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EXHIBIT 10.18
FUTURE VISION HOLDING, INC.
STOCK PURCHASE AGREEMENT
by and among
SOFTKEY INTERNATIONAL INC.,
FLEXTECH HOLDINGS PTE LTD,
HARRY FOX, JOSEPH ABRAMS, SOL ROSENBERG,
MATHEW BARLOW, SAMUEL ZEMSKY,
K.H. TRUSTEES LTD., SETH ALTHOLZ
and
SHELLY ABRAHAMI
dated as of July 17, 1995
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TABLE OF CONTENTS
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1. Company Shares to be Sold .......................................... 1
1.2. Consideration ...................................................... 2
1.3. Escrow ............................................................. 2
1.4. Registration ....................................................... 3
1.5. Closing ............................................................ 5
1.6. Deliveries by the Sellers .......................................... 5
1.7. Deliveries by the Buyer ............................................ 6
1.8. Accounting Consequences ............................................ 6
1.9. Deliveries by Accountants .......................................... 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
2.1. Corporate Organization; Related Entities .......................... 7
2.2. Authorization ..................................................... 8
2.3. Capitalization .................................................... 9
2.4. Ownership of Company Shares ....................................... 10
2.5. Consents and Approvals; Non-Contravention ......................... 10
2.6. Financial Statements .............................................. 11
2.7. Interim Change .................................................... 11
2.8. No Undisclosed Liabilities ........................................ 14
2.9. Litigation ........................................................ 14
2.10. No Violation ...................................................... 15
2.11. Title to Assets ................................................... 16
2.12. Intellectual Property ............................................. 16
2.13. Contracts and Commitments ......................................... 19
2.14. Customers and Suppliers ........................................... 23
2.15. Products .......................................................... 23
2.16. Competition ....................................................... 24
2.17. Insurance ......................................................... 24
2.18. Access to Buyer Information ....................................... 25
2.19. Sellers' Investment Intent ........................................ 25
2.20. Securities Legend; Stop Transfer Instructions ..................... 25
2.21. Environmental Matters ............................................. 26
2.22. Taxes ............................................................. 27
2.23. Benefit Plans ..................................................... 30
2.24. Pooling Matters ................................................... 31
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE BUYER
3.1. Corporate Organization ............................................ 32
3.2. Authorization ..................................................... 32
3.3. SEC Filings ....................................................... 32
3.4. Authorization and Issuance of SoftKey Shares ...................... 33
3.5. Consents and Approvals; Non-Contravention ......................... 33
3.6. Litigation ........................................................ 33
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1. Consents and Approvals ............................................ 34
4.2. Further Assurances ................................................ 35
4.3. Access ............................................................ 35
ARTICLE V
CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS
5.1. Performance of Obligations; Representations and
Warranties ........................................................ 36
5.2. No Injunction or Restraints ....................................... 36
5.3. Regulatory Approvals .............................................. 37
5.4. Section 1445 Certificates ......................................... 37
5.5. Escrow Agreement .................................................. 37
5.6. Affiliate Letters ................................................. 37
5.7. Accountants' Letters .............................................. 37
5.8. Terminations and Assignments ...................................... 37
5.9. Conversion of Note ................................................ 39
5.10. Stockholder Approval .............................................. 39
5.11. Cancelled Promissory Notes ........................................ 39
5.12. Translation of Documents .......................................... 39
ARTICLE VI
CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS
6.1. Performance of Obligations; Representations and
Warranties ........................................................ 40
6.2. No Injunction or Restraints ....................................... 40
6.3. Regulatory Approvals .............................................. 40
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ARTICLE VII
SURVIVAL AND INDEMNIFICATION
7.1. Survival .......................................................... 40
7.2. Indemnification ................................................... 41
7.3. Procedure for Indemnification ..................................... 42
7.4. Remedies Cumulative ............................................... 44
ARTICLE VIII
TERMINATION PRIOR TO CLOSING
8.1. Termination of Agreement .......................................... 45
8.2. Effect of Termination ............................................. 46
ARTICLE IX
GENERAL PROVISIONS
9.1. Amendment and Waiver .............................................. 46
9.2. Expenses .......................................................... 47
9.3. Broker's and Finder's Fees ........................................ 47
9.4. Notices ........................................................... 47
9.5. Entire Agreement; Binding Effect .................................. 48
9.6. Applicable Law .................................................... 49
9.7. Parties in Interest ............................................... 49
9.8. Counterparts ...................................................... 49
9.9. Headings; Pronouns and Conjunctions ............................... 49
9.10. Announcements ..................................................... 49
9.11. Severability ...................................................... 49
Schedule I -- Sellers' Information
Exhibit A -- Form of Escrow Agreement
Exhibit B -- Form of Affiliate Letter
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STOCK PURCHASE AGREEMENT
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THIS AGREEMENT is made and entered into as of this 17th day of
July, 1995, by and among SoftKey International Inc., a Delaware corporation (the
"Buyer"), and Flextech Holdings Pte Ltd, a Singapore corporation ("Flextech"),
Harry Fox ("Fox"), Joseph Abrams ("Abrams"), Sol Rosenberg ("Rosenberg"), Mathew
Barlow ("Barlow"), Samuel Zemsky ("Zemsky"), K.H. Trustees Ltd. ("KHT"), Seth
Altholz ("Altholz") and Shelly Abrahami ("Abrahami"). Flextech, Fox, Abrams,
Rosenberg, Barlow, Zemsky, KHT, Altholz and Abrahami are each sometimes referred
to herein as a "Seller" and are together referred to herein as the "Sellers."
WHEREAS, the Sellers are the owners of all of the issued and
outstanding capital stock of Future Vision Holding, Inc., a New York corporation
(the "Company"), and certain of the Sellers are officers and directors of the
Company; and
WHEREAS, the Sellers desire to sell to the Buyer, and the
Buyer desires to purchase from the Sellers, all of the issued and outstanding
shares of capital stock of the Company, upon the terms and subject to conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and conditions
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1 COMPANY SHARES TO BE SOLD. Upon the terms and subject to
the conditions contained herein, at the Closing (as hereinafter defined), each
Seller shall sell and transfer to the Buyer, and the Buyer shall purchase and
accept from each Seller, the number of shares of the Company's common stock, par
value $.01 per share ("Company Common Stock"), set forth on Schedule I hereto,
which collectively will constitute all of the issued and outstanding shares of
capital stock of the Company immediately prior to the Closing (the "Company
Shares").
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2 CONSIDERATION.
(a) Upon the terms and subject to the conditions
contained herein and in consideration of, and in full payment for, the aforesaid
sale and transfer of the Company Shares, at the Closing, the Buyer shall sell to
the Sellers and issue and deliver or cause to be delivered to the Sellers and
the Escrow Agent (as hereinafter defined) an aggregate of 1,116,784 shares,
subject to adjustment as set forth in paragraph (b) of this Section 1.2 (the
"SoftKey Shares"), of common stock, par value $.01 per share, of the Buyer
("SoftKey Common Stock"), less any shares required to be withheld by the Buyer
to pay Taxes of any Seller.
(b) In the event that:
(i) the expenses of the Company set forth in
paragraphs (a) and (b) of Section 9.2 hereof exceed $50,000 in the aggregate as
of the day immediately prior to the Closing Date (as hereinafter defined), then
the aggregate number of SoftKey Shares to be delivered to the Sellers pursuant
to paragraph (a) of this Section 1.2 shall be reduced by an amount equal to the
dollar amount of such excess over $50,000 divided by $31.34, and the number of
SoftKey Shares to be issued in the name of each Seller at the Closing (as set
forth in Schedule I hereto) shall be accordingly proportionately reduced; and
(ii) the indebtedness of the Company other than
trade indebtedness, including specifically all indebtedness to Flextech (other
than the Secured Convertible Note referred to in Section 5.9 hereof), all
indebtedness to other stockholders and affiliates, indebtedness under banking
arrangements, indebtedness under factoring arrangements and indebtedness
relating to the Company's acquisition of SuperStudio Ltd., a wholly owned
subsidiary of the Company ("SuperStudio"), exceeds $6,000,000 in the aggregate
as of the day immediately prior to the Closing Date, then the aggregate number
of SoftKey Shares to be delivered to the Sellers pursuant to paragraph (a) of
this Section 1.2 shall be reduced by an amount equal to the dollar amount of
such excess over $6,000,000 divided by $31.34, and the number of SoftKey Shares
to be issued in the name of each Seller at the Closing (as set forth in Schedule
I hereto) shall be accordingly proportionately reduced.
3 ESCROW. At the Closing, 148,373 of the SoftKey
Shares, subject to adjustment as set forth below in the event
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of a reduction in the number of SoftKey Shares to be delivered to the Sellers
pursuant to Section 1.2(b) hereof (the "Escrow Shares"), shall be issued in the
name of BOB and Co. and delivered to The First National Bank of Boston (the
"Escrow Agent"), as Escrow Agent under an Escrow Agreement dated the Closing
Date among the Buyer, the Sellers and the Escrow Agent substantially in the form
attached hereto as Exhibit A (the "Escrow Agreement"), which Escrow Agreement,
among other things, provides for the Escrow Shares to be set aside and held by
the Escrow Agent to satisfy (a) the Buyer's claims for indemnification hereunder
from and against the Sellers and (b) certain specified legal disputes and
proceedings involving the Company or the Subsidiaries (as hereinafter defined),
all subject to the terms and conditions set forth in the Escrow Agreement. The
Escrow Shares held by the Escrow Agent shall be set aside and held by the Escrow
Agent and distributed to the Sellers or the Buyer at the times, and upon the
terms and conditions, set forth in the Escrow Agreement. In the event that the
number of SoftKey Shares to be delivered to the Sellers is reduced pursuant to
Section 1.2(b) hereof, the number of Escrow Shares to be held in the Indemnity
Fund (as defined in the Escrow Agreement) shall be reduced to equal no more than
10% of the SoftKey Shares to be delivered to the Sellers after such reduction.
4 REGISTRATION.
(a) The Buyer agrees to file a registration statement
on Form S-3 (or another appropriate form) with respect to the resale by each
Seller of all of the SoftKey Shares acquired by it hereby, (the "Registration
Statement"), with the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act"), as soon as
practicable and to use reasonable efforts to cause the Registration Statement to
become effective as soon as practicable thereafter. The Buyer will promptly
prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep the Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of all of the
SoftKey Shares offered thereby until the earlier of (x) such time as all of the
SoftKey Shares offered thereby have been disposed of in accordance with the
intended methods of disposition set forth in the Registration Statement or (y)
the expiration of 90 days after the later to occur of (i) the date on which the
Registration Statement becomes effective or (ii) the date on
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which the Sellers are first permitted to Transfer (as defined therein) the
SoftKey Shares under paragraph 1(b) of the Affiliate Letters (as hereinafter
defined).
(b) (i) The Buyer shall promptly notify the Sellers
of the issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose.
The Buyer shall use reasonable efforts to obtain the withdrawal of any such stop
order. In the event of any stop order suspending the effectiveness of the
Registration Statement, the Buyer shall be required to keep the Registration
Statement effective until the earlier of (A) such time as all of the SoftKey
Shares offered thereby have been disposed of in accordance with the intended
methods of distribution by Flextech and Fox set forth in the Registration
Statement or (B) the period required by Section 1.4(a)(y) plus an extended
period equal to the number of days during which any such suspension was in
effect.
(ii) Notwithstanding anything to the contrary
set forth in this Agreement, the Buyer's obligations under this Section
1.4 to file the Registration Statement and to use its reasonable efforts to
cause the Registration Statement to become effective shall be suspended in the
event and during such period as unforeseen circumstances (including without
limitation pending negotiations relating to, or the consummation of, a
transaction or the occurrence of any event) which, based upon the advice of
outside counsel reasonably acceptable to the Sellers, would require additional
disclosure of material information by the Buyer in the Registration Statement as
to which the Buyer has a bona fide business purpose for preserving
confidentiality or which, based upon the advice of such counsel, renders the
Buyer unable to comply with SEC requirements (in either case, a "Suspension
Event"). Any such suspension shall continue only for so long as such event is
continuing. The Buyer shall notify the Sellers promptly in writing of the
existence of any Suspension Event and represents that no such Suspension Event
exists on the date hereof. In the event of any such suspension occurring prior
to the filing of the Registration Statement, the Buyer shall be required to file
the Registration Statement as soon as practicable after the conclusion of the
Suspension Event. In the event of any such suspension occurring after
effectiveness of the Registration Statement, the Buyer shall be required to keep
the Registration Statement effective until the earlier of (x) such time as all
of the SoftKey Shares offered thereby have been disposed of in accordance with
the intended methods of distribution set
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forth in the Registration Statement or (y) the period required by Section
1.4(a)(y) plus an extended period equal to the number of days during which any
such suspension was in effect.
(iii) Following the effectiveness of the
Registration Statement, each Seller agrees that it will not effect any sales of
SoftKey Common Stock at any time after he or it has received notice from the
Buyer to suspend sales as a result of a stop order or the occurrence or
existence of any Suspension Event or so that the Buyer may correct or update the
Registration Statement. The Sellers may recommence effecting sales of SoftKey
Common Stock following further notice to such effect from the Buyer, which
notice shall be given by the Buyer promptly after the withdrawal of any stop
order or the conclusion of any such Suspension Event.
5 CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall occur at the offices of Skadden, Arps,
Slate, Meagher & Flom, One Beacon Street, Boston, Massachusetts, at 10:00 A.M.,
local time, on the later to occur of (a) August 1, 1995 or (b) the date which is
two business days after the later to occur of (i) satisfaction of the condition
set forth in Section 5.3 hereof and (ii) satisfaction of the condition set forth
in Section 5.10 hereof, or at such other time and place as may be agreed upon by
the parties. The time and date of the Closing is sometimes referred to herein as
the "Closing Date." Upon consummation of the transactions contemplated hereby,
the Closing shall be deemed to have taken place as of the close of business on
the Closing Date.
6 DELIVERIES BY THE SELLERS. On the Closing Date, the
Sellers shall deliver or cause to be delivered to the Buyer the following:
(a) one or more stock certificates evidencing the
Company Shares duly endorsed in blank or accompanied by stock powers duly
executed in blank, in proper form for transfer and with all requisite stock
transfer stamps attached;
(b) the stock book, stock ledger, minute book and
corporate seal of the Company;
(c) written resignations of all of the officers and
directors of the Company from their positions as officers or directors,
effective as of the Closing Date; and
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(d) such other instruments or documents as may be
reasonably necessary to carry out the transactions contemplated by this
Agreement and to comply with the terms hereof.
7 DELIVERIES BY THE BUYER. On the Closing Date,
the Buyer shall deliver or cause to be delivered the following:
(a) to the Sellers, stock certificates evidencing
the SoftKey Shares other than the Escrow Shares, less any shares required to be
withheld by the Buyer to pay Taxes of any Seller, issued in the name of each of
the Sellers in the amounts set forth in Schedule I hereto;
(b) to the Escrow Agent, one or more stock
certificates evidencing the Escrow Shares issued in the name of BOB and Co.; and
(c) such other instruments or documents as may be
reasonably necessary to carry out the transactions contemplated by this
Agreement and to comply with the terms hereof.
8 ACCOUNTING CONSEQUENCES. It is intended that the purchase
of the Company Shares from the Sellers (a) be accounted for as a pooling of
interests and (b) constitute a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that
this Agreement constitute a "plan of reorganization" for the purposes of Section
368 of the Code. The Buyer agrees to use reasonable efforts not to jeopardize
the qualification of the purchase of the Company Shares from Sellers as a
reorganization within the meaning of Section 368(a) of the Code. Except as set
forth in the preceding sentence, the parties hereto shall have no liability to
each other in the event that the transaction provided for herein does not
constitute a reorganization within the meaning of Section 368(a) of the Code.
9 DELIVERIES BY ACCOUNTANTS. On the Closing Date, Coopers &
Lybrand L.L.P. and Ernst & Young LLP, independent accountants for the Buyer
and the Company, respectively, shall each deliver or cause to be delivered to
the Buyer a letter, satisfactory to the Buyer, to the effect that, based upon
the information respectively presented to them as of the Closing Date, the
business combination to be effected by this Agreement conforms in substance with
the principles, guides, rules and criteria of Accounting Principles Board
Opinion No. 16 setting forth the criteria for the pooling of interests method of
ac-
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counting, and that such accountants concur in the accounting treatment of the
business combination to be effected by this Agreement as a pooling of interests.
In the event that this Agreement includes a term or provision which would
prevent either Coopers & Lybrand L.L.P. or Ernst & Young LLP from delivering or
causing to be delivered such a letter, the Buyer and each of the Sellers agree
that each will use its respective reasonable efforts to amend or cause the
amendment of this Agreement so that such a letter may be delivered by each such
accounting firm.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller other than Abrams, Barlow and KHT hereby severally
represents, warrants and agrees as follows:
1 CORPORATE ORGANIZATION; RELATED ENTITIES. (a) The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of New York and has the corporate power and authority to own
or lease its properties and to carry on its business as it is presently being
conducted. The Company is duly qualified or licensed as a foreign corporation to
do business and is in good standing in the respective jurisdictions listed in
Section 2.1(a) of the disclosure schedule delivered by the Sellers to the Buyer
on or prior to the date hereof (the "Disclosure Schedule"), which constitute
every jurisdiction where the character of the Company's properties (owned or
leased) or the nature of its activities makes such qualification or licensure
necessary, except for failures, if any, to be so qualified or licensed which
would not in the aggregate have a Material Adverse Effect (as hereinafter
defined).
(b) Except as set forth in Section 2.1(b) of the
Disclosure Schedule, the Company does not own, directly or indirectly, any
capital stock of any corporation or have any direct or indirect equity or
ownership interest of any kind in any business, joint venture, partnership or
other entity. The term "Subsidiaries" means all of the corporations set forth in
Section 2.1(b) of the Disclosure Schedule. Each of the Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of organization and has the corporate power and
authority to own or lease its properties and to carry on its business as it is
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presently being conducted. Each of the Subsidiaries is duly qualified or
licensed as a foreign corporation to do business and is in good standing in the
respective jurisdictions listed in Section 2.1(b) of the Disclosure Schedule,
which constitute every jurisdiction where the character of the Subsidiary's
properties (owned or leased) or the nature of its activities makes such
qualification or licensure necessary except for failures, if any, to be so
qualified or licensed which would not in the aggregate have a Material Adverse
Effect.
(c) The copies of the Certificate of Incorporation
and By-Laws of the Company and the Subsidiaries heretofore delivered to the
Buyer are complete and correct copies of such instruments as presently in
effect.
(d) As used in this Agreement, any reference to any
event, change or effect having a "Material Adverse Effect" shall mean that such
event, change or effect is materially adverse to the business, operations,
prospects, properties, assets (including intangible assets), liabilities
(including contingent liabilities), condition (financial or other) or results of
operations of the Company and the Subsidiaries taken as a whole.
2 AUTHORIZATION. Such Seller, (a) if organized in corporate
form, has the requisite corporate power and authority, (b) if organized as a
trust, has the requisite power and authority or (c) if an individual, has the
requisite capacity, to enter into this Agreement and the other agreements,
documents and instruments to be executed and delivered or filed by such Seller
pursuant hereto (the "Additional Sellers' Documents") and to carry out the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Additional Sellers' Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of Flextech and, prior to the Closing Date,
will be duly authorized by the stockholders of Flextech, and no other corporate
proceedings on the part of Flextech or its stockholders are necessary to
authorize this Agreement and the Additional Sellers' Documents with respect to
Flextech and the transactions contemplated hereby and thereby with respect to
Flextech. No other action of any Seller is necessary to authorize this Agreement
and the Additional Sellers' Documents with respect to such Seller and the
transactions contemplated hereby and thereby with respect to such Seller. When
fully executed and delivered, this Agreement and each of the Additional Sellers'
Documents will consti-
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tute the valid and binding agreements of such Seller, enforceable against such
Seller in accordance with their respective terms.
3 CAPITALIZATION.
(a) As of the date of this Agreement, the authorized
capital stock of the Company consists of 25,000,000 shares of Company Common
Stock, 19,200,150 shares of which are issued and outstanding (the "Outstanding
Company Shares"). Except as set forth in Section 2.3 of the Disclosure Schedule,
all of the Outstanding Company Shares have been, and as of the Closing Date, all
of the Company Shares will have been, validly issued, and the Outstanding
Company Shares are, and as of the Closing Date, all of the Company Shares will
be fully paid, nonassessable and free of any mortgage, pledge, security
interest, encumbrance, lien, claim or charge of any kind or right of others of
whatever nature ("Liens"), preemptive rights or other restrictions with respect
thereto. The Outstanding Company Shares are, and, as of the Closing Date, the
Company Shares will be, owned of record and beneficially by the Sellers. Except
as set forth in Section 2.3 of the Disclosure Schedule, there are no securities
outstanding which are convertible into or exercisable or exchangeable for shares
of capital stock of the Company, and there are no outstanding options, rights,
contracts, warrants, subscriptions, conversion rights or other agreements or
commitments pursuant to which the Company may be required to purchase, redeem,
issue or sell any shares of capital stock or other securities of the Company or
in any way relating to the issuance or voting of any capital stock or other
securities of the Company.
(b) Except as set forth in Section 2.3 of the
Disclosure Schedule, all of the issued and outstanding capital stock of each of
the Subsidiaries has been validly issued, is fully paid and nonassessable and is
owned of record and beneficially, directly or indirectly, by the Company free of
any Liens, preemptive rights or other restrictions with respect thereto. There
are no securities outstanding which are convertible into or exercisable or
exchangeable for shares of capital stock of any of the Subsidiaries, and there
are no outstanding options, rights, contracts, warrants, subscriptions,
conversion rights or other agreements or commitments pursuant to which the
Company or any Subsidiary may be required to purchase, redeem, issue or sell any
shares of capital stock or other securities of any Subsidiary or in any way
relating to
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the issuance or voting of any capital stock or other securities of any
Subsidiary.
4 OWNERSHIP OF COMPANY SHARES. Such Seller has good and
valid title to the Outstanding Company Shares owned by such Seller, and, as of
the Closing Date, such Seller will have good and valid title to the Company
Shares owned by such Seller, in each case free and clear of any Liens, except as
set forth in Section 2.4 of the Disclosure Schedule, and at the Closing, upon
delivery by the Buyer to the Sellers and the Escrow Agent of the consideration
given pursuant to Section 1.2 hereof, the Buyer will acquire good and valid
title to the Company Shares owned by such Seller, free and clear of any Liens.
5 CONSENTS AND APPROVALS; NON-CONTRAVENTION. Except as set
forth in Section 2.5 of the Disclosure Schedule and except for any required
filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder (the "HSR Act"),
neither the execution, delivery or performance of this Agreement or of any of
the Additional Sellers' Documents, nor the consummation by the Sellers of the
transactions contemplated hereby or thereby, nor compliance by the Sellers with
any of the provisions hereof or thereof will (a) violate any provision of the
Certificate of Incorporation or By-Laws of the Company or any Subsidiary, (b)
require any filing with, or permit, authorization, consent or approval of, any
court, arbitral tribunal, administrative agency or commission or other
governmental or regulatory authority or agency (a "Governmental Entity"), (c)
require any consent, approval or authorization under any contract, lease or
other agreement, (d) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to such Seller or the Company or any Subsidiary or any
of their respective properties or assets or (e) result in a violation or breach
of, or constitute (with or without notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration or any loss of a material benefit) under, or result in the creation
or imposition of (or the obligation to create or impose) any Lien upon any of
the respective properties or assets of any Seller or the Company or any
Subsidiary under, any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which such Seller or the Company
or any Subsidiary is a party or by which such Seller or the Company or any
Subsidiary or any of their respective properties or assets may be bound, except
in the case of clause (d) of this Section 2.5, as to rules and regulations only,
and clauses (b), (c) and
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(e) of this Section 2.5: (i) for such filings, permits, authorizations, consents
or approvals which, if not made or obtained, would not materially impair the
ability of any Seller to perform its obligations hereunder and which would not,
either individually or in the aggregate, have a Material Adverse Effect; or (ii)
for such violations, breaches, defaults or Liens which would not materially
impair the ability of any Seller to perform its obligations hereunder and which
would not, either individually or in the aggregate, have a Material Adverse
Effect.
6 FINANCIAL STATEMENTS. The (a) audited consolidated
balance sheets of the Company and the Subsidiaries (other than SuperStudio)
dated December 31, 1994 and the audited consolidated statements of operations
and statements of cash flows of the Company and the Subsidiaries (other than
SuperStudio) for the year ended December 31, 1994, (b) unaudited consolidated
balance sheets of the Company and the Subsidiaries (other than SuperStudio)
dated March 31, 1995 and the unaudited consolidated statements of operations and
statements of cash flows of the Company and the Subsidiaries (other than
SuperStudio) for the three months ended March 31, 1995 and (c) the unaudited
balance sheets of SuperStudio dated December 31, 1994 and March 31, 1995 and
the statements of operations and statements of cash flows of SuperStudio for the
year ended December 31, 1994 and the three months ended March 31, 1995
heretofore delivered to the Buyer and included in Schedule 2.6 of the Disclosure
Schedule (collectively, the "Financial Statements"), fairly present the
financial condition of the Company and the Subsidiaries or SuperStudio, as the
case may be, as of the dates and for the periods indicated (subject, in the case
of interim statements, to normal, recurring, year-end adjustments) and have been
prepared in accordance with generally accepted accounting principles as
historically and consistently applied (subject, in the case of interim
statements, to the absence of footnote disclosure). The revenue recognition
policies of the Company and the Subsidiaries are and for all periods covered by
the Financial Statements have been in accordance with Statement of Position 91-1
on Software Revenue Recognition (dated December 12, 1991) as prepared by the
American Institute of Certified Public Accountants.
7 INTERIM CHANGE. Except as set forth in Section 2.7 of the
Disclosure Schedule, since March 31, 1995, the Company and the Subsidiaries have
been operating only in, and have not engaged in any material transaction other
than in, the
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ordinary course of business and consistent with past practice, and neither the
Company nor any Subsidiary has:
(a) suffered any change, nor has there occurred or
arisen any event, having or which in the future could reasonably be expected to
have a Material Adverse Effect;
(b) forgiven or cancelled any debts or claims or
waived, released or relinquished any contract right or any other rights of the
business of the Company or any of the Subsidiaries (other than in the ordinary
course of business and consistent with past practice);
(c) paid, discharged or satisfied any liens,
encumbrances, liabilities or obligations (absolute, accrued, contingent or
otherwise) other than in the ordinary course of business and consistent with
past practice;
(d) suffered any damage, destruction or loss of
property, whether or not covered by insurance, which has had or could reasonably
be expected to have a Material Adverse Effect;
(e) accelerated the collection of, granted any
discounts (other than in the ordinary course of business and consistent with
past practice) with respect to or sold or assigned to third parties any accounts
receivable or delayed the payment of any payables of the Company or any
Subsidiary or, other than in the ordinary course of business and consistent with
past practice, written off as uncollectible any accounts receivable or any
portion thereof;
(f) changed its policy with respect to the recording
of return reserve provisions or provisions for bad debt;
(g) created, incurred or assumed any long-term debt
(including obligations in respect of capital leases), or assumed, guaranteed,
endorsed or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other individual,
corporation, partnership, joint venture, association, organization or other
entity (a "Person"), except for the endorsement of checks in the ordinary course
of collection, or made any loans, advances or capital contributions to, or
investment in, any other Person;
(h) mortgaged, pledged or subjected to any mortgage,
pledge, lien, charge or other encumbrance of any kind
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or, except for liens for current Taxes (as defined in Section 2.22(b) hereof)
not yet due and except for sales of inventory in the ordinary course of business
and consistent with past practice, sold, assigned or transferred any of its
properties or assets (real, personal or mixed, tangible or intangible);
(i) (i) increased in any manner the wages, salaries
or compensation of any officer, employee or other person, except as required
under any written plan, agreement or arrangement in effect as of December 31,
1994, (ii) paid or agreed to pay any pension, retirement allowance or other
employee benefit not required or contemplated by any plan, agreement or
arrangement in effect as of December 31, 1994 to any such officer, employee or
other person or (iii) committed itself to any additional pension,
profit-sharing, bonus, severance pay, retirement or other benefit plan,
agreement or arrangement, or to any employment or consulting agreement with or
for the benefit of any person or to amend any such plan, agreement or
arrangement in effect as of December 31, 1994, except as may have been required
to comply with applicable law;
(j) experienced any work stoppage or other concerted
activity or labor difficulty;
(k) acquired (i) by merger or consolidation with, or
by the purchase of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof or (ii) any assets that are material in the aggregate to the Company and
the Subsidiaries taken as a whole, except purchases of inventory, materials and
supplies in the ordinary course of business and consistent with past practice
and capital expenditures for additions to property, plant, equipment or
intangible capital assets not exceeding $50,000 in the aggregate;
(l) entered into any agreement, contract or
commitment, other than (i) in the ordinary course of business or (ii) as
contemplated by this Agreement, with respect to the manufacture of any software
product of the Company or any of the Subsidiaries or any update, upgrade or
derivative thereof, whether now in process, under contract or in publication,
which has ever been or is currently being developed, licensed, manufactured,
sold, distributed or otherwise published by the Company or any of the
Subsidiaries (collectively, the "Products");
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(m) declared, paid or set aside for payment any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) directly or indirectly to any Seller;
(n) made any change in its accounting principles or
methods, except as may have been required by a change in generally accepted
accounting principles;
(o) amended the Certificate of Incorporation or
By-Laws of the Company or the charter or by-laws or other equivalent
organizational documents of any Subsidiary; or
(p) authorized, or committed or agreed, whether in
writing or otherwise, to take, any of the actions described elsewhere in this
Section 2.7.
8 NO UNDISCLOSED LIABILITIES. Except (a) as set forth in
Section 2.8 of the Disclosure Schedule, (b) as and to the extent of the amounts
specifically reflected or reserved against in the Financial Statements, (c) for
any contingent liabilities disclosed in the footnotes (if any) to the Financial
Statements, (d) for write-offs or discounts of receivables and actual returns
taken, made or accepted by the Company or the Buyer after the Closing or (e) for
current liabilities which were incurred, and obligations under agreements,
commitments or contracts entered into, in the ordinary course of business and
consistent with past practice, neither the Company nor any Subsidiary has
liabilities or obligations of any nature (whether absolute, accrued, known or
unknown, contingent or otherwise and whether due or to become due). Without
limiting the foregoing, to the extent minimum royalties under any contract,
agreement, arrangement or understanding have not been paid in full, such
royalties are adequately accrued for in the Financial Statements. The Sellers
shall not be liable for any Loss (as hereinafter defined) incurred or sustained
by the Buyer as a result of any breach of this Section 2.8 relating to an
undisclosed Intellectual Property (as hereinafter defined) liability or
obligation unless such Loss also constitutes a breach of Section 2.12 hereof.
9 LITIGATION. Except as set forth in Section 2.9
of the Disclosure Schedule, there is no claim, action, suit, inquiry, proceeding
or investigation by or before any Governmental Entity pending or, to the
knowledge of such Seller or the Company or any Subsidiary, threatened against or
involving any Seller or the Company or any Subsidiary or affecting any of
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the respective properties or assets of any Seller or the Company or any
Subsidiary which, if adversely determined, would, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, or
which in any manner seeks injunctive or other non-monetary relief which relief
could reasonably be expected to cause a Material Adverse Effect or seeks to
prevent, enjoin, alter or delay any transaction contemplated hereby, nor, to the
best knowledge of such Seller, is there any basis for any such claim, action,
suit, inquiry, proceeding or investigation. None of the Sellers or the Company
or any Subsidiary is subject to any order, writ, injunction or decree which,
individually or in the aggregate, has or in the future could reasonably be
expected to have a Material Adverse Effect or a material adverse effect on the
ability of any Seller to consummate the transactions contemplated hereby.
10 NO VIOLATION. Except as set forth in Section 2.10 of the
Disclosure Schedule, neither such Seller nor the Company or any Subsidiary is in
breach or violation of, or in default under (and no event has occurred which
with notice or lapse of time or both would constitute such a breach, violation
or default), any term, condition or provision of (a) in the case of the Company,
its Certificate of Incorporation or ByLaws, (b) in the case of a Subsidiary, its
charter or by-laws or other equivalent organizational documents, (c) any order,
writ, decree, statute, rule or regulation applicable to such Seller or the
Company or any Subsidiary or any of their respective properties or assets or (d)
any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which such Seller or the Company or any
Subsidiary is a party or by which such Seller or the Company or any Subsidiary
or any of their respective properties or assets may be bound, which breaches,
violations or defaults, individually or in the aggregate, would have a Material
Adverse Effect. The Company and each Subsidiary has, and is in compliance with,
all licenses, permits, variances, exemptions, orders, approvals and other
authorizations of all Governmental Entities as are necessary in order to enable
it to own its business and conduct its business as currently conducted and as
proposed to be conducted and to enter into the transactions contemplated hereby,
the lack of which, under applicable law, rule or regulation, (x) would render
legally impermissible the transactions contemplated by this Agreement or (y)
could reasonably be expected to result in the material impairment of the
continued use or exercise by the Company or any Subsidiary after the date hereof
of any material right used or exercised (or reasonably
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expected to be used or exercised) by the Company or the Subsidiary,
respectively, in the conduct of the Company's business or the Subsidiary's
business, respectively, in any case, as currently conducted and as proposed to
be conducted or (z) could reasonably be expected to have a Material Adverse
Effect.
11 TITLE TO ASSETS. Except as set forth in Section 2.11 of
the Disclosure Schedule, the Company or a Subsidiary has good and marketable
title, free and clear of all Liens (other than Liens for current Taxes not yet
due and minor imperfections of title or minor encumbrances, if any, which in the
aggregate do not materially detract from the value of the Assets (as hereinafter
defined) or impair in any material respect the conduct of the business of the
Company and the Subsidiaries taken as a whole as heretofore conducted or the
continued use by the Company or any Subsidiary of the property subject thereto
for the use being made thereof), to all of the assets, real property, interests
in real property, rights, franchises, copyrights, trademarks, trade names,
licenses and properties tangible or intangible, real or personal, wherever
located which are used in the conduct of the business conducted by the Company
or the Subsidiaries (the "Assets"), other than property that is leased or
licensed. Except as set forth in Section 2.11 of the Disclosure Schedule, the
Company or a Subsidiary has valid and enforceable leases or licenses, as the
case may be, with respect to the Assets consisting of property that is leased or
licensed, under which there exists no default, event of default or event which,
with notice or lapse of time or both, would constitute a default, except for
such defaults which could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
12 INTELLECTUAL PROPERTY. The Company or a Subsidiary owns,
licenses or otherwise has the right to use, sell, license or dispose of all
industrial and intellectual property rights, including without limitation all
patents, patent applications, patent rights, trademarks, trademark applications,
trade names, service marks, service mark applications, copyrights, copyright
registrations, computer programs, content and other computer software (including
CD-ROMs), source code and object code for the software programs already
published, currently being published, or proposed to be published by the
Company, technology, know-how, trade secrets, proprietary processes and formulae
(collectively, "Intellectual Property") material to the conduct of the business
of the Company or the Subsidiaries as heretofore conducted. A true and complete
listing labeled by owner or licensee, as the case may be, set-
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ting forth all patents, federal, foreign, state or common law trademarks or
service marks, trade names or brand name registrations, copyrights and copyright
registrations, and all pending applications and applications to be filed, if
any, therefor, owned by, or licensed to, the Company or any Subsidiary, and the
status thereof, is contained in Section 2.12 of the Disclosure Schedule, and the
rights of the Company or the Subsidiary to all such Intellectual Property are in
full force. Except as set forth in Section 2.12 of the Disclosure Schedule:
(a) the Company or a Subsidiary has the sole and
exclusive right to use, sell, license, dispose of or bring actions for the
infringement of its rights to the Intellectual Property, subject to such
third-party rights as are set forth in Section 2.12 of the Disclosure Schedule,
with such exceptions as could not reasonably be expected to have in the
aggregate a Material Adverse Effect; there are no royalties, honoraria, fees or
other payments payable by the Company or any Subsidiary to any Person by reason
of ownership, use, licensure, sale or disposition of any Intellectual Property;
and the consummation of the transactions contemplated hereby will not (i) give
rise to any right of termination, amendment, renegotiation, cancellation or
acceleration with respect to any license or other agreement to use, sell,
license or dispose of such Intellectual Property which could reasonably be
expected to have in the aggregate a Material Adverse Effect or (ii) in any way
impair the right of the Company or any Subsidiary to use, sell, license or
dispose of or to bring any action for the infringement of any of the rights of
the Company or the Subsidiary to the Intellectual Property or any portion
thereof;
(b) none of the former or present employees, officers
or directors of the Company or any Subsidiary holds any right, title or
interest, directly or indirectly, in whole or in part, in or to any Intellectual
Property which the Company or any Subsidiary currently uses, sells, licenses or
of which it disposes, or the use, sale, licensure or disposal of which is
necessary for the business of the Company or any Subsidiary as presently
conducted; neither the Company nor any Subsidiary is a party to any employment
contract, patent disclosure agreement or any other contract or agreement
relating to the relationship of any employee of the Company with the Company,
any Subsidiary or any other party;
(c) each license and other agreement with respect to
any Intellectual Property is a valid, legally binding obligation of the
Company or a Subsidiary and, to the best
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knowledge of the Company and such Seller, all other parties thereto, enforceable
in accordance with its terms, with such exceptions as could not reasonably be
expected to have in the aggregate a Material Adverse Effect and except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally, and neither the Company nor
any Subsidiary is in breach, violation or default thereof (and no event has
occurred which with the giving of notice or the passage of time or both would
constitute such a breach, violation or default or give rise to any right of
termination, amendment, renegotiation, cancellation or acceleration under any
such license or agreement), and neither such Seller nor the Company nor any
Subsidiary has reason to believe that any other party to any such license or
other agreement is in breach, violation or default thereof, other than, in each
case, such breaches, violations and defaults as could not reasonably be expected
to have in the aggregate a Material Adverse Effect;
(d) the manufacture, marketing, use, sale, licensure
or disposition of any Intellectual Property in the manner currently used, sold,
licensed or disposed of by the Company or any Subsidiary or proposed to be used,
sold, licensed or disposed of by the Company or any Subsidiary does not and will
not violate any license or agreement with any third party or infringe on the
rights of any Person, nor has such an infringement been alleged within three
years preceding the date of this Agreement; there is no pending or, to the best
knowledge of such Seller, the Company and the Subsidiaries, threatened claim or
litigation challenging or questioning the validity, ownership or right to use,
sell, license or dispose of any Intellectual Property nor, to the best knowledge
of such Seller, the Company and the Subsidiaries, is there a valid basis for any
such claim or litigation, nor has the Company or any Subsidiary received any
notice asserting that the proposed use, sale, license or disposition by the
Company or any Subsidiary of any of the Intellectual Property of the Company or
any Subsidiary conflicts or will conflict with the rights of any other party,
nor is there, to the best knowledge of such Seller and the Company and the
Subsidiaries, a valid basis for any such assertion; and
(e) neither the Company nor any Subsidiary has been
alleged in writing to have, nor, to the best knowledge of such Seller and the
Company and the Subsidiaries, has it, infringed any copyright, patent, trademark
or trade name or
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misappropriated or misused any invention, trade secret or other proprietary
information entitled to legal protection, with such exceptions as could not
reasonably be expected in the aggregate to have a Material Adverse Effect; and
none of such Seller or the Company or any Subsidiary has asserted any claim of
infringement, misappropriation or misuse within the past three years.
13 CONTRACTS AND COMMITMENTS.
(a) Section 2.13(a) of the Disclosure Schedule sets
forth, labeled by the subparagraph of this Section 2.13(a) to which each listed
item is responsive, a complete and accurate list of all of the following
contracts, agreements, arrangements or understandings (whether written or oral)
of the Company or any of its Subsidiaries (such contracts, agreements,
arrangements or understandings as set forth in Section 2.13(a) of the Disclosure
Schedule and all agreements relating to Intellectual Property set forth in
Section 2.12 of the Disclosure Schedule being "Material Contracts"):
(i) royalty or other payment obligations (A)
relating to any of the Products which has generated revenue within the Company's
last three fiscal years or which is reasonably anticipated to generate revenue
in fiscal year 1995 or fiscal year 1996 and (B) under any license, development
or other contract, agreement, arrangement or understanding providing for minimum
royalty or other payments not fully paid by the Company or any Subsidiary as of
the date of this Agreement;
(ii) advances made with respect to or on
account of the Products which remain outstanding and which have not been written
off;
(iii) (A) editorial and other development
agreements relating to the Products which have involved or are reasonably
anticipated to involve commitments of over $50,000 and which have not been fully
performed and (B) distributor, dealer or manufacturer's representative contracts
or agreements relating to the Products which are currently offered for sale by
the Company or any of its Subsidiaries (to the extent the obligations under such
agreements are not reflected on the Disclosure Schedule lists provided pursuant
to Section 2.13(a)(i) and (ii));
(iv) distributor, dealer or manufacturer's
representative contracts, agreements, arrangements or under-
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standings which are not terminable on less than 90 days notice without cost or
other liability to the Company or any of its Subsidiaries (except for contracts
which, in the aggregate, are not material to the business of the Company and the
Subsidiaries taken as a whole);
(v) sales contracts which entitle any customer
to a rebate or right of set-off, to return any product to the Company or any
Subsidiary after acceptance thereof or to delay the acceptance thereof,
including without limitation any consignment arrangements;
(vi) contracts or other commitments with any
supplier containing any provision permitting any party other than the Company or
any of its Subsidiaries to renegotiate the price or other terms, or containing
any pay-back or other similar provision, upon either the occurrence of a failure
by the Company or any Subsidiary to meet its obligations under the contract when
due or the occurrence of any other event;
(vii) all manufacturing contracts or
arrangements to which the Company or any Subsidiary is a party;
(viii) credit agreements, notes, indentures,
security agreements, pledges, guarantees of or agreements to acquire any such
debt obligation of others or similar documents relating to indebtedness for
borrowed money (including without limitation interest rate or currency swaps,
hedges or straddles or similar transactions) to which the Company or any
Subsidiary is a party or by which any of its assets are bound, restricted or
encumbered;
(ix) all employment, consulting, severance or
termination agreements, commitments or understandings which require or may
require the Company or any Subsidiary to pay more than $50,000 (in base salary
in the case of employment contracts) in any 12-month period;
(x) agreement, or group of related agreements
with the same party or any group of affiliated parties, under which the Company
or any Subsidiary has or has agreed to lease (A) any real property or (B) any
other property requiring aggregate annual payments of at least $25,000, in the
case of either (A) or (B) as lessee or lessor; and
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(xi) all deeds, title documents, title reports
or similar documents related to any real property owned by the Company or any
Subsidiary.
(b) Except as set forth in Section 2.13(b) of the
Disclosure Schedule:
(i) no purchase contract of the Company or any
Subsidiary (or group of related contracts with the same party) (A) continues for
a period of more than 6 months (including renewals or extensions at the option
of another party); (B) requires payment of more than $50,000 in any 12-month
period; or (C) is not terminable by the Company or any Subsidiary without
penalty upon notice of 60 days or less (excluding any contract or group of
contracts with a customer of the Company or any Subsidiary for the sale, lease,
license or rental of Products if such contract or group of contracts was entered
into by the Company or any Subsidiary in the ordinary course of business);
(ii) neither the Company nor any of its
Subsidiaries has any outstanding contract with respect o the employment of any
officer, individual, employee, agent, consultant, adviser, salesperson,
representative or other Person (whether of a legally binding nature or in the
nature of informal understandings) on a full-time, part-time, contract or
consulting basis which is not terminable by the Company or the Subsidiary, as
the case may be, on notice without cost or other liability to the Company or the
Subsidiary, including without limitation any penalty or premium or provision for
the payment of any bonus or commission based on the Company's (and not the
Person's) sales or earnings (except for payments required by applicable
statutes);
(iii) neither the Company nor any of its
Subsidiaries has any pension, profit-sharing, bonus, severance pay, retirement,
hospitalization, insurance, stock purchase, stock option or other benefit plan,
arrangement, understanding or agreement, commitment or understanding with or for
the benefit of any Person (a "Benefit Plan") or any other employment or
consulting agreement that contains any severance or termination pay, liability
or obligation;
(iv) neither the Company nor any of its
Subsidiaries has any Benefit Plan other than group insurance plans applicable to
employees generally;
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(v) neither the Company nor any of its
Subsidiaries has any employee to whom it is paying a base salary at an annual
rate of more than $75,000 for services rendered;
(vi) neither the Company nor any of its
Subsidiaries is restricted by any agreement (including without limitation any
distribution, marketing or sales contract or agreement) from carrying on its
business in any material respect anywhere in the world (other than by geographic
or use restrictions contained in licenses relating to Intellectual Property);
(vii) neither the Company nor any of its
Subsidiaries has any outstanding loan to any Person, other than reasonable
travel advances to employees for travel and reasonable entertainment expenses in
the ordinary course of business;
(viii) neither the Company nor any of its
Subsidiaries has any power of attorney outstanding or any obligation or
liability (whether absolute, accrued, contingent or otherwise) as surety,
co-signer, endorser, co-maker, indemnitor or otherwise in respect of the
obligation of any Person, except as an endorser of checks in the ordinary course
of collection;
(ix) there exists no voting trust,
stockholders' agreement, pledge agreement or buy-sell agreement relating to any
securities of the Company or any Subsidiary which is in effect or will be in
effect as of the Closing;
(x) neither the Company nor any of its
Subsidiaries has any agreement or obligation (contingent or otherwise) to issue
or sell or to repurchase or otherwise acquire or retire any shares of its
capital stock or any of its other equity securities; and
(xi) neither the Company nor any of its
Subsidiaries has any other contract which is material to its business,
operations or prospects or any other contract, instrument, commitment, plan or
arrangement, a copy of which would be required to be filed with the SEC as an
exhibit to a registration statement on Form S-1, if the Company were registering
securities under the Securities Act.
(c) Except as disclosed in Section 2.13(c) of the
Disclosure Schedule, each Material Contract: (i) is, to the best knowledge of
such Seller and the Company and the Subsid-
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iaries, valid and binding on the other party or parties thereto and is in full
force and effect and (ii) upon consummation of the transactions contemplated by
this Agreement, shall continue in full force and effect without penalty or other
adverse consequence. Neither the Company or any Subsidiary nor, to the best
knowledge of such Seller and the Company and the Subsidiaries, any other party
to any Material Contract is in breach of, or default under, any Material
Contract.
14 CUSTOMERS AND SUPPLIERS. Sections 2.14(a) and (b),
respectively, of the Disclosure Schedule set forth (a) a list of the ten largest
customers of the Company and the Subsidiaries in terms of net sales during the
fiscal year ended December 31, 1994, showing the approximate total sales by the
Company and the Subsidiaries to each such customer during the fiscal year ended
December 31, 1994 and the year-to-date 1995 net sales figure for each such
customer through May 31, 1995; and (b) a list of the ten largest suppliers of
goods and materials to the Company and the Subsidiaries in terms of purchases
during the fiscal year ended December 31, 1994, showing the approximate total
purchases by the Company and the Subsidiaries from each such supplier during the
fiscal year ended December 31, 1994 and the year-to-date 1995 purchase figure
for each such supplier through May 31, 1995. There has not been any adverse
change in the business relationship of the Company and the Subsidiaries with any
customer or supplier named in Section 2.14(a) or 2.14(b) of the Disclosure
Schedule since December 31, 1994 which could reasonably be expected to have in
the aggregate a Material Adverse Effect.
15 PRODUCTS.
(a) Set forth in Section 2.15(a) of the Disclosure
Schedule is (i) a complete and accurate list of all Products currently
developed, licensed, manufactured, sold, distributed or otherwise published by
the Company or any of the Subsidiaries ("Current Products"), (ii) if applicable,
the current version number of each Current Product and (iii) information as to
whether all rights to each Current Product and its software code are owned by
the Company or any Subsidiary or are licensed from one or more third parties,
naming any such third party.
(b) Set forth in Section 2.15(b) of the Disclosure
Schedule is a list of all license or other agreements pursuant to which any part
or component of any Current Product
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is licensed from a third party and a detailed description of the part or
component so licensed.
(c) Set forth in Section 2.15(c) of the Disclosure
Schedule is a detailed description of the video clips, audio clips, photography,
animations and other "content" files utilized or incorporated in any Current
Product, including information as to (i) whether such files are owned by the
Company or any Subsidiary or licensed from a third party and (ii) the sources of
such files.
(d) The general returns policy of the Company and
the Subsidiaries with respect to Current Products is as set forth in Section
2.15(d) of the Disclosure Schedule.
16 COMPETITION. Except as set forth in Section 2.16 of the
Disclosure Schedule and except for ownership of publicly traded shares of a
company, not in excess of 1% of such company's outstanding publicly traded
shares, such Seller does not own, directly or indirectly, any capital stock or
other equity securities of, has any direct or indirect equity or ownership
interest in, and is serving as a director, officer, employee, consultant or
agent of any individual, partnership, corporation, association, trust or
unincorporated association which competes with, or conducts the same business
as, the Company or any of its Subsidiaries.
17 INSURANCE. Section 2.17 of the Disclosure Schedule sets
forth all policies or binders of insurance held by or on behalf of the Company
and the Subsidiaries (specifying the insurer, amount of the coverage, type of
insurance, expiration date of each policy, risks insured and any pending claims
thereunder). There has not been any failure to give any notice or present any
claim under any such policy or binder in a timely fashion or in the manner or
detail required by the policy or binder. There are no outstanding past due
premiums or claims, and there are no provisions for retroactive or retrospective
premium adjustments. No notice of cancellation or nonrenewal with respect to, or
disallowance of any claim under, any such policy or binder has been received by
the Company or any Subsidiary or any officer or director thereof. Section 2.17
of the Disclosure Schedule also sets forth a description of all outstanding
bonds and other surety arrangements issued or entered into in connection with
the business of the Company and the Subsidiaries.
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18 ACCESS TO BUYER INFORMATION. Each Seller hereby
represents that (a) she or he has been furnished by the Buyer during the course
of this transaction with all information regarding the Buyer which she or he had
requested, (b) all documents that have been reasonably requested by any Seller
have been made available for such Seller or such Seller's counsel's inspection
and review, (c) she or he has been afforded the opportunity to ask questions of
and receive answers from duly authorized officers or other representatives of
the Buyer concerning the terms and conditions of the sale of the SoftKey Shares
to her or him by the Buyer, as consideration for her or his sale of the Company
Shares to the Buyer, and (d) any other additional information which she or he
has requested has been provided. Each Seller hereby agrees and acknowledges that
the terms of this Agreement represent the definitive terms of its acquisition of
the SoftKey Shares and shall supersede any terms set forth in any letter,
memorandum, document or term sheet and any discussion, agreement or
understanding of any and every nature among the parties hereto.
19 SELLERS' INVESTMENT INTENT. Each Seller represents that
the SoftKey Shares to be issued and delivered to her or him hereunder are being
acquired for her or his own account (or, in the case of KHT, for the account of
certain specified employees of SuperStudio Ltd., one of the Subsidiaries), for
investment for an indefinite period of time, not as nominee or agent for any
other person, firm or corporation and not for distribution or resale to others
in contravention of the Securities Act and the rules and regulations promulgated
thereunder; provided, however, that the parties hereto acknowledge that the
Sellers may dispose of some or all of the SoftKey Shares pursuant to an
effective registration statement under the Securities Act. Each Seller agrees
that she or he will not sell or otherwise transfer the SoftKey Shares unless
they are registered under the Securities Act or unless an exemption from such
registration is available.
20 SECURITIES LEGEND; STOP TRANSFER INSTRUCTIONS. Each
Seller consents to the placement of a legend on any certificate or other
document evidencing the SoftKey Shares, stating that such SoftKey Shares have
not been registered under the Securities Act or any state securities or "Blue
Sky" laws and setting forth or referring to the restrictions on transferability
and sale thereof, including the restrictions set forth herein. Each Seller is
aware that the Buyer will make a notation in its appropriate records with
respect to the restrictions on the transferability of such SoftKey Shares. Each
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Seller also consents and acknowledges that "stop transfer" instructions may be
noted against the SoftKey Shares received by him as consideration hereunder. The
Buyer hereby undertakes to remove any legend described in this Section 2.20 or
to rescind any "stop transfer" instructions described in this Section 2.20 as to
any Seller's SoftKey Shares (a) if such Seller furnishes the Buyer with an
opinion of counsel or other written information reasonably satisfactory in form
and content to the Buyer that such legend or any such instructions are no longer
required (as applicable) or (b) with respect to and at the time of the
disposition of any such SoftKey Shares pursuant to an effective registration
statement under the Securities Act.
21 ENVIRONMENTAL MATTERS.
(a) Except as set forth in 2.21 of the Disclosure
Schedule, during any period that the Company or any Subsidiary has leased or
owned its properties or owned or operated any facilities, there have been no
disposals, releases or threatened releases of oil or petroleum or Hazardous
Materials (as hereinafter defined) on, from or under such properties or
facilities by the Company or any Subsidiary or, to the best knowledge of such
Seller, by any third party. Except as set forth in Section 2.21 of the
Disclosure Schedule, neither the Company nor any Subsidiary nor such Seller has
knowledge of any presence, disposals, releases or threatened releases of oil or
petroleum or Hazardous Materials on, from or under any of such properties or
facilities (including without limitation the presence of oil or petroleum or
Hazardous Materials in the outdoor environment of such properties or facilities,
whether or not the oil or petroleum or Hazardous Material originated from such
properties or facilities), which may have occurred prior to the Company or any
Subsidiary having taken possession of any of such properties or facilities. For
the purposes of this Agreement, the terms "facility," "disposal," "release" and
"threatened release" shall have the definitions assigned thereto by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601 et seq., as amended ("CERCLA"). For the purposes of this
Agreement, "Hazardous Materials" shall mean any hazardous or toxic substance,
material or waste which is or becomes prior to the Closing regulated under, or
defined as a "hazardous substance," "pollutant," "contaminant," "toxic
chemical," "hazardous materials," "toxic substance" or "hazardous chemical"
under (i) CERCLA; (ii) any similar federal, state or local law; or (iii)
regulations promulgated under any of the above laws or statutes.
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(b) None of the properties, facilities or operations
of the Company or any Subsidiary is in violation of any federal, state or local
law, ordinance, regulation or order relating to industrial hygiene or to the
environmental conditions on, under or about such properties or facilities,
including, but not limited to, soil and ground water condition. Except as set
forth in Section 2.21 of the Disclosure Schedule, during the time that the
Company or any Subsidiary has owned or leased its properties and facilities,
neither the Company or any Subsidiary nor, to the best knowledge of such Seller
and the Company and the Subsidiaries, any third party, has used, generated,
manufactured or stored on, under or about such properties or facilities or
transported to or from such properties or facilities any Hazardous Materials.
(c) During the time that the Company or any
Subsidiary has owned or leased its properties and facilities, there has been no
litigation brought or threatened against and no request for information made to
the Company or any Subsidiary by, or any settlement reached by the Company or
any Subsidiary with, any party or parties alleging the presence, disposal,
release or threatened release of any oil or petroleum or Hazardous Materials on,
from or under any of such properties or facilities.
22 TAXES.
(a) Except as disclosed in Section 2.22 of the
Disclosure Schedule:
(i) All returns, declarations, reports,
estimates, information returns, and statements (collectively, "Tax Returns")
required to be filed by the Company or any Subsidiary on or before the date
hereof for all periods ending on or before the Closing Date have been (or will
be) timely filed, and all such Tax Returns are true, correct and complete,
except for such failures to be true, correct and complete which would not create
aggregate liability for the Company or the Subsidiaries in excess of $20,000.
Neither the Company nor any Subsidiary is required to file any state Tax Returns
other than in the State of New York.
(ii) The Company and each Subsidiary have
timely paid all Taxes reasonably believed to be due or claimed to be due from
any of them by any federal, state, local or foreign taxing authority in respect
to periods (or any portion thereof) ending on or before the date hereof.
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(iii) There are no liens for Taxes upon the
assets of the Company or any Subsidiary except liens for Taxes not yet due and
payable.
(iv) The Tax Returns of the Company and each
Subsidiary are closed by statute for the periods set forth in Section 2.22 of
the Disclosure Schedule. No deficiency for any Taxes has been proposed, asserted
or assessed against the Company or any Subsidiary which has not been resolved
and paid in full. There are no outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns that have been given by the Company or any Subsidiary.
(v) The Company has not made any change in
accounting methods, received a ruling from any taxing authority or signed an
agreement with any taxing authority which is reasonably likely to have a
Material Adverse Effect.
(vi) The Company and the Subsidiaries have
complied in all material respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes (including, without
limitation, withholding of Taxes pursuant to Sections 1441 and 1442 of the Code
or similar provisions under any foreign laws) and have, within the time and the
manner prescribed by law, withheld from employee wages and paid over to the
proper governmental authorities all amounts required to be so withheld and paid
over under applicable laws.
(vii) No audit or other proceeding by any
federal, state, local or foreign court, governmental, regulatory, administrative
or similar authority is presently pending with respect to any Taxes or Tax
Return of the Company or any Subsidiary, and neither the Company nor any
Subsidiary has received a written notice of any pending audits or proceedings.
(viii) Neither the Company nor any Subsidiary
is a party to, is bound by or has any obligation under, any Tax sharing
agreement or similar contract or arrangement. No power of attorney has been
granted by the Company with respect to any matter relating to Taxes which is
currently in force.
(ix) No deficiency for any Taxes has been
proposed, asserted or assessed against the Company or any Subsidiary which has
not been resolved or paid in full.
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(x) There are no outstanding requests,
agreements, consents or waivers to extend the statutory period of limitations
applicable to the assessment of any Taxes or deficiencies against the Company or
any of its Subsidiaries.
(xi) No power of attorney granted by either the
Company or any of the Subsidiaries with respect to any Taxes is currently in
force.
(xii) Neither the Company nor any of the
Subsidiaries is a party to, is bound by or has any obligation under, any
agreement providing for the allocation or sharing of Taxes.
(xiii) Neither the Company nor any of the
Subsidiaries has, with regard to any assets or property held, acquired or to be
acquired by any of them, filed a consent to the application of Section 341(f) of
the Code, or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by the Company or any of the Subsidiaries.
(xiv) Neither the Company nor any Subsidiary
is a party to any agreement, contract or arrangement that could result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
(xv) The Company is not and has not been during
the applicable period specified in Section 897(c)(1)(ii) of the Code a United
States real property holding company (as defined in Section 897(c)(2) of the
Code).
(b) For purposes of this Agreement, "Taxes"
(including, with correlative meaning, the term "Tax") shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, service, service use, ad
valorem, transfer, franchise, profits, license, withholding, social security,
payroll, employment, excise, estimated, severance, stamp, recording, occupation,
property or other taxes, customs duties, fees, assessments or charges of any
kind whatsoever, whether computed on a separate consolidated, unitary, combined
or other basis, together with any interest, fines, penalties, additions to tax
or other additional amounts imposed thereon or
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with respect thereto imposed by any taxing authority (domestic or foreign).
23 BENEFIT PLANS.
(a) Section 2.23 of the Disclosure Schedule sets
forth a true and complete list of each Benefit Plan, and each other "employee
benefit plan" (within the meaning of Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and regulations
promulgated thereunder ("ERISA")), that is or was maintained or contributed to
by the Company or any affiliate (including any Subsidiary) of the Company or by
any trade or business, whether or not incorporated, which together with the
Company or any affiliate (including any Subsidiary) would be deemed a "single
employer" within the meaning of Section 4001 of ERISA (an "ERISA Affiliate")
within the last six years, for the benefit of any employee, former employee,
consultant, officer or director of the Company or any Subsidiary or any ERISA
Affiliate (an "ERISA Plan"). Neither the Company nor any Subsidiary has any
commitment, whether formal or informal and whether legally binding or not, to
create any additional ERISA Plan which could have a Material Adverse Effect.
(b) No ERISA Plan is a "multiemployer plan," as such
term is defined in Section (3)(37) of ERISA; no ERISA Plan is subject to Section
412 of the Code or Title IV of ERISA; each of the ERISA Plans is, and has always
been, operated in all material respects in accordance with the requirements of
all applicable laws, and all persons who participate in the operation of such
ERISA Plans and all ERISA Plan "fiduciaries" (within the meaning of Section
3(21) of ERISA) have always acted substantially in accordance with the
provisions of all applicable law. None of the ERISA Plans is intended to be
"qualified" within the meaning of Section 401(a) of the Code; no ERISA Plan has
an accumulated or waived funding deficiency within the meaning of Section 412 of
the Code; within the past six years no "reportable event," as such term is
defined in Section 4043(b) of ERISA, has occurred with respect to any ERISA
Plan; and no condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring a liability to or on account of an ERISA Plan
pursuant to Title IV of ERISA.
(c) Full payment has been made, or will be made in
accordance with section 404(a)(6) of the Code, of all amounts which the Company
or any Subsidiary or any ERISA
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Affiliate is required to pay under the terms of each of the ERISA Plans as of
the last day of the most recent plan year thereof ended prior to the date of
this Agreement, and all such amounts properly accrued through the Closing Date
with respect to the current plan year thereof have been paid by the Company or
any Subsidiary or are properly reflected in accordance with generally accepted
accounting principles on the financial statements of the Company and the
Subsidiaries.
(d) No ERISA Plan provides benefits, including,
without limitation, death or medical benefits (whether or not insured), with
respect to current or former employees of the Company or any Subsidiary or any
ERISA Affiliates for periods extending beyond their retirement or other
termination of service for which the Company or any Subsidiary is or could be
liable. No amounts payable under the ERISA Plans will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the Code.
(e) There has been no prohibited transaction (within
the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to
any ERISA Plan; neither the Company nor any Subsidiary has incurred any material
liability for any excise tax arising under Section 4972 or 4980B of the Code,
and no fact or event exists that could reasonably give rise to any such
liability with respect to the filing of reports with respect to any ERISA Plan;
there are no pending, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the ERISA Plans, or any
trusts related thereto or any trustee or administrator thereof, and no material
litigation or administrative or other proceeding (including, without limitation,
any litigation or proceeding under Title IV of ERISA) has occurred or, to the
best knowledge of the Sellers, is threatened involving any ERISA Plan or any
trusts related thereto or any trustee or administrator thereof.
24 POOLING MATTERS. Neither the Company nor any affiliate
(including any Subsidiary), to the best knowledge of such Seller and the Company
and the Subsidiaries, based upon inquiries of responsible officers of the
Company, has taken or agreed to take any action that (without giving effect to
this Agreement, the transactions contemplated hereby or actions related thereto,
or any action taken or agreed to be taken by the Buyer or any of its affiliates)
would affect the ability of the Buyer to account for the business combination to
be effected by this Agreement and the transactions contemplated hereby as a
pooling of interests.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE BUYER
The Buyer hereby represents and warrants to each Seller as
follows:
1 CORPORATE ORGANIZATION. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
2 AUTHORIZATION. The Buyer has the requisite corporate
power and authority to enter into this Agreement and the other agreements,
documents and instruments to be executed and delivered by the Buyer pursuant
hereto (the "Additional Buyer's Documents") and to carry out the transactions
contemplated hereby and thereby. The execution, delivery and performance of this
Agreement and the Additional Buyer's Documents and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by the
Board of Directors of the Buyer, and no other corporate proceedings on the part
of the Buyer or its stockholders are necessary to authorize this Agreement and
the Additional Buyer's Documents and transactions contemplated hereby and
thereby. When fully executed and delivered, this Agreement and each of the
Additional Buyer's Documents will constitute the valid and binding agreements of
the Buyer, enforceable against the Buyer in accordance with their respective
terms.
3 SEC FILINGS.
(a) The Buyer has filed all forms, reports and
documents required to be filed by it with the SEC since January 1, 1995. Such
forms, reports and documents and all registration statements filed under the
Securities Act since January 1, 1995 (the "SEC Reports") (i) were prepared in
accordance with the requirements of the Securities Act or the Securities
Exchange Act of 1934, as amended, as the case may be, and the rules and
regulations thereunder, as amended (collectively, the "Rules and Regulations"),
and (ii) did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made or incorporated by reference
therein, in the light of the circumstances under
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which they were made or incorporated by reference, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained or incorporated by
reference in the SEC Reports was prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each fairly presented the consolidated financial position, results
of operations and changes in cash flow of the Buyer and its consolidated
subsidiaries as of the respective dates thereof and for the respective periods
indicated therein, except as otherwise noted therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments which were
not and are not expected, individually or in the aggregate, to have a material
adverse effect on the Buyer).
4 AUTHORIZATION AND ISSUANCE OF SOFTKEY SHARES. The
issuance of the SoftKey Shares has been duly authorized by the Buyer and, upon
delivery to the Sellers and the Escrow Agent of the certificate or certificates
therefor against receipt of the Company Shares being purchased by the Buyer and
the other deliveries by each Seller pursuant hereto, the SoftKey Shares will be
validly issued, fully paid and nonassessable, free and clear of all Liens and
restrictions other than the restrictions imposed herein or in the Escrow
Agreement, on the certificate or certificates or by the Rules and Regulations.
5 CONSENTS AND APPROVALS; NON-CONTRAVENTION. Except for any
required filings under the HSR Act, neither the execution, delivery or
performance of this Agreement or any of the Additional Buyer's Documents by the
Buyer nor the consummation by the Buyer of the transactions contemplated hereby
or thereby nor compliance by the Buyer with any of the provisions hereof or
thereof will (a) violate any provision of the Certificate of Incorporation or
By-Laws of the Buyer, (b) require any filing with, or permit, authorization,
consent or approval of, any Governmental Entity or (c) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Buyer or any
of its properties or assets.
6 LITIGATION. There is no claim, action, suit, inquiry,
proceeding or investigation by or before any Governmental Entity pending or,
to the Buyer's knowledge, threatened against or involving the Buyer which in any
manner seeks injunctive or other non-monetary relief or seeks to prevent,
enjoin, alter or delay any transaction contemplated hereby, nor
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is there any basis for any such claim, action, suit, inquiry, proceeding or
investigation. The Buyer is not subject to any order, writ, injunction or decree
which, individually or in the aggregate, has or in the future would have a
material adverse effect on the ability of the Buyer to consummate the
transactions contemplated hereby.
ARTICLE IV
ADDITIONAL AGREEMENTS
1 CONSENTS AND APPROVALS. The Buyer and each Seller shall,
and each Seller shall cause the Company and the Subsidiaries to, take all
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on themselves with respect to the transactions contemplated
hereby (which actions shall include, without limitation, furnishing all
information required in connection with approvals of or filings with any other
Governmental Entity) and will promptly cooperate with and furnish information to
each other in connection with any such requirements imposed on any of them in
connection with the transactions contemplated hereby. The Buyer and each Seller
shall, and each Seller shall cause the Company and the Subsidiaries to, take all
reasonable actions necessary to obtain (and shall cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private third party, required to
be obtained or made by the Buyer, any Seller, the Company or any of the
Subsidiaries in connection with the transactions contemplated hereby; provided,
however, that neither the Buyer nor any of its affiliates shall be under any
obligation to (a) make proposals, execute or carry out agreements or submit to
judicial or administrative orders, providing for the sale or other disposition
or holding separate (through the establishment of a trust or otherwise) of any
assets or categories of assets of the Buyer or any of its affiliates or the
Company or any of the Subsidiaries or the holding separate of the Company Shares
or imposing or seeking to impose any limitation on the ability of the Buyer or
any of its subsidiaries or affiliates to conduct their business or own such
assets or to acquire, hold or exercise full rights of ownership of the Company
Shares or (b) otherwise take any step to avoid or eliminate any impediment which
may be asserted under any law of the United States or any state governing
competition, monopolies or restrictive trade practices which, in the reasonable
judgment of the Buyer, could reasonably be
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expected to result in a material limitation of the benefit expected to be
derived by the Buyer as a result of the transactions contemplated hereby or
might adversely affect the Company or any Subsidiary or the Buyer or any of the
Buyer's affiliates.
2 FURTHER ASSURANCES.
(a) From time to time after the Closing, each Seller
will use all reasonable efforts (a) to obtain any licenses, permits, waivers,
consents, authorizations, qualifications and orders of Governmental Entities or
other Persons or entities as the Buyer shall reasonably request to enable the
Company and the Subsidiaries to enjoy after the Closing the rights and benefits
presently enjoyed by the Company and the Subsidiaries in the operation of the
business conducted by the Company or by any Seller in respect of the Company and
(b) to transfer to the Company or any Subsidiary, at the expense of the Sellers,
all rights in respect of any leases, licenses or other contracts, commitments or
agreements held by any Seller or any of its respective affiliates or other
subsidiaries relating to any real or other property used in the conduct of the
business conducted by the Company and the Subsidiaries or otherwise use all
reasonable efforts to provide benefits to the Company or any Subsidiary or their
respective assignees under any such leases, licenses and other contracts,
commitments and agreements which are at least as favorable as those in effect
immediately prior to the Closing hereunder.
(b) After the Closing, the Buyer will (i) use all
reasonable efforts to assist Fox, Rosenberg and Flextech in obtaining the
release of any personal guarantees by Fox, Rosenberg or Flextech of lease
obligations and other obligations of the Company or the Subsidiaries and
(ii) indemnify Fox, Rosenberg or Flextech, as the case may be from and
against any and all of such obligations.
3 ACCESS. For a period of at least five years after the
Closing Date, (a) the Buyer agrees to cause the Company and the Subsidiaries to
retain all financial and Tax records and minute books of the Company and the
Subsidiaries relating to the period on or before the Closing Date and (b) the
Sellers agree to retain any documents and other materials relating to the
Company which are not conveyed pursuant to this Agreement. After such five-year
period, none of the Company or any Subsidiary or the Sellers will dispose of
such materials without first giving the other party the opportunity, at such
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other party's expense, to remove and retain all or any part of such materials as
it may select. During the period such materials are so retained, each party
shall, on reasonable notice, afford representatives of the other party access
thereto, during regular business hours, to examine and copy such materials.
After the Closing, the Buyer and Sellers shall, and the Buyer shall cause the
Company and the Subsidiaries to, provide the requesting party with such
assistance at the expense of the requesting party as may reasonably be requested
by such party in connection with the preparation of any Tax Return, any audit,
or any judicial or administrative proceeding or determination relating to
liability for Taxes of Buyer, Sellers, the Company or any Subsidiary and shall
provide the requesting party at such party's expense with any reasonable
assistance (including, without limitation, making employees available to such
party during regular business hours) which may be relevant to such Tax Return,
audit, proceeding or determination.
ARTICLE V
CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS
All obligations of the Buyer to consummate the transactions
contemplated by this Agreement are subject to the satisfaction or waiver prior
to or at the Closing of the following conditions:
1 PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND
WARRANTIES. The Sellers shall have performed all obligations contained herein to
be performed by the Sellers at or prior to the Closing and the representations
and warranties of the Sellers contained herein shall be true and accurate on and
as of the date of this Agreement, and the Buyer shall have received a
certificate of the Sellers to that effect.
2 NO INJUNCTION OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction (an "Injunction") shall be in effect and no request for
an Injunction shall be pending before any Governmental Entity and remain
undecided for a period of ten business days to restrain, prohibit or otherwise
challenge the legality of this Agreement or the transactions contemplated
hereby.
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3 REGULATORY APPROVALS. All applicable waiting periods
under the HSR Act with respect to the transactions contemplated hereby shall
have expired or been terminated, and Flextech shall have received the approval
of the Singapore Stock Exchange for the transactions contemplated hereby.
4 SECTION 1445 CERTIFICATES. Each of the Sellers shall have
delivered to the Buyer a certificate satisfying the requirements of Section
1445(b)(2) or Section 1445(b)(3) of the Code, as the case may be, in either
case, in form and substance satisfactory to the Buyer.
5 ESCROW AGREEMENT. The Sellers, the Buyer and the Escrow
Agent shall have entered into the Escrow Agreement.
6 AFFILIATE LETTERS. To ensure that the business
combination to be effected by this Agreement and the transactions contemplated
hereby will be accounted for as a pooling of interests, and to ensure compliance
with the Securities Act, each Seller shall have signed and delivered to the
Buyer a letter in the form attached hereto as Exhibit B (collectively, the
"Affiliate Letters"), agreeing, among other things, that such persons will not
sell, pledge, transfer or otherwise dispose of any of the SoftKey Shares
received as consideration pursuant to Section 1.2 hereof, except in compliance
with Rule 144 under the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act or an effective registration
statement under the Securities Act.
7 ACCOUNTANTS' LETTERS. The Buyer shall have received from
Coopers & Lybrand L.L.P. and Ernst & Young LLP the letters described in Section
1.9 hereof, unless the Buyer's failure to receive one or both of such letters
results from a willful action taken by the Buyer which prevents either Coopers &
Lybrand L.L.P. or Ernst & Young LLP from delivering or causing to be delivered
its respective letter.
8 TERMINATIONS AND ASSIGNMENTS.
(a) The following contracts shall have been
terminated (with, where requested by the Buyer, appropriate waivers of past
noncompliance) without cost or other adverse effect on the Buyer:
(i) Agreement of Shareholders of Future Vision
Holding, Inc. dated April 8, 1994 by and among Fox, Rosenberg and Flextech;
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42
(ii) Security and Pledge Agreement dated as of
April 8, 1994 between the Company and Flextech;
(iii) Employment Agreement dated as of January
1, 1994 by and between the Company and Fox;
(iv) Employment Agreement dated as of January
1, 1994 by and between the Company and Rosenberg;
(v) Employment Agreement dated January 1, 1995
by and between the Company and Scott Tobin;
(vi) Employment Agreement dated January 1, 1995
by and between the Company and Eva Rosenstein;
(vii) Agreement of Shareholders of Inter-
active Publishing Corporation dated March 5, 1993 among Fox, Rosenberg, Joseph
Au Sai Chuen and Interactive Publishing Corporation;
(viii) Share Swap Agreement dated as of April
8, 1994 between Flextech, Fox and Rosenberg;
(ix) Agreement dated November 14, 1993 by and
between Altholz and Shelly Avrahami;
(x) the license agreement between Electec Pte.
Ltd. ("Electec") and Future Vision Holding, Inc. and its subsidiaries, Future
Vision Multimedia, Inc. and Multimedia Products Corporation, evidenced by (i) a
facsimile dated August 31, 1994 from Joseph Au to Fox, (ii) a facsimile dated
September 5, 1994 from Fox to Joseph Au and (iii) a Letter of Authorization
dated October 19, 1994, signed by Joseph B. Tuchinsky, General Counsel of the
Company;
(xi) Sales Distribution Agreement dated
December 15, 1993 by and between the Company and Flextech Holdings Pte Ltd; and
(xii) Stock Pledge Agreement dated as of July
10, 1995 by and between FVH Asia Pte Ltd., a Singapore corporation, and Altholz
and Abrahami, and the stock power issued in connection therewith.
(b) Fox shall have caused Advanced Strategies
Corporation, a New York corporation ("ASC"), to transfer to the
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Company any and all assets of ASC relating to the business of the Company or any
Subsidiary identified by Buyer for transfer.
9 CONVERSION OF NOTE. The $2,000,000 principal amount
Secured Convertible Note dated April 8, 1994 made by the Company to Flextech
shall have been converted into 2,807,429 shares of Company Common Stock in
accordance with its terms and cancelled.
10 STOCKHOLDER APPROVAL. Flextech shall have received the
approval of its stockholders for the transactions contemplated hereby.
11 CANCELLED PROMISSORY NOTES. Evidence, satisfactory to
the Buyer, of payment and cancellation of the following promissory notes shall
have been delivered to the Buyer:
(a) Promissory Note for $500,000 dated September
1, 1994 held by Flextech (maturity date: June 1, 1995);
(b) Promissory Note for $500,000 dated February
21, 1995 held by Flextech (maturity date: June 21, 1995);
(c) Promissory Note for $500,000 dated August 18,
1994 held by Joseph Au (maturity date: May 31, 1995);
(d) Promissory Note for $500,000 dated December 8,
1994 held by Flextech (maturity date: April 8, 1995); and
(e) Promissory Note for $250,000 dated April 8, 1994
held by Kentfield Associates (maturity date: June 1, 1995).
12 TRANSLATION OF DOCUMENTS. The Company shall have
provided an accurate summary in the English language of all documents included
in the Disclosure Schedule which are in the Hebrew language
ARTICLE VI
CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS
All obligations of Sellers to consummate the transac-
tions contemplated by this Agreement are subject to the satis-
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faction or waiver prior to or at the Closing of the following conditions:
1 PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND
WARRANTIES. The Buyer shall have performed all obligations contained herein to
be performed by the Buyer at or prior to the Closing and the representations and
warranties of the Buyer contained herein shall be true and accurate on and as of
the date of this Agreement, and the Sellers shall have received a certificate of
the Buyer to that effect.
2 NO INJUNCTION OR RESTRAINTS. No Injunction shall be in
effect and no request for an Injunction shall be pending before any Governmental
Entity and remain undecided for a period of ten business days to restrain,
prohibit or otherwise challenge the legality of this Agreement or the
transactions contemplated hereby.
3 REGULATORY APPROVALS. All applicable waiting periods
under the HSR Act with respect to the transactions contemplated hereby shall
have expired or been terminated, and Flextech shall have received the approval
of the Singapore Stock Exchange for the transactions contemplated hereby.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
1 SURVIVAL. All representations and warranties contained in
this Agreement shall survive the Closing until (a) for items expected to be
encountered in the audit process, as determined by the Buyer's independent
auditors in their reasonable judgment, the earlier to occur of (i) one year
after the Closing or (ii) the issuance of the first independent audit report on
the Buyer's financial statements after the Closing, which financial statements
include the financial results of the Company, or (b) for all other items, one
year after the Closing, but thereafter shall be of no further force or effect.
This Section 7.1 shall not limit any covenant or agreement of the parties which
by its terms contemplates performance after the Closing.
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2 INDEMNIFICATION.
(a) Each Seller other than Abrams and Barlow agrees
to indemnify and hold harmless the Buyer and its subsidiaries and affiliates and
their respective officers, directors, employees and agents against and in
respect of any loss, liability (including without limitation any liability for
Taxes), damage, deficiency, cost and expense (including without limitation
reasonable expenses of investigation and reasonable attorneys' fees incurred in
connection with any claim, suit or proceeding brought against an indemnified
party and including without limitation all costs and expenses incurred in
connection with any threatened claim of a third party relating to any patent
application, patent right, trademark, trademark application, trade name, service
mark, service mark application, copyright, copyright registration or trade
secret infringement including without limitation all costs and expenses incurred
in connection with any recalls (such as costs of returns, freight, costs to
receive returns, costs of returning content, royalties not recovered and other
similar costs), editing, modifying or repackaging of existing Products)
(collectively, "Losses") incurred or sustained by any of them as a result of (i)
any breach by such Seller of this Agreement, including its or his
representations, warranties and covenants contained herein or in any agreement,
document or other instrument delivered pursuant hereto or in connection herewith
or (ii) any threatened or actual infringement by the Intellectual Property
currently used, sold, licensed or disposed of by the Company or any Subsidiary
or proposed to be used, sold, licensed or disposed of by the Company on the
rights of any Person, regardless of whether such infringement constitutes a
breach by such Seller of this Agreement; provided, however, that (x)
indemnification under clause (ii) of this Section 7.2(a) as a result of any
threatened infringement shall be available only for Losses incurred or sustained
based upon any action taken by the Buyer in the exercise of reasonable business
judgment, taking into account the gravity of the threatened infringement that
occurred, is occurring or would occur if the Buyer failed to take any action and
(y) no indemnification shall be available under this Section 7.2(a) for any
actions taken by the Buyer or the Company or any Subsidiary after the Closing,
including without limitation any change by the Buyer or the Company or any
Subsidiary in any use of any Intellectual Property from the use of such
Intellectual Property made by the Company or any such Subsidiary prior to the
Closing. The Sellers shall not be required to indemnify the Buyer (and the other
indemnified parties set forth in this Section 7.2(a)) hereunder for a
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breach of Section 2.12 hereof (or any other Section of this Agreement which is
also breached by such event) or under clause (ii) of this Section 7.2(a) unless
and until the aggregate Losses in connection therewith exceed $35,000, provided
that the aforementioned $35,000 basket shall not apply in respect of Losses
related to, or arising out of, conditions, events or circumstances known to the
Sellers prior to the Closing and not disclosed in this Agreement or the
Disclosure Schedule. No investigation made by the Buyer or any other Person
shall affect any representation or warranty of any Seller contained in this
Agreement or the indemnification obligation of the Sellers set forth herein.
(b) The Buyer agrees to indemnify and hold harmless
each Seller and its respective affiliates and agents and, as to any Seller
organized in corporate form, its officers, directors and employees, against and
in respect of any Losses incurred or sustained by any of them as a result of any
breach by the Buyer of this Agreement, including the representations, warranties
and covenants contained herein or in any agreement, document or other instrument
delivered pursuant hereto or in connection herewith.
(c) No party shall be entitled to make any claim for
indemnification under this Article VII on account of any representation,
warranty or covenant contained herein after the date on which the same ceases to
survive pursuant to Section 7.1 hereof; provided, however, that if prior to such
date, the Indemnitor (as hereinafter defined) shall have received written notice
of a claim or event in accordance with Section 7.3 hereof, such claim or event,
if diligently pursued, shall continue as a basis for indemnity until it is
finally resolved.
(d) Losses as defined in Section 7.2(a) hereof shall
be limited to the amount of actual Losses sustained by the Indemnitee (as
hereinafter defined), net of any insurance proceeds recovered by the Indemnitee
under its insurance policies.
3 PROCEDURE FOR INDEMNIFICATION.
(a) Any Person or entity entitled to assert a claim
for indemnification under this Agreement (the "Indemnitee") shall give prompt
written notice to the indemnifying party (the "Indemnitor") of any claim or
event known to it which does or may give rise to a claim for indemnification
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47
hereunder by the Indemnitee against the Indemnitor; provided that the failure of
any Indemnitee to give notice as provided in this Section 7.3 shall not relieve
the Indemnitor of its obligations under this Article VII, except to the extent
that such failure has materially and adversely affected the rights of the
Indemnitor. In the case of any claim for indemnification hereunder arising out
of a claim, action, suit or proceeding brought by any Person who is not a party
to this Agreement (a "Third-Party Claim"), the Indemnitee shall also give the
Indemnitor copies of any written claims, process or legal pleadings with respect
to such Third-Party Claim promptly after such documents are received by the
Indemnitee.
(b) An Indemnitor may elect to compromise or defend,
at such Indemnitor's own expense and by such Indemnitor's own counsel, any
Third-Party Claim. If an Indemnitor elects to compromise or defend a Third-Party
Claim, it shall, within 30 days of its receipt of the notice provided pursuant
to Section 7.3(a) hereof (or sooner, if the nature of such Third-Party Claim so
requires), notify the related Indemnitee of its intent to do so, and such
Indemnitee shall reasonably cooperate in the compromise of, or defense against,
such Third-Party Claim. Such Indemnitor shall pay such Indemnitee's actual
out-of-pocket expenses incurred in connection with such cooperation. After
notice from an Indemnitor to an Indemnitee of its election to assume the defense
of a Third-Party Claim, such Indemnitor shall not be liable to such Indemnitee
under this Article VII for any legal expenses subsequently incurred by such
Indemnitee in connection with the defense thereof; provided that such Indemnitee
shall have the right to employ one counsel of its choice to represent such
Indemnitee if, in such Indemnitee's reasonable judgment, a conflict of interest
between such Indemnitee and such Indemnitor exists in respect of such claim, and
in that event the reasonable fees and expenses of such separate counsel shall be
paid by such Indemnitor. If an Indemnitor elects not to compromise or defend
against a Third-Party Claim, or fails to notify an Indemnitee of its election as
provided in this Section 7.3, such Indemnitee may pay, compromise or defend such
Third-Party Claim on behalf of and for the account and risk of the Indemnitor.
No Indemnitor shall consent to entry of any judgment or enter into any
settlement without the written consent of each related Indemnitee (which consent
shall not be unreasonably withheld), unless such judgment or settlement provides
solely for money damages or other money payments for which such Indemnitee is
entitled to indemnification hereunder and includes as an unconditional term
thereof the giving by the claimant or
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plaintiff to such Indemnitee of a release from all liability in respect of such
Third-Party Claim.
(c) If there is a reasonable likelihood that a
Third-Party Claim may have a material adverse effect on an Indemnitee, other
than as a result of money damages or other money payments for which such
Indemnitee is entitled to indemnification hereunder, such Indemnitee will have
the right, after consultation with the Indemnitor and at the cost and expense of
the Indemnitor, to defend such Third-Party Claim.
(d) If the amount of any Losses shall, at any time
subsequent to payment pursuant to this Agreement, be reduced by recovery,
settlement or otherwise, the amount of such reduction, less any expenses
incurred in connection therewith, shall promptly be repaid by the Indemnitee to
the related Indemnitor.
4 REMEDIES CUMULATIVE.
(a) The Buyer's recourse against each of the Sellers
with respect to damages resulting from the breach of any representation,
warranty or covenant contained in this Agreement, whether such recourse is
sought under Section 7.3 or otherwise, shall be limited to the SoftKey Shares
or, as to any of the SoftKey Shares which have been sold or otherwise disposed
of by such Seller at or prior to the time such damages are payable, the proceeds
of the sale or disposition of such SoftKey Shares.
(b) The Sellers hereby acknowledge and agree that
money damages would not be a sufficient remedy for, and the Buyer would be
irreparably harmed by, certain breaches by any of them of this Agreement and
that the Buyer shall be entitled to specific performance and injunctive relief,
without payment of bond or security, as remedies for any such breach.
(c) The remedies available to any party for any
breach of this Agreement by any other party shall be cumulative and shall not
preclude the assertion by any such party of any other rights or the seeking of
any other legal, equitable or statutory remedies against any other party.
(d) In the event that any party to this Agreement
shall be in default of any covenant, agreement or other continuing obligation
hereunder, any nondefaulting party shall send a written notice to the defaulting
party informing the
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defaulting party, in reasonable detail, of the existence and nature of such
default. The defaulting party shall then have 30 days (after receipt of such
notice) to cure such default. If, immediately after the end of that 30-day
period, the default has not been cured, then the nondefaulting party may declare
this Agreement in default and pursue all remedies against the defaulting party.
ARTICLE VIII
TERMINATION PRIOR TO CLOSING
1 TERMINATION OF AGREEMENT. This Agreement and the
transactions contemplated hereby may be terminated prior to the Closing Date, as
follows:
(a) by mutual written consent of the Buyer and the
Sellers;
(b) by the Buyer if: (i) Fox, Rosenberg, Altholz or
Abrahami shall have died or become permanently disabled; (ii) a temporary
restraining order, preliminary or permanent injunction or other order shall be
in effect or a request therefor shall be pending and remain undecided for a
period of ten business days to restrain, prohibit or otherwise challenge the
rights of the Company or any of the Subsidiaries to manufacture, market, sell or
distribute (A) Infopedia or (B) any product or products which, individually or
in the aggregate, were responsible for net sales of at least $2,000,000 in the
twelve months ended June 30, 1995; (iii) a bona fide, written claim, action,
suit, inquiry, proceeding or investigation shall be brought after the date of
this Agreement asserting damages against the Company or any of the Subsidiaries
in an amount equal to or exceeding $5,000,000; (iv) the facility leased by the
Company or a Subsidiary located in: Great Neck, New York, Nanuet, New York or
the State of Israel shall be substantially or totally impaired by a casualty
loss or act of God; (v) additional material governmental restrictions, not in
force and effect on the date hereof, shall have been imposed upon purchases or
sales of or trading in securities generally and is reasonably expected to cause
a Material Adverse Effect; (vi) the declaration of a banking moratorium or any
suspension of payments in respect of banks of the United States or any
limitation by any governmental authority on, or any other event which has a
reasonable likelihood of adversely affecting, the extension of credit by banks
or lending institutions in the
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United States generally shall have occurred, which declaration, suspension or
limitation shall be reasonably expected to cause a Material Adverse Effect; or
(vii) an outbreak of major hostilities or other national or international
calamity or any substantial change in national or international political,
financial or economic conditions shall have occurred or shall have accelerated
or escalated and shall be reasonably likely to cause a Material Adverse Effect;
(c) by the Sellers or the Buyer by written notice to
the other party or parties at any time prior to the Closing Date in the event
that (i) any representation or warranty made by such other party or parties in
this Agreement proves to have been materially incorrect or misleading when made
or (ii) such other party or parties has or have materially failed to perform and
observe any of the covenants or agreements in this Agreement; or
(d) by the Sellers or the Buyer, if the Closing has
not occurred on or before September 30, 1995 and this Agreement has not
previously been terminated; provided, however, that the right to terminate the
Agreement under this Section 8.1(d) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before such date.
2 EFFECT OF TERMINATION. In the event this Agreement is
terminated pursuant to Section 8.1 hereof, this Agreement shall become wholly
void and of no force or effect, without any liability or further obligation on
the part of the Sellers or the Buyer, except that the provisions and obligations
set forth in Sections 9.2, 9.3, 9.6 and 9.10 shall survive such termination. No
termination of this Agreement shall terminate or otherwise impair the
Confidentiality Agreement between the Buyer and the Company.
ARTICLE IX
GENERAL PROVISIONS
1 AMENDMENT AND WAIVER. No amendment of any provision of
this Agreement shall in any event be effective, unless the same shall be in
writing and signed by the parties hereto. Any failure of any party to comply
with any obligation, agreement or condition hereunder may only be waived in
writing
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51
by the other parties, but such waiver shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. No failure by any
party to take any action against any breach of this Agreement or default by the
other parties shall constitute a waiver of such party's right to enforce any
provision hereof or to take any such action.
2 EXPENSES. Whether or not the transactions contemplated by
this Agreement shall be consummated, each of the parties hereto agrees to pay
all costs and expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby, including without limitation the fees of its
counsel, accountants and consultants. Notwithstanding the foregoing, the Sellers
shall bear the following costs and expenses of the Company and the Subsidiaries
in connection with this Agreement to the extent that such costs and expenses
exceed $50,000 in the aggregate:
(a) the fees and expenses of Morrison & Foerster,
counsel to the Company; and
(b) the fees and expenses of Ernst & Young LLP,
accountants to the Company.
3 BROKER'S AND FINDER'S FEES. Each Seller hereby represents
and warrants to the Buyer with respect to each Seller and the Company and the
Subsidiaries, and the Buyer hereby represents and warrants to each Seller with
respect to the Buyer, that no Person or entity is entitled to receive from any
Seller or the Company or any Subsidiary, on the one hand, or from the Buyer, on
the other hand, any investment banking, brokerage or finder's fee or fees for
financial consulting or advisory services in connection with this Agreement or
the transactions contemplated hereby; except that Robertson, Stephens & Company,
L.P. is entitled to receive an investment banking fee of $500,000 from the
Buyer.
4 NOTICES. All notices, requests and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (if confirmed) or mailed by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice, as
specified below):
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(a) If to the Buyer:
SoftKey International Inc.
One Athenaeum Street
Cambridge, Massachusetts 02142
Attention: Neal S. Winneg, Esq.
Facsimile No.: (617) 494-5660
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
One Beacon Street
Boston, Massachusetts 02108
Attention: Louis A. Goodman, Esq.
Facsimile No.: (617) 573-4822
(b) If to the Sellers:
c/o Future Vision Holding, Inc.
60 Cutter Mill Road, Suite 502
Great Neck, New York 11021
Attention: Harry Fox
Facsimile No: (516) 773-0990
With a copy to:
Morrison & Foerster
345 California Street
San Francisco, California 94104-2675
Attention: Bruce Alan Mann, Esq.
Facsimile No.: (415) 677-7522
The address of a party for the purposes of this Section 9.4 may be changed by
giving written notice to the other party or parties of such change in the manner
provided herein for giving notice. Unless and until such written notice is
received, the addresses as provided herein shall be deemed to continue to effect
for all purposes hereunder.
5 ENTIRE AGREEMENT; BINDING EFFECT. This Agreement and the
documents referred to herein (a) constitute the entire agreement and supersede
all other agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof (provided that any
confidentiality agreement shall survive the execution of this Agreement), and
(b) shall not be assigned by any party (by operation of law or otherwise)
without the prior written consent of the
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other parties, except that the Buyer may assign, in its sole discretion, any of
its rights, interests and obligations hereunder to any affiliate of the Buyer;
provided, however, that no such assignment shall relieve the Buyer of its
obligations hereunder.
6 APPLICABLE LAW. This Agreement shall be governed by and
be construed in accordance with the laws of the Commonwealth of Massachusetts,
without giving effect to the principles thereof relating to conflicts of laws.
The parties hereby consent to the jurisdiction of Massachusetts state and
federal courts over all matters relating to this Agreement.
7 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and, subject to Section
9.5(b) hereof, their respective successors and assigns, and nothing in this
Agreement, express or implied, is intended to confer upon any other Person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
8 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
9 HEADINGS; PRONOUNS AND CONJUNCTIONS. The section and
other headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Unless otherwise indicated herein or the context otherwise requires, the
masculine pronoun shall include the feminine and neuter and the singular shall
include the plural. The word "or" shall not be deemed exclusive.
10 ANNOUNCEMENTS. Except as required by law or the rules of
the Nasdaq National Market or any national securities exchange, for so long as
this Agreement is in effect, no announcement of this Agreement or the
transactions contemplated hereby shall be made by any of the parties without the
written consent of the other party or parties, which consent shall not be
unreasonably withheld.
11 SEVERABILITY. In case any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal or unenforceable
in any jurisdiction, the validity,
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legality and enforceability of the remaining terms, provisions, covenants or
restrictions, or of such term, provision, covenant or restriction in any other
jurisdiction, shall not in any way be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties hereto have signed this
Agreement under seal as of the date first written above.
SOFTKEY INTERNATIONAL INC.
By:
------------------------
Name:
Title:
FLEXTECH HOLDINGS PTE LTD
By:
------------------------
Name:
Title:
---------------------------
Harry Fox
---------------------------
Joseph Abrams
---------------------------
Sol Rosenberg
---------------------------
Mathew Barlow
---------------------------
Seth Altholz
---------------------------
Shelly Abrahami
K.H. TRUSTEES LTD.
By:
------------------------
Name:
Title:
---------------------------
Samuel Zemsky
56
SCHEDULE I
SELLERS' INFORMATION
================================================================================
Number of SoftKey
Number of Company Shares to be
Shares to be Sold Issued in the Name
Name of Seller at Closing of Seller at Closing*
--------------------------------------------------------------------------------
Flextech 10,211,359.51** 449,336
--------------------------------------------------------------------------------
Fox 5,892,923.78 259,309
--------------------------------------------------------------------------------
Abrams 465,687.13 20,492
--------------------------------------------------------------------------------
Rosenberg 2,548,893.89 112,160
--------------------------------------------------------------------------------
Barlow 138,715.31 6,104
--------------------------------------------------------------------------------
Zemsky 250,000 11,001
--------------------------------------------------------------------------------
KHT 595,750 26,215
--------------------------------------------------------------------------------
Altholz 1,142,500 50,274
--------------------------------------------------------------------------------
Abrahami 761,750 33,520
================================================================================
<FN>
-------------------
* These amounts are gross of any withholding Taxes. If the Buyer must
withhold from any Seller, the number of SoftKey Shares to be issued in
the name of that Seller will be decreased by the number of SoftKey
Shares required to be withheld by the Buyer. In addition, these amounts
do not reflect any proportional adjustments which may be made at the
Closing under Section 1.2(b) of the Agreement.
** Includes 2,807,429 shares to be issued to Flextech upon conversion of
the Secured Convertible Note dated April 8, 1994 referred to in Section
5.9 of the Agreement.