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 ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇ ▇. Day, ▇▇▇▇ ▇▇▇
("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 ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. 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 ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
▇▇▇ to retire and payoff all monies owed to ▇▇▇▇▇▇ ▇▇▇ 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 ▇▇▇▇▇ 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 agreed to a stipulated judgment in
the amount of $62,026.08. The lease is to the Corporation's offices
at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
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 ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇. 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 ▇▇▇▇▇▇ ▇. Day and ▇▇▇▇▇ ▇▇▇ 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 ▇▇▇▇▇▇ ▇. Day and ▇▇▇▇▇ ▇▇▇
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.
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: ▇▇▇▇▇▇
▇. Day and ▇▇▇▇ ▇▇▇ 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 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;
(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.
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 ▇▇▇▇, or copyright.
Corporation has not infringed, and are not now infringing, on any
trade name, trademark, service ▇▇▇▇, 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.
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, 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 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 ▇▇▇▇▇▇ ▇. Day, ▇▇▇▇▇
▇▇▇ and ▇▇▇▇ ▇▇▇.
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
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.
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.
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.
▇▇.▇▇ 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.
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 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
▇▇▇▇▇▇ ▇. 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.
▇▇.▇▇ 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 ▇▇▇▇▇▇ ▇. 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 ▇▇▇▇▇▇ ▇▇▇ in the amount of $15,000.00 duly marked as fully paid
and cancelled.
h. Original Promissory Note executed by Corporation in favor
of ▇▇▇▇ ▇▇▇▇▇▇ duly marked cancelled.
i. Original Promissory Notes executed by Corporation in favor
of ▇▇▇▇▇ ▇▇▇▇▇▇ duly marked cancelled together with an appropriate
document acknowledging the discharge of all contracts between
Corporation and ▇▇▇▇▇ ▇▇▇▇▇▇ 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 ▇▇▇▇ ▇▇▇ or any new investors duly marked cancelled and paid in
full.
k. Letter or other document evidencing the approval by ▇▇▇▇▇
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.
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 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
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
▇▇▇▇▇▇ ▇▇▇.
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.▇▇▇▇▇▇ ▇. 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;
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:
(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 ▇▇▇▇▇▇▇, and ▇▇▇▇, 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, ▇▇▇▇▇▇ ▇.
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. ▇▇. ▇▇▇▇▇▇ ▇. 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.
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.
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 ▇▇▇ 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;
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 ▇▇▇▇▇▇. C. Day, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To Buyer at: Digital Learning Institute, Inc..
Attention President
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
Jinnah & Jinnah
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
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Attorney for Buyer
Software Education of America, Inc.
Approved as to form A California Corporation
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▇▇▇▇▇▇ ▇. Day, President
----------------------------
Attorney for Selling Parties
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▇▇▇▇▇▇ ▇. Day, Shareholder
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▇▇▇▇ ▇▇▇, Shareholder
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 ▇▇▇▇▇▇ ▇. 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
