purchaser, and such parties have waived or terminated any of their respective
remaining rights thereunder which would materially interfere with the Company's
or any other party's operations or performance thereunder (and the Seller has
obtained all required consents from third parties with respect thereto), except
with respect to Third Party Obligations and Permitted Distribution Channels as
defined in the Dealer Agreement.
3.17 Title to Real Property. The Company and each Subsidiary has good and
----------------------
insurable title to the real property owned and used in their respective
businesses, including without limitation those reflected on Schedule 3.17
-------------
hereto, subject to no mortgage, pledge, lien, conditional sales agreement,
encumbrance or charge, except for:
(a) liens reflected on Schedules 3.10 and 3.14 as securing liabilities
-------------- ----
reflected on such Schedules (with respect to which liabilities no default
exists);
(b) liens for current taxes not yet payable and assessments not in
default; or
-12-
(c) easements for utilities serving the property only.
3.18 Insurance. Schedule 3.18 sets forth an accurate list, as of the
--------- -------------
Balance Sheet Date, of all insurance policies carried by the Company and the
Subsidiaries and all insurance loss runs of workmen's compensation claims
received for the past two policy years. Also attached to Schedule 3.18 are
-------------
true, complete and correct copies of all current insurance policies, all of
which are in full force and effect. All premiums payable under all such
policies have been paid and the Company and its Subsidiaries are otherwise in
full compliance with the terms of such policies (or other policies providing
substantially similar insurance coverage). Such policies of insurance are of
the type and in amounts customarily carried by persons conducting businesses
similar to that of the Company. The Company does not know of any threatened
termination of, or material premium increase with respect to, any of such
policies.
3.19 Compensation; Employment Agreements. Schedule 3.19 hereto sets forth
----------------------------------- -------------
an accurate list, as of the date hereof, of all officers, directors and the five
(5) most highly compensated employees of the Company and the Subsidiaries,
listing all employment agreements with such officers, director and key employees
and the rate of compensation (and the portions thereof attributable to salary,
bonus and other compensation, respectively) of each of such persons as of (a)
the Balance Sheet Date and (b) the date hereof. The Company has provided to
Purchaser true, complete and correct copies of all employment contracts,
commitments and arrangements with persons listed on Schedule 3.19.
-------------
3.20 Employment, Labor and Other Relations. Neither the Company nor any
-------------------------------------
Subsidiary is bound by or subject to (and none of its respective assets or
properties is bound by or subject to) any arrangement with any labor union. No
employees of the Company or any Subsidiary are represented by any labor union or
covered by any collective bargaining agreement and, to the best knowledge of the
Company, no campaign to establish such representation is in progress. There is
no pending or, to the best knowledge of the Company threatened labor dispute
involving the Company or any Subsidiary and any group of its employees nor has
the Company or any Subsidiary experienced any labor interruptions over the past
three years and the Company considers its relationship with its employees to be
good. The Company is not engaged in any unfair labor practice and is not in
material violation of any applicable state or federal laws respecting employment
and labor practice, and there is no complaint against the Company actually
pending or, to the Company's knowledge, threatened before the National Labor
Relations Board. There is and has been no claim against the Company based on
actual or alleged race, age, sex, disability or other harassment or
discrimination under applicable state and federal laws, or similar tortious
conduct, nor, to the Company's knowledge, is there any basis for any such
claims. Set forth in Schedule 3.20 is a list of any and all former employees of
-------------
the Company or any Subsidiary who have resigned or been terminated, or for
whatever reason have ceased to be employed within the sixty (60) days prior to
the Closing Date, and those former employees who have been so terminated are
identified in Schedule 3.20. Each such termination was
-------------
-13-
effected in writing which was actually received by such terminated former
employee, and neither Seller nor Purchaser has any liability to any such
terminated former employee. No such termination of a former employee was or is
in violation of any agreement, law, regulation, judgment, order or decree.
3.21 Employee Benefit Plans. All employee benefit plans, programs and
----------------------
policies (whether formal or informal, and whether maintained for the benefit of
any individual or more than one individual) maintained or contributed to by the
Company or any Subsidiary for the benefit of any current or former employee of
the Company or any Subsidiary or in which such employees are entitled to
participate are listed in Schedule 3.21 ("Benefit Plans"), and copies of all
-------------
such written plans and policies, written descriptions of all such oral plans and
policies, and all other documentation relating to such, plans and policies have
been delivered or made available to Purchaser. Except as disclosed on Schedule
--------
3.21: (a) each Benefit Plan and the administration thereof complies, and has at
----
all times complied, in all material respects with the requirements of all
applicable laws, including without limitation the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Code, and each Benefit Plan
intended to qualify under section 401(a) of the Code so qualifies, and each
trust that forms a part of any such plan is tax-exempt under section 501(a) of
the Code; (b) no Benefit Plan subject to Part 3 of Title I of ERISA has incurred
any "accumulated funding deficiency" within the meaning of section 302 of ERISA
or section 412 of the Code; (c) no liability has been incurred or is expected to
be incurred under Title IV of ERISA to any party with respect to any Benefit
Plan, or any other plan presently or heretofore maintained or contributed to by
the Company or any Subsidiary, any predecessor to the Company or any Subsidiary,
or any entity that is or at any time was a member of a controlled group, as
defined in Section 412(n)(6)(B) of the Code, which includes or included the
Company or any Subsidiary ("Controlled Group Member"); (d) neither the Company
nor any Controlled Group Member has incurred any liability for any tax imposed
under section 4971 through 4980B of the Code or civil liability under section
502(i) or (1) of ERISA; (e) the "amount of unfunded benefit liabilities" within
the meaning of section 4001(a)(18) of ERISA does not exceed zero with respect to
any Benefit Plan subject to Title IV of ERISA; (f) no Benefit Plan is a
multiemployer plan within the meaning of section 3(37) of ERISA; (g) no Benefit
Plan provides health or death benefit coverage beyond the termination of an
employee's employment, except as required by Part 6 of Title I of ERISA or
section 4980B of the Code; (h) no material "reportable event" (within the
meaning of section 4043 of ERISA) has occurred with respect to any Benefit Plan
or any plan maintained by a Controlled Group Member since the Closing Date of
said section 4043; (i) no suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of plan activities) have been brought
against or with respect to any Benefit Plan; and (j) all contributions to
Benefit Plans that were required to be made under such Benefit Plans have been
made as of the Balance Sheet Date, and all benefits accrued under any unfunded
Benefit Plan will have been paid, accrued or otherwise adequately reserved in
accordance with GAAP as of such date and the Company and the Subsidiaries will
have performed by the Closing Date all material obligations required to be
performed as of such
-14-
date under Benefit Plans. If reasonably requested by Purchaser, the Company
and/or the Subsidiaries will terminate any Benefit Plan substantially
contemporaneously with the Closing. Without limiting the generality of the
foregoing, the Company's 1987 Incentive Stock Plan (as the same may have been
amended, restated, replaced superseded or otherwise modified) has been
terminated and all of the Company's obligations, duties or liabilities (actual,
contingent or otherwise) thereunder have been terminated, satisfied or waived.
3.22 Conformity with Law; Litigation. Neither the Company nor any
-------------------------------
Subsidiary has violated any law or regulation or any order of any court or
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over it, which violations
individually or in the aggregate would have a Material Adverse Effect, except as
set forth on Schedule 3.23; and except to the extent set forth on Schedule 3.9,
------------- ------------
there are no claims, actions, suits, proceedings or investigations, pending or,
to the best knowledge of the Company threatened, against or affecting the
Company or any Subsidiary, at law or in equity, or before or by any federal,
State, municipal or other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over it and no notice of any
claim, action, suit, proceeding or investigation, whether pending or threatened,
has been received, which claims are, individually or in the aggregate, material.
There are no material judgments or orders, injunctions, decrees, stipulations or
awards (whether rendered by a court of administrative agency or by arbitration)
against the Company, any of its Subsidiaries or against any of their respective
properties or businesses.
3.23 Taxes.
-----
(a) Except as set forth on Schedule 3.23:
-------------
(i) the Company and each Subsidiary has timely filed or will timely
file prior to the applicable due date (including valid extensions thereof) all
requisite federal, state and other Tax (as defined below) returns, reports and
forms ("Returns") for all periods ended on or before December 31, 1996, and has
paid all Taxes shown or required to be shown thereon as owing, and Seller, the
Company and each Subsidiary, as applicable, has timely filed or will timely file
prior to the applicable due date all Returns relating to the Company and/or any
Subsidiary for all periods beginning January 1, 1997 and ending on or before the
Closing Date, and has paid or will pay all Taxes shown or required to be shown
thereon as owing;
(ii) there are no Tax-related audits, investigations or examinations
in progress or claims against or with respect to the Company or any Subsidiary
for Taxes for any period or periods and no notice of any claim for Taxes,
whether pending or threatened, has been received;
-15-
(iii) the amounts shown as accruals for Taxes on the Interim Balance
Sheet are sufficient for the payment in full of all Taxes payable by the Company
or any Subsidiary, whenever determined or to be determined, for all periods
ended on or before the October 31,1997;
(iv) the Company and each Subsidiary has a taxable year ended on
December 31, in each year;
(v) the Company and each Subsidiary currently utilizes the accrual
method of accounting for income Tax purposes and such method of accounting is
permitted to be utilized and has not changed in the past five years;
(vi) the Company and each Subsidiary has paid or has fully accrued
for all Taxes and will have withheld, and remitted to the appropriate Tax
authorities, with respect to its employees all federal and state income taxes,
FICA, FUTA and other Taxes required to be withheld, whenever determined, with
respect to, periods ending on or before the Closing Date.
(vii) copies of all (i) Tax examination reports, (ii) extensions of
statutory limitations for the collection or assessment of Taxes and (iii) the
Returns of the Company and each Subsidiary for the last three (3) fiscal years
(or portions thereof) are included as part of Schedule 3.23;
-------------
(viii) there are (and as of immediately following the Closing there
will be) no liens, pledges, charges, claims, security interests or other
encumbrances of any sort ("Liens") on the assets of the Company or any
Subsidiary relating to or attributable to Taxes;
(ix) except as set forth on Schedule 3.23, neither the Company
-------------
nor any Subsidiary has knowledge of any basis for the assertion of any claim
relating or attributable to Taxes that, if adversely determined, would result in
any Lien on the assets of the Company or any Subsidiary;
(x) none of the Company's or any Subsidiary's assets are treated
as "tax exempt use property" within the meaning of Section 168(h) of the Code;
(xi) as of the Closing Date, there will not be any contract,
agreement, plan or arrangement, including but not limited to the provisions of
this Agreement, covering any employee or former employee of the Company or any
Subsidiary that, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to Section 280G, 404 or 162 of
the Code;
(xii) neither the Company nor any Subsidiary has filed any consent
-16-
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by the Company or any Subsidiary;
(xiii) neither the Company nor any Subsidiary is a party to a tax
sharing, tax indemnity or allocation agreement, nor does the Company or any
Subsidiary owe any amount under any such agreement;
(xiv) neither the Company nor any Subsidiary is, or has been at any
time, a "United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code;
(xv) the tax basis of the Company and each Subsidiary in its assets
for purposes of determining its future amortization, depreciation and other
federal income tax deductions is accurately and fully reflected on the Company's
tax books and records; and
(xvi) as of the Closing Date, the Company and each Subsidiary shall
have properly collected and remitted all sales tax and use tax as required in
those states in which the Company and/or any Subsidiary, does business.
For purposes of this Agreement, the term "Tax" shall be understood to include
any tax or similar governmental charge, impost or levy (including without
limitation income taxes, franchise taxes, transfer taxes or fees, sales taxes,
use taxes, gross receipts taxes, value added taxes, employment taxes, excise
taxes, ad valorem taxes, property taxes, withholding taxes, payroll taxes,
minimum taxes or windfall profit taxes) together with any related penalties,
fines, additions to tax or interest imposed by the United States or any state,
county, local or foreign government or subdivision or agency thereof.
3.24 Government Contracts. Except as set forth on Schedule 3.24, neither
-------------------- -------------
the Company nor any Subsidiary is a party to any governmental contracts subject
to price redetermination or renegotiation.
3.25 Absence of Changes. Since the Balance Sheet Date, except as set
------------------
forth on Schedule 3.25 there has not been:
-------------
(a) any change that by itself or together with other changes, has had
a Material Adverse Effect;
(b) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of the
Company or any Subsidiary;
(c) any change in the authorized capital of the Company or
any Subsidiary or
-17-
in its outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(d) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption, purchase or
other acquisition of any of the capital stock of the Company or any Subsidiary;
(e) any increase in the compensation, bonus, sales commissions or fee
arrangements payable or to become payable by the Company or any Subsidiary to
any of its officers, directors, stockholders, employees, consultants or agents,
except for ordinary and customary bonuses and salary increases for employees in
accordance with past practice;
(f) any work interruptions, labor grievances or claims filed, or any
similar event or condition of any character, materially adversely affecting the
business or future prospects of the Company or any Subsidiary;
(g) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of the Company or any Subsidiary to any
person;
(h) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company or any Subsidiary, provided that the
--------
Company and the Subsidiaries may negotiate and adjust bills in the course of
good faith disputes with customers in a manner consistent with past practice;
(i) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property or
rights of the Company or any Subsidiary or requiring consent of any party to the
transfer and assignment of any such assets, property or rights;
(j) any purchase or acquisition of, or agreement, plan or arrangement
to purchase or acquire, any property, rights or assets outside of the ordinary
course of business of the Company and the Subsidiaries;
(k) any waiver of any material rights or claims of the Company or any
Subsidiary;
(l) any material breach, amendment or termination of any material
contract, agreement, license, permit or other right to which the Company or any
Subsidiary is a party;
(m) any transaction by the Company or any Subsidiary outside the
ordinary course of business;
-18-
(n) capital expenditure or commitment by the Company or any
Subsidiary, either individually or in the aggregate, exceeding $5,000;
(o) filing of an amended Tax return or change in tax accounting or
financial accounting elections, methods or practices (including any change in
depreciation or amortization policies or rates) by the Company or any Subsidiary
or the revaluation by the Company or any Subsidiary of any of its assets;
(p) any creation or assumption by the Company or any Subsidiary of any
mortgage, pledge, security interest or lien or other encumbrance on any asset
(other than liens arising under existing lease financing arrangements that are
not material and liens for taxes not yet due and payable);
(q) any entry into, amendment of, relinquishment, termination or non-
renewal by the Company or any Subsidiary of any contract, lease transaction,
commitment or other right or obligation requiring aggregate payments by the
Company or any Subsidiary in excess of $25,000;
(r) loan by the Company or any Subsidiary to any person or entity,
incurring by the Company or any Subsidiary of any indebtedness, guaranteeing by
the Company or any Subsidiary of any indebtedness, issuance or sale of any debt
securities of the Company or any Subsidiary or guaranteeing of any debt
securities of others;
(s) the commencement or notice or, to the best knowledge of the
Company, threat of commencement of any lawsuit or proceeding against or
investigation of the Company, any Subsidiary or any of its affairs; or
(t) negotiation or agreement by the Company or any Subsidiary or any
officer or employee thereof to do any of the things described in the preceding
clauses (a) through (s) (other than negotiations with the officers and
authorized representatives of Purchaser regarding the transactions contemplated
by this Agreement).
3.26 Bank Accounts; Powers of Attorney. Schedule 3.26 hereto sets forth
--------------------------------- -------------
an accurate list, as of the date of this Agreement, of:
(a) the name of each financial institution in which the Company or any
Subsidiary has any account or safe deposit box;
(b) the names in which the accounts or boxes are held;
(c) the type of account; and
-19-
(d) the name of each person authorized to draw thereon or have access
thereto.
Schedule 3.26 also sets forth the name of each person, corporation, firm or
-------------
other entity holding a general or special power of attorney from the Company or
any Subsidiary and a description of the terms of such power.
3.27 Relations with Governments. Neither the Company nor the Subsidiary
--------------------------
has made, offered or agreed to offer anything of value to any governmental
official, political party or candidate for government office nor has it
otherwise taken any action that would cause the Company or any Subsidiary to be
in violation of the Foreign Corrupt Practices Act of 1977, as amended, or any
law of similar effect.
3.28 Representations Complete. None of the representations or warranties
------------------------
made by the Company (as modified by the Company Schedules), contained in this
Agreement, and no representation, warranty or statement contained in any list,
certificate, Schedule or other instrument, document, agreement furnished or to
be furnished in writing or otherwise to, or made with, Purchaser pursuant hereto
or in connection with the negotiation, execution or performance hereof, contains
or will contain at the Closing Date, any untrue statement of a material fact or
omits or will omit at the Closing Date to state any material fact necessary in
order to make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading.
3.29 Absence of Claims Against Company. Any and all intercompany
---------------------------------
indebtedness owed by the Company to Seller shall be extinguished immediately
prior to Closing. Since July 1, 1997, the Company has made no payments with
respect to intercompany indebtedness owed by the Company to Seller. The Company
has not made any dividends or distributions or acquired any of its capital stock
since July 1, 1997. Seller has no claims against the Company.
3.30 Compliance with Laws. The Company and each Subsidiary has complied
--------------------
in all material respects with, is not in violation in any material respect of,
and has not received any notices of violation or investigation with respect to,
any foreign, federal, state or local statute, law or regulation with respect to
the conduct of its business, or the ownership or operation of its business,
assets or properties other than such violations or investigations that,
individually or in the aggregate, would not have a Material Adverse Effect.
3.31 Complete Copies of Materials. The Company has delivered to Seller
----------------------------
true and complete copies, including all exhibits, schedules, addendums, annexes,
and attachments thereto, of each agreement, contract, commitment or other
document that is referred to in the Company Schedules or that has been requested
by Seller or its counsel.
-20-
3.32 Company Working Capital.
-----------------------
As of the date hereof, the working capital of the Company and its
Subsidiaries on a consolidated basis, equaling the sum of current assets
(excluding unamortized development or production costs) less current
liabilities, excluding any intercompany payables owed by the Company to Seller,
is not less than $695,000.
ARTICLE V
---------
Representations and Warranties of Purchaser
-------------------------------------------
To induce Seller to enter into this Agreement and to consummate the
transactions contemplated hereby, Purchaser represents and warrants to Seller as
follows:
4.1 Due Organization. Purchaser is a corporation duly organized, validly
----------------
existing and in good standing under the laws of the State of Illinois, and
Purchaser is or will be duly authorized and qualified to do business under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on its business in the places and in the manner as now or will be
conducted except for where the failure to be so authorized or qualified would
not have a material adverse effect on Purchaser's business, financial condition
or results of operations. Copies of the Articles of Incorporation and the
Bylaws of Seller (collectively, the "Purchaser Charter Documents") have been
delivered to Seller. Purchaser is not in violation of any Purchaser Charter
Document.
4.2 Investment Intent. Purchaser is purchasing the Shares for investment
-----------------
purposes only for its own account and not on behalf of other persons.
4.3 Authorization; Validity of Obligations. The representatives of
--------------------------------------
Purchaser executing this Agreement have all requisite corporate power and
authority to enter into and bind Purchaser to the terms of this Agreement.
Purchaser has the full legal right, power and corporate authority to enter into
this Agreement and the transactions contemplated hereby. The execution and
delivery of this Agreement by Purchaser and the performance by Purchaser of the
transactions contemplated herein have been duly and validly authorized by the
Board of Directors and shareholders of Purchaser, and this Agreement has been
duly and validly authorized by all necessary corporate action. This Agreement
is a legal, valid and binding obligation of Purchaser enforceable in accordance
with its terms.
4.4 No Conflicts. The execution, delivery and performance of this
------------
Agreement, the consummation of any transactions herein referred to or
contemplated by and the fulfillment of the terms hereof and thereof will not:
-21-
(a) conflict with, or result in a breach or violation of the Purchaser
Charter Documents;
(b) materially conflict with, or result in a material default (or
would constitute a default but for any requirement of notice or lapse of time or
both) under any document, agreement or other instrument to which Purchaser is a
party, or result in the creation or imposition of any material lien, charge or
encumbrance on any of Purchaser's properties pursuant to (i) any law or
regulation to which Purchaser or any of its property is subject, or (ii) any
judgment, order or decree to which Purchaser is bound or any of its property is
subject;
(c) result in termination or any impairment of any material permit,
license, franchise, contractual right or other authorization of Purchaser
(provided that any required third party consent listed on the attached Schedule
--------
4.4 is obtained) ("Purchaser Third Party Consents"); or
---
(d) violate any material law, order, judgment, rule or regulation to
which Purchaser is subject or by which Purchaser is bound.
ARTICLE VI
----------
Covenants
---------
5.1 Access to Information; Confidentiality.
--------------------------------------
(a) Between the date of this Agreement and the Closing Date, the
Company will afford to Purchaser and its investors, legal counsel, accountants
and financial advisors (collectively, "Representatives") access to (a) all of
the sites, properties, books and records of the Company and the Subsidiaries of
the Company identified in Schedule 3.6 hereto and (b) such additional financial
------------
and operating data and other information as to the business and properties of
the Company and the Subsidiaries as Purchaser may from time to time reasonably
request, including without limitation access upon reasonable request to the
Company's and the Subsidiaries' employees, customers and vendors for due
diligence inquiry. The Company will cooperate with Purchaser and its
Representatives in the preparation of any documents or other material that may
be required in connection with this Agreement or the Closing. No information or
knowledge obtained pursuant to this Section 5.1 or otherwise shall affect or be
-----------
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the transactions
contemplated hereby.
(b) Unless and until the Closing shall have occurred, neither
Purchaser nor any of its Representatives, affiliates, employees or agents will
use any of Seller's Confidential
-22-
Information (as defined below) for itself or for any other person, firm,
corporation, limited liability company, partnership or other entity, or disclose
any of Seller's Confidential Information to any person, firm, corporation,
limited liability company, partnership or other entity. As used herein, the term
"Seller's Confidential Information" shall mean all trade secrets and other
confidential information of or about Seller or the Company, including, without
limitation, any such information regarding the business of the Company,
operational policies, methods of operation, products, financial data, customers,
and pricing and cost policies, unless (i) such information becomes known to the
public generally through no fault of Purchaser, (ii) disclosure is required by
law, regulation or the order of any governmental authority under color of law,
or (iii) such disclosure reasonably relates to Purchaser's performance of its
obligations hereunder; provided, that prior to disclosing any information
--------
pursuant to clause (ii) above, Purchaser shall give reasonable prior written
notice thereof to Seller and provide Seller with a reasonable opportunity to
contest such disclosure. If this Agreement is terminated and abandoned as
provided in Article X below, or if the Closing shall fail to occur for any
---------
reason on or before the Termination Date (as defined in Section 9.1(b)),
--------------
then at Seller's request Purchaser shall return to Seller all documents and
materials supplied to Purchaser or its Representatives by Seller or the Company
which contain any of Seller's Confidential Information.
(c) From and after the Closing, neither Seller nor any of its
affiliates, employees or agents will use any of the Confidential Information of
the Company (as defined below) for itself or for any other person, firm,
corporation, limited liability company, partnership or other entity, or disclose
any Confidential Information of the Company to any person, firm, corporation,
limited liability company, partnership or other entity. As used herein, the
term "Confidential Information of the Company" shall mean all trade secrets and
other confidential information of or about the Company, including, without
limitation, any such information regarding the business of the Company,
operational policies, methods of operation, products, financial data, customers,
and pricing and cost policies, unless (i) such information becomes known to the
public generally through no fault of Seller, or (ii) disclosure is required by
law, regulation or the order of any governmental authority under color of law;
provided, that prior to disclosing any information pursuant to clause (ii)
--------
above, Seller shall give reasonable prior written notice thereof to Purchaser
and provide Purchaser with a reasonable opportunity to contest such disclosure.
5.2 Conduct of Business Pending Closing. Between the date hereof and the
-----------------------------------
Closing Date, Seller shall cause the Company and each Subsidiary to:
(a) carry on its respective business in substantially the same manner
as it has heretofore been operated and not introduce any material new method of
management, operation or accounting;
(b) maintain its respective properties and facilities, including those
held under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
-23-
(c) perform all of its respective obligations under agreements
relating to or affecting its respective assets, properties or rights;
(d) keep in full force and effect present insurance policies or other
comparable insurance coverage;
(e) use all commercially reasonable efforts to maintain and preserve
its business organization intact, retain its present officers and key employees
and maintain its respective relationships with suppliers, customers and others
having business relations with it;
(f) maintain compliance with all permits, laws, rules and regulations,
consent orders, and all other orders of applicable courts, regulatory agencies
and similar governmental authorities;
(g) maintain in full force and effect present debt and lease
instruments and not enter into new or amended debt or lease instruments; and
(h) maintain present salaries and commission levels for all officers,
directors, employees and agents, except for ordinary and customary bonuses and
salary increases for employees consistent with past practice.
5.3 Employee Benefits; Terminated Employees. On and after Closing, Seller
---------------------------------------
shall have full responsibility for and liability on account of providing
benefits payable under the Benefit Plans to all current or former employees and
any persons claiming through or as successors, dependents of current or former
employees or otherwise who are entitled to benefits under the Benefit Plans
after the Closing with respect to claims incurred or accrued on or before the
Closing Date, regardless of whether such claims were filed prior to the Closing.
On and after Closing, Seller shall have full responsibility and liability on
account of providing benefits under the Benefit Plans to any employee (or person
claiming through or as a successor or dependent of any employee of the Company
or any Subsidiary whose employment terminated on or prior to the Closing Date
regardless of whether such benefits are mandated by applicable Federal or state
statute. Seller shall have full responsibility for and liability on account of
any former employee of the Company or any Subsidiary who was terminated or
resigned or for any reason ceased being an employee prior to Closing.
5.4 Prohibited Activities. Between the date hereof and the Closing Date,
---------------------
Seller shall cause the Company and each Subsidiary not to, without the prior
written consent of Purchaser:
(a) make any change in its Articles of Incorporation or Bylaws, or
authorize or propose the same;
-24-
(b) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of any securities, options, warrants, calls, conversion rights
or commitments relating to any of its securities, or authorize or propose any
change in its equity capitalization, or issue or authorize the issuance of any
debt securities;
(c) declare or pay any dividend, or make any distribution (whether in
cash, stock or property) in respect of its capital stock whether now or
hereafter outstanding, or split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, or purchase, redeem
or otherwise acquire or retire for value any shares of its capital stock;
(d) enter into any contract or commitment or incur or agree to incur
any liability or make any capital expenditure, or guarantee any indebtedness,
except in the ordinary course of business and consistent with past practice,
provided in any such event the amount thereof is not in excess of $10,000,
including contracts to provide services to customers;
(e) except as contemplated by Section 5.2(h), increase the
--------------
compensation payable or to become payable to any officer, director, stockholder,
employee or agent; make any bonus or management fee payment to any such person;
make any loans or advances; adopt or amend any employee benefit plan; or grant
any severance or termination pay;
(f) create or assume or become liable under any mortgage, pledge or
other lien or encumbrance upon any assets or properties whether now owned or
hereafter acquired;
(g) sell, assign, lease, pledge or otherwise transfer or dispose of
any property or equipment except for fair value, in the ordinary course of
business and consistent with past practice;
(h) acquire or negotiate for the acquisition of (by merger,
consolidation, purchase of a substantial portion of assets or otherwise) any
business or the start-up of any new business or new line of business, or
otherwise acquire or agree to acquire any assets with a value that is material,
individually or in the aggregate, to the Company;
(i) merge or consolidate or agree to merge or consolidate with or into
any other corporation, person or entity;
(j) waive any material rights or claims of the Company or any
Subsidiary, provided that the Company and any Subsidiary may negotiate and
adjust bills in the course of good faith disputes with customers in the ordinary
course of business and consistent with past practice;
-25-
(k) commit a breach of, fail to enforce or amend or terminate any
material agreement, permit, license or other right;
(l) enter into any other transaction (i) that is not negotiated at
arm's length with a third party not affiliated with the Company, any Subsidiary
or any officer director or stockholder of the Company or any Subsidiary or (ii)
outside the ordinary course of business and consistent with past practice or
(iii) prohibited hereunder;
(m) commence a lawsuit other than for routine collection of bills;
(n) revalue any of its assets, including without limitation, writing
down the value of inventory or writing off notes or accounts receivable other
than in the ordinary course of business and consistent with past practice;
(o) make any material tax election other than in the ordinary course
of business and consistent with past practice, change any material tax election,
adopt any material tax accounting method other than in the ordinary course of
business and consistent with past practice, change any material tax accounting
method without Purchaser's prior written consent, file any material tax return
(other than any estimated tax returns, payroll tax returns or sale tax returns)
or any amendment to a material tax return, enter into any closing agreement,
settle any tax claim or assessment, or consent to any tax claim or assessment;
or
(p) take, or agree (in writing or otherwise) to take or commit to take
or reach any understanding to take any of the actions described in Sections
--------
5.4(a) through (o) above, or any action that would make any of the
------------------
representations and warranties of the Company contained in this Agreement
untrue, result in any covenant or agreement contained herein being breached or
result in any of the conditions set forth in Articles VI and VII not being
-------------------
satisfied.
5.5 No Shop. Seller shall not, and shall not permit the Company, any
-------
Subsidiary or any Representative of any of Seller, the Company, or any
Subsidiary to, during the period commencing on the date of this Agreement and
ending with the earlier to occur of the Closing or the termination of this
Agreement in accordance with its terms, directly or indirectly: (a) solicit,
encourage or initiate the submission of proposals or offers from any person for,
(b) participate in any discussions pertaining to, or (c) furnish any information
to any person other than Purchaser relating to, any acquisition or purchase of
all or a material amount of the assets of, or any equity interest in, the
Company or any Subsidiary or a merger, consolidation or business combination of
the Company or any Subsidiary. In addition to the foregoing, if Seller, the
Company, or any Subsidiary receive any unsolicited offer or proposal relating to
any of the above, Seller shall immediately notify Purchaser thereof, including
the identity of the party making such offer or proposal and the specific terms
of such offer or proposal.
-26-
5.6 Notification of Certain Matters. Each party hereto shall give prompt
-------------------------------
notice to the other parties hereto of (a) the occurrence or non-occurrence of
any event the occurrence or non-occurrence of which may cause any representation
or warranty of it contained herein to be untrue or inaccurate in any material
respect at or prior to the Closing and (b) any material failure of such party to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by such party hereunder. The delivery of any notice pursuant to
this Section 5.7 shall not, without the express written consent of the other
-----------
parties, be deemed to (x) modify the representations or warranties hereunder of
the party delivering such notice, (y) modify the conditions set forth in
Articles VI and VII, or (z) limit or otherwise affect the remedies available
-------------------
hereunder to the party receiving such notice.
5.7 Cooperation in Obtaining Required Consents and Approvals. Each Party
--------------------------------------------------------
hereto shall cooperate in obtaining all permits, consents and approvals required
by Section 6.6 (which shall nonetheless continue to be the responsibility of
-----------
Seller), including without limitation Company Third Party Consents set forth on
Schedule 3.16 and Section 7.4 (which shall nonetheless continue to be the
------------- -----------
responsibility of Purchaser), including without limitation Purchaser Third Party
Consents set forth on Schedule 4.4.
------------
5.8 Tax Returns. Seller shall timely file all federal and state Tax (as
-----------
defined in Section 3.23) returns relating to the Company for taxable periods
------------
ending on or prior to the Closing date and shall have paid or will pay all Taxes
attributable to such periods. Such returns will be prepared and filed in
accordance with applicable law and in an manner consistent with past practices
and shall be subject to review and approval by Purchaser. Seller shall include
the income of the Company and its Subsidiaries on Seller's consolidated federal
income tax return, and (where permitted) combined, unitary or consolidated
income tax returns, for the period through the Closing Date and shall pay any
income taxes attributable to such income. The income of the Company and its
Subsidiaries shall be apportioned to the period up to and including the Closing
Date and the period after the Closing Date by closing the books of the Company
and its Subsidiaries as of the end of the Closing Date. After the Closing Date,
Purchaser and the Company, on the one hand, and Seller, on the other hand, will
make available to the other, as reasonably requested, all information, records
or documents relating to the liability for Taxes of the Company or any
Subsidiary for all periods prior to or including the Closing Date and will
preserve such information, records or documents until the expiration of any
applicable statute of limitations or extensions thereof.
5.9 Tax Refund. The Company has received a federal income tax refund of
----------
an amount equal to $141,446 in cash in October, 1997. To the extent that the
Company is not permitted by the Internal Revenue Service to retain such amount,
Seller shall pay such amount to Purchaser by wire transfer of immediately
available funds. To the extent that amounts received and retained in respect of
such tax refund plus any payment made by Seller pursuant to this
-27-
Section 5.9 is in excess of $141,446, Purchaser shall promptly reimburse
-----------
Seller such that Purchaser does not receive in excess of $141,446 pursuant to
this Section 5.10.
------------
5.10 Repurchase of Stock. At or prior to the Closing, Seller shall
-------------------
repurchase from Xxxxxxxxx X. Xxxxxxxxxxx, and she shall deliver to Seller,
100,000 shares of Seller's common stock (the "Xxxxxxxxxxx Seller Stock") at
$5.00 per share for an aggregate purchase price equal to $500,000 in cash by
wire transfer of immediately available funds to an account designated by
Xxxxxxxxx X. Xxxxxxxxxxx.
5.11 Certain Prohibitions. For the period beginning on the Closing Date
--------------------
and ending two (2) years after the Closing Date, neither Seller nor any of its
affiliates shall (a) hire as an employee, retain as an independent contractor or
consultant, or otherwise accept any software or services from, whether or not
for compensation, any person or entity who has developed any software for the
Company on or prior to the Closing Date or during such two (2) year period, or
(b) permit Xxxxxx Xxxxxxxx to develop any software for Seller or any of its
affiliates. For the purposes of this Section 5.11, "develop(ed) any software"
------------
shall be given its broadest meaning and shall include, without limitation, the
authoring of, or suggestions or recommendations with respect to, code, comments,
algorithms, objects, routines, templates, specifications, flow charts,
architecture or documentation.
5.12 Inventory Fulfillment. For a period of sixty (60) days after the
---------------------
Closing Date or for such shorter period as Purchaser may elect, Seller shall
provide to the Company at cost inventory fulfillment with respect to the
Company's products, as more fully set forth in Exhibit C.
---------
5.13 Pfizer Commission. Purchaser shall cause the Company to pay to
-----------------
Seller, for payment to Xxxxxx Xxxx, a sales representative, a commission at
Butts' then generally applicable commission rate (but not to exceed 12% of
applicable net sales receipts for such sale) for a sale solely pursuant to the
current outstanding proposal (excluding any receipts for custom development by
the Company), if such sale shall be consummated prior to March 31, 1998.
ARTICLE VII
-----------
Conditions Precedent to Obligations of Purchaser
------------------------------------------------
The obligations of Purchaser to purchase the Shares and to consummate the
other transactions contemplated by this Agreement are subject to the
satisfaction or waiver, at or before the Closing Date, of the following
conditions:
6.1 Representations and Warranties; Performance of Obligations. All of
----------------------------------------------------------
-28-
the representations and warranties of Seller contained in this Agreement shall
be true, correct and complete on and as of the Closing Date with the same effect
as though such representations and warranties had been made on and as of such
date; all of the terms, covenants, agreements and conditions of this Agreement
to be complied with, performed or satisfied by Seller on or before the Closing
Date shall have been duly complied with, performed or satisfied; and a
certificate to the foregoing effects dated the Closing Date and signed on behalf
of Seller shall have been delivered to Purchaser.
6.2 No Litigation. No temporary restraining order, preliminary or
-------------
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision challenging
Purchaser's proposed acquisition of the Company, or limiting or restricting
Purchaser's conduct or operation of the business of the Company (or its own
business) following the Closing shall be in effect, nor shall any proceeding
brought by an administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of the foregoing
be pending. There shall be no action, suit, claim or proceeding of any nature
pending or threatened against Purchaser, the Company or any Subsidiary, their
respective properties or any of their officers or directors, that could
materially and adversely affect the business, assets, liabilities, financial
condition, results of operations or prospects of the Company and any Subsidiary
taken as a whole, or that challenges or seeks to restrict the consummation of
the transactions contemplated by this Agreement.
6.3 Severance Agreement with Xxxxxx X. Xxxxxxxx. Purchaser shall have
-------------------------------------------
received the Severance, Non-Disclosure and Non-Competition Agreement in the form
of Exhibit D, duly executed by Xxxxxx X. Xxxxxxxx and Seller.
---------
6.4 Dealer Agreement. Purchaser shall have received a counterpart of the
----------------
Dealer Agreement in the form of Exhibit E attached hereto and made a part hereof
---------
(the "Dealer Agreement"), duly executed by Seller.
6.5 Opinion of Counsel. Purchaser shall have received an opinion from
------------------
counsel to Seller, dated the Closing Date, in the form attached as Exhibit F.
---------
6.6 Consents and Approvals. All necessary consents of and filings with
----------------------
any governmental authority or agency or third party (with respect to Material
Contracts, as defined in Section 3.16, and including without limitation any
------------
Company Third Party Consents), including without limitation, approval by
Seller's Board of Directors, relating to the consummation by Seller of the
transactions contemplated hereby shall have been obtained and made and accepted.
6.7 Charter Documents; Good Standings. Seller shall have delivered to
---------------------------------
Purchaser (a) a copy of the Articles of Incorporation of the Company and each
Subsidiary certified as of a recent date by an appropriate authority in the
state of its incorporation, (b) a copy of the Bylaws
-29-
of the Company and each Subsidiary certified as of the Closing Date by the
Secretary thereof, and (c) a Certificate of Good Standing with respect to the
Company and each Subsidiary, dated within five (5) days of the Closing Date,
from the State of each such corporation's state of incorporation and each
additional state in which each such corporation is qualified to do business as a
foreign corporation.
6.8 Due Diligence Review. Purchaser shall be fully satisfied in its sole
--------------------
discretion, based upon its review of, and its other due diligence investigations
with respect to, the business, operations, affairs, prospects, properties,
assets, existing and potential liabilities, obligations, profits or condition
(financial or otherwise) of the Company and the Subsidiary that it has not
discovered any adverse matter that makes it inadvisable to effect the
transactions contemplated hereby.
6.9 No Material Adverse Change. No material adverse change in the
--------------------------
business, operations, affairs, prospects, properties, assets, existing and
potential liabilities, obligations, profits or condition (financial or
otherwise) of the Company and the Subsidiary, taken as a whole, shall have
occurred; and Purchaser shall have received a certificate signed on behalf of
Seller dated the Closing Date to such effect.
6.10 Shares. Seller shall have delivered to Purchaser a certificate or
------
certificates representing the Shares, duly endorsed by Seller for transfer to
Purchaser or accompanied by an assignment of the Shares to Purchaser duly
executed by Seller, and with all applicable transfer taxes paid by Seller.
6.11 Corporate Books. Seller shall have delivered to Purchaser the
---------------
corporate seal, corporate minute books and stock transfer records of the Company
and each Subsidiary.
6.12 Resignations. Seller shall have delivered to Purchaser the written
------------
resignations of all of the officers and directors of the Company and the
Subsidiaries, effective as of the Closing on the Closing Date.
6.13 Estoppel Certificate. Seller shall deliver to Purchaser an estoppel
--------------------
certificate from each lessor with respect to the Real Estate certifying as to
the validity and term of any and all leases with respect to the Real Estate, the
date to which rental is paid, the absence of default by both parties, the amount
of the security deposit, the amount of monthly rent, and that all bills and
invoices for labor and material of any kind relating to the Real Property have
been paid in full.
6.14 Financing. Purchaser shall have obtained financing in an amount
---------
sufficient to consummate the transactions contemplated by this Agreement and for
its and the Company's future working capital requirements on such terms and
conditions as are satisfactory to Purchaser, in the exercise of its sole
discretion.
-30-
6.15 Repurchase of Shares. The Xxxxxxxxxxx Seller Stock shall have been
--------------------
repurchased in accordance with Section 5.11.
------------
6.16 [intentionally omitted]
-----------------------
All documents, instruments and opinions to be furnished by Seller pursuant
hereto shall be in form and substance reasonably satisfactory to Purchaser and
its counsel.
ARTICLE VIII
------------
Conditions Precedent to Obligations of Seller
---------------------------------------------
The obligations of the Company to consummate the transactions contemplated
by this Agreement are subject to the satisfaction or waiver, at or before the
Closing Date, of the following conditions:
7.1 Representations and Warranties; Performance of Obligations. All of
----------------------------------------------------------
the representations and warranties of Purchaser contained in this Agreement
shall be true, correct and complete on and as of the Closing Date as though such
representations and warranties had been made as of such date; all of the terms,
covenants, agreements and conditions of this Agreement to be complied with,
performed or satisfied by Purchaser on or before the Closing Date shall have
been duly complied with, performed or satisfied; and a certificate to the
foregoing effects dated the Closing Date and signed by the President or any Vice
President of Purchaser shall have been delivered to the Company.
7.2 Litigation. No temporary restraining order, preliminary or permanent
----------
injunction or other order issued by any court of competent jurisdiction or other
legal or regulatory restraint or provision challenging Purchaser's proposed
acquisition of the Company, or limiting or restricting Purchaser's conduct or
operation of the business of the Company (or its own business) following the
Closing shall be in effect, nor shall any proceeding brought by an
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be pending.
There shall be no action, suit, claim or proceeding of any nature pending or
threatened, against Purchaser or the Company, their respective properties or any
of their officers or directors, that could materially and adversely affect the
business, assets, liabilities, financial condition, results of operations or
prospects of the Purchaser taken as a whole, or that challenges or seeks to
restrict the consummation of the transactions contemplated by this Agreement.
-31-
7.3 Opinion of Counsel. Seller shall have received an opinion from
------------------
counsel for Purchaser, dated the Closing Date, in the form attached as
Exhibit G.
---------
7.4 Consents and Approvals. All necessary consents of and filings with
----------------------
any governmental authority or agency or third party relating to the consummation
by Seller of the transactions contemplated hereby shall have been obtained and
made and accepted.
7.5 Dealer Agreement. Seller shall have received a counterpart of the
----------------
Dealer Agreement, duly executed by the Company.
7.6 Severance Agreement with Xxxxxx X. Xxxxxxxx. Seller shall have
-------------------------------------------
received the Xxxxxxxx Severance Agreement, duly executed by Xxxxxx X. Xxxxxxxx
and Purchaser.
7.7 Charter Documents; Good Standings. Purchaser shall have delivered to
---------------------------------
Seller (a) a copy of the Articles of Incorporation of Purchaser certified as of
a recent date by the Secretary of State of Illinois, (b) a copy of the Bylaws of
Purchaser certified as of the Closing Date by the Secretary thereof, and (c) a
Certificate of Good Standing with respect to Purchaser, dated within five (5)
days of the Closing Date, from the Secretary of State of Illinois and each
additional state in which Purchaser is qualified to do business as a foreign
corporation.
7.8 Delivery of Cash Consideration and Note. Purchaser shall have
---------------------------------------
delivered to Seller the Cash Consideration and the Note, duly executed by
Purchaser.
ARTICLE IX
----------
Indemnification; Remedies
-------------------------
IX.1 Survival; Right to Indemnification Not Affected by Knowledge. All
------------------------------------------------------------
representations, warranties, covenants, and obligations in this Agreement, the
Schedules, the certificate delivered pursuant to Section 6.1, and any other
-----------
certificate or document delivered pursuant to this Agreement will survive the
Closing. The right to indemnification, payment of Damages (as defined in Section
-------
8.2 below) or other remedy based on such representations, warranties, covenants,
---
and obligations will not be affected by any investigation conducted with respect
to, or any knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of or compliance with,
any such representation, warranty, covenant, or obligation. The waiver of any
condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
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IX.2 Indemnification and Payment of Damages by Seller. Seller will
------------------------------------------------
indemnify and hold harmless Purchaser, the Company, the Subsidiaries and their
respective employees, officers, directors, stockholders, agents, representatives
and affiliates (collectively, the "Indemnified Persons") for, and will pay to
the Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Seller in
this Agreement (including without limitation the Schedules hereto) or any
certificate or document delivered by Seller pursuant to this Agreement;
(b) any breach by Seller of any covenant or obligation of Seller in
this Agreement;
(c) any product shipped or manufactured by, or any services provided
by, the Company prior to the Closing Date;
(d) the claims, actions, proceedings or investigations disclosed in
Schedule 3.15(e); or
----------------
(e) any claim by any person or entity for brokerage or finder's fees
or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such person or entity with
either Seller or the Company (or any person or entity acting on their
behalf) in connection with any of the transactions contemplated hereby.
IX.3 Indemnification and Payment of Damages by Purchaser. Purchaser will
---------------------------------------------------
indemnify and hold harmless Seller, and will pay to Seller the amount of any
Damages arising, directly or indirectly, from or in connection with (a) any
breach of any representation or warranty made by Purchaser in this Agreement or
in any certificate delivered by Purchaser pursuant to this Agreement, (b) any
breach by Purchaser of any covenant or obligation of Purchaser in this
Agreement, or (c) any claim by any person or entity for brokerage or finder's
fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such person or entity with Purchaser
(or any person or entity acting on its behalf) in connection with any of the
transactions contemplated hereby.
IX.4 Time Limitations. If the Closing occurs, Sellers will have no
----------------
liability (for
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Date,
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, other than those in Section 3.4, Section 3.5 and Section 3.23, unless on
----------- ----------- ------------
or before May 31, 1999 Purchaser notifies Seller of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
Purchaser; a claim with respect to Section 3.23, or a claim for indemnification
------------
or reimbursement not based upon any representation or warranty or any covenant
or obligation to be performed and complied with prior to the Closing Date, may
be made at any time prior to the third (3rd) year anniversary of the date
hereof, and a claim with respect to Section 3.4 or Section 3.5 may be made
----------- -----------
at any time. If the Closing occurs, Purchaser will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, unless on or before May 31, 1999 Seller notifies Purchaser of a claim
specifying the factual basis of that claim in reasonable detail to the extent
then known by Seller.
IX.5 Limitations on Amount - Seller. (a) Seller will have no liability
------------------------------
(for indemnification or otherwise) with respect to the matters described in
clause (a) of Section 8.2 until the total of all Damages with respect to such
-----------
matters exceeds $50,000, except with respect to any breach of Section 3.32, and
------------
except as otherwise provided in this Section 8.5.
-----------
(b) (i) Seller shall pay any and all Sales Tax Obligations (as
hereinafter defined) arising from time to time with respect to the Company's
operations during the period commencing on December 31, 1996 and ending on the
Closing Date.
(ii) If there are any Sales Tax Obligations which arise with respect
to the Company's operations prior to January 1, 1997, then Purchaser shall be
responsible for the first Fifty Thousand Dollars ($50,000) of such Sales Tax
Obligations.
(iii) (A) If there are any Sales Tax Obligations which arise from
the Company's operations for the period prior to January 1, 1997 which are in
excess of the $50,000 referred to in subsection (ii) above, then Seller shall be
responsible for the next $400,000 (in excess of such $50,000).
(B) If there are any Sales Tax Obligations which arise from the
Company's operations for the period prior to January 1, 1997 which are in excess
of the $450,000 referred to in subsections (ii) and (iii)(A) above, then each of
Seller and Purchaser shall be responsible for one-half of any Sales Tax
Obligations in excess of such $450,000.
(iv) The limitations set forth in Section 8.5(a) shall not apply to
--------------
Seller's payment and indemnity obligations under this Section 8.5(b). The
--------------
limitations on amounts payable by Seller pursuant to this Section 8.5(b) shall
--------------
not apply to attorneys' fees and expenses in any action against Seller in
connection with a claim for indemnification.
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(c) Seller's liability for breaches of representations and warranties will
not exceed $950,000, plus the amount of any and all attorneys' fees and expenses
in any action against Seller in connection with a claim for indemnification to
the extent Seller is liable for any such fees and expenses under this Section
-------
8.5(c); provided that this Section 8.5(c) shall not apply to (i) any amounts
------ --------------
payable pursuant to Section 8.5(b), (ii) any breach of any of Seller's
--------------
representations and warranties of which Seller had knowledge at any time prior
to the date on which such representation and warranty is made, or (iii) Section
-------
3.4 or Section 3.5. In the event of an action by an Indemnified Person against
--- -----------
Seller or by Seller against Purchaser, then the prevailing party shall be
entitled to recover its reasonable attorneys' fees and expenses.
(d) For the purposes of this Section 8.5, "Sales Tax Obligation(s)" means
-----------
any and all Damages relating to any liability arising out of the Company's
operations to any state, county, or local government or subdivision or agency
thereof for any tax or similar governmental charge, impost or levy based on or
related to sales or use of the Company's products (including without limitation,
transfer taxes or fees, sales taxes, use taxes, gross receipt taxes, value added
taxes, excise taxes, or ad valorem taxes), together with any related penalties,
fines, additions to tax or interest imposed with respect thereto.
IX.6 Limitations on Amount - Purchaser. Purchaser will have no liability
---------------------------------
(for indemnification or otherwise) with respect to the matters described in
clause (a) of Section 8.3 until the total of all Damages with respect to such
-----------
matters exceeds $50,000. However, this Section 8.6 will not apply to any breach
-----------
of any of Purchaser's representations and warranties of which Purchaser had
knowledge at any time prior to the date on which such representation and
warranty is made.
IX.7 Procedure for Indemnification - Third Party Claims.
--------------------------------------------------
(a) Promptly after receipt by an indemnified party under Section 8.2
-----------
or Section 8.3 of notice of the commencement of any Proceeding (as defined
-----------
below) against it, such indemnified party will, if a claim is to be made
against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such claim, but the failure to
notify the indemnifying party will not relieve the indemnifying party of
any liability that it may have to any indemnified party, except to the
extent that the indemnifying party demonstrates that the defense of such
action is prejudiced by the indemnifying party's failure to give such
notice.
(b) If any Proceeding referred to in Section 8.7(a) is brought against
--------------
an indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the
claim involves Taxes, be entitled to participate in such Proceeding and, to
the extent that it wishes (unless (i) the indemnifying party is also a
party to such Proceeding and the indemnified party
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determines in good faith that joint representation would be inappropriate,
or (ii) the indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such Proceeding and
provide indemnification with respect to such Proceeding), to assume the
defense of such Proceeding with counsel satisfactory to the indemnified
party and, after notice from the indemnifying party to the indemnified
party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such
defense, be liable to the indemnified party under this Article VIII for any
------------
fees of other counsel or any other expenses with respect to the defense
of such Proceeding, in each case subsequently incurred by the indemnified
party in connection with the defense of such Proceeding, other than
reasonable costs of investigation. If the indemnifying party assumes the
defense of a Proceeding, (i) it will be conclusively established for
purposes of this Agreement that the claims made in that Proceeding are
within the scope of and subject to indemnification; (ii) no compromise or
settlement of such claims may be effected by the indemnifying party without
the indemnified party's consent unless (A) there is no finding or admission
of any violation of any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution,
law, ordinance, principle of common law, regulation, statute, or treaty or
any violation of the rights of any person or entity and no effect on any
other claims that may be made against the indemnified party, and (B) the
sole relief provided is monetary damages that are paid in full by the
indemnifying party; and (iii) the indemnified party will have no liability
with respect to any compromise or settlement of such claims effected
without its consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not, within
ten days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding,
the indemnifying party will be bound by any determination made in such
Proceeding or any compromise or settlement effected by the indemnified
party.
(c) Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a result of monetary
damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party
specifically identifying this Section 8.7(c), assume the exclusive right to
--------------
defend, compromise, or settle such Proceeding, but the indemnifying party
will not be bound by any determination of a Proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
(d) Seller hereby consents to the non-exclusive jurisdiction of any
court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this
Agreement with respect to such Proceeding or the matters alleged therein,
and agree that process may be served on Seller with respect to such a claim
anywhere in the world.
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(e) For the purposes of this Section 8.7, "Proceeding" means any
-----------
action, arbitration, audit, hearing, investigation, litigation, or suit
(whether civil, criminal, administrative, investigative, or informal)
commenced, brought, conducted, or heard by or before, or otherwise
involving, any (a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature; (b) federal, state, local, municipal,
foreign, or other government; (c) governmental or quasi-governmental
authority of any nature (including any governmental agency, branch,
department, official, or entity and any court or other tribunal);(d) multi-
national organization or body; (e) body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature; or (f) any
arbitrator.
IX.8 Procedure for Indemnification - Other Claims. A claim for
--------------------------------------------
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
IX.9 Exclusive Remedies. The remedies provided in this Article VIII are
------------------ ------------
the exclusive remedies available to Seller, Purchaser and the other Indemnified
Persons.
ARTICLE X
---------
General
-------
9.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing Date solely:
(a) by mutual consent of Seller and Purchaser; or
(b) by Seller, on the one hand, or by Purchaser, on the other hand, if the
Closing shall not have occurred on or before the date hereof (the "Termination
Date"); provided that the right to terminate this Agreement under this Section
-------
9.1(b) shall not be available to either party whose material misrepresentation,
------
breach of warranty or failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Closing to occur on or
before such date; or
(c) by Seller, on the one hand, or by Purchaser, on the other hand, if
there is or has been a material breach, failure to fulfill or default on the
part of the other party of any of the representations and warranties contained
herein or in the due and timely performance and satisfaction of any of the
covenants, agreements or conditions contained herein, and the curing of
-37-
such default shall not have been made or shall not reasonably be expected to
occur before the Closing Date; or
(d) by the Seller, on the one hand, or by Purchaser, on the other hand, if
there shall be a final nonappealable order of a federal or state court in effect
preventing consummation of the transactions contemplated hereby; or there shall
be any action taken, or any statute, rule regulation or order enacted,
promulgated or issued or deemed applicable to the transactions contemplated
hereby by any governmental entity that would make the consummation of the
transactions contemplated hereby illegal.
9.2 Effect of Termination. In the event of the termination of this
---------------------
Agreement pursuant to Section 9.1, this Agreement shall forthwith become void,
-----------
and there shall be no liability or obligation on the part of any party hereto or
its officers, directors or the shareholders. Notwithstanding the foregoing
sentence, (i) the provisions of this Section 9.2 and Section 5.1(b) and (c)
----------- ----------------------
(confidentiality) and the other provisions of Article IX (including without
----------
limitation with respect to brokers), shall remain in full force and effect and
survive any termination of this Agreement; (ii) each party shall remain liable
to the other party to the extent of the expenses incurred by such other party in
connection with this Agreement and the transactions contemplated hereby, as well
as any damages in accordance with applicable law.
9.3 Cooperation. Seller and Purchaser shall each deliver or cause to be
-----------
delivered to the other on the Closing Date, and at such other times and places
as shall be reasonably agreed to, such additional instruments as the other may
reasonably request for the purposes of carrying out this Agreement. Seller
shall cause its officers, directors and employees to cooperate with Purchaser on
and after the Closing Date in furnishing information, evidence, testimony and
other assistance in connection with any Tax Return filing obligations, actions,
proceedings, arrangements or disputes of any nature with respect to matters
pertaining to all periods prior to the Closing Date.
9.4 Successors and Assigns. This Agreement and the rights of the parties
----------------------
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto and the successors of
Seller and Purchaser.
9.5 Entire Agreement. This Agreement (which includes the Exhibits and
----------------
Schedules, and any other attachments hereto) sets forth the entire understanding
of the parties hereto with respect to the transactions contemplated hereby. It
shall not be amended or modified except by a written instrument duly executed by
each of the parties hereto. Any and all previous agreements and understandings
between or among the parties regarding the subject matters hereof, whether
written or oral, including that certain letter of intent, dated September 30,
1997, are superseded by this Agreement.
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9.6 Counterparts. This Agreement may be executed in any number of
------------
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered (which deliveries may be
by telefax) by the parties.
9.7 Brokers and Agents. Seller and Purchaser each agrees to indemnify the
------------------
other against all loss, damages or expense relating to or arising out of claims
for fees or commissions of any broker or agent employed or alleged to have been
employed by such indemnifying party.
9.8 Specific Performance; Remedies. Each party hereto acknowledges that
------------------------------
the other parties will be irreparably harmed and that there will be no adequate
remedy at law for any violation by any of them of any of the covenants or
agreements contained in this Agreement, including without limitation, the
confidentiality obligations set forth in Section 5.1(b) and (c). It is
----------------------
accordingly agreed that, in addition to any other remedies that may be available
upon the breach of any such covenants or agreements, each party hereto shall
have the right to obtain injunctive relief to restrain a breach or threatened
breach of, or otherwise to obtain specific performance of, the other parties'
covenants and agreements contained in this Agreement.
9.9 Notices. Any notice, request, claim, demand, waiver, consent,
-------
approval or other communication that is required or permitted hereunder shall be
in writing and shall be deemed given if delivered personally or sent by telefax
(with confirmation of receipt), by registered or certified mail, postage
prepaid, or by recognized courier service, as follows:
If to Seller to:
ITC Learning Corporation
00000 Xxxxxx Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telefax No. (000) 000-0000
Attn: Xx. Xxxxxxxxxxx X. Xxxx
Vice President Administration and Finance, and Treasurer
with a copy to:
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Telefax No. (000) 000-0000
Attn: Xxxx X. Berkeley, Esq.
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If to Purchaser to:
Xxxxxxxx Soft-Teach
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Telefax No. (000) 000-0000
Attn: Xx. Xxxxxxxxx X. Xxxxxxxxxxx
President
with a copy to:
Xxxxxxxx & Xxxxxx
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telefax No. (000) 000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
or to such other address as the person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, telefaxed, mailed or
dispatched and, if given by any other means, shall be deemed given only when
actually received by the addressees.
9.10 Governing Law. This Agreement shall be governed by and construed,
-------------
interpreted and enforced in accordance with the laws of the State of Illinois,
without regard to any applicable conflicts of law.
9.11 Severability. If any provision of this Agreement or the application
------------
thereof to any person or circumstances is held invalid or unenforceable in any
jurisdiction, the remainder hereof, and the application of such provision to
such person or circumstances in any other jurisdiction, shall not be affected
thereby, and to this end the provisions of this Agreement shall be severable.
9.12 Absence of Third Party Beneficiary Rights. No provision of this
-----------------------------------------
Agreement is intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, employee, partner of any party hereto or any
other person or entity.
9.13 Mutual Drafting. This Agreement is the mutual product of the parties
---------------
hereto, and
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each provision hereof has been subject to the mutual consultation, negotiation
and agreement of each of the parties, and shall not be construed for or against
any party hereto.
9.14 Amendment; Waiver. This Agreement may be amended by the parties
-----------------
hereto at any time prior to the Closing by execution of an instrument in writing
signed on behalf of each of the parties hereto. Any extension or waiver by any
party of any provisions hereto shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
9.15 Public Disclosure. Prior to the Closing Date, neither Seller nor the
-----------------
Company on the one hand, nor Purchaser on the other hand shall make any
disclosure (whether or not in response to an inquiry) of the subject matter of
this Agreement unless previously approved in writing by the other party;
provided that Seller may make such disclosure as is required under securities
laws, as reasonably determined by its legal counsel. Seller agrees to keep
Purchaser apprised in advance of any disclosure of the subject matter of this
Agreement by Seller.
9.16 Disclosure. Each matter disclosed by Seller in the Schedules hereto
----------
shall be deemed a disclosure of such matter only for the purpose of the Section
or Subsection of this Agreement referred to for each such matter in the
Schedules hereto and shall not be deemed a disclosure with respect to any other
Section or Subsection of this Agreement.
9.17 Knowledge of Seller. For purposes of this Agreement, the knowledge
-------------------
of Seller shall be deemed to include the knowledge of Seller and the Company.
[signature page follows]
-41-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above.
XXXXXXXX HOLDINGS, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxxxxxx
----------------------------
Xxxxxxxxx X. Xxxxxxxxxxx, President
ITC LEARNING CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------
Xxxxx X. Xxxxxx, Chief Executive Officer
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