AGREEMENT OF PURCHASE AND SALE OF STOCK
BY AND AMONG
MICROTEST, INC.
LOGICRAFT INFORMATION SYSTEMS, INC.
INFORMATION HANDLING SERVICES GROUP, INC.
AND
▇▇▇▇▇▇▇ ▇▇▇▇, AS ATTORNEY-IN-FACT FOR
CLASS B SHAREHOLDERS OF
LOGICRAFT INFORMATION SYSTEMS, INC.
Dated December 17, 1996
AGREEMENT OF PURCHASE AND SALE OF STOCK
ARTICLE 1 PURCHASE AND SALE OF STOCK..............................................................................1
1.1 Purchase and Sale of Shares.....................................................................1
1.2 Purchase Price..................................................................................1
1.3 Guaranty of Certain Accounts Receivable.........................................................1
1.4 ▇▇▇▇ as Attorney-in-Fact........................................................................2
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF MICROTEST.............................................................2
2.1 Organization and Qualification..................................................................2
2.2 Authority Relative to this Agreement............................................................2
2.3 Brokers' Fees...................................................................................3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF LOGICRAFT.............................................................3
3.1 Organization and Qualification..................................................................3
3.2 Authority Relative to this Agreement............................................................3
3.3 Capitalization..................................................................................4
3.4 Financial Statements............................................................................4
3.5 Subsidiaries....................................................................................4
3.6 Absence of Undisclosed Liabilities..............................................................5
3.7 No Material Adverse Changes.....................................................................5
3.8 Absence of Certain Developments.................................................................5
3.9 Title to Properties.............................................................................7
3.10 Environmental Matters...........................................................................8
3.11 Accounts Receivable.............................................................................9
3.12 Tax Matters.....................................................................................9
3.13 Contracts and Commitments......................................................................10
3.14 Restrictions on Business Activities............................................................11
3.15 Intellectual Property..........................................................................11
3.16 Litigation.....................................................................................13
3.17 Broker's Fees..................................................................................13
3.18 Employment.....................................................................................13
3.19 Employee Benefit Plans.........................................................................13
3.20 Insurance......................................................................................14
3.21 Affiliate Transactions.........................................................................15
3.22 Compliance with Laws; Permits; Certain Operations..............................................15
3.23 Suppliers......................................................................................15
3.24 Customers......................................................................................15
3.25 Warranties; Indemnities........................................................................15
3.26 Officers and Directors; Bank Accounts..........................................................16
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3.27 Minute Books...................................................................................16
3.28 Disclosure.....................................................................................16
ARTICLE 4 ADDITIONAL REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS ....................................................................................16
4.1 Authority......................................................................................16
4.2 Stock Ownership................................................................................17
ARTICLE 5 COVENANTS NOT TO COMPETE...............................................................................17
5.1 IHS Covenant Not to Compete....................................................................17
5.2 ▇▇▇▇ Covenant Not to Compete...................................................................18
5.3 Reasonableness of Scope; Remedies..............................................................19
5.4 Extension During Breach........................................................................19
ARTICLE 6 ADDITIONAL AGREEMENTS..................................................................................19
6.1 Pay Off of Intercompany Debt...................................................................19
6.2 Audited Financial Statements...................................................................19
6.3 H+H Buy Out....................................................................................19
6.4 Thomasmeyer Severance..........................................................................19
6.5 Expenses.......................................................................................20
6.6 Additional Agreements..........................................................................20
6.7 Employee Benefits..............................................................................20
ARTICLE 7 DELIVERIES AT CLOSING..................................................................................21
7.1 Deliveries by Microtest........................................................................21
7.2 Deliveries of Logicraft and the Shareholders...................................................21
ARTICLE 8 INDEMNITIES............................................................................................22
8.1 Survival of Representations and Warranties....................................................22
8.2 The Shareholders' Agreement to Indemnify.......................................................23
8.3 Microtest's Agreement to Indemnify.............................................................23
8.4 Notice of Claim................................................................................23
8.5 Certain Limitations............................................................................24
8.6 Securityholder Agent of the Shareholders; Power of Attorney....................................24
ARTICLE 9 GENERAL PROVISIONS.....................................................................................25
9.1 Notices........................................................................................25
9.2 Interpretation.................................................................................26
9.3 Amendment......................................................................................26
9.4 Severability; Reformation......................................................................26
9.5 Attorneys' Fees................................................................................26
9.6 Miscellaneous..................................................................................27
9.7 Best Knowledge of Logicraft....................................................................27
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INDEX OF SCHEDULES
Schedule 1.2 Payments to Shareholders
Schedule 3.1 Qualification to do Business
Schedule 3.2 Restriction on Logicraft's Authority
Schedule 3.3 Shareholders
Schedule 3.4 Deviations from GAAP
Schedule 3.5 Logicraft Subsidiaries
Schedule 3.6 Undisclosed Liabilities
Schedule 3.7 No Material Adverse Changes - Logicraft
Schedule 3.8 Certain Developments
Schedule 3.9 Liens, Leased Real Property, Equipment Leases and Violations
Schedule 3.10 Environmental Matters
Schedule 3.11 Accounts Receivable
Schedule 3.12 Inventory
Schedule 3.13 Tax Returns
Schedule 3.14 Contracts and Commitments
Schedule 3.15 Restrictions on Business Activities
Schedule 3.16 Intellectual Property Rights, Logicraft Licenses and Third-Party Licenses
Schedule 3.17 Litigation
Schedule 3.19 Employment
Schedule 3.20 Employee Benefit Plans
Schedule 3.21 Insurance
Schedule 3.22 Affiliate Transactions
Schedule 3.23 Claims and Permits
Schedule 3.24 Suppliers
Schedule 3.25 Customers
Schedule 3.26 Warranties and Indemnities
Schedule 3.27 Officers and Directors and Bank Accounts
Schedule 6.1 Intercompany Debt
Schedule 6.7 Participants in TBG Retirement Plan
Schedule 7.2(k) Forms UCC-1 to be Terminated
Schedule 8.2 Scheduled Contingencies
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AGREEMENT OF PURCHASE AND SALE OF STOCK
---------------------------------------
This AGREEMENT OF PURCHASE AND SALE OF STOCK (the "Agreement") is made
as of December 17, 1996 by and among MICROTEST, INC., a Delaware corporation
("Microtest"), LOGICRAFT INFORMATION SYSTEMS, INC., a Delaware corporation
("Logicraft"), INFORMATION HANDLING SERVICES, INC., a Delaware corporation
("IHS") and ▇▇▇▇▇▇▇ ▇▇▇▇ ("▇▇▇▇") as attorney-in-fact for the Class B
Shareholders of Logicraft identified on Schedule 1.2 hereof (collectively, the
"Class B Shareholders" and together with IHS, the "Shareholders").
RECITALS
A. The Shareholders are the owners of an aggregate of 10,000,000 shares
of common stock, $.0001 par value per share, of Logicraft with IHS owning
6,900,000 shares of Class A Common Stock and the Class B Shareholders owning
3,100,000 shares of Class B Common Stock (collectively "Logicraft Common
Stock").
B. Microtest desires to purchase from the Shareholders and the
Shareholders desire to sell to Microtest the Logicraft Common Stock on the terms
and conditions set forth herein.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF STOCK
1.1 Purchase and Sale of Shares. Subject to the terms and conditions
set forth herein, the Shareholders hereby sell, transfer, convey, assign, and
deliver the Logicraft Common Stock to Microtest and Microtest hereby acquires,
purchases, and accepts the Logicraft Common Stock from the Shareholders.
1.2 Purchase Price. The total purchase price for the Logicraft Common
Stock is $12,517,280 (the "Purchase Price"), receipt of which is hereby
acknowledged by the Shareholders. Schedule 1.2 sets forth a list of the Class B
Shareholders and the respective amounts paid to IHS and to ▇▇▇▇ as
attorney-in-fact for the Class B Shareholders.
1.3 Guaranty of Certain Accounts Receivable. The Shareholders hereby
guaranty the collectability of all accounts receivable of Logicraft as of the
date hereof that (i) are subject to product returns by Logicraft's customers
("Return Receivables") or (ii) have been referred for or are currently in
collection ("Collection Receivables"); provided, however, that the Shareholders'
maximum liability with respect to such guaranty of the Return Receivables and
Collection Receivables shall be $105,000 in the aggregate and $20,000 in the
aggregate, respectively. Subject to the foregoing limitations, the Shareholders
shall pay to Microtest an amount equal to all Return Receivables and Collection
Receivables not collected within one hundred and twenty (120) days
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following the date hereof. Microtest shall assign to the Shareholders all
accounts receivable upon which any such payment is made and the Shareholders may
collect for their own account all such assigned accounts receivable; provided,
however, that the Shareholders' collection efforts in respect of such assigned
accounts receivable shall comply with all applicable federal, state and local
laws, rules and regulations and shall not interfere with or adversely affect any
business relationships of Logicraft. Microtest shall forward to the Shareholders
any amounts that it receives on Returned Receivables or Collection Receivables
after they have been assigned to the Shareholders.
1.4 ▇▇▇▇ as Attorney-in-Fact. ▇▇▇▇ hereby represents and warrants to
Microtest that he has been duly authorized and appointed to act as
attorney-in-fact for and on behalf of the Class B Shareholders and has full and
complete power and authority to enter into this Agreement on behalf of the Class
B Shareholders and to carry out on their behalf their respective obligations
hereunder, including without limitation the obligations under Article 8.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF MICROTEST
Microtest hereby represents and warrants to the Shareholders as of the
date hereof each of the following:
2.1 Organization and Qualification. Microtest is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite corporate power and authority to own and operate
its properties and to carry on its business as now conducted in every
jurisdiction where the failure to do so would have a material adverse effect on
its business, properties or ability to conduct the business currently conducted
by it.
2.2 Authority Relative to this Agreement. Microtest has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by Microtest
and the consummation by Microtest of the transactions contemplated hereby have
been duly authorized by Microtest, and no other corporate proceedings on the
part of Microtest are necessary to authorize this Agreement and such
transactions. This Agreement has been duly executed and delivered by Microtest
and constitutes a valid and binding obligation of Microtest, enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization or other similar laws relating to the
enforcement of creditors' rights generally and by general principles of equity.
Microtest is not subject to, or obligated under, any provision of (a) its
Certificate of Incorporation or Bylaws, (b) any material agreement, arrangement
or understanding, (c) any material license, franchise or permit or (d) any law,
regulation, order, judgment or decree, which would be breached, or violated, or
in respect of which a right of termination or acceleration would arise or any
encumbrance on any of its or any of its subsidiaries' material assets would be
created, by its execution, delivery and performance of this Agreement and the
consummation by it of the transactions contemplated herein. Except for such
filings to be made pursuant to federal or state securities laws, no
authorization,
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consent or approval of, or filing with, any public body, court or authority is
necessary on the part of Microtest for the consummation by Microtest of the
transactions contemplated by this Agreement.
2.3 Brokers' Fees. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of Microtest.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF LOGICRAFT
Logicraft hereby represents and warrants to Microtest as of the date
hereof each of the following:
3.1 Organization and Qualification. Logicraft is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite corporate power and authority to own and operate
its properties and to carry on its business as now conducted. The copies of
Logicraft's Certificate of Incorporation and Bylaws which have been furnished by
Logicraft to Microtest prior to the date of this Agreement are correct and
complete and reflect all amendments made thereto. Logicraft is duly qualified to
do business in every jurisdiction where the failure to be so qualified would
have a material adverse effect on its business, properties or ability to conduct
the business currently conducted by it. Schedule 3.1 lists each jurisdiction in
which Logicraft is qualified to do business.
3.2 Authority Relative to this Agreement. Logicraft has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by Logicraft
and the consummation by Logicraft of the transactions contemplated hereby have
been duly authorized by the Board of Directors of Logicraft and have been duly
approved by or on behalf of all of the shareholders of Logicraft, and no other
corporate proceedings on the part of Logicraft are necessary to authorize this
Agreement and such transactions. This Agreement has been duly executed and
delivered by Logicraft and constitutes a valid and binding obligation of
Logicraft, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws relating to the enforcement of creditors' rights generally
and by general principles of equity. Except as set forth in Schedule 3.2 hereto,
Logicraft is not subject to, or obligated under, any provision of (a) its
Certificate of Incorporation or Bylaws, (b) any material agreement, arrangement
or understanding, (c) any material license, franchise or permit or (d) any law,
regulation, order, judgment or decree, which would be breached or violated, or
in respect of which a right of termination or acceleration would arise or any
encumbrance on any of its assets would be created, by its execution, delivery
and performance of this Agreement and the consummation by it of the transactions
contemplated hereby. No authorization, consent or approval of, or filing with,
any public body, court or authority is necessary on the part of Logicraft for
the consummation by Logicraft of the transactions contemplated by this
Agreement.
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3.3 Capitalization. The authorized equity capitalization of Logicraft
consists of 10,000,000 shares of Logicraft Common Stock, comprised of 6,900,000
shares of Class A Common Stock and 3,100,000 shares of Class B Common Stock. As
of the date hereof, 10,000,000 shares of Logicraft Common Stock are issued and
outstanding, all of which shares are validly issued, fully paid and
nonassessable. All of the issued and outstanding shares of Logicraft Common
Stock are owned by the Shareholders. Schedule 3.3 lists each shareholder of
Logicraft and the number and class of shares of Logicraft Common Stock owned by
each Shareholder. There are no options, warrants, conversion privileges or other
rights, agreements, arrangements or commitments obligating Logicraft to issue or
sell any shares of capital stock of Logicraft or securities or obligations of
any kind convertible into or exchangeable for any shares of capital stock of
Logicraft or of any other corporation, nor are there any stock appreciation,
phantom stock or similar rights outstanding based upon the book value or any
other attribute of Logicraft. No holders of outstanding shares of Logicraft
Common Stock are entitled to any preemptive or other similar rights. Upon
consummation of the transactions contemplated herein, Microtest will own
directly the entire equity interest in Logicraft, and there will be no options,
warrants, conversion privileges or other rights, agreements, arrangements or
commitments obligating Logicraft to issue or sell any shares of capital stock of
Logicraft or any other corporation.
3.4 Financial Statements. Except as set forth below and on Schedule
3.4, the unaudited financial statements of Logicraft for and as of the fiscal
years ended November 30, 1996 and 1995 (the "Unaudited Financial Statements")
have been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved and
fairly present the financial position of Logicraft as of the dates thereof and
the results of its operations and cash flows for the periods then ended.
Microtest agrees that it has been made aware that a substantial portion of the
inventory of Logicraft is not realizable and that Logicraft's accounting for
deferred maintenance revenues was not in accordance with GAAP. Anything in this
Agreement to the contrary notwithstanding, Logicraft makes no representations or
warranties with respect to inventory or to the accounting for deferred
maintenance revenues.
3.5 Subsidiaries. Except as set forth in Schedule 3.5 hereto, Logicraft
does not have and has never had any Subsidiaries and does not otherwise own and
has never otherwise owned any stock, partnership interest, joint venture
interest, or any other security issued by or equity interest in any other
corporation, organization or entity. Each of the Subsidiaries listed on Schedule
3.5 is duly organized, validly existing and in good standing under the laws the
jurisdiction in which it was incorporated, and has the requisite corporate power
and authority to own and operate its properties and to carry on its business as
presently conducted. Each of the Subsidiaries is duly qualified to do business
in and is in good standing in every jurisdiction where the failure to be so
qualified would have a material adverse effect on Logicraft. For purposes of
this Agreement, the term "Subsidiary" means any corporation of which securities
having a majority of the ordinary voting power in electing directors are owned
by Logicraft directly or through another Subsidiary.
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3.6 Absence of Undisclosed Liabilities. Logicraft does not have any
obligations or liabilities (whether accrued, absolute, contingent, liquidated,
unliquidated or otherwise, whether due or to become due and regardless of when
asserted), except (a) obligations under contracts or commitments described in
Schedule 3.9, 3.14 or 3.16 hereto, or under contracts and commitments which are
not required to be disclosed thereunder (but excluding any liabilities for
breaches thereof which shall be set forth on Schedule 3.16 hereto), (b)
liabilities reflected on the balance sheet of Logicraft as of November 30, 1996
(the "November 30, 1996 Balance Sheet") included in the Unaudited Financial
Statements, or (c) liabilities which have arisen in the ordinary course of
business after the date of the November 30, 1996 Balance Sheet (none of which is
an uninsured liability for breach of contract, breach of warranty, tort,
infringement, claim or lawsuit), (d) liabilities disclosed on Schedule 3.6, or
(e) liabilities disclosed in this Agreement or on any Schedule to this
Agreement.
3.7 No Material Adverse Changes. Except as set forth in Schedule 3.7
hereto, since November 30, 1996, there has not been any material adverse change
in the assets, financial condition, operating results, customer, employee,
supplier, dealer or value-added reseller relations, or business condition of
Logicraft.
3.8 Absence of Certain Developments. Except as set forth in Schedule
3.8 hereto or except as contemplated in this Agreement, since November 30, 1996,
Logicraft has not:
(a) changed its accounting methods or practices (including any
change in depreciation or amortization policies or rates);
(b) redeemed or purchased, directly or indirectly, any shares
of its capital stock, or declared or paid any dividends or
distributions with respect to any shares of its capital stock;
(c) issued or sold any equity securities of it, securities
convertible into or exchangeable for equity securities of it, warrants,
options or other rights to acquire equity securities of it, or bonds or
other securities of it;
(d) borrowed any amount under existing lines of credit or
otherwise or incurred or become subject to any indebtedness, except as
reasonably necessary for the ordinary operation of Logicraft's business
and in a manner and in amounts that are in keeping with the historical
practice of Logicraft;
(e) discharged or satisfied any lien or encumbrance or paid
any liability, other than current liabilities (or current installments
due on intermediate or long-term liabilities) paid or satisfied in the
ordinary course of business;
5
(f) mortgaged, pledged or subjected to any lien, charge or
other encumbrance, any of the assets of Logicraft with a fair market
value in excess of $5,000, except liens for current property taxes not
yet due and payable;
(g) sold, assigned or transferred (including without
limitation transfers to any employees, shareholders or affiliates of
Logicraft) any tangible assets, except in the ordinary course of
business, or canceled any debts or claims;
(h) revalued any of its assets;
(i) sold, assigned or transferred (including without
limitation transfers to any employees, shareholders or affiliates of
Logicraft) any patents, trademarks, trade names, copyrights, trade
secrets or other intangible assets, except in the ordinary course of
business, or disclosed any proprietary or confidential information to
any person other than Microtest;
(j) changed the pricing or royalties set or charged by
Logicraft to its customers or licensees or in the pricing or royalties
set or charged by persons who have licensed Intellectual Property (as
defined in Section 3.16) to Logicraft.
(k) suffered any extraordinary loss or canceled, waived or
compromised any right, claim or debt with a value in excess of $25,000,
whether or not in the ordinary course of business or consistent with
past practice, including any write-off or compromise of any account
receivable;
(l) taken any other action or entered into any other
transaction other than in the ordinary course of business and in
accordance with past custom and practice, or entered into any
transaction with any Insider (as defined in Section 3.22);
(m) suffered any theft, damage, destruction or loss of or to
any material property or properties owned or used by it, whether or not
covered by insurance;
(n) increased the annualized level of compensation of or
granted any extraordinary bonuses, benefits or other forms of direct or
indirect compensation to any employee, officer, director or consultant,
or increased, terminated, or amended or otherwise modified any plans
for the benefit of employees, except in the ordinary course of business
and consistent with historical adjustments to such compensation and
benefits;
(o) made any capital expenditures or commitments therefor that
aggregate in excess of $25,000;
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(p) engaged or agreed to engage in any extraordinary
transactions or distributions;
(q) entered into any contract, written or oral, that involves
consideration or performance by Logicraft of a value exceeding $25,000
or a term exceeding six months, other than in the ordinary course of
business;
(r) made any loans or advances to, or guarantees for the
benefit of, any persons; or
(s) made charitable contributions or pledges which in the
aggregate exceed $1,000.
3.9 Title to Properties.
(a) Logicraft owns good and marketable title to the properties
and assets reflected on the November 30, 1996 Balance Sheet or acquired
since the date thereof, free and clear of all liens and encumbrances,
except for (A) liens for current property taxes not yet due and
payable, (B) mechanics', carriers', landlords', vendors' or similar
liens arising in the ordinary course of business and securing amounts
which are not delinquent, (C) liens set forth under the caption "Liens"
in Schedule 3.9 hereto, (D) the properties subject to the leases set
forth under the caption "Leases" in Schedule 3.9 hereto, and (E) assets
disposed of since November 30, 1996 in the ordinary course of business.
(b) (i) Logicraft does not own any real estate; (ii) the
properties subject to the leases described under the caption "Leases"
in Schedule 3.9 hereto constitute all of the real estate used or
occupied by Logicraft (the "Real Estate") and (ii) the Real Estate has
access, sufficient for the conduct of Logicraft's business as currently
conducted, to public roads and to all utilities used in the operations
of Logicraft.
(c) The leases described under the caption "Leases" in
Schedule 3.9 are in full force and effect, and Logicraft has a valid
and existing leasehold interest under each such lease for the term set
forth therein. Logicraft has made available to Microtest complete and
accurate copies of each of the leases described under such caption and
none of such leases has been modified in any respect, except to the
extent that such modifications are disclosed by the copies made
available to Microtest. Logicraft is not in default, and no event has
occurred which with notice or the passage of time would constitute a
default, under any of such leases, nor to the best knowledge of
Logicraft is any other party to any of such leases in default.
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(d) All of the buildings (to the extent Logicraft is
responsible for the condition thereof), machinery, equipment and other
tangible assets necessary for the conduct of Logicraft's business as
currently conducted are in good condition and repair, ordinary wear and
tear excepted, and are usable in the ordinary course of business.
Logicraft owns, or leases under valid leases, all buildings, machinery,
equipment and other tangible assets necessary for the conduct of its
business as currently conducted. Logicraft has made available to
Microtest complete and accurate copies of all equipment leases and such
leases are described under the caption "Equipment Leases" in Schedule
3.9. None of such equipment leases has been modified in any respect,
except to the extent that such modifications are disclosed by the
copies made available to Microtest. Logicraft is not in default, and no
event has occurred which with notice or the passage of time would
constitute a default, under any of such equipment leases, nor to the
best knowledge of Logicraft is any other party to any of such equipment
leases in default.
(e) Logicraft is not in violation of any applicable zoning
ordinance or other law, regulation or requirement relating to the
operation of any properties used in the operation of its business,
including without limitation applicable environmental protection and
occupational health and safety laws and regulations, and, except as set
forth under the caption "Violations" in Schedule 3.9, Logicraft has not
received any notice of any such violation, or of the existence of any
condemnation proceeding with respect to any properties owned or leased
by Logicraft. Logicraft has not received, nor is aware of, any
notification, restrictions or stipulations from any federal, state,
county, municipality or other governmental authority requiring any work
to be done on the Real Estate or threatening the use of the Real
Estate.
3.10 Environmental Matters. Except as set forth in Schedule 3.10
hereto, Logicraft (i) has obtained all applicable permits, licenses and other
authorizations (each of which are listed under the caption "Authorizations" on
Schedule 3.10 hereto) which are required under federal, state or local laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
by Logicraft (or its agents); (ii) is in compliance with all terms and
conditions of any required permits, licenses and authorizations, and with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in such laws or in
any regulation, code, plan, order, decree, judgment, notice or demand letter
issued, entered, promulgated or approved thereunder; (iii) is not aware of nor
has it received notice of any event, condition, circumstance, activity,
practice, incident, action or plan which is reasonably likely to interfere with
or prevent continued compliance or which would give rise to any common law or
statutory liability, or otherwise form the basis of any claim, action, suit or
proceeding, based on or
8
resulting from Logicraft's (or any of its agent's) manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or the
emission, discharge, or release into the environment, of any pollutant,
contaminant, or hazardous or toxic material or waste; and (iv) has taken all
actions necessary under applicable requirements of such federal, state or local
laws, rules or regulations to register any products or materials required to be
registered by Logicraft (or any of its agents) thereunder.
3.11 Accounts Receivable. Logicraft's notes and accounts receivable
recorded on the November 30, 1996 Balance Sheet and those arising since the date
thereof have arisen in bona fide transactions in the ordinary course of
Logicraft's business. Anything in this Agreement notwithstanding, except for the
guaranty of certain accounts receivable up to a maximum of $125,000 in the
aggregate as set forth in Section 1.3 Logicraft makes no representations or
warranties with respect to the accounts receivable of Logicraft.
3.12 Tax Matters. Except as set forth in Schedule 3.12 hereto,
Logicraft has filed all federal, foreign, state, county and local income,
excise, property, sales and other returns, statements, forms and reports for
Taxes (as hereinafter defined) ("Returns") which are required to be filed by it,
and all such Returns are true and correct; all Taxes due and payable (whether or
not shown on any Return) by Logicraft have been paid; Logicraft's provisions for
Taxes on the balance sheets included in the Unaudited Financial Statements are
sufficient for all accrued and unpaid Taxes as of the dates of such balance
sheets; Logicraft has paid all Taxes due and payable by it or which it is
obligated to withhold from amounts owing to any employee, creditor, or third
party; Logicraft has not waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to an assessment or deficiency;
the assessment of any additional Taxes relating to Logicraft for periods for
which returns have been filed is not expected; and Logicraft has not received
notice of any unresolved questions or claims concerning the liability of
Logicraft for Taxes. "Taxes" means all taxes, assessments, charges, duties,
fees, levies or other governmental charges, including, without limitation, all
federal, state, local, foreign and other income, franchise, profits, capital
gains, capital stock, transfer, sales, use, occupation, property, excise,
severance, windfall profits, stamp, license, payroll, withholding, and other
taxes, assessments, charges, duties, fees, levies or other governmental charges
of any kind whatsoever (whether payable directly or by withholding and whether
or not requiring the filing of a Return), all estimated taxes, deficiency
assessments, additions to tax, penalties and interest and shall include any
liability for such amounts as a result either of being a member of a combined,
consolidated, unitary or affiliated group or of a contractual obligation to
indemnify any person or other entity. Logicraft has not filed any consent
agreement under or made an election under ss.341(f) of the Internal Revenue Code
of 1986, as amended (the "Code") or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a "subsection (f) asset" (as defined in Section
341(f)(4) of the Code) owned by Logicraft. Logicraft (i) is not a member of an
affiliated group filing a consolidated federal income tax return (except with
respect to which it is the parent corporation), and (ii) does not have any
liability for Taxes of any person (other than Logicraft) under Treasury
Regulation ss. 1.1502-6 (or any similar provision of state, local or foreign
law) as a transferee or successor by contract or otherwise. Logicraft is not a
party to a tax sharing or
9
allocation agreement nor does Logicraft owe nor is Logicraft due any amount
under any such agreement. Logicraft is not obligated to make any payments and is
not a party to any agreement that under certain circumstances could obligate it
to make any payments that, either in whole or in part, would be nondeductible
under Sections 280G or 162 of the Code. Logicraft has not been a "United States
real property holding corporation" (within the meaning of Section 897(c)(2) of
the Code) at any time within the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. For purposes of this Section 3.13, all references
to "Logicraft" shall mean and include Logicraft, the affiliated group within the
meaning of Section 1504(a)(1) of the Code with respect to which Logicraft was a
member and all other members of such affiliated group that filed a consolidated
Return.
3.13 Contracts and Commitments.
(a) Except as set forth in Schedule 3.13 hereto, under the
captions "Leases" and "Equipment Leases" in Schedule 3.9 hereto, or
under the captions "Third-Party Licenses" and "Third-Party Licenses" in
Schedule 3.15 hereto, Logicraft is not a party to any: (i) collective
bargaining agreement or contract with any labor union; (ii) bonus,
pension, profit sharing, retirement, or other form of deferred
compensation plan; (iii) medical, health or hospitalization insurance
or similar plan or practice, whether formal or informal; (iv) contract
for the employment of any officer, individual employee, or other person
on a full-time or consulting basis or relative to severance pay or
change-in-control benefits for any such person; (v) agreement or
indenture relating to the borrowing of money in excess of $50,000 or to
mortgaging, pledging or otherwise placing a lien on any of the assets
of Logicraft; (vi) guaranty of any obligation for borrowed money or
otherwise, other than endorsements made for collection; (vii) lease or
agreement under which it is lessor of, or permits any third party to
hold or operate, any property, real or personal; (viii) contract or
group of related contracts with the same party for the purchase by
Logicraft of products or services, under which the undelivered balance
of such products and services has a purchase price in excess of
$50,000; (ix) contract or group of related contracts with the same
party for the sale by Logicraft of products or services under which the
undelivered balance of such products or services has a sales price in
excess of $50,000; (x) contract relating to the distribution of
Logicraft's products; (xi) franchise agreement; or (xii) other
agreement material to Logicraft's business or not entered into in the
ordinary course of business.
(b) Prior to the date of this Agreement, Logicraft has made
available to Microtest a true and correct copy of each written contract
or commitment, and a written description of each oral contract or
commitment, referred to in Schedule 3.14, together with all amendments,
waivers or other changes thereto.
10
(c) Except as specifically disclosed in Schedule 3.13 hereto,
(i) since the date of the November 30, 1996 Balance Sheet, no customer
or supplier has indicated that it will stop or decrease the rate of
business done with Logicraft, except for changes in the ordinary course
of Logicraft's business; (ii) Logicraft has performed the obligations
required to be performed by it in connection with the contracts or
commitments and Logicraft has not been advised of or received any claim
of default under any contract or commitment required to be disclosed
under such caption; (iii) Logicraft has no present expectation or
intention of not fully performing any obligation pursuant to any
contract or commitment; and (iv) Logicraft has no knowledge of any
breach by any other party to any contract or commitment.
3.14 Restrictions on Business Activities. Except as set forth on
Schedule 3.14, there is no agreement (noncompete or otherwise), commitment,
judgment, injunction, order or decree to which Logicraft is a party or otherwise
binding on Logicraft which has or reasonably could be expected to have the
effect of prohibiting or restricting any business practice of Logicraft or
Microtest, any acquisition of property (tangible or intangible) by Logicraft or
Microtest or the conduct of business by Logicraft or Microtest, and Logicraft
has not entered into any agreement under which Logicraft is, or Microtest will
be, restricted from selling, licensing or otherwise distributing any of their
products to any class of customers, in any geographic area, during any period of
time or in any segment of the market.
3.15 Intellectual Property.
(a) Logicraft owns, or is licensed or otherwise possesses
legally enforceable rights to use and, with respect to those its owns,
enforce, all patents, trademarks, trade names, service marks,
copyrights, and all applications therefor, maskworks, net lists,
schematics, technology, know-how, computer software programs or
applications (in both source code and object code form with respect to
those Logicraft owns), trade secrets and tangible or intangible
proprietary information or material that are used in the business of
Logicraft as currently conducted or as proposed to be conducted by
Logicraft ("Intellectual Property Rights").
(b) Schedule 3.15 under the caption "Registered Property
Rights" sets forth a complete list of all patents, registered and
unregistered trademarks (and any applications therefor), registered
copyrights, maskworks, trade names and service marks, and any
applications therefor, owned by Logicraft and included in Intellectual
Property Rights, and specifies, where applicable, the jurisdictions in
which each such Logicraft Intellectual Property Right has been issued
or registered or in which an application for such issuance and
registration has been filed, including the respective registration or
application numbers and the names of all registered owners. Schedule
3.15 under the caption "Third-Party Licenses" sets
11
forth a complete list of all material licenses, sublicenses and other
agreements as to which Logicraft is a party and pursuant to which
Logicraft is authorized to use Intellectual Property Rights of any
third parties (including object code end-user licenses granted to
end-users in the ordinary course of business that permit use of
software products without a right to modify, distribute or sublicense
the same ("End-User Licenses")). Logicraft has furnished Microtest with
a true and correct copy of each such Third-Party License. Schedule 3.15
under the caption "Logicraft Licenses" sets forth a complete list of
all licenses, sublicenses and other agreements as to which Logicraft is
a party and pursuant to which any other person is authorized to use
Intellectual Property Rights of Logicraft (excluding End-User Licenses
in connection with Logicraft products and services, correct copies of
the forms of which have been made available to Microtest). Logicraft is
not in violation of any license, sublicense or agreement described in
under the captions "Logicraft Licenses" and "Third-Party Licenses" in
Schedule 3.15.
(c) The execution and delivery of this Agreement by Logicraft,
and the consummation of the transactions contemplated hereby will
neither cause Logicraft to be in violation or default under any
material license, sublicense or agreement, nor entitle any other party
to any such license, sublicense or agreement to terminate or modify
such license, sublicense or agreement. Except as set forth in Schedule
3.15, Logicraft is the sole and exclusive owner, with all right, title
and interest in and to (free and clear of any liens or encumbrances),
or is a non-exclusive licensee of, the Intellectual Property Rights,
and is not contractually obligated to pay any compensation to any third
party in respect thereof.
(d) No claims with respect to the Intellectual Property Rights
have been asserted or, to the best knowledge of Logicraft, are
threatened by any person nor are there any valid grounds for any bona
fide claims with respect to Intellectual Property Rights owned by
Logicraft or, to the best knowledge of Logicraft, Intellectual Property
Rights licensed to or by Logicraft (i) to the effect that the
manufacture, sale, licensing or use of any of the products of Logicraft
as now manufactured, sold or licensed or used or products of Logicraft
currently in development for manufacture, use, sale or licensing by
Logicraft infringes on any copyright, patent, trade ▇▇▇▇, service ▇▇▇▇,
trade secret or other proprietary right of any third party, (ii)
against the use by Logicraft of any trademarks, service marks, trade
names, trade secrets, copyrights, maskworks, patents, technology,
know-how or computer software programs and applications used in
Logicraft's business as currently conducted, or (iii) challenging the
ownership, validity, effectiveness or enforceability of any
Intellectual Property Rights. All registered trademarks, service marks
and copyrights held by Logicraft are valid and subsisting. To the best
knowledge of Logicraft, there is no material unauthorized use,
infringement or misappropriation of any Intellectual Property Rights by
any third party, including any employee or former employee of
Logicraft. No
12
Intellectual Property Right or product of Logicraft or any of its
subsidiaries is subject to any outstanding decree, order, judgment, or
stipulation restricting in any manner the licensing thereof by
Logicraft.
3.16 Litigation. Except as set forth in Schedule 3.16 hereto, there are
no actions, suits, proceedings, orders or investigations pending or, to the best
knowledge of Logicraft, threatened against Logicraft, at law or in equity, or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign. No
governmental entity has at any time challenged or questioned the legal right of
Logicraft to manufacture, offer or sell any of its products in the present
manner or style thereof.
3.17 Broker's Fees. Except for the fee that the Shareholders may pay to
Bentley Hall ▇▇▇ ▇▇▇▇ International, there are no claims for brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of Logicraft or the Shareholders.
3.18 Employment. Except as set forth on Schedule 3.18, to the best
knowledge of Logicraft, no key executive employee of Logicraft and no group of
Logicraft's other employees has any plans to terminate his, her or its
employment. Logicraft has no material labor relations problems pending.
Logicraft has complied with all laws relating to the employment of labor,
including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other taxes. Except
as set forth on Schedule 3.18, there is no written or oral agreement, contract,
arrangement or understanding that prevents Logicraft from terminating any
employee, with or without cause, without liability or obligation other than
those for salary and vacation accrued through the date of any such termination.
3.19 Employee Benefit Plans.
(a) With respect to all employees and former employees of
Logicraft, except as set forth in Schedule 3.19, Logicraft does not
presently maintain, contribute to or have any liability (including
current or potential multi-employer plan withdrawal liability under
Title IV of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) under any (i) non-qualified deferred compensation or
retirement plan or arrangement which is an "employee pension benefit
plan" as such term is defined in Section 3(2) of ERISA, (ii) defined
contribution retirement plan or arrangement designed to satisfy the
requirements of section 401(a) of the Internal Revenue Code of 1986, as
amended ("Code"), which is an employee pension benefit plan, (iii)
defined benefit pension plan or arrangement designed to satisfy the
requirements of section 401(a) of the Code, which is an employee
pension benefit plan, (iv) "multi-employer plan" as such term is
defined in Section 3(37) of ERISA, (v) unfunded or funded medical,
health or life insurance plan or arrangement for present or future
retirees or present or future terminated employees which is an
"employee welfare benefit plan" as such
13
term is defined in Section 3(1) of ERISA, except as required by section
4980B of the Code or sections 601 through 609 of ERISA, or (vi) any
other employee welfare benefit plan.
(b) With respect to each of the employee benefit plans listed
in Schedule 3.19, neither Logicraft nor any of its directors, officers,
employees or any other "fiduciary", as such term is defined in Section
3(21) of ERISA, has any liability for failure to comply with ERISA or
the Code for any action or failure to act in connection with the
administration or investment of such plans.
(c) With respect to each plan listed in Schedule 3.19: (i)
Logicraft has performed in all material respects all obligations
required to be performed by it under each such plan and each such plan
has been established and maintained in accordance with its terms and in
compliance with all applicable laws, statutes, rules, and regulations,
including but not limited to the Code and ERISA; (ii) there are no
actions, suits or claims pending, or to the best knowledge of Logicraft
threatened (other than routine claims for benefits) against any such
plan; (iii) each such plan can be amended or terminated after the date
hereof in accordance with its terms, without liability to Logicraft or
Microtest; and (iv) there are no inquiries or proceedings pending or to
the best knowledge of Logicraft threatened by the Internal Revenue
Service or the Department of Labor with respect to any such plan.
(d) With respect to the insurance contracts or funding
agreements which implement any of the employee benefit plans listed in
Schedule 3.20, such insurance contracts or funding agreements are fully
insured or the reserves under such contracts are sufficient to pay
claims incurred.
(e) Each plan listed in Schedule 3.20 hereto that is intended
to be qualified under Section 401(a) of the Code has been determined by
the Internal Revenue Service to so qualify and each trust created
thereunder has been determined by the Internal Revenue Service to be
exempt from tax under Section 501(a) of the Code and nothing has
occurred since the date of the most recent determination that would be
reasonably likely to cause any such plan or trust to fail to qualify
under Section 401(a) of the Code.
3.20 Insurance. Schedule 3.20 hereto lists and briefly describes each
insurance policy and fidelity bond maintained by Logicraft with respect to its
properties, assets, employees and officers and directors of Logicraft and sets
forth the date of expiration of each such insurance policy. All of such
insurance policies are in full force and effect and Logicraft is not in default
with respect to its obligations under any of such insurance policies. There is
no claim of Logicraft pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds. Logicraft has no knowledge of any
14
threatened termination of any of such policies. The insurance coverage of
Logicraft is adequate for the conduct of its business as currently conducted.
3.21 Affiliate Transactions. Except as set forth herein or in Schedule
3.21 hereto, no officer, director or, to the best knowledge of Logicraft,
shareholder of Logicraft or any member of the immediate family of any such
officer, director or, to the best knowledge of Logicraft, shareholder, or, to
the best knowledge of Logicraft, any entity in which any of such persons owns
any beneficial interest (other than a publicly-held corporation whose stock is
traded on a national securities exchange or in the over-the-counter market and
less than 1% of the stock of which is beneficially owned by any of such persons)
(collectively "Insiders"), has any agreement with Logicraft or any interest in
any property, real, personal or mixed, tangible or intangible, used in or
pertaining to the business of Logicraft. For purposes of the preceding sentence,
the members of the immediate family of an officer, director or shareholder shall
consist of the spouse, parents, children, siblings, mothers- and fathers-in-law,
sons- and daughters-in-law, and brothers- and sisters-in-law of such officer,
director or shareholder.
3.22 Compliance with Laws; Permits; Certain Operations. Logicraft and
its officers, directors, agents and employees have complied with all applicable
laws and regulations of foreign, federal, state and local governments and all
agencies thereof which affect the business or any owned or leased properties of
Logicraft and to which Logicraft may be subject, and no claims have been filed
against Logicraft alleging a violation of any such law or regulation, except as
set forth under the caption "Claims" in Schedule 3.22 hereto. Without limiting
the generality of the foregoing, Logicraft has not violated, or received a
notice or charge asserting any violation of, the Occupational Safety and Health
Act of 1970, or any other state or federal acts (including rules and regulations
thereunder) regulating or otherwise affecting employee health and safety.
Logicraft has not given or agreed to give any money, gift or similar benefit
(other than incidental gifts of articles of a small value) to any actual or
potential customer, supplier, governmental employee or any other person in a
position to assist or hinder Logicraft in connection with any actual or proposed
transaction. Logicraft holds all permits, licenses, certificates and other
authorizations of foreign, federal, state and local governmental agencies
required for the conduct of its business as currently conducted, a list of which
is set forth under the caption "Permits" in Schedule 3.22 hereto.
3.23 Suppliers. Schedule 3.23 hereto lists the 10 largest suppliers of
Logicraft for the fiscal year ended November 30, 1996, and sets forth opposite
the name of each such supplier the approximate amount of aggregate payments made
to such supplier.
3.24 Customers. Schedule 3.24 hereto lists the 10 largest customers of
Logicraft for the fiscal years ended November 30, 1996 and 1995, and sets forth
opposite the name of each such customer the approximate percentage of net sales
attributable to such customer.
3.25 Warranties; Indemnities. Schedule 3.25 sets forth a summary of
Logicraft's warranties and indemnities relating to products currently sold or
services currently rendered by
15
Logicraft, and no warranty or indemnity has been given by Logicraft with respect
to such products and services which differs therefrom in any material respect.
Products currently sold by Logicraft perform in all material respects in
accordance with the warranties and published specifications for such products.
The value of parts issued by Logicraft in satisfying warranty claims during each
of fiscal 1995 and 1996 did not exceed one percent (1%) of Logicraft's sales in
each of fiscal 1995 or 1996, respectively, nor has the value of such parts so
issued by Logicraft during the 1996 calendar year through the date hereof
exceeded one percent (1%) of Logicraft's sales during that same period.
3.26 Officers and Directors; Bank Accounts. Schedule 3.26 hereto lists
all officers and directors of Logicraft and all of Logicraft's bank accounts
(designating each authorized signer).
3.27 Minute Books. The minute books of Logicraft made available to
counsel for Microtest are the only minute books of Logicraft and contain minutes
of all meetings of directors (or committees thereof) and shareholders or actions
by written consent since the time of incorporation of Logicraft.
3.28 Disclosure. Neither this Agreement nor any of the schedules or
exhibits hereto contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading.
ARTICLE 4
ADDITIONAL REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
Each Shareholder hereby represents and warrants to Microtest as of the
date hereof each of the following:
4.1 Authority. The Shareholder has full and complete power and
authority to enter into this Agreement and to carry out his, her or its
obligations hereunder. This Agreement has been duly executed by or on behalf of
the Shareholder and constitutes a valid and binding obligation of the
Shareholder, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws relating to the enforcement of creditors' rights generally
and by general principles of equity. The Shareholder is not subject to, or
obligated under, any agreement, arrangement or understanding, or any law,
regulation, order, judgment or decree, that would be breached or violated, or in
respect of which a right of termination or acceleration would arise or any
encumbrance on any of the Logicraft Common Stock would be created, by his, her
or its execution, delivery and performance of this Agreement and the
consummation by the Shareholder of the transactions contemplated hereby.
16
No authorization, consent or approval of, or filing with, any public body, court
or authority is necessary on the part of the Shareholders for the consummation
by them, him, her or it of the transactions contemplated by this Agreement.
4.2 Stock Ownership. The Shareholder is the legal and beneficial owner
of the issued and outstanding shares of Logicraft Common Stock listed on
Schedule 3.3, free and clear of all restrictions, liens and encumbrances other
than those imposed hereunder and other than restrictions on transfer under
applicable securities laws and the Shareholders' Agreement dated April 30, 1995
(the "Shareholders' Agreement"). The Shareholders' Agreement shall terminate
upon the consummation of the transactions contemplated by this Agreement.
ARTICLE 5
COVENANTS NOT TO COMPETE
5.1 IHS Covenant Not to Compete. In consideration of the payment of the
Purchase Price and as an inducement to Microtest to enter into this Agreement,
IHS hereby covenants and agrees that it will not for a period of five (5) years
after the date hereof:
(a) Engage, directly or indirectly, for its own benefit in or
for, with or through any other individual, firm, corporation, limited
liability company, partnership or other entity (a "Business"), whether
acting in an individual, corporate, fiduciary or other capacity, own,
manage, operate, control, invest in (except as a 5% or less shareholder
of a public company), loan money to, or participate or assist in the
ownership, management, operation or control of, or act as a consultant
or advisor with respect to Competitive Products or Technologies (as
defined below) to, any Business within the United States of America or
any other country in which Microtest or Logicraft conducts business
during the term hereof, that is engaged in developing or manufacturing
any products or technologies competitive with products or technologies
of Microtest or Logicraft during the term hereof that enable Businesses
to access CD-ROM databases over computer networks ("Competitive
Products or Technologies"); provided, however, that:
(i) IHS has developed and licensed, and in the future
may develop and license, products and technologies that
provide client/server and Internet/Intranet access to CD-ROM
databases published and/or distributed by IHS and internal
data of IHS' customers. IHS shall have the right without
restriction to continue to develop, manufacture, sell, market,
promote, license and distribute such products and technologies
as they may relate to databases published and/or distributed
by IHS and internal data of IHS' customers.
17
(ii) IHS shall not be limited in the application,
use, sale, marketing, promotion, licensing and distribution of
commercially available operating systems, such as, for
example, Windows NT, that incorporate Competitive Products or
Technologies.
(iii) Nothing herein shall be deemed to restrict
customers, suppliers and agents of IHS from developing or
manufacturing Competitive Products or Technologies, provided
that they do so without the assistance or use of any
information of IHS, or any Business that, directly or
indirectly, controls, is controlled by or is under common
control with IHS, with respect to the development or
manufacturing of Competitive Products or Technologies.
(b) Either alone or in conjunction with any other person or
entity, directly or indirectly, go into business with any Company
Employee (as hereinafter defined) or solicit, induce, or recruit any
Company Employee to leave the employ of Microtest or Logicraft. For the
purpose of this Agreement, Company Employee means (a) any employee of
Microtest or Logicraft; or (b) any former employee of Microtest or
Logicraft whose employment with Microtest or Logicraft ceased less than
twelve (12) months before the date of such co-venturing, solicitation,
inducement, or recruitment.
5.2 ▇▇▇▇ Covenant Not to Compete. In consideration of the payment of
the Purchase Price and as an inducement to Microtest to enter into this
Agreement, ▇▇▇▇ hereby covenants and agrees that he will not for a period of two
(2) years after the date hereof:
(a) Engage, directly or indirectly, for his own benefit in or
for, with or through any other Business, whether acting in an
individual, corporate, fiduciary or other capacity, own, manage,
operate, control, advise, invest in (except as a 5% or less shareholder
of a public company), loan money to, or participate or assist in the
ownership, management, operation or control of, or act as a partner,
member, consultant, advisor, creditor, agent, contractor or otherwise
with, or acquiesce in the use of his name by, any Business within the
United States of America or any other country in which Microtest or
Logicraft conducts business during the term hereof, whose principal
business is, or one of whose principal businesses is, developing,
manufacturing, selling, marketing, promoting, licensing or distributing
any Competitive Products or Technologies.
(b) Either alone or in conjunction with any other person or
entity, directly or indirectly, go into business with any Company
Employee or solicit, induce, or recruit any Company Employee to leave
the employ of Microtest or Logicraft.
18
5.3 Reasonableness of Scope; Remedies. IHS and ▇▇▇▇ each agrees and
acknowledges that the restrictive covenants set forth in Sections 5.1 and 5.2,
respectively, are reasonably necessary to protect Microtest's and Logicraft's
legitimate business interests and are valid in duration, geographical territory,
and all other respects. IHS and ▇▇▇▇ each further acknowledges and agrees that a
breach by them of the provisions of Section 5.1 or 5.2, respectively, will cause
Microtest and/or Logicraft irreparable injury and damage that cannot be
reasonably or adequately compensated by damages at law. IHS and ▇▇▇▇ each
expressly agrees that Microtest and/or Logicraft shall be entitled, without
posting any bond, to injunctive or other equitable relief to prevent a
threatened breach, breach or continued breach of any of the provisions of
Section 5.1 or 5.2, as applicable, in addition to any other remedies legally
available to them.
5.4 Extension During Breach. IHS and ▇▇▇▇ each agrees that the duration
of the restrictive covenants set forth in Sections 5.1 and 5.2, respectively,
shall be extended with respect to the breaching party for a period equal to the
duration of any breach of Section 5.1 or 5.2, as applicable.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Pay Off of Intercompany Debt. Schedule 6.1 hereto identifies all
indebtedness owed by Logicraft to IHS (the "Intercompany Debt") in the aggregate
amount of $4,482,720. Immediately following the closing of the transactions
contemplated hereby, Microtest shall pay or cause Logicraft to pay IHS an amount
equal to the Intercompany Debt and IHS shall release all security interests,
liens and other encumbrances securing the Intercompany Debt.
6.2 Audited Financial Statements. The Shareholders shall cooperate with
Deloitte & Touche LLP ("D&T") in its audit of the financial statements of
Logicraft for the fiscal year ended November 30, 1996 (the "Audited Financial
Statements"). Microtest shall bear and be responsible for all accounting fees
and expenses incurred in connection with D&T's audit.
6.3 H+H Buy Out. Microtest shall bear and be responsible for all
expenses incurred in connection with purchasing ▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ five percent
(5%) equity interest and Christian Heimisch's fifteen percent (15%) equity
interest in H+H Zentrum Fur Rechnerkommunikation GmbH.
6.4 Thomasmeyer Severance. Microtest shall pay for severance benefits
afforded to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ("Thomasmeyer") upon termination of his
employment in accordance with Logicraft's standard severance policy (i.e.,
salary and medical, dental and vision benefits for a period of six (6) months).
The Shareholders shall bear and be responsible for all other Losses (as defined
in Section 8.2), other than Losses resulting from agreements or commitments made
by Microtest after the date hereof, incurred in connection with or arising out
of the termination of
19
Thomasmeyer's employment, including, without limitation, any and all Losses
resulting from any and all claims asserted by Thomasmeyer against Logicraft or
IHS.
6.5 Expenses. Except as otherwise provided in Section 6.2, the
Shareholders on one hand and Microtest on the other shall bear his, her or its
own legal and accounting fees and other expenses incurred in connection with
this Agreement and the transactions contemplated hereby.
6.6 Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement.
Subsequent to the date hereof, the Shareholders on one hand and Microtest and
Logicraft on the other shall make available to the other books, records and
other information reasonably necessary in connection with prosecuting or
defending any claims brought by the other party pursuant to Article 8.
6.7 Employee Benefits.
(a) IHS will continue the plans providing medical, dental and
vision coverage to Logicraft employees on the date hereof through
December 31, 1996. Microtest will reimburse IHS for the pro rata
portion of the premiums for such coverages. Microtest will provide
medical, dental and vision coverage to those Logicraft employees
employed by Microtest on January 1, 1997 under applicable Microtest
plans. Coverage for Logicraft employees under all other IHS insurance
plans, including life and ad&d shall cease on the date hereof.
(b) Employees of Logicraft have been eligible to participate
in the TBG Thrift Plan. On the date hereof, IHS shall fully vest the
account balances in the TBG Thrift Plan held on behalf of employees of
Logicraft. No employee or company contribution under the TBG Thrift
Plan may be made after the date hereof on behalf of Logicraft
employees. IHS shall take all actions needed, including, without
limitation, adoption of any amendment to the TBG Thrift Plan, if
necessary, to cause the trustee of the TBG Thrift Plan to distribute
all account balances to Logicraft employees in accordance with
applicable law as soon as practicable after the date hereof. IHS and
Microtest shall cooperate with each other with respect to
communications to Logicraft employees regarding the distribution of
account balances from the TBG Thrift Plan.
(c) The employees identified in Schedule 6.7 have been
maintained on the payroll of IHS and participate in the TBG Inc.
Salaried Employees Retirement Plan (the "Retirement Plan"). IHS shall
retain the liability and assets for the pension benefits accrued
through the date hereof by such individuals and Microtest shall have no
liability to pay benefits under such plan to any former employee of
20
Logicraft. Distribution to such individuals of his or her pension
benefit accrued under the Retirement Plan through the date hereof shall
be made by IHS in accordance with the terms of the Retirement Plan.
(d) IHS shall be responsible for providing COBRA coverage to
any Logicraft employee who is not employed by Microtest on January 1,
1997.
ARTICLE 7
DELIVERIES AT CLOSING
7.1 Deliveries by Microtest. Microtest hereby delivers to Logicraft and
the Shareholders the following documents:
(a) (i) a copy of the text of the resolutions by which the
corporate action on the part of Microtest necessary to approve this
Agreement and the transactions contemplated herein were taken and (ii)
a certificate executed on behalf of Microtest by its corporate
secretary or one of its assistant corporate secretaries certifying to
Logicraft, in each case, that such copy is a true, correct and complete
copy of such resolutions and that such resolutions were duly adopted
and have not been amended or rescinded;
(b) an opinion addressed to IHS and ▇▇▇▇▇▇▇ ▇▇▇▇, as
attorney-in-fact for the Class B Shareholders, from ▇▇▇▇▇ & ▇▇▇▇▇▇
L.L.P.; and
(c) a three-year International Distribution Agreement executed
by Microtest.
7.2 Deliveries of Logicraft and the Shareholders. Logicraft and the
Shareholders hereby deliver to Microtest the following:
(a) (i) a copy of the text of the resolutions by which the
corporate action on the part of Logicraft and IHS necessary to approve
this Agreement and the transactions contemplated herein were taken and
by which ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ were elected Chairman
of the Board, Chief Executive Officer and President and Chief Financial
Officer, Treasurer and Secretary, respectively; and (ii) certificates
executed on behalf of Logicraft and IHS certifying to Microtest that
such copy is a true, correct and complete copy of such resolutions and
that such resolutions were duly adopted and have not been amended or
rescinded;
(b) an opinion letter addressed to Microtest from ▇▇▇▇▇▇▇
▇▇▇▇▇ on behalf of IHS;
21
(c) an opinion letter addressed to Microtest from Coblentz,
Cahen, ▇▇▇▇▇▇ & Breyer, LLP on behalf of the Class B Shareholders;
(d) a three-year International Distribution Agreement executed
by IHS;
(e) a long form tax and good standing certificate for
Logicraft and Logicraft Information Systems Europe Corporation
("Logicraft Europe") from the State of Delaware dated as of the date
immediately prior to the date hereof, which includes copies of the
Certificate of Incorporation of Logicraft and Logicraft
Europe and all amendments thereto;
(f) good standing certificates or foreign qualifications for
Logicraft and Logicraft Europe, as applicable, dated as of the date
immediately prior to the date hereof from each of the jurisdictions
listed on Schedule 3.1;
(g) stock certificates representing the shares of Logicraft
Common Stock owned by the Shareholders marked cancelled and assignments
separate from such certificates to effectuate the transfer of the
shares represented by the certificates to Microtest;
(h) stock certificates representing the shares of Logicraft
Common Stock owned by Microtest upon consummation of the transactions
contemplated by this Agreement;
(i) written resignations of all current officers and directors
of Logicraft;
(j) the original corporate minute books and records of
Logicraft, including the stock ledger of Logicraft;
(k) evidence that all actions necessary to make the persons
identified by Microtest the sole signatories on all of Logicraft's bank
accounts have been taken; and
(l) evidence of termination of the Forms UCC-1 set forth on
Schedule 7.2(k).
ARTICLE 8
INDEMNITIES
8.1 Survival of Representations and Warranties. All representations and
warranties made by Microtest, Logicraft and the Shareholders in this Agreement
shall survive for a period of one (1) year after the date hereof and no claim
for any breach thereof may be made unless
22
notice thereof is given to the other party prior to such date; provided,
however, that the agreements, representations and warranties of Logicraft and
the Shareholders made pursuant to Sections 3.2, 3.3, 3.9(a), 3.10, 3.12,
3.15(a), the first sentence of 3.15(b), 4.1 and 4.2 of this Agreement shall
survive until all applicable statutory limitation periods have expired, taking
into account any extensions of such periods, and provided further, that,
notwithstanding the above 1-year limitation on survival, the limitation on
survival with respect to any breach of this Agreement resulting from fraud shall
be three (3) years after the date hereof.
8.2 The Shareholders' Agreement to Indemnify. The Shareholders hereby
agree to indemnify and hold harmless Microtest and its directors, officers,
employees and agents from and against all proceedings, judgments, decrees,
demands, claims, actions, losses, damages, liabilities, costs and expenses,
including, without limitation, reasonable attorneys' fees and costs and costs of
investigation (collectively referred to as "Losses") asserted against or
incurred by Microtest or its directors, officers, employees or agents resulting
from (a) a breach of any covenant, agreement, representation or warranty of
Logicraft or the Shareholders contained in this Agreement (including without
limitation those set forth in Sections 1.3 and those of ▇▇▇▇ set forth in
Section 1.4) or the exhibits or schedules hereto; and (b) any matter identified
in Schedule 8.2 hereto ("Scheduled Contingencies"). Each of the Shareholders
shall be liable for his, her or its pro rata portion of any Losses recoverable
by Microtest hereunder; provided, however, that Microtest shall be entitled to
recover any and all Losses directly from IHS and IHS then shall be entitled to
seek contribution from the Class B Shareholders.
8.3 Microtest's Agreement to Indemnify. Microtest hereby agrees to
indemnify and hold harmless the Shareholders and their respective directors,
officers, employees and agents from and against all Losses asserted against or
incurred by the Shareholders or their respective directors, officers, employees
and agents resulting from a breach of any covenant, agreement, representation or
warranty of Microtest contained in this Agreement or the exhibits or schedules
hereto.
8.4 Notice of Claim. Any party who has a claim which would give rise to
liability pursuant to this Article 8 shall give notice to the other party of
such claim, together with a reasonable description thereof. With respect to any
claim by a third party which is covered by the indemnifications contained
hereunder, the party obligated to indemnify shall be afforded the opportunity,
at its expense, to defend or settle such claim if, within 10 days of notice
thereof, it acknowledges in writing its indemnification obligation hereunder,
utilizes counsel reasonably satisfactory to the indemnified party, commences
such defense promptly and pursues such defense with diligence; provided,
however, that such indemnifying party shall secure the consent of the
indemnified party to any settlement, which consent shall not be unreasonably
withheld. If the indemnifying party assumes the defense of a claim, the
indemnifying party shall not be liable for any legal fees or expenses incurred
by the indemnified party in connection with the defense of such claim after
receipt by the indemnified party of the indemnifying party's written
acknowledgment of the indemnifying party's decision to assume the defense
thereof.
23
8.5 Certain Limitations. In no event shall either the Shareholders as a
party on one hand or Microtest as a party on the other hand be required to
indemnify the other party for any Losses relating to any matter subject to
indemnification under this Article 8, unless and until such Losses exceed
$100,000 in the aggregate, and then only for the amount that the aggregate of
all Losses exceed $100,000; provided, however, that neither Microtest nor the
Shareholders shall be liable for more than $2,700,000 of any such excess Losses.
The limitations provided under this Section 8.5 shall not apply to Losses
resulting from fraud or the Scheduled Contingencies (other than the Scheduled
Contingencies relating to state tax issues described in Paragraph No. 3 to
Schedule 8.2, which shall be subject to the limitations provided in this Section
8.5). Losses arising from the accounts receivable of Logicraft for which
Microtest is receiving a guaranty pursuant to Section 1.3, from a breach of the
representations and warranties in Section 1.4 and from the covenants or breach
thereof set forth in Sections 5.1, 5.2, 6.4 and 6.7 shall not be subject to or
count against the $100,000 deductible limitation set forth above.
8.6 Securityholder Agent of the Shareholders; Power of Attorney.
(a) The Shareholders hereby appoint L. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as
agent and attorney-in-fact (the "Securityholder Agent") for each
Shareholder, for and on behalf of Shareholders, to give notices, to
agree to, negotiate, enter into settlements and compromises of, and
initiate litigation or agree to arbitration and comply with orders of
courts and awards of arbitrators with respect to such claims for
Losses, and to take all actions necessary or appropriate in the
judgment of Securityholder Agent for the accomplishment of the
foregoing. Such agency may be changed by the Shareholders from time to
time upon not less than thirty (30) days prior written notice to
Microtest from IHS. No bond shall be required of the Securityholder
Agent, and the Securityholder Agent shall not receive compensation for
their services. Notices or communications from the Securityholder Agent
shall constitute notice from each of the Shareholders.
(b) The Securityholder Agent shall not be liable for any act
done or omitted hereunder as Securityholder Agent while acting in good
faith and in the exercise of reasonable judgment. The Shareholders
shall severally indemnify the Securityholder Agent and hold the
Securityholder Agent harmless against any loss, liability or expense
incurred without negligence or bad faith on the part of the
Securityholder Agent and arising out of or in connection with the
acceptance or administration of the Securityholder Agent's duties
hereunder, including the reasonable attorneys' fees and expenses.
(c) A decision, act, consent or instruction of the
Securityholder Agent shall constitute a decision of all the
Shareholders and shall be final, binding and conclusive upon each of
such Shareholders, and Microtest may rely upon any such decision, act,
consent or instruction of each of the Shareholders. Microtest is hereby
relieved from any liability to any person for any acts done by it in
24
accordance with such decision, act, consent or instruction of the
Securityholder Agent.
ARTICLE 9
GENERAL PROVISIONS
9.1 Notices. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by telecopier
(with a conforming copy by hand delivery, registered, certified or overnight
mail), or by registered or certified mail (postage prepaid and return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by it by like notice):
If to Microtest: Microtest, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
With a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
One Arizona Center
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to the Shareholders: Information Handling Services, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
Crossroute Software
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
With copies to: TBG Services Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
25
Coblentz, Cahen, ▇▇▇▇▇▇ & Breyer, LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
All such notices and other communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; three business days
after being deposited in the mail, postage prepaid, if delivered by mail; and
when receipt is acknowledged, if telecopied.
9.2 Interpretation. 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. References to Sections and Articles refer to
sections and articles of this Agreement unless otherwise stated. Words such as
"herein," "hereinafter," "hereof," "hereto," "hereby" and "hereunder," and words
of like import, unless the context requires otherwise, refer to this Agreement
(including the exhibits and attachments hereto). As used in this Agreement, the
masculine, feminine and neuter genders shall be deemed to include the others if
the context requires.
9.3 Amendment. This Agreement may not be amended except by an
instrument in writing approved by the parties to this Agreement and signed by or
on behalf of each of the parties hereto.
9.4 Severability; Reformation. If any court or arbiter determines that
any of the terms, provisions, covenants or restrictions in this Agreement, or
any part thereof, is or are invalid or unenforceable, the remainder of the
terms, provisions, covenants and restrictions shall not thereby be affected and
shall be given full effect, without regard to invalid portions. If any of the
provisions of this Agreement should ever be deemed to exceed the temporal,
geographic or occupational limitations permitted by applicable laws, those
provisions shall be and are hereby reformed to the maximum temporal, geographic
or occupational limitations permitted by law. If the court or arbiter refuses to
reform this Agreement as provided above, the parties hereto agree to modify the
provisions held to be unenforceable to preserve each party's anticipated
benefits thereunder.
9.5 Attorneys' Fees. In the event of any dispute, claim or other matter
in controversy arising directly or indirectly out of this Agreement, or the
breach hereof, whether contractual or non-contractual, including, without
limitation, any dispute as to the parties' respective indemnification
obligations under Article 8, the prevailing party shall be entitled to recover
all reasonable attorneys' fees and expenses incurred by him, her or it in
enforcing his, her or its rights.
26
9.6 Miscellaneous. This Agreement (together with all other documents
and instruments referred to herein): (a) constitutes the entire agreement, and
supersedes all other prior agreements, representations, warranties and
undertakings, both written and oral, among the parties, with respect to the
subject matter hereof; (b) is not intended to confer upon any other person any
rights or remedies hereunder; (c) shall not be assigned by operation of law or
otherwise, except that Microtest may assign all or any portion of their rights
under this Agreement to any wholly owned subsidiary, but no such assignment
shall relieve Microtest of its obligations hereunder, and except that this
Agreement may be assigned by operation of law to any corporation or entity with
or into which Microtest may be merged or consolidated or to which Microtest
transfers all or substantially all of its assets, and such corporation or entity
assumes this Agreement and all obligations and undertakings of Microtest
hereunder; and (d) shall be governed in all respects, including validity,
interpretation and effect, by the internal laws of the State of Arizona, without
giving effect to the principles of conflict of laws thereof. This Agreement may
be executed in two or more counterparts, which together shall constitute a
single agreement.
9.7 Best Knowledge of Logicraft. "To the best knowledge of Logicraft,"
"known to Logicraft" or similar phrases used herein shall mean the knowledge,
after due inquiry and the exercise of reasonable diligence, of L. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
27
AGREEMENT FOR PURCHASE AND SALE OF STOCK
SIGNATURE PAGE
IN WITNESS WHEREOF, Microtest, Logicraft and the Shareholders have
caused this Agreement to be executed on the date first written above by their
respective officers thereunder duly authorized.
MICROTEST, INC., a Delaware
corporation
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
LOGICRAFT INFORMATION
SYSTEMS, INC. a Delaware corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
---------------------------------------
Its Chairman
---------------------------------------
INFORMATION HANDLING SERVICES,
INC., a Delaware corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
---------------------------------------
Its President
---------------------------------------
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, as Attorney-in-Fact for the
Class B Shareholders of Logicraft Information
Systems, Inc.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, Individually only with respect to
Sections 1.4 and 5.2
