AGREEMENT FOR PURCHASE AND SALE OF STOCK
This Agreement for Purchase and Sale of Stock (this "Agreement") is made
as of January 13, 2004, at Torrance, California, by and among Digital Learning
Institute, Inc., ("Buyer"), a Delaware Corporation, having its principal office
at 00000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000; Xxxxxx X. Day, Xxxx Xxx
("Shareholders") residing respectively in the County of Orange, California and
Kirkland, Washington, and Software Education of America, Inc. ("Corporation"), a
California Corporation, having its principal office at 000 X. Xxxxxxxx Xxxxxx,
Xxxxx X000, Xxxx, Xxxxxxxxxx 00000-0000. In this Agreement, Shareholders and
Corporation are collectively referred to as the "Selling Parties."
Recitals:
Shareholders have represented that they own 100% of all the outstanding
stock of Corporation. Buyer desires to purchase from Shareholders, and
Shareholders desire to sell to Buyer, all the outstanding stock of Corporation
(the "Shares"); and Corporation and its Board of Directors have determined that
the consummation of this transaction is in its best interest:
NOW THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and in consideration of the mutual covenants,
agreements, representations, and warranties contained in this Agreement, the
parties agree as follows:
1. Shareholders, Corporation and Buyer adopt this Agreement as a plan of
reorganization under Internal Revenue Code Section 368(a) (1) (B).
2. The transaction shall be closed at the offices of Buyer at 00000
Xxxxxxx Xxxxxx, Xxxxxxxx and be subject to the terms and conditions set forth in
this Agreement. On the closing date, Shareholders will transfer and convey the
Shares to Buyer, and Buyer will acquire the Shares from Shareholders.
3. As consideration for the transfer of the Shares by Shareholders to
Buyer, in accordance with the provisions of paragraph 31, Buyer will deliver,
the following at closing:
a. Fifteen Thousand Dollars ($15,000.00), payable to Xxxxxx Xxx to
retire and payoff all monies owed to Xxxxxx Xxx by Corporation, which debt is
guaranteed by shareholders.
b. An agreement to indemnify and hold harmless Shareholders and all
other individuals who have personally guaranteed a loan to Corporation by Xxxxx
Fargo Bank in the amount of $219,000.00 (two hundred nineteen thousand dollars),
Said loan is evidenced by a Promissory Note and true copy of which is attached
herewith as part of EXHIBIT B.3
c. An agreement to indemnify and hold harmless Shareholders and all
other individuals who have personally guaranteed Corporation's existing
obligations under a real property lease and pursuant to which Corporation has
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agreed to a stipulated judgment in the amount of $62,026.08. The lease is to the
Corporation's offices at 000 X. Xxxxxxxx Xxxxxx, Xxxxx X000, Xxxx, Xxxxxxxxxx
00000-0000.
d. An agreement to indemnify and hold harmless Shareholders and all
other individuals who have personally guaranteed Corporation's obligation under
the existing personal property leases for the equipment which obligation,
together with equipment list, is more particularly listed in the attached
EXHIBIT C.2
e. Promissory Note or Notes, in standard form, from Corporation to
parties designated by Shareholders for the total amount of $100,000.00 in
exchange for cancellation of all existing Corporations indebtedness or future
obligations to Xxxx Xxxxxx, Xxxx Xxx and Xxxxx Xxxxxx. Said Note shall be
repayable in eleven equal monthly installments of $8333.33 and one final
installment of $8,333.37. The first of such monthly installments shall commence
thirty days after the closing of this transaction and each subsequent
installment shall be paid every thirty days there after until such Note is fully
paid. This Note or Notes shall carry no interest and be guaranteed by Buyer.
f. Letter from Corporation agreeing to pay the credit card
liabilities of Xxxxxx X. Day and Xxxxx Xxx in the amount of $100,000.00 and to
assume the amount of $20,000.00 to in Corporation credit card debt. Buyer agrees
to pay off all such liabilities within one year of the closing of this
transaction. All obligations to pay off the $100,000 liabilities of Xxxxxx X.
Day and Xxxxx Xxx will be guaranteed by Buyer. A complete list of the
indebtedness with amounts owing to each credit card company is set out in
EXHIBIT B.8 attached hereto.
g. A guaranty letter from Buyer that Corporation will release to
Shareholders, within ninety days of closing of this transaction, the collateral
provided by Shareholders for securing a Seventy Thousand ($70,000.00) letter of
credit for or instead of a bond per the requirements of the U.S. Department of
Education.
h. A certificate providing a grant of warrants to Shareholders or
their named designees the right to purchase 50,000 common shares of Buyer as a
publicly traded entity. It is specifically understood by all parties that said
warrants will provide the right to purchase 50,000 of Buyer's common shares
after Buyer becomes a publicly traded company and not before. Said warrants
shall provide the right to purchase shares at any time after Buyer becomes a
publicly traded entity and each share may be purchased at the price of $3.00 per
share. Said warrants shall expire five years from the date of closing. The
certificate shall provide that if Buyer does not become a publicly traded entity
within ninety days of the closing of this transaction, Shareholders shall be
entitled to be paid the sum of $150,000.00 in exchange for the return of the
warrants hereto provided for.
4. In addition to the foregoing payments, the parties acknowledge that all
non-corporate Selling Parties are also entitled to the payment of $1.00 (one
dollar) each for a noncompetition covenant as more fully provided in paragraph
34.
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5. Selling Parties, jointly and severally, warrant that, to their actual
current knowledge, and except as set forth in the disclosure schedule attached
as EXHIBIT A and initialed by the parties, that:
a. Corporation is a corporation duly organized, validly existing,
and in good standing under the laws of California and has all necessary
corporate powers to own its properties and operate its business as now owned and
operated by it. Neither the ownership of its properties nor the nature of its
business requires Corporation to be qualified in any jurisdiction other than the
state of its incorporation.
b. The authorized capital stock of Corporation consists of Ten
Thousand [10,000] shares of capital stock of no par value of which 7,600, seven
thousand six hundred shares (the Shares) are issued and outstanding. All the
Shares are validly issued, fully paid, and nonassessable. There will at the time
of closing be no outstanding subscriptions, options, rights, warrants,
convertible securities, or other agreements or commitments obligating
Corporation to issue or to transfer from treasury any additional shares of its
capital stock of any class.
c. Shareholders are the owners, beneficially and of record, of all
the Shares free and clear of all liens, encumbrances, security agreements,
equities, options, claims, charges, and restrictions. Shareholders have full
power to transfer the Shares to Buyer without obtaining the consent or approval
of any other person or governmental authority, other than the consent of the
California Department of Corporations. There are only two shareholders: Xxxxxx
X. Day and Xxxx Xxx and any other person having any interest in the shares have
agreed to transfer their interest if any, pursuant to a preexisting written
agreement between Shareholders and any such third person.
d. Corporation does not own, directly or indirectly, any interest or
investment (whether equity or debt) in any corporation, partnership, business,
trust, or other entity, other than its fifteen percent membership interest in IO
Enterprises, LLC ("LLC") a limited liability company organized in the State of
Washington and which LLC is duly organized, validly existing, and in good
standing under the laws of Washington State and has all necessary corporate
powers to own its properties and operate its business as now owned and operated
by it. Neither the ownership of its properties nor the nature of its business
requires LLC to be qualified in any jurisdiction other than the state of its
incorporation.
e. EXHIBIT B.1 to this Agreement sets forth balance sheets of
Corporation as of June 30, 2003, June 30, 2002, June 30, 2001, June 30 , 2000,
and the related statements of income and retained earnings for the four years
ending on those dates. EXHIBIT B.2 sets forth independent reviews by accountants
through December 31, 2003, and un-audited balance sheet of Corporation as of
December 31, 2003, together with related statements of income and retained
earnings for each of the six month periods ending on those dates, certified by
the President of the Corporation as accurately reflecting the financial
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condition of Corporation for those periods. The financial statements in EXHIBITS
B1 AND B2 are referred to as the "financial statements." The financial
statements have been prepared in accordance with generally accepted accounting
principles consistently followed by Corporation throughout the periods
indicated, and fairly present the financial position of Corporation on the
respective dates of the balance sheets included in the financial statements, and
the results of its operations for the respective periods indicated.
f. Since June 30, 2003, there has not been any change in the
financial condition or operations of Corporation, except changes in the ordinary
course of business, which have not been materially adverse.
g. Since June 30, 2003, there has been no:
(i)Transaction by Corporation except in the ordinary course of
business as conducted on that date;
(ii) Capital expenditure by Corporation exceeding $5,000.00;
(iii) Material adverse change in the financial condition,
liabilities, assets, business, or prospects of Corporation except as reflected
in financial statements of December 31, 2003;
(iv) Destruction, damage to, or loss of any asset of
Corporation (whether insured or uninsured) that materially and adversely affects
the financial condition, business, or prospects of Corporation;
(v)Change in accounting methods or practices (including,
without limitation, any change in depreciation or amortization policies or
rates) by Corporation;
(vi) Revaluation by Corporation of any of its assets;
(vii) Declaration, setting aside, or payment of a dividend or
other distribution in respect to the capital stock of Corporation, or any direct
or indirect redemption, purchase, or other acquisition by Corporation of any of
its shares of capital stock;
(viii) Increase in the salary or other compensation payable or
to become payable by Corporation to any of its officers, directors, or employees
or declaration, payment, or commitment or obligation of any kind for the
payment, by Corporation, of a bonus or other additional salary or compensation
to any such person;
(ix) Sale or transfer of any asset of Corporation, except in
the ordinary course of business;
(x)Amendment or termination of any contract, agreement, or
license to which Corporation is a party, except in the ordinary course of
business;
(xi) Loan by Corporation to any person or entity, or guaranty
by Corporation of any loan;
(xii) Mortgage, pledge, or other encumbrance of any asset of
Corporation;
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(xiii) Waiver or release of any right or claim of Corporation
except in the ordinary course of business;
(xiv) Commencement, notice, or threat of commencement of any
civil litigation or governmental proceeding against Corporation or investigation
of its affairs;
(xv) Claims of wrongful discharge, wage claims, or other
unlawful statutory labor claims;
(xvi) Issuance or sale by Corporation of any shares of its
capital stock of any class or of any other of its securities;
(xvii) Agreement by Corporation to do any of the things
described in the preceding clauses (i) through (xvi); or
(xviii) Other event or condition of any character that has or
might reasonably have a material and adverse effect on the financial condition,
business, assets, liabilities, or prospects of Corporation.
h. The Corporation has no debt, liability, or obligation of any
nature, whether accrued, absolute, contingent, or otherwise, and whether due or
to become due, that is not reflected or reserved against in Corporation's
balance sheet as of December 31, 2003, included in the financial statements or
set forth in EXHIBIT B.3 to this Agreement, except for (1) those that may have
been incurred after the date of the balance sheet, (2) those that are not
required by generally accepted accounting principles to be included in a balance
sheet, (3) those that are the subject of year-end adjustments, and (4) those
ordinarily included in footnotes. All debts, liabilities, and obligations
incurred after that date were incurred in the ordinary course of business and
are usual and normal in amount both individually and in the aggregate.
i. Within the times and in the manner prescribed by law, Corporation
has filed all federal, state, and local tax returns required by law and has paid
all taxes, assessments, and penalties shown to be due and payable on such
returns, except as specified in EXHIBIT "I".
Corporation has never filed, and will not file on or before the closing
date, any consent under Internal Revenue Code section 341(f).
j. EXHIBIT C.1 to this Agreement is a complete list of all real
property owned by or leased to Corporation.
k. The books and records of Corporation contain a complete and
accurate description of all un-depreciated vehicles, machinery, equipment,
furniture, supplies, and all other tangible personal property owned by, in the
possession of, or used by Corporation in connection with its business. Except as
stated in EXHIBIT C.2, no personal property used by Corporation in connection
with its business is held under any lease, security agreement, conditional sales
contract, or other title retention or security arrangement, or is located other
than in the possession and under the control of Corporation. The tangible
personal property reflected in those books and records constitutes all such
tangible personal property necessary for the conduct by Corporation business as
now conducted.
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l. All accounts receivable of Corporation shown on the balance sheet
of Corporation as of December 31, 2003, arose from valid sales in the ordinary
course of business
m. EXHIBIT D.1 to this Agreement is a schedule of all trade names,
trademarks, service marks, and copyrights and their registrations, owned by
Corporation or in which it has any rights or licenses, together with a brief
description of each. Selling Parties have received no notice of any infringement
or alleged infringement by others of any trade name, trademark, service xxxx, or
copyright. Corporation has not infringed, and are not now infringing, on any
trade name, trademark, service xxxx, or copyright belonging to any other person,
firm, or corporation. Corporation has the right to sell or assign to Buyer all
owned trademarks, trade names, service marks, copyrights, and all such licenses
and other rights.
n. EXHIBIT D.2 to this Agreement is a complete schedule of all
patents, and applications for patents owned by Corporation or in which they have
any rights, licenses, or immunities. The patents and applications for patents
listed in EXHIBIT D.2 are valid and in full force and effect and are not subject
to any taxes, maintenance fees, or actions falling due within 90 days after the
closing date. Except, as set forth in EXHIBITS D.3, there have been no
interference actions or other judicial, arbitration, or other adversary
proceedings concerning the patents or applications for patents listed in EXHIBIT
D.2. Each patent application is awaiting action by its respective patent office
except as otherwise indicated in EXHIBIT D.2. Except as set forth in EXHIBIT
D.4, neither Corporation nor its shareholders are a party to any license,
agreement, or arrangement, whether as licensee, licenser, or otherwise, with
respect to any patent, application for patent, or trade secret. Corporation and
shareholders have the right and authority to use and to transfer to Buyer such
trade secrets, as are necessary to enable Buyer to conduct and continue to
conduct all phases of their businesses in the manner presently conducted by
them, and that use does not, and will not, conflict with, infringe on, or
violate any patent or other rights of others.
o. EXHIBIT E.1 to this Agreement is a complete list, without
extensive or revealing descriptions, of Corporation's trade secrets, including
all customer lists, know-how, computer programs, and routines, and other
technical data. The specific location of each trade secrets documentation,
including its complete description, specifications, charts, procedures, and
other material relating to it, is also set forth in that exhibit. All trade
secrets documentation is current, accurate, and sufficient in detail and content
to identify and explain it and to allow its full and proper use by Buyer without
reliance on the special knowledge or memory of others. Corporation is the sole
owner of each of these trade secrets, free and clear of any liens, encumbrances,
restrictions, or legal or equitable claims of others, except as specifically
stated in EXHIBIT E.1. Corporation has taken all reasonable security measures to
protect the secrecy, confidentiality, and value of these trade secrets; any of
their employees and any other persons who, either alone or in concert with
others, developed, invented, discovered, derived, programmed, or designed these
secrets, or who have knowledge of or access to information relating to them,
have been put on notice and, if appropriate, have entered into agreements that
these secrets are proprietary to Corporation and not to be divulged or misused.
All these trade secrets are presently valid and protected and are not part of
the public knowledge or literature; they have not, to Selling Parties'
knowledge, been used, divulged, or appropriated for the benefit of any past or
present employees or other persons or to the detriment of Corporation.
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p. Corporation has good and marketable title to all its assets,
whether real, personal, mixed, tangible, or intangible assets that are used in
the businesses of Corporation. All these assets are free and clear of
restrictions on or conditions to transfer or assignment and free and clear of
mortgages, liens, pledges, charges, encumbrances, equities, claims, easements,
rights of way, covenants, conditions, or restrictions, except for (1) those
disclosed in Corporation's balance sheet as of December 31, 2003, or in EXHIBITS
B.1 AND B.2 to this Agreement; (2) the lien of current taxes not yet due and
payable; and (3) possible minor matters that, in the aggregate, are not
substantial in amount and do not materially detract from or interfere with the
present or intended use of any of these assets or materially impair business
operations. The Corporation is not in default or in arrears in any material
respect under any lease except as specifically declared in attachments to
EXHIBITS C.1 AND EXHIBITS C.2. All real property and tangible personal property
of Corporation, that is necessary to the operation of its businesses is in good
operating condition and repair, ordinary wear and tear excepted. No Shareholder;
nor any officer, director, or employee of Corporation or any spouse, child, or
other relative of any of these persons owns, or has any interest, directly or
indirectly, in any of the real or personal property owned by or leased to
Corporation or any copyrights, patents, trademarks, trade names, or trade
secrets licensed by Corporation.
q. EXHIBIT F.1 to this Agreement is a correct and current list of
all presently enrolled students of Corporation, together with summaries of the
courses in which they are enrolled and the level of completion reached by each
student.
r. EXHIBIT B.4 to this Agreement is a description of all insurance
policies held by Corporation concerning its businesses and properties. All these
policies are in the respective principal amounts set forth in EXHIBIT B.4.
Corporation has maintained and now maintains, or is in the process of obtaining,
(1) insurance on all its assets and businesses of a type customarily insured,
covering property damage and loss of income by fire or other casualty, and (2)
adequate insurance protection against all liabilities, claims, and risks against
which it is customary to insure. Corporation is not in default with respect to
payment of premiums on any such policy.
s. Corporation has received no written or constructive notice or
communication from any agency or body retaining jurisdiction of any violation of
any applicable federal, state, or local statute, law, or regulation (including
any applicable building, zoning, environmental protection), or other law,
ordinance, or regulation affecting their properties or the operation of their
business.
t. Corporation has received no written or constructive notice or
communication from any agency or body retaining jurisdiction of any violation of
any applicable federal, state, or local statute, law, or regulation, and
represents that (i) Corporation has complied in all material respects with all
federal, state, and local environmental protection laws and regulations and has
not been cited for any violation of any such law or regulation, and (ii)
Corporation has complied with all requirements of the Occupational Safety and
Health Act and its California equivalents and regulations promulgated under any
such legislation.
u. Except as set forth in EXHIBIT G.1, Corporation and Shareholders
have received no written notice of any pending, or, threatened, suit, action,
arbitration, or legal, administrative, or other proceeding, or governmental
investigation against or affecting Corporation or any of its businesses, assets,
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or financial conditions. Selling Parties have furnished or made available to
Buyer copies of all relevant court papers and other documents relating to the
matters set forth in EXHIBIT G.1. Corporation is not in default with respect to
any order, writ, injunction, or decree of any federal, state, local, or foreign
court, department, agency, or instrumentality. Except as set forth in EXHIBIT
G.1, neither Corporation nor Shareholders are presently engaged in any legal
action to recover money owed to any of them or damages sustained by any of them.
v. The consummation of the transactions contemplated by this
Agreement will not result in or constitute any of the following: (1) a breach of
any term or provision of this Agreement; (2) a default or an event that, with
notice, lapse of time, or both, after applicable cure periods, would be a
material default, breach, or violation of the articles of incorporation or
bylaws of Corporation or any lease, license, promissory note, conditional sales
contract, or other agreement, instrument, or arrangement to which Shareholders
or Corporation are a party or by which any of them or the property of any of
them is bound; (3) an event that would permit any party to terminate any
agreement or to accelerate the maturity of any indebtedness or other obligation
of Corporation, (4) the creation or imposition of any lien, charge, or
encumbrance on any of the properties of Corporation, (5) or the loss of
Corporation's eligibility or approval from participating in programs under the
California Bureau of Private Post Secondary and Vocational Education (the
"BPPVE"), the Accrediting Commission of Career Schools and Colleges of
Technology (the "ACCSCT"), and the Department of Education (the "DOE") loan
programs, except Buyer acknowledges that approval of the various authorities is
required to continue eligibility for all such program after change of control of
Corporation as will result from the consummation of this agreement and
Shareholders, with all necessary cooperation with Buyer, will make their best
efforts to ensure that all approvals are obtained expeditiously in order to
permit Corporation to carry on its present business in the future without
interruption.
w. Selling Parties have the right, power, legal capacity, and
authority to enter into and perform their respective obligations under this
Agreement; and no approvals or consents of any persons other than Selling
Parties are necessary in connection with it, other than; (a) the consent of the
California Commissioner of Corporations to the transfer of the Shares; (b) the
approval of the California BPPVE, ACCST and DOE under Code of Regulations Title
IV to the change of control to carry on the business of the Corporation as now
being conducted. In that regard Selling Parties shall immediately on signing of
this agreement make their best efforts to obtain all approvals and permits, and
other similar documentation and approvals from the BPPVE and the ACCSCT, and DOE
for the proposed change of control of Corporation as envisaged by this agreement
in order to permit Corporation to carry on its business as now carried on.
x. No Shareholder, officer, director, or employee of the Corporation
or any spouse or child of any of them has any direct or indirect interest in any
competitor, supplier, or customer of Corporation or in any person from whom or
with whom Corporation is doing business.
y. Selling Parties shall furnish the following matters to Buyer for
its examination (1) copies of the articles of incorporation and bylaws of
Corporation; (2) the minute books of Corporation containing all records required
to be set forth of all proceedings, consents, actions, and meetings of the
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shareholders and boards of directors of Corporation; (3) all permits, orders,
and consents issued by the California Commissioner of Corporations with respect
to Corporation, or any security of either of them, and all applications for such
permits, orders, and consents; (4) copies of all documents evidencing
eligibility and approvals, if any, to participate for funding programs under
U.S. Code of Regulations, Title IV, the California BPPVE program and the ACCSCT;
(5) the stock transfer books of Corporation setting forth all transfers of any
capital stock in Corporation.
z. EXHIBIT B.5 is a list of the names and addresses of all officers,
directors, employees, and agents of Corporation, stating the rates of
compensation payable to each.
aa. EXHIBIT B.6 is a list of all Corporation's material employment
contracts; collective bargaining agreements; and pension, bonus, profit-sharing,
stock option, or other agreements providing for employee remuneration or
benefits. To the best of Selling Parties' knowledge, Corporation is not in
default under any of these agreements.
bb. None of the warranties made by Shareholders or Corporation, or
made in any certificate or memorandum furnished or to be furnished by any of
them or on their behalf, taken as a whole contains or will contain any untrue
statement of a material fact, or omits to state any material fact necessary to
make the statements made true.
For the purposes of this Agreement, the term "actual current knowledge" of
the Selling Parties means the present actual knowledge of Xxxxxx X. Day, Xxxxx
Xxx and Xxxx Xxx.
6. Buyer represents and warrants that:
a. Buyer is a corporation duly organized, existing, and in good
standing under the laws of California. The execution and delivery of this
Agreement and the consummation of this transaction by Buyer have been duly
authorized, and no further corporate authorization is necessary on the part of
Buyer.
b. Buyer need not make nor obtain any consent, approval, or
authorization of, or declaration, filing, or registration with, any federal or
state governmental or regulatory authority in connection with the execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement
c. Buyer has sufficient, immediately available resources to
consummate all transactions contemplated by this Agreement,
d. The consummation of the transactions contemplated by this
Agreement will not result in or constitute any of the following: (1) a breach of
any term or provision of this Agreement; (2) a default or an event that, with
notice, lapse of time, or both, after applicable cure periods, would be a
material default, breach, or violation of the articles of incorporation or
bylaws of Buyer or any lease, license, promissory note, conditional sales
contract, or other agreement, instrument, or arrangement to which Buyer is a
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party or by which any of them or the property of any of them is bound; (3) an
event that would permit any party to terminate any agreement or to accelerate
the maturity of any indebtedness or other obligation of Buyer, (4) the creation
or imposition of any lien, charge, or encumbrance on any of the properties of
Buyer, or (5) the loss of Corporation's eligibility or approval from
participating in and under the California BPPVE, ACCST and DOE programs.
e. Buyer has the right, power, legal capacity, and authority to
enter into and perform their obligations under this Agreement; and no approvals
or consents of any persons are necessary in connection with it.
f. There is no action, proceeding, or claim pending, or, to Buyer's
knowledge, threatened, against Buyer that would affect Buyer's ability to
consummate the transactions contemplated by this Agreement.
g. Buyer has not received any written or actual notice or
communication that it has not complied, and is not currently in substantial
compliance, with all applicable laws, regulations and other requirements of all
governmental authorities, and of all states, municipalities and other political
subdivision and agencies of government, having jurisdiction over Buyer. Buyer
has not received any written or actual notice or communication of any asserted
present or past failure by it to comply with such laws, rules or regulations.
7. Selling Parties covenant that from the date of this Agreement until the
closing:
a. Buyer and its counsel, accountants, and other representatives
will have full access during normal business hours, to all properties, books,
accounts, records, contracts, and documents of or relating to Corporation.
Selling Parties will furnish or cause to be furnished to Buyer and its
representatives all material data and information concerning the business,
finances, and properties of Corporation that may reasonably be requested. Buyer
agrees to give Selling Parties twenty-four (24) hours advance notice before
visiting Corporation place of business. Buyer shall not contact Selling Parties'
employees, lenders, creditors, or customers without Selling Parties' prior
written approval.
b. Nothing in this Agreement will obligate Selling Parties to
disclose any classified information or provide any access to representatives of
Buyer prohibited or not authorized by applicable governmental authority.
8. Corporation will carry on its businesses and activities in
substantially the same manner as previously carried out and will not institute
any unusual or novel methods of purchase, sale, lease, management, accounting,
or operation that vary materially from those methods used by Corporation as of
the date of this Agreement.
9. Corporation will use reasonable efforts, without making any commitments
on behalf of Buyer, to preserve its business organization intact; to keep
available to Corporation its present officers and employees; and to preserve its
present relationships with customers and others having business relationships
with it.
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10.Corporation will not (1) amend its articles of incorporation or bylaws;
(2) issue any shares of its capital stock; (3) issue or create any warrants,
obligations, subscriptions, options, convertible securities, or other
commitments under which any additional shares of its capital stock of any class
might be directly or indirectly authorized, issued, or transferred from
treasury; or (4) agree to do any of the acts listed above.
11.Corporation will continue to carry its existing insurance, subject to
variations in amounts required by the ordinary operations of their businesses.
At the request of Buyer and at Buyer's sole expense, the amount of insurance
against fire and other casualties that, at the date of this Agreement,
Corporation on any of its properties or in respect of its operations will be
increased by the amount or amounts Buyer will specify. The representations in
this section are made subject to the insurers' agreement to renew existing
policies.
12.Corporation will not do or agree to do, without Buyer's consent, any of
the following:
a. Enter into any contract, commitment, or transaction not in the
usual and ordinary course of its business,
b. Enter into any contract, commitment, or transaction in the usual
and ordinary course of business involving an amount exceeding $5,000.00,
c. Make any capital expenditures in excess of $2,500.00 for any
single item or $10,000.00 in the aggregate, or enter into any leases of capital
equipment or property under which the annual lease charge is in excess of
$2,500.00; or
d. Sell or dispose of any capital assets with a net book value
exceeding $1,000.00, individually, or $5,000.00 in the aggregate.
13. Corporation will not:
a. Declare, set aside, or pay any dividend or make any distribution
in respect of its capital stock,
b. Directly or indirectly purchase, redeem, or otherwise acquire any
shares of its capital stock; or
c. Enter into any agreement obligating it to do any of the foregoing
prohibited acts.
d. Agree to: (i) pay any obligation or liability, fixed or
contingent, other than current liabilities; (ii) waive or compromise any right
or claim; or (iii) cancel, without full payment, any note, loan, or other
obligation owed to Corporation.
e. Agrees to, modify, amend, cancel, or terminate any of its
existing contracts or agreements.
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14.a. Buyer will exercise its best efforts, and promptly execute and
deliver any documents and instruments that may be reasonably required, to assist
Selling Parties in obtaining any consents or approvals to consummate this
transaction. Provided, however, that Buyer will not be obligated under this
paragraph to execute any guaranty, assumption of liability, or other document or
instrument requiring it to assume obligations not contemplated by this
Agreement.
b. Selling parties will exercise best efforts to obtain consent to
the transfer of control of the Corporation relating to the BPPVE, ACCSCT and DOE
licenses and approvals as contemplated by this Agreement.
c. The Buyer understands and acknowledges that according to BPPVE
regulations the BPPVE process may take up to 90 days and the ACCSCT and DOE
approvals may take up to 60 days. Selling Parties and Buyer, by execution of
this Agreement, agree to cooperate fully in obtaining, and each will use its
best efforts and due diligence to obtain, all necessary BPPVE, ACCSCT, DOE and
other regulatory consents and approvals and to execute all other documents
consents and approvals necessary to consummate the transactions contemplated by
this Agreement. Selling Parties and Buyer, their affiliates, parents,
successors, assigns, officers, directors, employees and agents, will take no
action to hinder the prompt grant of any consents and approvals. Selling Parties
will not enter into any transaction or series of transactions which may have the
effect of circumventing the rights granted to Buyer under this Agreement. From
the date of this Agreement, Selling Parties will not enter into any agreement,
partnership or other arrangement that would prevent or encumber or delay
Corporation from obtaining the necessary consents for the BPPVE, ACCSCT and DOE
licenses, permits and approvals for Buyer to carry on the present business of
Corporation because of the change of control resulting from consummation of this
Agreement.
d. Selling Parties and Buyer shall, prior to or after closing,
execute any and all documents and perform any and all acts reasonably necessary,
incidental, or appropriate to give effect the transaction contemplated by this
Agreement.
e. Notification of Changed Circumstances. At any time after the
execution date of this Agreement, and prior to the Closing, if either party
becomes aware of any fact or circumstance that would materially change a
representation or warranty made under this Agreement, the party with knowledge
of those facts shall notify the other in writing as soon as possible after the
discovery of the changed circumstances.
15. At the written request of Buyer, Corporation will within five business
days document and describe any of its trade secrets, processes, or business
procedures, if any, specified by Buyer, in form and content satisfactory to
Buyer.
16. All warranties of Selling Parties set forth in this Agreement will
also be true on the closing date as if made on that date, except to the extent
that any of them may become untrue because of events beyond the control of
Selling Parties, who are unable to make them true as of the closing date despite
their best efforts to do so.
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17. Whether or not the closing takes place, Buyer and Selling Parties
waive any cause of action, right, or claim against the other party arising out
of the access of the other party or its representatives to any trade secrets or
other confidential business information of the other party from the date of this
Agreement, except for the negligent or intentional competitive misuse by the
other party or its representatives of such trade secrets or other confidential
business information if the closing does not take place.
18. Buyer agrees that, unless and until the closing has been consummated,
Buyer and its officers, directors, and other representatives will hold in strict
confidence, and will not use to the detriment of Shareholders or Corporation all
data and information about the business of Corporation obtained in connection
with this transaction or agreement, except as far as the data and information
may be required by law to be included in any federal or state filings and/or
disclosures required to be made. If the transactions contemplated by this
Agreement are not consummated, Buyer will return to Selling Parties all that
data and information that Selling Parties may reasonably request, including
worksheets, test reports, manuals, lists, memoranda, and other documents
prepared by or made available to Buyer in connection with this transaction.
19. The obligations of Buyer to purchase the Shares under this Agreement
are subject to the satisfaction, at or before the closing, of the following
conditions:
a. Selling Parties commencing in good faith the process of
transferring, all licenses, permits, approvals and consents regulatory
authorities to carry on the business of Corporation in substantially the same
manner as carried on by the selling parties.
b. Buyer may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such waiver of a condition
will constitute a waiver by Buyer of any of its other rights or remedies, at law
or in equity, if Shareholders, or Corporation are in default of any of their
representations, warranties, or covenants under this Agreement.
20. Except as otherwise permitted by this Agreement, all warranties by
each of the Parties in this Agreement, or in any written statement that will be
delivered to by one party to another under this Agreement, must be true in all
material respects on the closing date as though made at that time.
21. During the period from December 31, 2003 to the closing date, there
will not have been any material adverse change in the financial condition or the
results of operations of Corporation and Corporation will not have sustained any
insured or uninsured loss or damage to its assets that materially and adversely
affects its ability to conduct a material part of its business.
22. Buyer will receive a certificate, dated the closing date, signed and
verified by Corporation's president in such detail as Buyer and its counsel may
reasonably request, that to the best of their knowledge the conditions specified
in paragraphs, 21 have been fulfilled, and;
a. No action, suit, or proceeding before any court or any
governmental body or authority, pertaining to the transaction contemplated by
this Agreement or to its consummation, will have been instituted or threatened
13
on or before the closing date, except as specified in writing to Buyer in
EXHIBIT G-1.
b. That on the basis of a limited review (not an audit) of the
latest available accounting records of Corporation, consultations with other
responsible officers of Corporation and with Shareholders, and other pertinent
inquiries that he deemed necessary, he has no knowledge or reason to suspect
that during the period from December 31, 2003 to a specified date not more than
five business days before the closing date, there was any change in the
financial condition or results of operations of Corporation except changes
incurred in the ordinary and usual course of its respective business during that
period that in the aggregate are not materially adverse, and any other changes
or transactions contemplated by this Agreement.
23. Buyer will receive corporation tax clearance certificates, as of a
date not more than 5 days before the closing date, of the California Franchise
Tax Board for Corporation. In the event that it is not possible to obtain such
certificate, before closing date, Selling Parties shall have commenced in good
faith the process to obtain the tax clearance certificate.
24. Buyer will have received a Certificate of Report from the California
Employment Development Department stating that, as of November 30, 2003, no
contributions, interest, or penalties are due to the Employment Development
Department from Corporation.
25. All necessary agreements and consents of any parties to the
consummation of the transactions contemplated by this Agreement, or otherwise
pertaining to the matters covered by it, will have been obtained or have been
applied for by Selling Parties and delivered, if received, to Buyer on the date
of closing of this transaction, including; a) all required consents from the
California Commissioner of Corporations for the transfer of the Shares to Buyer
as provided for in this Agreement; b) all necessary approval documents to permit
continuance of operations of Corporation in its present manner after the change
of control under the California BPPVE, the ACCSCT and DOE and , which documents
will include temporary or conditional permits and documents, if any, providing
the parties have commenced the approval process in good faith as otherwise
provided in this Agreement, and subject to Paragraph 14.
26. Employment agreement in the form set forth in EXHIBIT B.7, to be
effective on the closing date, will have been executed and delivered by Xxxxxx
X. Day to Buyer.
27. The form and substance of all certificates, instruments and other
documents delivered to Buyer and Selling Parties under this Agreement will be
satisfactory in all reasonable respects to Buyer, Selling Parties, and their
respective counsel.
28. Selling Parties will have delivered to Buyer, except as otherwise
requested by Buyer, the written resignations of all the officers and directors
of Corporation, and will cause any other action to be taken with respect to
these resignations that Buyer may reasonably request.
29. The closing will take place at the offices of Buyer. The closing date
shall be ten (10) days after the signing of this agreement by all parties.
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30. At the closing, Shareholders must deliver to Buyer the following
instruments, in form and substance satisfactory to Buyer and its counsel,
against delivery of the items specified in paragraph 3:
a. A certificate or certificates representing the Shares, registered
in the name of Shareholders, duly endorsed by Shareholder for transfer or
accompanied by an assignment of the Shares duly executed by Shareholders.
b. All documents evidencing Corporation's 15% membership interest in
IO Enterprises, LLC accompanied by a certification by President of IO
Enterprises, LLC to verify such interest and and approving the change of control
in Corporation as provided for by consummation of this Agreement.
c. All Corporation records relating to stock issues, redemptions,
transfers and shall include the stock ledgers, minute books, and corporation
seal.
d. The Corporation's financial statements, as provided for in
paragraph 5.e. of this agreement.
e. Unless otherwise specified by Buyer, the written resignations of
all the officers and directors of Corporation.
f. The employment agreement between Xxxxxx X. Day and Corporation,
effective the closing date, in the form set forth in EXHIBIT B.7.
g. Original Promissory Note executed by Corporation in favor of
Xxxxxx Xxx in the amount of $15,000.00 duly marked as fully paid and cancelled.
h. Original Promissory Note executed by Corporation in favor of Xxxx
Xxxxxx duly marked cancelled.
i. Original Promissory Notes executed by Corporation in favor of
Xxxxx Xxxxxx duly marked cancelled together with an appropriate document
acknowledging the discharge of all contracts between Corporation and Xxxxx
Xxxxxx and accompanied by a General Release acknowledging that all past and
future claims against Corporation have been satisfied and or are waived.
j. Original Promissory Note executed by Corporation in favor of Xxxx
Xxx or any new investors duly marked cancelled and paid in full.
k. Letter or other document evidencing the approval by Xxxxx Fargo
Bank to the change of control of Corporation without acceleration of payment on
the existing $219,000.00 Promissory Note. Buyer agrees to cooperate by providing
its guaranty to effectuate such approval if the same be required by the Bank.
Buyer may waive the requirements of this section by closing this transaction.
15
l. Letter or other document evidencing the approval by Landlord of
the change of control of Corporation without forfeiture of the existing lease to
the office premises at 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx X000, Xxxx, Xxxxxxxxxx.
m. Letter or other documents evidencing the approval by all lessors
of equipment to the change of control of Corporation without acceleration of
maturity or forfeiture of the existing equipment leases.
n. An undertaking duly executed by Shareholders not to withdraw or
otherwise jeopardize, for a period of ninety days from the date of closing, the
collateral provided by Shareholders for the benefit of Corporation to obtain and
secure a Seventy Thousand ($70,000.00) dollar standby Letter of Credit in favor
of DOE.
o. A certificate executed by Selling Parties, dated the closing
date, certifying that all their representations and warranties in this Agreement
are true on the closing date, as though each of those representations and
warranties had been made on that date, except to the extent that any of them may
have become untrue after the date of this Agreement because of events outside
Selling Parties' control that they are unable to make true on the closing date
despite their best efforts to do so.
p. A general release in the form set forth in EXHIBIT F.2, in favor
of Corporation executed by Shareholders, and dated the closing date.
31. At the closing, Buyer shall deliver to Shareholders
a. Business check in the amount of $15,000.00 payable to Xxxxxx Xxx.
b. A Promissory Note or Notes, duly executed by Corporation, and
guaranteed by Buyer in the amount of One Hundred thousand ($100,000.00) dollars
in accordance with the terms set out in paragraph 3.e.;
c. Indemnity Agreements in accordance with the terms set out in
paragraph 3.b, 3c, and 3.d.
d. A guaranty letter to refund to Shareholders the sum of Seventy
Thousand ($70,000.00) dollars in accordance with terms of paragraph 3.g.
e. A warrant certificate in accordance with the terms of Paragraph
3.h.
f. Certified resolutions of Buyer's board of directors, in form
satisfactory to counsel for Shareholders, authorizing the execution and
performance of this Agreement and all actions to be taken by Buyer under this
Agreement.
32. Xxxxxx X. Day agrees to fully cooperate with Buyer to ensure
collection of the unpaid balance of all existing accounts receivable of
Corporation at the closing date.
33. Mutual Indemnity Obligations;
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a. Shareholders agree to provide a written commitment to indemnify,
defend, and hold harmless Buyer against and in respect of claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including interest, penalties, and reasonable attorney fees that
it or Corporation may incur or suffer that arise, result from, or relate to any
breach of, or failure by Shareholders to perform, any of their representations,
warranties, covenants, or agreements in this Agreement or in any schedule,
certificate, exhibit, or other instrument furnished or to be furnished by
Shareholders under this Agreement ("Buyer's Damages"). Shareholder's liability
under this paragraph will not, however, exceed the aggregate amount of
$25,000.00. Despite any other provision of this Agreement, Shareholder will not
be liable to Buyer on any warranty, representation, or covenant made by Selling
Parties in this Agreement, or under any of their indemnities in this Agreement,
regarding any single claim, loss, expense, obligation, or other liability that
does not exceed $5,000.00.
b. Subject to the conditions and provisions set forth in this
Agreement, Buyer will pay, indemnify, defend and hold harmless each Shareholder
from and against all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs and expenses, including, without limitation,
interest, penalties and attorney fees, asserted against or imposed upon or
incurred by Selling Parties or any Shareholder resulting from a breach of any
representation, warranty, covenant, agreement or obligation of Buyer contained
in or made pursuant to this Agreement (collectively, " Shareholders Damages").
c. Indemnity Claims Procedure. In the event of any claim for Buyer's
Damages or Shareholders Damages under this Agreement, the party claiming the
right to indemnity (the "Claimant") will promptly notify the indemnifying party
(the "Indemnitor") in writing of that claim, which notice will set forth the
basis of the claim for indemnity and, if then determinable by Claimant, a
reasonable estimate of the amount thereof (or, if in Claimant's good faith
opinion, no such reasonable estimate can then be made by it, the maximum
potential damages that, in Claimant's good faith opinion, might be sustained in
connection with such claim). The obligations and liabilities of Shareholders
with respect to claims for Buyer's Damages and the obligations and liabilities
of Buyer with respect to claims for Shareholders Damages resulting in either
case from the assertion of liability by third parties ("Third Party Claims"),
are subject to compliance by Claimant with the following terms and conditions:
(i) Claimant will give Indemnitor prompt notice of any Third
Party Claim asserted against or imposed upon or incurred by
Claimant, and indemnitor will undertake the defense of that claim by
representatives of its own choosing.
(ii) In the event that Indemnitor, within a reasonable time,
not to exceed thirty (30) days, after notice of any such Third Party
Claim, fails to defend, Claimant will (upon further notice to
Indemnitor) have the right to undertake the defense, compromise or
settlement of such Third Party Claim for the account of Indemnitor,
subject to the right of Indemnitor to assume the defense of such
Third Party Claim at any time prior to settlement, compromise or
final determination thereof.
d. Anything in this Section to the contrary notwithstanding:
17
(i) If there is a reasonable probability that a Third Party
Claim may materially and adversely affect Claimant or any Affiliate
of Claimant (other than as a result of the payment of money
damages), Claimant will have the right to defend such Third Party
Claim, or to compromise or settle such Third Party Claim for the
account of Indemnitor with the prior written consent of Indemnitor,
which consent will not be unreasonably withheld; and
(ii) No Indemnitor will, without Claimant's written consent,
settle or compromise any Third Party Claim or consent to entry of
any judgment which does not include as an unconditional term thereof
the release by the claimant or the plaintiff of Claimant from all
further liability in respect of such Third Party Claim.
e. The remedies provided in this Agreement will be cumulative and
will not preclude any party from asserting any other rights or seeking any other
remedies against any other party or its successors or assigns.
34. In consideration for the payment by Buyer of $1.00 to Shareholders, to
be made on the closing date, Shareholders agree that they will not, at any time
within the two-year period immediately following the closing date, start,
create, own, or have any ownership interest in any firm, corporation, or
business that engages in computer training in any of the counties of Los
Angeles, Orange, Riverside, San Bernardino, Imperial, Ventura, Santa Xxxxxxx,
and Xxxx, California, that is the same as or directly competitive with any
activity now engaged in by Corporation or any successor in any of these counties
or cities as long as Buyer or any successor engages in this activity in such
county. Notwithstanding the foregoing, it is the express intention of the
parties that, after expiration of the employment agreement, if it is not
renewed, Xxxxxx X. Day may work as an employee, consultant, agent, contractor,
or other relationship with a competitor computer training entity, so long as he
does not hold any ownership interest as described herein, or start any
competitor entity. Xx. Xxxxxx X. Day further covenants that he will not, at any
time within the two-year period immediately following the closing date, solicit
directly or indirectly any current officers, employees, or clients of the
Corporation.
35. The parties intend the covenant contained in the preceding portion of
this section to be construed as a series of separate covenants, one for each
county specified. Except for geographic coverage, each separate covenant will be
considered identical in terms to the covenant contained in the preceding
paragraph. If, in any judicial proceeding, a court refuses to enforce any of the
separate covenants included in this paragraph, this unenforceable covenant will
be considered eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced.
36. Shareholders further agrees not to divulge, communicate, use to the
detriment of Buyer or for the benefit of any other person or persons, or misuse
in any way, any confidential information or trade secrets of Corporation,
including personnel information, secret know-how, customer lists, programs, or
other technical data. Shareholder acknowledges and agrees that any information
or data it has acquired on any of these matters or items was received in
confidence and as a fiduciary of Corporation.
18
37. Buyer acknowledges that Selling Parties have advised Buyer of
Corporation's employee benefits, including the medical insurance, annual
vacations, and annual discretionary bonuses. Buyer understands that
discontinuing any of these employment benefits might have a detrimental effect
on employment relationships and on the business being acquired.
38. Buyer will indemnify and hold harmless Shareholders against, and in
respect of, claims, losses, expenses, costs, obligations, and liabilities they
may incur by reason of Buyer's breach of or failure to perform any of its
warranties, guaranties, commitments, or covenants in this Agreement, or by
reason of any act or omission of Buyer, or any of its successors or assigns,
after the date, that constitutes a breach or default under, or a failure to
perform, any obligation, duty, or liability of any of the Selling Parties under
any loan agreement, lease, contract, order, or other agreement to which it is a
party or by which it is bound at the date, but only to the extent to which Buyer
expressly indemnify and hold harmless the shareholders from these obligations,
duties, and liabilities under this Agreement.
39. Shareholders represent and warrant that they will be responsible for
all broker's commission or finder fees in connection with the transaction
contemplated by this Agreement.
40. Each party will pay all costs and expenses incurred or to be incurred
by it in negotiating and preparing this Agreement and in carrying out the
transactions contemplated by this Agreement.
41. The subject headings, if any, of the paragraphs and subparagraphs of
this Agreement are included for convenience only and will not affect the
construction or interpretation of any of its provisions.
Unless the context clearly requires otherwise:
b. Plural and singular numbers will each be considered to include
the other;
c. The masculine, feminine, and neuter genders will each be
considered to include the others;
d. The words `Shall' `will' `agree' and `covenants' are each
mandatory;
e. The word `May' is permissive;
f. The word `Or' is not exclusive; and
g. The words `Includes' and `including' are not limiting.
42. This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter contained in it and supersedes all prior and
contemporaneous agreements, representations, and understandings of the parties.
No supplement, modification, or amendment of this Agreement will be binding
unless executed in writing by all the parties. No waiver of any of the
provisions of this Agreement will constitute a waiver of any other provision,
whether or not similar, nor will any waiver constitute a continuing waiver. No
waiver will be binding unless executed in writing by the party making the
waiver.
19
43. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be considered an original, but all of which
together will constitute one and the same instrument.
44. Nothing in this Agreement, whether express or implied, is intended to
confer any rights or remedies under or by reason of this Agreement on any
persons other than the parties to it and their respective successors and
assigns. Nothing in this Agreement is intended to relieve or discharge the
obligation or liability of any third persons to any party to this Agreement. No
provision gives any third persons any right of subrogation or action against any
party to this Agreement.
45. Any controversy or claim arising out of, or relating to, this
Agreement, or the making, performance, or interpretation of it, will be settled
by arbitration in the County of Orange, California under the commercial
arbitration rules of the American Arbitration Association then existing, and
judgment on the arbitration award may be entered in any court having
jurisdiction over the subject matter of the controversy.
46. Each party's obligation under this Agreement is unique. If any party
should default in its obligations under this Agreement, both parties acknowledge
that it would be extremely impracticable to measure the resulting damages;
accordingly, the non-defaulting party or parties, in addition to any other
available rights or remedies, may xxx in equity for specific performance, and
the parties each expressly waive the defense that a remedy in damages will be
adequate. Despite any breach or default by any of the parties of any of their
respective representations, warranties, covenants, or agreements under this
Agreement, if the purchase and sale contemplated by it will be consummated at
the closing, each of the parties waives any rights that it may have to rescind
this Agreement or the transaction consummated by it; provided, however, that
this waiver will not affect any other rights or remedies available to the
parties under this Agreement or under the law.
47. If any arbitration or other proceeding is brought for the enforcement
of this Agreement, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties will be entitled to recover
reasonable attorney fees and other costs incurred in that action or proceeding,
in addition to any other relief to which it or they may be entitled.
48. Subject to the provisions of paragraph 29, relating to the time of
closing of this transaction, any party may on the closing date or earlier
terminate this Agreement, without liability to any other:
a. If any bona fide action or proceeding will be pending against any
party on the closing date that could result in an unfavorable judgment, decree,
or order that would prevent or make unlawful the performance of this Agreement;
or if any agency of the federal or of any state government has objected at or
before the closing date to this acquisition or to any other action required by
or in connection with this Agreement;
20
b. If the legality and sufficiency of all steps taken and to be
taken by the parties and their shareholders in carrying out this Agreement has
not been approved by counsel as required by this Agreement. .
49. If either Buyer or Selling Parties materially default in the due and
timely performance of any of their warranties or agreements under this
Agreement, the non-defaulting party or parties may on the closing date give
notice of termination of this Agreement, in the manner provided hereafter. The
notice will specify with particularity the default or defaults on which the
notice is based. The termination will be effective five days after the giving of
such notice, unless the specified default or defaults have been cured on or
before this effective date for termination.
50. All representations, warranties, covenants, and agreements of the
parties contained in this Agreement, or in any instrument, certificate, opinion,
or other writing provided for in it, will survive the closing for the period
time provided for in paragraph 51.
51. There are no representations or warranties made by any party except as
are specifically set forth in this Agreement, or in an instrument, certificate,
opinion, or other writing provided for in this Agreement. All statements
contained in any of these instruments, certificates, opinions, or other writings
will be considered to be representations and warranties under this Agreement.
The representations, warranties, and indemnities made by the parties in this
Agreement or in instruments, certificates, opinions, or other writings provided
for in the agreement to be performed or complied with by the respective parties
under it before the closing date, will be continuing and will survive the
closing date, but will expire on the second anniversary date following the
closing date, unless a specific claim in writing with respect to these matters
has been made, or an action at law or in equity has been commenced or filed,
before that date. Nothing in this paragraph will affect the obligations and
indemnities of the parties with respect to covenants and agreements contained in
this Agreement that are permitted to be performed, in whole or in part, after
the closing date.
All notices, requests, demands, and other communications under this
Agreement must be in writing and will be considered to have been duly given on
the date of service if served personally on the party to whom notice is to be
given, or on the second day after mailing if mailed to the party to whom notice
is to be given, by first class mail, registered or certified, postage prepaid,
and properly addressed as follows:
To Selling Parties Xxxxxx. C. Day, 0000 Xxxxxxxx Xxxxx,
Xxxxxxxxx, Xx 00000
To Buyer at: Digital Learning Institute, Inc..
Attention President
00000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
With a copy to:
Jinnah & Jinnah
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
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Any party may change its address for purposes of this paragraph by giving
the other parties written notice of the new address in the manner set forth
above.
This Agreement will be construed in accordance with, and governed by, the
laws of the State of California as applied to contracts that are executed and
performed entirely in California.
If any provision of this Agreement is held invalid or unenforceable by any
court of final jurisdiction, it is the intent of the parties that all other
provisions of this Agreement be construed to remain fully valid, enforceable,
and binding on the parties.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on
the day and year first above written.
Approved as to form:
Digital Learning Institute, Inc
A Delaware corporation
---------------------------------------
Xxxxxxxxx Xxxxxx, President
---------------------------------
Attorney for Buyer
Software Education of America, Inc.
Approved as to form A California Corporation
---------------------------------------
--------------------------------- Xxxxxx X. Day, President
Attorney for Selling Parties
---------------------------------------
Xxxxxx X. Day, Shareholder
---------------------------------------
Xxxx Xxx, Shareholder
22
SCHEDULE OF EXHIBITS
EXHIBIT A: EXCEPTIONS TO SELLING PARTIES WARRANTIES
EXHIBIT B.1: SEA BALANCE SHEETS AS OF JUNE 30, 2003, JUNE 30, 2002, JUNE
30, 2001, AND JUNE 30 , 2000
EXHIBIT B.2: UNAUDITED FINANCIAL STATEMENTS OF SEA AS OF DECEMBER 31, 2003
EXHIBIT B.3: SCHEDULE OF DEBTS, LIABILITIES AND OBLIGATIONS
EXHIBIT B.4: SCHEDULE OF INSURANCE POLICIES
EXHIBIT B.5: SCHEDULE OF IDT OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS
EXHIBIT B.6: SCHEDULE OF EMPLOYMENT CONTRACTS; COLLECTIVE BARGAINING
AGREEMENTS, AND OTHER EMPLOYEE AGREEMENTS
EXHIBIT B.7: EMPLOYMENT AGREEMENTS FOR XXXXXX X. DAY
EXHIBIT B. 8: LIST OF CREDIT CARD DEBT
EXHIBIT C.1: LEASE TO REAL PROPERTY
EXHIBIT C.2: LIST OF LEASED PERSONAL PROPERTY
EXHIBIT D.1: SCHEDULE OF TRADE NAMES, TRADEMARKS, SERVICE MARKS, AND
COPYRIGHTS
EXHIBIT D.2: SCHEDULE OF PATENTS AND APPLICATIONS
EXHIBIT D.3: SCHEDULE OF CLAIMS RE PATENTS [NONE]
EXHIBIT D.4: SCHEDULE OF LICENSES FOR PATENTS [NONE]
EXHIBIT E.1: SCHEDULE OF TRADE SECRETS
EXHIBIT F.1: PRESENTLY ENROLLED STUDENT LIST
EXHIBIT F.2: SHAREHOLDER'S RELEASE OF CORPORATION
EXHIBIT G.1: SCHEDULE OF LITIGATION AND OTHER CLAIMS
EXHIBIT H: SCHEDULE OF CONTRACTS TO BE ASSIGNED AND ASSUMED
23
