Exhibit 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
EDT LEARNING, INC.,
A DELAWARE CORPORATION,
AND
QUISIC CORPORATION,
A CALIFORNIA CORPORATION
TABLE OF CONTENTS
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Section 1. Terms of the Sale and Purchase of the Purchased Assets..........1
1.1 Conveyance of Purchased Assets..................................1
1.2 Excluded Assets.................................................2
1.3 Purchase Price; Assumption of Liabilities.......................2
1.4 Subsequent Actions..............................................3
Section 2. Representations and Warranties of Seller........................3
2.1 Corporate Existence; Good Standing..............................3
2.2 Power and Authority for Transactions............................3
2.3 Permits, Licenses and Governmental Authorizations...............4
2.4 Corporate Records...............................................4
2.5 Consents........................................................4
2.6 Seller's Financial Information..................................4
2.7 Leases..........................................................4
2.8 Condition of Purchased Assets...................................4
2.9 Title to and Encumbrances on Property...........................4
2.10 Intellectual Property...........................................4
2.11 Payroll Information; Employees..................................5
2.12 Legal Proceedings...............................................6
2.13 Contracts.......................................................6
2.14 Subsequent Events...............................................6
2.15 Taxes...........................................................7
2.16 Liabilities; Debt...............................................8
2.17 Insurance Policies..............................................8
2.18 Employee Benefit Plans..........................................8
2.19 Compliance with Laws in General.................................9
2.20 No Untrue Representations.......................................9
2.21 Customers.......................................................9
2.22 Brokers and Finders.............................................9
2.23 Website Content.................................................9
Section 3. Representations and Warranties of Purchaser.....................9
3.1 Corporate Existence: Good Standing..............................9
3.2 Power and Authority.............................................9
3.3 Brokers and Finders............................................10
Section 4. Covenants of Seller............................................10
Section 5. Covenants of Purchaser.........................................10
Section 6. Purchaser's Conditions Precedent...............................10
6.1 Representations and Warranties.................................10
6.2 Covenants and Conditions.......................................10
6.3 Proceedings....................................................10
6.4 Closing Deliveries.............................................10
6.5 Consents and Approvals.........................................11
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6.6 Approval by the Board of Directors.............................11
6.7 Due Diligence Review...........................................11
6.8 No Material Adverse Change.....................................11
6.9 Employees of Seller............................................11
6.10 Lien Termination...............................................11
6.11 Real Property..................................................11
6.12 Prepayments Statements.........................................12
Section 7. Seller Conditions Precedent....................................12
7.1 Representations and Warranties.................................12
7.2 Covenants and Conditions.......................................12
7.3 Proceedings....................................................12
7.4 Closing Deliveries.............................................12
7.5 Employees of Seller............................................12
7.6 Consents and Approvals.........................................12
Section 8. Closing Deliveries.............................................12
8.1 Deliveries of Seller...........................................12
8.2 Deliveries of Purchaser........................................13
Section 9. Nature and Survival of Representations and Warranties..........14
9.1 Effect of Investigation........................................14
Section 10. Termination....................................................14
Section 11. Miscellaneous..................................................15
11.1 Notices........................................................15
11.2 Successors and Assigns.........................................16
11.3 Entire Agreement...............................................16
11.4 Governing Law; Severability....................................16
11.5 Schedules and Exhibits.........................................16
11.6 Waivers........................................................16
11.7 Headings.......................................................16
11.8 Counterparts...................................................16
11.9 Confidentiality................................................16
11.10 Expenses.......................................................17
11.11 No Third Party Beneficiaries...................................17
11.12 Further Assurances.............................................17
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, ("Agreement") made and executed as of the
14th day of June, 2002, is by and among EDT LEARNING, INC., a Delaware
corporation ("EDT" or "Purchaser"), and Quisic Corporation, a California
corporation ("Seller").
WITNESSETH:
WHEREAS, Seller owns certain assets and has incurred certain liabilities in
the e-learning business ("Seller's Business"); and
WHEREAS, Seller wishes to sell to Purchaser, and Purchaser wishes to
acquire from Seller, all of the Purchased Assets (defined herein) of Seller's
Business, all upon the terms and subject to the conditions set forth herein; and
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. TERMS OF THE SALE AND PURCHASE OF THE PURCHASED ASSETS.
The purchase and sale of the Purchased Assets provided for in this
Agreement (the "Closing") will occur on the 14th day of June, 2002 ("Closing
Date"), unless another date (as soon as practical following the execution of
this Agreement) is mutually agreed upon by Purchaser and Seller in writing. The
sale of the Purchased Assets shall be based on the respective representations,
warranties and agreements of Purchaser and Seller contained herein and shall be
subject to the terms and conditions herein stated.
1.1 CONVEYANCE OF PURCHASED ASSETS. Subject to and upon the terms and
conditions contained herein, on the Closing Date, Seller shall sell, convey,
transfer, deliver and assign to Purchaser all of Seller's right, title and
interest in and to the assets of Seller's Business (personal, tangible and
intangible)(except as otherwise provided herein) (the "Purchased Assets").
Without limiting the foregoing, the Purchased Assets specifically include:
(a) All of the personal property, plant, furniture, fixtures, computer
hardware, other equipment and goodwill of Seller's Business, as set forth in
SCHEDULE 1.1(A) to this Agreement;
(b) All of the software, including source and object code, online
video and computer-based training courses used in Seller's Business;
(c) The trade names used by Seller, including all derivations thereof,
together with any and all other names, slogans, trademarks, servicemarks, and
logos used in Seller's Business, including but not limited to those set forth in
SCHEDULE 1.1(C) to this Agreement;
(d) All accounts and notes receivable related to Seller's Business in
SCHEDULE 1.1(D) to this Agreement.
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(e) All executory vendor and customer contracts pertaining to or
entered into in connection with Seller's Business (excluding this Agreement and
the agreements, instruments and documents executed and delivered by Seller
pursuant to this Agreement), as set forth in SCHEDULE 1.1(E) to this Agreement;
(f) The books and records of Seller's Business relating to the
Purchased Assets, e.g. bills of sale, purchase receipts and originally executed
equipment leases;
(g) All transferable licenses and other regulatory approvals necessary
for or incident to the operation of Seller's Business; and
(h) All administrative policy and procedure manuals, trade secrets,
trademarks, service marks, marketing and promotional materials (including
audiotapes, videotapes and printed materials), educational programs and all
other property rights required for or incident to the marketing of the products
and services of Seller's Business, and all books and records relating thereto,.
1.2 EXCLUDED ASSETS. There shall be excluded from the Purchased Assets to
be transferred and conveyed hereunder, and Seller shall retain all of its right,
title and interest in and to the assets listed on SCHEDULE 1.2 to this
Agreement.
1.3 PURCHASE PRICE; ASSUMPTION OF LIABILITIES.
(a) PURCHASE PRICE.
(i) As consideration for the sale of the Purchased Assets by
Seller, Purchaser shall, on the Closing Date, pay to Seller Three Hundred
Twenty Thousand Dollars ($320,000) by wire transfer. Additionally,
following Closing, once Purchaser has received (i) the written consent of
the Public Broadcasting Systems ("PBS') to the assignment by Seller to
Purchaser of the Course Licensing and Distribution Agreement dated July 5,
2001 between Seller and PBS (the "PBS Contract") and (ii) the written
consent of Employment Law Training, Inc. ("ELT") to the assignment by
Seller to Purchaser of that certain Distribution Agreement dated July 7,
1999 between Seller and ELT (the "ELT Contract"), Purchaser shall assume
Seller's outstanding obligations to Investor Growth Capital Limited,
Investor Group L.P. and Leeds Equity Partners III, L.P. and their
respective affiliates under that certain Secured Line of Credit Demand
Promissory Note dated April 30, 2002 in the original principal amount of
$225,000 and that certain Secured Line of Credit Demand Promissory Note in
the original principal amount of $100,000 dated March 28, 2002, as amended
(collectively, the "Secured Notes"), the aggregate outstanding principal
amount of which is $920,000 at the date of this Agreement.
The purchase price shall be allocated for federal income tax purposes
as set forth on SCHEDULE 1.3(A).
(b) ASSUMPTION OF LIABILITIES. Except for obligations from and after
the Closing Date under contracts assigned by Seller to Purchaser pursuant to the
terms of this Agreement and the obligations under the Secured Notes (following
receipt of each of the consents referenced in SECTION 1.3(A)(I)), Purchaser
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shall not assume any other liabilities, commitments or obligations of Seller in
connection with the consummation of the transactions contemplated by this
Agreement, including, without limitation, Seller's liabilities, obligations or
commitments for: (i) employee or independent contractor salaries, wages, or
bonuses, payroll taxes, or benefits payable to employees or independent
contractors retained by Seller; (ii) any liability based upon or arising out of
any tortious or wrongful actions related to Seller's Business occurring prior to
the Closing Date; (iii) any liability for the payment of any taxes imposed by
law on Seller arising from or by reason of the operation of Seller's Business
prior to the Closing Date or the transactions contemplated by this Agreement;
nor (iv) any liability incurred or to be incurred pursuant to any claims, suits
or actions based on the operation of Seller's Business prior to the Closing
Date, whether or not pending or threatened against Seller as of the Closing
Date.
1.4 SUBSEQUENT ACTIONS. Seller will from time to time subsequent to the
Closing Date, at Purchaser's request and without further consideration, execute
and deliver such other instruments of conveyance, assignment and transfer, and
take such other actions, as Purchaser may reasonably request in order to more
effectively convey, assign, transfer to and vest in Purchaser the Purchased
Assets.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents and warrants to Purchaser the following:
2.1 CORPORATE EXISTENCE; GOOD STANDING. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. Seller has all necessary corporate powers to own the Purchased
Assets and to carry on Seller's Business as such business is now being
conducted. Seller is qualified to do business as a foreign corporation in each
other state or jurisdiction where qualification is required in connection with
Seller's Business, which states or other jurisdictions are listed on SCHEDULE
2.1 attached hereto, except where failure to so qualify would not have a
material adverse effect.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. Seller has the corporate power to
execute, deliver and perform this Agreement and all agreements and other
documents executed and delivered by it pursuant to this Agreement or to be
executed and delivered by it on the Closing Date, and has taken all action
required by law, its Articles of Incorporation, and its Bylaws, to authorize the
execution, delivery and performance of this Agreement and such related
documents. Seller has the legal capacity to enter into and perform this
Agreement and the other agreements to be executed and delivered by it in
connection herewith. Seller has obtained the necessary approval of its
shareholders in order to consummate the transactions contemplated herein. This
Agreement and all agreements and documents executed and delivered in connection
herewith have been, or will be as of the Closing Date, duly executed and
delivered by Seller, and constitute or will constitute the legal, valid and
binding obligations of Seller, enforceable against Seller in accordance with
their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies. The execution and delivery of this
Agreement, and the agreements executed and delivered by Seller pursuant to this
Agreement or to be executed and delivered by Seller on the Closing Date, do not,
and the consummation of the actions contemplated hereby will not, violate any
provision of the Articles of Incorporation or Bylaws of Seller or any provisions
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of, or result in the acceleration of, any obligation under any mortgage, lien,
lease, agreement, rent, instrument, order, arbitration award, judgment or decree
to which Seller is a party or by which Seller is bound, or violate any material
restrictions of any kind to which Seller is subject, or result in any lien or
encumbrance on any of the Purchased Assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All permits material
licenses and other governmental authorizations and approvals required to be
maintained by Seller have been duly obtained and are in full force and effect.
There are no proceedings pending or, to the knowledge of Seller, threatened,
which may result in the revocation, cancellation or suspension, or any adverse
modification, of any thereof.
2.4 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation and Bylaws of Seller and all amendments thereto have been
delivered to Purchaser.
2.5 CONSENTS. Except as set forth in SCHEDULE 2.5, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement by the Seller.
2.6 SELLER'S FINANCIAL INFORMATION. Attached hereto as SCHEDULE 2.6 are
Seller's unaudited financial statements at and for the fiscal year ending
December 31, 2001 and unaudited financial statements at and for the period
ending May 31, 2002 (May 31, 2002 being referred to herein as the "Financials
Date") reflecting the results of the operations and financial condition of
Seller at and for the periods then ended which have been prepared in accordance
with generally accepted accounting principles, consistently applied (the
"Financial Statements"). The Financial Statements: (i) fairly and accurately
present the financial position of Seller as of the dates indicated and present
the results of Seller's operations for the periods then ended; and (ii) are in
accordance with the books and records of Seller which have been properly
maintained and are complete and correct in all material respects.
2.7 LEASES. A list of all material personal property leases pursuant to
which Seller leases, as lessor or lessee, property used in operating the
Purchased Assets as of the date hereof is attached as SCHEDULE 2.7. All such
leases listed are valid and enforceable in accordance with their respective
terms, and there is not under any such lease any existing material default by
Seller, as lessor or lessee, or any condition or event of which Seller has
knowledge which with notice or lapse of time, or both, would constitute a
default, in respect of which Seller has not taken adequate steps to cure such
default or to prevent a default from occurring.
2.8 CONDITION OF PURCHASED ASSETS. All tangible Purchased Assets
transferred to Purchaser under this Agreement are in good condition and repair
subject to normal wear and tear.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY. Seller owns good, valid and
marketable title to all of the Purchased Assets, free and clear of any liens,
claims, charges, exceptions or encumbrances, except for those, if any, which are
set forth in SCHEDULE 2.9 attached hereto.
2.10 INTELLECTUAL PROPERTY. Set forth in SCHEDULE 2.10 is a true and
correct description of the following proprietary rights owned by Seller (the
"Proprietary Rights"): (i) all registered trade-marks, trade-names, Internet
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domain names, service marks and other trade designations, including applications
therefor, and (ii) all registered patents and copyrights, including applications
therefor, currently owned, in whole or in part, by Seller with respect to
Seller's Business. SCHEDULE 2.10 identifies, to the best of Seller's knowledge:
(i) all licenses, royalties, assignments and other similar agreements relating
to the Proprietary Rights to which Seller is a party (including expiration date
if applicable); and (ii) all agreements, other than end user license agreements
or other similar agreements for the use of off the shelf software, relating to
patents, copyrights, trademarks, trade names, service marks, computer programs
and other computer software, technology, know-how or processes that Seller is
licensed or authorized to use by others (the "Third Party Rights"), or which it
licenses or authorizes others to use. Except as set forth in SCHEDULE 2.10,
Seller owns or has the unrestricted right to use all of its Proprietary Rights
including its patents, patent applications, trade-marks, trade names, Internet
domain names or URL's including, without limitation, xxx.Xxxxxx.xxx, its
computer programs and other computer software, service marks and copyrights, if
any, necessary to conduct its business without conflict with the rights of
others. Except as expressly set forth in the agreements listed on SCHEDULE 2.10
hereto, Seller has the sole and exclusive right to use the Proprietary Rights
without infringing or violating the rights of any third parties. Except as
expressly set forth in the agreements listed on SCHEDULE 2.10 hereto, use of the
Proprietary Rights and the Third Party Rights does not require the consent of
any other person and the Proprietary Rights are freely transferable. No claim
has been asserted to Seller by any person to the ownership of or right to use
any the Proprietary Right or challenging or questioning the validity or
effectiveness of any license or agreement constituting a part of any Proprietary
Right, and Seller does not know of any valid basis for any such claim. Each of
the Proprietary Rights is valid and subsisting, has not been cancelled,
abandoned or otherwise terminated and, if applicable, has been duly issued or
filed.
Seller has no knowledge of any claim that, or inquiry as to whether, any
product, activity or operation of Seller infringes upon or involves, or has
resulted in the infringement of, any proprietary right of any other person or
other entity; and no proceedings have been instituted, are pending or are
threatened against Seller that challenge the rights of Seller with respect to
the Proprietary Rights, the Third Party Rights or any software or computer
program used by Seller in its ordinary course of business. Seller has no
knowledge of any claim that any current or former employee or consultant claims
any interest in, or right to use, the Proprietary Rights, nor has any current or
former employee retained any interest in or to any of the Proprietary Rights.
The Proprietary Rights, the Third Party Rights, and any technology,
know-how, processes, computer programs and other computer software (including
any copyrights inhering therein) owned by Seller constitute the only
intellectual property used by Seller in the operation of its business, other
than intellectual property used under off-the-shelf end user licenses.
2.11 PAYROLL INFORMATION; EMPLOYEES. Set forth on SCHEDULE 2.11 attached
hereto is a true and complete list, as of the date of this Agreement of: (a) the
name of each employee, consultant, or independent contractor that is employed by
Seller in connection with Seller's Business; (b) the most recent payroll report
of Seller related to Seller's Business, showing all the current levels of
compensation of all such employees, consultants or independent contractors; (c)
promised increases in compensation for such employees, consultants or
independent contractors; (d) oral or written employment agreements or
independent contractor agreements (and all amendments thereto) to which Seller
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is a party which require Seller to pay annual compensation in excess of $75,000
in connection with Seller's Business, copies of which have been delivered to
Purchaser. Seller has previously provided to Purchaser access to or true and
accurate copies of all employee manuals, materials, policies, procedures and
work-related rules To it knowledge, Seller has not engaged in any unfair labor
practice. There are no unfair labor practice charges or complaints pending or to
the knowledge of Seller, threatened against Seller, and Seller has never been a
party to any agreement with any union, labor organization or collective
bargaining unit.
2.12 LEGAL PROCEEDINGS. Other than as set forth on SCHEDULE 2.12, neither
Seller, nor Seller's Business, nor any of the Purchased Assets are subject to
any pending, nor does Seller have knowledge of any threatened, litigation,
governmental investigation, condemnation or other proceeding against or relating
to or affecting Seller, Seller's Business, or any of the Purchased Assets, the
operations, business or prospects of Seller's Business, or the transactions
contemplated by this Agreement, and, to the knowledge of Seller, no basis for
any such action exists.
2.13 CONTRACTS. Seller has delivered to Purchaser true copies of all
written, and disclosed to Purchaser all material oral, outstanding contracts,
obligations and commitments of Seller relating to Seller's Business
("Contracts"), all of which are listed or incorporated by reference to SCHEDULE
2.7 (in the case of leases), SCHEDULE 2.11 (in the case of employment
agreements) and SCHEDULE 1.1(E) (in the case of Contracts other than leases and
employment agreements ) attached hereto. Except as otherwise indicated on such
Schedules, all of such Contracts are valid, binding and enforceable in
accordance with their terms and are in full force and effect, and no defenses,
offsets or counterclaims have been asserted or may be made by any party thereto.
Except as indicated on such Schedules, there is not under any such Contract any
existing default by Seller, or any condition or event of which Seller has
knowledge which with notice or lapse of time, or both, would constitute a
default. Except as indicated on SCHEDULE 2.5, there is not under any such
Contract a requirement that a party to such Contract other than Seller consent
to the assignment of such Contract to Purchaser in connection with the
consummation of the transactions contemplated by this Agreement. Seller has no
knowledge of any default by any other party to such Contracts. Seller has not
received notice of the intention of any party to any Contract to cancel or
terminate any Contract and Seller has no reason to believe that any amendment or
change to any Contract is contemplated by any party thereto. Other than those
contracts, obligations and commitments of Seller listed on SCHEDULE 2.7,
SCHEDULE 2.11 and SCHEDULE 1.1(E), Seller is not a party to any material written
or oral agreement contract, lease or arrangement that relates in any way to
Seller's Business.
2.14 SUBSEQUENT EVENTS. Except as set forth on SCHEDULE 2.14, Seller has
not, in connection with Seller's Business, since the Financials Date:
(a) Knowingly incurred any material obligation or liability (absolute,
accrued, contingent or otherwise) or entered into any contract, lease, license
or commitment, relating to Seller's Business, except in connection with the
performance of this Agreement, other than in the ordinary course of business or
knowingly incurred any indebtedness;
(b) Knowingly discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability in
connection with Seller's Business (absolute, accrued, contingent or otherwise)
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other than (i) liabilities shown or reflected on Seller's balance sheet at the
Financials Date (the "Balance Sheet") or (ii) liabilities incurred since the
Financials Date in the ordinary course of business;
(c) Lost or terminated any employee, customer or supplier of Seller's
Business, that has, individually or in the aggregate, had a material adverse
effect on its business;
(d) Mortgaged, pledged or subjected to any lien, charge or other
encumbrance any of the Purchased Assets;
(e) Sold or contracted to sell or transferred or contracted to
transfer any of the Purchased Assets used in the conduct of Seller's Business,
or canceled any debts or claims or waived any rights, except in the ordinary
course of business;
(f) Except in the ordinary course of business consistent with past
practices, granted any increase in the rates of pay of employees, independent
contractors or agents whose employment relates to Seller's Business, or by means
of any bonus or pension plan, contract or other commitment, increased the
compensation of such person;
(g) Authorized or incurred any capital expenditures in excess of Five
Thousand and No/100 Dollars ($5,000.00) relating to Seller's Business;
(h) Except for this Agreement and any other agreements executed and
delivered pursuant to this Agreement, entered into any material transaction
related to Seller's Business other than in the ordinary course of business or
permitted hereunder;
(i) Experienced damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting Seller's Business, or experienced
any other material adverse change in the financial condition, Purchased Assets,
prospects, or liabilities of Seller's Business;
(j) Suffered any material adverse change related to Seller's Business
or to the Purchased Assets.
2.15 TAXES. Seller has filed all tax returns (including tax reports and
other statements) required to be filed by it, and made all payments of taxes
(including any interest, penalty or addition thereto) required to be made by it,
on or before the date of this Agreement, with respect to income taxes, real and
personal property taxes, sales taxes, use taxes, employment taxes, excise taxes
and other taxes. All such tax returns are complete and accurate in all respects
and properly reflect the relevant taxes for the periods covered thereby. Except
as would not reasonably be expected to have a material adverse effect on the
business or operations of Seller, Seller has no tax liability, except for real
and personal property taxes for the current period not yet due and payable and
sales, use, employment and similar taxes for periods as to which such taxes have
not yet become due and payable. Seller has not received any notice that any tax
deficiency or delinquency has been asserted against Seller. To Seller's
knowledge, there are no audits relating to taxes of Seller threatened, pending
or in process. Seller is not currently the beneficiary of any waiver of any
statute of limitations in respect of taxes nor of any extension of time within
which to file any tax return or to pay any tax assessment or deficiency. There
are no liens or encumbrances relating to taxes on or threatened against any of
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the Purchased Assets. To its knowledge, Seller has withheld and paid all taxes
required by law to have been withheld and paid by it. Seller has delivered to
Purchaser correct and complete copies of Seller's three most recently filed
annual state and federal income tax returns, together with all examination
reports and statements of deficiencies assessed against or agreed to by Seller
during the three (3) calendar year period preceding the date of this Agreement.
2.16 LIABILITIES; DEBT. Except to the extent reflected or reserved against
on the Balance Sheet or as otherwise disclosed herein or on the Schedules
hereto, Seller did not have, as of the Financials Date, and has not incurred
since that date and will not have incurred as of the Closing Date, any
liabilities or obligations of any nature, whether accrued, absolute, contingent
or otherwise, and whether due or to become due, related to Seller's Business,
other than those incurred in the ordinary course of business or as would not
reasonably be expected to have a material adverse effect on the business or
operations of Seller. Seller does not know, or have grounds to know, of any
basis for the assertion against Seller as of the Financials Date, of any
material claim or liability of any nature, related to Seller's Business in any
amount not fully reflected or reserved against on the Balance Sheet, or of any
claim or liability of any nature arising since that date other than those
incurred in the ordinary course of business or contemplated by this Agreement.
All indebtedness of Seller related to Seller's Business (including without
limitation, indebtedness for borrowed money, guaranties and capital lease
obligations) is described on SCHEDULE 2.16 attached hereto.
2.17 INSURANCE POLICIES. Seller carries property, liability, workers'
compensation and such other types of insurance , with coverage amounts
comparable to companies engaged in similar businesses and similarly situated.
Valid and enforceable policies are outstanding and duly in force and will remain
duly in force through the Closing Date. True and correct copies of such policies
have been delivered to Purchaser. Seller has not received notice or other
communication from the issuer of any such insurance policy canceling or amending
such policy or threatening to do so. Seller does not have any outstanding
claims, settlements or premiums owed against any insurance policy.
2.18 EMPLOYEE BENEFIT PLANS. Except as set forth on SCHEDULE 2.18 attached
hereto, Seller has not established, nor maintains, nor is obligated to make
contributions to or under or otherwise participate in, with regard to Seller's
Business, (a) any bonus or other type of compensation or employment plan,
program, agreement, policy, commitment, contract or arrangement (whether or not
set forth in a written document); (b) any pension, profit-sharing, retirement or
other plan, program or arrangement; or (c) any other employee benefit plan, fund
or program, including, but not limited to, those described in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All
such plans listed on SCHEDULE 2.18 have been operated and administered in all
material respects in accordance with all applicable laws, rules and regulations,
including without limitation, ERISA, the Internal Revenue Code of 1986, as
amended, Title VII of the Civil Rights Act of 1964, as amended, the Equal Pay
Act of 1967, as amended, the Age Discrimination in Employment Act of 1967, as
amended, and the related rules and regulations adopted by those federal agencies
responsible for the administration of such laws.
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2.19 COMPLIANCE WITH LAWS IN GENERAL. Seller has complied in all material
respects with all applicable laws, rules, regulations and licensing
requirements, including, without limitation, the Federal Environmental
Protection Act, the Occupational Safety and Health Act, the Americans with
Disabilities Act and any environmental laws Seller has not received any notice
of a violation of any federal, state and local laws, regulations and ordinances
relating to the operations of the business and Purchased Assets and no notice of
any pending inspection or violation of any such law, regulation or ordinance has
been received by Seller.
2.20 NO UNTRUE REPRESENTATIONS. No representation or warranty by Seller in
this Agreement, and no Exhibit or certificate issued or executed by, or
information furnished by, executive officers or directors of Seller and
furnished or to be furnished to Purchaser pursuant hereto, or in connection with
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements or facts contained therein not misleading.
2.21 CUSTOMERS. Set forth in SCHEDULE 2.21 is a complete and accurate list
of the ten (10) largest customers of Seller's Business in terms of dollar volume
of transactions for the last fiscal year and the current fiscal year to date,
showing, with respect to each, the name, address and aggregate dollar volume of
business from such customer.
2.22 BROKERS AND FINDERS. Neither Seller, nor any shareholder, director,
officer, employee or agent of Seller has retained any broker or finder in
connection with the transactions contemplated by this Agreement.
2.23 WEBSITE CONTENT. To the knowledge of Seller, the xxx.Xxxxxx.xxx
website does not contain any content that is obscene or would cause damage to
the reputation of Seller, or is defamatory or libelous toward any person or
entity; or contains viruses or other computer programs that could cause damage
to Seller's or an end user's computer or data.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to Seller the following:
3.1 CORPORATE EXISTENCE: GOOD STANDING. Purchaser is a corporation duly
organized and existing and in good standing under the laws of the State of
Delaware.
3.2 POWER AND AUTHORITY. Purchaser has corporate power to execute, deliver
and perform this Agreement and all agreements and other documents executed and
delivered by it pursuant to this Agreement or to be executed and delivered on
the Closing Date, and has taken all actions required by law, its Certificate of
Incorporation, its Bylaws or otherwise, to authorize the execution, delivery and
performance of this Agreement and such related documents. Purchaser has the
legal capacity to enter into and perform this Agreement and the other agreements
to be executed and delivered by it in connection herewith. This Agreement and
all agreements and documents executed and delivered in connection herewith have
been or will be as of the Closing Date, duly executed and delivered by
Purchaser, and constitute or will constitute the legal, valid, and binding
obligations of Purchaser enforceable against Purchaser in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally or the availability of
equitable remedies. The execution and delivery of this Agreement and the
9
agreements related hereto executed and delivered pursuant to this Agreement or
to be executed and delivered on the Closing Date do not and, subject to the
receipt of consents to assignments of leases and other contracts where required
and the receipt of regulatory approvals where required, the consummation of the
transactions contemplated hereby will not, violate any provision of the
Certificate of Incorporation or Bylaws of Purchaser or any provisions of, or
result in the acceleration of, any obligation under any mortgage, lien, lease,
agreement instrument, order, arbitration award, judgment or decree to which
Purchaser is a party or by which it is bound, or violate any restrictions of any
kind to which Purchaser is subject.
3.3 BROKERS AND FINDERS. Neither Purchaser, nor any of its shareholders,
directors, officers, employees or agents has retained any broker or finder in
connection with the transactions contemplated by this Agreement.
SECTION 4. COVENANTS OF SELLER.
Seller agrees that between the date hereof and the Closing Date, Seller
shall use its best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions. Seller shall,
within two (2) weeks) following the Closing, provide Purchaser with copies of
the audited financial statements of Seller for the years ended December 31, 2001
and December 31, 2000, the fee for which Seller has already paid in full.
SECTION 5. COVENANTS OF PURCHASER.
Purchaser agrees that between the date hereof and the Closing Date,
Purchaser shall use its best efforts to cause the consummation of the
transactions contemplated hereby in accordance with its terms and provisions.
SECTION 6. PURCHASER'S CONDITIONS PRECEDENT.
The obligations of Purchaser hereunder are subject to the fulfillment or
waiver of each of the following conditions upon the earliest to occur of June
14, 2002 or the Closing Date:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Seller contained herein shall have been true and correct in all material
respects when initially made and shall be true and correct in all material
respects as of the Closing Date.
6.2 COVENANTS AND CONDITIONS. Seller shall have performed and complied with
all covenants and conditions required by this Agreement to be performed and
complied with by Seller prior to the Closing Date.
6.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby and no bankruptcy proceeding involving Seller
shall have commenced.
6.4 CLOSING DELIVERIES. Purchaser shall have received all documents, duly
executed in a form satisfactory to Purchaser and its counsel, referred to in
SECTION 8.1.
10
6.5 CONSENTS AND APPROVALS. Seller shall have obtained third-party
approvals and consents to the consummation of the transactions contained herein
that are listed on SCHEDULE 6.5 on terms and conditions reasonably satisfactory
to Purchaser.
6.6 APPROVAL BY THE BOARD OF DIRECTORS. This Agreement and the transactions
contemplated hereby shall have been approved by the Board of Directors and
shareholders of Purchaser.
6.7 DUE DILIGENCE REVIEW. By the Closing Date, Purchaser shall have
completed a due diligence review of Seller's Business, and its legal, financial
and operating condition, including its financial statements, the results of
which shall be satisfactory to Purchaser in its sole discretion.
6.8 NO MATERIAL ADVERSE CHANGE. Except as provided in the Schedules hereto,
no material adverse change in the condition (financial or otherwise),
operations, liabilities, business or prospects of Seller relating to Seller's
Business or in the condition of the Purchased Assets shall have occurred since
the Financials Date.
6.9 EMPLOYEES OF SELLER.
(a) As of the Closing Date, Seller shall have terminated all
employees, consultants and independent contractors identified on SCHEDULE 6.9
and Seller shall have presented Purchaser written evidence satisfactory to the
Purchaser of satisfaction by Seller of all accrued vacation or other
compensation claims payable to the employees listed on SCHEDULE 6.9 ("Employee
Releases").
6.10 LIEN TERMINATION. Seller shall have delivered to Purchaser UCC-3
Amendment Statements (the "Amendment Statements") with respect to UCC-1
Financing Statements filed by Investor Growth Capital Limited and Investor
Group, L.P. (collectively, "IGC") and Leeds Equity Partners III, L.P. ("Leeds")
releasing all liens held by IGC and Leeds in the Purchased Assets (other than
rights to payment under the PBS Contract and rights to payment under the ELT
Contract) or written authorization from such entities authorizing Seller to file
the Amendment Statements. Following Closing, Seller shall use its best efforts
to obtain authorization to file UCC-3 Termination Statements from Xxxxxx
Xxxxxxxx, LLP ("Xxxxxxxx") releasing all liens held by Xxxxxxxx in the Purchased
Assets. Such "best efforts" shall include (to the extent that revised Article 9
of the Uniform Commercial Code has been adopted in the jurisdictions in which
Xxxxxxxx has filed financing statements related to the Purchased Assets),
delivery by Seller to Xxxxxxxx on or before June 20, 2002 of an authenticated
demand to have termination statements filed related to the Purchased Assets
pursuant to Section 9-509(d)(2) of the Uniform Commercial Code and, if Xxxxxxxx
fails to so file or send UCC-3 Termination Statements (as required by
subdivision (a) or (c) of Section 9-513 of the Uniform Commercial Code), Seller
shall file UCC-3 Termination Statements, as contemplated under Section
9-509(d)(2) of the Uniform Commercial Code.
6.11 REAL PROPERTY. Purchaser shall have made on terms satisfactory to it,
arrangements to use the premises leased by Seller on a month-to-month basis.
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6.12 PREPAYMENTS STATEMENTS. Seller shall have delivered to Purchaser a
statement setting forth all customer prepayments and deposits made to Seller
(the "Prepayments Statement").
SECTION 7. SELLER CONDITIONS PRECEDENT.
The obligations of Seller hereunder are subject to the fulfillment or
waiver of each of the following conditions upon the earliest to occur of June
14, 2002 or the Closing Date:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Purchaser contained herein shall have been true and correct in all material
respects when initially made and shall be true and correct in all material
respects as of the Closing Date.
7.2 COVENANTS AND CONDITIONS. Purchaser shall have performed and complied
with all covenants and conditions required by this Agreement to be performed and
complied with by Purchaser prior to the Closing Date.
7.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
7.4 CLOSING DELIVERIES. Seller shall have received all documents, duly
executed in form satisfactory to Seller and its counsel, referred to in SECTION
8.2.
7.5 EMPLOYEES OF SELLER. On the Closing Date, Purchaser shall offer
employment to substantially all of the employees of Seller listed on SCHEDULE
6.9, and, in connection therewith shall provide each such employee with the
opportunity to take unpaid leave from Seller with respect to those accrued and
unused vacation days for which such employee was paid upon termination from
Seller.
7.6 CONSENTS AND APPROVALS. Seller shall have obtained all necessary
government and other third-party approvals and consents to the consummation of
the transactions contained herein that are listed on SCHEDULE 6.5 on terms and
conditions reasonably satisfactory to Purchaser.
SECTION 8. CLOSING DELIVERIES.
8.1 DELIVERIES OF SELLER. At the Closing, Seller shall deliver to Purchaser
the following, all of which shall be in a form satisfactory to counsel to
Purchaser:
(a) a copy of the resolutions of the Board of Directors and of the
shareholders of Seller authorizing the execution, delivery and performance of
this Agreement and all related documents and agreements to be executed by Seller
in connection therewith;
(b) a certificate of the Secretary of Seller certifying as to the
incumbency of the directors and officers of Seller, certifying as to the
signatures of such directors and officers who have executed documents delivered
at the Closing on behalf of Seller, and certifying that certain documents
provided to Purchaser, including Seller's Articles of Incorporation and Bylaws
and the resolutions referred to in subsection (a) above, are true and correct
copies of the originals thereof;
12
(c) a certificate of the President of Seller, dated as of the Closing
Date, as to (i) the truth and correctness of the representations and warranties
of Seller contained herein; (ii) the performance of and compliance by Seller
with all covenants contained herein; and (iii) the satisfaction of all
conditions precedent of Seller contained herein;
(d) a certificate, dated within ten (10) days of the Closing Date, of
the Secretary of the State of California establishing that Seller is in
existence and is in good standing to transact business in its state of
incorporation;
(e) an opinion of counsel to Seller opining as to the execution and
delivery of this Agreement and the other documents and agreements to be executed
pursuant hereto, the good standing and authority of Seller, the enforceability
of this Agreement and the other agreements and documents to be executed in
connection herewith, and other matters reasonably requested by Purchaser;
(f) a Xxxx of Sale executed by Seller in the form of EXHIBIT A;
(g) an Assignment and Assumption Agreement executed by Seller in the
form of EXHIBIT B (the "Assignment and Assumption Agreement");
(h) all authorizations, consents, approvals, permits and licenses
referred to in SECTION 6.5;
(i) the Amendment Statements executed by IGC and Leeds;
(j) an Assignment of Trademarks executed by Seller in the form of
EXHIBIT C;
(k) the Employee Releases;
(l) the Prepayments Statements; and
(m) such other instruments and documents as reasonably requested by
Purchaser to carry out and effect the purpose and intent of this Agreement.
8.2 DELIVERIES OF PURCHASER. At the Closing, Purchaser shall deliver to
Seller the following, all of which shall be in a form satisfactory to counsel to
Seller:
(a) Cash by wire transfer of Three Hundred Twenty Thousand Dollars
($320,000);
(b) a copy of the resolutions of the Board of Directors of Purchaser
(or a committee thereof if within the authority of such committee) authorizing
the execution, delivery and performance of this Agreement and all related
documents and agreements each certified by the Secretary of Purchaser as being
true and correct copies of the original thereof;
13
(c) a certificate of the Chief Executive Officer of Purchaser as of
the Closing Date, as to (i) the truth and correctness of the representations and
warranties of Purchaser contained herein; (ii) the performance of and compliance
by Purchaser with all covenants contained herein; and (iii) the satisfaction of
all conditions precedent of Purchaser contained herein;
(d) a certificate of the Secretary of Purchaser certifying as to the
incumbency of the directors and officers of Purchaser and as to the signatures
of such directors and officers who have executed documents delivered at the
Closing on behalf of Purchaser;
(e) certificates, dated within ten (10) days of the Closing Date, of
the Secretary of the State of Delaware and Arizona establishing that Purchaser
is in existence and is in good standing to transact business in the States of
Delaware and Arizona;
(f) an opinion of counsel to Purchaser opining as to the execution and
delivery of this Agreement and the other documents and agreements to be executed
pursuant hereto, the good standing and authority of Purchaser, the
enforceability of this Agreement and the other agreements and documents to be
executed in connection herewith, and other matters reasonably requested by
Seller;
(g) the Assignment and Assumption Agreement executed by Purchaser;
(h) such other instruments and documents as reasonably requested by
Seller to carry out and effect the purpose and intent of this Agreement.
SECTION 9. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties in this Agreement, including any
certificate or Schedule made a part thereof or Exhibit delivered pursuant to
this Agreement, shall survive the Closing and continue in full force and effect
until the first anniversary of the Closing Date (referred to herein as the
"Termination Date"). Notwithstanding the foregoing, the provisions of SECTION
2.15 shall continue for six (6) months after the expiration of the applicable
statute of limitations for assessment of additional taxes.
9.1 EFFECT OF INVESTIGATION. No investigation or inquiry made by either
party shall, regardless of the Closing of the transactions contemplated hereby,
affect or limit any representation or warranty made by the other party or in any
Schedule delivered by any of them pursuant hereto or any right of
indemnification contained in this Agreement.
SECTION 10. TERMINATION.
This Agreement may be terminated:
(a) at any time prior to the Closing Date by Purchaser by delivery by
Purchaser of written notice to Seller if any representation or warranty of
Seller contained in this Agreement or in any certificate or other document
executed and delivered by Seller pursuant to this Agreement is or becomes untrue
or breached in any material respect or if Seller fails to comply in any material
respect with any covenant or agreement contained herein;
14
(b) at any time prior to the Closing Date by Seller by delivery of
written notice to Purchaser if any representation or warranty of Purchaser
contained in this Agreement or in any certificate or other document executed and
delivered by Purchaser pursuant to this Agreement is or becomes untrue or
breached in any material respect or if Purchaser fails to comply in any material
respect with any covenant or agreement contained herein;
(c) by Purchaser by delivery of written notice to Seller if the
transactions contemplated hereby shall not have been consummated by July 31,
2002; or
(d) by Seller by delivery of written notice to Purchaser if the
transactions contemplated hereby shall not have been consummated by July 31,
2002.
SECTION 11. MISCELLANEOUS.
11.1 NOTICES.
If to Purchaser:
EDT Learning, Inc.
0000 X. 00xx Xx., Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxx, Xx.
Phone: 000-000-0000
With a Copy to:
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx, III
Phone: 000-000-0000
If to Seller:
Quisic Corporation
0000 Xxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: President
Phone: _____________
With a Copy to:
Xxxx Xxxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
Phone: 000-000-0000
15
Or such other address as shall be furnished in writing by any party to the
other party. All such notices shall be considered received: (a) if transmitted
by certified mail, return receipt requested, with proper postage prepaid, upon
the fifth (5th) business day after mailing; (b) if transmitted by overnight
carrier, on the next business day; and (c) if transmitted by personal delivery,
upon receipt.
11.2 SUCCESSORS AND ASSIGNS. This Agreement shall not be assignable, by
operation of law or otherwise, without the prior written consent of all parties.
Subject to the foregoing, this Agreement shall inure to the benefit of, be
enforceable by and be binding upon the parties, their successors and permitted
assigns.
11.3 ENTIRE AGREEMENT. This Agreement and the Exhibits, Schedules,
certificates and other documents delivered pursuant hereto or incorporated
herein by reference, contain and constitute the entire agreement among the
parties and supersede and cancel any prior agreements, representations,
warranties, or communications, whether oral or written, among the parties
relating to the transactions contemplated by this Agreement. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, but only by an agreement in writing signed by the party
against whom or which the enforcement of such change, waiver, discharge or
termination is sought.
11.4 GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona without giving
effect to the principles of conflicts of law thereof, provided, however, that
the laws of the respective jurisdictions of incorporation of each of the parties
shall govern the relative rights, obligations, powers, duties and other internal
affairs of such party and its board of directors.
11.5 SCHEDULES AND EXHIBITS. All Schedules and Exhibits attached to this
Agreement are by reference made a part hereof.
11.6 WAIVERS. No failure on the part of any party hereto to exercise, and
no delay in exercising, any right, power or remedy created hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or remedy by any such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. No waiver by any
party hereto of any breach of or default in any term or condition of this
Agreement shall constitute a waiver of or assent to any succeeding breach of or
default in the same or any other term or condition hereof.
11.7 HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
11.8 COUNTERPARTS. 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 agreement.
11.9 CONFIDENTIALITY. The parties agree that they will not make any public
comment, statement, communication or disclosure about the existence or contents
of this Agreement or activities relating to the consummation of the transactions
contemplated herein without prior approval of the other party, except as may be
required by law, as may be necessary to obtain the required consents, licenses,
permits or approvals pursuant to SECTION 2.5 herein, or as may be necessary in
the ordinary course of business.
16
11.10 EXPENSES. Each party will be responsible for payment of all fees and
expenses incurred by that party in connection with this Agreement and the
consummation of the transactions contemplated thereby regardless of whether this
Agreement is terminated without consummation of the transaction contemplated
hereby.
11.11 NO THIRD PARTY BENEFICIARIES. Nothing contained in this Agreement
(express or implied) is intended or shall be construed to confer upon or give to
any person, corporation or other entity, other than the parties hereto and their
permitted successors or assigns, any rights or remedies under or by reason of
this Agreement.
11.12 FURTHER ASSURANCES. Each party hereby agrees to perform any further
acts and to execute and deliver any documents which may be reasonably necessary
to carry out the provisions of this Agreement.
[SIGNATURES ON FOLLOWING PAGE]
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
EDT LEARNING, INC. QUISIC CORPORATION
By: /s/ Xxxxx X. Xxxxxx, Xx. By: /s/ Xxxxx Wash
-------------------------------- ------------------------------------
Name: Xxxxx X. Xxxxxx, Xx. Its: Xxxxx Wash
------------------------------ -----------------------------------
Title: CEO Title: Vice President
----------------------------- ---------------------------------
18
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
------- -----------
A Xxxx of Sale
B Assignment and Assumption Agreement
C Assignment of Trademarks
19
INDEX TO SCHEDULES
SCHEDULE DESCRIPTION
-------- -----------
1.1(a) Equipment
1.1(c) Trade Names
1.1(d) Accounts and Notes Receivable
1.1(e) Contracts
1.2 Excluded Assets
1.3(a) Purchase Price Allocation
2.1 Jurisdictions of Qualification
2.5 Required Consents of Seller
2.6 Seller's Financial Information
2.7 Leases
2.9 Title to and Encumbrances on Property
2.10 Intellectual Property
2.11 Payroll Information; Seller's Employees and Independent Contractors
2.12 Legal Proceedings
2.14 Subsequent Events
2.16 Seller's Liabilities Related to Seller's Business
2.18 Seller's Employee Benefits Plans
2.21 Seller's Customers
6.5 Consents and Approvals
6.9 Employees of Seller
20
COMMON STOCK PURCHASE AGREEMENT
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (this "Agreement") is made and entered
into this 14th day of June, 2002, by and between EDT Learning, Inc., a Delaware
corporation ("EDT"), Investor Growth Capital Limited, a Guernsey corporation
("IGCLTD") and Investor Group, L.P., a Guernsey limited partnership ("IGCLP")
(IGCLTD AND IGCLP collectively referred to herein as IGC"), and Leeds Equity
Partners III, L.P., a Delaware limited partnership ("Leeds"). IGC and Leeds are
collectively referred to herein as "Purchasers."
R E C I T A L S
WHEREAS, EDT has authorized the sale of 2,500,000 shares of EDT's Common
Stock, par value $0.001 per share (the "Shares") to Purchasers, pursuant to the
terms of this Agreement; and
WHEREAS, each Purchaser desires to purchase the number of Shares set forth
opposite such Purchaser's name on EXHIBIT A attached hereto on the terms and
conditions set forth herein; and
WHEREAS, contemporaneously with and as a condition to the consummation of
the transactions contemplated by this Agreement, EDT will purchase certain
assets and assume certain liabilities of Quisic Corporation, a California
corporation ("Quisic"), pursuant to that certain Asset Purchase Agreement of
even date herewith between EDT and Quisic (the "Asset Purchase Agreement"); and
WHEREAS, each of Purchasers is a shareholder and secured creditor of
Quisic.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. SALE AND PURCHASE.
(a) The consummation of the transactions contemplated by this Agreement
(the "Closing") will occur on June 17, 2002 (the "Closing Date"), unless another
date (as soon as practical following the execution of this Agreement) is
mutually agreed upon by EDT and each Purchaser in writing on the terms and
conditions set forth herein
(b) Subject to the terms and conditions hereof, effective the Closing Date
EDT agrees to issue and sell to each Purchaser the number of Shares set forth
opposite such Purchaser's name on EXHIBIT A in consideration of the following:
(i) the payment by Purchasers to EDT of an aggregate of Three Hundred
Twenty Thousand Dollars ($320,000) in cash (the "Cash Consideration") at
Closing, each Purchaser paying the amount set forth opposite its name on
EXHIBIT A;
(ii) Purchasers' agreement as set forth in SECTION 4.1 hereof to vote
(as shareholders of Quisic) to approve the transactions contemplated by the
Asset Purchase Agreement;
(iii) Purchasers' agreement to be bound by the terms and provisions of
SECTION 9.2 of this Agreement; and
(iv) Purchasers' agreement as set forth in SECTION 4.2 hereof to
release all liens held by them in the assets and property of Quisic (other
than rights to payment under Course Licensing and Distribution Agreement
dated July 5, 2001 between Quisic and the Public Broadcasting Systems (the
"PBS Contract") and the Distribution Agreement dated July 7, 1999 between
Quisic and Employment Law Training, Inc. (the "ELT Contract"))
contemporaneously with the consummation of the transactions contemplated by
the Asset Purchase Agreement.
(c) At Closing, EDT shall deliver to (i) Purchasers stock certificates
representing an aggregate of 1,500,000 Shares, each Purchaser to receive a stock
certificate representing the number of Shares designated as "Closing Shares"
opposite its name on EXHIBIT A to this Agreement and (ii) the escrow agent named
in the Escrow Agreement in the form attached hereto as EXHIBIT B (the "Escrow
Agreement") stock certificates representing an aggregate of 1,000,000 Shares
(the "Escrow Shares"), such stock certificates being in the individual amounts
set forth opposite each Purchaser's name on EXHIBIT A.
(d) As further described in the Escrow Agreement, (i) all of the Escrow
Shares shall be subject to return to EDT to satisfy Purchasers' indemnity
obligations hereunder and (ii) Five Hundred Thousand (500,000) of the Escrow
Shares will be released from escrow and delivered to Purchasers only if EDT
receives cash collections during the twelve (12) months following the Closing
Date of at least $2,000,000 in the aggregate from UAL Corp., Siemens AG and
Hewlett-Packard Company and their affiliates and successors. EDT will structure
its business with such customers and diligently pursue such cash collections in
the normal course of business and not in order to avoid release of Escrow Shares
to the Purchasers. In connection with its receipt of Shares pursuant to this
Agreement, each Purchaser shall be required to execute an agreement with EDT
(the "Lock-Up Agreement") pursuant to which each Purchaser will agree not to
sell or transfer the Shares received by it pursuant to the terms of this
Agreement for a period of one (1) year from the Closing Date. Each certificate
representing Shares issued pursuant to the terms of this Agreement shall bear
the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. FURTHERMORE, THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A LOCK-UP AGREEMENT WITH THE COMPANY. SUCH
SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION WITHOUT AN EXEMPTION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR AN OPINION OF LEGAL COUNSEL REASONABLY ACCEPTABLE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED, AND MAY BE TRANSFERRED
ONLY IN COMPLIANCE WITH THE LOCK-UP AGREEMENT."
2
2. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. Each Purchaser hereby
severally, but not jointly, represents and warrants (with respect to itself
only) to EDT as follows:
2.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power and
authority under all applicable provisions of law to execute, deliver and perform
its obligations under this Agreement and to carry out its provisions. All action
on Purchasers' part required for the lawful execution and delivery of this
Agreement by Purchaser has been or will be taken prior to the Closing. Assuming
due execution and delivery by EDT, upon its execution and delivery by Purchaser,
this Agreement will be the valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, except (a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights,
and (b) general principles of equity that restrict the availability of equitable
remedies.
2.2 INVESTMENT REPRESENTATIONS. Purchaser understands that the Shares have
not been registered under the Securities Act of 1933, as amended (the
"Securities Act"). Purchaser also understands that the Shares are being offered
and sold pursuant to an exemption from registration contained in the Securities
Act based in part upon Purchaser's representations contained in this Agreement.
Purchaser hereby represents and warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to EDT so that it is capable of evaluating
the merits and risks of its investment in EDT and has the capacity to
protect its own interests. Purchaser must bear the economic risk of this
investment indefinitely unless the Shares are registered pursuant to the
Securities Act, or an exemption from registration is available. Purchaser
understands that, except as provided by in SECTION 11 of this Agreement,
EDT has no present intention of registering the Shares. Purchaser also
understands that there is no assurance that any exemption from registration
under the Securities Act will be available and that, even if available,
such exemption may not allow Purchaser to transfer all or any portion of
the Shares under the circumstances, in the amounts or at the times
Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the Shares for
Purchaser's own account for investment only, and not with a view towards
their distribution in violation of state or federal securities laws.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents that by
reason of its business or financial experience Purchaser has the capacity
to protect its own interests in connection with the transactions
contemplated in this Agreement.
(d) ACCREDITED INVESTOR. Purchaser represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act.
(e) CORPORATION INFORMATION. Purchaser has received and read the
Financial Statements (hereafter defined) and has had an opportunity to
discuss EDT's business, management and financial affairs with directors,
3
officers and management of EDT and has had the opportunity to review EDT's
operations and facilities. Purchaser has also had the opportunity to ask
questions of and receive answers from, EDT and its management regarding the
terms and conditions of this investment.
(f) RULE 144. Purchaser acknowledges and agrees that the Shares must
be held indefinitely (subject to any right of redemption applicable to the
Shares) unless they are subsequently registered under the Securities Act or
an exemption from such registration is available. Purchaser has been
advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act as in effect from time to time ("Rule 144"), which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain current public information about EDT, the resale
occurring following the required holding period under Rule 144 and the
number of shares being sold during any three-month period not exceeding
specified limitations.
(g) RESIDENCE. The office of each Purchaser in which its investment
decision was made is located at the address or addresses of the Purchaser
set forth on EXHIBIT A.
2.3 NO BROKER OR FINDER. Purchaser has not engaged any broker or finder in
connection with this Agreement or the transactions contemplated hereby.
3. REPRESENTATIONS AND WARRANTIES OF EDT. EDT represents and warrants to
Purchasers the following:
3.1 CORPORATE EXISTENCE: GOOD STANDING. EDT is a corporation duly organized
and existing and in good standing under the laws of the State of Delaware.
3.2 POWER AND AUTHORITY. EDT has corporate power to execute, deliver and
perform this Agreement and all agreements and other documents executed and
delivered by it pursuant to this Agreement or to be executed and delivered on
the Closing Date, including without limitation, the Asset Purchase Agreement and
the agreements contemplated thereby, and has taken all actions required by law,
its Certificate of Incorporation, its Bylaws or otherwise, to authorize the
execution, delivery and performance of this Agreement and such related
documents. EDT has the legal capacity to enter into and perform this Agreement
and the other agreements to be executed and delivered by it in connection
herewith. This Agreement and all agreements and documents executed and delivered
in connection herewith have been or will be as of the Closing Date, duly
executed and delivered by EDT, and constitute or will constitute the legal,
valid, and binding obligations of EDT enforceable against EDT in accordance with
their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies. The execution and delivery of this Agreement
and the agreements related hereto executed and delivered pursuant to this
Agreement or to be executed and delivered on the Closing Date do not and the
consummation of the transactions contemplated hereby will not, violate any
provision of the Certificate of Incorporation or Bylaws of EDT or any provisions
of, or result in the acceleration of, any obligation under any mortgage, lien,
4
lease, agreement instrument, order, arbitration award, judgment or decree to
which EDT is a party or by which it is bound, or violate any restrictions of any
kind to which EDT is subject.
3.3 EDT SHARES. All of the Shares issued at Closing will be, when so
issued, (i) duly authorized, validly issued, fully paid and nonassessable and
(ii) free of preemptive rights created by statute, EDT's Certificate of
Incorporation or Bylaws or any agreement to which EDT is a party or by which EDT
is bound.
3.4 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 3.4 are EDT's audited
financial statements for the fiscal year ended March 31, 2001 and the unaudited
financial statements for the interim period ending December 31, 2001 (December
31, 2001 being hereinafter referred to as the "EDT Financials Date"), reflecting
the results of the operations and financial condition of EDT at such dates which
have been prepared in accordance with generally accepted accounting principles,
consistently applied (the "Financial Statements"). The Financial Statements: (i)
fairly and accurately present the financial position of EDT as of the dates
indicated and present the results of EDT's operations for the periods then
ended; and (ii) are in accordance with the books and records of EDT, as the case
may be, which have been properly maintained and are complete and correct in all
material respects.
3.5 SEC DOCUMENTS AND REPORTS. EDT has filed all required documents with
the Securities and Exchange Commission (the "SEC") since March 31, 2000 (the
"SEC Documents"). As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Securities Exchange Act of 1934, as amended, as the case may be, and, at the
respective times they were filed, none of the SEC Documents contained any untrue
statement of a material fact or omitted 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.
3.6 LEGAL PROCEEDINGS. Other than as set forth on SCHEDULE 3.6, neither EDT
nor any of its affiliates is subject to any pending, nor does EDT have knowledge
of any threatened, litigation, governmental investigation, condemnation or other
proceeding against or relating to or affecting EDT (or any of its affiliates),
the operations, business or prospects of EDT's business, or the transactions
contemplated by this Agreement, and, to the knowledge of EDT, no basis for any
such action exists, nor is there any legal impediment of which EDT has knowledge
to the continued operation of EDT's business in its ordinary course.
3.7 NO UNDISCLOSED LIABILITIES. Except as and to the extent reflected in
the Financial Statements or as expressly shown in SCHEDULE 3.7, EDT has no
liability or obligation whatsoever, whether matured, unmatured, absolute,
contingent or otherwise, except for liabilities and obligations incurred in the
ordinary course of its business since the EDT Financials Date, which, in the
aggregate, would reasonably be expected to have a material adverse effect on the
operations, assets or financial condition of EDT or its business.
3.8 NO VIOLATION OF LAW. EDT has not been nor shall it be as of the Closing
Date (by virtue of any action, omission to act, contract to which it is a party
or any occurrence or state of facts whatsoever) in violation of any applicable
local, state or federal law, ordinance, regulation, order, injunction or decree,
or any other requirement of any governmental body, agency or authority or court
5
binding on it, or relating to its property or business which, in the aggregate,
has or is reasonably likely to have a material adverse effect on the business,
assets or financial position of EDT.
3.9 CAPITALIZATION; TITLE TO SHARES. The authorized capital stock of EDT
consists of 40,000,000 shares of common stock, par value $0.001 per share
("Common Stock") and 10,000,000 shares of preferred stock, $0.01 par value
("Preferred Stock"). As of May 31, 2002 (i) 15,301,068 shares of Common Stock
were issued, (ii) no shares of Preferred Stock were issued, (iii) 1,179,630
shares of Common Stock were issued and held in the treasury of EDT, (iv) a total
of 3,500,000 shares of Common Stock were reserved for issuance pursuant to the
EDT 1997 Stock Compensation Plan (the "Plan") (with options to purchase
1,722,938 shares of Common Stock currently outstanding under the Plan), (v)
1,753,095 shares of Common Stock were reserved for issuance pursuant to warrants
and (vi) 5,944,921 shares of Common Stock were reserved for issuance upon
conversion of convertible notes. All issued and outstanding shares of Common
Stock are duly authorized, fully paid and non-assessable and were issued in
accordance with the registration or qualification provisions of the Securities
Act, and of any relevant state securities laws or pursuant to valid exemptions
therefrom. Except as set forth above, there are no other outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal), proxy or stockholder agreements, or agreements of any kind for the
purchase or acquisition from EDT of any of its securities. All shares of Common
Stock presently outstanding are, and all shares which may be issued pursuant to
the exercise of outstanding options under the EDT 1997 Stock Compensation Plan,
when issued in accordance with the terms thereof will be, validly authorized and
issued and fully paid and nonassessable. Since the EDT Financials Date, EDT has
not redeemed or purchased any shares of Common Stock, or declared, set aside, or
paid any dividend or other distribution in respect of Common Stock.
4. PURCHASERS' COVENANTS.
4.1 SHAREHOLDER VOTE. Each Purchaser agrees to take all actions necessary
to vote as a shareholder of Quisic to approve the transactions contemplated by
the Asset Purchase Agreement.
4.2 RELEASE OF LIENS. Each Purchaser agrees to take all actions necessary
to release all liens held by it in assets owned by Quisic (other than rights to
payment under the ELT Contract and the PBS Contract) contemporaneously with the
consummation of the transactions contemplated by the Asset Purchase Agreement.
Each Purchaser agrees to take all actions necessary to release all liens held by
it in rights to payment under the PBS Contract upon receipt of written consent
of the Public Broadcasting System to the assignment to EDT of the PBS Contract.
Each Purchaser agrees to take all actions necessary to release all liens held by
it in rights to payment under the ELT Contract upon receipt of the written
consent of Employment Law Training, Inc. to the assignment to EDT of the ELT
Contract. Each Purchaser further agrees to cancel and extinguish all
indebtedness of Quisic to such Purchaser and such Purchaser's affiliates once
consent to assignment by Quisic to EDT of each of the PBS Contract and the ELT
Contract have been obtained.
6
5. EDT'S COVENANT. EDT agrees to pay to Purchasers (in the percentages set
forth on EXHIBIT A) all cash collections up to $1,250,000 received by EDT during
the five (5) year period following the Closing Date under the terms of the (i)
Course Licensing and Distribution Agreement dated July 5, 2001 between Quisic
and the Public Broadcasting Systems (the "PBS Contract"), (ii) Agreement between
Strategos and Quisic dated Xxxxx 00, 0000, (xxx) Marketing and Distribution
Agreement dated March 22, 2001 between Strategos and Quisic for Online
Innovation Academy and related Promissory Note in the original principal amount
of $382,023 and (iv) Distribution Agreement between Quisic and Employment Law
Training, Inc. dated July 7, 1999 (the "ELT Contract") and related Promissory
Note dated July 20, 2001 payable to Internal and External Communications, Inc.
and fifty percent (50%) of all cash collections during the five (5) year period
following the Closing Date in excess of $1,250,000 related thereto. In addition,
EDT shall diligently and faithfully endeavor to collect as soon as possible from
the payment obligors set forth above all amounts due and shall not exchange,
modify, amend or otherwise compromise any right to payment with respect thereto
without the prior written consent of Purchasers. Any payments received by
Purchaser directly from the third parties listed above shall be credited toward
the payments EDT has agreed to make to Purchaser. Notwithstanding anything to
the contrary contained in this SECTION 5, if, at the expiration of the five (5)
years following the Closing Date a payment dispute exists related to one of the
listed contracts, any payments received by EDT or Purchaser in connection with
resolution of the dispute shall be included in the payments provided for in the
first sentence of this SECTION 5.
6. EDT'S CONDITIONS PRECEDENT. The obligations of EDT hereunder are subject to
the fulfillment or waiver of each of the following conditions upon the earlier
to occur of June 14, 2002 or the Closing Date:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Purchasers contained herein shall have been true and correct in all material
respects when initially made and shall be true and correct in all material
respects as of the Closing Date.
6.2 COVENANTS AND CONDITIONS. Purchasers shall have performed and complied
with all material covenants and conditions required by this Agreement to be
performed and complied with by Purchasers prior to the Closing Date.
6.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby and no bankruptcy proceeding involving Quisic
shall have been instituted.
6.4 CLOSING DELIVERIES. EDT shall have received all documents, duly
executed in a form reasonably satisfactory to EDT and its counsel, referred to
in SECTION 8.1.
6.5 CONSENTS AND APPROVALS. Purchasers shall have obtained all necessary
government and other third-party approvals and consents required to consummate
the transactions contained herein on terms and conditions reasonably
satisfactory to EDT.
6.6 APPROVAL BY THE BOARD OF DIRECTORS. This Agreement and the transactions
contemplated hereby shall have been approved by the Board of Directors of EDT.
7
6.7 APPROVAL AND CONSUMMATION OF TRANSACTIONS CONTEMPLATED BY ASSET
PURCHASE AGREEMENT. Purchasers shall have presented EDT evidence, in form and
substance reasonably satisfactory to EDT, of their approval as shareholders of
Quisic, of the transactions contemplated by the Asset Purchase Agreement, and
the consummation of the transactions contemplated by the Asset Purchase
Agreement shall occur contemporaneously with Closing.
7. PURCHASERS' CONDITIONS PRECEDENT. The obligations of Purchasers hereunder
are subject to the fulfillment or waiver of each of the following conditions
upon the earliest to occur of June 14, 2002 or the Closing Date:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
EDT contained herein shall have been true and correct in all respects when
initially made and shall be true and correct in all respects as of the Closing
Date.
7.2 COVENANTS AND CONDITIONS. EDT shall have performed and complied with
all covenants and conditions required by this Agreement to be performed and
complied with by EDT prior to the Closing Date.
7.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
7.4 CLOSING DELIVERIES. Purchasers shall have received all documents, duly
executed in form satisfactory to Purchasers and their counsel, referred to in
SECTION 8.2.
7.5 CONSENTS AND APPROVALS. Purchasers shall have obtained all necessary
government and other third-party approvals and consents required to consummate
the transactions contained herein on terms and conditions reasonably
satisfactory to Purchasers.
8. CLOSING DELIVERIES.
8.1 DELIVERIES OF PURCHASERS. At the Closing, Purchasers shall deliver to
EDT the following, all of which shall be in a form reasonably satisfactory to
counsel to EDT:
(a) an opinion of counsel to Purchasers opining as to the execution
and delivery of this Agreement and the other documents and agreements to be
executed pursuant hereto, the good standing and authority of Purchasers,
the enforceability of this Agreement and the other agreements and documents
to be executed in connection herewith, and other matters reasonably
requested by EDT;
(b) the Escrow Agreement executed by each Purchaser;
(c) a Lock-Up Agreement executed by each Purchaser; and
(d) such other instruments and documents as reasonably requested by
EDT to carry out and effect the purpose and intent of this Agreement.
8
8.2 DELIVERIES OF EDT. At the Closing, EDT shall deliver to Purchasers the
following, all of which shall be in a form satisfactory to counsel to
Purchasers:
(a) A copy of written instructions to EDT's transfer agent
(Continental Stock Transfer & Trust Company) to deliver to Purchasers stock
certificates representing the Closing Shares and to the escrow agent named
in the Escrow Agreement stock certificates representing the Escrow Shares;
(b) a copy of the resolutions of the Board of Directors of EDT (or a
duly authorized a committee thereof) authorizing the execution, delivery
and performance of this Agreement and all related documents and agreements,
each certified by the Secretary of EDT as being true and correct copies of
the original thereof;
(c) a certificate of the Chief Executive Officer of EDT as of the
Closing Date, as to (i) the truth and correctness of the representations
and warranties of EDT contained herein; (ii) the performance of and
compliance by EDT with all covenants contained herein; and (iii) the
satisfaction of all conditions precedent of EDT contained herein;
(d) a certificate of the Secretary of EDT certifying as to the
incumbency of the directors and officers of EDT and as to the signatures of
such directors and officers who have executed documents delivered at the
Closing on behalf of EDT;
(e) certificates, dated within ten (10) days of the Closing Date, of
the Secretary of the State of Delaware and Arizona establishing that EDT is
in existence and is in good standing to transact business in the States of
Delaware and Arizona;
(f) an opinion of counsel to EDT opining as to the execution and
delivery of this Agreement and the other documents and agreements to be
executed pursuant hereto, the good standing and authority of EDT, the
enforceability of this Agreement and the other agreements and documents to
be executed in connection herewith, due authorization as to the issuance of
Shares and other matters reasonably requested by Purchasers;
(g) the Escrow Agreement executed by EDT; and
(h) such other instruments and documents as reasonably requested by
Purchasers to carry out and effect the purpose and intent of this
Agreement.
9. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
9.1 SURVIVAL. All representations and warranties in this Agreement,
including any certificate or Schedule made a part thereof or Exhibit delivered
pursuant to this Agreement, shall survive the Closing and continue in full force
and effect until the first anniversary of the Closing Date (referred to herein
as the "Termination Date"), except with respect to SECTION 3.3 which shall
survive indefinitely.
9.2 INDEMNIFICATION BY PURCHASERS. From and after the Closing, subject to
the limitations set forth in this SECTION 9.2, Purchasers jointly and severally
will indemnify and hold harmless EDT, and EDT's officers, directors,
stockholders, employees and subsidiaries (collectively, the "Indemnified
9
Persons"), from and against any loss, liability, claim, damage, expense
(including reasonable costs of investigation and defense and reasonable
attorneys' fees and expenses) (collectively, "Damages") incurred by the
Indemnified Person, (i) as a result of any breach of any representation or
warranty, covenant or agreement made by Purchasers in this Agreement, or any
other certificate or document delivered by Purchasers pursuant to this
Agreement, or (ii) related to the operation by Quisic of Quisic's business or
the use by Quisic of its assets, in each case prior to the Closing Date or (iii)
as a result of any breach of any representation or warranty, covenant or
agreement made by Quisic in the Asset Purchase Agreement or any other
certificate or document delivered by Quisic pursuant to the Asset Purchaser
Agreement. Notwithstanding the foregoing, no such indemnification under this
SECTION 9.2 shall be available for any inaccuracy in or breach of any
representation, or warranty (other than a breach of SECTION 2.15 of the Asset
Purchase Agreement) unless written notice thereof has been delivered to
Purchasers prior to the Termination Date specifying in reasonable detail the
information or circumstances making such representation or warranty untrue and,
to the extent reasonably ascertainable, the expected Damages related thereto.
9.3 PRIORITY OF OFFSET. All Damages owed by Purchasers to the Indemnified
Persons under this SECTION 9 shall be satisfied out of the Escrow Shares
pursuant to the terms of the Escrow Agreement.
9.4 THRESHOLD. With respect to claims for Damages, Purchasers will be
liable to the Indemnified Persons for Damages only if the aggregate amount
suffered by the Indemnified Persons exceeds Fifty Thousand Dollars ($50,000)
(the "Threshold"), in which event, the Indemnified Persons will be indemnified
for all such Damages, including the amount of the Threshold.
9.5 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS. Promptly after
receipt by an Indemnified Person of notice of the commencement of any action,
arbitration, audit, hearing, investigation, litigation, or suit (whether civil,
criminal, administrative, judicial or investigative, whether formal or informal,
public or private) commenced, brought, conducted or heard by or before or
otherwise involving any governmental body or arbitrator (a "Proceeding") against
it, such Indemnified Person will, if a claim is to be made against Purchasers
under this SECTION 9, give notice to the indemnifying parties of the
commencement of such Proceeding, but the failure of the Indemnified Person to
notify the indemnifying parties will not relieve the indemnifying parties of any
liability that indemnifying parties may have to any Indemnified Persons, except
to the extent the indemnifying parties are materially prejudiced thereby. If any
Proceeding is brought against an Indemnified Person and the Indemnified Person
gives notice to the indemnifying parties of the commencement of such Proceeding,
the indemnifying parties will be entitled to participate in such Proceeding and,
to the extent that they wish (unless the indemnifying parties are also parties
to such Proceeding and the Indemnified Person determines in good faith that
joint representation would be inappropriate, or the indemnifying parties fail to
provide reasonable assurance to the Indemnified Persons of their financial
capacity to defend such Proceeding), to assume the defense of such Proceeding
with counsel satisfactory to the Indemnified Persons and, after notice from the
indemnifying parties to the Indemnified Persons of their election to assume the
defense of such Proceeding. If the indemnifying parties assume the defense of a
Proceeding, (i) it will be conclusively established for purposes of this
10
Agreement that the claims made in that Proceeding are within the scope of and
subject to indemnification; and (ii) no compromise or settlement of such claims
may be effected by the indemnifying parties without the Indemnified Persons'
consent. If notice is given to the indemnifying parties of the commencement of
any Proceeding and the indemnifying parties do not, within twenty (20) days
after the Indemnified Persons' notice is given, give notice to the Indemnified
Persons of their election to assume the defense of such Proceeding, the
indemnifying parties will be bound by any determination made in such Proceeding
or any compromise or settlement effected by the Indemnified Persons. With
respect to any Proceeding both the Indemnified Persons and the indemnifying
parties, as the case may be, shall keep the other parties fully informed of the
Proceeding at all stages thereof and to render to each other such assistance as
they may reasonably require of each other and to cooperate in good faith with
each other in order to ensure the proper and adequate defense of any Proceeding
brought by any third party. With respect to any Proceeding, the parties agree to
cooperate in such a manner as to preserve in full (to the extent possible) the
confidentiality of all confidential business records and the attorney-client and
work-product privileges.
9.6 EFFECT OF INVESTIGATION. No investigation or inquiry made by either
party shall, regardless of the consummation of the transactions contemplated
hereby or by the Asset Purchase Agreement, affect or limit any representation or
warranty made by the other party or in any Schedule delivered by any of them
pursuant hereto or any right of indemnification contained in this Agreement.
10. TERMINATION. This Agreement may be terminated:
(a) at any time prior to Closing by EDT by delivery by EDT of written
notice to each Purchaser if any representation or warranty of any Purchaser
contained in this Agreement or in any certificate or other document executed and
delivered by any Purchaser pursuant to this Agreement is or becomes untrue or
breached in any material respect or if any Purchaser fails to comply in any
material respect with any covenant or agreement contained herein;
(b) at any time prior to Closing
(c) by Purchasers by delivery of written notice to EDT if any
representation or warranty of EDT contained in this Agreement or in any
certificate or other document executed and delivered by EDT pursuant to this
Agreement is or becomes untrue or breached in any material respect or if EDT
fails to comply in any material respect with any covenant or agreement contained
herein;
(d) by EDT by delivery of written notice to Purchasers if the transactions
contemplated hereby shall not have been consummated by July 31, 2002; or
(e) by Purchasers by delivery of written notice to EDT if the transactions
contemplated hereby shall not have been consummated by July 31, 2002.
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11. REGISTRATION RIGHTS.
11.1 PURCHASERS' REGISTRATION RIGHTS.
(a) Upon receipt of notice from each Purchaser (the "Registration
Request Notice") requesting registration under the Securities Act of the
Shares, on only one occasion, at any time commencing on the first
anniversary of the Closing Date and terminating one (1) year thereafter,
EDT will use its reasonable best efforts to file with the SEC as promptly
as practicable, a registration statement (the "Demand Registration
Statement") registering the sale under the Securities Act of the Shares
issued to Purchasers pursuant to the terms of this Agreement, and will use
its reasonable best efforts to have the Demand Registration Statement
declared effective and remain effective until the earliest of (i) two (2)
years after the date it is declared effective, (ii) the date all the Shares
registered thereby (the "Underlying Shares") have been sold, or, (iii) in
the reasonable opinion of EDT's counsel, which opinion shall qualify as a
satisfactory opinion of counsel pursuant to the legend condition of SECTION
1(D) hereof, the Underlying Shares may be sold publicly without
registration. If each Purchaser requests that EDT file the Demand
Registration Statement, each Purchaser will, in a timely fashion, provide
EDT and its counsel with such information and execute such documents as
EDT's counsel may reasonably require to prepare and process the Demand
Registration Statement. In the event that EDT has filed a registration
statement with the SEC relating to its securities within ninety (90) days
prior to its receipt of the Registration Request Notice, which registration
statement has not been declared effective, each Purchaser agrees that EDT
can thereafter delay the filing of the Demand Registration Statement for a
period not to exceed ninety (90) days.
(b) If at any time after the date hereof, EDT proposes to file a
registration statement under the Securities Act with respect to any of its
securities (except one relating to stock option or employee benefit plans
or a merger, acquisition or similar transaction), EDT shall give written
notice of its intention to effect such filing to each Purchaser at least
thirty (30) days prior to filing such registration statement (the
"Piggyback Registration Statement"). If the Shares issued to a Purchaser
pursuant to the terms of this Agreement have not been previously registered
and such Purchaser desires to include such shares in the Piggyback
Registration Statement, it shall notify EDT in writing within fifteen (15)
days after receipt of such notice from EDT, in which event EDT shall
include such shares in the Piggyback Registration Statement. If a Purchaser
elects to include such shares in the Piggyback Registration Statement as
set forth herein, it shall, in a timely manner, provide EDT and its counsel
with such information and execute such documents as its counsel may
reasonably require to prepare and process the Piggyback Registration
Statement. Anything to the contrary notwithstanding, in the event that the
offering for which the Piggyback Registration Statement has been filed is
to be effected through or with the assistance of an underwriter other than
EDT, each Purchaser will consent to restrict the sale of its shares or
reduce the number of its shares (on a pro rata basis with shares of EDT
Common Stock issued to any other stockholders of EDT prior to or after the
date hereof, and that, as of the time of determination, have presently
exercisable registration rights and are requested by such stockholders to
be included in such Piggyback Registration Statement) that may be included
12
in such Piggyback Registration Statement in accordance with the
requirements of such underwriter; provided, however, in no event shall
Purchasers be precluded from registering less than twenty-five percent of
their Shares. EDT will provide each Purchaser whose Shares are covered
thereby with a copy of the Demand Registration Statement or the Piggyback
Registration Statement, as the case may be, and any amendments thereto, and
copies of the final prospectus included therein in such quantities as may
reasonably be required to permit each Purchaser to sell its Underlying
Shares after the Demand Registration Statement or the Piggyback
Registration Statement is declared effective by the SEC.
(c) EDT will bear all expenses (except underwriting discounts and
commission, if any, and the legal fees and expenses, if any, of counsel to
Purchasers) necessary and incidental to the performance of its obligations
under this Section.
(d) EDT and each Purchaser, if such Purchaser's shares are included in
a Demand Registration Statement or Piggyback Registration Statement
pursuant to this Section, shall provide customary and appropriate cross
indemnities to each other covering the information supplied by the
indemnifying party for inclusion in the Demand Registration Statement or
Piggyback Registration Statement.
(e) Anything to the contrary notwithstanding, EDT shall not be
required to register any Shares issued to any Purchaser pursuant to the
terms of this Agreement or provide notices under this SECTION 11 to any
Purchaser if such Shares are either (i) covered by a then currently
effective registration statement or (ii) in the reasonable opinion of EDT's
counsel, may be sold pursuant to the exemption from registration provided
by Section (k) of Rule 144.
12. MISCELLANEOUS.
12.1 NOTICES.
If to EDT:
EDT Learning, Inc.
0000 X. 00xx Xx., Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxx, Xx.
Phone: 000-000-0000
With a Copy to:
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx, III
Phone: 000-000-0000
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If to Purchasers:
Investor Growth Capital Limited
Investor Group, L.P.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Phone: 000-000-0000
Leeds Equity Partners III, L.P.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Phone: 000-000-0000
Or such other address as shall be furnished in writing by any party to the
other party. All such notices shall be considered received: (a) if transmitted
by certified mail, return receipt requested, with proper postage prepaid, upon
the fifth (5th) business day after mailing; (b) if transmitted by overnight
carrier, on the next business day; and (c) if transmitted by personal delivery,
upon receipt.
12.2 SUCCESSORS AND ASSIGNS. This Agreement shall not be assignable, by
operation of law or otherwise, without the prior written consent of all parties.
Subject to the foregoing, this Agreement shall inure to the benefit of, be
enforceable by and be binding upon the parties, their successors and permitted
assigns.
12.3 ENTIRE AGREEMENT. This Agreement and the Exhibits, Schedules,
certificates and other documents delivered pursuant hereto or incorporated
herein by reference, contain and constitute the entire agreement among the
parties and supersede and cancel any prior agreements, representations,
warranties, or communications, whether oral or written, among the parties hereto
relating to the transactions contemplated by this Agreement. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, but only by an agreement in writing signed by the party
against whom or which the enforcement of such change, waiver, discharge or
termination is sought.
12.4 GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona without giving
effect to the principles of conflicts of law thereof, provided, however, that
the laws of the respective jurisdictions of incorporation of each of the parties
shall govern the relative rights, obligations, powers, duties and other internal
affairs of such party and its board of directors.
12.5 SCHEDULES AND EXHIBITS. All Schedules and Exhibits attached to this
Agreement are by reference made a part hereof.
12.6 WAIVERS. No failure on the part of any party hereto to exercise, and
no delay in exercising, any right, power or remedy created hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
14
right, power or remedy by any such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. No waiver by any
party hereto of any breach of or default in any term or condition of this
Agreement shall constitute a waiver of or assent to any succeeding breach of or
default in the same or any other term or condition hereof.
12.7 HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
12.8 COUNTERPARTS. 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 agreement.
12.9 CONFIDENTIALITY. The parties agree that they will not make any public
comment, statement, communication or disclosure about the existence or contents
of this Agreement or activities relating to the consummation of the transactions
contemplated herein without prior approval of the other party, except as may be
required by law, or as may be necessary in the ordinary course of business.
12.10 EXPENSES. Each party will be responsible for payment of all fees and
expenses incurred by that party in connection with this Agreement and the
consummation of the transactions contemplated thereby regardless of whether this
Agreement is terminated without consummation of the transaction. Additionally,
Purchasers jointly and severally agree that they will be responsible for any
unpaid fees of Quisic's independent auditors for fees and expenses incurred by
such independent auditors for the audit of Quisic's financial statements at and
for the years ended December 31, 2000 and 2001, respectively.
12.11 NO THIRD PARTY BENEFICIARIES. Nothing contained in this Agreement
(express or implied) is intended or shall be construed to confer upon or give to
any person, corporation or other entity, other than the parties hereto and their
permitted successors or assigns, any rights or remedies under or by reason of
this Agreement.
12.12 FURTHER ASSURANCES. Each party hereby agrees to perform any further
acts and to execute and deliver any documents which may be reasonably necessary
to carry out the provisions of this Agreement.
[SIGNATURES ON FOLLOWING PAGE]
15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
EDT LEARNING, INC. INVESTOR GROWTH CAPITAL LIMITED
By: /s/ Xxxxx X. Xxxxxx, Xx. By:
------------------------------ ------------------------------
Name: Xxxxx X. Xxxxxx, Xx. Name:
---------------------------- ----------------------------
Title: CEO Title:
--------------------------- ---------------------------
INVESTOR GROUP, L.P. LEEDS EQUITY PARTNERS III, L.P.
By: Leeds Equity Associates, L.P.
Its: General Partner
By: Leeds Equity Management, L.L.C.
Its: General Partner
By: By:
------------------------------ ------------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ---------------------------
16
EXHIBIT A
Aggregate Aggregate
Shares to be Closing Cash Escrow Section 5
Purchaser Address Purchased Shares Consideration Shares Percentages
--------- ------- --------- ------ ------------- ------ -----------
Investor Growth Capital 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx 875,000 525,000 112,000 350,000 35
Limited Xxx Xxxx, XX 00000-0000
Investor Group, L.P. 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx 375,000 225,000 48,000 150,000 15
Xxx Xxxx, XX 00000-0000
Leeds Equity Partners 000 Xxxxxxx Xxxxxx
III, L.P. 15th Floor 1,250,000 750,000 160,000 500,000 50
Xxx Xxxx, XX 00000
ESCROW AGREEMENT
ESCROW AGREEMENT
This Escrow Agreement, dated as of June __, 2002 (this "Agreement"), among
EDT Learning, Inc., a Delaware corporation ("EDT"), Investor Growth Capital
Limited, a Guernsey corporation ("IGCLTD"), Investor Group L.P., a Guernsey
limited partnership ("IGLP") (IGCLTD and IGLP collectively referred to as
"IGC"), Leeds Equity Partners III, L.P., a Delaware limited partnership
("Leeds") (IGC and Leeds collectively referred to herein as "Escrow
Stockholders") and Xxxxxxx Xxxxxx L.L.P., as escrow agent ("Escrow Agent").
This is the Escrow Agreement referred to in the Common Stock Purchase
Agreement dated June ___, 2002 (the "Stock Purchase Agreement"), among EDT and
the Escrow Stockholders.
The parties, intending to be legally bound, hereby agree as follows:
1. ESTABLISHMENT OF ESCROW
(a) EDT is depositing with Escrow Agent One Million (1,000,000) Shares
of the EDT Stock (the "Escrow Stock") represented by stock certificates being in
the individual amounts set forth opposite each Escrow Stockholder's name on
Schedule 1. Escrow Agent acknowledges receipt thereof.
(b) Escrow Agent hereby agrees to act as escrow agent and to hold,
safeguard and disburse the Escrow Stock pursuant to the terms and conditions
hereof.
2. DEFINITIONS
All capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Stock Purchase Agreement.
3. CLAIMS AGAINST THE ESCROW STOCK
The Escrow Stock shall be held by the Escrow Agent as security and the sole
source of satisfaction for any Damages incurred from time to time by any of the
Indemnified Persons and for which the Indemnified Persons are entitled to
recover pursuant to the provisions of Section 9 of the Stock Purchase Agreement.
The Escrow Stockholders agree that all Damages for which any Indemnified Person
is entitled to be indemnified by Escrow Stockholders may be recovered and
satisfied by issuance to each Indemnified Person of the appropriate number of
shares of Escrow Stock determined in accordance with this Agreement and to be
recovered from each Escrow Stockholder in the percentage set forth opposite its
name on Schedule 1. For all purposes under this Agreement, and all notices
delivered hereunder, each share of Escrow Stock shall be deemed to have a value
equal to $1.25 per share.
4. PROCEDURE FOR INDEMNIFICATION CLAIMS AGAINST THE ESCROW STOCK
(a) In the event that EDT believes in good faith that there exist
reasonable grounds on the part of any of the Indemnified Persons to make a claim
for Damages (an "Indemnification Claim") against the Escrow Stock, EDT will
deliver to the Escrow Agent and the Escrow Stockholders a certificate in
1
substantially the form of Exhibit A attached hereto (a "Notice of Claim"). The
Escrow Agent shall give written notice to EDT and the Escrow Stockholders of its
receipt of a Notice of Claim not later than the fifth (5th) business day
following receipt thereof, together with a copy of such Notice of Claim.
(b) If the Escrow Agent: (i) shall not, within fifteen (15) business
days following its receipt of a Notice of Claim (the "Objection Period"), have
received from the Escrow Stockholders a certificate in substantially the form of
Exhibit B attached hereto (an "Objection Certificate") disputing the obligation
to pay the claims referred to in such Notice of Claim; or (ii) shall have
received an Objection Certificate within the Objection Period and shall
thereafter have received either (A) a certificate from EDT and the objecting
Escrow Stockholders substantially in the form of Exhibit C attached hereto (a
"Resolution Certificate") stating that EDT and the Escrow Stockholders have
agreed that the claims referred to in such Notice of Claim (or a specified
portion thereof) are payable to EDT, or (B) a final judgment entered in a court
proceeding or an arbitration order accompanied by a certificate of EDT
substantially in the form of Exhibit D attached hereto (a "Judgment
Certificate") stating that the claims referred to in such Notice of Claim (or a
specified portion thereof) are payable to EDT, then the Escrow Agent shall,
within five (5) business days following the expiration of the Objection Period,
in the case of subclause (i), or the Escrow Agent's receipt of a Resolution
Certificate or a Judgment Certificate, in the case of subclause (ii), deliver to
EDT the Escrow Stock against delivery by EDT of certificates evidencing the
balance of the Escrow Stock equal to the difference between (x) the aggregate
balance of Escrow Stock originally delivered to Escrow Agent pursuant to the
terms of this Agreement less (y) any Escrow Stock previously distributed to EDT
and the Escrow Stockholders pursuant to the terms hereof less (z) the Escrow
Stock to be delivered to EDT in satisfaction of the applicable Indemnification
Claim.
(c) The Escrow Stockholders shall not deliver an Objection Certificate
to the Escrow Agent unless the Escrow Stockholders believe in good faith that
there exists reasonable grounds for the objection set forth in such certificate,
and any Objection Certificate delivered to the Escrow Agent by the Escrow
Stockholders shall be concurrently delivered to EDT. The Escrow Agent shall give
written notice to EDT and the Escrow Stockholders of its receipt of an Objection
Certificate not later than the fifth (5th) business day following receipt
thereof, together with a copy of such Objection Certificate. EDT will deliver to
the Escrow Stockholders a Resolution Certificate or Judgment Certificate
concurrently with the delivery of such Resolution Certificate or Judgment
Certificate to the Escrow Agent. The Escrow Agent shall give written notice to
EDT and the Escrow Stockholders of its receipt of a Resolution Certificate or
Judgment Certificate not later than the fifth (5th) business day following
receipt thereof, together with a copy of such Resolution Certificate or Judgment
Certificate.
(d) Upon (i) EDT's determination that reasonable grounds no longer
exist for an Indemnification Claim referred to in a Notice of Claim (or a
specified portion thereof), or (ii) EDT's decision to release its claim with
respect to any Indemnification Claim referred to in a Notice of Claim (or a
specified portion thereof), EDT will promptly deliver to the Escrow Agent and
the Escrow Stockholders a certificate substantially in the form of Exhibit E
attached hereto (a "Cancellation Certificate") canceling such Notice of Claim
(or such specified portion thereof), and such Notice of Claim (or such specified
portion thereof) shall thereupon be deemed canceled. The Escrow Agent shall give
2
written notice to EDT and the Escrow Stockholders of its receipt of a
Cancellation Certificate not later than the fifth (5th) business day following
receipt thereof, together with a copy of such Cancellation Certificate.
(e) Upon receipt of a final judgment entered in a court proceeding or
an arbitration order stating that the claims (or a specified portion thereof)
referred to in a Notice of Claim as to which the Escrow Stockholders have
delivered an Objection Certificate within the Objection Period are not payable,
the Escrow Stockholders shall deliver to the Escrow Agent and EDT a copy of such
order superseding such Notice of Claim (or such specified portion thereof), and
such Notice of Claim (or such specified portion thereof) shall thereupon be
deemed superseded. The Escrow Agent shall give written notice to EDT and the
Escrow Stockholders of its receipt of such order not later than the fifth (5th)
business day following receipt thereof.
5. PERFORMANCE TARGET
Five Hundred Thousand (500,000) shares of the Escrow Stock will be released
to Escrow Stockholders, in proportion to the percentage of Escrow Stock being in
the name of each individual Escrow Stockholder, only if EDT receives cash
collections during the twelve (12) month period following the Closing Date (the
"Performance Target Period") of a total of at least Two Million Dollars
($2,000,000) from UAL Corp., Siemens AG, Hewlett-Packard Company, and their
affiliates and successors.
6. PROCEDURE FOR RELEASE OF PERFORMANCE TARGET ESCROW STOCK
(a) EDT will send a certificate in substantially the form of Exhibit F
attached hereto ("Notice") to the Escrow Agent and Escrow Stockholders, within
Thirty Days (30) after the end of the Performance Target Period, stating whether
(i) the performance target as provided in Section 5 has been satisfied and (ii)
whether Five Hundred Thousand (500,000) shares of the Escrow Stock or, if fewer
than 500,000 shares of Escrow Stock remain with the Escrow Agent, then such
lower number of remaining shares should be released to Escrow Stockholders or
EDT, in proportion to the percentage of Escrow Stock being in the name of each
individual Escrow Stockholder. The Escrow Agent and Escrow Stockholders shall
give written notice to EDT of its receipt of the Notice not later than the fifth
(5th) business day following receipt thereof, together with a copy of such
Notice.
(b) If the Escrow Agent: (i) shall not, within fifteen (15) business
days following its receipt of a Notice (the "Objection Period"), have received
from the Escrow Stockholders a certificate in substantially the form of Exhibit
G attached hereto (an "Objection Certificate") disputing the obligation to
deliver the shares as provided in such Notice; or (ii) shall have received an
Objection Certificate within the Objection Period and shall thereafter have
received either (A) a certificate from EDT and the objecting Escrow
Stockholder(s) substantially in the form of Exhibit H attached hereto (a
"Resolution Certificate") stating that EDT and the Escrow Stockholders have
agreed that the shares referred to in such Notice should be released to EDT or
Escrow Stockholders, or (B) a final judgment entered in a court proceeding or an
arbitration order accompanied by a certificate of EDT or the Escrow Stockholders
substantially in the form of Exhibit I attached hereto (a "Judgment
Certificate") stating that the shares referred to in such Notice should be
released to EDT or Escrow Stockholders, then the Escrow Agent shall, within five
(5) business days following the expiration of the Objection Period, in the case
of subclause (i), or the Escrow Agent's receipt of a Resolution Certificate or a
3
Judgment Certificate, in the case of subclause (ii), deliver to EDT or Escrow
Stockholders the shares as provided in the Notice, Resolution Certificate or
Judgment Certificate.
(c) The Escrow Stockholders shall not deliver an Objection Certificate
to the Escrow Agent unless the Escrow Stockholders believe in good faith that
there exists reasonable grounds for the objection set forth in such certificate,
and any Objection Certificate delivered to the Escrow Agent by the Escrow
Stockholders shall be concurrently delivered to EDT. The Escrow Agent shall give
written notice to EDT and the Escrow Stockholders of its receipt of an Objection
Certificate not later than the fifth (5th) business day following receipt
thereof, together with a copy of such Objection Certificate. EDT will deliver to
the Escrow Stockholders a Resolution Certificate or Judgment Certificate
concurrently with the delivery of such Resolution Certificate or Judgment
Certificate to the Escrow Agent. The Escrow Agent shall give written notice to
EDT and the Escrow Stockholders of its receipt of a Resolution Certificate or
Judgment Certificate not later than the fifth (5th) business day following
receipt thereof, together with a copy of such Resolution Certificate or Judgment
Certificate.
(d) Upon receipt of a final judgment entered in a court proceeding or
an arbitration order stating that the shares referred to in the Notice as to
which the Escrow Stockholders have delivered an Objection Certificate within the
Objection Period are not payable as provided in such Notice, the Escrow
Stockholders shall deliver to the Escrow Agent and EDT a copy of such order
superseding such Notice (or such specified portion thereof), and such Notice (or
such specified portion thereof) shall thereupon be deemed superseded. The Escrow
Agent shall give written notice to EDT and the Escrow Stockholders of its
receipt of such order not later than the fifth (5th) business day following
receipt thereof.
7. TERMINATION OF DISBURSEMENTS FROM ESCROW
The Escrow Agent shall deliver to the Escrow Stockholders on the date that
is twelve (12) months after the date hereof, a number of shares of Escrow Stock
equal to the difference between (i) the then remaining shares of Escrow Stock
minus (ii) a number of shares of Escrow Stock equal in value to the value of any
unresolved pending Indemnification Claims (as such value is designated in the
applicable Notice of Claim(s)). The Escrow Stock delivered to each Escrow
Stockholder will be in the amount of Escrow Stock as determined in the preceding
sentence multiplied by the percentage of Escrow Stock opposite its name on
Schedule 1. Notwithstanding the foregoing, Five Hundred Thousand Shares
(500,000) shall be retained by Escrow Agent until the performance target
revenues, as provided in Section 6, have been properly accounted.
This Agreement shall automatically terminate following the distribution of
all Escrow Stock. Notwithstanding anything to the contrary contained in this
Agreement or the Stock Purchase Agreement, no distribution shall be made from
escrow if, and to the extent, the aggregate value of the number of shares of
Escrow Stock remaining in escrow following such distribution would be less than
the aggregate Damages claimed by EDT under any Notice of Claim then pending.
4
8. DUTIES OF ESCROW AGENT
(a) Escrow Agent shall not be under any duty to give the Escrow Stock
held by it hereunder any greater degree of care than it gives its own similar
property.
(b) Escrow Agent shall not be liable for actions or omissions
hereunder, except for its own gross negligence or willful misconduct and, except
with respect to claims based upon such gross negligence or willful misconduct
that are successfully asserted against Escrow Agent, the other parties hereto
shall jointly and severally indemnify and hold harmless Escrow Agent (and any
successor Escrow Agent) from and against any and all losses, liabilities,
claims, actions, damages and expenses, including reasonable attorneys' fees and
disbursements, arising out of and in connection with this Agreement.
(c) Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so. Escrow
Agent may conclusively presume that the undersigned representative of any party
hereto which is an entity other than a natural person has full power and
authority to instruct Escrow Agent on behalf of that party unless written notice
to the contrary is delivered to Escrow Agent.
(d) Escrow Agent may act pursuant to the advice of independent counsel
with respect to any matter relating to this Agreement and shall not be liable
for any action taken or omitted by it in good faith in accordance with such
advice.
(e) Escrow Agent does not have any interest in the Escrow Stock
deposited hereunder but is serving as escrow holder only and has only possession
thereof.
(f) Escrow Agent makes no representation as to the validity, value,
genuineness or collectability of any security or other document or instrument
held by or delivered to it.
(g) Escrow Agent shall not be called upon to advise any party as to
the wisdom in selling or retaining or taking or refraining from any action with
respect to any securities or other property deposited hereunder.
(h) Escrow Agent (and any successor Escrow Agent) may at any time
resign as such by delivering the Escrow Stock to any successor Escrow Agent
jointly designated by the other parties hereto in writing, or to any court of
competent jurisdiction, whereupon Escrow Agent shall be discharged of and from
any and all further obligations arising in connection with this Agreement. The
resignation of Escrow Agent will take effect on the earlier of (i) the
appointment of a successor (including a court of competent jurisdiction)
mutually agreed upon by EDT and the Escrow Stockholders or (ii) the day which is
thirty (30) days after the date of delivery of its written notice of resignation
to the other parties hereto. If, at that time, Escrow Agent has not received a
designation of a successor Escrow Agent, Escrow Agent's sole responsibility
5
after that time shall be to retain and safeguard the Escrow Stock until receipt
of a designation of successor Escrow Agent or a joint written disposition
instruction by the other parties hereto or a final, nonappealable order of a
court of competent jurisdiction.
(i) In the event of any disagreement between the other parties hereto
resulting in adverse claims or demands being made in connection with the Escrow
Stock or in the event that Escrow Agent is in doubt as to what action it should
take hereunder, Escrow Agent shall be entitled to retain the Escrow Stock until
Escrow Agent shall have received (i) a final, nonappealable order of a court of
competent jurisdiction directing delivery of the Escrow Stock or (ii) a written
agreement executed by the other parties hereto directing delivery of the Escrow
Stock, in which event Escrow Agent shall disburse the Escrow Stock in accordance
with such order or agreement. Any court order shall be accompanied by a legal
opinion by counsel for the presenting party satisfactory to Escrow Agent to the
effect that the order is final and nonappealable. Escrow Agent shall act on such
court order and legal opinion without further question.
(j) EDT and Escrow Stockholders hereby agree to reimburse Escrow Agent
for all reasonable expenses, disbursements and advances incurred or made by
Escrow Agent in performance of its duties hereunder (including reasonable fees,
expenses and disbursements of its counsel). Any such compensation and
reimbursement to which Escrow Agent is entitled shall be borne fifty percent
(50%) by Escrow Stockholders and fifty percent (50%) by EDT. Any fees or
expenses of Escrow Agent or its counsel that are not paid as provided for herein
may be taken from any property held by Escrow Agent hereunder.
(k) No printed or other matter in any language (including, without
limitation, prospectuses, notices, reports and promotional material) that
mentions Escrow Agent's name or the rights, powers or duties of Escrow Agent
shall be issued by the other parties hereto or on such parties' behalf unless
Escrow Agent shall first have given its specific written consent thereto.
(l) The other parties hereto authorize Escrow Agent, for any
securities held hereunder, to use the services of any United States central
securities depository it reasonably deems appropriate, including, without
limitation, the Depository Trust Company and the Federal Reserve Book Entry
System.
9. LIMITED RESPONSIBILITY
This Agreement expressly sets forth all the duties of Escrow Agent with
respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this Agreement against Escrow Agent. Escrow Agent
shall not be bound by the provisions of any agreement among the other parties
hereto except this Agreement.
10. OWNERSHIP FOR TAX PURPOSES
Escrow Stockholders agree that, for purposes of federal and other taxes
based on income, Escrow Stockholders will be treated as the owner of the Escrow
Stock and that Escrow Stockholders will report all income, if any, that is
earned on, or derived from, the Escrow Stock as its income in the taxable year
or years in which such income is properly includible and pay any taxes
attributable thereto.
6
11. NOTICES
All notices, Consents, waivers and other communications required or
permitted under this Agreement shall be in writing and shall be deemed given to
a party when (a) delivered to the appropriate address by hand or by a nationally
recognized overnight courier service (costs prepaid); (b) sent by facsimile or
e-mail (with confirmation by the transmitting equipment); or (c) received by the
addressee, if sent by certified mail, return receipt requested, in each case to
the following addresses and facsimile numbers and marked to the attention of the
person (by name or title) designated below (or to such other address, facsimile
number or person as a party may designate by notice to the other parties):
Escrow Stockholders:
Investor Growth Capital Limited
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Facsimile No.: 000-000-0000
E-Mail address: xxxxx.x.xxxxx@xxxxxxxxxx.xxx
Investor Group, L.P.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Facsimile No.: 000-000-0000
E-Mail address: xxxxx.x.xxxxx@xxxxxxxxxx.xxx
Leeds Equity Partners III, L.P.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Facsimile No.: 000-000-0000
E-Mail address: xxx@xxxxxxxxx.xxx
with a mandatory copy to:
Xxxx Xxxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx
Facsimile No.: 000-000-0000
7
EDT:
EDT Learning, Inc.
0000 X. 00xx Xx., Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxx, Xx.
Facsimile No.: 602-952-1200
with a mandatory copy to:
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx, III
Facsimile No.: 214-953-6000
Escrow Agent:
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx, III
Facsimile No.: 000-000-0000
12. JURISDICTION; SERVICE OF PROCESS
Any Proceeding arising out of or relating to this Agreement may be brought
in the courts of the State of Arizona, County of Maricopa, or, if it has or can
acquire jurisdiction, in the United States District Court for Arizona, and each
of the parties irrevocably submits to the exclusive jurisdiction of each such
court in any such Proceeding and waives any objection it may now or hereafter
have to venue or to convenience of forum, agrees that all claims in respect of
the Proceeding shall be heard and determined only in any such court and agrees
not to bring any Proceeding arising out of or relating to this Agreement in any
other court. Process in any Proceeding referred to in the preceding sentence may
be served on any party anywhere in the world.
13. EXECUTION OF AGREEMENT
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement. The
exchange of copies of this Agreement and of signature pages by facsimile
transmission shall constitute effective execution and delivery of this Agreement
as to the parties and may be used in lieu of the original Agreement for all
purposes. Signatures of the parties transmitted by facsimile shall be deemed to
be their original signatures for any purposes whatsoever.
8
14. SECTION HEADINGS, CONSTRUCTION
The headings of sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation.
15. WAIVER
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither the failure nor any delay by any party in exercising
any right, power or privilege under this Agreement or the documents referred to
in this Agreement will operate as a waiver of such right, power or privilege,
and no single or partial exercise of any such right, power or privilege will
preclude any other or further exercise of such right, power or privilege or the
exercise of any other right, power or privilege. To the maximum extent permitted
by applicable law, (a) no claim or right arising out of this Agreement or the
documents referred to in this Agreement can be discharged by one party, in whole
or in part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation
of such party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
16. ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements among the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by EDT, Escrow
Stockholders and Escrow Agent.
17. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Arizona
without regard to conflicts of law principles that would require the application
of any other law.
9
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
EDT LEARNING, INC. INVESTOR GROWTH CAPITAL LIMITED
By: /s/ Xxxxx X. Xxxxxx, Xx. By:
------------------------------ ------------------------------
Its: CEO Its:
----------------------------- -----------------------------
INVESTOR GROUP L.P. LEEDS EQUITY PARTNERS III, L.P.
By: By:
------------------------------ ------------------------------
Its: Its:
----------------------------- -----------------------------
ESCROW AGENT
XXXXXXX XXXXXX L.L.P.
By:
------------------------------
Its:
-----------------------------
10
EXHIBIT A
NOTICE OF CLAIM
The undersigned, Indemnified Person, pursuant to Section 4 of the Escrow
Agreement dated as of June __, 2002 (the "Escrow Agreement"), by and among EDT
Learning, Inc., a Delaware corporation ("EDT"), Investor Growth Capital Limited,
a Guernsey corporation ("IGCLTD"), Investor Group L.P., a Guernsey limited
partnership ("IGLP") (IGCLTD and IGLP collectively referred to as "IGC"), Leeds
Equity Partners III, L.P., a Delaware limited partnership ("Leeds") (IGC and
Leeds collectively referred to herein as "Escrow Stockholders") and Xxxxxxx
Xxxxxx L.L.P., as escrow agent ("Escrow Agent"), (terms defined in the Escrow
Agreement have the same meanings when used herein), hereby delivers this Notice
of Claim to you, the Escrow Agent, and hereby:
a. certifies that Indemnified Person has sent to the Escrow Stockholders a
written notification of a claim for indemnity pursuant to the terms of the
Escrow Agreement in the amount of $_______________; and
b. instructs you to deliver to Indemnified Person Escrow Stock (value of
$1.25 per share) to satisfy the amount set forth in paragraph (a) above, and
such Escrow Stock shall be delivered in accordance with Section 4(b) of the
Escrow Agreement, within five (5) Business Days following the expiration of the
Objection Period, unless you receive an Objection Certificate from Escrow
Stockholders prior to the expiration of the Objection Period, in which case you
are instructed to pay such amount (or any specified portion thereof) within five
(5) Business Days following your receipt of a Resolution Certificate or a
Judgment Certificate.
INDEMNIFIED PERSON
By: ____________________________________
[Name], [Title]
Dated:_________________
EXHIBIT B
OBJECTION CERTIFICATE
The undersigned, Escrow Stockholders, pursuant to Section 4 of the Escrow
Agreement dated as of June __, 2002 (the "Escrow Agreement"), by and among EDT
Learning, Inc., a Delaware corporation ("EDT"), Investor Growth Capital Limited,
a Guernsey corporation ("IGCLTD"), Investor Group L.P., a Guernsey limited
partnership ("IGLP") (IGCLTD and IGLP collectively referred to as "IGC"), Leeds
Equity Partners III, L.P., a Delaware limited partnership ("Leeds") (IGC and
Leeds collectively referred to herein as "Escrow Stockholders") and Xxxxxxx
Xxxxxx L.L.P., as escrow agent ("Escrow Agent"), (terms defined in the Escrow
Agreement have the same meanings when used herein), hereby deliver this
Objection Certificate to you, the Escrow Agent, and hereby:
a. dispute that the claims for Damages referred to in the Notice of Claim
dated ____________ are payable to Indemnified Person (identified in the Notice
of Claim) pursuant to the terms of Section 9 of the Stock Purchase Agreement;
b. certify that the undersigned has sent to Indemnified Person a written
statement dated _____________ disputing the liability of the undersigned to
Indemnified Person for such claim; and
c. instruct you to withhold delivery to Indemnified Person of Escrow Stock
(value of $1.25 per share) to satisfy the amount set forth in paragraph (a)
unless and until you receive a Resolution Certificate or a Judgment Certificate,
in which case you are authorized to deliver Escrow Stock to satisfy such amount
(or any portion thereof) specified in such Resolution Certificate or Judgment
Certificate, and such Escrow Stock shall be delivered in accordance with Section
4(b) of the Escrow Agreement, within five (5) Business Days following your
receipt of such Resolution Certificate or a Judgment Certificate.
ESCROW STOCKHOLDERS:
INVESTOR GROWTH CAPITAL LIMITED
By: _______________________________
Its: _______________________________
INVESTOR GROUP L.P.
By: _______________________________
Its: _______________________________
LEEDS EQUITY PARTNERS III, L.P.
By: _______________________________
Its: _______________________________
Dated: _________________
EXHIBIT C
RESOLUTION CERTIFICATE
The undersigned, Indemnified Person, pursuant to Section 4 of the Escrow
Agreement dated as of June __, 2002 (the "Escrow Agreement"), by and among EDT
Learning, Inc., a Delaware corporation ("EDT"), Investor Growth Capital Limited,
a Guernsey corporation ("IGCLTD"), Investor Group L.P., a Guernsey limited
partnership ("IGLP") (IGCLTD and IGLP collectively referred to as "IGC"), Leeds
Equity Partners III, L.P., a Delaware limited partnership ("Leeds") (IGC and
Leeds collectively referred to herein as "Escrow Stockholders") and
_____________________, as escrow agent ("Escrow Agent"), (terms defined in the
Escrow Agreement have the same meanings when used herein), hereby delivers this
Resolution Certificate to you, the Escrow Agent, and hereby:
d. certify that Indemnified Person and the Escrow Stockholders have
resolved their dispute as to the claims described in the Notice of Claim dated
_____________ and the related Objection Certificate dated _____________ and that
the amount owed with respect to the claims described in such certificates is
$______________; and
e. instruct you to deliver to Indemnified Person Escrow Stock (value of
$1.25 per share) to satisfy the amount set forth in paragraph (a) above, and
such Escrow Stock shall be delivered in accordance with Section 4(b) of the
Escrow Agreement, within five (5) Business Days of your receipt of this
Resolution Certificate.
[INDEMNIFIED PERSON]
By:_____________________________
[Name], [Title]
ESCROW STOCKHOLDERS:
INVESTOR GROWTH CAPITAL LIMITED
By: _____________________________
Its:_____________________________
INVESTOR GROUP L.P.
By: _____________________________
Its:_____________________________
LEEDS EQUITY PARTNERS III, L.P.
By: _____________________________
Its:_____________________________
Dated:_________________
EXHIBIT D
JUDGMENT CERTIFICATE
The undersigned, Indemnified Person, pursuant to Section 4 of the Escrow
Agreement dated as of June __, 2002 (the "Escrow Agreement"), by and among EDT
Learning, Inc., a Delaware corporation ("EDT"), Investor Growth Capital Limited,
a Guernsey corporation ("IGCLTD"), Investor Group L.P., a Guernsey limited
partnership ("IGLP"), (IGCLTD and IGLP collectively referred to as "IGC"), Leeds
Equity Partners III, L.P., a Delaware limited partnership ("Leeds") (IGC and
Leeds collectively referred to herein as "Escrow Stockholders") and
_____________________, as escrow agent ("Escrow Agent"), (terms defined in the
Escrow Agreement have the same meanings when used herein), hereby delivers this
Judgment Certificate to you, the Escrow Agent, and hereby:
f. certifies that attached hereto is a copy of a final arbitration order
resolving the dispute between Indemnified Person and the undersigned Escrow
Stockholders as to the claim described in the Notice of Claim dated ____________
and the related Objection Certificate dated ______________ and that the amount
owed with respect to the claim described in such certificates, as provided in
such judgment, is $______________; and
g. instructs you to deliver to Indemnified Person such number of shares of
Escrow Stock (value of $1.25 per share) to satisfy the amount set forth in
paragraph (a) above, and such Escrow Stock shall be delivered in accordance with
Section 4(b) of the Escrow Agreement, within five (5) Business Days of your
receipt of this Resolution Certificate.
[INDEMNIFIED PERSON]
By: _____________________________
[Name], [Title]
Dated:_________________
EXHIBIT E
CANCELLATION CERTIFICATE
The undersigned, Indemnified Person, pursuant to Section 4 of the Escrow
Agreement dated as of June __, 2002 (the "Escrow Agreement"), by and among EDT
Learning, Inc., a Delaware corporation ("EDT"), Investor Growth Capital Limited,
a Guernsey corporation ("IGCLTD"), Investor Group L.P., a Guernsey limited
partnership ("IGLP") (IGCLTD and IGLP collectively referred to as "IGC"), Leeds
Equity Partners III, L.P., a Delaware limited partnership ("Leeds") (IGC and
Leeds collectively referred to herein as "Escrow Stockholders") and
_____________________, as escrow agent ("Escrow Agent"), (terms defined in the
Escrow Agreement have the same meanings when used herein), hereby delivers this
Cancellation Certificate to you, the Escrow Agent, and hereby:
h. certifies that it hereby releases [all] [specify portion] of the claims
designated in the Notice of Claim dated _________________ and that, as a result,
the remaining Damages claimed by Indemnified Person with respect to such Notice
of Claim is $__________; and
i. agrees that such Notice of Claim is, to the extent released as provided
in paragraph (a) above, canceled.
[INDEMNIFIED PERSON]
By: _____________________________
[Name], [Title]
Dated:_________________
EXHIBIT F
NOTICE
The undersigned, pursuant to Section 6 of the Escrow Agreement dated as of
June __, 2002 (the "Escrow Agreement"), by and among EDT Learning, Inc., a
Delaware corporation ("EDT"), Investor Growth Capital Limited, a Guernsey
corporation ("IGCLTD"), Investor Group L.P., a Guernsey limited partnership
("IGLP") (IGCLTD and IGLP collectively referred to as "IGC"), Leeds Equity
Partners III, L.P., a Delaware limited partnership ("Leeds") (IGC and Leeds
collectively referred to herein as "Escrow Stockholders") and
_____________________, as escrow agent ("Escrow Agent"), (terms defined in the
Escrow Agreement have the same meanings when used herein), hereby delivers this
Notice to you, the Escrow Agent, and hereby:
j. certifies that EDT has sent to the Escrow Stockholders a written
notification stating that the performance target [has/has not] been satisfied;
and
k. instructs you to deliver to [EDT/Escrow Stockholders] Five Hundred
Thousand shares (500,000) of Escrow Stock within five (5) Business Days
following the expiration of the Objection Period, unless you receive an
Objection Certificate from Escrow Stockholders prior to the expiration of the
Objection Period, in which case you are instructed to deliver the Escrow Stock
within five (5) Business Days following your receipt of a Resolution Certificate
or a Judgment Certificate.
EDT LEARNING, INC.
By:_________________________________
Its:________________________________
Dated:_________________
EXHIBIT G
OBJECTION CERTIFICATE
The undersigned, pursuant to Section 6 of the Escrow Agreement dated as of
June __, 2002 (the "Escrow Agreement"), by and among EDT Learning, Inc., a
Delaware corporation ("EDT"), Investor Growth Capital Limited, a Guernsey
corporation ("IGCLTD"), Investor Group L.P., a Guernsey limited partnership
("IGLP") (IGCLTD and IGLP collectively referred to as "IGC"), Leeds Equity
Partners III, L.P., a Delaware limited partnership ("Leeds") (IGC and Leeds
collectively referred to herein as "Escrow Stockholders") and
_____________________, as escrow agent ("Escrow Agent"), (terms defined in the
Escrow Agreement have the same meanings when used herein), hereby delivers this
Notice to you, the Escrow Agent, and hereby:
l. dispute that the performance target has not been satisfied;
m. certify that the undersigned has sent to EDT a written statement dated
_____________ disputing EDT's determination that the performance target has not
been satisfied; and
n. instruct you to withhold delivery to EDT of the Five Hundred Thousand
shares (500,000) of Escrow Stock (a) unless and until you receive a Resolution
Certificate or a Judgment Certificate, in which case you are authorized to
deliver the Escrow Stock specified in such Resolution Certificate or Judgment
Certificate within five (5) Business Days following your receipt of such
Resolution Certificate or a Judgment Certificate.
ESCROW STOCKHOLDERS:
INVESTOR GROWTH CAPITAL LIMITED
By: _____________________________
Its: _____________________________
INVESTOR GROUP L.P.
By: _____________________________
Its: _____________________________
LEEDS EQUITY PARTNERS III, L.P.
By: _____________________________
Its: _____________________________
Dated: _________________
EXHIBIT H
RESOLUTION CERTIFICATE
The undersigned, pursuant to Section 6 of the Escrow Agreement dated as of
June __, 2002 (the "Escrow Agreement"), by and among EDT Learning, Inc., a
Delaware corporation ("EDT"), Investor Growth Capital Limited, a Guernsey
corporation ("IGCLTD"), Investor Group L.P., a Guernsey limited partnership
("IGLP") (IGCLTD and IGLP collectively referred to as "IGC"), Leeds Equity
Partners III, L.P., a Delaware limited partnership ("Leeds") (IGC and Leeds
collectively referred to herein as "Escrow Stockholders") and
_____________________, as escrow agent ("Escrow Agent"), (terms defined in the
Escrow Agreement have the same meanings when used herein), hereby delivers this
Notice to you, the Escrow Agent, and hereby:
o. certify that EDT and the undersigned Escrow Stockholders have resolved
their dispute as to the dispute described in the Notice dated _____________ and
the related Objection Certificate dated _____________; and
p. instruct you to deliver to [EDT/Escrow Stockholders] Five Hundred
Thousand shares (500,000) of Escrow Stock, within five (5) Business Days of your
receipt of this Resolution Certificate.
EDT LEARNING, INC.
By:_______________________________
Its:______________________________
ESCROW STOCKHOLDERS:
INVESTOR GROWTH CAPITAL LIMITED
By: _____________________________
Its: _____________________________
INVESTOR GROUP L.P.
By: _____________________________
Its: _____________________________
LEEDS EQUITY PARTNERS III, L.P.
By: _____________________________
Its: _____________________________
Dated:_________________
EXHIBIT I
JUDGMENT CERTIFICATE
The undersigned, pursuant to Section 6 of the Escrow Agreement dated as of
June __, 2002 (the "Escrow Agreement"), by and among EDT Learning, Inc., a
Delaware corporation ("EDT"), Investor Growth Capital Limited, a Guernsey
corporation ("IGCLTD"), Investor Group L.P., a Guernsey limited partnership
("IGLP") (IGCLTD and IGLP collectively referred to as "IGC"), Leeds Equity
Partners III, L.P., a Delaware limited partnership ("Leeds") (IGC and Leeds
collectively referred to herein as "Escrow Stockholders") and
_____________________, as escrow agent ("Escrow Agent"), (terms defined in the
Escrow Agreement have the same meanings when used herein), hereby delivers this
Notice to you, the Escrow Agent, and hereby:
q. certifies that attached hereto is a copy of a final arbitration order
resolving the dispute between EDT and the Escrow Stockholders as to the claim
described in the Notice dated ____________ and the related Objection Certificate
dated ______________; and
r. instructs you to deliver to [EDT/Escrow Stockholders] Five Hundred
Thousand shares (500,000) of Escrow Stock, within five (5) Business Days of your
receipt of this Judgment Certificate.
[EDT LEARNING, INC. OR ESCROW STOCKHOLDERS]
By:________________________________
Its:_______________________________
Dated:_________________
SCHEDULE 1
AMOUNT OF PERCENTAGE OF
ESCROW STOCKHOLDER ESCROW STOCK ESCROW STOCK
------------------ ------------ ------------
Investor Growth Capital Limited 350,000 35%
Investor Group L.P. 150,000 15%
Leeds Equity Partners III, L.P. 500,000 50%
