EXHIBIT 2.1
STOCK AND ASSET PURCHASE AGREEMENT
BY AND AMONG
T.N.H. FRANCE SARL,
T.N.H. HOLDINGS GmbH,
THE THOMSON CORPORATION (AUSTRALIA) PTY LTD,
THOMSON INFORMATION & SOLUTIONS LIMITED,
THOMSON GLOBAL RESOURCES
AND
THOMSON LEARNING INC.
(THE "SELLERS")
AND
SKILLSOFT PUBLIC LIMITED COMPANY
AND
SKILLSOFT CORPORATION
(THE "BUYERS")
October 25, 2006
TABLE OF CONTENTS
PAGE
ARTICLE I STOCK AND ASSET PURCHASE....................................................... 1
1.1 Purchase and Sale of Stock................................................................. 1
1.2 Purchase and Sale of Assets................................................................ 1
1.3 Assumption of Liabilities.................................................................. 2
1.4 Purchase Price; Severance Amount; Reimbursement Amount..................................... 2
1.5 The Closing................................................................................ 3
1.6 Pre-Closing Adjustments.................................................................... 5
1.7 Post-Closing Adjustments................................................................... 6
1.8 Further Assurances......................................................................... 8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THOMSON LEARNING............................. 9
2.1 Organization, Qualification and Corporate Power............................................ 9
2.2 Capitalization; Representations Regarding Stock............................................ 9
2.3 Authorization of Transaction............................................................... 10
2.4 Government Consents and Approvals; Noncontravention........................................ 10
2.5 Subsidiaries............................................................................... 11
2.6 Financial Statements....................................................................... 11
2.7 Absence of Certain Changes................................................................. 11
2.8 Undisclosed Liabilities.................................................................... 11
2.9 Tax Matters................................................................................ 12
2.10 Ownership and Condition of Assets.......................................................... 14
2.11 Owned Real Property........................................................................ 15
2.12 Real Property Leases....................................................................... 15
2.13 Intellectual Property...................................................................... 16
2.14 Contracts.................................................................................. 18
2.15 Litigation................................................................................. 20
2.16 Employees.................................................................................. 20
2.17 Employee Benefits.......................................................................... 21
2.18 Environmental Matters...................................................................... 23
2.19 Legal Compliance........................................................................... 24
2.20 Permits.................................................................................... 24
2.21 Certain Business Relationships With Affiliates............................................. 24
2.22 Brokers' Fees.............................................................................. 24
2.23 Inventory.................................................................................. 25
2.24 Accounts Receivable........................................................................ 25
2.25 Insurance.................................................................................. 25
2.26 Warranties................................................................................. 25
2.27 Customers.................................................................................. 25
2.28 Powers of Attorney......................................................................... 25
2.29 Books and Records.......................................................................... 26
2.30 Investment Representation.................................................................. 26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SKILLSOFT PLC................................ 26
3.1 Organization, Qualification and Corporate Power............................................ 26
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PAGE
3.2 Authorization of Transaction............................................................... 27
3.3 Noncontravention........................................................................... 27
3.4 Turnover in Ireland........................................................................ 27
3.5 Litigation................................................................................. 27
3.6 Brokers' Fees.............................................................................. 28
3.7 Independent Investigation; Sellers' Representations........................................ 28
3.8 Capitalization............................................................................. 28
3.9 Reports and Financial Statements........................................................... 28
3.10 Absence of Material Adverse Change......................................................... 29
ARTICLE IV COVENANTS...................................................................... 29
4.1 Closing Efforts............................................................................ 29
4.2 Regulatory and Other Authorizations; Notices and Consents.................................. 29
4.3 Additional Financial Statements............................................................ 31
4.4 Operation of Business...................................................................... 32
4.5 Access to Information...................................................................... 34
4.6 Exclusivity................................................................................ 35
4.7 Expenses................................................................................... 35
4.8 Financing Commitments...................................................................... 35
4.9 Insurance.................................................................................. 36
4.10 Elimination of Intercompany Items.......................................................... 36
4.11 Listing of Shares.......................................................................... 36
4.12 Equity Financing........................................................................... 36
4.13 Valuation Report........................................................................... 37
4.14 Depositary................................................................................. 37
4.15 German Audit............................................................................... 37
4.16 Tax Filings................................................................................ 37
ARTICLE V CONDITIONS TO CLOSING.......................................................... 37
5.1 Conditions to Obligations of Each Party.................................................... 37
5.2 Conditions to Obligations of the Buyers.................................................... 37
5.3 Conditions to Obligations of the Sellers................................................... 38
ARTICLE VI POST-CLOSING COVENANTS......................................................... 39
6.1 Proprietary Information.................................................................... 39
6.2 Solicitation and Hiring.................................................................... 39
6.3 Non-Competition............................................................................ 39
6.4 Sharing of Data............................................................................ 41
6.5 Use of Name................................................................................ 41
6.6 Cooperation in Litigation.................................................................. 43
6.7 Collection of Accounts Receivable.......................................................... 43
6.8 Employees.................................................................................. 43
6.9 COBRA...................................................................................... 43
6.10 Seller Benefit Plans....................................................................... 43
6.11 Buyer Savings Plan......................................................................... 44
6.12 Termination Liability for Thomson Learning Business Employees.............................. 44
6.13 Termination Liability for Business Subsidiary Business Employees........................... 45
6.14 Employee Release........................................................................... 45
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PAGE
6.15 Scottsdale Lease........................................................................... 45
6.16 UK Business Subsidiary Structure........................................................... 46
6.17 German Audit............................................................................... 46
ARTICLE VII INDEMNIFICATION................................................................ 46
7.1 Indemnification by Thomson Learning........................................................ 46
7.2 Indemnification by SkillSoft PLC........................................................... 47
7.3 Indemnification Claims..................................................................... 47
7.4 Survival of Representations and Warranties................................................. 49
7.5 Limitations................................................................................ 50
7.6 Treatment of Indemnity Payments............................................................ 51
7.7 Tax Matters................................................................................ 51
ARTICLE VIII TAX MATTERS.................................................................... 51
8.1 Preparation and Filing of Tax Returns; Payment of Taxes.................................... 51
8.2 Tax Indemnification........................................................................ 52
8.3 Allocation of Certain Taxes................................................................ 53
8.4 Cooperation on Tax Matters; Tax Audits..................................................... 54
8.5 Termination of Tax Sharing Agreements...................................................... 56
8.6 Time of Payment............................................................................ 56
8.7 Tax Refunds and Tax Benefits............................................................... 57
8.8 Tax Covenants.............................................................................. 57
8.9 Miscellaneous.............................................................................. 58
ARTICLE IX REGISTRATION RIGHTS............................................................ 58
9.1 Demand Registration........................................................................ 58
9.2 Limitations on Registration Rights......................................................... 58
9.3 Registration Procedures.................................................................... 59
9.4 Requirements of the Holders................................................................ 60
9.5 Indemnification............................................................................ 60
9.6 Assignment of Rights....................................................................... 61
ARTICLE X TERMINATION.................................................................... 61
10.1 Termination of Agreement................................................................... 61
10.2 Effect of Termination...................................................................... 62
ARTICLE XI DEFINITIONS.................................................................... 62
ARTICLE XII MISCELLANEOUS.................................................................. 79
12.1 Press Releases and Announcements........................................................... 79
12.2 No Third Party Beneficiaries............................................................... 79
12.3 Entire Agreement........................................................................... 79
12.4 Succession and Assignment.................................................................. 79
12.5 Counterparts and Facsimile Signature....................................................... 79
12.6 Headings................................................................................... 79
12.7 Notices.................................................................................... 80
12.8 Governing Law.............................................................................. 80
12.9 Amendments and Waivers..................................................................... 80
12.10 Severability............................................................................... 81
12.11 Submission to Jurisdiction................................................................. 81
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PAGE
12.12 Construction................................................................................... 81
ARTICLE XIII SELLER PARENT GUARANTEE........................................................ 82
Schedule 1.4 - Purchase Price Allocation
Schedule 4.8(a) - Financing Terms
Schedule 4.2(i) - Content and Technology Agreements
Schedule 5.2(a) - Required Consents
Schedule 6.5(a) - Business-Related Names
Schedule 6.12(a) - Thomson Learning Business Employees
Schedule 6.13(a) - Business Subsidiary Business Employees
Schedule 11.1 - Monsoon Platform
Exhibit A - Form of Xxxx of Sale
Exhibit B - Form of Patent Assignment
Exhibit C - Form of Trademark Assignment
Exhibit D- Form of Copyright Assignment
Exhibit E - Form of Instrument of Assumption
Exhibit F - Transition Services Agreement
Exhibit G - License Agreement
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STOCK AND ASSET PURCHASE AGREEMENT
This Stock and Asset Purchase Agreement is entered into as of October 25,
2006 by and among SkillSoft Public Limited Company, a corporation incorporated
under the laws of the Republic of Ireland ("SkillSoft PLC"), SkillSoft
Corporation, a Delaware corporation ("SkillSoft Inc."), Thomson Learning Inc., a
Delaware corporation ("Thomson Learning"), Thomson Global Resources, a
corporation incorporated under the laws of the Republic of Ireland ("TGR", and
collectively with Thomson Learning, the "Asset Sellers"), T.N.H. France SARL, a
French limited liability company ("Thomson France"), T.N.H. Holdings GmbH, a
company legally established under the laws of Germany ("Thomson Germany"), The
Thomson Corporation (Australia) Pty Ltd, an Australian private limited company
("Thomson Australia"), and Thomson Information & Solutions Limited, a
corporation organized under the laws of England and Wales ("Thomson UK").
SkillSoft PLC and SkillSoft Inc. are each individually referred to herein as a
"Buyer" and collectively as the "Buyers." Thomson France, Thomson Germany,
Thomson Australia and Thomson UK are each individually referred to herein as a
"Parent" and are collectively referred to herein as the "Parents." The Parents
and Asset Sellers are each individually referred to herein as a "Seller" and are
collectively referred to herein as the "Sellers."
1. Capitalized terms used in this Agreement shall have the meanings
ascribed to them in Article XI.
2. The Business Subsidiaries and the Asset Sellers are engaged, among
other matters, in the Business.
3. SkillSoft PLC desires to purchase from the Parents, and the Parents
desire to sell to SkillSoft PLC, all of the Stock upon the terms and subject to
the conditions set forth herein.
4. The Buyers desire to purchase from the Asset Sellers, and the Asset
Sellers desire to sell to the Buyers, the Acquired Assets and the Buyers are
willing to assume from the Asset Sellers all Assumed Liabilities upon the terms
and subject to the conditions set forth herein.
Now, therefore, in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows.
ARTICLE I
STOCK AND ASSET PURCHASE
1.1 Purchase and Sale of Stock. Upon and subject to the terms and
conditions of this Agreement, SkillSoft PLC shall purchase from each Parent, and
each Parent shall sell, transfer, convey, assign and deliver to SkillSoft PLC,
at the Closing, for the consideration specified below in this Article I, the
Stock of each Business Subsidiary held by such Parent.
1.2 Purchase and Sale of Assets.
(a) Upon and subject to the terms and conditions of this
Agreement, SkillSoft Inc. shall purchase from Thomson Learning, and Thomson
Learning shall sell, transfer, convey,
assign and deliver to SkillSoft Inc., at the Closing, for the consideration
specified below in this Article I, all of Thomson Learning's right, title and
interest in, to and under the TL Assets.
(b) Upon and subject to the terms and conditions of this
Agreement, SkillSoft PLC shall purchase from TGR, and TGR shall sell, transfer,
convey, assign and deliver to SkillSoft PLC, at the Closing, for the
consideration specified below in this Article I, all of TGR's right, title and
interest in, to and under the Monsoon Platform.
(c) Notwithstanding the provisions of Sections 1.2(a) and 1.2(b),
the Acquired Assets shall not include the Excluded Assets.
1.3 Assumption of Liabilities.
(a) Upon and subject to the terms and conditions of this
Agreement, SkillSoft Inc. shall assume all Assumed Liabilities relating to the
TL Assets and SkillSoft PLC shall assume all Assumed Liabilities relating to the
Monsoon Platform and any other Assumed Liabilities to the extent that such
liabilities are not assumed by SkillSoft Inc.
(b) Notwithstanding the terms of Section 1.3(a) or any other
provision of this Agreement to the contrary, the Buyers shall not assume or
become responsible for, and the Asset Sellers shall remain liable for, the
Excluded Liabilities.
1.4 Purchase Price; Severance Amount; Reimbursement Amount.
(a) In consideration for the sale and transfer of the Acquired
Assets and the Stock, the Buyers shall, at the Closing, pay to the Sellers an
amount equal to the Purchase Price, and in consideration of the sale and
transfer of the Acquired Assets, the Buyers shall assume the Assumed
Liabilities. Except as otherwise provided in Section 4.8, the Purchase Price
shall consist of (i) $215,778,000 in cash in immediately available funds and
(ii) at SkillSoft PLC's option, either (A) 11,093,230 Buyer ADSs, (B)
$69,221,760 in cash in immediately available funds or (C) a combination of cash
and such Buyer ADSs having an aggregate value of $69,221,760, it being agreed
that each Buyer ADS shall be deemed to have a value of $6.24. The number of
Buyer ADSs to be issued shall be subject to equitable adjustment in the event of
any stock split, stock dividend, reverse stock split or similar event affecting
the Buyer ADSs between the date of this Agreement and the Closing.
(b) SkillSoft Inc. shall pay, and SkillSoft PLC shall cause
SkillSoft Inc. to pay, to Thomson Learning, or its designee, the portion of the
Purchase Price allocated to the TL Assets, the non-solicitation covenant set
forth in Section 6.2 and the non-competition covenant set forth in Section 6.3
in accordance with Schedule 1.4. SkillSoft PLC shall pay to TGR and the Parents
the respective portions of the Purchase Price allocated to the Monsoon Platform
and the Stock in accordance with Schedule 1.4.
(c) The Purchase Price is subject to adjustment as provided in
Section 1.7, Section 1.8, Article VII and Article VIII. Any such adjustment to
the Purchase Price shall be allocated among the consideration to be paid
pursuant to Schedule 1.4 in accordance with the source of the respective
adjustments to the extent such source is traceable, and otherwise to the TL
Assets.
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(d) Subject to the provisions of Section 6.12(d), at the Closing,
SkillSoft Inc. shall pay to Thomson Learning in cash in immediately available
funds an amount equal to the parties' good faith calculation of the Severance
Amount, which amount may, if applicable, be offset against any amounts payable
by Thomson Learning pursuant to Section 1.4(d) below.
(e) Subject to the provisions of Section 6.13(c), at the Closing,
Thomson Learning shall pay to SkillSoft Inc. in cash in immediately available
funds an amount equal to the parties' good faith calculation of the
Reimbursement Amount, which amount may, if applicable, be offset against any
amounts payable by SkillSoft Inc. pursuant to Section 1.4(c) above.
(f) Without prejudice to the terms of Section 1.4(a) or Schedule
1.4, any portion of the Purchase Price that is not attributable to (i) any of
the anticipated debt financings as described in Section 4.8, (ii) the Equity
Financing, or (iii) the issuance of up to 11,093,230 Buyer ADSs, shall be funded
out of the cash of the Buyers.
(g) Notwithstanding anything to the contrary in this Agreement,
any Seller that is entitled to receive Buyer ADSs at the Closing may not
transfer or agree to transfer at any time before the Closing any or all of such
Buyer ADSs, but may transfer such Buyer ADSs at any time thereafter.
1.5 The Closing.
(a) The Closing shall take place at the offices of Xxxxxx Xxxxxx
Xxxxxxxxx Xxxx and Xxxx LLP in Boston, Massachusetts commencing at 9:00 a.m.
local time on the Closing Date. All transactions at the Closing shall be deemed
to take place simultaneously, and no transaction shall be deemed to have been
completed and no documents or certificates shall be deemed to have been
delivered until all other transactions are completed and all other documents and
certificates are delivered.
(b) At the Closing:
(i) the Sellers shall deliver to the Buyers the various
certificates, instruments and documents referred to in Section 5.2;
(ii) the Buyers shall deliver to the Sellers the various
certificates, instruments and documents referred to in Section 5.3;
(iii) each Parent shall deliver to SkillSoft PLC
certificate(s) evidencing all of the Stock owned by such Parent, duly endorsed
in blank or with stock powers duly executed by the Parent;
(iv) each Asset Seller shall execute and deliver a Xxxx of
Sale in substantially the form attached hereto as Exhibit A;
(v) each Asset Seller shall execute and deliver a Patent
Assignment in substantially the form attached hereto as Exhibit B;
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(vi) each Asset Seller shall execute and deliver a Trademark
Assignment in substantially the form attached hereto as Exhibit C;
(vii) each Asset Seller shall execute and deliver a Copyright
Assignment in substantially the form attached hereto as Exhibit D;
(viii) each Asset Seller shall execute and deliver such other
instruments of conveyance as the Buyers may reasonably request in order to
effect the sale, transfer, conveyance and assignment to the Buyers of valid
ownership of the Acquired Assets owned by the Asset Seller;
(ix) each Buyer shall execute and deliver to each Asset
Seller an instrument of assumption in substantially the form attached hereto as
Exhibit E and such other instruments as such Asset Seller may reasonably request
in order to effect the assumption by the appropriate Buyer of the Assumed
Liabilities;
(x) the Asset Sellers shall transfer to the Buyers all the
books, records, files and other data (or copies thereof) within the possession
or control of such Asset Sellers relating to the Acquired Assets;
(xi) the Parents shall deliver (or shall cause to be
delivered) to SkillSoft PLC the minute books, stock books, ledgers and
registers, corporate seals and other similar corporate records of the Business
Subsidiaries;
(xii) the Buyers shall pay to the Sellers, payable by wire
transfer or other delivery of immediately available funds to an account
designated by the Sellers, the cash portion of the Purchase Price pursuant to
Section 1.4;
(xiii) SkillSoft PLC shall, if applicable, deliver the Buyer
ADSs to the Parents and TGR;
(xiv) the Asset Sellers shall deliver to the Buyer, or
otherwise put the Buyer in possession and control of, all of the Acquired Assets
of a tangible nature; and
(xv) the Buyers and the Sellers shall execute and deliver to
each other a cross-receipt evidencing the transactions referred to above.
1.6 Allocation. Within 45 days after the Closing, SkillSoft Inc. shall
provide Thomson Learning with a proposed allocation of the sum of the Purchase
Price to be allocated to the TL Assets, the non-solicitation covenant set forth
in Section 6.2 and the non-competition covenant set fort in Section 6.3
(collectively, "TL Assets Amount") and the portion of the Assumed Liabilities
attributable to the TL Assets among the TL Assets (the "Allocation"). If Thomson
Learning does not provide any comments to SkillSoft Inc. in writing within 45
days following delivery by SkillSoft Inc. of the proposed Allocation, then the
Allocation proposed by SkillSoft Inc. shall be deemed to be final and binding,
absent manifest error. If, however, Thomson Learning submits comments to
SkillSoft Inc. within such 45-day period, SkillSoft Inc. and Thomson Learning
shall negotiate in good faith to resolve any differences within 30 days. If
Thomson Learning and SkillSoft Inc. are unable to reach a resolution within such
30 day period,
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then all remaining disputed items shall be submitted for resolution by an
internationally-recognized, independent accounting firm mutually selected by
Thomson Learning and SkillSoft Inc. (the "Allocation Accounting Firm"), which
shall make a final determination as to the disputed items within 30 days after
such submission, and such determination shall be final, binding and conclusive
on Thomson Learning and SkillSoft Inc. The fees and disbursements of the
Allocation Accounting Firm shall be shared equally between Thomson Learning and
SkillSoft Inc. Any subsequent adjustments to the TL Assets Amount shall be
reflected in the Allocation in a manner consistent with Section 1060 of the Code
and the Regulations thereunder. For all Tax purposes, SkillSoft Inc. and Thomson
Learning agree that the transactions contemplated by this Agreement shall be
reported in a manner consistent with the terms of this Agreement, including the
Allocation, and that neither of them will take any position inconsistent
therewith in any Tax Return, in any refund claim, in any litigation, or
otherwise. Each of Thomson Learning and SkillSoft Inc. agrees to cooperate with
the other in preparing IRS Form 8594, and to furnish the other with a copy of
such form prepared in draft form within a reasonable period before its filing
due date.
1.7 Pre-Closing Adjustments. The Purchase Price shall be subject to
adjustment prior to the Closing Date as follows:
(a) If the Audited 2005 Revenue is less than $161,300,000 and
greater than or equal to $145,620,000, the Purchase Price shall be reduced by an
amount equal to the product of (i) 1.78 and (ii) the amount by which the Audited
2005 Revenue is less than $161,800,000.
(b) If the Audited 2005 Revenue is less than $145,620,000, the
Purchase Price shall be reduced by an amount equal to the sum of (X)
$28,800,400, and (Y) the product of (i) 3.00 and (ii) the amount by which the
Audited 2005 Revenue is less than $145,620,000.
(c) If the Audited 2005 Expenses are greater than $174,500,000 and
less than or equal to $191,400,000, the Purchase Price shall be reduced by an
amount equal to the product of (i) 1.78 and (ii) the amount by which the Audited
2005 Expenses exceed $174,000,000.
(d) If the Audited 2005 Expenses are greater than $191,400,000,
the Purchase Price shall be reduced by an amount equal to the sum of (X)
$30,972,000, and (Y) the (i) product of 3.00 and (ii) the amount by which the
Audited 2005 Expenses exceed $191,400,000.
(e) If the Sellers are unable to obtain a consent to assignment in
favor of the Buyers to any agreement required to be disclosed pursuant to
Section 2.14(a)(iii)(A) for which (i) such consent is required pursuant to the
terms of such agreement in order to transfer the rights and obligations of such
agreement to the Buyers in connection with the transactions contemplated by this
Agreement and (ii) such agreement does not otherwise provide such customer with
a legally enforceable right to terminate such agreement either for convenience
or without cause (each such agreement, a "Consent Agreement"), then the Purchase
Price shall be reduced by an amount equal to the product of (i) 1.78 and (ii)
the aggregate amount of Committed Revenue as of the Closing Date under all
Consent Agreements for which a consent to assignment in favor of the Buyers has
not been obtained. Notwithstanding the foregoing, (A) the Buyers shall promptly
reimburse Thomson Learning for an amount equal to the product of (i) 1.78 and
(ii) all Committed Revenue actually collected by the Buyers pursuant to Consent
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Agreements for which consent to assignment had not been obtained prior to the
Closing, (B) the Purchase Price shall not be reduced pursuant to this Section
1.7(e) if, prior to the Closing, the counterparty to a Consent Agreement enters
into an agreement with a Seller or SkillSoft PLC or any of its Affiliates that
includes among other products and services the provision of substantially
similar services or the sale of substantially similar products as are provided
or sold pursuant to such Consent Agreement (a "Substitute Agreement") on terms
for such services or products that are not materially worse to the Buyer than
the terms of such Consent Agreement and (C) if, following the Closing, a
customer that is party to a Consent Agreement terminates such Consent Agreement
and enters into a Substitute Agreement and it is reasonably apparent that such
Substitute Agreement was entered into in connection with the termination of the
original Consent Agreement, SkillSoft PLC shall reimburse Thomson Learning for
an amount equal to the product of (i) 1.78 and (ii) all Committed Revenue under
the Consent Agreement; provided, however, that if the financial terms of such
Substitute Agreement in clause (B) or (C) are materially worse to the Buyers
than the original Consent Agreement, SkillSoft PLC shall reimburse Thomson
Learning the difference between (X) an amount equal to the product of (i) 1.78
and (ii) the aggregate amount of the Committed Revenue as of the Closing Date
under such Consent Agreement, minus (Y) an amount equal to the product of (i)
1.78 and (ii) the Committed Revenue under the Substitute Agreement for the
remaining term of the Consent Agreement prior to its termination.
1.8 Post-Closing Adjustments. The Purchase Price shall be subject to
adjustment after the Closing Date as follows:
(a) Within 75 days after the Closing Date, SkillSoft PLC shall
prepare and deliver to Thomson Learning, as the agent for all of the Sellers,
the Draft Working Capital Statement. SkillSoft PLC shall prepare the Draft
Working Capital Statement in accordance with GAAP applied on a basis consistent
with the application of GAAP to and otherwise in a manner consistent with the
preparation of the Most Recent Balance Sheet and having line items set forth in
the definition of "Closing Working Capital" in Article XI.
(b) At all reasonable times during the 75 days immediately
following Thomson Learning's receipt of the Draft Working Capital Statement,
Thomson Learning and its representatives shall be permitted to review the
records of SkillSoft PLC relating to the Business and each Business Subsidiary
relating to the Draft Working Capital Statement, and SkillSoft PLC shall direct
any accountants engaged to prepare the Draft Working Capital Statement, upon
receipt of customary waivers, to permit Thomson Learning and its representatives
to review such accountant's work papers, if any, relating to the Draft Working
Capital Statement, in each case reasonably requested by Thomson Learning, and
SkillSoft PLC shall make reasonably available to Thomson Learning and its
representatives the individuals employed by SkillSoft PLC and the Business
Subsidiaries and responsible for the preparation of the Draft Working Capital
Statement in order to respond to the inquiries of Thomson Learning related
thereto.
(c) Thomson Learning shall deliver to SkillSoft PLC by the
Objection Deadline Date either a notice indicating that Thomson Learning accepts
the Draft Working Capital Statement ("Notice of Acceptance") or a detailed
statement describing its objections to the Draft Working Capital Statement
("Notice of Disagreement"). If Thomson Learning delivers
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to SkillSoft PLC a Notice of Acceptance, or Thomson Learning does not deliver a
Notice of Disagreement by the Objection Deadline Date, then, effective as of
either the date of delivery of such Notice of Acceptance or as of the close of
business on the Objection Deadline Date, the Draft Working Capital Statement
shall be deemed to be the Final Working Capital Statement. If Thomson Learning
timely delivers a Notice of Disagreement, only those matters specified in such
Notice of Disagreement shall be deemed to be in dispute, and all other matters
shall be final and binding upon the Sellers and SkillSoft PLC.
(d) The objections set forth on the Notice of Disagreement shall
be resolved as follows:
(i) SkillSoft PLC and Thomson Learning shall first use
reasonable efforts to resolve such objections.
(ii) Any resolution by SkillSoft PLC and Thomson Learning as
to such objections shall be final and binding on the Parties.
(iii) If SkillSoft PLC and Thomson Learning do not reach a
resolution of all objections set forth on Thomson Learning's Notice of
Disagreement within 30 days after delivery of such Notice of Disagreement,
SkillSoft PLC and Thomson Learning shall, within 30 days following the
expiration of such 30-day period, engage the Neutral Accountant, pursuant to an
engagement agreement executed by SkillSoft PLC, Thomson Learning and the Neutral
Accountant, to resolve any Unresolved Objections.
(iv) SkillSoft PLC and Thomson Learning shall jointly submit
to the Neutral Accountant, within 10 days after the date of the engagement of
the Neutral Accountant (as evidenced by the date of the engagement agreement), a
copy of the Draft Working Capital Statement, a copy of the Notice of
Disagreement, and a statement setting forth the resolution of any objections
agreed to by SkillSoft PLC and Thomson Learning. Each of SkillSoft PLC and
Thomson Learning shall submit to the Neutral Accountant (with a copy delivered
to SkillSoft PLC or Thomson Learning, as the case may be, on the same day),
within 45 days after the date of the engagement of the Neutral Accountant, a
memorandum (which may include supporting exhibits) setting forth its position on
the Unresolved Objections. Each of SkillSoft PLC and Thomson Learning may (but
shall not be required to) submit to the Neutral Accountant (with a copy
delivered to SkillSoft PLC or Thomson Learning, as the case may be, on the same
day), within 60 days after the date of the engagement of the Neutral Accountant,
a memorandum responding to the initial memorandum submitted to the Neutral
Accountant by SkillSoft PLC or Thomson Learning, as the case may be. Unless
requested by the Neutral Accountant in writing, neither Party may present any
additional information or arguments to the Neutral Accountant, either orally or
in writing.
(v) Within 90 days after the date of its engagement
hereunder, the Neutral Accountant shall determine whether the objections raised
by Thomson Learning are appropriate and shall issue a ruling which shall include
a balance sheet, comprised of the Draft Working Capital Statement as adjusted
pursuant to any resolutions to objections agreed upon by SkillSoft PLC and
Thomson Learning and pursuant to the Neutral Accountant's resolution of the
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Unresolved Objections. Such balance sheet shall be deemed to be the Final
Working Capital Statement.
(vi) The resolution by the Neutral Accountant of the
Unresolved Objections shall be conclusive and binding upon SkillSoft PLC and
Thomson Learning. SkillSoft PLC and Thomson Learning agree that the procedure
set forth in this Section 1.8(d) for resolving disputes with respect to the
Draft Working Capital Statement shall be the sole and exclusive method for
resolving any such disputes; provided that this provision shall not prohibit any
Party from instituting litigation to enforce the ruling of the Neutral
Accountant.
(vii) SkillSoft PLC and Thomson Learning shall share the fees
and expenses of the Neutral Accountant equally.
(e) The Draft Working Capital Statement shall be deemed to be the
Final Working Capital Statement for the purposes of this Section 1.8 upon the
earliest of (x) the delivery by Thomson Learning of the Notice of Acceptance or
the failure of Thomson Learning to deliver the Notice of Disagreement by the
Objection Deadline Date pursuant to Section 1.8(c), (y) the resolution of all
disputes by Thomson Learning and SkillSoft PLC pursuant to Section 1.8(d)(ii)
and (z) the resolution of all disputes pursuant to Section 1.8(d)(v) by the
Neutral Accountant. Within five (5) Business Days after the Final Working
Capital Statement becomes or is deemed final and binding on the parties, an
adjustment to Purchase Price shall be made as follows:
(i) If the Closing Working Capital as shown on the Final
Working Capital Statement is less than the Reference Working Capital Amount by
at least $250,000, the Purchase Price shall be reduced by the amount by which
such deficiency exceeds $250,000 and Thomson Learning shall pay to SkillSoft
PLC, by wire transfer or other delivery of immediately available funds, within
three (3) Business Days after the date on which the Final Working Capital
Statement is finally determined pursuant to this Section 1.8, an amount equal to
the amount by which such deficiency exceeds $250,000.
(ii) If the Closing Working Capital as shown on the Final
Working Capital Statement exceeds the Reference Working Capital Amount by at
least $250,000, the Purchase Price shall be increased by the amount by which
such excess exceeds $250,000 and SkillSoft PLC shall pay to Thomson Learning, by
wire transfer or other delivery of immediately available funds, within three (3)
Business Days after the date on which the Final Working Capital Statement is
finally determined pursuant to this Section 1.8, an amount equal to the amount
by which such excess exceeds $250,000.
(f) Any payment required to be made by SkillSoft PLC or Thomson
Learning pursuant to this Section 1.8 shall bear interest from the Closing Date
through the date of payment at the interest rate per annum equal to the average
of the rate per annum publicly announced by Citibank, N.A. or any successor
thereto in New York, New York from time to time as its "base rate", on each day
during the period from the Closing Date through the date of payment.
1.9 Further Assurances. At any time and from time to time after the
Closing, at the request of the Buyers, the Asset Sellers shall execute and
deliver such other instruments of sale,
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transfer, conveyance and assignment and take such actions as the Buyers may
reasonably request to give effect to the transfer, conveyance and assignment to
the Buyers, and to confirm the Buyers' rights to, title in and ownership of, the
Acquired Assets, all as contemplated by this Agreement. The Asset Sellers shall
bear the expenses for the preparation of such instruments that are necessary to
give effect to the transfer, conveyance and assignment of the Acquired Assets to
the Buyers, and the Buyers shall bear all other expenses arising under this
Section 1.9.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THOMSON LEARNING
Thomson Learning represents and warrants to the Buyers as follows, except
as set forth in the Disclosure Schedule. The disclosures in any section or
subsection of the Disclosure Schedule shall qualify other sections and
subsections in this Article II only to the extent it is reasonably apparent from
a reading of the disclosure that such disclosure is applicable to such other
sections and subsections.
2.1 Organization, Qualification and Corporate Power.
(a) The Sellers. Each of the Sellers is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Each Asset Seller has all requisite corporate
power and authority to carry on the Business and to own and use the properties
owned and used by it in the Business.
(b) The Business Subsidiaries. Each Business Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization and is duly qualified to conduct business
and is in good standing under the laws of each jurisdiction in which the
properties owned or leased by it or the operation of its business requires such
qualification, except for such failure to be so qualified or in good standing
that, individually or in the aggregate, has not had and would not reasonably be
expected to have a Business Material Adverse Effect. Each Business Subsidiary
has all requisite corporate power and authority to carry on the business in
which it is engaged and to own and use the properties owned and used by it.
(c) Charter and Corporate Records of each Business Subsidiary.
Except as set forth in Section 2.1 of the Disclosure Schedule, Sellers have made
available to SkillSoft PLC correct and complete copies of the certificate of
incorporation and bylaws or other organizational documents of each Business
Subsidiary (each as amended through the date hereof). The minute books
(containing the records of meetings of the stockholders and the board of
directors) and the stock record books of each Business Subsidiary are correct
and complete in all material respects. No Business Subsidiary is in default
under or in violation of any provision of its certificate of incorporation,
bylaws or other organizational documents.
2.2 Capitalization; Representations Regarding Stock.
(a) The capitalization of each Business Subsidiary is set forth in
Section 2.2 of the Disclosure Schedule. All of the issued and outstanding shares
of capital stock of each Business Subsidiary are duly authorized, validly
issued, fully paid and nonassessable. There are no (i) outstanding or authorized
options, warrants, rights, agreements or commitments to which
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any Business Subsidiary or any Seller is a party or which are binding upon any
Business Subsidiary providing for the issuance, disposition or acquisition of
any shares of capital stock of any Business Subsidiary, (ii) outstanding or
authorized stock appreciation, phantom stock or similar rights with respect to
any Business Subsidiary or (iii) agreements, voting trusts or proxies with
respect to the voting, or registration under the Securities Act, of any Business
Subsidiary.
(b) All of the issued and outstanding shares of capital stock of
the Business Subsidiaries are owned of record and beneficially by the Sellers as
set forth in Section 2.2 of the Disclosure Schedule, and each of the Sellers has
good title to such capital stock free and clear of any Security Interest,
contractual restriction or covenant, option or other adverse claim (whether
arising by contract or by operation of law), in each case as set forth in
Section 2.2 of the Disclosure Schedule.
2.3 Authorization of Transaction. Each Seller has all requisite power
and authority to execute and deliver this Agreement and the Ancillary Agreements
to which it will be a party and to perform its obligations hereunder and
thereunder. The execution and delivery by each Seller of this Agreement and the
performance by each Seller of this Agreement and the Ancillary Agreements to
which it will be a party and the consummation by each Seller of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of such Seller. This Agreement has been
duly and validly executed and delivered by each Seller and constitutes, and each
of the Ancillary Agreements, upon its execution and delivery by each Seller, as
the case may be, will constitute, a valid and binding obligation of such Seller,
as the case may be, enforceable against such Seller in accordance with its
terms.
2.4 Government Consents and Approvals; Noncontravention.
(a) Except (i) as set forth in Section 2.4 of the Disclosure
Schedule, (ii) for the premerger notification and waiting period requirements of
the Xxxx-Xxxxx-Xxxxxx Act, or (iii) as may be necessary as a result of any facts
or circumstances relating solely to SkillSoft PLC or any of its Affiliates,
neither the execution and delivery by any Seller of this Agreement or the
Ancillary Agreements to which any Seller will be a party, nor the consummation
by any Seller of the transactions contemplated hereby or thereby, will require
on the part of any Seller any notice to or filing with, or any permit,
authorization, consent or approval of, any Governmental Entity.
(b) Assuming that all consents, approvals, authorizations and
other actions described in Section 2.4(a) have been obtained, all filings and
notifications listed in Section 2.4(a) of the Disclosure Schedule have been made
and any applicable waiting period has expired or been terminated, and except as
may result from any facts or circumstances relating solely to the Buyers, the
execution, delivery and performance of this Agreement and the Ancillary
Agreements by each Seller do not and will not (a) conflict with or violate any
provision of the certificate of incorporation or by-laws of any Seller or any
Business Subsidiary, (b) materially conflict with, result in a material breach
of, or constitute a material default under, any Material Contract to which any
Seller or any Business Subsidiary is a party or by which any Seller or any
Business Subsidiary is bound or to which any of their respective assets is
subject, (c) result in the imposition of any Security Interest upon any of the
Acquired Assets or the assets of any Business Subsidiary except for such
Security Interests as may result in connection with
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the financing contemplated by Section 4.8 or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to any Seller or any
Business Subsidiary or any of their respective properties or assets.
2.5 Subsidiaries. The Business Subsidiaries do not, and with respect to
the Business, the Asset Sellers do not, control, directly or indirectly, or have
any direct or indirect equity participation or similar interest in any
corporation, partnership, limited liability company, joint venture, trust or
other business association or entity.
2.6 Financial Statements.
(a) The Unaudited Financial Statements are attached to Section
2.6(a)(i) of the Disclosure Schedule. Except as set forth in Section 2.6(a)(ii)
of the Disclosure Schedule, Unaudited Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, fairly present in all material respects the combined financial
condition, results of operations and cash flows of the Business as of the
respective dates thereof and for the periods referred to therein and are
consistent with the books and records of the Business; provided, however, that
the Unaudited Financial Statements referred to in clause (b) of the definition
of such term are subject to normal recurring year-end adjustments.
(b) Section 2.6(b) of the Disclosure Schedule lists, and Thomson
Learning has made available to SkillSoft PLC, copies of the documentation
creating or governing, all securitization transactions and "off-balance sheet
arrangements" (as defined in Item 303(a)(4) of Regulation S-K of the SEC)
relating to the Business effected by any Seller or any Business Subsidiary since
January 1, 2002.
(c) The turnover of the Business in the Republic of Ireland from
sales and/or services supplied to customers for the fiscal year ended December
31, 2005 was less than 40,000,000 Euro.
2.7 Absence of Certain Changes. Since the Balance Sheet Date, except as
set forth in Section 2.7 of the Disclosure Schedule, (a) there has occurred no
event or development which, individually or in the aggregate, has had, or would
reasonably be expected to have, a Business Material Adverse Effect, and (b) no
Seller nor any Business Subsidiary has taken any of the actions set forth in
paragraphs (a) through (m) of Section 4.4 with respect to the Business.
2.8 Undisclosed Liabilities. Except as set forth in Section 2.8 of the
Disclosure Schedule, the Business Subsidiaries do not, and, with respect to the
Business, the Asset Sellers do not, have any material liability (whether known
or unknown, whether absolute or contingent, whether liquidated or unliquidated
and whether due or to become due), except for (a) liabilities shown on the Most
Recent Balance Sheet, (b) liabilities which have arisen since the Balance Sheet
Date in the Ordinary Course of Business, (c) liabilities which have arisen prior
to the Balance Sheet Date under the Assumed Contracts and contractual and other
liabilities incurred in the Ordinary Course of Business which are not required
by GAAP to be reflected on a balance sheet and (d) liabilities relating to
Taxes.
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2.9 Tax Matters. Except as set forth in Section 2.9 of the Disclosure
Schedule and except for matters that would not have a Business Material Adverse
Effect, to the Knowledge of the Sellers:
(a) Each Business Subsidiary and, to the extent relating to the
Business, each Seller has properly filed on a timely basis (taking into account
any extension of time to file granted or obtained) all Tax Returns that each is
and was required to file, and all such Tax Returns were true, correct and
complete in all material respects. Each Business Subsidiary and, to the extent
relating to the Business, each Seller has properly paid on a timely basis all
Taxes, whether or not shown on any of its Tax Returns, that were due and
payable. All Taxes that each Business Subsidiary and to the extent relating to
the Business all Taxes that each Seller is or was required by law to withhold or
collect have been withheld or collected and, to the extent required, have been
properly paid on a timely basis to the appropriate Governmental Entity. Each
Business Subsidiary and, to the extent related to the Business, each Seller has
complied with all information reporting and back-up withholding requirements
including maintenance of the required records with respect thereto, in
connection with amounts paid to any employee, independent contractor, creditor
or other third party.
(b) The unpaid Taxes of each Seller and each Business Subsidiary
for periods through the Balance Sheet Date with respect to the Business do not
exceed the accruals and reserves for Taxes (excluding accruals and reserves for
deferred Taxes established to reflect timing differences between book and Tax
income) (the "Tax Reserves") set forth on the Most Recent Balance Sheet. All
Taxes attributable to the period from and after the Balance Sheet Date and
continuing through the Closing Date with respect to the Business are, or will
be, attributable to the conduct by the Sellers and each Business Subsidiary of
their operations in the ordinary course of business and are, or will be,
consistent both as to type and amount with Taxes attributable to such comparable
period in the immediately preceding year, and will not exceed the Tax Reserves
set forth on the Final Working Capital Statement.
(c) No Seller and no Business Subsidiary is or has ever been a
member of any group of corporations with which it has filed (or been required to
file) consolidated, combined, or unitary Tax Returns for taxable periods with
respect to which the statute of limitations has not expired, other than a group
the common parent of which is Thomson Corporation (the "Seller Parent"). No
Seller and no Business Subsidiary (i) has any actual or potential liability
under Treasury Regulation Section 1.1502-6 (or any comparable or similar
provision of federal, state, local or foreign law), or as a transferee or
successor, by contract or otherwise, for any Taxes of any person (including
without limitation any affiliated, combined or unitary group of corporations or
other entities that included the Sellers or any Business Subsidiary during a
prior Taxable period) for Taxable periods with respect to which the statute of
limitations has not expired, other than a group the common parent of which is
the Seller Parent, or (ii) is a party to, bound by or obligated under any Tax
allocation, Tax sharing, Tax indemnity or similar agreement.
(d) The Sellers have delivered or made available to SkillSoft PLC
complete and correct copies of all Tax Returns for any Income Taxes of each
Business Subsidiary for all Taxable periods beginning on or after January 1,
2003 and with respect to each Business Subsidiary, to the extent it has a
material effect on any Taxable period or portion thereof of any
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Business Subsidiary, complete and correct copies of all private letter rulings,
revenue agent reports, information document requests, notices of assessment,
notices of proposed deficiencies, deficiency notices, protests, petitions,
closing agreements, settlement agreements, pending ruling requests and any
similar documents submitted by, received by or agreed to by or on behalf of any
Business Subsidiary, or, to the extent related to the income, business, assets,
operations, activities or status of any Business Subsidiary, submitted by,
received by or agreed to by or on behalf of any such entity or member of an
Affiliated Group (which includes a Business Subsidiary), and relating to Taxes
for all Taxable periods for which the applicable statute of limitations has not
yet expired. No examination or audit of any Tax Return of any Business
Subsidiary or, to the extent relating to the Business, any Seller or any other
member of an Affiliated Group by any Governmental Entity is currently in
progress or, to the Knowledge of the Sellers, threatened or contemplated. No
Seller and no Business Subsidiary or any other member of an Affiliated Group has
been informed in writing by any jurisdiction that the jurisdiction believes that
any Business Subsidiary or, to the extent relating to the Business, any Seller
or any other member of an Affiliated Group was required to file any Tax Return
that was not filed. To the Knowledge of the Sellers, there is no basis upon
which a Tax deficiency or assessment could reasonably be expected to be asserted
against any Seller relating to the Business or any Business Subsidiary.
(e) No Business Subsidiary and, to the extent relating to the
Business, no Seller and no other member of an Affiliated Group has (i) waived
any statute of limitations with respect to Taxes or agreed to extend the period
for assessment or collection of any Taxes, (ii) requested any extension of time
within which to file any Tax Return, which Tax Return has not yet been filed, or
(iii) executed or filed any power of attorney relating to Taxes with any
Governmental Entity.
(f) No Business Subsidiary and, to the extent relating to the
Business, no Seller is a party to any Tax litigation. No Business Subsidiary
and, to the extent relating to the Business, no Seller is or has ever been a
party to any transaction or agreement that is in conflict with the Tax rules on
transfer pricing in any relevant jurisdiction. No Business Subsidiary is a party
to any understanding or arrangement described in Section 6662(d)(2)(C)(ii) of
the Code or Section 1.6011-4(b) of the Regulations or is a material advisor as
defined in Section 6111(b) of the Code or, if applicable, comparable provisions
under state or foreign law.
(g) There are no liens or other encumbrances with respect to Taxes
upon any of the Acquired Assets or the assets or properties of any Business
Subsidiary, other than with respect to Taxes not yet due and payable, and there
is no basis for the assertion of any claim relating or attributable to Taxes,
which, if adversely determined, would result in any lien or encumbrance on the
Acquired Assets or the assets of any Business Subsidiary.
(h) No Business Subsidiary has been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(l)(A)(ii) of the Code.
(i) No Business Subsidiary will be required to include any item of
income in, or exclude any item of deduction from, Taxable income for any Taxable
period (or portion thereof) ending after the Closing Date as a result of any (i)
change in method of accounting for a
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Taxable period ending on or prior to the Closing Date (or as a result of the
transactions contemplated by this Agreement) under Section 481 of the Code (or
any corresponding or similar provision of federal, state, local or foreign Tax
law); (ii) "closing agreement" as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign Tax law) executed
on or prior to the Closing Date; (iii) deferred intercompany gain or any excess
loss account described in Treasury Regulations under Section 1502 of the Code
(or any corresponding or similar provision of state, local or foreign Tax law);
(iv) installment sale or open transaction disposition made on or prior to the
Closing Date; or (v) prepaid amount received on or prior to the Closing Date.
Each Business Subsidiary currently utilizes the accrual method of accounting for
Income Tax purposes and such method of accounting has not changed in the past
five (5) years.
(j) No Seller and no Business Subsidiary has participated in or
cooperated with an international boycott within the meaning of Section 999 of
the Code.
(k) Section 2.9(k) of the Disclosure Schedule sets forth each
jurisdiction (other than United States federal) in which any Seller or any
Business Subsidiary files, or is required to file or has been required to file a
Tax Return.
(l) No Business Subsidiary owns any interest in an entity that is
characterized as a partnership for federal Income Tax purposes.
2.10 Ownership and Condition of Assets.
(a) Except for any additions, removals or modifications of assets
made in the Ordinary Course of Business after the date hereof, each Asset Seller
is the true and lawful owner, and has good title to, or is the lessee under a
valid lease of, all of the Acquired Assets purported to be owned by it, free and
clear of all Security Interests. Each Business Subsidiary is the true and lawful
owner, and has good title to, all material assets purported to be owned by it,
free and clear of all Security Interests. Upon execution and delivery by the
Asset Sellers to the Buyers of the instruments of conveyance referred to in
Section 1.5(b) and except to the extent that any consents set forth in Section
2.4 of the Disclosure Schedule are not obtained, the Buyers will receive good
title to the Acquired Assets, free and clear of all Security Interests except
for such Security Interests as may result in connection with the financing
contemplated by Section 4.8.
(b) The tangible assets owned by or leased to the Business
Subsidiaries, together with the Acquired Assets, will be sufficient for the
conduct of the Business as presently conducted and, except for (i) any
additions, removals or modifications of assets in the Ordinary Course of
Business, (ii) the Excluded Assets and (iii) the assets used in connection with
the services to be provided pursuant to the Ancillary Agreements, will
constitute all the tangible assets used primarily or exclusively by the Sellers
and the Business Subsidiaries in the Business. Each material tangible asset used
primarily or exclusively in the Business is free from material defects, has been
maintained in all material respects in accordance with normal industry practice,
is in good operating condition and repair (subject to normal wear and tear) and
is suitable for the purposes for which it presently is used.
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(c) Except (x) for the Excluded Assets, (y) for the Intellectual
Property covered by, and the assets used in connection with, and the services to
be provided pursuant to, the Ancillary Agreements and (z) to the extent that any
consents set forth in Section 2.4 of the Disclosure Schedule are not obtained:
(i) after the Closing, all of the material assets,
properties and rights of every type and description, real, personal and
tangible, used or held for use primarily or exclusively in the conduct of the
Business will be owned by, or leased or licensed by third parties to the Buyers
or a Business Subsidiary; and
(ii) after the Closing, no Seller or any other Affiliate of
any Seller will have any ownership, license or similar interest in or to any of
the assets, properties or rights of any type and description, real, personal and
tangible, used primarily or exclusively in the conduct of the Business.
Notwithstanding anything herein to the contrary, this Section 2.10(c) shall not
apply to Company Intellectual Property, which shall instead be governed by the
provisions set forth in Section 2.13.
2.11 Owned Real Property. No Asset Seller and no Business Subsidiary owns
any real property used primarily or exclusively in connection with the operation
of the Business.
2.12 Real Property Leases. Section 2.12 of the Disclosure Schedule lists
all Leases of any Business Subsidiary or included in the Acquired Assets and the
annual rent and operating expenses (or rates and services, as the case may be)
payable thereunder, in each case as in effect as of the date hereof. The Sellers
have made available to SkillSoft PLC complete and accurate copies of such Leases
in effect as of the date hereof. Except as would not adversely affect in any
material respect the ability of the Asset Sellers and the Business Subsidiaries
to conduct the Business as it is currently conducted, to the extent that any
consents set forth in Section 2.4 of the Disclosure Schedule are not obtained or
as described in Section 2.12 of the Disclosure Schedule, with respect to each
such Lease:
(a) such Lease is legal, valid, binding, enforceable and in full
force and effect;
(b) such Lease will continue to be legal, valid, binding,
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the Closing;
(c) no Seller nor any Business Subsidiary or, to the Knowledge of
the Sellers, any other party is in breach or violation of, or default under, any
such Lease, and no event has occurred, is pending or, to the Knowledge of the
Sellers, is threatened which, after the giving of notice, with lapse of time or
otherwise, would constitute a breach or default by any Seller or any Business
Subsidiary or, to the Knowledge of the Sellers, any other party under such
Lease;
(d) no Seller nor any Business Subsidiary has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in
the leasehold or subleasehold;
(e) no Seller is aware of any Security Interest, easement,
covenant or other restriction applicable to the real property subject to such
lease which would reasonably be
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expected to materially impair the current uses or the occupancy by any Business
Subsidiary, or, with respect to the Business, any Seller, of the property
subject thereto; and
(f) each leased or subleased facility is in such condition that,
upon the expiration of the lease or sublease, as the case may be, and without
giving effect to any conditions created or changes made on or after the Closing
Date, the Buyers or the applicable Business Subsidiary will not be obligated to
make any alterations or improvements to such facility in excess of $100,000 in
the aggregate for such facility and the obligations of the Buyers or such
Business Subsidiary relating to the condition of such premises will have been
discharged in full.
2.13 Intellectual Property.
(a) Company Registrations. Section 2.13(a) of the Disclosure
Schedule lists all Company Registrations (except with respect to copyrights and
applications therefor), in each case enumerating specifically the applicable
filing or registration number, title, jurisdiction in which filing was made or
from which registration issued, date of filing or issuance, and names of all
current applicant(s) and registered owners(s), as applicable. To the Knowledge
of the Sellers, all Company Registrations are valid and enforceable.
(b) Ownership; Sufficiency. To the Knowledge of the Sellers, after
the Closing, each item of Company Intellectual Property will be owned or
available for use by the Buyers or the relevant Business Subsidiary immediately
following the Closing on substantially identical terms and conditions as it was
immediately prior to the Closing. After the Closing, the Buyers or a Business
Subsidiary will be the sole and exclusive owner of all Company Owned
Intellectual Property, free and clear of any Security Interests. The Company
Intellectual Property constitutes all Intellectual Property used in the Ordinary
Course of Business.
(c) Protection Measures. Except as would not, individually or in
the aggregate, have a Business Material Adverse Effect, the Sellers and each
Business Subsidiary have taken reasonable measures in accordance with normal
industry practice to maintain in confidence all material trade secrets and
confidential information comprising a part of the Company Owned Intellectual
Property. To the Knowledge of the Sellers, there has been no: (i) unauthorized
disclosure of any material third party proprietary or confidential information
in the possession, custody or control of the Sellers or any Business Subsidiary
or (ii) material breach of any Seller's or any Business Subsidiary's security
procedures wherein confidential information has been disclosed without
authorization to a third person. Except as would not, individually or in the
aggregate, have a Business Material Adverse Effect, each Seller and each
Business Subsidiary has taken commercially reasonable measures to monitor the
quality of goods and services sold, licensed, distributed or marketed under each
of its Trademarks that are licensed to third parties.
(d) Infringement by the Business. The operation of the Business as
currently conducted does not infringe or violate, or constitute misappropriation
of, any Intellectual Property rights in the form of trade secrets or copyrights
of any third party in any material respect. The operation of the Business as
currently conducted does not, to the Knowledge of the Sellers, infringe or
violate any patents or trademarks of any third party in any material respect.
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Section 2.13(d) of the Disclosure Schedule lists any written complaint, claim,
notice, or threat of any of the foregoing (including any written notification
that a license under any patent is or may be required), received by any Seller
or any Business Subsidiary alleging any such infringement, violation or
misappropriation.
(e) Infringement of Company Rights. To the Knowledge of the
Sellers, no person is infringing, violating or misappropriating any of the
Company Owned Intellectual Property or any Company Licensed Intellectual
Property which is exclusively licensed to any Seller or any Business Subsidiary.
(f) Outbound IP Agreements. Except for those licenses granted to
customers and end users in the Ordinary Course of Business and except for
non-disclosure agreements entered into in the Ordinary Course of Business with
terms consistent with non-disclosure agreements typically used by similar
companies, Section 2.13(f) of the Disclosure Schedule identifies each license,
covenant or other agreement pursuant to which any Seller or any Business
Subsidiary has assigned, transferred, licensed, distributed or otherwise granted
any right to any person, or covenanted not to assert any right, with respect to
any existing or future Company Intellectual Property. Each Seller and each
Business Subsidiary has in the Ordinary Course of Business agreed to indemnify
its end users and customers against any infringement, violation or
misappropriation of any Intellectual Property rights with respect to any
Customer Offerings; however, no Seller nor any Business Subsidiary has received
any written request or demand for indemnification from such end users and
customers or from any other third party within the past three (3) years.
(g) Inbound IP Agreements. Section 2.13(g) of the Disclosure
Schedule identifies each license or other agreement pursuant to which any Seller
or any Business Subsidiary has obtained from a third party a license in, to or
under any Company Licensed Intellectual Property (excluding licenses of
commercial off the shelf software programs that are licensed to the Seller or
any Seller Subsidiary pursuant to "shrink wrap" licenses). To the Knowledge of
the Sellers, there are no agreements or contracts with third parties (other than
agreements with employees entered into in the Ordinary Course of Business),
under which any Seller or any Business Subsidiary acquired any Company Owned
Intellectual Property, requiring any Seller or any Business Subsidiary to make
payments after the date of the Closing to such third parties in respect of any
Company Owned Intellectual Property or which impose any other material
obligations after the date of the Closing with respect to any Company Owned
Intellectual Property.
(h) Source Code. Except as would not have a Business Material
Adverse Effect, and to the Knowledge of the Sellers, none of the Sellers nor any
Business Subsidiary has licensed, distributed or disclosed, and there has been
no distribution or disclosure by others of, the material Company Source Code
included in the Company Owned Intellectual Property to any person, except
pursuant to the agreements listed in Section 2.13(h) of the Disclosure Schedule,
and each Seller and each Business Subsidiary has taken reasonable physical and
electronic security measures in accordance with normal industry practice to
prevent the unauthorized disclosure of such material Company Source Code.
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(i) Open Source Code. Section 2.13(i) of the Disclosure Schedule
lists all Open Source Materials that, to the Knowledge of the Sellers, any
Seller or any Business Subsidiary has utilized in any material Customer
Offerings distributed by any Seller or any Business Subsidiary or in conjunction
with any other software developed and distributed by any Seller in connection
with the Business.
(j) Employee and Contractor Assignments. Each employee and each
independent contractor of XxxxxxxxxXxx.xxx, Inc. that contributed to the
development of the Monsoon Platform and the XxxxxxxxxXxx.xxx, Inc. technology
executed a proprietary and invention assignment agreement. To the Knowledge of
the Sellers, TGR exclusively owns all right, title and interest in and to the
Monsoon Platform.
(k) Quality. Except as would not, individually or in the
aggregate, have a Business Material Adverse Effect, to the Knowledge of the
Sellers, the Customer Offerings and the Internal Systems (i) are free from
significant defects in design, workmanship and materials and conform in all
material respects to the written Documentation, if any, and specifications
therefor, and (ii) do not contain any disabling device, virus, worm, back door,
Trojan horse or other disruptive or malicious code that is intended to impair
their intended performance or otherwise permit unauthorized access to, hamper,
delete or damage any computer system, software, network or data.
(l) Support and Funding. No Seller and no Business Subsidiary has
received any support, funding, resources or assistance from any federal, state,
local or foreign governmental or quasi-governmental agency in connection with
the development of the Customer Offerings or the Internal Systems or any
facilities or equipment used in connection therewith.
2.14 Contracts.
(a) Section 2.14 of the Disclosure Schedule lists the following
agreements in effect as of the date hereof to which any Seller or any Business
Subsidiary is a party and which relate primarily or exclusively to the Business
as of the date of this Agreement (such agreements being the "Material
Contracts"):
(i) any agreement (or group of related agreements) for the
lease of personal property from or to third parties providing for remaining
lease payments in excess of $200,000 during the current term of such agreement;
(ii) any agreement (or group of related agreements) for the
purchase of products or the receipt of services which involves the remaining
payment of more than $200,000 during the current term of such agreement;
(iii) any agreement (or group of related agreements) for the
sale of products or for the furnishing of services (A) with a customer of the
Business from which more than $150,000 is expected to be received between June
30, 2006 and the end of the current term of such agreement, (B) with a customer
of the Business from which more than $150,000 is expected to be received between
June 30, 2006 and the end of the current term of such agreement in which any
Seller or any Business Subsidiary has granted to such customer "most favored
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nation" pricing provisions or marketing or distribution rights relating to any
products or territory or (C) under which any Seller or a Business Subsidiary is
obligated to provide custom designed products or services for a customer of the
type included or to be included in the line item for Custom Services on the
Business's profit and loss statement as of the Balance Sheet Date and from which
more than $50,000 is expected to be received between the Balance Sheet Date and
the end of the current term of such agreement;
(iv) any agreement concerning the establishment or operation
of a partnership, joint venture or limited liability company;
(v) any agreement where a Governmental Entity has provided a
Tax or other credit, made a grant, funded operations or otherwise provided an
economic benefit under which any Seller or any Business Subsidiary may be
obligated to refund all or a portion of such benefit in the event the Business
does not satisfy certain performance criteria;
(vi) any agreement (or group of related agreements) under
which any Seller or any Business Subsidiary has created, incurred, assumed or
guaranteed (or may create, incur, assume or guarantee) indebtedness (including
capitalized lease obligations) involving more than $200,000 or under which any
Seller or any Business Subsidiary has imposed (or may impose) a Security
Interest on any of its assets, tangible or intangible;
(vii) any agreement for the disposition of any significant
portion of the assets or business of any Seller or any Business Subsidiary
(other than sales of products in the Ordinary Course of Business) or any
agreement for the acquisition of the assets or business of any other entity
(other than purchases of inventory or components in the Ordinary Course of
Business);
(viii) any agreement under which any Seller or any Business
Subsidiary is restricted from selling, licensing or otherwise distributing any
of its technology or products, or providing services to, customers or potential
customers or any class of customers, in any geographic area, during any period
of time or any segment of the market or line of business;
(ix) any agreement under which a third party would be
entitled to receive a license or any other right to any Buyer Intellectual
Property as a result of the consummation of the transactions contemplated by
this Agreement;
(x) any employment or consulting agreement;
(xi) any agreement involving any current or former officer,
director or stockholder of any Seller, any Business Subsidiary or an Affiliate
thereof;
(xii) any agreement under which Company Source Code has been
placed in escrow by any Seller or any Business Subsidiary; and
(xiii) any other agreement (or group of related agreements)
involving more than $200,000 in remaining receipts or payments during the
current term of such agreement, and not entered into in the Ordinary Course of
Business.
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(b) The Sellers have made available to SkillSoft PLC or its
advisors a complete and accurate copy of each agreement listed in Section 2.13
or Section 2.14 of the Disclosure Schedule. Except as disclosed in Section
2.14(b) of the Disclosure Schedule, with respect to each agreement so listed:
the agreement (i) is legal, valid and binding on the Asset Seller or the
Business Subsidiary that is party thereto and, to the Knowledge of the Sellers,
the counterparties thereto and is enforceable and in full force and effect, and
(ii) upon consummation of the transactions contemplated by this Agreement,
except to the extent that any consents set forth in Section 2.4(b) of the
Disclosure Schedule are not obtained, shall continue in full force and effect
without penalty or other adverse consequence. Except as disclosed in Section
2.14(b) of the Disclosure Schedule, neither any Seller nor any Business
Subsidiary is in breach of, or default under, any Material Contract to which it
is a party, except for such breaches or defaults that would not have a Business
Material Adverse Effect and no event has occurred, is pending, or, to the
Knowledge of the Sellers, is threatened which, after the giving of notice, with
lapse of time, or otherwise, would constitute a breach or default by any Seller
or any Business Subsidiary or, to the Knowledge of the Sellers, any other party
under such agreement.
2.15 Litigation. Except as set forth in Section 2.15 of the Disclosure
Schedule and except for collection matters in the Ordinary Course of Business,
as of the date hereof, there is no material Legal Proceeding that is pending by
or against any Seller or any Business Subsidiary, or, to the Knowledge of the
Sellers, has been threatened with respect to the Business, and there are no
outstanding judgments, orders or decrees outstanding with respect to the
Business against any Seller or any Business Subsidiary.
2.16 Employees.
(a) Section 2.16 of the Disclosure Schedule contains a list of all
Business Employees identified only by employee number as of the date hereof,
along with the position, regional (except for sales employees) location and the
annual rate of compensation (base salary plus bonus) of each such person, in
each case in effect as of the date hereof. Except as set forth in Section
2.16(a) of the Disclosure Schedule, each current Business Employee who (i)
performs a product development or human resources function, or (ii) performs a
finance function and has an rate of annual pay (base salary and bonus) in excess
of $70,000 has entered into a confidentiality agreement with a Seller or a
Business Subsidiary, a copy or form of which has previously been made available
to SkillSoft PLC. Section 2.16 of the Disclosure Schedule contains a list of all
Business Employees as of the date hereof who are a party to a non-competition
agreement with a Seller or any Business Subsidiary; a copy or form of such
agreement has previously been made available to SkillSoft PLC. Section 2.16 of
the Disclosure Schedule contains a list of all Business Employees as of the date
hereof whose employment is based in the United States who are not citizens of
the United States.
(b) No Seller and no Business Subsidiary is a party to or bound by
any collective bargaining agreement, nor have any of them experienced any
strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes within the past two years. To the Knowledge of the Sellers,
no organizational effort has been made or threatened, either currently or within
the past two years, by or on behalf of any labor union with respect to the
Business Employees.
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(c) The Asset Sellers, with respect to the Business, and the
Business Subsidiaries are in compliance with all applicable laws relating to the
hiring and employment of employees.
2.17 Employee Benefits.
(a) Section 2.17(a) of the Disclosure Schedule contains a complete
and accurate list of all material Business Benefit Plans. Complete and accurate
copies of (i) all Business Benefit Plans which have been reduced to writing,
(ii) written summaries of all unwritten Business Benefit Plans, (iii) all trust
agreements, insurance contracts and summary plan descriptions related to any
Business Benefit Plans, (iv) all descriptions of Business Benefit Plans offering
equity securities of a Seller and related prospectuses, (v) in the case of a
Business Benefit Plan qualified under Code Section 401(a), a copy of the most
recent IRS determination letter for such plan, (vi) the two most recent annual
reports filed on IRS Form 5500, 5500C or 5500R, for each Business Benefit Plan,
if any, together with all attachments and (vii) all plan financial statements,
if any, for the last three plan years for which they are available for each
Business Benefit Plan, have been made available to SkillSoft PLC.
(b) Each Business Benefit Plan has been administered in all
material respects in accordance with its terms, and each Seller, each Business
Subsidiary and each ERISA Affiliate has in all material respects met its
obligations with respect to each Business Benefit Plan and has made all required
premium payments or contributions thereto. Each Business Benefit Plan is in
compliance in all material respects with applicable law, including the
provisions of ERISA and the Code and the regulations thereunder (including
Section 4980 B of the Code, Subtitle K, Chapter 100 of the Code and Sections 601
through 608 and Section 701 ET SEQ. of ERISA). Except as would not result in
material liability to the Buyers or any of the Business Subsidiaries, all
filings and reports as to each Business Benefit Plan required to have been
submitted to the Internal Revenue Service, to the United States Department of
Labor, to the PBGC or any other regulatory agency have been timely submitted.
Except as set forth in Section 2.17(b) of the Disclosure Schedule, no Business
Benefit Plan that includes an arrangement described in Section 401(k)(2) of the
Code has assets that include securities issued by any Seller, any Business
Subsidiary or any ERISA Affiliate or any other assets that cannot be readily
liquidated at fair market value without adjustment, penalty or charge under the
terms of the investment. The assets of each such Business Benefit Plan are
reported at their fair market value on the books and records of such plan as of
the date of determination indicated thereon.
(c) There are no pending or, to the Knowledge of the Sellers,
threatened Legal Proceedings (except claims for benefits payable in the normal
operation of the Business Benefit Plans and proceedings with respect to
qualified domestic relations orders) against or involving any Business Benefit
Plan or asserting any rights or claims to benefits under any Business Benefit
Plan that would reasonably be expected to give rise to any material liability
for the Business or any Business Subsidiary, and there are no audits involving
any Business Benefit Plan by any Governmental Entity in progress, or for which
notice has been received, or which has been concluded and resulted in any
finding of a breach of fiduciary duty or any material liability for any Asset
Seller or any Business Subsidiary.
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(d) All the Business Benefit Plans that are intended to be
qualified under Section 401(a) of the Code have received determination letters
from the Internal Revenue Service to the effect that such Business Benefit Plans
are so qualified and are exempt from federal Income Taxes under Section 401(a)
of the Code. Except as set forth in Section 2.17(d) of the Disclosure Schedule,
no such determination letter has been revoked, and, to the Knowledge of the
Sellers, revocation has not been threatened, and no such Business Benefit Plan
has been amended since the date of its most recent determination letter or
application therefor in any respect, and no act or omission has occurred, in
each case, that would adversely affect its qualification. Except as set forth in
Section 2.17(d) of the Disclosure Schedule, no such Business Benefit Plan has
experienced a termination or partial termination in the past six years. Each
Business Benefit Plan that is required to satisfy Section 401(k)(3) or Section
401(m)(2) of the Code has been tested for compliance with, and satisfies the
requirements of, such section for each plan year ending prior to the Closing
Date, and each such Business Benefit Plan that provides for compliance with
Section 404(c) of ERISA, or is intended to comply with such provision, so
complies.
(e) Except as set forth in Section 2.17(e) of the Disclosure
Schedule, no Seller, no Business Subsidiary and no ERISA Affiliate maintains or
has maintained in the past six years an Employee Benefit Plan subject to Section
412 of the Code or Title IV of ERISA.
(f) Except as set forth in Section 2.17(f) of the Disclosure
Schedule, at no time in the past six years has any Seller, any Business
Subsidiary or any ERISA Affiliate been obligated to contribute to any
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA).
(g) Except as set forth in Section 2.17(g) of the Disclosure
Schedule, there are no obligations under any Business Benefit Plan providing
benefits after termination of employment to any Business Employee (or to any
beneficiary of any such employee), including, but not limited to, retiree health
coverage and deferred compensation, but excluding (i) continuation of health
coverage required to be continued under COBRA, but only to the extent such
continuation coverage is provided solely at the participant's expense, or (ii)
obligations under a Business Benefit Plan intended to be qualified under Code
Section 401(a).
(h) No act or omission has occurred and no condition exists with
respect to any Business Benefit Plan that would subject any Asset Seller, any
Business Subsidiary or Buyer to (i) any material fine, penalty, tax or liability
of any kind imposed under ERISA or the Code or (ii) any contractual
indemnification or contribution obligation protecting any fiduciary, insurer or
service provider with respect to any Business Benefit Plan, nor will any of the
transactions contemplated by this agreement give rise to such an obligation.
(i) No Business Benefit Plan is funded by, associated with or
related to a "voluntary employees' beneficiary association" with the meaning of
Section 501(c)(9) of the Code.
(j) Except as set forth in Section 2.17(j) of the Disclosure
Schedule, each Business Benefit Plan in which any Business Employee will be
eligible to participate following
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the transactions contemplated by this Agreement may be amended or terminated, at
any time, without participant consent and without liability or expense to the
Buyers, any Business Subsidiary or such Business Benefit Plan as a result
thereof (other than for benefits accrued through the date of amendment or
termination and reasonable administrative expenses related thereto), and no such
Business Benefit Plan (nor any plan documentation or agreement or summary plan
description or other written communication distributed generally to employees
with respect thereto) by its terms prohibits the amendment or termination
thereof.
(k) Except as set forth in Section 2.17(k) of the Disclosure
Schedule, there is no agreement with any key Business Employee (i) the benefits
of which are contingent, or the terms of which are altered, upon the occurrence
of the transactions contemplated by this Agreement or (ii) providing any term of
employment or compensation guarantee. There is no agreement or plan binding any
Seller or any Business Subsidiary, including any stock option plan, stock
appreciation right plan, restricted stock plan, stock purchase plan, severance
benefit plan or Business Benefit Plan with or for the benefit of any such
Business Employee, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
(l) Except as set forth in Section 2.17(l) of the Disclosure
Schedule, there are no outstanding loans from any Asset Seller or any Business
Subsidiary to any Business Employee. No Business Benefit Plan is a split-dollar
life insurance program or otherwise provides for loans to any Business Employee
in violation of the prohibition on personal loans under Section 13(k) of the
Securities Exchange Act of 1934, as amended.
(m) Except as set forth in Section 2.17(m) of the Disclosure
Schedule, each Asset Seller and each Business Subsidiary has at all times in the
past six years and in all material respects properly classified each Business
Employee as an employee and each independent contractor or leased employee of
the Business as an independent contractor or employee of the lessor, as
applicable, and no claim has been made, and, to the Knowledge of the Sellers, no
indication has been received from any Governmental Entity that such independent
contractors or leased employees would be considered employees of any Asset
Seller or any Business Subsidiary for employment law or Tax purposes at any
time.
2.18 Environmental Matters.
(a) Except as set forth in Section 2.18 of the Disclosure
Schedule, each Asset Seller and each Business Subsidiary are, with respect to
the Business, in material compliance with all applicable Environmental Laws.
There is, with respect to the Business, no pending or, to the Knowledge of the
Sellers, threatened civil or criminal litigation, written notice of violation,
formal administrative proceeding, or written inquiry or information request by
any Governmental Entity, relating to any Environmental Law involving any Seller
or any Business Subsidiary, in each case, with respect to the Business.
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(b) No Asset Seller and no Business Subsidiary has, with respect
to the Business, any liabilities or obligations arising from the release of any
Materials of Environmental Concern into the environment.
(c) No Asset Seller and no Business Subsidiary is, with respect to
the Business, a party to or bound by any court order, administrative order,
consent order or other agreement with any Governmental Entity entered into in
connection with any legal obligation or liability arising under any
Environmental Law.
(d) To the Knowledge of the Sellers, there is no environmental
liability of any solid or hazardous waste transporter or treatment, storage or
disposal facility that has been used by any Seller or any Business Subsidiary,
in each case, in connection with the Business. (e) The representations in this
Section 2.18 constitute the sole and exclusive representations and warranties
concerning Environmental Laws, environmental permits, or Materials of
Environmental Concern.
2.19 Legal Compliance. Except as set forth in Section 2.19 of the
Disclosure Schedule, each Seller and each Business Subsidiary is currently
conducting, and has at all times since January 1, 2003 conducted, the Business
in material compliance with each applicable law (including rules and regulations
thereunder) of any federal, state, local or foreign government, or any
Governmental Entity. No Seller nor any Business Subsidiary has received any
notice or communication from any Governmental Entity alleging noncompliance by
the Business with any applicable law, rule or regulation.
2.20 Permits. Section 2.20 of the Disclosure Schedule sets forth a list
of all material Permits issued to or held by any Asset Seller or any Business
Subsidiary with respect to the Business. Such listed Permits are the only
material Permits that are required to conduct the Business as presently
conducted. Each such Permit is in full force and effect; each of the Asset
Sellers and the Business Subsidiaries is in compliance with the terms of each
such Permit; and, to the Knowledge of the Sellers, no suspension or cancellation
of such Permit is threatened.
2.21 Certain Business Relationships With Affiliates. Except as set forth
in Section 2.21 of the Disclosure Schedule, no Affiliate of any Seller or any
Business Subsidiary (other than a Seller or a Business Subsidiary) (a) owns any
material property or right, tangible or intangible, which is used in the
Business, (b) has any claim or cause of action against any Asset Seller or any
Business Subsidiary with respect to the Business, or (c) owes any money to, or
is owed any money by, any Asset Seller or any Business Subsidiary with respect
to the Business. Section 2.21 of the Disclosure Schedule describes any
agreements or arrangements relating to the Business between any Asset Seller or
any Business Subsidiary, on the one hand, and any Affiliate of any Seller or
Business Subsidiary (other than a Seller or a Business Subsidiary), on the other
hand, which is in effect as of the date hereof.
2.22 Brokers' Fees. The Business Subsidiaries do not, and, with respect
to the Acquired Assets, the Asset Sellers do not, have any liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.
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2.23 Inventory. All inventory of the Business, whether or not reflected
on the Most Recent Balance Sheet, consists of a quality and quantity usable and
saleable in the Ordinary Course of Business, except for obsolete items and items
of below-standard quality, all of which have been reserved, written off or
written down to net realizable value on the Most Recent Balance Sheet.
2.24 Accounts Receivable. All accounts receivable of the Business
reflected on the Most Recent Balance Sheet (other than those paid since such
date and other than the Course ILT Receivables) are valid receivables subject to
no setoffs or counterclaims, net of the applicable reserve for bad debts on the
Most Recent Balance Sheet. A complete and accurate list of the accounts
receivable outstanding as of June 30, 2006, showing the aging thereof as of such
date, is included in Section 2.24 of the Disclosure Schedule. All accounts
receivable of the Business that have arisen since the Balance Sheet Date are
valid receivables subject to no setoffs or counterclaims.
2.25 Insurance. Section 2.25 of the Disclosure Schedule lists each
insurance policy in effect as of the date hereof (including fire, theft,
casualty, commercial general liability, workers compensation, business
interruption, environmental, product liability and automobile insurance policies
and bond and surety arrangements) relating to the Business to which any Seller
or any Business Subsidiary is a party, all of which are in full force and effect
and all claims filed by any Seller or any Business Subsidiary with respect to
the Business during the three (3) years prior to the date hereof. There is no
material claim relating to the Business pending under any such policy as to
which coverage has been questioned, denied or disputed by the underwriter of
such policy. All premiums due and payable under all such policies have been
paid, and each Seller and each Business Subsidiary is otherwise in compliance in
all material respects with the terms of such policies. There are no insurance
policies held exclusively by any Business Subsidiary.
2.26 Warranties. No product or service sold, leased, licensed or
delivered by the Business is subject to any Warranty Obligations other than any
Warranty Obligations provided in the Ordinary Course of Business. During the
fiscal year ended December 31, 2005, no product or service sold, leased,
licensed or delivered by the Business was subject to any claims by customers of
the Business with respect to a Warranty Obligation other than any Warranty
Obligations (a) to any one such customer that were not in excess of $25,000 or
(b) in the aggregate that were not in excess of $250,000. As of the Balance
Sheet Date, there are no outstanding claims by customers of the Business with
respect to Warranty Obligations (a) to any one such customer that were in excess
of $25,000 or (b) in the aggregate that were in excess of $250,000.
2.27 Customers. Section 2.27 of the Disclosure Schedule sets forth a list
of (a) each customer that accounted for more than 1% of the consolidated
revenues of the Business during the fiscal year ended December 31, 2005 and the
amount of revenues accounted for by such customer during each such period. No
such customer has indicated in writing within the past year that it will stop
buying products of the Business.
2.28 Powers of Attorney. Except as set forth in Section 2.28 of the
Disclosure Schedule, there are no outstanding powers of attorney relating to the
Business executed on behalf of any Asset Seller or any Business Subsidiary.
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2.29 Books and Records. The minute books and other similar records of
each Seller and each Business Subsidiary with respect to the Business contain
complete and accurate records of all actions taken at any meetings of the
Sellers' or any Business Subsidiary's stockholders, Board of Directors or any
committee thereof and of all written consents executed in lieu of the holding of
any such meeting.
2.30 Investment Representation.
(a) Each Seller that is acquiring any Buyer ADSs is acquiring the
Buyer ADSs for its own account for investment only, and not with a view to, or
for sale in connection with, any distribution of the Buyer ADSs in violation of
the Securities Act, or any rule or regulation under the Securities Act.
(b) Thomson Learning has had adequate opportunity to obtain from
publicly available sources such information about SkillSoft PLC as is necessary
for the Seller to evaluate the merits and risks of Seller's investment in
SkillSoft PLC.
(c) Thomson Learning is an "accredited investor" as defined in
Rule 501(a) of the Securities Act, and each Seller that is acquiring any Buyer
ADSs has sufficient expertise in business, financial and investment matters to
be able to evaluate the risks involved in the acquisition of the Buyer ADSs and
to make an informed investment decision with respect to such investment. Each
such Seller is capable of bearing the economic risk of the Seller's investment
in the Buyer ADSs indefinitely.
(d) Each Seller that is acquiring any Buyer ADSs understands that
the Buyer ADSs have not been registered under the Securities Act and are
"restricted securities" within the meaning of Rule 144 under the Securities Act;
and the Buyer ADSs cannot be sold, transferred or otherwise disposed of unless
they are subsequently registered under the Securities Act or an exemption from
registration is then available.
(e) Each Seller that is acquiring any Buyer ADSs agrees that a
legend substantially in the following form will be placed on the Buyer ADRs
representing the Buyer ADSs:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and may not be sold, transferred or
otherwise disposed of in the absence of an effective registration statement
under such Act or an exemption therefrom."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SKILLSOFT PLC
SkillSoft PLC represents and warrants to the Sellers as follows:
3.1 Organization, Qualification and Corporate Power. SkillSoft PLC is a
public limited liability company, incorporated and validly existing under the
laws of the Republic of Ireland. SkillSoft Inc. is a corporation duly organized,
validly existing and in good standing under the laws of the state of Delaware.
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3.2 Authorization of Transaction. Each of the Buyers has all requisite
power and authority to execute and deliver this Agreement and the Ancillary
Agreements to which it will be a party and to perform its obligations hereunder
and thereunder. The execution and delivery by each Buyer of this Agreement and
the Ancillary Agreements to which it will be a party and the consummation by the
Buyers of the transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action on the part of each Buyer.
No approval of SkillSoft PLC's shareholders is required to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements or to
secure the necessary financing to consummate the transactions contemplated by
this Agreement and the Ancillary Agreements. This Agreement has been duly and
validly executed and delivered by each Buyer and constitutes, and each of the
Ancillary Agreements, upon its execution and delivery by the applicable Seller
will constitute, a valid and binding obligation of each Buyer enforceable
against such Buyer in accordance with its terms.
3.3 Noncontravention.
(a) Except (i) as set forth in Section 3.3 of the Disclosure
Schedule, (ii) for the premerger notification and waiting period requirements of
the Xxxx-Xxxxx-Xxxxxx Act, or (iii) as may be necessary as a result of any facts
or circumstances relating solely to the Sellers or any of their Affiliates,
neither the execution and delivery by the Buyers of this Agreement or the
Ancillary Agreements to which the Buyers will be a party, nor the consummation
by the Buyers of the transactions contemplated hereby or thereby, will require
on the part of the Buyers any notice to or filing with, or any permit,
authorization, consent or approval of, any Governmental Entity.
(b) Assuming that all consents, approvals, authorizations and
other actions described in Section 3.3(a) have been obtained, all filings and
notifications listed in Section 3.3(a) of the Disclosure Schedule have been made
and any applicable waiting period has expired or been terminated, and except as
may result from any facts or circumstances relating solely to the Sellers, the
execution, delivery and performance of this Agreement and the Ancillary
Agreements by the Buyers do not and will not (a) conflict with or violate any
provision of the Buyer Charter Documents or by-laws of SkillSoft Inc., (b)
conflict with, result in a breach of, or constitute a default under, any
contract or instrument to which any Buyer is a party or by which any Buyer is
bound or to which any of its assets is subject, (c) result in the imposition of
any Security Interest upon any assets of any Buyer or (d) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to any Buyer or
any of its properties or assets.
3.4 Turnover in Ireland. The turnover of SkillSoft PLC and its
subsidiaries from sales and/or services supplied to customers in the Republic of
Ireland for the fiscal year ended January 31, 2006 was less than 40,000,000
Euro.
3.5 Litigation. There is no Legal Proceeding by or against any Buyer
which is pending or, to the Buyer's Knowledge, has been threatened and there are
no outstanding judgments, orders or decrees against the Buyers, that could
reasonably be expected to affect the legality, validity or enforceability of
this Agreement, any Ancillary Agreement or the consummation of the transactions
contemplated hereby or thereby.
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3.6 Brokers' Fees. Except for Credit Suisse Securities (USA) LLC and its
Affiliates, the Buyers do not have any liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
3.7 Independent Investigation; Sellers' Representations. In entering
into this Agreement, each Buyer acknowledges that it has not relied upon any
factual representations, opinions, projections or forecasts of the Sellers or
their representatives (except the specific representations and warranties of the
Sellers set forth in Article II and the schedules thereto). Each Buyer hereby
acknowledges and agrees that, other than the representations and warranties made
in Article II, none of the Sellers, their Affiliates, or any of their respective
officers, directors, employees or representatives make or have made any
representation or warranty, express or implied, at law or in equity, with
respect to the Business, the Business Subsidiaries, the Stock or the Acquired
Assets.
3.8 Capitalization.
(a) The authorized share capital of SkillSoft PLC is
(euro)27,500,000 divided into 250,000,000 Buyer Ordinary Shares. As of September
30, 2006, 108,284,548 Buyer Ordinary Shares were issued and outstanding (in the
form of Buyer Ordinary Shares or Buyer ADSs), of which 6,533,884 Buyer Ordinary
Shares were held in the treasury of SkillSoft PLC. Each Buyer ADS represents one
Buyer Ordinary Share.
(b) All outstanding shares of SkillSoft PLC are, and all Buyer
Ordinary Shares underlying the Buyer ADSs to be issued pursuant to this
Agreement will be upon issuance, duly authorized, validly issued, fully paid and
not subject to or issued in violation of any purchase option, call option, right
of first refusal, preemptive right, subscription right or any similar right
under any provision of Irish law, the Buyer Charter Documents or any agreement
to which SkillSoft PLC is a party or is otherwise bound. Upon the due issuance
by the Bank of New York, as depository, of Buyer ADRs evidencing Buyer ADSs to
be issued pursuant to this Agreement against deposit of the Buyer Ordinary
Shares underlying such Buyer ADSs in accordance with this Agreement and the
provisions of the Deposit Agreement, such Buyer ADRs will be duly and validly
issued, and the Seller will be entitled to the rights of a registered holder of
Buyer ADRs specified in the Deposit Agreement.
3.9 Reports and Financial Statements. SkillSoft PLC has previously
furnished or made available to the Seller complete and accurate copies, as
amended or supplemented, of the Buyer Reports. The Buyer Reports constitute all
of the documents required to be filed by SkillSoft PLC under Section 13 or
subsections (a) or (c) of Section 14 of the Exchange Act with the SEC from
February 1, 2004 through the date of this Agreement. The Buyer Reports complied
in all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder when filed. As of their respective dates, the Buyer
Reports did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited financial statements and unaudited interim financial
statements of SkillSoft PLC included in the Buyer Reports (a) complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto when filed, (b)
were prepared in accordance with
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GAAP applied on a consistent basis throughout the periods covered thereby
(except as may be indicated therein or in the notes thereto, and in the case of
quarterly financial statements, as permitted by Form 10-Q under the Exchange
Act), and (c) fairly present the consolidated financial condition, results of
operations and cash flows of SkillSoft PLC as of the respective dates thereof
and for the periods referred to therein.
3.10 Absence of Material Adverse Change. Since July 31, 2006, there has
not occurred any Buyer Material Adverse Effect.
ARTICLE IV
COVENANTS
4.1 Closing Efforts. Each of the Parties shall use its reasonable best
efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated by this Agreement.
4.2 Regulatory and Other Authorizations; Notices and Consents.
(a) Each of the Buyers and the Sellers shall use its best efforts
to promptly obtain all authorizations, consents, orders and approvals of all
Governmental Entities and officials that are necessary for its execution and
delivery of, and the performance of its obligations pursuant to, this Agreement
and will cooperate fully with the other party in promptly seeking to obtain all
such authorizations, consents, orders and approvals. Each of the Buyers and the
Sellers agrees to make its filing pursuant to the Xxxx-Xxxxx-Xxxxxx Act with
respect to the transactions contemplated by this Agreement on or before November
10, 2006 and to supply as promptly as practicable to the appropriate
Governmental Entities any information and documentary material that may be
requested pursuant to the Xxxx-Xxxxx-Xxxxxx Act or any other applicable
antitrust, competition or trade regulation law.
(b) Without limiting the generality of the Buyers' undertaking
pursuant to Section 4.2(a), each Buyer agrees to use its best efforts, and to
take any and all steps necessary, to eliminate each and every impediment under
any antitrust, competition or trade regulation law that is asserted by any
Governmental Entity (through the Head of the Governmental Entity or Division
thereof) or any other party so as to enable the Parties hereto to close the
transactions contemplated hereby, prior to the Termination Date, including but
not limited to (i) negotiating, committing to and effecting by consent decree,
hold separate orders, or otherwise, the sale, divesture or disposition of such
of the Buyers' assets, properties or businesses or of the Company's properties
or businesses to be acquired by it pursuant hereto, and the entrance into such
other arrangements, as are necessary in order to effect the dissolution of any
injunction, temporary restraining order or other order in any suit or
proceeding, which would otherwise have the effect of preventing the consummation
of the transactions contemplated by this Agreement prior to the Termination Date
and (ii) defending through litigation on the merits any claim asserted in court
by any party in order to avoid entry of, or to have vacated or terminated, any
decree, order or judgment (whether temporary, preliminary or permanent) that
would prevent the Closing from occurring prior to the Termination Date;
provided, however, that such litigation in no way limits the obligation of each
Buyer to use its best efforts, and to take any and all steps
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necessary, to eliminate each and every impediment under any antitrust,
competition or trade regulation law to close the transactions contemplated
hereby prior to the Termination Date.
(c) Each Buyer and each Seller shall promptly notify the other
party of any communication it or any of its Affiliates receives from any
Governmental Entity relating to the matters that are the subject of this
Agreement and permit the other party to review in advance any proposed
communication by such party to any Governmental Entity. Neither any Buyer nor
any Seller shall agree to participate in any meeting with any Governmental
Entity in respect of any filings, investigation (including any settlement of the
investigation), litigation, or other inquiry unless it consults with the other
party in advance and, to the extent permitted by such Governmental Entity, gives
the other party the opportunity to attend and participate at such meeting. Each
Buyer and each Seller will coordinate and cooperate fully with each other in
exchanging such information and providing such assistance as the other party may
reasonably request in connection with the foregoing and in seeking early
termination of any applicable waiting periods, including under the
Xxxx-Xxxxx-Xxxxxx Act. Each Buyer and each Seller will provide each other with
copies of all correspondence, filings or communications between them or any of
their representatives, on the one hand, and any Governmental Entity or members
of its staff, on the other hand, with respect to this Agreement and the
transactions contemplated by this Agreement.
(d) Neither any Buyer nor any Seller shall take any action, or
enter into any transaction or any agreement to effect any transaction (including
any merger or acquisition but not including transactions or agreements in the
Ordinary Course of Business), that would reasonably be expected to make it more
difficult to: (i) obtain the expiration or termination of the waiting period
under the Xxxx-Xxxxx-Xxxxxx Act applicable to the transactions contemplated by
this Agreement, (ii) obtain the approval under any applicable antitrust,
competition or trade regulation law, (iii) avoid the entry of, the commencement
of litigation seeking the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order that would prevent the
completion of the transactions contemplated hereby, or (iv) obtain all
authorizations, consents, orders and approvals of Governmental Entities
necessary for the consummation of the transactions contemplated by this
Agreement, in each case prior to the Termination Date.
(e) Each Buyer and each Seller agrees that, during the term of
this Agreement, it will not withdraw its filing under the Xxxx-Xxxxx-Xxxxxx Act
or any other applicable antitrust, competition or trade regulation law without
the written consent of the other party.
(f) Each Buyer and each Seller agrees that it will not enter into
any timing agreement with any Governmental Entity without the written consent of
the other party.
(g) In the event any Buyer or any Seller receives a Second Request
in connection with the transactions contemplated by this Agreement, such party
will comply with such request as provided by Section 7A(e) of the
Xxxx-Xxxxx-Xxxxxx Act not more than 60 days from the date of service of the
request. For purposes of this provision, a party shall be deemed to have
complied with any such request by providing a response that the party in good
faith believes to be in substantial compliance notwithstanding any Governmental
Entity's ultimate refusal to certify substantial compliance within the 60-day
period. In the event that a party receives a subpoena or civil investigative
demand requesting materials and information similar to
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that usually demanded in a Second Request, such Party shall comply with such
subpoena or civil investigative demand not more than 60 days from the date of
service of the subpoena or civil investigative demand. In the event the
Governmental Entity disputes the adequacy of compliance by a party with respect
to a Second Request, subpoena, or civil investigative demand, the party shall
endeavor to satisfy the Governmental Entity so as to minimize any delay in the
conduct or resolution of the investigation.
(h) Each Buyer shall be responsible for making any settlement
offers and negotiating any consent decree or consent order with any Governmental
Entity in order to permit the transactions contemplated by this Agreement to be
consummated prior to the Termination Date. Each Buyer agrees that, at any time
in an investigation, if a Governmental Entity suggests or proffers a settlement
of the investigation to permit the transactions contemplated by this Agreement
to close, each Buyer shall promptly (and in any event within one (1) Business
Day) communicate the terms of the offer to the Sellers. Each Buyer, in its sole
discretion, may accept or reject any settlement of the investigation proposed by
any Governmental Entity, provided that each Buyer's actions permit the
transactions contemplated by this Agreement to be consummated prior to the
Termination Date.
(i) Each Seller shall use its reasonable best efforts to obtain,
at its expense, all waivers, consents or approvals from third parties, and to
give all such notices to third parties listed in Schedule 4.2(i). The Sellers
shall use commercially reasonable efforts to give notice to those additional
third parties set forth in Section 2.4 of the Disclosure Schedule. In connection
with the foregoing, the Buyers shall cooperate with the Sellers in obtaining the
necessary consents of the counterparties to the Consent Agreements and the
agreements listed in Schedule 4.2(i) which cooperation shall include entering
into Substitute Agreements and Substitute Content Agreements but shall not
include the obligations of the Buyers to make any payments in connection with
obtaining such consents.
4.3 Additional Financial Statements.
(a) Prior to the Closing, Thomson Learning shall (i) provide such
information, assistance and cooperation as SkillSoft PLC may reasonably request
in connection with any offering, financing or Buyer filings under the Exchange
Act, including, without limitation, assisting with the preparation of
information packages, Rule 144A offering memoranda, prospectuses and
registration statements filed under the Securities Act and reports under the
Securities Act (the "Public Filings"), (ii) reasonably cooperate with SkillSoft
PLC so SkillSoft PLC can obtain information sufficient for SkillSoft PLC to
comply with the requirements for the Management's Discussion and Analysis
portion of the Public Filings, (iii) use commercially reasonable efforts to
cause the officers of the Sellers or senior executives of the Business to
execute any reasonably necessary officers' certificates or management
representation letters to the Sellers' accountants to issue unqualified reports
with respect to the financial statements to be included in any Public Filings,
(iv) upon reasonable prior notice, use commercially reasonable efforts to make
senior management and other representatives of Thomson Learning or the Business
available to participate in the preparation of any Public Filings or related
materials and (v) request from the present and former independent accountants of
Thomson Learning that they (A) cooperate with and assist SkillSoft PLC in
preparing financial statements with respect to the Business for inclusion by
SkillSoft PLC in the Public Filings, including in compliance with the
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applicable provisions of Regulation S-X, Form 8-K and Form S-3, (B) participate
in drafting sessions related to the preparation of the Public Filings, (C) make
work papers available to SkillSoft PLC and its representatives (subject to Buyer
entering into any agreements reasonably required or requested by the accountants
in connection with the provision of such work papers), (D) deliver
"comfort-letters" in customary form in connection with any offering or
financing, and (E) deliver consents to the inclusion of financial statements
required in connection with any Public Filing.
(b) Prior to Closing, Thomson Learning shall deliver to SkillSoft
PLC historical financial statements for the Business for the fiscal year 2006
and, if applicable, for the relevant quarterly periods of 2007 in a form that
complies with what is required by Item 9.01 of Form 8-K and Regulation S-X of
the SEC for a business acquisition required to be described in answer to Item
2.01 of Form 8-K, including information required in order for SkillSoft PLC to
prepare the pro forma financial information required by Item 9.01 of Form 8-K.
The historical financial statements for the Business for the fiscal year 2006
shall be accompanied by an unqualified report from Thomson Learning's
independent registered accounting firm stating to the effect that such financial
statements present fairly, in all material respects, the combined financial
position of the Business, as well as the combined results of operations and cash
flows, for each of the periods covered by the such financial statements, in
conformity with GAAP.
(c) Not later than forty (40) days after the completion of each
fiscal quarter of Thomson Learning that occurs during the period from the date
of this Agreement through the Closing Date (other than the quarter ending
December 31, 2006), Thomson Learning shall deliver to SkillSoft PLC quarterly
financial statements for the Business (together with any required notes) in a
form that Thomson Learning prepares for internal financial reporting ; provided,
however, that Thomson Learning shall provide SkillSoft PLC with such additional
information as SkillSoft PLC may reasonably request in order to comply with the
requirements for financial statements included in Quarterly Reports on Form 10-Q
filed under the Exchange Act.
(d) On or prior to March 31, 2007, Thomson Learning shall deliver
to SkillSoft PLC the Audited Financial Statements. The Audited Financial
Statements shall be accompanied by an unqualified report from Thomson Learning's
independent registered accounting firm stating to the effect that the Audited
Financial Statements present fairly, in all material respects, the combined
financial position of the Business, as well as the combined results of
operations and cash flows, for each of the periods covered by the Audited
Financial Statements, in conformity with GAAP.
4.4 Operation of Business. Except as contemplated by this Agreement,
during the period from the date of this Agreement to the Closing, each Asset
Seller shall, and each Parent shall cause each Business Subsidiary to, conduct
operations of the Business in the Ordinary Course of Business in all material
respects and in compliance in all material respects with all applicable laws and
regulations. Without limiting the generality of the foregoing, except as set
forth in Section 4.4 of the Disclosure Schedule, prior to the Closing, no Seller
nor any Business Subsidiary shall, to the extent related to the Business,
without the written consent of SkillSoft PLC, which shall not be unreasonably
withheld or delayed:
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(a) issue or sell any stock or other securities of any Business
Subsidiary or any options, warrants or other rights to acquire any such stock or
other securities;
(b) create, incur or assume any indebtedness for borrowed money
(including obligations in respect of capital leases); assume, guarantee, endorse
or otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person or entity relating to
indebtedness for borrowed money; or make any loans, advances or capital
contributions to, or investments in, any other person or entity;
(c) enter into, adopt or amend any Employee Benefit Plan or any
employment or severance agreement or arrangement of the type described in
Section 2.17(k) or (except in the Ordinary Course of Business) increase in any
manner the compensation or fringe benefits of, or materially modify the
employment terms of, its directors, officers or employees, generally or
individually, or pay any bonus or other benefit to its directors, officers or
employees (except for existing payment obligations listed in Section 2.17 of the
Disclosure Schedule), in each case, which would constitute an Assumed Liability
or for which any Business Subsidiary could have any liability, or hire any new
officers or (except in the Ordinary Course of Business or to replace any
employee who has departed the Business) any new employees at a rate of annual
pay (base salary and bonus) in excess of $100,000;
(d) acquire, sell, lease, license or dispose of any assets or
property that are material, either individually or in the aggregate, to the
Business (including any shares or other equity interests in or securities of any
subsidiary or any corporation, partnership, association or other business
organization or division thereof), other than purchases, licenses and sales of
assets in the Ordinary Course of Business;
(e) mortgage or pledge any of its property or assets or subject
any such property or assets to any Security Interest;
(f) discharge or satisfy any Security Interest or pay any
obligation or liability other than in the Ordinary Course of Business;
(g) amend the certificate of incorporation, by-laws or other
organizational documents of any Business Subsidiary;
(h) change the accounting methods, principles or practices of any
Business Subsidiary, or with respect to the Business, Thomson Learning, except
insofar as may be required by a generally applicable change in GAAP, or make any
new elections, or changes to any current elections, with respect to Taxes;
(i) enter into, amend, terminate, take or omit to take any action
that would constitute a violation of or default under, or waive any rights
under, any contract or agreement of a nature required to be listed in Section
2.12, Section 2.13, Section 2.14(a)(iv), Section 2.14(a)(v), Section
2.14(a)(vi), Section 2.14(a)(vii), Section 2.14(a)(viii), Section 2.14(a)(ix) or
Section 2.14(a)(xii) of the Disclosure Schedule; provided, however, that a
Seller or Business Subsidiary may enter into a Substitute Content Agreement or
amend any contract set forth on Schedule 4.2(i) to the extent necessary to
comply with Section 4.2(i);
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(j) enter into, amend, terminate, take or omit to take any action
that would constitute a violation of or default under, or waive any rights
under, any contract or agreement of a nature required to be listed in Section
2.14(a)(i), Section 2.14(a)(ii), Section 2.14(a)(iii), Section 2.14(a)(x),
Section 2.14(a)(xi) or Section 2.14(a)(xiii) of the Disclosure Schedule;
provided, however, that the Sellers and each Business Subsidiary may enter into
any such contract or agreement (1) in the Ordinary Course of Business, provided
that (A) the initial term of any such contract or agreement does not exceed 12
months, or (B) any such contract is terminable without penalty upon not more
than 60 days notice or (2) that is a Substitute Agreement for purposes of
Section 1.7(e);
(k) make or commit to make any capital expenditure for plant,
property or equipment in excess of $100,000 per item, $200,000 in any fiscal
quarter or $500,000 in the aggregate;
(l) institute or settle any material Legal Proceeding other than
collection proceedings commenced in the Ordinary Course of Business; or
(m) agree in writing or otherwise to take any of the foregoing
actions.
Nothing contained in this Agreement shall prohibit transfers of cash from
or to the Business Subsidiaries in accordance with the current cash management
policies and procedures of the Sellers and their Affiliates.
4.5 Access to Information.
(a) From the date hereof until the Closing, upon reasonable
notice, each Asset Seller shall, and each Parent shall cause each Business
Subsidiary and each of its officers, directors, employees, agents,
representatives, accountants and counsel to, (i) afford SkillSoft PLC and its
authorized representatives reasonable access to the offices, properties and
books and records of the Business and (ii) furnish to the officers, employees
and authorized agents and representatives of SkillSoft PLC such additional
financial and operating data and other information regarding the Business (or
copies thereof) as SkillSoft PLC may from time to time reasonably request;
provided, however, that any such access or furnishing of information shall be
conducted at SkillSoft PLC's expense, during normal business hours, under the
supervision of the Sellers' personnel and in such a manner as not to interfere
with the normal business operations. Notwithstanding anything to the contrary in
this Agreement, no Seller nor any Business Subsidiary shall be required to
disclose any information to SkillSoft PLC if such disclosure would, in a
Seller's reasonable discretion, (i) jeopardize any attorney-client or other
legal privilege that affects such Seller or any Business Subsidiary that is
unrelated to the Business or (ii) contravene any applicable Laws.
(b) Promptly after the end of each month ending prior to the
Closing, the Sellers shall furnish to the Buyer reports with respect to the
Business in the same format as those that were provided to the Sellers on a
monthly basis in the Ordinary Course of Business prior to the date hereof.
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4.6 Exclusivity.
(a) The Sellers shall not, and shall cause each Business
Subsidiary and each of their respective officers, directors, employees,
representatives and agents not to, directly or indirectly, (i) initiate,
solicit, encourage or otherwise facilitate any inquiry, proposal, offer or
discussion with any party (other than the Buyers) concerning any merger,
reorganization, consolidation, recapitalization, business combination,
liquidation, dissolution, share exchange, sale of stock, sale of material assets
or similar business transaction involving the Business, (ii) furnish any
non-public information concerning the Business to any party (other than the
Buyers) in connection with any such transaction or (iii) engage in discussions
or negotiations with any party (other than the Buyers) concerning any such
transaction.
(b) The Sellers shall immediately notify any party with which
discussions or negotiations of the nature described in paragraph (a) above were
pending that the Sellers are terminating such discussions or negotiations. If
any Seller receives any inquiry, proposal or offer of the nature described in
paragraph (a) above, such Seller shall, within one Business Day after such
receipt, notify SkillSoft PLC of such inquiry, proposal or offer, including the
identity of the other party and the terms of such inquiry, proposal or offer.
4.7 Expenses. Except as set forth in Article VII, each of the Parties
shall bear its own costs and expenses (including legal and accounting fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby whether or not the Closing shall have occurred.
4.8 Financing Commitments.
(a) SkillSoft Inc. shall use commercially reasonable efforts to
obtain a debt financing commitment on terms no less favorable to SkillSoft Inc.
than those set forth on Schedule 4.8(a)(i) attached hereto. SkillSoft Inc.
shall, within two (2) Business Days after written request of Thomson Learning,
inform Thomson Learning in reasonable detail of the status of its efforts to
obtain such financing. If for any reason SkillSoft Inc., after the use of such
commercially reasonable efforts, is unable to obtain such commitment or
otherwise consummate any such financing prior to the satisfaction of the
condition set forth in Section 5.1, Thomson Learning or The Thomson Corporation
or one of its Affiliates (the "Thomson Lender") shall provide debt financing on
the terms set forth on Schedule 4.8(a)(ii) in such amount (not to exceed the
amount set forth on Schedule 4.8(a)(ii)) as SkillSoft Inc. shall specify by
notice provided to Thomson Learning no later than five (5) Business Days after
the satisfaction of the condition set forth in Section 5.1 (the "Financing
Notice"). Under such circumstances, SkillSoft PLC shall promptly provide the
Thomson Lender with such information, documents and materials (including the
reasons for SkillSoft Inc.'s inability to obtain or consummate such financing)
as may be reasonably requested by the Thomson Lender in order for the Thomson
Lender to complete its due diligence on the Buyers.
(b) In the event that SkillSoft Inc. provides Thomson Learning the
Financing Notice, the Thomson Lender and SkillSoft Inc. shall negotiate
financing documents on commercially reasonable terms and conditions consistent
with the Financing Notice and the provisions of Schedule 4.8(a)(ii). Such
financing documents shall provide that the Thomson
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Lender may assign, transfer or convey to any third party without restriction all
or any portion of the debt issued pursuant to such financing.
(c) From the date hereof until the Closing Date, SkillSoft PLC
shall preserve its cash on hand except for reasonable expenses incurred in the
Ordinary Course of Business. From the date hereof until the Closing Date,
SkillSoft PLC shall conduct its business in the Ordinary Course of Business and
shall not (i) declare, set aside or pay any cash dividend or other distribution
in respect of its capital stock, (ii) repurchase or offer to repurchase any
shares of its capital stock, (iii) repay any indebtedness for borrowed money
prior to its due date or maturity or (iv) acquire any assets or property
(including any shares or other equity interest in or securities of any
subsidiary or any corporation, partnership, association or other business
organization or division thereof), other than (A) purchases of goods and
services necessary for the operation of SkillSoft PLC's business in the Ordinary
Course of Business and (B) the acquisition of the assets or property (including
shares or other equity interests in or securities of any subsidiary or any
corporation, partnership, association or other business organization or division
thereof) for an aggregate price not to exceed $10,000,000.
4.9 Insurance. As of the open of business on the Closing Date, SkillSoft
PLC shall have entered into all necessary insurance policies (including fire,
theft, casualty, commercial general liability, workers' compensation, business
interruption, environmental, product liability and automobile insurance policies
and bond and surety arrangements) to insure the Business in a manner consistent
with the insurance provided for SkillSoft PLC's other business.
4.10 Elimination of Intercompany Items. Effective as of the Closing, all
payables, receivables, liabilities and other obligations between the Business,
on the one hand, and each Seller and its Affiliates, on the other hand, shall be
eliminated except to the extent expressly provided for on Section 4.10 of the
Disclosure Schedule.
4.11 Listing of Shares. SkillSoft PLC shall, if required by the rules of
The Nasdaq Stock Market, file with The Nasdaq Stock Market a Notification Form
for Listing Additional Shares with respect to the Buyer ADSs issuable at the
Closing.
4.12 Equity Financing. SkillSoft PLC shall use commercially reasonable
efforts to pursue a potential equity investment of at least $70,000,000 in
SkillSoft PLC by a third party investment firm on terms and conditions
reasonably acceptable to SkillSoft PLC (the "Equity Financing"). SkillSoft PLC
shall, within two (2) Business Days after written request of Thomson Learning,
inform Thomson Learning in reasonable detail of the status of its efforts to
obtain the Equity Financing. In the event that SkillSoft PLC does not obtain the
Equity Financing prior to the satisfaction of the condition set forth in Section
5.1, and chooses, pursuant to the provisions of Section 1.4, to issue some or
all of the Buyer ADSs at Closing, SkillSoft PLC shall promptly provide the
Sellers and their Affiliates with such information, documents and materials as
may be reasonably requested by the Sellers and their Affiliates in order for the
Sellers and their Affiliates to complete their due diligence on the Buyers.
Notwithstanding any other provision of the Agreement to the contrary, in the
event that SkillSoft PLC obtains the Equity Financing, the consideration payable
pursuant to Section 1.4 shall consist entirely of cash (including amounts that
may be loaned by Thomson Learning under Section 4.8).
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4.13 Valuation Report. SkillSoft PLC shall, prior to Closing, procure the
completion of any valuation required under Irish law with respect to any Buyer
ADSs issuable at Closing. If such valuation report prohibits SkillSoft PLC from
issuing any Buyer ADSs to the Sellers in accordance with the provisions of
Section 1.4, SkillSoft PLC and Thomson Learning shall reallocate the Purchase
Price in a manner reasonably acceptable to both parties, it being understood
that such reallocation shall not change the aggregate amount of cash paid or the
aggregate number of Buyer ADSs issuable.
4.14 Depositary. Prior to the Closing SkillSoft PLC shall deposit
sufficient Buyer Ordinary Shares with the Bank of New York to permit the Bank of
New York to issue the Buyer ADSs at Closing, and SkillSoft PLC shall cause the
Bank of New York to issue the Buyer ADSs at Closing in accordance with the terms
of the Deposit Agreement.
4.15 German Audit. The Sellers shall timely advise SkillSoft PLC of
developments and progress in connection with the pending German Income Tax
audit.
4.16 Tax Filings. The Sellers shall use commercially reasonable efforts
to cause each Business Subsidiary to properly complete and file before the
Closing Date any and all standalone Tax Returns of the Business Subsidiaries due
on or before the Closing Date (without regard to extensions).
ARTICLE V
CONDITIONS TO CLOSING
5.1 Conditions to Obligations of Each Party. The respective obligations
of each Party to consummate the transactions contemplated in this Agreement are
subject to the condition that all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated.
5.2 Conditions to Obligations of the Buyers. The obligation of the
Buyers to consummate the transactions contemplated in this Agreement is subject
to the satisfaction (or waiver by the Buyers) of the following additional
conditions; provided, however, that the conditions set forth in Section 5.2(d)
shall expire and be of no further force and effect following the Condition Date:
(a) the Sellers shall have obtained at their own expense (and
shall have provided copies thereof to SkillSoft PLC) all consents referred to in
Schedule 5.2(a);
(b) the representations and warranties of the Sellers set forth in
Article II shall be true and correct in all respects, without regard to
materiality qualifiers (including Business Material Adverse Effect), as of the
earlier to occur of (i) the Condition Date or (ii) the Closing (the "Bring Down
Date") as though made as of the Bring Down Date, except to the extent such
representations and warranties are specifically made as of a particular date (in
which case such representations and warranties shall be true and correct as of
such date), in all cases, except for failure to be true and correct that, in the
aggregate, would not have a Business Material Adverse Effect;
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(c) Thomson Learning shall have delivered the Audited Financial
Statements, and the Sellers shall have performed or complied with their
agreements and covenants under Section 4.3 and the Sellers shall have performed
or complied in all material respects with their agreements and covenants
required to be performed or complied with under this Agreement as of or prior to
the Closing;
(d) there shall not have occurred, from the date of this Agreement
through the Condition Date, any Business Material Adverse Effect or any event or
development which, individually or in the aggregate, would reasonably be
expected to have a Business Material Adverse Effect;
(e) except for shareholder lawsuits initiated against SkillSoft
PLC, no Legal Proceeding shall be pending that would reasonably be expected to
result in an unfavorable judgment, order, decree, stipulation or injunction that
would (i) prevent consummation of the transactions contemplated by this
Agreement or (ii) cause the transactions contemplated by this Agreement to be
rescinded following consummation;
(f) the Sellers shall have delivered to SkillSoft PLC the Seller
Certificate;
(g) the Buyers shall have received the resignations, effective as
of the Closing, of each director and officer of each Business Subsidiary
specified by SkillSoft PLC in writing at least ten (10) Business Days prior to
the Closing;
(h) the Sellers shall have executed and delivered to the Buyers a
counterpart of each of the Ancillary Agreements;
(i) SkillSoft PLC shall have received certificates of good
standing of each Seller and each Business Subsidiary in their respective
jurisdictions of organization as it shall reasonably request in connection with
the Closing; and
(j) Thomson Learning shall have delivered or caused to be
delivered to SkillSoft Inc. a certification that Thomson Learning is not a
foreign person in accordance with the Treasury Regulations under Section 1445 of
the Code and Treasury Regulations. If Thomson Learning has not provided the
certification described above to SkillSoft Inc. on or before the Closing Date,
SkillSoft Inc. shall be permitted to reduce the portion of the Purchase Price
paid by SkillSoft Inc. to Thomson Learning in consideration for the TL Assets by
an amount equal to any required withholding Tax under Section 1445 of the Code.
5.3 Conditions to Obligations of the Sellers. The obligation of the
Sellers to consummate the transactions contemplated by this Agreement is subject
to the satisfaction (or the waiver by Thomson Learning as the agent for all of
the Sellers) of the following additional conditions:
(a) the representations and warranties of SkillSoft PLC set forth
in the first and second sentences of Section 3.1 and in Sections 3.2 and 3.5 and
any representations and warranties of SkillSoft PLC set forth in this Agreement
that are qualified as to materiality shall be true and correct in all respects,
and all other representations and warranties of SkillSoft PLC
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set forth in this Agreement shall be true and correct in all material respects,
in each case as of the date of this Agreement and as of the Closing as though
made as of the Closing;
(b) the Buyers shall have performed or complied in all material
respects with its agreements and covenants required to be performed or complied
with under this Agreement as of or prior to the Closing;
(c) no Legal Proceeding shall be pending that would reasonably be
expected to result in an unfavorable judgment, order, decree, stipulation or
injunction that would (i) prevent consummation of the transactions contemplated
by this Agreement or (ii) cause the transactions contemplated by this Agreement
to be rescinded following consummation;
(d) the Buyers shall have delivered to the Sellers the Buyer
Certificate; and
(e) the Buyers shall have executed and delivered to the Sellers a
counterpart of each of the Ancillary Agreements.
ARTICLE VI
POST-CLOSING COVENANTS
6.1 Proprietary Information. From and after the Closing, no Seller shall
disclose or make use of (except to pursue its rights under this Agreement or the
Ancillary Agreements), and each Seller shall and shall cause its Affiliates not
to disclose or make use of, any knowledge, information or documents of a
confidential nature or not generally known to the public with respect to the
Business or any Buyer or its business (including the financial information,
technical information or data relating to the products and names of customers of
the Business), except to the extent that such knowledge, information or
documents shall have become public knowledge other than through improper
disclosure by any Seller or any of its Affiliates. At SkillSoft PLC's request
and at SkillSoft PLC's expense, each Seller shall enforce, for the benefit of
the Buyers, all confidentiality agreements, invention assignments and similar
agreements between a Seller and any other party relating to the Business which
are not Assigned Contracts or contracts of a Business Subsidiary.
6.2 Solicitation and Hiring. For a period of thirty (30) months after
the Closing Date, no Non-Solicitation Party shall, either directly or
indirectly, (a) solicit or attempt to induce any Restricted Employee to
terminate his or her employment with SkillSoft PLC or any subsidiary of
SkillSoft PLC other than through general solicitations through a public medium
not targeted at any Restricted Employee or (b) hire or attempt to hire any
Restricted Employee; provided that this clause (b) shall not apply to any
individual whose employment with SkillSoft PLC or a subsidiary of SkillSoft PLC
has been terminated for a period of six months or longer. At SkillSoft PLC's
request and at SkillSoft PLC's expense, each Seller shall enforce, for the
benefit of the Buyers, all confidentiality, non-solicitation and non-hiring
assignments and similar agreements with respect to the Business between any
Seller and any other party which are not Assigned Contracts or contracts of a
Business Subsidiary.
6.3 Non-Competition.
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(a) Except as otherwise provided in the License Agreement, for a
period of thirty (30) months after the Closing Date, no Non-Competition Party
shall either directly or indirectly engage in the Restricted Business in any of
the countries in which the Business is transacted as of the Closing Date (the
"Territory"). At SkillSoft PLC's request and at SkillSoft PLC's expense, each
Seller shall enforce, for the benefit of the Buyers, all non-competition and
similar agreements with respect to the Business between any Seller or any other
party which are not Assigned Contracts or contracts of a Business Subsidiary.
Notwithstanding the foregoing, no Non-Competition Party shall be prohibited
from:
(i) continuing to engage in any type of business conducted
by any Non-Competition Party as of the date hereof, or in which any of them have
an interest, which is not part of the Business Subsidiaries or the Business as
conducted by the Asset Sellers, and any reasonable extension or development
thereof so long as any such extension or development is not focused primarily on
providing IT, desktop or business soft skills content;
(ii) acquiring or owning less than 5% (by voting power) of
the outstanding capital stock of any publicly traded company which is primarily
engaged in the Restricted Business;
(iii) performing its obligations under this Agreement and the
Ancillary Agreements or otherwise taking actions in connection with the
winding-up of the Business; or
(iv) acquiring any entity which is engaged in the Restricted
Business ("Acquired Company") if, in its last full fiscal year prior to such
acquisition, the consolidated revenues of such Acquired Company from the
Restricted Business constituted less than ten percent (10%) of the total
revenues of such entity, provided that a Non-Competition Party may acquire an
Acquired Company with consolidated revenues from the Restricted Business
constituting more than ten percent (10%) of the total revenues of such entity so
long as either (i) within six months after such acquisition, such
Non-Competition Party disposes or agrees to dispose of the relevant portion of
the Acquired Company's business or securities to comply with this Section or
(ii) such acquisition closes within six (6) months prior to the expiration of
the obligations set forth in this Section.
(b) Each Seller agrees that the duration and geographic scope of
the non-competition provision set forth in this Section 6.3 are reasonable. In
the event that any court determines that the duration or the geographic scope,
or both, is unreasonable and that such provision is to that extent
unenforceable, the Buyers and the Sellers agree that the provision shall remain
in full force and effect for the greatest time period and in the greatest area
that would not render it unenforceable. The Buyers and the Sellers intend that
this non-competition provision shall be deemed to be a series of separate
covenants, one for each and every county of each and every state of the United
States of America and each and every political subdivision of each and every
country outside the United States of America where this provision is intended to
be effective.
(c) The Sellers shall, and shall use their commercially reasonable
efforts to cause their Affiliates to, refer all inquiries regarding the
business, products and services of the Business to the Buyers.
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6.4 Sharing of Data.
(a) Each Seller shall have the right for a period of seven (7) years
following the Closing Date to have reasonable access to such books, records and
accounts, including financial and Tax information, correspondence, production
records, employment records and other records, that are transferred to any Buyer
or any Business Subsidiary pursuant to the terms of this Agreement for the
limited purposes of concluding its involvement in the Business conducted by any
Seller prior to the Closing Date and for complying with its obligations under
applicable securities, Tax, environmental, employment or other laws and
regulations. Each Buyer shall have the right for a period of seven (7) years
following the Closing Date to have reasonable access to those books, records and
accounts, including financial and accounting records, correspondence, production
records, employment records and other records, that are retained by any Seller
pursuant to the terms of this Agreement to the extent that any of the foregoing
is needed by any Buyer for the purpose of conducting the Business after the
Closing and complying with its obligations under applicable securities,
environmental, employment or other laws and regulations. Notwithstanding
anything to the contrary in this Agreement, the Sellers shall not be required to
disclose any information to the Buyers if such disclosure would, in such
Seller's reasonable discretion, jeopardize any attorney-client or other legal
privilege that is unrelated to the Business. The Sellers and the Buyers shall
make themselves (and their respective employees) reasonably available on a
mutually convenient basis to provide explanations of any documents or
information provided under this Section 6.4(a). Neither the Buyers nor any
Seller shall destroy any such books, records or accounts retained by it without
first providing the other with the opportunity to obtain or copy such books,
records or accounts at such other party's expense.
(b) Promptly upon request by any Buyer made at any time following
the Closing Date, the Sellers shall authorize the release to such Buyer of all
files pertaining to the operations of the Business held by any federal, state,
county or local authorities, agencies or instrumentalities.
6.5 Use of Name.
(a) The Sellers shall not use, and shall not permit any Affiliate to
use, any of the names listed on Section 6.5(a) of the Disclosure Schedule or any
name confusingly similar thereto after the Closing Date. Within ten (10) days
following the Closing, each Seller shall change its name and amend its charter
and other corporate records, if necessary, to comply with this provision.
(b) Each Buyer hereby acknowledges that all right, title and
interest in and to the names set forth in Section 6.5(b) of the Disclosure
Schedule, together with all variations thereof and all trademarks, service
marks, domain names, trade names, trade dress, corporate names and other
identifiers of source containing, incorporating or associated with any of the
foregoing (the "Retained Names and Marks"), are owned exclusively by the Sellers
or their Affiliates (other than the Business Subsidiaries) and that, except as
expressly provided below, any and all right of the Business Subsidiaries to use
the Retained Names and Marks shall terminate as of the Closing and shall
immediately revert to the owner thereof. Each Buyer
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further acknowledges that it has no rights, and is not acquiring any rights, to
use the Retained Names and Marks, except as provided herein.
(c) SkillSoft PLC shall, within ten (10) days following the Closing,
cause each Business Subsidiary, as applicable, to change its name and amend its
charter and other corporate records, if necessary, to comply with this provision
and to supply promptly any additional information and documentary materials that
may be requested by any Seller with respect to such filings.
(d) Except as provided in subsection (e) below, each Buyer and each
Business Subsidiary shall, for a period of sixty (60) days after the date of the
Closing, be entitled to use all of the Asset Sellers' and the Business
Subsidiaries' existing stocks of letterheads, advertisements, promotional
materials, Internet web sites and Internet domain names, inventory and other
documents and materials ("Existing Stock") containing the Retained Names and
Marks. From and after such date, each Buyer shall and shall cause each Business
Subsidiary to remove or obliterate all Retained Names and Marks from such
Existing Stock or cease using such Existing Stock, and transfer to Thomson
Learning any rights with respect to Internet domain names incorporating any
Retained Names or Marks.
(e) Each Buyer and each Business Subsidiary shall, within
one-hundred and eighty (180) days after the date of Closing, change any and all
references to the Retained Names and Marks in the Asset Sellers' and the
Business Subsidiaries' courseware, products and related Software. From and after
such date, each Buyer shall and shall cause each Business Subsidiary to cease to
use display courseware, products and software that bear or otherwise contain the
Retained Names and Marks.
(f) Except as expressly provided in this Agreement, no other right
to use the Retained Names and Marks is granted by the Sellers to the Buyers or
the Business Subsidiaries, whether by implication or otherwise, and nothing
hereunder permits any Buyer or any of the Business Subsidiaries to use the
Retained Names and Marks on any documents, materials, products or services other
than as provided in this Section 6.5. Each Buyer shall ensure that all use of
the Retained Names and Marks by such Buyer or the Business Subsidiaries as
provided in this Section 6.5 shall be only with respect to goods and services of
a level of quality equal to or greater than the quality of goods and services
with respect to which the Business used the Retained Names and Marks prior to
the Closing.
(g) Each Buyer agrees that no Seller shall have any responsibility
for claims by third parties arising out of, or relating to, the use by the
Buyers or the Business Subsidiaries of any Retained Names and Marks after the
Closing. SkillSoft PLC shall indemnify and hold harmless the Sellers and their
respective Affiliates from any and all claims that may arise out of the use
thereof by the Buyers or the Business Subsidiaries in accordance with the terms
and conditions of this Section 6.5 other than claims that the Retained Names and
Marks infringe the Intellectual Property rights of any third party. In addition
to any and all other remedies available, SkillSoft PLC shall indemnify and hold
harmless the Sellers and their respective Affiliates from any and all claims
that may arise out of the use of the Retained Names and Marks in violation of or
outside the scope permitted by this Section 6.5.
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6.6 Cooperation in Litigation. From and after the Closing Date, each Party
shall fully cooperate with each other Party in the defense or prosecution of any
litigation or proceeding already instituted or which may be instituted hereafter
against or by such other Party relating to or arising out of the conduct of the
Business prior to or after the Closing Date (other than litigation among the
Parties and/or their Affiliates arising out of the transactions contemplated by
this Agreement). The Party requesting such cooperation shall pay the reasonable
out-of-pocket expenses incurred in providing such cooperation (including legal
fees and disbursements) by the Party or Parties providing such cooperation and
by each such Party's officers, directors, employees and agents, but shall not be
responsible for reimbursing any such Party or its officers, directors, employees
and agents for their time spent in such cooperation.
6.7 Collection of Accounts Receivable. Each Asset Seller agrees that it
shall forward promptly to SkillSoft Inc. any monies, checks or instruments
received by such Asset Seller after the Closing Date with respect to the
accounts receivable of the Business transferred to any Buyer pursuant to this
Agreement. Each Asset Seller shall provide to the Buyers such reasonable
assistance as any Buyer may reasonably request with respect to the collection of
any such accounts receivable, provided that such Buyer pays the reasonable
out-of-pocket expenses of such Asset Seller and its officers, directors and
employees incurred in providing such assistance. Each Asset Seller hereby grants
to each Buyer a power of attorney to endorse and cash any checks or instruments
payable or endorsed to such Seller or its order which are received by the Buyer
and which relate to accounts receivable of the Business.
6.8 Employees. Effective as of the Closing, each Asset Seller shall
terminate and the Sellers shall cause their Affiliates (other than the Business
Subsidiaries) to terminate the employment of each of their respective Business
Employees. The Buyers shall be permitted to offer employment to each such
Business Employee, terminable at the will of such Buyer. The Asset Sellers
hereby consent to the hiring of any such Business Employees by any Buyer and
waive, with respect to the employment by any Buyer of such Business Employees,
any claims or rights any Asset Seller may have against any Buyer or any such
Business Employee under any non-competition, confidentiality or employment
agreement.
6.9 COBRA. The Buyers shall reimburse each Asset Seller for all
liabilities incurred by such Asset Seller or its Affiliates for post-employment
health coverage under COBRA or any similar state law with respect to Business
Employees terminated by any Asset Seller effective as of the Closing and the
Buyers shall indemnify and hold each Asset Seller harmless from and against any
loss as a result of any liability incurred by such Asset Seller or its
Affiliates based on a claim by any such Business Employee that the consummation
of the transactions contemplated hereby results in a "qualifying event" (as
defined in Section 4980B(f)(3) of the Code) with respect to such Business
Employee, and each Buyer agrees to provide any required notice under COBRA,
HIPAA or any similar statute that may be required as a result of the
transactions contemplated by this Agreement and agrees to hold the Asset Sellers
harmless from any liability arising from any failure to properly give such
notice.
6.10 Seller Benefit Plans. Effective as of the Closing Date, the Business
Employees shall terminate active participation in the employee welfare benefit
and employee pension benefits plans of the Sellers and their Affiliates and
shall cease to accrue benefits thereunder. The Seller shall retain liability for
all hospital, medical, disability, workers' compensation,
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unemployment compensation and other welfare benefits with respect to claims
incurred prior to the Closing Date and the Buyers shall be liable for all claims
for such benefits incurred on or after the Closing Date by any Business Employee
or dependent thereof. For this purpose, claims under any medical, dental, vision
or prescription drug plan will be deemed to be incurred on the date that the
service giving rise to such claim is performed. Claims for disability will be
incurred on the first and each subsequent date the employee is absent from work
because of the condition giving rise to such disability. Claims for workers'
compensation will be incurred on the date the claim is paid.
6.11 Buyer Savings Plan. The Buyers shall cause the Buyer's Saving Plan to
provide that each Business Employee who was a participant in The Thomson 401(k)
Savings Plan immediately prior to the Closing Date will become a participant in
the Buyer's Savings Plan as of the Closing Date and the service of each such
Business Employee that is recognized under The Thomson 401(k) Savings Plan shall
be taken into account under the Buyer's Savings Plan.
6.12 Termination Liability for Thomson Learning Business Employees.
SkillSoft PLC shall be liable and responsible for, and shall reimburse Thomson
Learning in connection with Section 6.8 as follows:
(a) For each Business Employee listed on Section 6.12(a) of the
Disclosure Schedule who is employed by Thomson Learning or any of its Affiliates
(other than the Business Subsidiaries) on the Closing Date and does not become
an employee of SkillSoft PLC or any of its Affiliates immediately following the
Closing Date or otherwise does not maintain an employment relationship with
Thomson Learning or any of its Affiliates, Thomson Learning or its Affiliate
shall pay, and SkillSoft PLC shall reimburse Thomson Learning such amount, set
forth directly opposite such Business Employee's name on Section 6.12(a) of the
Disclosure Schedule.
(b) For each Business Employee (other than any Business Employee
listed on Section 6.12(a) of the Disclosure Schedule) employed by Thomson
Learning or any of its Affiliates (other than the Business Subsidiaries) who
does not become an employee of SkillSoft PLC or any of its Affiliates
immediately following the Closing Date, Thomson Learning or its Affiliate shall
pay, and SkillSoft PLC shall reimburse Thomson Learning an amount equal to eight
weeks of such Business Employee's base rate of pay in connection with Thomson
Learning's termination of employment of such Business Employee.
(c) In addition to any amounts payable to Thomson Learning pursuant
to Sections 6.12(a) and 6.12(b), SkillSoft PLC shall promptly reimburse Thomson
Learning for any other Termination Liability incurred by any Seller or any of
its Affiliates that terminated a Business Employee in accordance with Section
6.8, including any notification, payments or benefits required to be provided
under WARN (including rules and regulations thereunder) with respect to the
Business Employees, regardless of whether any such notification would be
required prior to the Closing Date.
(d) To the extent possible, all payments provided for in this
Section 6.12 shall be made on the Closing Date. In the event that any or all of
the payments provided for in this
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Section 6.12 cannot be calculated as of the Closing Date, the appropriate
payment may be made by SkillSoft PLC to Thomson Learning as promptly following
the Closing Date as practicable.
6.13 Termination Liability for Business Subsidiary Business Employees.
Thomson Learning shall be liable and responsible for, and shall reimburse
SkillSoft PLC for certain termination-related costs and expenses incurred by
SkillSoft PLC in connection with the termination of any Business Employee of any
Business Subsidiary on or promptly following the Closing Date as follows:
(a) For each Business Employee listed on Section 6.13(a) of the
Disclosure Schedule who is employed by any Business Subsidiary on the Closing
Date and whose employment is terminated by SkillSoft PLC on or within 15 months
following the Closing Date, the Business Subsidiary shall pay, and Thomson
Learning shall reimburse SkillSoft PLC for the amount set forth directly
opposite such Business Employee's name on Schedule 6.13(a) to the extent that
such payments have not been made prior to Closing.
(b) For each Business Employee employed by any Business Subsidiary
on the Closing Date (other than any Business Employee listed on Section 6.13(a)
of the Disclosure Schedule) and whose employment is terminated by SkillSoft PLC
on or within 15 months following the Closing Date, the Business Subsidiary shall
pay, and Thomson Learning shall reimburse SkillSoft PLC for an amount equal to
the difference between (i) the amount of severance that such employee has a
vested, legally enforceable right to receive pursuant to any contract, plan,
standard practice, or arrangement between such employee and Thomson Learning or
any of its Affiliates (in each case, the "Contract Liability"), and (ii) the
minimum amount of severance required by law that would have been payable upon
the termination of employment of such Business Employee in the jurisdiction in
which such Business Employee is employed had there been no Contract Liability.
(c) To the extent possible, all payments provided for in this
Section 6.13 shall be made on the Closing Date. In the event that any or all of
the payments provided for in this Section 6.13 cannot be calculated as of the
Closing Date, the appropriate payment may be made by Thomson Learning to
SkillSoft PLC as promptly following the Closing Date as practicable.
6.14 Employee Release. The Buyers shall, for the benefit of Thomson
Learning, include in the offer letter of each Business Employee who is employed
by Thomson Learning on the Closing Date and who is offered employment by
SkillSoft Inc. following the Closing, a provision stating that acceptance of the
employment offer constitutes a waiver releasing Thomson Learning of any
severance related liabilities that Thomson Learning may have with respect to
such Business Employee.
6.15 Scottsdale Lease. The parties acknowledge that the office leases
relating to Thomson Learning's facilities in Scottsdale, Arizona (collectively,
the "Scottsdale Lease") shall expire on June 30, 2007, and that Thomson
Learning's obligations under the Scottsdale Lease are secured by a letter of
credit (the "Letter of Credit"). No later than February 28, 2007, Thomson
Learning shall prepare a project plan and time line in a form mutually agreeable
to the parties (the "Project Plan") setting forth the various actions to be
taken in order to allow Thomson Learning to vacate the facilities relating to
the Scottsdale Lease (the "Scottsdale Facility") and
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lease an alternative facility in a manner designed to minimize disruption of the
operation of the Business and avoid any liability under the Scottsdale Lease or
"draw down" under the Letter of Credit. In the event that the Closing occurs
prior to June 30, 2007, SkillSoft PLC hereby covenants and agrees to continue to
take all actions to vacate the Scottsdale Facility in accordance with the terms
of the Project Plan. If the Closing occurs before June 30, 2007, and at Closing,
(i) Thomson Learning has been in compliance in all material respects with the
Project Plan, and (ii) SkillSoft PLC fails to comply with the Project Plan and
as a result thereof fails to vacate the Scottsdale Facility in accordance with
the terms of the Project Plan on or prior to June 30, 2007, then SkillSoft PLC
shall indemnify and hold harmless Thomson Learning from any and all draw downs
under the Letter of Credit that relate to or result from SkillSoft PLC's failure
to comply with the Project Plan.
6.16 UK Business Subsidiary Structure. The Buyers covenant and agree to
retain Wave and NETg UK under identical ownership structures until January 31,
2008.
6.17 German Audit. The Sellers shall timely advise SkillSoft PLC of
developments and progress in connection with the pending German Income Tax
audit.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by Thomson Learning. Thomson Learning shall indemnify
the Buyers in respect of, and hold the Buyers harmless against, any and all
Damages actually incurred or suffered by any Buyer or any Affiliate thereof
resulting from, relating to or constituting:
(a) any breach (i) as of the Bring Down Date of any representation
or warranty of the Sellers contained in this Agreement or any instrument
furnished by any Seller to any Buyer pursuant to this Agreement and (ii) as of
the Closing Date of any representation or warranty contained in any Ancillary
Agreement;
(b) any failure to perform any covenant or agreement of any Seller
contained in this Agreement, any Ancillary Agreement or any agreement or
instrument furnished by any Seller to the Buyer pursuant to this Agreement;
(c) any Excluded Liabilities;
(d) any breach of Section 2.8 of the Agreement relating to matters
that appear on the balance sheet, including footnotes, for the fiscal year ended
December 31, 2005 contained in the Audited Financial Statements and that do not
appear on the balance sheet, including footnotes, for the fiscal year ended
December 31, 2005 contained in the Unaudited Financial Statements;
(e) provided that the Buyers are in compliance with their
obligations pursuant to Section 6.16 of this Agreement, any liabilities of any
kind or nature whatsoever of Wave in existence as of the Closing Date or
resulting from or arising out of any action or omission of Wave prior to the
Closing Date;
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(f) any commercially reasonable costs or expenses of any nature
whatsoever actually incurred, after prior notice and consultation with the
Sellers including a reasonable estimate of the costs and expenses anticipated by
the Buyers, by the Buyers after the Closing in connection with obtaining the
rights or benefits under any of the contracts listed on Schedule 4.2(i) that (i)
has not expired by its terms prior to the Closing, (ii) does not provide the
counterparty with a legally enforceable right to terminate such agreement either
for convenience or without cause, (iii) for which the Sellers have not obtained
a consent to assignment prior to Closing in favor of the Buyers and (iv) has
been terminated in connection with the failure to obtain such consent (each a
"Lost Content Contract") it being understood that among the ways in which such
rights and benefits can be obtained is (A) through an assignment of or
performance under the original Lost Content Contract, (B) entry by SkillSoft PLC
or any of its Affiliates into an agreement on terms not materially worse than
the terms of such Lost Content Contract for the provision of substantially
similar services or content, or (C) reasonably acceptable alternative services
or content, including existing services or content offered by the Buyers at such
time, as are provided or sold pursuant to such Lost Content Contract (a
"Substitute Content Agreement"); and
(g) the Lost Content Amount but only if there has been no purchase
price adjustment with respect to such customer contract pursuant to Section
1.7(e).
Notwithstanding the foregoing, Thomson Learning shall not be obligated to
make any payments pursuant to Section 7.1(f) with respect to a Lost Content
Contract if it chooses, and so notifies the Buyers within five (5) Business Days
following the initial notice and consultation described in Section 7.1(f), to
indemnify the Buyers for the Lost Content Amount for all customers with respect
to such Lost Content Contract.
7.2 Indemnification by SkillSoft PLC. SkillSoft PLC shall indemnify the
Sellers in respect of, and hold the Sellers harmless against, any and all
Damages actually incurred or suffered by the Sellers resulting from, relating to
or constituting:
(a) any breach as of the Closing Date of any representation or
warranty of SkillSoft PLC contained in this Agreement, any Ancillary Agreement
or any other agreement or instrument furnished by any Buyer to the Sellers
pursuant to this Agreement;
(b) any failure to perform any covenant or agreement of any Buyer
contained in this Agreement, any Ancillary Agreement or any other agreement or
instrument furnished by any Buyer to the Sellers pursuant to this Agreement; or
(c) any Assumed Liabilities.
7.3 Indemnification Claims.
(a) An Indemnified Party shall give written notification to the
Indemnifying Party of the commencement of any Third Party Action. Such
notification shall be given within 20 days after receipt by the Indemnified
Party of notice of such Third Party Action, and shall describe in reasonable
detail (to the extent known by the Indemnified Party) the facts constituting the
basis for such Third Party Action and the amount of the claimed damages;
provided, however, that no delay or failure on the part of the Indemnified Party
in so notifying the
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Indemnifying Party shall relieve the Indemnifying Party of any liability or
obligation hereunder except to the extent of any damage or liability caused by
or arising out of such failure. Within 20 days after delivery of such
notification, the Indemnifying Party may, upon written notice thereof to the
Indemnified Party, assume control of the defense of such Third Party Action with
counsel reasonably satisfactory to the Indemnified Party; provided that (i) the
Indemnifying Party may only assume control of such defense if (A) it
acknowledges in writing to the Indemnified Party that any damages, fines, costs
or other liabilities that may be assessed against the Indemnified Party in
connection with such Third Party Action constitute Damages for which the
Indemnified Party shall be indemnified pursuant to this Article VII and (B) the
amount of Damages reasonably expected to be incurred in such Third Party Action,
together with all other unresolved claims for indemnification, is less than or
equal to the amount of Damages for which the Indemnifying Party is liable under
this Article VII and (ii) the Indemnifying Party may not assume control of the
defense of any Third Party Action involving criminal liability or in which
equitable relief is sought against the Indemnified Party. If the Indemnifying
Party does not, or is not permitted under the terms hereof to, so assume control
of the defense of a Third Party Action, the Indemnified Party shall control such
defense. The Non-controlling Party may participate in such defense at its own
expense. The Controlling Party shall keep the Non-controlling Party advised of
the status of such Third Party Action and the defense thereof and shall consider
in good faith recommendations made by the Non-controlling Party with respect
thereto. The Non-controlling Party shall furnish the Controlling Party with such
information as it may have with respect to such Third Party Action (including
copies of any summons, complaint or other pleading which may have been served on
such party and any written claim, demand, invoice, billing or other document
evidencing or asserting the same) and shall otherwise cooperate with and assist
the Controlling Party in the defense of such Third Party Action. The reasonable
fees and expenses of counsel to the Indemnified Party with respect to a Third
Party Action shall be considered Damages for purposes of this Agreement if (i)
the Indemnified Party controls the defense of such Third Party Action pursuant
to the terms of this Section 7.3(a) or (ii) the Indemnifying Party assumes
control of such defense and the Indemnified Party reasonably concludes upon the
advice of outside counsel that the Indemnifying Party and the Indemnified Party
have conflicting interests or different defenses available with respect to such
Third Party Action. The Indemnifying Party shall not agree to any settlement of,
or the entry of any judgment arising from, any Third Party Action without the
prior written consent of the Indemnified Party, which consent shall not be
unreasonably withheld, conditioned or delayed; provided, however, that if such
settlement includes a written, unconditional release of the Indemnified Party
from any and all liability relating to or arising out of such Third Party
Action, no such consent shall be required. The Indemnified Party shall not agree
to any settlement of, or the entry of any judgment arising from, any such Third
Party Action without the prior written consent of the Indemnifying Party, which
shall not be unreasonably withheld, conditioned or delayed.
(b) In order to seek indemnification under this Article VII, an
Indemnified Party shall deliver a Claim Notice to the Indemnifying Party.
(c) Within 20 days after delivery of a Claim Notice, the
Indemnifying Party shall deliver to the Indemnified Party a Response, in which
the Indemnifying Party shall: (i) agree that the Indemnified Party is entitled
to receive all of the Claimed Amount (in which case the Response shall be
accompanied by a payment by the Indemnifying Party to the
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Indemnified Party of the Claimed Amount, by check or by wire transfer), (ii)
agree that the Indemnified Party is entitled to receive the Agreed Amount (in
which case the Response shall be accompanied by a payment by the Indemnifying
Party to the Indemnified Party of the Agreed Amount, by check or by wire
transfer) or (iii) dispute that the Indemnified Party is entitled to receive any
of the Claimed Amount.
(d) During the thirty (30)-day period following the delivery of a
Response that reflects a Dispute, the Indemnifying Party and the Indemnified
Party shall use good faith efforts to resolve the Dispute.
(e) Notwithstanding the other provisions of this Section 7.3, if a
third party asserts (other than by means of a lawsuit) that an Indemnified Party
is liable to such third party for a monetary or other obligation which may
constitute or result in Damages for which such Indemnified Party may be entitled
to indemnification pursuant to this Article VII, and such Indemnified Party
reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) such Indemnified Party shall be entitled to satisfy such
obligation, without prior notice to or consent from the Indemnifying Party, (ii)
such Indemnified Party may subsequently make a claim for indemnification in
accordance with the provisions of this Article VII, and (iii) such Indemnified
Party shall be reimbursed, in accordance with the provisions of this Article
VII, for any such Damages for which it is entitled to indemnification pursuant
to this Article VII (subject to the right of the Indemnifying Party to dispute
the Indemnified Party's entitlement to indemnification, or the amount for which
it is entitled to indemnification, under the terms of this Article VII).
7.4 Survival of Representations and Warranties. All representations and
warranties that are covered by the indemnification agreements in Section 7.1(a)
and Section 7.2(a) shall (a) survive the Closing and (b) expire on the date
fifteen (15) months following the Closing Date, except that (i) the
representations and warranties set forth in Sections 2.1, 2.2, 2.3, 3.1, 3.2 and
3.8 shall survive the Closing without limitation, and (ii) the representations
and warranties set forth in Section 2.18 shall survive until the third
anniversary of the Closing Date, and (iii) the representations and warranties
set forth in Section 2.9 shall terminate on the Closing Date. If an Indemnified
Party delivers to an Indemnifying Party, before expiration of a representation
or warranty, either a Claim Notice based upon a breach of such representation or
warranty or an Expected Claim Notice based upon a breach of such representation
or warranty, then the applicable representation or warranty shall survive until,
but only for purposes of, the resolution of any claims arising from or related
to the matter covered by such notice. If the legal proceeding or written claim
with respect to which an Expected Claim Notice has been given is definitively
withdrawn or resolved in favor of the Indemnified Party, the Indemnified Party
shall promptly so notify the Indemnifying Party. The rights to indemnification
set forth in this Article VII shall not be affected by (i) any investigation
conducted by or on behalf of an Indemnified Party or any knowledge acquired (or
capable of being acquired) by an Indemnified Party, whether before or after the
date of this Agreement or the Closing Date, with respect to the inaccuracy or
noncompliance with any representation, warranty, covenant or obligation which is
the subject of indemnification hereunder or (ii) any waiver by an Indemnified
Party of any closing condition relating to the accuracy of any representations
and warranties or the performance of or compliance with agreements and
covenants. Notwithstanding the foregoing, if Thomson Learning provides SkillSoft
PLC with supplemental information relating to an event or
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circumstance that Thomson Learning certifies in writing to SkillSoft PLC gives
rise to the Buyers' right to terminate this Agreement in accordance with the
provisions of Section 10.1(b), then, if SkillSoft PLC does not elect to so
terminate this Agreement within five (5) Business Days after such disclosure and
certification, such supplemental information shall constitute an amendment of
the representation, warranty or statement to which it relates for purposes of
Article V, this Article VII and Article X of this Agreement such that SkillSoft
PLC shall not be entitled to (x) refuse to close the transactions contemplated
by this Agreement (assuming the fulfillment or waiver of all of the other
conditions to Closing set forth in Sections 5.1 and 5.2), (y) indemnification
with respect to such matter to the extent of the information so disclosed or (z)
terminate this Agreement with respect to such matter to the extent of the
information so disclosed; provided that if such supplemental information is
provided to SkillSoft PLC less than two (2) full Business Days prior to the
scheduled Closing Date, then the Closing Date shall be deferred by two (2)
Business Days to provide SkillSoft PLC with sufficient time to evaluate such
information.
7.5 Limitations.
(a) Notwithstanding anything to the contrary herein, (i) the
aggregate liability of Thomson Learning for Damages under Section 7.1(a) shall
not exceed $57,000,000; (ii) Thomson Learning shall not be liable under Section
7.1(a) unless and until the aggregate Damages for which they would otherwise be
liable under Section 7.1(a) exceed $3,000,000 (at which point the Sellers shall
become liable for the aggregate Damages under Section 7.1(a) in excess of
$3,000,000); and (iii) no Damages may be claimed under Section 7.1(a) by the
Buyers or shall be included in calculating the aggregate Damages set forth in
clause (ii) above other than Damages in excess of $75,000 resulting from any
single claim or aggregated claims arising out of the same or substantially
similar facts, events or circumstances; provided that the limitations set forth
in this sentence shall not apply to a claim pursuant to Section 7.1(a) relating
to a breach of the representations and warranties set forth in Section 2.1, 2.2
or 2.3 with respect to which Thomson Learning's cumulative obligation shall in
no event exceed the Purchase Price. For purposes solely of this Article VII, all
representations and warranties of the Sellers in Article II (other than Sections
2.6(a) and 2.7(a)) shall be construed as if the term "material" and any
reference to "Business Material Adverse Effect" (and variations thereof) were
omitted from such representations and warranties.
(b) Notwithstanding anything to the contrary herein, (i) the
aggregate liability of SkillSoft PLC for Damages under Section 7.2(a) shall not
exceed $57,000,000; (ii) SkillSoft PLC shall not be liable under Section 7.2(a)
unless and until the aggregate Damages for which it would otherwise be liable
under Section 7.2(a) exceed $3,000,000 (at which point SkillSoft PLC shall
become liable for the aggregate Damages under Section 7.2(a) in excess of
$3,000,000); and (iii) no Damages may be claimed under Section 7.1(a) by the
Sellers or shall be included in calculating the aggregate Damages set forth in
clause (ii) above other than Damages in excess of $75,000 resulting from any
single claim or aggregated claims arising out of the same or substantially
similar facts, events or circumstances; provided that the limitations set forth
in this sentence shall not apply to a claim pursuant to Section 7.2(a) relating
to a breach of the representations and warranties set forth in Section 3.1, 3.2,
3.6 or 3.8.
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(c) Except with respect to claims based on fraud, after the Closing,
the rights of the Indemnified Parties under this Article VII shall be the
exclusive remedy of the Indemnified Parties with respect to claims resulting
from or relating to any misrepresentation, breach of warranty or failure to
perform any covenant or agreement contained in this Agreement.
(d) The amount of any Damages payable under this Article VII by the
Indemnifying Party shall be net of amounts actually recovered by the Indemnified
Party under applicable insurance policies. If an Indemnified Party receives any
amounts under applicable insurance policies for any Damages subsequent to an
indemnification payment by any Indemnifying Party, and provided that the
Indemnified Party has collected all sums due from the Indemnifying Party, then
the amount of Damages to be recovered by the Indemnified Party shall be
recalculated, taking into account the limitations of this Section 7.5, as if
such insurance proceeds had been made prior to collection of any Damages under
this Agreement and any excess Damages previously collected after such
recalculation shall be repaid to the Indemnifying Party. Each Indemnified Party
shall use its commercially reasonable efforts to pursue claims for Damages under
its then existing insurance policies.
(e) The Buyers shall not be entitled to make any claim for
indemnification with respect to any matter to the extent such matter has been
taken into consideration in determining any Purchase Price adjustment or whether
any Purchase Price adjustment is made.
7.6 Treatment of Indemnity Payments. Any payments made to an Indemnified
Party pursuant to this Article VII or pursuant to Article VIII shall be treated
as an adjustment to the Purchase Price for tax purposes.
7.7 Tax Matters. With the exception of Section 7.1(e) and Section 7.6 and
the express reference to Tax matters in Section 7.4, anything in this Article
VII to the contrary notwithstanding, the rights and obligations of the parties
with respect to indemnification for any and all Tax matters shall be governed
solely by Article VIII and shall not be subject to the provisions of this
Article VII.
ARTICLE VIII
TAX MATTERS
8.1 Preparation and Filing of Tax Returns; Payment of Taxes.
(a) The Sellers shall prepare and timely file or shall cause to be
prepared and timely filed (i) all Tax Returns for any Income Taxes of each
Business Subsidiary for all taxable periods that end on or before the Closing
Date and (ii) all other Tax Returns of any Business Subsidiary required to be
filed (taking into account extensions) prior to the Closing Date. The Sellers
shall make or cause to be made all payments required with respect to any such
Tax Returns. The Buyers shall reimburse the Sellers in accordance with the
provisions of Section 8.6 for the amount of any such Taxes paid by the Sellers
(i) to the extent such Taxes are attributable (as determined under Section 8.3
hereof) to periods following the Closing Date and (ii) to the extent of any Tax
Reserves.
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(b) SkillSoft PLC shall prepare and timely file or shall cause to be
prepared and timely filed all other Tax Returns for each Business Subsidiary.
SkillSoft PLC shall make all payments required with respect to any such Tax
Returns; provided, however, that the Sellers shall reimburse SkillSoft PLC in
accordance with the provisions of Section 8.6 to the extent any payment
SkillSoft PLC is required to make relates to the operations of the Business for
any period ending (or deemed pursuant to Section 8.3(b) to end) on or before the
Closing Date to the extent such portion of the payment exceeds the amount of the
Tax Reserves.
(c) Any Tax Return of a Business Subsidiary to be prepared and filed
for taxable periods beginning before the Closing Date and ending after the
Closing Date shall be prepared on a basis consistent with the last previous
similar Tax Return to the extent permitted by applicable Law. SkillSoft PLC
shall provide the Sellers with a copy of each proposed Tax Return (and such
additional information regarding such Tax Return as may reasonably be requested
by the Sellers) at least 30 days prior to the filing of such Tax Return, and the
Sellers and their authorized representative shall have the right to review and
comment on such Tax Return and information prior to the filing of such Tax
Return. The Sellers and the Buyers agree to consult and to attempt in good faith
to resolve any issues arising as a result of the review of such Tax Return and
information by the Sellers or their authorized representative.
(d) The Sellers shall be responsible for the payment of any
transfer, sales, use, stamp, conveyance, value-added, recording, registration,
documentary, filing and other non-Income Taxes and administrative fees
(including, without limitation, notary fees) (collectively, "Conveyance Taxes")
arising in connection with the consummation of the transactions contemplated by
this Agreement, other than Irish stamp duty, which shall be solely the
responsibility of the Buyers.
8.2 Tax Indemnification.
(a) The Sellers shall jointly and severally indemnify and hold
harmless the Buyers, each Business Subsidiary (except that in the case of
Thomson NETg Ltd (U.K.) the parties agree that any indemnification claim shall
be made exclusively to SkillSoft PLC) and any successors thereto or Affiliates
thereof in respect of and against (x) the failure to perform any covenant or
agreement set forth in this Article VIII and (y) without duplication, the
following Taxes to the extent such Taxes exceed the Tax Reserves (the "Excluded
Taxes"):
(i) any Taxes for any Taxable period ending (or deemed
pursuant to Section 8.3(b) to end) on or before the Closing Date due and payable
by (x) any Buyer in respect of the Business, (y) any Business Subsidiary or (z)
any Seller (for the avoidance of doubt, Taxes for any Taxable period include any
penalties, interest or additions thereto, whether or not accruing in such
Taxable period or in any subsequent Taxable period including the periods after
the Closing Date);
(ii) any Taxes for which any Business Subsidiary may be liable
as a member of an affiliated, consolidated or unitary group on or before the
Closing Date, including pursuant to Treasury Regulations Section 1.1502-6 or
under any comparable or similar provision of state, local or foreign laws, as a
transferee or successor, or pursuant to any contractual obligation;
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(iii) any Conveyance Taxes, other than Irish stamp duty,
arising in connection with the consummation of the transactions contemplated by
this Agreement whether levied on any Buyer, any Seller, any Business Subsidiary
or any other respective Affiliate, but only to the extent borne by any Buyer or
any Business Subsidiary or any their respective Affiliates and only to the
extent that such Conveyance Taxes may not be claimed back or recovered by the
person bearing such Taxes or refunded thereto;
(iv) any Taxes incurred by any Business Subsidiary arising out
of the elimination of inter-company items as required by Section 4.10 hereof or
resulting from the treatment of any deferred inter-company gain or any excess
loss account under any provision of foreign Tax law corresponding or similar to
the Treasury Regulations under Section 1502 of the Code in connection with the
transactions contemplated by this Agreement; and
(v) any and all liabilities, whether or not associated with a
particular tax liability, arising with respect to Taxable periods ending (or
deemed pursuant to Section 8.3(b) to end) on or before the Closing Date out of
the failure of any Asset Seller or any Business Subsidiary to comply with the
laws, regulations or other requirements of any Governmental Entity prior to the
Closing Date including, without limitation, penalties imposed for failure to
file required Tax Returns or maintain required records in connection with
transfer pricing.
(b) The Buyers shall indemnify and hold harmless the Sellers in
respect of and against (x) the failure to perform any covenant or agreement set
forth in this Article VIII and (y) without duplication, the following Taxes:
(i) any and all Taxes due and payable by any Business
Subsidiary for any taxable period beginning (or deemed pursuant to Section
8.3(b) to begin) after the Closing Date other than Taxes for which the Sellers
are liable pursuant to Section 8.2(a)(ii);
(ii) the Tax Reserves; and
(iii) any Irish stamp duty arising in connection with the
consummation of the transactions contemplated by this Agreement.
(c) The Buyers and Thomson France agree that neither the Buyers nor
NETg S.A. (France) will be authorized to seek any indemnification from Thomson
France in respect of the net operating losses incurred by NETg S.A. (France) on
the tax periods closed on December 31, 2004 and December 31, 2005 and
transferred to Thomson France in accordance with the rules applicable to French
tax-consolidated groups.
8.3 Allocation of Certain Taxes.
(a) The Buyers and the Sellers agree that if any Seller or any
Business Subsidiary is permitted but not required under applicable foreign,
state or local Tax laws to treat the Closing Date as the last day of a taxable
period, the Buyers and such Seller shall treat such day as the last day of a
taxable period. The Buyers and the Sellers agree that they will treat each
Business Subsidiary as if it ceased to be part of the affiliated group of
corporations of which such Seller is a member within the meaning of Section 1504
of the Code, and any comparable or
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similar provision of state, local or foreign laws or regulations, as of the
close of business on the Closing Date.
(b) Any Taxes for a taxable period beginning before and ending after
the Closing Date shall be paid by any Buyer or its Affiliates, and the portion
of any such Taxes allocable to the portion of such period ending on the Closing
Date shall be deemed to equal (i) in the case of Taxes that (x) are based upon
or related to income or receipts or (y) are imposed in connection with any sale
or other transfer or assignment of property, other than Taxes described in
Section 8.1(d), the amount which would be payable if the taxable year ended with
the Closing Date, and (ii) in the case of other Taxes imposed on a periodic
basis (including property Taxes), the amount of such Taxes for the entire period
multiplied by a fraction the numerator of which is the number of calendar days
in the period ending with the Closing Date and the denominator of which is the
number of calendar days in the entire period. For purposes of the provisions of
Section 8.1, each portion of such period shall be deemed to be a Taxable period
(whether or not it is in fact a Taxable period).
8.4 Cooperation on Tax Matters; Tax Audits.
(a) The Buyers and the Sellers and their respective Affiliates shall
cooperate in the preparation of all Tax Returns for any Tax periods for which
one Party could reasonably require the assistance of the other Party in
obtaining any necessary information. Such cooperation shall include, but not be
limited to, furnishing prior years' Tax Returns or return preparation packages
for each Business Subsidiary and for the Acquired Assets to the extent related
to the Business illustrating previous reporting practices or containing
historical information relevant to the preparation of such Tax Returns, and
furnishing such other information within such Party's possession requested by
the Party filing such Tax Returns as is relevant to their preparation. Such
cooperation and information also shall include promptly forwarding copies of
appropriate notices and forms or other communications received from or sent to
any Taxing Authority which relate to the Business or any Business Subsidiary,
and providing copies of all relevant Tax Returns of the Business Subsidiaries or
to the extent related to the Business, together with accompanying schedules and
related workpapers, documents relating to rulings or other determinations by any
Taxing Authority and records concerning the ownership and Tax basis of property,
which the requested Party may possess. The Buyers and the Sellers and their
respective Affiliates shall make their respective employees and facilities
available on a mutually convenient basis to explain any documents or information
provided hereunder. Notwithstanding anything to the contrary in Section 6.4,
each of the Sellers and the Buyers shall retain all Tax Returns, work papers and
all material records or other documents in its possession (or in the possession
of its Affiliates) relating to Tax matters of any Business Subsidiary for any
taxable period that includes the Closing Date and for all prior taxable periods
until the later of (i) the expiration of the statute of limitations of the
taxable periods to which such Tax Returns and other documents relate, without
regard to extensions or (ii) six years following the due date (without
extension) for such Tax Returns. After such time, before any Seller or any Buyer
shall dispose of any such documents in its possession (or in the possession of
its Affiliates), the other party shall be given an opportunity, after ninety
(90) days' prior written notice, to remove and retain all or any part of such
documents as such other party may select (at such other party's expense). Any
information obtained under this Section 8.4 shall be kept
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confidential, except as may be otherwise necessary in connection with the filing
of Tax Returns or claims for refund or in conducting an audit or other
proceeding.
(b) (i) After the Closing, the Buyers shall promptly notify the
Sellers in writing of the proposed assessment or the commencement of any Tax
audit or administrative or judicial proceeding or of any demand or claim on any
Buyer, its Affiliates, or any Business Subsidiary which, if determined adversely
to the taxpayer or after the lapse of time, could be grounds for indemnification
by any Seller under Section 8.2 or which, in the case of a Tax audit of the
French Business Subsidiary, relates to the years 2004 and 2005 (during which
such periods such Business Subsidiary was part of the French Seller
tax-consolidated group). Such notice shall contain factual information (to the
extent known to any Buyer, its Affiliates or any Business Subsidiary) describing
the asserted Tax liability in reasonable detail and shall include copies of any
notice or other document received from any taxing authority in respect of any
such asserted Tax liability. If any Buyer fails to give any Seller prompt notice
of an asserted Tax liability as required by this Section 8.4(b), then such
Seller shall not have any obligation to indemnify for any loss arising out of
such asserted Tax liability, but only to the extent that failure to give such
notice results in a detriment to such Seller. If SkillSoft PLC fails to give
Thomson France prompt notice of the commencement of any Tax audit relating to
the period during which the French Business Subsidiary was part of the French
Seller tax-consolidated group, then SkillSoft PLC shall have an obligation to
indemnify the French Seller for any damage arising out of this lack of
notification, but only to the extent that failure to give such notice results in
a detriment to the French Seller. If SkillSoft PLC fails to give Thomson Germany
prompt notice of the commencement of any Tax audit relating to the period during
which NETg GmbH (Germany) was part of the Thomson Germany tax-consolidated
group, then SkillSoft PLC shall have an obligation to indemnify Thomson Germany
for any damage arising out of this lack of notification, but only to the extent
that failure to give such notice results in a detriment to Thomson Germany.
(ii) In the case of a Tax audit or administrative or judicial
proceeding (a "Contest") that relates solely to taxable periods ending on or
before the Closing Date, each Seller shall have the sole right, at its expense,
to control the conduct of such Contest; provided, however, that such Sellers may
not settle or resolve any Contest if such settlement or resolution would
adversely affect any Buyer, any Business Subsidiary or any of their Affiliates
without the prior consent of SkillSoft PLC.
(iii) The Sellers shall have the right, at their own expense,
to control any Tax Audit, initiate any claim for refund, contest, resolve and
defend against any assessment, notice of deficiency, or other adjustment or
proposed adjustment relating to any and all Taxes for any taxable period ending
on or before the Closing Date with respect to the Business; provided, however,
that the Sellers may not settle or resolve any Contest if such settlement or
resolution would adversely affect any Buyer, any Business Subsidiary or any of
their Affiliates without the prior consent of SkillSoft PLC. SkillSoft PLC shall
have the right, at its own expense, to control any other Tax Audit, initiate any
other claim for refund, and contest, resolve and defend against any other
assessment, notice of deficiency, or other adjustment or proposed adjustment
relating to Taxes with respect to the Business; provided that, with respect to
(i) any state, local or foreign Taxes for any taxable period beginning before
the Closing Date and ending after the Closing Date and (ii) any item the
adjustment of which may cause any Seller to become obligated to
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make any payment pursuant to Section 8.1(a) hereof, SkillSoft PLC shall consult
with such Seller with respect to the resolution of any issue that would affect
such Seller, and not settle any such issue, or file any amended Tax Return
relating to such issue, without the consent of the Seller. Where consent to a
settlement is withheld by any Seller pursuant to this Section 8.4(b), such
Seller may continue or initiate any further proceedings at its own expense,
provided that any liability of the Buyers, after giving effect to this
Agreement, shall not exceed the liability that would have resulted had such
Seller not withheld its consent.
(iv) Each Buyer and each Seller agree to cooperate, and
SkillSoft PLC agrees to cause the Business Subsidiaries to cooperate, in the
defense against or compromise of any claim in any Contest.
8.5 Termination of Tax Sharing Agreements.
(a) Except for the Tax sharing agreement to which NETg Australia
Pty. Ltd. (Australia) is a party, all Tax sharing agreements or similar
arrangements with respect to or involving the Business shall be terminated prior
to the Closing Date, and, on and after the Closing Date, each Buyer, the
Business Subsidiaries and each Buyer's Affiliates shall not be bound thereby or
have any liability thereunder for amounts due in respect of periods ending on or
before the Closing Date. As from the Closing Date, SkillSoft PLC shall not raise
and shall procure that NETg GmbH (Germany) will not raise any claims (including
without limitation any possible claim for damages or other claims based on
German corporate law or the law concerning groups of companies (KONZERNRECHT))
arising under or in connection with, or in relation to the termination of, the
Profit and Loss Pooling Agreement (GEWINNABFUHRUNGSVERTRAG) between Thomson
Germany and NETg GmbH dated September 13, 2004 (the "Profit and Loss Pooling
Agreement"), which shall be terminated as of or prior to the Closing Date.
Thomson Germany shall cause NETg GmbH to shorten its current business year so
that such fiscal year ends at a time on or prior to the Closing Date, provided,
however, that the Profit and Loss Pooling Agreement shall be terminated as of
the same date. Nothing herein shall prevent SkillSoft PLC and/or NETg GmbH from
exercising any and all of their rights to indemnification in accordance with
Articles VII and VIII.
(b) The parties to this Agreement agree that if any payment is made
after the Closing by Thomson Germany to NETg GmbH (the "First Case"), or by NETg
GmbH to Thomson Germany (the "Second Case"), under or in connection with the
termination of the Profit and Loss Pooling Agreement, such payment shall be
treated as an adjustment to the Purchase Price. Promptly after such payments are
made, SkillSoft PLC shall make a payment to Thomson Germany in an amount equal
to any amount paid by Thomson Germany to NETg GmbH in the First Case, and
Thomson Germany shall make a payment to SkillSoft PLC in an amount equal to any
amount paid by NETg GmbH to Thomson Germany in the Second Case (the "Subsequent
Payments"). The parties agree that such Subsequent Payments, if any, shall be
treated as adjustments to the Purchase Price.
8.6 Time of Payment. Payment by any Seller or any Buyer of any amounts due
under this Article VIII in respect of Taxes shall be made (a) at least three
Business Days before the due date of the applicable estimated or final Tax
Return required to be filed by the other party and (b) within three Business
Days following an agreement between any Seller and any Buyer that an
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indemnity amount is payable, an assessment of a Tax by a taxing authority, or a
"determination" as defined in Section 1313(a) of the Code. If liability under
this Article VIII is in respect of costs or expenses other than Taxes, payment
by any Seller or any Buyer of any amounts due under this Article VIII shall be
made within five Business Days after the date when the Seller or the Buyer, as
applicable, has been notified by the other party that such party has a liability
for a determinable amount under this Article VIII and is provided with
calculations or other materials supporting such liability.
8.7 Tax Refunds and Tax Benefits.
(a) Any Tax refund, credit or similar benefit (including any
interest paid or credited with respect thereto) relating to taxable periods (or
portions of taxable periods) ending on or before the Closing Date (except for
refunds of Taxes included in the Tax Reserves, which shall be the property of
the applicable Buyer and, if paid to the Sellers, shall be paid over promptly to
such Buyer) shall be the property of the Sellers, and, if received by any Buyer
or any Business Subsidiary, shall be paid over promptly to the Sellers. The
Buyers shall, if the Sellers so request and at the Sellers' expense, cause one
of the Business Subsidiaries or other relevant entity to file for and use its
reasonable best efforts to obtain and expedite the receipt of any refund to
which the Sellers are entitled under this Section 8.7. The Buyers shall permit
the Sellers to participate (at the Sellers' expense) in the prosecution of any
such refund claim. Notwithstanding the foregoing, the Buyers shall be entitled
to any refund resulting from the carry-back of any item of loss, deduction or
credit which arises in a Taxable period or portion thereof beginning after the
Closing Date to any Taxable period ending on or before the Closing Date.
(b) Any amount otherwise payable by the Sellers under Section 8.2
shall be reduced by any Tax benefit available to, and actually realized (or
realizable in the Taxable period in which the indemnity claim arose or prior
Taxable periods) by, any Buyer, its Affiliates or any Business Subsidiary
arising in connection with any underlying adjustment resulting in the obligation
of any Buyer, its Affiliates or any Business Subsidiary to pay Taxes or other
amounts for which the Sellers are responsible under Section 8.2 or the accrual,
incurrence or payment of such Taxes.
8.8 Tax Covenants. Except to the extent required by any applicable law,
without the prior written consent of the Seller:
(a) No Buyer nor any Affiliate of any Buyer shall take, or cause or
permit any Business Subsidiary to take, any action or omit to take any action
which could increase the Sellers' or any of their Affiliates' liability for
Taxes.
(b) No Buyer nor any Affiliate of any Buyer shall amend, refile or
otherwise modify, or cause or permit any Business Subsidiary to amend, refile or
otherwise modify, any Tax election or Tax Return with respect to any Taxable
period (or portion of any Taxable period) ending on or before the Closing Date;
provided, however, that any Buyer may make (without the consent of the Sellers)
any filing in connection with a claim for refund pursuant to Section 8.7(a) if
such filing does not adversely affect the Sellers or any of their Affiliates.
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8.9 Miscellaneous.
(a) Except as provided in Section 7.7, this Article VIII shall be
the sole provision governing indemnities for Taxes under this Agreement.
(b) For purposes of this Article VIII, all references to the Buyers,
the Sellers, Affiliates, and any Business Subsidiary include successors.
(c) Notwithstanding any provision in this Agreement to the contrary,
the covenants and agreements of the parties hereto contained in this Article
VIII shall survive the Closing and shall remain in full force until the 30th day
following the expiration of the applicable statutes of limitations for the Taxes
in question (taking into account any extensions or waivers thereof).
(d) Payments by the Sellers under this Article VIII shall be limited
to the amount of any liability or damage that remains after deducting therefrom
any indemnity, contribution or other similar payment recoverable by the Buyer or
any of the Business Subsidiaries or any Affiliates of the Buyer from any third
party with respect thereto.
ARTICLE IX
REGISTRATION RIGHTS
9.1 Demand Registration. SkillSoft PLC agrees that, upon the request of
any holder of the Buyer ADSs issued pursuant to Section 1.4 (the "Holders"), it
will file a registration statement relating to an underwritten public offering
(a "Registration Statement") under the Securities Act as to the number of Buyer
ADSs specified in such request (a "Demand Registration").
9.2 Limitations on Registration Rights.
(a) SkillSoft PLC may, by written notice to the Holders, (i) delay
the filing or effectiveness of the Registration Statement by no more than 45
days, in the event that SkillSoft PLC is engaged in any transaction or
negotiations for any transaction that SkillSoft PLC desires to keep confidential
for business reasons, if SkillSoft PLC determines in good faith upon the advice
of outside counsel that the public disclosure requirements imposed on SkillSoft
PLC under the Securities Act in connection with the Registration Statement would
require disclosure of such activity, transaction, preparations or negotiations.
SkillSoft PLC shall not delay the filing or effectiveness of the Registration
Statement more than once for each Demand Registration.
(b) If SkillSoft PLC delays the filing of a Registration Statement,
SkillSoft PLC shall, as promptly as practicable following the termination of the
circumstance which entitled SkillSoft PLC to do so or the delay period referred
to in Section 9.2, whichever is earlier, take such actions as may be necessary
to file and have such Registration Statement declared effective. If as a result
thereof the prospectus included in the Registration Statement has been amended
to comply with the requirements of the Securities Act, SkillSoft PLC shall
provide notice of such amendment to the Holders with the notice to the Holders
given pursuant to this paragraph (b), and the Holders shall make no offers or
sales of shares pursuant to the Registration Statement other than by means of
such revised prospectus.
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(c) SkillSoft PLC shall not be required to file a Registration
Statement prior to such time as all financial statements required under the
Securities Act to be included therein are available and all required
accountants' consents have been obtained;
(d) SkillSoft PLC shall not be required to file a Registration
Statement prior to the date that is 16 months following the Closing Date,
provided, however, that if requested by the Holders, SkillSoft PLC shall file a
Registration Statement prior to the date that is 18 months following the Closing
Date (but in no event earlier than the date that is 16 months following the
Closing Date) and SkillSoft PLC shall use its commercially reasonable efforts to
cause such registration statement to become effective by the date that is 18
months following the Closing Date. Notwithstanding the foregoing, nothing in
this Section 9.2(d) shall require SkillSoft PLC to request the acceleration of
the effectiveness of such Registration Statement before the date that is 18
months following the Closing Date;
(e) SkillSoft PLC shall not be required to file more than two
Registration Statements;
(f) only Holders may register shares pursuant to a Demand
Registration; and
(g) the Holders shall not make more than one request for a Demand
Registration in any six month period.
9.3 Registration Procedures.
(a) In connection with the filing by SkillSoft PLC of the
Registration Statement, SkillSoft PLC shall file with the SEC a copy of the
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act.
(b) SkillSoft PLC shall use its best efforts to register or qualify
the Buyer ADSs covered by the Registration Statement under the securities laws
of each state of the United States; provided, however, that SkillSoft PLC shall
not be required in connection with this paragraph (b) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction.
(c) If SkillSoft PLC has filed with the SEC preliminary or final
prospectuses as part of the Registration Statement and after having done so the
prospectus is amended or supplemented to comply with the requirements of the
Securities Act, SkillSoft PLC shall promptly notify the Holders and, if
requested by SkillSoft PLC, the Holders shall immediately cease making offers or
sales of shares under the Registration Statement. Following the filing of such
amended or supplemented prospectuses, the Holders shall be free to resume making
offers and sales under the Registration Statement.
(d) SkillSoft PLC shall pay the expenses incurred by it in complying
with its obligations under this Article IX, including all registration and
filing fees, exchange listing fees, fees and expenses of counsel for SkillSoft
PLC, and fees and expenses of accountants for SkillSoft PLC, but excluding (i)
any brokerage fees, selling commissions or underwriting discounts incurred by
the Holders in connection with sales under the Registration Statement and (ii)
the fees and expenses of any counsel retained by the Holders.
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(e) In the case of each Demand Registration, the Holders and
SkillSoft PLC shall each select one joint book-runner (each of whom shall be
entitled to equal stature, participation and economics in the Demand
Registration), and any additional underwriters and managers to be used in
connection with the offering shall be selected by Thomson Learning, subject to
SkillSoft PLC's reasonable approval. In addition, SkillSoft PLC agrees to (i)
promptly provide the Holders and the underwriters with such information,
documents and materials as may be reasonably requested by each of them in order
for them to complete their due diligence on SkillSoft PLC; (ii) enter into an
underwriting agreement containing customary representations and warranties with
respect to the business and operations of SkillSoft PLC and customary covenants
and agreements to be performed by SkillSoft PLC, including customary provisions
with respect to indemnification by SkillSoft PLC of the underwriters of such
offering; (iii) use its reasonable best efforts to cause its legal counsel to
render customary opinions to the underwriters with respect to the Registration
Statement; and (iv) use its reasonable best efforts to cause its independent
public accounting firm to issue customary "cold comfort letters" to the
underwriters with respect to the Registration Statement.
(f) For each Demand Registration effected pursuant to this Article
IX, SkillSoft PLC shall use its reasonable best efforts to make available its
executive officers for a seven (7) Business Day period, to participate and to
cooperate with the Holders and any underwriters in any "road shows" or other
selling efforts, in each case in the United States, that may be reasonably
requested upon reasonable notice thereof by the Holders.
9.4 Requirements of the Holders.
(a) Each Holder shall furnish to SkillSoft PLC in writing such
information regarding it and the proposed sale of Buyer ADSs by it as SkillSoft
PLC may reasonably request in writing in connection with the Registration
Statement or as shall be required in connection therewith by the SEC or any
state securities law authorities.
(b) Each Holder shall:
(i) indemnify SkillSoft PLC and each of its directors and
officers against, and hold SkillSoft PLC and each of its directors and officers
harmless from, any losses, claims, damages, expenses or liabilities (including
reasonable attorneys fees) to which SkillSoft PLC or such directors and officers
may become subject by reason of any statement or omission in the Registration
Statement made in reliance upon, or in conformity with, a written statement by
the Holders furnished pursuant to this Section 9.4; and
(ii) report to SkillSoft PLC sales made pursuant to the
Registration Statement.
9.5 Indemnification. SkillSoft PLC agrees to indemnify and hold harmless
the Holders against any losses, claims, damages, expenses or liabilities to
which the Holders may become subject by reason of any untrue statement of a
material fact contained in the Registration Statement or any omission to state
therein a fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages, expenses
or liabilities arise out of or are based upon information furnished to SkillSoft
PLC by or
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on behalf of the Holders for use in the Registration Statement. SkillSoft PLC
shall have the right to assume the defense and settlement of any claim or suit
for which SkillSoft PLC may be responsible for indemnification under this
Section 9.5.
9.6 Assignment of Rights. Each Holder may assign any of its rights under
this Article IX to any Affiliate.
ARTICLE X
TERMINATION
10.1 Termination of Agreement. The Parties may terminate this Agreement
prior to the Closing, as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent;
(b) so long as each Buyer is in compliance in all material respects
with its obligations under this Agreement, except with respect to Sections 4.2
and 4.8, in which case such Buyer shall be in full compliance with such
provisions, the Buyers may terminate this Agreement by giving written notice to
Thomson Learning in the event any Seller is in breach of any representation,
warranty or covenant contained in this Agreement, and such breach, individually
or in combination with any other such breach, (i) would cause the conditions set
forth in clauses (b) or (c) of Section 5.2 not to be satisfied and (ii) is not
cured within 20 Business Days following delivery by SkillSoft PLC to Thomson
Learning of written notice of such breach; provided, however, that the Buyers
may not terminate this Agreement pursuant to this Section 10.1(b) following the
Condition Date in connection with a breach causing the condition in Section
5.2(b) or 5.2(d) not to be satisfied;
(c) so long as each Seller is in compliance in all material respects
with its obligations under this Agreement, the Sellers may terminate this
Agreement by giving written notice to SkillSoft PLC in the event any Buyer is in
breach of any representation, warranty or covenant contained in this Agreement,
and such breach, individually or in combination with any other such breach, (i)
would cause the conditions set forth in clauses (a) or (b) of Section 5.3 not to
be satisfied and (ii) is not cured within 20 days following delivery by Thomson
Learning to SkillSoft PLC of written notice of such breach;
(d) so long as each Buyer is in compliance in all material respects
with its obligations under this Agreement, except with respect to Sections 4.2
and 4.8, in which case such Buyer shall be in full compliance with such
provisions, the Buyers may terminate this Agreement by giving written notice to
Thomson Learning if the Closing shall not have occurred on or before the
Termination Date by reason of the failure of any condition precedent under
Section 5.2(c) (unless the failure shall have been caused by or resulted from a
breach by any Buyer of any representation, warranty or covenant contained in
this Agreement); provided, however, that the Buyers shall not have the right to
terminate this Agreement pursuant to this Section 10.1(d) if at the time of such
termination the condition precedent set forth in Section 5.1 is not satisfied;
(e) the Sellers may terminate this Agreement by giving written
notice to SkillSoft PLC if the Closing shall not have occurred on or before the
Termination Date by reason
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of the failure of any condition precedent under Section 5.1 or 5.3 (unless the
failure results primarily from a breach by the Seller of any representation,
warranty or covenant contained in this Agreement); or
(f) notwithstanding any other provision of this Agreement to the
contrary, the Buyers may terminate this Agreement by giving written notice to
Thomson Learning in the event that (i) Thomson Learning is in breach of any of
its obligations under Section 4.3(b) or 4.3(d), (ii) the total revenue of the
Business for the year ended December 31, 2005 as shown in the Audited Financial
Statements (the "Audited 2005 Revenue") is less than or equal to $137,530,000,
or (iii) the Audited 2005 Expenses are greater than or equal to $200,100,000.
10.2 Effect of Termination. If either the Sellers or the Buyers terminate
this Agreement pursuant to Section 10.1, all obligations of the Parties
hereunder shall terminate without any liability of any Party to the other
Parties (except for any liability of a Party for breaches of this Agreement
prior to such termination). Section 4.7 and Article XII shall survive any
termination of this Agreement.
ARTICLE XI
DEFINITIONS
For purposes of this Agreement, each of the following terms shall have the
meaning set forth below.
"Acquired Assets" shall mean all of the assets, properties and rights of
the Asset Sellers of every kind, nature, character and description, tangible and
intangible, real, personal or mixed, wherever located, existing as of the
Closing Date which are primarily or exclusively used in or relate primarily or
exclusively to the Business (provided, however, that the Parties acknowledge and
agree that the sole asset of TGR that relates primarily or exclusively to the
Business is the Monsoon Platform), other than the Excluded Assets or in
connection with the Transition Services including:
(a) all trade and other accounts receivable (other than the Course
ILT Receivables) and notes and loans receivable that are payable to the Asset
Sellers, and all rights to unbilled amounts for products delivered or services
provided, together with any security held by the Asset Sellers for the payment
thereof;
(b) all Course ILT Receivables arising after the Closing;
(c) all inventories;
(d) all computers, equipment, furniture, fixtures, supplies,
leasehold improvements, and other tangible personal property;
(e) all real property, leaseholds and subleaseholds in real
property, and easements, rights-of-way and other appurtenants thereto;
(f) all Company Owned Intellectual Property;
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(g) all rights under Assigned Contracts;
(h) all claims, prepayments, deposits, refunds, causes of action,
choises in action, rights of recovery, rights of setoff and rights of
recoupment;
(i) all Permits;
(j) all books, records, accounts, ledgers, files, documents,
correspondence, lists (including customer and prospect lists), employment
records, manufacturing and procedural manuals, sales and promotional materials,
studies, reports and other printed or written materials; and
(k) the Monsoon Platform.
"Acquired Company" shall have the meaning set forth in Section 6.3(a)(iv).
"Affiliate" shall mean any affiliate, as defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended.
"Affiliated Group" shall mean a group of corporations with which the
Sellers or a Business Subsidiary has filed (or was required to file)
consolidated, combined, unitary or similar Tax Returns.
"Agreed Amount" shall mean part, but not all, of the Claimed Amount.
"Allocation" shall have the meaning set forth in Section 1.6(b).
"Allocation Accounting Firm" shall have the meaning set forth in Section
1.6(b).
"Ancillary Agreements" shall mean the Transition Services Agreement in
substantially the form attached hereto as Exhibit F and the License Agreement.
"Asset Seller" shall have the meaning set forth in the first paragraph of
this Agreement.
"Assigned Contracts" shall mean any contracts, agreements or instruments
to which the Asset Sellers are a party and which relate primarily or exclusively
to the Business, including the Material Contracts and any agreements or
instruments securing any amounts owed to the Asset Sellers, any leases or
subleases of real property, any employment contracts and any licenses or
sublicenses relating to Company Intellectual Property.
"Assumed Liabilities" shall mean any and all liabilities or obligations
(whether known or unknown, absolute or contingent, liquidated or unliquidated,
due or to become due and accrued or unaccrued, and whether claims with respect
thereto are asserted before or after the Closing Date) of the Asset Sellers to
the extent related primarily or exclusively to the Business or the Acquired
Assets including:
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(a) all liabilities of the Asset Sellers reflected in the Most
Recent Balance Sheet or any notes thereto, to the extent they have not been paid
or discharged prior to the Closing Date (other than the Course ILT Payables);
(b) all liabilities of the Asset Sellers which have arisen after the
Balance Sheet Date in the Ordinary Course of Business, to the extent that they
have not been paid or discharged (other than the Course ILT Payables);
(c) all Course ILT Payables arising after the Closing;
(d) all obligations of the Asset Sellers under any Assigned
Contract;
(e) all obligations of the Asset Sellers to customers for the
replacement or return of products sold or licensed in the Ordinary Course of
Business prior to the date of Reorganization; and
(f) all liabilities relating to Taxes.
"Audited 2005 Expenses" shall mean the total expenses for the year ended
December 31, 2005 as shown in the Audited Financial Statements; provided,
however, that Audited 2005 Expenses shall not include expenses resulting from
deferred Taxes and Income Tax provisions, the impairment of goodwill, the
impairment or amortization of identifiable intangibles (other than capitalized
content development or software costs capitalized as part of the Knowledge Net
platform) or stock option compensation.
"Audited 2005 Revenue" shall have the meaning set forth in Section
10.1(f).
"Audited Financial Statements" shall mean the audited combined balance
sheets and statements of income, changes in stockholders' equity and cash flows
of the Business as of the end and for each of the fiscal years ended December
31, 2004 and December 31, 2005.
"Balance Sheet Date" shall mean September 30, 2006.
"Bring Down Date" shall have the meaning set forth in Section 5.2(b).
"Business" shall mean the business of selling, marketing and developing
integrated learning solutions that include instructional content, multiple
delivery options, enabling technologies and/or consulting services as currently
conducted by NETg.
"Business Benefit Plan" shall mean any Employee Benefit Plan maintained,
or contributed to, by any Seller, any Business Subsidiary or any ERISA Affiliate
for the benefit of one or more Business Employees.
"Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which banks in New York, New York are authorized or required to
close under applicable law.
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"Business Employees" shall mean all employees and former employees of any
Seller or any Business Subsidiary who have performed or are performing services
related primarily or exclusively to the Business.
"Business Material Adverse Effect" shall mean any event, circumstance,
development with respect to, change in or effect on the Business that is
materially adverse to the business, assets, liabilities, financial condition or
results of operations of the Business, taken as a whole; provided, however, that
any event, circumstance, development, change or effect arising out of or
relating to the following shall not be taken into account in determining whether
a Business Material Adverse Effect shall have occurred or would be reasonably be
expected to occur (i) changes in general economic conditions which do not have a
disproportionate impact on the Business, (ii) changes affecting generally the
industries or markets in which the Sellers conduct the Business (including legal
and regulatory changes) which do not have a disproportionate impact on the
Business, (iii) the performance by the Sellers of their obligations under this
Agreement or as a result of any action required to be taken under any law or
change in accounting requirements by which any Seller (or any of their
respective properties) is bound or (iv) the announcement or pendency of the
transactions contemplated by this Agreement, including the loss of any customer
of the Business as a result thereof. For the avoidance of doubt, the Parties
agree that the terms "material", "materially" or "materiality" as used in this
Agreement with an initial lower case "m" shall have their respective customary
and ordinary meanings, without regard to the meaning ascribed to Business
Material Adverse Effect.
"Business Subsidiary" shall mean each of NETg S.A. ("NETg France"), NETg
GmbH ("NETg Germany"), NETg Australia Pty Ltd ("NETg Australia"), Thomson NETg
Ltd ("NETg UK") and Wave Technologies Limited ("Wave").
"Buyer and Buyers" shall have the meanings set forth in the first
paragraph of this Agreement.
"Buyer ADRs" shall mean American Depository Receipts evidencing Buyer
ADSs.
"Buyer ADSs" shall mean American Depository Shares of SkillSoft PLC, each
of which represents one Buyer Ordinary Share.
"Buyer Certificate" shall mean a certificate executed by an authorized
officer of SkillSoft PLC to the effect that each of the conditions specified in
clauses (a) and (b) of Section 5.3 has been satisfied as of the Closing Date in
all respects.
"Buyer Charter Documents" shall mean SkillSoft PLC's Memorandum and
Articles of Association, and SkillSoft Inc.'s Certificate of Incorporation.
"Buyer Material Adverse Effect" shall mean any event, circumstance,
development with respect to, change in or effect on SkillSoft PLC or its
subsidiaries that is materially adverse to the business, assets, liabilities,
financial condition or results of operations of SkillSoft PLC and its
subsidiaries, taken as a whole; provided, however, that any event, circumstance,
development, change or effect arising out of or relating to the following shall
not be taken into account in determining whether a Buyer Material Adverse Effect
shall have occurred or would be reasonably be expected to occur (i) changes in
general economic conditions which do not have a
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disproportionate impact on SkillSoft PLC, (ii) changes affecting generally the
industries or markets in which SkillSoft PLC conducts its business (including
legal and regulatory changes) which do not have a disproportionate impact on
SkillSoft PLC, (iii) the performance by SkillSoft PLC of its obligations under
this Agreement or as a result of any action required to be taken under any law
or change in accounting requirements by which SkillSoft PLC (or any of its
properties) is bound or (iv) the announcement or pendency of the transactions
contemplated by this Agreement. A decline in the trading price of the Buyer
ADSs, in and of itself, shall not constitute a Buyer Material Adverse Effect.
For the avoidance of doubt, the parties agree that the terms "material",
"materially" or "materiality" as used in this Agreement with an initial lower
case "m" shall have their respective customary and ordinary meanings, without
regard to the meaning ascribed to Buyer Material Adverse Effect.
"Buyer Ordinary Shares" shall mean the ordinary shares, nominal value
(euro)0.11 per share, of SkillSoft PLC.
"Buyer Reports" shall mean (a) SkillSoft PLC's Annual Report on Form 10-K
for the fiscal year ended January 31, 2004, as filed with SEC, and (b) all other
reports filed by SkillSoft PLC under Section 13 or subsections (a) or (c) of
Section 14 of the Exchange Act with the SEC since February 1, 2004.
"Buyer's Knowledge" or similar terms used in this Agreement shall mean the
actual (but not constructive or imputed) knowledge of Xxxxxxx Xxxxx, Xxxxxx
XxXxxxxx, Xxxx Xxxxx and Xxxx Xxxxx as of the date of this Agreement (or, with
respect to a certificate delivered pursuant to this Agreement, as of the date of
delivery of such certificate) without any implication of verification or
investigation concerning such knowledge.
"Buyer's Savings Plan" shall mean the SkillSoft Inc. 401(k) Plan.
"CERCLA" shall mean the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Claim Notice" shall mean written notification which contains (i) a
description of the Damages incurred or reasonably expected to be incurred by the
Indemnified Party and the Claimed Amount of such Damages, to the extent then
known, (ii) a statement that the Indemnified Party is entitled to
indemnification under Article VII for such Damages and a reasonable explanation
of the basis therefor, and (iii) a demand for payment in the amount of such
Damages (it being understood that only such Damages actually incurred shall be
considered for indemnification in accordance with the terms and subject to the
conditions of Article VII).
"Claimed Amount" shall mean the amount of any Damages incurred or
reasonably expected to be incurred by the Indemnified Party (it being understood
that only Damages actually incurred shall be considered for indemnification in
accordance with the terms and subject to the conditions of Article VIII).
"Closing" shall mean the closing of the transactions contemplated by this
Agreement.
"Closing Date" shall mean (a) the date after the satisfaction or waiver of
all of the conditions to the obligations of the Parties to consummate the
transactions contemplated hereby
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(excluding the delivery at the Closing of any of the documents set forth in
Article V) that is (i) if the debt financing is provided by a third party, the
earlier of (A) the date of the syndication of any third party debt financing by
SkillSoft PLC and (B) thirty (30) days after the satisfaction of the condition
set forth in Section 5.1, (provided, further, that that such period shall not
include any day from and including (i) December 16, 2006 through and including
January 2, 2007 and (ii) August 17, 2007 through and including September 4,
2007), (ii) if the debt financing is provided by the Thomson Lender, thirty (30)
days after the delivery of the Financing Notice, or (b) such other date as may
be mutually agreed by the Parties. Notwithstanding the foregoing, if the Audited
Financial Statements are delivered to SkillSoft PLC within thirty (30) days of
the delivery of the financial statements referenced in Section 4.3(b), then the
Closing Date shall be at least sixty (60) days following the later of such
deliveries.
"Closing Working Capital" shall mean the total consolidated current assets
of the Business minus the total consolidated current liabilities of the Business
(including in current assets all cash and cash equivalents, short term
investments, accounts receivable (long and short term), unbilled receivables,
inventory, prepaid expenses and other current assets and excluding from current
assets all Income Tax assets, Course ILT Receivables and any receivables arising
under or in connection with the termination of the Profit and Loss Pooling
Agreement, and including in current liabilities accounts payable, accrued
expenses and deferred revenue (long and short term) and excluding from current
liabilities Income Tax liabilities, any Termination Liability and Course ILT
Payables and any payables arising under or in connection with the termination of
the Profit and Loss Pooling Agreement).
"COBRA" shall mean Part 6 of Title I of ERISA and Code Section 4980B and
the regulations promulgated under any of them, as amended.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committed Revenue" shall mean, as of a particular date of determination,
all payments of any kind or nature whatsoever for products or services required
to be paid by a customer of the Business from such date until the end of the
current term of an agreement with such customer.
"Company Intellectual Property" shall mean the Company Owned Intellectual
Property and the Company Licensed Intellectual Property.
"Company Licensed Intellectual Property" shall mean all Intellectual
Property that is used primarily or exclusively in the Business and is licensed
to any Seller or any Business Subsidiary by any third party.
"Company Owned Intellectual Property" shall mean all Intellectual Property
that is used primarily or exclusively in the Business and is owned by any Seller
or any Business Subsidiary, in whole or in part.
"Company Registrations" shall mean Company Owned Intellectual Property
that is in the form of Intellectual Property Registrations.
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"Company Source Code" shall mean the source code for any Software included
in the Customer Offerings or Internal Systems or other confidential information
constituting, embodied in or pertaining to such Software.
"Condition Date" shall mean the 210th day following the date of this
Agreement.
"Confidentiality Agreement" shall mean the Confidentiality Agreement dated
July 26, 2005, as amended, between SkillSoft PLC and Thomson Learning.
"Consent Agreement" shall have the meaning set forth in Section 1.7(e).
"Contest" shall have the meaning set forth in Section 8.4(b)(ii).
"Contract Liability" shall have the meaning set forth in Section 6.13(b).
"Controlling Party" shall mean the party controlling the defense of any
Third Party Action.
"Course ILT Payables" shall mean any and all accounts payable arising from
the print or book portion of the Business known as Course ILT.
"Course ILT Receivables" shall mean any and all accounts receivable
arising from the print or book portion of the Business known as Course ILT.
"Conveyance Taxes" shall have the meaning set forth in Section 8.1(d).
"Customer Offerings" shall mean (a) the products (including Software and
Documentation, if any) that relate primarily or exclusively to the Business that
any Seller or any Business Subsidiary (i) currently develops, markets,
distributes, makes available, sells or licenses to third parties, or (ii) has
developed, marketed, distributed, made available, sold or licensed to third
parties within the previous three (3) years, or (iii) currently plans to
develop, market, distribute, make available, sell or license to third parties in
the future and (b) the services that relate primarily or exclusively to the
Business that any Seller or any Business Subsidiary (i) currently provides or
makes available to third parties, or (ii) has provided or made available to
third parties within the previous three (3) years, or (iii) currently plans to
provide or make available to third parties in the future.
"Damages" shall mean any and all diminution in value (but only to the
extent that the value of the Business as of the Closing Date has been
diminished), monetary damages, fines, fees, penalties, interest obligations,
losses and expenses (including amounts paid in settlement, interest, court
costs, costs of investigators, reasonable fees and expenses of attorneys,
accountants, financial advisors and other experts, and other reasonable expenses
of litigation, arbitration or other dispute resolution proceedings relating to a
Third Party Action or an indemnification claim under Article VII).
Notwithstanding the foregoing, Damages shall not include any punitive,
incidental, consequential, special or indirect damages, including loss of future
revenue or income or loss of business reputation or opportunity; provided,
however, that any such amounts payable in connection with a Third Party Action
shall constitute monetary damages.
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"Demand Registration" shall have the meaning set forth in Section 9.1.
"Deposit Agreement" shall mean the Amended and Restated Deposit Agreement,
dated as of April 13, 1995, as amended and restated as of September 4, 2002,
among SkillSoft PLC, The Bank of New York, as Depositary, and each owner and
beneficial owner from time to time of American Depositary Receipts issued
thereunder.
"Disclosure Schedule" shall mean the disclosure schedule provided by the
Sellers to the Buyers on the date hereof.
"Dispute" shall mean the dispute resulting from the Indemnifying Party in
a Response disputing its liability for all or part of the Claimed Amount.
"Documentation" shall mean printed, visual or electronic materials,
reports, white papers, documentation, specifications, designs, flow charts, code
listings, instructions, user manuals, frequently asked questions, release notes,
recall notices, error logs, diagnostic reports, marketing materials, packaging,
labeling, service manuals and other information describing the use, operation,
installation, configuration, features, functionality, pricing, marketing or
correction of a product, whether or not provided to end users.
"Draft Working Capital Statement" shall mean a statement setting forth
SkillSoft PLC's determination of the Closing Working Capital prepared on the
basis of, and using the same accounting policies, principles and methodologies
as the Most Recent Balance Sheet and certified by the Chief Financial Officer of
SkillSoft PLC.
"Employee Benefit Plan" shall mean any "employee pension benefit plan" (as
defined in Section 3(2) of ERISA), any "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA), and any other written or oral plan, agreement
or arrangement involving direct or indirect compensation, including insurance
coverage, severance benefits, disability benefits, deferred compensation,
bonuses, stock options, stock purchase, phantom stock, stock appreciation or
other forms of incentive compensation or post-retirement compensation.
"Environmental Law" shall mean any federal, state or local law, statute,
rule, order, directive, judgment, Permit or regulation or the common law
relating to the protection of the environment, or exposure of persons or
property to Materials of Environmental Concern, including any statute,
regulation, administrative decision or order pertaining to: (i) the presence,
the treatment, storage, disposal, generation, transportation, handling,
distribution, manufacture, processing, use, import, export, labeling, recycling,
registration, investigation or remediation of Materials of Environmental Concern
or documentation related to the foregoing; (ii) air, water and noise pollution;
(iii) groundwater and soil contamination; (iv) the release, threatened release,
or accidental release into the environment, the workplace or other areas of
Materials of Environmental Concern, including emissions, discharges, injections,
spills, escapes or dumping of Materials of Environmental Concern; (v) transfer
of interests in or control of real property which may be contaminated; (vi)
community or worker right-to-know disclosures with respect to Materials of
Environmental Concern; (vii) the protection of wild life, marine life and
wetlands, and endangered and threatened species; (viii) storage tanks, vessels,
containers, abandoned or
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discarded barrels and other closed receptacles that contain Materials of
Environmental Concern. As used above, the term "release" shall have the meaning
set forth in CERCLA.
"Equity Financing" shall have the meaning set forth in Section 4.12.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean any entity which is, or at any applicable
time was, a member of (1) a controlled group of corporations (as defined in
Section 414(b) of the Code), (2) a group of trades or businesses under common
control (as defined in Section 414(c) of the Code), or (3) an affiliated service
group (as defined under Section 414(m) of the Code or the regulations under
Section 414(o) of the Code), any of which includes [or included] any Seller or a
Business Subsidiary.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Excluded Assets" shall mean the following assets of the Asset Sellers:
(a) whether or not primarily or exclusively related to the Business,
all cash, short-term investments, deposits, bank accounts and other similar
assets;
(b) all outstanding Course ILT Receivables arising prior to the
Closing;
(c) the certificate of incorporation, qualifications to conduct
business as a foreign corporation, arrangements with registered agents relating
to foreign qualifications, taxpayer and other identification numbers, seals,
minute books, stock transfer books and other documents relating to the
organization and existence of the Asset Sellers as corporations;
(d) all rights relating to refunds, recovery or recoupment of Taxes
paid by the Asset Seller;
(e) all rights of the Asset Sellers in and with respect to the
assets associated with its Employee Benefit Plans;
(f) any of the rights of the Asset Sellers under this Agreement or
under the Ancillary Agreements;
(g) all insurance policies of the Asset Sellers;
(h) all of the rights of Thomson Learning in the Xxxxxx Xxxxxxx
Group, K.K.;
(i) the Retained Names and Marks;
(j) all U.S. disbursement accounts;
(k) all agreements and any other rights relating to ReferenceNow.
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"Excluded Liabilities" shall mean the following liabilities and
obligations of the Asset Sellers:
(a) all liabilities and obligations of the Asset Sellers that are
not primarily or exclusively related to the Business;
(b) all outstanding Course ILT Payables arising prior to the
Closing;
(c) for Excluded Taxes;
(d) except as otherwise provided in this agreement, all liabilities
or obligations under any Employee Benefit Plan of any Asset Seller or any ERISA
Affiliate of any Asset Seller other than a Business Subsidiary;
(e) for fees, costs and expenses incurred in connection with this
Agreement or the consummation of the transactions contemplated by this
Agreement;
(f) under this Agreement or the Ancillary Agreements;
(g) to indemnify any person or entity by reason of the fact that
such person or entity was a director, officer, employee, or agent of such Asset
Seller or was serving at the request of such Asset Seller as a partner, trustee,
director, officer, employee or agent of another entity (whether such
indemnification is for judgments, damages, penalties, fines, costs, amounts paid
in settlement, losses, expenses, or otherwise and whether such indemnification
is pursuant to any statute, certificate of incorporation document, bylaw,
agreement or otherwise);
(h) any right to Tax refunds, credits or similar benefits
attributable to Excluded Taxes; and
(i) all liabilities and obligations of the Asset Sellers for the
matters set forth in Section 2.15 of the Disclosure Schedule.
"Excluded Taxes" shall have the meaning set forth in Section 8.2(a).
"Existing Stock" shall have the meaning set forth in Section 6.5(d).
"Expected Claim Notice" shall mean a notice that, as a result of a legal
proceeding instituted by or written claim made by a third party, an Indemnified
Party reasonably expects to incur Damages for which it is entitled to
indemnification under Article VII.
"Final Working Capital Statement" shall mean the balance sheet determined
pursuant to the procedures set forth in Section 1.8.
"Financing Notice" shall have the meaning set forth in Section 4.8(a).
"First Case" shall have the meaning set forth in Section 8.5(b).
"GAAP" shall mean United States generally accepted accounting principles
and practices in effect from time to time applied consistently throughout the
periods involved.
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"Governmental Entity" shall mean any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency.
"Xxxx-Xxxxx-Xxxxxx Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder, as amended.
"HIPAA" shall mean the Health Insurance Portability and Accountability Act
of 1996 and the rules and regulations promulgated thereunder, as amended.
"Holders" shall have the meaning set forth in Section 9.1.
"Income Taxes" shall mean any Taxes imposed upon or measured by net
income.
"Indemnified Party" shall mean a party entitled, or seeking to assert
rights, to indemnification under Article VII.
"Indemnifying Party" shall mean the party from whom indemnification is
sought by the Indemnified Party.
"Intellectual Property" shall mean the following subsisting throughout the
world:
(a) Patent Rights;
(b) Trademarks and all goodwill in the Trademarks;
(c) copyrights and registrations and applications for registration
thereof, including moral rights of authors;
(d) mask works and registrations and applications for registration
thereof and any other rights in semiconductor topologies under the laws of any
jurisdiction;
(e) designs, data, databases and registrations and applications for
registration thereof, as applicable;
(f) inventions, invention disclosures, statutory invention
registrations, trade secrets, know-how and other confidential and proprietary
information, whether patentable or nonpatentable, whether copyrightable or
noncopyrightable and whether or not reduced to practice; and
(g) other proprietary rights relating to any of the foregoing
(including remedies against infringement thereof and rights of protection of
interest therein under the laws of all jurisdictions).
"Intellectual Property Registrations" means Patent Rights, registered
Trademarks, registered copyrights, registered designs and mask work
registrations and applications for each of the foregoing.
"Internal Systems" shall mean the Software and Documentation, if any, and
the computer, communications and network systems (both desktop and
enterprise-wide) used by any
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Seller or any Business Subsidiary primarily or exclusively in the Business or in
its operations or to develop, provide, distribute, support, maintain or test the
Customer Offerings, whether located on the premises of any Seller or a Business
Subsidiary or hosted at a third-party site. All Internal Systems that are used
primarily or exclusively in the Business are listed and described in Section
2.13(c) of the Disclosure Schedule.
"Knowledge of the Sellers", "Sellers' Knowledge" or similar terms used in
this Agreement shall mean the actual (but not constructive or imputed) knowledge
of Xxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxx, Xxxxxxx Xxxxxxx, Xxxxxxx X. XxXxxx,
Xxxxxxxx X. Xxxxxx, Xxxxx Xxxxx, Xxxxxx X. Xxxxxxxx, Xxxxxxxx X. Xxxxxxxx, Xxxxx
X. XxXxxx, Xxxx X. Xxxxx and Xxxxx X. Xxxxxx as of the date of this Agreement
(or, with respect to a certificate delivered pursuant to this Agreement, as of
the date of delivery of such certificate) without any implication of
verification or investigation concerning such knowledge.
"Lease" shall mean any lease or sublease pursuant to which any Seller or
any Business Subsidiary leases or subleases from another party any real property
that is used primarily or exclusively in the Business.
"Legal Proceeding" shall mean any action, suit, proceeding, claim,
arbitration or investigation before any Governmental Entity or before any
arbitrator.
"License Agreement" shall mean the License Agreement in substantially the
form attached hereto as Exhibit G.
"Letter of Credit" shall have the meaning set forth in Section 6.15.
"Lost Content" shall have the meaning set forth in Section 7.1(f)
"Lost Content Amount" shall mean an amount equal to the product of (i)
1.78 and (ii) the Committed Revenue, as of the date of termination, of any
agreement required to be disclosed pursuant to Section 2.14(a)(iii)(A) that
following the Closing Date is terminated by such customer of the Business due to
any Buyer's inability to provide products or services under such agreement due
to a Lost Content Contract.
"Material Contracts" shall have the meaning set forth in Section 2.14(a).
"Materials of Environmental Concern" shall mean any pollutants,
contaminants or hazardous substances (as such terms are defined under CERCLA),
pesticides (as such term is defined under the Federal Insecticide, Fungicide and
Rodenticide Act), hazardous wastes (as such terms are defined under the Resource
Conservation and Recovery Act), chemicals, other hazardous, radioactive or toxic
materials, oil, petroleum and petroleum products (and fractions thereof), or any
other material (or article containing such material) listed or subject to
regulation under any Environmental Law.
"Monsoon Platform" shall have the meaning set forth on Schedule 11.1
attached hereto.
"Most Recent Balance Sheet" shall mean the combined statement of net
assets of the Business as of the Balance Sheet Date.
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"Neutral Accountant" shall mean Deloitte & Touche LLP.
"Non-Competition Party" shall mean The Thomson Corporation and each
corporation, partnership, trust, limited liability company or other
non-corporate business enterprise in which The Thomson Corporation (or a
subsidiary thereof) holds stock or other ownership interests representing more
than 50% of the voting power of all the outstanding stock or ownership interests
of such entity.
"Non-controlling Party" shall mean the party not controlling the defense
of any Third Party Action.
"Non-Solicitation Party" shall mean any Affiliate of Thomson Learning,
other than the Business Subsidiaries, that is within the Thomson Learning market
group of The Thomson Corporation.
"Notice of Acceptance" shall have the meaning set forth in Section 1.8(c).
"Notice of Disagreement" shall have the meaning set forth in Section
1.8(c).
"Objection Deadline Date" shall mean the date 75 days after delivery by
SkillSoft PLC to Thomson Learning of the Draft Working Capital Statement.
"Open Source Materials" means all Software or other material that is
distributed as "free software", "open source software" or under a similar
licensing or distribution model, including, but not limited to, the GNU General
Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public
License (MPL), or any other license described by the Open Source Initiative as
set forth on xxx.xxxxxxxxxx.xxx.
"Ordinary Course of Business" shall mean the ordinary course of business
consistent with past practice (including with respect to frequency and amount).
"Parent" and "Parents" shall have the meanings set forth in the first
paragraph of the Agreement.
"Parties" shall mean the Buyers and the Sellers.
"Patent Rights" shall mean all patents, patent applications, utility
models, design registrations and certificates of invention and other
governmental grants for the protection of inventions or industrial designs
(including all related continuations, continuations-in-part, divisionals,
reissues and reexaminations).
"Permits" shall mean all permits, licenses, registrations, certificates,
orders, approvals, franchises, variances and similar rights issued by or
obtained from any Governmental Entity (including those issued or required under
Environmental Laws and those relating to the occupancy or use of owned or leased
real property).
"Profit and Loss Pooling Agreement" shall have the meaning set forth in
Section 8.5.
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"Project Plan" shall have the meaning set forth in Section 6.15.
"Public Filings" shall have the meaning set forth in Section 4.3(a).
"Purchase Price" shall mean $285,000,000, payable in cash or a combination
of cash and Buyer ADSs, in accordance with the provisions of Section 1.4.
"Reimbursement Amount" shall mean the amount, calculated as of the Closing
Date, equal to Thomson Learning's estimated obligations pursuant to Section
6.13.
"Reference Working Capital Amount" shall mean $0.
"Registration Statement" shall have the meaning set forth in Section 9.1.
"Regulations" shall mean the Treasury regulations (including temporary
regulations) promulgated by the United States Department of Treasury with
respect to the Code or other federal tax statutes.
"Response" shall mean a written response containing the information
provided for in Section 7.3(c).
"Restricted Business" shall mean the development or sale of e-learning
products consisting primarily of IT, desktop and business soft skills content,
deployed via a learning management system, hosted, on corporate intranets, on a
stand alone basis or over the internet and intended for use primarily by
customers in corporate education and training, but specifically excluding
without limitation the development or sale of e-learning products containing
content developed or sold primarily to (i) academic customers (including without
limitation vocational, k-12 and postsecondary), (ii) consumer retail customers,
(iii) library customers (including corporate libraries), and (iv) customers of
desktop products and services offered or sold by The Thomson Corporation or its
Affiliates for education and/or training offered in connection therewith.
"Restricted Employee" shall mean any person who either (a) was a sales or
IT employee of any Buyer on the Closing Date or (b) was a sales or IT Business
Employee on the Closing Date.
"Retained Names and Marks" shall have the meaning set forth in Section
6.5(b).
"Scottsdale Facility" shall have the meaning set forth in Section 6.15.
"Scottsdale Lease" shall have the meaning set forth in Section 6.15.
"SEC" shall mean the Securities and Exchange Commission.
"Second Case" shall have the meaning set forth in Section 8.5(b).
"Second Request" shall mean a request for additional information or
documentary material issued by the Governmental Entity pursuant to 16 C.F.R.
Section. 803.20.
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"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Interest" shall mean any mortgage, pledge, security interest,
encumbrance, charge or other lien (whether arising by contract or by operation
of law), other than (i) mechanics', materialmen's and similar liens, (ii) liens
arising under workers' compensation, unemployment insurance, social security,
retirement and similar legislation and (iii) liens on goods in transit incurred
pursuant to documentary letters of credit, in each case arising in the Ordinary
Course of Business, (iv) statutory liens for current Taxes not yet due or
delinquent (or which may be paid without interest or penalties) or the validity
or amount of which is being contested in good faith by appropriate proceedings,
(v) zoning, entitlement, conservation restriction and other land use and
environmental regulations by Governmental Entities, in each case arising in the
Ordinary Course of Business, (vi) all covenants, conditions, restrictions,
easements, charges, rights-of-way, other encumbrances and similar matters of
record set forth in any state, local or municipal franchise under which the
Business operates, (vii) matters which would be disclosed by an accurate survey
or inspection of real property used in the Business and (viii) licenses of
Intellectual Property.
"Seller and Sellers" shall have the meanings set forth in the first
paragraph of this Agreement.
"Seller Certificate" shall mean a certificate executed by an authorized
officer of Thomson Learning to the effect that each of the conditions specified
in clauses (a) and (b) of Section 5.2 has been satisfied as of the Closing Date
in all respects.
"Seller Parent" shall have the meaning set forth in Section 2.9(c).
"Severance Amount" shall mean the amount, calculated as of the Closing
Date, equal to the Buyers' estimated obligations pursuant to Section 6.12.
"SkillSoft Inc." shall have the meaning set forth in the first paragraph
of the Agreement.
"SkillSoft PLC" shall have the meaning set forth in the first paragraph of
the Agreement.
"Singapore Assets" shall mean the assets of the Business physically
located in Singapore, which assets shall, if the Sellers will receive any Buyer
ADSs, be transferred, prior to Closing, at the Sellers' option, to: (i) a
Business Subsidiary, or (ii) a separate entity whose sole purpose and function
is to hold such assets, which upon notice to SkillSoft PLC shall automatically
be deemed to be a Business Subsidiary for all purposes hereunder.
"Software" shall mean computer software code, applications, utilities,
development tools, diagnostics, databases and embedded systems, whether in
source code, interpreted code or object code form.
"Stock" shall mean the outstanding shares of capital stock of the Business
Subsidiaries.
"Stock Consideration" shall have the meaning set forth in Section 1.6.
"Subsequent Payments" shall have the meaning set forth in Section 8.5(b).
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"Tax Reserves" shall have the meaning set forth in Section 2.9(b).
"Tax Returns" means any and all reports, returns, declarations,
statements, forms, or other information required to be supplied to a
Governmental Entity in connection with Taxes and any associated schedules,
attachments, work papers or other information provided in connection with such
items, including any amendments, thereof.
"Taxes" (including with correlative meaning "Tax" and "Taxable") means (a)
any and all taxes, and any and all other charges, fees, levies, duties,
deficiencies, customs or other similar assessments or liabilities in the nature
of a tax, including without limitation any income, gross receipts, ad valorem,
net worth, premium, value-added, alternative or add-on minimum, excise,
severance, stamp, occupation, windfall profits, real property, personal
property, assets, sales, use, capital stock, capital gains, documentary,
recapture, transfer, transfer gains, estimated, withholding, employment,
unemployment insurance, unemployment compensation, social security, business
license, business organization, environmental, workers' compensation, payroll,
profits, license, lease, service, service use, gains, franchise and other taxes
imposed by any federal, state, local, or foreign governmental entity, and (b)
any interest, fines, penalties, assessments, or additions resulting from,
attributable to, or incurred in connection with any items described in this
paragraph or any contest or dispute thereof.
"Termination Date" shall mean the date one year after the submission of
initial notification by the Buyers and the Sellers under the Xxxx-Xxxxx-Xxxxxx
Act in accordance with the provisions of Section 4.2, as such date may be
extended by written agreement between the Buyers and the Sellers.
"Termination Liability" shall mean the liabilities, costs, claims, damages
and expenses incurred, either on or after the Closing Date, in connection with
the termination of any Business Employee, including outplacement pay, salary,
commissions and benefits for periods on and after the Closing Date, and
compensation required to be accrued by any Business Subsidiary in such Business
Subsidiary's financial statements, including, but not limited to, annual and
long term service leave or pension indemnities (provided, however, that such
obligations are actually accrued for in the calculation of the Closing Working
Capital), claims of wrongful termination, age, race or sex discrimination or
similar claims, and any taxes or penalties payable with respect to any of the
foregoing, but specifically excluding severance payments, retention bonuses,
stay-pay or similar retention payments.
"Territory" shall have the meaning set forth in Section 6.3(a).
"TGR" shall have the meaning set forth in the first paragraph of the
Agreement.
"Third Party Action" shall mean any suit or proceeding by a person or
entity other than a Party for which indemnification may be sought by a Party
under Article VII.
"TL Assets" shall mean all of the Acquired Assets other than the Monsoon
Platform.
"TL Assets Amount" shall have the meaning set forth in Section 1.6(b).
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"Trademarks" shall mean all registered trademarks and service marks,
logos, Internet domain names, corporate names and doing business designations
and all registrations and applications for registration of the foregoing, common
law trademarks and service marks and trade dress.
"Transition Services" means the services to be provided to the Buyers and
the Business Subsidiaries pursuant to the Transition Services Agreement.
"Thomson Australia" shall have the meaning set forth in the first
paragraph of the Agreement.
"Thomson France" shall have the meaning set forth in the first paragraph
of the Agreement.
"Thomson Germany" shall have the meaning set forth in the first paragraph
of the Agreement.
"Thomson Learning" shall have the meaning set forth in the first paragraph
of the Agreement.
"Thomson Lender" shall have the meaning set forth in Section 4.8(a).
"Thomson UK" shall have the meaning set forth in the first paragraph of
the Agreement.
"Unaudited Financial Statements" shall mean:
(a) the unaudited combined statements of net assets, operating
income and free cash flows of the Business as of the end of and for each of the
fiscal years ended December 31, 2004 and December 31, 2005; and
(b) the Most Recent Balance Sheet and the unaudited combined
statements of operating income and free cash flows of the Business for the nine
months ended as of the Balance Sheet Date.
"Unresolved Objections" shall mean any unresolved objections set forth on
Thomson Learning's Notice of Disagreement delivered to SkillSoft PLC pursuant to
Section 1.8.
"WARN" shall mean the Worker Adjustment and Retraining Notification Act.
"Warranty Obligations" shall mean any binding guaranty, warranty, right of
return or right of credit with respect to any products or services sold, leased,
licensed or delivered by the Business; provided, that in no case shall Warranty
Obligations include (i) any right of credit that may arise from a party's
termination for convenience of any agreement with the Business or (ii) any
implied warranties, including, without limitation, implied warranties of
merchantability or fitness for a particular purpose.
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ARTICLE XII
MISCELLANEOUS
12.1 Press Releases and Announcements. No Party shall issue any press
release or public announcement or otherwise communicate with any news media
relating to the subject matter of this Agreement without the prior written
approval of the other Parties, unless otherwise required by applicable law,
regulation or stock market rule. The Parties shall cooperate as to the timing
and contents of any such press release, public announcement or communication.
12.2 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns, and nothing herein, express or implied
(including the provisions of Article VII relating to indemnified parties), is
intended to confer upon any other person any legal or equitable rights, benefits
or remedies of any nature whatsoever.
12.3 Entire Agreement. This Agreement, the Ancillary Agreements and the
Confidentiality Agreement constitute the entire agreement among the Parties and
supersede any prior understandings, agreements or representations by or among
the Parties, written or oral, with respect to the subject matter hereof;
provided that the Confidentiality Agreement shall remain in effect in accordance
with its terms through the Closing. From and after the Closing, the Buyers shall
have no further obligations under the Confidentiality Agreement regarding
Proprietary Information (as defined in the Confidentiality Agreement) relating
to the Business. If this Agreement is, for any reason, terminated prior to the
Closing, the Confidentiality Agreement shall nonetheless remain in full force
and effect.
12.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign any of its rights or delegate any of
its performance obligations hereunder without the prior written approval of the
other Parties (which consent or approval may be granted or withheld at the sole
discretion of the Parties); provided that (a) each Buyer may (i) assign its
rights and delegate its obligations to acquire the Stock or the Acquired Assets
to one or more Affiliates of the Buyers and (ii) assign its rights under this
Agreement and the Ancillary Agreements to any of Buyers' lenders or any agent
for such lenders, and (b) each Seller may assign its rights and delegate its
obligations under this Agreement to The Thomson Corporation or one of The
Thomson Corporation's subsidiaries. No such assignment by any Buyer or any
Seller shall release such Buyer or such Seller from any of its obligations under
this Agreement. Any purported assignment of rights or delegation of performance
obligations in violation of this Section 12.4 is void.
12.5 Counterparts and Facsimile Signature. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument. This Agreement
may be executed by facsimile signature.
12.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
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12.7 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly delivered four Business
Days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or one Business Day after it is sent for next Business Day
delivery via a reputable nationwide overnight courier service, in each case to
the intended recipient as set forth below:
If to the Sellers: Copy to:
----------------- -------
Thomson Learning Inc. Shearman & Sterling LLP
c/o The Thomson Corporation 000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxxx Xxxxx Xxx Xxxx, XX 00000
000 Xxxxx Xxxxxxxx Xxxxx, 0xx Xxxxx Attention: Xxxxxx Xxxxx
Xxxxxxxx, XX 00000 Telecopy: (000) 000-0000
Attention: General Counsel
Telecopy: (000) 000-0000
If to the Buyers: Copy to:
---------------- -------
SkillSoft Public Limited Company Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP
000 Xxxxxxxxxxxx Xxxx. 00 Xxxxx Xxxxxx
Xxxxxx, XX 00000 Xxxxxx, XX 00000
Attention: Chief Executive Officer Attention: Xxxxxxx X. Xxxxxxx and Xxxxxxx
Telecopy: (000) 000-0000 X.Xxxxxxxxx
Telecopy: (000) 000-0000
Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy or ordinary mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been duly given
unless and until it actually is received by the party for whom it is intended.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
12.8 Governing Law. All matters arising out of or relating to this
Agreement and the transactions contemplated hereby (including, without
limitation, its interpretation, construction, performance and enforcement) shall
be governed by and construed in accordance with the internal laws of the State
of New York without giving effect to any choice or conflict of law provision or
rule (whether of the State of New York or any other jurisdiction) that would
cause the application of laws of any jurisdictions other than those of the State
of New York.
12.9 Amendments and Waivers. The Parties may mutually amend any provision
of this Agreement at any time prior to the Closing. No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by all of the Parties. No waiver of any right or remedy hereunder
shall be valid unless the same shall be in writing and signed by the Party
giving such waiver. No waiver by any Party with respect to any default,
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misrepresentation or breach of warranty or covenant hereunder shall be deemed to
extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
12.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree to negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner in order that the transactions contemplated by
this Agreement are consummated as originally contemplated to the greatest extent
possible, and this Agreement shall be enforceable as so modified.
12.11 Submission to Jurisdiction. Each Party (a) submits to the exclusive
jurisdiction of any New York federal court sitting in the Borough of Manhattan
of The City of New York in any action or proceeding arising out of or relating
to this Agreement (including any action or proceeding for the enforcement of any
arbitral award made in connection with any arbitration of a Dispute hereunder),
(b) agrees that all claims in respect of such action or proceeding may be heard
and determined in any such court, (c) waives any claim of inconvenient forum or
other challenge to venue in such court, (d) agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court, and
(e) waives any right it may have to a trial by jury with respect to any action
or proceeding arising out of or relating to this Agreement; provided, however,
that if such federal court does not have jurisdiction over such action, such
action shall be heard and determined exclusively in any New York state court
sitting in the Borough of Manhattan of The City of New York. Each Party agrees
to accept service of any summons, complaint or other initial pleading made in
the manner provided for the giving of notices in Section 12.7, provided that
nothing in this Section 12.11 shall affect the right of any Party to serve such
summons, complaint or other initial pleading in any other manner permitted by
law.
12.12 Construction.
(a) The language used in this Agreement shall be deemed to be the
language chosen by the Parties to express their mutual intent, and no rule of
strict construction shall be applied against any Party.
(b) Any reference to any federal, state, local or foreign statute or
law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
(c) Any reference herein to "including" shall be interpreted as
"including without limitation".
(d) Any reference to any Article, Section or paragraph shall be
deemed to refer to an Article, Section or paragraph of this Agreement, unless
the context clearly indicates otherwise.
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(e) Any reference to "$" or "dollar" shall mean the valid currency
of the United States of America.
ARTICLE XIII
SELLER PARENT GUARANTEE
The Seller Parent hereby unconditionally guarantees the due and punctual
payment and performance of all of the Sellers' obligations set forth in this
Agreement whenever at any time and from time to time any or all of the Sellers
fail to pay or perform its or their obligations when due or as may be required
by the terms hereof (subject to any applicable grace, cure or deferral period),
promptly after the Seller Parent has received a written demand from the Buyer,
provided that the Buyer has first demanded payment or performance, as the case
may be, in writing from any or all of the Sellers. This guaranty is an
irrevocable guaranty of payment (and not just of collection) and shall continue
in effect notwithstanding any extension or modification of the terms of this
Agreement, any assumption of any such guaranteed obligation by any other party
or any other act or event that might otherwise operate as a legal or equitable
discharge of the Seller Parent under this Article XIII. So long as any
obligation of the Sellers to the Buyers under this Agreement remains unpaid or
undischarged, the Seller Parent hereby waives (but only with respect to the
Buyers and their Affiliates and not as to any other parties) all rights to
subrogation arising out of any payment by the Seller Parent under this Article
XIII.
The obligations of the Seller Parent hereunder shall be absolute and
unconditional irrespective of the validity, legality or enforceability of this
Agreement or any other document related hereto, and shall not be affected by or
contingent upon (a) the liquidation or dissolution of, or the merger or
consolidation of any Seller with or into any corporation, or any sale or
transfer by any Seller of all or part of its property or assets, (b) the
bankruptcy, receivership, insolvency, reorganization or similar proceedings
involving or affecting any Seller, (c) any modification, alteration, amendment
or addition of or to this Agreement, or (d) any disability or any other defense
of any Seller or any other person and any other circumstance whatsoever (with or
without notice to or knowledge of the Seller Parent) which may or might in any
manner or to any extent vary the risks of the Seller Parent or might otherwise
constitute a legal or equitable discharge of a surety or a guarantor or
otherwise.
Except as provided in this Article XIII, the Seller Parent hereby waives
all special suretyship defenses and protest, notice of protest, demand for
performance, diligence, notice of any other action at any time taken or omitted
by the Buyers and, generally, all demands and notices of every kind in
connection with this Article XIII and the Sellers' obligations hereby
guaranteed, and which the Seller Parent may otherwise assert against the Buyers.
This Article XIII shall continue to be effective or shall be reinstated,
as the case may be, if at any time payment or performance of any of the
obligations of the Sellers under this Agreement is rescinded or must otherwise
be restored or returned by the Buyers upon the insolvency, bankruptcy or
reorganization of any Seller or otherwise.
The Seller Parent acknowledges that each of the waivers set forth above is
made with full knowledge of its significance and consequences and under the
circumstances the waivers are reasonable and not contrary
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to public policy. If any of said waivers is determined to be contrary to any
applicable law or public policy, such waivers shall be effective only to the
extent permitted by law.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
SKILLSOFT PUBLIC LIMITED COMPANY
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Title: Authorized Signatory
SKILLSOFT CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Title: Authorized Signatory
T.N.H. FRANCE SARL
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
Title: Illegible
T.N.H. HOLDINGS GmbH
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
Title: Director
THE THOMSON CORPORATION
(AUSTRALIA) PTY LTD
By: /s/ Xxxxxxx Xxxx Xxxxxxx
-----------------------------
Title: Director
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By: /s/ Xxxxx Xxxxxx
-----------------------------
Title: Director
THOMSON GLOBAL RESOURCES
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Title: Director
By: /s/ Xxxxxxx Xxxxxxx
-----------------------------
Title: CFO/COO
THOMSON LEARNING INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
Title: President/CEO
THOMSON INFORMATION & SOLUTIONS
LIMITED
By: /s/ Illegible
-----------------------------
Title: Director/Secretary
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The Thomson Corporation has joined the execution of this Agreement solely for
the purpose of becoming bound by Article XIII.
THE THOMSON CORPORATION
By: /s/ Xxxxxx Xxxxxxx
----------------------------------------
Title: Senior Vice President/General Counsel
By: /s/ Xxxxxxxx Xxxxx..
----------------------------------------
Title: Senior Vice Present/Treasurer
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